Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1 DCDB (i)
JOINT CI TY COUNCIL AND,
1 CAR l SBAID MUNIC I PA l WATER DISTRICT
Staff Report
Meeting Date: April 15, 2025
To:
From:
Staff Contact:
Mayor/President and City Council/Board Members
Geoff Patnoe, City Manager/Executive Manager
Gary Barberio, Deputy City Manager, Community Services
[email protected], 442-339-2822
Cindie K. McMahon, City Attorney/General Counsel
[email protected], 442-339-2891
CA Review CKM
Subject: Settlement Agreement Between City of Carlsbad, San Diego Gas & Electric Company, and Cabrillo Power I LLC
District: 2
Recommended Action
1. Adopt a City Council resolution approving the new Seaside Transaction Agreement and Settlement Agreement between the City of Carlsbad, San Diego Gas & Electric Company, and Cabrillo Power I LLC, terminating the prior settlement agreement dated as of Jan. 14, 2014, between and among the City of Carlsbad, Carlsbad Municipal Water District, Cabrillo Power I LLC, Carlsbad Energy Center LLC, and San Diego Gas and Electric Company and authorizing the City Manager to execute all documents and take all actions necessary to implement the new agreement and terminate the prior agreement.
2. Adopt a Carlsbad Municipal Water District Board resolution terminating the Settlement Agreement dated as of Jan. 14, 2014, between and among the City of Carlsbad, Carlsbad Municipal Water District, Cabrillo Power I LLC, Carlsbad Energy Center LLC, and San Diego Gas and Electric Company and authorizing the Executive Manager to execute all documents and take all actions necessary to terminate the agreement.
Executive Summary
The City of Carlsbad has been negotiating with San Diego Gas & Electric Company, or SDG&E, and Cabrillo Power I LLC, or Cab I, since 2021 to reconfigure SDG&E's North Coast Service Center at its current location near the northeast corner of Carlsbad Boulevard and Cannon Road. The reconfiguration includes property and financial transfers from SDG&E and Cab I to the city.
These negotiations were anticipated in an original settlement agreement. ("Settlement Agreement dated as of Jan. 14, 2014, Between and Among The City of Carlsbad, Carlsbad Municipal Water District, Cabrillo Power I LLC, Carlsbad Energy Center LLC, and San Diego Gas and Electric Company," provided as Exhibit 3).
April 15, 2025 Item #8 Page 1 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1 DCDB The final negotiated settlement agreement, the Seaside Transaction Agreement and Settlement Agreement, or Agreement, is provided as Attachment A to Exhibit 1. The Agreement includes multiple property and financial transfers between SDG&E and the city, Cab I and the city, and SDG&E and Cab I. These include:
• A Cannon Road Access Easement for a future road from Cannon Road at Los Robles Drive through the service center site to Carlsbad Boulevard, which will allow the parties to effectively use their properties after the transfers occur • An amendment to the city's Hub Park Lease with SDG&E in the area on the south side of the Agua Hedionda Lagoon to allow the city to develop the Hub Park trail system, including a trailhead parking lot on the SDG&E-owned Lot 11 property on the north side of Cannon Road near Armada Drive
• A $1 million contribution from SDG&E for the development of the Hub Park trail system Explanation & Analysis
Background
Through the course of negotiations over the past four years, the parties have pursued several different and ultimately unsuccessful avenues for relocation of the SDG&E service center.
On Aug. 31, 2023, SDG&E and Cab I proposed an option for reconfiguring the existing service center site and transferring approximately six acres to the city. The six acres includes the approximately 2.4-acre Cannon Park lease area, or Cannon Park Land, while the remaining approximately 3.6 acres includes the existing "Hilda's" administration building as well as other SDG&E existing service center land. Approximately one acre of the six acres will be the future road through the service center site from Cannon Road to Carlsbad Boulevard. The parties refer to this option as the Seaside option.
After several months of analysis, SDG&E and Cab I determined that the Seaside option was logistically feasible, and the two parties solidified a plan to eliminate any funding gap associated with this option for it to be economically feasible.
At the Dec. 12, 2023, City Council meeting, the City Council authorized staff to continue negotiations with SDG&E and Cab I on the Seaside option and to return to the City Council with an agreement for consideration.
April 15, 2025 Item #8 Page 2 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1 DCDB The Seaside option, generally depicted below, and the associated Agreement provide for reconfiguring the current SDG&E service center site to the east, away from Carlsbad Boulevard and the coastline.
The reconfiguration allows SDG&E to construct a new service center administration building on the eastern 13-acre portion of the 19-acre site and to relocate parking and materials staging areas to an approximately 9.2-acre portion of Cab I property to be transferred to SDG&E. The existing Hilda's administration building located on the northwestern portion of SDG&E's property will continue to be occupied by SDG&E until the new administration building is constructed and occupied. The Hilda's building will then be demolished .
This option makes available for eventual conveyance to the city approximately six acres along the western portion of the SDG&E service center site, which the parties refer to as the New City Land. The six acres includes Cannon Park and the future road between Cannon Road and Carlsbad Boulevard.
Community benefits
The future road will provide the city with options for future use of the New City Land, such as a location for a permanent Fire Station No. 7, ownership - as opposed to a lease - and possible expansion of Cannon Park and an area to provide parking for Cannon Park and beach visitors, among other potential uses. The actual future uses of the New City Land, which will require environmental review and permitting, would be determined by the City Council at a later date.
April 15, 2025 Item #8 Page 3 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1DCDB In addition to the New City Land and the possible options for future use of this property, the Seaside option and the associated agreement provide the following community benefits:
• The city will receive from SDG&E an irrevocable offer of dedication 1 of a 5.76-acre property on the north shore of the Agua Hedionda Lagoon, known as the North Shore Land.
• The city will receive from Cab I irrevocable offers of dedication for approximately 10.2 acres on the west side of Carlsbad Boulevard (referred to as the Bluff Land), approximately 21 acres of the Agua Hedionda Lagoon middle basin between the railroad tracks and Interstate 5, (the Middle Lagoon Land), and approximately 181.23 acres of the Agua Hedionda Lagoon inner basin east of lnterstate-5 (the Inner Lagoon Land). o The city currently has an irrevocable offer of dedication covering approximately
2.9 acres of the upper-bluff portion of the Bluff Land. The new irrevocable offer of dedication would cover the remaining portion of the Bluff Land, or an additional approximately 7.3 acres.
o The city also has a lease agreement on the Inner Lagoon Land and previously had a lease agreement on the Middle Lagoon Land.
o The irrevocable offers of dedication received by the city from both SDG&E and Cab I will be recorded and will allow the city to take ownership of the properties at a future date, if so desired.
o If the city does not take ownership of the properties, the irrevocable offer of dedication for the North Shore Land will include a process by which the offer may become abandoned after 15 years and the offers for the Bluff Land, Middle Lagoon Land and Inner Lagoon Land will include a process by which the offers may become abandoned after 25 years.
• SDG&E will cooperate with the city to develop the Hub Park trail system on the south shore of the Agua Hedionda Lagoon, including allowing parking and access to the trail system via the SDG&E-owned Lot 11 property on the north side of Cannon Road near Armada Drive and two existing pedestrian tunnels underneath Cannon Road. • SDG&E will give the city ownership of the Carlsbad Boulevard Land and the Cannon Road Land fronting the service center site.
• Cab I will give the city ownership of the Carlsbad Boulevard Land fronting Cab l's property if a title report from a nationally recognized title company indicates Cab I owns fee title to the property .
• SDG&E and Cab I will work with the city to determine an appropriate alignment for the Coastal Rail Trail through Cab l's property and the reconfigured SDG&E service center site.
1 An irrevocable offer of dedication is a formal, written offer by a property owner to dedicate land for public purposes. It allows a public entity, like a city or county, to acquire land for public use without needing to purchase it outright. The offer must be executed, acknowledged, and recorded in the same manner as a conveyance of real property. Once recorded, the offer becomes irrevocable unless terminated or abandoned. The public entity can then accept or reject the offer at a later date.
April 15, 2025 Item #8 Page 4 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1DCDB • The city and Cab I will work cooperatively to consider a joint development strategy for the New City Land and Cab l's adjacent property to ensure that future development of each party's property is carried out so as to avoid conflicts during construction and operations, ensure effective communication and collaboration, and promote cohesive, complementary design and operations.
Other property transfers
The Agreement also includes several property and financial transfers between SDG&E and Cab I:
• Cab I will convey to SDG&E an approximately 9.2-acre portion of the Cab I property located north of the existing SDG&E service center and along the railroad tracks. SDG&E will use this property for parking and materials staging areas for the reconfigured SDG&E service center site.
• Cab I will convey to SDG&E ownership of an approximately 5.8-acre property located on the Cab I property that SDG&E currently leases from Cab I and is occupied by an SDG&E switchyard that services the new Carlsbad Energy Center power plant. • Cab I will pay SDG&E $20 million, which SDG&E will use to build a new administration building on the reconfigured service center site and pay the taxes and transaction costs incurred by SDG&E as a result of the transactions.
• SDG&E will convey to Cab I the Cannon Road Access Easement over the eastern one acre of the New City Land. This easement will be conveyed prior to SDG&E conveying the New City Land to the city. The Cannon Road Access Easement would be used to provide vehicle access to the New City Land, SDG&E's reconfigured service center site, and Cab l's property from Cannon Road at its intersection with Los Robles Drive, to Carlsbad Boulevard.
Agreement requirements
The Agreement's effective date is one business day after the City Council adopts the resolution and signs the five attached documents in Exhibit 1 and the CMWD Board adopts the resolution and signs the three attached documents in Exhibit 2. The attached documents are:
• This Agreement
• A memorandum describing the Agreement, to be recorded against the affected properties
• An agreement terminating the original settlement agreement • A memorandum noting the termination of the original settlement agreement to be recorded against the affected properties
• A release agreement releasing the parties from claims arising under the original settlement agreement.
Most of the major deal points of the original settlement agreement have already been satisfied, including the shutdown, decommissioning and above-ground demolition of the Encina Power Station. Cab I has recorded a fossil fuel deed restriction that limits the development of fossil fuel electric generation on land owned by Cab I in the City of Carlsbad, and SDG&E has agreed that it will not expand the footprint of the existing switchyard and will not undertake switchyard activities on the new SDG&E land or the service center site.
April 15, 2025 Item #8 Page 5 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1DCDB The remaining original settlement agreement points have been incorporated into the new Agreement, including the originally agreed upon property transfers to the city from SDG&E and Cab I.
After the effective date of the Agreement, there is a due diligence period of at least 180 days to perform an initial due diligence review of the properties being transferred. This includes the right to perform examinations, tests, investigations, and studies of the properties and to examine and review available documents relating to the properties. If any party acquiring property is not satisfied with the results of its due diligence review, the party may void the Agreement during the due diligence period by providing written notice to the other parties.
This initial due diligence period is intended to ensure there are no "fatal flaws" before proceeding with the extensive efforts necessary to fully implement the Agreement.
SDG&E has already completed and provided the city with two phase I environmental site assessments. One for the approximately 2.4-acre Cannon Park Land and one for the remaining approximately 3.6 acres of SDG&E property to be transferred to the city. These site assessments found that there were no recognized, controlled recognized, or historical recognized environmental conditions identified on either property, and based on these findings, did not recommend further investigations for either property.
Nonetheless, the environmental site assessments for the 3.6-acre SDG&E property identified the existence of two former above-ground storage tanks on the New City Land. These two storage tanks were water tanks used for fire suppression systems associated with the now demolished Encina Power Station. The tanks were reportedly underlain by approximately four to six feet of anti-corrosion sand, which was mixed with light-grade oil to prevent corrosion, below which is a clay barrier to limit oil migration. While the tanks have been removed, the sand remains on-site.
Cab I is responsible for remediation of the tank sands. While the sand is not considered hazardous or in other ways a concern, the Agreement contains a provision that SDG&E and Cab I will enter into a tank sands remediation agreement no later than the closing date of the conveyance of the property to the city. The Agreement further specifies that Cab I must remediate the tank sands on the new city property within six months after the closing date. Cab I has already initiated remediation efforts and the tank sands will be fully remediated well before the property is conveyed to the city.
There is also an existing SDG&E fueling station with underground fuel storage tanks located on the existing SDG&E service center site just east of the New City Land. Due to the proximity and age of these tanks, the Agreement requires SDG&E to complete a phase II environmental site assessment on the eastern boundary of the New City Land before it is conveyed to the city. This assessment will include at a minimum two soil borings for soil, soil gas and groundwater sampling to ensure there are no environmental concerns on the New City Land.
The Agreement also requires SDG&E to remediate any preexisting environmental conditions identified in the phase II report on the New City Land to applicable industrial standards and provide to the city a report from a qualified independent third party environmental professional confirming that any required remediation has occurred.
April 15, 2025 Item #8 Page 6 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1DCDB The transfer of any property owned by SDG&E is subject to California Public Utilities Code Section 851, which requires California Public Utilities Commission, or CPUC, review and approval for the sale or disposition of any utility owned property. Under Section 851, transfers of utility property require the utility to file a formal application with the CPUC.
The transfer of any utility property is also subject to the CPUC's Tribal Land Transfer Policy.
When a utility begins the process of disposing of land, that policy creates an expectation that the utility will work with the California Native American Heritage Commission to identify any tribes whose ancestral territory is on or adjacent to a particular property. Once the utility identifies any interested tribe or tribes, the utility is expected to negotiate a transfer to the tribe before putting the land on the market.
Before SDG&E can submit a CPUC application in compliance with Section 851 and the Tribal Land Transfer Policy, SDG&E must submit a project application to the city for all necessary discretionary permits for the new administration building project, or Project, and receive approval of the necessary city permits, including a certified California Environmental Quality Act, or CEQA, document, as appropriate. A certified CEQA document is necessary prior to submittal of a CPUC application. The Agreement requires SDG&E to submit a Project application to the city as soon as reasonably possible and no later than nine months after the effective date of the Agreement. Once that application is submitted to the city, it is anticipated that the processing of the application to a City Council decision point will take 12 to 18 months.
Concurrent with SDG&E's pursuit of city permit approvals, SDG&E will begin to draft the CPUC application. The Agreement requires that SDG&E file a CPUC application as soon as reasonably possible and no later than nine months after the city permit approvals have been obtained.
Once the CPUC application is submitted, it is anticipated that CPUC review and decision on the application will take 18 to 30 months.
The Agreement also requires SDG&E to apply for a coastal development permit with the California Coastal Commission for the Project as soon as reasonably possible and no later than nine months after the city permit approvals have been obtained. SDG&E does not need Coastal Commission approval of the coastal development permit before filing the CPUC application and is able to pursue review and approval of both the CPUC application and the coastal development permit concurrently. Once the Coastal Commission application is submitted, it is anticipated review and decision on the application will take 12 to 24 months.
In addition, the Agreement requires that the city submit an application for an amendment to the city's Local Coastal Program Land Use Plan and Land Use Map as soon as reasonably possible and no later than six months after the city permit approvals have been obtained. Once the city's Local Coastal Program Amendment application is submitted, it is anticipated review and decision on the application will take 12 to 24 months. The Coastal Commission processing of SDG&E's application and the city's application will likely run concurrently.
The closing of all the property conveyances and financial transactions contemplated by the Agreement will occur 30 days following the later of the date SDG&E's CPUC approval is final and non-appealable, the date SDG&E's Coastal Commission approval is final and non-appealable, or the date the city's Local Coastal Program Amendment is final and non-appealable. The only transaction that will not close on this date is the approximately 3.6 acres of land containing the Hilda's administration building, which will be conveyed at a second closing.
April 15, 2025 Item #8 Page 7 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1 DCDB The second closing is necessary as SDG&E will need to continue to occupy the existing Hilda's administration building until the construction of the new administration building on the reconfigured service center site is completed. The second closing will occur the earlier of the date that is two years after the first closing date and the date that is 30 days after the date SDG&E receives a certificate of occupancy for the new administration building. Construction of the new administration building will not begin until the city permit approvals, the CPUC approval, and the Coastal Commission approvals are final and non-appealable. It is expected construction of the new administrative building will take 18 to 24 months to complete.
Once the new administration building is complete, SDG&E will vacate and demolish the Hilda's administration building, including the underground utilities serving the building to the public right of way. It is expected that the demolition of the administration building and the underground utilities serving the building will take six to nine months to complete.
The costs associated with the closing and second closing as to the property to be transferred to the city will be borne equally by SDG&E and Cab I; the city will not bear any of these costs. The costs incurred in connection with the engagement of the Escrow Agent will also be borne equally by SDG&E and Cab I.
Should the agreement be voided during the due diligence period or should the CPUC or Coastal Commission not approve the Project or the Local Coastal Program Amendment, Cab I must pay the city $10,000,000. In addition, Cab I will convey to the city irrevocable offers of dedication for ownership of the Inner Lagoon Land, the Middle Lagoon Land and the Bluff Land and convey ownership of the Carlsbad Boulevard Land fronting Cab l's property if a title report from a nationally recognized title company indicates Cab I owns the property.
Fiscal Analysis
The city's costs to negotiate the Agreement have generally been limited to staff time only.
Some legal expenses were incurred for outside legal counsel and experts advising the city on environmental considerations. These expenses were within the city's existing budget and no additional appropriations are required.
The city will not bear any costs, fees or expenses associated with the closing and second closing. Those costs are to be borne equally by SDG&E and Cab I. The costs required to be incurred in connection with the engagement of the Escrow Agent will also be borne equally by SDG&E and Cab I. The city may incur limited costs associated with due diligence efforts prior to the closing and the second closing. Additionally, the city may incur limited costs associated with additional due diligence efforts prior to the city electing to take ownership at a future date of any of the properties covered by the irrevocable offers of dedication.
Next Steps
After the effective date of the Agreement, the parties will initiate the initial due diligence review. It is expected that the city, CPUC, and Coastal Commission approval processes will take approximately 3 ½ to 5 years to become final and non-appealable, with the initial closing occurring 30 days following these approvals. The second closing is expected to occur an additional 18 to 24 months after the closing, or approximately 5 to 7 years after the effective date of the Agreement.
April 15, 2025 Item #8 Page 8 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1 DCDB Environmental Evaluation
The proposed action is not a "project" as defined by CEQA Section 21065 and CEQA Guidelines Section 15378(a) and does not require environmental review under CEQA Guidelines Section 15060(c)(2) because the action is limited to the execution of a settlement agreement and ancillary documents. The action has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Future projects for the development of property being transferred or dedicated through the Agreement will require environmental review.
Exhibits
1. City Council resolution
2. CMWD Board resolution
3. Jan. 14, 2014, City Council staff report with original settlement agreement April 15, 2025 Item #8 Page 9 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1DCDB RESOLUTION NO. 2025-082
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CARLSBAD,
CALIFORNIA, APPROVING THE NEW SEASIDE TRANSACTION AGREEMENT
AND SETTLEMENT AGREEMENT BETWEEN THE CITY OF CARLSBAD, SAN
DIEGO GAS & ELECTRIC COMPANY, AND CABRILLO POWER I LLC, TERMINATING THE PRIOR SETTLEMENT AGREEMENT DATED AS OF JAN. 14, 2014, BETWEEN AND AMONG THE CITY OF CARLSBAD, CARLSBAD
MUNICIPAL WATER DISTRICT, CABRILLO POWER I LLC, CARLSBAD ENERGY
CENTER LLC, AND SAN DIEGO GAS AND ELECTRIC COMPANY, AND
AUTHORIZING THE CITY MANAGER TO EXECUTE ALL DOCUMENTS AND TAKE
ALL ACTIONS NECESSARY TO IMPLEMENT THE NEW AGREEMENT AND
TERMINATE THE PRIOR AGREEMENT
Exhibit 1
WHEREAS, on Jan. 14, 2014, the City Council of the City of Carlsbad adopted Resolution 2014- 010 approving a settlement agreement, or the Original Settlement Agreement, between and among the City of Carlsbad, the Carlsbad Municipal Water District, Cabrillo Power I LLC (Cab I), Carlsbad Energy Center LLC, and San Diego Gas & Electric Company {SDG&E); and WHEREAS, among its provisions, the Original Settlement Agreement anticipated the relocation of SDG&E's North Coast Service Center, currently located near the northeast corner of Carlsbad Boulevard and Cannon Road; and
WHEREAS, despite the parties' good-faith efforts, a suitable relocation site was not found; and WHEREAS, on Aug. 31, 2023, SDG&E and Cab I proposed an option, referred to as the Seaside option, for reconfiguring the service center site on the eastern portion of the parcel and conveying approximately six acres of the western portion of the site, including Cannon Park, to the city; and WHEREAS, the six acres of property to be conveyed to the city will be subject to an approximately one-acre easement allowing for a road from Cannon Road at Los Robles Drive through the service center site to Carlsbad Boulevard; and
WHEREAS, the city, Cab I, and SDG&E have negotiated a new settlement agreement, the Seaside Transaction Agreement and Settlement Agreement, or Agreement (Attachment A), based on the Seaside option; and
WHEREAS, in addition to the transfer of approximately six acres on the western portion of the service center site to the city, the Agreement provides additional community benefits, including (1) an irrevocable offer of dedication, or IOD, from SDG&E of fee title to an approximately 5.76-acre property on the north shore of the Agua Hedionda Lagoon; (2) an IOD from Cab I for fee title to an approximately April 15, 2025 Item #8 Page 10 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1DCDB
7.3-acre property on the beach bluff on the west side of Carlsbad Boulevard to complement a prior IOD for approximately 2.9 acres of upper beach bluff property, for 10.2 acres of beach bluff property (3) an IOD from Cab I for fee title to the approximately 21-acre middle Agua Hedionda Lagoon basin between the railroad tracks and Interstate 5, (4) an IOD from Cab I for fee title to the approximately 181.23-acre inner Agua Hedionda Lagoon basin east of Interstate 5, (5) transfer from SDG&E of fee title to the portions of Carlsbad Boulevard and Cannon Road fronting the service center site, (6) and if Cab I has fee title, transfer from Cab I of fee title to the portion of Carlsbad Boulevard fronting Cab l's property; and
WHEREAS, as a further community benefit, SDG&E will cooperate with city to develop the Hub Park trail system on the south shore of the Agua Hedionda Lagoon, including making a $1 million contribution toward the trail system's development and allowing parking and access to the trail system via the SDG&E-owned Lot 11 on the north side of Cannon Road near Armada Drive and two pedestrian tunnels underneath Cannon Road; and
WHEREAS, the Agreement provides for property and financial transfers between SDG&E and Cab I as described in the Agreement; and
WHEREAS, the Agreement provides for the parties to record a memorandum of the Agreement (Attachment B) with the San Diego County Recorder; and
WHEREAS, the Agreement provides for the parties to the Original Settlement Agreement to execute an agreement terminating the Original Settlement Agreement (Attachment C), to record a memorandum of the termination agreement (Attachment D) with the San Diego County Recorder, and to execute a release of any claims arising under Original Settlement Agreement (Attachment E).
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Carlsbad, California, as follows:
1. 2.
That the above recitations are true and correct.
That the proposed action is not a "project" as defined by CEQA Section 21065 and CEQA Guidelines Section 15378(a) and does not require environmental review under CEQA Guidelines Section 15060(c)(2) because the action is limited to the execution of a settlement agreement and ancillary documents. The action has no potential to cause either a direct physical change in the environment or a reasonably foreseeable indirect physical change in the environment. Future projects for the development of property April 15, 2025 Item #8 Page 11 of 321
Docusign Envelope ID: 29B6AA39-0C83-45AB-B8B3-513D76E1 DCDB being transferred or dedicated through the Agreement will require environmental review.
3. That the City Manager is authorized to execute the Agreement in Attachment A and the ancillary documents in Attachments B through E.
4. That the City Manager is further authorized to execute all other documents and take all other actions necessary to implement the Agreement and terminate the Original Settlement Agreement.
PASSED, APPROVED AND ADOPTED at a Joint Meeting of the City Council of the City of Carlsbad, California, and the Board of Directors of the Carlsbad Municipal Water District of the City of Carlsbad, California, on the 15th day of April, 2025, by the following vote, to wit:
AYES:
NAYS:
ABSTAIN:
ABSENT:
April 15, 2025
Blackburn, Bhat-Patel, Acosta, Burkholder, Shin.
None.
None.
None.
KEITH BLACKBURN, Mayor
SHERRY FREISINGER, City Clerk
(SEAL)
Item #8 Page 12 of 321
ATTACHMENT A
Execution Version
SEASIDE TRANSACTION AGREEMENT AND SETTLEMENT AGREEMENT
SMRI 14909-8942-1601.2
US-DOCS\ 148870986.28
by and among
THE CITY OF CARLSBAD,
CARRILLO POWER I LLC,
and
SAN DIEGO GAS & ELECTRIC COMPANY
-1-
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND RULES OF CONSTRUCTION ............................................... 2 Section 1.1
Section 1.2
I>efinitions ............................................................................. ................. 2 Rules of Construction . ......................................................................... 16 ARTICLE II GENERAL SETTLEMENT TERMS ...................................................................... 17 Section 2.1
Section 2.2
Section 2.3
Section 2.4
Section 2.5
Section 2.6
Term of this Agreement ....................................................................... 17 Covenants Running with the Land ...................................................... 17 Approvals and Effective Date .............................................................. 17 CPUC Review and Approval and Tribal Land Transfer Policy .......... 18 Potential Hub Park Trail System .......................................................... 18 Settlement ............................................................................................ 18
ARTICLE III TERMINATION OF ORIGINAL SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS .................................................................................................... 18 Section 3.1
Section 3.2
Termination of Original Settlement Agreement .................................. 18 Release of Claims ................................................................................ 19 ARTICLE IV TRANSFER OF ACQUIRED ASSETS; CLOSING ............................................. 19 Section 4.1
Section 4.2
Section 4.3
Section 4.4
Section 4.5
Section 4.6
Section 4.7
Section 4.8
Transfer of Acquired Assets; Assumption of Assumed
Liabilities; Excluded Assets and Excluded Liabilities ......................... 19 Consideration ....................................................................................... 20 Deposits; Payment on Closing ............................................................. 21 Closing Statement ................................................................................ 21 The Closing and the Second Closing ................................................... 22 Closing Deliverables ............................................................................ 22 Proration Calculation Principles .......................................................... 28 Closing Costs ....................................................................................... 30 ARTICLE V CONTINGENCIES .................................................................................................. 31 Section 5.1 Due Diligence . ..................................................................................... 31 ARTICLE VI TITLE TO THE PROPERTY ................................................................................. 33 Section 6.1
Section 6.2
Section 6.3
Section 6.4
Title Report ................................................................................ .......... 33 Survey .......................................................................................... ........ 33 Exceptions to Title ............................................................................... 33 Fee Interest in Cab I Carlsbad Boulevard Land ................................... 36
ARTICLE VII REPRESENT A TIO NS AND WARRANTIES RELATING TO EACH PARTY .............................................................................................................................. 36 Section 7.1
Section 7.2
SMRH:4900-8942-1601.3
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Organization of Each Party ................................................................. . 36 Authorization; Enforceability .............................................................. 36 -i-
Section 7.3
Section 7.4
Section 7.5
Section 7.6
Section 7.7
Section 7.8
Section 7.9
Section 7 .10
TABLE OF CONTENTS
(continued)
Page
No Conflict. .......................................................................................... 37 Broker Fees .......................................................................................... 37 Litigation .............................................................................................. 37 Tax Matters .......................................................................................... 38 OFAC ................................................................................................... 38 Bankruptcy ........................................................................................... 38 ERISA .................................................................................................. 38 No Default. ........................................................................................... 38
ARTICLE VIII REPRESENTATIONS AND WARRANTIES RELATING TO ACQUIRED ASSETS ....................................................................................................... 38 Section 8.1
Section 8.2
Section 8.3
Section 8.4
Section 8.5
Section 8.6
Section 8.7
Section 8.8
Section 8.9
Right of First Refusal ........................................................................... 39 Title to Property ................................................................................... 39 Condemnation ...................................................................................... 39 Employees ............................................................................................ 39 Leases and Contracts ............................................................................ 39 Legal Compliance; Permits .................................................................. 39 Insurance .............................................................................................. 39 Environmental ...................................................................................... 40 WARN Act. .......................................................................................... 40 ARTICLE IX COVENANTS ........................................................................................................ 40 Section 9.1
Section 9.2
Section 9.3
Section 9.4
Section 9.5
Section 9.6
Section 9.7
Section 9.8
Section 9.9
Section 9 .10
Section 9 .11
Section 9 .12
Section 9 .13
Section 9.14
Section 9.15
Section 9 .16
Section 9 .17
Section 9 .18
Section 9 .19
SMRH:4909-8942-1601.3
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Conduct of Business Pending the Closing or the Second
Closing ................................................................................................. 40 Entitlement and CEQA Approvals for SDG&E Project.. ................... .42 CPUC Approval ................................................................................... 43 Coastal Development Permit .............................................................. .44 Amendment to the Local Coastal Program Land Use Plan ................ .45 Demolition and Site Clearance of New City Property ........................ .45 Map Act Exemption ............................................................................. 45 Books and Records; Post-Closing Access .......................................... .46 Risk of Loss ......................................................................................... 46 Notice of Certain Events ..................................................................... .4 7 Publicity ............................................................................................... 4 7 Confidentiality ..................................................................................... 4 7 Permits ................................................................................................. 48 Contracts; Further Assurances ............................................................ .48 City Cooperation .................................................................................. 49 Switchyard Covenant. .......................................................................... 49 Employee Matters ................................................................................ 49 Encina Redevelopment Land Project and Coastal Rail Trail... ........... .49 Fossil Fuel Deed Restriction ................................................................ 50 -ii-
Section 9.20
Section 9.21
TABLE OF CONTENTS
( continued)
Page
Assessor Parcel Numbers ..................................................................... 50 Conditional Covenants ........................................................................ .51 ARTICLE X CONDITIONS TO OBLIGATIONS .................. ..................................................... 51 Section 10.1
Section 10.2
Section 10.3
Section 10.4
Conditions to Obligations of SDG&E ..................... ............................ 51 Conditions to the Obligations of Cab I ................................................ 52 Conditions to the Obligations of the City ............................................ 53 Frustration of Closing Conditions ........................................................ 54 ARTICLE XI INDEMNIFICATION ............................................................................................ 54 Section 11.1
Section 11.2
Section 11.3
Section 11.4
Section 11.5
Section 11.6
Section 11. 7
Survival ..................... ........................................................................... 54 Indemnification .................................................................................... 54 Indemnification Procedures ................................................................ .55 Limitations on Liability of Transferors ................................................ 57 Waiver of Other Representations ......................................................... 58 Remedies; Limited Recourse; Limitations on Damages ...................... 61 Guaranteed Obligations ....................................................................... 64 ARTICLE XII DEFAULT REMEDIES ........................................................................................ 64 Section 12.1
Section 12.2
Section 12.3
Voiding of Voidable Obligations ......................................................... 64 Effect of Voiding of Voidable Obligations; Payment of
I>eposits ................................................................................................ 65 Specific Performance ........................................................................... 65 ARTICLE XIII MISCELLANEOUS ......................................................................................... -... 66 Section 13.1
Section 13.2
Section 13.3
Section 13.4
Section 13.5
Section 13.6
Section 13.7
Section 13.8
Section 13.9
Section 13.10
Section 13.11
Section 13.12
Section 13.13
Section 13.14
Section 13.15
Section 13.16
Section 13.17
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Administration Building ...................................................................... 66 Notices ................................................................................................. 66 Successors and Assigns ........................................................................ 68 Rights of Third Parties ......................................................................... 68 Expenses ......................... ..................................................................... 68 Counterparts; Electronic Signatures .................................................... 68 Entire Agreement ............................. .................................................... 68 Amendments; Waiver .......................................................................... 69 Severability .......................................................................................... 69 Mutual Drafting ................................................................................... 69 Governing Law; Jurisdiction ................................................................ 69 Time is of the Essence ......................................................................... 70 Offers .................................................................................................. . 71 No-Offer ............................................................................................... 71 Natural Hazard Disclosures ................................................................. 71 Relationship of Parties; No Joint Venture or Partnership .................... 72 Tax-Deferred Exchange ....................................................................... 72 -iii-
Joinder
Exhibit A-1
Exhibit A-2
Exhibit A-3
Exhibit B-1
Exhibit B-2
Exhibit B-3A
Exhibit B-3B
Exhibit B-4
Exhibit B-5
Exhibit B-6
Exhibit B-7
Exhibit B-8
Exhibit B-9
Exhibit B-10
Exhibit C
Exhibit D-1
Exhibit D-2
Exhibit E-1
Exhibit E-2
Exhibit F
Exhibit G
Exhibit H
Exhibit I
Exhibit J
Exhibit K
Exhibit L
Exhibit M
Exhibit N
Exhibit 0
Exhibit P
Exhibit Q
Exhibit R
Exhibit S
Exhibit T
Schedules
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Exhibits
Joinder by NRG Energy Inc.
