HomeMy WebLinkAbout23 - Agreement for Purchase and Sale and Escrow Instructions for the Purchase of Real Property at 1201 Dove StreetQ SEW Pp�T
CITY OF
z NEWPORT BEACH
c�<,FORN'P City Council Staff Report
November 15, 2022
Agenda Item No. 23
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: Seimone Jurjis, Community Development Director - 949-644-3232,
sjurjis@newportbeachca.gov
PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator,
Iwooding@newportbeachca.gov
PHONE: 949-644-3236
TITLE: Agreement for Purchase and Sale and Escrow Instructions with
AG Dove Owner, L.P., for the Purchase of Real Property at
1201 Dove Street
ABSTRACT -
The City of Newport Beach (City) Police Department is currently headquartered on the
City -owned property at 870 Santa Barbara Drive. The building is within 10 years of the
end of its useful life, and Police Department operations have outgrown the existing facility.
The replacement of the police facility is planned for in the Capital Improvement Program.
The City's long-range strategic plan is to purchase property and manage it for the next
10 years or until the City is in a position to develop a new police station headquarters.
Acquiring property now to develop a new police station will allow the City to capitalize on
current real estate prices, avoid competing with residential developers seeking housing
opportunity sites, and recoup a portion of the purchase price with the property's existing
net income stream.
For the City Council's consideration is an Agreement for Purchase and Sale of Real
Property and Escrow Instructions (Agreement) for the purchase of property located at
1201 Dove Street (Property) for a price of $30.5 million, utilizing FY 2021-22 year-end
General Fund surplus and unallocated capital project reserve funds. Given the limited
number of parcels of a suitable size for a new police station and the upward trend of
commercial real estate values in Newport Beach, staff proposes for the City to purchase
the Property and to continue leasing the office spaces. The net income generated from
the property will help offset the purchase price.
RECOMMENDATION:
a) Determine this action exempt from the California Environmental Quality Act (CEQA)
pursuant to Sections 15060(c)(2) (the activity will not result in a direct or reasonably
foreseeable indirect physical change in the environment) and Section 15060(c)(3)
(the activity is not a project as defined in Section 15378) of the CEQA Guidelines,
California Code of Regulations, Title 14, Chapter 3, because this action will not result
in a physical change to the environment, directly or indirectly;
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Agreement for Purchase and Sale and Escrow Instructions with AG Dove Owner, L.P.,
for the Purchase of Real Property at 1201 Dove Street
November 15, 2022
Page 2
b) Authorize the City Manager and City Clerk to execute the Agreement for Purchase
and Sale of Real Property and Escrow Instructions, and all associated documents
necessary to complete the purchase transaction, with AG Dove Owner, L.P., to
purchase the property at 1201 Dove Street, for a price of $30,500,000, in a form
substantially similar to the agreement prepared by the City Attorney; and
c) Approve Budget Amendment No. 23-028 to record a budget increase of $30,775,000
as expenditure from the Police Facility Fund, a transfer of $5,231,559 from the Facility
Financing Plan Fund (FFP), a transfer of $1,450,000 from the General Fund Capital
Improvement Plan, and a budget increase of $300,000 as revenue to the General
Fund.
DISCUSSION:
The Newport Beach Police Department headquarters was acquired by the City in
1973 from The Irvine Company. The police station facility was constructed by the City
and shares the four -acre parcel with Fire Station No. 3. While the building and site have
been maintained and remodeled over the last 50 years, the Police Department operations
have expanded and effectively outgrown its existing facility. The building is scheduled for
replacement in the Capital Improvement Program in the next 10 years. The City has a
need to replace the existing police station with a larger more modern facility that will meet
the future needs of the Police Department.
Police Department Facility Needs
The Public Works Department completed a utilization survey of the spaces within the
existing police station and conducted a needs assessment to determine the needs of a
future police station. The survey determined the existing police headquarters includes
49,284 square feet of gross floor area of facilities. The needs assessment determined a
future police facility will require a minimum of 73,000 square feet. The differences
between the existing facility and the future needs of the Police Department include
adequate space for the Patrol Division, and an appropriately laid -out firearms training and
shooting range.
Structural Upgrades
When the current police station was constructed in 1973 it was built to the building code
standards of that time. Since then, the seismic structural design requirements have
changed for facilities considered "essential". Police stations, fire stations, and hospitals
are considered "essential" facilities and are designed to a much higher seismic standard
than non -essential buildings. While it is possible to structurally upgrade the existing police
station, it is more cost effective to replace the building due to the future facility space and
utilization needs. A new police station facility will be structurally designed to the highest
seismic standard required by the building codes.
