As discussed below, the petition was returned to the City’s Elections Official (i.e., the City Clerk) on October 27, 2025, and the OC Registrar subsequently verified there were a sufficient number of signatures to qualify the measure on the ballot. Accordingly, and as also further discussed below, it is recommended that the City Council submit the measure to the voters at the City’s next General Municipal Election scheduled for Tuesday, November 3, 2026.
DISCUSSION
The California Constitution reserves for the voters the right of the initiative power, which allows for voters of a specific jurisdiction to directly create or change laws—including local ordinances—by placement of a measure on a city ballot. “Initiative and referendum powers may be exercised by the electors of each city or county under procedures that the Legislature shall provide.” (Cal. Const. Art. 2, § 11(a)) Accordingly, the California Legislature has established procedures for the exercise of initiative powers by city voters. As described below, although initiative measures are largely regulated by the California Elections Code, ballot measures for term limits (including initiatives), in particular, are additionally regulated by a more specific provision in the Government Code. Government Code Section 36502(b), in short, requires the City Council to place a qualified initiative measure for term limits on the ballot at a regularly scheduled election only.
Term Limits Initiative Background
As noted above, on April 29, 2025, the proponents submitted to the City’s Elections Official (i.e., the City Clerk) a Notice of Intent to circulate an initiative petition, pursuant to California Elections Code Section 9202. As required by Section 9202, the proponents submitted the text of the initiative (“Initiative”) with the Notice of Intent. Initiative measures for an amendment to a city’s municipal code are submitted in the form of a proposed ordinance (see Elec. Code §§ 9200, 9201).
Here, the Initiative is a proposed ordinance to amend the Laguna Beach Municipal Code to create term limits on City Councilmembers. The proposed ordinance is attached hereto as Attachment 1.
After the City Clerk received the Notice of Intent and Initiative, the City Attorney prepared a Ballot Title and Summary for the proposed measure, in accordance with California Elections Code Section 9203. This required Ballot Title and Summary of the proposed Initiative is attached hereto as Attachment 2. As explained therein, the Initiative proposes a two-term limit on City Councilmembers; after two consecutive terms, a person seeking a City Council seat must then have a two-year cooling off period before he or she may again seek City Council office. This attachment explains the terms of the proposed Initiative in further detail.1
Thereafter, on May 15, 2025, the City Clerk submitted the Ballot Title and Summary to the Initiative proponents and notified them of the 180-day deadline to file a signed petition with the City Clerk’s Office.
Pursuant to California Elections Code Section 9215, an initiative petition must be signed by not less than 1 Under California law, a measure for term limits can apply prospectively only. (Gov. Code § 36502(b).)
QUALIFICATION OF INITIATIVE MEASURE PROPOSING TO ENACT CITY COUNCIL
TERM LIMITS
December 9, 2025
10% of the registered voters of the City to qualify the measure for the ballot. Per the OC Registrar’s official report of registration to the Secretary of State at the time the notice of intention was published, the number of registered voters in Laguna Beach was 18,179.
The proponents had 180 days from receipt of the Ballot Title and Summary for signature gathering (Elec.
Code § 9208). On October 27, 2025, the Initiative proponents filed the signed petition with the City Clerk’s Office (see Attachment 3). Pursuant to the California Elections Code, the petition was examined by the City Clerk’s Office and subsequently sent to the OC Registrar for signature verification (see Attachment 4). As authorized under Elections Code sections 9115 and 9211, the OC Registrar conducted signature verification through the random sampling method of 500 petition signatures. Based upon that examination, 438 out of the 500 sampled signatures were verified as valid, equating to 87.6% validity rate. A total of 2,543 petition signatures were filed and, based upon the above validity rate, this equates to 2,227 signatures being valid.
Under State law, 1,818 voter signatures are required to qualify the measure for the ballot. On December 1, 2025, the City received notification from the OC Registrar’s Office that the signature verification process was complete. On December 4, 2025, the City Clerk’s Office notified the proponents via email that the petition had sufficient signatures to qualify the Initiative measure on the ballot.
The Certificate of Sufficiency of Initiative Petition from the County is attached to this report as Attachment
5. It is recommended that the City Council receive, file, and accept the certificate as valid in all respects.
Requirements for Placement on the Ballot
Typically, once a proposed initiative (e.g., a land use, regulatory or other municipal police power initiative measure) has obtained the required number of signatures to qualify the measure, the City Council has multiple options to proceed. Under Elections Code Section 9215, those options include that the City Council may (1) adopt the proposed measure "as is" (i.e., adopting the ordinance without taking the measure to the voters); (2) submit the measure "as is" to the voters, either at the general municipal election or at a special election that is between 88 and 103 days of the order of the election, pursuant to Elections Code Section 1405 (as cross-referenced in Section 9215(b)); or (3) order an additional report, pursuant to Elections Code Section 9212 (as cross-referenced in Section 9215(c)).
However, and as noted above, the California Government Code includes a provision that more specifically governs the consideration of a measure proposing term limits on City Council seats. Specifically, Government Code Section 36502, subdivision (b), governs the issue of term limits imposed on City Councils and is restated in pertinent part (with emphases added), below:
Notwithstanding any other provision of law, the city council of a general law or charter city may adopt or the residents of the city may propose, by initiative, a proposal to limit or repeal a limit on the number of terms a member of the city council may serve on the city council, …. Any proposal to limit the number of terms a member of the city council may serve on the city council, …, shall apply prospectively only and shall not become
QUALIFICATION OF INITIATIVE MEASURE PROPOSING TO ENACT CITY COUNCIL
TERM LIMITS
December 9, 2025
operative unless it is submitted to the electors of the city at a regularly scheduled election and a majority of the votes cast on the question favor the adoption of the proposal.
When multiple statutes govern the same subject—as is the case here—they should be read together to harmonize them, where possible, and, where there is a conflict, the specific statute should prevail in matters it directly controls.
Here, the Elections Code technically allows the City Council to adopt a qualified initiative measure as an ordinance, without alteration, either at this meeting or within 10 days thereafter, thereby foregoing an election. If this were a land use, regulatory, or other type of initiative measure, this option would likely be available. (Elections Code § 9215(a).) However, Government Code section 36502(b) requires any municipal term limits measure, whether proposed by the City Council or by initiative petition, to be voter approved to become effective. Therefore, this Initiative measure must be placed before Laguna Beach voters for their approval, and outright adoption by the City Council is not a legal option in this case.
Similarly, the Elections Code also technically allows the Council to submit the Initiative measure to the voters at a Special Municipal Election to be scheduled on a Tuesday between 88 and 103 days following the Council’s order of the Special Election. (Elections Code §§ 9215(b), 1405(b).) Again, this may apply to other types of initiative measures. However, Government Code section 36502(b) requires a municipal term limits measure to be placed on a “regularly scheduled election” date. Pursuant to Laguna Beach Municipal Code Section 1.08.010, the “general municipal election for the city shall be held on the same day as the statewide general election in November of even-numbered years.” Note also that the Statewide Primary in 2026 will be held on June 2, 2026, which is more than 103 days from the date of this staff report; there is no other Statewide or County regular election within the 88-to-103 day window for which a special election called by the City could be consolidated from the date of this staff report. Accordingly, consolidation with the June 2, 2026, Statewide primary would not comply with Election Codes Section 1405, in any event.3
Accordingly, in reading Elections Code Section 9215 and Government Code Section 36502(b) together and reconciling conflicts in favor of Government Code Section 36502(b)’s more specific provisions, the City Council does not have the options under Election Code Sections 1405 or 9215 to either (1) adopt the Initiative as is without an election, or (2) to call a special election for the Initiative to occur before the City’s next regular General Municipal Election on November 3, 2026. The remaining options available to the City 3 Note that Section 2 of the proposed Initiative (see Attachment 1) references the June primary as the date of the election.
However, as explained, that is not a legally permissible option here and thus the matter will need to be placed on the November 3, 2026 ballot. Notwithstanding the November 2026 election date for the Initiative matter, if adopted by the voters at that election, the terms limits will apply to any persons elected to a City Council office at the November of 2026 election. (See Op.Atty.Gen. 11-401 (July 13, 2012), 2012 WL 2950130 [finding that if city voters enact an ordinance imposing a two-consecutive-term limit on incumbency on the Town Council and in the same election elect or re-elect members to the Town Council, where the terms of the newly elected and re-elected members commence shortly before the effective date of the term limit ordinance, the new term may be counted as the first of the two terms subject to the limitation, such that an incumbent Town Council member may serve consecutively his or her current term and one more].)
QUALIFICATION OF INITIATIVE MEASURE PROPOSING TO ENACT CITY COUNCIL
TERM LIMITS
December 9, 2025
Council under Section 9215 (and Section 1405, as cross-referenced in Section 9215) of the California Elections Code and Section 36502(b) of the California Government Code, are as follows:
1) Submit the Initiative measure to the voters at the City’s next General Municipal Election scheduled for Tuesday November 3, 2026 (since that is the only date which complies with both statutes with Elections Code Section 9215 and 1405 and Government Code Section 36502); or 2) Order staff to prepare a report on the Measure’s fiscal impact, effect on the General Plan, land use and housing, impact on infrastructure funding, and other related impacts on the City’s facilities and services, pursuant to Elections Code Section 9212 (as authorized by Election Code 9215(c)). If ordered, the report must be presented to the Council no later than 30 days after the City Clerk’s certifying the petition as sufficient (which occurred this evening).5 After the report is presented to the City Council, it must then call the election for Tuesday, November 3, 2026.
Staff does not recommend that an impact report be prepared as this Initiative is predominantly an issue of democratic representation for the voters to decide. The fiscal, land use, and other impacts of a Council termlimits measure on the City’s day-to-day operations will be nominal and, irrespective of the outcome, the matter will ultimately be required to be submitted to the voters. Therefore, staff does not believe an impact report is needed to analyze the details of this term limits measure.
As a result, staff recommends the City Council schedule the Initiative measure for the November 3, 2026, General Municipal Election. Staff has included a Resolution calling the election for November 3, 2026, attached hereto as Attachment 6. The attached Resolution submits the Initiative to the voters at the November 3, 2026, General Municipal Election; requests the County to consolidate that election with the Statewide General Election of the same date; and sets the rules and deadlines for arguments and rebuttals for and against the measure.
The Resolution also includes the proposed Initiative to be submitted to the voters. Note that there were minor changes made to the Initiative due to scrivener’s errors in the original text. In particular, the following revisions were made to address those errors (strikeouts to reflect deletions, underlining/italicizing to reflect additions):
Section 3: “If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are severable. The City Council people hereby declares that the they would have adopted this ordinance irrespective of the invalidity of any particular portion thereof.” Added Section 5 and signature lines, to create the mechanism for the Ordinance to take effect upon approval by the voters6:
5 There is not a regular City Council meeting scheduled within 30 days of this staff report. 6 Government Code section 36932(a) requires an ordinance be signed by the Mayor and attested to by the City Clerk.
QUALIFICATION OF INITIATIVE MEASURE PROPOSING TO ENACT CITY COUNCIL
TERM LIMITS
December 9, 2025
“Section 5. Signature and Attestation of Ordinance.
The Mayor is hereby authorized to sign, and the City Clerk is hereby authorized to attest to the adoption of this Ordinance by the People voting on November 3, 2026, by signing where indicated below.
_______________________
________________, Mayor
Attest:
_____________________
ANN MARIE MCKAY
City Clerk”
Staff recommends the City Council adopt the Resolution attached as Attachment 6.
FINANCIAL ANALYSIS
Submitting the proposed measure to the voters and consolidating the election on the measure with the November 2026 general municipal election is estimated by the OC Registrar to cost up to $55,000. It will be necessary to appropriate such funds for election expenses as part of the Fiscal Year 2026-2027 Operating Budget. The Orange County Registrar-Recorder/County Clerk will invoice the City of Laguna Beach for Election Services after the General Municipal Election.
ENVIRONMENTAL ANALYSIS
The proposed actions are not subject to the California Environmental Quality Act (CEQA) pursuant to State CEQA Guidelines, as it is not a "project" and has no potential to result in a direct or reasonably foreseeable indirect physical change to the environment (14 Cal. Code Regs. § 15378(a)). The placement of the measure on the ballot is not a discretionary action of the City Council within the meaning of CEQA and the State CEQA Guidelines and is, therefore, not subject to CEQA review. See, Tuolumne Jobs and Small Business Alliance v. Superior Court, (2014) 59 Cal. 4th 1029. (See Tuolumne Jobs and Small Business Alliance v.
Superior Court, (2014) 59 Cal. 4th 1029.)
ATTACHMENTS
1. Proponent’s Submitted Initiative [An Ordinance of the People of the City of Laguna Beach, California, Adding Section 2.04.080 to the Laguna Beach Municipal Code to Establish Term Limits for City Council Members] (Pgs. x-x)
2. Ballot Title and Summary (Pgs. X-X)
3. City Clerk’s Receipt for Petition (Pgs. X-X)
4. City Clerk’s Letter to OC Registrar for Signature Verification (Pgs. X-X)
5. OC Registrar of Voters Certification (Pgs. X-X)
6. Resolution Submitting the Initiative to the Voters at the November 3, 2026; Requesting the County to Consolidate the Election with the Statewide General Election of the Same Date; and Setting the Rules and Deadlines for Arguments and Rebuttals For and Against the Measure (Pgs. X-X))
QUALIFICATION OF INITIATIVE MEASURE PROPOSING TO ENACT CITY COUNCIL
TERM LIMITS
December 9, 2025
Submitted By: . Approved: .
Ann Marie McKay, City Clerk Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Ann Marie McKay, City Clerk Megan Garibaldi, City Attorney City of Laguna Beach
ORDINANCE NO.
AN ORDINANCE OF THE CITY OF LAGUNA BEACH, CALIFORNIA,
ADDING A NEW SECTION 2.04.080 TO CHAPTER 2.04 TO TITLE 2 OF
THE LAGUNA BEACH MUNICIPAL CODE RELATING TO TERM
LIMITS, SUBJECT TO APPROVAL OF A MAJORITY OF THE
ELECTORS VOTING ON THE MEASURE AT THE NEXT REGULARLY
SCHEDULED STATEWIDE PRIMARY ELECTION TO BE HELD
TUESDAY, JUNE 2, 2026.
THE PEOPLE OF THE CITY OF LAGUNA BEACH DO ORDAIN AS FOLLOWS:
Section 1. Amendment of the Laguna Beach Municipal Code.
Pursuant to California Government Code section 36502(6) and subject to the approval of a majority of the voters of the City of Laguna Beach, the Laguna Beach Municipal Code is hereby amended to add a new Section 2.04.080, Term Limits, to Chapter 2.04, City Council, to Title 2, Administrative and Personnel, to read as follows:
"§ 2.04.080. Term Limits.
(A) No person shall be eligible to serve as a member of the City Council for more than two consecutive four-year terms following the adoption of this ordinance commencing with the, and including those persons elected to serve as a member of the City Council in the November 3, 2026 election. Notwithstanding the foregoing, any person who is appointed by the City Council or elected to fill a vacant office of a member of the City Council for the balance of a four-year term, but serves less than two years in that office, shall be eligible for nomination and election for two consecutive four-year terms thereafter.
(B) Any person who shall be ineligible for election, appointment, or futther services as a member of the City Council due to the limitation set forth in subsection A of this section, shall again be eligible for election or appointment as a member of the City Council, and a new period of consecutive years of service shall commence, provided that at least two years has or will have elapsed between the most recent date of such person's prior service as a member of the City Council and the effective date of such person's most recent election or appointment to such office.
(C) The phrase "nvo years" as used in subsection B of this section shall mean the period between the date of the declaration of the results of any general municipal election held in November of an even numbered year and the date of the declaration of the results of any general municipal election held in November of any immediately preceding or immediately succeeding even-numbered year, even though such period may be more or less than an actual period of two years."
Section 2. Voter Approval, Prospective Application, and Effective Date Except as provided in section 3 below, this ordinance shall take effect if approved by a majority of the eligible voters of the City of Laguna Beach voting on the measure in the primary election held on Tuesday, June 2, 2026, and shall only apply prospectively beginning with the terms of members of the City Council that start after the November 3, 2026 election. If so approved, this ordinance becomes effective IO days after the City Council declares and certifies the results of the election by resolution.
Section 3. Severability
If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are severable. The City Council hereby declares that it would have adopted this ordinance irrespective of the invalidity of any paiticular portion thereof.
Section 4. Publication
The City Clerk is hereby directed to publish this ordinance at least once, within I 5 days after the election results are certified, in a newspaper of general circulation published and circulated in the City of Laguna Beach.
RESOLUTION NO. 2025-___
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF LAGUNA BEACH, CALIFORNIA SUBMITTING TO
THE QUALIFIED VOTERS OF THE CITY OF LAGUNA
BEACH ON THE NOVEMBER 3, 2026 GENERAL
MUNICIPAL ELECTION BALLOT AN INITIATIVE
MEASURE TO ENACT CITY COUNCIL TERM LIMITS;
REQUESTING THE COUNTY OF ORANGE TO
CONSOLIDATE SAID ELECTION WITH THE
STATEWIDE GENERAL ELECTION OF EVEN DATE;
AND SETTING RULES AND DEADLINES FOR
ARGUMENTS AND REBUTTALS FOR AND AGAINST
THE MEASURE.
WHEREAS, pursuant to authority provided by the California Elections and Government Code, a petition has been filed with the City Council of the City of Laguna Beach, seeking to enact an initiative measure/ordinance which would add a new Section 2.04.080 to Chapter 2.04 of Title 2 of the Laguna Beach Municipal Code to enact a two consecutive term limit on City Council service with a two-year “cooling off” period before one could again seek City Council office, (the “Measure” or “Ordinance”); and
WHEREAS, pursuant to California Elections Code section 9215, an initiative petition must be in filed with the City in valid form and signed by not less than ten percent (10%) of the registered voters of the City in order to qualify the Measure for the ballot; and
WHEREAS, according to Orange County voter records, the minimum signature requirement in order to qualify the Measure for the ballot is 1,818 registered City voters; and
WHEREAS, the City Clerk, through the Orange County Registrar of Voters, has certified that the form of the petition complies with California law and, based upon an examination of voter registration records via the random sampling method of at least 500 signatures as authorized by Elections Code sections 9115 and 9211, has ascertained that the petition is signed by the requisite number of voters to qualify the Measure for the ballot under the Elections Code; and
WHEREAS, while Elections Code section 9215(a) normally gives the City Council the option to adopt a qualified initiative measure without alteration and without holding an election, because this is a municipal term limits measure, Government Code section 36502(b), the more specific statute, provides that this Measure cannot become effective unless approved by a majority of City voters voting at a “regularly scheduled election”, and therefore, the City Council has not voted in favor of adopting this Measure in lieu of an election; and
WHEREAS, the City Council is therefore authorized and required by California Elections Code Sections 1405 and 9215 and Government Code Section 36502(b) to submit the proposed Measure to the voters at its “next regularly scheduled election occurring not less than 88 days after the date of the order of election”; and WHEREAS, the City’s “next regularly scheduled election” is the City’s General Municipal Election to be held on Tuesday, November 3, 2026; and WHEREAS, the specific terms of the Measure are attached hereto as Exhibit “A” and by this reference made an operative part hereof, and in accordance with all applicable laws; and
WHEREAS, it is desirable that the General Municipal Election be consolidated with the Statewide General Election to be held on the same date, that within the City the precincts, polling places, voting centers and election officers of the two elections be the same, that the Orange County election department canvass the returns of the General Municipal Election, and that the election be held in all respects as if there were only one election; and
WHEREAS, it is also desirable to establish deadlines and rules for the submission of written arguments and rebuttals for and against the Measure in accordance with applicable California Elections Code procedures.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF LAGUNA BEACH,
CALIFORNIA, DOES RESOLVE, DECLARE, DETERMINE AND ORDER AS FOLLOWS:
SECTION 1. Recitals. The City Council hereby finds and determines that the foregoing recitals are true and correct, and are incorporated herein and by this reference are made an operative part hereof.
SECTION 2. Submission of Ballot Measure. The City Council of the City, pursuant to its right and authority as contained in California Elections Code Sections 1405 and 9215 and California Government Code Section 36502(b), hereby orders the Measure attached hereto as Exhibit “A” to be submitted to the qualified voters of the City at a General Municipal Election to be held on Tuesday, November 3, 2026. The proposed Measure shall be in the form attached hereto as Exhibit “A” to this Resolution and is incorporated by this reference as if fully set forth herein.
SECTION 3. Ballot Measure Question. The City Council, pursuant to its right and authority, does hereby order that the ballot question for the Measure shall be presented and printed upon the ballot submitted to the qualified voters in the manner and form set forth in this Section 3. On the ballot to be submitted to the qualified voters at the General Municipal Election to be held on Tuesday, November 3, 2026, in addition to any other matters required by law, there shall be printed substantially the following ballot question:
YES "Shall an ordinance to amend the Laguna Beach
Municipal Code by enacting a limit on consecutive
years of service by members of the City Council to a
combined total of two four-year consecutive terms, with the ability to again serve as a Councilmember after a
lapse of service of at least two years, be adopted?"
NO
SECTION 4. Election Procedures.
A. The ballots to be used at the election shall be in the form and content as required by law.
B. Pursuant to the requirements of Section 10403 of the Elections Code, the Board of Supervisors of the County of Orange is hereby requested to consent and agree to the consolidation of a General Municipal Election with the Statewide General Election on Tuesday, November 3, 2026, for the purpose of submitting to the voters the questions relating to the City’s Measure.
C. The election services which the City of Laguna Beach requests the Registrar of Voters, or such other official as may be appropriate, to perform and which such officer is hereby authorized and directed to perform, if said Board of Supervisors consents, include: the preparation, printing and mailing of sample ballots; the establishment or appointment of precincts, polling places, voting centers and election officers; the preparation, printing, mailing and furnishing of vote-by-mail ballots; making such publications as are required by law in connection therewith; the furnishing of ballots, voting booths, and other necessary supplies or materials for polling places or voting centers; the canvassing of the returns of the election and the furnishing of the results of such canvassing to the City Clerk of the City of Laguna Beach; and the performance of such other election services as may be requested by the City Clerk.
D. The City Clerk is authorized, instructed and directed to procure and furnish, or cause to be procured and furnished through the County of Orange, any and all official ballots, notices, printed matter and all supplies, equipment and paraphernalia that may be necessary in order to properly and lawfully conduct the election.
E. The polls, voting centers and/or vote-by-mail drop-off boxes shall be open and the procedures for submitting votes-by-mail or votes at polls and vote centers shall be in accordance with those times and procedures established by the County of Orange, except as otherwise provided in the Elections Code of the State of California.
F. In all particulars not recited in this Resolution, the election shall be held and conducted as provided by law for holding municipal elections in the City.
G. Notice of the time and place of holding the election is given and the City Clerk is authorized, instructed and directed to give further or additional notice of the election, in time, form, and manner as required by law.
H. All ballots shall be tallied at a central counting place and not at the precincts.
Said central counting place shall be at a County center as designated by the Registrar of Voters.
I. The Orange County Registrar of Voters is hereby authorized to canvass the returns of said election.
J. The City Clerk of the City of Laguna Beach shall receive the canvass from the County as it pertains to the election on the Measures, and shall certify the results to the City Council, as required by law.
SECTION 5. Arguments and Impartial Analysis.
A. The City Council authorizes (i) the City Council or any member(s) of the City Council, (ii) the proponents of the above Measure, (iii) any individual voter eligible to vote on the above Measure, (iv) a bona fide association of such citizens or (v) any combination of voters and associations, to file a written argument in favor of or against the Measure, in accordance with Article 4, Chapter 3, Division 9 of the Elections Code of the State of California, which arguments may be changed until and including Friday, August 7, 2026, after which no arguments for or against the Measure may be submitted to the City Clerk. Arguments in favor of or against the Measure shall each not exceed 300 words in length. Each argument shall be filed with the City Clerk, signed, and include the printed name(s) and signature(s) of the author(s) submitting it, or if submitted on behalf of an organization, the name of the organization, and the printed name and signature of at least one of its principal officers who is the author of the argument.
B. The City Clerk shall comply with all provisions of law establishing priority of arguments for printing and distribution to the voters, and shall take all necessary actions to cause the selected arguments to be printed and distributed to the voters.
C. Pursuant to Section 9280 of the Elections Code, the City Council directs the City Clerk to transmit a copy of the Measure to the City Attorney. The City Attorney shall prepare an impartial analysis of the Measure, not to exceed 500 words in length, showing the effect of the Measure on the existing law and the operation of the Measure. The City Attorney shall transmit such impartial analysis to the City Clerk, who shall cause the analysis to be published in the voter information guide along with the Measure as provided by law. The Impartial Analysis shall be filed by the deadline set for filing of primary arguments as set forth in Subsection 5(A) above. The impartial analysis shall include a statement indicating whether the Measure was placed on the ballot by a petition signed by the requisite number of voters or by the City Council. In the event the entire text of the Measure is not printed on the ballot, nor in the voter information portion of the sample ballot, there shall be printed immediately below the impartial analysis, in no less than 10-font bold type, the following: “The above statement is an impartial analysis of Ordinance or Measure ____. If you desire a copy of the Ordinance or Measure, please call the election official’s office at (949) 497-0705 and a copy will be mailed at no cost to you.”
D. The provisions of this Section 5 shall apply only to the election to be held on November 3, 2026, and shall then be repealed.
SECTION 6. Rebuttals.
A. Pursuant to Section 9285 of the Elections Code of the State of California, when the Clerk has selected the arguments for and against the various City initiated measures which will be printed and distributed to the voters, the Clerk shall send copies of the argument in favor of the measures to the authors of the argument against, and copies of the argument against to the authors of the argument in favor. The authors or persons designated by them may prepare and submit rebuttal arguments not exceeding 250 words. The rebuttal arguments shall be filed with the City Clerk not later than Wednesday, August 12, 2026. Rebuttal arguments shall be printed in the same manner as the direct arguments. Each rebuttal argument shall immediately follow the direct argument which it seeks to rebut.
B. The provisions of this Section 6 shall apply only to the election to be held on November 3, 2026, and shall then be repealed.
SECTION 7. Placement on the Ballot. The full text of the Measure shall be printed in the voter information guide, and a statement shall be printed in the ballot pursuant to Section 9223 of the Elections Code advising voters that they may obtain a copy of the Measure at no cost, upon request made to the City Clerk.
SECTION 8. Delivery of Resolution to County. The City Clerk shall certify to the passage and adoption of this Resolution and enter it into the book of original resolutions. The City Council directs the City Clerk to deliver copies of this Resolution, including the Measure attached hereto as Exhibit “A”, to the Clerk of the Board of Supervisors of Orange County and to the Registrar of Voters of Orange County.
SECTION 9. Public Examination. Pursuant to California Elections Code section 9295, the Measure will be available for public examination for no fewer than ten (10) calendar days prior to being submitted for printing in the voter information guide. The Clerk shall post notice in the Clerk’s office of the specific dates that the examination period will run.
SECTION 10. CEQA. The City Council hereby finds and determines that placement of the Measure on the ballot is not a discretionary action of the City Council within the meaning of the California Environmental Quality Act (“CEQA”) and the State CEQA Guidelines and is, therefore, not subject to CEQA review. See, Tuolumne Jobs and Small Business Alliance v. Superior Court, (2014) 59 Cal. 4th 1029.
SECTION 11. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The City Council hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof.
SECTION 12. Effective Date of Resolution. This Resolution shall take effect immediately upon its adoption.
APPROVED AND ADOPTED this 9th day of December, 2025.
________________________________
___________________________, Mayor
ATTEST:
______________________________
ANN MARIE MCKAY
City Clerk
I, Ann Marie McKay, City Clerk of the City Council of the City of Laguna Beach, California, do hereby certify that the whole number of the members of the City Council is five (5); that the above and foregoing Resolution was duly and regularly passed and adopted by at least three affirmative votes of all members at a regular meeting of the City Council of the City of Laguna Beach on the 9th day of December, 2025, by the following vote:
AYES: Council Members:
NOES: Council Member:
ABSENT: Council Member:
ABSTAIN: Council Member:
________________________________
ANN MARIE MCKAY, City Clerk
EXHIBIT “A”
ORDINANCE NO. 2026-____
AN ORDINANCE OF THE PEOPLE OF THE CITY OF
LAGUNA BEACH, CALIFORNIA, ADDING A NEW
SECTION 2.04.080 TO CHAPTER 2.04 TO TITLE 2 OF
THE LAGUNA BEACH MUNICIPAL CODE RELATING TO
TERM LIMITS.
THE PEOPLE OF THE CITY OF LAGUNA BEACH, CALIFORNIA, DO
ORDAIN AS FOLLOWS:
Section 1. Amendment of the Laguna Beach Municipal Code.
Pursuant to California Government Code section 36502(b) and subject to the approval of a majority of the voters of the City of Laguna Beach, the Laguna Beach Municipal Code is hereby amended to add a new Section 2.04.080, Term Limits, to Chapter
2.04, City Council, to Title 2, Administrative and Personnel, to read as follows:
"§ 2.04.080. Term Limits.
(A) No person shall be eligible to serve as a member of the City Council for more than two consecutive four-year terms following the adoption of this ordinance commencing with the, and including those persons elected to serve as a member of the City Council in the November 3, 2026 election.
Notwithstanding the foregoing, any person who is appointed by the City Council or elected to fill a vacant office of a member of the City Council for the balance of a four-year term, but serves less than two years in that office, shall be eligible for nomination and election for two consecutive four-year terms thereafter. (B) Any person who shall be ineligible for election, appointment, or further services as a member of the City Council due to the limitation set forth in subsection A of this section, shall again be eligible for election or appointment as a member of the City Council, and a new period of consecutive years of service shall commence, provided that at least two years has or will have elapsed between the most recent date of such person's prior service as a member of the City Council and the effective date of such person's most recent election or appointment to such office.
(C) The phrase "two years" as used in subsection B of this section shall mean the period between the date of the declaration of the results of any general municipal election held in November of an even numbered year and the date of the declaration of the results of any general municipal election held in November of any immediately preceding or immediately succeeding evennumbered year, even though such period may be more or less than an actual period of two years."
Section 2. Voter Approval, Prospective Application, and Effective Date Except as provided in section 3 below, this ordinance shall take effect if approved by a majority of the eligible voters of the City of Laguna Beach voting on the measure in the primary election held on Tuesday, June 2, 2026, and shall only apply prospectively beginning with the terms of members of the City Council that start after the November 3, 2026 election. If so approved, this ordinance becomes effective 10 days after the City Council declares and certifies the results of the election by resolution.
Section 3. Severability
If any provision of this ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of the ordinance which can be given effect without the invalid provision or application, and to this end the provisions of this ordinance are severable. The People hereby declare that they would have adopted this ordinance irrespective of the invalidity of any particular portion thereof.
Section 4. Publication
The City Clerk is hereby directed to publish this ordinance at least once, within 15 days after the election results are certified, in a newspaper of general circulation published and circulated in the City of Laguna Beach.
Section 5. Attestation of Ordinance
The Mayor is hereby authorized to attest to the adoption of this Ordinance by the People voting thereon on November 3, 2026, by signing where indicated below.
PASSED, APPROVED AND ADOPTED by the People of the City of Laguna Beach this 3rd day of November, 2026.
_______________________________
____________________, Mayor
ATTEST:
______________________________
ANN MARIE MCKAY
City Clerk
STAFF REPORT
Meeting Date:
December 9, 2025
BUSINESS
23 SUBJECT: LAGUNA PLAYHOUSE FUNDING ASSISTANCE
RECOMMENDATION: It is recommended that the City Council:
1. Following the development and review of an acceptable Lease Amendment, authorize the expenditure of $500,000 in two installments to the Laguna Playhouse for operational support in exchange for greater access by community organizations to the Playhouse venue for more expansive performance art opportunities for the public‘s enjoyment;
2. Direct staff to return to the Council with a proposed Lease Amendment to the 2003 Playhouse – City Lease that memorializes the terms of the payment as well as the community organization access agreements; and
3. Find that these actions do not constitute a “project” within the meaning of the California Environmental Quality Act. (Public Resources Code Section 21065; 14 CCR Section 15378(b)(5).)
SUMMARY OF THE MATTER
At 104 years young, the Laguna Playhouse located at 606 Laguna Canyon Road is attempting to remain sustainable even as other regional theaters have struggled or closed in recent years. Playhouse leadership has proposed a retooling of their business model in what they assert will be sustainable, including more opportunities for community use of this City-owned facility, but have asked for $500,000 in support within the City’s Fiscal Year (FY) 25-26 budget year to allow time to transition to the new model.
DISCUSSION
According to a March 12, 2025 New York Times article about theaters (and music and film) both on Broadway and in various communities, “the picture (of theater survivals since COVID) is decidedly mixed…. Non-profit theaters, both off Broadway and in cities across the country, are struggling. Having burned through the government assistance that came at the height of the pandemic, many regional theaters are now reporting budget deficits and are programming fewer shows and attracting smaller audiences than they did previously.”
The Laguna Playhouse, which traces back its community roots to October 1920 and the Laguna Beach Community Dramatic Club, operates on City-owned land at 606 Laguna Canyon Road. The Playhouse leases property (both the building and the parking lot) from the City via a 40-year lease (which began in 2003 and expires June 30, 2043 – see Attachment A). The lease includes provisions that the Playhouse:
• Has sole use of the premises for theatrical performances (including film). The premises can be used under contract by other local organizations for “concert, ballet, and opera…” • Pay for utilities, janitorial and landscaping, building repair and maintenance, and insurance. • Pay rent starting at $8,500/year, increased by CPI or 4% per year, whichever is less (rent is now $15,000/year – see page 29 of the adopted City FY 25-26 Budget under “rent – Moulton”). • Has access to the back parking lot (Parcel 2).
LAGUNA PLAYHOUSE FUNDING ASSISTANCE
December 9, 2025
• Must cooperate with the Festival of Arts, especially regarding parking.
The City can terminate the lease if, during any period of 90 consecutive days between September 1 and June 30th, no theatrical plays occur.
Today, the Laguna Beach Tourism and Marketing District (TMD) provides roughly $300,000 a year to support the Playhouse. This amount varies given that it is set at 10% of the total amount of Transient Occupancy Tax (TOT) revenue that is generated by a 2% TOT charge on nightly rentals in Laguna Beach.
With the most recent 10-year renewal of the TMD in July 2025, the share going to the Playhouse will fall to 8% of total TMD TOT revenues (estimated at $240,000 per year starting in FY 26-27 after a one-year transition period). This new 8% of TMD TOT per organization also applies to the other recipients in the TMD program – including LCAD, the Laguna Art Museum, the City’s cultural arts grants, and programming for the Arts Commission.
The reduction from 10% of all TMD TOT revenues to 8% of all TMD TOT revenues allowed a total of 10% of all TMD TOT revenues to be assigned to the new Cultural and Environmental Stewardship program.
In March 2016, the City ended up providing $1,000,000 to the Playhouse (and $1,000,000 to the Laguna Art Museum) in grant funds for “facility improvements”. The guidelines with that agenda item directed that it be provided via a 1:1 matching program. News items for that period suggested that the City’s grant was a catalyst for a second $1,000,000 donation from the Moulton family.
Playhouse Meeting. Board members and staff from the Laguna Playhouse met with Council Member Whalen, Mayor Rounaghi, and the City Manager in late October 2025 to express three main points:
1. That the Playhouse’s most recent model – theatrical productions (about seven per year), with an emphasis on dramatic productions versus musicals, including staff and production costs – appears to be unsustainable.
2. That a new model – one that still has theatrical productions but changes the mix to consider more known productions and musicals with longer runs and utilizes the Playhouse for less rehearsal time to in part increase the amount of time available for other cultural arts uses, including community cultural arts uses – could be sustainable.
3. That rapid intervention on the Board’s part, with a similar request to the City, is vital to ensuring the longer-term viability of the Playhouse. As such, Playhouse officials asked for the Council’s consideration of granting $500,000 to the Playhouse, allocated in two separate $250,000 payments.
Mr. Whalen and Mr. Rounaghi told Playhouse leadership that the City would review the request and discuss it with the Council on December 9, 2025, provided that the Playhouse provide the City with a cash flow analysis (discussed below) and provided that the Playhouse would adopt the new operational model that expands the use of the Playhouse for affordable community-based rental performances – for dance, music, other theatrical presentations, lectures, and other performances.
About Cash Flows. Playhouse leadership proposed a cash flow model for the remainder of FY 2025-26 and for all of FY 2026-27 that, among other things:
LAGUNA PLAYHOUSE FUNDING ASSISTANCE
December 9, 2025
• Reduces the Playhouse’s monthly operating expenses by roughly 45% as soon as January 2026. This is done in large part by rightsizing the amount of staff, including combining duties into single job classifications.
• Reinvests in fund development, with a qualified professional assigned to this role. This would include expanding corporate sponsorships, regular fund drives, and subscription-based fundraising. • Proposes selling two condominiums in Aliso Viejo that are owned by the Playhouse and used to house visiting actors. Instead, visiting actors will be housed in local hotels or short-term lodgings. • Proposes hosting – for pay – various new productions (referred to as “enhancements” and generally at least one per year) that are having “out of town tryouts” before being considered for formal bookings in larger venues. These can provide revenue to the Playhouse plus bring innovative – albeit untested – performances to town for local audiences.
• Proposed a move to more musical productions than dramatic productions, based on national data. • Proposes rethinking theater rehearsal time and spaces, which is intended to add new availability at the Playhouse for rental use by existing Laguna Beach community groups in search of similar space – like Laguna Dance, Opera Laguna, Laguna Live, and more. • Asks for pledges from the Board and other donors to match other donations, as well as show the Board’s commitment to the new model.
• Opens up the Playhouse’s theatrical runs to at least one proven favorite production per year versus being entirely based around first-run events not seen in other locations. • Reduces the amount of theatrical performances at the Playhouse from seven to four per year, but include more proven favorites and potentially longer show runs.
With these changes, the Playhouse projects that it could maintain a relatively healthy operation with solid cash in the bank through June 2027. As with any cash flow modeling, the success of the Playhouse operation is dependent upon multiple variables that may or may not come to pass.
City Considerations. The Laguna Playhouse is clearly an important Laguna institution – for the community as well as for the arts and cultural scene across the region. Its survival likely means addressing the aforementioned trends in community theater by adopting a different model of serving the community and region. City team members who considered this proposal liked the following:
• A willingness on the Playhouse’s part to change, including to rather dramatically adjust ongoing operational expenses;
• A willingness on the Board’s part to put personal resources and effort into the change; • The Playhouse leadership’s apparent commitment to opening up its venue to more extensive community use; and
• A willingness on Playhouse leadership’s part to be transparent with us and with the community as to what it might take to remain on a fiscally sustainable path.
Should the City Council wish to proceed further down this pathway, the internal team (Whalen, Rounaghi) asked for the following:
LAGUNA PLAYHOUSE FUNDING ASSISTANCE
December 9, 2025
• That the Playhouse agree to amend the 2003 lease to include the community venue commitments, including pricing and quantity of time, and that the Lease amendment be brought back at the January 13th Council meeting even as the Council takes a straw vote commitment to pledge the $500,000 (in two installments) at the December 9th, 2025 Council meeting; • That the Playhouse regularly report to City staff progress as to achieving its transition goals – including meeting (or not) projected cash flows.
• That the Playhouse Board at least verbally commit to a sustainable model akin to what they are describing now – with an approach that prioritizes the Playhouse’s business survival. • That the Council consider two sources of funds for this grant – $250,000 from FY 24-25’s $500,000 for Cultural and Environmental Stewardship TMD funds, and $250,000 from about $927,000 that is held in reserve for a future expenditure related to the arts – such as a permanent art piece or improvements to (for example) the Forum Theater.
One challenge may be how to describe the commensurate community use commitment from the Playhouse.
At a preliminary level, City officials and Playhouse leadership discussed having up to twelve (12) weeks per year of the Playhouse’s schedule made available to community-based performing arts organizations (i.e. about 23% of the schedule). A later follow-up discussion showed that this might be too expansive a time commitment – from the Playhouse’s point of view and possibly from a cost perspective for community based performing arts organizations as well as actual need – and that eight (8) weeks may be more aligned with community needs and Playhouse operational goals.
Community use time involves Playhouse costs – set-up, take-down, rentals (such as chairs, stands, risers), and Playhouse staff hours to ensure proper safety during events (such as fire safety). The cash flow model assumes that these community events will at least not result in a loss per event. But will community organizations find these costs – even provided at the Playhouse’s actual costs – to be too high? (Playhouse leadership believes not – in preliminary communications, concerns from other organizations have been about scheduling). During a normal production week, the Playhouse says that it nets about $65,000 – as such, during local group rentals, it can lose money if local rentals otherwise replace a week of ticketed productions.
Lease Amendment. As such, should the Council wish to proceed with this grant, we propose language similar to the below for consideration as a lease amendment to the 2003 City-Playhouse lease:
(NEW) Section 6.5 - Community Venue Space and Collaboration. From FY 2025-26 onward, and in exchange for the one-time $500,000 in funding support provided by the City of Laguna Beach during FY 2025-26, the Playhouse shall use its best efforts to provide venue space, at the Playhouse’s actual and direct costs or less, for community-based, performance-based, art organizations (“Organizations”) such as (but not limited to) Laguna Dance, Opera Laguna, Laguna Live, and related groups. In some cases, rather than providing venue space, the Playhouse shall use its best efforts to collaborate with these Organizations on rehearsal space, community arts education, and other programs that benefit the Laguna Beach arts community.
LAGUNA PLAYHOUSE FUNDING ASSISTANCE
December 9, 2025
Similarly, the Playhouse shall regularly coordinate in advance with the Organizations to align on a calendar that determines appropriate days or time periods during which the Organizations will be able to rent the Playhouse venue at the Playhouse’s actual direct cost rate for the Organizations’ signature events. To the maximum extent feasible, the Playhouse shall endeavor to provide up to __ weeks (or __ days) of venue space per year for these Organizations and for other community-based programming.
There are other limits or protections that the City could apply to these funds via a Lease Amendment. The City could:
• Tie the funding to specific outcomes, like meeting a cash reserve target, the Board’s adoption of a revised budget, or completion of a consensus-based community use calendar. • Consider offering a forgivable loan – i.e. if the Playhouse is unable to meet a net income target in 5-10 years, then the loan or portions of it do not have to be paid back. • Ask the Playhouse to include a city liaison on the Board (as a non-voting member). • Add a reporting requirement to the City as to fund development and remaining within expenditure projections, for example.
Should the Council approve this proposal in concept at its December 9, 2025, meeting, staff will return on January 13, 2026, with proposed amendments to the 2003 Playhouse-City lease agreement.
FINANCIAL ANALYSIS
The fiscal impact is $500,000, made in two installments across the remainder of FY 2025-26 via budget amendments. Staff proposes utilizing $250,000 from the Cultural and Environmental Stewardship fund (from FY 24-25 commitments) and $250,000 from the current reserve of $927,000 set aside for cultural arts facilities. As noted, this could be done via a grant or a loan.
ENVIRONMENTAL ANALYSIS
The recommended action consists of organizational or administrative activities of the City that will not result in a direct or indirect physical change in the environment and therefore does not constitute a “project” within the meaning of the California Environmental Quality Act. (Public Resources Code Section 21065; 14 CCR Section 15378(b)(5).)
ATTACHMENTS
1. 2003 Playhouse – City Lease Agreement
Submitted By: David A Kiff Approved: David A Kiff
Dave Kiff, City Manager Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Dave Kiff, City Manager
Gavin Curran, Assistant City Manager
Michelle Bannigan, Finance Director
LAGUNA PLAYHOUSE FUNDING ASSISTANCE
December 9, 2025
Mayor Rounaghi
Council Member Whalen
Jane Abzug, Assistant City Attorney
STAFF REPORT
Meeting Date:
December 9, 2025
BUSINESS
24 SUBJECT: ARTIST LIVE-WORK UNITS; AMENDMENT TO THE PURCHASE AND SALE AGREEMENT FOR 2307 AND 2535 LAGUNA CANYON ROAD, EXECUTION OF
A LETTER OF INTENT WITH THE LAGUNA BEACH COMMUNITY LAND
TRUST, AND ASSIGNMENT OF CONSULTANT AGREEMENT
RECOMMENDATION: It is recommended that the City Council:
1. Approve the Second Amendment to the Purchase and Sale Agreements for 2535 and 2307 Laguna Canyon Road to update the combined purchase price to eight million dollars and revise the escrow and closing timelines, and authorize the City Manager to execute all documents necessary to effectuate the amendment;
2. Authorize the City Manager to execute the nonbinding Letter of Intent between the City of Laguna Beach and the Laguna Beach Community Land Trust, memorializing the key terms of the anticipated loan agreement and Purchase and Sale Agreement assignment that will return to the City Council for consideration on January 13, 2026;
3. Authorize assignment of the City’s Professional Services Agreement with Harris and Associates to the Laguna Beach Community Land Trust, allowing the consultant to complete the remaining nonprofit formation work directly under the Land Trust’s direction;
4. Approve a one-time payment to the Laguna Beach Community Land Trust in the amount of $41,987, or the remaining balance at the time of payment, under the Harris and Associates contract to support completion of the consultant’s scope and to provide initial operational capacity for the Land Trust;
5. Direct staff to return on January 13, 2026 with the proposed loan agreement and assignment documents for full City Council consideration; and
6. Find that the recommended action is not a project under the California Environmental Quality Act pursuant to Section 15378 because the actions will not result in a direct or reasonably foreseeable indirect physical change in the environment.