Service Center Land
Cannon Park Land
Encina Redevelopment Land
Cannon Road Land
Hub Park Land
Inner Lagoon Land
Middle Lagoon Land
New City Land
New SDG&E Land
North Shore Land
Switchyard Land
Cab I Carlsbad Boulevard Land
SDG&E Carlsbad Boulevard Land
Bluff Land
Memorandum of Agreement
Termination of Original Settlement Agreement
Memorandum of Settlement Agreement Termination
Agreement
Form of Deed
Form of Irrevocable Off er of Dedication
Form of Bill of Sale
Form of Assignment and Assumption Agreement
Reserved
Reserved
Form of Closing Certificate
Reserved
Form of Hub Park Lease Amendment
Cannon Road Access Easement Agreement
Permitted Exceptions
Closing Cost Limitations
Insurance
Environmental Reports
Form of Release
Residual Cab I Land
Residual SDG&E Land
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SEASIDE TRANSACTION AGREEMENT AND SETTLEMENT AGREEMENT
This SEASIDE TRANSACTION AGREEMENT AND SETTLEMENT AGREEMENT (this "Agreement") is dated as of the Effective Date, is entered into by and among: (i) the City of Carlsbad, a charter city, Jocated in San Diego County (the "City"), Cabrillo Power I LLC, a Delaware limited liability company ("Cab I"), and San Diego Gas & Electric Company, a California corporation ("SDG&E"). The City, Cab I, and SDG&E are sometimes referred to in this Agreement collectively as the "Parties" and each individually as a "Party").
RECITALS
A. SDG&E is the fee owner of that certain parcel of real property identified on Exhibit A-1 attached hereto (the "Service Center Land"), on which is located the construction and operations center commonly known as the North Coast Service Center (the "Service Center"), and SDG&E is the fee owner of that certain real property identified on Exhibit A-2 (the "Cannon Park Land'').
B. Cab I is the fee owner of that certain parcel of real property identified on Exhibit A-3 attached hereto (the "Encina Redevelopment Land'' and, together with the Service Center Land and the Cannon Park Land, the "Land'').
C. The City, Cab I, Carlsbad Energy Center LLC ("CEC'), Carlsbad Municipal Water District ("CMWD") and SDG&E (collectively, the "Original Settlement Parties") entered into that certain Settlement Agreement, dated as of January 14, 2014 (the "Original Settlement Agreement"), to resolve long-standing disputes between the City, Cab I and CEC, and to provide for certain other transactions specified therein.
D. Between the execution of the Original Settlement Agreement and the Effective Date, the Parties negotiated in good faith in order to attempt to implement the terms of the Original Settlement Agreement, but were unable to resolve all open issues in order to implement in full the terms of the Original Settlement Agreement.
E. Cab I and SDG&E have entered into a separate agreement that provides for Cab I to convey the fee interest in that certain parcel of real property identified on Exhibit B-7 attached hereto (the "Switchyard Land'') to SDG&E in accordance with the procedures and subject to the terms and conditions set forth in such separate agreement.
F. The Parties now desire to enter into this Agreement in order to (i) terminate the Original Settlement Agreement and release each Original Sett]ement Party from its obligations in respect thereunder, (ii) resolve all matters and disputes relating to the Original Settlement Agreement, the transactions relating thereto and all negotiations between the Parties prior to the Effective Date, and (iii) transfer certain portions of the Land to and grant other rights and incur other obligations to the other Parties, in each case, as set forth herein.
NOW, THEREFORE , in consideration of the promises and mutual covenants in this Agreement and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:
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ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.1 Definitions. As used herein, the following terms shall have the following meanings:
"Acquired Assets" means, collectively, the Transferors' right, title and interest in, to and under the New SDG&E Property, the Inner Lagoon Property, the Middle Lagoon Property, the New City Property, the Hub Park Easement Interest, the North Shore Property, the Cab I Carlsbad Boulevard Land (subject to its potential removal as an Acquired Asset pursuant to Section 6.4), the SDG&E Carlsbad Boulevard Land, the Cannon Road Land and the Bluff Land. "Administration Building" has the meaning set forth in Section 4.2. "Affiliate" means, with respect to any Person, any other Person that Controls, is Controlled by or is under common Control with, such specified Person. "Agreement" has the meaning set forth in the Preamble.
''Ancillary Property" means, with respect to any Parcel, the Improvements located on such Parcel, all Ancillary Real Property Rights relating to such Parcel, all Leases encumbering such Parcel, all Tangible Personal Property relating to such Parcel and all Intangible Personal Property relating to such Parcel, but specifically excluding any Excluded Property of the applicable Transferor related to such Parcel.
"Ancillary Real Property Rights" means, with respect to any Parcel, all rights, benefits, privileges, easements, tenements, hereditaments, rights-of-way and other appurtenances thereon or in any way appertaining thereto (including all mineral rights, development rights, air and water rights), and all strips and gores and any land lying in the bed of any street, road or alley, open or proposed, adjoining such Parcel.
"Anti-Te"orism Laws" means Executive Order 13224 issued by the President of the United States, the USA PATRIOT Act, and all other applicable Law addressing or in any way relating to terrorist acts and acts of war.
"Approval Date" has the meaning set forth in Section 2.3. "Approval Resolution" has the meaning set forth in Section 2.3. ''Approved Qualified CPUC Approvaf' has the meaning set forth in Section 9.3(b). ''Assignment and Assumption" means an assignment and assumption agreement substantially in the form of Exhibit G.
"Assumed liabilities" means, with respect to any Transferee, any liability or obligation (i) arising from and after the Closing, or the Second Closing, as applicable, relating to ownership, lease, operation or use of the Acquired Assets acquired by such Transferee, (ii) for which such Transferee or its Affiliates receive a proration or other credit at the Closing, or the Second Closing, SMRH:4909-8942-1601.3
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as applicable, (iii) arising out of or related to the condition of the Acquired Assets acquired by such Transferee (regardless of whether such condition existed prior to the Closing, or the Second Closing), as applicable, including the design, construction, engineering, maintenance and repair or environmental condition of such Acquired Assets, or (iv) for which such Transferee or its Affiliates are otherwise made responsible pursuant to this Agreement or any Transaction Document.
Assumed Liabilities shall not include any Excluded Liabilities. "Bill of Sale" means a bill of sale substantially in the form of Exhibit F. "Bluff Land'' means that certain parcel of real property identified on Exhibit B-10 attached hereto.
"Breaching Transferee" has the meaning set forth in Section 12.2(b). "Breaching Transferor" has the meaning set forth in Section 12.2(c). "Business Day" means any day that is not a Saturday, Sunday or legal holiday in the City of Carlsbad or State of California or a federal holiday in the United States. "Cab I" has the meaning set forth in the Preamble.
"Cab I Carlsbad Boulevard Land'' means the fee interest in that certain parcel of real property identified on Exhibit B-8 attached hereto.
"Cab I Parties" has the meaning set forth in Section 9.18. "Cab I Title Search" has the meaning set forth in Section 6.4. "Cal ISO" shall mean the California Independent System Operator, a non-profit independent system operator serving California.
"Cannon Access Road Property" shall mean that certain real property described on Exhibit D to the Cannon Road Access Easement Agreement (which includes, for the avoidance of doubt, a portion of the Cannon Road Land adjacent to the proposed easement), which will be encumbered by the Cannon Road Access Easement pursuant to the Cannon Road Access Easement Agreement.
"Cannon Park Land'' has the meaning set forth in the Recitals. "Cannon Park Lease" means that certain Lease, dated as of June 1, 1963, between SDG&E and the City.
"Cannon Road Access Easement" shall mean the easement evidenced by the Cannon Road Access Easement Agreement, pursuant to which Cab I would acquire from SDG&E, and SDG&E would reserve, an easement for ingress to and egress from the Residual Cab I Land and access to Cannon Road and Carlsbad Boulevard, which easement shall be located over, across and through the Cannon Access Road Property.
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"Cannon Road Access Easement Agreement" shall mean that certain easement agreement in the form attached hereto and incorporated herein as Exhibit M, pursuant to which Cab I would acquire from SDG&E, and SDG&E would reserve, an easement for ingress to and egress from the Residual Cab I Land and access to Cannon Road and Carlsbad Boulevard, which easement shall be located over, across and through the Cannon Access Road Property. "Cannon Road Land'' means the fee interest in that certain parcel of real property identified on Exhibit B-1 attached hereto.
"Cap" has the meaning set forth in Section 11.4(b).
"CCC Application" has the meaning set forth in Section 9.4. "CCC Approval Action" has the meaning set forth in Section 9.4. "CCC LCP Amendment" has the meaning set forth in Section 9.5 "CEC' has the meaning set forth in the Recitals.
"CEC Lease" means that certain Ground Lease and Easement Agreement, dated as of January 1, 2016, by and between Cab I, as lessor and grantor, and CEC, as lessee and grantee. "Certificate of Compliance" means an unconditional certificate of compliance issued by the City with respect to the Residual Cab I Land, the New SDG&E Land or the New City Land. "CEQA" means the California Environmental Quality Act.
"City" has the meaning set forth in the Preamble.
"City Application" has the meaning set forth in Section 9.2. "City Councir' means the City Council of the City.
"City Discretionary Approvals" has the meaning set forth in Section 9.2. "City Surveys" has the meaning set forth in Section 6.2. "Claim Notice" has the me:aning set forth in Section 11.3(a). "Closing" has the meaning set forth in Section 4.5(a).
"Closing Certificate" means a certificate in the form of Exhibit J. "Closing Date" has the meaning set forth in Section 4.5(c). "Closing Extension Notice" has the meaning set forth in Section 4.5(b). "Closing Statement" has the meaning set forth in Section 4.4.
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"CMWD" has the meaning set forth in the Recitals.
"Coastal Rail Traif' means the planned continuous bike route that runs approximately 42 miles between Oceanside and the Santa Fe Depot in downtown San Diego and is being constructed in segments by the San Diego Association of Governments and the cities the trail traverses.
"Code" means the Internal Revenue Code of 1986, as amended. "Competing Proposed Transaction" has the meaning set forth in Section 13.13. "Contract" means any legally binding agreement, commitment, lease for personal property, license or contract.
"Contribution" has the meaning set forth in Section 4.2(a). "Controf' means the possession, directly or indirectly, of the power to direct or cause the direction of the management, affairs or policies of a Person, whether through the ability to exercise voting power, by Contract, operation of law or otherwise. "Controlling" and "Controlled" have meanings correlative thereto.
"Convey" has the meaning set forth in Section 4. l{a).
"CPUC' means the California Public Utilities Commission, and any successor or replacement Government Authority.
"CPUC Application" has the meaning set forth in Section 9.3(a). "CPUC Approvaf' has the meaning set forth in Section 9.3(c). "CPUC R&A" means, with respect to any transfer of real property, the review and approval by the CPUC of such transfer under Section 851 and any other approvals required by the CPUC and consistent with SDG&E's regulatory obligations.
"Deductible" has the meaning set forth in Section 11.4(a). "Deed" means a deed in the form of Exhibit E-1.
"Deposits" has the meaning set forth in Section 4.3(a). "Deposit Escrow Agreement" means the deposit escrow agreement to be entered into within sixty (60) days of the Effective Date, between the Escrow Agent, SDG&E, the City and Cab I relating to the Deposits.
"Disapproved Qualified CPUC Approvaf' has the meaning set forth in Section 9.3(b). "Disclosing Party" has the meaning set forth in Section 9.12. "Dollars" or "$'' mean the lawful currency of the United States.
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"Due Diligence Contingency" has the meaning set forth in Section 5. l{a). "Due Diligence Materials" has the meaning set forth in Section 1 l .5(b ). "Due Diligence Period'' has the meaning set forth in Section 5. l{a). "Effective Date" has the meaning set forth in Section 2.3. "Encina Project" has the meaning set forth in Section 9.18. "Encina Redevelopment Land'' has the meaning set forth in the Recitals. "Environmental Law" means any Law pertaining to worker or workplace safety (relating to exposure to Hazardous Materials), environmental conditions or environmental quality, the regulations promulgated pursuant thereto, and the conditions of any permits, judgments, agreements, or authorizations issued pursuant thereto, including but not limited to (i) the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), 43 U.S.C. § 9601 et seq., (ii) the Resource Conservation and Recovery Act of 1976 (RCRA), 42 U.S.C. § 6901 et seq., (iii) the Toxic Substances Control Act of 1976 (TSCA), 15 U.S.C. § 2601 et seq., (iv) the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., (v) the Clean Water Act (CWA), 33 U.S.C. § 1251 et seq., (vi) the Porter Cologne Water Quality Act, California Water Code§ 13000 et seq., (vii) the Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code § 25249.5 et seq., (viii) the Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health and Safety Code § 25300 et seq., (ix) the California Hazardous Waste Control Law, California Health and Safety Code§ 15200 et seq., (x) the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq., (xi) the California Occupational Safety and Health Act, California Labor Code § 6300 et seq; (xii) the National Environmental Policy Act, 42 U.S.C. §§ 4321-4370h, (xiii) the California Environmental Quality Act, California Public Resources Code § 21000 et seq., (xiv) the Endangered Species Act, 16 U.S.C. §§ 1531- 1544, (xv) the Migratory Bird Treaty Act, 16 U.S.C. §§ 703-712, (xvi) the Bald and Golden Eagle Protection Act, 16 U.S.C. §§ 668-668d, (xvii) the California Endangered Species Act, California Fish and Game Code§ 2050, et seq., and (xviii) the Native Plant Protection Act, California Fish and Game Code, Section 1900 et seq.
"ERISA" means the United States Employee Retirement Income Security Act of 1974, as amended.
"Escrow Agent" means the Title Company.
"Estimated Proration Report" has the meaning set forth in Section 4.7(b). "Exchange" has the meaning set forth in Section 13 .17. "Excluded Liabilities" means any liability or obligation (i) arising prior to the Closing, or the Second Closing, as applicable, relating to ownership, lease, operation or use of the Acquired Assets to the extent the Transferee of such Acquired Assets does not receive a proration or other credit at the Closing, or the Second Closing, as applicable, (ii) for which, with respect to any such Acquired Asset, the Transferor of such Acquired Asset or its Affiliates are made responsible SMRH:4909-8942-1601.3
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pursuant to this Agreement or any Transaction Document, and (iii) with respect to the Excluded Property.
"Excluded Property" means, with respect to any Parcel, (i) any items of personal property owned by tenants under Permitted Leases of such Parcel, (ii) any confidential or proprietary information of the Transferor of such Parcel, and (iii) with respect to any easements granted to SDG&E and described on Exhibit N, the personal property of SDG&E located on such Parcel in the area described in such easement.
"Extended Closing Date" has the meaning set forth in Section 4.5(b). "Final and Non-Appealable" means, with respect to any approval issued by a Governmental Authority, the time when (i) such approval is considered to be active and effective, (ii) all periods in which such approval could be challenged via an administrative, procedural, judicial or other appeal have expired, and (iii) any administrative, procedural, judicial, or other challenge to such approval has been concluded (a) by a final order issued from the applicable administrative, judicial, or other body without the opportunity for further appeal or (b) by a settlement agreement executed by all real parties in interest to the administrative, procedural, judicial or other challenge which has received approval, if required, by the requisite tribunal.
Notwithstanding the foregoing, with respect to a CPUC Approval, such approval shall be considered "Final and Non-Appealable" only when (1) thirty (30) days have passed since the date of the CPUC' s decision and no application for rehearing has been filed, or (2) if an application for rehearing has been filed, such application has been affirmatively denied by the CPUC and either (A) the time period in which to seek judicial review of the denial of the application for rehearing has expired without any judicial challenge or (B) if there has been any judicial challenge following the CPUC' s denial of the application for rehearing, such judicial challenge has concluded and the CPUC Approval has been affirmed by a final order issued from the applicable judicial body without the opportunity for further appeal.
"Final Proration Period'' has the meaning set forth in Section 4.7(b). "Final Settlement Statement" has the meaning set forth in Section 4.7(b). "Fossil Fuel Deed Restriction" has the meaning set forth in Section 9.19. "Fundamental Representations" means the representations and warranties of each Party contained in Section 7.1 (Organization), Section 7.2 (Authorization, Enforceability), Section 7.4 (Broker's Fees), Section 7.6 (Tax Matters) and Section 7.7 (OFAC). "GAAP" means generally accepted accounting principles of the United States in effect at the applicable date of determination, consistently applied. "Governmental Authority" means any United States or foreign federal, state, provincial, municipal, local or similar governmental authority, regulatory or administrative agency, tribunal or court.
"Hazardous Materiaf' means any product, substance, chemical, material, or waste whose presence, nature, quantity and/or intensity of existence, use, manufacture, disposal, transportation, SMRH:4909-8942-1601.3
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spill, release, or effect, either by itself or in combination with other materials expected to be on an Acquired Asset, is either; (i) potentially injurious to the public health, safety, or welfare, the environment, or such Acquired Asset, (ii) regulated or monitored by any Governmental Authority, or (iii) a basis for liability of any Party to any governmental agency or third party under any applicable statute or common law theory. Hazardous Materials shall include, but not be limited to, hydrocarbons, petroleum, gasoline, crude oil, or any products, by-products, or fractions thereof. "Hub Park Contribution" has the meaning in Section 4.2(b). "Hub Park Land" means the portion of the real property subject to the Hub Park Lease, as amended by the Hub Park Lease Amendment, as described on Exhibit B-2. "Hub Park Lease" means that certain Lease Agreement, dated as of November 10, 1975, between SDG&E, as lessor, and the City, as lessee.
"Hub Park Lease Amendment" means an amendment to the Hub Park Lease, executed by SDG&E and the City, which, (i) grants to the City the right to construct and operate the potential Hub Park Trail System over the Hub Park Land, subject to the City obtaining all necessary future permits and approvals, (ii) shall be in the form of Exhibit L, and (iii) allows for SDG&E to elect, with sixty (60) days' written notice to the City, to terminate the Hub Park Easement Interest (but not, for the avoidance of doubt, with respect to the real property leased to the City under the Hub Park Lease) in the event that the City voluntarily initiates changes to the land use designation applicable to the Service Center Land or the New SDG&E Land such that the operation of the Service Center and/or the Administration Building by SDG&E would be a non-conforming use, and the City shall be required to remove the Hub Park Trail System from the Hub Park Land. This right of termination shall not apply to land use designation changes required by federal or state law or by federal or state regulatory bodies, including the California Coastal Commission. "Hub Park Easement Interest" means the additional easement interests granted to the City in the Hub Park Lease Amendment (which, for the avoidance of doubt, shall not include a lease or transfer of any personal property or fixtures of SDG&E located on the Hub Park Land). "Hub Park Trail System" means, as further described in Section 2.5, a potential trail system with elements such as access to Cannon Road, access to the two Cannon Road undercrossings, and associated parking, in each case, as conceptually depicted on Exhibit C of Exhibit L.
"Improvements" means, with respect to any Parcel, all buildings, structures (surface and sub-surface) and other improvements located on or affixed to such Parcel and all fixtures on such Parcel which constitute real property under applicable Law. "Indemnified Party" has the meaning in Section 11.3(a). "Indemnifying Party" has the meaning in Section 1 l.3(a). "Inner Lagoon Land" means that certain parcel of real property identified on Exhibit B-3A attached hereto.
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"Inner Lagoon Property" means the Inner Lagoon Land and all Ancillary Property related to the Inner Lagoon Land.
"Inspections" has the meaning set forth in Section 5. l(a). "Intangible Personal Property" means, with respect to any Parcel, to the extent assignable at no cost to the Transferor of such Parcel or, at the Transferee of such Parcel's option, at such Transferee's cost, all intangible personal property, if any, owned by such Transferor and related solely to such Parcel, the Improvements on such Parcel or the Tangible Personal Property related solely to such Parcel, including, without limitation: any plans and specifications and other architectural and engineering drawings for the Improvements on such Parcel; any warranties and guaranties relating solely to such Parcel; and any Permits relating solely to such Parcel. "Irrevocable Offer of Dedication" means an irrevocable offer of dedication in the form of Exhibit E-2.
"Joinder" has the meaning set forth in Section 11. 7.
"Knowledge" means: (i) as to SDG&E, the actual knowledge of Adam Smith or an appropriate designee selected by SDG&E in a similar role (collectively, the "SDG&E Knowledge Individuaf'); (ii) as to Cab I, the actual knowledge of Mark Rohrlick or an appropriate designee selected by Cab I in a similar role (the "Cab I Knowledge lndividuaf') and (iii) as to the City, the actual knowledge of the City Manager or an appropriate designee selected by the City in a similar role (the "City Knowledge Individual"). For the purposes of this definition, the term "actual knowledge" means the conscious awareness of such Person at the time in question after due inquiry by such Person, which shall be deemed to include (a) any matter disclosed by such Person's Party in any exhibit to this Agreement and (b) any matter disclosed in any documents or materials provided by such Person or such Person's Party prior to the Closing, or the Second Closing, as applicable. No SDG&E Knowledge Individual, Cab I Knowledge Individual nor any City Knowledge Individual shall have any personal liability in connection with this Agreement. "Land'' has the meaning set forth in the Recitals.
"Law" means (i) all statutes, laws, common law, rules, regulations, ordinances, codes, or other legal requirements of any Governmental Authority, stock exchange, board of fire underwriters and similar quasi-governmental authority, and (ii) any judgment, injunction, order or other similar requirement of any court or other adjudicatory authority, in effect at the time in question and in each case to the extent the Person or property in question is subject to the same. "Leases" means, with respect to any Parcel, any lease, license, occupancy agreement or concession agreement that provides for the use or occupancy of any portion of such Parcel or any Improvements on such Parcel.
"Legal Proceeding" means any (i) lawsuit, action, claim or other proceeding at law or in equity by or before a Governmental Authority, or (ii) any arbitration, mediation or other alternative dispute resolution proceeding.
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"Liabilities" means any and all direct or indirect damages, demands, claims, payments, obligations, actions or causes of action, assessments, losses, Liens, liabilities, costs and expenses of any kind or nature whatsoever, including, without limitation, penalties, interest on any amount payable to a third party, lost income and profits, and any legal or other expenses (including, without limitation, reasonable attorneys' fees and expenses) reasonably incurred in connection with investigating or defending any claims or actions, whether or not resulting in any liability. "lien" means any mortgage, deed of trust or other monetary lien, mechanic's or materialman' s lien, judgment lien, lien for delinquent ad valorem real estate Taxes or assessments, other Tax and statutory lien or security interest in respect of any property or asset, other than any lien created by a Transferee of the applicable Acquired Asset or arising out of such Transferee's actions or activities (including any mechanic's lien arising out of work performed by or on behalf of such Transferee).
"Losses" means any losses, liabilities, expenses, Taxes, causes of action, or damages that are actually, or could have been, asserted, suffered, incurred or sustained, whether resulting from the operation of this Agreement, a judgment, a settlement or an award, including those arising out of any Legal Proceeding, Law or Contract, including the costs and expenses (including reasonable fees and out-of-pocket expenses of counsel, consultants, experts, and other professional fees) associated therewith.
"Mandatory Unpermitted Exceptions" has the meaning set forth in Section 6.3(a). "Material Adverse Effect" means a material adverse effect on a Transferee's ability to use, operate or own an Acquired Asset for the purpose intended after the Closing, or the Second Closing, as applicable.
"Memorandum of Agreement" has the meaning in Section 2.2(a). "Memorandum of Termination of Original Settlement Agreement" has the meaning in Section 3.l(b).
"Middle Lagoon Land'' means that certain parcel of real property identified on Exhibit B-3B attached hereto.
"Middle Lagoon Property" means the Middle Lagoon Land and all Ancillary Property related to the Middle Lagoon Land.
"Natural Hazard Consultant" has the meaning in Section 13.15(a). "New City Land'' means the fee interest in that certain parcel of real property identified on Exhibit B-4 attached hereto, which includes the Cannon Park Land ( other than the portion of the Cannon Park Land that is part of the Cannon Road Land or the SDG&E Carlsbad Boulevard Land). "New City Property" means the New City Land and all Ancillary Property related to the New City Land.
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"New SDG&E Land'' means the fee interest in that certain parcel of real property identified on Exhibit B-5 attached hereto.
"New SDG&E Property" means the New SDG&E Land and all Ancillary Property related to the New SDG&E Land.
"New Survey Defect" has the meaning in Section 6.3(c).
"New Title and Survey Election Notice" has the meaning in Section 6.3(c). "New Title and Survey Objection Notice" has the meaning in Section 6.3(c). "New Title and Survey Response Notice" has the meaning in Section 6.3(c). "New Title Exception" has the meaning in Section 6.3(c). "Non-Breaching Transferee" has the meaning set forth in Section l2.2(c). "Non-Breaching Transferor" has the meaning set forth in Section l2.2(b). "Non-Party Affiliate" has the meaning in Section l l.6(e). "North Shore Land'' means that parcel of real property described on Exhibit B-6 attached hereto.
"North Shore Property" means the fee interest in the North Shore Land and all Ancillary Property related to the North Shore Land.
"Notifying Party" has the meaning in Section 9. I 0.
"Official Records" means the official records of the City and of the County of San Diego, California.
"Ordinary Course of Business" means the ordinary course of business for the operations of each Acquired Asset consistent with the applicable Transferor's past custom and practice, taking into account the facts and circumstances in existence from time to time, but in accordance with all Laws, existing Liens, Contracts, Leases and Ancillary Real Property Rights. "Organizational Documents" means any charter, certificate of incorporation, declaration of partnership, articles of association, bylaws, operating agreement, limited liability company agreement, partnership agreement or similar formation or governing documents and instruments. "Original Settlement Agreement" has the meaning set forth in the Recitals . "Original Settlement Parties" has the meaning set forth in the Recitals. "Parcel" means each of the Cannon Road Land, the Cab I Carlsbad Boulevard Land, the SDG&E Carlsbad Boulevard Land, the Bluff Land, the Hub Park Land, the Inner Lagoon Land, the Middle Lagoon Land, the New City Land, the New SDG&E Land, and the North Shore Land.
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"Party" or "Parties" has the meaning set forth in the Preamble. "Permit" or "Permits" shall mean any and all discretionary and ministerial approvals, permits, licenses, consents, registrations, certificates, and other authorizations obtained from, or issued by, Governmental Authorities, including environmental, site plan approval, use permits, general plan amendments, zone changes, conditional use permits, variances and other zoning approvals, coastal development permits, demolition, grading and building permits, certificates of occupancy and all amendments, modifications, supplements, general conditions and addenda thereto.
"Permitted Exceptions" shall mean, with respect to any Acquired Asset, collectively, (i) any lien, encumbrance or security interest created by a Transferee at Closing in connection with such Transferee's acquisition of such Acquired Asset hereunder, (ii) local, state and federal (if applicable) zoning ordinances and regulations, (iii) mechanic's liens caused by a Transferee acquiring such Acquired Asset or its agents, (iv) standard printed title exceptions, other than those that may be removed by endorsement or deletion or by the execution and delivery of an owner's affidavit, (v) any exceptions to title that are mutually agreed upon by the Transferor and Transferee of such Acquired Asset in writing, (vi) any title exceptions or state of facts disclosed by a Survey to which the Transferee of such Acquired Asset does not object in accordance with Section 6.3, (vii) any title exceptions or state of facts disclosed by a Survey to which a Transferee of such Acquired Asset objects that are not cured and which such Transferee is deemed to have accepted and approved in accordance with Section 6.3, (viii) any lien or encumbrance described on Exhibit N, and (ix) all real estate taxes and assessments not yet due and payable as of the Closing. "Permitted Leases" means (i) with respect to the New City Land, the Cannon Park Lease, (ii) with respect to the Hub Park Land, the Hub Park Lease and the Strawberry Field License, (iii) with respect to the New SDG&E Land, the Poseidon Lease and the CEC Lease. "Person" means any individual, firm, corporation, partnership, limited liability company, incorporated or unincorporated association, joint venture, joint stock company, Governmental Authority or other entity of any kind.
"Phase II Report" has the meaning set forth in Section 9.l{c). "Poseidon Lease" means that certain Third Amended and Restated Ground Lease and Easement Agreement, dated as of January 19, 2023, by and between Cab I, as lessor and grantor, and Poseidon Resources (Channelside) LP, as lessee and grantee. "Possession" means, with respect to any Party, in the physical possession of any officer or employee of such Party who has primary responsibility for the applicable Acquired Asset owned by such Party; provided, however, that any reference in this Agreement to a Party's Possession of any documents or materials expressly excludes the possession of any such documents or materials that (i) are legally privileged or constitute attorney work product, (ii) are subject to a confidentiality agreement or to applicable Law prohibiting their disclosure by any such Party, or (iii) constitute confidential internal assessments, reports, studies, memoranda, notes or other correspondence prepared by or on behalf of any officer or employee of any such Party. "Potential Contributor" has the meaning in Section 11.4(f).
