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PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS
This Purchase and Sale Agreement and Escrow Instructions (“Agreement”) is made and entered into as of _________, 2024 (the “Signing Date”), betwe en BOB MORELAND, a married man as his sole and separate property (“Seller”), and CITY OF SAN MARCOS (“Buyer”). The parties agree as follows:
1. Definitions. As used in this Agreement, the terms set forth below shall have the following meanings:
“Affiliate” means any Person (a) which directly or indirectly through one or more intermediaries controls, or is controlled by, or is under common control with, another Person or (b) five percent (5%) or more of the voting securities or equity interests of which is held beneficially or of record by another Person. For purposes of this definition, the term “control” means the possession, directly or indirectly, of the power to cause the direction of the management and policies of a Person, whether through t he ownership of voting securities or equity interests, by contract, by family relationship or otherwise. “Agreement” has the meaning set forth in the first paragraph of this Agreement. “Assigned Documents” has the meaning set forth in the definition of “Assignment”.
“Assignment” means a written assignment from Seller to Buyer in the form attached hereto as Exhibit B of all of Seller’s right, title and interest in and to any and all Materials, including, without limitation, any and all contracts, agreements, entitlements, plans, permits, licenses, surveys, specifications, governmental approvals, authorizations and oth er intangible personal property owned by Seller and used in connection with the Property as Buyer may desire , excluding any goodwill of the business locate d on the property and other intellectual property related to such business (the “Assigned Documents”). “Authorities” means the various governmental and quasi -governmental bodies and agencies having jurisdiction over the Property, including, without limitation, the County, courts, special taxing districts, administrative tribunals, and public and private utilities. “Buyer” has the meaning set forth in the first paragraph of this Agreement. “Buyer’s Title Policy” means the policy of title insurance described in Section 7. “City” means the City of San Marcos, California.
“Closing” or “Close of Escrow” has the meaning set forth in subsection 9.2. “County” means the County of San Diego, California.
“Default” means each of the events so designated in subsection 18.1. “Deposit” has the meaning set forth in Section 4.
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“Developer” means Urban Villa ges San Marcos , LLC, a California limited liability company.
“Due Diligence” has the meaning set forth in subsection 8.1. “Entitlements” has the meaning set forth in subsection 17.4. “Escrow” means the Escrow to be opened with the Escrow Holder or, in the event Escrow Holder ceases to exist or fails or refuses to act as Escrow Holder for the transactions contemplated by this Agreement, any other escrow with an Escrow Holder selected by Buyer which is not affiliated with either party.
“Escrow Date” means the Opening of Escrow.
“Escrow Holder” means Chicago Title Company, 2111 Palomar Airport Road, Suite 260, Telephone: (760) 581-7005 Facsimile (760) 683-6763, E-mail: [email protected], Attn: Ms. Meg Kilfoil-Dick or, in the event such corporation ceases to exist or fails or refuses to act as Escrow Holder for the transactions contemplated by this Agreement, or is deemed by Buyer not to have adequate financial capacity to do so, any other Escrow Holder selected by Buyer which is not affiliated with either party.
“Governmental Material” has the meaning set forth in subsection 17.4. “Grant Deeds” means the grant deeds described in Section 6, which shall be in a form customarily used by the Title Company for similar transactions. “Hazardous Material” means (a) any “hazardous substance” as defined in § 101(14) of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time [42 U.S.C. §§ 9601 et seq.]; (b) petroleum and petroleum products (including, without limitation, crude oil, natural gas, natural gas liquids, liquefied natural gas and synthetic gas); (c) polychlorinated bipheynls (PCBs); (d) asbestos; (e) urea formaldehyde; (f) radon gas; (g) methane; and (h) any additional substances, materials, or waste which are classified or considered to be hazardous or toxic under the Laws of California or any other applicable Laws.
“Hazardous Material Laws” means all Laws, orders, licenses and permits relating to Hazardous Material.
“Laws” means all federal, state and local laws, rules, regulations, ordinances and codes. The term “Laws” includes Hazardous Material Laws. “Materials” has the meaning set forth in subsection 9.3.4. “Opening of Escrow” has the meaning set forth in Section 3. “Person” means any entity, whether an individual, trustee, corporation, partnership, joint stock company, trust, unincorporated organization, governmental agencies and/or bodies, bank, business association or firm or otherwise. -3-
“Property” has the meaning set forth in subsection 2.1. “Purchase Price” means the purchase price for the Property as specified in Section 4.
“Seller” has the meaning set forth in the first paragraph of this Agreement. “Title Company” means Chicago Title Company, 2111 Palomar Airport Road, Suite 260, Telephone: (760) 581-7005 Facsimile (760) 683-6763, E-mail: [email protected], Attn: Ms. Meg Kilfoil-Dick or, in the event Title Company ceases to exist or fails or refuses to act as Title Company for the transactions contemplated by this Agreement, any other title company selected by Buyer which is not affiliated with either party.
2. Recitals.
2.1 Ownership of Property. Seller is the fee owner of the real property and all improvements contained thereon commonly known as 318 E. Barham Drive , San Marcos, CA, identified collectively as Assessor’s Parcel Number 220 -202-27 (“Property”). , more particularly described in Exhibit A attached hereto and incorporated by reference.
2.2 Facilitation of Development . Buyer desires to acquire the Property to facilitate installation of public infrastructure including, but not limited to, the widening of travel lanes on Barham Drive to accommodate vehicular circulation, to install sidewalks to facilitate pedestrian circulation, provide bike lanes, and to install parkway landscaping and associated facilities that will serve the University District Specific Plan area (“UDSPA”).
2.3 Developer. Pursuant to this Agreement, Buyer agrees to purchase and Seller agrees to sell the Property for the purchase price set forth herein. Seller has insisted that Buyer acquire the entire parcel comprising the Property even though only a portion of the same is required for the Barham Drive improvements , and Seller acknowledges that pursuant to a separate agreement with the Developer (“Developer Agreement”), after Buyer’s purchase of the Property, Buyer will sell the Property to Developer following confirmation issued by the California Department of Housing and Community Development that the proposed subsequent transfer is exempt from the Surplus Land Act to accommodate the installation of public improvements to be located within the University District Specific Plan area as the same may be subsequently revised, amended or modified.
2.4 Desires of Parties. Buyer desires to purchase the Property from Seller, and Seller desires to sell the Property to Buyer.
3. Purchase and Sale of Property. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property upon the terms set forth in this Agreement. The parties shall cause escrow to be opened by delivery of a fully signed Agreement to Escrow Holder (“Opening of Escrow”).
4. Purchase Price . The Purchase Price for the Property is One Million Five Hundred Thousand Dollars ($ 1,500,000), which shall be paid by Buyer to Seller in the following manner: Buyer shall deliver a deposit o f One Hundred Fifty Thousand dollars -4-
($150,000.00) (“Deposit”) to Escrow Holder within three (3) business days of the execution of this Agreement. If Buyer approves of Due Diligence as set forth in Section 8, the Deposit shall be non-refundable, except as set forth in Section 18.3 . On or before the Closing, Buyer shall deposit the remaining One Million Three Hundred Fifty Thousand Dollars ($1,350,000.00), of the Purchase Price with Escrow Holder.
5. Transaction in Lieu of Initiation of Eminent Domain Action. The terms of this transaction were negotiated in good faith with Seller. In the event the transaction contemplated by this Agreement fails to close for any reason, Buyer will be in the position of having to consider initiation of an action in eminent domain to acquire the Property.
6. Condition of Title and Grant Deed . At the Closing , Seller shall convey fee simple title for the Property to Buyer by Grant Deeds, subject only to (a) real property taxes not then delinquent, (b) matters of title set forth on Exhibit C attached hereto and (c) matters affecting the condition of title to the Property created by or with the written consent of Buyer (including, without limitation, the lien of any trust deed securing a loan obtained by Buyer to purchase the Property). Neither title to nor possession of the Property shall pass to Buyer until the Close of Escrow. Notwithstanding the foregoing, Buyer disapproves of all liens evidencing monetary encumbrances (other than liens for nondelinquent real property taxes) and, Seller agrees to cause all such liens to be removed (as a disbursement by Escrow Holder) at its own cost and expense (including, without limitation, the cost of any prepayment penalties and charges) prior to the Close of Escrow.
7. Title Insurance. Seller shall cause the Title Company to issue to Buyer at the Close of Escrow for a standard form CLTA Standard Owner’s Policy of Title Insurance with liability equal to the Purchase Price and showing fee simple title to the Property vested in Buyer subject only to the matters specified in the above Section 6 (“Buyer’s Title Policy”). The policy shall contain a CLTA 101.4 endorsement and other such endorsements as Buyer may require.