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Agreement for Purchase and Sale and Escrow Instructions with AG Dove Owner, L.P.,
for the Purchase of Real Property at 1201 Dove Street
November 15, 2022
Page 3
Redeveloping the Existing Police Headquarters Location
Staff did consider replacing the existing police station at its current location but
determined the replacement cost would outweigh the costs to relocate the facility to a
new location. To redevelop at the existing location on Santa Barbara, the costs would not
only include the cost of constructing a new building, but would also include the cost of
temporarily relocating the entire police department operations during construction. All
police department functions and services including telecommunications, jail, helicopter
landing pad, and dispatch services would need to be temporarily relocated to another
location while the new facility is being built. It is more cost effective for the City to
purchase 1201 Dove Street, operate the Property in its current office building
configuration and collect the net income revenue for at least the next10 years, then
develop a new modern police station that the Police Department can move into without
any interruption in services.
1201 Dove Street - Property
The Property for consideration is located in the Airport Area of Newport Beach
(Attachment C), and is a 3.59-acre site currently developed with an 82,868 square foot,
six story office building. The building was constructed in 1973 and underwent a major
renovation in 1989, with various system upgrades and maintenance and tenant
improvements completed since then. The property was acquired by AG Dove Owner, L.P.
(Seller), an institutional investor, in 2018.
The Property is professionally managed by Lincoln Property Company Commercial, Inc.
(Lincoln Property) and is currently 84 percent leased; 13,540 square feet is currently
available for rent, with five spaces ranging in size from 1,020 — 5,835 square feet.
The 21 existing tenants include finance, healthcare, real estate, legal, and other users in
spaces ranging from approximately 950 to 7,500 square feet and have leases expiring in
2023 to 2028 and beyond.
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Staff from the Police Department, Community Development Department, Public Works
Department, and the City Manager conducted a site tour in March 2022, and determined
the general location, size, and configuration of the Property to be sufficient and
appropriate for development of a new police station. Access to the Property is located on
Dove Street, and staff will work with the adjacent property owners to determine if a
secondary point of access to Quail Street can be obtained to create operational
efficiencies for the Police Department. The Seller's agent has offered to facilitate
discussions regarding a potential additional point of access.
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Agreement for Purchase and Sale and Escrow Instructions with AG Dove Owner, L.P.,
for the Purchase of Real Property at 1201 Dove Street
November 15, 2022
Page 4
Opening - Closing Escrow and Due Diligence
Upon execution of the Agreement and opening of escrow, staff will proceed with a
120-day due diligence period to investigate the condition of the Property. Staff anticipates
due diligence to cost approximately $75,000 and will likely include, but not be limited to,
a Phase I environmental report, geotechnical investigation, survey of the property and
improvements, a hazardous materials survey of the building, a building condition
inspection, and an ADA compliance inspection. Due diligence will be handled by
professional consultants that specialize in tenant lease review, property inspection, and
geotechnical reviews.
After due diligence is completed and staff is satisfied with the condition of the property,
the close of escrow will be scheduled within 30 days after due diligence approval. The
close of escrow is anticipated to be April, 2023.
Purchase Price and Closing Costs
Over the last six months the City and the Seller have negotiated the terms of a Purchase
and Sale Agreement. The negotiated purchase price is $30.5 million. Staff proposes to
use the FY 2021-22 year-end General Fund surplus of $24.1 million and $6.7 million from
available funds in the Facilities Financial Planning Fund (FFP) and General Fund Capital
Improvement Plan Fund to fund the purchase and associated closing costs. It is
anticipated the FFP and General Fund Capital Improvement Plan Fund will be
replenished from General Fund surplus at the end of FY 2022-23. The FY 2021-22
year-end General Fund surplus is being transferred to the Police Facility Fund under
separate City Council action, also on November 15, 2022.
In addition to the purchase price of the Property and due diligence costs, staff anticipates
closing costs of less than $10,000, an owner's policy of title insurance policy premium
cost of approximately $15,000, and prorated property taxes of $175,000 or less (which
will be refunded by the County of Orange after closing).
Income Generated
If the City were to purchase and manage the Property for the next 10 to 15 years, the
projected net income to the City would be $15 million to $25 million respectively. The net
income is based on projected rental revenues minus all operating expenses and building
management costs. The income revenue from the property will be deposited in the City's
general fund account.