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"Pre-Closing Tax Period'' means any taxable period ending on or before Closing Date and, with respect to any taxable period beginning on or before and ending after the Closing Date, the portion of such taxable period ending as of the Closing Date. "Prorated Items" has the meaning in Section 4.7(a).
"Qualified CPUC Approvaf' has the meaning set forth in Section 9.3(b). "Reasonable Efforts" means good faith efforts in accordance with reasonable commercial practice and without the incurrence of unreasonable cost or expense. "Receiving Party" has the meaning in Section 9.12.
"Released Claims" has the meaning in Section 11.5( e ). "Releases" has the meaning in Section 3.2.
"Representatives" means, as to any Person, its Affiliates and its and their respective equity holders, officers, directors, managers, employees, counsel, accountants, advisers, consultants and agents.
"Residual Cab I Land" means the fee interest in that certain parcel of real property identified on Exhibit S attached hereto.
"Residual SDG&E Land'' means the fee interest in that certain parcel of real property identified on Exhibit T attached hereto.
"Required Governmental Approvals" means all discretionary approvals for the SDG&E Project required pursuant to Sections 9.2, 9.3, 9.4 and 9.5, including the City Discretionary Approvals, the CPUC Approval, the CCC Approval Action and the CCC LCP Amendment. "Scheduled Closing Date" has the meaning set forth in Section 4.5(a). "Scheduled Second Closing Date" has the meaning set forth in Section 4.5(d). "SDG&E" has the meaning set forth in the Preamble.
"SDG&E Carlsbad Boulevard Land" means the fee interest in that certain parcel of real property identified on Exhibit B-9 attached hereto.
"SDG&E Project" means (i) the Administration Building, (ii) any other modifications to the Service Center, the Service Center Land and the New SDG&E Land requested or required by SDG&E, and (iii) any improvements necessary for the existing and continuing operation of the Service Center prior to the completion of the construction of the Administration Building. "Second Closing" has the meaning set forth in Section 4.5(d). "Second Closing Extension Notice" has the meaning set forth in Section 4.5(e).
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"Second Extended Closing Date" has the meaning set forth in Section 4.5(e). "Section 851" has the meaning in Section 9.3(a).
"Service Center" has the meaning set forth in the Recitals. "Service Center Land'' has the meaning set forth in the Recitals. "Settlement Released Claims" has the meaning on Exhibit R. "Strawberry Field LJcense" means that certain License, dated as of March 8, 1995, between SDG&E and James Ukegawa, as amended by that certain First Amendment to License, dated as of December 1, 2010, by and between SDG&E and James Ukegawa, as has been or may be amended from time to time.
"Survey Defects" has the meaning in Section 6.3(a).
"Surviving Covenants" means covenants and agreements set forth in Article II, Article III, Section 4.7, Section 4.8, Section 5.l(e) (Indemnification), Section 6.4, Section 9.15, Section 9.17, Section 9.18, Section 9.19, Article XI (Indemnification), and Article XIII (Miscellaneous) and each other provision of this Agreement that expressly states that it survives the Closing. "Switchyard Activities" means activities that are currently conducted solely in the switchyard on the Switchyard Land (and not on any Parcel) and any other activities that are typically undertaken by SDG&E solely within switchyards similar to the switchyard on the Switchyard Land (the Parties agree that Switchyard Activities shall not include, for the avoidance of doubt, any energy storage and related facilities and activities). "Switchyard Land'' means the fee interest in that certain parcel of real property identified on Exhibit B-7 attached hereto.
"Tank Sands Remediation Agreement" means an agreement relating to Cab I's obligations to remediate certain tank sands on the New City Property, to be entered into by SDG&E and Cab I no later than the Closing Date, containing the terms and otherwise negotiated in accordance with Section 9.l(e).
"Tangible Personal Property" means, with respect to any Parcel, all of the equipment, machinery, furniture, furnishings, supplies and other tangible personal property, if any, owned by the Transferor of such Parcel and now or hereafter located on and used exclusively in the operation, ownership or maintenance of such Parcel.
"Tax Authority" means any Governmental Authority having jurisdiction over the assessment, determination, collection or imposition of any Tax. "Tax Return" means any report, return, election, document, estimated tax filing, declaration or other filing filed or required to be filed with any Tax Authority including any amendments thereto. -
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"Tax(es)" means any and all taxes, assessments, charges, duties, fees, levies, imposts or other similar charges imposed by a Governmental Authority (whether disputed or not), including all income, franchise, business, profits, capital gains, capital stock, transfer, gross receipts, sales, parking, use, service, occupation, ad valorem, property, excise, severance, windfall profits, premium, stamp, license, payroll, employment, social security, unemployment, disability, alternative minimum, add-on, value-added and withholding taxes, and taxes, assessments, charges, duties, fees, levies, imposts or other similar charges of any kind whatsoever (whether payable directly or by withholding and whether or not requiring the filing of a Tax Return), and all estimated taxes, deficiency assessments, additions to tax, additional amounts imposed by any Governmental Authority, penalties and interest.
"Termination of Original Settlement Agreement" has the meaning in Section 3.1 (b). "Third Party Claim" has the meaning in Section 11.3(a). "Title Company" means Chicago Title Company.
"Title Exceptions" has the meaning in Section 6.3(a).
"Title Policy" means an AL TA Owner's Title Insurance Policy with respect to each Acquired Asset that consists of real property, insuring the fee simple title ( or such other interest granted hereunder) in such Acquired Asset, which policy shall be in such amount as is reasonably selected by the applicable Transferee and which Title Policy shall be subject only to the Permitted Exceptions.
"Title Proforma" has the meaning in Section 6.3(a).
"Title Reports" has the meaning in Section 6.1.
"TLTP" means the Tribal Land Transfer Policy of the CPUC. "Trade Payables" means all open accounts payable to trade vendors or suppliers of any Acquired Asset ( or the Transferor associated with such Acquired Asset) and its related facilities. "Transaction Document" means any agreement, instrument or document executed or delivered by any Party (or Affiliate thereof) lo any other Party (or Affiliate thereof) al the Closing, or Second Closing, as applicable, pursuant to the terms of this Agreement. "Transactions" means all transactions between the Parties set forth in this Agreement. "Transferee" has the meaning set forth in Section 4.1 (a). "Transferee Indemnified Parties" has the meaning set forth in Section 1 I .2(a). "Transferee's Inspectors" has the meaning set forth in Section 5.](b). "Transferor" has the meaning set forth in Section 4.1 (a). "Transferor Indemnified Parties" has the meaning set forth in Section 1 l .2(b).
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"True-Up Accountant" has the meaning in Section 4.7(b). "True-up Amount" has the meaning in Section 4.7(b).
"United States" means United States of America.
"Unpermitted Exceptions" means any exception to title that is not a Permitted Exception. "Unresolved Items" has the meaning in Section 4.7(b).
"Voidable Obligations" refers to the obligations set forth in Article IV (other than Sections
4.2(c) and 4.3(a)). Article V (other than Section 5.l(e)), Article VI. Section 9.1 through Section
9.10, Section 9.13 and Article X.
"WARN Act" means the federal Worker Adjustment and Retraining Notification Act and any similar state and local Laws.
Section 1.2 Rules of Construction.
(a) All article, section and exhibit references used in this Agreement are to articles, sections and exhibits to this Agreement unless otherwise specified. The exhibits attached to this Agreement constitute a part of this Agreement and are incorporated herein for all purposes. (b) When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded. If the last day of such period is a non Business Day, the period in question shall end on the next succeeding Business Day. (c) If a term is defined as one part of speech (such as a noun), it shall have a corresponding meaning when used as another part of speech (such as a verb). Terms defined in the singular have the corresponding meanings in the plural, and vice versa. Unless the context of this Agreement clearly requires otherwise, words importing the masculine gender shall include the feminine and neutral genders and vice versa. The term "includes" or "including" shall mean "including without limitation." The words "hereof," "hereto," "hereby," "herein," "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular section or Article in which such words appear. ( d) The captions in this Agreement are for convenience only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement. (e) All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP.
(f) As used herein, the term "applicable Transferee" shall mean, in reference to any Transferor, the Transferee that is acquiring the applicable Acquired Asset from such Transferor, and the term "applicable Transferor" shall mean. in reference to any Transferee, the Transferor that is transferring the applicable Aquired Asset to such Transferee.
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ARTICLE II
GENERAL SETTLEMENT TERMS
Section 2.1 Term of this Agreement. The term of this Agreement shall commence on the Effective Date and shall remain in effect until the Parties have fulfilled all of their obligations under this Agreement, unless terminated earlier in writing in accordance with the terms and conditions of this Agreement.
Section 2.2 Covenants Running with the Land.
(a) Recording of Memorandum of Agreement. The Parties agree to execute, acknowledge and cause a memorandum of this Agreement substantially in the form attached to this Agreement as Exhibit C (the "Memorandum of Agreement") to be recorded in the Official Records as soon as possible following the Effective Date. (b) Binding on Successors. Upon recordation of the Memorandum of Agreement as provided in clause (a) above, this Agreement shall constitute covenants running with the Land binding on all successors and assigns of the Parties that own the Land.
Section 2.3 Approvals and Effective Date. Once Cab I and SDG&E have signed and de1ivered this Agreement to the City, the City shall timely submit this Agreement to the City Council for approval. Notwithstanding anything in this Agreement to the contrary, each of Cab I and SDG&E understands and agrees that no officer or employee of the City has authority to bind the City to this Agreement unless and until the City Council shall have duly adopted a resolution in its sole and absolute discretion approving this Agreement (the "Approval Resolution").
Therefore, any obligations of the Parties under this Agreement are contingent upon such Approval Resolution, and this Agreement shall not be effective unless and until such Approval Resolution is duly adopted in accordance with the City's applicable ordinances and codes. The effective date of this Agreement (the "Effective Date") shall be the Business Day immediately following the date such Approval Resolution becomes effective (the "Approval Date"); provided, that this Agreement shall not become effective on the Effective Date unless the Original Settlement Parties have executed and delivered the Termination of Original Settlement Agreement, the Memorandum of Termination of Original Settlement Agreement, and the Releases on or prior to the Effective Date.
Notwithstanding the foregoing, if an Approval Resolution does not become effective by the date that is the ninetieth (901h) day following de1ivery of this Agreement by SDG&E and Cab I to the City or the Original Settlement Parties have not executed and delivered the Termination of Original Settlement Agreement, the Memorandum of Termination of Original Settlement Agreement and the Releases on or prior to the Effective Date, then this Agreement shall terminate and shall be of no force and effect. The Parties agree that, at any time after Cab I and SDG&E have signed and delivered this Agreement to the City, but prior to the Effective Date, Cab I and SDG&E shall have the right to update the schedules to this Agreement to reflect events or circumstances that have changed since the date that Cab I and SDG&E signed and delivered this Agreement to the City to reflect such changes and, in the event of any such change, the other Parties may, each in their sole discretion, either (i) withdraw its signature to this Agreement or agree not to adopt the Approval Resolution, as applicable, or (ii) if such Party has not so withdrawn by the Effective Date, the Agreement shall be effective as of the Effective Date and the right to update, withdraw or fail to adopt pursuant to clause (i) above shall have terminated as of the Effective Date.
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Section 2.4 CPUC Review and Approval and Tribal Land Transfer Policy. Each of the Parties acknowledge and agree that transfers of interests in real property by SDG&E are subject to CPUC R&A and are subject to SDG&E's compliance with the TLTP and, notwithstanding anything to the contrary contained herein, SDG&E shall have no obligation to transfer any interest in real property to the extent such transfer is subject to CPUC R&A and does not receive CPUC Approval as contemplated in Section 9.3 or would violate the TLTP. For the avoidance of doubt, (a) any representation, warranty or covenant contained in this Agreement shall be deemed to be modified to reflect that SDG&E's obligations under this Agreement are subject to CPUC R&A and the TLTP, and (b) nothing in this Section 2.4 shall modify or reduce SDG&E's obligations to seek CPUC Approval in accordance with Section 9.3.
Section 2.5 Potential Hub Park Trail System. The Parties acknowledge and agree that (a) the Hub Park Lease Amendment and this Agreement are not intended and shall not be construed as a grant of any discretionary approvals related to the City's potential Hub Park Trail System, (b) the City's potential Hub Park Trail System is a future project that is presently only conceptual in nature, and remains expressly subject to the preparation, review and approval of a specific development plan, an entitlements application, and appropriate environmental review as may be required by CEQA, (c) the City retains full discretion to independently determine compliance with any CEQA requirements the City deems applicable with respect to the potential Hub Park Trail System when it is proposed, and (d) the City, pursuant to CEQA, has the absolute discretion to impose mitigation measures, require modifications to, consider alternatives to as part of the CEQA process, and to ultimately approve or disapprove any City discretionary approvals related to the potential Hub Park Trail System or any proposed or required alternatives thereto. Furthermore, the Parties acknowledge that a coastal development permit (approved and issued by the California Coastal Commission) may also be required for the potential Hub Park Trail System in addition to any CEQA requirements and discretionary approvals deemed applicable or required by the City with respect to the potential Hub Park Trail System. Nothing contained herein is intended or shall be construed as any government commitment, vested right, entitlement, approval or permit to the City to develop the potential Hub Park Trail System.
Section 2.6 Settlement. The discussions that have produced this Agreement have been conducted with the explicit understanding that they are privileged under California Evidence Code section 1152 and Federal Rule of Evidence 408, and that such discussions shall be without prejudice to the position of any Party and may not be used in any manner in any proceeding or otherwise, except as may be necessary to enforce this Agreement or as otherwise required by Law.
ARTICLE III
TERMINATION OF ORIGINAL SETTLEMENT AGREEMENT AND RELEASE OF CLAIMS
Section 3.1 Termination of Original Settlement Agreement. (a) On or prior to the Effective Date, the Parties shall, and Cab I shall cause CEC to and the City shall cause the CMWD to, execute a termination of the Original Settlement Agreement substantially in the form attached to this Agreement as Exhibit D-1 (the "Termination of Original Settlement Agreement"), pursuant to which, the Original Settlement Parties agree that the Original Settlement Agreement is terminated in full as of the Effective Date, and the terms of SMRH:4909-8942-1601.3
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the Original Settlement Agreement shall have no further force or effect from and after the Effective Date.
(b) On or prior to the Effective Date, the Parties shall, and Cab I shall cause CEC to and the City shall cause the CMWD to, execute, acknowledge and cause a memorandum of the termination of the Original Settlement Agreement substantially in the form attached to this Agreement as Exhibit D-2 (the "Memorandum of Termination of Original Settlement Agreement") to be recorded in the Official Records as soon as reasonably possible, but no later than three (3) Business Days, following the Effective Date.
Section 3.2 Release of Claims.
On or prior to the Effective Date, the Parties shall, and Cab I shall cause CEC to and the City shall cause CMWD to, execute and deliver to the other Parties a fully executed release agreement, in the form attached hereto and incorporated herein as Exhibit R (the "Releases"), pursuant to which, upon the Effective Date (i) each party thereto will release the other Parties from all Losses arising out of or related to the Original Settlement Agreement, (ii) any and all guaranties from Cab I and its Affiliates under the Original Settlement Agreement will be terminated, and (iii) any and all letters of credit from Cab I and its Affiliates under the Original Settlement Agreement will be surrendered and cancelled.
ARTICLE IV
TRANSFER OF ACQUIRED ASSETS; CLOSING
Section 4.1 Transfer of Acquired Assets; Assumption of Assumed Liabilities; Excluded Assets and Excluded Liabilities.
(a) Transfer of Acquired Assets. At the Closing (or, if specified below, at the Second Closing), upon the terms and subject to the conditions set forth in this Agreement, each Party referenced below as a "Transferor" ( each a "Transferor") shall assign, transfer and convey (as applicable, to "Convey") to the other Party referred to below as a "Transferee" (each a "Transferee"), and each Transferee shall acquire from such applicable Transferor, all of such Transferor's right, title and interest in, to and under the applicable Acquired Assets, free and clear of any Liens other than Permitted Exceptions:
(i) Cab I (as Transferor) shall Convey to SDG&E (as Transferee) the New SDG&E Property;
(ii) Cab I (as Transferor) shall Convey to the City (as Transferee), pursuant to an Irrevocable Offer of Dedication, the Inner Lagoon Property; (iii) Cab I (as Transferor) shall Convey to the City (as Transferee), pursuant to an Irrevocable Offer of Dedication, the Middle Lagoon Property; (iv) [Reserved];
(v) SDG&E (as Transferor) shall Convey to the City (as Transferee) the Cannon Park Land portion of the New City Property ( other than the portion of the Cannon Park SMRH:4909-8942-1601 .3
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Land that is part of the Cannon Road Land or the SDG&E Carlsbad Boulevard Land) and, at the Second Closing, SDG&E (as Transferor) shall Convey to the City (as Transferee) the remainder of the New City Property;
(vi) SDG&E (as Transferor) shall Convey to the City (as Transferee) the Hub Park Easement Interest;
(vii) SDG&E (as Transferor) shall Convey to the City (as Transferee), pursuant to an Irrevocable Offer of Dedication, the North Shore Property; (viii) SDG&E (as Transferor) shall Convey to the City (as Transferee) the Cannon Road Land and the SDG&E Carlsbad Boulevard Land; (ix) Cab I (as Transferor) shall Convey to the City (as Transferee) the Cab I Carlsbad Boulevard Land;
(x) Cab I (as Transferor) shall Convey to the City (as Transferee), pursuant to an Irrevocable Offer of Dedication, the Bluff Land; and (xi) SDG&E (as Transferor) shall Convey to Cab I (as Transferee) the Cannon Road Access Easement (which shall be recorded prior to the Deed for the New City Property).
(b) At the Closing, or the Second Closing for property transfer at the Second Closing, upon the terms and subject to the conditions set forth in this Agreement, each Transferee shall assume and become responsible for, and shall pay, perform and discharge (or cause to be paid, performed and discharged) when due, the Assumed Liabilities of such Transferee. (c) Notwithstanding anything to the contrary contained herein, (i) the Acquired Assets shall not include any assets or properties other than those set forth in the definition of "Acquired Assets" and (ii) at the Closing, or the Second Closing for property transferred at the Second Closing, no Transferee will assume or become responsible for any Excluded Liabilities.
Section 4.2 Consideration.
(a) In addition to the consideration delivered to the Transferees in Section 4.1 above, Cab I shall pay to SDG&E, as consideration for entering into the transactions set forth in this Agreement, Twenty Million Dollars ($20,000,000) (the "Contribution"), which Contribution SDG&E shall utilize, subject to Section 13.1, (i) to build an administration building on the Service Center Land (the "Administration Building") and to otherwise develop the SDG&E Project, and (ii) to pay the Taxes and transaction costs incurred by SDG&E as a result of the transactions contemplated by this Agreement. The Contribution shall be paid by Cab I at the Closing pursuant to Section 4.3(c).
(b) In addition to the consideration delivered to the Transferees in Section 4.1 above, SDG&E shall pay to City, as consideration for entering into the transactions set forth in this Agreement, One Million Dollars ($1,000,000) (the "Hub Park Contribution"), which SMRH:4900-8942-1601.3
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contribution the City shall set aside for improvements pursuant to the Hub Park Lease. The Hub Park Contribution shall be paid by SDG&E at the Closing pursuant to Section 4.3(c). (c) In addition to the consideration delivered to the Parties under Section 4.1 and the consideration set forth in Section 4.2(a) and fu}_ above, each Party acknowledges that such Party has received substantial benefits from the entering into of this Agreement by the Parties, including the settlement of claims under the Original Settlement Agreement, and, regardless of whether the Closing (as defined below) occurs, such settlement of claims under the Original Settlement Agreement shall serve as independent consideration for the execution and delivery of this Agreement.
Section 4.3 Deposits; Payment on Closing.
(a) Deposits. SDG&E and Cab I shall each deposit One Hundred Dollars ($l00.00) with the Escrow Agent (together with all interest and earnings thereon, collective1y, the "Deposits" and each, a "Deposit") within five (5) Business Days of the Effective Date. The Deposits sha11 be held in a segregated interest-bearing account in accordance with the provisions of the Deposit Escrow Agreement. If any Party voids the Voidable Obligations pursuant to the Due Diligence Contingency in accordance with Section 5 .1, each Party's Deposit sha11 be refunded to such Party.
(b) Deposits Disposition. If the Closing occurs, then each Deposit sha11 be applied against any obligations of the applicable Party that made such Deposit, as set forth in the Closing Statement.
(c) Contribution and Prorated Items Deliveries. On the Closing Date, Cab I sha11 deliver to the Escrow Agent, by wire transfer of immediately available funds, the Contribution (less Cab I's portion Deposit) plus an amount, if any, owed by Cab I under the Closing Statement. On the Closing Date, SDG&E shall deliver to the Escrow Agent, by wire transfer of immediately available funds, an amount, if any, owed by SDG&E under the Closing Statement. On the Second Closing Date, SDG&E shall deliver to the Escrow Agent, by wire transfer of immediately available funds, an amount, if any, owed by SDG&E under the Second Closing Statement. Without limiting the foregoing, but in furtherance thereof, the Parties hereby agree that on the Closing Date, the Escrow Agent shall be instructed to disburse the Contribution, the Hub Park Contribution, and the other amounts described in this clause in accordance with the Closing Statement approved by the Parties in accordance with Section 4.4 and prepared consistent with the terms of this Agreement.
Section 4.4 Closing Statement. Prior to the Closing, SDG&E shall cause to be prepared and delivered to Cab I a closing statement for the Transactions, setting forth the Contribution and attaching the Estimated Proration Report pursuant to Section 4.7(b) (with such attachment, collectively, the "Closing Statement"). In the event that any Party objects to all or any portion of the Closing Statement, the Parties shall work together in good faith to agree upon the amounts set forth therein prior to the Closing, but if the Parties are unable to resolve any such objection, the amount set forth in the Closing Statement shall control; provided however, with respect to any Unresolved Items or other unresolved disputes, the amounts in dispute shall not be disbursed at Closing, but shall be held in escrow by the Escrow Agent. Following the Closing, any Unresolved SMRH:490'H942-160 l .3
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Items and unresolved disputes with respect to matters set forth in the Closing Statement shall be resolved pursuant to the procedures set forth in Section 4.7(b).
Section 4.5 The Closing and the Second Closing.
(a) Closing. Subject to clause (d) below, the closing of all of the transactions contemplated by this Agreement shall be in a closing (the "Closing") at the offices of the Escrow Agent, on the date which is thirty (30) days following the later of (x) the date the CPUC Approval becomes Final and Non-Appealable, (y) the date the CCC Approval Action becomes Final and Non-Appealable, or (z) the date the CCC LCP Amendment, if any, becomes Final and Non Appealable, unless the Parties agree in writing on another date or location (the "Scheduled Closing Date").
(b) Closing Extension. Upon written notice to all Parties ("Closing Extension Notice") delivered not later than fifteen (15) days prior to the Scheduled Closing Date, any Party may elect to extend the Closing by a period of up to thirty (30) days after the Scheduled Closing Date (the "Extended Closing Date") to the date set forth in the Closing Extension Notice. (c) Closing. The term "Closing Date" shall refer to the Scheduled Closing Date, or, if extended pursuant to clause (b) above, the Extended Closing Date. The Closing shall be deemed to have been consummated on the Closing Date. (d) Second Closing. Notwithstanding anything to the contrary contained herein, the closing of the transactions contemplated under Section 4. l(a)(v) of this Agreement shall be in a closing (the "Second Closing") at the offices of the Escrow Agent, on the date which is the earlier of (x) the date that is two (2) years after the Closing Date, and (y) the date that is thirty (30) days after the date that SDG&E receives the certificate of occupancy for the Administration Building, unless the Parties agree in writing on another date or location (the "Scheduled Second Closing Date").
(e) Second Closing Extension. Upon written notice to the City ("Second Closing Extension Notice") delivered not later than fifteen (15) days prior to the Scheduled Second Closing Date, SDG&E may elect to extend the Second Closing by a period of up to one (1) year after the Scheduled Second Closing Date (the "Second Extended Closing Date") to the date set forth in the Second Closing Extension Notice; provided, that SDG&E shall only be permitted to deliver such Second Closing Extension Notice if SDG&E has not received the certificate of occupancy for the Administration Building as of the Scheduled Second Closing Date.
Section 4.6 Closing Deliverables. The following deliveries shall be made at the Closing ( or, if required by Section 4.1, at the Second Closing):
(a) SDG&E Deliverables. SDG&E shall deliver or cause to be delivered to the Escrow Agent for each Acquired Asset to be transferred by SDG&E hereunder or to be transferred to SDG&E hereunder, as applicable (provided, that failure to deliver more than one original counterpart of each of the following shall not be a breach of this Agreement):
(i) with respect to each Acquired Asset to be transferred by SDG&E to the City at the Closing (other than the Hub Park Easement Interest), a duly executed counterpart SMRH:4909-8942-1601.3
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to a Deed conveying the fee estate in such Acquired Asset, provided that, for the following parcel, SDG&E shall instead deliver an Irrevocable Offer of Dedication of the fee estate in such parcel:
the North Shore Property;
(ii) (a) two (2) original counterparts of a duly executed Bill of Sale, transferring to the City all of SDG&E's right, title and interest in, to and under the Acquired Assets to be acquired by the City hereunder ( other than those being transferred or assigned pursuant to clauses (i) or (iii) of this subsection (a)) to be transferred at the Closing, and (b) two (2) original counterparts of a duly executed Bill of Sale, transferring to SDG&E all of Cab I's right, title and interest in, to and under the Acquired Assets to be acquired by SDG&E hereunder ( other than those being transferred or assigned pursuant to clauses (iii) or (iv) of Section 4.6(b)) to be transferred at the Closing;
(iii) two (2) original counterparts of a duly executed Assignment and Assumption Agreement, transferring to the City all of SDG&E's right, title and interest in, to and under the Intangible Personal Property relating to the Acquired Assets to be transferred from SDG&E to the City hereunder, and evidencing the City's assumption of the Assumed Liabilities to be assumed at the Closing;
(iv) two (2) original counterparts of a duly executed Assignment and Assumption Agreement, transferring to SDG&E all of Cab I's or its Affiliate's right, title and interest in, to and under the Intangible Personal Property relating to the Acquired Assets to be transferred from said parties to SDG&E hereunder, and evidencing SDG&E's assumption of the Assumed Liabilities to be assumed at the Closing;
(v) one (1) counterpart of a duly executed copy of the Closing Statement;
(vi) a duly executed counterpart to Jomt written instructions to the Escrow Agent, directing the Escrow Agent to disburse the Deposits and other amounts in accordance with Section 4.3(b) and the Closing Statement; (vii) one (1) original of a Closing Certificate from SDG&E dated the Closing Date, duly executed by an authorized officer or authorized signatory of SDG&E; (viii) one (1) original of an Internal Revenue Service Form W-9 dated the Closing Date, duly executed by an authorized officer or authorized signatory of SDG&E; (ix) a duly executed Tax declaration or similar documents (or counterparts thereto, as applicable) required to be executed by a "seller" or "grantor" in connection with any transfer, stamp, excise, or similar Tax imposed by the state, county or city in connection with the transfer of Acquired Assets at the Closing;
(x) a duly executed Tax declaration or similar documents ( or counterparts thereto, as applicable) required to be executed by a "buyer" or "grantee" in connection with any transfer, stamp, excise or similar Tax imposed by the state, county or city in connection with the transfer of Acquired Assets at the Closing;
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(xi) copies of such articles of incorporation, organization, or fonnation; agreements or certificates of partnership; resolutions; authorizations; bylaws; certifications; or other corporate, partnership, limited liability company, or trust documents or agreements relating to SDG&E as the Title Company shall reasonably require in connection with the transactions contemplated by this Agreement;
(xii) an owner's affidavit from SDG&E, in fonn and substance reasonably acceptable to SDG&E and the Title Company and in a fonn necessary to provide extended coverage for each Acquired Asset to be transferred by SDG&E hereunder; (xiii) two (2) original counterparts of the Hub Park Lease Amendment; (xiv) two (2) original counterparts of a termination of the Cannon Park Lease;
(xv) the Hub Park Contribution and such other amounts, if any, required by Section 4.3(c):
(xvi) three (3) original counterparts of a duly executed Cannon Road Access Easement Agreement;
(xvii) two (2) original counterparts of the Tank Sands Remediation Agreement, if the Tank Sands Remediation Agreement was not executed and delivered prior to the Closing Date; and
(xviii) such other instruments as are contemplated by this Agreement to be executed or delivered by SDG&E, reasonably required by any Transferee of SDG&E's Acquired Assets, reasonably required by any Transferor transferring Acquired Assets to SDG&E, the Title Company or the Escrow Agent, in any such case, to effectuate the conveyance of property similar to the Acquired Assets, with the effect that, after the Closing, such applicable Transferee will have succeeded to all of the rights, titles, and interests of SDG&E related to such Acquired Assets transferred by SDG&E and SDG&E will no longer have any rights, titles, or interests in and to such Acquired Assets.