SUMMARY OF THE MATTER
This report presents a set of coordinated actions necessary to preserve two of the last artist work and live properties in Laguna Beach. The City has experienced a steady decline in artist workspaces due to private acquisitions and conversion of light industrial buildings for other uses, placing the community’s historic artistic character at risk. When 2535 and 2307 Laguna Canyon Road were listed for sale in late 2024, the City took preliminary steps to prevent the loss of approximately twenty-five (25) artist-oriented units that serve as hub for the local creative economy.
Following Council direction, the City entered into Purchase and Sale Agreements in January 2025, completed extensive due diligence, and worked with the property owners, who supported the goal of preserving the artist uses. At the same time, the City advanced the long-standing community objective of forming a nonprofit land holding entity (a Community Land Trust) to steward affordable artist, senior, ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
workforce, and family housing. Under the leadership of multiple Council ad hoc committees, the Laguna Beach Community Land Trust was established, its governance structure adopted, and its founding board appointed.
With due diligence completed and the Land Trust positioned to assume long term ownership, the next step is to align contractual terms and prepare for the January 13, 2026 Council hearing on the assignment of the Purchase and Sale Agreements and the related loan agreement. This report recommends: (1) amending the Purchase and Sale Agreements to update the purchase price and escrow schedule, (2) authorizing a nonbinding Letter of Intent between the City and the Community Land Trust outlining the anticipated structure of the assignment and loan agreements, and (3) assigning the City’s consultant agreement with Harris and Associates to the Land Trust, along with a one-time payment of the remaining contract balance to support completion of the nonprofit formation process and initial operational needs.
These actions advance Council Priority #5, “Pursue Artist Work/Live Affordable Housing Opportunities,” and position the community to preserve vital artist resources in perpetuity.
DISCUSSION
Preservation of Artist Workspace
Laguna Beach’s artistic identity is a defining element of its history, culture, and community character. For decades, the city’s creative economy has depended on a limited number of light industrial and live work spaces that allow artists to produce, exhibit, and sustain their work. These spaces are scarce, tightly concentrated, and vulnerable to displacement as property values increase and market pressures drive owners toward conversion of these buildings to other uses.
The city has witnessed a steady reduction in the number of remaining artist workspaces. Private acquisitions have led to repurposing of buildings that once housed painters, sculptors, fabricators, and other creative trades. Each conversion eliminates a piece of the city’s artistic infrastructure and erodes the community’s long-standing connection to its creative heritage. Without intervention, the city risks losing the essential facilities that allow working artists to remain in Laguna Beach.
This challenge became acute in late 2024, when 2535 and 2307 Laguna Canyon Road were placed on the market. Together, these properties contain approximately twenty-five (25) units of light industrial and live work space. They represent two of the last significant artist-oriented properties remaining in the City. Their potential sale generated immediate concern among artists, community members, and policy makers given the likelihood that a private buyer would redevelop the sites and remove their creative uses.
Recognizing the magnitude of the threat, the City Council identified the preservation of these properties as a priority and directed staff to monitor at risk artist spaces and pursue strategies to protect them. The Council’s direction was grounded in policy commitments to support the arts and to maintain the creative fabric that defines Laguna Beach. Consistent with this direction, the City engaged property owners, ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
conducted due diligence, coordinated with the artist community, and initiated steps to secure these properties and prevent the loss of their creative functions.
These efforts form the basis for the proposed amendments to the Purchase and Sale Agreements and the development of a long-term preservation strategy in coordination with the Laguna Beach Community Land Trust.
Due Diligence and Engagement with Property Owners
Although the property owners intended to sell, they expressed a strong desire for the sites to remain dedicated to artist work and live uses. They were concerned that a private market sale would likely eliminate the creative functions that have defined these properties for decades. Prior to the City’s involvement, the owners had not been presented with an opportunity to structure a transaction that would preserve the artistic integrity of the sites.
Once the City became aware that both properties were entering the market, staff-initiated discussions with the owners to explore alternatives to private sale. Those discussions confirmed that the owners were open to working with the City on a preservation focused acquisition. This alignment of interests created a path for the City to intervene and protect these vital community assets.
On January 16, 2025, after completing preliminary analysis, the City entered into Purchase and Sale Agreements for both properties. Over the following year, the City conducted a comprehensive and methodical due diligence process to confirm asset condition, evaluate risk, and ensure that acquisition would preserve long term viability for artistic use. This process included:
• Phase I environmental assessments
• Phase II environmental assessments
• Geotechnical analysis
• ALTA and boundary surveys
• Property condition assessments
• Code and safety evaluations
• Title and encumbrance review
This level of diligence ensured that the City developed a complete understanding of each property’s physical, environmental, and regulatory condition before determining next steps.
Appraisal Summary and Valuation Adjustments
To support negotiations and ensure that the proposed acquisition reflected fair market value, the City commissioned independent appraisals for both properties. When the properties were originally listed in late 2024, 2307 Laguna Canyon Road carried an asking price of $4,500,000, and 2535 Laguna Canyon Road was listed at $4,950,000.
ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
On November 13, 2024, the City received formal appraisal reports concluding the following market values:
• 2307 Laguna Canyon Road: $3,400,000
• 2535 Laguna Canyon Road: $5,000,000
Based on these appraisals, and after initial negotiations, the City entered into Purchase and Sale Agreements in January 2025 for:
• $4,950,000 at 2535 Laguna Canyon Road
• $3,700,000 at 2307 Laguna Canyon Road
During the due diligence period, ALTA surveys revealed that the rentable square footage for 2307 Laguna Canyon Road was materially less than advertised, and several necessary site improvements were identified.
As a result, the City negotiated a revised purchase price for 2307 Laguna Canyon Road, reducing it to $3,050,000. The purchase price for 2535 Laguna Canyon Road remained unchanged.
The second amendment to the Purchase and Sale Agreements memorializes the final negotiated values:
• 2535 Laguna Canyon Road: $4,950,000
• 2307 Laguna Canyon Road: $3,050,000
The combined acquisition value falls below the aggregate of the original appraised values, ensuring that the transaction reflects both market conditions and the physical realities documented during due diligence.
Table 1: Appraisal Summary
Item 2307 LCR 2535 LCR
Original Listing Price $4,500,000 $4,950,000
Appraised Value (Nov. 13, 2024) $3,400,000 $5,000,000
Initial PSA Price (Jan. 2025) $3,700,000 $4,950,000
Due Diligence Findings Reduced square footage; site
improvements required No price change required
Final Negotiated Purchase Price $3,050,000 $4,950,000
Variance from Appraisals Below appraisal by $399,950 Below appraisal by $50,000 Total Combined Purchase Price $8,000,000
Formation of the Laguna Beach Community Land Trust
For many years, residents, artists, housing advocates, and policy makers have recognized the need for a permanent community-based entity capable of acquiring, holding, and stewarding real property in Laguna Beach for long term affordability. The City’s unique geography, limited land supply, and escalating property values have made it increasingly difficult to preserve housing opportunities for artists, seniors, the local workforce, and young families. Community members consistently expressed that a nonprofit land ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
holding entity, independent from the City, would be better positioned to acquire property, structure long term affordability, and insulate assets from private market pressures.
In response to this longstanding need, the Affordable Housing Ad Hoc Committee, led by then Councilmember Rounaghi and Councilmember Orgill, studied various models and recommended creation of a Community Land Trust. The City Council unanimously approved the recommendation, and formal work to establish the Laguna Beach Community Land Trust began in September 2024.
The original intent was to create the Land Trust as a forward-looking tool for affordable housing and community benefit, not in direct connection with any particular property acquisition. However, shortly after formation efforts began, the opportunity to preserve 2535 and 2307 Laguna Canyon Road emerged. These properties, containing some of the last remaining artist live work units in the city, represented exactly the type of high value community assets that a Land Trust is designed to protect.
Recognizing the significance of the opportunity, the newly formed Land Trust Ad Hoc Committee, now led by Councilmember Whalen and Councilmember Orgill, spent the following year developing the organizational structure of the Land Trust while simultaneously coordinating with staff on due diligence for the two properties. This included drafting bylaws, establishing governance procedures, securing nonprofit formation documents, and identifying the founding board members who would ultimately assume control of the Land Trust.
The objective throughout this period was to establish a stable, community driven nonprofit that could take ownership of the properties and serve as an ongoing steward of additional affordable housing opportunities.
The work completed by the ad hoc committee and the appointed board ensures that the Land Trust is now positioned to accept these two key properties into its portfolio once the loan and assignment agreements are presented for Council consideration in January 2026.
Amendment to the Purchase and Sale Agreements and Execution of a Letter of Intent with the Laguna Beach Community Land Trust
After fourteen months of coordinated work evaluating both properties and establishing the Laguna Beach Community Land Trust, the City and the Land Trust have reached the point where the transfer of the properties into long term community ownership can move forward. Both entities agree that the appropriate next step is to enter into a nonbinding Letter of Intent that outlines their shared understanding of the future assignment of the Purchase and Sale Agreements and the principal terms of a proposed loan from the City to the Land Trust. This Letter of Intent (LOI) provides transparency to the City Council and the community regarding the structure of the forthcoming transaction while allowing both parties to finalize formal documents for Council consideration.
The Letter of Intent is not a binding contract. It does not authorize transfer of funds, transfer of property rights, or any legal obligation beyond continued negotiations. Instead, it serves as a summary of the ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
anticipated terms of the assignment agreement and the loan agreement, which will return to the City Council for approval on January 13, 2026. The Land Trust board will consider the same documents in its own process. A summary of LOI terms is listed below in Table 2 and the letter is included as Attachment 1.
Table 2: Summary of Letter of Interest
Category Key Terms
Purpose
City intends to assign the Purchase and Sale Agreements for 2307 and 2535 Laguna Canyon Road to the Land Trust and provide a loan to support acquisition.
Lender: City of Laguna Beach Parties Borrower: Laguna Beach Community Land Trust Loan Amount Eight million dollars ($8,000,000) secured by a deed of trust on both properties.
Loan Term Five years; full principal due at maturity.
Interest Rate Four percent fixed annually.
Debt Service Quarterly interest only payments during the term.
Use of Loan Proceeds Purchase price for both properties under the Purchase and Sale Agreements.
Closing Date January 30, 2026, concurrent with PSA closing; extended automatically if PSA closing extends.
Financial Reporting Annual financial statements, rent rolls, and compliance documentation required from the Land Trust or its management company.
Code Remediation: Correct identified violations per schedule; City retains cure rights.
Redevelopment Restrictions: No redevelopment without City approval during loan term except remediation.
Rent Covenant: Rents set to ensure net operating income covers debt service and complies with affordability rules.
Covenants
Affordability: Compliance with applicable state and federal affordability requirements; recordation of instruments if required.
Insurance Requirements
Property/Fire, Flood (if applicable), Commercial General Liability, and other coverages as required; City named as additional insured or loss payee.
Indemnification Land Trust must indemnify and defend the City for claims relating to the properties, including environmental matters.
Cost Responsibilities Each party pays its own costs; Land Trust responsible for third party expenses such as escrow, title, recording, and insurance.
Confidentiality City will make reasonable efforts to maintain confidentiality of designated proprietary information consistent with State law.
ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
Binding Effect
LOI is nonbinding and expresses preliminary intent only. Binding obligations occur only upon execution of a loan agreement and assignment documents.
Governing Law State of California; compliance with nondiscrimination, fair housing, and equal opportunity laws required.
Until those agreements are approved, the Purchase and Sale Agreements remain solely between the City of Laguna Beach and the property owners. To keep the transaction on track and to reflect updated negotiated terms, the City Council must approve an amendment to the Purchase and Sale Agreements originally executed January 16, 2025. A summary of the second amendment and the Purchase and Sale Agreement is listed in Table 3 below and the Purchase and Sale Agreement with both amendments is included as Attachment 2.
Table 3: Summary of Purchase and Sale Agreement Amendment Category Term
Properties 2535 Laguna Canyon Road and 2307 Laguna Canyon Road $4,950,000 dollars (2535 LCR)
Purchase Price $3,050,000 dollars (2307 LCR)
$8,000,000 dollars total
Buyer (Current) City of Laguna Beach
Seller Property Owners (Names per PSA)
PSA Execution Date January 16, 2025
First Amendment February 28, 2025
Deposit Fifty thousand dollars per property ($100,000 total) Due Diligence Period Ends January 20, 2026 (deposit becomes nonrefundable upon expiration) Closing Date January 30, 2026
Assignment Provision PSA may be assigned to Laguna Beach Community Land Trust subject to City approval and execution of a formal assignment instrument Conditions to Closing Standard title, escrow, and document delivery requirements, plus any conditions added by amendment
Intended Action Amend PSA to reflect updated total purchase price, timeline, and assignment pathway
Approval of the amended Purchase and Sale Agreements will align the contractual terms with current understanding and will allow the City and the Land Trust to complete their respective due diligence and finalize the loan and assignment documents. These documents will be presented to the City Council in January for full consideration and potential ratification.
ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
Assignment of the Harris and Associates Professional Services Agreement to the Laguna Beach Community Land Trust
On March 11, 2025, the City Council approved a professional services agreement with Harris and Associates to serve as the Land Trust Specialist responsible for guiding the formation of the Laguna Beach Community Land Trust. The consultant’s scope of work included supporting the incorporating board in preparing, finalizing, and filing all organizational documents with the State of California and the Internal Revenue Service to establish the Land Trust as a nonprofit public benefit corporation and to secure federal 501(c)(3) tax exempt status.
The consultant was also originally tasked with assisting in the financial evaluation of the potential acquisition of 2535 and 2307 Laguna Canyon Road. That portion of the scope was later discontinued, and staff assumed responsibility for preparing the financial pro forma and related acquisition analysis. Harris and Associates continued to focus on nonprofit formation, governance structure, and compliance with State and federal requirements.
Now that the City has completed the formation process, appointed the founding board, and transitioned governance of the Land Trust to the community, the consultant’s remaining work relates solely to advancing and completing the federal nonprofit determination, which remains under review by the Internal Revenue Service (IRS). Because this work is specific to the Land Trust and no longer under the jurisdiction of the City, it is more appropriate for the Land Trust to assume direct control of the contract going forward.
The total contract amount approved in March 2025 was $94,671. Approximately $41,000 remains unspent.
Staff estimates that roughly $20,000 of consultant work remains necessary to complete the formation process, leaving an approximate balance of $21,000 that would otherwise remain unused under the City’s contract.
To support the Land Trust during its early operational phase and reduce the administrative burden of securing immediate fundraising, staff recommends that the City Council authorize two actions:
1. Assign the City’s professional services agreement with Harris and Associates to the Laguna Beach Community Land Trust, allowing the consultant to complete the nonprofit formation work directly under the Land Trust’s direction.
2. Authorize a one-time payment of the remaining contract balance of $41,987, or the remaining at the time of the payment, to the Land Trust, enabling the Land Trust to fully fund the completion of the consultant’s scope and to use the remaining funds to support early operational needs, including insurance, administrative overhead, or potential closing costs associated with acquisition.
The Land Trust has expressed confidence in its long-term fundraising ability, but early-stage operational support will provide stability as the organization completes the final steps required for nonprofit status and ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
prepares to assume ownership of the properties once the loan and assignment agreements are approved in January.
FINANCIAL ANALYSIS
Use of the Vehicle Replacement Fund for the Future Loan Although no loan is being approved this evening, staff intends to return to the City Council on January 13, 2026 with a proposed loan agreement that would provide eight million dollars ($8,000,000) to the Laguna Beach Community Land Trust to acquire 2535 and 2307 Laguna Canyon Road. The anticipated funding source for that loan is the City’s Vehicle Replacement Fund.
The Vehicle Replacement Fund maintains a balance of approximately seventeen million dollars ($17,000,000). This balance exceeds the projected fleet replacement needs over the next five (5) years and provides sufficient capacity to extend an interim loan without impairing the City’s ability to procure essential vehicles or equipment. Use of the fund for this purpose allows the City to leverage existing funds in a manner that preserves liquidity, safeguards fleet replacement schedules, and avoids reliance on General Fund appropriations.
Loan Terms. Under the terms that will be presented in January, the loan would accrue interest at a fixed four percent (4.0%) rate (generally the same growth rate expected if it were to remain invested in the Local Agency Investment Fund or “LAIF” – which on 12/4/2025 is at 4.07% but headed downwards in this rate environment) with a five year balloon payment at maturity.
Interest earnings would flow back into the Vehicle Replacement Fund and would maintain the Fund’s financial stability during the loan period. This structure ensures that the City continues to earn a rate of return comparable to LAIF while supporting the preservation of critical artist live work spaces. A complete financial analysis of the vehicle replacement schedule and that loan from the Vehicle Replacement fund will be included in the January staff report.
If the Land Trust is unable to refinance or repay the balloon payment at the end of the term, the City would retain the ability to sell the properties to recover the loan principal. This mechanism protects the Vehicle Replacement Fund and ensures responsible stewardship of fleet replacement.
ALIGNMENT WITH CITY COUNCIL GOALS AND PRIORITIES
This report is based on City Council Priority #5: 'Pursue Artist Work/Live Affordable Housing Opportunities, established during the City Council's Annual Planning Retreat on January 19, 2024.
ENVIRONMENTAL ANALYSIS
Staff recommends that the City Council find that the actions before the Council do not constitute a project under the California Environmental Quality Act pursuant to Section 15378. The amendments to the Purchase and Sale Agreements, execution of a nonbinding Letter of Intent, and assignment of the Harris ARTIST LIVE/WORK UNITS; RESOLUTION APPROVING A PURCHASE AND SALE AGREEMENT FOR THE ACQUISITION OF 2307 AND 2535 LAGUNA CANYON ROAD,
AUTHORIZING A LETTER OF INTENT FOR ASSIGNMENT TO THE LAGUNA BEACH
COMMUNITY LAND TRUST, AND DETERMINING THE ACTION IS EXEMPT UNDER THE
CALIFORNIA ENVIRONMENTAL QUALITY ACT
December 9, 2025
and Associates professional services agreement involve administrative, financial, and organizational steps that do not authorize, approve, or commit the City to any physical development or activity that may cause a direct or reasonably foreseeable indirect physical change in the environment.
These actions do not grant development rights, do not modify land use entitlements, and do not approve construction, alteration, or redevelopment of the properties. Any future actions that may result in a physical environmental effect will require separate review and compliance with CEQA before consideration by the City Council.
Based on this analysis, the recommended action is not a project under CEQA and no further environmental review is required at this time.
ATTACHMENTS
1. Letter of Intent with the Laguna Beach Community Land Trust (Pgs. 11-15)
2. Purchase and Sale Agreement with Proposed Second Amendment (Pgs. 16-211)
3. Harris and Associates Assignment (Pgs. 212-234)
Submitted By:
.
Approved: .David A Kiff
Jeremy Frimond, Assistant City
Manager
Dave Kiff, City Manager
Report Prepared By: Coordinated With:
Jeremy Frimond, Assistant City Manager
55852.00001\44433439.1
LETTER OF INTENT
December 9, 2025
The Laguna Beach Community Land Trust
Attn:
Re: Letter of Intent for Loan re Acquisition of 2307 and 2535 Laguna Canyon Road
This non-binding Letter of Intent (“LOI”) describes the principal business terms under which:
1. Purpose and Background. The City of Laguna Beach, a California municipal corporation (“City”), intends to enter into a purchase and sale agreement (the “PSA”) with the owner(s) of the real property commonly known as 2307 Laguna Canyon Road and 2535 Laguna Canyon Road, Laguna Beach, California (collectively, the “Properties”). The City anticipates assigning the PSA to The Laguna Beach Community Land Trust (“Land Trust”) pursuant to the terms of the PSA and a corresponding assignment instrument. In connection with such assignment, and to facilitate the Land Trust’s acquisition of the Properties, the City intends to make a loan to the Land Trust on the terms summarized in this LOI and a definitive loan agreement (the “Loan Agreement”), with funding to occur concurrently with the closing under the PSA (the “Loan”).
2. Loan Terms:
a. Lender: City
b. Borrower: Land Trust
c. Term/Maturity. The Loan term will be five (5) years. d. Loan Amount. The Loan amount will be Eight Million Dollars ($8,000,000).
Attachment 1
11 55852.00001\44433439.1
e. Interest Rate: Fixed 4.00% per annum.
f. Use of Loan Amount. The purchase price for both Properties under the PSA (as assigned).
g. Debt Service: Interest-only payments during the Term, payable quarterly. The full principal amount will be due at maturity of the Term. h. Closing. January 30, 2026. This is the same date as the PSA closing. In the event the PSA closing is extended, the closing date of the Loan will be similarly extended.
i. Financial/Reporting: Customary annual financial statements and rent rolls prepared by the Land Trust or applicable management company; evidence of compliance with covenants below (specifics to be addressed in the Loan Agreement).
3. Covenants and Operating Requirements.
a. Code Violation Remediation. The Land Trust will correct all identified code violations on the Properties within an agreed upon schedule to be set forth in the Loan Agreement. The City and Land Trust acknowledge and agree that as part of the agreed upon schedule, there will be required milestones for remedying these code violations as well as cure rights by the City in the event of failing to meet these milestones.
b. Redevelopment Restrictions. No redevelopment work or construction will occur on the Properties while the Loan is outstanding, without the City’s prior written approval, except for any remediation work required to address code violations on the Properties. The approval process, notice requirements, and any additional limited exceptions will be further defined in the Loan Agreement.
c. Rent Rate Covenant. The Land Trust will establish and adjust rents such that net operating income of the Properties supports ongoing debt service, while keeping rents consistent with any applicable affordability requirements. d. Affordability Covenant. The Land Trust will comply with all applicable state and federal affordability rules; any affordability covenants or regulatory agreements will be honored and, if required by City, recorded against the Properties.
e. Insurance. The Land Trust will maintain insurance naming the City as an additional insured/loss payee (as applicable), including: Property/Fire, Flood (if applicable), and Commercial General Liability. City may require 12 55852.00001\44433439.1
additional coverage (e.g., Earthquake, Business Interruption, Gap, Environmental Liability) commensurate with risk and availability.
f. Indemnification. The Land Trust will indemnify, defend, and hold harmless City from and against claims relating to the Properties, including environmental matters. To be further defined in the Loan Agreement.
4. Conditions. The Loan Agreement will include customary conditions precedent, which are expected to include:
a. Approvals. All required City approvals (including City Council approval, if applicable) and Land Trust approvals.
b. PSA Assignment & Closing Readiness. Executed assignment and assumption of the PSA to the Land Trust and evidence that all PSA conditions to close are satisfied or waived.
c. Organizational Status. Evidence of the Land Trust’s good standing, authority, and nonprofit status or active non-profit application status with the Internal Revenue Service.
d. Insurance Certificates. Evidence of required coverages and City additional insured/loss payee status.
e. Title/Closing Deliverables. Preliminary title, escrow instructions, and any required City-approved regulatory/affordability instruments (if applicable).
f. No Default/Adverse Change. Absence of material adverse change and default under the PSA or the Loan Agreement documents. g. Other Customary Items. Such other documents and opinions as are customary for transactions of this type and acceptable to City.
5. Miscellaneous.
a. Each party will bear its own costs and expenses. Borrower shall be responsible for customary third-party costs related to the Loan (e.g., escrow, title, recording, insurance, and any environmental or other third-party reports Borrower elects to obtain), as further detailed in the Loan documents. 13 55852.00001\44433439.1
b. The parties acknowledge the City’s obligations under the California Public Records Act. To the extent permitted by law, the City will endeavor to maintain the confidentiality of proprietary information appropriately designated by the Land Trust.
c. This LOI is an expression of interest only and not a binding commitment to lend, purchase, or close. Any binding obligations will arise only upon final approval and execution of definitive, mutually acceptable documents. d. This LOI and any binding provisions herein shall be governed by the laws of the State of California, without regard to conflict of law principles.
The Land Trust will comply with all applicable non-discrimination, fair housing, and equal opportunity laws.
[Signatures on following page]
14 55852.00001\44433439.1
Acknowledged and Agreed:
CITY OF LAGUNA BEACH
By: _ ___
Name:
Title:
Date: ___________________
THE LAGUNA BEACH COMMUNITY LAND TRUST
By:
Name: Kristine Thalman
Title: President
Date: December 3, 2025
15 55852.01006\44451121.1
Amendment to Purchase and Sale Agreement
SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY AND JOINT ESCROW INSTRUCTIONS
This Second Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions (“Second Amendment”) is made as of December __, 2025 (the “Effective Date”), by and between PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988 (“Seller”), and THE CITY OF LAGUNA BEACH, a California municipal corporation (“Buyer”), who agree as follows:
AGREEMENT
1. Background.
A. Seller and Buyer have entered into that certain Purchase and Sale Agreement dated January 16, 2025 as amended by that certain First Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions dated as of February 28, 2025 (the “First Amendment”) (as amended, the “Purchase Agreement”), for the purchase and sale of that certain located at 2307 Laguna Canyon Road, City of Laguna Beach, County of Orange, State of California, and as further described in Exhibit A to the Purchase Agreement (the “Property”). Capitalized terms not defined herein shall have the meanings set forth in the Purchase Agreement.
B. Pursuant to the First Amendment, the Due Diligence Period was extended to April 23, 2025 to accommodate a Phase II Environmental Assessment and testing on the Property (“Phase II”). Buyer disapproved the results of its due diligence investigation prior to April 23, 2025, but elected to keep the Deposit in Escrow pending further testing and negotiations with Seller.
C. Buyer and Seller now desire to revive the Purchase Agreement and modify same on the terms and conditions set forth herein.
2. Purchase Price. As express consideration for Buyer’s obligations under the Purchase Agreement, as amended herein, the Purchase Price for Seller’s undivided fifty percent (50%) interest in the Property shall be reduced to One Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000.00).
3. Due Diligence Period. Notwithstanding anything to the contrary set forth in the Purchase Agreement, and notwithstanding Buyer’s disapproval of its due diligence investigation, the Due Diligence Period pursuant to Section 3.1.1 of the Purchase Agreement is hereby extended, and shall expire at 5:00 p.m. on January 20, 2026.
4. Closing. Subject to the satisfaction of the conditions precedent set forth in Article 4 of the Purchase Agreement, the Closing Date is hereby extended to January 30, 2026.
5. Effect on Agreement. All other terms of the Purchase Agreement, except as expressly modified herein, shall continue in full force and effect. In the event and to the extent Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 Attachment 2
16 55852.01006\44451121.1
Amendment to Purchase and Sale Agreement
2 of any conflict between the terms of this Second Amendment and the terms of the Purchase Agreement, the terms of this Second Amendment shall govern.
6. Counterparts. This Second Amendment may be executed in any number of identical counterparts. If so executed, each of such counterparts is to be deemed an original for all purposes and all such counterparts shall collectively constitute one Agreement. This Second Amendment may be executed by facsimile or PDF signatures which shall be binding on the parties hereto.
7. Incorporation of Recitals. The Recitals are hereby incorporated into this Second Amendment.
[Signatures on Following Page]
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 17 55852.01006\44451121.1
Signature Page to PSA Amendment
IN WITNESS WHEREOF, Seller and Buyer have executed this Second Amendment effective as of the day and year first above written.
SELLER:
TRUST B UNDER THE BURKHARDT FAMILY
TRUST established December 6, 1988
By: Philip E. Burkhardt
Its: Trustee
BUYER:
CITY OF LAGUNA BEACH, a California
municipal corporation
By: ______________________
Its: _______________________
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 18 55852.01006\44451112.1
Amendment to Purchase and Sale Agreement
SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY AND JOINT ESCROW INSTRUCTIONS
This Second Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions (“Second Amendment”) is made as of December __, 2025 (the “Effective Date”), by and between PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 (“Seller”), and THE CITY OF LAGUNA BEACH, a California municipal corporation (“Buyer”), who agree as follows:
AGREEMENT
1. Background.
A. Seller and Buyer have entered into that certain Purchase and Sale Agreement dated January 16, 2025 as amended by that certain First Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions dated as of February 28, 2025 (the “First Amendment”) (as amended, the “Purchase Agreement”), for the purchase and sale of that certain located at 2307 Laguna Canyon Road, City of Laguna Beach, County of Orange, State of California, and as further described in Exhibit A to the Purchase Agreement (the “Property”). Capitalized terms not defined herein shall have the meanings set forth in the Purchase Agreement.
B. Pursuant to the First Amendment, the Due Diligence Period was extended to April 23, 2025 to accommodate a Phase II Environmental Assessment and testing on the Property (“Phase II”). Buyer disapproved the results of its due diligence investigation prior to April 23, 2025, but elected to keep the Deposit in Escrow pending further testing and negotiations with Seller.
C. Buyer and Seller now desire to revive the Purchase Agreement and modify same on the terms and conditions set forth herein.
2. Purchase Price. As express consideration for Buyer’s obligations under the Purchase Agreement, as amended herein, the Purchase Price for Seller’s undivided fifty percent (50%) interest in the Property shall be reduced to One Million Five Hundred Twenty-Five Thousand Dollars ($1,525,000.00).
3. Due Diligence Period. Notwithstanding anything to the contrary set forth in the Purchase Agreement, and notwithstanding Buyer’s disapproval of its due diligence investigation, the Due Diligence Period pursuant to Section 3.1.1 of the Purchase Agreement is hereby extended, and shall expire at 5:00 p.m. on January 20, 2026.
4. Closing. Subject to the satisfaction of the conditions precedent set forth in Article 4 of the Purchase Agreement, the Closing Date is hereby extended to January 30, 2026.
5. Effect on Agreement. All other terms of the Purchase Agreement, except as expressly modified herein, shall continue in full force and effect. In the event and to the extent Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 19 55852.01006\44451112.1
Amendment to Purchase and Sale Agreement
2 of any conflict between the terms of this Second Amendment and the terms of the Purchase Agreement, the terms of this Second Amendment shall govern.
6. Counterparts. This Second Amendment may be executed in any number of identical counterparts. If so executed, each of such counterparts is to be deemed an original for all purposes and all such counterparts shall collectively constitute one Agreement. This Second Amendment may be executed by facsimile or PDF signatures which shall be binding on the parties hereto.
7. Incorporation of Recitals. The Recitals are hereby incorporated into this Second Amendment.
[Signatures on Following Page]
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 20 55852.01006\44451112.1
Signature Page to PSA Amendment
IN WITNESS WHEREOF, Seller and Buyer have executed this Second Amendment effective as of the day and year first above written.
SELLER:
TRUST C UNDER THE BURKHARDT FAMILY
TRUST established December 6, 1988
By: Philip E. Burkhardt
Its: Trustee
BUYER:
CITY OF LAGUNA BEACH, a California
municipal corporation
By: ______________________
Its: _______________________
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 21 22
23 24
25 26
27 Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600O
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This Purchase and Sale Agreement and Joint Escrow Instructions (this "Agreement") is made as of January l!Q, 2025 (the "Effective Date"), between PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988 ("Seller"), and CITY OF LAGUNA BEACH, a California municipal corporation ("Buyer").
ARTICLE 1. AGREEMENT OF SALE.
Subject to and on the terms and conditions of this Agreement, Seller shall sell to Buyer and Buyer shall purchase from Seller an undivided fifty percent (50%) interest in all of the following:
I. 1 Land. The real property consisting of approximately 101,495 square feet (2.33 acres) located at 2307 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN:
632-101-10), which is more particularly described in Exhibit A, together with (a) all privileges, rights, easements and appurtenances belonging to the real property, including without limitation all minerals, oil, gas and other hydrocarbon substances on and under the real property, (b) all development rights, air rights, water, water rights and water stock relating to the real property, and ( c) all right, title and interest of Seller in and to any streets, alleys, passages, other easements and other rights-of-way or appurtenances included in, adjacent to or used in connection with such real property, before or after the vacation thereof (collectively, the "Land");
1.2 Improvements. Any and all structures, systems, facilities, fixtures, fences, landscaping, and parking areas located on the Land and any and all machinery, equipment, apparatus and appliances used in connection with the operation or occupancy of the Land (such as heating and air conditioning systems and facilities used to provide utility services, refrigeration, ventilation, garbage disposal or other amenities on the Land) and other improvements located upon the Land, including, but not limited to, an industrial office building improvements (collectively, the "Improvements"
The Land and the Improvements are sometimes collectively referred to in this Agreement as the "Property"
1.3 Personal Property. All of Seller's right, title and interest in and to any personal property located within or used in connection with the Property, including, without limitation, the furniture, fixtures and equipment referenced in Section 2.1, below, and that described in the Personal Property Inventory attached hereto as Exhibit B (collectively, the "Personal Property").
1.4 Service Contracts. Those Service Contracts (defined in Section 5.7) which Buyer expressly agrees to assume;
1.5 Leases. All of the landlord's interest in and to the Leases (the "Leases") between Seller, as Landlord, and the tenants ("Tenants") in occupancy under the Leases referenced in Section 5.7, below and set forth on Exhibit G; and
5 5852. 0 I 006\4306521 I .4
28 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
1.6 Other Assets. To the extent owned by Seller, all tangible and intangible assets of any nature relating to the Property or the Personal Property, including without limitation (a) all warranties upon the Improvements or Personal Property, to the full extent such warranties are assignable, (b) copies of all plans, specifications, engineering drawings and prints relating to the construction of the Improvements, (c) all license agreements, copyrights, logos, designs, trademarks, trade names, service marks and all goodwill associated with the Property, (d) all other intellectual or intangible property used by Seller in connection with the Property; and (e) all claims and causes of action arising out of or in connection with the Property; ARTICLE 2. PURCHASE PRICE.
2.1 Amount; Contingencies. The purchase price (the "Purchase Price") for an undivided fifty percent (50%) interest in the Property shall be $1,850,000.00. Seller acknowledges and agrees that Buyer is not requesting a financing or appraisal contingency in contemplation of the Purchase Price, however, Buyer may, in its sole discretion, engage with an appraiser to evaluate the value of the Property during the Due Diligence Period (as defined in Section 3.1.1 ). The parties further acknowledge and agree that the Purchase Price is predicated on the assumption that no adverse environmental conditions exist on the Property. Should Buyer determine, in its reasonable discretion, that adverse environmental conditions are present on the Property during its Due Diligence Investigation (as defined below in Section 3.1.2), the parties shall, prior to expiration of the Due Diligence Period, negotiate in good faith, the manner in which such conditions shall be remedied and the Due Diligence Period shall be tolled for the duration of such negotiations.
Additionally, the amount of the Purchase Price shall be contingent on Buyer obtaining legal possession of all furniture, fixtures, and equipment used in connection with the operation of the Property in good working order and repair, and otherwise owned by Seller. Seller agrees to cooperate fully to ensure the transfer of such items to Buyer as part of the transaction.
2.2 Deposit/Purchase Price.
2.2.1 Within 5 business days after the Effective Date, Buyer shall deposit $25,000.00 into Escrow (as defined below) into an interest bearing account on behalf of Buyer (the "Deposit"). The deposit shall be refundable to Buyer unless Buyer waives all contingencies by the expiration of the Due Diligence Period. If the Closing of the transaction contemplated by this transaction occurs, the Deposit shall be disbursed to Seller and applied to the Purchase Price at Closing. The failure of Buyer to make the Deposit within the time frame specified in this Section shall be material breach of this Agreement and Seller may terminate the Agreement.
2.2.2 Buyer shall pay the Purchase Price to Seller through escrow at the Closing described in Section 9.1. On or before the Closing Date (as defined below), Buyer shall deposit into Escrow the Purchase Price, subject to adjustment by reason of any applicable prorations and the allocation of closing costs described below.
2.2.3 The Deposit and Purchase Price shall be made by wire transfer of federal funds, cashier's check or in another immediately available form. Notwithstanding anything herein to the contrary, One Hundred Dollars ($100.00) of the Initial Deposit (the "Independent Consideration") shall not be refundable to Buyer, but shall represent consideration for this Agreement and shall be paid to Seller. The Independent Consideration shall be paid to Seller 2 55852.01006\4306521 l.4
29 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D within 3 days of the Effective Date. The Independent Consideration shall serve as consideration for the granting of the time periods herein contained for Buyer to exercise Buyer's right to satisfy and approve all of Buyer's conditions herein contained. If the Deposit is refunded to Buyer for any reason pursuant to this Agreement, the Independent Consideration shall be subtracted from the Deposit pursuant to this Section.
2.2.4 In the event Buyer exercises the right to extend the Closing Date pursuant to Section 9.1, below, Buyer shall, within three (3) business days after delivery of the Closing Extension Notice (defined below), deposit into Escrow an additional Six Thousand Two Hundred Fifty Dollars ($6,250.00) (the "Extension Deposit"), which Extension Deposit shall be added to the Deposit and shall be applied to the Purchase Price at Closing.
ARTICLE 3. DUE DILIGENCE.
3.1 Due Diligence Period; Inspection and Access.
3.1.1 Due Diligence Period. The "Due Diligence Period" means the period beginning on the Effective Date and ending at 5:00 p.m. on February 21, 2025, provided, however, in the event the Preliminary Documents and the Lease Documentation (defined below) are not delivered on or before the Seller Document Deadline (defined below), the Due Diligence Period and the Closing Date shall be automatically extended one (1) day for each day beyond the Seller Document Deadline that the Preliminary Documents and the Lease Documentation are not delivered to Buyer by Seller.
3.1.2 Access to Information and the Property. Buyer shall conduct its investigation of the Property during the Due Diligence Period at no cost to Seller. This investigation ("Due Diligence Investigation") may include, at Buyer's option: a physical inspection of the Land and all Improvements thereon, including soil, geological and other tests, engineering evaluations of the mechanical, electrical, HV AC and other systems in the Improvements and review of the Plans; review of all governmental matters affecting the Property, including zoning, environmental and building permit and occupancy matters; review and verification of all financial and other information previously provided by Seller relating to the operation of the Property; review of the condition of title to the Property, including the building, structural system and roof inspection; and review of such other matters pertaining to an investment in the Property as Buyer deems advisable. In addition to the Preliminary Documents delivered to Buyer pursuant to Section 3.2, Buyer and its representatives shall have the right of access during reasonable business hours to all files, books and records maintained by Seller or its agents (including, without limitation, all of the Additional Documents to be made available to Buyer at the Property pursuant to Section 3 .3), wherever located, relating to the Property, including the right to copy the same. Buyer and its representatives shall also have the right of access to the Property during reasonable business hours to conduct its investigation of the physical condition of the Property. Seller agrees that the rights granted to Buyer herein and the results of its Due Diligence Investigation shall not relieve Seller of any obligations Seller may have under any other provisions of this Agreement, or under other documents entered into concurrently herewith, or implied by law, nor shall they constitute a waiver by Buyer of the right to enforce any of the same. Seller shall cooperate with Buyer in its due diligence activities and provide access to the Property, its records, or provide information so long as it is within Seller's control. 3 55852.01006\43065211.4
30 Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600D
3.2 Delivery of Preliminary Documents. Within five (5) business days after the Effective Date ("Seller Document Deadline"), if Seller hasn't previously provided such documents prior to the Effective Date, Seller shall deliver to Buyer, at Seller's expense, all of the documents described in the remaining subsections of this Section 3.2 (collectively, the "Preliminary Documents") in Seller's possession or control.
3.2.1 Title Report and Survey. A preliminary title report or commitment for title insurance (the "Preliminary Title Report"), dated no earlier than 10 days before the Effective Date, covering the Property and issued by a title insurance company or companies acceptable to Buyer (the "Title Company"), together with a legible copy of each document, map and survey referred to in the Preliminary Title Report. Buyer, at Buyer's sole cost, may obtain an as-built survey of the Property (the "Survey") prepared by a certified land surveyor in accordance with the most recent American Land Title Association standards, certified by such surveyor to Buyer and the Title Company in a form acceptable to the Title Company for the purpose of deleting any survey exception from the Title Policy described in Section 4.1.3.
3.2.2 Plans. Copies of all as-built plans and specifications for the Improvements, including without limitation the plans and specifications for and a complete description of all existing renovations and improvements to the Property and all rentable space therein, and as-built drawings for all underground utilities (collectively, the "Plans"), together with a certificate from an architect approved by Buyer certifying to Buyer that the Improvements were constructed and completed in accordance with the Plans;
3.2.3 Soils Report. Any soils report on the Land prepared at Seller's request or in the possession or control of Seller, including (if available) a report on compliance with any soils work recommended to be done prior to construction of the Improvements;
3.2.4 Engineers' Reports. Any structural, mechanical, environmental or geological reports concerning the Property which have been prepared at Seller's request or which are within Seller's possession or control;
3.2.5 Operating Statements; Tax Bills. Copies of operating statements for the Property for the monthly period between January 1, 2022, through November, 2024 certified by Seller including an itemization of income and expenses and copies of all real property tax bills for the Property for such periods. During the Due Diligence Period, Seller shall provide copies of true and accurate operating statements for the months of December 2024 and January 2025, as they become available, but in no event later than the expiration of the Due Diligence Period;
3.2.6 Licenses, Etc. Copies of any licenses, permits or certificates required by governmental authorities in connection with construction or occupancy of the Improvements, including, without limitation, building permits, certificates of completion, certificates of occupancy and environmental permits and licenses;
3.2.7 Lease Documentation. Fully executed copies of all of the Leases set forth on Exhibit G, including, without limitation, new Leases or Lease amendments for such leases for which an original is either lost, incomplete, unsigned, or otherwise unavailable, along with duly executed estoppel certificates on a form reasonably acceptable to Buyer disclosing no defaults or 4 55852.01006\430652 l l.4
31 Docusign Envelope ID: 0BE25851-B03A-4B 1 D-848B-09EBCC6C600D alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant (the "Preliminary Estoppels"), the Leases and the Preliminary Estoppels shall be referred to herein as the "Lease Documentation"); and
3.2.8 Inspection Reports. Copies of all written reports received by Seller within three (3) years prior to the Effective Date from Seller's insurance companies, any governmental agency or any other person or entity, which requires or demands correction of any condition, or requests modification in or termination of any uses of the Property, accompanied by Seller's summary of (a) any oral reports from such insurance companies or governmental agencies, and (b) the present status of any matter noted in any oral or written report.
3.3 Additional Documents and Information. From the Effective Date through the Closing Date, Seller shall make available to Buyer at the Property in accordance with Section 3.1, the documents and information described in this Section 3.3 (collectively, the "Additional Documents"):
3.3.1 Agreements. Copies of written, and written descriptions of oral, easements, covenants, restrictions, agreements, contracts and other documents, whether existing or, to the knowledge of Seller, proposed as of the Effective Date, including without limitation any agreements relating to the insurance, service, operation, repair, supply, advertising, promotion, sale, leasing or management of the Property, which (a) affect the Property, (b) are not disclosed by the Preliminary Title Report, and (c) have not been delivered to Buyer pursuant to Section 3.2.
If no such documents exist, Seller shall furnish its certification to that effect;
3.3.2 Warranties/Roof Inspections/HY AC Inspections. Copies of any and all guarantees or warranties and other rights given to Seller in connection with the construction, maintenance, repair or remodeling of the Improvements, periodic inspections, or the purchase of any of the Personal Property. If no such documents exist, Seller shall furnish its certification to that effect;
3.3.3 Insurance Policies. Copies of certificates evidencing the insurance carried by Seller of the Property;
3.3.4 Other Documents. All data, correspondence, documents, agreements, waivers, notices, applications and other records with respect to the Property relating to transactions with taxing authorities, governmental agencies, utilities, vendors and others with whom Buyer may be dealing from and after the Closing Date; and
3.3.5 Requested Information. Such other documents and information concerning the Property as Buyer may reasonably request.
3.4 Approval/Disapproval of Due Diligence Investigations. Buyer shall approve or disapprove the results of Buyer's Due Diligence Investigation, in the exercise of Buyer's sole discretion, by written notice delivered to Seller no later than the expiration of the Due Diligence Period. Buyer's disapproval shall terminate this Agreement unless, at the time Buyer gives notice of its disapproval, Buyer also notifies Seller of Buyer's desire to enter into negotiations with Seller for the purpose of reaching an accommodation concerning the disapproval. If Buyer so notifies Seller and the parties have not reached a written agreement satisfactory to both of them regarding 5 55852.01006\430652 l l .4
32 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D the disapproval within 10 days after the date of the disapproval notice, Buyer, at its option, may either (a) elect to terminate this Agreement by so notifying Seller and recover the Deposit, or (b) elect to proceed with the transactions contemplated by this Agreement notwithstanding its earlier disapproval. If Buyer fails to deliver to Seller notice of its approval or disapproval of the results of its Due Diligence Investigation, Buyer shall be deemed to have disapproved such results. If Buyer elects to terminate the Agreement, Buyer shall return to Seller all of the Preliminary Documents and Additional Documents previously delivered by Seller to Buyer within 5 business days of such termination, and Escrow shall immediately refund Buyer the Deposit, and Buyer shall have no further obligations to Seller.
3.5 Title Review.
3 .5 .1 Monetary Liens. At its expense, Seller shall remove all I iens on the Property at or prior to the Closing (collectively, "Monetary Liens"): (i) all delinquent taxes, bonds and assessments and interest and penalties thereon (it being agreed that Seller shall not be required to remove any non-delinquent taxes and assessments imposed by any governmental agency that are paid with the property taxes for the Property); and (ii) all other monetary liens, including without limitation all those shown on the Preliminary Title Report (including judgment and mechanics' liens, whether or not liquidated, and mortgages and deeds of trust, with Seller being fully responsible for any fees or penalties incurred in connection therewith).