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Agreement for Purchase and Sale and Escrow Instructions with AG Dove Owner, L.P.,
for the Purchase of Real Property at 1201 Dove Street
November 15, 2022
Page 5
Property Management
The Property is currently managed by Lincoln Property. If purchased, the property
management agreement will be assigned to the City, with the management fee set at
2.5% of the effective gross revenue, which expense is factored into the estimated net
revenues. Staff proposes to continue to utilize the services of Lincoln Property until their
agreement expires in August 2023. Before the expiration of the agreement, staff will
release an RFP to competitively bid out the services of property management for the
building. An agreement with the selected property manager will be presented to City
Council for their consideration at a future meeting.
Proposed Agreement
The City and Seller have negotiated terms of an Agreement for Purchase and Sale of
Real Property and Escrow Instructions (Agreement) (Attachment A), for the City to
purchase the Property from the Seller.
The proposed terms of the sale are summarized below:
1. City will pay the Seller a purchase price of $30,500,000"
2. City will deposit $305,000 in initial earnest money; which money will become
non-refundable after the expiration of the due diligence period;
3. City will have a 120-day due diligence period from the opening of escrow and
receipt of all existing agreements and reports related to the Property, to inspect
the Property and perform any tests to determine its condition;
4. City will deposit an additional $305,000 in earnest money, which money will
become immediately non-refundable, after expiration of the due diligence period
and City approval of the condition of the Property;
5. Escrow will close 30 days from the City's approval of due diligence; and
6. City and Seller will each pay half of the closing costs, and City will pay for its own
owner's title insurance policy.
The Agreement has been prepared by the City Attorney's Office and has been approved
as to form. The Seller reviewed and approved the proposed Agreement (Attachment A).
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Agreement for Purchase and Sale and Escrow Instructions with AG Dove Owner, L.P.,
for the Purchase of Real Property at 1201 Dove Street
November 15, 2022
Page 6
FISCAL IMPACT:
Approval of this item will result in an increase in expenditures to the Police Facility Fund
for purchase of the Property, due diligence investigations, the City's share of closing costs
and recording fees, an owner's policy of title insurance, and payment of prorated property
taxes. Upon purchase of the Property, the City will increase General Fund revenues and
collect approximately $1,200,000 in rental income each year from existing tenants. The
Budget Amendment No. 23-028 (Attachment B) records a $30,775,000 expenditure that
will be posted to the Police Facility New CIP — Capital Project account in the Police Facility
Fund — 521-52101-911047, and $300,000 in Fiscal Year 2022-23 revenue will be posted
to the Rental of Property account in the Community Development Department
— 01050505-551115.
ENVIRONMENTAL REVIEW:
Staff recommends the City Council find this action is not subject to the California
Environmental Quality Act (CEQA) pursuant to Sections 15060(c)(2) (the activity will not
result in a direct or reasonably foreseeable indirect physical change in the environment)
and 15060(c)(3) (the activity is not a project as defined in Section 15378) of the CEQA
Guidelines, California Code of Regulations, Title 14, Chapter 3, because it has no
potential for resulting in physical change to the environment, directly or indirectly.
NOTICING:
The agenda item has been noticed according to the Brown Act (72 hours in advance of
the meeting at which the City Council considers the item).
ATTACHMENTS:
Attachment A — Agreement for Purchase and Sale of Real Property
Attachment B — Budget Amendment No. 23-028
Attachment C — Map
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Attachment A
Agreement for Purchase and Sale of Real Property and Escrow Instructions
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AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND ESCROW INSTRUCTIONS
Escrow No.
Date of Opening of Escrow: 2022
To: First American Title Insurance Company ("Escrow Holder")
777 S. Figueroa StreetAtl Floor
Los Angeles, California 99617
Attention: Gloria Ned
Telephone: 213-926-9894
Email: gneri@firstam.com
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND ESCROW INSTRUCTIONS ("Agreement") is made this day of
2022 ("Effective Date"), by and between AG Dove Owner, L.P., a Delaware limited
partnership ("Seller"), and City of Newport Beach, a California municipal corporation and
charter city ("City"). City and Seller are sometimes hereinafter individually referred to as
a "Party" and collectively as the "Parties" to this Agreement.
RECITALS:
The following Recitals are a substantive part of this Agreement and are
incorporated herein:
A. City is a municipal corporation duly organized and validly existing under the
laws of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of City.