(b) Cab I Deliverables. Cab I shall deliver or cause its Affiliate to deliver to the Escrow Agent for each Acquired Asset to be transferred by Cab I or its Affiliate hereunder or to be transferred to Cab I or its Affiliate hereunder, as applicable (provided, that failure to deliver more than one original counterpart of each of the following shall not be a breach of this Agreement):
(i) the Contribution and such other amounts required by Section 4.3(c); (ii) with respect to each Acquired Asset to be transferred by Cab I or its Affiliate to the City at the Closing, a duly executed counterpart to a Deed conveying the fee estate in such Acquired Asset, provided that, for the following three parcels, Cab I or its Affiliate shall instead deliver an Irrevocable Offer of Dedication of the fee estate in such parcel: the Inner Lagoon Property, the Middle Lagoon Property, and the Bluff Land; provided further, to the extent that Cab I does not own the Cab I Carlsbad Boulevard Land as determined pursuant to Section 6.4, then SMRH:4909-8942-1601.3
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Cab I shall only be required to make the deliveries with respect to the Cab I Carlsbad Boulevard Land set forth in Section 6.4;
(iii) with respect to each Acquired Asset to be transferred by Cab I or its Affiliate to SDG&E at the Closing, a duly executed Deed conveying the fee estate in such Acquired Asset;
(iv) two (2) original counterparts of a duly executed Bill of Sale, transferring to SDG&E all of Cab I's and/or its Affiliate's right, title and interest in, to and under the Acquired Assets to be acquired by SDG&E hereunder ( other than those being transferred or assigned pursuant to clauses (iii) or (vi) of this subsection (b)) to be transferred at the Closing; (v) two (2) original counterparts of a duly executed Bill of Sale, transferring to the City all of Cab I's and/or its Affiliate's right, title and interest in, to and under the Acquired Assets to be acquired by the City hereunder ( other than those being transferred or assigned pursuant to clauses (ii) or (vii) of this subsection (b)) to be transferred at the Closing if and only if City acquires a fee interest in any Acquired Asset; (vi) two (2) original counterparts of a duly executed Assignment and Assumption Agreement, transferring to SDG&E all of Cab I's and/or its Affiliate' s right, title and interest in, to and under the Intangible Personal Property relating to the Acquired Assets to be transferred from Cab I and/or its Affiliate to SDG&E hereunder, and evidencing SDG&E's assumption of the Assumed Liabilities to be assumed at the Closing; (vii) two (2) original counterparts of a duly executed Assignment and Assumption Agreement, transferring to the City all of Cab I's and/or its Affiliate' s right, title and interest in, to and under the Intangible Personal Property relating to the Acquired Assets to be transferred from Cab I and/or its Affiliate to the City hereunder, and evidencing the City's assumption of the Assumed Liabilities to be assumed at the Closing; (viii) one (1) copy counterpart of a duly executed copy of the Closing Statement;
(ix) a duly executed counterpart to joint written instructions to the Escrow Agent, directing the Escrow Agent to disburse the Deposits, the Contribution and the other amounts in accordance with Section 4.3(b) and the Closing Statement; (x) one ( 1) original of a Closing Certificate from Cab I dated the Closing Date, duly executed by an authorized officer or authorized signatory of Cab I; (xi) one (1) original of an Internal Revenue Service Form W-9 dated the Closing Date, duly executed by an authorized officer or authorized signatory of Cab I; (xii) a duly executed Tax declaration or similar documents (or counterparts thereto, as applicable) required to be executed by a "seller" or "grantor" in connection with any transfer, stamp, excise, or similar Tax imposed by the state, county or city in connection with the transfer of Acquired Assets at the Closing;
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(xiii) a duly executed Tax declaration or similar documents (or counterparts thereto, as applicable) required to be executed by a "buyer" or "grantee" in connection with any transfer, stamp, excise or similar Tax imposed by the state, county or city in connection with the transfer of Acquired Assets at the Closing;
(xiv) copies of such articles of incorporation, organization, or formation; agreements or certificates of partnership; resolutions; authorizations; bylaws; certifications; or other corporate, partnership, limited liability company, or trust documents or agreements relating to Cab I as the Title Company shall reasonably require in connection with the transactions contemplated by this Agreement;
(xv) an owner's affidavit from Cab I or its Affiliates, in form and substance reasonably acceptable to Cab I and the Title Company and in a form necessary to provide extended coverage, for each Acquired Asset to be transferred by said parties hereunder, as and to the extent applicable;
(xvi) two (2) original counterparts of the Tank Sands Remediation Agreement, if the Tank Sands Remediation Agreement was not executed and delivered prior to the Closing Date; and
(xvii) such other instruments as are contemplated by this Agreement to be executed or delivered by Cab I or its Affiliate, reasonably required by any Transferee of Cab I's or its Affiliate's Acquired Assets, reasonably required by any Transferor transferring Acquired Assets to Cab I and its Affiliate, the Title Company or the Escrow Agent, in any such case, to effectuate the conveyance of property similar to the Acquired Assets, with the effect that, after the Closing, such applicable Transferee will have succeeded to all of the rights, titles, and interests of Cab I and its Affiliate related to such Acquired Assets (as applicable) and Cab I and its Affiliate will no longer have any rights, titles, or interests in and to the applicable Acquired Assets. (c) City Deliverables. The City shall deliver or cause to be delivered to the Escrow Agent for each Acquired Asset to be transferred to the City hereunder (provided, that failure to deliver more than one original counterpart of each of the following shall not be a breach of this Agreement):
(i) two (2) original counterparts of a duly executed Assignment and Assumption Agreement, transferring to the City all of SDG&E's right, title and interest in, to and under the Intangible Personal Property relating to the Acquired Assets to be transferred from SDG&E to the City hereunder, and evidencing the City's assumption of the Assumed Liabilities to be assumed at the Closing, if and only if, the City acquires a fee interest in any Acquired Asset; (ii) two (2) original counterparts of a duly executed Assignment and Assumption Agreement, transferring to the City all of Cab I's and/or its Affiliates' right, title and interest in, to and under the Intangible Personal Property relating to the Acquired Assets to be transferred from Cab I and/or its Affiliates to the City hereunder, and evidencing the City's assumption of the Assumed Liabilities to be assumed at the Closing, if and only if the City acquires a fee interest in any Acquired Asset;
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(iii) (a) two (2) original counterparts of a duly executed Bill of Sale, transferring to the City all of SDG&E's right, title and interest in, to and under the Acquired Assets to be acquired by the City hereunder ( other than those being transferred or assigned pursuant to clauses (i) or (iii) of Section 4.6(a)) to be transferred at the Closing, and (b) two (2) original counterparts of a duly executed Bill of Sale, transferring to the City all of Cab I's and/or its Affiliate's right, title and interest in, to and under the Acquired Assets to be acquired by the City hereunder (other than those being transferred or assigned pursuant to clauses (ii) or (vii) of Section
4.6(b )) to be transferred at the Closing if and only if the City acquires a fee interest in any Acquired Asset; provided to the extent that Cab I does not own the Cab I Carlsbad Boulevard Land as determined pursuant to Section 6.4, then the City shall not be required to provide any deliverables under this clause (iii) with respect to the Cab I Carlsbad Boulevard Land; (iv) one (1) copy counterpart of a duly executed copy of the Closing Statement;
(v) a duly executed counterpart to joint written instructions to the Escrow Agent, directing the Escrow Agent to disburse the Deposits and other amounts in accordance with Section 4.3(b) and the Closing Statement; (vi) one (1) original of a Closing Certificate from the City dated the Closing Date, duly executed by an authorized officer or authorized signatory of the City; (vii) a duly executed Tax declaration or similar documents (or counterparts thereto, as applicable) required to be executed by a "buyer" or "grantee" in connection with any transfer, stamp, excise or similar Tax imposed by the state, county or city in connection with the transfer of Acquired Assets at the Closing; •
(viii) copies of such charter or formation documents, ordinances, resolutions, authorizations, certifications, or agreements relating to the City as the Title Company shall reasonably require in connection with the transactions contemplated by this Agreement; (ix) two (2) original counterparts to the Hub Park Lease Amendment; (x) two (2) original counterparts to a termination of the Cannon Park Lease;
(xi) three (3) original counterparts of a duly executed Cannon Road Access Easement Agreement; and
(xii) such other instruments as are contemplated by this Agreement to be executed or delivered by the City, including a General Plan consistency determination and Certificates of Acceptance and Consents to Recordation of Grant Deeds, in the form attached to the Deed, reasonably required by any Transferor transferring Acquired Assets to the City, the Title Company or the Escrow Agent, in any such case, to effectuate the conveyance of property similar to the Acquired Assets, with the effect that, after the Closing, the City will have succeeded to all of the rights, titles, and interests of SDG&E and/or Cab I and its Affiliates related to the Acquired Assets transferred to the City and such Transferor will no longer have any rights, titles, or interests in and to the applicable Acquired Assets.
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Section 4.7 Proration Calculation Principles.
(a) The following items (collectively, the "Prorated Items") shall be prorated between the Parties as of the Closing Date (on the basis of the actual number of days elapsed over the applicable period) in accordance with the calculation principles set forth below and to the extent any information needed for such prorations is unavailable then based on the information available for the most recent full calendar month prior to the Closing Date, with each Transferee being deemed to be the owner of the applicable Acquired Asset transferred at the Closing during the entire day on the Closing Date, and being obligated to pay all expenses of such Acquired Assets, with respect to the Closing Date:
(i) Each Transferor agrees to pay at or as of the Closing, all Trade Payables applicable to the Acquired Asset such Transferor is transferring hereunder incurred prior to the Closing.
(ii) Each Transferee shall receive a credit for any accrued but unpaid Taxes, personal property Taxes, ad valorem real estate Taxes and other Taxes imposed in respect of the Acquired Assets received by Transferee for the portion of the current year which has elapsed prior to the Closing Date (and to the extent unpaid, for prior years), and each Transferor shall receive a credit for any such Taxes imposed in respect of the Acquired Assets transferred by Transferor for the portion of the period after the Closing to the extent such Taxes have been paid prior to the Closing. If the amount of any such Taxes have not been determined as of the Closing, such credit shall be based on the most recent ascertainable Taxes and shall be re-prorated promptly upon issuance of the final Tax bill. Any refunds of such Taxes shall be aJlocated between each Transferor and the applicable Transferee based on the portion of the year in which the Closing occurred that each of them owned (directly or indirectly) the applicable Acquired Asset. In no event shall any Transferor be charged with or be responsible for any increase in the Taxes on any Acquired Asset resulting from the transfer of such Acquired Asset contemplated by this Agreement or from any improvements made or leases entered into on or after the Closing Date. If any assessments on an Acquired Asset is payable in installments, then the instalJment allocable to the current period shall be prorated (with Transferee being allocated the obligation to pay any instalJments due after the Closing Date).
(iii) Utilities and fuel, including steam, water, electricity, gas and oil shall be prorated as of the Closing. Each Transferor shalJ cause the meters, if any, for utilities to be read the day on which the Closing Date occurs and to pay the biJls rendered on the basis of such readings. If any such meter reading for any utility is not available, then adjustment therefor shall be made on the basis of the most recently issued bills therefor which are based on meter readings no earlier than thirty (30) days prior to the Closing Date, and such adjustment shall be re-prorated when the next utility bilJs are received. Each Transferor shaJI receive a credit for all deposits made by or on behalf of such Transferor as of the Closing Date as security under any utility, public service or other arrangement to the extent the same remains on deposit for the benefit of the applicable Transferee.
(iv) Each Transferor shall receive a credit for any recurring fees for any Acquired Asset or any Permit that have been paid by such Transferor prior to the Closing and relate to the period from and after the Closing Date, and each applicable Transferee shall receive SMRH:4909-8942-1601.3
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a credit for any such fees which have not been paid as of the Closing and relate to the period prior to the Closing Date.
(v) Any other items of income or expense which are customarily apportioned between the parties in real estate closings in San Diego County shall be prorated between each Transferor, on the one hand, and the applicable Transferee, on the other hand, as of the Closing Date on an accrual basis, based on the actual number of days in the applicable period (month, quarter, year or otherwise) during which the Closing Date occurs. (b) All of the Prorated Items that can be determined or estimated as of the Closing Date shall be so determined or estimated by SDG&E or Cab I, as the case may be, at least ten (10) Business Days prior to the Closing in a report (an "Estimated Proration Report"), which shall be attached to, and form a part of, the Closing Statement delivered by SDG&E or Cab I, as the case may be, to the other Parties in respect of the Closing. Any such Estimated Proration Report shall include a detailed breakdown of the Prorated Items applicable to the Closing and shall be prepared in a manner consistent with the calculation principles and procedures set forth in Section
4.7(a). which shall be finalized and included on the Closing Statement on the Closing Date. All Parties shall review and use Reasonable Efforts to resolve any disagreements about the Estimated Proration Report and SDG&E shall issue a revised Estimated Proration Report at least five (5) Business Days prior to Closing. Within ninety (90) days following the Closing Date, SDG&E shall prepare and issue to the the other Parties updated proration reports and Closing Statement (each, a "Final Settlement Statement") prepared in a manner consistent with the calculation principles and procedures set forth in Section 4.7(a). and which shall adjust those Prorated Items applicable to the Closing and other items on the Closing Statement (A) that were not apportioned on the Estimated Proration Report or Closing Statement because of the unavailability of information, (B) that were apportioned on the Estimated Proration Report or Closing Statement based upon estimated, inaccurate or incomplete information or (C) for which manifest errors existed on the Estimated Proration Report or Closing Statement, which shall not include any real property tax prorations for which final bills have not yet been issued. No Transferor shall be responsible for any increase in ad valorem real estate Taxes post-Closing as a result of reassessment of any Acquired Asset as a result of the transfers described herein. The Parties shall each have the right to have their respective accountants review drafts of the Final Settlement Statement such that the Final Settlement Statement accurately reflects the operations of the applicable Acquired Assets on the Closing Date, and each Party shall provide the other Parties reasonable access to such Party's principal place of business where such books and records are maintained to review such books and records to enable the Parties to audit the same with respect to the Final Settlement Statement. The Parties shall meet to come to a final determination of the accuracy of the Final Settlement Statement within thirty (30) days ("Final Proration Period'') after the issuance of the Final Settlement Statement. Unless any matters remain in dispute upon the expiration of the Final Proration Period, then within three (3) Business Days of such expiration, if any amount is required by the Final Settlement Statement to be paid by any Party to any other Party, then such Party shall pay such amount ( or instruct the Escrow Agent to release such amount, if applicable) to the account( s) designated by such Party by wire transfer of immediately available funds (in either case, the "True-up Amount"). If any matters remain in dispute (the "Unresolved Items") at the expiration of the Final Proration Period, then the Parties shall jointly engage an independent accounting firm of recognized national standing that has not provided material services to any of the Parties (or their respective Affiliates) and is otherwise mutually selected by the applicable SMRH:4900-8942-l(i() 1.3
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Parties (such firm, the "True-Up Accountant"). The Parties shall submit any Unresolved Items to the True-Up Accountant, and the True-Up Accountant shall resolve such Unresolved Items, acting as an expert and not an arbitrator, but in no case shall they review or propose any resolution for any matters that are not Unresolved Items. The Parties shall use their Reasonable Efforts to cause the True-Up Accountant to issue its written determination regarding the Unresolved Items within ten (10) Business Days after such Unresolved Items are submitted for review. The True-Up Accountant shall make a determination with respect to the Unresolved Items only and shall be limited to those adjustments, if any, that need to be made in order for the Final Settlement Statement to comply with the standards referred to in this Section 4.7. In no event shall the True Up Accountant's determination of any Unresolved Items be outside the range of the Parties' disagreement. The determination of the True-Up Accountant shall be final, binding and conclusive for all purposes hereunder. Such amounts as finally determined by the True-Up Accountant shall be used to determine the True-Up Amount, which shall be paid within three (3) Business Days of the True-Up Accountant's determination by wire transfer of immediately available funds to the account(s) designated by the applicable Party owed such amounts. Upon payment of the True-up Amount pursuant to this Section 4.7(b), such True-Up Amount shall be deemed final and binding on the Parties and except as otherwise expressly set forth in this Agreement there shall be no further adjustment between the Parties for income and expenses. This Section 4.7(b) shall survive Closing. (c) The Parties shall share the fees and expenses of the True-Up Accountant in inverse proportion to the relative amounts of the Unresolved Items determined in favor of such Party, in accordance with the following formula: each Party shall pay a portion of such fees and expenses equal to the total fees and expenses multiplied by a fraction, the numerator of which is the dollar amount of Unresolved Items resolved in favor of such Party and the denominator of which is the total dollar amount of Unresolved Items.
(d) This Section 4.7 does not apply to the City as the transactions contemplated by this Agreement will be at no cost to the City (and (i) each reference to a Transferee herein shall be deemed to not refer to the City, (ii) each reference to a Transferor herein shall, with respect to each transfer of an Acquired Asset to the City, not be deemed to include the Transferor of any such Acquired Asset, and (iii) each reference to a Party herein shall be deemed to not refer to the City). ( e) Notwithstanding the foregoing, with respect to any Acquired Asset that is transferred on the Second Closing Date, the provisions of this Section 4.7 shall not apply with respect to such Acquired Asset on the Closing Date, but shall apply on the Second Closing Date, and all references in this Section 4. 7 to the Closing Date shall refer to the Second Closing Date with respect to the transfer of such Acquired Asset.
Section 4.8 Closing Costs. In connection with the Closing and Second Closing, as applicable, each Transferee shall pay the costs, fees and expenses required to be incurred in connection with, or arising as a result of, (a) obtaining any Title Policies obtained by such Transferee and any title policy endorsements and any lender's title policies with respect to any Acquired Assets acquired by such Transferee, (b) obtaining any property condition assessment, environmental reports, seismic reports, and property zoning report costs . ordered by such Transferee, (c) obtaining any survey costs incurred by such Transferee, (d) such Transferee's diligence of or access to the Acquired Assets acquired by such Transferee, ( e) preparing the applicable Deeds, Bill of Sale and notary and recordation fees for Acquired Assets acquired by SMRH:490'J-8942-1601.3
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such Transferee, and (t) preparing and recording any mortgage, deed of trust, deed to secure debt, financing statement or other financing instrument and all mortgage or similar taxes incident to encumbrance of such Acquired Assets transferred by such Transferor. Notwithstanding the foregoing, as to the Acquired Assets acquired by the City, SDG&E and Cab I will each bear half the aforesaid costs, fees, and expenses and the City shall bear no such costs, fees and expenses; provided, that (i) the insured value for any Acquired Asset in any Title Policy obtained by the City shall be an amount reasonably agreed upon by the Transferor and the City, not to exceed the Transferor's appraised value of the applicable Acquired Asset, (ii) neither SDG&E nor Cab I shall be required to pay for any Title Policy endorsements other than those set forth on Exhibit 0, and (iii) SDG&E and Cab I shall have no obligation to reimburse the City for any of the items described in clauses (b) or (d) above; provided that SDG&E shall be responsible for the costs of the environmental reports set forth on Exhibit O and required by Section 9. l(c). Each Transferor shall pay all transfer Taxes and other similar Taxes due on the transfer of the Acquired Assets. The costs, fees and expenses required to be incurred in connection with the engagement of the Escrow Agent shall be borne equally by Cab I and SDG&E. Each Party shall pay its own attorneys' fees.
This Section 4.8 shall survive Closing.
Section 5.1 Due Diligence.
ARTICLE V
CONTINGENCIES
(a) Due Diligence Contingency. Each Transferee shall have until one hundred eighty (180) days after the Effective Date (the "Due Diligence Period''), to perform its due diligence review of the Acquired Assets to be acquired by such Transferee and all matters related thereto which such Transferee deems advisable, including any engineering, environmental, title, survey, permitting, financial, operational and legal compliance matters relating to the Acquired Assets to be acquired by such Transferee; provided, that the Due Diligence Period with respect to the environmental review, title and survey shall be the later of one hundred eighty (180) days after the Effective Date or one hundred eighty ( 180) days after delivery of the Surveys. If such Transferee, in its sole discretion, is not satisfied with the results of its due diligence review of the applicable Acquired Assets for any reason, such Transferee shall have the right to void the Voidable Obligations by providing written notice to the other Parties prior to the expiration of the Due Diligence Period (the "Due Diligence Contingency"). If any Transferee voids the Voidable Obligations pursuant to the Due Diligence Contingency in accordance with this Section 5.1, then the Deposits shall be refunded to each Party that made such Deposit by Escrow Agent no later than two (2) Business Days after the expiration of the Due Diligence Period. If no Transferee voids the Voidable Obligations pursuant to the Due Diligence Contingency in accordance with this Section ll, all such Transferees shall be deemed to have waived its rights to void the Voidable Obligations pursuant to the Due Diligence Contingency.
(b) Due Diligence Inspections. Each Transferee shall have the right to perform such examinations, tests, investigations and studies of the Acquired Assets to be acquired by such Transferee (the "Inspections") as such Transferee reasonably deems advisable; provided, however, that Transferor shall have approved any invasive Inspections before they occur; and provided, further, each Transferee shall not cause or permit damage or injury to such Acquired Assets (ordinary wear and tear excepted), and such Transferee shall promptly repair any such SMRH:4909-8942-1601.3
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damage or injury and return any such Acquired Assets to substantially the condition existing prior to any tests or inspections. In accordance with this Section 5.l(b) such Transferee may conduct the Inspections with its officers, employees, contractors, consultants, agents or representatives ("Transferee's Inspectors"); provided, however, that such Transferee shall cause its Transferee's Inspectors to comply with the terms of this Agreement and applicable Law. In exercising its right of access hereunder, each Transferee will use, and will cause the Transferee's Inspectors to use, commercially reasonable efforts not to interfere with the activities of Persons occupying or providing services at the Acquired Assets. Each Transferee will give reasonable advance prior written notice to (which may be by any means of electronic communication) each applicable Transferor of its intention to conduct any inspection and the nature of such inspection. Each Transferor expressly reserves the right to have a representative present during any inspection and agrees to cooperate with any reasonable request Transferee makes in connection with the timing or conduct of any inspection. Each Transferee and each of Transferee's Inspectors shall maintain insurance as set forth on Exhibit P attached hereto and each Transferee will provide to each Transferor written evidence, reasonably satisfactory to each Transferor, of the insurance required under this Section 5.l(b).
( c) Transferor's Due Diligence Materials. Each Transferor shall provide to each Transferee of such Transferor's Acquired Assets, promptly upon request by such Transferee for review and copying by such Transferee, such additional Due Diligence Materials in such Transferor's Possession relating to the Acquired Assets to be Conveyed to such Transferee which are reasonably requested by such Transferee, and such Transferee agrees to acknowledge in writing, upon the Transferor's Representative's request, the receipt of any due diligence documents or materials delivered to such Transferee. If the Voidable Obligations are voided in accordance with the terms of this Agreement, each such Transferee promptly shall (i) return all original Due Diligence Materials provided to such Transferee, and destroy all other Due Diligence Materials, (ii) cause all Persons to whom such Transferee has provided any Due Diligence Materials to return any original Due Diligence Materials to the applicable Transferor, and destroy all other Due Diligence Materials, and (iii) certify to such Transferor that all original Due Diligence Materials have been returned to such Transferor and all other Due Diligence Materials have been destroyed. Each Transferor shall make available to each applicable Transferree, during the Due Diligence Period, copies of all material Permits with respect to such Acquired Assets in Transferor's Possession.
(d) Transferee's Due Diligence Reports. Each Transferee shall promptly provide a copy to each Transferor of the title report, any updated surveys and zoning reports in connection with the Inspections of such Transferor's Acquired Assets. (e) Indemnification. Each Transferee agrees to indemnify, defend, protect and hold each Transferor of any Acquired Asset and the Transferor Indemnified Parties free and harmless from and against any and all Liabilities arising out of or related to due diligence activities conducted at the Acquired Assets by such Transferee or the Transferee's Inspectors prior to the Closing Date or Second Closing Date, as applicable ( excluding the mere discovery of any pre existing condition at the Acquired Assets). This Section 5.l(e) shall survive the Closing, the Second Closing or any voiding of the Voidable Obligations.
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ARTICLE VI
TITLE TO THE PROPERTY
Section 6.1 Title Report. Except as provided for in Section 6.4, each Transferor shall deliver to each applicable Transferee, within ninety (90) days of the Effective Date, title reports for ALTA owner's title insurance policies from the Title Company for each Acquired Asset that consists of real property (each, a "Title Report", and collectively the "Title Reports"), together with a copy of all documents referenced therein obtained from the Title Company; provided, that no Title Report shall be required to be provided for the Hub Park Easement Interest or any other property for which the Acquired Asset is not a fee interest.
Section 6.2 Survey. SDG&E will provide the City with an ALT A survey for each Acquired Asset that SDG&E will transfer to the City under this Agreement; provided, that no survey shall be required to be provided for the Hub Park Easement Interest or any other property for which the Acquired Asset is not a fee interest. Cab I will provide the City with an AL TA survey for each Acquired Asset that Cab I will transfer to the City under this Agreement that is a fee interest ( each of the surveys described in the first and second sentence of this Section 6.2 (collectively, the "City Surveys"). SDG&E and Cab I agree to provide their respective City Surveys within one hundred twenty (120) days of the Effective Date. Each other Transferor shall within one hundred twenty (120) days of the Effective Date deliver to the Transferee a survey for each Acquired Asset such Transferee is obtaining hereunder (each, a "Survey" and collectively, the "Surveys").
Section 6.3 Exceptions to Title.
(a) Unpermitted Exceptions. If, with respect to any Acquired Asset (other than the Hub Park Easement Interest or other property for which the Acquired Asset is not a fee interest), the Transferee of such Acquired Asset objects to any (a) Liens, encumbrances or other exceptions to title (the "Title Exceptions") disclosed in the applicable Title Report, or (b) encroachments by improvements on adjoining properties onto or over such Acquired Asset, any encroachments of the Improvements onto or over adjoining properties, setback lines or easements (to the extent in violation thereof) or other survey defects (the "Survey Defects") disclosed in a Survey, such Transferee shall confer with the Title Company and the applicable Transferor to attempt to agree on which shall constitute Unpermitted Exceptions to title to such Acquired Asset prior to the expiration of the Due Diligence Period; provided, however, that all liens and encumbrances caused or created by such Transferee shall in no event constitute Unpermitted Exceptions. Notwithstanding the foregoing, each Transferor agrees that the following (the "Mandatory Unpermitted Exceptions") shall constitute Unpermitted Exceptions: (w) any New Title Exception or and/or New Survey Defect (in each case, as defined below) that was caused or created by such Transferor, (x) any mortgages, deeds of trust or fixture filings regarding any financing incurred by such Transferor and, with respect to any Acquired Asset to be Conveyed to the City, any other financial lien, (y) Taxes on the applicable Acquired Assets which constitute Title Exceptions which would be delinquent if unpaid at the Closing provided, however, that if any such Taxes are payable in installments, such obligation shall apply only to the extent such installments would be delinquent if unpaid at the Closing, and (z) any other judgement liens against such Transferor or recorded against such Acquired Asset or mechanic liens related to work commissioned by or on behalf of such Transferor in violation of this Agreement. If the applicable SMRH:4909-8942-1601.3
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Transferor and Transferee agree on which Title Exceptions and Survey Defects shall constitute the Unpermitted Exceptions, then such Transferee shall request from the Title Company a specimen or proforma ALTA Owner's Policy of Title Insurance (or such other comparable form of title insurance policy as is available in California) issued by the Title Company in form and substance reasonably acceptable to the Transferee and in the form of the applicable Title Report, and containing, unless prohibited by applicable statutes or regulations, such endorsements as Transferee may obtain from the Title Company prior to the Due Diligence Contingency ("Title Proforma"); provided, however, that (1) except as to the City's Acquired Assets, such endorsements shall be at no cost to, and shall impose no additional liability on, Transferor, (2) Transferee's obligations under this Agreement shall not be conditioned upon Transferee's ability to obtain such endorsements and, if Transferee is unable to obtain such endorsements, Transferee shall nevertheless be obligated to proceed to the Closing or Second Closing, as applicable, without credit, in each case, other than receipt of those endorsements set forth in the Title Proforma delivered prior to the Due Diligence Contingency, and (3) the Closing or the Second Closing, as applicable, shall not be delayed as a result of Transferee's request for said endorsements. If any applicable Transferor and Transferee cannot agree on which Title Exceptions and Survey Defects shall constitute the Unpermitted Exceptions, such Transferor's sole and exclusive remedy shall be to void the Voidable Obligations on or before the Due Diligence Contingency. (b) Permitted Exceptions. All Title Exceptions and Survey Defects which are reflected in the Title Reports and Surveys provided to Transferees during the Due Diligence Period other than Unpermitted Exceptions and those expressly set forth in Section 6.3(a) shall constitute "permitted exceptions" to title to the Acquired Assets (the "Permitted Exceptions"). (c) Updated Title Report or Survey. If any update of any Title Report delivered to any Transferee after the expiration of the Due Diligence Period discloses any new Title Exception recorded after the date of the applicable initial Title Report delivered to such Transferee (a "New Title Exception"), or any update of a Survey previously obtained by such Transferee and delivered to the applicable Transferor is delivered to such Transferee after the expiration of the Due Diligence Period discloses any Survey Defect created after the date of the initial Survey (a "New Survey Defect"), and (i) such Transferee was not otherwise provided previous written notice of such New Title Exception or New Survey Defect at least two (2) Business Days prior to the expiration of the Due Diligence Period, (ii) such New Title Exception or New Survey Defect would have a Material Adverse Effect, and (iii) such New Title Exception or New Survey Defect was not caused by such Transferee or any Person on behalf of such Transferee, then such Transferee shall have the right to request the applicable Transferor to remove or cure such New Title Exception or New Survey Defect at or prior to the Closing by providing written notice to such Transferor within the earlier of: (A) five (5) Business Days after receiving such update of such Title Report or Survey, or (B) the Closing (a "New Title and Survey Objection Notice"). If such Transferee provides a New Title and Survey Objection Notice to an applicable Transferor, such Transferor may elect, by providing written notice (the "New Title and Survey Election Notice") to such Transferee within five (5) Business Days after such Transferor's receipt of such New Title and Survey Objection Notice (and, if necessary, the Closing shall be automatically extended (by not more than five (5) Business Days) to allow such Transferor to make such election) (1) to accept such New Title Exception or New Survey Defect as an additional Unpermitted Exception to be removed or cured at or prior to the Closing, or (2) not to remove or cure such New Title Exception or New Survey Defect. If such Transferor does not provide a New Title and Survey Election Notice SMRH:4909-8942-1601.3
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to such Transferee within such time period, then such Transferor shall be deemed to have elected not to remove or cure such New Title Exception or New Survey Defect as an Unpermitted Exception pursuant to clause (2) of the preceding sentence. If such Transferor elects or is deemed to have elected not to remove or cure a New Title Exception or New Survey Defect, then such Transferee shall have the right to elect, by providing written notice (the "New Title and Survey Response Notice") to such Transferor within the earlier of ten (10) Business Days after such Transferee's receipt of the New Title and Survey Election Notice or the Closing to (I) void the Voidable Obligations, in which case the Deposits shall be refunded to each Party that made such Deposit, or (II) proceed to the Closing pursuant to this Agreement and accept title to the applicable Acquired Asset subject to such New Title Exception and New Survey Defect (as applicable) which thereafter shall be deemed to constitute a Permitted Exception, without any credit. If such Transferee does not provide a New Title and Survey Response Notice to such Transferor within such time period, such Transferee shall be deemed to have elected to proceed to the Closing pursuant to clause (II) of the preceding sentence.