3.5.2 Approval/Disapproval of Title Review. Buyer shall approve or disapprove of the Preliminary Title Report, the Survey and any exceptions to title shown thereon ( other than the Monetary Liens) in the exercise of Buyer's sole discretion, by the expiration of the Due Diligence Period. If Buyer disapproves, Buyer may either (a) terminate this Agreement by giving Seller written notice of termination or (b) give Seller a written notice ("Disapproval Notice") identifying the disapproved title matters ("Disapproved Title Matters"). With respect to any Disapproved Title Matters, other than the Monetary Liens, Seller shall notify Buyer in writing within 5 days after Seller's receipt of the Disapproval Notice whether Seller will cause the Disapproved Title Matters to be removed or cured at or prior to Closing. If Seller elects not to remove or cure all Disapproved Title Matters, Buyer may, at its option: (i) subject to satisfaction of the other conditions to Closing, close the purchase of the Property and take title subject to the Disapproved Title Matters which Seller elects not to remove or cure; or (ii) terminate this Agreement in accordance with Section 9 .6.1.
3.5.3 Buyer's Options. If any Disapproved Title Matters (including the Monetary Liens) have not been removed at least 5 days prior to Closing or provision for their removal at the Closing has not been made to Buyer's satisfaction, Buyer may, at its option: (i) close the purchase of the Property and take title subject to the Disapproved Title Matters which have not been removed; (ii) close the purchase of the Property and cure or remove the Disapproved Title Matters which have not been removed. Buyer may credit the costs of such cure or removal against the Purchase Price by reducing the amount of cash payable by Buyer at the Closing, but only to the extent such costs are expended to remove (A) Monetary Liens referred to in Section 3.5.1 or (B) Disapproved Title Matters which Seller agreed to remove; or (iii) terminate this Agreement in accordance with Section 9 .6.1.
6 55852.01006\43065211.4
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3.5.4 Failure to Disapprove. If Buyer fails to notify Seller of its approval or disapproval of the Preliminary Title Report, the Survey or the exceptions shown thereon by the end of the Due Diligence Period, then Buyer shall be deemed to have disapproved the same.
ARTICLE 4. CONDITIONS PRECEDENT.
4.1 Buyer's Conditions. Buyer's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.1 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or in part by Buyer by written notice to Seller.
4.1.1 Due Diligence. Buyer having approved of the results of its Due Diligence Investigation pursuant to Section 3 .4;
4.1.2 Title Review. Buyer having approved of the results of its review of title pursuant to Section 3.5.
4.1.3 Title Policy. Seller having caused the Title Company to deliver to Buyer (a) a CLTA Owner's policy oftitle insurance, provided that Buyer may require an ALTA Owner's Policy if Buyer pays the incremental premium for ALT A coverage ("Title Policy") ( or at Buyer's election a binder therefor) for the Property, or (b) the Title Company's irrevocable commitment to issue such policy of title insurance, (including such coinsurance, reinsurance and endorsements as Buyer shall require), with liability equal to the Purchase Price showing fee title to the Property vested in Buyer and subject only to: (i) the matters and exceptions which were approved by Buyer pursuant to Section 3.5; and (ii) the standard printed exceptions in the form of title policy called for ( collectively, "Conditions of Title").
4.1.4 Performance of Covenants. Seller performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Seller prior to or at the Closing.
4 .1.5 Representations and Warranties. The representations and warranties of Seller set forth in Article 5 being true and accurate on the Closing Date, as if made on such date.
4.1.6 Non-Foreign Certification. Seller having executed and delivered to Buyer on or prior to the Closing Date a certification (the "Non-Foreign Certification"), substantially in the form of Exhibit C.
4.1. 7 California Certification. Seller having furnished the residency certification required pursuant to Sections 18805 and 26131 of the California Revenue and Taxation Code ("Form 593") or having authorized Escrow Holder in writing to withhold from the Purchase Price the amounts required to be withheld by such Sections.
4.1.8 Condition of Property. The non-occurrence of any material adverse change to the physical status of the Property between the end of the Due Diligence Period and Closing.
4.1.9 Possession of FF&E's. Buyer obtaining legal possession of all furniture, fixtures, and equipment integral to the operation of the Property, and otherwise owned by Seller. 7 55852.01006\43065211.4
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4.1.10 Simultaneous Closing. Seller shall have caused the Closing to occur simultaneously with the closing for the remaining fifty-percent (50%) undivided interest in and to the Property and the closings for that certain property known as 2535 Laguna Canyon Road
4.1.11 Closing Estoppel Certificates. Seller shall have delivered or caused to be delivered the Closing Estoppel Certificates in accordance with Section 9.3.5.
4.2 Seller's Conditions. Seller's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.2 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or part by Seller by written notice to Buyer.
4.2.1 Covenants. Buyer performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Buyer prior to or at the Closing.
4.2.2 Representations and Warranties. The representations of Buyer set forth in Article 6 being true and accurate on the Closing Date, as if made on such date.
ARTICLE 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
Subject to the Disclaimer of Warranties contained in Section 5.19, and subject to Buyer's opportunity to conduct its Due Diligence Investigation of the Property,] Seller hereby makes the following representations and warranties to Buyer with the understanding that each such representation and warranty is material and is being relied upon by Buyer:
5.1 Defects. The Improvements and the Personal Property are in good condition and repair and are free of any latent or patent design, construction, physical or mechanical defects and there is no actual or threatened settlement, earth movement, termite infestation or damage affecting the Property.
5.2 Compliance. The Property, and the operation thereof, are in compliance with all applicable laws, ordinances, rules, regulations, judgments, orders, covenants, conditions, restrictions, whether federal, state, local, foreign or private, and Seller has not received any notice of any violation of the same. Seller has not received any request either formal or informal, oral or written, that Seller modify or terminate any use of the Property. The zoning of the Property permits the current Improvements and use of the Property, and, there is no pending or to Seller's knowledge, contemplated rezoning. The Property complies with all applicable subdivision laws and all local ordinances enacted thereunder and no subdivision or parcel map not already obtained is required to transfer the Property to Buyer.
5.3 Documents. All of the Preliminary Documents and the Additional Documents which have been delivered or made available to Buyer pursuant to Article 3, and all other documents delivered to Buyer by or on behalf of Seller (a) are true, correct and complete copies of what they purport to be, (b) represent truly the factual matters stated therein, ( c) are in full force and effect, ( d) have not been modified, except as set forth therein and ( e) do not omit any information required to make the submission thereof accurate and complete in all material respects. 8 55852.0\006\430652 l 1.4
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5.4 Taxes and Condemnation. There are no presently pending or, contemplated special taxes or assessments which will affect the Property. There are no presently pending or, to Seller's knowledge, contemplated proceedings to condemn or demolish the Property or any part of it.
5.5 Utilities. All water, sewer, gas, electric, telephone and drainage facilities, and all other utilities required by law or by the normal operation of the Property, are (a) installed to the property lines of the Property, (b) connected to the Property, (c) adequate to service the Property in its present use and to permit full compliance with all requirements of law and normal usage by the occupants of the Property and (d) in good working order and repair. All such utilities and storm and sanitary sewers required for the operation of the Property enter the Land through adjoining public streets or through adjoining private land in accordance with valid public or private easements that will inure to the benefit of Buyer.
5.6 Licenses. Seller has all required licenses, permits (including, without limitation, all building permits and occupancy permits), easements and rights-of-way which are required in order to continue the present use of the Property. Seller has no know ledge of any law or regulation of any governmental authority having jurisdiction which might require the Property to be improved beyond its present state or which might restrict the use and enjoyment of the Property in the manner it is presently being used and enjoyed.
5.7 Contracts/Leases/Occupancy Rights.
5.7.1 The Preliminary Documents include a list, description and copies of all contracts entered into by Seller or its property manager or leasing agent relating to the management, maintenance, leasing or operation of the Property ("Service Contracts"). Except for the Service Contracts, there are no agreements or other obligations to which Seller is party or, to Seller's knowledge, by which it or the Property is bound which may affect the current use of the Property, nor are there any current leases, occupancy or operating agreements in force. Seller has fully performed all the obligations required to be performed by Seller under the Service Contracts, and to Seller's knowledge, the other parties to the same are not in default thereunder.
5.7.2 There are no leases, rental agreements or other claims to possession effecting possession or occupancy of the Property other than the Leases set forth in Exhibit G hereto, and Seller shall not enter into any new leases or renewals and/or modifications of the existing Leases during the term of this Agreement except with the prior written consent of Buyer, which may be withheld in Buyer's reasonable discretion. Seller is not in default under any of the Leases, and all of the Leases are valid, binding, and enforceable in accordance with their respective terms.
5.7.3 There are no collective bargaining agreements, other union contracts of any nature, pension plans or other benefit plans of any nature in existence to which Seller is a party and which affect the Property or the operation thereof.
5.8 Litigation. There are no actions, suits, proceedings, judgments, orders, decrees or governmental investigations pending or threatened against the Property or Seller which could affect the Property or the purchase, use or enjoyment thereof by Buyer. 9 55852.01006\43065211 .4
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5.9 Agreements with Governmental Authorities. There are no agreements with governmental authorities, agencies, utilities or quasi-governmental entities which affect the Property except those agreements which are identified in the Preliminary Title Report and those matters which are disclosed by the Survey.
5.10 Hazardous Materials.
5.10.1 Definitions. For purposes of this Agreement:
(a) "Environmental Law(s)" means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U .S.C. Sections 960 I, et ~-, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et~-, the Toxic Substances Control Act, 15 U .S.C. Sections 2601 et. ~-, the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq., the Clean Water Act, 33 U.S.C. Sections 1251 et~-, The Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. H&S Code Sections 25249.5- 25249.13), the Carpenter-Preseley-Tanner Hazardous Substance Account Act (Cal. H&S Code Sections 25300 et seq.), and the California Water Code Sections 1300, et seq., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any other federal, state or local law, statute, rule, regulation or ordinance which regulates or proscribes the use, storage, disposal, presence, cleanup, transportation or Release or threatened Release into the environment of Hazardous Material.
(b) "Hazardous Material" means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii) infectious materials or (viii) radioactive materials. (c) "Release" means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping or disposing into the environment of any Hazardous Material (including the abandonment or discarding of barrels, containers, and other receptacles containing any Hazardous Material).
5.10.2 Representations.
(a) The Property and all existing uses and conditions of the Property are in compliance with all Environmental Laws, and Seller has not received any written notice of violation issued pursuant to any Environmental Law with respect to the Property or any use or • condition thereof.
(b) Neither Seller nor any other present or former owner of the Property has used, handled, stored, transported, released or disposed of any Hazardous Material on, under or from the Property in violation of any Environmental Law. ( c) There is no Release of any Hazardous Material existing on, beneath or from or in the surface or ground water associated with the Property. 10 55852.01006\430652114
37 Docusign Envelope ID: 0BE25851-B03A-481 D-8488-09EBCC6C600D (d) All required permits, licenses and other authorizations required by or issued pursuant to any Environmental Law for the ownership or operation of the Property by Seller have been obtained and are presently maintained in full force and effect. (e) There exists no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or investigation pending or, to Seller's knowledge, threatened pursuant to any Environmental Law relating to (i) the ownership, occupancy or use of any portion of the Property by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property, (ii) any alleged violation of any Environmental Law by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property or (iii) the suspected presence, Release or threatened Release of any Hazardous Material on, under, in or from any portion of the Property. (t) There are no above-ground or underground tanks located on the Property used or formerly used for the purpose of storing any Hazardous Material. (g) No asbestos abatement or remediation work has been performed on the Property.
(h) There is no PCB-containing equipment or PCB-containing material located on or in the Property.
5.11 Title to the Property. Seller has good and marketable title to the Property, subject to the Conditions of Title. There are no outstanding rights of first refusal or first look, options to purchase, rights of reverter, or claim of right relating to the transfer or sale of the Property or any interest therein. To Seller's knowledge, there are no unrecorded or undisclosed documents or other matters which affect title to the Property. No person holding a security interest in the Property or any part thereof has the right to consent or deny consent to the sale of the Property as contemplated herein, and Seller has the right to pay off such person and to remove all such liens as of the Closing Date. Seller has enjoyed the continuous and uninterrupted quiet possession, use and operation of the Property.
5.12 Seller's Authority. Seller has the requisite power and authority to own and operate the Property and conduct its business where the same is now owned or operated. The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Seller (or its board of directors or shareholders) in order to consummate the transactions contemplated herein. This Agreement and the other documents executed by Seller in connection herewith are legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement by Seller, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Seller was organized, or any indenture, mortgage, deed of trust, agreement, undertaking, instrument or document to which Seller or any affiliate thereof is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller. 11 55852.01006\430652 l 1.4
38 Oocusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 5 .13 Parking. Seller has received no written notice from any governmental agency that the parking spaces on the Property are in violation of law. 5 .14 Zoning. Seller has received no written notice from any governmental agency that the Property is not in compliance with zoning requirements and laws.
5.15 Foreign Person. Seller is not a "foreign person" within the meaning of Section 1445(f) of the Internal Revenue Code.
5.16 No Employees. There are no on-site employees of Seller at the Property. On or before Closing, Seller shall terminate any employees at the Property and any residence or occupancy thereof, if any, and Buyer shall have no obligation to employ or continue to employ any individual employed by Seller or its affiliates in connection with the Property, if any.
5.17 Inspections. The Preliminary Documents include a full description of (a) all inspections of the Property by any governmental agency or insurance company occurring within three (3) years prior to the Effective Date, (b) all matters which were noted by such governmental agency or insurance company as requiring correction, requesting or recommending modifications or termination of uses of the Property and ( c) the present status of each such noted matter.
5.18 Misstatements and Omissions. Neither the representations and warranties made by Seller in this Article 5 nor elsewhere in this Agreement contain any untrue statement or any omission of a material fact. Seller has no documents in its possession, nor has any knowledge, that omits material facts related to the property or which would contradict or negate any of its representations contained in this Agreement.
ARTICLE 6. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer makes the following representation and warranties to Seller with the understanding that each such representation and warranty is material and is being relied upon by Seller:
6.1 Buyer's Authority. The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Buyer in order to consummate the transactions contemplated herein.
6.2 No Conflict. Neither the execution nor delivery of this Agreement by Buyer, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Buyer was organized, or any agreement to which Buyer is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Buyer.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
7 .1 Survival of Warranties. Buyer and Seller agree that each representation and warranty, covenant by the respective parties contained herein or made in writing pursuant to this 12 55852 01006\43065211 .4
39 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D Agreement are intended to and shall be deemed made as of the date of this Agreement or such writing and again at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive the execution and delivery of this Agreement, the Deed and the Closing.
7.2 Notice of Changed Circumstances. If either party becomes aware of any fact or circumstances which would render false or misleading a representation or warranty made by such party, then it shall immediately give notice of such fact or circumstance to the other party, but such notice shall not relieve any party of any liabilities or obligations with respect to any representation or warranty.
ARTICLE 8. SELLER'S PRECLOSING COVENANTS.
Seller shall comply with the covenants contained in this Article 8 from the Effective Date through the Closing Date unless Buyer consents otherwise in writing. Buyer may grant or withhold any such consent requested by Seller in Buyer's sole discretion.
8.1 Contracts and Documents. Seller shall not, without Buyer's approval, not to be unreasonably withheld or delayed, (a) amend or waive any right under any Service Contract, Lease, Preliminary Document or Additional Document, or (b) enter into any material agreement of any type affecting the Property that would survive the Closing Date.
8.2 Insurance. Seller shall maintain or cause to be maintained in full force and effect its present insurance policies for the Property.
8.3 Compliance with Obligations. Seller shall fully and timely comply with all obligations to be performed by it under the Service Contracts, the other Preliminary Documents, the Conditions of Title and all permits, licenses, approvals and laws, regulations and orders applicable to the Property.
8.4 No Transfers. Seller shall not sell, encumber or otherwise transfer any interest in all or any portion of the Property, or agree to do so.
8.5 Termination of Contracts. Seller at its sole cost and expense shall terminate all of the Service Contracts described in Section 5.7 at or before the Closing Date, except for those contracts which Buyer expressly agrees to assume and which are actually assumed by Buyer pursuant to Section 9.3.3.
8.6 Maintenance. At its sole cost and expense, Seller shall operate and maintain the Property such that on the Closing Date the Property shall be in at least as good a condition and repair as on the Effective Date, reasonable wear and tear excepted. Without limiting the generality of the foregoing, Seller shall, at a minimum, spend such amounts for repair and maintenance as are consistent with its prior practice. Seller shall promptly advise Buyer of any significant repair or improvement required to keep the Property in such condition. Seller shall not make any material alterations to the Property, or remove any of the Personal Property therefrom, without Buyer's prior consent, unless such Personal Property so removed is simultaneously replaced with new Personal Property of similar quality and utility.
13 55852.01006\430652 l l.4
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8.7 Best Efforts. Seller shall use its best efforts to cause the conditions set forth in Section 4.1 to be satisfied by the Closing Date, and Seller shall not take or permit any action that would result in any of the representations and warranties set forth in Article 5 becoming false or incorrect.
ARTICLE 9. CLOSING.
9 .1 Time. Provided all conditions set forth in Article 4 have been either satisfied or waived, and to the extent such date has not been extended pursuant to Section 3. I. I, above, the parties shall close this transaction (the "Closing"), on February 28, 2025 (the "Closing Date"), as such date may be extended by the provisions of Article 10. Notwithstanding the foregoing, Buyer shall have the right to extend the Closing Date to March 28, 2025 by providing written notice on or before the original Closing Date ("Closing Extension Notice") and depositing into Escrow the Extension Deposit in accordance with Section 2.2.4, above.
9.2 Escrow. This Article 9, together with such additional instructions as Fidelity Title Company, Attention Brenna Ryan, 4400 MacArthur Blvd., Suite 200, Newport Beach, CA 92660, California (telephone: 949-623-3038; e-mail: [email protected], [email protected] ("Escrow Holder"), shall reasonably request and the parties shall agree to, shall constitute the escrow instructions to Escrow Holder. If there is any inconsistency between this Agreement and the Escrow Holder's additional escrow instructions, this Agreement shall control unless the intent to amend this Agreement is clearly stated in said additional instructions. Buyer and Seller shall cause Escrow Holder to execute and deliver a counterpart of this Agreement to each of them. If the Title Company does not serve as the Escrow Holder, the Title Company shall provide a letter to Buyer, in form and content acceptable to Buyer, pursuant to which the Title Company accepts responsibility and liability for the acts and omissions of Escrow Holder in discharging Escrow Holder's obligations hereunder, including, without limitation, any acts or omissions of Escrow Holder relating to the Title Company's commitment to issue the Title Policy, the receipt, recordation or delivery of any documents placed into escrow, and the receipt and disbursement of any funds placed into escrow.
9.3 Seller's Deposit of Documents and Funds Into Escrow. Seller shall deposit into escrow on or before Closing (unless otherwise set forth herein) the following documents:
9.3.1 A duly executed and acknowledged grant deed, in the form acceptable to Buyer, conveying the Property to Buyer ("Grant Deed") in the form attached as Exhibit F;
9.3.2 A duly executed bill of sale, in the form of Exhibit D, conveying the Personal Property to Buyer free and clear of liens, encumbrances and restrictions ("Bill of Sale");
9.3.3 A duly executed assignment, in the form of Exhibit E, assigning to Buyer all of Seller's interest (a) in the Plans, (b) in all warranties of which Seller is the beneficiary with respect to the Property, (c) in all intangible assets of the Property, and (d) in the Service Contracts which Buyer has elected to assume (the "General Assignment");
9.3.4 A duly executed assignment, in the form of Exhibit H, assigning to Buyer all of Seller's interest in and to the Leases (the "Assignment of Leases"); 14 55852.0 I 006\43065211.4
41 Docusign Envelope ID: 0BE25851-B03A-481D-8488-09EBCC6C600D
9.3.5 No later than three (3) business days prior to the Closing Seller shall have delivered to Buyer estoppel certificates ("Closing Estoppel Certificates") in a form acceptable to Buyer, dated no earlier than fifteen (15) days prior to the Closing and disclosing no defaults or alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant, or any modification in rent, expiration date or other material Lease term reflected in the Lease Documentation;
9 .3 .6 No more than 10 days but no less than 5 days before the expiration of the Due Diligence Period, the originals ( or copies if originals are unavailable) of the Service Contracts Buyer has elected to assume, if any, and estoppel certificates from the other parties to such Service Contracts in form and substance satisfactory to Buyer;
9.3.7 All costs of Closing, including, but not limited to, the CLTA increment of the premium for the Title Policy, recording fees (if any), transfer taxes (if any) and fees, one-half of the escrow fees, sales tax and any other costs of Closing customarily paid by sellers of real property, plus or minus prorations as provided in Section 9.8; provided that, subject to Section 9.6, Buyer and Seller shall bear their own attorneys' fees and costs in connection with the negotiation and preparation of this Agreement and the transactions completed by this Agreement;
9.3.8 Seller's Non-foreign Certification;
9.3.9 All records and files relating to the management or operation of the Property, including, without limitation, property tax bills, insurance, and property taxes; and
9.3.10 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.3.11 Form593;
9.3.12 Notice letter to tenants regarding new owner and addresses for payment of rent payment ("Tenant Notice Letter").
9.4 Deliveries Outside of Escrow. Notwithstanding Section 9.3, Seller and Buyer may elect to deliver the documents described in Section 9.3 outside of escrow (other than documents which are to be recorded) by giving Escrow Holder a joint written notice of such election, specifying the documents which will be so delivered outside of escrow. Upon receipt of such notice, Escrow Holder shall have no further obligation concerning such specified documents.
9.5 Buyer's Deposit of Documents and Funds. Buyer shall deposit into escrow:
9.5.1 The Purchase Price in accordance with the provisions of Article 2, plus or minus prorations as provided in Section 9 .8, by electronic transfer of federal funds to Escrow Holder, on or before the Closing Date;
9 .5 .2 A duly executed counterpart of the Assignment of Leases; and 15 55852.0 I 006\43065211.4
42 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
9.5.3 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.6 Default, Termination and Remedies.
9 .6.1 Buyer's Termination. This Agreement shall automatically terminate without further notice or action by Buyer upon the occurrence of any of the following events, provided that Buyer is not then in material breach of this Agreement: (a) any condition to Closing contained in Section 4.1 has not been satisfied or waived by Buyer by the Closing Date; or (b) Buyer having exercised its right to terminate this Agreement pursuant to Section 3.4 (disapproval of Due Diligence Investigation), Section 3 .5 ( disapproval of title) or Article 10 ( damage or condemnation). In such event, the parties shall have no further obligation to each other except for those obligations that specifically survive the termination of this Agreement. If this Agreement terminates as a result of Seller's material breach of this Agreement, Buyer shall have all remedies it may have hereunder or at law as a result of such occurrence, including the remedy of specific performance.
9.6.2 Seller's Termination. Provided that Seller is not then in material breach of this Agreement, this Agreement shall automatically terminate without further notice or action by Seller if any condition to Closing contained in Section 4.2 has not been satisfied or waived by Seller by the Closing Date.
9.6.3 Release from Escrow. Upon termination of this Agreement pursuant to Section 9 .6.1 or 9 .6.2, Escrow Holder shall promptly return to Buyer and Seller, respectively, all documents and monies deposited by them into escrow without prejudice to their rights and remedies hereunder.
9.6.4 Remedies.
(a) Buyer's Remedies. If Seller breaches this Agreement, Buyer shall be entitled to pursue all remedies permitted herein and by law, including the remedy of specific performance. No termination of the escrow by Buyer following a breach by Seller shall be deemed to waive such breach or any remedy otherwise available to Buyer. (b) Seller's Remedies/Liquidated Damages. IF BEFORE THE CLOSE
OF ESCROW BUYER FAILS TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT AND (EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.6)
DOES NOT CURE SUCH FAILURE WITHIN TEN BUSINESS DAYS AFTER SELLER'S WRITTEN NOTICE OF SUCH FAIL URE, THEN SELLER MAY THEREAFTER: (I) TERMINATE THIS AGREEMENT; (II) RECEIVE AND RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES IF SUCH DEFAULT OCCURS AFTER BUYER'S APPROVAL PERIOD; AND (III) EXERCISE THE OTHER RIGHTS AND REMEDIES RESERVED BY SELLER AS PROVIDED IN THIS SECTION. IN THE EVENT SELLER TERMINATES THIS
AGREEMENT BY REASON OF BUYER'S DEFAULT, BUYER AND SELLER SHALL BE
RELIEVED OF ANY FURTHER OBLIGATION TO EACH OTHER WITH RESPECT TO THIS
AGREEMENT AND THE PROPERTY EXCEPT FOR ANY OBLIGATIONS WHICH 16 55852.01006\43065211.4
43 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
SELLEK~: I~S. BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART
OF THE CONSIDERATION BEING GIVEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGRE~'[ tl) TIIE ABSENCE OF THE PROVISIONS OF THIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and ( c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852.01006\430652 l l.4
44 EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFOR!\1 BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
~L
SELLER'S INITIALS BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART OF THE CONSIDERATION BEING GIVEN TO BUYER FOR ENTERING. INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGREEMENT IN THE ABSENCE OF THE PROVISIONS OF THIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a confonned copy (showing all recording infonnation thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and (c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9. 7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing alJ receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852.01006\43065211.4
! lrTTl"l""lf'"Ffli .Rnimr.TT-"• -iMl•IFi•l'"''loilf:,A•HMil&,IJi-ii41il...+f;TTr.1' ,llfrr.JffiCJltT:,JI 1fITTI ··;"1TT"'1,rlTrlr-l'lll~l'fl 1a11,~:;aT,17111r"ll:-':5i-,·;·-, --r.T1,r· -.,,-,·1-11iWWWIIWWWiA•1, .. nno1o1· I 45 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D Revenue Service (with copies to Buyer and Seller) the reporting statement required under Section 6045(e) of the Internal Revenue Code.
9.8 Prorations. Subject to the other provisions of this Section 9.8, all receipts and disbursements of the Property will be prorated as of 11 :59 p.m. on the day immediately preceding the Closing Date. Not less than five business days prior to the Closing, Seller shall submit to Buyer for its approval a tentative prorations schedule showing the categories and amounts of all prorations proposed, including all rents and operating expenses. Security deposits shall be credited to Buyer from Seller proceeds. The parties shall agree on a final prorations schedule prior to the Closing and shall deliver the same to Escrow Holder. If following the Closing either party discovers an error in the prorations statement, it shall notify the other party and the parties shall promptly make any adjustment required. The parties agree that any trailing bills that pertain to the Property operations before the Closing Date, which are not available as of Closing, may be presented to Buyer for proration and reimbursement up to forty five ( 45) days after Closing. Failure to provide any bills by such date shall be a waiver by Seller of such reimbursement and Buyer shall have no further obligation for any such bills and Property expenses. This section 9.8 shall survive Closinw, Cc:) .
SELLER INITIALS
9.8.1 Capital Expenditures and Accounts Payable. All capital and other improvements (including labor and material) which have been performed or contracted for, by or on behalf of Seller prior to the Closing Date, and all sums due for accounts payable which have been incurred with respect to the Property prior to the Closing Date shall be paid by Seller and shall be subject to the indemnification provisions of Section 7.3. Buyer shall furnish to Seller for payment any bills for such period received after the Closing Date, and Buyer shall have no further obligation with respect thereto.
9.8.2 Property Taxes. General real estate taxes, water or sewer rates and charges (if not metered), personal property taxes, or any other governmental tax or charge levied or assessed against the Property ( collectively, the "Taxes"), relating to the Property and payable during the year in which Closing occurs shall not be prorated between Seller and Buyer in Escrow.
Upon recordation of the Grant Deed, Buyer will request cancellation of the real property taxes for the Property pursuant to California Revenue and Taxation Code Section 4986. If current taxes have not yet been paid as of the Closing Date, then at Closing Seller shall pay through Escrow or out of Seller's proceeds, the full amount of the installment applicable for the period in which Closing occurs. Seller shall be entitled to a refund of any excess payment made to the taxing authority on account of the Property, including any taxes paid by Seller and applicable to any period from and after the Closing Date. The taxing authority will notify Seller of any refund due Seller resulting from the subject acquisition after a review and any subsequent proration of the property tax assessment by the county assessor. Seller retains the right, following close of escrow, to apply to the appropriate governmental authority/ies for refund of real property taxes pursuant to Revenue and Taxation Code Section 5096.7 (or such other applicable law), and Buyer shall reasonably cooperate with Seller's efforts to obtain said refund. 18 55852.01006\430652 l l .4
46 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
9.8.3 Utility Charges. All utility charges shall be prorated as of the Closing Date and Seller shall obtain a final billing therefor. All utility security deposits, if any, shall be retained by Seller.
9.9 Possession. Seller shall deliver exclusive right of possession of the Property to Buyer on the Closing Date, subject only to the Conditions of Title.
ARTICLE 10. DAMAGE, DESTRUCTION AND CONDEMNATION.
This Agreement shall be governed by the Uniform Vendor and Purchaser Risk Act as set forth in Section 1662 of the California Civil Code as supplemented and modified by this Article 10. Seller shall promptly notify Buyer in writing of any material damage to the Property and of any taking or threatened taking of all or any portion of the Property. Within a reasonable period of time after receipt of such notice, Buyer shall determine whether a material part of the Property has been damaged or whether such taking or threatened taking has affected or will affect a material part of the Property. As used herein, (a) the destruction of a "material part" of the Property shall be deemed to mean an insured or uninsured casualty to the Property having an estimated cost of repair which in the reasonable judgment of Buyer equals or exceeds $200,000 and (b) a taking by eminent domain of a portion of the Property shall be deemed to affect a "material part" of the Property if in the reasonable judgment of Buyer the estimated value of the portion of the Property taken exceeds $200,000. Upon making its determination, Buyer shall notify Seller in writing of the results of such determination. Buyer may elect, by written notice delivered to Seller within 30 days after giving Seller notice of such determination, to terminate this Agreement in accordance with Section 9.6.1 if a material part of the Property has been damaged or if such taking has affected or will affect a material part of the Property. If Buyer does not so terminate, (i) in the case of damage to a material part of the Property, Seller shall assign to Buyer at the Closing its right to recover under any insurance policies covering such damage and shall pay Buyer at the Closing the amount of the deductible, if any, and (ii) in the case of a threatened or actual taking of a material part of the Property, Seller shall assign to Buyer at the Closing Seller's entire right, title and interest in the proceeds thereof. If between the Effective Date and the Closing Date the Property suffers damage which is not material, Seller shall repair such damage at its expense prior to the Closing, and the Closing Date shall be extended for a reasonable period of time not to exceed 30 days to allow for completion of such repairs. The Closing Date shall be extended as necessary to permit Buyer to exercise its rights under this Article
10. ARTICLE 11. GENERAL.
11.1 Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective (a) when personally delivered to the recipient at the recipient's address set forth below; (b) five business days after deposit in a sealed envelope in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the recipient as set forth below; or (c) one business day after deposit with a recognized overnight courier or delivery service, addressed to the recipient as set forth below, whichever is earlier. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday. Email notices may be used for 19 55852.01006\430652 l 1.4
47 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D convenience only, unless otherwise agreed by the parties in writing, and shall be deemed delivered one (1) business day after delivery if sent after 5 pm, or received the same day if sent on a business day between 8 am and 5 pm, and a duplicate shall be sent via USPS on the same day as the email.
The addresses for notice are:
SELLER:
With a copy to:
BUYER:
With a copy to:
PHILIP E. BURKHARDT, Trustee
7042 Palomino Drive
Sanger, CA, 92657
Phone: (704) 245-2690
Email: [email protected]
Casey Estate & Business Planning,
a Professional Law Corporation.
Attn Wayne J. Casey
610 Newport Center Drive, Suite 840
Newport Beach, CA 92660
Phone: (949) 640-5200
Email: [email protected]
CITY OF LAGUNA BEACH
Attn: Jeremy Frimond
505 Forest Ave.
Laguna Beach, CA 92561
Email: [email protected]
Best Best & Krieger
Attn: Megan Garibaldi
18101 Von Karman Ave., Suite 1000
Irvine, CA 92612
Phone: (949) 263-6592
Email: [email protected]
Either party may change its address by written notice to the other given in the manner set forth above.
11.2 California Environmental Quality Act. Buyer's future use and/or development of the Property is expressly conditioned upon compliance with the California Environmental Quality Act ("CEQA") as Buyer shall conduct environmental review pursuant to CEQA prior to taking any discretionary action with regard to any proposed development of the Property.
11.3 Joint and Several Liability of Seller. The obligations, representations, warranties, and covenants of Seller under this Agreement shall be the joint and several obligations of each individual or entity comprising Seller. Each such individual or entity shall be fully responsible for 20 55852.01006\43065211 .4
48 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D the full performance of all obligations under this Agreement, regardless of the performance or default of any other individual or entity comprising Seller. Buyer may, at its sole discretion, seek recourse, enforcement, or remedy against any one or more of such individuals or entities without seeking recourse against the others, and no such action shall release any other individual or entity comprising Seller from their obligations under this Agreement.
11.4 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement and understanding between Buyer and Seller concerning the subject matter of this Agreement and supersede all prior agreements, including any previous letter of intent or terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Seller concerning the Property or the other matters which are the subject of this Agreement.
11.5 Amendments and Waivers. No addition to or modification of this Agreement shall be effective unless set forth in writing and signed by the party against whom the addition or modification is sought to be enforced. The party benefited by any condition or obligation may waive the same, but such waiver shall not be enforceable by another party unless made in writing and signed by the waiving party.
11.6 Invalidity of Provision. If any provision of this Agreement as applied to either party or to any circumstance shall be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the same shall in no way affect (to the maximum extent permissible by law) any other provision of this Agreement, the application of any such provision under circumstances different from those adjudicated by the court, or the validity or enforceability of this Agreement as a whole.
11.7 References. Unless otherwise indicated, (a) all Article, Section, Schedule and Exhibit references are to the articles, sections, schedules and exhibits of this Agreement, and (b) all references to days are to calendar days. All the Schedules and Exhibits attached hereto are incorporated herein by this reference. Whenever under the terms of this Agreement the time for performance of a covenant or condition falls upon a Saturday, Sunday or California state holiday, such time for performance shall be extended to the next business day. The headings used in this Agreement are provided for convenience only and this Agreement shall be interpreted without reference to any headings. The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so indicates or requires.
11.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in California.
11.9 Confidentiality and Publicity. Buyer is a public entity and as such, this Agreement, upon its presentation for approval at Buyer's City council at a duly called and agendized public meeting, shall be subject to the Public Records Act and the Freedom of Information Act. No press release or other public disclosure may be made by Seller or any of its agents regarding Buyer's intent for this Property this transaction without the prior consent of Buyer. 21 55852.01006\43065211.4
49 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
11.10 Time. Time is of the essence in the performance of the parties' respective obligations under this Agreement.
11. I I Attorneys' Fees. In the event of any legal or equitable proceeding to enforce any of the terms or conditions of this Agreement, or any alleged disputes, breaches, defaults or misrepresentations in connection with any provision of this Agreement, the prevailing party in such proceeding shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and costs of defense paid or incurred in good faith.
11.12 Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. However, Seller shall not have the right to assign all or any portion of its interest in this Agreement without Buyer's prior written consent.
Buyer shall have the right to assign all or any portion of its interest in this Agreement, or substitute for itself a nominee, upon notice to Seller not later than three (3) days prior to the Closing Date.
Any permitted assignment shall not relieve Buyer of its obligations hereunder, and Buyer shall • remain fully liable for the performance of all terms and conditions unless otherwise agreed to by Seller.
11.13 Further Assurances. Seller, at any time before or after Closing, shall, at its own expense, execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Buyer and shall take any other action consistent with the terms of this Agreement that may reasonably be requested by Buyer for the purpose of transferring and confirming to Buyer, or reducing to Buyer's possession, any or all of the Property or otherwise carrying out the terms of this Agreement.
11.14 Cooperation With Exchange. Buyer agrees to cooperate with the other if Seller intends to accomplish a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code of 1986. Buyer and/or Seller may assign this Agreement to an exchange intermediary for the purpose of facilitating such an exchange by the assigning party. Buyer's duty to cooperate shall be limited to the transfer of money to Seller or Seller's designee in exchange for the Property, and in no event shall Buyer act as purchaser or acquirer of any exchange property. Seller shall indemnify and defend and hold Buyer harmless from any claims, loss, damages or liability arising out of participation in an exchange.
11.15 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the parties to it and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any party hereto or give any third person any right of subrogation or action over against any party to this Agreement.
11.16 Remedies Cumulative. The remedies set forth in this Agreement are cumulative and not exclusive to any other legal or equitable remedy available to a party.
11.17 Commissions, Indemnity, Disclosure. Each party represents to the other party that there is no broker representing such party in the current transaction, and that the representing party has incurred no liability for any brokerage commission or finder's fee arising from or relating to the transactions contemplated by this Agreement. Seller shall be responsible for any broker 22 55852.01006\4306521 I .4
50 commission associated with this purchase. Each party hereby indemnifies and agrees to protect, defend and hold harmless the other party from and against all liability, cost, damage or expense (including without limitation attorneys' fees and costs incurred in connection therewith) on account of any brokerage commission or finder's fee which the indemnifying party has agreed to pay or which is claimed to be due as a result of the actions of the indemnifying party. This Section
11.17 is intended to be solely for the benefit of the parties hereto and is not intended to benefit, nor may it be relied upon by, any person or entity not a party to this Agreement.
11.18 Counterparts/Facsimile/PDF Signatures. This Agreement may be executed in counterparts and when so executed by the parties, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument that shall be binding upon the parties, notwithstanding that the parties may not be signatories to the same counterpart or counterparts. The parties may integrate their respective counterparts by attaching the signature pages of each separate counterpart to a single counterpart. In order to expedite the transaction contemplated herein, facsimile or .pdf signatures may be used in place of original signatures on this Agreement. Seller and Buyer intend to be bound by the signatures on the facsimile or .pdf document, are aware that the other party wiH rely on the facsimile or .pdf signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
BUYER:
City of Laguna Beach,
a California municipal corporation
By: ¥:?vW/\...
v 'S
Name: ~">v:<, \C'tt
Title: C~M~
ATTEST:
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
By: Megan . Garibaldi (Jan 17, 202511:53 PST)
City Attorney
23 55852.0 I 006\43065211.4
51 Docusign Envelope ID: 0BE25B51-B03A-4B 1 D-848B-09EBCC6C600D SELLER SIONA TURE PAGE TO PURCHASE AND SALE AGREEMENT - 2535 LAGUNA
CANYON ROAD
55852.01006\43065211 .4
SELLER:
Trust B under the Burkhardt Family Trust
established December 6, 1988
Name: PHILIP E. BURKHARDT
Title: Trustee
24 52
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foreg(?Jng
ntained therein. •••
Dated
,-:--
I--P.,,C'~=--------it----9l200\0
25 55852.01006\43065211.4
53 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT A
LAND DESCRIPTION
Real property in the City of Laguna Beach, County of Orange, State of California, described as follows:
Parcel 1:
That portion of Lot 2 of Fractional Section 13, in Township 7 South, Range 9 West, San Bernardino Base and Meridian described as follows:
Commencing at station 453+00.85, a point on the center line of Laguna Canyon Road, as shown on a map thereof approved by Nat Neff, Superintendent of Highways of Orange County, California, on November 4, 1929, said point being the Northwest corner of a parcel of land described in deed to Arch Craig by The Yoch Company, recorded March 5, 1930 in Book 366, Page 48, Official Records; thence Southerly fol!owing the centerline of Laguna Canyon Road, 1459. 15 feet to the most Westerly corner of the parcel of land conveyed to Patricia M. Goldbar, by deed dated May 27, 1939 and recorded in Book 998, page 253, Official Records, said corner being the true point of beginning of the boundary of the property described herein; thence South 58° 49' West, along the Southwesterly line of said land of Goldbar, 197.18 feet to the most Southerly corner of said land; thence South 17° 59' 28" West 109.90 feet more or less to the Northeasterly corner of the parcel of land conveyed to Georgia Day Robertson, and others by deed dated May 27, 1939 and recorded in Book 1001 Page 119, Official Records; thence North 58° 49' West, along the Northeasterly line of said land of Robertson, 222.26 feet to the center line of Laguna Canyon Road; thence North 31° 11' East; along said center line 107 feet to the true point of beginning.
Parcel 2:
The Northeasterly 107 .0 feet of that certain parcel of land described in a deed to Robert P. Kellogg and Hazel A. Kellogg, recorded October 6, 1944 in Book 1285, Page 357, Official Records, Records of Orange County, State of California.
APN: 632-101-10
Exhibit "A"
55852.01006\43065211 .4
54 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
EXHIBIT B
PERSONAL PROPERTY INVENTORY
Exhibit "B"
55852.0 I 006\43065211.4
55 Docusign Envelope ID: 0BE25851-B03A-481 D-848B-09EBCC6C600D
EXHIBIT C
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the CITY OF LAGUNA BEACH, a California municipal corporation (the "Transferee"), that withholding of tax under Section 1445 of the Code will not be required upon the transfer of a U.S. real property interest to the Transferee by PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988, as to an undivided fifty percent (50%) interest (the "Transferor"), the undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is 47-6849246; and
3. The Transferor's office address is 7042 Palomino Drive, Sanger, CA 92657.
The Transferor understands that this Certificate may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this Certification and, to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.
DATED:
55852.01006\43065211.4
_______ ,20_
Trust B under the Burkhardt Family Trust
established December 6, 1988
By: -----------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Exhibit "C"
56 Docusign Envelope ID: OBE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBITD
BILL OF SALE
This Bill of Sale (the "Bill of Sale") is made as of ______ , 20_, by PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988 ("Transferor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Purchase and Sale Agreement dated _, 20_ (the "Agreement"), Transferor hereby sells, transfers, assigns and delivers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Transferee"), an undivided fifty percent (50%) interest in any and all personal property (the "Personal Property") located within or used in connection with that certain improved real property commonly known as 2307 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN: 632-101-10) (the "Real Property"). The Personal Property shall include, without limitation, the items described in the Personal Property Inventory attached hereto as Schedule I.
1. Transferor hereby assigns all warranties, guarantees and indemnities, whether those warranties are express or implied, and all similar rights which Transferor may have against any other manufacturer or supplier of the Personal property or any portion thereof or against any seller, engineer, contractor or builder, in respect of the Personal Property.
2. Transferor warrants that each item of the Personal Property is in good condition, order and repair and suitable for its intended purpose on the date of this Bill of Sale.
3. Transferor at any time at or after the date of this Bill of Sale shall execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Transferee, and shall take any other action consistent with the terms of this Bill of Sale that may reasonably be requested by Transferee for the purpose of granting and confirming to Transferee, or reducing to Transferee's possession, any or all of the Personal Property. If requested by Transferee, Transferor further agrees to prosecute or otherwise enforce in its own name for the benefit of Transferee any claims, rights or benefits included in the Personal Property that require prosecution or enforcement in Transferor's name. Transferor also hereby appoints Transferee as its agent to act in Transferor's name and on Transferor's behalf to take any action necessary to effect the transfer of any of the Personal Property to Transferee, or prosecute or otherwise enforce any claims, rights or benefits included in the Personal Property in Transferor's name, including bringing suit in Transferor's name.
4. This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.
DATED: ______ , 20_.
TRANSFEROR:
Exhibit "D"
55852.01006\43065211.4
57 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.01006\430652 l 1.4
Trust B under the Burkhardt Family Trust
established December 6, 1988
By:------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
2 58
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D SCHEDULE 1
PERSONAL PROPERTY INVENTORY
All Personal Property existing at the Real Property as of the Closing Date Exhibit "D"
55852.01006\430652 l l.4
59 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBITE
GENERAL ASSIGNMENT
This Assignment (the "Assignment") is dated for reference purposes only as of _______ , by PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988 ("Assignor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated ___ , 20_ (the "Agreement"), Assignor hereby assigns and transfers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Assignee"), an undivided fifty percent (50%) interest in the following:
A. All equipment leases, service and/or maintenance agreements and contracts relating to the Real Property (collectively, the "Contracts"), as more particularly described in Schedule I attached hereto;
B. All permits, licenses, consents, registrations and other similar approvals applicable to the Real Property (collectively, the "Approvals"), which Approvals are more particularly described in Schedule 2 attached hereto;
C. All as-built plans and specifications for: (I) the Real Property; (2) any and all improvements used in connection with the operation or occupancy of the Real Property or located upon the Real Property (the "Improvements"); and (3) any and all personal property owned by Assignor located within or used in connection with the operation of the Real Property and Improvements (the "Personal Property") (collectively, the "Plans"); and D. All warranties of which Assignor is the beneficiary (the "Warranties") with respect to the Improvements or Personal Property.
This Assignment shall not supersede the Agreement and, in the event of conflict between this Assignment and the Agreement, the Agreement shall control.
This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns.
This Assignment shall take effect the last to occur of the following: (i) full execution by all parties and Lessor's consent, as shown by the last date entered below the parties' signatures and (ii) upon the consummation of the transaction between Assignee and Assignor IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written.
ASSIGNOR:
Exhibit "E"
55852.01006\430652] 1.4
60 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.0 I 006\43065211.4
Trust B under the Burkhardt Family Trust
established December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Date: --------------
Exhibit "E"
61 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.01006\4306521 I .4
SCHEDULE 1
Note to Seller: List all equipment leases, service
and/or maintenance agreements and contracts
relating to the Real Property - if none known, delete
this schedule and bracketed phrase but leave
general assignment of unspecified contracts.