B. Seller is the owner of that certain real property commonly known as 1201
Dove Street, located in the City of Newport Beach, County of Orange, State of California,
having County Assessor's Parcel Number 427-221-96, which, on the Effective Date,
consists of a six story office building containing approximately 82,868 rentable square
feet upon an approximately 3.59 acre parcel, as more particularly described on Exhibit
"A" and depicted on Exhibit "B" attached hereto and by this reference incorporated herein,
together with all improvements now or hereafter constructed thereon, all easements,
licenses and interests appurtenant thereto and all intangible property owned by Seller in
connection with such real property, including without limitation, development rights,
governmental approvals and land entitlements (collectively referred to herein as the
"Property").
C. Seller desires to sell to City, and City desires to purchase from Seller, the
Property, upon the terms and conditions set forth in this Agreement.
oo119o10-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 1
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NOW, THEREFORE, for good and valuable consideration as set forth herein, the
receipt and sufficiency of which is acknowledged, the Parties agree as follows:
TERMS AND CONDITIONS
1. PURCHASE AND SALE OF PROPERTY. City hereby agrees to purchase
from Seller, and Seller agrees to sell to City, the Property, upon the terms and conditions
hereinafter set forth.
2. PURCHASE PRICE. The total purchase price for the Property, which
includes the value of the land and improvements is THIRTY MILLION FIVE HUNDRED
THOUSAND DOLLARS and 001100 ($30,500,000.00) ("Purchase Price").
2.1 Payment of Purchase Price.
(a) Not later than five (5) business days following the Opening of
Escrow, as defined herein, City shall deposit in Escrow in good funds, the sum of
THREE HUNDRED FIVE THOUSAND DOLLARS and 001100 ($305,000.00)
("Initial Deposit"), which Initial Deposit shall be applicable to the Purchase Price
upon Closing unless (i) Seller is in default in any material respect under this
Agreement and City, as its sole and exclusive remedy, elects to terminate this
Agreement and have its Deposit returned within seven (7) days of such termination
(provided, that City is not in Monetary Default independent of Seller's default as
provided herein), (ii) this Agreement is terminated by City on or before the
expiration of the Due Diligence Period, or (iii) this Agreement is terminated in
accordance with either Section 8.3 or 13.1, in which case, the Initial Deposit shall
be returned to City within seven (7) days of such termination and neither City nor
Seller shall have any further obligations to the other, except for those obligations,
which as outlined in this Agreement, expressly survive termination. The Initial
Deposit shall remain refundable until the City approves of the condition of the
Property pursuant to the terms of Section 5.3. "Good funds" shall mean a wire
transfer of immediately available funds, cashier's or certified check drawn on or
issued by the offices of a financial institution located in the State of California, or
cash.
(b) Not later than five (5) business days following the City's approval of
the condition of the Property, pursuant to the terms of Section 5.3 below, City shall
deposit in Escrow in good funds, an additional sum of THREE HUNDRED FIVE
THOUSAND DOLLARS and 001100 ($305,000.00) ("Second Deposit"), which
Second Deposit shall be immediately non-refundable and applicable to the
Purchase Price upon Closing unless (i) Seller is in default in any material respect
under this Agreement and City, as its sole and exclusive remedy, elects to
terminate this Agreement and have its Deposit returned within seven (7) days of
such termination (provided that City is not in Monetary Default independent of
Seller's default as provided herein), or (ii) this Agreement is terminated in
accordance with either Section 8.3 or 13.1, in which case, the Second Deposit
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 2
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shall be returned to City within seven (7) days of such termination and neither party
hereto shall have any further rights or obligations hereunder other than those that
expressly survive the termination of this Agreement.
(c) On or before the Closing Date, hereinafter defined, City shall deposit
the balance of the Purchase Price, subject to any other credits or debits hereunder,
with Escrow Holder in good funds.
(d) The Initial Deposit, Second Deposit, and Extension Deposit, as
defined in Section 6.3, shall collectively constitute the "Deposit."
2.2 Interest Bearing Account. If requested in writing to do so by City, Escrow
Holder shall deposit and hold the Deposit funds specified in Section 2.1 above in an
interest -bearing account. All interest earned on said funds shall be credited to the party
receiving the Deposit pursuant to the terms of this Agreement.
3. ESCROW.
3A Opening Of Escrow. Within one (1) business day after the execution of this
Agreement, the Parties shall open an escrow ("Escrow") with the Escrow Holder by
causing an executed copy of this Agreement to be deposited with Escrow Holder. Escrow
shall be deemed open on the date that Escrow Holder countersigns this Agreement. The
Parties agree to perform all acts reasonably necessary to close Escrow if and when
required hereby.
