REAL ESTATE OPTION AND PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This Real Estate Option and Purchase and Sale Agreement and Joint Escrow Instructions (this “Agreement”), dated for reference purposes only as of ____________, 2024 (the “Effective Date”) is entered into between SA Golden Investments, a California limited liability company (“Buyer”), and the City of Fontana, a California municipal corporation (“Seller”), for the purchase and sale of that certain real Option Property consisting of approximately ____ acres located in the City of Fontana, County of San Bernardino (“County”), State of California, as legally described on Exhibit A attached hereto and identified on the map attached hereto as Exhibit A-1 (the “Option Property”). As used herein the term “Option Property” shall include all of Seller’s right, title and interest in and to all entitlements, easements, mineral rights, oil and gas rights, water, water rights, air rights, development rights and privileges appurtenant thereto and all improvements located thereon, excepting any right, title or interest to any public rights of way or public easements.
R E C I T A L S
This Agreement is entered into with reference to the following facts:
City owns the fee interest in the Option Property;
Buyer desires to purchase the Option Property for the fair market value as set forth in the Appraisal defined below; The appraisal conducted for the Option Property by Bender Rosenthal Inc. dated December 21, 2023 and concluded that the fair market value for the Option Property was SIX HUNDRED AND FIFTY THOUSAND DOLLARS ($650,000) (the “Appraisal”); and Seller desires to grant an option to purchase the Option Property and Buyer desires to acquire an option to purchase the Option Property as specifically described herein.
No application for any land use entitlement involving the Property has been submitted to any public agency.
The specifics of any potential future use of the Property are not yet known in sufficient detail to allow for the completion of "meaningful environmental assessment" under California Environmental Quality Act ("CEQA") as discussed further under Section 4.3.
Any application (if any) for future land use entitlement would require the local land use authority to undertake all required environmental review pursuant to CEQA.
This Agreement does not anticipate or approve any land use or development entitlement, does not grant any vested development rights, and does not otherwise restrict the City's full and complete consideration and adoption of any feasible mitigation measures or feasible alternatives (expressly including the "no project" alternative) that may be required as part of any future CEQA process.
NOW, THEREFORE, the parties hereto agree as follows:
GRANT OF OPTION
Grant of Option. SELLER hereby grants to BUYER an option to purchase the Option Property on the terms and conditions specified in this Agreement.
Option Consideration. Failure to make any payment required by this section on or before the date specified shall cause this option to terminate. As used in this Agreement, the term “Option consideration” includes consideration both for the initial option and for any extension term. The consideration for the initial term of the option shall be the Deposit described in section 3.B., below.
If Buyer desires to extend the term as provided in Section 1.C, below, Buyer, prior to the expiration of the then current term shall (i) give written notice to Seller of Buyer’s election to extend, and (ii) deposit with Escrow Holder additional option consideration. Additional option consideration for the single six-month extension shall be ONE THOUSAND DOLLARS ($1,000).
If this Agreement is terminated pursuant to Section 7, below regarding title matters, option consideration for the initial term of the option shall be refunded to Buyer. Otherwise, except as provided in Section 1, all option consideration shall be nonrefundable unless Seller defaults under this Agreement. The consideration for the initial option and option extensions is to be disbursed to Seller within forty-eight (48) hours of deposit thereof by Buyer. This Agreement constitutes irrevocable instructions to Escrow Holder that consideration for the initial option and option extensions is to be disbursed to Seller within forty-eight (48) hours of deposit thereof by Buyer.
All option consideration (including extensions) shall be applicable to the purchase price.
Option Term. The initial term of this option shall expire at 5:00 p.m. on first anniversary of the Effective Date (“Option Term”). If this option has not theretofore expired, Buyer may extend the Option Term for up to one (1) Six-month period only if Buyer timely deposits the additional option consideration pursuant to Section 1.B and timely gives notice of election to extend as provided in that Section. Each extension period shall expire at 5:00 p.m. on the last day of a calendar [month/year] unless such day is not a Business Day, in which case the extension period shall expire on the next following day which is a Business Day. A Business Day shall mean Monday through Friday, except for holidays on which the San Bernardino County Recorder’s office is closed.
Permission To Enter. SELLER hereby grants to BUYER, or its authorized agents, permission to enter upon the Option Property at all reasonable times from the Effective Date until the expiration of the Option Term, and if the option is exercised, from and after such exercise until close of this transaction for the purpose of conducting due diligence, including making necessary or appropriate inspections. BUYER will give SELLER at least two (2) business days written or oral notice before going on the Option Property. BUYER does hereby indemnify and hold harmless SELLER, SELLER’s heirs, successors, assigns, officers, employees, agents and representatives free and harmless from and against any and all liability, loss, damages and costs and expenses, demands, causes of action, claims or judgments, arising from or that is in any way connected with BUYER’s inspections or non-permanent improvements involving entrance onto the Option Property pursuant to this Section 1D. If BUYER fails to acquire the Option Property due to BUYER’s default, this license will terminate upon the termination of BUYER’s right to purchase the Option Property. In such event, BUYER will remove or cause to be removed all of BUYER’s personal Option Property, facilities, tools and equipment from the Option Property. If BUYER does not remove all of BUYER’s personal Option Property, facilities, tools, and equipment from the Option Property within ten (10) business days of the date that BUYER’s license terminates under this Section, SELLER has the right to remove said personal Option Property, facilities, tools and equipment from the Option Property. In the event BUYER fails to remove BUYER’s personal Option Property, facilities, tools and equipment from the Option Property after entering the Option Property to perform due diligence, including to make necessary or appropriate inspections as specified in this Section 1D, BUYER is responsible for all reasonable costs incurred by SELLER in any such removal by SELLER.