Leases should have a separate assignment, so do
not assign seller's interest in leases in this
document.
Exhibit "E"
62 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.01006\4306521 l.4
SCHEDULE2
Note to Seller: List all permits, licenses, consents,
registrations and other similar approvals
applicable to the Real Property- ifnone known,
delete this schedule and bracketed phrase but leave
general assignment of unspecified contracts
Exhibit "E"
63 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
City of Laguna Beach
505 Forest Ave.
Laguna Beach, CA 92561
ATTN: City Clerk
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
APNs: 632-101-10
EXHIBIT F
GRANT DEED
SPACE ABOVE THIS LINE FOR RECORDER'S USE
Grant Deed
The undersigned Grantor(s) declare(s): City of Laguna Beach is exempt from property taxes Documentary transfer tax is $0.
D Computed on full value of property conveyed, or
D Computed on full value less value of liens and encumbrances remaining at time of sale.
D Unincorporated area ~ City of Laguna Beach and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988,
hereby GRANT(S) to
CITY OF LAGUNA BEACH, a California municipal corporation an undivided fifty percent (50%) interest in the following described real property in the City of Laguna Beach
County of Orange
State of California:
SEE ATTACHED EXHIBIT A
Dated: _______ , 20_
55852.01006\43065211.4
By: [Do not execute, Exhibit only]
Exhibit "F"
64 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF ________ _
)
)
On ___ _, 20_ before me, _____________ __, Notary Public, personally appeared-----------------~ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person( s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature: _________________ _ (seal)
Exhibit "F"
55852.01006\430652 I I .4
65 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the undivided fifty percent (50%) interest in real property conveyed by the Grant Deed dated ________ , 20_, from PHILIP E. BURKHARDT, Trustee of Trust B under the Burkhardt Family Trust established December 6, 1988, to the City of Laguna Beach, a municipal corporation, is hereby accepted by the undersigned officer on behalf of the City of Laguna Beach, pursuant to the authority conferred by Resolution No. ___ , adopted by the City Council of the City of Laguna Beach on _________ ., and the Grantee consents to recordation thereof by its duly authorized officer.
Dated: _______ , 20_ CITY OF LAGUNA BEACH,
a California municipal corporation
By-------------
Exhibit "F"
55852.01006\43065211.4
66 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
EXHIBIT G
LIST OF LEASES AND SUMMARY OF LEASE TERMS
. Current . Copy of Property Unit Use Tenant Listed SF
Rent (OM) Lease
2307 Apt/ 1+1 1,800 Charlotte NIA Yes
2309 Henderson
2307 1 Flex 835 Edith Otto N/A No
2307 2 ' Flex 1,365 Colas (Darrell) NIA Missing
Moore Page4
2307 3 Flex 1,200 Tom Lamb 700 Missing
Pages 5-7
2307 4 Flex 1,080 Clayton Dubin & 500 Yes Amanda Hunter Peter Blake
2307 5 Flex 1,350 Gallery I 725 Unsigned Stephanie
Bachier(o)
2307 6 Flex 1,650 Jan Mach N/A Yes
2307 7 Flex 1,385 Marlo Bartels N/A No
2307 8 Flex 1,300 Mike Ezzell No
2307 9 Flex 1,300 Casey Parlette NIA Missing
Pages 5-7
2307 10 Flex 850 Issac Anderson & N/A No Jason Hanek
Exhibit "G"
55852.0 I 006\43065211.4
67 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT H
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LEASES
This ASSIGNMENT OF LEASES (the "Assignment"), dated _____ , (the "Assignment Date"), is by and between ("Assignor"),
_____________ ("Assignee").
RECITALS
A. Pursuant to those leases listed in Exhibit 1 hereto, as such may have been amended (the "Leases"), the improved real property located at _______________ _ (the "Property") is occupied by the tenants as more particularly described in the Leases.
B. Concurrently herewith, Assignee has acquired the Property from Assignor.
C. In connection with the acquisition by Assignee of title in and to the Property, Assignor desires to assign its interest in the Leases to Assignee, and Assignee desires to accept assignment thereof on the terms and conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals which are specifically incorporated into the body of this Assignment, and the promises and covenants set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Assignment. Effective as of the Assignment Date, Assignor hereby assigns to Assignee all of its right, title and interest in and to the Leases and any guaranties and warranties related thereto. Assignor hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all cost, liability, loss, damage or expense including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property prior to the Assignment Date and relating to claims of personal injury and/or property damage.
2. Assumption. Assignee hereby accepts the assignment set forth in Section 1 above, and hereby assumes all of Assignor's obligations under the Leases arising or accruing on and after the Assignment Date. Assignee hereby agrees to indemnify Assignor against and hold Assignor harmless from any and all cost, liability, loss, damage or expense, including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property on and after the Assignment Date and relating to claims of personal injury and/or property damage occurring during Assignee's ownership of the Property.
3. Effective Date. This Assignment shall be conditioned and effective upon the conveyance to Assignee of record fee title to the Property (the "Effective Date").
Exhibit "G"
55852 01006\430652114
68 Docusign Envelope ID: 0BE25B51-B03A-4B1O-B4BB-09EBCC6C600O
4. Binding on Successors. This Assignment shall be binding on and shall inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns.
5. Counterparts. This Assignment may be executed in two (2) or more counterparts, each of which shall be deemed an original (including copies sent to a party by electronic transmission as against the party signing such counterpart), but which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have signed this Assignment as set forth below.
55852.01006\43065211.4
ASSIGNOR
Trust B under the Burkhardt Family Trust established
December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
ASSIGNEE
By: ___ ~~~=~~-
Name: --------- Its:
Exhibit "H"
69 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.01006\430652 l l .4
EXHIBIT 1 TO ASSIGNMENT OF LEASES
LEASES TO BE ASSIGNED
Exhibit "H"
70 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This Purchase and Sale Agreement and Joint Escrow Instructions (this "Agreement") is made as of January W, 2025 (the "Effective Date"), between PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 ("Seller"), and CITY OF LAGUNA BEACH, a California municipal corporation ("Buyer").
ARTICLE 1. AGREEMENT OF SALE.
Subject to and on the terms and conditions of this Agreement, Seller shall sell to Buyer and Buyer shall purchase from Seller an undivided fifty percent (50%) interest in all of the following:
1. 1 Land. The real property consisting of approximately 101,495 square feet (2.33 acres) located at 2307 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN:
632-101-10), which is more particularly described in Exhibit A, together with (a) all privileges, rights, easements and appurtenances belonging to the real property, including without limitation all minerals, oil, gas and other hydrocarbon substances on and under the real property, (b) all development rights, air rights, water, water rights and water stock relating to the real property, and ( c) all right, title and interest of Seller in and to any streets, alleys, passages, other easements and other rights-of-way or appurtenances included in, adjacent to or used in connection with such real property, before or after the vacation thereof ( collectively, the "Land");
1.2 Improvements. Any and all structures, systems, facilities, fixtures, fences, landscaping, and parking areas located on the Land and any and all machinery, equipment, apparatus and appliances used in connection with the operation or occupancy of the Land (such as heating and air conditioning systems and facilities used to provide utility services, refrigeration, ventilation, garbage disposal or other amenities on the Land) and other improvements located upon the Land, including, but not limited to, an industrial office building improvements (collectively, the "Improvements"
The Land and the Improvements are sometimes collectively referred to in this Agreement as the "Property"
1.3 Personal Property. All of Seller's right, title and interest in and to any personal property located within or used in connection with the Property, including, without limitation, the furniture, fixtures and equipment referenced in Section 2.1, below, and that described in the Personal Property Inventory attached hereto as Exhibit B (collectively, the "Personal Property").
1.4 Service Contracts. Those Service Contracts (defined in Section 5.7) which Buyer expressly agrees to assume;
1.5 Leases. All of the landlord's interest in and to the Leases (the "Leases") between Seller, as Landlord, and the tenants ("Tenants") in occupancy under the Leases referenced in Section 5.7, below and set forth on Exhibit G; and
1 55852.01006\43065213.4
71 Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600O
1.6 Other Assets. To the extent owned by Seller, all tangible and intangible assets of any nature relating to the Property or the Personal Property, including without limitation (a) all warranties upon the Improvements or Personal Property, to the full extent such warranties are assignable, (b) copies of all plans, specifications, engineering drawings and prints relating to the construction of the Improvements, ( c) all license agreements, copyrights, logos, designs, trademarks, trade names, service marks and all goodwill associated with the Property, (d) all other intellectual or intangible property used by Seller in connection with the Property; and (e) all claims and causes of action arising out of or in connection with the Property.
ARTICLE 2. PURCHASE PRICE.
2.1 Amount; Contingencies. The purchase price (the "Purchase Price") for an undivided fifty percent (50%) interest in the Property shall be $1,850,000.00. Seller acknowledges and agrees that Buyer is not requesting a financing or appraisal contingency in contemplation of the Purchase Price, however, Buyer may, in its sole discretion, engage with an appraiser to evaluate the value of the Property during the Due Diligence Period (as defined in Section 3.1.1). The parties further acknowledge and agree that the Purchase Price is predicated on the assumption that no adverse environmental conditions exist on the Property. Should Buyer determine, in its reasonable discretion, that adverse environmental conditions are present on the Property during its Due Diligence Investigation (as defined below in Section 3.1.2), the parties shall, prior to expiration of the Due Diligence Period, negotiate in good faith, the manner in which such conditions shall be remedied and the Due Diligence Period shall be tolled for the duration of such negotiations.
Additionally, the amount of the Purchase Price shall be contingent on Buyer obtaining legal possession of all furniture, fixtures, and equipment used in connection with the operation of the Property in good working order and repair, and otherwise owned by Seller. Seller agrees to cooperate fully to ensure the transfer of such items to Buyer as part of the transaction.
2.2 Deposit/Purchase Price.
2.2.1 Within 5 business days after the Effective Date, Buyer shall deposit $25,000.00 into Escrow (as defined below) into an interest bearing account on behalf of Buyer (the "Deposit"). The deposit shall be refundable to Buyer unless Buyer waives all contingencies by the expiration of the Due Diligence Period. If the Closing of the transaction contemplated by this transaction occurs, the Deposit shall be disbursed to Seller and applied to the Purchase Price at Closing. The failure of Buyer to make the Deposit within the time frame specified in this Section shall be material breach of this Agreement and Seller may terminate the Agreement.
2.2.2 Buyer shall pay the Purchase Price to Seller through escrow at the Closing described in Section 9.1. On or before the Closing Date (as defined below), Buyer shall deposit into Escrow the Purchase Price, subject to adjustment by reason of any applicable prorations and the allocation of closing costs described below.
2.2.3 The Deposit and Purchase Price shall be made by wire transfer of federal funds, cashier's check or in another immediately available form. Notwithstanding anything herein to the contrary, One Hundred Dollars ($100.00) of the Initial Deposit (the "Independent Consideration") shall not be refundable to Buyer, but shall represent consideration for this Agreement and shall be paid to Seller. The Independent Consideration shall be paid to Seller 2 55852.0 I 006\43065213.4
72 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D within 3 days of the Effective Date. The Independent Consideration shall serve as consideration for the granting of the time periods herein contained for Buyer to exercise Buyer's right to satisfy and approve all of Buyer's conditions herein contained. If the Deposit is refunded to Buyer for any reason pursuant to this Agreement, the Independent Consideration shall be subtracted from the Deposit pursuant to this Section.
2.2.4 In the event Buyer exercises the right to extend the Closing Date pursuant to Section 9.1, below, Buyer shall, within three (3) business days after delivery of the Closing Extension Notice (defined below), deposit into Escrow an additional Six Thousand Two Hundred Fifty Dollars ($6,250.00) (the "Extension Deposit"), which Extension Deposit shall be added to the Deposit and shall be applied to the Purchase Price at Closing.
ARTICLE 3. DUE DILIGENCE.
3.1 Due Diligence Period; Inspection and Access.
3.1.1 Due Diligence Period. Due Diligence Period. The "Due Diligence Period" means the period beginning on the Effective Date and ending at 5:00 p.m. on February 21, 2025, provided, however, in the event the Preliminary Documents and the Lease Documentation (defined below) are not delivered on or before the Seller Document Deadline (defined below), the Due Diligence Period and the Closing Date shall be automatically extended one (1) day for each day beyond the Seller Document Deadline that the Preliminary Documents and the Lease Documentation are not delivered to Buyer by Seller.
3.1.2 Access to Information and the Property. Buyer shall conduct its investigation of the Property during the Due Diligence Period at no cost to Seller. This investigation ("Due Diligence Investigation") may include, at Buyer's option: a physical inspection of the Land and all Improvements thereon, including soil, geological and other tests, engineering evaluations of the mechanical, electrical, HV AC and other systems in the Improvements and review of the plans; review of all governmental matters affecting the Property, including zoning, environmental and building permit and occupancy matters; review and verification of all financial and other information previously provided by Seller relating to the operation of the Property; review of the condition of title to the Property, including the building, structural system and roof inspection; and review of such other matters pertaining to an investment in the Property as Buyer deems advisable. In addition to the Preliminary Documents delivered to Buyer pursuant to Section 3.2, Buyer and its representatives shall have the right of access during reasonable business hours to all files, books and records maintained by Seller or its agents (including, without limitation, all of the Additional Documents to be made available to Buyer at the Property pursuant to Section 3.3), wherever located, relating to the Property, including the right to copy the same. Buyer and its representatives shall also have the right of access to the Property during reasonable business hours to conduct its investigation of the physical condition of the Property. Seller agrees that the rights granted to Buyer herein and the results of its Due Diligence Investigation shall not relieve Seller of any obligations Seller may have under any other provisions of this Agreement, or under other documents entered into concurrently herewith, or implied by law, nor shall they constitute a waiver by Buyer of the right to enforce any of the same. Seller shall cooperate with Buyer in its due diligence activities and provide access to the Property, its records, or provide information so long as it is within Seller's control. 3 55852.01006\43065213.4
73 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
3.2 Delivery of Preliminary Documents. Within five (5) business days after the Effective Date ("Seller Document Deadline"), if Seller hasn't previously provided such documents prior to the Effective Date, Seller shall deliver to Buyer, at Seller's expense, all of the documents described in the remaining subsections of this Section 3 .2 ( collectively, the "Preliminary Documents") in Seller's possession or control.
3.2.1 Title Report and Survey. A preliminary title report or commitment for title insurance (the "Preliminary Title Report"), dated no earlier than 10 days before the Effective Date, covering the Property and issued by a title insurance company or companies acceptable to Buyer (the "Title Company"), together with a legible copy of each document, map and survey referred to in the Preliminary Title Report. Buyer, at Buyer's sole cost, may obtain an as-built survey of the Property (the "Survey") prepared by a certified land surveyor in accordance with the most recent American Land Title Association standards, certified by such surveyor to Buyer and the Title Company in a form acceptable to the Title Company for the purpose of deleting any survey exception from the Title Policy described in Section 4.1.3.
3.2.2 Plans. Copies of all as-built plans and specifications for the Improvements, including without limitation the plans and specifications for and a complete description of all existing renovations and improvements to the Property and all rentable space therein, and as-built drawings for all underground utilities (collectively, the "Plans"), together with a certificate from an architect approved by Buyer certifying to Buyer that the Improvements were constructed and completed in accordance with the Plans;
3.2.3 Soils Report. Any soils report on the Land prepared at Seller's request or in the possession or control of Seller, including (if available) a report on compliance with any soils work recommended to be done prior to construction of the Improvements;
3.2.4 Engineers' Reports. Any structural, mechanical, environmental or geological reports concerning the Property which have been prepared at Seller's request or which are within Seller's possession or control;
3.2.5 Operating Statements; Tax Bills. Copies of operating statements for the Property for the monthly period between January 1, 2022, through November, 2024 certified by Seller including an itemization of income and expenses and copies of all real property tax bills for the Property for such periods. During the Due Diligence Period, Seller shall provide copies of true and accurate operating statements for the months of December 2024 and January 2025, as they become available, but in no event later than the expiration of the Due Diligence Period;
3.2.6 Licenses, Etc. Copies of any licenses, permits or certificates required by governmental authorities in connection with construction or occupancy of the Improvements, including, without limitation, building permits, certificates of completion, certificates of occupancy and environmental permits and licenses;
3 .2. 7 Lease Documentation. Fully executed copies of all of the Leases set forth on Exhibit G, including, without limitation, new Leases or Lease amendments for such leases for which an original is either lost, incomplete, unsigned, or otherwise unavailable, along with duly executed estoppel certificates on a form reasonably acceptable to Buyer disclosing no defaults or 4 55852.01006\43065213.4
74 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant (the "Preliminary Estoppels"), the Leases and the Preliminary Estoppels shall be referred to herein as the "Lease Documentation");
3.2.8 Inspection Reports. Copies of all written reports received by Seller within three (3) years prior to the Effective Date from Seller's insurance companies, any governmental agency or any other person or entity, which requires or demands correction of any condition, or requests modification in or termination of any uses of the Property, accompanied by Seller's summary of (a) any oral reports from such insurance companies or governmental agencies, and (b) the present status of any matter noted in any oral or written report.
3.3 Additional Documents and Information. From the Effective Date through the Closing Date, Seller shall make available to Buyer at the Property in accordance with Section 3.1, the documents and information described in this Section 3 .3 ( collectively, the "Additional Documents"):
3.3.1 Agreements. Copies of written, and written descriptions of oral, easements, covenants, restrictions, agreements, contracts and other documents, whether existing or, to the knowledge of Seller, proposed as of the Effective Date, including without limitation any agreements relating to the insurance, service, operation, repair, supply, advertising, promotion, sale, leasing or management of the Property, which (a) affect the Property, (b) are not disclosed by the Preliminary Title Report, and (c) have not been delivered to Buyer pursuant to Section 3.2.
If no such documents exist, Seller shall furnish its certification to that effect;
3.3.2 Warranties/Roof Inspections/HY AC Inspections. Copies of any and all guarantees or warranties and other rights given to Seller in connection with the construction, maintenance, repair or remodeling of the Improvements, periodic inspections, or the purchase of any of the Personal Property. If no such documents exist, Seller shall furnish its certification to that effect;
3.3.3 Insurance Policies. Copies of certificates evidencing the insurance carried by Seller of the Property;
3 .3 .4 Other Documents. All data, correspondence, documents, agreements, waivers, notices, applications and other records with respect to the Property relating to transactions with taxing authorities, governmental agencies, utilities, vendors and others with whom Buyer may be dealing from and after the Closing Date; and
3.3.5 Requested Information. Such other documents and information concerning the Property as Buyer may reasonably request.
3.4 Approval/Disapproval of Due Diligence Investigations. Buyer shall approve or disapprove the results of Buyer's Due Diligence Investigation, in the exercise of Buyer's sole discretion, by written notice delivered to Seller no later than the expiration of the Due Diligence Period. Buyer's disapproval shall terminate this Agreement unless, at the time Buyer gives notice of its disapproval, Buyer also notifies Seller of Buyer's desire to enter into negotiations with Seller for the purpose of reaching an accommodation concerning the disapproval. If Buyer so notifies Seller and the parties have not reached a written agreement satisfactory to both of them regarding 5 55852.010061430652 l 3.4
75 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D the disapproval within 10 days after the date of the disapproval notice, Buyer, at its option, may either (a) elect to terminate this Agreement by so notifying Seller and recover the Deposit, or (b) elect to proceed with the transactions contemplated by this Agreement notwithstanding its earlier disapproval. If Buyer fails to deliver to Seller notice of its approval or disapproval of the results of its Due Diligence Investigation, Buyer shall be deemed to have disapproved such results. If Buyer elects to terminate the Agreement, Buyer shall return to Seller all of the Preliminary Documents and Additional Documents previously delivered by Seller to Buyer within 5 business days of such termination, and Escrow shall immediately refund Buyer the Deposit, and Buyer shall have no further obligations to Seller.
3.5 Title Review.
3.5.1 Monetary Liens. At its expense, Seller shall remove all liens on the Property at or prior to the Closing (collectively, "Monetary Liens"): (i) all delinquent taxes, bonds and assessments and interest and penalties thereon (it being agreed that Seller shall not be required to remove any non-delinquent taxes and assessments imposed by any governmental agency that are paid with the property taxes for the Property); and (ii) all other monetary liens, including without limitation all those shown on the Preliminary Title Report (including judgment and mechanics' liens, whether or not liquidated, and mortgages and deeds of trust, with Seller being fully responsible for any fees or penalties incurred in connection therewith).
3.5.2 Approval/Disapproval of Title Review. Buyer shall approve or disapprove of the Preliminary Title Report, the Survey and any exceptions to title shown thereon (other than the Monetary Liens) in the exercise of Buyer's sole discretion, by the expiration of the Due Diligence Period. If Buyer disapproves, Buyer may either (a) terminate this Agreement by giving Seller written notice of termination or (b) give Seller a written notice ("Disapproval Notice") identifying the disapproved title matters ("Disapproved Title Matters"). With respect to any Disapproved Title Matters, other than the Monetary Liens, Seller shall notify Buyer in writing within 5 days after Seller's receipt of the Disapproval Notice whether Seller will cause the Disapproved Title Matters to be removed or cured at or prior to Closing. If Seller elects not to remove or cure all Disapproved Title Matters, Buyer may, at its option: (i) subject to satisfaction of the other conditions to Closing, close the purchase of the Property and take title subject to the Disapproved Title Matters which Seller elects not to remove or cure; or (ii) terminate this Agreement in accordance with Section 9 .6.1.
3 .5 .3 Buyer's Options. If any Disapproved Title Matters (including the Monetary Liens) have not been removed at least 5 days prior to Closing or provision for their removal at the Closing has not been made to Buyer's satisfaction, Buyer may, at its option: (i) close the purchase of the Property and take title subject to the Disapproved Title Matters which have not been removed; (ii) close the purchase of the Property and cure or remove the Disapproved Title Matters which have not been removed. Buyer may credit the costs of such cure or removal against the Purchase Price by reducing the amount of cash payable by Buyer at the Closing, but only to the extent such costs are expended to remove (A) Monetary Liens referred to in Section 3.5.1 or (B) Disapproved Title Matters which Seller agreed to remove; or (iii) terminate this Agreement in accordance with Section 9 .6.1.
6 55852.0 I 006\43065213.4
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3.5.4 Failure to Disapprove. If Buyer fails to notify Seller of its approval or disapproval of the Preliminary Title Report, the Survey or the exceptions shown thereon by the end of the Due Diligence Period, then Buyer shall be deemed to have disapproved the same.
ARTICLE 4. CONDITIONS PRECEDENT.
4.1 Buyer's Conditions. Buyer's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.1 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or in part by Buyer by written notice to Seller.
4.1.1 Due Diligence. Buyer having approved of the results of its Due Diligence Investigation pursuant to Section 3.4;
4.1.2 Title Review. Buyer having approved of the results of its review of title pursuant to Section 3.5.
4.1.3 Title Policy. Seller having caused the Title Company to deliver to Buyer (a) a CLTA Owner's policy of title insurance, provided that Buyer may require an ALTA Owner's Policy if Buyer pays the incremental premium for ALT A coverage ("Title Policy") ( or at Buyer's election a binder therefor) for the Property, or (b) the Title Company's irrevocable commitment to issue such policy of title insurance, (including such coinsurance, reinsurance and endorsements as Buyer shall require), with liability equal to the Purchase Price showing fee title to the Property vested in Buyer and subject only to: (i) the matters and exceptions which were approved by Buyer pursuant to Section 3.5; and (ii) the standard printed exceptions in the form of title policy called for ( collectively, "Conditions of Title").
4.1.4 Performance of Covenants. Seller performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Seller prior to or at the Closing.
4.1.5 Representations and Warranties. The representations and warranties of Seller set forth in Article 5 being true and accurate on the Closing Date, as if made on such date.
4.1.6 Non-Foreign Certification. Seller having executed and delivered to Buyer on or prior to the Closing Date a certification (the "Non-Foreign Certification"), substantially in the form of Exhibit C.
4.1. 7 California Certification. Seller having furnished the residency certification required pursuant to Sections 18805 and 26131 of the California Revenue and Taxation Code ("Form 593") or having authorized Escrow Holder in writing to withhold from the Purchase Price the amounts required to be withheld by such Sections.
4.1.8 Condition of Property. The non-occurrence of any material adverse change tci the physical status of the Property between the end of the Due Diligence Period and Closing.
4.1.9 Possession of FF&E's. Buyer obtaining legal possession of all furniture, fixtures, and equipment integral to the operation of the Property, and otherwise owned by Seller. 7 55852.0 I 006\43065213.4
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4.1.10 Simultaneous Closing. Seller shall have caused the Closing to occur simultaneously with the closing for the remaining fifty-percent (50%) undivided interest in and to the Property and the closings for that certain property known as 2535 Laguna Canyon Road.
4.1.11 Closing Estoppel Certificates. Seller shall have delivered or caused to be delivered the Closing Estoppel Certificates in accordance with Section 9.3.5.
4.2 Seller's Conditions. Seller's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.2 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or part by Seller by written notice to Buyer.
4.2.1 Covenants. Buyer performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Buyer prior to or at the Closing.
4.2.2 Representations and Warranties. The representations of Buyer set forth in Article 6 being true and accurate on the Closing Date, as if made on such date.
ARTICLE 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
Subject to the Disclaimer of Warranties contained in Section 5.19, and subject to Buyer's opportunity to conduct its Due Diligence Investigation of the Property,] Seller hereby makes the following representations and warranties to Buyer with the understanding that each such representation and warranty is material and is being relied upon by Buyer:
5.1 Defects. The Improvements and the Personal Property are in good condition and repair and are free of any latent or patent design, construction, physical or mechanical defects and there is no actual or threatened settlement, earth movement, termite infestation or damage affecting the Property.
5.2 Compliance. The Property, and the operation thereof, are in compliance with all applicable laws, ordinances, rules, regulations, judgments, orders, covenants, conditions, restrictions, whether federal, state, local, foreign or private, and Seller has not received any notice of any violation of the same. Seller has not received any request either formal or informal, oral or written, that Seller modify or terminate any use of the Property. The zoning of the Property permits the current Improvements and use of the Property, and, there is no pending or to Seller's knowledge, contemplated rezoning. The Property complies with all applicable subdivision laws and all local ordinances enacted thereunder and no subdivision or parcel map not already obtained is required to transfer the Property to Buyer.
5.3 Documents. All of the Preliminary Documents and the Additional Documents which have been delivered or made available to Buyer pursuant to Article 3, and all other documents delivered to Buyer by or on behalf of Seller (a) are true, correct and complete copies of what they purport to be, (b) represent truly the factual matters stated therein, ( c) are in full force and effect, (d) have not been modified, except as set forth therein and (e) do not omit any information required to make the submission thereof accurate and complete in all material respects. 8 55852.01006\43065213.4
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5.4 Taxes and Condemnation. There are no presently pending or, contemplated special taxes or assessments which will affect the Property. There are no presently pending or, to Seller's knowledge, contemplated proceedings to condemn or demolish the Property or any part of it.
5.5 Utilities. All water, sewer, gas, electric, telephone and drainage facilities, and all other utilities required by law or by the normal operation of the Property, are (a) installed to the property lines of the Property, (b) connected to the Property, (c) adequate to service the Property in its present use and to permit full compliance with all requirements of law and normal usage by the occupants of the Property and (d) in good working order and repair. All such utilities and storm and sanitary sewers required for the operation of the Property enter the Land through adjoining public streets or through adjoining private land in accordance with valid public or private easements that will inure to the benefit of Buyer.
5.6 Licenses. Seller has all required licenses, permits (including, without limitation, all building permits and occupancy permits), easements and rights-of-way which are required in order to continue the present use of the Property. Seller has no knowledge of any law or regulation of any governmental authority having jurisdiction which might require the Property to be improved beyond its present state or which might restrict the use and enjoyment of the Property in the manner it is presently being used and enjoyed.
5.7 Contracts/Leases/Occupancy Rights.
5.7.1 The Preliminary Documents include a list, description and copies of all contracts entered into by Seller or its property manager or leasing agent relating to the management, maintenance, leasing or operation of the Property ("Service Contracts"). Except for the Service Contracts, there are no agreements or other obligations to which Seller is party or, to Seller's knowledge, by which it or the Property is bound which may affect the current use of the Property, nor are there any current leases, occupancy or operating agreements in force. Seller has fully performed all the obligations required to be performed by Seller under the Service Contracts, and to Seller's knowledge, the other parties to the same are not in default thereunder.
5.7.2 There are no leases, rental agreements or other claims to possession effecting possession or occupancy of the Property other than the Leases set forth in Exhibit G hereto, and Seller shall not enter into any new leases or renewals and/or modifications of the existing Leases during the term of this Agreement except with the prior written consent of Buyer, which may be withheld in Buyer's reasonable discretion. Seller is not in default under any of the Leases, and all of the Leases are valid, binding, and enforceable in accordance with their respective terms.
5.7.3 There are no collective bargaining agreements, other union contracts of any nature, pension plans or other benefit plans of any nature in existence to which Seller is a party and which affect the Property or the operation thereof.
5.8 Litigation. There are no actions, suits, proceedings, judgments, orders, decrees or governmental investigations pending or threatened against the Property or Seller which could affect the Property or the purchase, use or enjoyment thereof by Buyer. 9 55852.01006\43065213.4
79 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
5.9 Agreements with Governmental Authorities. There are no agreements with governmental authorities, agencies, utilities or quasi-governmental entities which affect the Property except those agreements which are identified in the Preliminary Title Report and those matters which are disclosed by the Survey.
5 .10 Hazardous Materials.
5.10.1 Definitions. For purposes of this Agreement:
(a) "Environmental Law(s)" means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U .S.C. Sections 9601, et ~-, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et. ~-, the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et~., the Clean Water Act, 33 U.S.C. Sections 1251 et seq., The Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. H&S Code Sections 25249.5- 25249.13), the Carpenter-Preseley-Tanner Hazardous Substance Account Act (Cal. H&S Code Sections 25300 et seq.), and the California Water Code Sections 1300, et seq., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any other federal, state or local law, statute, rule, regulation or ordinance which regulates or proscribes the use, storage, disposal, presence, cleanup, transportation or Release or threatened Release into the environment of Hazardous Material.
(b) "Hazardous Material" means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii) infectious materials or (viii) radioactive materials. (c) "Release" means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping or disposing into the environment of any Hazardous Material (including the abandonment or discarding of barrels, containers, and other receptacles containing any Hazardous Material).
5.10.2 Representations.
(a) The Property and all existing uses and conditions of the Property are in compliance with all Environmental Laws, and Seller has not received any written notice of violation issued pursuant to any Environmental Law with respect to the Property or any use or condition thereof.
(b) Neither Seller nor any other present or former owner of the Property has used, handled, stored, transported, released or disposed of any Hazardous Material on, under or from the Property in violation of any Environmental Law. ( c) There is no Release of any Hazardous Material existing on, beneath or from or in the surface or ground water associated with the Property. 55852.01006\43065213.4
80 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D (d) All required permits, licenses and other authorizations required by or issued pursuant to any Environmental Law for the ownership or operation of the Property by Seller have been obtained and are presently maintained in full force and effect. (e) There exists no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or investigation pending or, to Seller's knowledge, threatened pursuant to any Environmental Law relating to (i) the ownership, occupancy or use of any portion of the Property by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property, (ii) any alleged violation of any Environmental Law by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property or (iii) the suspected presence, Release or threatened Release of any Hazardous Material on, under, in or from any portion of the Property. (f) There are no above-ground or underground tanks located on the Property used or formerly used for the purpose of storing any Hazardous Material. (g) No asbestos abatement or remediation work has been performed on the Property.
(h) There is no PCB-containing equipment or PCB-containing material located on or in the Property.
5.11 Title to the Property. Seller has good and marketable title to the Property, subject to the Conditions of Title. There are no outstanding rights of first refusal or first look, options to purchase, rights of reverter, or claim of right relating to the transfer or sale of the Property or any interest therein. To Seller's knowledge, there are no unrecorded or undisclosed documents or other matters which affect title to the Property. No person holding a security interest in the Property or any part thereof has the right to consent or deny consent to the sale of the Property as contemplated herein, and Seller has the right to pay off such person and to remove all such liens as of the Closing Date. Seller has enjoyed the continuous and uninterrupted quiet possession, use and operation of the Property.
5.12 Seller's Authority. Seller has the requisite power and authority to own and operate the Property and conduct its business where the same is now owned or operated. The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Seller ( or its board of directors or shareholders) in order to consummate the transactions contemplated herein. This Agreement and the other documents executed by Seller in connection herewith are legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement by Seller, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Seller was organized, or any indenture, mortgage, deed of trust, agreement, undertaking, instrument or document to which Seller or any affiliate thereof is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller. 11 55852.01006\43065213.4
81 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D 5 .13 Parking. Seller has received no written notice from any governmental agency that the parking spaces on the Property are in violation of law.
5.14 Zoning. Seller has received no written notice from any governmental agency that the Property is not in compliance with zoning requirements and laws.
5.15 Foreign Person. Seller is not a "foreign person" within the meaning of Section 1445(£) of the Internal Revenue Code.
5.16 No Employees. There are no on-site employees of Seller at the Property. On or before Closing, Seller shall terminate any employees at the Property and any residence or occupancy thereof, if any, and Buyer shall have no obligation to employ or continue to employ any individual employed by Seller or its affiliates in connection with the Property, if any.
5.17 Inspections. The Preliminary Documents include a full description of (a) all inspections of the Property by any governmental agency or insurance company occurring within three (3) years prior to the Effective Date, (b) all matters which were noted by such governmental agency or insurance company as requiring correction, requesting or recommending modifications or termination of uses of the Property and ( c) the present status of each such noted matter.
5.18 Misstatements and Omissions. Neither the representations and warranties made by Seller in this Article 5 nor elsewhere in this Agreement contain any untrue statement or any omission of a material fact. Seller has no documents in its possession, nor has any knowledge, that omits material facts related to the property or which would contradict or negate any of its representations contained in this Agreement.
ARTICLE 6. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer makes the following representation and warranties to Seller with the understanding that each such representation and warranty is material and is being relied upon by Seller:
6.1 Buyer's Authority. The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Buyer in order to consummate the transactions contemplated herein.
6.2 No Conflict. Neither the execution nor delivery of this Agreement by Buyer, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Buyer was organized, or any agreement to which Buyer is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Buyer.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
7 .1 Survival of Warranties. Buyer and Seller agree that each representation and warranty, covenant by the respective parties contained herein or made in writing pursuant to this 12 55852.01006\430652 I 3.4
82 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D Agreement are intended to and shall be deemed made as of the date of this Agreement or such writing and again at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive the execution and delivery of this Agreement, the Deed and the Closing.
7.2 Notice of Changed Circumstances. If either party becomes aware of any fact or circumstances which would render false or misleading a representation or warranty made by such party, then it shall immediately give notice of such fact or circumstance to the other party, but such notice shall not relieve any party of any liabilities or obligations with respect to any representation or warranty.
ARTICLE 8. SELLER'S PRECLOSING COVENANTS.
Seller shall comply with the covenants contained in this Article 8 from the Effective Date through the Closing Date unless Buyer consents otherwise in writing. Buyer may grant or withhold any such consent requested by Seller in Buyer's sole discretion.
8.1 Contracts and Documents. Seller shall not, without Buyer's approval, not to be unreasonably withheld or delayed, (a) amend or waive any right under any Service Contract, Lease, Preliminary Document or Additional Document, or (b) enter into any material agreement of any type affecting the Property that would survive the Closing Date.
8.2 Insurance. Seller shall maintain or cause to be maintained in full force and effect its present insurance policies for the Property.
8.3 Compliance with Obligations. Seller shall fully and timely comply with all obligations to be performed by it under the Service Contracts, the other Preliminary Documents, the Conditions of Title and all permits, licenses, approvals and laws, regulations and orders applicable to the Property.
8.4 No Transfers. Seller shall not sell, encumber or otherwise transfer any interest in all or any portion of the Property, or agree to do so.
8.5 Termination of Contracts. Seller at its sole cost and expense shall terminate all of the Service Contracts described in Section 5. 7 at or before the Closing Date, except for those contracts which Buyer expressly agrees to assume and which are actually assumed by Buyer pursuant to Section 9 .3 .3.
8.6 Maintenance. At its sole cost and expense, Seller shall operate and maintain the Property such that on the Closing Date the Property shall be in at least as good a condition and repair as on the Effective Date, reasonable wear and tear excepted. Without limiting the generality of the foregoing, Seller shall, at a minimum, spend such amounts for repair and maintenance as are consistent with its prior practice. Seller shall promptly advise Buyer of any significant repair or improvement required to keep the Property in such condition. Seller shall not make any material alterations to the Property, or remove any of the Personal Property therefrom, without Buyer's prior consent, unless such Personal Property so removed is simultaneously replaced with new Personal Property of similar quality and utility.
13 55852.0\006\430652 l 3.4
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8.7 Best Efforts. Seller shall use its best efforts to cause the conditions set forth in Section 4.1 to be satisfied by the Closing Date, and Seller shall not take or permit any action that would result in any of the representations and warranties set forth in Article 5 becoming false or incorrect.
ARTICLE 9. CLOSING.
9 .1 Time. Provided all conditions set forth in Article 4 have been either satisfied or waived, and to the extent such date has not been extended pursuant to Section 3 .1.1, above, the parties shall close this transaction (the "Closing"), on February 28, 2025 (the "Closing Date"), as such date may be extended by the provisions of Article 10. Notwithstanding the foregoing, Buyer shall have the right to extend the Closing Date to March 28, 2025 by providing written notice on or before the original Closing Date ("Closing Extension Notice") and depositing into Escrow the Extension Deposit in accordance with Section 2.2.4, above.
9.2 Escrow. This Article 9, together with such additional instructions as Fidelity Title Company, Attention Brenna Ryan, 4400 MacArthur Blvd., Suite 200, Newport Beach, CA 92660, California (telephone: 949-623-3038; e-mail: [email protected], [email protected] ("Escrow Holder"), shall reasonably request and the parties shall agree to, shall constitute the escrow instructions to Escrow Holder. If there is any inconsistency between this Agreement and the Escrow Holder's additional escrow instructions, this Agreement shall control unless the intent to amend this Agreement is clearly stated in said additional instructions. Buyer and Seller shall cause Escrow Holder to execute and deliver a counterpart of this Agreement to each of them. If the Title Company does not serve as the Escrow Holder, the Title Company shall provide a letter to Buyer, in form and content acceptable to Buyer, pursuant to which the Title Company accepts responsibility and liability for the acts and omissions of Escrow Holder in discharging Escrow Holder's obligations hereunder, including, without limitation, any acts or omissions of Escrow Holder relating to the Title Company's commitment to issue the Title Policy, the receipt, recordation or delivery of any documents placed into escrow, and the receipt and disbursement of any funds placed into escrow.
9.3 Seller's Deposit of Documents and Funds Into Escrow. Seller shall deposit into escrow on or before Closing (unless otherwise set forth herein) the following documents:
9.3.1 A duly executed and acknowledged grant deed, in the form acceptable to Buyer, conveying the Property to Buyer ("Grant Deed") in the form attached as Exhibit F;
9.3.2 A duly executed bill of sale, in the form of Exhibit D, conveying the Personal Property to Buyer free and clear of liens, encumbrances and restrictions ("Bill of Sale");
9.3.3 A duly executed assignment, in the form of Exhibit E, assigning to Buyer all of Seller's interest (a) in the Plans, (b) in all warranties of which Seller is the beneficiary with respect to the Property, (c) in all intangible assets of the Property, and (d) in the Service Contracts which Buyer has elected to assume (the "General Assignment");
9.3.4 A duly executed assignment, in the form of Exhibit H, assigning to Buyer all of Seller's interest in and to the Leases (the "Assignment of Leases"); 14 55852.0 I 006\43065213.4
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9.3.5 No later than three (3) business days prior to the Closing Seller shall have delivered to Buyer estoppel certificates ("Closing Estoppel Certificates") in a form acceptable to Buyer, dated no earlier than fifteen (15) days prior to the Closing and disclosing no defaults or alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant, or any modification in rent, expiration date or other material Lease term reflected in the Lease Documentation;
9.3.6 No more than 10 days but no less than 5 days before the expiration of the Due Diligence Period, the originals ( or copies if originals are unavailable) of the Service Contracts Buyer has elected to assume, if any, and estoppel certificates from the other parties to such Service Contracts in form and substance satisfactory to Buyer;
9 .3. 7 All costs of Closing, including, but not limited to, the CL TA increment of the premium for the Title Policy, recording fees (if any), transfer taxes (if any) and fees, one-half of the escrow fees, sales tax and any other costs of Closing customarily paid by sellers of real property, plus or minus prorations as provided in Section 9.8; provided that, subject to Section 9.6, Buyer and Seller shall bear their own attorneys' fees and costs in connection with the negotiation and preparation of this Agreement and the transactions completed by this Agreement;
9.3.8 Seller's Non-foreign Certification;
9.3.9 All records and files relating to the management or operation of the Property, including, without limitation, property tax bills, insurance, and property taxes; and
9.3.10 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.3.11 Form 593;
9.3.12 Notice letter to tenants regarding new owner and addresses for payment of rent payment ("Tenant Notice Letter").
9.4 Deliveries Outside of Escrow. Notwithstanding Section 9.3, Seller and Buyer may elect to deliver the documents described in Section 9.3 outside of escrow (other than documents which are to be recorded) by giving Escrow Holder a joint written notice of such election, specifying the documents which will be so delivered outside of escrow. Upon receipt of such notice, Escrow Holder shall have no further obligation concerning such specified documents. 9 .5 Buyer's Deposit of Documents and Funds. Buyer shall deposit into escrow:
9.5.1 The Purchase Price in accordance with the provisions of Article 2, plus or minus prorations as provided in Section 9.8, by electronic transfer of federal funds to Escrow Holder, on or before the Closing Date;
9.5.2 A duly executed counterpart of the Assignment of Leases; and 15 55852.0 I 006\43065213.4
85 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
9.5.3 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.6 Default, Termination and Remedies.
9.6. l Buyer's Termination. This Agreement shall automatically terminate without further notice or action by Buyer upon the occurrence of any of the following events, provided that Buyer is not then in material breach of this Agreement: (a) any condition to Closing contained in Section 4.1 has not been satisfied or waived by Buyer by the Closing Date; or (b) Buyer having exercised its right to terminate this Agreement pursuant to Section 3.4 (disapproval of Due Diligence Investigation), Section 3.5 (disapproval of title) or Article 10 (damage or condemnation). In such event, the parties shall have no further obligation to each other except for those obligations that specifically survive the termination of this Agreement. If this Agreement terminates as a result of Seller's material breach of this Agreement, Buyer shall have all remedies it may have hereunder or at law as a result of such occurrence, including the remedy of specific performance.
9.6.2 Seller's Termination. Provided that Seller is not then in material breach of this Agreement, this Agreement shall automatically terminate without further notice or action by Seller if any condition to Closing contained in Section 4.2 has not been satisfied or waived by Seller by the Closing Date.
9.6.3 Release from Escrow. Upon termination of this Agreement pursuant to Section 9.6.1 or 9.6.2, Escrow Holder shall promptly return to Buyer and Seller, respectively, all documents and monies deposited by them into escrow without prejudice to their rights and remedies hereunder.
9.6.4 Remedies.
(a) Buyer's Remedies. If Seller breaches this Agreement, Buyer shall be entitled to pursue all remedies permitted herein and by law, including the remedy of specific performance. No termination of the escrow by Buyer following a breach by Seller shall be deemed to waive such breach or any remedy otherwise available to Buyer. (b) Seller's Remedies/Liquidated Damages. IF BEFORE THE CLOSE
OF ESCROW BUYER FAILS TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT AND (EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.6)
DOES NOT CURE SUCH FAILURE WITHIN TEN BUSINESS DAYS AFTER SELLER'S WRITTEN NOTICE OF SUCH FAILURE, THEN SELLER MAY THEREAFTER: (I) TERMINATE THIS AGREEMENT; (II) RECEIVE AND RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES IF SUCH DEFAULT OCCURS AFTER BUYER'S APPROVAL PERIOD; AND (III) EXERCISE THE OTHER RIGHTS AND REMEDIES RESERVED BY SELLER AS PROVIDED IN THIS SECTION. IN THE EVENT SELLER TERMINATES THIS
AGREEMENT BY REASON OF BUYER'S DEFAULT, BUYER AND SELLER SHALL BE
RELIEVED OF ANY FURTHER OBLIGATION TO EACH OTHER WITH RESPECT TO THIS
AGREEMENT AND THE PROPERTY EXCEPT FOR ANY OBLIGATIONS WHICH 16 55852.0 I 006\43065213.4
86 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
SELLE~~~i, BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART
OF THE CONS ID ERA TION BEING GIVEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGWN6 THE ABSENCE OF THE PROVISIONS OF THIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and ( c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852.01006\430652 I 3.4
87 EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT TS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT OF THE DIFFICULTY .THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
SELLER'S INITIALS BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THATTHEPROVISIONS OF THIS SECTION AREA MATERIAL PART
OF THE CONSIDERATION BEING GIVEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND IHA T BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGREEMENT IN THE ABSENCE OF THE PROVISIONS OF THIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Po1icy, then, and only then, Escrow Holder shall:
9.7.1 Record the Gl'ant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and ( c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852.01006\43065213.4
88 Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D Revenue Service (with copies to Buyer and Seller) the reporting statement required under Section 6045(e) of the Internal Revenue Code.