8. Buyer’s Due Diligence.
8.1 Buyer’s Inspections and Due Diligence . Buyer and Developer shall conduct its examinations, inspections, testing, studies and investigations (collectively, the “Due Diligence”) of the Property, information regarding the Property, and such documents applicable to the Property as Seller delivers or makes available as set forth in Section 8.2 below. Except for any limitations imposed by Section 17.1, Buyer and Developer may conduct any and all due diligence activities, inspections, and studies of the Property as it deems necessary or appropriate, and examine and investigate to its full satisfaction all facts, circumstances, and matters relating to the Property (including financial feasibility, the physical condition and use, availability and adequacy of utiliti es, access, zoning, compliance with applicable laws, environmental conditions, engineering and structural matters), title and survey matters, and any other matters it deems necessary or appropriate for purposes of consummating this transaction.
The Due Diligence shall be at Buyer’s sole cost and expense. Buyer shall have until 5:00 p.m. on the date which is Sixty (60) days from the Signing Date (“Due Diligence Period”) to approve or disapprove of the Due Diligence . If Buyer does not notify Seller and Escrow Holder in writing that it approves of the Due Diligence by the expiration of the Due Diligence Period, the Deposit shall be released to Buyer and this Agreement shall be terminated and no parties shall -5-
have further obligations to one another except those that survive the termination of this Agreement. If Buyer notifies the Escrow Holder in writing of its approval of the Due Diligence, the Deposit will remain in Escrow and shall be applied to the Purchase Price at the Closing.
8.2 Delivery Period. On or before the date which is three (3) days after the Signing Date, Seller shall deliver to Buyer, true, complete and unaltered copies of all reports, correspondence, books, files, documents, agreements, leases, licenses, zoning, applications, permits, authorizations, orders, certificates, plans, appraisals, surveys, maps, tests, plans, studies, service contracts and warranties affecting or rela ting to the Property which are in Seller’s or Seller’s agent’s possession (collectively, the “Materials”). The Materials shall also include such other documents and due diligence m aterials that are reasonably requested by Buyer, which Seller or its agents shall deliver to Buyer within a reasonable time after Buyer ’s request for such documents or material.
8.3 Title to Real Property. As soon as reasonably possible but no later than three (3) days following the Signing Date, Seller shall provide a copy of each of the following to Buyer: (a) a preliminary title report for the Property issued by the Title Company (the “Preliminary Report”), and (b) copies of all recorded documents referred to on Schedule B of the Preliminary Report as exceptions to coverage (the “Title Documents”).
8.4 Certain Exceptions to Title. Within fifteen (15) days after receipt of the Title Documents, Buyer may give notice ( “Buyer’s Notice”) to Seller that Buyer disapproves of any matter shown on the Title Documents and affecting title to the Property (each an “Objectionable Condition ”). Any such matter affecting title and not timely objected to by Buyer shall be deemed approved (“Permitted Exceptions”). Seller shall have three (3) business days after receipt of Buyer ’s Notice to give Buyer: (i) written notice of Seller’s intention to cure such Objectionable Condition prior to the Closing; or (ii) written notice that Seller elects not to cause such Objectionable Condition to be cured. If Seller fails to give Buyer notice pursuant to the prior sentence, or if Seller gives Buyer notice under clause (ii) of the preceding sentence, then Buyer shall have the right in its sole discretion either to waive i n writing the Objectionable Condition (in which case the Objectionable Condition shall be a Permitted Exception hereunder) and proceed with the purchase or Buyer may terminate this Agreement.
If Buyer shall fail to give Seller written notice of Buyer ’s election within three (3) business days of Buyer ’s receipt of Seller ’s written election pursuant to clause (ii), above, or six (6) business days from the date of the Buyer ’s Notice, whichever is earlier, Buyer shall be conclusively deemed to have elected to terminate this Agreement. Notwithstanding anything in this Agreement to the contrary, and notwithstanding any approval or consent given or deemed given by Buyer hereunde r, Seller shall, all at no cost or expense to Buyer, satisfy the Title Company as to Seller’s power and authority to enter into this Agreement, convey the Property to Buyer and otherwise consummate the transactions contemplated hereby and to cause the following to be cured or removed from title to th e Property prior to the Closing : (i) any exceptions or other matters affecting title to the Property which are voluntarily created by Seller after the Signing Date (other than those which are contemplated in or permitted by this Agreement); and (ii) except for real estate taxes and assessments no t yet due or payable, all mortgages, deeds of trust and other monetary encumbrances, including without limitation all mechanics’ liens. If this Agreement is terminated pursuant to this Section, then the Deposit shall be returned to Buyer, and all obligations of Buyer and Seller other than those obligations -6-
which by their express terms survive the Closing shall terminate and be of no further force or effect.
8.5 New Exceptions. Seller shall not voluntarily cause or permit any new exceptions to title to the Property ( “New Seller Exceptions ”) after the Signing Date without Buyer’s prior written consent. If there are any new exceptions to title that are not New Seller Exceptions (“New Exceptions”), Seller shall have the right but not the obligation to cure or remove all such New Exceptions prior to the Closing, by delivery of written notice to Buyer within three (3) business days after Buyer informs Seller of such N ew Exceptions. If Seller does not elect to cause such New Exceptions to be removed from title prior to the Closing, Buyer may elect to proceed to consummate the transaction contemplated herein, without claim against Seller based on such New Exceptions and without reduction of or setoff against the Purchase Price at the Closing, or Buyer may terminate this Agreement, without claim against Seller based on such New Exceptions, by giving written notice to Seller within three (3) business days after Seller info rms Buyer that such New Exception will not be removed by Seller. The foregoing limitations on Buyer ’s rights and remedies shall not apply to any New Seller Exception. If Buyer does not give such notice, then Buyer shall be deemed to have elected to terminate this Agreement. Upon any such termination of this Agreement, the Deposit will be returned to Buyer, and the Parties shall have no further rights or obligations hereunder except for the obligations which by their express terms survive the Closing.
8.6 Other Due Diligence Activities . Buyer and its representatives and designees, which shall include the Developer, shall have the right to contact any third parties (including, without limitation, public, quasi -public and private agencies and utilities, adjacent landowners, Seller ’s lenders for the Property, developers, builders, tenants, contractors and consultants and prior owners of the Property) and discuss and/or negotiate with, disclose any matter to and enter into agreements or understandings with, third parties concerning or related to all or any portion of the Property (including, without limitation, the financing, development and condition of the Property) so long as such agreements and understandings are not binding upon the Property before the Close of Escrow or upon Seller at any time without Seller’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed.
Buyer shall attempt to advise Seller from time to time of the names or types of third parties it intends to contact, but shall not have any liability for fai ling to do so. Seller consents to all such activities undertaken by Buyer and its representatives and designees prior to the date of this Agreement.
9. Escrow and Conditions
9.1 Opening of Escrow and Escrow Instructions. Buyer and Seller promptly shall cause Escrow to be opened for the consummation of the transaction contemplated by this Agreement by delivering a fully executed copy of this Agreement to the Escrow Holder. This Agreement shall constitute instructions to the Escrow Holder with respect to the transaction.
The Escrow Holder immediately shall notify Buyer and Seller of the Escrow Date. Buyer and Seller shall execute such additional escrow instructions as reasonably may be required to consummate the transaction contemplated by this Agreement and as Buyer and Seller may approve, which approval shall not be unreasonably withheld. To the extent such additional escrow instructions conflict with any provisions of this Agr eement, the provisions of this -7-
Agreement shall control, unless such additional escrow instructions specifically state to the contrary and satisfy subsection 21.6.
9.2 Close of Escrow. For purposes of this Agreement, the Close of Escrow shall be deemed to be the date that the Grant Deed for the Property is recorded in the Official Records of the County (including filing a separate statement of documentary transfer taxes due so that such amount does not appear in the Grant Deed or otherwise in the Official Records of the County). Subject to the terms of the final paragraph of subsection 9.3 and p rovided that Buyer’s conditions to Close of Escrow set forth herein have been satisfied or expressly waived in writing, the Close of Escrow shall occur on or before thirty (30) days following the expiration of the Due Diligence Period (the “Closing” or “Close of Escrow”).
9.3 Buyer’s Conditions to Close of Escrow . The Close of Escrow and Buyer’s obligations to close Escrow under this Agreement are subject to the satisfaction or waiver, not later than the Close of Escrow (unless otherwise provided), of the following conditions (and certain of the obligations of the parties with respect to such conditions are as follows):
9.3.1 Seller’s Representations . Seller’s representations and warranties set forth in Section 16 shall be true and correct as of the date of this Agreement and as of the Close of Escrow.
9.3.2 Seller’s Deliveries and Default. Seller shall have delivered to Buyer and Escrow Holder all documents required to be delivered by Seller to Buyer and Escrow Holder, respectively, pursuant to the terms of this Agreement and Seller shall not be in Default under the terms of this Agreement and no event shall have occurred which would constitute a Default by Seller under the terms of this Agreement but for the requirement that notice be given or time elapse or both.