EXERCISE OF OPTION
Exercise. The option shall be exercised, if at all, prior to the expiration of the initial term, or, if extended, prior to the expiration of the applicable extension term. In order to exercise the option, BUYER must give written notice to SELLER of election to exercise on or before the deadline for exercise which is the Option Term (“Option Exercise”). If an expiration date or deadline would otherwise be a day which is not a Business Day, then the expiration date or deadline shall be the next following Business Day.
Memorandum of Option. The parties shall execute a memorandum or short form of this Agreement to be recorded, filed or published in the public records of San Bernardino County within 3 Business days of the execution of this Agreement.
Quitclaim Deed. Upon expiration or termination of this option without the option having been effectively exercised, BUYER agrees that it shall, within five (5) Business days of any request therefor, execute and deliver to SELLER a quitclaim deed to the Option Property. The provisions of this section shall survive the termination of this Agreement.
PURCHASE PRICE/ DEPOSIT/ INDEPENDENT CONSIDERATION
The purchase price for the Option Property shall be in consistent with the Appraisal Six Hundred and Fifty Thousand Dollars ($650,000) (the “Purchase Price”) to be paid all cash to Seller at Closing, less the Deposit made by Buyer pursuant to Section 2.
Buyer has deposited a cash sum equal to Five Thousand Dollars at First American, 4380 La Jolla Village Dr., Suite 200, San Diego, CA, Attn: Sheri Keene (“Escrow Holder”). Buyer may replace the Deposit held with Escrow so long as Buyer pays any and all fees and costs associated with the Deposit replacement; Seller shall cooperate with the Deposit replacement, but shall not be responsible for any fees or costs. The Deposit, is also the option consideration, shall be held in the Escrow until the Feasibility Deadline (as defined in Section 11 below) with the interest earned thereon inuring to the benefit of Buyer. If on or before the Feasibility Deadline, Buyer delivers to Seller and Escrow Holder written notice approving the feasibility of the Option Property, the Deposit shall thereafter be non-refundable to Buyer, except as otherwise set forth in this Agreement, and shall remain in Escrow until the Closing or earlier termination of this Agreement, and provided further that until the Closing occurs or until Seller receives the Deposit as liquidated damages pursuant to Section 8.E. hereof, Buyer shall be deemed the owner of the Deposit, and Seller and its successors and assigns shall not be entitled to withdraw from Escrow or to receive from Escrow all or any part of the Deposit. If this Agreement is terminated or deemed terminated on or before the Feasibility Deadline, Seller hereby authorizes Escrow Holder to immediately release the Deposit (and all of the interest earned on the Deposit) to Buyer without any additional documentation required from the parties. Seller releases Escrow Holder from all liability in connection with the release of the Deposit to Buyer in accordance with the preceding sentence, and following such release of the Deposit, neither party shall have any further rights or obligations hereunder (other than those arising from a party’s breach of this Agreement). The Deposit shall be credited against the Purchase Price at the Closing.
Within three (3) business days following the mutual execution and delivery of this Agreement to Escrow, Buyer shall deposit into Escrow the amount of One Hundred Dollars ($100.00) (the “Independent Consideration”). The Independent Consideration shall be non-refundable to Buyer as independent consideration for the rights and options extended to Buyer hereunder, including, without limitation, the right and option to terminate this Agreement as provided herein. The Independent Consideration shall be disbursed to Seller immediately following Buyer's deposit thereof into Escrow. In all instances under this Agreement in which Buyer elects to terminate or is deemed to have terminated this Agreement and the Deposit is returned to Buyer, Seller shall retain the Independent Consideration when the Deposit is returned to Buyer. The Independent Consideration shall not be applicable to the Purchase Price or treated as consideration given by Buyer for any purpose other than as provided herein. The parties agree that it is their intention that the amount of the Independent Consideration is sufficient consideration, as such term is defined in Steiner v. Thexton, 48 Cal. 4th 411 (2010). Buyer and Seller hereby acknowledge and confirm that they have had an opportunity to review this provision with their respective, independent counsel.
FAIR MARKET VALUE; NO SUBSIDY BY SELLER; NO AGENCY OBLIGATIONS Buyer and Seller acknowledge and agree that the Purchase Price represents the current fair market value of the Option Property as set for the in the Appraisal. Buyer and Seller further acknowledge and agree that neither Seller not City, in their regulatory capacity or otherwise, has provided or agreed to provide any subsidy to the Buyer in connection with Buyer’s acquisition, development, use and/or operation of the Option Property, nor is there any plan to provide any such subsidy to the Buyer.
REQUIRED SUBMITTALS TO CITY
By the end of the Buyers Feasibility Approval, as set for in Section 11 below, Buyer shall submit its complete application to the City of Fontana for all required approvals.
Within three (3) months of submitting the complete application to the City, Buyer shall submit to the City all required environmental documents to the City.
ESCROW
Closing. The parties shall open an escrow within one (1) business day of Option Exercise on which Buyer exercises its Option. Close of Escrow means the date on which the Grant Deed is recorded in the Official Records of the County of San Bernardino. The Close of Escrow will be 30 days after the Option Exercise, subject to satisfaction of all conditions precedent as described under Section 12 and Section 13, but in no event shall the Close of Escrow be later than ninety (90) days after the Option Exercise (the “Closing Date” or “Closing”). The Closing Date may be extended by the City Manager as set forth in Section 10. Buyer may elect to close the Escrow before the Closing Date upon thirty (30) days prior written notice to Seller.
Escrow Instructions; Costs. The provisions hereof shall constitute joint instructions to Escrow Holder to consummate the purchase in accordance with the terms and provision hereof. The parties shall execute such additional escrow instructions, not inconsistent with the provisions hereof, as may be deemed reasonably necessary to carry out the intentions of the parties as expressed herein; provided, however, if the provisions of any such additional instructions contradict with the provisions of this Agreement, then the provisions of this Agreement shall control. At Closing, (i) real estate taxes shall be prorated between Buyer and Seller as of the closing date, and (ii) all other closing costs and prorations shall be paid by county custom.
Deposit of Documents.