If (i) any Transferee discovers a New Title Exception or a New Survey Defect that would not have a Material Adverse Effect, (ii) such Transferee was not otherwise provided previous written notice of such New Title Exception or New Survey Defect at least two (2) Business Days prior to the expiration of the Due Diligence Period, and (ii) such New Title Exception or New Survey Defect was not caused by such Transferee or any Person on behalf of such Transferee, then such Transferee shall have the right to request the applicable Transferor to remove or cure such New Title Exception or New Survey Defect at or prior to the Closing by providing a New Title and Survey Objection Notice with respect to such New Title Exception or New Survey Defect. If such Transferee provides a New Title and Survey Objection Notice to the applicable Transferor, such Transferor may elect to provide a New Title Survey and Election Notice to such Transferee within five (5) Business Days after such Transferor's receipt of such New Title and Survey Objection Notice (and, if necessary, the Closing shall be automatically extended (by not more than five (5) Business Days) to allow such Transferor to make such election) (1) to accept such New Title Exception or New Survey Defect as an additional Unpermitted Exception to be removed or cured at or prior to the Closing, or (2) not to remove or cure such New Title Exception or New Survey Defect. If such Transferor does not provide a New Title and Survey Election Notice to such Transferee within such time period, then such Transferor shall be deemed to have elected not to remove or cure such New Title Exception or New Survey Defect as an Unpermitted Exception pursuant to clause (2) of the preceding sentence. If such Transferor elects or is deemed to have elected not to remove or cure a New Title Exception or New Survey Defect, then such Transferee shall proceed to the Closing pursuant to this Agreement and accept title to the applicable Acquired Asset subject to such New Title Exception and New Survey Defect (as applicable) which thereafter shall be deemed to constitute a Permitted Exception, without any credit.
(d) Removal of Unpermitted Exceptions. Except as provided in Section 6.3(a), no Transferor shall have any obligation to cure any Title Exceptions or Survey Defects other than the Mandatory Unpermitted Exceptions and the Unpermitted Exceptions as set forth in any New Title and Survey Election Notice. Each Transferor may cure any Unpermitted Exception by removing such Unpermitted Exception from title or causing the Title Company to commit to remove or insure over such Unpermitted Exception in the Title Policy obtained by such Transferee at the Closing.
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( e) Extension of the Closing Date. If any Transferor determines that it will be unable to remove or cure any Unpermitted Exceptions prior to the Closing, then the Transferor, at its option, shall have the right to postpone the Closing in its entirety for a period not to exceed thirty (30) days.
Section 6.4 Fee Interest in Cab I Carlsbad Boulevard IAnd. Notwithstanding anything to the contrary in this Agreement, this Section 6.4 shall govern the obligations of Cab I to Convey the Cab I Carlsbad Boulevard Land to the City. As of the Effective Date, it has not been established that Cab I has insurable fee title to the Cab I Carlsbad Boulevard Land. Cab I agrees to obtain a Title Report from a nationally recognized title company to determine, by not later than the end of the Due Diligence Period, whether Cab I has insurable fee title to the Cab I Carlsbad Boulevard Land ("Cab I Title Search"). Cab I shall deliver to the City the results of the Cab I Title Search and all recorded documents referenced in the Title Report. If the Cab I Title Search demonstrates that Cab I has insurable fee title to the Cab I Carlsbad Boulevard Land, then the Cab I Carlsbad Boulevard Land shall be an Acquired Asset under this Agreement and Cab I shall Convey the Cab I Carlsbad Boulevard Land to the City at the Closing in accordance with the procedures and requirements set forth herein. If the Cab I Title Search does not demonstrate that Cab I has insurable fee title to the Cab I Carlsbad Boulevard Land and Cab I and the City are otherwise unable to determine Cab I has insurable fee title, then (a) the Cab I Carlsbad Boulevard Land shall be excluded from the definition of Acquired Assets, (b) if requested by the City, at the Closing, Cab I shall quitclaim to the City any interest that Cab I may hold or potentially hold in the Cab I Carlsbad Boulevard Land, and (c) Cab I shall have no further obligation hereunder with respect to the Cab I Carlsbad Boulevard Land, except that, if, at any point in time, it can be established Cab I had insurable fee title to the Cab I Carlsbad Boulevard Land, Cab I will execute a Grant Deed or other document reasonably required to provide the City with insurable fee title to the Cab I Carlsbad Boulevard Land. If the City elects to bring an action to quiet title to the Cab I Carlsbad Boulevard Land, Cab I will not oppose, and will cooperate with the City, in such action.
This Section 9.8 shall survive Closing.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES RELATING TO EACH PARTY
Each Party hereby represents and warrants to each other Party as of the date that each such Party executes this Agreement, subject to the matters disclosed on any schedules to this Agreement, as follows:
Section 7.1 Organization of Each Party. Such Party has been duly formed and is validly existing and in good standing under the Laws of the state of its organization and has the requisite power and authority to own or lease its assets and to conduct its business as it is now being conducted. Such Party is duly licensed or qualified and in good standing as a foreign entity in each jurisdiction in which it is required by Law to be so licensed or qualified or in good standing, as applicable.
Section 7.2 Authorizati,on; Enforceability. Except for, with respect to SDG&E, the CPUC R&A and the TLTP, such Party has all requisite power and authority to execute and deliver this Agreement and the Transaction Documents to which it is a party and to perform all obligations to be performed by such Party hereunder or thereunder. The execution and delivery of this SMRH:4909-8942-1601.3
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Agreement and the Transaction Documents and the consummation of the transactions contemplated hereby or thereby have been duly and validly authorized and approved by all requisite action on the part of such Party except for, with respect to SDG&E, the CPUC R&A and the TL TP. This Agreement has been, and as of the Closing Date, each of the Transaction Documents to which such Party is a party and that are to be delivered on the Closing Date will be, duly and validly executed and delivered by such Party and constitutes, or in the case of such Transaction Documents, will constitute a legally valid and binding obligation of such Party, enforceable against such Party in accordance with its terms, in each case, subject to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws affecting creditors' rights generally and subject, as to enforceability, to general principles of equity.
Section 7 .3 No Conflict.
(a) None of the execution and delivery by such Party of this Agreement or the Transaction Documents to which it is a party, the consummation of the transactions contemplated hereby or thereby, or the compliance by such Party with any of the provisions hereof or thereof will conflict with, or result in any violation of, such Party's Organizational Documents or any Law (except, with respect to SDG&E, the CPUC R&A and the TLTP). (b) No consent, waiver, approval, order or Permit of, or declaration or filing with, or notification to, any Governmental Authority ( other than the City Council for the City and the CMWD Board of Directors for CMWD, each of which the City represents and warrants have been obtained on or prior to the Effective Date) is required on the part of such Party in connection with the execution and delivery by such Party of this Agreement or the Transaction Documents to which it is a party or the consummation by such Party of the transactions contemplated hereby or thereby, except for, with respect to SDG&E, the CPUC R&A and the TLTP and except for such consents, waivers, approvals, orders, Permits, declarations, filings or notifications the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to prevent or materially delay the ability of such Party to enter into and perform its obligations under this Agreement or the Transaction Documents to which it is a party or consummate the transactions contemplated hereby or thereby.
Section 7.4 Broker Fees. No broker, finder, investment banker or other Person is entitled to any brokerage fee, finders' fee or other commission in connection with the transactions contemplated by this Agreement or the Transaction Documents based upon any Contract with such Party or any of its Affiliates. Such Party agrees to indemnify, defend, protect and hold each other Party and its Affiliates harmless against and from any and all liabilities arising out of or resulting from any claim for brokerage commissions, compensation or fees in connection with the sale of the Acquired Assets or the transactions contemplated hereby resulting from the acts of such Party.
Section 7.5 Litigation. As of the Effective Date (a) there are no Legal Proceedings pending or, to the Knowledge of such Party, threatened in writing by any Person against such Party with respect to its Acquired Assets, and (b) to the Knowledge of such Party, there is no outstanding order or unsatisfied judgment against such Party with respect to its Acquired Assets from any Governmental Authority.
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Section 7.6 Tax Matters. Neither such Party nor such Party's applicable regarded owner is a "foreign person" or a "foreign corporation" within the meaning of Section 1445 of the Code.
Such Party has not received written notice of any audit or any delinquency with respect to any Taxes payable with respect to any Acquired Asset owned by such Party, which audit or delinquency has not been resolved. Such Party is not currently contesting or appealing any of such ad valorem real estate Taxes with respect to any Acquired Asset. No such Party has received written notice of, nor has Knowledge of, any special assessments or any proposed increase in the assessed valuation of any Acquired Asset owned by such Party (unrelated to the sale of the Acquired Assets contemplated in this Agreement). All Tax Returns with respect to each Acquired Asset owned by such Party required to be filed by such Party for any Pre-Closing Tax Period have been, or will be, timely filed. Such Tax Returns are, or will be, true and complete in all respects, and all real estate Taxes relating to each Acquired Asset owned by such Party due and owing by such Party (whether or not shown on any such Tax Return) have been, or will be, timely paid.
Section 7.7 OFAC. Neither such Party nor, to the Knowledge of such Party, any of its Affiliates is (a) listed on the Specially Designated Nationals and Blocked Persons List or any other similar list maintained by the Office of Foreign Assets Control or Department of the Treasury, pursuant to any authorizing statute, executive order or regulation; or (b) a "specially designated global terrorist" or other Person listed on Appendix A to Chapter V of 31 C.F.R, as the same has been from time to time updated and amended; or (c) a Person either (i) included within the term "designated national" as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 5 I 5; or (ii) designated under Sections l(a), l(b), J(c) or l(d) of Executive Order No. 13224, 66 Fed. Reg. 49079 (published September 25, 200 I) or a Person similarly designated under any related enabling legislation or any other similar Executive Orders. None of such Party's property or interests is subject to being "blocked" under any Anti-Terrorism Laws, and neither such Party nor any Person holding any direct or indirect interest in such Party is in violation of any Anti-Terrorism Laws.
Section 7.8 Bankruptcy. Such Party is not insolvent and there has been no filing by or against such Party, nor to the Knowledge of such Party, threatened against such Party, of a petition in bankruptcy under any applicable law, or the filing by or against such Party of any petition or answer seeking or acquiescing in any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief for such Party under any applicable law or regulation relating to bankruptcy, insolvency or other relief for debtors.
Section 7.9 ERISA. Such Party is not acting on behalf of an "employee benefit plan" within the meaning of Section 3(3) of ERISA that is subject to Title I of ERISA, a "plan" within the meaning of the Code that is subject to Section 4975 of the Code or an entity deemed to hold "plan assets" within the meaning of 29 C.F.R. § 2510.3-101, as modified by Section 3(42) of ERISA, of any such employee benefit plan or plans.
Section 7.10 No Default. Such Party is not in default of any of its obligations under this Agreement.
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ARTICLE VIII
REPRESENTATIONS AND WARRANTIES RELATING
TO ACQUIRED ASSETS
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Each Transferor hereby represents and warrants to the Transferee as of the date that each such Party executes this Agreement, subject to the matters disclosed on any schedules to this Agreement, that it is transferring any of its Acquired Assets under this Agreement as follows:
Section 8.1 Right of First Refusal. No Person, other than such Transferee or, with respect to SDG&E, any tribes that may have such a right under the TLTP, has any right or option to acquire such Acquired Assets of such Transferor.
Section 8.2 Title to Property. Such Transferor owns and has good title to all material tangible personal property included in such Acquired Assets, free and clear of all Liens, other than (i) Permitted Exceptions, and (ii) Liens that will be released at Closing or, with respect to the Acquired Assets transferred at the Second Closing, at Second Closing.
Section 8.3 Condemnation. As of the Effective Date, there are no pending condemnation proceedings, and such Transferor has not received any written notice of any threatened condemnation proceedings, in each case, with respect to any such Acquired Asset.
Section 8.4 Employees. Such Transferor does not employ any employee at any such Acquired Asset or, if such Transferor does so employ any such employee, such employee's employment will not continue with respect to such Acquired Asset following the Closing Date or, with respect to the Acquired Assets transferred at the Second Closing, following the Second Closing Date.
Section 8.5 Leases and Contracts.
(a) No such Acquired Asset owned by such Transferor is subject to or encumbered by any Lease, other than Permitted Leases.
(b) No such Acquired Asset owned by such Transferor is subject to or encumbered by any material supply, service or vendor Contract that will encumber such Acquired Asset from and after the Closing Date or, with respect to any Acquired Asset transferred on the Second Closing Date, from and after the Second Closing Date.
Section 8.6 Legal Compliance; Permits.
(a) Such Transferor has not received from any Governmental Authority any written notices of violations or alleged violations of Law with respect to its Acquired Assets that have not been corrected to the satisfaction of the issuer of the notice. (b) Such Transferor has not, as of the Effective Date, received any written notice from any Governmental Authority or other Person with respect to such Acquired Assets of (i) any violation, suspension, revocation or non-renewal of any Permits that has not been cured or dismissed or (ii) any failure by such Transferor to obtain any Permits required with respect to such Acquired Asset being transferred that has not been cured or dismissed.
Section 8.7 Insurance. Such Transferor has not received any written notice from any insurance company or Board of Fire Underwriters of any defects or inadequacies in or at any Acquired Asset or any part or component thereof that would materially and adversely affect the SMRH:4909-8942-1601.3
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insurability of such Acquired Asset or cause any material increase in the premiums for insurance for such Acquired Asset that have not been cured or repaired.
Section 8.8 Environmental
(a) Such Transferor has provided to such Transferee true and correct copies of those certain environmental reports regarding the Acquired Assets set forth on Exhibit O. (b) With respect to environmental matters, such Transferor has not received any written notice or claim that all or any portion of its Acquired Assets is not in compliance with Environmental Laws.
Section 8.9 WARN Act. Such Transferor has not given notice under any applicable federal or state plant closing or similar act, including, if applicable, the WARN Act, solely a result of the transactions contemplated hereby.
ARTICLE IX
COVENANTS
Section 9.1 Conduct of Business Pending the Closing or the Second Closing. From the Effective Date until the Closing or until the Voidable Obligations are voided in accordance with the terms of this Agreement ( or, with respect to the Acquired Assets transferred at the Second Closing, until the Second Closing), except (A) as required by Law, (B) as otherwise contemplated by this Agreement or (C) with respect to any Acquired Asset, the prior written consent of the Transferee of such Acquired Asset (which consent shall not be unreasonably withheld, delayed or conditioned):
(a) Each Transferor shall own, operate, maintain, and manage the Acquired Assets owned by such Transferor in substantially the same manner during the twelve (12) months immediately prior to the Effective Date, including by operating in the Ordinary Course of Business.
(b) No Transferor shall:
(i) subject any of the Acquired Assets owned by such Transferor to any Lien (other than Liens described in clauses (i) through (v), (viii) and/or (ix) of the definition of Permitted Exceptions);
(ii) sell, assign, license, transfer, convey, lease or otherwise dispose of any of the Acquired Assets owned by such Transferor other than the disposition of personal property or improvements as a result of or in connection with ordinary wear and tear, replacement or disposal in the Ordinary Course of Business, and in connection with a casualty event; (iii) settle any Legal Proceeding involving any of the Acquired Assets owned by such Transferor or relating to the transactions contemplated by this Agreement or the Transaction Documents, other than settlements involving the payment of cash (and no ongoing restrictions on any such Acquired Asset) for which such Transferor bears sole financial responsibility;
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(iv) enter into any (A) Lease or Contract or (B) modifications, amendments, waivers or supplements to any existing Lease or Contract, unless (1) such modification or amendment is contemplated by such Lease or Contract or (2) such Lease or Contract will not survive the Closing or Second Closing hereunder, as applicable; other than, (x) with respect to the Hub Park Lease, the Hub Park Lease Amendment, and (y) with respect to the Strawberry Field License, an amendment to the Strawberry Field License to permit the Hub Park Lease Amendment and the potential Hub Park Trail System; (v) utilize or release, or permit any Affiliate to utilize or release, any Hazardous Materials on any of the Acquired Assets owned by such Transferor, other than Hazardous Materials utilized in the Ordinary Course of Business and in accordance with all Laws; or
(vi) do anything prohibited by this Section 9.l{b).
(c) Within thirty (30) days after the commencement of the Due Diligence Period, SDG&E shall, for the benefit of the City, commission a qualified environmental professional to prepare a limited phase II environmental site assessment investigation report focused on the three underground storage tanks (USTs) on the Service Center Land in the area of the proposed property line for the New City Property (the "Phase II Report"). The Phase II investigation shall contain at a minimum two soil borings for soil, soil gas, and groundwater sampling. The borings will be spaced 20-30 feet apart from each other along the property line of the New City Property closest to the underground storage tanks on the Residual SDG&E Land. The borings will be advanced using a direct-push drill rig, with soil samples collected at approximately 5, 10, and 15 feet bgs. Temporary soil vapor probes will be installed at approximately 5 and 15 feet bgs, subject to lithologic considerations. The borings should also be advanced to groundwater (estimated at approximately 30 to 35 feet bgs), with grab groundwater samples being collected and analyzed for TPHs and VOCs. The Phase II Report shall be provided to the City within ten ( 10) Business Days after SDG&E' s acceptance of the final report. After the Closing Date, but prior to the Second Closing, SDG&E shall remediate any preexisting environmental conditions identified in the Phase II Report on the New City Land to applicable industrial standards pursuant to applicable Law and shall provide to the City a report from a qualified independent third party environmental professional confirming that the New City Land has been remediated to such industrial standard.
(d) If Cab I requires the delivery of a Certificate of Compliance as a condition precedent to Closing, Cab I shall apply for such a Certificate of Compliance from the City at least six (6) months prior to the Closing and, in the event Cab I fails to apply for a Certificate of Compliance prior to such date, Cab I's condition precedent requiring delivery of a Certificate of Compliance shall be deemed to have been waived. As a courtesy to the City, at the request of the City and without in any way conceeding that any such certificate is necessary, SDG&E shall apply for a Certificate of Compliance on behalf of the City from the City for the New City Land at least six (6) months prior to the Closing.
(e) SDG&E and Cab I shall enter into a Tank Sands Remediation Agreement no later than the Closing Date. Each of SDG&E and Cab I shall use commercially reasonable efforts to negotiate the form of the Tank Sands Remediation Agreement during the Due Diligence SMRH:4900-8942-1601.3
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Period. The Tank Sands Remediation Agreement shall (i) require Cab I to engage a vendor at Cab I's sole cost and expense to remediate Cab I's environmental obligations relating to the tank sands on the New City Property, which vendor shall be reasonably acceptable to SDG&E, (ii) specifically identify the scope of the remediation project to be undertaken by Cab I, (iii) require Cab I and SDG&E to cooperate to identify the applicable environmental agency to provide a regulatory closure determination relative to the remediation of the tank sands on the New City Property and to cooperate to establish oversight through the Voluntary Assistance Program with the County of San Diego or other applicable regulatory agency to cover such remediation, provided that such Voluntary Assistance Program may be the amendment of an existing and active Voluntary Assistance Program attributable to either Cab I or SDG&E, or may be a new Voluntary Assistance Program instituted by Cab I on the New City Property, (iv) specify that the remediation of the tank sands on the New City Property must occur prior to the date that is six (6) months after the Closing Date, and contain such other terms reasonably acceptable to the Parties, and (v) shall include the City as third party beneficiary of the terms of the Tank Sands Remediation Agreement.
If the Parties agree to the form of the Tank Sands Remediation Agreement, the Parties shall use commercially reasonable efforts to amend this Agreement, or enter into a confirmation hereof, which attaches the agreed form of the Tank Sands Remediation Agreement.
Section 9.2 Entitlement and CEQA Approvals for SDG&E Project. As soon as reasonably possible and no later than nine (9) months after the Effective Date, SDG&E shall prepare and submit a project application (the "City Application") meeting City requirements for all discretionary approvals (the "City Discretionary Approvals") required for the construction and operation of the SDG&E Project. Following the submission of the City Application, ( a) the City shall expeditiously process the City Application and conduct any environmental review required under CEQA for the SDG&E Project and each of the City Discretionary Approvals and (b) SDG&E shall use all commercially reasonable efforts to cause the City to adopt or certify the required CEQA document for the SDG&E Project, if any, and grant approval of the City Discretionary Approvals. In the event that Cab I is required to execute any documents in connection with the City Application or the requirements to obtain the City Discretionary Approvals, Cab I shall not unreasonably withhold its approval or execution of any such documents.
In the event that any required CEQA document is not certified or the City Discretionary Approvals are not Final and Non-Appealable on or before three years from the Effective Date (provided that, upon written notice from SDG&E to the other Parties, SDG&E may extend such date by one year if SDG&E is continuing to use commercially reasonable efforts to obtain such City Discretionary Approvals (provided that SDG&E has timely submitted all materials requested by the City for such City Discretionary Approvals and is not otherwise the primary cause of any delay in the receipt of such City Discretionary Approvals) or if SDG&E is litigating any matter related to such City Discretionary Approvals), then any Party may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties. The three year period (as it may be extended hereunder) may be extended by mutual agreement of the Parties. The Parties hereto recognize that the SDG&E Project is a future project that is presently only conceptual in nature, and remains expressly subject to the preparation, review and approval of a specific development plan, an entitlements application, and appropriate environmental review as may be required by CEQA. The Parties acknowledge and agree that the City retains full discretion under this Agreement to independently determine compliance with any CEQA requirements the City deems SMRH:4900-8942-1601.3
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applicable with respect to the SDG&E Project when it is proposed. The Parties further acknowledge and agree that the City, pursuant to CEQA, has the absolute discretion to impose mitigation measures, require modifications, and consider alternatives to the proposed SDG&E Project as part of the CEQA process, and to ultimately approve or disapprove the City Discretionary Approvals or any proposed or required alternatives thereto. Nothing contained herein is intended or shall be construed to require the City to grant any of the City Discretionary Approvals or result in or constitute any commitment, vested rights, entitlements, development approvals or permits with respect to the SDG&E Project. In the event that the City or the California Coastal Commission disapproves any of the City Discretionary Approvals, or requires mitigation measures, modifications, or other conditions to the proposed SDG&E Project that SDG&E, in SDG&E's reasonable discretion, does not agree to accept or implement, SDG&E may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties.
Notwithstanding anything to the contrary contained herein, the City Discretionary Approvals may be conditioned upon the receipt of CCC approval of the CCC LCP Amendment, if required, and SDG&E shall have no right to void the Voidable Obligations under this Section 9.2 as a result of such condition and the satisfaction of that condition shall not be necessary for the City Discretionary Approvals to be Final and Non-Appealable. The City and SDG&E acknowledge that SDG&E has filed an application for a conditional use permit for the use of certain trailers for the Service Center and the City hereby agrees to toll such application until the earlier of the voiding of the Voidable Obligations or the completion of construction of the Administration Building.
Section 9.3 CPUC Approval.
(a) Concurrently with SDG&E's pursuit of the City Discretionary Approvals SDG&E shall begin to draft the CPUC Application, to the extent that SDG&E reasonably determines that beginning such process is appropriate and efficient. As soon as reasonably possible and no later than nine (9) months after the City Discretionary Approvals have been obtained (provided, that if there is any administrative, procedural, judicial, or other challenge to any City Discretionary Approval, such period shall be extended to nine (9) months after the City Discretionary Approvals become Final and Non-Appealable), SDG&E shall file one or more applications or requests for approval (collectively, the "CPUC Application") with the CPUC for all Transactions that require regulatory approval, including but not limited to seeking CPUC R&A regarding the Transactions and related matters under Public Utilities Code Section 851 ("Section 851'') and approval from the CPUC for ratepayer contribution towards the cost of the SDG&E Project. All Parties will use their Reasonable Efforts to support the regulatory approval process as reasonably requested by SDG&E, including providing documents, testimony, or other support. (b) In the event that the CPUC approves the CPUC Application with modifications or conditions (a "Qualified CPUC Approvaf'), within thirty (30) days of the delivery of the Qualified CPUC Approval by the CPUC, each Party shall review the Qualified CPUC Approval and shall provide written notice to the other Parties whether it approves or disapproves of such Qualified CPUC Approval. Each Party shall only disapprove the Qualified CPUC Approval if any such modification or condition is not consistent with the terms of this Agreement or is adverse to such Party and shall not unreasonably withhold such approval (any such Qualified CPUC Approval approved by all Parties in writing, an "Approved Qualified CPUC SMRH:4909-8942-J(i()J .3
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Approvaf' and any Qualified CPUC Approval disapproved by any Party in accordance with this clause, a "Disapproved Qualified CPUC Approvaf').
( c) In the event that the CPUC approves the CPUC Application without modifications or conditions, or the Parties agree a Qualified CPUC Approval is an Approved Qualified CPUC Approval (in either such case, a "CPUC Approvaf'), the Parties shall proceed to Closing when such CPUC Approval becomes Final and Non-Appealable in accordance with, and subject to, Section 4.5.
(d) In the event that a CPUC Approval has not been obtained by the date that is thirty (30) months after the submission to the CPUC of the CPUC Application (provided that, upon written notice from SDG&E to the other Parties, SDG&E may extend such date by one year if SDG&E is continuing to use commercially reasonable efforts to obtain such CPUC Approval (provided that SDG&E has timely submitted all materials requested by the CPUC for such CPUC Approval and is not otherwise the primary cause of any delay in the receipt of such CPUC Approval) or if SDG&E is litigating any matter related to such CPUC Approval), or if prior to such date, the CPUC approves a Qualified CPUC Approval that is a Disapproved Qualified CPUC Approval, then any Party may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties. The thirty (30) month period (as it may be extended hereunder) may be extended by mutual agreement of the Parties.
Section 9.4 Coastal Development Permit. As soon as reasonably possible after the City certifies or approves any required CEQA document for the SDG&E Project and approves the City Discretionary Approvals but no later than nine (9) months after the City Discretionary Approvals have been obtained (provided, that if there is any administrative, procedural, judicial, or other challenge to any City Discretionary Approval, such period shall be extended to nine (9) months after the City Discretionary Approvals become Final and Non-Appealable), SDG&E shall prepare and submit an application (the "CCC Application") meeting all applicable requirements to the California Coastal Commission for the issuance of a coastal development permit for the SDG&E Project pursuant to the applicable provisions of the California Coastal Act of 1976 (Public Resources Code section 30000 et seq.) (collectively, the "CCC Approval Action"). SDG&E shall use all commercially reasonable efforts to cause the California Coastal Commission to expeditiously review, act upon, approve, and issue (as applicable) the CCC Approval Action. In the event that Cab I is required to execute any documents in connection with the CCC Application or the requirements to obtain the CCC Approval Action, Cab I shall not unreasonably withhold its approval or execution of any such documents. In the event that the CCC Approval Action is not Final and Non-Appealable by the date that is thirty (30) months after the submission to the California Coastal Commission of the CCC Application (provided that, upon written notice from SDG&E to the other Parties, SDG&E may extend such date by one year if SDG&E is continuing to use commercially reasonable efforts to obtain such CCC Approval Action (provided that SDG&E has timely submitted all materials requested by the California Coastal Commission for such CCC Approval Action and is not otherwise the primary cause of any delay in the receipt of such CCC Approval Action) or if SDG&E is litigating any matter related to such CCC Approval Action), then any Party may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, SMRH:4909-8942-1601.3
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notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties. The thirty (30) month period (as it may be extended hereunder) may be extended by mutual agreement of the Parties. Additionally, in the event that the Coastal Commission disapproves the CCC Approval Action, or requires mitigation measures, modifications, or other conditions to the proposed SDG&E Project that SDG&E, in its reasonable discretion, does not agree to accept or implement, SDG&E may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties.
Section 9.5 Amendment to the Local Coastal Program Land Use Plan As soon as reasonably possible but no later than six (6) months after the City certifies any required CEQA document for the SDG&E Project and approves the City Discretionary Approvals (provided, that if there is any administrative, procedural, judicial, or other challenge to any City Discretionary Approval, such period shall be extended to six (6) months after the City Discretionary Approvals become Final and Non-Appealable), and if the City Discretionary Approvals include any amendment to the City's existing certified local coastal program land use plan related to the SDG&E Project, then the City shall prepare and submit an amendment to the City's Local Coastal Program Land Use Plan and Map (the "CCC LCP Amendment") meeting all applicable requirements to the California Coastal Commission for review, approval, and certification of such CCC LCP Amendment. The City shall use all commercially reasonable efforts to cause the California Coastal Commission to expeditiously review, act upon, and approve the CCC LCP Amendment. In the event that the California Coastal Commission has not approved the CCC LCP Amendment in a decision that is Final and Non-Appealable by the date that is thirty (30) months after the submission to the California Coastal Commission of the CCC LCP Amendment, then any Party may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties. The thirty (30) month period may be extended by mutual agreement of the Parties. Additionally, in the event that the Coastal Commission disapproves the CCC LCP Amendment, or requires mitigation measures, modifications, or other conditions to the proposed SDG&E Project that SDG&E, in its reasonable discretion, does not agree to accept or implement, SDG&E may, by written notice to the other Parties, void the Voidable Obligations, thereby superseding the obligation to undertake the Closing; for avoidance of doubt, notwithstanding the invocation of the right to void the Voidable Obligations, this Agreement shall remain in place and binding upon the Parties.
Section 9.6 Demolition and Site Clearance of New City Property. Prior to the Second Closing, SDG&E agrees, at its sole expense, to obtain all necessary permits (including, if necessary, a Coastal Development Permit and a demolition permit) and demolish the structures known as the Hilda's building, including the underground utilities serving the Hilda's building to the public right of way, on the New City Property (other than the Cannon Park Land (other than the portion of the Cannon Park Land that is part of the Cannon Road Land or the SDG&E Carlsbad Boulevard Land)).
Section 9.7 Map Act Exemption. Each Party acknowledges and agrees, with respect to itself and not as to any other Party, that the requirements of the California Subdivision Map Act SMRH:4909-8942-1601.3
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(California Government Code section 66410 et seq.,), including the requirement for a parcel map, are not applicable to such Party and its transfer of any and all of its Acquired Assets pursuant to section 66428(a)(2) thereof, subject to, with respect to Cab I, a determination by the City Engineer under Carlsbad Municipal Code sections 20.24.150 and 20.48.040 and the City Engineer's issuance of a Certificate of Compliance. Nothing in this Agreement is intended to commit the City Engineer to a particular outcome for an action requiring discretionary approval or a public hearing, including delivery of a Certificate of Compliance.
Section 9.8 Books and Records; Post-Closing Access. Until the expiration of the applicable statute of limitations, except in connection with a claim for indemnification between the Parties pursuant to Article XI, each Transferee shall provide to the applicable Transferors reasonable access, during normal business hours and in such manner as to not unreasonably interfere with the normal operation of such Transferee's business, to the properties, books, Contracts, property tax bills and records (including work papers), concerning the affairs of the applicable Acquired Assets that were the subject of the Closing, or the Second Closing, as applicable, in each case, as such Transferor or its Representatives reasonably request to the extent reasonably required by such Transferor in connection with their accounting, tax, legal compliance or defense of claims or other similar needs. Notwithstanding the foregoing, in no event shall any Transferee have any obligation to provide to the applicable Transferor or its Representative any proprietary, privileged, confidential, or otherwise protected information relating to the applicable Acquired Assets. This Section 9.8 shall survive Closing.