9.8 Prorations. Subject to the other provisions of this Section 9.8, all receipts and disbursements of the Property will be prorated as of 11 :59 p.m. on the day immediately preceding the Closing Date. Not less than five business days prior to the Closing, Seller shall submit to Buyer for its approval a tentative prorations schedule showing the categories and amounts of all prorations proposed, including all rents and operating expenses. Security deposits shall be credited to Buyer from Seller proceeds. The parties shall agree on a final prorations schedule prior to the Closing and shall deliver the same to Escrow Holder. If following the Closing either party discovers an error in the prorations statement, it shall notify the other party and the parties shall promptly make any adjustment required. The parties agree that any trailing bills that pertain to the Property operations before the Closing Date, which are not available as of Closing, may be presented to Buyer for proration and reimbursement up to forty five ( 45) days after Closing. Failure to provide any bills by such date shall be a waiver by Seller of such reimbursement and Buyer shall have no further obligation for any such bills and Property expenses. This section 9.8 shall survive Closw, (l; .
SELLER INITIALS
9.8.1 Capital Expenditures and Accounts Payable. All capital and other improvements (including labor and material) which have been performed or contracted for, by or on behalf of Seller prior to the Closing Date, and all sums due for accounts payable which have been incurred with respect to the Property prior to the Closing Date shall be paid by Seller and shall be subject to the indemnification provisions of Section 7.3. Buyer shall furnish to Seller for payment any bills for such period received after the Closing Date, and Buyer shall have no further obligation with respect thereto.
9.8.2 Property Taxes. General real estate taxes, water or sewer rates and charges (if not metered), personal property taxes, or any other governmental tax or charge levied or assessed against the Property ( collectively, the "Taxes"), relating to the Property and payable during the year in which Closing occurs shall not be prorated between Seller and Buyer in Escrow.
Upon recordation of the Grant Deed, Buyer will request cancellation of the real property taxes for the Property pursuant to California Revenue and Taxation Code Section 4986. If current taxes have not yet been paid as of the Closing Date, then at Closing Seller shall pay through Escrow or out of Seller's proceeds, the full amount of the installment applicable for the period in which Closing occurs. Seller shall be entitled to a refund of any excess payment made to the taxing authority on account of the Property, including any taxes paid by Seller and applicable to any period from and after the Closing Date. The taxing authority will notify Seller of any refund due Seller resulting from the subject acquisition after a review and any subsequent proration of the property tax assessment by the county assessor. Seller retains the right, following close of escrow, to apply to the appropriate governmental authority/ies for refund ofreal property taxes pursuant_to Revenue and Taxation Code Section 5096.7 (or such other applicable law), and Buyer shall reasonably cooperate with Seller's efforts to obtain said refund. 18 55852.0 I 006\43065213.4
89 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
9.8.3 Utility Charges. All utility charges shall be prorated as of the Closing Date and Seller shall obtain a final billing therefor. All utility security deposits, if any, shall be retained by Seller.
9.9 Possession. Seller shall deliver exclusive right of possession of the Property to Buyer on the Closing Date, subject only to the Conditions of Title.
ARTICLE 10. DAMAGE, DESTRUCTION AND CONDEMNATION.
This Agreement shall be governed by the Uniform Vendor and Purchaser Risk Act as set forth in Section 1662 of the California Civil Code as supplemented and modified by this Article 10. Seller shall promptly notify Buyer in writing of any material damage to the Property and of any taking or threatened taking of all or any portion of the Property. Within a reasonable period of time after receipt of such notice, Buyer shall determine whether a material part of the Property has been damaged or whether such taking or threatened taking has affected or will affect a material part of the Property. As used herein, (a) the destruction of a "material part" of the Property shall be deemed to mean an insured or uninsured casualty to the Property having an estimated cost of repair which in the reasonable judgment of Buyer equals or exceeds $200,000 and (b) a taking by eminent domain of a portion of the Property shall be deemed to affect a "material part" of the Property if in the reasonable judgment of Buyer the estimated value of the portion of the Property taken exceeds $200,000. Upon making its determination, Buyer shall notify Seller in writing of the results of such determination. Buyer may elect, by written notice delivered to Seller within 30 days after giving Seller notice of such determination, to terminate this Agreement in accordance with Section 9.6.1 if a material part of the Property has been damaged or if such taking has affected or will affect a material part of the Property. If Buyer does not so terminate, (i) in the case of damage to a material part of the Property, Seller shall assign to Buyer at the Closing its right to recover under any insurance policies covering such damage and shall pay Buyer at the Closing the amount of the deductible, if any, and (ii) in the case of a threatened or actual taking of a material part of the Property, Seller shall assign to Buyer at the Closing Seller's entire right, title and interest in the proceeds thereof. If between the Effective Date and the Closing Date the Property suffers damage which is not material, Seller shall repair such damage at its expense prior to the Closing, and the Closing Date shall be extended for a reasonable period of time not to exceed 30 days to allow for completion of such repairs. The Closing Date shall be extended as necessary to permit Buyer to exercise its rights under this Article
10. ARTICLE 11. GENERAL.
11.1 Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective (a) when personally delivered to the recipient at the recipient's address set forth below; (b) five business days after deposit in a sealed envelope in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the recipient as set forth below; or (c) one business day after deposit with a recognized overnight courier or delivery service, addressed to the recipient as set forth below, whichever is earlier. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday. Email notices may be used for 19 55852.01006\43065213.4
90 Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600O convenience only, unless otherwise agreed by the parties in writing, and shall be deemed delivered one (1) business day after delivery if sent after 5 pm, or received the same day if sent on a business day between 8 am and 5 pm, and a duplicate shall be sent via USPS on the same day as the email.
The addresses for notice are:
SELLER:
With a copy to:
BUYER:
With a copy to:
PHILIP E. BURKHARDT, Trustee
7042 Palomino Drive
Sanger, CA, 92657
Phone: (704) 245-2690
Email: [email protected]
Casey Estate & Business Planning,
a Professional Law Corporation.
Attn Wayne J. Casey
610 Newport Center Drive, Suite 840
Newport Beach, CA 92660
Phone: (949) 640-5200
Email: [email protected]
CITY OF LAGUNA BEACH
Attn: Jeremy Frimond
505 Forest Ave.
Laguna Beach, CA 92561
Emai 1 :[email protected]
Best Best & Krieger
Attn: Megan Garibaldi
18101 Von Karman Ave., Suite 1000
Irvine, CA 92612
Phone: (949) 263-6592
Email: [email protected]
Either party may change its address by written notice to the other given in the manner set forth above.
11.2 California Environmental Quality Act. Buyer's future use and/or development of the Property is expressly conditioned upon compliance with the California Environmental Quality Act ("CEQA") as Buyer shall conduct environmental review pursuant to CEQA prior to taking any discretionary action with regard to any proposed development of the Property.
11.3 Joint and Several Liability of Seller. The obligations, representations, warranties, and covenants of Seller under this Agreement shall be the joint and several obligations of each individual or entity comprising Seller. Each such individual or entity shall be fully responsible for 20 55852.0 I 006143065213.4
91 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D the full performance of all obligations under this Agreement, regardless of the performance or default of any other individual or entity comprising Seller. Buyer may, at its sole discretion, seek recourse, enforcement, or remedy against any one or more of such individuals or entities without seeking recourse against the others, and no such action shall release any other individual or entity comprising Seller from their obligations under this Agreement.
11.4 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement and understanding between Buyer and Seller concerning the subject matter of this Agreement and supersede all prior agreements, including any previous letter of intent or terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Seller concerning the Property or the other matters which are the subject of this Agreement.
11.5 Amendments and Waivers. No addition to or modification of this Agreement shall be effective unless set forth in writing and signed by the party against whom the addition or modification is sought to be enforced. The party benefited by any condition or obligation may waive the same, but such waiver shall not be enforceable by another party unless made in writing and signed by the waiving party.
11.6 Invalidity of Provision. If any provision of this Agreement as applied to either party or to any circumstance shall be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the same shall in no way affect (to the maximum extent permissible by law) any other provision of this Agreement, the application of any such provision under circumstances different from those adjudicated by the court, or the validity or enforceability of this Agreement as a whole.
11.7 References. Unless otherwise indicated, (a) all Article, Section, Schedule and Exhibit references are to the articles, sections, schedules and exhibits of this Agreement, and (b) all references to days are to calendar days. All the Schedules and Exhibits attached hereto are incorporated herein by this reference. Whenever under the terms of this Agreement the time for performance of a covenant or condition falls upon a Saturday, Sunday or California state holiday, such time for performance shall be extended to the next business day. The headings used in this Agreement are provided for convenience only and this Agreement shall be interpreted without reference to any headings. The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so indicates or requires.
11.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in California.
I 1.9 Confidentiality and Publicity. Buyer is a public entity and as such, this Agreement, upon its presentation for approval at Buyer's City council at a duly called and agendized public meeting, shall be subject to the Pub! ic Records Act and the Freedom of Information Act. No press release or other public disclosure may be made by Seller or any of its agents regarding Buyer's intent for this Property this transaction without the prior consent of Buyer. 21 55852.01006\43065213.4
92 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
11.10 Time. Time is of the essence in the performance of the parties' respective obligations under this Agreement.
11.11 Attorneys' Fees. In the event of any legal or equitable proceeding to enforce any of the terms or conditions of this Agreement, or any alleged disputes, breaches, defaults or misrepresentations in connection with any provision of this Agreement, the prevailing party in such proceeding shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and costs of defense paid or incurred in good faith.
11.12 Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. However, Seller shall not have the right to assign all or any portion of its interest in this Agreement without Buyer's prior written consent.
Buyer shall have the right to assign all or any portion of its interest in this Agreement, or substitute for itself a nominee, upon notice to Seller not later than three (3) days prior to the Closing Date.
Any permitted assignment shall not relieve Buyer of its obligations hereunder, and Buyer shall remain fully liable for the performance of all terms and conditions unless otherwise agreed to by Seller.
11.13 Further Assurances. Seller, at any time before or after Closing, shall, at its own expense, execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Buyer and shall take any other action consistent with the terms of this Agreement that may reasonably be requested by Buyer for the purpose of transferring and confirming to Buyer, or reducing to Buyer's possession, any or all of the Property or otherwise carrying out the terms of this Agreement.
11.14 Cooperation With Exchange. Buyer agrees to cooperate with the other if Seller intends to accomplish a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code of 1986. Buyer and/or Seller may assign this Agreement to an exchange intermediary for the purpose of facilitating such an exchange by the assigning party. Buyer's duty to cooperate shall be limited to the transfer of money to Seller or Seller's designee in exchange for the Property, and in no event shall Buyer act as purchaser or acquirer of any exchange property. Seller shall indemnify and defend and hold Buyer harmless from any claims, loss, damages or liability arising out of participation in an exchange.
11.15 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the parties to it and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any party hereto or give any third person any right of subrogation or action over against any party to this Agreement.
11.16 Remedies Cumulative. The remedies set forth in this Agreement are cumulative and not exclusive to any other legal or equitable remedy available to a party.
11.17 Commissions, Indemnity, Disclosure. Each party represents to the other party that there is no broker representing such party in the current transaction, and that the representing party has incurred no liability for any brokerage commission or finder's fee arising from or relating to the transactions contemplated by this Agreement. Seller shall be responsible for any broker 22 55852.01006\43065213.4
93 commission associated with this purchase. Each party hereby indemnifies and agrees to protect, defend and hold harmless the other party from and against all liability, cost, damage or expense (including without limitation attorneys' fees and costs incurred in connection therewith) on account of any brokerage commission or finder's fee which the indemnifying party has agreed to pay or which is claimed to be due as a result of the actions of the indemnifying party. This Section
11.17 is intended to be solely for the benefit of the parties hereto and is not intended to benefit, nor may it be relied upon by, any person or entity not a party to this Agreement.
11.18 Counterparts/Facsimile/PDF Signatures. This Agreement may be executed in counterparts and when so executed by the parties, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument that shall be binding upon the parties, notwithstanding that the parties may not be signatories to the same counterpart or counterparts. The parties may integrate their respective counterparts by attaching the signature pages of each separate counterpart to a single counterpart. In order to expedite the transaction contemplated herein, facsimile or .pdf signatures may be used in place of original signatures on this Agreement. Seller and Buyer intend to be bound by the signatures on the facsimile or .pdf document, are aware that the other party will rely on the facsimile or .pdf signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
BUYER:
ATTEST:
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
M~aM K. Ganbatdi By :Me;.;;~aribaldi (Jan 17, 202511:53 PST) City Attorney
55852.01006\43065213.4
City of Laguna Beach,
a California municipal corporation
By ~C.....\~
Its ~ M»o,A:~
23 94
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D SELLER SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT - 2535 LAGUNA
CANYON ROAD
55852.01006\43065213.4
SELLER:
Trust C under the Burkhardt Family Trust
established December 6, 1988
ldSigned by:
By __ _____,L~~-~-i-so~n-2~-D-C60_4_0B- ... ---------
Name: PHILIP E. BURKHARDT
Title: Trustee
24 95
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the instruc • ons contained therein.
Dated\ .... -~~~"'-"t-""--'--' 20_
B
Brenna Ryan, Officer
25 55852.0 I 006\43065213.4
96 Oocusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT A
LAND DESCRIPTION
Real property in the City of Laguna Beach, County of Orange, State of California, described as follows:
Parcel 1:
That portion of Lot 2 of Fractional Section 13, in Township 7 South, Range 9 West., San Bernardino Base and Meridian described as follows:
Commencing at station 453+00.85, a point on the center line of Laguna Canyon Road, as shown on a map thereof approved by Nat Neff, Superintendent of Highways of Orange County, California, on November 4, 1929, said point being the Northwest corner of a parcel of land described in deed to Arch Craig by The Yach Company, recorded March 5, 1930 in Book 366, Page 48, Official Records; thence Southerly following the centerline of Laguna Canyon Road, 1459. 15 feet to the most Westerly corner of the parcel of land conveyed to Patricia M. Goldbar, by deed dated May 27, 1939 and recorded in Book 998, page 253, Official Records, said corner being the true point of beginning of the boundary of the property described herein; thence South 58° 49' West., along the Southwesterly line of said land of Goldbar, 197.18 feet to the most Southerly comer of said land; thence South 17° 59' 28" West 109.90 feet more or less to the Northeast.erly corner of the parcel of land conveyed to Georgia Day Robertson, and others by deed dated May 27, 1939 and recorded in Book 1001 Page 119, Official Records; thence North 58° 49' West, along the Northeasterly line of said land of Robertson, 222.26 feet to the center line of Laguna Canyon Road; thence North 31 ° 11' East; along said center line 107 feet to the true point of beginning.
Parcel 2:
The Northeasterly 107 .0 feet of that certain parcel of land described in a deed to Robert P. Kellogg and Hazel A. Kellogg1 recorded October 6, 1944 in Book 1285, Page 357, Official Records, Records of Orange County, State of California.
APN: 632-101-10
Exhibit "A"
55852.0 I 006\43065213.4
97 Docusign Envelope ID: 0BE25851-B03A-481 D-848B-09EBCC6C600D
EXHIBIT B
PERSONAL PROPERTY INVENTORY
Exhibit "B"
55852.01006\430652 I 3.4
98 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBITC
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the CITY OF LAGUNA BEACH, a California municipal corporation (the "Transferee"), that withholding of tax under Section 1445 of the Code will not be required upon the transfer of a U.S. real property interest to the Transferee by PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988, as to an undivided fifty percent (50%) interest (the "Transferor"), the undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is 47-6852238; and
3. The Transferor's office address is 7042 Palomino Drive, Sanger, CA 92657.
The Transferor understands that this Certificate may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this Certification and, to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.
DATED: ______ , 20_
55852.0 I 006\43065213.4
Trust C under the Burkhardt Family Trust
established December 6, 1988
By: _______________ _
Name: PHILIP E. BURKHARDT
Title: Trustee
Exhibit "C"
, ;·111-:r, l""T-fllr~--=F-., -~~~lllllA"~HllllfAr<nTT:i. rn,....n- TTTTI ,·:.r.r-T11,,wi.:a111-)l,l,iiiiilQr n1n::r.r:.--.-;n " 99 Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBITD
BILL OF SALE
This Bill of Sale (the "Bill of Sale") is made as of ______ , 20_, by PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 ("Transferor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Purchase and Sale Agreement dated _, 20_ (the "Agreement"), Transferor hereby sells, transfers, assigns and delivers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Transferee"), an undivided fifty percent (50%) interest in any and all personal property (the "Personal Property") located within or used in connection with that certain improved real property commonly known as 2307 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN: 632-101-10) (the "Real Property"). The Personal Property shall include, without limitation, the items described in the Personal Property Inventory attached hereto as Schedule 1. l. Transferor hereby assigns all warranties, guarantees and indemnities, whether those warranties are express or implied, and all similar rights which Transferor may have against any other manufacturer or supplier of the Personal property or any portion thereof or against any seller, engineer, contractor or builder, in respect of the Personal Property.
2. Transferor warrants that each item of the Personal Property is in good condition, order and repair and suitable for its intended purpose on the date of this Bill of Sale.
3. Transferor at any time at or after the date of this Bill of Sale shall execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Transferee, and shall take any other action consistent with the terms of this Bill of Sale that may reasonably be requested by Transferee for the purpose of granting and confirming to Transferee, or reducing to Transferee's possession, any or all of the Personal Property. If requested by Transferee, Transferor further agrees to prosecute or otherwise enforce in its own name for the benefit of Transferee any claims, rights or benefits included in the Personal Property that require prosecution or enforcement in Transferor's name. Transferor also hereby appoints Transferee as its agent to act in Transferor's name and on Transferor's behalf to take any action necessary to effect the transfer of any of the Personal Property to Transferee, or prosecute or otherwise enforce any claims, rights or benefits included in the Personal Property in Transferor's name, including bringing suit in Transferor's name.
4. This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.
DATED: ______ , 20_
TRANSFEROR:
Exhibit "D"
55852.01006\43065213.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D 55852.01006\430652 I 3.4
Trust C under the Burkhardt Family Trust
established December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
2 101
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D SCHEDULE 1
PERSONAL PROPERTY INVENTORY
All Personal Property existing at the Real Property as of the Closing Date Exhibit "D"
55852.01006\43065213.4
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EXHIBITE
GENERAL ASSIGNMENT
This Assignment (the "Assignment") is dated for reference purposes only as of _______ , by PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 ("Assignor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated ___ , 20_ (the "Agreement"), Assignor hereby assigns and transfers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Assignee"), an undivided fifty percent (50%) interest in the following:
A. All equipment leases, service and/or maintenance agreements and contracts relating to the Real Property (collectively, the "Contracts")[, as more particularly described in Schedule 1 attached hereto];
B. All permits, licenses, consents, registrations and other similar approvals applicable to the Real Property (collectively, the "Approvals")[, which Approvals are more particularly described in Schedule 2 attached hereto];
C. All as-built plans and specifications for: (1) the Real Property; (2) any and all improvements used in connection with the operation or occupancy of the Real Property or located upon the Real Property (the "Improvements"); and (3) any and all personal property owned by Assignor located within or used in connection with the operation of the Real Property and Improvements (the "Personal Property") (collectively, the "Plans"); and D. All warranties of which Assignor is the beneficiary (the "Warranties") with respect to the Improvements or Personal Property.
This Assignment shall not supersede the Agreement and, in the event of conflict between this Assignment and the Agreement, the Agreement shall control.
This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns.
This Assignment shall take effect the last to occur of the following: (i) full execution by all parties and Lessor's consent, as shown by the last date entered below the parties' signatures and (ii) upon the consummation of the transaction between Assignee and Assignor IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written.
ASSIGNOR:
Exhibit "E"
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.01006\430652 I 3.4
Trust C under the Burkhardt Family Trust
established December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Date: --------------
Exhibit "E"
104
Docusign Envelope ID: 0BE25B51-B03A-4B 1 D-848B-09EBCC6C600D 55852.01006\43065213.4
SCHEDULE 1
Note to Seller: List all equipment leases, service
and/or maintenance agreements and contracts
relating to the Real Property - if none known. delete
this schedule and bracketed phrase but leave
general assignment of unspecified contracts.
Leases should have a separate assignment. so do
not assign seller's interest in leases in this
document.
Exhibit "E"
105
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D 55852.01006\430652 l 3.4
SCHEDULE2
Note to Seller: List all permits, licenses, consents.
registrations and other similar approvals
applicable to the Real Property- if none known,
delete this schedule and bracketed phrase but leave
general assignment of unspecified contracts
Exhibit "E"
106
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
City of Laguna Beach
505 Forest Ave.
Laguna Beach, CA 92561
ATTN: City Clerk
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
APNs: 632-101-10
EXHIBIT F
GRANT DEED
SPACE ABOVE THIS LINE FOR RECORDER'S USE
Grant Deed
The undersigned Grantor(s) declare(s): City of Laguna Beach is exempt from property taxes Documentary transfer tax is $0.
D Computed on full value of property conveyed, or
D Computed on full value less value of liens and encumbrances remaining at time of sale.
D Unincorporated area J:gj City of Laguna Beach and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988,
hereby GRANT(S) to
CITY OF LAGUNA BEACH, a California municipal corporation an undivided fifty percent (50%) interest in the following described real property in the City of Laguna Beach County of Orange
State of California:
SEE ATTACHED EXHIBIT A
Dated: _______ , 20_
By: [Do not execute, Exhibit only]
Exhibit "F"
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF _________ _
)
)
On ___ _, 20 before me, _____________ _, Notary Public, personally appeared-----------------~ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature:. _________________ _ (seal)
Exhibit "F"
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CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the undivided fifty percent (50%) interest in real property conveyed by the Grant Deed dated ________ , 20_, from PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988, to the City of Laguna Beach, a municipal corporation, is hereby accepted by the undersigned officer on behalf of the City of Laguna Beach, pursuant to the authority conferred by Resolution No. ___ , adopted by the City Council of the City of Laguna Beach on _________ , and the Grantee consents to recordation thereof by its duly authorized officer.
Dated: _______ , 20_ CITY OF LAGUNA BEACH,
a California municipal corporation
By-------------
Exhibit "F"
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT G
LIST OF LEASES AND SUMMARY OF LEASE TERMS
. Current . Copy of Property Umt Use M Tenant Listed SF 2307 Apt/
2309
1+1
2307 1 Flex
2307 2 Flex
2307 3 Flex
2307 4 Flex
2307 5 Flex
2307 6 Flex
2307 7 Flex
2307 8 Flex
2307 9 Flex
2307 10 Flex
55852.01006\430652 I 3.4
Rent (0 ) Lease
1,800 · Charlotte
Henderson
835 Edith Otto
1,365 Colas (Darrell)
Moore
1,200 Tom Lamb
1,080 Clayton Dubin &
Amanda Hunter
Peter Blake
1,350 Gallery I
Stephanie
... ~.c3Gbi~r(9} ....
1,650 Jan Mach
1,385 Marlo Bartels
1,300 Mike Ezzell
1,300 Casey Parlette
850 Issac Anderson &
Jason Hanek
Exhibit "H"
NIA
N/A
N/A
700
500
725
N/A
N/A
N/A
N/A
N/A
Yes
No
Missing
Page4
Missing
Pages 5-7
Yes
Unsigned
Yes
No
No
Missing
Pages 5-7
No
110
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EXHIBITH
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LEASES
This ASSIGNMENT OF LEASES (the "Assignment"), dated _____ , __ (the "Assignment Date"), 1s by and between ("Assignor"),
-------------("Assignee").
RECITALS
A. Pursuant to those leases listed in Exhibit 1 hereto, as such may have been amended (the "Leases"), the improved real property located at _______________ _ (the "Property") is occupied by the tenants as more particularly described in the Leases.
B. Concurrently herewith, Assignee has acquired the Property from Assignor.
C. In connection with the acquisition by Assignee of title in and to the Property, Assignor desires to assign its interest in the Leases to Assignee, and Assignee desires to accept assignment thereof on the terms and conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals which are specifically incorporated into the body of this Assignment, and the promises and covenants set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Assignment. Effective as of the Assignment Date, Assignor hereby assigns to Assignee all of its right, title and interest in and to the Leases and any guaranties and warranties related thereto. Assignor hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all cost, liability, loss, damage or expense including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property prior to the Assignment Date and relating to claims of personal injury and/or property damage.
2. Assumption. Assignee hereby accepts the assignment set forth in Section 1 above, and hereby assumes all of Assignor's obligations under the Leases arising or accruing on and after the Assignment Date. Assignee hereby agrees to indemnify Assignor against and hold Assignor harmless from any and all cost, liability, loss, damage or expense, including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property on and after the Assignment Date and relating to claims of personal injury and/or property damage occurring during Assignee's ownership of the Property.
3. Effective Date. This Assignment shall be conditioned and effective upon the conveyance to Assignee of record fee title to the Property (the "Effective Date").
Exhibit "H"
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4. Binding on Successors. This Assignment shall be binding on and shall inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns.
5. Counterparts. This Assignment may be executed in two (2) or more counterparts, each of which shall be deemed an original (including copies sent to a party by electronic transmission as against the party signing such counterpart), but which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have signed this Assignment as set forth below.
55852.010061430652 I 3.4
ASSIGNOR
Trust C under the Burkhardt Family Trust established
December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
ASSIGNEE
By:·------~--=
Name: --------- 1 ts:
Exhibit "H"
112
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.01006\430652 I 3.4
EXHIBIT 1 TO ASSIGNMENT OF LEASES
LEASES TO BE ASSIGNED
Exhibit "H"
113
55852.01006\44451124.1
Amendment to Purchase and Sale Agreement
SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY AND JOINT ESCROW INSTRUCTIONS
This Second Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions (“Second Amendment”) is made as of December __, 2025 (the “Effective Date”), by and between PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988 (“Seller”), and THE CITY OF LAGUNA BEACH, a California municipal corporation (“Buyer”), who agree as follows:
AGREEMENT
1. Background.
A. Seller and Buyer have entered into that certain Purchase and Sale Agreement dated January 16, 2025 as amended by that certain First Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions dated as of February 28, 2025 (the “First Amendment”) (as amended, the “Purchase Agreement”), for the purchase and sale of that certain located at 2535 Laguna Canyon Road, City of Laguna Beach, County of Orange, State of California, and as further described in Exhibit A to the Purchase Agreement (the “Property”). Capitalized terms not defined herein shall have the meanings set forth in the Purchase Agreement.
B. Pursuant to the First Amendment, the Due Diligence Period was extended to April 23, 2025 to accommodate a Phase II Environmental Assessment and testing on the Property (“Phase II”). Buyer disapproved the results of its due diligence investigation prior to April 23, 2025, but elected to keep the Deposit in Escrow pending further testing and negotiations with Seller.
C. Buyer and Seller now desire to revive the Purchase Agreement and modify same on the terms and conditions set forth herein.
2. Due Diligence Period. Notwithstanding anything to the contrary set forth in the Purchase Agreement, and notwithstanding Buyer’s disapproval of its due diligence investigation, the Due Diligence Period pursuant to Section 3.1.1 of the Purchase Agreement is hereby extended, and shall expire at 5:00 p.m. on January 20, 2026.
3. Closing. Subject to the satisfaction of the conditions precedent set forth in Article 4 of the Purchase Agreement, the Closing Date is hereby extended to January 30, 2026.
4. Effect on Agreement. All other terms of the Purchase Agreement, except as expressly modified herein, shall continue in full force and effect. In the event and to the extent of any conflict between the terms of this Second Amendment and the terms of the Purchase Agreement, the terms of this Second Amendment shall govern.
5. Counterparts. This Second Amendment may be executed in any number of identical counterparts. If so executed, each of such counterparts is to be deemed an original for all purposes and all such counterparts shall collectively constitute one Agreement. This Second Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 114
55852.01006\44451124.1
Amendment to Purchase and Sale Agreement
2 Amendment may be executed by facsimile or PDF signatures which shall be binding on the parties hereto.
6. Incorporation of Recitals. The Recitals are hereby incorporated into this Second Amendment.
[Signatures on Following Page]
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 115
55852.01006\44451124.1
Signature Page to PSA Amendment
IN WITNESS WHEREOF, Seller and Buyer have executed this Second Amendment effective as of the day and year first above written.
SELLER:
TRUST A UNDER THE BURKHARDT FAMILY
TRUST established December 6, 1988
By: Philip E. Burkhardt
Its: Trustee
BUYER:
CITY OF LAGUNA BEACH, a California
municipal corporation
By: ______________________
Its: _______________________
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 116
55852.01006\44451122.1
Amendment to Purchase and Sale Agreement
SECOND AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE OF REAL
PROPERTY AND JOINT ESCROW INSTRUCTIONS
This Second Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions (“Second Amendment”) is made as of December __, 2025 (the “Effective Date”), by and between PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 (“Seller”), and THE CITY OF LAGUNA BEACH, a California municipal corporation (“Buyer”), who agree as follows:
AGREEMENT
1. Background.
A. Seller and Buyer have entered into that certain Purchase and Sale Agreement dated January 16, 2025 as amended by that certain First Amendment to Agreement for Purchase and Sale of Real Property and Joint Escrow Instructions dated as of February 28, 2025 (the “First Amendment”) (as amended, the “Purchase Agreement”), for the purchase and sale of that certain located at 2535 Laguna Canyon Road, City of Laguna Beach, County of Orange, State of California, and as further described in Exhibit A to the Purchase Agreement (the “Property”). Capitalized terms not defined herein shall have the meanings set forth in the Purchase Agreement.
B. Pursuant to the First Amendment, the Due Diligence Period was extended to April 23, 2025 to accommodate a Phase II Environmental Assessment and testing on the Property (“Phase II”). Buyer disapproved the results of its due diligence investigation prior to April 23, 2025, but elected to keep the Deposit in Escrow pending further testing and negotiations with Seller.
C. Buyer and Seller now desire to revive the Purchase Agreement and modify same on the terms and conditions set forth herein.
2. Due Diligence Period. Notwithstanding anything to the contrary set forth in the Purchase Agreement, and notwithstanding Buyer’s disapproval of its due diligence investigation, the Due Diligence Period pursuant to Section 3.1.1 of the Purchase Agreement is hereby extended, and shall expire at 5:00 p.m. on January 20, 2026.
3. Closing. Subject to the satisfaction of the conditions precedent set forth in Article 4 of the Purchase Agreement, the Closing Date is hereby extended to January 30, 2026.
4. Effect on Agreement. All other terms of the Purchase Agreement, except as expressly modified herein, shall continue in full force and effect. In the event and to the extent of any conflict between the terms of this Second Amendment and the terms of the Purchase Agreement, the terms of this Second Amendment shall govern.
5. Counterparts. This Second Amendment may be executed in any number of identical counterparts. If so executed, each of such counterparts is to be deemed an original for all purposes and all such counterparts shall collectively constitute one Agreement. This Second Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 117
55852.01006\44451122.1
Amendment to Purchase and Sale Agreement
2 Amendment may be executed by facsimile or PDF signatures which shall be binding on the parties hereto.
6. Incorporation of Recitals. The Recitals are hereby incorporated into this Second Amendment.
[Signatures on Following Page]
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 118
55852.01006\44451122.1
Signature Page to PSA Amendment
IN WITNESS WHEREOF, Seller and Buyer have executed this Second Amendment effective as of the day and year first above written.
SELLER:
TRUST C UNDER THE BURKHARDT FAMILY
TRUST established December 6, 1988
By: Philip E. Burkhardt
Its: Trustee
BUYER:
CITY OF LAGUNA BEACH, a California
municipal corporation
By: ______________________
Its: _______________________
Docusign Envelope ID: C1C79568-390E-4CE4-BDD8-FEAC7BFE6A54 119
120
121
122
123
124
125
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This Purchase and Sale Agreement and Joint Escrow Instructions (this "Agreement") is made as of January }b, 2025 (the "Effective Date"), between PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988 ("Seller"), and CITY OF LAGUNA BEACH, a California municipal corporation ("Buyer").
ARTICLE 1. AGREEMENT OF SALE.
Subject to and on the terms and conditions of this Agreement, Seller shall sell to Buyer and Buyer shall purchase from Seller an undivided fifty percent (50%) interest in all of the following:
1.1 Land. The real property consisting of approximately 40,780 square feet (0.94 acres) located at 2535 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN: 632-091- 12), which is more particularly described in Exhibit A, together with (a) all privileges, rights, easements and appurtenances belonging to the real property, including without limitation all minerals, oil, gas and other hydrocarbon substances on and under the real property, (b) all development rights, air rights, water, water rights and water stock relating to the real property, and ( c) all right, title and interest of Seller in and to any streets, alleys, passages, other easements and other rights-of-way or appurtenances included in, adjacent to or used in connection with such real property, before or after the vacation thereof (collectively, the "Land");
1.2 Improvements. Any and all structures, systems, facilities, fixtures, fences, landscaping, and parking areas located on the Land and any and all machinery, equipment, apparatus and appliances used in connection with the operation or occupancy of the Land (such as heating and air conditioning systems and facilities used to provide utility services, refrigeration, ventilation, garbage disposal or other amenities on the Land) and other improvements located upon the Land, including, but not limited to, an industrial office building improvements (collectively, the "Improvements"
The Land and the Improvements are sometimes collectively referred to in this Agreement as the "Property"
1.3 Personal Property. All of Seller's right, title and interest in and to any personal property located within or used in connection with the Property, including, without limitation, the furniture, fixtures and equipment referenced in Section 2.1, below, and that described in the Personal Property Inventory attached hereto as Exhibit B ( collectively, the "Personal Property").
1.4 Service Contracts. Those Service Contracts (defined in Section 5.7) which Buyer expressly agrees to assume;
1.5 Leases. All of the landlord's interest in and to the Leases (the "Leases") between Seller, as Landlord, and the tenants ("Tenants") in occupancy under the Leases referenced in Section 5.7, below and set forth on Exhibit G; and
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1.6 Other Assets. To the extent owned by Seller, all tangible and intangible assets of any nature relating to the Property or the Personal Property, including without limitation (a) all warranties upon the Improvements or Personal Property, to the full extent such warranties are assignable, (b) copies of all plans, specifications, engineering drawings and prints relating to the construction of the Improvements, (c) all license agreements, copyrights, logos, designs, trademarks, trade names, service marks and all goodwill associated with the Property, (d) all other intellectual or intangible property used by Seller in connection with the Property; and (e) all claims and causes of action arising out of or in connection with the Property.
ARTICLE 2. PURCHASE PRICE.
2.1 Amount; Contingencies. The purchase price (the "Purchase Price") for an undivided fifty percent (50%) interest in the Property shall be $2,475,000.00. Seller acknowledges and agrees that Buyer is not requesting a financing or appraisal contingency in contemplation of the Purchase Price, however, Buyer may, in its sole discretion, engage with an appraiser to evaluate the value of the Property during the Due Diligence Period (as defined in Section 3.1.1 ). The parties further acknowledge and agree that the Purchase Price is predicated on the assumption that no adverse environmental conditions exist on the Property. Should Buyer determine, in its reasonable discretion, that adverse environmental conditions are present on the Property during its Due Diligence Investigation (as defined below in Section 3.1.2), the parties shall, prior to expiration of the Due Diligence Period, negotiate in good faith, the manner in which such conditions shall be remedied and the Due Diligence Period shall be tolled for the duration of such negotiations.
Additionally, the amount of the Purchase Price shall be contingent on Buyer obtaining legal possession of all furniture, fixtures, and equipment used in connection with the operation of the Property in good working order and repair, and otherwise owned by Seller. Seller agrees to cooperate fully to ensure the transfer of such items to Buyer as part of the transaction.
2.2 Deposit/Purchase Price.
2.2.1 Within 5 business days after the Effective Date, Buyer shall deposit $25,000.00 into Escrow (as defined below) into an interest bearing account on behalf of Buyer (the "Deposit"). The deposit shall be refundable to Buyer unless Buyer waives all contingencies by the expiration of the Due Diligence Period. If the Closing of the transaction contemplated by this transaction occurs, the Deposit shall be disbursed to Seller and applied to the Purchase Price at Closing. The failure of Buyer to make the Deposit within the time frame specified in this Section shall be material breach of this Agreement and Seller may terminate the Agreement.
2.2.2 • Buyer shall pay the Purchase Price to Seller through escrow at the Closing described in Section 9.1. On or before the Closing Date (as defined below), Buyer shall deposit into Escrow the Purchase Price, subject to adjustment by reason of any applicable prorations and the allocation of closing costs described below.
2.2.3 The Deposit and Purchase Price shall be made by wire transfer of federal funds, cashier's check or in another immediately available form. Notwithstanding anything herein to the contrary, One Hundred Dollars ($100.00) of the Initial Deposit (the "Independent Consideration") shall not be refundable to Buyer, but shall represent consideration for this Agreement and shall be paid to Seller. The Independent Consideration shall be paid to Seller 2 55852.0 I 006\42962433.6
127
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D within 3 days of the Effective Date. The Independent Consideration shall serve as consideration for the granting of the time periods herein contained for Buyer to exercise Buyer's right to satisfy and approve all of Buyer's conditions herein contained. If the Deposit is refunded to Buyer for any reason pursuant to this Agreement, the Independent Consideration shall be subtracted from the Deposit pursuant to this Section.
2.2.4 In the event Buyer exercises the right to extend the Closing Date pursuant to Section 9.1, below, Buyer shall, within three (3) business days after delivery of the Closing Extension Notice (defined below), deposit into Escrow an additional Six Thousand Two Hundred Fifty Dollars ($6,250.00) (the "Extension Deposit"), which Extension Deposit shall be added to the Deposit and shall be applied to the Purchase Price at Closing.
ARTICLE 3. DUE DILIGENCE.
3.1 Due Diligence Period; Inspection and Access.
3.1.1 Due Diligence Period. The "Due Diligence Period" means the period beginning on the Effective Date and ending at 5:00 p.m. on February 21, 2025, provided, however, in the event the Preliminary Documents and the Lease Documentation (defined below) are not delivered on or before the Seller Document Deadline (defined below), the Due Diligence Period and the Closing Date shall be automatically extended one (1) day for each day beyond the Seller Document Deadline that the Preliminary Documents and the Lease Documentation are not delivered to Buyer by Seller.
3.1.2 Access to Information and the Property. Buyer shall conduct its investigation of the Property during the Due Diligence Period at no cost to Seller. This investigation ("Due Diligence Investigation") may include, at Buyer's option: a physical inspection of the Land and all Improvements thereon, including soil, geological and other tests, engineering evaluations of the mechanical, electrical, HV AC and other systems in the Improvements and review of the Plans; review of all governmental matters affecting the Property, including zoning, environmental and building permit and occupancy matters; review and verification of all financial and other information previously provided by Seller relating to the operation of the Property; review of the condition of title to the Property, including the building, structural system and roof inspection; and review of such other matters pertaining to an investment in the Property as Buyer deems advisable. In addition to the Preliminary Documents delivered to Buyer pursuant to Section 3.2, Buyer and its representatives shall have the right of access during reasonable business hours to all files, books and records maintained by Seller or its agents (including, without limitation, all of the Additional Documents to be made available to Buyer at the Property pursuant to Section 3.3), wherever located, relating to the Property, including the right to copy the same. Buyer and its representatives shall also have the right of access to the Property during reasonable business hours to conduct its investigation of the physical condition of the Property. Seller agrees that the rights granted to Buyer herein and the results of its Due Diligence Investigation shall not relieve Seller of any obligations Seller may have under any other provisions of this Agreement, or under other documents entered into concurrently herewith, or implied by law, nor shall they constitute a waiver by Buyer of the right to enforce any of the same. Seller shall cooperate with Buyer in its due diligence activities and provide access to the Property, its records, or provide information so long as it is within Seller's control. 3 55852.01006\42962433.6
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3.2 Delivery of Preliminary Documents. Within five (5) business days after the Effective Date ("Seller Document Deadline"), if Seller hasn't previously provided such documents prior to the Effective Date, Seller shall deliver to Buyer, at Seller's expense, all of the documents described in the remaining subsections of this Section 3.2 (collectively, the "Preliminary Documents") in Seller's possession or control.
3.2.1 Title Report and Survey. A preliminary title report or commitment for title insurance (the "Preliminary Title Report"), dated no earlier than 10 days before the Effective Date, covering the Property and issued by a title insurance company or companies acceptable to Buyer (the "Title Company"), together with a legible copy of each document, map and survey referred to in the Preliminary Title Report. Buyer, at Buyer's sole cost, may obtain an as-built survey of the Property (the "Survey") prepared by a certified land surveyor in accordance with the most recent American Land Title Association standards, certified by such surveyor to Buyer and the Title Company in a form acceptable to the Title Company for the purpose of deleting any survey exception from the Title Policy described in Section 4.1.3.
3.2.2 Plans. Copies of all as-built plans and specifications for the Improvements, including without limitation the plans and specifications for and a complete description of all existing renovations and improvements to the Property and all rentable space therein, and as-built drawings for all underground utilities (collectively, the "Plans"), together with a certificate from an architect approved by Buyer certifying to Buyer that the Improvements were constructed and completed in accordance with the Plans;
3.2.3 Soils Report. Any soils report on the Land prepared at Seller's request or in the possession or control of Seller, including (if available) a report on compliance with any soils work recommended to be done prior to construction of the Improvements;
3.2.4 Engineers' Reports. Any structural, mechanical, environmental or geological reports concerning the Property which have been prepared at Seller's request or which are within Seller's possession or control;
3.2.5 Operating Statements; Tax Bills. Copies of operating statements for the Property for the monthly period between January 1, 2022, through November, 2024 certified by Seller including an itemization of income and expenses and copies of all real property tax bills for the Property for such periods. During the Due Diligence Period, Seller shall provide copies of true and accurate operating statements for the months of December 2024 and January 2025, as they become available, but in no event later than the expiration of the Due Diligence Period;
3.2.6 Licenses, Etc. Copies of any licenses, permits or certificates required by governmental authorities in connection with construction or occupancy of the Improvements, including, without limitation, building permits, certificates of completion, certificates of occupancy and environmental permits and licenses;
3 .2. 7 Lease Documentation. Fully executed copies of all of the Leases set forth on Exhibit G, including, without limitation, new Leases or Lease amendments for such leases for which an original is either lost, incomplete, unsigned, or otherwise unavailable, along with duly executed estoppel certificates on a form reasonably acceptable to Buyer disclosing no defaults or 4 55852.01006\42962433.6
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant (the "Preliminary Estoppels"), the Leases and the Preliminary Estoppels shall be referred to herein as the "Lease Documentation"); and
3.2.8 Inspection Reports. Copies of all written reports received by Seller within three (3) years prior to the Effective Date from Seller's insurance companies, any governmental agency or any other person or entity, which requires or demands correction of any condition, or requests modification in or termination of any uses of the Property, accompanied by Seller's summary of (a) any oral reports from such insurance companies or governmental agencies, and (b) the present status of any matter noted in any oral or written report.
3.3 Additional Documents and Information. From the Effective Date through the Closing Date, Seller shall make available to Buyer at the Property in accordance with Section 3.1, the documents and information described in this Section 3.3 (collectively, the "Additional Documents"):
3 .3 .1 Agreements. Copies of written, and written descriptions of oral, easements, covenants, restrictions, agreements, contracts and other documents, whether existing or, to the knowledge of Seller, proposed as of the Effective Date, including without limitation any agreements relating to the insurance, service, operation, repair, supply, advertising, promotion, sale, leasing or management of the Property, which (a) affect the Property, (b) are not disclosed by the Preliminary Title Report, and (c) have not been delivered to Buyer pursuant to Section 3.2.
If no such documents exist, Seller shall furnish its certification to that effect;
3.3.2 Warranties/Roof Inspections/HY AC Inspections. Copies of any and all guarantees or warranties and other rights given to Seller in connection with the construction, maintenance, repair or remodeling of the Improvements, periodic inspections, or the purchase of any of the Personal Property. If no such documents exist, Seller shall furnish its certification to that effect;
3.3.3 Insurance Policies. Copies of certificates evidencing the insurance carried by Seller of the Property;
3;3.4 Other Documents. All data, correspondence, documents, agreements, waivers, notices, applications and other records with respect to the Property relating to transactions with taxing authorities, governmental agencies, utilities, vendors and others with whom Buyer may be dealing from and after the Closing Date; and
3.3.5 Requested Information. Such other documents and information concerning the Property as Buyer may reasonably request.
3.4 Approval/Disapproval of Due Diligence Investigations. Buyer shall approve or disapprove the results of Buyer's Due Diligence Investigation, in the exercise of Buyer's sole discretion, by written notice delivered to Seller no later than the expiration of the Due Diligence Period. Buyer's disapproval shall terminate this Agreement unless, at the time Buyer gives notice of its disapproval, Buyer also notifies Seller of Buyer's desire to enter into negotiations with Seller for the purpose of reaching an accommodation concerning the disapproval. If Buyer so notifies Seller and the parties have not reached a written agreement satisfactory to both of them regarding 5 55852.0 I 006\42962433.6
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D the disapproval within 10 days after the date of the disapproval notice, Buyer, at its option, may either (a) elect to terminate this Agreement by so notifying Seller and recover the Deposit, or (b) elect to proceed with the transactions contemplated by this Agreement notwithstanding its earlier disapproval. If Buyer fails to deliver to Seller notice of its approval or disapproval of the results of its Due Diligence Investigation, Buyer shall be deemed to have disapproved such results. If Buyer elects to terminate the Agreement, Buyer shall return to Seller all of the Preliminary Documents and Additional Documents previously delivered by Seller to Buyer within 5 business days of such termination, and Escrow shall immediately refund Buyer the Deposit, and Buyer shall have no further obligations to Seller.