At or before the Closing, Seller shall deposit into escrow the duly executed and acknowledged Deed (defined below) conveying the Option Property to Buyer; At or before the Closing, Buyer shall deposit into escrow the funds necessary to close this transaction; and Seller and Buyer shall each deposit such other instruments as are reasonably required by the “Title Company” (defined below) or otherwise required to close the escrow and consummate the purchase of the Option Property in accordance with the terms hereof.
Prorations. The Current Taxes shall be prorated as of the Closing Date based on the tax assessor’s most recent tax bill for the Option Property except all delinquent taxes and assessments shall be paid by Seller. The parties shall cooperate in good faith following the Closing (and outside of the Escrow) to reconcile any prorations made at the Closing that do not accurately reflect the actual prorated cost or revenue. All prorations of amounts for which Seller is responsible but which Buyer pays or agrees to pay in the future shall be credited against the Purchase Price.
Balance of Purchase Price. Prior to 10:00 a.m. on the day of Closing, Buyer shall deposit with wire to Escrow Holder in immediately available funds the balance of the Purchase Price, together with such other amounts as may be required in order to pay Buyer’s share of closing costs and prorations.
Closing Procedure. Upon receipt of all funds and instruments described in this Section 5, and upon satisfaction or waiver of all contingencies and conditions set forth in this Agreement, Escrow Holder shall:
Record the Grant Deed in the Official Records of San Bernardino County, California.
Issue the Title Policy (as defined below) to the Buyer.
Deliver the Purchase Price to Seller, less any costs and expenses shown on the closing statements approved by Seller and Buyer, which costs and expenses shall be disbursed as instructed by Seller and Buyer in escrow instructions delivered to Escrow Holder prior to the Closing Date.
TITLE
Buyer has procured that current preliminary title report respecting the Option Property issued by First American Title (the “Title Company”) attached hereto as Exhibit B, along with legible copies of the documentation evidencing all exceptions shown therein (the “Title Report”). Within thirty (30) days following the Effective Date, Buyer shall disapprove in writing any exceptions contained in the Title Report to which Buyer objects (the “Disapproved Exceptions”); all exceptions not so objected to by Buyer in writing shall be referred to as “Approved Exceptions”. Seller shall have ten (10) days after Buyer delivers such notice to advise Buyer if Seller will agree to remove any of such Disapproved Exceptions from title. If Seller does not so agree in writing to remove all of the Disapproved Exceptions, then, until the Feasibility Deadline, Buyer may elect to terminate this Agreement and recover the Deposit previously made and any interest actually earned thereon, in which event the parties shall have no further rights or obligations hereunder; or, alternatively, Buyer may elect to waive its objection to those Disapproved Exceptions in which event such Disapproved Exceptions will be deemed to be Approved Exceptions. At the Closing, Seller shall convey its fee interest in and to the Option Property to Buyer (or to such other . affiliated entity as may be specified in Buyer’s escrow instructions and approved by Agency) by deed in a form reasonably mutually acceptable to Buyer and Seller (the “Deed”). Title to the Option Property shall be subject only to (i) a lien for then current taxes, bonds and assessments not yet delinquent and (ii) the Approved Exceptions (collectively, the “Permitted Exceptions”). Immediately following recordation of the Deed, Escrow Holder shall issue to Buyer an A.L.T.A. Standard Coverage Owner’s policy of title insurance, with coverage in the amount of the Purchase Price for the Option Property, showing fee simple title to the Option Property vested in Buyer, subject only to the Permitted Exceptions (the “Title Policy”). Buyer may elect to obtain an extended coverage policy at Buyer’s cost. “AS IS” PURCHASE; RELEASE OF SELLER; LIQUIDATED DAMAGES Buyer’s Independent Investigation. Buyer represents and warrants to Seller that Buyer shall, prior to the Feasibility Deadline, perform a diligent and thorough inspection and investigation of each and every aspect of the Option Property, either independently or through agents of Buyer's choosing, including, without limitation, the following matters (collectively, the “Option Property Conditions”):
All matters relating to title including, without limitation, the existence, quality, nature and adequacy of Seller’s interest in the Option Property and the existence of physically open and legally sufficient access to the Option Property.
The zoning and other legal status of the Option Property, including, without limitation, the compliance of the Option Property or its operation with any applicable codes, laws, regulations, statutes, ordinances and private or public covenants, conditions and restrictions, and all governmental and other legal requirements such as taxes, assessments, use permit requirements and building and fire codes.
The quality, nature, adequacy, and physical, geological and environmental condition of the Option Property (including soils and any groundwater), and the presence or absence of any Hazardous Materials in, on, under or about the Option Property or any other real Option Property in the vicinity of the Option Property. As used in this Agreement, “Hazardous Material” shall mean any material that, because of its quantity, concentration or physical or chemical characteristics, is now or hereafter deemed by any federal, state or local governmental authority to pose a present or potential hazard to human health or safety or to the environment.
The suitability of the Option Property for Buyer’s intended use of the Option Property.
The economics and development potential, if any, of the Option Property.
All other matters of material significance affecting the Option Property.
Hazardous Materials Disclosure. California law requires sellers to disclose to buyers the presence or potential presence of certain Hazardous Materials. Accordingly, Buyer is hereby advised that occupation of the Option Property may lead to exposure to Hazardous Materials such as, but not limited to, gasoline, diesel and other vehicle fluids, vehicle exhaust, office maintenance fluids, tobacco smoke, methane and building materials containing chemicals, such as formaldehyde. By execution of this Agreement, Buyer acknowledges that the notices and warnings set forth above satisfy the requirements of California Health and Safety Code Section 25359.7 and related statutes.