Section 9.9 Risk of Loss. In the event that, after the Effective Date but prior to Closing, or Second Closing, as applicable any material portion of any Acquired Asset is or will be taken pursuant to eminent domain proceedings, the applicable Transferor shall notify the applicable Transferee of the same in writing within ten (10) Business Days after such Transferor's actual discovery of the same. If such condemnation constitutes a Material Adverse Effect on any Acquired Asset to be transferred at Closing, then such Transferee, at its option, may void the Voidable Obligations upon seven (7) Business Days' prior written notice to the other Parties in which event all Parties shall jointly instruct the Escrow Agent to return the Deposits to the Parties that provided such Deposits. If such condemnation constitutes a Material Adverse Effect and such Transferee does not exercise its option to void the Voidable Obligations, or if such condemnation involves an Acquired Asset to be transferred at the Second Closing or does not constitute a Material Adverse Effect, then such Transferee shall proceed with the Closing, or the Second Closing, as applicable, as set forth in this Agreement with no reduction in the Contribution or any other obligations, and such Transferor shall, upon the Closing, or the Second Closing, as applicable, pay any insurance deductible due under the condemnation insurance policy for such Acquired Asset and shall promptly thereafter assign to such Transferee (without recourse to Transferor) any condemnation insurance coverage proceeds payable under the insurance policies for such Acquired Asset, as well as all condemnation award proceeds except to the extent such insurance proceeds or condemnation award are attributable to any items of loss (including, without limitation, loss of business income) applicable to any period prior . to the Closing, or the Second Closing, as applicable. Additionally, such Transferee shall have the right to participate in the negotiations and consent to any settlement of any condemnation claim, and such Transferor shall not accept any settlement or condemnation offer until such Transferee has provided its prior written consent to the same, which consent shall not be unreasonably withheld. If the Improvements on any Acquired Asset are damaged or destroyed by any casualty, no Party shall have any right to void the Voidable SMRH:490'J-8942-1601.3
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Obligations or to obtain any other remedies hereunder and each Party shall proceed to Closing, or the Second Closing, as applicable, pursuant to the terms of this Agreement. This Section 9.9 shall survive Closing.
Section 9.10 Notice of Certain Events. Prior to the Closing, or the Second Closing, as applicable, each Party (in the context set forth in this Section 9.10, the "Notifying Party") shall promptly notify the other Parties of: (a) any written notice or other communication from any Governmental Authority to the Notifying Party in connection with the transactions contemplated by this Agreement; (b) any Legal Proceedings commenced or, to the Notifying Party's Knowledge, threatened against, relating to, involving or otherwise affecting the consummation of the transactions contemplated by this Agreement; (c) the actual discovery by the Notifying Party of any inaccuracy in or breach of any representation, warranty or covenant of such Notifying Party in this Agreement; or (d) the actual discovery by the Notifying Party of any event, condition, fact or circumstance that would make the timely satisfaction of any of the conditions to such Notifying Party's obligation to proceed to the Closing, or the Second Closing, as applicable, as set forth in Article X, impossible or unlikely.
Section 9.11 Publicity. Each Party (other than the City), shall not, and each Party (other than the City) shall use its Reasonable Efforts to cause its respective Representatives not to, issue any press release, public announcement or other disclosure concerning this Agreement, the Transaction Documents, the terms hereof or thereof and/or the transactions contemplated hereby or thereby without obtaining the prior written approval of the other Parties, which approval will not be unreasonably withheld, conditioned or delayed, unless, in the reasonable judgment of any such Party disclosure is otherwise required by Law; provided that, to the extent required by Law, the Party intending to make such release, public announcement or disclosure shall use its Reasonable Efforts consistent with Law to consult with the other Parties with respect to the text thereof prior to the issuance of such release, public announcement or disclosure. Notwithstanding anything set forth in this Section 9.11 to the contrary, a Party shall have the right to make a public announcement regarding the transaction described in this Agreement upon the Closing or Second Closing, as applicable, provided that each Party shall approve the form and substance of any such public announcement, which shall not be unreasonably withheld, conditioned or delayed. This Section 9.11 shall survive the Closing.
Section 9.12 Confidentiality. Each Party (in the context set forth in this Section 9.12, the "Receiving Party") shall not, and shall use Reasonable Efforts to cause its respective Affiliates and Representatives not to, for a period of one (1) year after the earlier of the Closing and the voiding of the Voidable Obligations, directly or indirectly, without the prior written consent of the other Parties (in the context set forth in this Section 9.12, the "Disclosing Party"), disclose to any third party (other than such Receiving Party's Representatives) any confidential or proprietary information of the Disclosing Party made available to the Receiving Party pursuant to the provisions of, or in connection with the negotiation of, this Agreement or the Transaction Documents; provided that the foregoing restrictions shall not (1) apply to any information (A) generally available to, or known by, the public (other than as a result of disclosure in violation of this Section 9.12). (B) independently developed by the Receiving Party or any of its Affiliates or Representatives without reference to or use of any such information disclosed by the Disclosing Party or (C) in the case of any Transferee as the Receiving Party, any information relating to any Acquired Asset that is obtained by such Transferee by virtue of the purchase and sale thereof or SMRH :490'J-8942-1601.3
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(2) prohibit any disclosure (A) required by Law, including the California Public Records Act, so long as, to the extent permissible under Law and commercially reasonable, the Receiving Party provides the Disclosing Party with prior written notice of such disclosure, and allows the Disclosing Party the opportunity, at its sole cost and expense, to contest, prosecute or defend any action concerning such disclosure and indemnify, defend, and hold the Receiving Party harmless from all costs and expenses, including attorneys' fees, in connection with such action, or (B) made in connection with the enforcement of any right or remedy relating to this Agreement or the transactions contemplated hereby. Notwithstanding anything to the contrary set forth in this Section 9.12, the Receiving Party and its Representatives shall be deemed to have satisfied their obligations hereunder with respect to confidential or proprietary information of the Disclosing Party if they exercise the same degree of care (but no less than a reasonable degree of care) as they take to preserve confidentiality for their own similar information. This Section 9.12 shall survive the Closing.
Section 9.13 Permits. Each Transferee shall be responsible, at its sole cost and expense, for obtaining the transfer of all Permits (to the extent transferable) or the issuance of new licenses and permits. Each Transferee, at its sole cost and expense, shall submit all necessary applications and other materials to the appropriate Governmental Authority and take such other actions to effect the transfer of Permits or issuance of new licenses and permits as of the Closing, and such Transferor shall use Reasonable Efforts (at no cost or expense to such Transferor other than any de minimis cost or expense) to cooperate with such Transferee to cause the Permits to be transferred or new licenses and permits to be issued to such Transferee. Notwithstanding anything to the contrary in this Section 9.13, such Transferee shall not communicate, file any application or otherwise commence any procedure or proceeding with any Governmental Authority for the transfer of any Permits or issuance of new licenses and permits or publish any notice required for the transfer of the Permits or issuance of new licenses and permits as aforesaid without the prior written consent of the Transferor, which consent shall not be unreasonably withheld. If the Voidable Obligations are voided in accordance with this Agreement and such Transferee has filed an application or otherwise commenced the processing of obtaining new licenses and permits, such Transferee shall withdraw all such applications and cease all other activities with respect to such new licenses and permits.
Section 9.14 Contracts; Further Assurances.
(a) Each Transferor shall remain liable for any Contracts entered into prior to the Closing Date, or the Second Closing Date, as applicable, and shall terminate, or cause to be terminated with respect to the Acquired Assets, all Contracts on or prior to the Closing Date, or the Second Closing Date, as applicable.
(b) Subject to, and not in limitation of the obligations in this Section 9.14(b), each Transferor and each Transferee shall use their respective Reasonable Efforts to (i) take all actions necessary or appropriate to consummate the transactions contemplated by this Agreement (including by executing and delivering to each other such other documents, agreements or instruments of transfer as are reasonably necessary therefor) and (ii) cause the fulfillment at the earliest practicable date of all of the conditions to their respective obligations to consummate the transactions contemplated by this Agreement.
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Section 9.15 City Cooperation. The City shall reasonably cooperate (i) in connection with the Permits related to the SDG&E Project, and (ii) in connection with the construction and completion of the SDG&E Project, in each of the foregoing cases, in accordance with the terms required by any Governmental Authority or quasi-Governmental Authority having jurisdiction over the property for which such Permit is sought and/or the Required Governmental Approvals.
Nothing in this Section 9.15 is intended to commit the City or a city official with discretionary approval authority to a particular outcome for an action requiring discretionary approval or a public hearing.
Section 9.16 Switchyard Covenant. SDG&E agrees that it will not expand the footprint of the switchyard currently located on the Switchyard Land beyond the perimeter of the Switchyard Land and will not undertake Switchyard Activities on the New SDG&E Land or the Service Center Land.
Section 9.17 Employee Matters. No Party shall take any action ( or knowingly permit any action to be taken) which would trigger the application of the WARN Act. Each Transferee shall employ a sufficient number of employees on sufficient terms and conditions to avoid applicability of the WARN Act to the transactions contemplated by this Agreement. Each Transferee shall defend, indemnify and hold harmless the Transferor Indemnified Parties from and against any Losses incurred by any such Transferor Indemnified Party arising out of or relating to the applicable Transferee's failure to comply with the WARN Act in connection with the transactions contemplated by this Agreement, except in the case of the illegal act, fraud, gross negligence or willful misconduct of any Transferor Indemnified Party.
Section 9.18 Encina Redevelopment Land Project and Coastal Rail Trail. The Parties recognize that Cab I and a development partner (the "Cab I Parties") intend in the future to redevelop the Encina Redevelopment Land, other than the New SDG&E Land, with a new mixed use, master-planned hospitality, retail, commercial, and open space development (the "Encina Project") that the Cab I Parties anticipate they will require discretionary approvals from the City and CEQA compliance. The City hereby agrees to review and in good faith expeditiously process the Cab I Parties' future application for the Encina Project, inclusive of its required compliance with CEQA, in accordance with all applicable Laws. The Parties acknowledge and agree that (i) this Agreement is not intended and shall not be construed as a grant of any discretionary approvals related to the Encina Project, (ii) the Encina Project constitutes a future project that is presently only conceptual in nature, and remains expressly subject to the preparation, review and approval of a specific development plan, an entitlements application, and appropriate environmental review as may be required by CEQA, (c) the City retains full discretion to independently determine compliance with any CEQA requirements the City deems applicable with respect to the Encina Project when proposed, and (d) the City, pursuant to CEQA, has the absolute discretion to impose mitigation measures, require modifications to, consider alternatives to as part of the CEQA process, and to ultimately approve or disapprove any City discretionary approvals related to the Encina Project or any proposed or required alternatives thereto. Nothing contained herein is intended or shall be construed as grant of any discretionary approvals related to any such potential future improvements or expansions or result in or constitute any commitment, vested rights, entitlements, development approvals or permits with respect to the Encina Project. Consistent with such principles of cooperation with respect to the Encina Project, the City and Cab I further agree and acknowledge (and SDG&E agrees and acknowledges with respect to clause (c)) that:
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(a) The City and Cab I have a mutual interest in the productive reuse of the Encina Redevelopment Land, other than the New SDG&E Land, and that the City staff and Cab I will work in good faith to consider the potential redevelopment of the Encina Redevelopment Land, other than the New SDG&E Land, in any General Plan updates undertaken by the City, subject to the City's ultimate policy discretion.
(b) If the City takes fee title to land previously owned by SDG&E adjacent to the Encina Redevelopment Land or concurrently develops public facilities in the vicinity of the Encina Project, the City and Cab I hereby agree to work cooperatively in good faith to consider a joint development strategy pertaining to such land comprising basic principles to be identified in a subsequent binding agreement and to ensure their respective developments are carried out so as to avoid conflicts during construction and operations, ensure effective communication and collaboration, and promote cohesive, complementary design and operations. ( c) SDG&E and Cab I shall each use commercially reasonable efforts to work with the City to determine an appropriate alignment for the Coastal Rail Trail; provided, however, that failure to reach agreement on the alignment for the Coastal Rail Trail shall not impact performance of other obligations established in this Agreement. The Parties acknowledge and agree that (i) this Agreement is not intended and shall not be construed as a grant of any discretionary approvals related to the Coastal Rail Trail, (ii) the Coastal Rail Trail constitutes a future project that is presently only conceptual in nature, and remains expressly subject to the preparation, review and approval of a specific development plan, an entitlements application, and appropriate environmental review as may be required by CEQA, ( c) the City retains full discretion to independently determine compliance with any CEQA requirements the City deems applicable with respect to the Coastal Rail Trail when proposed, and ( d) the City, pursuant to CEQA, has the absolute discretion to impose mitigation measures, require modifications to, consider alternatives to as part of the CEQA process, and to ultimately approve or disapprove any City discretionary approvals related to the Coastal Rail Trail or any proposed or required alternatives thereto. Nothing contained herein is intended or shall be construed as grant of any discretionary approvals related to any such potential future improvements or expansions or result in or constitute any commitment, vested rights, entitlements, development approvals or permits with respect to the Coastal Rail Trail.
Section 9.19 Fossil Fuel Deed Restriction. The Parties affirm the existence of a restrictive covenant in the form of a fossil fuel deed restriction that limits the development of fossil fuel electric generation on land owned by Cab I in the City of Carlsbad, including the Encina Redevelopment Land, that was created and recorded pursuant to the Original Settlement Agreement ("Fossil Fuel Deed Restriction"). This Agreement does not supersede the Fossil Fuel Deed Restriction, and the Fossil Fuel Deed Restriction shall continue to run with the land to which it applies notwithstanding the termination of the Original Settlement Agreement.
Section 9.20 Assessor Parcel Numbers. The Parties agree that, for any document to be entered into after the Effective Date in a form attached as an exhibit hereto, notwithstanding the assessor parcel numbers set forth on such exhibit, to the extent such assessor parcel numbers are changed by the relevant Governmental Authority, the Parties agree to include the correct assessor parcel numbers on such document on the date of its execution which relate to the legal descriptions included on such document.
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Section 9.21 Conditional Covenants. In the event the Voidable Obligations are voided in accordance with the terms of this Agreement, in which case neither the Closing nor the Second Closing will occur, the following conditional covenants shall be owed in lieu of the Voidable Obligations.
(a) Cab I Conditional Payment to the City. Cab I shall pay to the City the amount of ten million dollars ($10,000,000). Such payment shall occur within thirty (30) days of Cab I's receipt of a notice from the City demanding such payment, provided that such notice from the City may occur only after the Voidable Obligations become void. For avoidance of doubt, this conditional payment by Cab I to the City is mutually exclusive with Cab I's covenant to pay SDG&E twenty million dollars ($20,000,000) pursuant to Section 4.2(a) of this Agreement; as long as Cab I has an obligation to SDG&E under Section 4.2(a) of this Agreement, Cab I will not have an obligation to make the conditional payment to the City. Cab I's payment to SDG&E of the amount specified in Section 4.2(a) shall supercede and nullify any obligation of Cab I to make payment to the City under this subsection.
(b) Within one hundred eighty (180) days following any notice of invocation of the right to void the Voidable Obligations, Cab I shall Convey to the City an Irrevocable Offer of Dedication for a fee simple interest in the Inner Lagoon Property, the Middle Lagoon Property and the Bluff Land and shall Convey to the City the Cab I Carlsbad Boulevard Land as provided for in Section 6.4.
ARTICLEX
CONDITIONS TO OBLIGATIONS
Section 10.1 Conditions to Obligations of SDG&E. The obligations of SDG&E to cause the Closing to occur are subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by SDG&E:
(a) (i) each of the Fundamental Representations made by the City and Cab I shall be true and correct at and as of the Effective Date and at and as of the Closing Date as if made at and as of the Closing Date ( other than such representations and warranties that expressly address matters only as of another specified date, which need only be true and correct as of such date) and (ii) each of the other representations and warranties of the City and Cab I in this Agreement, without giving effect to materiality or other similar qualifications, shall be true and correct in all material respects at and as of the Effective Date and at and as of the Closing Date, as if made at and as of the Closing Date {other than such representations and warranties that expressly address matters only as of another specified date, which need only be true and correct as of such date); (b) the City and Cab I shall have performed and complied in all material respects with the covenants and agreements required by this Agreement to be performed or complied with by the City and Cab I on or before the Closing Date; (c) the City and Cab I shall have delivered or caused to be delivered to the Escrow Agent their respective items and documents as set forth in Section 4.6(b) and Section
4.6(c):
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(d) the City and Cab I have delivered or caused to be delivered to the Title Company the documents required by the Title Company to satisfy the requirements from such Persons in the Title Reports, and the Title Company shall be prepared to issue a title policy to SDG&E in accordance with the Title Proforma, subject to receipt of any insurance premium; (e) there shall not be in force any Law restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement or the Transaction Documents; (f) the Escrow Agent shall have recorded the Cannon Road Access Easement Agreement before recording the Deeds or, as applicable, interests in real property, with respect to the New City Property, the Hub Park Easement Interest, the North Shore Property, the Inner Lagoon Property, the Middle Lagoon Property, the SDG&E Carlsbad Boulevard Land, the Cab I Carlsbad Boulevard Land, the Cannon Road Land and the Bluff Land; and (g) (i) the Required Governmental Approvals have been obtained and are Final and Non-Appealable, and (ii) with respect to the CPUC Approval, no petition for modification of such approval is pending before the CPUC or threatened by any Party to this Agreement or other third-party.
Section 10.2 Conditions to the Obligations of Cab I. The obligations of Cab I to cause the Closing to occur are subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by Cab I:
(a) (i) each of the Fundamental Representations of SDG&E and the City shall be true and correct at and as of the Effective Date and at and as of the Closing Date as if made at and as of the Closing Date ( other than such representations and warranties that expressly address matters only as of another specified date, which need only be true and correct as of such date) and (ii) each of the other representations and warranties of SDG&E and the City in this Agreement, without giving effect to materiality or other similar qualifications, shall be true and correct in all material respects at and as of the Effective Date and at and as of the Closing Date, as if made at and as of the Closing Date ( other than such representations and warranties that expressly address matters only as of another specified date, which need only be true and correct as of such date); (b) SDG&E and the City shall have performed and complied in all material respects with the covenants and agreements required by this Agreement to be performed or complied with by the City and SDG&E on or before the Closing Date; (c) SDG&E and the City shall ~ave delivered to the Escrow Agent their respective items and documents as set forth in Section 4.6(a) and Section 4.6(c):
(d) SDG&E and the City have delivered to the Title Company the documents required by the Title Company to satisfy the requirements from such Persons in the Title Reports, and the Title Company shall be prepared to issue a title policy to Cab I in accordance with the Title Proforma, subject to receipt of any insurance premium;
(e) there shall not be in force any Law restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement or the Transaction Documents; SMRH:4909-8942-1601.3
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(f) a Certificate of Compliance for the Residual Cab I Land and the New SDG&E Land shall be available for recording immediately following the recordation of the Deeds with respect to each Acquired Asset to be transferred by the Parties at the Closing; (g) the Escrow Agent shall have recorded the Cannon Road Access Easement Agreement before recording the Deeds or, as applicable, any other interests in real property, with respect to the New City Property, the Hub Park Easement Interest, the North Shore Property, the Inner Lagoon Property, the Middle Lagoon Property, the SDG&E Carlsbad Boulevard Land, the Cab I Carlsbad Boulevard Land, the Cannon Road Land and the Bluff Land; and (h) (i) the Required Governmental Approvals have been obtained and are Final and Non-Appealable, and (ii) with respect to the CPUC Approval, no petition for modification of such approval is pending before the CPUC or threatened by any Party to this Agreement or other third-party.
Section 10.3 Conditions to the Obligations of the City. The obligations of the City to cause the Closing to occur or, with respect to the Acquired Assets transferred on the Second Closing, the Second Closing to occur, in each case, are subject to the satisfaction of the following conditions, any one or more of which may be waived in writing by the City:
(a) (i) each of the Fundamental Representations of SDG&E and Cab I shall be true and correct at and as of the Effective Date and at and as of the Closing Date (or, with respect to the Acquired Assets transferred on the Second Closing Date, as of the Second Closing Date) as if made at and as of the Closing Date or Second Closing Date, as applicable ( other than such representations and warranties that expressly address matters only as of another specified date, which need only be true and correct as of such date) and (ii) each of the other representations and warranties of SDG&E and Cab I in this Agreement, without giving effect to materiality or other similar qualifications, shall be true and correct in all material respects at and as of the Effective Date and at and as of the Closing Date (or, with respect to the Acquired Assets transferred on the Second Closing Date, as of the Second Closing Date), as if made at and as of the Closing Date or Second Closing Date, as applicable (other than such representations and warranties that expressly address matters only as of another specified date, which need only be true and correct as of such date);
(b) SDG&E and Cab I shall have performed ( or caused to be performed) and complied ( or caused to be complied) in all material respects with the covenants and agreements required by this Agreement to be performed or complied with by SDG&E and Cab I and its Affiliates on or before the Closing Date or Second Closing Date, as applicable; (c) SDG&E and Cab I shall have delivered (or caused to be delivered) to the Escrow Agent their respective items and documents as set forth in Section 4.6(a) and Section
4.6(b):
(d) SDG&E and Cab I have delivered (or caused to be delivered) to the Title Company the documents required by the Title Company to satisfy the requirements from such Persons in the Title Reports, and the Title Company shall be prepared to issue a title policy to the City in accordance with the Title Proforma, subject to receipt of any insurance premium; SMRH:4909-8942-1601.3
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( e) there shall not be in force any Law restraining, enjoining or prohibiting the consummation of the transactions contemplated by this Agreement or the Transaction Documents; and
(f) a Certificate of Compliance for the New City Land shall be available for recording immediately following the recordation of the Deed or Irrevocable Off er of Dedication, as applicable, with respect to each Acquired Asset to be transferred by SDG&E at the Closing or Second Closing, ~s applicable.
Section 10.4 Frustration of Closing Conditions. No Party may rely on the failure of the conditions in this Article X if such failure was caused by such Party's failure to act in good faith or to use its Reasonable Efforts to cause the Closing or Second Closing to occur.
ARTICLE XI
INDEMNIFICATION
Section 11.1 Survival. All representations and warranties of the Parties in this Agreement, to the extent they relate to the transactions being consummated or the Acquired Assets being transferred at the Closing, or Second Closing, as applicable, shall survive such Closing, or Second Closing, as applicable, until twelve (12) months after the Closing, or the Second Closing.
All of the Surviving Covenants shall survive the Closing until fully performed or fulfilled, unless and to the extent only that non-compliance with any such Surviving Covenant is waived in writing by the Party entitled to such performance. Except for the Surviving Covenants, the covenants and agreements of the Parties contained herein shall not survive the Closing, or the Second Closing for the Acquired Assets being transferred at the Second Closing, as applicable, and the Parties shall have no further obligations with respect thereto from and after the Closing or the Second Closing, as applicable. No Party shall have any liability for indemnification claims made under this Article XI with respect to any representation, warranty, covenant or agreement contained herein unless a Claim Notice is provided by the non-breaching Party to the breaching Party prior to the expiration of the applicable survival period for such representation, warranty, covenant or agreement, as the case may be. The Parties acknowledge and agree that with respect to any claim that any Party may have against any other Party that is permitted pursuant to the terms of this Agreement, the survival periods set forth and agreed to in this Section 11.1 shall govern when any such claim may be brought and shall replace and supersede any statute of limitations or accrual thereunder that may otherwise be applicable. If a Claim Notice has been timely given in accordance with this Agreement prior to the expiration of the applicable survival period for such representation, warranty, covenant or agreement, then the applicable representation, warranty, covenant or agreement shall survive as to such claim, until such claim has been finally resolved. This Section
11.1 shall survive the Closing.
Section 11.2 Indemnification.
(a) Subject to the provisions of this Article XI, from and after the Closing, or the Second Closing for Acquired Assets being transferred at the Second Closing, as applicable, each Transferor shall indemnify, defend, protect and hold harmless each Transferee that acquires an Acquired Asset from such Transferor and its Affiliates, and its and their respective direct or indirect equity holders, elected or appointed officials, officers, directors, managers and employees SMRH:4909-8942-1601.3
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(the "Transferee Indemnified Parties") from and against all Losses that such Transferee Indemnified Parties incur to the extent arising from or out of (i) any breach of any representation or warranty of such Transferor in this Agreement, (ii) any breach by any such Transferor of any Surviving Covenant in this Agreement, (iii) any Excluded Liability retained by any such Transferor hereunder, (iv) the failure of such Transferor to pay any Taxes that are the responsibility of such Transferor under this Agreement, or (v) the failure of such Transferor to pay any True-Up Amount owed by such Transferor under Section 4.7(b) hereof. (b) Subject to the provisions of this Article XI, from and after the Closing, or the Second Closing for Acquired Assets being transferred at the Second Closing, as applicable, each Transferee shall indemnify, defend, protect and hold harmless each Transferor that transferred an Acquired Asset to a Transferee and its Affiliates, and its and their respective direct or indirect equity holders of Transferor and its Affiliates and any of their subsidiaries, parents or affiliates, and any officers, directors, affiliates, principals, partners, shareholders, representatives, managers, employees of Transferor and its Affiliates (collectively, the "Transferor Indemnified Parties") from and against all Losses that such Transferor Indemnified Parties incur to the extent arising from or out of (i) any breach of any representation or warranty of such Transferee in this Agreement, (ii) any breach of any Surviving Covenant of such Transferee in this Agreement, (iii) any Assumed Liability of such Transferee hereunder, (iv) the failure of such Transferee to pay any Taxes that are the responsibility of such Transferee under this Agreement, and (v) the failure of such Transferee to pay any True-Up Amount owed by such Transferee under Section 4.7(b) hereof. ( c) Notwithstanding anything to the contrary herein, the Parties shall have a duty to use Reasonable Efforts to mitigate any Loss arising out of or relating to this Agreement or the transactions contemplated hereby.
( d) This Section 11.2 shall survive the Closing.
Section 11.3 Indemnification Procedures. Claims for indemnification under this Agreement shall be asserted and resolved as follows:
(a) Any Transferor Indemnified Party or Transferee Indemnified Party claiming indemnification under this Agreement (an "Indemnified Party") with respect to any claim asserted against the Indemnified Party by a third party ("Third Party Claim") in respect of any matter that is subject to indemnification under Section 11.2 shall promptly (i) notify the Party obligated to so indemnify (the "Indemnifying Party") of the Third Party Claim and (ii) transmit to the Indemnifying Party a written notice (a "Claim Notice") describing in reasonable detail the nature of the Third Party Claim, the amount of the claim or a reasonably detailed estimate thereof, a copy of all documents related to such claim (if any) and the basis of the Indemnified Party's request for indemnification under this Agreement. Subject to Section 11.1, failure to timely provide such Claim Notice shall not affect the right of the Indemnified Party to indemnification hereunder, except to the extent (and only to the extent) that the Indemnifying Party demonstrates such failure shall have caused the Losses (in whole or in part) for which the Indemnifying Party is obligated to be greater than such Losses would have been had the Indemnified Party given the Indemnifying Party timely notice.
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(b) The Indemnifying Party shall have the right to defend the Indemnified Party against such Third Party Claim. If the Indemnifying Party notifies the Indemnified Party that the Indemnifying Party elects to assume the defense of the Third Party Claim, then the Indemnifying Party shall have the right to defend such Third Party Claim, with counsel selected by the Indemnifying Party (which counsel shall be subject to the approval of the Indemnified Party, such approval not to be unreasonably withheld, conditioned or delayed), by all appropriate proceedings, to a final conclusion or settlement at the discretion of the Indemnifying Party in accordance with this Section 11.3(b). The Indemnifying Party shall have full control of such defense and proceedings, including any compromise or settlement thereof; provided, however, that the Indemnifying Party shall not enter into any compromise or settlement of any Third Party Claim without the written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed). Notwithstanding the foregoing, such consent shall not be required if (i) the settlement agreement contains a complete and unconditional general release by the third party asserting the claim of all Indemnified Parties affected by the claim and (ii) the settlement agreement does not contain any sanction or restriction upon the conduct of any business by the Indemnified Party or its Affiliates or any admission of guilt or culpability on any of their behalves. The Indemnified Party may participate in, but not control, any defense or settlement of any Third Party Claim controlled by the Indemnifying Party pursuant to this Section 11.3(b). and the Indemnified Party shall bear its own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party shall have the right to control the defense of any Third Party Claim if the Third Party Claim alleges criminal charges against the Indemnified Party.
( c) If the Indemnifying Party does not notify the Indemnified Party that the Indemnifying Party elects to defend the Indemnified Party pursuant to Section 11.3(b) or the Indemnifying Party does not otherwise have the right to defend such claim pursuant to Section
11.3(b). then the Indemnified Party shall have the right to defend, and be reimbursed for its reasonable cost and expense (but only if the Indemnified Party is actually entitled to indemnification hereunder) in regard to the Third Party Claim with counsel selected by the Indemnified Party (which counsel shall be subject to the approval of the Indemnifying Party, such approval not to be unreasonably withheld, conditioned or delayed), by all appropriate proceedings, which proceedings shall be prosecuted diligently by the Indemnified Party. In such circumstances, the Indemnified Party shall defend any such Third Party Claim in good faith and have full control of such defense and proceedings; provided, however, that the Indemnified Party may not enter into any compromise or settlement of such Third Party Claim if indemnification is to be sought hereunder without the Indemnifying Party's consent (which consent shall not be unreasonably withheld, conditioned or delayed). The Indemnifying Party may participate in, but not control, any defense or settlement controlled by the Indemnified Party pursuant to this Section l 1.3(c). and the Indemnifying Party shall bear its own costs and expenses with respect to such participation. ( d) If requested by the Indemnifying Party, the Indemnified Party agrees, at the sole cost and expense of the Indemnifying Party (but only if the Indemnified Party is actually entitled to indemnification hereunder), to fully cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim that the Indemnifying Party elects to contest, including providing reasonable access to documents, records and information. In addition, the Indemnified Party will make its personnel reasonably available at no cost to the Indemnifying Party for conferences, discovery, proceedings, hearings, trials or appeals as may be reasonably required by SMRH:4909-8942-1601.3
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the Indemnifying Party. The Indemnified Party also shall cooperate, at no cost to the Indemnified Party, with the Indemnifying Party and its counsel in the making of any related counterclaim against the Person asserting the Third Party Claim or any cross complaint against any Person and executing powers of attorney to the extent necessary.
( e) Subject to the other provisions of this Article XI, a claim for indemnification for any matter not involving a Third Party Claim may be asserted by notice to the party from whom indemnification is sought (such notice describing in reasonable detail the nature of the claim, the amount of the claim or a reasonably detailed estimate thereof, a copy of all documents served with respect to such claim (if any) and the basis of the Indemnified Party's request for indemnification under this Agreement). Subject to Section 11.1, failure to timely provide such notice shall not affect the right of the Indemnified Party to indemnification hereunder except to the extent ( and only to the extent) that the Indemnifying Party demonstrates such failure shall have caused the Losses (in whole or in part) for which the Indemnifying Party is obligated to be greater than such Losses would have been had the Indemnified Party given the Indemnifying Party timely notice.