3.2 Escrow Holder Is Authorized To And Shall:
(a) Prior to disbursing any portion of the Purchase Price to Seller in
connection with the Close of Escrow (as defined below), Escrow Holder shall pay
and deduct from the Purchase Price any amount necessary to satisfy (i) any
delinquent taxes on the Property together with penalties and interest thereon,
and/or (ii) delinquent or non -delinquent assessments or bonds on the Property
except those which title is to be taken subject to in accordance with the terms of
this Agreement;
(b) Prior to disbursing any portion of the Purchase Price to Seller in
connection with the Close of Escrow, Escrow Holder shall pay and deduct from the
Purchase Price, all amounts necessary to cause to be released and fully
reconveyed any and all Monetary Liens (as defined below);
(c) Pay and charge Seller for all recording fees incurred in this
transaction related to payment of reconveyance fees and forwarding fees for partial
or full reconveyances of deeds of trust or release of any mortgage by Seiler;
(d) Pay and charge to City all premiums, fees, and charges for any title
policy and endorsements the City may wish to purchase for the Property;
ooiisoio-a Agreement for Purchase and Sale of Real Property and Escrow instructions Page 3
23-10
(e) Pay and charge Seller and City for escrow fees, recording fees,
charges, and costs payable under Section 7, in accordance with Section 9A below,
except as otherwise expressly provided in this Section;
(f) Prorate, as between City and Seller, real estate taxes and
assessments through the Close of Escrow, with City to be charged with and have
the benefit of the Closing Date, as provided in Section 9.3 of this Agreement; and
(g) Disburse the Purchase Price in accordance with this Agreement and
record the Grant Deed in the Official Records of the County Recorder of Orange
County, California.
4. ADDITIONAL FUNDS AND DOCUMENTS REQUIRED FROM CITY AND
SELLER.
4.1 City. Subject to City's written approval of the condition of the Property as
set forth in Section 5.3, City agrees that on or before 1:90 p.m. on the business day
preceding the Closing Date, City will deposit with Escrow Holder all additional funds and
any other items and/or documents (executed and acknowledged, if appropriate) as may
be necessary to comply with the terms of this Agreement, including without limitation, the
following:
(a) The balance of the Purchase Price plus the sums necessary to pay
City's share of closing costs and prorations;
(b) A Preliminary Change of Ownership Statement completed in the
manner required in Orange County;
(c) Two duplicate originals of an Assignment of Leases by Seller to City
in a form substantially similar to the form of Exhibit "D" attached hereto and
incorporated herein by this reference ("Assignment of Leases");
(d) Two duplicate originals of an Assignment of Contracts in a form
substantially similar to the form of Exhibit "E" attached hereto and incorporated
herein by this reference ("Assignment of Contracts"), which Assignment of
Contracts will convey all assignable contracts, warranties and guaranties in effect,
if any, with respect to the Property; and
(e) Such funds and other items and instruments as may be reasonably
necessary in order for Escrow Holder to comply with this Agreement.
4.2 Seller. Seller agrees that on or before 1:90 p.m. on the business day
preceding the Closing Date, Seller will deposit with Escrow Holder items and/or
documents (executed and acknowledged, if appropriate) as may be necessary to comply
with the terms of this Agreement, including without limitation, the following:
ooi1golo-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 4
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(a) A grant deed conveying the Property to City in a form substantially
similar to the form of Exhibit "C" attached hereto and incorporated herein by this
reference ("Grant Deed");
(b) A Bill of Sale in a form substantially similar to the form of Exhibit "F"
attached hereto and incorporated herein by this reference ("Bill of Sale");
(c) Two duplicate originals of the Assignment of Leases;
(d) Two duplicate originals of the Assignment of Contracts;
(e) A Non -Foreign Affidavit on Escrow Holder's Standard form or a form
substantially similar thereto ("Non -Foreign Affidavit"); and
(f) Such funds and other items and instruments as may be reasonably
necessary in order for Escrow Holder to comply with this Agreement.
In the event City determines that an Assignment of Leases, an Assignment of Contracts,
or a Bill of Sale is unnecessary, City shall advise Seller and Escrow Holder and such
documents shall be waived as conditions to the Closing hereunder.
4.3 Assignment of Contracts and Leases. On or before five (5) business days
following the Opening of Escrow Seller shall deliver to City copies of all contracts which
affect or relate to the Property and are binding on Seller and which will be assigned to the
City with the Property, including any and all (i) building service, management, supply and
maintenance contracts ("Existing Contracts)"), and (ii) leases, licenses and occupancy
agreements, and terms sheets and/or letters of intent under negotiation to which Seller is
a party or that affect or relate to the Property ("Leases"). City shall notify Seiler on or
before the expiration of the Due Diligence Period of City's approval or disapproval of each
Existing Contract and Leases. City's failure to notify Seller within the time specified shall
be considered disapproval. As to those Existing Contracts and Leases City elects to
assume, Seller shall assign same in the Assignment of Contracts. As to those contracts
City does not elect to assume, Seller shall terminate or otherwise remain responsible for
same after Close of Escrow.