As-Is Purchase. Buyer specifically acknowledges and agrees that Seller is selling and Buyer is purchasing Seller’s interest in the Option Property on an “as is with all faults” basis. Buyer is relying solely on its independent investigation and not on any representations or warranties of any kind whatsoever, express or implied, from Seller or its agents as to any matters concerning the Option Property, its suitability for Buyer's intended uses or any of the Option Property Conditions. Seller does not guarantee the legal, physical, geological, environmental or other conditions of the Option Property, nor does it assume any responsibility for the compliance of the Option Property or its use with any statute, ordinance or regulation. It is Buyer's sole responsibility to determine all building, planning, zoning and other regulations relating to the Option Property and the uses to which it may be put. [Intentionally left blank.]
Release/Indemnity. Buyer shall defend, indemnify, and hold harmless Seller, the City and their respective officials, officers, employees, consultants, contractors and agents (collectively, “Indemnitees”) from and against any and all actual and alleged claims, losses, damages, fines, costs, penalties, expenses (including reasonable attorneys’ fees, costs of experts and other litigation expenses), and liabilities of any type or nature, including those related or due to death or injury to any person and injury to any Option Property, proximately resulting from any negligent acts or omissions by Buyer related to the activities described or contemplated by this Agreement. No officials, officers, employees, consultants, contractors or agents of Seller or City shall be personally liable to Buyer, any voluntary or involuntary successors or assignees, or any lender or other party holding an interest in the Option Property, in the event of any default or breach by Seller or City, or for any amount which may become due to Buyer or to its successors or assignees, or on any obligations arising under this Agreement. No officials, officers, employees, consultants, contractors or agents of Buyer shall be personally liable to City or Seller in the event of any default or breach by Buyer, or for any amount which may become due to Seller or City, or on any obligations arising under this Agreement.
The provisions of this Section 8.E. shall survive the Closing hereunder or the termination of this Agreement and shall not be merged into the Deed.
LIQUIDATED DAMAGES: BUYER AND SELLER AGREE THAT IF, AFTER THE FEASIBILITY DEADLINE, BUYER DEFAULTS ON ITS OBLIGATION TO PURCHASE THE OPTION PROPERTY PURSUANT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT, THE DAMAGES TO SELLER WOULD BE DIFFICULT AND IMPRACTICAL TO DETERMINE. ACCORDINGLY, BUYER AND SELLER HAVE AGREED TO FIX AS LIQUIDATED DAMAGES THE DEPOSIT OF $200,000 SPECIFIED IN SECTION 3, AND SUCH AMOUNT SHALL BE PAYABLE TO SELLER AS LIQUIDATED DAMAGES, AND SHALL CONSTITUTE SELLER’S SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT. BUYER AND SELLER AGREE THAT THIS LIQUIDATED DAMAGES PROVISION IS REASONABLE UNDER THE CIRCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE, GIVEN THE DIFFICULTY AND IMPRACTICALITY OF DETERMINING SELLER’S DAMAGES, THE COSTS OF NEGOTIATING AND DRAFTING THIS AGREEMENT, PERFORMING SELLER’S OBLIGATIONS HEREUNDER, KEEPING THE OPTION PROPERTY OUT OF THE MARKETPLACE, COSTS OF SEEKING ANOTHER BUYER AND OTHER COSTS INCURRED IN CONNECTION HEREWITH. PAYMENT OF SUCH AMOUNT TO SELLER AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY UNDER CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT INSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. SELLER AGREES THAT THESE LIQUIDATED DAMAGES SHALL BE IN LIEU OF ANY OTHER MONETARY RELIEF OR OTHER REMEDY, INCLUDING WITHOUT LIMITATION SPECIFIC PERFORMANCE, TO WHICH SELLER OTHERWISE MIGHT BE ENTITLED UNDER THIS AGREEMENT, AT LAW OR IN EQUITY. BUYER AND SELLER SPECIFICALLY ACKNOWLEDGE THEIR AGREEMENT TO THE FOREGOING LIQUIDATED DAMAGES PROVISION BY INITIALING THIS SECTION IN THE APPROPRIATE SPACES PROVIDED BELOW:
Buyer’s Initials _______ Seller’s Initials _______
POSSESSION; MAINTENANCE OF OPTION PROPERTY
Seller shall deliver to Buyer possession of the Option Property immediately on Closing, free of all uses, tenancies and occupancies unless approved by Buyer. Until possession is delivered to Buyer, subject to Buyer’s authorization to enter the Option Property as set forth in Section 11, Seller agrees, at its sole cost and expense, to maintain and keep the Option Property and all the improvements thereon in not less than the same order and condition as they are on the date this Agreement is executed by Seller. Pending the Closing, Seller shall continue to manage and operate the Option Property and maintain insurance covering the Option Property in substantially the same manner as Seller has managed and operated the Option Property for the last twelve (12) months, and shall not commit waste or otherwise materially and adversely affect the Option Property.
City Manager AUTHORITY
The City Manager of the City (“City Manager”) shall have the authority to take all actions and execute all documents required or necessary for the Agency to perform its obligations under this Agreement, to extend each of the Closing Date or Feasibility Deadline for up to 180 days (or for an additional period beyond said 180 days), and to otherwise complete the Closing and conveyance of the Option Property to Buyer pursuant to this Agreement. Further, City Manager may execute any entitlement applications in connection with the Buyer’s future use of the Option Property, where the signature of the Agency is required as the owner of the Option Property.
DUE DILIGENCE
Buyer shall have until the date that is one hundred and eighty (180) days following the Effective Date (the “Feasibility Deadline”) to determine the feasibility of the Option Property for Buyer’s intended use in Buyer’s sole discretion by its delivery of its written notice of feasibility approval (the “Buyer Feasibility Approval”) to Seller and Escrow Holder on or before 5:00 p.m. Pacific Time on or before the Feasibility Deadline. Buyer’s failure to deliver to Seller and Escrow Holder the Buyer Feasibility Approval on or before the Feasibility Deadline shall automatically be deemed to constitute Buyer’s termination of this Agreement.