3.5 Title Review.
3.5. l Monetary Liens. At its expense, Seller shall remove all liens on the Property at or prior to the Closing (collectively, "Monetary Liens"): (i) all delinquent taxes, bonds and assessments and interest and penalties thereon (it being agreed that Seller shall not be required to remove any non-delinquent taxes and assessments imposed by any governmental agency that are paid with the property taxes for the Property); and (ii) all other monetary liens, including without limitation all those shown on the Preliminary Title Report (including judgment and mechanics' liens, whether or not liquidated, and mortgages and deeds of trust, with Seller being fully responsible for any fees or penalties incurred in connection therewith).
3.5.2 Approval/Disapproval of Title Review. Buyer shall approve or disapprove of the Preliminary Title Report, the Survey and any exceptions to title shown thereon (other than the Monetary Liens) in the exercise of Buyer's sole discretion, by the expiration of the Due Diligence Period. If Buyer disapproves, Buyer may either (a) terminate this Agreement by giving Seller written notice of termination or (b) give Seller a written notice ("Disapproval Notice") identifying the disapproved title matters ("Disapproved Title Matters"). With respect to any Disapproved Title Matters, other than the Monetary Liens, Seller shall notify Buyer in writing within 5 days after Seller's receipt of the Disapproval Notice whether Seller will cause the Disapproved Title Matters to be removed or cured at or prior to Closing. If Seller elects not to remove or cure all Disapproved Title Matters, Buyer may, at its option: (i) subject to satisfaction of the other conditions to Closing, close the purchase of the Property and take title subject to the Disapproved Title Matters which Seller elects not to remove or cure; or (ii) terminate this Agreement in accordance with Section 9 .6.1.
3 .5 .3 Buyer's Options. If any Disapproved Title Matters (including the Monetary Liens) have not been removed at least 5 days prior to Closing or provision for their removal at the Closing has not been made to Buyer's satisfaction, Buyer may, at its option: (i) close the purchase of the Property and take title subject to the Disapproved Title Matters which have not been removed; (ii) close the purchase of the Property and cure or remove the Disapproved Title Matters which have not been removed. Buyer may credit the costs of such cure or removal against the Purchase Price by reducing the amount of cash payable by Buyer at the Closing, but only to the extent such costs are expended to remove (A) Monetary Liens referred to in Section 3.5.1 or (B) Disapproved Title Matters which Seller agreed to remove; or (iii) terminate this Agreement in accordance with Section 9.6.1.
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3.5.4 Failure to Disapprove. If Buyer fails to notify Seller of its approval or disapproval of the Preliminary Title Report, the Survey or the exceptions shown thereon by the end of the Due Diligence Period, then Buyer shall be deemed to have disapproved the same.
ARTICLE 4. CONDITIONS PRECEDENT.
4.1 Buyer's Conditions. Buyer's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.1 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or in part by Buyer by written notice to Seller.
4.1.1 Due Diligence. Buyer having approved of the results of its Due Diligence Investigation pursuant to Section 3 .4;
4.1.2 Title Review. Buyer having approved of the results of its review of title pursuant to Section 3.5.
4.1.3 Title Policy. Seller having caused the Title Company to deliver to Buyer (a) a CLTA Owner's policy oftitle insurance, provided that Buyer may require an ALTA Owner's Policy if Buyer pays the incremental premium for AL TA coverage ("Title Policy") ( or at Buyer's election a binder therefor) for the Property, or (b) the Title Company's irrevocable commitment to issue such policy of title insurance, (including such coinsurance, reinsurance and endorsements as Buyer shall require), with liability equal to the Purchase Price showing fee title to the Property vested in Buyer and subject only to: (i) the matters and exceptions which were approved by Buyer pursuant to Section 3 .5; and (ii) the standard printed exceptions in the form of title policy called for ( collectively, "Conditions of Title").
4.1.4 Performance of Covenants. Seller performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Seller prior to or at the Closing.
4.1.5 Representations and Warranties. The representations and warranties of Seller set forth in Article 5 being true and accurate on the Closing Date, as if made on such date.
4.1.6 Non-Foreign Certification. Seller having executed and delivered to Buyer on or prior to the Closing Date a certification (the "Non-Foreign Certification"), substantially in the form of Exhibit C.
4.1. 7 California Certification. Seller having furnished the residency certification required pursuant to Sections 18805 and 26131 of the California Revenue and Taxation Code ("Form 593") or having authorized Escrow Holder in writing to withhold from the Purchase Price the amounts required to be withheld by such Sections.
4.1.8 Condition of Property. The non-occurrence of any material adverse change to the physical status of the Property between the end of the Due Diligence Period and Closing.
4.1.9 Possession of FF&E's. Buyer obtaining legal possession of all furniture, fixtures, and equipment integral to the operation of the Property, and otherwise owned by Seller. 7 55852.01006\42962433.6
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4.1.10 Simultaneous Closing. Seller shall have caused the Closing to occur simultaneously with the closing for the remaining fifty-percent (50%) undivided interest in and to the Property and the closings for that certain property known as 2307 Laguna Canyon Road.
4.1.11 Closing Estoppel Certificates. Seller shall have delivered or caused to be delivered the Closing Estoppel Certificates in accordance with Section 9.3.5.
4.2 Seller's Conditions. Seller's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.2 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or part by Seller by written notice to Buyer.
4.2.1 Covenants. Buyer performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Buyer prior to or at the Closing.
4.2.2 Representations and Warranties. The representations of Buyer set forth in Article 6 being true and accurate on the Closing Date, as if made on such date.
ARTICLE 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
Subject to the Disclaimer of Warranties contained in Section 5.19, and subject to Buyer's opportunity to conduct its Due Diligence Investigation of the Property,] Seller hereby makes the following representations and warranties to Buyer with the understanding that each such representation and warranty is material and is being relied upon by Buyer:
5.1 Defects. The Improvements and the Personal Property are in good condition and repair and are free of any latent or patent design, construction, physical or mechanical defects and there is no actual or threatened settlement, earth movement, termite infestation or damage affecting the Property.
5.2 Compliance. The Property, and the operation thereof, are in compliance with all applicable laws, ordinances, rules, regulations, judgments, orders, covenants, conditions, restrictions, whether federal, state, local, foreign or private, and Seller has not received any notice of any violation of the same. Seller has not received any request either formal or informal, oral or written, that Seller modify or terminate any use of the Property. The zoning of the Property permits the current Improvements and use of the Property, and, there is no pending or to Seller's knowledge, contemplated rezoning. The Property complies with all applicable subdivision laws and all local ordinances enacted thereunder and no subdivision or parcel map not already obtained is required to transfer the Property to Buyer.
5.3 Documents. All of the Preliminary Documents and the Additional Documents which have been delivered or made available to Buyer pursuant to Article 3, and all other documents delivered to Buyer by or on behalf of Seller (a) are true, correct and complete copies of what they purport to be, (b) represent truly the factual matters stated therein, ( c) are in full force and effect, (d) have not been modified, except as set forth therein and (e) do not omit any information required to make the submission thereof accurate and complete in all material respects. 8 55852.01006\42962433.6
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5.4 Taxes and Condemnation. There are no presently pending or, contemplated special taxes or assessments which will affect the Property. There are no presently pending or, to Seller's knowledge, contemplated proceedings to condemn or demolish the Property or any part of it.
5.5 Utilities. All water, sewer, gas, electric, telephone and drainage facilities, and all other utilities required by law or by the normal operation of the Property, are (a) installed to the property lines of the Property, (b) connected to the Property, ( c) adequate to service the Property in its present use and to permit full compliance with all requirements of law and normal usage by the occupants of the Property and (d) in good working order and repair. All such utilities and storm and sanitary sewers required for the operation of the Property enter the Land through adjoining public streets or through adjoining private land in accordance with valid public or private easements that will inure to the benefit of Buyer.
5.6 Licenses. Seller has all required licenses, permits (including, without limitation, all building permits and occupancy permits), easements and rights-of-way which are required in order to continue the present use of the Property. Seller has no knowledge of any law or regulation of any governmental authority having jurisdiction which might require the Property to be improved beyond its present state or which might restrict the use and enjoyment of the Property in the manner it is presently being used and enjoyed.
5.7 Contracts/Leases/Occupancy Rights.
5.7.1 The Preliminary Documents include a list, description and copies of all contracts entered into by Seller or its property manager or leasing agent relating to the management, maintenance, leasing or operation of the Property ("Service Contracts"). Except for the Service Contracts, there are no agreements or other obligations to which Seller is party or, to Seller's knowledge, by which it or the Property is bound which may affect the current use of the Property, nor are there any current leases, occupancy or operating agreements in force. Seller has fully performed all the obligations required to be performed by Seller under the Service Contracts, and to Seller's knowledge, the other parties to the same are not in default thereunder.
5.7.2 There are no leases, rental agreements or other claims to possession effecting possession or occupancy of the Property other than the Leases set forth in Exhibit G hereto, and Seller shall not enter into any new leases or renewals and/or modifications of the existing Leases during the term of this Agreement except with the prior written consent of Buyer, which may be withheld in Buyer's reasonable discretion. Seller is not in default under any of the Leases, and all of the Leases are valid, binding, and enforceable in accordance with their respective terms.
5.7.3 There are no collective bargaining agreements, other union contracts of any nature, pension plans or other benefit plans of any nature in existence to which Seller is a party and which affect the Property or the operation thereof.
5.8 Litigation. There are no actions, suits, proceedings, judgments, orders, decrees or governmental investigations pending or threatened against the Property or Seller which could affect the Property or the purchase, use or enjoyment thereof by Buyer. 9 55852.0 I 006\42962433.6
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5.9 Agreements with Governmental Authorities. There are no agreements with governmental authorities, agencies, utilities or quasi-governmental entities which affect the Property except those agreements which are identified in the Preliminary Title Report and those matters which are disclosed by the Survey.
5 .10 Hazardous Materials.
5.10.1 Definitions. For purposes of this Agreement:
(a) "Environmental Law(s)" means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U .S.C. Sections 9601, et seq., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et~-, the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq., the Clean Water Act, 33 U.S.C. Sections 1251 et~-, The Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. H&S Code Sections 25249.5- 25249.13), the Carpenter-Preseley-Tanner Hazardous Substance Account Act (Cal. H&S Code Sections 25300 et~-), and the California Water Code Sections 1300, et seq., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any other federal, state or local law, statute, rule, regulation or ordinance which regulates or proscribes the use, storage, disposal, presence, cleanup, transportation or Release or threatened Release into the environment of Hazardous Material.
(b) "Hazardous Material" means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii) infectious materials or (viii) radioactive materials. (c) "Release" means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping or disposing into the environment of any Hazardous Material (including the abandonment or discarding of barrels, containers, and other receptacles containing any Hazardous Material).
5.10.2 Representations.
(a) The Property and all existing uses and conditions of the Property are in compliance with all Environmental Laws, and Seller has not received any written notice of violation issued pursuant to any Environmental Law with respect to the Property or any use or condition thereof.
(b) Neither Seller nor any other present or former owner of the Property has used, handled, stored, transported, released or disposed of any Hazardous Material on, under or from the Property in violation of any Environmental Law. ( c) There is no Release of any Hazardous Material existing on, beneath or from or in the surface or ground water associated with the Property. 10 55852.0 I 006\42962433.6
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D (d) All required permits, licenses and other authorizations required by or issued pursuant to any Environmental Law for the ownership or operation of the Property by Seller have been obtained and are presently maintained in full force and effect. ( e) There exists no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or investigation pending or, to Seller's knowledge, threatened pursuant to any Environmental Law relating to (i) the ownership, occupancy or use of any portion of the Property by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property, (ii) any alleged violation of any Environmental Law by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property or (iii) the suspected presence, Release or threatened Release of any Hazardous Material on, under, in or from any portion of the Property. (f) There are no above-ground or underground tanks located on the Property used or formerly used for the purpose of storing any Hazardous Material. (g) No asbestos abatement or remediation work has been performed on the Property.
(h) There is no PCB-containing equipment or PCB-containing material located on or in the Property.
5 .11 Title to the Property. Seller has good and marketable title to the Property, subject to the Conditions of Title. There are no outstanding rights of first refusal or first look, options to purchase, rights of reverter, or claim of right relating to the transfer or sale of the Property or any interest therein. To Seller's knowledge, there are no unrecorded or undisclosed documents or other matters which affect title to the Property. No person holding a security interest in the Property or any part thereof has the right to consent or deny consent to the sale of the Property as contemplated herein, and Seller has the right to pay off such person and to remove all such liens as of the Closing Date. Seller has enjoyed the continuous and uninterrupted quiet possession, use and operation of the Property.
5.12 Seller's Authority. Seller has the requisite power and authority to own and operate the Property and conduct its business where the same is now owned or operated. The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Seller ( or its board of directors or shareholders) in order to consummate the transactions contemplated herein. This Agreement and the other documents executed by Seller in connection herewith are legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement by Seller, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Seller was organized, or any indenture, mortgage, deed of trust, agreement, undertaking, instrument or document to which Seller or any affiliate thereof is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller. 11 55852.01006\42962433.6
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 5 .13 Parking. Seller has received no written notice from any governmental agency that the parking spaces on the Property are in violation of law.
5.14 Zoning. Seller has received no written notice from any governmental agency that the Property is not in compliance with zoning requirements and laws.
5.15 Foreign Person. Seller is not a "foreign person" within the meaning of Section 1445(f) of the Internal Revenue Code.
5.16 No Employees. There are no on-site employees of Seller at the Property. On or before Closing, Seller shall terminate any employees at the Property and any residence or occupancy thereof, if any, and Buyer shall have no obligation to employ or continue to employ any individual employed by Seller or its affiliates in connection with the Property, if any.
5.17 Inspections. The Preliminary Documents include a full description of (a) all inspections of the Property by any governmental agency or insurance company occurring within three (3) years prior to the Effective Date, (b) all matters which were noted by such governmental agency or insurance company as requiring correction, requesting or recommending modifications or termination of uses of the Property and ( c) the present status of each such noted matter.
5.18 Misstatements and Omissions. Neither the representations and warranties made by Seller in this Article 5 nor elsewhere in this Agreement contain any untrue statement or any omission of a material fact. Seller has no documents in its possession, nor has any knowledge, that omits material facts related to the property or which would contradict or negate any of its representations contained in this Agreement.
ARTICLE 6. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer makes the following representation and warranties to Seller with the understanding that each such representation and warranty is material and is being relied upon by Seller:
6.1 Buyer's Authority. The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Buyer in order to consummate the transactions contemplated herein.
6.2 No Conflict. Neither the execution nor delivery of this Agreement by Buyer, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Buyer was organized, or any agreement to which Buyer is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Buyer.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
7 .1 Survival of Warranties. Buyer and Seller agree that each representation and warranty, covenant by the respective parties contained herein or made in writing pursuant to this 12 5 5852.01006\42962433.6
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Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D Agreement are intended to and shall be deemed made as of the date of this Agreement or such writing and again at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive the execution and delivery of this Agreement, the Deed and the Closing.
7.2 Notice of Changed Circumstances. If either party becomes aware of any fact or circumstances which would render false or misleading a representation or warranty made by such party, then it shall immediately give notice of such fact or circumstance to the other party, but such notice shall not relieve any party of any liabilities or obligations with respect to any representation or warranty.
ARTICLE 8. SELLER'S PRECLOSING COVENANTS.
Seller shall comply with the covenants contained in this Article 8 from the Effective Date through the Closing Date unless Buyer consents otherwise in writing. Buyer may grant or withhold any such consent requested by Seller in Buyer's sole discretion.
8.1 Contracts and Documents. Seller shall not, without Buyer's approval, not to be unreasonably withheld or delayed, (a) amend or waive any right under any Service Contract, Lease, Preliminary Document or Additional Document, or (b) enter into any material agreement of any type affecting the Property that would survive the Closing Date.
8.2 Insurance. Seller shall maintain or cause to be maintained in full force and effect its present insurance policies for the Property.
8.3 Compliance with Obligations. Seller shall fully and timely comply with all obligations to be performed by it under the Service Contracts, the other Preliminary Documents, the Conditions of Title and all permits, licenses, approvals and laws, regulations and orders applicable to the Property.
8.4 No Transfers. Seller shall not sell, encumber or otherwise transfer any interest in all or any portion of the Property, or agree to do so.
8.5 Termination of Contracts. Seller at its sole cost and expense shall terminate all of the Service Contracts described in Section 5.7 at or before the Closing Date, except for those contracts which Buyer expressly agrees to assume and which are actually assumed by Buyer pursuant to Section 9 .3 .3.
8.6 Maintenance. At its sole cost and expense, Seller shall operate and maintain the Property such that on the Closing Date the Property shall be in at least as good a condition and repair as on the Effective Date, reasonable wear and tear excepted. Without limiting the generality of the foregoing, Seller shall, at a minimum, spend such amounts for repair and maintenance as are consistent with its prior practice. Seller shall promptly advise Buyer of any significant repair or improvement required to keep the Property in such condition. Seller shall not make any material alterations to the Property, or remove any of the Personal Property therefrom, without Buyer's prior consent, unless such Personal Property so removed is simultaneously replaced with new Personal Property of similar quality and utility.
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8.7 Best Efforts. Seller shall use its best efforts to cause the conditions set forth in Section 4.1 to be satisfied by the Closing Date, and Seller shall not take or permit any action that would result in any of the representations and warranties set forth in Article 5 becoming false or incorrect.
ARTICLE 9. CLOSING.
9.1 Time. Provided all conditions set forth in Article 4 have been either satisfied or waived, and to the extent such date has not been extended pursuant to Section 3. I. I, above, the parties shall close this transaction (the "Closing"), on February 28, 2025 (the "Closing Date"), as such date may be extended by the provisions of Article 10. Notwithstanding the foregoing, Buyer shall have the right to extend the Closing Date to March 28, 2025 by providing written notice on or before the original Closing Date ("Closing Extension Notice") and depositing into Escrow the Extension Deposit in accordance with Section 2.2.4, above.
9.2 Escrow. This Article 9, together with such additional instructions as Fidelity Title Company, Attention Brenna Ryan, 4400 MacArthur Blvd., Suite 200, Newport Beach, CA 92660, California (telephone: 949-623-3038; e-mail: [email protected], [email protected] ("Escrow Holder"), shall reasonably request and the parties shall agree to, shall constitute the escrow instructions to Escrow Holder. If there is any inconsistency between this Agreement and the Escrow Holder's additional escrow instructions, this Agreement shall control unless the intent to amend this Agreement is clearly stated in said additional instructions. Buyer and Seller shall cause Escrow Holder to execute and deliver a counterpart of this Agreement to each of them. If the Title Company does not serve as the Escrow Holder, the Title Company shall provide a letter to Buyer, in form and content acceptable to Buyer, pursuant to which the Title Company accepts responsibility and liability for the acts and omissions of Escrow Holder in discharging Escrow Holder's obligations hereunder, including, without limitation, any acts or omissions of Escrow Holder relating to the Title Company's commitment to issue the Title Policy, the receipt, recordation or delivery of any documents placed into escrow, and the receipt and disbursement of any funds placed into escrow.
9.3 Seller's Deposit of Documents and Funds Into Escrow. Seller shall deposit into escrow on or before Closing (unless otherwise set forth herein) the following documents:
9.3.1 A duly executed and acknowledged grant deed, in the form acceptable to Buyer, conveying the Property to Buyer ("Grant Deed") in the form attached as Exhibit F;
9.3.2 A duly executed bill of sale, in the form of Exhibit D, conveying the Personal Property to Buyer free and clear of liens, encumbrances and restrictions ("Bill of Sale");
9.3.3 A duly executed assignment, in the form of Exhibit E, assigning to Buyer all of Seller's interest (a) in the Plans, (b) in all warranties of which Seller is the beneficiary with respect to the Property, (c) in all intangible assets of the Property, and (d) in the Service Contracts which Buyer has elected to assume (the "General Assignment");
9.3.4 A duly executed assignment, in the form of Exhibit H, assigning to Buyer all of Seller's interest in and to the Leases (the "Assignment of Leases"); 14 55852.01006\42962433.6
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9.3.5 No later than three (3) business days prior to the Closing Seller shall have delivered to Buyer estoppel certificates ("Closing Estoppel Certificates") in a form acceptable to Buyer, dated no earlier than fifteen (15) days prior to the Closing and disclosing no defaults or alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant, or any modification in rent, expiration date or other material Lease term reflected in the Lease Documentation;
9.3.6 No more than 10 days but no less than 5 days before the expiration of the Due Diligence Period, the originals ( or copies if originals are unavailable) of the Service Contracts Buyer has elected to assume, if any, and estoppel certificates from the other parties to such Service Contracts in form and substance satisfactory to Buyer;
9.3.7 All costs of Closing, including, but not limited to, the CLTA increment of the premium for the Title Policy, recording fees (if any), transfer taxes (if any) and fees, one-half of the escrow fees, sales tax and any other costs of Closing customarily paid by sellers of real property, plus or minus prorations as provided in Section 9.8; provided that, subject to Section 9.6, Buyer and Seller shall bear their own attorneys' fees and costs in connection with the negotiation and preparation of this Agreement and the transactions completed by this Agreement;
9.3.8 Seller's Non-foreign Certification;
9.3.9 All records and files relating to the management or operation of the Property, including, without limitation, property tax bills, insurance, and property taxes; and
9.3.10 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.3.11 Form 593;
9.3.12 Notice letter to tenants regarding new owner and addresses for payment of rent payment ("Tenant Notice Letter").
9.4 Deliveries Outside of Escrow. Notwithstanding Section 9.3, Seller and Buyer may elect to deliver the documents described in Section 9.3 outside of escrow (other than documents which are to be recorded) by giving Escrow Holder a joint written notice of such election, specifying the documents which will be so delivered outside of escrow. Upon receipt of such notice, Escrow Holder shall have no further obligation concerning such specified documents.
9.5 Buyer's Deposit of Documents and Funds. Buyer shall deposit into escrow:
9.5.1 The Purchase Price in accordance with the provisions of Article 2, plus or minus prorations as provided in Section 9.8, by electronic transfer of federal funds to Escrow Holder, on or before the Closing Date;
9.5.2 A duly executed counterpart of the Assignment of Leases; and 15 55852.01006142962433.6
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9.5.3 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.6 Default, Termination and Remedies.
9.6. l Buyer's Termination. This Agreement shall automatically terminate without further notice or action by Buyer upon the occurrence of any of the following events, provided that Buyer is not then in material breach of this Agreement: (a) any condition to Closing contained in Section 4.1 has not been satisfied or waived by Buyer by the Closing Date; or (b) Buyer having exercised its right to terminate this Agreement pursuant to Section 3.4 (disapproval of Due Diligence Investigation), Section 3.5 (disapproval of title) or Article 10 (damage or condemnation). In such event, the parties shall have no further obligation to each other except for those obligations that specifically survive the termination of this Agreement. If this Agreement terminates as a result of Seller's material breach of this Agreement, Buyer shall have all remedies it may have hereunder or at law as a result of such occurrence, including the remedy of specific performance.
9.6.2 Seller's Termination. Provided that Seller is not then in material breach of this Agreement, this Agreement shall automatically terminate without further notice or action by Seller if any condition to Closing contained in Section 4.2 has not been satisfied or waived by Seller by the Closing Date.
9.6.3 Release from Escrow. Upon termination of this Agreement pursuant to Section 9.6.l or 9.6.2, Escrow Holder shall promptly return to Buyer and Seller, respectively, all documents and monies deposited by them into escrow without prejudice to their rights and remedies hereunder.
9.6.4 Remedies.
(a) Buyer's Remedies. If Seller breaches this Agreement, Buyer shall be entitled to pursue all remedies permitted herein and by law, including the remedy of specific performance. No termination of the escrow by Buyer following a breach by Seller shall be deemed to waive such breach or any remedy otherwise available to Buyer. (b) Seller's Remedies/Liquidated Damages. IF BEFORE THE CLOSE
OF ESCROW BUYER FAILS TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT AND (EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.6)
DOES NOT CURE SUCH FAILURE WITHIN TEN BUSINESS DAYS AFTER SELLER'S WRITTEN NOTICE OF SUCH FAILURE, THEN SELLER MAY THEREAFTER: (I) TERMINATE THIS AGREEMENT; (II) RECEIVE AND RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES IF SUCH DEFAULT OCCURS AFTER BUYER'S APPROVAL PERIOD; AND (III) EXERCISE THE OTHER RIGHTS AND REMEDIES RESERVED BY SELLER AS PROVIDED IN THIS SECTION. IN THE EVENT SELLER TERMINATES THIS
AGREEMENT BY REASON OF BUYER'S DEFAULT, BUYER AND SELLER SHALL BE
RELIEVED OF ANY FURTHER OBLIGATION TO EACH OTHER WITH RESPECT TO THIS
AGREEMENT AND THE PROPERTY EXCEPT FOR ANY OBLIGATIONS WHICH 16 55852.01006\42962433.6
141
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACW~GES AS A RESULT OF SUCH DEF AULT BY BUYER.
SELLER'S INITIALS BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART
OF THE CONS ID ERA TION BEING GIVEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGWNT IN THE ABSENCE OF THE PROVISIONS OF THIS SECTION. if (o.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and (c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852.0 I 006\42962433.6
142
EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER:· THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
SELLER'S INITIALS BUYER'S iNITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION AREA MATERIAL PART
OF THE CONSIDERATION BEING GNEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGREEMENT IN THE ABSENCE OF THE PROVISIONS OF THIS SECTION. );;J...~\..,
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7 .3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording infonnation thereon) of the Grant Deed; (b) fully executed original counterparts of the Bi lI of Sale, the General Assignment; and ( c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7,5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852:01006142%2433.6
r ,! ---·-,1 1 r 'f-""'ITITT' ,
1 l~l'l"~"'Fl"-~~~> ~·AW•lftlMMirHll•Al,,.;i~-- -~-"Jl',,Tl-~~, Olllfl'!F+il""'"'!;lfl fAf TJ"TTT"llr'7F"~·-·:.1&14ifH_,Mlillt--iiiij!•F·-·•i-r1~-,-•• ........ WM-WI ----·-• iiil--Fr,1·1 143
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D Revenue Service (with copies to Buyer and Seller) the reporting statement required under Section 6045(e) of the Internal Revenue Code.
9.8 Prorations. Subject to the other provisions of this Section 9.8, all receipts and disbursements of the Property will be prorated as of 11 :59 p.m. on the day immediately preceding the Closing Date. Not less than five business days prior to the Closing, Seller shall submit to Buyer for its approval a tentative prorations schedule showing the categories and amounts of all prorations proposed, including all rents and operating expenses. Security deposits shall be credited to Buyer from Seller proceeds. The parties shall agree on a final prorations schedule prior to the Closing and shall deliver the same to Escrow Holder. If following the Closing either party discovers an error in the prorations statement, it shall notify the other party and the parties shall promptly make any adjustment required. The parties agree that any trailing bills that pertain to the Property operations before the Closing Date, which are not available as of Closing, may be presented to Buyer for proration and reimbursement up to forty five ( 45) days after Closing. Failure to provide any bills by such date shall be a waiver by Seller of such reimbursement and Buyer shall have no further obligation for any such bills and Property expenses. This section 9.8 shall survive Closiw, (lJ .
SELLER INITIALS
9.8.1 Capital Expenditures and Accounts Payable. All capital and other improvements (including labor and material) which have been performed or contracted for, by or on behalf of Seller prior to the Closing Date, and all sums due for accounts payable which have been incurred with respect to the Property prior to the Closing Date shall be paid by Seller and shall be subject to the indemnification provisions of Section 7.3. Buyer shall furnish to Seller for payment any bills for such period received after the Closing Date, and Buyer shall have no further obligation with respect thereto.
9.8.2 Property Taxes. General real estate taxes, water or sewer rates and charges (if not metered), personal property taxes, or any other governmental tax or charge levied or assessed against the Property ( collectively, the "Taxes"), relating to the Property and payable during the year in which Closing occurs shall not be prorated between Seller and Buyer in Escrow.
Upon recordation of the Grant Deed, Buyer will request cancellation of the real property taxes for the Property pursuant to California Revenue and Taxation Code Section 4986. If current taxes have not yet been paid as of the Closing Date, then at Closing Seller shall pay through Escrow or out of Seller's proceeds, the full amount of the installment applicable for the period in which Closing occurs. Seller shall be entitled to a refund of any excess payment made to the taxing authority on account of the Property, including any taxes paid by Seller and applicable to any period from and after the Closing Date. The taxing authority will notify Seller of any refund due Seller resulting from the subject acquisition after a review and any subsequent proration of the property tax assessment by the county assessor. Seller retains the right, following close of escrow, to apply to the appropriate governmental authority/ies for refund of real property taxes pursuant to Revenue and Taxation Code Section 5096. 7 ( or such other applicable law), and Buyer shall reasonably cooperate with Seller's efforts to obtain said refund. 18 55852.01006\42962433.6
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9.8.3 Utility Charges. All utility charges shall be prorated as of the Closing Date and Seller shall obtain a final billing therefor. All utility security deposits, if any, shall be retained by Seller.
9.9 Possession. Seller shall deliver exclusive right of possession of the Property to Buyer on the Closing Date, subject only to the Conditions of Title.
ARTICLE 10. DAMAGE, DESTRUCTION AND CONDEMNATION.
This Agreement shall be governed by the Uniform Vendor and Purchaser Risk Act as set forth in Section 1662 of the California Civil Code as supplemented and modified by this Article 10. Seller shall promptly notify Buyer in writing of any material damage to the Property and of any taking or threatened taking of all or any portion of the Property. Within a reasonable period of time after receipt of such notice, Buyer shall determine whether a material part of the Property has been damaged or whether such taking or threatened taking has affected or will affect a material part of the Property. As used herein, (a) the destruction of a "material part" of the Property shall be deemed to mean an insured or uninsured casualty to the Property having an estimated cost of repair which in the reasonable judgment of Buyer equals or exceeds $200,000 and (b) a taking by eminent domain of a portion of the Property shall be deemed to affect a "material part" of the Property ifin the reasonable judgment of Buyer the estimated value of the portion of the Property taken exceeds $200,000. Upon making its determination, Buyer shall notify Seller in writing of the results of such determination. Buyer may elect, by written notice delivered to Seller within 30 days after giving Seller notice of such determination, to terminate this Agreement in accordance with Section 9.6.1 if a material part of the Property has been damaged or if such taking has affected or will affect a material part of the Property. If Buyer does not so terminate, (i) in the case of damage to a material part of the Property, Seller shall assign to Buyer at the Closing its right to recover under any insurance policies covering such damage and shall pay Buyer at the Closing the amount of the deductible, if any, and (ii) in the case of a threatened or actual taking of a material part of the Property, Seller shall assign to Buyer at the Closing Seller's entire right, title and interest in the proceeds thereof. If between the Effective Date and the Closing Date the Property suffers damage which is not material, Seller shall repair such damage at its expense prior to the Closing, and the Closing Date shall be extended for a reasonable period of time not to exceed 30 days to allow for completion of such repairs. The Closing Date shall be extended as necessary to permit Buyer to exercise its rights under this Article
10. ARTICLE 11. GENERAL.
11.1 Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective (a) when personally delivered to the recipient at the recipient's address set forth below; (b) five business days after deposit in a sealed envelope in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the recipient as set forth below; or ( c) one business day after deposit with a recognized overnight courier or delivery service, addressed to the recipient as set forth below, whichever is earlier. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday. Email notices may be used for 19 55852.0 I 006\42962433.6
145
Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600O convenience only, unless otherwise agreed by the parties in writing, and shall be deemed delivered one ( 1) business day after delivery if sent after 5 pm, or received the same day if sent on a business day between 8 am and 5 pm, and a duplicate shall be sent via USPS on the same day as the email.
The addresses for notice are:
SELLER:
With a copy to:
BUYER:
With a copy to:
PHILIP E. BURKHARDT, Trustee
7042 Palomino Drive
Sanger, CA, 92657
Phone: (704) 245-2690
Email: [email protected]
Casey Estate & Business Planning,
a Professional Law Corporation.
Attn Wayne J. Casey
610 Newport Center Drive, Suite 840
Newport Beach, CA 92660
Phone: (949) 640-5200
Email: [email protected]
CITY OF LAGUNA BEACH
Attn: Jeremy Frimond
505 Forest Ave.
Laguna Beach, CA 92561
Email: [email protected]
Best Best & Krieger
Attn: Megan Garibaldi
18101 Von Karman Ave., Suite 1000
Irvine, CA 92612
Phone: (949) 263-6592
Email: [email protected]
Either party may change its address by written notice to the other given in the manner set forth above.
11.2 California Environmental Quality Act. Buyer's future use and/or development of the Property is expressly conditioned upon compliance with the California Environmental Quality Act ("CEQA") as Buyer shall conduct environmental review pursuant to CEQA prior to taking any discretionary action with regard to any proposed development of the Property.
11.3 Joint and Several Liability of Seller. The obligations, representations, warranties, and covenants of Seller under this Agreement shall be the joint and several obligations of each individual or entity comprising Seller. Each such individual or entity shall be fully responsible for 20 55852.01006\42962433.6
146
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D the full performance of all obligations under this Agreement, regardless of the performance or default of any other individual or entity comprising Seller. Buyer may, at its sole discretion, seek recourse, enforcement, or remedy against any one or more of such individuals or entities without seeking recourse against the others, and no such action shall release any other individual or entity comprising Seller from their obligations under this Agreement.
11.4 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement and understanding between Buyer and Seller concerning the subject matter of this Agreement and supersede all prior agreements, including any previous letter of intent or terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Seller concerning the Property or the other matters which are the subject of this Agreement.
11.5 Amendments and Waivers. No addition to or modification of this Agreement shall be effective unless set forth in writing and signed by the party against whom the addition or modification is sought to be enforced. The party benefited by any condition or obligation may waive the same, but such waiver shall not be enforceable by another party unless made in writing and signed by the waiving party.
11.6 Invalidity of Provision. If any provision of this Agreement as applied to either party or to any circumstance shall be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the same shall in no way affect (to the maximum extent permissible by law) any other provision of this Agreement, the application of any such provision under circumstances different from those adjudicated by the court, or the validity or enforceability of this Agreement as a whole.
11.7 References. Unless otherwise indicated, (a) all Article, Section, Schedule and Exhibit references are to the articles, sections, schedules and exhibits of this Agreement, and (b) all references to days are to calendar days. All the Schedules and Exhibits attached hereto are incorporated herein by this reference. Whenever under the terms of this Agreement the time for performance of a covenant or condition falls upon a Saturday, Sunday or California state holiday, such time for performance shall be extended to the next business day. The headings used in this Agreement are provided for convenience only and this Agreement shall be interpreted without reference to any headings. The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so indicates or requires.
11.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in California.
11.9 Confidentiality and Publicity. Buyer is a public entity and as such, this Agreement, upon its presentation for approval at Buyer's City council at a duly called and agendized public meeting, shall be subject to the Public Records Act and the Freedom of Information Act. No press release or other public disclosure may be made by Seller or any of its agents regarding Buyer's intent for this Property this transaction without the prior consent of Buyer. 21 55852.01006\42962433.6
147
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11.10 Time. Time is of the essence in the performance of the parties' respective obligations under this Agreement.
11.11 Attorneys' Fees. In the event of any legal or equitable proceeding to enforce any of the terms or conditions of this Agreement, or any alleged disputes, breaches, defaults or misrepresentations in connection with any provision of this Agreement, the prevailing party in such proceeding shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and costs of defense paid or incurred in good faith.
11.12 Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. However, Seller shall not have the right to assign all or any portion of its interest in this Agreement without Buyer's prior written consent.
Buyer shall have the right to assign all or any portion of its interest in this Agreement, or substitute for itself a nominee, upon notice to Seller not later than three (3) days prior to the Closing Date.
Any permitted assignment shall not relieve Buyer of its obligations hereunder, and Buyer shall remain fully liable for the performance of all terms and conditions unless otherwise agreed to by Seller.
11.13 Further Assurances. Seller, at any time before or after Closing, shall, at its own expense, execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Buyer and shall take any other action consistent with the terms of this Agreement that may reasonably be requested by Buyer for the purpose of transferring and confirming to Buyer, or reducing to Buyer's possession, any or all of the Property or otherwise carrying out the terms of this Agreement.
11.14 Cooperation With Exchange. Buyer agrees to cooperate with the other if Seller intends to accomplish a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code of 1986. Buyer and/or Seller may assign this Agreement to an exchange intermediary for the purpose of facilitating such an exchange by the assigning party. Buyer's duty to cooperate shall be limited to the transfer of money to Seller or Seller's designee in exchange for the Property, and in no event shall Buyer act as purchaser or acquirer of any exchange property. Seller shall indemnify and defend and hold Buyer harmless from any claims, loss, damages or liability arising out of participation in an exchange.
I 1. 15 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the parties to it and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any party hereto or give any third person any right of subrogation or action over against any party to this Agreement.
11.16 Remedies Cumulative. The remedies set forth in this Agreement are cumulative and not exclusive to any other legal or equitable remedy available to a party.
11.17 Commissions, Indemnity, Disclosure. Each party represents to the other party that there is no broker representing such party in the current transaction, and that the representing party has incurred no liability for any brokerage commission or finder's fee arising from or relating to the transactions contemplated by this Agreement. Seller shall be responsible for any broker 22 55852.01006\42962433.6
148
commission associated with this purchase. Each party hereby indemnifies and agrees to protect, defend and hold harmless the other party from and against all liability, cost, damage or expense (including without limitation attorneys' fees and costs incurred in connection therewith) on account of any brokerage commission or finder's fee which the indemnifying party has agreed to pay or which is claimed to be due as a result of the actions of the indemnifying party. This Section
11.17 is intended to be solely for the benefit of the parties hereto and is not intended to benefit, nor may it be relied upon by, any person or entity not a party to this Agreement.
11.18 Counterparts/Facsimile/PDF Signatures. This Agreement may be executed in counterparts and when so executed by the parties, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument that shall be binding upon the parties, notwithstanding that the parties may not be signatories to the same counterprut or counterparts. The parties may integrate their respective counterparts by attaching the signature pages of each separate counterpart to a single counterpart. In order to expedite the transaction contemplated herein, facsimile or .pdf signatures may be used in place of original signatures on this Agreement. Seller and Buyer intend to be bound by the signatures on the facsimile or .pdf document, are aware that the other party will rely on the facsimile or .pdf signatures, and hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
BUYER:
ATTEST:
B
APPROVED AS TO FORM:
BEST BEST &KRIEGER LLP
By:Megan
City Attorney
55852.01006\42962433.6
City of Laguna Beach,
a California municipal corporation
By~~
Name: b~l A. \L..\(;
Title: ½ m'>:Ntfr
23 149
Docusign Envelope ID: 0BE25851-B03A-481 D-848B-09EBCC6C600D SELLER SIGNATURE PAGE TO PURCHASE AND SALE AGREEMENT - 2535 LAGUNA
CANYON ROAD
55852.0 I 006\42962433.6
SELLER:
Trust A under the Burkhardt Family Trust
established December 6, 1988
(?Signed by:
By __ __,.,L-~-~=3s=ao=~=2~=oc=ao=4o~s.- .. - ......... ------- Name: PHILIP E. BURKHARDT
Title: Trustee
24 150
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the instru9\ons contained therein.
Date(11U wiaJI, 2oa'i
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EXHIBIT A
LAND DESCRIPTION
Real property in the City of Laguna Beach, County of Orange, State of California, described as follows:
Parcel 1:
That portion of Lot 2 in Section 13, Township 7 South, Range 9 West, of the San Bernardino Meridian, in the County of Orange, State of California, according to an Official Plat of said land filed in the District Land Office, August 13, 1875, described as follows:
Beginning at station 453+00.85 on the center line of Laguna Canyon Road as shown on a map thereof approved by Nat Neff, Superintendent of Highways of Orange County on November 4, 1929, said point also being the Northwest corner of the land described in the Deed to Arch Craig; thence Westerly 461.00 feet along said center line; thence continuing along said center line South 76° 38' 15" West 52.95 feet to the true Point of Beginning; then continuing along said center line South 76° 38' 15" West 35.31 feet; thence Southwesterly 81.99 feet along said center line; thence Southeasterly to a point on the Southeasterly line of the land conveyed to B.W. Morton, et. ux., by Deed recorded in Book 717, Page 407, Official Records, said point being North 76° 38' 15" East 97.68 feet from the Southwesterly corner of said Morton land; thence North 76° 38' 15" East 97.68 feet to the Southeasterly corner of said Morton land; thence North 13° 21' 25" West 207.56 feet to the true Point of Beginning.
Parcel 2:
That portion of Lot 2 in Section 13, Township 7 South, Range 9 West, of the San Bernardino Meridian, in the County of Orange, State of California, according to an Official Plat of said land filed in the District Land Office, August 13, 1875, described as follows:
Beginning at the Southwest corner of the land described in the Deed to Glenn R. Carlton, et. ux, recorded January 23, 1948, in Book 1612, Page 424, Official Records; thence Southeasterly 150.00 feet along the Southeasterly prolongation of the Westerly line of the land described in said deed; thence Easterly to the Southwesterly corner of the !and conveyed to W. L. Craig, et. ux., by Deed recorded in Book 1532, Page 157, Official Records; thence North 13° 21' 45" West 150.00 feet to the Northwesterly corner of said land of Craig; Thence South 76° 38' 15" West to the Point of Beginning.
APN: 632-091-12
Exhibit "A"
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EXHIBIT B
PERSONAL PROPERTY INVENTORY
Exhibit "B"
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EXHIBITC
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the CITY OF LAGUNA BEACH, a California municipal corporation (the "Transferee"), that withholding of tax under Section 1445 of the Code will not be required upon the transfer of a U.S. real property interest to the Transferee by PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988, as to an undivided fifty percent (50%) interest (the "Transferor"), the undersigned hereby certifies the following on behalf of the Transferor:
l. The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is 99-6462945; and
3. The Transferor's office address is 7042 Palomino Drive, Sanger, CA 92657.
The Transferor understands that this Certificate may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this Certification and, to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.
DATED: ,20_ -------
55852.0 I 006\42962433.6
Trust A under the Burkhardt Family Trust
established December 6, 1988
By:-----------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Exhibit "C"
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EXHIBIT D
BILL OF SALE
This Bill of Sale (the "Bill of Sale") is made as of ______ , 20_, by PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988 ("Transferor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Purchase and Sale Agreement dated _, 20_ (the "Agreement"), Transferor hereby sells, transfers, assigns and delivers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Transferee"), an undivided fifty percent (50%) interest in any and all personal property (the "Personal Property") located within or used in connection with that certain improved real property commonly known as 2535 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN: 632-091-12) (the "Real Property"). The Personal Property shall include, without limitation, the items described in the Personal Property Inventory attached hereto as Schedule I.
1. Transferor hereby assigns all warranties, guarantees and indemnities, whether those warranties are express or implied, and all similar rights which Transferor may have against any other manufacturer or supplier of the Personal property or any portion thereof or against any seller, engineer, contractor or builder, in respect of the Personal Property.
2. Transferor warrants that each item of the Personal Property is in good condition, order and repair and suitable for its intended purpose on the date of this Bill of Sale.
3. Transferor at any time at or after the date of this Bill of Sale shall execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Transferee, and shall take any other action consistent with the terms of this Bill of Sale that may reasonably be requested by Transferee for the purpose of granting and confirming to Transferee, or reducing to Transferee's possession, any or all of the Personal Property. If requested by Transferee, Transferor further agrees to prosecute or otherwise enforce in its own name for the benefit of Transferee any claims, rights or benefits included in the Personal Property that require prosecution or enforcement in Transferor's name. Transferor also hereby appoints Transferee as its agent to act in Transferor's name and on Transferor's behalf to take any action necessary to effect the transfer of any of the Personal Property to Transferee, or prosecute or otherwise enforce any claims, rights or benefits included in the Personal Property in Transferor's name, including bringing suit in Transferor's name.
4. This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.
DATED: -------'----' 20_
TRANSFEROR:
Exhibit "D"
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Trust A under the Burkhardt Family Trust
established December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
2 156
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D SCHEDULE 1
PERSONAL PROPERTY INVENTORY
All Personal Property existing at the Real Property as of the Closing Date Exhibit "D"
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EXHIBITE
GENERAL ASSIGNMENT
This Assignment (the "Assignment") is dated for reference purposes only as of _______ , by PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988 ("Assignor").
FOR VALUABLE CON SID ERA TION, as set forth in that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated ___ , 20_ (the "Agreement"), Assignor hereby assigns and transfers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Assignee"), an undivided fifty percent (50%) interest in the following:
A. All equipment leases, service and/or maintenance agreements and contracts relating to the Real Property (collectively, the "Contracts"), as more particularly described in Schedule 1 attached hereto;
B. All permits, licenses, consents, registrations and other similar approvals applicable to the Real Property (collectively, the "Approvals"), which Approvals are more particularly described in Schedule 2 attached hereto;
C. All as-built plans and specifications for: (1) the Real Property; (2) any and all improvements used in connection with the operation or occupancy of the Real Property or located upon the Real Property (the "Improvements"); and (3) any and all personal property owned by Assignor located within or used in connection with the operation of the Real Property and Improvements (the "Personal Property") (collectively, the "Plans"); and D. All warranties of which Assignor is the beneficiary (the "Warranties") with respect to the Improvements or Personal Property.