9.3.3 Feasibility and Inspections . Buyer shall have approved the results of any and all feasibility, marketing, entitlement and other studies, inspections, appraisals, audits, tests, evaluations, investigations, condition of the Property (subject to Section 17.5) surveys and reports of t he Property, and other property in the vicinity of the Property, all engineering and environmental audits, evaluations and tests relative to the presence of any Hazardous Material within, under, upon or in the vicinity of the Pro perty (collectively, “Inspections”). The cost of any such Inspections shall be and have been borne by Buyer. Buyer and Developer shall have the right seven (7) days prior to the Closing to walk through the Property and inspect the condition of the Property to determine and approve the condition of the Property, and confirm that all items, debris, waste, and personal property have been removed , and that the Property is in a satisfactory condition to deliver to Buyer (“Property Condition”).
9.3.4 Materials. Seller shall have delivered or made available to Buyer the Materials.
9.3.5 Assignment. Seller shall have obtained any approvals or consents required in connection with the Assignment, including without limitation any -8-
approval or consent required under any of the Assigned Documents, and Seller shall provide written evidence of the same to Buyer. No such approvals or consents are required of Seller.
9.3.6 Buyer’s Title Insurance. The Title Company shall have issued, or committed in writing to Buyer ’s reasonable satisfaction to issue, Buyer ’s Title Policy to Buyer in compliance with the requirements of Sections 6 and 7. Three (3) days prior to the Closing Date, Escrow Holder shall obtain an updated Title Commitment concerning the Property from the Title Company and provide copies thereof to each of the parties.
9.3.7 Material Change. There shall have been no adverse material change to the Property prior to the Closing, where a “Material Change” shall mean a substantial adverse change in the use, occupancy, tenants, title or condition of the Property that occurs after the Signing Date and prior to the Closing. Seller shall provide written notice of any Material Change and Buyer shall have three (3) days from receipt of notice to waive this Section 9.3.7 or to continue with the Closing.
9.3.8 Absence of Condemnation . There shall be no pending or threatened material condemnation of all or part of the Property by any entity with eminent domain authority other than Buyer.
9.3.9 Absence of Litigation . There shall be no action, suit or administrative proceeding pending which is likely to have a material adverse effect on the Property or Buyer’s proposed use or development of the Property.
9.3.10 Absence of Bankruptcy . That no action or proceeding shall have been commenced by or against Seller under the federal bankruptcy code or any state law for the relief of debtors or for the enforcement of the rights of creditors and that no attachment, execution, lien or levy sh all have attached to or been issued with respect to the Property or any portion thereof after the Signing Date and not removed prior to the Closing.
9.3.11 Confirmation of No Tenancies . Seller shall have properly noticed any and all existing tenants, if any, by delivery of notices of termination to all tenants, Escrow and Buyer within the prescribed time set forth in this Agreement and Buyer shall have confirmed at any time prior to the Close of Escrow (such confirmation shall include Buyer and/or Developer walking the Property to determine such termination) there are no tenants or other parties in possession or entitled to be in possession of any portion of the Property (other than possession by condemnation or eminent domain that may arise which shall be treated in accordance with Section 19 hereof) (“Tenancy Condition”).
9.3.12 Confirmation of No Right of Access . Buyer shall have received written assurances from Seller that no adjacent property owner has any claim or right of access to or use of the Property.
9.3.13 Commitment of Developer . Buyer shall have received evidence reasonably sufficient to Buyer from the Developer that Developer is unconditionally and irrevocably committed to consummate the close of escrow under the Developer Agreement in accordance with the terms and conditions of the Developer Agreement. -9-
9.3.14 Approval of City Council. Buyer shall have obtained approval of this Agreement by the City Council of the City of San Marcos.
The foregoing conditions are solely for the benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have the right to waive any condition, which waiver or waivers shall be irrevocable and must be in writing to be effective. Neither the waiver by Buyer of any condition nor the satisfaction of any condition shall relieve Seller of any liability or obligation as respects any representation, warranty or covenant of Seller under this Agreement unless Buyer shall so agree in writing. All app rovals and disapprovals given by Buyer under this subsection 9.3 (except disapprovals deemed to have been made by Buyer) and any acknowledgments given by Buyer of the satisfaction or failure of any conditions set forth in this subsection 9.3 must be in writing to be effective. Buyer and Seller agree and acknowledge that the time, effort and expense incurred by Buyer to negotiate this Agreement and conduct such investigations regarding the Property as Buyer may elect to conduct in its sole and absolute discretion shall constitute adequate consideration for Buyer’s rights under this subsection 9.3.
9.4 Seller’s Conditions to Close of Escrow . The Close of Escrow and Seller’s obligations to close Escrow under this Agreement are subject to the satisfaction or waiver, not later than Close of Escrow (unless otherwise provided), of the following conditions:
9.4.1 Buyer’s Representations . Buyer’s representations and warranties set forth in Section 14 shall be true and correct as of the date of this Agreement and as of the Close of Escrow.
9.4.2 Buyer’s Deliveries and Default. Buyer shall have delivered to Seller and Escrow Holder all funds and documents required to be delivered by Buyer to Seller and Escrow Holder, respectively, pursuant to the terms of this Agreement, and Buyer shall not be in Default under the terms of this A greement and no event shall have occurred which would constitute a Default by Buyer under the terms of this Agreement but for the requirement that notice be given or time elapse or both.
9.4.3 Approval of City Council. Buyer shall have obtained approval of this Agreement by the City Council of the City of San Marcos.
With the exception of 9.4.3, the foregoing conditions are solely for the benefit of Seller and may be waived only by Seller. Seller shall at all times have the right to waive any condition, which waiver or waivers must be in writing to be effective. Neit her the waiver by Seller of any condition nor the satisfaction of any condition shall relieve Buyer of any liability or obligation as respects any representation, warranty or covenant of Buyer under this Agreement unless Seller shall so agree in writing.
9.5 Cooperation Regarding Conditions . Except as otherwise provided herein, neither Seller nor Buyer shall act or fail to act for the purpose of permitting or causing any condition to fail. Each party shall cooperate with the other party, at the written request of the other party, in the ot her party’s efforts with respect to the satisfaction of the conditions; provided, however, that the reasonable costs of such cooperation shall be borne by the party making the request.
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9.6 Failure of Conditions to Close of Escrow . If any of the conditions set forth in subsections 9.3 or 9.4 are not satisfied for a reason other than the Default of Buyer or Seller under this Agreement, and not waived:
9.6.1 Termination. This Agreement, Escrow and the rights and obligations of Buyer and Seller shall terminate, except as otherwise provided in this Agreement.
9.6.2 Failure Due to Seller Default . If the Closing does not occur because the conditions set forth in subsection 9.3.1 or subsection 9.3.2 are not satisfied and not waived, and Seller has failed to cure within three (3) business days of receiving notice from Buyer of Seller’s default, the nonsatisfaction of the conditio ns shall be treated as a Default by Seller and the terms of subsection 18.3 shall be applicable and shall control.
9.6.3 Failure Due to Buyer Default . If the Closing does not occur because the conditions set forth in subsection 9.4.1 or subsection 9.4.2 are not satisfied and not waived, and Buyer has failed to cure within three (3) business days of receiving notice from Seller of Buyer’s default, the nonsatisfaction of the conditions shall be treated as a Default by Buyer and the terms of subsection 18.2 shall be applicable and shall control.
9.6.4 Failure Without Default. If the Closing does not occur because any of the other conditions set forth in subsections 9.3 or 9.4 are not satisfied and not waived for a reason other than the Default of Buyer or Seller under this Agreement, a party not then in default under this Agreement may notify the other party and Escrow Holder in writing that, unless the Closing occurs within five (5) business days following said notice, the Escrow shall be deemed terminated without further notice or instructions and sub section 9.6.6 shall be applicable and control.
9.6.5 Return of Funds/Documents . Subject to the foregoing terms, Escrow Holder is instructed promptly to return to Seller and Buyer all remaining funds, including the Deposit, and documents deposited by them, respectively, into Escrow which are held by Escrow Holder on the date of such termination (unless the party entitled to such funds is required to pay cancellation and other charges under the following subsection 9. 6.6, in which case the Escrow Holder shall deduct the amount of such charges from the funds to which such party is entitled).
9.6.6 Cancellation Fees and Expenses. If Escrow terminates because of the nonsatisfaction of the conditions set forth in subsection 9.3.1 or subsection 9.3.2, the payment of the cancellation and other charges required to be paid by and to Escrow Holder and the Title Company shall be governe d by subsection 18.3. If Escrow terminates because of the nonsatisfaction of the conditions set forth in subsection 9.4.1 or subsection 9.4.2, the payment of the cancellation and other charges required to be paid by and to Es crow Holder and the Title Company shall be governed by the terms of subsection 18.2. If Escrow terminates because any of the other conditions set forth in subsections 9.3 or 9.4 are not satisfied for a reason other than the Default of Buyer or Seller unde r this Agreement, Buyer and Seller shall each be responsible for the payment of one-half of the cancellation and other charges required to be paid by and to the Escrow Holder and the Title Company. -11-
10. Closing Costs. If the Closing occurs, then e xcept as expressly set forth herein, all costs associated with the transfer of title and the associated escrow shall be in accordance with the customary practices in the County. Seller shall pay all delinquent real property taxes (if any), all transfer taxes, recording fees for the Grant Deed, and one -half (1/2) of the escrow fees and closing fees. At Closing, Buyer shall pay one -half (1/2) of the escrow fees , the premiums for the Title Policy and closing fees. All other costs shall be allocated between Buyer and Seller in accordance with customary practice in the County. Each party shall be solely responsible for its own legal fees and costs.
