PUT OPTION AGREEMENT
This Put Option Agreement (this "Agreement") is entered into as of January , 2024, by and between the City of Placentia, a municipal corporation ("City"), and California Land Acquisition Fund Holding IV LLC, a California limited liability company ("Owner").
WHEREAS, concurrently with the execution of this Agreement, Owner is acquiring fee title to that certain real property commonly known as and located at 325 Baker Street, Placentia, California (the "Property");
WHEREAS, Owner has financed its acquisition of the Property with a loan from California Land Acquisition Fund LLC, a Delaware limited liability company, in the amount of $673,000 (the "Owner Loan");
WHEREAS, Owner is acquiring the Property for the purpose of developing an affordable multifamily housing project at the Property (the "Development"); and WHEREAS, Owner and the City have agreed that in the event Owner determines it is not feasible to construct the Development, Owner shall have the option to require the City to purchase the Property from Owner on and subject to the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained in this Agreement, the parties agree as follows:
1. Grant of Option. The City hereby grants to Owner the right and option to require that the City purchase the Property from Owner for the purchase price and on the terms and conditions set forth in this Agreement (the "Option").
2. Term and Exercise of Option.
a. Option Term. The term of the Option ("Option Term") shall be for a period commencing on the date this Agreement and ending on the earlier of the following events: (i) the closing of the construction loans financing Owner's construction of the Development (the "Construction Loans"); and (ii) the date that is four (4) years following the date of this Agreement. Owner shall provide City with thirty (30) days' prior written notice of the closing of the Construction Loans.
b. Exercise of Option. Owner may only exercise the Option if, at any time during the Option Period, Owner reasonable determines that it is infeasible for Owner to construct the Development at the Property. In such event, Owner may exercise the Option by delivering written notice of its exercise of the Option ("Option Notice") to the City prior to the expiration of the Option Term.
3. Purchase of the Property. If Owner timely delivers the Option Notice, the parties shall promptly open an escrow for the purchase of the Property and the following terms and conditions shall apply to such purchase:
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a. Closing Date. The closing of the purchase of the Property (the "Closing") shall occur thirty (30) days after the date of the Option Notice or on such other date as Owner and the City may agree upon (the "Closing Date").
b. Purchase Price; Post -Closing Payment. The purchase price for the Property (the "Purchase Price") shall be equal to (i) $595,000.00 (the purchase price paid by Owner to acquire the Property), plus (ii) all reasonable out-of-pocket costs and expenses incurred by Owner in connection with its acquisition of the Property (the "Owner Acquisition Costs"), plus (iii) one- half (1/2) of all insurance costs, real property taxes, maintenance costs, interest payments under the Owner Loan and other reasonable out-of-pocket costs and expenses incurred by Owner in connection with its ownership of the Property prior to the Closing (the "Owner Carrying Costs").
The City shall deposit the Purchase Price into escrow prior to the Closing Date. c. Grant Deed. Prior to the Closing Date, the Owner shall execute and deposit into escrow a grant deed (the "Deed") conveying to the City the Property and all improvements located on the Property, which Deed shall be recorded in the Official Records of the County of Orange on the Closing Date.
d. Closing Expenses. All city and county documentary transfer tax and conveyance taxes to the extent they are not exempt pursuant to the Revenue and Taxation Code, and recording charges for the Deed (if any) shall be borne by Owner. The cost of the Title Policy (as defined below) all other expenses, fees or costs (except for attorneys' fees and costs) incurred by the parties in connection with the purchase and sale of the Property pursuant to this Agreement shall be borne by the City. Each party shall bear its own attorneys' fees and costs. e. Proration of Taxes. All real property taxes and assessments, if any, levied against the Property shall be prorated as of the Closing Date and Owner's share shall be fully paid by Owner at or prior to the Closing.