This Assignment shall not supersede the Agreement and, in the event of conflict between this Assignment and the Agreement, the Agreement shall control.
This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns.
This Assignment shall take effect the last to occur of the following: (i) full execution by all parties and Lessor's consent, as shown by the last date entered below the parties' signatures and (ii) upon the consummation of the transaction between Assignee and Assignor IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written.
ASSIGNOR:
Exhibit "E"
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Trust A under the Burkhardt Family Trust
established December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Date: --------------
Exhibit "E"
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SCHEDULE 1
Note to Seller: List all equ;pment leases, servfoe
and/or ma;ntenance agreements and contracts
relating to the Real Property - if none known. delete
th;s schedule and bracketed phrase but leave
general assignment of unspecified contracts.
Leases should have a separate assignment. so do
not assign seller's interest in leases ;n this
document.
Exhibit "E"
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SCHEDULE2
Note to Seller: List all permits, licenses, consents,
registrations and other similar approvals
applicable to the Real Property- if none known,
delete this schedule and bracketed phrase but leave
general assignment of unspecified contracts
Exhibit "E"
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RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
City of Laguna Beach
505 Forest Ave.
Laguna Beach, CA 92561
ATTN: City Clerk
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
APNs: 632-091-12
EXHIBIT F
GRANT DEED
SPACE ABOVE THIS LINE FOR RECORDER'S USE
Grant Deed
The undersigned Grantor(s) declare(s): City of Laguna Beach is exempt from property taxes Documentary transfer tax is $0.
D Computed on full value of property conveyed, or
D Computed on full value less value of liens and encumbrances remaining at time of sale.
D Unincorporated area l:8J City of Laguna Beach and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988,
hereby GRANT(S) to
CITY OF LAGUNA BEACH, a California municipal corporation an undivided fifty percent (50%) interest in the following described real property in the City of Laguna Beach County of Orange
State of California:
SEE A TT ACHED EXHIBIT A
Dated: ______ , 20_
By: [Do not execute, Exhibit only]
Exhibit "F"
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ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STATE OF CALIFORNIA
COUNTY OF _________ _
)
)
On ___ _, 20 before me, ______________ Notary Public,
personally appeared _________________ _, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature:. _________________ _ (seal)
Exhibit "F"
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CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the undivided fifty percent (50%) interest in real property conveyed by the Grant Deed dated ________ , 20_, from PHILIP E. BURKHARDT, Trustee of Trust A under the Burkhardt Family Trust established December 6, 1988, to the City of Laguna Beach, a municipal corporation, is hereby accepted by the undersigned officer on behalf of the City of Laguna Beach, pursuant to the authority conferred by Resolution No. ___ , adopted by the City Council of the City of Laguna Beach on _________ , and the Grantee consents to recordation thereof by its duly authorized officer.
Dated: _______ , 20_ CITY OF LAGUNA BEACH,
a California municipal corporation
By-------------
Exhibit "F"
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EXHIBIT G
LIST OF LEASES AND SUMMARY OF LEASE TERMS
. Current . Copy of
Property Umt Use R OM) Tenant Listed SF L ent ( ease
2535 A Flex 1,855 Mark Garry NIA Unsigned
Stephanie Missing 2535 B Flex 1.855 Bachiero I Peter NIA Pages 4-7 Blake Gallery Martin Brooks Maybe
2535 C123 Flex 3,175 Cabinetry NIA missing
page4
2535 C4 Flex 765 Katlin Evans NIA Yes
2535 C5 Flex 630 Mark Garry NIA No
2535 C6 Flex 250 Brady Norton NIA No
1+1.5
(plus (prior
2535 D sublease 2,950 Jorg Dubin rent No
residenti
al studio)
Robert Taylor Missing 2535 E1 Flex 925 Welder on NIA
.VVheels page 2
Gunther Gee Missing E2 Flex 885 Management Pro NIA
Tern page2
E3 Flex 885 Van derVeen
NIA Yes Family
2535 E4 Flex 850 Jennifer King NIA Yes Justin Bower
Clayton Dubin
2535 E5 1+1 2,150 (Amanda Hunter NIA Yes
also on estoppel)
2535 E6 1+1
2535 E7 1+1 1,775: Ron Tober NIA Unsigned
Exhibit "G"
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EXHIBITH
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LEASES
This ASSIGNMENT OF LEASES (the "Assignment"), dated _____ , __ (the "Assignment Date"), is by and between ("Assignor"),
_____________ ("Assignee").
RECITALS
A. Pursuant to those leases listed in Exhibit 1 hereto, as such may have been amended (the "Leases"), the improved real property located at _______________ _ (the "Property") is occupied by the tenants as more particularly described in the Leases.
B. Concurrently herewith, Assignee has acquired the Property from Assignor.
C. In connection with the acquisition by Assignee of title in and to the Property, Assignor desires to assign its interest in the Leases to Assignee, and Assignee desires to accept assignment thereof on the terms and conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals which are specifically incorporated into the body of this Assignment, and the promises and covenants set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Assignment. Effective as of the Assignment Date, Assignor hereby assigns to Assignee all of its right, title and interest in and to the Leases and any guaranties and warranties related thereto. Assignor hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all cost, liability, loss, damage or expense including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property prior to the Assignment Date and relating to claims of personal injury and/or property damage.
2. Assumption. Assignee hereby accepts the assignment set forth in Section 1 above, and hereby assumes all of Assignor's obligations under the Leases arising or accruing on and after the Assignment Date. Assignee hereby agrees to indemnify Assignor against and hold Assignor harmless from any and all cost, liability, loss, damage or expense, including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property on and after the Assignment Date and relating to claims of personal injury and/or property damage occurring during Assignee's ownership of the Property.
3. Effective Date. This Assignment shall be conditioned and effective upon the conveyance to Assignee of record fee title to the Property (the "Effective Date").
Exhibit "G"
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4. Binding on Successors. This Assignment shall be binding on and shall inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns.
5. Counterparts. This Assignment may be executed in two (2) or more counterparts, each of which shall be deemed an original (including copies sent to a party by electronic transmission as against the party signing such counterpart), but which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have signed this Assignment as set forth below.
55852.0 I 006\42962433.6
ASSIGNOR
Trust A under the Burkhardt Family Trust established
December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
ASSIGNEE
By: ___ ==-~==-
Name: --------- 1 ts:
Exhibit "H"
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EXHIBIT I TO ASSIGNMENT OF LEASES
LEASES TO BE ASSIGNED
Exhibit "H"
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PURCHASE AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS
This Purchase and Sale Agreement and Joint Escrow Instructions (this "Agreement") is made as of January 112, 2025 (the "Effective Date"), between PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 ("Seller"), and CITY OF LAGUNA BEACH, a California municipal corporation ("Buyer").
ARTICLE 1. AGREEMENT OF SALE.
Subject to and on the terms and conditions of this Agreement, Seller shall sell to Buyer and Buyer shall purchase from Seller an undivided fifty percent (50%) interest in all of the following:
1.1 Land. The real property consisting of approximately 40,780 square feet (0.94 acres) located at 2535 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN: 632-091- 12), which is more particularly described in Exhibit A, together with (a) all privileges, rights, easements and appurtenances belonging to the real property, including without limitation all minerals, oil, gas and other hydrocarbon substances on and under the real property, (b) all development rights, air rights, water, water rights and water stock relating to the real property, and ( c) all right, title and interest of Seller in and to any streets, alleys, passages, other easements and other rights-of-way or appurtenances included in, adjacent to or used in connection with such real property, before or after the vacation thereof (collectively, the "Land");
1.2 Improvements. Any and all structures, systems, facilities, fixtures, fences, landscaping, and parking areas located on the Land and any and all machinery, equipment, apparatus and appliances used in connection with the operation or occupancy of the Land (such as heating and air conditioning systems and facilities used to provide utility services, refrigeration, ventilation, garbage disposal or other amenities on the Land) and other improvements located upon the Land, including, but not limited to, an industrial office building improvements ( collectively, the "Improvements"
The Land and the Improvements are sometimes collectively referred to in this Agreement as the "Property"
1.3 Personal Property. All of Seller's right, title and interest in and to any personal property located within or used in connection with the Property, including, without limitation, the furniture, fixtures and equipment referenced in Section 2.1, below, and that described in the Personal Property Inventory attached hereto as Exhibit B (collectively, the "Personal Property").
1.4 Service Contracts. Those Service Contracts (defined in Section 5.7) which Buyer expressly agrees to assume;
1.5 Leases. All of the landlord's interest in and to the Leases (the "Leases") between Seller, as Landlord, and the tenants ("Tenants") in occupancy under the Leases referenced in Section 5.7, below and set forth on Exhibit G; and
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1.6 Other Assets. To the extent owned by Seller, all tangible and intangible assets of any nature relating to the Property or the Personal Property, including without limitation (a) all warranties upon the Improvements or Personal Property, to the full extent such warranties are assignable, (b) copies of all plans, specifications, engineering drawings and prints relating to the construction of the Improvements, ( c) all license agreements, copyrights, logos, designs, trademarks, trade names, service marks and all goodwill associated with the Property, (d) all other intellectual or intangible property used by Seller in connection with the Property; and (e) all claims and causes of action arising out of or in connection with the Property.
ARTICLE 2. PURCHASE PRICE.
2.1 Amount; Contingencies. The purchase price (the "Purchase Price") for an undivided fifty percent (50%) interest in the Property shall be $2,475,000.00. Seller acknowledges and agrees that Buyer is not requesting a financing or appraisal contingency in contemplation of the Purchase Price, however, Buyer may, in its sole discretion, engage with an appraiser to evaluate the value of the Property during the Due Diligence Period (as defined in Section 3.1.1). The parties further acknowledge and agree that the Purchase Price is predicated on the assumption that no adverse environmental conditions exist on the Property. Should Buyer determine, in its reasonable discretion, that adverse environmental conditions are present on the Property during its Due Diligence Investigation (as defined below in Section 3.1.2), the parties shall, prior to expiration of the Due Diligence Period, negotiate in good faith, the manner in which such conditions shall be remedied and the Due Diligence Period shall be tolled for the duration of such negotiations.
Additionally, the amount of the Purchase Price shall be contingent on Buyer obtaining legal possession of all furniture, fixtures, and equipment used in connection with the operation of the Property in good working order and repair, and otherwise owned by Seller. Seller agrees to cooperate fully to ensure the transfer of such items to Buyer as part of the transaction.
2.2 Deposit/Purchase Price.
2.2.1 Within 5 business days after the Effective Date, Buyer shall deposit $25,000.00 into Escrow (as defined below) into an interest bearing account on behalf of Buyer (the "Deposit"). The deposit shall be refundable to Buyer unless Buyer waives all contingencies by the expiration of the Due Diligence Period. If the Closing of the transaction contemplated by this transaction occurs, the Deposit shall be disbursed to Seller and applied to the Purchase Price at Closing. The failure of Buyer to make the Deposit within the time frame specified in this Section shall be material breach of this Agreement and Seller may terminate the Agreement.
2.2.2 Buyer shall pay the Purchase Price to Seller through escrow at the Closing described in Section 9.1. On or before the Closing Date (as defined below), Buyer shall deposit into Escrow the Purchase Price, subject to adjustment by reason of any applicable prorations and the allocation of closing costs described below.
2.2.3 The Deposit and Purchase Price shall be made by wire transfer of federal funds, cashier's check or in another immediately available form. Notwithstanding anything herein to the contrary, One Hundred Dollars ($ I 00.00) of the Initial Deposit (the "Independent Consideration") shall not be refundable to Buyer, but shall represent consideration for this Agreement and shall be paid to Seller. The Independent Consideration shall be paid to Seller 2 55852.0 I 006\43065208.4
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2.2.4 In the event Buyer exercises the right to extend the Closing Date pursuant to Section 9.1, below, Buyer shall, within three (3) business days after delivery of the Closing Extension Notice (defined below), deposit into Escrow an additional Six Thousand Two Hundred Fifty Dollars ($6,250.00) (the "Extension Deposit"), which Extension Deposit shall be added to the Deposit and shall be applied to the Purchase Price at Closing.
ARTICLE 3. DUE DILIGENCE.
3.1 Due Diligence Period; Inspection and Access.
3 .1.1 Due Diligence Period. The "Due Diligence Period" means the period beginning on the Effective Date and ending at 5 :00 p.m. on February 21, 2025, provided, however, in the event the Preliminary Documents and the Lease Documentation (defined below) are not delivered on or before the Seller Document Deadline (defined below), the Due Diligence Period and the Closing Date shall be automatically extended one (1) day for each day beyond the Seller Document Deadline that the Preliminary Documents and the Lease Documentation are not delivered to Buyer by Seller.
3 .1.2 Access to Information and the Property. Buyer shall conduct its investigation of the Property during the Due Diligence Period at no cost to Seller. This investigation ("Due Diligence Investigation") may include, at Buyer's option: a physical inspection of the Land and all Improvements thereon, including soil, geological and other tests, engineering evaluations of the mechanical, electrical, HV AC and other systems in the Improvements and review of the Plans; review of all governmental matters affecting the Property, including zoning, environmental and building permit and occupancy matters; review and verification of all financial and other information previously provided by Seller relating to the operation of the Property; review of the condition of title to the Property, including the building, structural system and roof inspection; and review of such other matters pertaining to an investment in the Property as Buyer deems advisable. In addition to the Preliminary Documents delivered to Buyer pursuant to Section 3.2, Buyer and its representatives shall have the right of access during reasonable business hours to all files, books and records maintained by Seller or its agents (including, without limitation, all of the Additional Documents to be made available to Buyer at the Property pursuant to Section 3.3), wherever located, relating to the Property, including the right to copy the same. Buyer and its representatives shall also have the right of access to the Property during reasonable business hours to conduct its investigation of the physical condition of the Property. Seller agrees that the rights granted to Buyer herein and the results of its Due Diligence Investigation shall not relieve Seller of any obligations Seller may have under any other provisions of this Agreement, or under other documents entered into concurrently herewith, or implied by law, nor shall they constitute a waiver by Buyer of the right to enforce any of the same. Seller shall cooperate with Buyer in its due diligence activities and provide access to the Property, its records, or provide information so long as it is within Seller's control. 3 55852. 0 I 006\43065208.4
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3.2 Delivery of Preliminary Documents. Within five (5) business days after the Effective Date ("Seller Document Deadline"), if Seller hasn't previously provided such documents prior to the Effective Date, Seller shall deliver to Buyer, at Seller's expense, all of the documents described in the remaining subsections of this Section 3.2 (collectively, the "Preliminary Documents") in Seller's possession or control. 3 .2.1 Title Report and Survey. A preliminary title report or commitment for title insurance (the "Preliminary Title Report"), dated no earlier than 10 days before the Effective Date, covering the Property and issued by a title insurance company or companies acceptable to Buyer (the "Title Company"), together with a legible copy of each document, map and survey referred to in the Preliminary Title Report. Buyer, at Buyer's sole cost, may obtain an as-built survey of the Property (the "Survey") prepared by a certified land surveyor in accordance with the most recent American Land Title Association standards, certified by such surveyor to Buyer and the Title Company in a form acceptable to the Title Company for the purpose of deleting any survey exception from the Title Policy described in Section 4.1.3. 3 .2.2 Plans. Copies of all as-built plans and specifications for the Improvements, including without limitation the plans and specifications for and a complete description of all existing renovations and improvements to the Property and all rentable space therein, and as-built drawings for all underground utilities (collectively, the "Plans"), together with a certificate from an architect approved by Buyer certifying to Buyer that the Improvements were constructed and completed in accordance with the Plans;
3.2.3 Soils Report. Any soils report on the Land prepared at Seller's request or in the possession or control of Seller, including (if available) a report on compliance with any soils work recommended to be done prior to construction of the Improvements;
3.2.4 Engineers' Reports. Any structural, mechanical, environmental or geological reports concerning the Property which have been prepared at Seller's request or which are within Seller's possession or control;
3.2.5 Operating Statements; Tax Bills. Copies of operating statements for the Property for the monthly period between January 1, 2022, through November, 2024 certified by Seller including an itemization of income and expenses and copies of all real property tax bills for the Property for such periods. During the Due Diligence Period, Seller shall provide copies of true and accurate operating statements for the months of December 2024 and January 2025, as they become available, but in no event later than the expiration of the Due Diligence Period;
3.2.6 Licenses, Etc. Copies of any licenses, permits or certificates required by governmental authorities in connection with construction or occupancy of the Improvements, including, without limitation, building permits, certificates of completion, certificates of occupancy and environmental permits and licenses;
3 .2. 7 Lease Documentation. Fully executed copies of all of the Leases set forth on Exhibit G, including, without limitation, new Leases or Lease amendments for such leases for which an original is either lost, incomplete, unsigned, or otherwise unavailable, along with duly executed estoppel certificates on a form reasonably acceptable to Buyer disclosing no defaults or 4 55852.01006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant (the "Preliminary Estoppels"), the Leases and the Preliminary Estoppels shall be referred to herein as the "Lease Documentation"); and
3.2.8 Inspection Reports. Copies of all written reports received by Seller within three (3) years prior to the Effective Date from Seller's insurance companies, any governmental agency or any other person or entity, which requires or demands correction of any condition, or requests modification in or termination of any uses of the Property, accompanied by Seller's summary of (a) any oral reports from such insurance companies or governmental agencies, and (b) the present status of any matter noted in any oral or written report.
3.3 Additional Documents and Information. From the Effective Date through the Closing Date, Seller shall make available to Buyer at the Property in accordance with Section 3.1, the documents and information described in this Section 3.3 (collectively, the "Additional Documents"):
3.3.1 Agreements. Copies of written, and written descriptions of oral, easements, covenants, restrictions, agreements, contracts and other documents, whether existing or, to the knowledge of Seller, proposed as of the Effective Date, including without limitation any agreements relating to the insurance, service, operation, repair, supply, advertising, promotion, sale, leasing or management of the Property, which (a) affect the Property, (b) are not disclosed by the Preliminary Title Report, and (c) have not been delivered to Buyer pursuant to Section 3.2.
If no such documents exist, Seller shall furnish its certification to that effect;
3.3.2 Warranties/Roof Inspections/HY AC Inspections. Copies of any and all guarantees or warranties and other rights given to Seller in connection with the construction, maintenance, repair or remodeling of the Improvements, periodic inspections, or the purchase of any of the Personal Property. If no such documents exist, Seller shall furnish its certification to that effect;
3.3.3 Insurance Policies. Copies of certificates evidencing the insurance carried by Seller of the Property;
3.3.4 Other Documents. All data, correspondence, documents, agreements, waivers, notices, applications and other records with respect to the Property relating to transactions with taxing authorities, governmental agencies, utilities, vendors and others with whom Buyer may be dealing from and after the Closing Date; and
3.3.5 Requested Information. Such other documents and information concerning the Property as Buyer may reasonably request.
3.4 Approval/Disapproval of Due Diligence Investigations. Buyer shall approve or disapprove the results of Buyer's Due Diligence Investigation, in the exercise of Buyer's sole discretion, by written notice delivered to Seller no later than the expiration of the Due Diligence Period. Buyer's disapproval shall terminate this Agreement unless, at the time Buyer gives notice of its disapproval, Buyer also notifies Seller of Buyer's desire to enter into negotiations with Seller for the purpose of reaching an accommodation concerning the disapproval. If Buyer so notifies Seller and the parties have not reached a written agreement satisfactory to both of them regarding 5 55852.0 I 006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D the disapproval within 10 days after the date of the disapproval notice, Buyer, at its option, may either (a) elect to terminate this Agreement by so notifying Seller and recover the Deposit, or (b) elect to proceed with the transactions contemplated by this Agreement notwithstanding its earlier disapproval. If Buyer fails to deliver to Seller notice of its approval or disapproval of the results of its Due Diligence Investigation, Buyer shall be deemed to have disapproved such results. If Buyer elects to terminate the Agreement, Buyer shall return to Seller all of the Preliminary Documents and Additional Documents previously delivered by Seller to Buyer within 5 business days of such termination, and Escrow shall immediately refund Buyer the Deposit, and Buyer shall have no further obligations to Seller.
3.5 Title Review.
3.5.1 Monetary Liens. At its expense, Seller shall remove all liens on the Property at or prior to the Closing (collectively, "Monetary Liens"): (i) all delinquent taxes, bonds and assessments and interest and penalties thereon (it being agreed that Seller shall not be required to remove any non-delinquent taxes and assessments imposed by any governmental agency that are paid with the property taxes for the Property); and (ii) all other monetary liens, including without limitation all those shown on the Preliminary Title Report (including judgment and mechanics' liens, whether or not liquidated, and mortgages and deeds of trust, with Seller being fully responsible for any fees or penalties incurred in connection therewith).
3.5.2 Approval/Disapproval of Title Review. Buyer shall approve or disapprove of the Preliminary Title Report, the Survey and any exceptions to title shown thereon (other than the Monetary Liens) in the exercise of Buyer's sole discretion, by the expiration of the Due Diligence Period. If Buyer disapproves, Buyer may either (a) terminate this Agreement by giving Seller written notice of termination or (b) give Seller a written notice ("Disapproval Notice") identifying the disapproved title matters ("Disapproved Title Matters"). With respect to any Disapproved Title Matters, other than the Monetary Liens, Seller shall notify Buyer in writing within 5 days after Seller's receipt of the Disapproval Notice whether Seller will cause the Disapproved Title Matters to be removed or cured at or prior to Closing. If Seller elects not to remove or cure all Disapproved Title Matters, Buyer may, at its option: (i) subject to satisfaction of the other conditions to Closing, close the purchase of the Property and take title subject to the Disapproved Title Matters which Seller elects not to remove or cure; or (ii) terminate this Agreement in accordance with Section 9.6.1.
3.5.3 Buyer's Options. If any Disapproved Title Matters (including the Monetary Liens) have not been removed at least 5 days prior to Closing or provision for their removal at the Closing has not been made to Buyer's satisfaction, Buyer may, at its option: (i) close the purchase of the Property and take title subject to the Disapproved Title Matters which have not been removed; (ii) close the purchase of the Property and cure or remove the Disapproved Title Matters which have not been removed. Buyer may credit the costs of such cure or removal against the Purchase Price by reducing the amount of cash payable by Buyer at the Closing, but only to the extent such costs are expended to remove (A) Monetary Liens referred to in Section 3.5.1 or (B) Disapproved Title Matters which Seller agreed to remove; or (iii) terminate this Agreement in accordance with Section 9.6.1.
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3.5.4 Failure to Disapprove. If Buyer fails to notify Seller of its approval or disapproval of the Preliminary Title Report, the Survey or the exceptions shown thereon by the end of the Due Diligence Period, then Buyer shall be deemed to have disapproved the same.
ARTICLE 4. CONDITIONS PRECEDENT.
4.1 Buyer's Conditions. Buyer's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.1 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or in part by Buyer by written notice to Seller.
4.1.1 Due Diligence. Buyer having approved of the results of its Due Diligence Investigation pursuant to Section 3 .4;
4.1.2 Title Review. Buyer having approved of the results of its review of title pursuant to Section 3.5.
4.1.3 Title Policy. Seller having caused the Title Company to deliver to Buyer (a) a CLTA Owner's policy ohitle insurance, provided that Buyer may require an ALTA Owner's Policy if Buyer pays the incremental premium for ALT A coverage ("Title Policy") ( or at Buyer's election a binder therefor) for the Property, or (b) the Title Company's irrevocable commitment to issue such policy ohitle insurance, (including such coinsurance, reinsurance and endorsements as Buyer shall require), with liability equal to the Purchase Price showing fee title to the Property vested in Buyer and subject only to: (i) the matters and exceptions which were approved by Buyer pursuant to Section 3 .5; and (ii) the standard printed exceptions in the form of title policy called for ( collectively, "Conditions of Title").
4.1.4 Performance of Covenants. Seller performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Seller prior to or at the Closing.
4.1.5 Representations and Warranties. The representations and warranties of Seller set forth in Article 5 being true and accurate on the Closing Date, as if made on such date.
4.1.6 Non-Foreign Certification. Seller having executed and delivered to Buyer on or prior to the Closing Date a certification (the "Non-Foreign Certification"), substantially in the form of Exhibit C.
4.1. 7 California Certification. Seller having furnished the residency certification required pursuant to Sections 18805 and 26131 of the California Revenue and Taxation Code ("Form 593") or having authorized Escrow Holder in writing to withhold from the Purchase Price the amounts required to be withheld by such Sections.
4.1.8 Condition of Property. The non-occurrence of any material adverse change to the physical status of the Property between the end of the Due Diligence Period and Closing.
4.1.9 Possession of FF&E's. Buyer obtaining legal possession of all furniture, fixtures, and equipment integral to the operation of the Property, and otherwise owned by Seller. 7 55852.01006\43065208 .4
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4.1.10 Simultaneous Closing. Seller shall have caused the Closing to occur simultaneously with the closing for the remaining fifty-percent (50%) undivided interest in and to the Property and the closings for that certain property known as 2307 Laguna Canyon Road.
4.1.11 Closing Estoppel Certificates. Seller shall have delivered or caused to be delivered the Closing Estoppel Certificates in accordance with Section 9.3.5.
4.2 Seller's Conditions. Seller's obligations under this Agreement are expressly subject to the timely fulfillment of the conditions set forth in this Section 4.2 on or before the Closing Date, or such earlier date as is set forth below. Each condition may be waived in whole or part by Seller by written notice to Buyer.
4.2.1 Covenants. Buyer performing and complying in all material respects with all of the terms of this Agreement to be performed and complied with by Buyer prior to or at the Closing.
4.2.2 Representations and Warranties. The representations of Buyer set forth in Article 6 being true and accurate on the Closing Date, as if made on such date.
ARTICLE 5. SELLER'S REPRESENTATIONS AND WARRANTIES.
Subject to the Disclaimer of Warranties contained in Section 5.19, and subject to Buyer's opportunity to conduct its Due Diligence Investigation of the Property,] Seller hereby makes the following representations and warranties to Buyer with the understanding that each such representation and warranty is material and is being relied upon by Buyer:
5. I Defects. The Improvements and the Personal Property are in good condition and repair and are free of any latent or patent design, construction, physical or mechanical defects and there is no actual or threatened settlement, earth movement, termite infestation or damage affecting the Property.
5.2 Compliance. The Property, and the operation thereof, are in compliance with all applicable laws, ordinances, rules, regulations, judgments, orders, covenants, conditions, restrictions, whether federal, state, local, foreign or private, and Seller has not received any notice of any violation of the same. Seller has not received any request either formal or informal, oral or written, that Seller modify or terminate any use of the Property. The zoning of the Property permits the current Improvements and use of the Property, and, there is no pending or to Seller's knowledge, contemplated rezoning. The Property complies with all applicable subdivision laws and all local ordinances enacted thereunder and no subdivision or parcel map not already obtained is required to transfer the Property to Buyer.
5.3 Documents. All of the Preliminary Documents and the Additional Documents which have been delivered or made available to Buyer pursuant to Article 3, and all other documents delivered to Buyer by or on behalf of Seller (a) are true, correct and complete copies of what they purport to be, (b) represent truly the factual matters stated therein, (c) are in full force and effect, (d) have not been modified, except as set forth therein and (e) do not omit any information required to make the submission thereof accurate and complete in all material respects. 8 55852.0 I 006\43065208.4
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5.4 Taxes and Condemnation. There are no presently pending or, contemplated special taxes or assessments which will affect the Property. There are no presently pending or, to Seller's knowledge, contemplated proceedings to condemn or demolish the Property or any part of it.
5.5 Utilities. All water, sewer, gas, electric, telephone and drainage facilities, and all other utilities required by law or by the normal operation of the Property, are (a) installed to the property lines of the Property, (b) connected to the Property, (c) adequate to service the Property in its present use and to permit full compliance with all requirements of law and normal usage by the occupants of the Property and (d) in good working order and repair. All such utilities and storm and sanitary sewers required for the operation of the Property enter the Land through adjoining public streets or through adjoining private land in accordance with valid public or private easements that will inure to the benefit of Buyer.
5.6 Licenses. Seller has all required licenses, permits (including, without limitation, all building permits and occupancy permits), easements and rights-of-way which are required in order to continue the present use of the Property. Seller has no knowledge of any law or regulation of any governmental authority having jurisdiction which might require the Property to be improved beyond its present state or which might restrict the use and enjoyment of the Property in the manner it is presently being used and enjoyed.
5.7 Contracts/Leases/Occupancy Rights.
5.7.1 The Preliminary Documents include a list, description and copies of all contracts entered into by Seller or its property manager or leasing agent relating to the management, maintenance, leasing or operation of the Property ("Service Contracts"). Except for the Service Contracts, there are no agreements or other obligations to which Seller is party or, to Seller's knowledge, by which it or the Property is bound which may affect the current use of the Property, nor are there any current leases, occupancy or operating agreements in force. Seller has fully performed all the obligations required to be performed by Seller under the Service Contracts, and to Seller's knowledge, the other parties to the same are not in default thereunder.
5. 7 .2 There are no leases, rental agreements or other claims to possession effecting possession or occupancy of the Property other than the Leases set forth in Exhibit G hereto, and Seller shall not enter into any new leases or renewals and/or modifications of the existing Leases during the term of this Agreement except with the prior written consent of Buyer, which may be withheld in Buyer's reasonable discretion. Seller is not in default under any of the Leases, and all of the Leases are valid, binding, and enforceable in accordance with their respective terms.
5.7.3 There are no collective bargaining agreements, other union contracts of any nature, pension plans or other benefit plans of any nature in existence to which Seller is a party and which affect the Property or the operation thereof.
5.8 Litigation. There are no actions, suits, proceedings, judgments, orders, decrees or governmental investigations pending or threatened against the Property or Seller which could affect the Property or the purchase, use or enjoyment thereof by Buyer. 9 55852.0 l 006\43065208.4
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5.9 Agreements with Governmental Authorities. There are no agreements with governmental authorities, agencies, utilities or quasi-governmental entities which affect the Property except those agreements which are identified in the Preliminary Title Report and those matters which are disclosed by the Survey.
5.10 Hazardous Materials.
5.10.1 Definitions. For purposes of this Agreement:
(a) "Environmental Law(s)" means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, 42 U .S.C. Sections 9601, et ~-, the Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et. seq., the Hazardous Materials Transportation Act, 49 U.S.C. 1801 et gm., the Clean Water Act, 33 U.S.C. Sections 1251 et seq., The Safe Drinking Water and Toxic Enforcement Act of 1986 (Cal. H&S Code Sections 25249 .5- 25249.13), the Carpenter-Preseley-Tanner Hazardous Substance Account Act (Cal. H&S Code Sections 25300 et seq.), and the California Water Code Sections 1300, et seq., as said laws have been supplemented or amended to date, the regulations promulgated pursuant to said laws and any other federal, state or local law, statute, rule, regulation or ordinance which regulates or proscribes the use, storage, disposal, presence, cleanup, transportation or Release or threatened Release into the environment of Hazardous Material.
(b) "Hazardous Material" means any substance which is (i) designated, defined, classified or regulated as a hazardous substance, hazardous material, hazardous waste, pollutant or contaminant under any Environmental Law, as currently in effect or as hereafter amended or enacted, (ii) a petroleum hydrocarbon, including crude oil or any fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v) asbestos, (vi) flammable explosives, (vii) infectious materials or (viii) radioactive materials. (c) "Release" means any spilling, leaking, pumping, pouring, emitting, discharging, injecting, escaping, leaching, dumping or disposing into the environment of any Hazardous Material (including the abandonment or discarding of barrels, containers, and other receptacles containing any Hazardous Material).
5.10.2 Representations.
(a) The Property and all existing uses and conditions of the Property are in compliance with all Environmental Laws, and Seller has not received any written notice of violation issued pursuant to any Environmental Law with respect to the Property or any use or condition thereof.
(b) Neither Seller nor any other present or former owner of the Property has used, handled, stored, transported, released or disposed of any Hazardous Material on, under or from the Property in violation of any Environmental Law. ( c) There is no Release of any Hazardous Material existing on, beneath or from or in the surface or ground water associated with the Property. 10 55852.0 I 006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D (d) All required permits, licenses and other authorizations required by or issued pursuant to any Environmental Law for the ownership or operation of the Property by Seller have been obtained and are presently maintained in full force and effect. (e) There exists no writ, injunction, decree, order or judgment outstanding, nor any lawsuit, claim, proceeding, citation, directive, summons or investigation pending or, to Seller's knowledge, threatened pursuant to any Environmental Law relating to (i) the ownership, occupancy or use of any portion of the Property by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property, (ii) any alleged violation of any Environmental Law by Seller or occupant or user of any portion of the Property or any former owner of any portion of the Property or (iii) the suspected presence, Release or threatened Release of any Hazardous Material on, under, in or from any portion of the Property. (f) There are no above-ground or underground tanks located on the Property used or formerly used for the purpose of storing any Hazardous Material. (g) No asbestos abatement or remediation work has been performed on the Property.
(h) There is no PCB-containing equipment or PCB-containing material located on or in the Property.
5 .11 Title to the Property. Seller has good and marketable title to the Property, subject to the Conditions of Title. There are no outstanding rights of first refusal or first look, options to purchase, rights of reverter, or claim of right relating to the transfer or sale of the Property or any interest therein. To Seller's knowledge, there are no unrecorded or undisclosed documents or other matters which affect title to the Property. No person holding a security interest in the Property or any part thereof has the right to consent or deny consent to the sale of the Property as contemplated herein, and Seller has the right to pay off such person and to remove all such liens as of the Closing Date. Seller has enjoyed the continuous and uninterrupted quiet possession, use and operation of the Property.
5. 12 Seller's Authority. Seller has the requisite power and authority to own and operate the Property and conduct its business where the same is now owned or operated. The execution, delivery and performance of this Agreement by Seller have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Seller ( or its board of directors or shareholders) in order to consummate the transactions contemplated herein. This Agreement and the other documents executed by Seller in connection herewith are legal, valid and binding obligations of Seller, enforceable in accordance with their respective terms. Neither the execution and delivery of this Agreement by Seller, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Seller was organized, or any indenture, mortgage, deed of trust, agreement, undertaking, instrument or document to which Seller or any affiliate thereof is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Seller. 11 55852.0 I 006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 5 .13 Parking. Seller has received no written notice from any governmental agency that the parking spaces on the Property are in violation of law. 5 .14 Zoning. Seller has received no written notice from any governmental agency that the Property is not in compliance with zoning requirements and laws.
5.15 Foreign Person. Seller is not a "foreign person" within the meaning of Section 1445(f) of the Internal Revenue Code.
5.16 No Employees. There are no on-site employees of Seller at the Property. On or before Closing, Seller shall terminate any employees at the Property and any residence or occupancy thereof, if any, and Buyer shall have no obligation to employ or continue to employ any individual employed by Seller or its affiliates in connection with the Property, if any.
5.17 Inspections. The Preliminary Documents include a full description of (a) all inspections of the Property by any governmental agency or insurance company occurring within three (3) years prior to the Effective Date, (b) all matters which were noted by such governmental agency or insurance company as requiring correction, requesting or recommending modifications or termination of uses of the Property and ( c) the present status of each such noted matter.
5.18 Misstatements and Omissions. Neither the representations and warranties made by Seller in this Article 5 nor elsewhere in this Agreement contain any untrue statement or any omission of a material fact. Seller has no documents in its possession, nor has any knowledge, that omits material facts related to the property or which would contradict or negate any of its representations contained in this Agreement.
ARTICLE 6. BUYER'S REPRESENTATIONS AND WARRANTIES.
Buyer makes the following representation and warranties to Seller with the understanding that each such representation and warranty is material and is being relied upon by Seller:
6.1 Buyer's Authority. The execution, delivery and performance of this Agreement by Buyer have been duly and validly authorized by all necessary action and proceedings, and no further action or authorization is necessary on the part of Buyer in order to consummate the transactions contemplated herein.
6.2 No Conflict. Neither the execution nor delivery of this Agreement by Buyer, nor performance of any of its obligations hereunder, nor consummation of the transactions contemplated hereby, shall conflict with, result in a breach of, or constitute a default under, the terms and conditions of the organizational documents pursuant to which Buyer was organized, or any agreement to which Buyer is a party or is bound, or any order or regulation of any court, regulatory body, administrative agency or governmental body having jurisdiction over Buyer.
ARTICLE 7. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
7 .1 Survival of Warranties. Buyer and Seller agree that each representation and warranty, covenant by the respective parties contained herein or made in writing pursuant to this 12 55852. 01006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D Agreement are intended to and shall be deemed made as of the date of this Agreement or such writing and again at the Closing, shall be deemed to be material, and unless expressly provided to the contrary shall survive the execution and delivery of this Agreement, the Deed and the Closing.
7.2 Notice of Changed Circumstances. If either party becomes aware of any fact or circumstances which would render false or misleading a representation or warranty made by such party, then it shall immediately give notice of such fact or circumstance to the other party, but such notice shall not relieve any party of any liabilities or obligations with respect to any representation or warranty.
ARTICLE 8. SELLER'S PRECLOSING COVENANTS.
Seller shall comply with the covenants contained in this Article 8 from the Effective Date through the Closing Date unless Buyer consents otherwise in writing. Buyer may grant or withhold any such consent requested by Seller in Buyer's sole discretion.
8.1 Contracts and Documents. Seller shall not, without Buyer's approval, not to be unreasonably withheld or delayed, (a) amend or waive any right under any Service Contract, Lease, Preliminary Document or Additional Document, or (b) enter into any material agreement of any type affecting the Property that would survive the Closing Date.
8.2 Insurance. Seller shall maintain or cause to be maintained in full force and effect its present insurance policies for the Property.
8.3 Compliance with Obligations. Seller shall fully and timely comply with all obligations to be performed by it under the Service Contracts, the other Preliminary Documents, the Conditions of Title and all permits, licenses, approvals and laws, regulations and orders applicable to the Property.
8.4 No Transfers. Seller shall not sell, encumber or otherwise transfer any interest in all or any portion of the Property, or agree to do so.
8.5 Termination of Contracts. Seller at its sole cost and expense shall terminate all of the Service Contracts described in Section 5.7 at or before the Closing Date, except for those contracts which Buyer expressly agrees to assume and which are actually assumed by Buyer pursuant to Section 9.3.3.
8.6 Maintenance. At its sole cost and expense, Seller shall operate and maintain the Property such that on the Closing Date the Property shall be in at least as good a condition and repair as on the Effective Date, reasonable wear and tear excepted. Without limiting the generality of the foregoing, Seller shall, at a minimum, spend such amounts for repair and maintenance as are consistent with its prior practice. Seller shall promptly advise Buyer of any significant repair or improvement required to keep the Property in such condition. Seller shall not make any material alterations to the Property, or remove any of the Personal Property therefrom, without Buyer's prior consent, unless such Personal Property so removed is simultaneously replaced with new Personal Property of similar quality and utility.
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8.7 Best Efforts. Seller shall use its best efforts to cause the conditions set forth in Section 4.1 to be satisfied by the Closing Date, and Seller shall not take or permit any action that would result in any of the representations and warranties set forth in Article 5 becoming false or incorrect.
ARTICLE 9. CLOSING.
9 .1 Time. Provided all conditions set forth in Article 4 have been either satisfied or waived, and to the extent such date has not been extended pursuant to Section 3 .1.1, above, the parties shall close this transaction (the "Closing"), on February 28, 2025 (the "Closing Date"), as such date may be extended by the provisions of Article 10. Notwithstanding the foregoing, Buyer shall have the right to extend the Closing Date to March 28, 2025 by providing written notice on or before the original Closing Date ("Closing Extension Notice") and depositing into Escrow the Extension Deposit in accordance with Section 2.2.4, above.
9.2 Escrow. This Article 9, together with such additional instructions as Fidelity Title Company, Attention Brenna Ryan, 4400 MacArthur Blvd., Suite 200, Newport Beach, CA 92660, California (telephone: 949-623-3038; e-mail: [email protected], [email protected] ("Escrow Holder"), shall reasonably request and the parties shall agree to, shall constitute the escrow instructions to Escrow Holder. If there is any inconsistency between this Agreement and the Escrow Holder's additional escrow instructions, this Agreement shall control unless the intent to amend this Agreement is clearly stated in said additional instructions. Buyer and Seller shall cause Escrow Holder to execute and deliver a counterpart of this Agreement to each of them. If the Title Company does not serve as the Escrow Holder, the Title Company shall provide a letter to Buyer, in form and content acceptable to Buyer, pursuant to which the Title Company accepts responsibility and liability for the acts and omissions of Escrow Holder in discharging Escrow Holder's obligations hereunder, including, without limitation, any acts or omissions of Escrow Holder relating to the Title Company's commitment to issue the Title Policy, the receipt, recordation or delivery of any documents placed into escrow, and the receipt and disbursement of any funds placed into escrow.
9.3 Seller's Deposit of Documents and Funds Into Escrow. Seller shall deposit into escrow on or before Closing (unless otherwise set forth herein) the following documents:
9.3.1 A duly executed and acknowledged grant deed, in the form acceptable to Buyer, conveying the Property to Buyer ("Grant Deed") in the form attached as Exhibit F;
9.3.2 A duly executed bill of sale, in the form of Exhibit D, conveying the Personal Property to Buyer free and clear of liens, encumbrances and restrictions ("Bill of Sale");
9.3.3 A duly executed assignment, in the form of Exhibit E, assigning to Buyer all of Seller's interest (a) in the Plans, (b) in all warranties of which Seller is the beneficiary with respect to the Property, (c) in all intangible assets of the Property, and (d) in the Service Contracts which Buyer has elected to assume (the "General Assignment");
9.3.4 A duly executed assignment, in the form of Exhibit H, assigning to Buyer all of Seller's interest in and to the Leases (the "Assignment of Leases"); 14 55852.0 I 006\43065208.4
'!..--i<fl'"ll-.---.,.,,-----,~, , ......... ,.,,.,,,,MIIIIIM+l•• .. •·•·~ ll'fTfWllllq\"TC-,JTTf '''''"'" .,,,,, Hllf"+ ......... ,, ... Wflfiii,i rnn~T•:n,,.,--=,,-:--,-- '''"""""'Iii 182
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
9.3.5 No later than three (3) business days prior to the Closing Seller shall have delivered to Buyer estoppel certificates ("Closing Estoppel Certificates") in a form acceptable to Buyer, dated no earlier than fifteen (15) days prior to the Closing and disclosing no defaults or alleged defaults by either Seller or the Tenant under such Lease or any Tenant bankruptcy, or any dispute between Seller and a Tenant, or any modification in rent, expiration date or other material Lease term reflected in the Lease Documentation;
9 .3 .6 No more than 10 days but no less than 5 days before the expiration of the Due Diligence Period, the originals ( or copies if originals are unavailable) of the Service Contracts Buyer has elected to assume, if any, and estoppel certificates from the other parties to such Service Contracts in form and substance satisfactory to Buyer;
9.3.7 All costs of Closing, including, but not limited to, the CLTA increment of the premium for the Title Policy, recording fees (if any), transfer taxes (if any) and fees, one-half of the escrow fees, sales tax and any other costs of Closing customarily paid by sellers of real property, plus or minus prorations as provided in Section 9.8; provided that, subject to Section 9.6, Buyer and Seller shall bear their own attorneys' fees and costs in connection with the negotiation and preparation of this Agreement and the transactions completed by this Agreement;
9.3.8 Seller's Non-foreign Certification;
9.3.9 All records and files relating to the management or operation of the Property, including, without limitation, property tax bills, insurance, and property taxes; and
9.3.10 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.3.11 Form 593;
9.3.12 Notice letter to tenants regarding new owner and addresses for payment of rent payment ("Tenant Notice Letter").
9.4 Deliveries Outside of Escrow. Notwithstanding Section 9.3, Seller and Buyer may elect to deliver the documents described in Section 9 .3 outside of escrow ( other than documents which are to be recorded) by giving Escrow Holder a joint written notice of such election, specifying the documents which will be so delivered outside of escrow. Upon receipt of such notice, Escrow Holder shall have no further obligation concerning such specified documents.
9.5 Buyer's Deposit of Documents and Funds. Buyer shall deposit into escrow:
9.5.1 The Purchase Price in accordance with the provisions of Article 2, plus or minus prorations as provided in Section 9.8, by electronic transfer of federal funds to Escrow Holder, on or before the Closing Date;
9.5.2 A duly executed counterpart of the Assignment of Leases; and 15 55852.01006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600O
9.5.3 Such additional documents, including written escrow instructions consistent with this Agreement, as may be necessary or desirable for conveyance of the Property in accordance with this Agreement.
9.6 Default, Termination and Remedies.
9.6.1 Buyer's Termination. This Agreement shall automatically terminate without further notice or action by Buyer upon the occurrence of any of the following events, provided that Buyer is not then in material breach of this Agreement: (a) any condition to Closing contained in Section 4.1 has not been satisfied or waived by Buyer by the Closing Date; or (b) Buyer having exercised its right to terminate this Agreement pursuant to Section 3.4 (disapproval of Due Diligence Investigation), Section 3.5 (disapproval of title) or Article 10 (damage or condemnation). In such event, the parties shall have no further obligation to each other except for those obligations that specifically survive the termination of this Agreement. If this Agreement terminates as a result of Seller's material breach of this Agreement, Buyer shall have all remedies it may have hereunder or at law as a result of such occurrence, including the remedy of specific performance.