11. Prorations. Escrow Holder shall prorate real property taxes as of the Close of Escrow on the basis of a 365-day year, based upon the latest available tax bills. If on Close of Escrow, the latest available tax bills for the Property are for the fiscal year preceding the fiscal year in which the proration date occurs, Seller and Buyer shall re -prorate real property taxes after the Close of Escrow on the basis of the tax bills for the fiscal year in which the proration date occurs as soon as the final bills are available. If such bills give effect to the transactions contemplated by this Agreement, such effect shall be disregarded for purposes of the re - proration. If any supplemental taxes are assessed against the Property after the Close of Escrow, Seller promptly shall pay Buyer upon demand the portion, if any, of the supplemental taxes which is applicable to the period prior to the Close of Escrow and Buyer shall be responsible for the portion, if any, of the supplemental taxes which is applicable to the period following the Close of Escrow. If the tax bills cover real property owned by Seller in addition to the Property, Seller and Buyer agree that for purposes of this subsection, the amount of the taxes allocable to the Property shall be an amount which bears the same relationship to the total real property taxes set forth in the bills as the fair market value of Property bears to the fair market value of the real property covered by the bills. Seller and Buyer agree to cooperate and use their good faith efforts to make any adjustments no later than thirty (30) days after the Closing.
12. Deliveries to Escrow Holder.
12.1 Deliveries by Seller . Prior to the Close of Escrow (unless otherwise provided), Seller shall deposit the following documents into Escrow:
12.1.1 Grant Deeds . The Grant Deed duly executed by Seller, notarized and in recordable form.
12.1.2 Assignment. Four (4) copies of the Assignment duly executed by Seller.
12.1.3 Seller’s Proof of Authority. Such proof of Seller’s authority to enter into this Agreement and to perform the transactions contemplated by this Agreement as reasonably may be required by the Title Company and/or Buyer.
12.1.4 FIRPTA. A certification as to the nonforeign status of Seller for federal tax withholding purposes, completed and executed by Seller.
12.1.5 Form 593 -C. A Withholding Exemption Certificate on California Franchise Tax Board Form 593-C, duly executed by Seller. -12-
12.1.6 Seller’s Closing Certification. Seller’s certification regarding the accuracy of Seller’s warranties and representations as of the Close of Escrow.
12.2 Deliveries by Buyer . Prior to the Close of Escrow (unless otherwise provided), Buyer shall deposit the following documents into Escrow:
12.2.1 Assignment. Four (4) copies of the Assignment duly executed by Buyer.
12.2.2 Buyer’s Proof of Authority. Such proof of Buyer’s authority to enter into this Agreement and to perform the transactions contemplated by this Agreement as reasonably may be required by the Title Company and/or Seller.
13. Deliveries to Buyer Outside of Escrow . Upon the Opening of Escrow, Seller shall have delivered to Buyer true, correct and complete originals of the Assigned Documents.
All Materials that are not Assigned Documents shall be terminated by Seller not later than the Close of Escrow without liability of any kind to Buyer or the Property. If the Closing does not occur, upon Seller’s written request, Buyer shall return to Seller the copies of the Materials delivered previously by Seller to Buyer pursuant to subsection 9.3.4.
14. Disbursements and Other Actions by Escrow Holder . Upon the Close of Escrow, Escrow Holder promptly shall undertake all of the following:
14.1 Disburse Purchase Price . Disburse all funds deposited with Escrow Holder by Buyer in payment of the Purchase Price as follows:
14.1.1 Deduction of Closing Costs. Deduct all items chargeable to the account of Seller under Section 10 and pay the amount of such items to the Persons entitled to the items.
14.1.2 Deduction of Prorations. If as a result of the prorations under Section 11 amounts are to be charged to the account of Seller, deduct the total amount of such charges and pay and credit as appropriate the amount of such charges to Buyer.
14.1.3 Monetary Encumbrances. Obtain payoff amounts and cause all disapproved monetary liens encumbering the Property to be extinguished.
14.1.4 Disburse to Seller. Disburse the remaining balance of the funds to Seller, or in accordance with Seller’s written instructions, promptly upon the Close of Escrow.
14.2 Buyer’s Closing Costs . Bill Buyer for all items chargeable to Buyer under Section 9, for which items Buyer agrees to be responsible.
14.3 Recordation. Cause the Grant Deed and any other documents which the parties may mutually direct to be recorded in the Official Records of the County. -13-
14.4 Copies of Grant Deed. Prepare and deliver to each of Buyer and Seller two conformed copies of the Grant Deed.
14.5 Deliver Buyer’s Title Policy. Cause the Title Company to issue Buyer’s Title Policy to Buyer.
14.6 Deliver Assignment. Deliver two executed copies of the Assignment to each of Buyer and Seller.
14.7 Deliver Seller’s Proof of Authority . Deliver to Buyer the proof of authority deposited into Escrow by Seller pursuant to subsection 12.1.3.
14.8 Deliver FIRPTA . Deliver to Buyer the certifications deposited into Escrow by Seller pursuant to subsection 12.1.4 and subsection 12.1.5.
14.9 Deliver Buyer’s Proof of Authority . Deliver to Seller the proof of authority deposited into Escrow by Buyer pursuant to subsection 12.2.2.
15. Buyer’s Representations and Warranties . Buyer represents and warrants to Seller as follows:
15.1 Due Execution; Binding . This Agreement has been duly executed and delivered by Buyer, and assuming the due execution and delivery of this Agreement by Seller, constitutes the legal, vali d and binding obligation of Buyer, enforceable against Buyer in accordance with its terms.
15.2 No Consents. No approval or consent not previously obtained by any Person is necessary in connection with the execution of this Agreement by Buyer or the performance of Buyer’s obligations under this Agreement.
15.3 No Violations of Agreements . The execution and delivery of this Agreement and the performance of the transactions contemplated hereby does not and will not constitute a violation of nor be a default under or conflict Buyer’s charter, the terms of any contract, lease, indenture, agreement, order, judgment or decree to which Buyer is a party or by which it is bound, and does not and will not, to the best of Buyer’s knowledge, violate or constitute a default under any Laws.
15.4 Brokers. No broker, salesperson or finder has been engaged by Buyer in connection with the transactions contemplated by this Agreement, except as otherwise provided in Section 17.3, below.
Each of the foregoing representations and warranties shall be, and Buyer shall cause them to be, true in all respects on and as of the date of this Agreement and on and as of the Close of Escrow as though made at that time.
16. Seller’s Representations and Warranties . Seller represents and warrants to Buyer as follows:
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16.1 Ownership. Seller is now and at all times between the date hereof and Closing, inclusive, will be the fee simple owner of the Property (either of record or beneficially) entire right, title and interest of Seller in and to the Property.
16.2 Authority. Seller has the right, power, legal capacity and authority to enter into and perform its obligations under this Agreement. Those individuals executing this Agreement on behalf of Seller have the right, power, legal capacity and authority to enter into this Agreement on behalf of Seller and to execute all other documents and perform all other acts as may be necessary to perform all of Seller’s obligations under this Agreement.
16.3 No Consents. No approval or consent not previously obtained by any Person is necessary in connection with the execution of this Agreement by Seller or the performance of Seller’s obligations under this Agreement.
16.4 No Violations of Agreements . Neither this Agreement nor anything provided to be done under this Agreement violates or shall violate any contract, document, understanding, agreement or instrument to which Seller is a party or by which it may be bound.
16.5 Binding Agreement. The Agreement constitutes the legally valid and binding obligation of Seller and is enforceable against Seller in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws, or by equitable principals relating to or limiting the rights of creditors generally.
16.6 Broker. No broker, salesperson or finder has been engaged by Seller in connection with the transactions contemplated by this Agreement, except as otherwise provided in Section 17.3, below.
16.7 Materials. Seller has delivered or made available to Buyer all of the Materials and all of the Materials delivered or made available by Seller to Buyer are true, correct and complete copies of such items in Seller’s possession.
16.8 No Violation of Laws . To the best of Seller’s knowledge, Seller has complied with all, and neither Seller nor the Property is in violation of any, Laws (including, without limitation, Hazardous Material Laws) applicable to the Property and Seller has not received any notice of any such violation. Seller has not received any written notice of any current and pending violation of any existing codes, rules, ordinances, laws or regulations of any governmental body, agency or authority affecting the Property. Seller will, promptly upon receipt, deliver to Buyer a copy of any such notice received after the date of this Agreement and before the Closing.