Upon the Effective Date of this Agreement, Buyer may enter upon the Option Property until the earlier of the Closing or termination of this Agreement to conduct any investigation, test, study or analysis related to the development thereof, including, but not limited to, soils studies, Phase I and/or Phase II toxic studies, engineering studies, tree surveys, archeological studies, biological studies, utilities and constraints study, hydrology studies and any other matters necessary to evaluate the development of the Option Property. Buyer shall pay all costs with respect to such studies and tests and shall be solely responsible for the disposal of any soil samples (including any Hazardous Materials or other wastes in these samples), which obligation shall survive the termination of this Agreement. Buyer shall exercise due care, follow best commercial practices in connection with such entry and testing, and shall comply with all laws, ordinances, rules, regulations, orders and the like in connection with any entry onto or testing of the Option Property. Prior to any entry onto the Option Property, Buyer shall obtain and maintain, and shall require that its agents, consultants, contractors and representatives (collectively, the “Agents”) to obtain and maintain in full force during the term of this Agreement, at Buyer’s sole cost and expense, a policy of comprehensive liability insurance, including Option Property damage, which will insure Agency, City and their respective officers, members, employees and agents against liability for injury to persons, damage to Option Property, and death of any person arising in connection with Buyer or its Agents entry upon the Option Property and/or conducting of tests or studies thereon. The policy shall be approved as to form and insurance (including approval of the insurance company) by the Agency, and shall be in an amount not less than One Million Dollars ($1,000,000). Buyer shall provide Agency with a certificate for any insurance policy required hereunder, including an endorsement that states that the policy will not be cancelled except after thirty (30) days' notice in writing to Agency and names the additional insureds as required herein. Buyer shall provide Agency with evidence of such insurance coverage prior to any entry onto the Option Property by Buyer or its Agents. Following any such tests or studies, Buyer shall leave the Option Property in substantially similar condition as of the Effective Date of this Agreement, and Buyer shall indemnify, defend and hold harmless Seller, City, and their respective officers, members, employees and agents from and against any liabilities, claims, damages (including injury or damage to person or Option Property), losses, costs, expenses and fees (including reasonable attorneys’ and experts’ fees and costs) to the extent resulting from the entry, inspections and studies conducted by Buyer and its Agents on, under, or about the Option Property, except that Buyer shall have no liability under this Section 11 for, and no obligation to remedy, any liabilities, claims, damages, costs, expenses, fees, conditions or defects on or under the Option Property to the extent (i) not caused by Buyer or its Agents, (ii) resulting from any conditions or defects discovered during Buyer’s investigations and inspections, including the discovery of any Hazardous Materials and the results or findings of any tests, or (iii) to the extent resulting from the acts or omissions of Seller, or Seller’s agents, engineers, contractors, consultants and representatives. Without limiting the foregoing, Buyer shall have no liability for any diminution in the value of the Option Property resulting from the activities excluded in (ii) above, provided in the event Buyer or its Agents discover any toxic or Hazardous Materials on or under the Option Property, Buyer and its Agents shall cease any further investigation in that area of the Option Property, notify Seller by phone and email within twenty four (24) hours of that discovery, exercise reasonable due care so as not to exacerbate that condition and properly dispose of any soils samples which contain such toxic or Hazardous Materials. Nothing in this Section is intended to limit or modify the indemnity contained in Section 8.E. The foregoing indemnity shall survive beyond the Closing, or, if the sale is not consummated, beyond the termination of this Agreement.
To the extent Seller has not previously done so, Seller shall make available to Buyer for Buyer’s review and inspection, during the term of this Agreement at the office of Seller and upon at least twenty-four (24) hours’ prior notice, and in each case to the extent the materials are in the Seller’s possession or control, copies of all soil and hydrology reports, environmental or toxic material reports, biological reports, archeological reports, engineering reports, traffic studies, environmental impact studies, or any public records which concern the Option Property (collectively the “Documents”). Buyer shall have the right, at Buyer’s cost, to make copies of the Documents for Buyer’s review and approval but if this Agreement is terminated, Buyer shall, upon the written request of Seller, return all such Documents and copies to Seller. Seller makes no representation or warranties whatsoever regarding the existence, availability, completeness or accuracy of the Documents. Buyer shall promptly deliver to Seller copies of any reports relating to any testing or other inspection of the Option Property performed by Buyer or its agents, employees or contractors (the “Buyer Work Product”), but shall not deliver copies of any such reports to any other person or entity without Seller’s prior written approval. Seller acknowledges and agrees that any and all of the Buyer Work Product is provided by Buyer for informational purposes only and do not constitute representations or warranties of Buyer of any kind, including any representations and warranties concerning the accuracy or completeness of any information in the Buyer Work Product.
CONDITIONS TO BUYER’S PERFORMANCE
Buyer’s obligations to purchase the Option Property under this Agreement are subject to Buyer’s written approval of the following conditions precedent (“Buyer’s Closing Conditions”), but Buyer shall have the right to waive any such condition(s) in writing within the time period specified in such condition, or if not specified, prior to the Closing. If Buyer waives any of Buyer’s Closing Conditions, then Seller shall be relieved of any further obligation or liability, including any representation or warranty, in connection with such condition. In the event Buyer determines that any such condition is objectionable, unacceptable, or cannot be satisfied within the period specified below, or if no time period is specified then prior to Closing, Buyer may, in its sole and absolute discretion, fail to approve said condition. In such event, then (without limiting Buyer’s remedies in the event of a breach of this Agreement by Seller which are provided in Section 21 below) the Deposit and all interest earned thereon while in Escrow, shall be returned immediately to Buyer by Escrow Holder, and neither party shall have any further rights or obligations hereunder. If the Closing occurs and Buyer has failed to disapprove of any of the following Buyer’s Closing Conditions, then such condition(s) shall be deemed waived.
Feasibility Study. Buyer’s approval of the feasibility of the Option Property for Buyer’s intended use in accordance with Section 11 prior to the Feasibility Deadline.