9.6.2 Seller's Termination. Provided that Seller is not then in material breach of this Agreement, this Agreement shall automatically terminate without further notice or action by Seller if any condition to Closing contained in Section 4.2 has not been satisfied or waived by Seller by the Closing Date.
9.6.3 Release from Escrow. Upon termination of this Agreement pursuant to Section 9.6.1 or 9.6.2, Escrow Holder shall promptly return to Buyer and Seller, respectively, all documents and monies deposited by them into escrow without prejudice to their rights and remedies hereunder.
9.6.4 Remedies.
(a) Buyer's Remedies. If Seller breaches this Agreement, Buyer shall be entitled to pursue all remedies permitted herein and by law, including the remedy of specific performance. No termination of the escrow by Buyer following a breach by Seller shall be deemed to waive such breach or any remedy otherwise available to Buyer. (b) Seller's Remedies/Liquidated Damages. IF BEFORE THE CLOSE
OF ESCROW BUYER FAILS TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT AND (EXCEPT AS OTHERWISE PROVIDED IN SECTION 9.6)
DOES NOT CURE SUCH FAILURE WITHIN TEN BUSINESS DAYS AFTER SELLER'S WRITTEN NOTICE OF SUCH FAILURE, THEN SELLER MAY THEREAFTER: (I) TERMINATE THIS AGREEMENT; (II) RECEIVE AND RETAIN THE DEPOSIT AS
LIQUIDATED DAMAGES IF SUCH DEFAULT OCCURS AFTER BUYER'S APPROVAL PERIOD; AND (III) EXERCISE THE OTHER RIGHTS AND REMEDIES RESERVED BY SELLER AS PROVIDED IN THIS SECTION. IN THE EVENT SELLER TERMINATES THIS
AGREEMENT BY REASON OF BUYER'S DEFAULT, BUYER AND SELLER SHALL BE
RELIEVED OF ANY FURTHER OBLIGATION TO EACH OTHER WITH RESPECT TO THIS
AGREEMENT AND THE PROPERTY EXCEPT FOR ANY OBLIGATIONS WHICH 16 55852.0 I 006\43065208.4
184
Docusign Envelope ID: 0BE25851-B03A-4810-8488-09EBCC6C600D EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND THAT THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUW~GES AS A RESULT OF SUCH DEFAULT BY BUYER.
SELLER'S INITIALS BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMP EN SA TED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION ARE A MATERIAL PART
OF THE CONSIDERATION BEING GIVEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AG~cb THE ABSENCE OF THE PROVISIONS OF THIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9.7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and ( c) the Seller's Certificate, the Service Contracts referred to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Sel !er and, if applicable, shall file with the Internal 17 55852. 0 I 006\43065208.4
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185
EXPRESSLY SURVIVE. IT IS EXPRESSLY UNDERSTOOD AND AGREED BY BUYER AND SELLER: THAT SELLER WILL INCUR SUBSTANTIAL DAMAGES AS A RESULT
OF ANY FAILURE BY BUYER TO COMPLY WITH OR PERFORM BUYER'S OBLIGATIONS UNDER THIS AGREEMENT; THAT IT IS EXTREMELY DIFFICULT AND
IMPRACTICAL TO CALCULATE AND ASCERTAIN AS OF THE EFFECTIVE DATE OF
THIS AGREEMENT THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED IN SUCH EVENT BY SELLER; AND TBA T THE DEPOSIT IS A REASONABLE ESTIMATE OF THE
EXTENT TO WHICH SELLER MAY BE DAMAGED BY BUYER'S DEFAULT IN LIGHT
OF THE DIFFICULTY THE PARTIES WOULD HAVE IN DETERMINING SELLER'S ACTUAL DAMAGES AS A RESULT OF SUCH DEFAULT BY BUYER.
SELLER'S INITIALS BUYER'S INITIALS
(c) Waiver of Specific Performance. SELLER HEREBY WAIVES
THE RIGHT TO MAINTAIN AN ACTION FOR SPECIFIC PERFORMANCE OF BUYER'S
OBLIGATION TO PURCHASE THE PROPERTY AND SELLER AGREES THAT SELLER
CAN BE ADEQUATELY COMPENSATED IN MONEY DAMAGES IF BUYER FAILS TO PURCHASE THE PROPERTY IN BREACH OF THIS AGREEMENT. SELLER
ACKNOWLEDGES THAT THE PROVISIONS OF THIS SECTION AREA MATERIAL PART
OF THE CONSIDERATION BEING GIVEN TO BUYER FOR ENTERING INTO THIS
AGREEMENT AND THAT BUYER WOULD BE UNWILLING TO ENTER INTO THIS AGREEMENT IN THE ABSENCE OF THE PROVISIONS OF TIIIS SECTION.
SELLER'S INITIALS BUYER'S INITIALS
9.7 Closing. When Escrow Holder has received all documents and funds identified in Sections 9.3 and 9.5, has received notification from Buyer and Seller that all conditions to Closing to be satisfied outside of escrow have been satisfied or waived and Title Company is irrevocably committed to issue the Title Policy, then, and only then, Escrow Holder shall:
9.7.1 Record the Grant Deed;
9.7.2 Cause the Title Company to issue the Title Policy to Buyer;
9. 7.3 To the extent not otherwise delivered to Buyer outside of escrow, deliver to Buyer: (a) a conformed copy (showing all recording information thereon) of the Grant Deed; (b) fully executed original counterparts of the Bill of Sale, the General Assignment; and (c) the Seller's Certificate, the Service Contracts refen-ed to in Section 9.3.6, the Non-foreign Certification;
9.7.4 Deliver the Purchase Price (as adjusted pursuant to Section 9.8) to Seller;
9.7.5 Deliver or mail Tenant Notice Letter to tenants for each Lease.
Escrow Holder shall prepare and sign closing statements showing all receipts and disbursements and deliver copies to Buyer and Seller and, if applicable, shall file with the Internal 17 55852.01006\43065208.4
186
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D Revenue Service (with copies to Buyer and Seller) the reporting statement required under Section 6045(e) of the Internal Revenue Code.
9.8 Prorations. Subject to the other provisions of this Section 9.8, all receipts and disbursements of the Property will be prorated as of 11 :59 p.m. on the day immediately preceding the Closing Date. Not less than five business days prior to the Closing, Seller shall submit to Buyer for its approval a tentative prorations schedule showing the categories and amounts of all prorations proposed, including all rents and operating expenses. Security deposits shall be credited to Buyer from Seller proceeds. The parties shall agree on a final prorations schedule prior to the Closing and shall deliver the same to Escrow Holder. If following the Closing either party discovers an error in the prorations statement, it shall notify the other party and the parties shall promptly make any adjustment required. The parties agree that any trailing bills that pertain to the Property operations before the Closing Date, which are not available as of Closing, may be presented to Buyer for proration and reimbursement up to forty five ( 45) days after Closing. Failure to provide any bills by such date shall be a waiver by Seller of such reimbursement and Buyer shall have no further obligation for any such bills and Property expenses. This section 9.8 shall survive Closing.
WI~-
SELLER INITIALS
9.8.1 Capital Expenditures and Accounts Payable. All capital and other improvements (including labor and material) which have been performed or contracted for, by or on behalf of Seller prior to the Closing Date, and all sums due for accounts payable which have been incurred with respect to the Property prior to the Closing Date shall be paid by Seller and shall be subject to the indemnification provisions of Section 7 .3. Buyer shall furnish to Seller for payment any bills for such period received after the Closing Date, and Buyer shall have no further obligation with respect thereto.
9.8.2 Property Taxes. General real estate taxes, water or sewer rates and charges (if not metered), personal property taxes, or any other governmental tax or charge levied or assessed against the Property ( collectively, the "Taxes"), relating to the Property and payable during the year in which Closing occurs shall not be prorated between Seller and Buyer in Escrow.
Upon recordation of the Grant Deed, Buyer will request cancellation of the real property taxes for the Property pursuant to California Revenue and Taxation Code Section 4986. If current taxes have not yet been paid as of the Closing Date, then at Closing Seller shall pay through Escrow or out of Seller's proceeds, the full amount of the installment applicable for the period in which Closing occurs. Seller shall be entitled to a refund of any excess payment made to the taxing authority on account of the Property, including any taxes paid by Seller and applicable to any period from and after the Closing Date. The taxing authority will notify Seller of any refund due Seller resulting from the subject acquisition after a review and any subsequent proration of the property tax assessment by the county assessor. Seller retains the right, following close of escrow, to apply to the appropriate governmental authority lies for refund of real property taxes pursuant to Revenue and Taxation Code Section 5096.7 (or such other applicable law), and Buyer shall reasonably cooperate with Seller's efforts to obtain said refund. 18 55852.0 I 006\43065208.4
187
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
9.8.3 Utility Charges. All utility charges shall be prorated as of the Closing Date and Seller shall obtain a final billing therefor. All utility security deposits, if any, shall be retained by Seller.
9.9 Possession. Seller shall deliver exclusive right of possession of the Property to Buyer on the Closing Date, subject only to the Conditions of Title.
ARTICLE 10. DAMAGE, DESTRUCTION AND CONDEMNATION.
This Agreement shall be governed by the Uniform Vendor and Purchaser Risk Act as set forth in Section 1662 of the California Civil Code as supplemented and modified by this Article 10. Seller shall promptly notify Buyer in writing of any material damage to the Property and of any taking or threatened taking of all or any portion of the Property. Within a reasonable period of time after receipt of such notice, Buyer shall determine whether a material part of the Property has been damaged or whether such taking or threatened taking has affected or will affect a material part of the Property. As used herein, (a) the destruction of a "material part" of the Property shall be deemed to mean an insured or uninsured casualty to the Property having an estimated cost of repair which in the reasonable judgment of Buyer equals or exceeds $200,000 and (b) a taking by eminent domain of a portion of the Property shall be deemed to affect a "material part" of the Property if in the reasonable judgment of Buyer the estimated value of the portion of the Property taken exceeds $200,000. Upon making its determination, Buyer shall notify Seller in writing of the results of such determination. Buyer may elect, by written notice delivered to Seller within 30 days after giving Seller notice of such determination, to terminate this Agreement in accordance with Section 9 .6.1 if a material part of the Property has been damaged or if such taking has affected or will affect a material part of the Property. If Buyer does not so terminate, (i) in the case of damage to a material part of the Property, Seller shall assign to Buyer at the Closing its right to recover under any insurance policies covering such damage and shall pay Buyer at the Closing the amount of the deductible, if any, and (ii) in the case of a threatened or actual taking of a material part of the Property, Seller shall assign to Buyer at the Closing Seller's entire right, title and interest in the proceeds thereof. If between the Effective Date and the Closing Date the Property suffers damage which is not material, Seller shall repair such damage at its expense prior to the Closing, and the Closing Date shall be extended for a reasonable period of time not to exceed 30 days to allow for completion of such repairs. The Closing Date shall be extended as necessary to permit Buyer to exercise its rights under this Article
10. ARTICLE 11. GENERAL.
11.1 Notices. All notices, demands, approvals, and other communications provided for in this Agreement shall be in writing and shall be effective (a) when personally delivered to the recipient at the recipient's address set forth below; (b) five business days after deposit in a sealed envelope in the United States mail, postage prepaid, by registered or certified mail, return receipt requested, addressed to the recipient as set forth below; or (c) one business day after deposit with a recognized overnight courier or delivery service, addressed to the recipient as set forth below, whichever is earlier. If the date on which any notice to be given hereunder falls on a Saturday, Sunday or legal holiday, then such date shall automatically be extended to the next business day immediately following such Saturday, Sunday or legal holiday. Email notices may be used for 19 55852.0 I 006\43065208.4
188
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D convenience only, unless otherwise agreed by the parties in writing, and shall be deemed delivered one (1) business day after delivery if sent after 5 pm, or received the same day if sent on a business day between 8 am and 5 pm, and a duplicate shall be sent via USPS on the same day as the email.
The addresses for notice are:
SELLER:
With a copy to:
BUYER:
With a copy to:
PHILIP E. BURKHARDT, Trustee
7042 Palomino Drive
Sanger, CA, 92657
Phone: (704) 245-2690
Email: [email protected]
Casey Estate & Business Planning,
a Professional Law Corporation.
Attn Wayne J. Casey
610 Newport Center Drive, Suite 840
Newport Beach, CA 92660
Phone: (949) 640-5200
Email: [email protected]
CITY OF LAGUNA BEACH
Attn: Jeremy Frimond
505 Forest Ave.
Laguna Beach, CA 92561
Email: [email protected]
Best Best & Krieger
Attn: Megan Garibaldi
18101 Von Karman Ave., Suite 1000
Irvine, CA 92612
Phone: (949) 263-6592
Email: [email protected]
Either party may change its address by written notice to the other given in the manner set forth above.
11.2 California Environmental Quality Act. Buyer's future use and/or development of the Property is expressly conditioned upon compliance with the California Environmental Quality Act ("CEQA") as Buyer shall conduct environmental review pursuant to CEQA prior to taking any discretionary action with regard to any proposed development of the Property.
11.3 Joint and Several Liability of Seller. The obligations, representations, warranties, and covenants of Seller under this Agreement shall be the joint and several obligations of each individual or entity comprising Seller. Each such individual or entity shall be fully responsible for 20 55852.0 I 006\43065208.4
"i•rn•1•W1•R-II
189
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D the full performance of all obligations under this Agreement, regardless of the performance or default of any other individual or entity comprising Seller. Buyer may, at its sole discretion, seek recourse, enforcement, or remedy against any one or more of such individuals or entities without seeking recourse against the others, and no such action shall release any other individual or entity comprising Seller from their obligations under this Agreement.
11.4 Entire Agreement. This Agreement and the Schedules and Exhibits hereto contain the entire agreement and understanding between Buyer and Seller concerning the subject matter of this Agreement and supersede all prior agreements, including any previous letter of intent or terms, understandings, conditions, representations and warranties, whether written or oral, made by Buyer or Seller concerning the Property or the other matters which are the subject of this Agreement.
11.5 Amendments and Waivers. No addition to or modification of this Agreement shall be effective unless set forth in writing and signed by the party against whom the addition or modification is sought to be enforced. The party benefited by any condition or obligation may waive the same, but such waiver shall not be enforceable by another party unless made in writing and signed by the waiving party.
11.6 Invalidity of Provision. If any provision of this Agreement as applied to either party or to any circumstance shall be adjudged by a court of competent jurisdiction to be void or unenforceable for any reason, the same shall in no way affect (to the maximum extent permissible by law) any other provision of this Agreement, the application of any such provision under circumstances different from those adjudicated by the court, or the validity or enforceability of this Agreement as a whole.
11.7 References. Unless otherwise indicated, (a) all Article, Section, Schedule and Exhibit references are to the articles, sections, schedules and exhibits of this Agreement, and (b) all references to days are to calendar days. All the Schedules and Exhibits attached hereto are incorporated herein by this reference. Whenever under the terms of this Agreement the time for performance of a covenant or condition falls upon a Saturday, Sunday or California state holiday, such time for performance shall be extended to the next business day. The headings used in this Agreement are provided for convenience only and this Agreement shall be interpreted without reference to any headings. The masculine, feminine or neuter gender and the singular or plural number shall be deemed to include the others whenever the context so indicates or requires.
11.8 Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California applicable to contracts made and to be performed in California.
11.9 Confidentiality and Publicity. Buyer is a public entity and as such, this Agreement, upon its presentation for approval at Buyer's City council at a duly called and agendized public meeting, shall be subject to the Public Records Act and the Freedom of Information Act. No press release or other public disclosure may be made by Seller or any of its agents regarding Buyer's intent for this Property this transaction without the prior consent of Buyer. 21 55852. 01006\43065208.4
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190
Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600O I I. IO Time. Time is of the essence m the performance of the parties' respective obligations under this Agreement.
11.11 Attorneys' Fees. In the event of any legal or equitable proceeding to enforce any of the terms or conditions of this Agreement, or any alleged disputes, breaches, defaults or misrepresentations in connection with any provision of this Agreement, the prevailing party in such proceeding shall be entitled to recover its reasonable costs and expenses, including, without limitation, reasonable attorneys' fees and costs of defense paid or incurred in good faith.
11.12 Assignment. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. However, Seller shall not have the right to assign all or any portion of its interest in this Agreement without Buyer's prior written consent.
Buyer shall have the right to assign all or any portion of its interest in this Agreement, or substitute for itself a nominee, upon notice to Seller not later than three (3) days prior to the Closing Date.
Any permitted assignment shall not relieve Buyer of its obligations hereunder, and Buyer shall remain fully liable for the performance of all terms and conditions unless otherwise agreed to by Seller.
11.13 Further Assurances. Seller, at any time before or after Closing, shall, at its own expense, execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Buyer and shall take any other action consistent with the terms of this Agreement that may reasonably be requested by Buyer for the purpose of transferring and confirming to Buyer, or reducing to Buyer's possession, any or all of the Property or otherwise carrying out the terms of this Agreement.
11.14 Cooperation With Exchange. Buyer agrees to cooperate with the other if Seller intends to accomplish a tax-deferred exchange pursuant to Section 1031 of the Internal Revenue Code of 1986. Buyer and/or Seller may assign this Agreement to an exchange intermediary for the purpose of facilitating such an exchange by the assigning party. Buyer's duty to cooperate shall be limited to the transfer of money to Seller or Seller's designee in exchange for the Prope1iy, and in no event shall Buyer act as purchaser or acquirer of any exchange property. Seller shall indemnify and defend and hold Buyer harmless from any claims, loss, damages or liability arising out of participation in an exchange.
11.15 No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any person other than the parties to it and their respective permitted successors and assigns, nor is anything in this Agreement intended to relieve or discharge any obligation of any third person to any party hereto or give any third person any right of subrogation or action over against any party to this Agreement.
11.16 Remedies Cumulative. The remedies set forth in this Agreement are cumulative and not exclusive to any other legal or equitable remedy available to a party.
11.17 Commissions, Indemnity, Disclosure. Each party represents to the other party that there is no broker representing such party in the current transaction, and that the representing party has incurred no liability for any brokerage commission or finder's fee arising from or relating to the transactions contemplated by this Agreement. Seller shall be responsible for any broker 22 55852.0 I 006\43065208.4
191
commission associated with this purchase. Each party hereby indemnifies and agrees to protect, defend and hold hannless the other party from and against all liability, cost, damage or expense (including without limitation attorneys' fees and costs incurred in connection therewith) on account of any brokerage commission or finder's fee which the indemnifying party has agreed to pay or which is claimed to be due as a result of the actions of the indemnifying party. This Section
11.17 is intended to be solely for the benefit of the parties hereto and is not intended to benefit, nor may it be relied upon by, any person or entity not a party to this Agreement.
I 1. 18 Counterparts/Facsimile/PDF Signatures. This Agreement may be executed in counterparts and when so executed by the parties, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument that shall be binding upon the parties, notwithstanding that the parties may not be signatories to the same counterpart or counterparts. The parties may integrate their respective counterpaits by attaching the signature pages of each separate counterpart to a single counterpart. In order to expedite the transaction contemplated herein, facsimile or .pdf signatures may be used in place of original signatures on this Agreement. Seller and Buyer intend to be bound by the signatures on the facsimile or .pdf document, are aware that the other party will rely on the facsimile or .pdf signatures, and hereby waive any defenses to the enforcement of the tenns of this Agreement based on the fonn of signature.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective Date.
BUYER:
City of Laguna Beach,
a California municipal corporation
By ~ Q,.,\U¾
Name: ho--; J. ~. ~\lf
Title: (..~1'1yw,.~
ATTEST:
By,CJJ.Lt l. l
City Clerk 1)
APPROVED AS TO FORM:
BEST BEST & KRIEGER LLP
Met.al'! K. Ganbatd{ By; Me;.;;~ Garibaldi (Jan 11, 202511:53 PST) City Attorney
23 55852,01006\43065208.4
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192
Docusign Envelope ID: 0BE25B51-B03A-4B10-848B-09EBCC6C600D SELLER SIONA TURE PAGE TO PURCHASE AND SALE AGREEMENT - 2535 LAGUNA
CANYON ROAD
55852.0 I 006\43065208.4
T 0 '1ITT
SELLER:
Trust C under the Burkhardt Family Trust
established December 6, 1988
(?Signed by:
By __ ___..,L-{J';;~~=s5=0=~=2~=oc=6M=o~a .. -.--'"'-------- Name: PHILIP E. BURKHARDT
Title: Trustee
24 193
Docusign Envelope ID: OBE25B51-B03A-4B1 D-848B-09EBCC6C600D Acceptance by Escrow Holder
Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the ns contained therein.
.
. ~ \
Brenna Ryan, Escrowf fficer
25 55852.01006\43065208.4
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Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT A
LAND DESCRIPTION
Real property in the City of Laguna Beach, County of Orange, State of California, described as follows:
Parcel 1:
That portion of Lot 2 in Section 13, Township 7 South, Range 9 West, of the San Bernardino Meridian, in the County of Orange, State of California, according to an Official Plat of said land filed in the District Land Office, August 13, 1875, described as follows:
Beginning at statlon 453+00.85 on the center line of Laguna Canyon Road as shown on a map thereof approved by Nat Neff, Superintendent of Highways of Orange County on November 4, 1929, said point also being the Northwest corner of the land described in the Deed to Arch Craig; thence Westerly 461.00 feet along said center line; thence continuing along said center line South 76° 38' 15'' West 52.95 feet to the true Point of Beginning; then continuing along said center line South 76° 38' 15" West 35.31 feet; thence Southwesterly 81.99 feet along said center line; thence Southeasterly to a point on the Southeasterly line of the land conveyed to B.W. Morton, et. ux., by Deed recorded in Book 717, Page 407, Official Records, said point being North 76° 38' 15" East 97.68 feet from the Southwesterly corner of said Morton land; thence North 76° 38' 15" East 97.68 feet to the Southeasterly corner of said Morton land; thence North 13° 21' 25" West 207.56 feet to the true Point of Beginning.
Parcel 2:
That portion of Lot 2 in Section 13, Township 7 South, Range 9 West, of the San Bernardino Meridian, in the County of Orange, State of California, according to an Official Plat of said land filed in the District Land Office, August 13, 1875, described as follows:
Beginning at the Southwest corner of the land described in the Deed to Glenn R. Carlton, et. ux, recorded January 23, 1948, in Book 1612, Page 424, Official Records; thence Southeasterly 150.00 feet along the Southeasterly prolongation of the Westerly line of the land described in said deed; thence Easterly to the Southwesterly corner of the land conveyed to W. L. Craig, et. ux., by Deed recorded in Book 1532, Page 157, Official Records; thence North 13° 21' 45" West 150.00 feet to the Northwesterly corner of said land of Craig; Thence South 76° 38' 15" West to the Point of Beginning.
APN: 632-091-12
Exhibit "A"
55852.0 I 006\43065208.4
195
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT B
PERSONAL PROPERTY INVENTORY
Exhibit "B"
55852.0 I 006\43065208.4
196
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBITC
TRANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code"), provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. To inform the CITY OF LAGUNA BEACH, a California municipal corporation (the "Transferee"), that withholding of tax under Section 1445 of the Code will not be required upon the transfer of a U.S. real property interest to the Transferee by PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988, as to an undivided fifty percent (50%) interest (the "Transferor"), the undersigned hereby certifies the following on behalf of the Transferor:
1. The Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder);
2. The Transferor's U.S. employer identification number is 47-6852238; and
3. The Transferor's office address is 7042 Palomino Drive, Sanger, CA 92657.
The Transferor understands that this Certificate may be disclosed to the Internal Revenue Service by the Transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.
Under penalty of perjury I declare that I have examined this Certification and, to the best of my knowledge and belief, it is true, correct and complete, and I further declare that I have authority to sign this document on behalf of the Transferor.
DATED: ______ ,20_
55852.0 I 006\43065208.4
Trust C under the Burkhardt Family Trust
established December 6, 1988
By: -----------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Exhibit "C"
197
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBIT D
BILL OF SALE
This Bill of Sale (the "Bill of Sale") is made as of ______ , 20_, by PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 ("Transferor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Purchase and Sale Agreement dated _, 20_ (the "Agreement"), Transferor hereby sells, transfers, assigns and delivers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Transferee"), an undivided fifty percent (50%) interest in any and all personal property (the "Personal Property") located within or used in connection with that certain improved real property commonly known as 2535 Laguna Canyon Road, City of Laguna Beach, Orange, California (APN: 632-091-12) (the "Real Property"). The Personal Property shall include, without limitation, the items described in the Personal Property Inventory attached hereto as Schedule 1. •
1. Transferor hereby assigns all warranties, guarantees and indemnities, whether those warranties are express or implied, and all similar rights which Transferor may have against any other manufacturer or supplier of the Personal property or any portion thereof or against any seller, engineer, contractor or builder, in respect of the Personal Property.
2. Transferor warrants that each item of the Personal Property is in good condition, order and repair and suitable for its intended purpose on the date of this Bill of Sale.
3. Transferor at any time at or after the date of this Bill of Sale shall execute, acknowledge and deliver any further deeds, assignments, conveyances and other assurances, documents and instruments of transfer reasonably requested by Transferee, and shall take any other action consistent with the terms of this Bill of Sale that may reasonably be requested by Transferee for the purpose of granting and confirming to Transferee, or reducing to Transferee's possession, any or all of the Personal Property. If requested by Transferee, Transferor further agrees to prosecute or otherwise enforce in its own name for the benefit of Transferee any claims, rights or benefits included in the Personal Property that require prosecution or enforcement in Transferor's name. Transferor also hereby appoints Transferee as its agent to act in Transferor's name and on Transferor's behalf to take any action necessary to effect the transfer of any of the Personal Property to Transferee, or prosecute or otherwise enforce any claims, rights or benefits included in the Personal Property in Transferor's name, including bringing suit in Transferor's name.
4. This Bill of Sale shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.
DATED: ______ ,20_
TRANSFEROR:
Exhibit "D"
55852.01006\43065208.4
198
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852.0 I 006\43065208.4
Trust C under the Burkhardt Family Trust
established December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
2 199
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D SCHEDULE 1
PERSONAL PROPERTY INVENTORY
All Personal Property existing at the Real Property as of the Closing Date Exhibit "D"
55852.0 I 006\43065208.4
200
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
EXHIBITE
GENERAL ASSIGNMENT
This Assignment (the "Assignment") is dated for reference purposes only as of _______ , by PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988 ("Assignor").
FOR VALUABLE CONSIDERATION, as set forth in that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated ___ , 20_ (the "Agreement"), Assignor hereby assigns and transfers to the CITY OF LAGUNA BEACH, a California municipal corporation ("Assignee"), an undivided fifty percent (50%) interest in the following:
A. All equipment leases, service and/or maintenance agreements and contracts relating to the Real Property (collectively, the "Contracts"), as more particularly described in Schedule I attached hereto;
B. All permits, licenses, consents, registrations and other similar approvals applicable to the Real Property (collectively, the "Approvals"), which Approvals are more particularly described in Schedule 2 attached hereto;
C. All as-built plans and specifications for: (1) the Real Property; (2) any and all improvements used in connection with the operation or occupancy of the Real Property or located upon the Real Property (the "Improvements"); and (3) any and all personal property owned by Assignor located within or used in connection with the operation of the Real Property and Improvements (the "Personal Property") ( collectively, the "Plans"); and D. All warranties of which Assignor is the beneficiary (the "Warranties") with respect to the Improvements or Personal Property.
This Assignment shall not supersede the Agreement and, in the event of conflict between this Assignment and the Agreement, the Agreement shall control.
This Assignment shall be binding upon and inure to the benefit of Assignor and Assignee and their respective heirs, executors, administrators, successors and assigns.
This Assignment shall take effect the last to occur of the following: (i) full execution by all parties and Lessor's consent, as shown by the last date entered below the parties' signatures and (ii) upon the consummation of the transaction between Assignee and Assignor IN WITNESS WHEREOF, Assignor has executed this Assignment as of the date first above written.
ASSIGNOR:
Exhibit "E"
55852.0 I 006\43065208.4
201
Docusign Envelope ID: 0BE25851-B03A-481 D-848B-09EBCC6C600D 55852.0 I 006\43065208.4
Trust C under the Burkhardt Family Trust
established December 6, 1988
By:-----------------
Name: PHILIP E. BURKHARDT
Title: Trustee
Date: --------------
Exhibit "E"
202
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D 55852.0 I 006\43065208.4
SCHEDULE I
Note to Seller: List all equipment leases, service
and/or maintenance agreements and contracts
relating to the Real Property - if none known, delete
this schedule and bracketed phrase but leave
general assignment of unspecified contracts.
Leases should have a separate assignment, so do
not assign seller's interest in leases in this
document.
Exhibit "E"
203
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D 55852. 0 I 006\43065208.4
SCHEDULE2
Note to Seller: List all permits, licenses, consents,
registrations and other similar approvals
applicable to the Real Property- if none known,
delete this schedule and bracketed phrase but leave
general assignment of unspecified contracts
Exhibit "E'~
204
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
City of Laguna Beach
505 Forest Ave.
Laguna Beach, CA 92561
ATTN: City Clerk
EXEMPT FROM RECORDING FEES PURSUANT
TO GOVERNMENT CODE SECTION 27383
APNs: 632-091-12
EXHIBITF
GRANT DEED
SPACE ABOVE THIS LINE FOR RECORDER'S USE
Grant Deed
The undersigned Grantor(s) declare(s): City of Laguna Beach is exempt from property taxes Documentary transfer tax is $0.
D Computed on full value of property conveyed, or
D Computed on full value less value of liens and encumbrances remaining at time of sale.
D Unincorporated area 1ZJ City of Laguna Beach and
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988,
hereby GRANT(S) to
CITY OF LAGUNA BEACH, a California municipal corporation an undivided fifty percent (50%) interest in the following described real property in the City of Laguna Beach County of Orange
State of California:
SEE ATTACHED EXHIBIT A
Dated: ______ , 20_
By: [Do not execute, Exhibit only]
Exhibit "F"
55852.0 I 006\43065208.4
205
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
ACKNOWLEDGMENT
A notary public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document.
STA TE OF CALIFORNIA
COUNTY OF _________ _
)
)
On ___ _, 20 before me, ____________ _, Notary Public,
personally appeared-----------------~ who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENAL TY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature:. _________________ _ (seal)
Exhibit "F"
55852.01006\43065208.4
206
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
CERTIFICATE OF ACCEPTANCE
Pursuant to Section 27281 of the
California Government Code
This is to certify that the undivided fifty percent (50%) interest in real property conveyed by the Grant Deed dated ________ , 20_, from PHILIP E. BURKHARDT, Trustee of Trust C under the Burkhardt Family Trust established December 6, 1988, to the City of Laguna Beach, a municipal corporation, is hereby accepted by the undersigned officer on behalf of the City of Laguna Beach, pursuant to the authority conferred by Resolution No. ___ , adopted by the City Council of the City of Laguna Beach on _________ , and the Grantee consents to recordation thereof by its duly authorized officer.
Dated: _______ , 20_ CITY OF LAGUNA BEACH,
a California municipal corporation
By------------
Exhibit "F"
55852.0 I 006\43065208.4
I •! ---1 l ,-- -r,rrnT ,. ~!'"TTTTF~"'IJ'll" -~~ '4'Hljjiii ....... i•ipiOfflMilllliliWii.-,Af IHiiiNfillf"I'•'" ~--ti, II ,.,,0I~•0•111+1P '4W .... ,l~"lfijiiiji P[lf:ll7""T''""!~--,,_ '"lf,HMMI 207
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
EXHIBITG
LIST OF LEASES AND SUMMARY OF LEASE TERMS
. Current . Copy of Property Unit Use Tenant Listed SF
Rent (OM) Lease
2535 A Flex 1,855 Mark Garry N/A Unsigned
Stephanie Missing 2535 B Flex 1,855 Bachiero / Peter N/A Blak~ Gc1llery Pages 4-7
Martin Brooks Maybe
2535 C123 Flex 3,175 Cabinetry N/A missing
page4
C4 Flex 765 Katlin Evans N/A Yes
2535 cs Flex 630 Mark Garry N/A No
Flex 250 Brady Norton N/A No
1+1.5
(plus (prior
sublease 2,950 Jorg Dubin rent No
residenti increase
al studio) notice)
Robert Taylor Missing E1 Flex 925 Welder on N/A
Wheels page2
Gunther Gee Missing 885 Management Pro NIA
Tern page2
885 Van derVeen N/A Yes Family
850 Jennifer King NIA Yes Justin Bower
Clayton Dubin
2535 ES 1+1 2,150 (Amanda Hunter N/A Yes
also on estoppel)
2535 E6 1+1
2535 E7 1+1 1,775 Ron Tober NIA Unsigned
Exhibit "G"
55852.01006\43065208.4
-·"II ' ,'<JrT1
208
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D
EXHIBIT H
ASSIGNMENT OF LEASES
ASSIGNMENT AND ASSUMPTION OF LEASES
This ASSIGNMENT OF LEASES (the "Assignment"), dated _____ , (the "Assignment Date"), 1s by and between ("Assignor"),
_____________ ("Assignee").
RECITALS
A. Pursuant to those leases listed in Exhibit 1 hereto, as such may have been amended (the "Leases"), the improved real property located at _______________ _ (the "Property") is occupied by the tenants as more particularly described in the Leases.
B. • Concurrently herewith, Assignee has acquired the Property from Assignor.
C. In connection with the acquisition by Assignee of title in and to the Property, Assignor desires to assign its interest in the Leases to Assignee, and Assignee desires to accept assignment thereof on the terms and conditions set forth herein.
AGREEMENTS
NOW, THEREFORE, in consideration of the foregoing recitals which are specifically incorporated into the body of this Assignment, and the promises and covenants set forth herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
1. Assignment. Effective as of the Assignment Date, Assignor hereby assigns to Assignee all of its right, title and interest in and to the Leases and any guaranties and warranties related thereto. Assignor hereby agrees to indemnify Assignee against and hold Assignee harmless from any and all cost, liability, loss, damage or expense including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property prior to the Assignment Date and relating to claims of personal injury and/or property damage.
2. Assumption. Assignee hereby accepts the assignment set forth in Section 1 above, and hereby assumes all of Assignor's obligations under the Leases arising or accruing on and after the Assignment Date. Assignee hereby agrees to indemnify Assignor against and hold Assignor harmless from any and all cost, liability, loss, damage or expense, including without limitation reasonable attorneys' and experts' fees and costs, arising out of facts or circumstances occurring at the Property on and after the Assignment Date and relating to claims of personal injury and/or property damage occurring during Assignee's ownership of the Property.
3. Effective Date. This Assignment shall be conditioned and effective upon the conveyance to Assignee of record fee title to the Property (the "Effective Date").
Exhibit "G"
55852.01006\430652084
209
Docusign Envelope ID: 0BE25B51-B03A-4B1D-848B-09EBCC6C600D
4. Binding on Successors. This Assignment shall be binding on and shall inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns.
5. Counterparts. This Assignment may be executed in two (2) or more counterparts, each of which shall be deemed an original (including copies sent to a party by electronic transmission as against the party signing such counterpart), but which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have signed this Assignment as set forth below.
55852.0 I 006\43065208.4
r-rimr
ASSIGNOR
Trust C under the Burkhardt Family Trust established
December 6, 1988
By: ------------------
Name: PHILIP E. BURKHARDT
Title: Trustee
ASSIGNEE
By: ___ ~-----=
Name: --------- Its:
Exhibit "H"
210
Docusign Envelope ID: 0BE25B51-B03A-4B1 D-848B-09EBCC6C600D 55852.01006\43065208.4
EXHIBIT 1 TO ASSIGNMENT OF LEASES
LEASES TO BE ASSIGNED
Exhibit "H"
211
CONSENT OF ASSIGNMENT
Professional Services Agreement
Assignment by the City of Laguna Beach to the Laguna Beach Community Land Trust This Consent of Assignment is entered into by and between the City of Laguna Beach (“City”) and, Laguna Beach Community Land Trust (“Land Trust”) with the acknowledgment and consent of the Harris and Associates Inc (“Harris”), collectively the Parties.
Whereas the City of Laguna Beach City and Harris and Associates Inc Harris entered into that certain Professional Services Agreement dated ____________ for professional services related to the establishment of the Laguna Beach Community Land Trust and; Whereas the City intends to assign and transfer all of its rights duties responsibilities and obligations under the Agreement to the Land Trust including but not limited to oversight performance requirements deliverables reporting and all contractual responsibilities identified in the Agreement; and
Whereas the Land Trust is willing to accept such assignment and assume full responsibility for performance of all obligations under the Agreement as though it were the original contracting party; and
Whereas Harris agrees to such assignment and accepts the Land Trust as the substituted contracting party provided that all terms obligations and standards under the Agreement remain unchanged; and
Now therefore in consideration of the foregoing and the mutual promises contained herein the Parties agree as follows:
1. Assignment by the City
The City hereby assigns transfers and conveys to the Land Trust all of the City’s rights obligations interests and responsibilities under the Agreement. Upon execution of this Consent the Land Trust shall stand in the place of the City with respect to all contractual duties.
2. Assumption by the Land Trust
The Land Trust accepts the assignment and assumes all obligations duties responsibilities and liabilities of the City under the Agreement including but not limited to administration oversight performance compliance insurance obligations indemnity obligations and all other terms contained in the Agreement.
Attachment 3
212
3. Consent of Harris
Harris hereby consents to the assignment and agrees to recognize the Land Trust as the contracting entity in place of the City. Harris further agrees to perform all services under the Agreement for the benefit of the Land Trust consistent with all terms conditions and standards set forth therein.
4. No Modification of Agreement
Except for the substitution of the Land Trust for the City all terms of the Agreement remain in full force and effect. No amendment or modification is intended or created by this Consent.
5. Effective Date
This Consent shall be effective upon full execution by all Parties.
6. Counterparts
This Consent may be executed in multiple counterparts each of which shall be deemed an original and all of which together constitute one instrument.
CITY OF LAGUNA BEACH HARRIS AND ASSOCIATES
INC
LAGUNA BEACH
COMMUNITY LAND TRUST
By:
______________________
_________
Name:
Title:
Date:
By:
______________________
_________
Name:
Title:
Date:
By:
______________________
_________
Name:
Title:
Date:
213
22 Executive Park, Suite 200, Irvine, CA 92614 p: 949.655.3900 f: 949.655.3995 www.WeAreHarris.com
MEMORANDUM
To: City of Laguna Beach, Jeremy Frimond and Louie Lacasella From: Harris & Associates
RE: Amendment Memo– Laguna Beach Community Land Trust Project Date: Friday, November 7, 2025
CC: Mark Asturias Consulting and Redwood Public Law
Harris & Associates (Harris) was engaged by the City of Laguna Beach in March 2025 to support establishment of a Community Land Trust (CLT). The original contract amount was $94,681, and included tasks related to community engagement, feasibility analysis, organizational structuring, and regulatory compliance tasks.
On November 3, 2025, the City directed Harris to pause all other work and limit remaining efforts to the following:
1. Founding Board appointments
2. Founding Board orientation
3. IRS 1023 filing completion
Under this revised direction, remaining tasks/deliverables in the original scope that fall outside these three priorities will be paused and are not expected to be completed under the updated scope. A deliverable tracker/list is provided here to document which tasks have been completed to date under the original scope, and which tasks have been paused based on the revised direction. Any remaining balance after the three priorities are completed will be reserved for the Founding Board to determine how best to allocate at a later time.
Based on these revised priorities, and the increased need for subconsultant support, Harris proposes restructuring the remaining budget of $ 34,210.50 as follows:
• $4,500 (approximately 15 hours) added to Mark Asturias Consulting subconsultant agreement contract to assist with board appointments, orientation, and IRS application. • $3,000 (approximately 4.5 hours) added to Redwood Public Law subconsultant agreement for legal counsel during onboarding and as needed.
• $5,000 allocated to a new Task 7: Project Management for coordination, contract administration, invoicing, documentation, amendments/reallocations, etc. • $21,710.50 remaining to be held for future project needs / Founding Board direction/ additional project management (if needed).
The budget amounts above are proposed on a Time & Materials (T&M) not-to-exceed basis. The figures reflect current assumptions only and they are not a guarantee that the work associated with these three 214
2 priorities can be fully completed within these amounts, as actual support needs may vary depending on final direction and level of effort required.
The contract term remains unchanged, through March 31, 2026.
Once the City confirms agreement with the revised scope, budget allocations, and assumptions outlined above, Harris will proceed under this revised direction. 215
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1 McKay, Ann Marie CC
Subject: December 9th Council Meeting
From: Linh Ronson
Sent: Monday, December 8, 2025 3:42 PM
To: City Council <[email protected]>
Subject: December 9th Council Meeting
Dear City Councilmen,
I highly support the arts and the proposal would prove that Laguna does too. Working artists do not make much money and this proposal, when passed, would help them greatly.
Thank you for your consideration.
Linh
1 McKay, Ann Marie CC
Subject: City Council Agenda 12-9-25, Consent Calendar Item 24 From: David Browning
Sent: Monday, December 8, 2025 1:49 PM
To: McKay, Ann Marie CC <[email protected]>
Subject: City Council Agenda 12-9-25, Consent Calendar Item 24 Please accept the following as my public comment in lieu of a presentation at Tuesday's meeting. "I am a resident of, a realtor in, and operate a non-profit based out of Laguna Beach. From all of these perspectives I support the recommendations for this item.
Our non-profit is the mountain bike advocacy organization for Orange County (www.ocmtba.com), we fully respect the efforts by the city to honor the core threads of our legacy as we also have a four decade history in our coastal village. Making sure art stays at our heart is of paramount importance to keep Laguna what makes it special.
Moreover, from a realty perspective, I applaud the efforts to negotiate not only a reasonable purchase price, but also favorable loan terms while maintaining a focus on the ongoing operation financials. This is truly a work item where the city, the present owners, lending institutions and the artist community are working together for a positive solution.
Finally, as a resident, I appreciate the diligence represented in the design of the Laguna Beach Community Land Trust and the approach with which this transaction will be managed. Pursuing this unique set of properties, along with the process to fully empower the LBCLT, not only provides the fiduciary oversight but also visibility to other potential contributors. The model has been well thought out to protect the investment of our citizenry.
The recommendations in this Consent Calendar item support and progress the correct answer to preserve our culture, optimize our investment and protect our capitol. Therefore I would respectfully request that the council vote in favor of these actions.
Thank you."
David Browning
President
Orange County Mountain Bike Association
STAFF REPORT
Meeting Date:
December 9, 2025
BUSINESS
25 SUBJECT: RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) RECOMMENDATION: It is recommended that the City Council:
1. Adopt the attached Resolution titled, “A RESOLUTION OF THE CITY OF LAGUNA BEACH,
CALIFORNIA, DETERMINING UNPAID ASSESSMENTS IN UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1 (WEST STREET) AND THE MANNER OF PAYMENT THEREOF AND LISTING BONDS ISSUED ON THE SECURITY THEREOF”;
2. Adopt the attached Resolution titled, “A RESOLUTION OF THE CITY OF LAGUNA BEACH,
CALIFORNIA, AUTHORIZING THE ISSUANCE OF CITY OF LAGUNA BEACH UNDERGROUND UTILITY ASSESSMENT DISTRICT NO. 2021-1 (WEST STREET)
LIMITED OBLIGATION IMPROVEMENT BONDS, AWARDING THE SALE OF SUCH
BONDS, APPROVING FISCAL AGENT AGREEMENT, OFFICIAL STATEMENT, BOND
PURCHASE AGREEMENT, AND CONTINUING DISCLOSURE CERTIFICATE AND
AUTHORIZING THE CITY MANAGER, OR ASSISTANT CITY MANAGER TO NEGOTIATE THE TERMS OF THE PURCHASE OF THE BONDS”;
3. Approve the purchase of Underground Utility Assessment District 2021-1 (West Street) public offering municipal serial bonds at a 25-year term with an estimated true interest cost of 4.71%;
4. Authorize the City Manager to award a task order to Accenture in the amount of $143,700 for construction management and inspection services, and approve project-related expenses and change orders for additional construction inspection services that may be required in an amount not-toexceed $15,000;
5. Appropriate $6,580,699 for construction and other related expenses within Underground Utility Assessment District 2021-1 (West Street), increase revenues by the same amount, and authorize the City Manager to expend all appropriated funds; and
6. Authorize the City Manager to enter into necessary utility company agreements and make advance payments to the utility companies for their construction services for a total amount of $2,075,840.
SUMMARY OF THE MATTER
On September 23, 2025, the City Council approved the formation of Underground Utility Assessment District 2021-1 (West Street). To move forward with constructing the improvements, staff recommends the sale of bonds under the provisions of the Improvement Bond Act of 1915 and other applicable laws and regulations. To issue bonds, the City Council must adopt the attached two resolutions, included as Attachment 1, and appropriate funding for construction and related expenses. The resolutions have been prepared and approved by the City’s Bond Counsel, Best Best & Krieger, LLP, in coordination with the City’s municipal advisor, Fieldman Rolapp & Associates, Inc., and the bond underwriter, Oppenheimer & Co. Inc. Construction improvements are scheduled to begin in February 2026, and it is recommended that a task order be issued to Accenture for construction management and inspection services to manage the
RESOLUTIONS AND APPROPRIATIONS RELATED TO SALE OF BONDS FOR UNDERGROUND UTILITY ASSESSMENT DISTRICT 2021-1 (WEST STREET) December 9, 2025