16.9 Hazardous Materials. To the best of Seller’s knowledge, after reasonable inquiry and investigation, (i) no prior use of the Property was in violation of any then existing, or would have been in violation of any currently existing, Hazardous Material Laws, (ii) no Hazardous Material is located on, under, about or in the vicinity of the Property (other than in compliance with Hazardous Material Laws) or has at any time been released into the environment, or generated, stored, treated, deposited, discharged, placed or disposed of on, under, about or near the Property (other than in compliance with Hazardous Material Laws), (iii) the Property has not been used at any time by any Person as a landfill or a waste disposal -15-
site, and (iv) there are no underground storage tanks located at the Property or in the vicinity of the Property, nor has Seller received any notice of any of the same.
16.10 No Litigation . There is no suit, action, claim, proceeding or protest pending or, to the best of Seller’s knowledge, after reasonable inquiry and investigation, there is no proposed or existing public improvement which may involve any charge being levied or assessed upon Seller or the Property or any plan, study or effort by any of the Authorities or any other Person or any existing or proposed Law which may adversely affect the Property.
Condemnation, eminent domain or similar actions by or at the request of the City are expressly excluded from this section.
16.11 Destruction, Damage or Loss. There shall not have occurred prior to the Closing, the destruction of, or damage or loss to, the Property or any portion thereof, from any cause whatsoever, which would cost more than $10,000 to repair or cure. If the cost of repair or cure is $10,000 or less, Seller shall repair or cure the loss prior to the Closing. Bu yer shall have the option, within 5 days after receipt of written notice of a loss costing more than $10,000 to repair or cure, to either terminate this Agreement or to purchase the Property notwithstanding such loss, but without deduction or offset against the Purchase Price. If the cost to repair or cure is more than $10,000 and Buyer does not elect to terminate this Agreement, Buyer shall be entitled to any insurance proceeds applicable to such loss.
16.12 Tenancies. Seller represents and warrants to the Buyer that there are no tenants and/or occupan ts that have a legal interest to occupy the Property (collectively, “Tenants”) and that no leases and/or any other written agreements exist between Seller and Tenants.
16.13 “AS IS” PURCHASE . EXCEPT AS SET FORTH IN THIS
AGREEMENT, WHICH SHALL INCLUDE SELLER’S OBLIGATIONS PURSUANT TO SECTION 17.5 OF THIS AGREEMENT, BUYER HAS AGREED TO ACCEPT POSSESSION OF THE PROPERTY ON THE CLOSING DATE ON AN “AS IS” BASIS.
Each of the foregoing representations and warranties shall be, and Seller shall cause them to be, true in all respects on and as of the date of this Agreement and on and as of the Close of Escrow as though made at that time. In addition, as of the Close of Escrow, Seller shall provide Buyer with a certification regarding the accuracy of such representations and warranties as of such date, including any exceptions or qualifications thereto as of such date (“ Seller’s Closing Certification”). If the exceptions or qualifications to such representations and warranties as of the Close of Escrow (i) are not acceptable to Buyer in its sole discretion, (ii) have a material adverse effect on the Property , and (iii) were not previously disclosed to Buyer’s Representative (as hereinafter defined) prior during Opening of Escrow (it being agreed that Seller have the obligation to prove such knowledge or disclosure by a preponderance of the evidence), then Buyer may refuse to consu mmate this transaction, but Seller shall have no liability to Buyer as a result of such qualifications and exceptions, provided that Seller did not have actual knowledge of such qualifications and exceptions on the Opening of Escrow of this Agreement (but if Seller did have such actual knowledge on the Opening of Escrow, then the terms of subsections 9.3.1 and 9.6.2 shall apply). As used herein, “ Buyer’s Representative” means Michelle Bender. Seller hereby agrees to defend, indemnify, and hold harmless Buy er -16-
from and against any and all claims, damages, losses, risks, liabilities, and expenses (including attorney’s fees and costs) arising from or related to any breach of the foregoing representations and warranties. As used in Seller ’s representations and warranties in this agreement “to the best of Seller’s knowledge” means the actual, current knowledge (without any duty of inquiry or investigation and without imputed or constructive knowledge) of Bob Moreland.
17. Additional Rights and Obligations.
17.1 Entry on Property . Buyer, Developer, and their representatives and designees shall have the right to enter upon the Property at any reasonable time (but in any event upon at least twenty-four (24) hours’ notice) during the term of this Agreement, at its own cost and expense entirely, for any purpose in connection with its proposed purchase or use of the Property including, without limitation, the right to make such studies, inspections, appraisals, audits, tests, evaluations, investigations, surveys and re ports of the Property and other reasonable diligence as Buyer or Developer may elect to make or obtain (including, without limitation, the taking of soil and water samples in connection with any environmental audit of the Property). Seller promptly shall obtain all required consents to any such entry.
Seller acknowledges that all entries by Buyer or Developer on the Property prior to the date of this Agreement were with Seller’s consent. All entries by Buyer or Developer upon the Property shall be in compliance with all applicable Laws. Buyer and Developer shall keep the Property free and clear of any mechanic’s or materialmen’s liens arising out of any such entry.
If the Closing does not occur for any reason other than the Default of Seller, Buyer shall, at its own cost and expense entirely, repair any damage to the Property resulting from any such entry.
Buyer hereby agrees to indemnify, defend and hold harmless Seller and the Property from and against any and all claims, liabilities, costs, liens, ac tions or judgments (including, without limitation, reasonable attorneys’ fees and costs) resulting from Buyer’s or any of its employees, agents or independent contractors entrance or activities on or about the Property prior to the Close of Escrow . Upon Seller’s request, Buyer shall deliver to Seller an endorsement to Buyer’s and Developer’s commercial general liability insurance policy which evidence s that Buyer and Developer are carrying a commercial general liability insurance policy with a financially responsible insurance company covering the activities of Buyer or Developer and Buyer’s and Developer’s agents on the Property.
17.2 Encumbrancing. After the date of this Agreement, Seller shall not subject or suffer to be subjected, without the prior written consent of Buyer, the Property to any mortgage, deed of trust, lien, license, encumbrance, claim, charge, equity, writ, injunction, decree, order, judgment, covenant, condition, restriction, easement, right, right of way, lease, tenancy, occupancy agreement or similar right or other matter affecting the Property and shall not enter, without the prior written consent of Buyer, into any agreement to do, permit or suffer any of the above. In addition, after the date of the Agreement, Seller shall not, without the prior written consent of Buyer, enter into any contracts or service agreements, or amend, modify or change any existing contracts or ser vice agreements, and shall pay and perform all of its obligations under such existing contracts and service agreements.
17.3 Brokers and Finders. Each party represents to the other that it has not had any contact, dealings or communications with a broker or finder in connection with the transaction contemplated by this Agreement or any other person who can claim a right to a -17-
commission or finder’s fee. If any broker, finder or other person makes a claim for commissions or finder’s fee based upon any contract, dealing or communication with a party, then such party shall indemnify, defend and hold the other party harmless from and against all damages, claims, losses and expenses, including attorneys’ fees, arising out of the broker’s, finder’s or other person’s claim.
17.4 Permits. Buyer shall have the right, but not the obligation, at its own cost and expense entirely, (a) to obtain or attempt to obtain from the Authorities whatever approvals, zoning, licenses, registrations, permits, entitlements and authorizations (collectively, “Entitlements”) may be necessary for Buyer’s planned acquisition, development, use and disposition of the Property, and (b) to file and process with the Authorities such applications, maps, plans, specifications, drawings, documents and other mate rials (collectively, “Governmental Material”) as may be necessary in connection with obtaining the Entitlements if, and only if, the Entitlements are not binding upon the Property before the Close of Escrow or upon Seller at any time without Seller’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). Seller shall (at no cost or expense to Seller), reasonably cooperate with Buyer in Buyer’s efforts to obtain Ent itlements, including, without limitation, executin g any Governmental Material and other documents and taking whatever action may be necessary for Buyer to obtain access to the Authorities, file and process Governmental Material with the Authorities, and to obtain or attempt to obtain Entitlements.
At no time shall Seller unreasonably act or unreasonably fail to act in any manner that could adversely affect Buyer’s ability to obtain Entitlements. Seller shall not have any control or right of review with respect to any Governmental Material or its filing o r processing with the Authorities or Buyer’s attempt to obtain Entitlements. After the date of this Agreement, Seller shall not, without the prior written consent of Buyer or as otherwise specifically provided in this Agreement, (a) obtain, consent to or suffer to be created any Entitlements (except as otherwise provided in this subsection) or (b) amend, modify or change any of the terms of any Entitlements to which Buyer may consent or which Buyer may obtain under this subsection.
During the term of this Agreement, Seller shall have no obligation to pay, or perform any obligations under the Entitlements obtained by Buyer hereunder. Notwithstanding any provision in this section, Seller shall not be required to take any action which may impose an obligation or liability on Seller or the Property.