Truth and Accuracy of Seller’s Representations and Warranties. Seller’s representations and warranties as set forth in this Agreement shall be true and correct on the Effective Date of this Agreement and on the Closing Date.
Title. Escrow Holder is irrevocably and unconditionally committed to issue to Buyer the Title Policy with no exceptions to coverage other than the Permitted Exceptions, and no person or entity has any right to use or occupy the Option Property, except as shown in any Permitted Exceptions in the Title Policy.
Seller’s Other Obligations. Seller shall have performed all of its other covenants and obligations as set forth in this Agreement.
E. Parking Structure. An adjacent parking structure containing not less than 300 spaces shall have commenced construction prior to the Closing Date.
CONDITIONS TO SELLER’S PERFORMANCE
The following are conditions precedent to Seller’s obligation to sell the Option Property to Buyer (“Seller’s Closing Conditions”):
Buyer shall have received final approval (beyond any challenge or appeal period with no challenge or appeal then pending) of all necessary land-use approvals, authorizations and entitlements, including, without limitation, entering into a development agreement between Buyer and the City (collectively, the “Entitlements”), to develop the Option Property.
Seller shall have completed all required review under CEQA, including an evaluation of the significant adverse effects, alternative projects (including the “no project alternative”), and mitigation measures. This Option Agreement merely confirms the fiscal and business-related terms relative to the potential purchase and sale of the Property. This Option Agreement shall not be construed as, and does not approve, any land use or development entitlement, does not grant any vested development rights, and does not otherwise restrict the lead agency's full and complete consideration and adoption of any feasible mitigation measures or alternatives (expressly including the "no project" alternative) that may be required as part of any future CEQA process. Further, any potential future uses of the Property are not yet known in sufficient detail to allow for the completion of "meaningful ... environmental assessment," such that undertaking environmental review would be premature under State CEQA Guidelines Section 15004. As such, this Agreement does not bind or commit the lead agency or any other governing jurisdiction to any definite course of action with regard to the property, and this Option Agreement does not constitute the approval of a "project" pursuant to CEQA. Nonetheless, the Closing of escrow and any transfer of title under this Agreement, as well any consideration by the governing jurisdictions of future actions allowing for potential future development of the Property, are expressly made contingent upon the completion of all required environmental review under CEQA, as permitted by State CEQA Guidelines Section 15004(b).
Seller’s approval of Buyers proof of construction financing and construction contracts, such approval not to be unreasonably withheld.
Approval of the first phase building permit by the City Building and Safety Department and ability to issue upon only the payment of required fees.
Buyer shall have performed all of its obligations hereunder and all of Buyer’s representations and warranties shall be true and correct.
Each of Seller’s conditions precedent are intended solely for the benefit of Seller and is deemed to be material to and of the essence of this Agreement. If any of Seller’s conditions precedent are not satisfied as provided above, Seller may, at its option, terminate this Agreement. In such event, then (without limiting Seller’s remedies) the Deposit and all interest earned thereon while in Escrow, shall be delivered to Seller by Escrow Holder except in the event that Seller terminates this agreement pursuant to Section 13.A, in which case such amounts shall be returned immediately to Buyer by Escrow Holder, and neither party shall have any further rights or obligations hereunder. If the Closing occurs and Seller has failed to disapprove of any of Seller’s Closing Conditions, then such condition(s) shall be deemed waived.
SELLER’S REPRESENTATIONS AND WARRANTIES
Seller hereby makes the representations and warranties set forth in this Agreement for the benefit of Buyer and its successors and assigns for a period of six (6) months from and after the Closing Date, after which Seller’s representations and warranties will be of no further force or effect. Seller shall notify Buyer in writing within ten (10) business days after Seller’s City Manager receives actual knowledge that any representation or warranty has become untrue or misleading in light of information obtained by Seller after the Effective Date of this Agreement, and if such ten (10) business day period would expire after the Closing, then the Closing shall be extended until the expiration of the ten (10) business day period. As used herein, “Seller’s knowledge” shall mean the present actual, not constructive, knowledge of Seller’s current City Manager, without any investigation or inquiry or duty to do so. All representations and warranties contained in the Agreement shall be deemed remade at Closing except as otherwise disclosed to Buyer in writing, shall survive the Closing for the prescribed six-month period and shall not merge with the Deed.
To Seller’s knowledge, there is no litigation, arbitration or proceeding pending, or threatened, before any court or administrative agency or any other condition that relates to or affects the Option Property, Seller’s performance hereunder, Buyer’s intended use of the Option Property, or which will result in a lien, charge, encumbrance or judgment against any part of or any interest in the Option Property, except (i) as disclosed in the Title Report, or (ii) as otherwise disclosed to Buyer in writing.
To Seller’s knowledge, the Option Property is not in violation of any federal, state or local law, statute, regulation, code or ordinance.
Seller is not a foreign person, foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the Internal Revenue Code Section 1145 and any related regulations and Seller is exempt from the withholding obligations imposed by California Revenue and Taxation Code Sections 18805, 18815, and 26131.
To Seller’s knowledge, no person or entity has the right to use, occupy, possess or reside on the Option Property except as disclosed in the Title Report and Seller has not, to Seller’s knowledge, nor has City, to Seller’s knowledge, granted any person or entity any such rights .
BUYER’S REPRESENTATIONS, WARRANTIES AND COVENANTS
Buyer represents and warrants that it is a limited liability company duly organized under the laws of California, in good standing and authorized to conduct business in State of California, has the capacity and full power and authority to enter into and carry out the agreements contained in and the transactions contemplated by this Agreement, and that this Agreement has been duly authorized and executed by Buyer, and upon delivery to and execution by Seller, shall be a valid and binding agreement of Buyer.