Section 11.4 Limitations on liability of Transferors. Notwithstanding anything to the contrary herein:
(a) No Transferor shall have any liability arising out of or relating to Section
11.2(a)(i) (except for any breach of the Fundamental Representations), except if the aggregate Losses actually incurred by Transferee Indemnified Parties as a result of such Transferor and its Affiliates exceeds Two Hundred Fifty Thousand Dollars ($250,000.00) in the aggregate (the "Deductible"), and then only to the extent such aggregate Losses exceed such amount; provided, however, that the Deductible shall not apply to any single item that results in Losses (without regard to the Deductible, and the payment of which shall not be counted towards the Deductible) that Transferee Indemnified Parties actually incurred to the extent arising from or out of the breach of any Fundamental Representation;
(b) in no event shall any Transferor's aggregate liability arising out of or relating to Section l 1.2(a)(i) exceed Two Million Dollars ($2,000,000.00) (the "Cap"); provided, however, that the Cap shall not apply to any single item, or group of related items, that results in Losses (the payment of which shall not be counted towards the Cap) that Transferee Indemnified Parties actually incurred to the extent arising from or out of the breach of any Fundamental Representation, or as a result of such Transferor's obligations for proration under Section 4.7(b):
(c) in no event shall any Transferor be liable under Section l l.2(a) to any Transferee for any Losses arising from an action taken or not taken by such Transferor at the written request of or with the written consent of such Transferee; (d) the amount of any Loss for which a Transferee Indemnified Party claims indemnification under this Agreement shall be reduced by: (i) any insurance proceeds actually received by such Transferee Indemnified Party with respect to such Loss; and (ii) indemnification or reimbursement payments actually received by such Transferee Indemnified Party from third parties with respect to such Loss;
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( e) if an Indemnified Party shall recover Losses in respect of a claim of indemnification under this Article XI, no other Indemnified Party shall be entitled to recover the same Losses in respect of a claim for indemnification;
(f) if the Indemnified Party receives any payment from an Indemnifying Party in respect of any Losses pursuant to Section 11.2 and the Indemnifying Party could have recovered all or a part of such Losses from a third party, including any provider of insurance (a "Potential Contributor") based on the underlying claim asserted against the Indemnifying Party, the Indemnified Party shall assign such of its rights to proceed against the Potential Contributor as are necessary to permit the Indemnifying Party to recover from the Potential Contributor the amount of such payment;
(g) No Transferor shall be liable in respect Many claim for indemnification under Section 11.2 if and to the extent that any applicable Transferee or any of its Representatives has knowledge or is deemed to have knowledge of a fact, matter, event or circumstance which would be the subject to the claim prior to the Closing, unless (i) such Transferee has promptly provided such Transferor notice of such information which would result in a breach by such Transferor of any express representation and warranty or covenant set forth in this Agreement, (ii) such Transferor has not remedied or cured the fact, matter, event or circumstances which would be subject to the claims, and (iii) the breach as a result of such fact, matter, event or circumstances would not have a Material Adverse Effect, then such Transferee can bring a post-Closing claim under Section 11.2 against such Transferor subject to the limitations set forth in this Section 11.4; and
(h) This Section 11.4 shall survive the Closing.
Section 11.5 Waiver of Other Representations.
(a) Each Transferee is an informed and sophisticated Person, who is familiar with the ownership and operation of, and has engaged expert advisors, experienced in the evaluation and ownership of, real property such as the Acquired Assets as contemplated hereunder. Each Transferee has had adequate opportunity to undertake, and has undertaken, such investigation and has been provided with access to and has evaluated such documents and information as it has deemed necessary to (i) enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement and the other Transaction Documents and (ii) evaluate the Acquired Assets and any of their respective prospects or condition (financial or otherwise), including the evaluation of the items set forth in Section l 1.5(b){i)(A). Each Transferee shall accept the Acquired Assets in the condition they are in on the Closing Date or Second Closing Date, as applicable, based upon such Transferee's own inspection, examination and determination with respect thereto as to all matters, and without reliance upon any express or implied representations or warranties of any nature, other than those expressly made by the Transferors herein, or made by or on behalf of or imputed to any Transferor. (b) Except for the specific representations and warranties expressly made by the Transferors in this Agreement: (i) each Transferee acknowledges and agrees that (A) no Transferor of any Acquired Asset to such Transferee or any of its Representatives is making or has made any representation or warranty, expressed or implied, at law or in equity, in respect of the SMRH:4909-8942-1601.3
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Acquired Assets or any of their respective prospects or condition (financial or otherwise), including with respect to (1) the quality, nature, habitability, merchantability, use, operation, value, marketability, adequacy or physical condition of any Acquired Asset or any aspect or portion thereof, including structural elements, foundation, roof, appurtenances, access, landscaping, parking facilities, electrical, mechanical, HV AC, plumbing, sewage, water and utility systems, facilities and appliances, soils, geology and groundwater, (2) the dimensions or lot size of any Acquired Asset or the square footage of any of the improvements thereon or of any space therein, (3) the condition of title to any Acquired Asset, (4) the development or income potential, or rights of or relating to, any Acquired Asset or the fitness, suitability, value or adequacy of any Acquired Asset for any particular purpose, (5) the zoning or other legal status of any Acquired Asset, (6) the compliance of any Acquired Asset or its operation with any applicable Laws, covenants, conditions and restrictions of any Governmental Authority or of any other Person (including the Americans with Disabilities Act of 1990, as amended), (7) the ability of such Transferee or any of its Affiliates to obtain any necessary Permits for the use or development of any Acquired Asset, (8) the presence, absence, condition or compliance of any Hazardous Materials on, in, under, above or about any Acquired Asset or any adjoining or neighboring property, (9) the quality of any labor and materials used in any improvements at, or otherwise relating in any manner to, any Acquired Asset, ( 10) the economics of, or the income and expenses, revenue or expense projections or other financial matters relating to the operation of, any Acquired Asset, or (11) the accuracy or completeness of any documents, projections, estimates, material or other information (financial or otherwise) regarding the Acquired Assets provided to such Transferee or its Representatives or otherwise made available to such Transferee and its Representatives in any "data rooms," "virtual data rooms," presentations or in any other form in expectation of, or in connection with, the transactions contemplated by this Agreement or the Transaction Documents, or in respect of any other matter or thing whatsoever (collectively, "Due Diligence Materials"), and (B) other than such Transferor, no Representative of such Transferor has any authority, express or implied, to make any representations, warranties or agreements not specifically set forth in this Agreement and subject to the limited remedies provided in this Agreement; (ii) such Transferee specifically disclaims that it is relying upon or has relied upon any such other representations or warranties that may have been made by any Person, and acknowledges and agrees that such Transferor has specifically disclaimed and does hereby specifically disclaim any such other representation or warranty made by any Person; (iii) such Transferee specifically disclaims any obligation or duty by such Transferor or any Person to make any disclosures of fact other than facts required to be disclosed pursuant to the specific representations and warranties set forth in this Agreement, and (iv) such Transferee is acquiring the Acquired Assets subject only to the specific representations and warranties of such Transferor set forth in this Agreement as further limited by the specifically bargained-for exclusive remedies as set forth in this Agreement. (c) EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, EACH
TRANSFEROR HAS NOT, DOES NOT AND WILL NOT MAKE ANY REPRESENTATIONS
OR WARRANTIES WITH REGARD TO COMPLIANCE WITH ANY ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR
REQUIREMENTS, INCLUDING THOSE PERTAINING TO THE HANDLING,
GENERATING, TREATING, STORING OR DISPOSING OF ANY HAZARDOUS MATERIALS. AS OF THE CLOSING DA TE OR SECOND CLOSING DA TE, AS
APPLICABLE, EACH TRANSFEREE RELEASES EACH TRANSFEROR FROM ANY AND
ALL CLAIMS SUCH TRANSFEREE MAY HA VE AGAINST SUCH TRANSFEROR OF SMRH:4909-8942-1601.3
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WHATEVER KIND OR NATURE RESULTING FROM OR IN ANY WAY CONNECTED
WITH THE ENVIRONMENT AL CONDITION OF THE ACQUIRED ASSETS, INCLUDING
ANY AND ALL CLAIMS SUCH TRANSFEREE MAY HA VE AGAINST SUCH
TRANSFEROR UNDER THE COMPREHENSIVE ENVIRONMENT AL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980, AS AMENDED (CERCLA), OR ANY
OTHER LAW PERTAINING TO THE RELEASE OF HAZARDOUS MATERIALS INTO THE ENVIRONMENT FROM OR AT ANY REAL PROPERTY OR ANY ACQUIRED ASSET.
EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, SUCH TRANSFEREE
RELEASES EACH SUCH TRANSFEROR FROM, AND ASSUMES ALL RISKS WITH
RESPECT TO, ALL CLAIMS WHICH SUCH TRANSFEREE OR ANY PARTY RELATED TO
OR AFFILIATED WITH SUCH TRANSFEREE HAS OR MAY HAVE ARISING FROM OR
RELATED TO ANY MATTER OR THING RELATED TO OR IN CONNECTION WITH THE
ACQUIRED ASSETS INCLUDING THE DOCUMENTS AND INFORMATION REFERRED
TO HEREIN, AND SUCH TRANSFEREE SHALL NOT LOOK TO ANY TRANSFEROR IN CONNECTION WITH THE FOREGOING FOR ANY REDRESS OR RELIEF. THIS
RELEASE SHALL BE GIVEN FULL FORCE AND EFFECT ACCORDING TO EACH OF ITS
EXPRESSED TERMS AND PROVISIONS, INCLUDING THOSE RELATING TO UNKNOWN AND UNSUSPECTED CLAIMS, DAMAGES AND CAUSES OF ACTION. (d) EACH TRANSFEREE AND EACH TRANSFEROR AGREE THAT,
EXCEPT AS EXPRESSLY PROVIDED FOR IN THIS AGREEMENT OR THE OTHER
TRANSACTION DOCUMENTS, (I) THE ACQUIRED ASSETS SHALL BE SOLD AND
EACH SUCH TRANSFEREE SHALL ACCEPT POSSESSION OF THE ACQUIRED ASSETS ON THE CLOSING DATE OR SECOND CLOSING DATE, AS APPLICABLE, "AS IS," "WHERE IS," AND "WITH ALL FAULTS," WITH NO RIGHT OF SET-OFF OR REDUCTION IN THE CONTRIBUTION OR PAYMENT OF ANY OTHER AMOUNT; AND (II) SUCH
TRANSFER SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND,
OTHER THAN AS EXPRESSLY SET FORTH IN THIS AGREEMENT, WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING ANY WARRANTY OF
INCOME POTENTIAL, OPERA TING EXPENSES, USES, MERCHANT ABILITY OR
FITNESS FOR A PARTICULAR PURPOSE, AND EACH TRANSFEROR HEREBY DISCLAIM AND RENOUNCE ANY SUCH REPRESENTATION OR WARRANTY. (e) Except with respect to any Losses arising out of any breach of any express representation, warranty, covenant or agreement set forth in this Agreement or any Transaction Document that shall be governed exclusively by the provisions of this Article XI, each Transferee, for itself and on behalf of each of its Affiliates and its and their Representatives, hereby waives, releases and forever discharges each Transferor, its Affiliates and its and their Representatives from any and all Losses whether known or unknown, which such Transferee has or may have in the future, arising out of or in connection with the Acquired Assets, including the physical, environmental, governmental, economic or legal condition thereof or the operation thereof (collectively, the "Released Cla.ims"). EACH TRANSFEREE, FOR ITSELF AND ON BEHALF
OF EACH OF ITS AFFILIATES AND ITS AND THEIR REPRESENTATIVES,
SPECIFICALLY WAIVES THE PROVISIONS OF ANY LEGAL REQUIREMENT LIMITING
THE GENERALITY OR SCOPE OF THE RELEASES HEREIN, INCLUDING BUT NOT LIMITED TO CALIFORNIA CIVIL CODE SECTION 1542, WHICH READS AS FOLLOWS:
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"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."
(f) Each Transferee, for itself and on behalf of each of its Affiliates and its and their Representatives, acknowledges that it or its attorneys or agents may hereafter discover claims or facts in addition to, or different from, those which it now believes to be true with respect to the subject matter of the Released Claims, but agrees that (A) it has taken such possibility into account in reaching this Agreement, (B) the releases given herein shall be and remain in effect notwithstanding the discovery or existence of any such additional or different claims or facts, as to which such Transferee expressly assumes the risk, and (C) notwithstanding the discovery or existence of any such additional or different claims or facts, it is nonetheless such Transferee ' s intention, for itself and on behalf of each of its Affiliates and its and their Representatives, to fully, finally and forever settle and release all disputes and differences, known or unknown, suspected or unsuspected , as to the Released Claims. Each Transferee, for itself and on behalf of each of its Affiliates and its and their Representatives , hereby covenants not to file or commence any Legal Proceedings against any Transferor or any of such Transferor's Affiliates or its or their respective Representatives in connection with any matter released hereunder. (g) Each Transferee , for itself and on behalf of each of its Affiliates and its and their Representatives, acknowledges that it has carefully reviewed this Section 11.5 and has had the opportunity to discuss it with legal counsel and that this Section 11.5 is a material part of this Agreement.
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(h) This Section 11.5 shall survive the Closing.
Section 11.6 Remedies; Limited Recourse; Limitations on Damages. (a) The sole and exclusive remedies for breach of the terms and provisions of this Agreement (including any representations and warranties set forth herein, made in connection herewith or as an inducement to enter into this Agreement) or any claim or cause of action otherwise arising out of or related to the transactions contemplated by this Agreement shall be those remedies available at law or in equity for breach of contract only (as such contractual remedies have been further limited or excluded pursuant to the express terms of this Agreement , including the indemnification provisions of this Article XI), and the Parties hereby agree that no Party hereto shall have any remedies or causes of action (whether in contract or in tort) for any statements, communications , disclosures, failures to disclose, representation or warranties not set forth in this Agreement.
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(b) Prior to the Closing, in the event that any Transferee breaches any of its representations, warranties, covenants or agreements hereunder, which breach would give rise to a Transferor's right to void the Voidable Obligations pursuant to Section 12.l(d) (after giving effect to the cure periods set forth therein), such Transferor shall be entitled, as its sole and exclusive remedy hereunder, to (i) exercise such right to void the Voidable Obligations and, in such case, shall be entitled to the portion of the Deposit paid by such Transferee and (ii) exercise any other remedies available to any Transferor pursuant to Section 12.2(b). Notwithstanding the foregoing, in the event that, prior to the Closing, any Transferee breaches any of its representations, warranties, covenants or agreements hereunder, which breach would result in the failure to satisfy any of the conditions set forth in Article X and allow a Transferor to void the Voidable Obligations and the applicable Transferor elects not to void the Voidable Obligations pursuant to Section
12. l(d) , but instead proceeds to the Closing, such Transferor shall thereby expressly waive its right to recover, and forever releases such Transferee from, any Losses arising out of or related to any such breach.
( c) Prior to the Closing, in the event that any Transferor breaches any of its representations, warranties, covenants or agreements hereunder, which breach would give rise to a Transferee's right to void the Voidable Obligations pursuant to Section 12.l(c) (after giving effect to the cure periods set forth therein), such Transferee shall be entitled to elect, at such Transferee's option, one and only one of the following remedies: (i) to exercise such right to void the Voidable Obligations and, in such case, shall be entitled to the portion of the Deposit paid by such Transferor, and any other remedies available to any Transferee pursuant to Section 12.2(c), or (ii) to sue Transferor for specific performance of this Agreement in accordance with the terms and conditions of Section 12.3. Notwithstanding the foregoing, in the event that, prior to the Closing, any Transferor breaches any of its representations, warranties, covenants or agreements hereunder, which breach would result in the failure to satisfy any of the conditions set forth in Article X and allow a Transferee to void the Voidable Obligations and such Transferee elects not to void the Voidable Obligations pursuant to Section 12.l(c), but instead proceeds to the Closing, such Transferee shall thereby expressly waive its right to recover, and forever releases such Transferor from, any Losses arising out of or related to any such breach. g k:"ceq-
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IF THE CLOSING OCCURS, THE SOLE AND EXCLUSIVE REMEDY FOR ANY
AND ALL CLAIMS, LOSSES OR OTHER MATTERS ARISING UNDER, OUT OF, OR
RELATED TO THE THEN ACQUIRED ASSETS AND THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY WITH RESPECT TO SUCH ACQUIRED
ASSETS (EXCEPT FOR CLAIMS OF BREACH OF THIS AGREEMENT PRIOR TO THE CLOSING THAT WERE WAIVED BY A TRANSFEROR PURSUANT TO SECTION 11.6(a))
SHALL BE THE RIGHTS OF INDEMNIFICATION SET FORTH IN THIS ARTICLE XI ONLY (AND IN THE CASE OF INDEMNIFICATION SOUGHT PURSUANT TO SECTIONS 5.l(e) ,
7.4 AND 9.17, THE RIGHTS OF INDEMNIFICATION SET FORTH THEREIN) AND NO
PERSON WILL HA VE ANY OTHER ENTITLEMENT, REMEDY OR RECOURSE WITH
RESPECT TO SUCH ACQUIRED ASSETS, WHETHER IN CONTRACT, TORT, STRICT SMRH:4909-8942-1601.3
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(b) Prior to the Closing, in the event that any Transferee breaches any of its representations, warranties, covenants or agreements hereunder, which breach would give rise to a fransferor's right to void the Voidable Obligations pursuant to Section 12.l(d) (after giving effect to the cure periods set forth therein), such Transferor shall be entitled, as its sole and exclusive remedy hereunder, to (i) exercise such right to void the Voidable Obligations and, in such case, shall be entitled to the po11ion of the Deposit paid by such Transferee and (ii) exercise any other remedies available to any Transferor pursuant to Section I 2.2(b). Notwithstanding the foregoing, in the event that, prior to the Closing, any Transferee breaches any of its representations, warranties, covenants or agreements hereunder. which breach would result in the failure to satisfy any of the conditions set forth in Article X and allow a Transferor to void the Voidable Obligations and the applicable Transferor elects not to void the Voidable Obligations pursuant to Section
12.1 (d), but instead proceeds to the Closing, such Transferor shall thereby expressly waive its right to recover, and forever releases such Transferee from, any Losses arising out of or related to any such breach.
( c) Prior to the Closing, in the event that any Transferor breaches any of its representations, warranties, covenants or agreements hereunder, which breach would give nse to a Transferee's right to void the Voidable Obligations pursuant to Section 12. l(c) (after giving effect to the cure periods set f011h therein), such Transferee shall be entitled to elect, at such 'transferee's option, one and only one of the following remedies: (i) to exercise such right to void the Voidable Obligations and, in such case, shall be entitled to the portion of the Deposit paid by such Transferor, and any other remedies available to any Transferee pursuant to Section 12.2(c), or (ii) to sue Transferor for specific performance of this Agreement in accordance with the terms and conditions of Section 12.3. Notwithstanding the foregoing, in the event that, prior to the Closing, any Transferor breaches any of its representations, warranties, covenants or agreements hereunder, which breach would result in the failure to satisfy any of the conditions set f011h in A11icle X and allow a Transferee to void the Voidable Obligations and such Transferee elects not to void the Voidable Obligations pursuant to Section 12. l( c), but instead proceeds to the Closing, such Transferee shall thereby expressly waive its right to recover. and forever releases such Transferor from, any Losses arising out of or related to any such breach.
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IF THE CLOSING OCCURS. THE SOLE AND EXCLUSIVE REMEDY FOR Ar"- 1 '-·
AND ALL CLAIMS, LOSSES OR OTHER MATTERS ARISING UNDER, OUT OF, OR R.ELA TED TO THE THEN ACQUIRED ASSETS AND THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY WITH RESPECT TO SUCH ACQUIRED
ASSETS (EXCEPT FOR CLAIMS OF BREACH OF THIS AGREEMENT PRIOR TO THE CLOSING THAT WERE WAIVED BY A TRANSFEROR PURSUANT TO SECTION l l .6(a))
SHALL BE THE RIGHTS OF INDEMNIFICATION SET FORTH IN THIS ARTICLE XI ONLY (AND IN THE CASE OF INDEMNIFICATION SOUGHT PURSUANT TO SECTIONS 5.1 (e),
7.4 AND 9.17, THE RIGHTS OF INDEMNIFICATION SET FORTH THEREIN) AND NO PERSON WILL HA VE ANY OTHER ENTITLEMENT. REMEDY OR RECOURSE WITH RESPECT TO SUCH ACQUIRED ASSETS. WHETHER IN CONTRACT. TORT. STRICT SMRH:4909-8942-1601.3
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LIABILITY, EQUITABLE REMEDY OR OTHERWISE, IT BEING AGREED THAT ALL OF
SUCH OTHER REMEDIES, ENTITLEMENTS AND RECOURSE ARE EXPRESSLY
WAIVED AND RELEASED BY THE PARTIES TO THE FULLEST EXTENT PERMITTED BYLAW.
g KC<::(
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(d) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN,
NO PARTY SHALL BE LIABLE FOR, AND THE DEFINITION OF LOSSES SHALL NOT
INCLUDE, ANY SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL, INDIRECT OR
CONSEQUENTIAL DAMAGES, INCLUDING ANY LOST PROFITS OR LOST BENEFITS,
LOSS OF ENTERPRISE VALUE, DIMINUTION INV ALUE OR MULTIPLES OF EARNINGS
OF ANY BUSINESS, DAMAGE TO REPUTATION OR LOSS TO GOODWILL, WHETHER
BASED ON CONTRACT, TORT, STRICT LIABILITY, OTHER LAW OR OTHERWISE AND
WHETHER OR NOT ARISING FROM ANY OTHER PARTY'S SOLE, JOINT OR
CONCURRENT NEGLIGENCE, WILLFUL MISCONDUCT OR OTHER FAULT, EXCEPT,
WITH RESPECT TO THE DEFINITION OF LOSSES, TO THE EXTENT SUCH DAMAGES
ARE ACTUALLY AWARDED AND PAID TO A THIRD PARTY WITH RESPECT TO A
THIRD PARTY CLAIM AS TO WHICH A PARTY IS ENTITLED TO INDEMNIFICATION UNDER THIS AGREEMENT.
(e) All claims or causes of action (whether in contract or in tort, in law or in equity) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in or in connection with this Agreement or as an inducement to enter into this Agreement), may be made only against the entities that are expressly named as parties hereto. No Person that is not a named party to this Agreement (including any such named party's Affiliates and such named party's and such Affiliates' respective past, present or future director, officer, employee, incorporator, member, partner, stockholder, manager, agent, attorney or Representative ("Non-Party Affiliate")) shall have any liability (whether in contract or in tort, in law or in equity, or based on any theory that seeks to impose liability of an entity party against its owners or affiliates) for any obligations or liabilities arising under, in connection with or related to this Agreement or for any claim based on, in respect of, or by reason of, this Agreement or its negotiation or execution, and each party waives and releases all such liabilities and claims against any such Non-Party Affiliates. (f) The provisions of this Section 11.6 were specifically bargained-for between the Transferors, on the one hand, and the Transferees, on the other hand, and were taken into account by the the Transferors and the Transferees in arriving at the Contribution and the other consideration set forth herein. Each of the Transferors, on the one hand, and the Transferees, on the other hand, specifically relied upon the provisions of this Section 11.6 in agreeing to the Contribution and the other consideration set forth herein and in agreeing to provide the specific representations and warranties set forth in Article VII and Article VIII. (g)
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This Section 11.6 shall survive any voiding of the Voidable Obligations. -63-
LIABILITY. EQUITABLE REMEDY OR OTHERWISE, IT BEING AGREED THAT ALL OF SUCH OTHER REMEDIES. ENTITLEMENTS AND RECOURSE ARE EXPRESSLY \V/\lVED AND RELEASED RY nm PARTTFS TO THE FULLEST EXTENT PERMITTED RY LAW.
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(d) NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREJN.
NO PARTY SHALL BE LIABLE FOR. AND THE DEHN lliUN 01· LUSStS SHALL i\ltYi lNCT.T JOE. ANY SPECIAL. PUNITIVE. EXEMPLARY. INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES. INCLUDING ANY LOST PROFITS OR LOST BENEFITS, LOSS OF ENTERPRISE VALUE, DIMINUTION IN VALUE OR MULTIPLES UF L'.,AKNiNvS OF ANY RlfSINF.SS. DAMAGE TO REPUTATION OR LOSS TO GOODWILL. WHETHER BASED ON CONTRACT. TORT , STRICT LIABILITY, OTHER LAW OR OTHERWISE AND WHETHER OR NOT ARISING FROM ANY OTHER PARTY'S SOLE, J01N'1 Uk CONC1 .1RRENT NFG! .lCrFNf:F, WILLFUL MISCONDUCT OR OTHER FAULT, EXCEPT, WITH RESPECT TO THE DEFINITION OF LOSSES. TO THE EXTENT SUCH DAMAGES
ARE ACTUALLY AW ARD ED AND PAID TO A THIRD PARTY WITH RESPECT TO A THIRD PARTY CLAIM AS TO WHICH A PARTY lS ENTITLED TO INDEIVfNIFICATION l JNOER THIS AGREEMENT.
(e) All claims or causes of action (whether in contract or in tort, in law or in equitv) that may be based upon, arise out of or relate to this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made m or in connection with this Agreernent 0r as an inducement to enter into this Agreement). may be made only against the entities that are expressly named as paiiies hereto. No Person that is not a named paiiy to this Agreement (including any such named party's Affiliates and such named pmiy's and such Affiliates' respective past, present or future director, officer. employee, incoq)orator. memher. partner. stockholder, manager, agent , attorney or Representative ("Non-Party Affiliate")) shall have any liability (whether in contract or in to1i, in law or in equity, or based on any theory that seeks to impose liability of an entity pmiy against its owners or affiliates) for any obligations or li;:ihilities arising under. in connection with or related to this Agreement or for any claim based on, in respect of: or by reason of, this Agreement or its negotiation or execution, and each pmiy waives and releases all such liabilities and claims against any such Non-Pmiy Affiliates. (f) The provisions of this Section 11.6 were specifically bargained-for between the Transferors, on the one hand, and the Transferees, on the other hand. and were taken into ~ccount by the the Transferors and the Transferees in arriving at the Contribution and the other consideration set fo1ih herein. Each of the Transferors, on the one hand, and the Transferees , on the other hand, specifically relied upon the provisions of this Section 11.6 in agreeing to the f'nntrih11tion and the other consideration set fotih herein and in agreeing to provide the specific representations and warranties set fo1ih in Article VII and Article VIII. '' MTUI:4909-8942-1601 J
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This Sectjon 11.6 shall survive any voiding of the Voidable Obligations. -o3-
Section 11.7 Guaranteed Obligations. NRG Energy Inc. is executing the joinder attached to this Agreement (the "Joinder") for the purpose of guaranteeing certain of the obligations of Cab I under or in connection with this Agreement as set forth therein.
ARTICLE XII
DEFAULT REMEDIES
Section 12.1 Voiding of Voidable Obligations. At any time prior to the Closing, a Party may void the Voidable Obligations, thereby superseding the obligation to undertake the Closing or the Second Closing:
(a) by the mutual consent of all Parties as evidenced in writing signed by all Parties;
(b) by any Party if any Governmental Authority having competent jurisdiction has issued a final, non-appealable order, decree, ruling or injunction (other than a temporary restraining order) or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement; provided that the right to void the Voidable Obligations pursuant to this Section 12.1 (b) shall not be available to any Party whose failure to comply with its obligations under this Agreement is the primary cause of such order, decree, ruling, injunction or other action;
( c) by any Transferee, in the event of any breach by a Transferor transfering any Acquired Assets to such Transferee of any of such Transferor's representations, warranties, covenants or agreements contained herein, which breach would result in the failure to satisfy any of the conditions set forth in Section 10.1 X and the failure of such Transferor to cure such breach (if capable of cure) within thirty (30) days after receipt of notice from such Transferee requesting such breach to be cured; provided that the right to void the Voidable Obligations pursuant to this Section 12.l(c) shall not be available to such Transferee at any time that such Transferee is in material breach of any of such Transferee's representations, warranties, covenants or agreements contained herein;
(d) by any Transferor, in the event of any breach by a Transferee acquiring any Acquired Assets from such Transferor of any of such Transferee's representations, warranties, covenants or agreements contained herein, which breach would result in the failure to satisfy any of the conditions set forth in Section 10.2 X and the failure of such Transferee to cure such breach (if capable of cure) within thirty (30) days after receipt of notice from such Transferor requesting such breach to be cured; provided that the right to void the Voidable Obligations pursuant to this Section 12.l{d) shall not be available to such Transferor at any time that such Transferor is in material breach of any of such Transferor's representations, warranties, covenants or agreements contained herein; or
( e) by any Party that has the right to void the Voidable Obligations in accordance with the express terms of this Agreement.
For avoidance of doubt, an event of default or the failure to satisfy conditions precedent to the Closing shall not give rise to a right to void the Voidable Obligations.
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Section 12.2 Effect of Voiding of Voidable Obligations; Payment of Deposits. (a) In the event a Party invokes its right to void the Voidable Obligations prior to the Closing for any reason, the Parties agree that remaining provisions of this Agreement shall continue to be binding upon the Parties.
(b) In the event that the Voidable Obligations are voided prior to the Closing by any Transferor pursuant to Section 12. Hd), then within one (1) Business Day after the election to void the Voidable Obligations, each Party shall provide joint written instructions to the Escrow Agent, instructing the Escrow Agent to disburse, if and as applicable, (i) the portion of the Deposit paid by the breaching Transferee (the "Breaching Transferee") or its Affiliates to the applicable Transferor (the "Non-Breaching Transferor"), (ii) the portion of the Deposit paid by the Non Breaching Transferor or its Affiliates shall be returned to such Non-Breaching Transferor, and (iii) the portion of the Deposit paid by a Party or its Affiliates that is neither the Non-Breaching Transferor or the Breaching Transferee shall be returned to such Party. In addition to the foregoing, the non-Breaching Transferor shall have all rights and remedies available at law or in equity, including to bring a breach of contract claim and sue for damages. (c) In the event that the Voidable Obligations are voided prior to the Closing by any Transferee pursuant to Section 12.l(c), then within one (1) Business Day after the election to void the Voidable Obligations, each Party shall provide joint written instructions to the Escrow Agent, instructing the Escrow Agent to disburse (i) the portion of the Deposit paid by the breaching Transferor (the "Breaching Transferor") or its Affiliates to the applicable Transferee (the "Non Breaching Transferee"), (ii) the portion of the Deposit paid by the Non-Breaching Transferee or its Affiliates shall be returned to the Non-Breaching Transferee, and (iii) the portion of the Deposit paid by a Party or its Affiliates that is neither the Breaching Transferor or the Non-Breaching Transferee shall be returned to such Party. In addition to the foregoing, the non-Breaching Transferee shall have all rights and remedies available at law or in equity, including to bring a breach of contract claim and sue for damages.