17.5 Maintenance of and Changes to Property . Prior to the Close of Escrow but in no event later than seven (7) days before the Close of Escrow , Seller shall, at Seller’s sole cost and expense entirely deliver the Property to Buyer in a neat, orderly and clean condition and all trash, debris, waste, hazardous substances, abandoned structure, equipment and any and all personal property located on the Property raised by Buyer during the Due Diligence Period shall be removed from the Property. Additionally, if a Phase I or Phase II Environmental Report requires remediation of hazardous materials then Seller acknowledges and agrees that Seller, at Seller’s sole cost and expense, is solely responsible for all such clean up prior to the Closing . Unless required by law, Seller shall not make any physical addition to or change or alteration of the Property without the prior written consent of Buyer.
17.6 Use of Property . Seller agrees to use, and to cause to be used, the Property solely for the purpose for which the Property is currently being used and for no other purpose without Buyer’s prior written consent, which consent may be withheld in the sole and -18-
absolute discretion of Buyer. Seller shall, at its own expense, comply and cause others to comply with all present and future Laws and all covenants, conditions, restrictions and easements which may be applicable to the Property or to the use of the Prope rty including, without limitation, Hazardous Material Laws. Seller shall not use or permit the use of the Property in any manner that will tend to create waste or a nuisance. On or prior to Closing, Seller shall cause all leases, licenses and similar suc h occupancy agreements to be terminated and the Property to be free of tenants, licensees and other occupants.
17.7 Taxes and Costs of Ownership. Before the Close of Escrow, Seller shall timely pay prior to delinquency all taxes and assessments of any kind levied against and all other costs of ownership of the Property.
17.8 No Assumption of Obligations . Seller acknowledges and agrees that Buyer does not assume, directly or indirectly, any liability, obligation, duty or responsibility whatsoever for the payment, discharge or other performance of any liability, obligation, indebtedness, lien, security interest, encumbrance, claim or other problem, condition, or matter which has been or may in the future be created or assumed by Seller, any one associated with Seller or any of Seller’s predecessors in interest or which may otherwise presently exist or arise in the future with respect to any Materials.
17.9 Hazard Insurance . Seller shall maintain Hazard Insurance on the Property through the Close of Escrow with such stated coverage amounts for the building and for loss of rents as may be acceptable to Buyer. In the event of any destruction of or damage to the Property on or before the Close of Escrow, upon the Close of Escrow Seller shall pay to Buyer all insurance proceeds received by Seller relating to such damage or destruction, assign to Buyer all of Seller’s right to any insurance proceeds relating to su ch damage or destruction (whether or not such proceeds have been previously paid by the insurance carrier), and, if the deductible for such insurance policy exceeds $5,000, provide a credit to Buyer at Closing for the amount by which such deductible exceed s $5,000. Seller hereby agrees to cooperate with Buyer, at no cost to Seller, to obtain any and all payments for damages or compensation on account of such damage or destruction to the extent assigned by Seller to Buyer pursuant to this Section 17.9.
18. Default.
18.1 Events of Default. The occurrence of any one or more of the following events before the Close of Escrow shall constitute a Default by a party under this Agreement:
18.1.1 Notice/Cure Period. The failure of the party to perform any material obligation contained in this Agreement on its part to be performed if the failure should continue uncured for a period of five (5) days (or to the date of the Close of Escrow hereunder if such date occurs before the expiration of the five (5) day period) after written notice is given to the party of the occurrence of the failure; provided, however, that the failure shall not be deemed to have occurred if the failure is of a nature that reasonably requires more than five (5) days to cure, is capable of being cured fully before the Close of Escrow and the party is proceeding continuously and diligently to cure the failure and does cure the failure before the Close of Escrow;
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18.1.2 Representation/Warranty. Any representation or warranty made by the party in this Agreement proves to have been materially incorrect as of the date made or as of any other date on which the representation and warranty was required by the terms of this Agreement to be true;
18.1.3 Relief of Debtors. Institution by the party of proceedings under any law of the United States or of any state or foreign jurisdiction for the relief of debtors;
18.1.4 General Assignment. A general assignment by the party for the benefit of creditors or the filing of a voluntary petition in bankruptcy;
18.1.5 Bankruptcy. The filing of an involuntary petition in bankruptcy against the party by the creditors of such party, such petition remaining undischarged for a period of thirty (30) days after the date the same was filed (or to the date of a Close of Escrow hereunder if such date occurs before the expiration of the thirty (30) day period);
18.1.6 Receiver. The appointment of a receiver to take possession of any of the assets of the party, such receivership remaining undischarged for a period of thirty (30) days from the date of its appointment (or to the date of Close of Escrow if such date occurs before the expiration of the thirty (30) day period); or
18.1.7 Attachment. The attachment, execution or other judicial seizure of the party’s interest in this Agreement (and, in the case of Seller, in the Property and Materials), such attachment, execution or seizure being in an amount not less than Fifty Thousand Dollars ($50,000) and remaining undismissed or undischarged for a period of thirty (30) days after the levy of the attachment, execution or seizure (or to the date of the Close of Escrow if such date occurs before the expiration of the thirty (30) day period).
18.2 DEFAULT BY BUYER. SELLER AND BUYER AGREE THAT THE AMOUNT OF DAMAGES TO SELLER IN THE CASE OF BUYER’S MATERIAL
DEFAULT ON OR BEFORE THE DATE OF THE CLOSE OF ESCROW SET FORTH IN SUBSECTION 9.2 WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX.
THEREFORE, BUYER AND SELLER AGREE THAT IF BUYER MATERIALLY
DEFAULTS UNDER THIS AGREEMENT ON OR BEFORE THE DATE OF THE CLOSE OF ESCROW:
18.2.1 TERMINATION. SELLER SHALL BE ENTITLED AS
SELLER’S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER (MEANING SELLER
HEREBY WAIVES, AMONG OTHER THINGS, THE RIGHTS TO SEEK SPECIFIC
PERFORMANCE OF THE AGREEMENT AND TO RECEIVE DAMAGES) TO
TERMINATE THIS AGREEMENT AND ESCROW, AND SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF THE DEPOSIT (“LIQUIDATED DAMAGES”). IN THE EVENT SELLER EXERCISES THIS TERMINATION RIGHT,
THIS AGREEMENT, ESCROW AND THE RIGHTS AND OBLIGATIONS OF BUYER
AND SELLER UNDER THIS AGREEMENT SH ALL TERMINATE, EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, AND BUYER SHALL BE
RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND ANY ESCROW -20-
CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER.
18.2.2 RETURN OF FUNDS/DOCUMENTS . SUBJECT TO THE
FOREGOING PROVISIONS, ESCROW HOLDER IS INSTRUCTED PROMPTLY TO
RETURN TO BUYER AND SELLER ALL REMAINING FUNDS AND DOCUMENTS
DEPOSITED BY THEM, RESPECTIVELY, INTO ESCROW WHICH ARE HELD BY ESCROW HOLDER ON THE DATE OF TERMINATION (LESS IN BU YER’S CASE,
HOWEVER, THE AMOUNT OF ANY CANCELLATION AND OTHER CHARGES
REQUIRED TO BE PAID BY AND TO ESCROW HOLDER AND THE TITLE COMPANY, FOR WHICH CHARGES BUYER SHALL BE RESPONSIBLE).
SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE TERMS OF THIS SUBSECTION 18.2 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
SELLER: __________ BUYER: __________
18.3 Default by Seller . If Seller shall materially Default under any of the terms of this Agreement before the date of the Close of Escrow set forth in subsection 9.2, Buyer shall have all rights and remedies which it may have at law or in equity, including, without limitation, the right (i) to seek specific performance of this Agreement, or (ii) to terminate this Agreement by giving written notice of such termination to Seller and Escrow Holder. Upon the giving of such termination notice:
18.3.1 Termination. This Agreement, Escrow and the rights and obligations of Buyer and Seller under this Agreement shall terminate, except for Buyer’s rights and remedies related to such Seller default and as otherwise provided in this Agreement.
18.3.2 Return of Funds/Documents . Escrow Holder is instructed promptly to return to Buyer and Seller all funds (including the Deposit) and documents deposited by them, respectively, into Escrow which are held by Escrow Holder on the date of termination (less in Seller’s case, however, the amount of any cancellation and other charges required to be paid by and to Escrow Holder and the Title Company, for which charges Seller shall be responsible).
19. Condemnation, Damage or Destruction to Property . If there is any nonmaterial damage, destruction, taking or condemnation of any portion of the land ( “Land”) comprising the Property, Buyer shall be required to purchase the Property with a credit against the Purchase Price equal to the amount of any condemnation awards relating to the Land only that are actually collected by Seller prior to the Closing due to such condemnation, less any sums expended by Seller prior to the Closing in collecting such condemnat ion awards. A condemnation will be considered nonmaterial if such taking has no material adverse effect on Buyer ’s intended use for the Property after the Close of Escrow. If the condemnation awards have not been collected as of the Closing, then such portion of the awards relating to the Land shall be assigned to Buyer, except to the extent needed to reimburse Seller for sums it expended prior to the Closing in collectin g such condemnation awards. Notwithstanding the foregoing, if the Land is -21-
damaged, destroyed, taken or condemned and if the value or utility of the Land or portion thereof so damaged, destroyed or condemned would have a material adverse effect on Buyer’s intended use of the Property after the Close of Escrow , then Seller shall give Buyer prompt notice thereof and Buyer may, at its option to be exercised by delivery of written notice to Seller within five (5) business days after Buyer’s receipt of Seller’s notice to Buyer of the occurrence of such condemnation, elect not to purchase the Property under this Agreement. If Buyer timely elects not to purchase the Property in accordance with the immediately preceding sentence, this Agreement shall terminate, the Deposit shall be returned to Buyer and neither party shall have any further rights or obligations under this Agreement other than obligations which by their express terms survive the Closing. If Buyer fails to timely notify Seller that it elects not to purchase the Property, Buyer shall be obligated to consummate the purchase of the Property in accordance with the same terms set forth in this Agreement.