There is no action, suit, arbitration, unsatisfied order or judgment, government investigation or proceeding pending or, to the actual knowledge of Buyer threatened, against Buyer which, if adversely determined, could individually or in the aggregate materially interfere with the consummation by Buyer of the transaction contemplated by this Agreement. The term “actual knowledge” means the present actual, not constructive, knowledge of Robert Martin without any further investigation or inquiry or duty to do so.
In compliance with Executive Order 13224 and the USA Patriot Act of 2001, Buyer and Seller each affirmatively represents and warrants to the other that (a) neither it, nor any of its officers, directors, or principals, has committed or supported terrorist acts; or (b) neither it, nor any of its officers, directors, or principals is identified on the list of Specially Designated Nations and Blocked Persons generated by the Office of Foreign Assets Control.
COMMISSIONS
Each party represents to the other that it has not dealt with any broker, agent, or finder for which a commission or fee is payable with respect to the Option Property or this Agreement, and each party shall indemnify, defend and hold harmless the other from any claims, demands, liabilities, or judgments for commissions or fees arising from such party’s breach of this Section. The foregoing indemnification, defense and hold harmless obligations of the parties shall survive Closing and any termination of this Agreement.
FOREIGN INVESTOR DISCLOSURE
Seller understands that if Seller is unable to certify that it is U.S. citizen or a resident of the State of California at the time of the Closing, Buyer shall be entitled to withhold from the purchase price such amounts as are necessary to satisfy Buyer’s withholding obligations under the Foreign Investment in Real Property Tax Act and under California Revenue and Taxation Code Sections 18805, 18815 and 26131.
FUTURE LEASES, COMMITMENTS AND ENCUMBRANCES
From and after the Effective Date of this Agreement, except to the extent required by law or otherwise, Seller shall not (a) execute, modify and/or approve any leases, contracts or commitments affecting the Option Property that would extend beyond the Closing Date without Buyer’s written approval; which approval may be given or withheld in Buyer’s sole discretion; or (b) voluntarily encumber the Option Property with any liens, encumbrances or other instruments creating a cloud on title or securing a monetary obligation with the Option Property.
CONDEMNATION/CASUALTY
If after the Effective Date of this Agreement and prior to the Closing all or any part of the Option Property is taken or threatened to be taken by eminent domain or condemnation or is destroyed by fire, earthquake or other casualty, Buyer may elect either (a) to terminate this Agreement as to the entire Option Property, in which event all the Deposit and interest earned thereon while in Escrow, shall be returned to Buyer, and this Agreement shall be null and void and of no further force or effect, or (b) to consummate purchase of the Option Property as herein provided, in which event Seller shall pay or assign to Buyer all condemnation awards or payments in respect of the Option Property and/or all insurance proceeds paid or payable to Seller as a consequence of such casualty. If this Agreement is terminated in full pursuant to this Section 19, neither party shall have any further rights, duties, obligations or liabilities, at law or in equity, arising out of or relating to this Agreement except for those that specifically survive termination of this Agreement pursuant to other provisions hereof.
Prevailing Wage Requirements.
Buyer acknowledges that the Seller has made no representation, express or implied, to Buyer or any person associated with Buyer regarding whether or not laborers employed relative to the construction, installation and maintenance of improvements on the Option Property, if any, must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to California Labor Code Sections 1720, et seq. Buyer agrees with Seller that Buyer shall assume the responsibility and be solely responsible for determining whether or not laborers employed relative to any construction of capital improvements on the Property must be paid the prevailing per diem wage rate for their labor classification, as determined by the State of California, pursuant to California Labor Code Sections 1720, et seq.
Buyer, on behalf of itself, its successors, and assigns, waives and releases Seller from any right of action that may be available to any of them pursuant to California Labor Code Sections 1726 and 1781. Buyer acknowledges the protections of California Civil Code Section 1542 relative to the waiver and release contained in this Section which reads as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
BY INITIALING BELOW, OWNER KNOWINGLY AND VOLUNTARILY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542 SOLELY IN CONNECTION WITH THE WAIVERS AND RELEASES OF THIS SECTION:
___________________________
Buyer
Additionally, Buyer shall indemnify, defend with counsel acceptable to Seller and hold harmless Seller against any claims pursuant to California Labor Code Section 1781 arising from this Agreement or the construction or installation or maintenance of any improvements on or in the Option Property, in accordance with the terms of Section 3.2 of this Agreement.
If Civil Code sections 9550 et seq. require contractors to procure a payment bond, then the Buyer shall ensure that its contractors deliver the required bond.
AMENDMENTS
This Agreement expresses the agreement of the parties. There are no other understandings, oral or written, which in any manner alter or enlarge its terms. This Agreement supersedes any and all prior agreements between the parties hereto regarding the Option Property. Seller and Buyer agree to execute such additional documents as may be reasonable and necessary to carry out the provisions of this Agreement. This Agreement may be amended, but only in writing and only if such writing is executed by both parties.
BUYER’S REMEDIES; NO MONEY DAMAGES
If Seller defaults on its obligation to deliver title to the Option Property to Buyer in the manner required hereby or otherwise breaches this Agreement, Buyer shall have the right to seek specific performance of this Agreement or Buyer may terminate this Agreement, in which case Buyer shall be entitled to an immediate return of the Deposit and any interest earned thereon while in the Escrow and Buyer shall have no further right to seek damages. The failure of Buyer to receive approval of any applicable development permits, maps, or other entitlements for the Option Property shall not constitute a default or breach of Seller’s obligations contained in this Agreement. Buyer acknowledges that Seller would not have entered into this Agreement if doing so would subject it to the risk of incurring liability in money damages, either for breach of this Agreement, anticipatory breach, repudiation of the Agreement, or for any actions with respect to its negotiation, preparation, implementation or application. The parties further acknowledge that money damages and remedies at law generally are inadequate, and specific performance is the most appropriate remedy for the enforcement of this Agreement and should be available to Buyer. Therefore, the parties hereby acknowledge and agree that it is a material part of Buyer’s consideration to Seller that Seller shall not be at any risk whatsoever of liability for money damages relating to or arising from this Agreement, and except for the express indemnity obligations hereunder and non-damages remedies, including the remedy of specific performance, Buyer, for itself, its successors and assignees, hereby release Agency, the City and their respective officers, members, employees and agents from any and all claims, demands, actions, or suits of any kind or nature arising out of any liability, known or unknown, present or future, including, but not limited to, any claim or liability, based or asserted, pursuant to Article I, Section 19 of the California Constitution, the Fifth and Fourteenth Amendments of the United States Constitution, or any other law or ordinance which seeks to impose any money damages, whatsoever, upon the parties because the parties entered into this Agreement, because of the terms of this Agreement, or because of the manner of implementation or performance of this Agreement.