(d) In the event that the Voidable Obligations are voided prior to the Closing pursuant to Section 12.l(a), Section 12.l(b) or Section 12.He). then, within one (1) Business Day after the election to void the Voidable Obligations, the Parties shall provide joint written instructions to the Escrow Agent, instructing the Escrow Agent to disburse the Deposits back to each Party that made such Deposits.
Section 12.3 Specific Performance. Subject to Section 1 l.6(c), in the event of any breach by a Transferor of any of such Transferor's representations, warranties, covenants or agreements contained herein, which breach would result in the failure to satisfy any of the conditions set forth in Article X and the failure of such Transferor to cure such breach (if capable of cure) within thirty (30) days after receipt of notice from such Transferee requesting such breach to be cured, such Transferee shall have the right to enforce by specific performance all of the transfers of the Acquired Assets in accordance with the terms of this Agreement, but only if such Transferee exercises said rights as aforesaid within one hundred twenty (120) days after Transferee's Knowledge Individual's knowledge of the occurrence of Transferor's alleged default. Transferee agrees that its failure to timely commence an action for specific performance within such period noted above shall be deemed a waiver by it of its right to commence an action for specific SMRH:4909-8942 -1601.3
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perfonnance as well as a waiver by it of any right it may have to file or record a notice of lis pend.ens or notice of pendency of action or similar notice against any portion of the applicable Acquired Asset.
ARTICLE XIII
MISCELLANEOUS
Section 13.1 Administration Building. The Parties hereby agree that Cab I's sole obligation with respect to the Administration Building and the SDG&E Project shall be to provide the Contribution. All costs (other than the Contribution) arising out of or relating to any applications, planning, pennitting, construction and operation of the Administration Building and the SDG&E Project shall be at the sole cost and expense of SDG&E. With respect to the construction of the Administration Building and the SDG&E Project, SDG&E shall have the sole right to design, modify and construct the Administration Building and the SDG&E Project in its sole discretion and no other Party shall have any consent right with respect to such design, modification or construction, except the City in its role as a regulator. The commencement and/or completion of the construction of the Administration Building and the SDG&E Project shall be undertaken in SDG&E's sole discretion. Notwithstanding the foregoing, in the event that the construction of the Administration Building is completed, SDG&E shall remove all existing trailers that are currently located on the Service Center Land from such land.
Section 13.2 Notices. Except as otherwise expressly provided in this Agreement (including Section 9.6), all notices and other communications under this Agreement shall be in writing and shall be deemed given (a) when delivered personally by hand (with written confinnation of receipt), (b) one (1) Business Day after the day sent by nationally recognized overnight courier (with written confinnation of receipt), or (c) on the date sent if sent before 5:00 pm PST by electronic mail (provided that a copy of such notice is also delivered within twenty four (24) hours by one of the other methods listed herein), in each case at the following addresses (or to such other address as a party may have specified by notice given to the other party pursuant to this provision):
(a) If to SDG&E, to:
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San Diego Gas & Electric Company
8335 Century Park Court
San Diego, California 92123
Attention: Jennifer F. Jett, Vice President, Operations Support Email: jjett@sdg&e.com
and
San Diego Gas & Electric Company
8335 Century Park Court
San Diego, California 92123
Attention: Erbin Keith, SDG&E General Counsel
Email: [email protected]
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and
Email: [email protected]
with a mandatory copy (which shall not constitute notice) to:
Latham & Watkins LLP
12670 High Bluff Drive
San Diego, California 92130
Attention: James Mann
Email: [email protected]
Attention: Sony Ben-Moshe
Email: [email protected]
(b) If to Cab I, to:
Cabrillo Power I LLC
910 Louisiana Street
Houston, TX 77002
Attention: Mark Rohrlick
Email: [email protected]
with mandatory copy (which shall not constitute notice) to:
Sheppard Mullin Richter & Hampton LLP
12275 El Camino Real, Suite 100
San Diego, CA 92130-4092
Attention: Tony Toranto, Esq.
Email: [email protected]
(c) If to the City, to:
City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Manager
Email: [email protected]
with mandatory copy (which shall not constitute notice) to:
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City of Carlsbad
1200 Carlsbad Village Drive
Carlsbad, CA 92008
Attention: City Attorney
Email: [email protected]
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The Parties shall have the right from time to time to change their respective addresses for notice by at least five (5) Business Days' written notice to the other Parties. The Email addresses of the Parties are set forth above, and they may be relied on for purposes of notice (provided that a copy of such notice is delivered within twenty-four (24) hours by one of the other methods listed herein for providing notice). Notice given by counsel to any Party shall be deemed notice given by such Party.
Section 13.3 Successors and Assigns.
(a) This Agreement shall inure to the benefit of and be binding upon the heirs, personal representatives, successors and permitted assigns of each of the Parties to this Agreement; provided, however, the same is not intended nor shall it be construed as creating any rights in or for the benefit of any Person other than the Parties to this Agreement and their respective personal representatives, successors and permitted assigns.
(b) No Party may assign its rights under this Agreement without all other Parties' written consent, which consent may be withheld in any such Party's sole discretion.
Section 13.4 Rights of Third Parties. Except for the indemnification provisions expressly set forth in this Agreement, each of which are intended to be enforceable by the Persons respectively referred to therein, nothing expressed or implied in this Agreement shall create or be deemed to create any third party beneficiary rights in any Person not a party to this Agreement.
Section 13.5 Expenses. Except as otherwise expressly provided herein, each Party shall bear its own expenses incurred in connection with this Agreement and the transactions contemplated hereby whether or not such transactions shall be consummated.
Section 13.6 Counterparts; Electronic Signatures. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including PDF or any electronic signature complying with the U.S. federal ESIGN Act of 2000, e.g., DocuSign) or other transmission method and any counterpart so delivered shall be deemed an original and shall be binding upon each of the undersigned as if signed and delivered in the original. The Parties further consent and agree that to the extent a party signs this Agreement using electronic signature technology, by clicking "SIGN" or similar method, such party is signing this Agreement electronically, and the resulting electronic signatures or indication of execution appearing on this Agreement shall be treated, for purposes of validity, enforceability and admissibility, the same as handwritten signatures.
Section 13.7 Entire Agreement. This Agreement (together with the exhibits to this Agreement) and the Transaction Documents constitute the entire agreement among the Parties and supersede any other agreements, whether written or oral, that may have been made or entered into by or among any of the Parties or any of their respective Affiliates relating to the transactions contemplated hereby. The Parties have voluntarily agreed to define their rights, liabilities and obligations respecting the transactions contemplated hereby exclusively in contract pursuant to the express terms and provisions of this Agreement, and the Parties expressly disclaim that they are owed any duties or are entitled to any remedies not expressly set forth in this Agreement.
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Furthermore, the Parties each hereby acknowledge that this Agreement embodies the justifiable expectations of sophisticated parties derived from arm's-length negotiations, and all Parties to this Agreement specifically acknowledge that no Party has any special relationship with another Party that would justify any expectation beyond that of an arm's-length transaction.
Section 13.8 Amendments; Waiver. This Agreement may be amended, supplemented or modified in whole or in part if, but only if, such amendment, supplement or modification is in writing and is signed by each of Parties and specific reference to this Agreement is made in such writing. Any provision of this Agreement may be waived if, but only if, such waiver is in writing and is signed by the Party or Parties against whom enforcement of any such waiver is sought and specific reference to this Agreement is made in such writing. The waiver by any Party of a breach of any provision of this Agreement shall not operate or be construed as a further or continuing waiver of such breach or as a waiver of any other or subsequent breach. No failure on the part of any Party to exercise, and no delay in exercising, any right, power or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of such right, power or remedy by such Party preclude any other or further exercise thereof or the exercise of any other right, power or remedy.
Section 13.9 Severability. If any provmon of this Agreement is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Agreement shall remain in full force and effect. The parties further agree that if any provision contained herein is, to any extent, held invalid or unenforceable in any respect under the Laws governing this Agreement, they shall take any commercially reasonable actions necessary to render the remaining provisions of this Agreement valid and enforceable to the fullest extent permitted by Law and, to the extent reasonably necessary, shall amend or otherwise modify this Agreement to replace any provision contained herein that is held invalid or unenforceable with a valid and enforceable provision giving effect to the intent of the parties to the greatest extent permissible under Law.
Section 13.10 Mutual Drafting. The Parties have participated jointly in the negotiation and drafting of this Agreement and, if an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as jointly drafted by the Parties and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement. Further, prior drafts of this Agreement or any of the Transaction Documents or the fact that any clauses have been added, deleted or otherwise modified from any prior drafts of this Agreement or any Transaction Document shall not be used as a rule of construction or otherwise constitute evidence of the intent of the Parties, and no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of such prior drafts.
Section 13.11 Governing Law; Jurisdiction.
(a) This Agreement and the transactions contemplated herein, and all disputes between the parties directly arising out of or related to this Agreement, the transactions contemplated herein or the facts and circumstances leading to its or their execution or performance, whether in Contract, tort or otherwise, shall be governed by the Laws of the State of California, without reference to conflict of laws principles.
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(b) Each of the Parties (A) irrevocably submits itself to the personal jurisdiction and sole venue of the state or federal courts sitting in San Diego County, California, as well as to the jurisdiction of all courts to which an appeal may be taken from such courts, in any Legal Proceeding arising out of or relating to this Agreement or any of the transactions contemplated herein, (B) agrees that every such Legal Proceeding shall be brought, heard and determined exclusively in the courts of the State of California, (C) agrees that it shall not attempt to deny or defeat such personal jurisdiction by motion or other request for leave from such courts, (D) agrees not to bring any Legal Proceeding arising out of or relating to this Agreement or any of the transactions contemplated herein in any other courts and (E) waives any defense of inconvenient forum to the maintenance of any Legal Proceeding so brought. (c) To the fullest extent permitted by applicable Law, each of the parties agrees to waive any bond, surety or other security that might be required of any other party with respect to any Legal Proceeding, including an appeal thereof.
(d) Each of the parties agrees that, to the fullest extent permitted by applicable Law, (i) service of any process, summons, notice or document delivered by U.S. registered mail, return receipt requested, to its address as specified in Section 13.2 hereof, and for the City to the attention of the City Clerk, with a proof of mailing receipt validated by the U. S. Postal Service shall be an effective means of service of process for any Legal Proceeding brought against it (provided, however, that nothing in the foregoing clause shall affect the right of any party to serve legal process in any other manner permitted by applicable Law) and (ii) to the fullest extent permitted by applicable Law, that service made pursuant to (i) above shall have the same legal force and effect as if served upon such party personally within the State of California. (e) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE, WHETHER IN CONTRACT, TORT, OR
OTHERWISE, RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREIN IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE, TO THE FULLEST EXTENT PERMITTED BY LAW, IT
HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREIN OR THE FACTS AND CIRCUMSTANCES LEADING TO ITS EXECUTION OR PERFORMANCE. EACH PARTY CERTIFIES AND
ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER, (II) IT UNDERSTANDS AND HAS CONSIDERED THE
IMPLICATIONS OF SUCH WAIVER, (III) IT MAKES SUCH WAIVER KNOWINGLY AND
VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 13.lle).
Section 13.12 Time is of the Essence. Time is of the essence of this Agreement, provided that notwithstanding anything to the contrary in this Agreement, if the time period for the performance of any obligation, satisfaction of any condition or delivery of any notice, document SMRH:4909-8942-1601.3
US-DOCS\148870986.28
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or item required under this Agreement expires on a day other than a Business Day, such time period shall be extended automatically to the next Business Day.
Section 13.13 Offers. Following the mutual execution of this Agreement and continuing until the Closing or the voiding of the Voidable Obligations, each Transferor agrees not to (i) grant any other party a prior right to purchase any of its Acquired Assets, nor to (ii) solicit, encourage, initiate, entertain or participate in any negotiations or discussions with any person with respect to any offer or proposal to sell any Acquired Assets or any part thereof (a "Competing Proposed Transaction"); nor to (iii) assist, cooperate with, facilitate or encourage any person to make any offer or proposal to engage in a Competing Proposed Transaction; or (iv) agree to, enter into a contract regarding, approve, recommend or endorse any transaction involving a Competing Proposed Transaction; provided, in no instance shall SDG&E's compliance with the TLTP, or offers received with respect to the TLTP, be deemed to be a Competing Proposed Transaction.
Section 13.14 No-Offer. The delivery of this Agreement to each Transferee shall not be deemed an offer by any Transferor to enter into any transaction or to enter into any other relationship with any such Transferee, whether on the terms contained in this Agreement or on any other terms. This Agreement shall not be binding upon any Party, nor shall any Party have any obligations or liabilities or any rights with respect hereto, unless and until all Parties have executed and delivered this Agreement.
Section 13.15 Natural Hazard Disclosures.
(a) Without in anyway limiting any Transferor's representations set forth in this Agreement or the validity of the waiver set forth in Section 11.5, each Transferor and each Transferee acknowledge that each Transferor is required by Laws of the State of California to disclose if any of the Acquired Assets to be transferred by such Transferor lies within the following natural hazard areas or zones: (i) a special flood hazard area designated by the Federal Emergency Management Agency; (ii) an area of potential flooding; (iii) a very high fire hazard severity zone; (iv) a wild land area that may contain substantial forest fire risks and hazards; (v) an earthquake fault or special studies zone; or (vi) a seismic hazard zone. Each Transferee acknowledges that such Transferor has employed the services of a natural hazard consultant ("Natural Hazard Consulta.nt") to examine the maps and other information specifically made available to the public by government agencies with respect to each such Acquired Asset and to report the results of its examination to each Transferee acquiring such Acquired Asset, and each such Transferor shall deliver to each applicable Transferee in writing the written report prepared by the Natural Hazard Consultant regarding the results of its examination that was made available to such Transferee prior to the Closing Date.
(b) Each Transferor is required by California Health and Safety Code Section 25359.7 to notify the Transferee acquiring such Transferor's Acquired Assets if such Transferor knows, or has reasonable cause to believe, that any release of hazardous substance has come to be located on or beneath any such Acquired Assets. Without limiting each Transferor's disclosure obligations under California Health and Safety Code Section 25359.7 or such Transferor's representations under Section 8.8, such Transferor acknowledges that delivery of the environmental report(s) which are part of the Due Diligence Materials previously provided to the SMRH:4909-8942-1601.3
US-DOCS\! 48870986.28
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applicable Transferee constitutes written notice to such Transferor under California Health and Safety Code Section 25359.7 as to the matters disclosed in such environmental report(s).
Section 13.16 Relationship of Parties; No Joint Venture or Partnership. None of the provisions in this Agreement is intended to or shall be construed or deemed to render the City, SDG&E or Cab I a partner in any other Party's business, or a joint venturer or member in any development or joint enterprise with any Party. Nothing in this Agreement is intended to or shall be construed to create any principal-agent relationship between SDG&E, Cab I and the City.
Section 13.17 Tax-Defe"ed Exchange. The Parties agree to cooperate with each other in effecting for the benefit of SDG&E a tax-deferred exchange pursuant to Section 1031 of the Code (an "Exchange") with respect to one or more Acquired Assets, provided that: (a) no Party shall be obligated to delay the Closing, (b) no Party shall be obligated to execute any note, contract, deed or other document, except a reasonable and customary acknowledgment of SDG&E's assignment of its rights and obligations under this Agreement to a qualified intermediary, nor shall any Party be obligated to take title to any property other than the Acquired Assets as otherwise contemplated in this Agreement or incur material additional expense for the benefit of any other Party, (c) such assignment shall not release SDG&E from its obligations and liabilities under this Agreement, (d) all documents executed by other Parties shall recognize that they are acting solely as accommodating parties to such Exchange, such other Parties shall have no liability with respect thereto, and such other Parties are making no representation or warranty that the transactions qualify as a tax-deferred exchange under Section 1031 of the Code or any other applicable Laws and such other Parties shall have no liability whatsoever if any such transactions fail to so qualify; (e) SDG&E shall pay all other Parties incremental costs incurred in connection with an Exchange; and (f) in no event shall SDG&E's consummation of such Exchange constitute a condition precedent to SDG&E's obligations under this Agreement, and SDG&E's failure or inability to consummate such Exchange for any reason or for no reason shall not be deemed to excuse or release SDG&E from its obligations under this Agreement. The terms of this Section 13.17 shall survive the Closing and the transfer of title of the Acquired Assets.
SMRH:4909-8942-1601.3
US-DOCS\148870986 .28
[Signature page follows.]
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IN WITNESS WHEREOF this Agreement has been duly executed and delivered by each Party as of the date first above written.
SDG&E:
Cab I:
City:
SAN DIEGO GAS & ELECTRIC COMPANY
~~~e: &rk~
Title: Chief Operating Officer & Chief Safety
Officer
CABRILLO POWER I LLC
By:
Name: Mark Rohrlick
Title: Vice President of Cabrillo Power I LLC
CITY OF CARLSBAD
By:
Name: Geoff Patnoe
Title: City Manager
[Signature Page to 2025 Settlement Agreement]
IN WITNESS WHEREOF this Agreement has been duly executed and delivered by each Party as of the date first above written.
SDG&E:
Cab I:
City:
APPROVED AS TO FORM
Cindie K. McMahon, City Attorney
SAN DIEGO GAS & ELECTRIC COMPANY
By:
Name: Kevin C. Geraghty
Title: Chief Operating Officer & Chief Safety
Officer
CABRI
By:
Name:Ma. ~~
Title: Vice Presi ent of Cabrillo Power I LLC
CITY OF CARLSBAD
By: w Q.~
Name: Geoff Patnoe
Title: City Manager
~ ~/~~
-Assistant/Oeput9 City Attorney
City of Carlsbad, California
JOINDER TO AND MADE A PART OF THAT CERTAIN SEASIDE TRANSACTION
AGREEMENT AND SETTLEMENT AGREEMENT BY AND AMONG THE CITY OF
CARLSBAD, CABRILLO POWER I LLC AND SAN DIEGO GAS & ELECTRIC COMPANY, DATED AS OF APRIL ~ , 2025
In consideration of the City's and SDG&E' s execution of that certain Seaside Transaction Agreement and Settlement Agreement (the "Agreement") to which this "Joinder" is attached (and of which it forms a part), the undersigned ("Guarantor"), hereby absolutely, unconditionally, and irrevocably guarantees to SDG&E and the City the timely satisfaction of the obligations of Cab I under Sections 4.2(a), 4.3(c) and 9.21 of the Agreement and, if the Guaranty Condition occurs, Section 12.2(c) of the Agreement (collectively, the "Guaranteed Obligations"). Capitalized terms used in this Joinder and not otherwise defined in this Joinder have the same meanings as set forth in the Agreement. Guarantor represents and acknowledges that (i) such Guarantor is an affiliate of Cab I, (ii) such Guarantor will derive substantial benefits from the execution of the Agreement and the transactions contemplated thereby, (iii) such Guarantor's execution of this J oinder is a material inducement and condition to SDG&E's, the City and Cab I's execution of the Agreement and (iv) SDG&E, the City and Cab I are, for all purposes, direct beneficiaries of this Joinder. As used herein, the "Guaranty Condition" means the occurrence of both (i) the Closing failing to occur as a result of Cab I's default under Section 4.6(b) of the Agreement after the satisfaction of all conditions set forth in Section 10.2 of the Agreement, and (ii) any Acquired Asset owned by Cab I as of the Effective Date is transferred to another Person, other than the applicable Transferee under the Agreement.
To the fullest extent permitted by applicable law, Guarantor unconditionally waives any guarantor or suretyship defenses that might otherwise be available to Guarantor. The obligations of Guarantor under this Joinder are independent of the obligations of Cab I under the Agreement and, if there is a default under this Joinder, one or more separate actions may be brought and prosecuted against Guarantor whether or not Guarantor is the alter ego of Cab I and whether Cab I or any other Person is joined in such action or one or more separate actions are brought against Cab I or any other Person. The obligations of Guarantor under this Joinder will remain in full force and effect without regard to, and will not be affected or impaired by, the following, any of which may be taken without the consent of, or notice to, Guarantor, and none of the following will give Guarantor any recourse or right of action against the City or SDG&E: (a) any express or implied amendment, modification, renewal, addition, supplement, or extension of the Guaranteed Obligations or the Agreement; (b) any exercise or non-exercise by the City or SDG&E of any right or remedy under the Agreement or this Joinder or available at law or in equity; (c) any bankruptcy event relating to Guarantor, the City, SDG&E, any Affiliate of Guarantor, the City or SDG&E, or any other Person, or any action taken with respect to any Person or this Joinder by any trustee or receiver, or by any court, in any such proceeding, whether Guarantor had notice or knowledge of any of the foregoing; ( d) any release or discharge of the City or SDG&E from its liability under the Guaranteed Obligations or any release or discharge of any other Person at any time directly or contingently liable for the Guaranteed Obligations; (e) any taking or releasing of any security for any obligation under the Agreement; and (f) any acceptance of partial performance of the Guaranteed Obligations. Notwithstanding anything to the contrary in this Joinder, the aggregate liability of Guarantor under this Joinder (other than any liability arising under the second to last paragraph of this Joinder relating to collection and enforcement of the Guaranteed Obligations) is limited to $20,000,000.
US-DOCS\149621923.21
Without limiting the generality of the foregoing:
(a) Guarantor specifically agrees that Guarantor shall not be released from liability hereunder by any action taken by any Party, in any case that would afford Cab I a defense based on California's anti-deficiency laws, in general, and California Code of Civil Procedure Section 580d, in specific. Without limiting the foregoing, Guarantor expressly understands, acknowledges and agrees as follows:
(i) Were it not for Guarantor's knowing and intentional waivers contained herein, the destruction of Guarantor's subrogation rights and anti-deficiency protections would afford Guarantor a defense to an action against Guarantor hereunder; and
(ii) Notwithstanding the foregoing, Guarantor expressly waives any such defense to any action against Guarantor hereunder in any circumstance under which Guarantor's subrogation rights against Cab I have been destroyed. (b) In the event of any failure of Guarantor to pay the Guaranteed Obligations as and when required or otherwise comply with its obligations hereunder, the City or SDG&E may maintain an action upon this Joinder whether or not an action is brought against Cab I and whether or not Cab I is joined in any such action. The City or SDG&E may maintain successive actions for other defaults, and such Party's rights hereunder shall not be exhausted or waived, and such Party shall not be estopped to proceed against Guarantor pursuant to this Joinder by the exercise of any of such Party's rights or remedies or by any such action or by any number of successive actions, until and unless all obligations of Cab I and the Guaranteed Obligations have been indefeasibly paid and satisfied in full.
(c) Guarantor expressly waives any and all benefits, rights and/or defenses which might otherwise be available to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2822, 2825, 2839, 2845, 2848, 2849, 2850, 2899, 2953 and 3433. (d) Guarantor expressly waives any and all benefits, rights and/or defenses which might otherwise be available to Guarantor under California Code of Civil Procedure Sections 580a, 580b, 580d and 726. In specific, but not by way of limitation, Guarantor expressly waives any and all fair value rights under California Code of Civil Procedure Section 580a. (e) Any action, whether judicial or non-judicial or in pursuit of any provisional remedy, taken by SDG&E or the City against Cab I which shall impair or destroy any rights Guarantor may have against Cab I shall not act as a waiver or an estoppel of SDG&E's or the City's rights to proceed against and initiate any action against Guarantor to enforce the terms of this Joinder.
(t) Guarantor acknowledges that it has been made aware of the provisions of California Civil Code Section 2856, has read and understands the provisions of that statute, has been advised by its counsel as to the scope, purpose and effect of that statute, and based thereon, and without limiting the foregoing waivers, Guarantor agrees to waive all suretyship rights and defenses described in Civil Code Sections 2856(a) and (b). Without limiting any other waivers herein, Guarantor hereby gives the following waiver pursuant to Section 2856(b) of the California US-DOCS\149621923.21
Civil Code: Guarantor waives all rights and defenses arising out of an election of remedies by SDG&E or the City even though that election of remedies has destroyed the Guarantor's rights of subrogation and reimbursement against Cab I by the operation of Section 580d of the California Code of Civil Procedure or otherwise. This means, among other things, SDG&E or the City may collect from Guarantor without first exercising any rights against property owned by Cab I. These rights and defenses include, but are not limited to, any rights or defenses based on Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure. The foregoing is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have under the above referenced sections.
(g) [Reserved];
(h) Guarantor assumes the responsibility for keeping informed of the financial condition of Cab I and of all other circumstances bearing upon the risk of nonpayment of Cab I's obligations, and agrees that neither SDG&E nor the City shall have any duty to advise the Guarantor of any information known to either SDG&E or the City regarding any such financial condition or circumstances. Guarantor hereby irrevocably waives any defense (except for the defense of payment or performance (i.e., the defense that Cab I has already paid or satisfied the Guaranteed Obligations)) which, absent this waiver, Guarantor would have that its obligations under this Joinder could be exonerated based upon SDG&E's or the City's failure to inform Guarantor of the existing or ongoing financial condition of Cab I or of any other circumstances bearing upon the risk of nonpayment of any amount guaranteed hereunder. (i) Without limiting the generality of any of the foregoing or any other provision hereof, Guarantor further expressly waives, to the extent permitted by law, any and all rights and defenses ( ( except for the defense of payment or performance (i.e., the defense that Cab I has already paid or satisfied the Guaranteed Obligations)), including without limitation any rights of subrogation, reimbursement, indemnification and contribution, which might otherwise be available to Guarantor under California Civil Code Sections 2787 to 2855, inclusive and Chapter 2 of Title 14, 2899 and 3433, or under California Code of Civil Procedure Sections 580a, 580b, 580d and 726, or any of such sections.
(i) Guarantor consents to the waiver by Cab I of all of its rights under California Civil Code Section 2822, which provides as follows, "(a) the acceptance, by a creditor, of anything in partial satisfaction of an obligation, reduces the obligation of a surety thereof, in the same measure as that of the principal, but does not otherwise affect it. However, if the surety is liable upon only a portion of an obligation and the principal provides partial satisfaction of the obligation, the principal may designate the portion of the obligation that is to be satisfied; and (b) for the purposes of this Section and Section 2819, an agreement by a creditor to accept from the principal debtor a sum less than the balance owed on the original obligation, without the prior consent of the surety and without any other change to the underlying agreement between the creditor and principal debtor, shall not exonerate the surety for the lesser sum agreed upon by the creditor and principal debtor."
Notwithstanding anything to the contrary contained herein, Guarantor agrees to pay all costs and expenses, including reasonable attorneys' fees, that are incurred by the City and SDG&E US-DOCS\149621923.21
in any effort to collect or enforce any of the Guaranteed Obligations, whether any lawsuit is filed, including all costs and reasonable attorneys' fees incurred by the City or SDG&E as the prevailing party in any bankruptcy proceeding to which SDG&E, the City or Guarantor is subject (including any action for relief from the automatic stay of any bankruptcy proceeding). Guarantor is prohibited from assigning any of its rights or obligations under this Joinder.
The following Sections of the Agreement will apply to this Joinder as though herein set forth in full, mutatis mutandis (and, without limitation on the foregoing, references to "Cab I" and "this Agreement" or ''the Agreement" therein shall be deemed changed for this purpose to "Guarantor" and "this Joinder", respectively): Section 13.2 (Notices), Section 13.3 (Successors and Assigns), Section 13.4 (Rights of Third Parties), Section 13.6 (Counterparts; Electronic Signatures), Section 13.7 (Entire Agreement), Section 13.8 (Amendments; Waiver), Section 13.10 (Mutual Drafting), Section 13.11 (Governing Law; Jurisdiction) and Section 13.2 (Time is of the Essence). Guarantor, SDG&E, the City and Cab I agree that this Joinder involves at least $100,000.
US-IX>CS\149621923.21
In witness whereof,
t,!: /15 , 202s. __________,~~/ ~--
the undersigned has executed this Joinder as of
NRG ENERGY INC.
US-DOCS\149621923 .21
Exhibit A-1
Service Center Land
[See attached]
LEGAL DESCRIPTION
That portion of Lot H of Rancho Hedionda, in the City of Carlsbad, County of San Diego, State of California, according to Partition Map thereof No. 823, filed in the Office of the County Recorder of San Diego County on November 16, 1896, being a portion of land defined as Parcel 5 in the Certificate of Compliance recorded October 30, 2001, as Document No. 2001-0789069, Official Record of said County, being more particularly described as follows:
COMMENCING at the Northeasterly corner of Record of Survey No. 14621, recorded in the Office of the County Recorder of San Diego County, August 18, 1994 as File No. 1994-500086, said corner being on the Westerly line of the Right-of-Way of the Atchison Topeka and Santa Fe Railroad; thence along said Westerly line and Easterly line of said Record of Survey No. 14621 South 28°40' 19" East, 656. 70 feet to the most Southerly corner of said Record of Survey No. 14621; thence continuing South 28°40' 19" East, 1110.14 feet; thence South 22°30'13" East, 2664.53 feet to the TRUE POINT OF BEGINNING; thence continuing South 22°30'13" East, 362.82 feet; thence leaving said Westerly line of Railroad, South 67°33'08" West, 941.91 feet; thence North 22°30'45" West, 324.69 feet; thence South 67°27'18" West, 343.53 feet to the Westerly line of the 100 foot wide Carlsbad Boulevard; thence along said Westerly line of Carlsbad Boulevard, North 30°02'15" West, 280.66 Feet to the beginning of a curve concave Easterly having a radius of 5316.55 feet; thence Northerly 88.59 feet along said curve through a central angle of 00°57'17"; thence leaving said Westerly line, North 0°43'42" East, 203.71 feet; thence North 71 °53'50" East, 49.05 feet; thence North 88°29'46" East, 149.63 feet; thence North 77°06'32" East, 80.00 feet; thence North 68°28'15" East, 121.97 feet; thence North 63°21 '24" East, 220.51 feet; thence North 67°56'35" East, 167.57 feet; thence North 76°27'03" East, 60.33 feet; thence South 77°37'06" East, 172.85 feet; thence South 60°55'41" East, 66.30 feet; thence South 45°30'57" East, 47.42 feet; thence South 82°40'44" East, 84.31 feet; thence South 44°29'52" East, 52.55 feet to the TRUE POINT OF BEGINNING.
Containing 16.3 7 acres more or less
Date
J:122000 • SDGE Land Sw-vey MSA\86_Land Serviccs\1306739_25017.0388\19170\Sw-vey\Lcpl1\l306739·19870 CHICAGO TITLE REPORT A.docx