20. Deferred Exchange. Seller may consummate the purchase or sale of the Property as part of a so-called deferred exchange (the “Exchange”) pursuant to Section 1031 or Section 1033 of the Internal Revenue Code of 1986, as amended, provided that (i) Close of Escrow shall not be delayed or affected by reason of the Exchange, nor shall the consummation or accomplishment of the Exchange be a condition precedent or condition subsequent to either party’s obligations under this Agreement; (ii) Buyer shall not be required to take an assignment of the purchase agreement for the relinquished property or be required to acquire or hold title to any real property for purposes of consummating the Exchange; and (iii) Seller shall reimburse Buyer for any additional costs that would not otherwise have been incurred by Buyer had Seller not consummated this transaction through the Exchange. Buyer shall not by this Agreement or acquiescence to the Exchange proposed by Seller have its rights under this Agreement affected or diminished in any manne r or be responsible for compliance with or be deemed to have warranted to Seller that the Exchange in fact complies with Section 1031 or Section 1033 of the Internal Revenue Code of 1986, as amended.
21. General Provisions.
21.1 Legal Fees. In the event of the bringing of any action or suit by either party against the other party by reason of any breach of any of the covenants, conditions, agreements or provisions on the part of the other party arising out of this Agreement, the party in whose favor final judgment shall be entered shall be entitled to have and recover of and from the other party all costs and expenses of suit, including reasonable attorneys’ fees (or, in the event of any action to enforce this Agreement, the prevailing party shall be entitled to recover all of its costs and expenses of the action, including reasonable attorney’s fees), as determined by a court of competent jurisdiction.
21.2 Notices. All notices or other communication provided for under this Agreement shall be in writing, and shall be delivered personally, sent by reputable overnight mail equivalent carrier, or sent by registered or certified mail, return receipt requested, postage prepaid, addressed to the person to receive such notice or communication at the following address and shall be effective upon receipt or refusal to accept delivery:
To Seller: Bob Moreland
____________________________
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_________________________
Phone: ______________________
Fax:________________________
Email:______________________
and _____________________________
.__________________________
________________________
______________________
______________________
______________________
To Buyer: City of San Marcos
1 Civic Center Drive
San Marcos, CA 92069
Attn: Michelle Bender, City Manager
Phone: (760) 744-1050, ext. 3115
Fax: (760) 744-7543
Email: [email protected]
and City of San Marcos
Lounsbery Ferguson Altona & Peak
960 Canterbury Place, Suite 300
Escondido, CA 92025
Attn: Helen Holmes Peak, City Attorney
Phone: (760) 743-1226, ext. 108
Fax: (760) 743-9926
Email: [email protected]
(with copies to:)
Urban Villages San Marcos, LLC
5550 Carmel Mountain Road, Suite 204
San Diego, CA 92130
Attn: Gary Levitt
Phone: (858) 361-8555
Email: [email protected]
Notice of change of address shall be given by written notice in the manner set forth in this subsection. Notices may also be sent by facsimile, which shall be deemed received upon actual receipt and the sending party’s telephonic confirmation of such receipt.
21.3 Survival. All of the covenants, representations and warranties set forth in this Agreement shall survive the Close of Escrow, the delivery of the Grant Deed and any -23-
inspection by the parties. Where the context shall require, the provisions of this Agreement shall survive the termination of this Agreement prior to the Close of Escrow.
21.4 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties and their respective heirs, executors, administrators, successors and assigns; provided, however, prior to the Close of Escrow, neither party to this Agreement shall assign or transfer this Agreement or the Materials or any interest, right or obligation in this Agreement or the Materials without the prior written consent of the other party and any such assignment or transfer with out such written conse nt shall be null and void; except that Buyer may, at any time prior to the Close of Escrow and upon prior written notice to Seller, assign its right, title, and interest in this Agreement to an Affiliate of Buyer or to any entity in which Buyer or an Affiliate of Buyer has a direct or indirect equity interest without the consent of Seller, and upon the Close of Escrow, Buyer shall be relieved of any further obligation under this Agreement or under any document or instrument executed pursuant hereto.
21.5 Required Actions of Buyer and Seller. Buyer and Seller agree to execute all instruments and documents and to take all actions as may be required in order to consummate the transactions contemplated by this Agreement and shall use their reasonable efforts to accomplish the Close of Escrow in accordance with the provisions of this Agreement.
21.6 Entire Agreement . This Agreement contain s the entire agreement between the parties concerning the subject matter of this Agreement and supersede s any prior agreements, understandings or negotiations. No addition or modification of any term or provision shall be effective unless set forth in writing and signed by both Seller and Buyer.
21.7 Time of Essence . Time is of the essence of each and every term, condition, obligation and provision of this Agreement.
21.8 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which, together, shall constitute one and the same instrument.
21.9 Severability. If any portion of this Agreement shall be declared by any court of competent jurisdiction to be invalid, illegal or unenforceable, such portion shall be deemed severed from this Agreement, and the remaining parts of this Agreement shall remain in full f orce and effect, as fully as though such invalid, illegal or unenforceable portion had never been part of this Agreement.
21.10 Headings. Headings at the beginning of each section and subsection are solely for convenience of reference and are not a part of this Agreement.
21.11 Construction. Whenever the context of this Agreement requires the same, the singular shall include the plural and the masculine, feminine and neuter shall include the others. Without limitation, any defined term used in the plural shall refer to all members of the relevant class, and any defined term used in the singular shall refer to any number of the relevant class. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the sa me. Unless otherwise indicated, all references to sections and subsections are to this Agreement. All exhibits are incorporated in -24-
this Agreement by reference. The term “Agreement” includes such exhibits (as exhibits and, if appropriate, as subsequently executed agreements and instruments). If the day on which Buyer or Seller is required to take any action under the terms of this Agreement is not a business day, the action shall be taken on the next succeeding business day. For purposes of this Agreement, business days shall not include Saturdays, Sundays or holidays recognized by the Federal Reserve Bank of San Francisco. Any refe rence in this Agreement to an agreement or other instrument shall mean such agreement or instrument as it may from time to time be supplemented, modified, amended and extended in accordance with the terms of this Agreement. This Agreement is executed and delivered in the State of California and shall be construed and enforced in accordance with, and governed by, the laws of the State of California.
21.12 No Waiver. No waiver by a party of any Default by the other party under this Agreement shall be implied from any omission or delay by the non-defaulting party to take action on account of the Default if the Default persists or is repeated. Any waiver of any covenant, term or condition contained in this Agreement must be in writing. Any such express written waiver shall not be construed as a wa iver of any subsequent breach of the same covenant, term or condition, nor shall it affect any Default other than the Default expressly made the subject of the waiver. Any such express waiver shall be operative only for the time and to the extent stated in the waiver. The consent or approval by a party to or of any act by the other party shall not be deemed to waive or render unnecessary consent or approval to or of any subsequent act.
21.13 Relationship Between Parties . Seller and Buyer agree that (a) the relationship between them is, is intended to be and shall at all times remain, in connection with the transactions contemplated by this Agreement, that of seller and purchaser and (b) neither party is, is intended to be or shall be construed as a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of the other party or any of its Affiliates and neither party intends to ever assume such status.
21.14 Third Parties Not Benefited. This Agreement is made for the purpose of defining and setting forth certain rights and obligations of Buyer and Seller. It is made for the sole protection of Buyer and Seller, and Buyer’s and Seller’s heirs, executors, administrators, successors and assigns. No other Person shall have any rights of any nature under or by reason of this Agreement.
21.15 Confidentiality. Subject to Buyer’s obligations as a public agency with respect to public records, Buyer and Seller shall each use reasonable efforts to maintain as confidential such personally -identifiable information adduced during the transaction contemplated hereby and, except as required by law and subsection 8.2, shall not disclose such information to any third party, except to the extent disclosure is made to their respective attorneys, accountants, consultants, bankers, lenders , brokers, and, with respect to Buyer, any individuals or entities required to approve the terms of this transaction or from whom financial contributions will be sought in order to acquire and develop the Property.