f. Title Insurance. At the Closing, the City shall cause a title company of the City's choice to issue a CLTA or ALTA policy of title insurance (the "Title Policy") insuring fee title to the Property to be vested in the City, subject only to those encumbrances, conditions, or exceptions acceptable to the City in its reasonable discretion ("Permitted Exceptions"). Owner shall be responsible for removing from the Property title any encumbrances, conditions, or exceptions other than Permitted Exceptions at or prior to the Closing. g. Other Closing Documents. Owner and the City shall each execute and, if applicable, deposit into escrow, all other escrow instructions and other documents reasonably necessary to consummate the Closing in accordance with this Section. h. Owner's Representations and Warranties. Owner represents and warrants to the City that (a) no leases, occupancies, tenancies, or licenses exist that affect the Property; (b) to the best of Owner's knowledge, there are not presently any actions, suits, or proceedings pending or, threatened against or affecting the Property or the interest of Owner in the Property or its use or that would affect Owner's ability to consummate the transaction contemplated in this 2 485.260/581187
Agreement; (c) there are not any outstanding and unpaid arbitration awards or judgments affecting title to any portion of the Property, and Owner shall promptly notify City of any of these matters arising during the term of this Agreement; and (d) to the best of Owner's knowledge, there are not presently any pending or threatened condemnation, eminent domain, or similar proceedings affecting the Property. The foregoing representations and warranties shall be true and correct as of the date of this Agreement and the Closing Date. i. Owner's Conduct During Term of Agreement. During the term of this Agreement, Owner shall comply with the following terms relating to the Property: (a) Owner shall pay for all labor and work performed and all material furnished at Owner's request or on Owner's behalf, and there shall be no claim for which a mechanic's, materialman's, or similar lien can be claimed by any person or firm against the Property as a result of any act of Owner; (b) Owner shall not affirmatively take any actions constituting waste of the Property, and shall not excavate, mine, or otherwise materially alter the Property; (c) Owner shall not enter into any lease, occupancy, tenancy, or license agreement affecting the Property, without City's prior written consent; (d) Owner shall not incur any obligations or liabilities or enter into any transactions that will affect the Property without the prior written consent of City which consent shall not be unreasonably withheld; (e) at least quarterly, or more frequently as reasonably requested by City, Owner shall provide City with updates on the status of Developer's efforts to acquire property for the construction of a second phase of the Development; and (f) Owner will explore alternative uses for the Property including additional parking for nearby housing developments.
4. Assignment of Option. Neither the Owner nor City may assign its rights or obligations under this Agreement without the prior written consent of the other party. Any assignment of this Agreement not authorized under this section shall be null and void.
5. Further Documents. Upon the reasonable request of the other party, each party will execute, acknowledge and deliver or cause to be executed, acknowledged and delivered, such further instruments and documents as may be reasonably necessary in order to carry out the intent and purpose of this Agreement, including escrow instructions.
6. Notices. All notices or other communications made pursuant to this Agreement shall be in writing and shall be deemed properly delivered, given or served to the parties at the following addresses when (a) mailed by certified mail, postage prepaid, return receipt requested; (b) sent by express delivery service, charges prepaid with a delivery receipt; or (c) personally delivered when a delivery receipt is obtained:
City:
485.260/581187
City of Placentia
401 E. Chapman Avenue
Placentia, CA 92870
Attn: Damien R. Arrula, City Administrator
3 Owner:
California Land Acquisition Fund Holding IV LLC
c/o Mercy Housing California
1256 Market Street
San Francisco, CA 94102
Attention: Melissa Garcia
All notices so delivered, mailed or sent shall be deemed received as of the date shown on the delivery receipt as the date of delivery or the date delivery was refused. Either party may change its address for the purposes of this paragraph by giving prior written notice of the change to the other party in the manner provided in this paragraph.
7. Binding Effect. This Agreement and its terms and conditions shall be binding upon and inure to the benefit of the parties to this Agreement and their respective permitted successors and assigns.
8. Time. Time is of the essence of this Agreement.
9. Attorneys' Fees. In any action between the City and Owner to enforce or interpret any of the terms of this Agreement, the prevailing party shall be entitled to recover costs of suit and expenses, including, without limitation, reasonable attorneys' fees.