ATTORNEYS’ FEES
If this Agreement or the transaction contemplated herein gives rise to a lawsuit or other legal proceeding between the parties hereto, the prevailing party shall be entitled to recover its costs and reasonable attorneys’ fees and costs of litigation in addition to any other judgment of the court.
ASSIGNMENT
Without Seller’s written consent, Buyer’s rights and obligations hereunder may not be assigned to any other party; provided that Buyer notifies Seller in writing within twenty (20) business days of such assignment, and provided that said assignee assumes all of the obligations of Buyer under this Agreement and agrees to perform all the obligations of Buyer hereunder as if such assignee were the original Buyer hereunder. Any such approved assignee shall have all the benefits, including rights to specific performance, damages, and enforcement of Seller’s representations and warranties that Buyer has under this Agreement. No such assignment, however, shall relieve Buyer of any of its obligations hereunder.
NOTICES
All notices or tender required or permitted herein shall be in writing and shall be sent to the address set forth below (or such other address as a party may hereafter designate for itself by written notice to the other parties as required hereby) of the party for whom such notice or communication is intended:
If to Seller:
Attn: Matthew C. Ballantyne
City of Fontana
8353 Sierra Ave.
Fontana, CA 92336
With copy to:
Best Best & Krieger LLP
2855 E. Guasti Road
Suite 400
Attn: Ruben Duran
Email: [email protected]
If to Buyer:
Attn: Saber Awad
SA Golden Investments, Inc.
6226 Cooper Ave.
Fontana, CA 92336
Email: [email protected]
Any such notice or communication shall be sufficient if sent by registered or certified mail, return receipt requested, postage prepaid; by hand delivery; by overnight courier service; or by fax or electronic mail if receipt is confirmed by the recipient. Any such notice or communication shall be effective on the business day delivered to the office of the addressee or upon refusal of such delivery, or three business days after deposit by first class mail. Notice transmitted after 5:00 p.m. or on Saturday or Sunday shall be deemed to have been given on the next business day. Should any act or notice required hereunder fall due on a weekend or holiday, the time for performance shall be extended to the next business day.
MISCELLANEOUS
Section headings contained herein are included solely for convenience of reference and shall in no way affect the construction of this Agreement.
Time is of the essence of this Agreement.
This Agreement shall be governed by the laws of the State of California.
Each party shall execute, acknowledge, and deliver, after the Effective Date of this Agreement, including at or after closing, such further assurances, instruments and documents as the other may reasonably request in order to fulfill the intent of this Agreement and the transactions contemplated hereby.
If any provision of this Agreement is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement shall continue in full force and effect and shall in no way be impaired or invalidated, and the parties agree to substitute for the invalid or unenforceable provision a valid and enforceable provision that most closely approximates the intent and economic effect of the invalid or unenforceable provision.
This Agreement may be executed in counterparts, and transmitted by facsimile by and to each of the parties, and each such counterpart shall be deemed an original, and all of them together shall constitute a single instrument.
If a party hereto believes the other party is in breach or default under this Agreement, the non-breaching party shall deliver written notice of the alleged breach or default to the other party, and the other party shall have ten (10) business days after receipt of such written notice in which to cure the breach or default, and if the breach or default is actually cured within such ten (10) business day period, the breaching party shall not be in breach or default under this Agreement by reason of the matter(s) alleged in the non-breaching party’s notice that have been so cured.
Except as expressly set forth herein, this Agreement is not intended nor shall it be construed to create any third party beneficiary rights in any person who is not expressly made a party and signatory hereto.
If Buyer executes this Agreement before Seller, such execution and delivery of the Agreement shall be deemed an offer to buy the above described Option Property for the price and upon the terms and conditions herein stated.
INTENTIONALLY LEFT BLANK;
SIGNATURES FOLLOW IMMEDIATELY ON NEXT PAGE
SELLER:
City of Fontana
BUYER:
SA Golden Investments, Inc.
By:
By:
Name:
Matthew C. Ballantyne
Name:
Saber Awad
Title:
City Manager
Title:
Chief Executive Officer
Date:
Date:
APPROVED AS TO FORM:
APPROVED AS TO FORM:
By:
By:
Name:
Name:
Ruben Duran
Title:
Special Legal Counsel
Title:
City Attorney
Date:
Date:
ATTESTS:
By:
Name:
Title:
City Clerk
Dated:
List of Exhibits
A Description of Option Property
A-1 Map of Option Property
B Title Report
The undersigned representative of Escrow Holder hereby accepts the foregoing instructions and agrees to comply with them in connection with the purchase and sale of the Option Property.
Escrow Holder:
___________________:
Effective Date:
By:
Authorized Representative
Exhibit A
Description of the Option Property
Approximately 21,500 square feet, known as the following in the City of Fontana, County of San Bernardino, California:
Assessors Parcel Numbers 0191-163-16, 0191-163-17, and 0191-163-26 Exhibit A-1
Map of Option Property
Exhibit B
Title Report
[To be inserted]
-2-
15341.00000\41935680.1
15341.00000\41935680.1
15341.00000\41935680.1
15341.00000\41935680.1
SECOND DRAFT; SUBJECT TO REVISIONS
1/9/24