4.4 Miscellaneous Documents. City acknowledges that as of the Effective Date
Seller has purported to provide the due diligence items identified on Exhibit "G" (the "Due
Diligence Items"). City acknowledges and understands that all such materials made
available by Seller are only for City's convenience in making its own examination and
determination during the Due Diligence Period, defined below, as to whether it wishes to
purchase the Property, and, in s❑ doing, City shall rely exclusively upon its own
independent investigation and evaluation of the Property and not on any materials
supplied by Seller except to the extent Seller is making representations and warranties
under the terms of this Agreement. If City does not acquire the Property, all said
documents shall be promptly returned to Seller. In addition, within thirty (30) calendar
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 5
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days of the Effective Date, Seller shall deliver to City (or cause Escrow Holder to deliver
to City), natural hazard disclosure reports covering the Property in such form as required
by law, which shall be countersigned and returned to Seller and Escrow Holder.
4.5 Estoppel Certificate. In the event the Property will be subject to Leases as
of the Closing (i.e., assuming the existing tenants hold over), at least five (5) calendar
days prior to the Closing Date, Seller shall have delivered to Escrow Holder an original
estoppel certificate, and to City, copies thereof, dated within forty-five (45) calendar days
of the then -Closing Date (for the avoidance of doubt, if City exercises its right to extend
the Closing Period pursuant to Section 6,2, the estoppel certificates shall be dated within
one hundred five (145) calendar days of the Closing Date), from tenants leasing no less
than 75% of the then -occupied leased space on the Property (the "Estoppel Delivery
Requirement"). Such estoppel certificates shall be substantially in the form a tenant is
required to deliver under its Lease if the tenant refuses to execute the form attached
hereto as Exhibit "H". Seller shall use its good faith efforts to obtain such estoppel
certificates from the tenants under a Lease and Seller may provide a Seller's estoppel in
order to meet the Estoppel Delivery Requirement in the event Seller is unable to obtain
such estoppel certificate from the tenant under a Lease; provided, however, that (a) Seller
shall not be permitted to deliver Seller estoppel certificates for more than 15% of the then -
occupied leased space in the Property, and (b) City shall not be required to complete its
purchase of the Property unless Seller satisfies the Estoppel Delivery Requirement. If an
estoppel certificate contains any material and adverse deviations from the form of
estoppel certificate a tenant is required to deliver under its Lease or the form attached
hereto as Exhibit "H", as applicable (so long as such information was not previously
Known by City prior to the expiration of the Due Diligence Period), then City shall have
five (5) business days from Seller's delivery to City of such estoppel certificate to object
to it; provided, that City's failure to object to an estoppel certificate within such five (5)
business day period shall be deemed City's approval of such estoppel certificate. The
failure of Seller to satisfy the Estoppel Delivery Requirement as set forth in this Section
4.5 shall not constitute a breach of this Agreement by Seller if such requirement is not
satisfied despite Seller's good faith efforts, but shall entitle City to terminate this
Agreement.
5. DUE DILIGENCE PERIOD.
5.1 Inspection Rights. At City's own cost and expense, it may make an
independent investigation of the Property and all other aspects of this transaction, and
may rely thereon and on the advice of its consultants in entering into and, if applicable,
terminating this Agreement. City shall have the unqualified and unrestricted right to
terminate its obligations under this Agreement on or before the expiration of the Due
Diligence Period, hereinafter defined.
5.2 City Inspection. Commencing upon the Opening of Escrow, subject to an
objection from the City that the Due Diligence Items identified in Exhibit "G" are
inconsistent with the actual documents provided by Seller, (which objection shall be
provided by City in writing to Seller within five (5) business days of Opening of Escrow)
oo118olo-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 6
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and continuing thereafter for one hundred twenty (120) calendar days ("Due Diligence
Period"), City, its agents, and employees shall have the right to:
(a) examine and inspect the Property including the physical condition,
quality, quantity and state of repair of the Property in all respects, subject to Section
5.4 below;
(b) review all instruments, records and documents which City deems
appropriate or advisable to review in connection with this transaction, including,
but not by way of limitation, any and all plans, specifications, surveys,
environmental assessments, existing leases, contracts, and/or easement
documents, reports, and title reports; and
(c) review all applicable laws, ordinances, rules and governmental
regulations (including those relating to building, zoning and land use) affecting the
development, use, occupancy or enjoyment of the Property.