10. Eminent Domain. Notwithstanding any other provision of this Agreement, if at any time prior to execution and recordation of the Deed, any portion of the Property shall be taken by eminent domain or is the subject of eminent domain proceedings (either threatened in writing or commenced), and regardless of whether the City has exercised the Option, then the City shall have the right to terminate this Agreement upon written notice to Owner, whereupon the parties shall have no further obligations under this Agreement.
11. Exhibits. All exhibits attached to this Agreement and referred to in this Agreement are incorporated into this Agreement by this reference as though they were fully set forth in this Agreement.
12. Captions. The captions of the paragraphs of this Agreement are for convenience and reference only, and the words contained in the captions shall in no way be held to explain, modify, amplify or aid in the interpretations, constructions or meaning of the provisions of this Agreement.
13. Entire Agreement; Counterparts. This Agreement contains the entire agreement between the parties respecting the matters set forth, and supersedes all prior agreements between the parties respecting such matters. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, but all of which together shall constitute one and the same Agreement.
14. No Third Party Beneficiaries. Nothing in this Agreement, express or implied, is intended to confer to any person, other than the parties and their permitted successors and assigns, any rights or remedies under or by reason of this Agreement. 4 485.260/581187
15. Waiver. No provision of this Agreement shall be deemed waived by a party unless such waiver is in writing and signed by the party making the waiver. Failure of either party at any time to require performance of any provision of this Agreement shall not limit that party's right to enforce the provision unless the waiver is made in writing. Waiver of any breach of a provision shall not be a waiver of any succeeding breach of the provision or a waiver of the provisions itself or of any other provision.
16. Authority of Signatories. Each of the parties to this Agreement represents and warrants to the other party that the persons who have executed this Agreement have been authorized to do so by the party on whose behalf the party is signing. All documents to be delivered under this Agreement will be executed by an authorized person. Each party has a good an legal right to enter into this Agreement and to perform all covenants of that party contained in this Agreement.
17. Governing Law. This Agreement shall be governed and constructed in accordance with California law.
18. Amendments. This Agreement may only be amended in writing signed by all parties.
19. Brokers. Each party will defend, indemnify, and hold the other party harmless from any claim, loss, or liability made or imposed by any other party claiming a commission or fee in connection with this transaction and arising out of that party's own conduct.
20. Indemnification by Owner. Owner shall indemnify, defend and hold harmless the City, any City agencies, and their respective elected and appointed councils, boards, commissions, officers, agents, employees and representatives from any and all losses, liabilities, fines, penalties, forfeitures, costs and damages and from any and all claims, demands and actions in law or equity (including attorneys' fees and litigation expenses) by any person or entity, directly or indirectly arising or alleged to have arisen out of or in any way relating to the Property during the term of this Agreement. This indemnity provision shall survive termination of this Agreement.
21. Indemnification by City. In the event the City acquires the Property pursuant to this Agreement, the City shall indemnify, defend and hold harmless Owner and its officers, agents, employees and representatives from any and all losses, liabilities, fines, penalties, forfeitures, costs and damages and from any and all claims, demands and actions in law or equity (including attorneys' fees and litigation expenses) by any person or entity, directly or indirectly arising or alleged to have arisen out of or in any way relating to the Property following the Closing. This indemnity provision shall survive termination of this Agreement.
22. Remedies for Breach. Each party shall have the right to exercise all remedies available under law and equity for any breach of this Agreement by the other party. [remainder of page left intentionally blank; signature page follows] 5 485.260/581187
IN WITNESS WHEREOF, the City and Owner have executed this Agreement as of the date first written above.
OWNER:
CALIFORNIA LAND ACQUISITION FUND HOLDING
IV LLC, a California limited liability company
By: California Land Acquisition Fund LLC,
a Delaware limited liability company,
its sole member/manager
By: Mercy Housing California, a California
nonprofit public benefit corporation, its sole
member
By:
CITY:
Doug Shoemaker, President
CITY OF PLACENTIA, a municipal corporation
By:
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Damien R. Arrula, City Administrator
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