21.16 Vesting. The grantee under the Grant Deed shall be Buyer (City of San Marcos, a chartered municipal corporation), and no changes to such vesting shall be permitted. -25-
21.17 Arbitration of Disputes. Any controversy as to whether Seller is entitled to the Liquidated Damages and/or Buyer is entitled to the return of the D eposit, shall be determined by binding arbitration . Arbitration hearings shall be held in the county where the Property is located. The arbitration will be conducted by Judicial Arbitration and Mediation Services (“JAMS”) in accordance with the rules of JAMS in effect as of the initiation of the arbitrations (“JAMS Rules”). The arbitrator shall be neutral and impartial and either a retired judge or a member or former member of the California State Bar with at least fifteen (15) years’ experience as a practicing lawyer. The arbitrator to preside over the dispute shall be selected in accordance with the JAMS Rules, but no later than sixty (60) days after a notice of claim is filed. All fees, costs and expenses charged by JAMS and the arbitrator shall be borne equally by the parties. Attorneys’ fees may be awarded to the prevailing party at the discretion of the arbitrator. The arbitrator must follow California substantive law (including statutes of limitations) but strict conformity with rules of evidence is not required, except that the arbitrator shall apply applicable California law relating to privilege and work product. Notwithstanding the foregoing contained in this Section 21.17, prior to resorting to binding arbitration, the parties shall first attempt to resolve any controversy as to whether Seller is entitled to the Liquidated Damages and/or Buyer is entitled to the return of the Deposit through mediation, which shall also be conducted by JAMS in accordance with JAMS Rules. In the event one of the parties fails to participate in the mediation, such party shall forfeit its attorneys’ fees.
Buyer’s resort to or participation in such arbitration proceedings shall not bar suit in a court of competent jurisdiction by Buyer for damages and/or specific performance unless and until the arbitration results in an award to the seller of Liquidated Damages, in which event such award shall act as a bar against any action by Buyer for damages and/or specific performance By initialing in the space below you are agreeing to have any dispute arising out of the matters included in this Section 21.17 decided by neutral arbitration as provided by California Law and you are giving up any right you might possess to have the dispu te litigated in a court of jury trial.
______ ______
Buyer Seller
[Signature Page to Follow]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first above written.
Seller:
Bob Moreland, a married man as his sole and separate property By:
Name: Bob Moreland
Buyer:
CITY OF SAN MARCOS
By:
Name: Michelle Bender, City Manager
APPROVED AS TO FORM:
By:
Name: Helen Holmes Peak, City Attorney
EXHIBIT A
Exhibit “A”
PROPERTY
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF SAN MARCOS, IN THE COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A: APN: 220-202-27-00
ALL OF THE SOUTHERLY 160 FEET OF LOT 8, BLOCK 58 OF RANCHO LOS VALLECITOS DE SAN
MARCOS, IN THE CITY OF SAN MARCOS, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 806, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DECEMBER 21, 1895, EXCEPTING THEREFROM THE WESTERLY 168 FEET.
ALSO EXCEPTING THEREFROM THE SOUTHERLY 9 FEET OF THE WESTERLY 89 FEET OF THE EASTERLY 119 FEET OF SAID LOT 8 IN BLOCK 58 OF RANCHO LOS VALLECITOS DE SAN MARCOS; TOGETHER WITH THE EASTERLY 30 FEET OF THE SOUTHERLY 160 FEET OF SAID LOT 8.
ALSO EXCEPTING THEREFROM THAT PORTION OF SAID LOT 8, LYING SOUTHERLY AND EASTERLY OF AND ADJOINING THE ARC OF 20 FOOT RADIUS CURVE, CONCAVE TO THE NORTHWEST, WHICH IS TANGENT TO THE WESTERLY LINE OF THE EASTERLY 30 FEET OF SAID LOT 8 AND TO THE NORTHERLY LINE OF THE SOUTHERLY 9 FEET OF SAID LOT 8.
EXHIBIT B
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EXHIBIT “B”
ASSIGNMENT
THIS ASSIGNMENT (this “Assignment”) is made and entered into as of ____________, 2023, by Bob Moreland, a married man as his sole and separate property (“Assignor”), and CITY OF SAN MARCOS, a chartered municipal corporation (“Assignee”).
W I T N E S S E T H:
WHEREAS, Assignor and Assignee are parties to that certain Purchase and Sale Agreement and Escrow Instructions dated as of ________, 2024 (the “Agreement”) for the purchase and sale of that certain real property more particularly described in the Agreement (the “Property”). Capitalized terms used but not defined herein shall have the respective meanings assigned thereto in the Agreement; and
WHEREAS, Assignor has agreed to execute and deliver this Assignment pursuant to the Agreement.
ASSIGNOR AND ASSIGNEE HEREBY AGREE AND COVENANT AS
FOLLOWS:
1. ASSIGNMENT. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in accordance with and subject to the terms of the Agreement, Assignor hereby assigns and transfers unto Assignee all of its right, title, and interes t in and to any and all Materials, including, without limitation, any and all contracts, agreements, entitlements, plans, permits, licenses, surveys, specifications, governmental approvals, authorizations and other intangible personal property owned by Assignor on the date of the Closing and used in connection with the ownership, use, operation, maintenance a nd occupancy of the Property, including, without limitation, the Assigned Documents attached hereto as Exhibit 1, and excluding the Materials listed on Exhibit 2 attached hereto.
2. MISCELLANEOUS.
2.1 In the event of any litigation between Assignor and Assignee arising out of the obligations of Assignor under this Assignment or concerning the meaning or interpretation of any provision contained herein, the losing party shall pay the prevailing party’s costs and expenses of such litigation, including, without limitation, reasonable attorneys ’ fees and costs actually incurred before and at trial, on appeal and on any petition for review.
2.2 Each of the parties hereto agrees to execute all instruments and documents and to take all other actions as may be required herein or in the Agreement in order to consummate the purposes of this Assignment.
2.3 All notices required or appropriate to be delivered hereunder shall be delivered to the addresses set forth in and otherwise in accordance with the Agreement.
EXHIBIT B
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2.4 This Assignment shall be binding on and inure to the benefit of the parties hereto, their heirs, executors, administrators, successors in interest and assigns.
2.5 This Assignment may be executed in any number of counterparts, and each such counterpart shall be deemed to be an original instrument.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment as of the date and year first above written.
Assignor: Assignee:
Bob Moreland, a married man as his sole and
separate property
By: ______________________________
Name: Bob Moreland:
CITY OF SAN MARCOS
By:
Name: Michelle Bender, City Manager
APPROVED AS TO FORM
By:
Name: Helen Holmes Peak, City Attorney
EXHIBIT 1
Exhibit 1 to Assignment
[Assigned Documents? If so, to be attached.]
EXHIBIT 2
Exhibit 2 to Assignment
[Materials Excluded from Assignment? If so, to be attached.]
EXHIBIT C
EXHIBIT “C”
TITLE EXCEPTIONS
(Permissible Exceptions)
1. Matters contained in that certain document
Entitled: Boundary Map, Community Facilities District No. 2011-01 Congestion Management, City of San Marcos, County of San Diego, State of California, Annexation No. 3, Exhibit “B”
Recording Date: September 25, 2012
Recording No: 2012-0581010 of Official Records
Reference is hereby made to said document for full particulars Matters contained in that certain document
2. The fact that the ownership of said land does not include rights of access to or from the street, highway,
or freeway abutting said land, such rights having been severed from said land by the document.
Recorded:. March 20, 1987 as Instrument No. 87-144193 of Official Records Affects:. That portion of said land which abuts Myrtle Street and Industrial Street Except the Northerly 30 feet.
3. A document entitled “Agreement to Impose Development Condition on Building or Development Permits for Property”, dated, March 13, 1987, executed by Paula Prohoroff and the City of San Marcos, a municipal corporation, subject to all the terms, provisions an d conditions therein contained, recorded March 20, 1987 as Instrument No. 87-144194 of Official Records.
4. Covenants, conditions and restrictions (“but omitting, except to the extent that said covenant or restriction is controlled or permitted by any applicable federal or state law, any covenants or restrictions, if any, based upon race, color, religion, sex, sexual orientation, familial status, marital status, disability, medical condition, national origin, source of income, or ancestry” as set forth in the document Recorded:. June 4, 2002 as Instrument No. 2002-0472869 of Official Records
5. The Land described herein is included within a project area of the Redevelopment Agency shown below, and that proceedings for the redevelopment of said project have been instituted under the Redevelopment Law (such redevelopment to proceed only after the adoption of the Redevelopment Plan) as disclosed by a document.
Redevelopment Agency: City of San Marcos
Recording Date: July 13, 1983
Recording No: 1983-0239024 of Official Records
6. Any boundary discrepancies, rights or claims which may exist or arise as disclosed by a record of survey
Record of Survey No.:. Record of Survey Map No. 20367
7. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other matters shown
EXHIBIT C
on
Map: Record of Survey Map No. 22014
8. Water rights, claims or title to water, whether or not disclosed by the public records
9. Matters which may be disclosed by an inspection and/or by a correct ALTA/NSPS Land Title Survey of said Land that is satisfactory to the Company, and/or by inquiry of the parties in possession thereof.