5.3 Approval or Disapproval of Property After Inspection. On or before the
expiration of the Due Diligence Period, City may notify Escrow Holder, in writing, of its
approval or disapproval of the condition of the Property. Should City fail to provide written
notice of its approval or disapproval, City shall be deemed to have disapproved the
condition of the Property. Upon City's delivery of written notice of its approval of the
condition of the Property to Escrow Holder, the Initial Deposit shall remain applicable to
the Purchase Price but shall become non-refundable except as otherwise expressly
provided in this Agreement. City may, its sole discretion, elect to terminate this Agreement
based on disapproval of the condition of the Property. Upon termination of this
Agreement, neither City nor Seller shall have any further obligations to the other, except
for those obligations, which as outlined in this Agreement, expressly survive termination,
and the Initial Deposit shall be returned to City as provided in Section 2.1 above.
5.4 Entry for Investigation. Subject to the conditions hereafter stated and the
rights of tenants in possession, Seller grants to City, its agents, employees, and
consultants a limited license to enter upon any portion of the Property, at a time and
manner reasonably approved by Seller and to minimize disruption or interference with
any tenants, for the purpose of conducting engineering surveys, soil tests, investigations
or other studies reasonably necessary to evaluate the condition of the Property, which
studies, surveys, investigations and tests shall be done at City's sole cost and expense.
City shall (a) notify Seller at least two (2) business days prior to each entry of the date
and purpose of intended entry and provide to Seller the names and affiliations of the
persons entering the Property; (b) conduct all studies in a diligent, expeditious and safe
manner and not allow any dangerous or hazardous conditions to occur on the Property
during or after such investigation; (c) comply with all applicable laws and governmental
regulations; (d) keep the Property free and clear of all materialmen's liens, lis pendens
and other liens arising out of the entry and work performed under this paragraph; (e)
maintain or assure maintenance of workers' compensation insurance (or state approved
self-insurance) on all persons entering the property in the amounts required by the State
oo118olo-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 7
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of California; (f) provide to Seller prior to initial entry a certificate of insurance evidencing
that City has procured and paid premiums for an all-risk public liability insurance policy
written on a per occurrence and not claims made basis in a combined single limit of not
less than TWO MILLION DOLLARS ($2,000,000.00) which insurance names Seller and
its Property Manager (as identified in Section 30) as additional insured entitled to not less
than thirty (30) days cancellation notice and is primary and non-contributing with
insurance carried by Seller; and (g) return the Property to its original condition following
City's entry. Notwithstanding the foregoing, City shall not be permitted to undertake any
air sampling or any intrusive or destructive testing of the Property, including, without
limitation, a "Phase 11" environmental assessment (collectively, the "Intrusive Tests"),
without in each instance first obtaining Seller's prior written consent thereto, which
consent Seller may give or withhold in Seller's sole and absolute discretion. If Seller fails
to advise City of its disapproval of any proposed Intrusive Tests within such two (2)
business day period, such failure shall be deemed Seller's disapproval thereof. If
requested by Seller in writing, City hereby agrees to provide to Seller a true and complete
copy of all finalized tests, reports, studies and the like generated in connection with City's
inspection of the Property. City agrees to indemnify, defend, protect and hold Seiler and
its Property Manager (and their respective principals, members, partners, directors,
officers, employees, attorneys and agents) and the Property free and harmless from any
and all loss, liability, claims, damages, liens and expenses (including but not limited to
attorneys' fees and costs) arising directly or indirectly from the active negligence or willful
misconduct by City in the exercise of said license, or from City's failure to comply with the
conditions to City's entry onto the Property provided herein. Such undertaking of
indemnity shall expire two (2) years from the Close of Escrow or the termination of this
Agreement, whichever occurs later. The limited license herein granted shall be co-
extensive with the term of this Agreement or any extension thereof.
5.5 Access Easement. Seller, within ten (10) calendar days of the Opening of
Escrow, shall (a) facilitate a meeting between the City and the property owner of 1500
Quail Street, Newport Beach [A.P.N. 427-221-16], and (b) use good faith efforts to
separately facilitate a meeting between the City and the property owner of 1301 Dove
Street, Newport Beach [A.P.N. 427-221-171, to discuss an access easement across the
respective sites to connect the Property to Quail Street. While not a contingency of this
Agreement, nor an item to be approved or disapproved per Section 5.3 above, City
requests Seller's cooperation and assistance in facilitating these discussions.
6. CLOSING DATE.
6.1 Closing. Close of Escrow shall occur on or before thirty (30) calendar days
from the expiration of the Due Diligence Period ("Closing Period"). The terms the "Close
of Escrow", "Closing Date" or "Closing" are used herein to mean the filing by Escrow
Holder of Seller's Grant Deed for record in the Office of the County Recorder of Orange
County, California. City and Seller each specifically agrees to strictly comply and perform
its obligations herein in the time and manner specified and waives any and all rights to
claim such compliance by mere substantial compliance with the terms of this Agreement.
oo11goio-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 8
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6.2 Extension of Closing, Extension Deposit. City shall have the right to extend
the Closing Period by sixty (60) calendar days, provided City has approved in writing its
due diligence investigation pursuant to Section 5.3 above, and provided City delivers to
Escrow Holder the sum of THREE HUNDRED FIVE THOUSAND AND 00/100 DOLLARS
($305,000.00) ("Extension Deposit"), which amount shall be immediately non-refundable
and applicable to the Purchase Price and shall be deemed consideration for such
extension of the Closing Period. Notwithstanding the foregoing, the Extension Deposit
shall be promptly returned to City if (i) Seller is in default in any material respect under
this Agreement and City, as its sole and exclusive remedy, elects to terminate this
Agreement and have its Deposit returned within seven (7) days of such termination
(provided, that City is not in Monetary Default independent of Seller's default as provided
herein), or (ii) this Agreement is terminated in accordance with either Section 8.3 or 13.1,
in which case, the Extension Deposit shall be returned to City within seven (7) days of
such termination and neither party hereto shall have any further rights or obligations
hereunder other than those that expressly survive the termination of this Agreement.
6.3 Distribution of Documents. Following Close of Escrow, Escrow Holder shall
distribute the documents as follows:
(a) To City-
(i) One (1) certified conformed copy of the Grant Deed, the
original to be mailed to City following recordation thereof;
(ii) One (1) duplicate original each of the Bill of Sale, Assignment
of Lease(s) (if any), the Assignment of Contracts, and the Non -Foreign
Affidavit;
(iii) One (1) original estoppel certificate of each tenant holding
over under a lease; and
(iv) One (1) certified copy, conformed if recorded, of any other
document delivered to Escrow Holder by City or Seller pursuant to the terms
hereof.
(b) To Seller:
(i) One (1) duplicate original each of the Bill of Sale, the
Assignment of Lease(s) (if any), the Assignment of Contracts, and the Non -
Foreign Affidavit; and
(ii) One (1) certified copy, conformed if recorded, of any other
document delivered to Escrow Holder by City or Seller pursuant to the terms
hereof.
oo11go10-a Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 9
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6A Leasinq and Maintenance Obligations Prior to Close of Escrow. Seller
agrees to maintain the Property in the same or substantially similar condition, free from
unauthorized occupation, graffiti, and accumulation of debris or waste material (each, a
"Changed Property Condition"), as it exists as of the Effective Date of this Agreement
through the Close of Escrow consistent with Seller's past practices; provided, however,
(i) Seller shall not be obligated to undertake any capital improvements or deferred
maintenance repairs, and (ii) if any Changed Property Condition exists on the Closing
Date and City has not waived such Changed Property Condition in writing, then Seller
shall have the right to cure such and be entitled to extend the Closing Date for up to ten
(10) days for purposes of such cure. Notwithstanding the foregoing, in addition to the
City's rights under Section 13.1, if Seller fails or refuses to cure such Changed Property
Condition, City shall have the right at its sole and exclusive discretion to terminate this
Agreement and have its Deposit returned within seven (7) days of such termination.
6.5 Contracts. Subsequent to the expiration of the Due Diligence Period and
assuming this Agreement has not been terminated, and assuming City has not delivered
notice of its disapproval of the condition of the Property, Seller shall not enter into any
new contracts or any amendments or modifications to the Existing Contracts, which new
contracts or modifications shall survive Closing (collectively, "New Contracts") without
City's prior written consent, which consent may be withheld in City's reasonable discretion
and will be deemed to have been given by City if City does not notify Seller in writing to
the contrary within five (5) business days after Seller provides written notice to City of
such New Contract; provided, that, in the case of emergency (including, without limitation,
immediate repairs) or other exigent circumstances, or as required by law or required
under any Lease, Seller shall have the right to enter into New Contracts with respect to
the foregoing without City's consent, provided that Seller shall notify City of such New
Contracts as soon as practicable. Notwithstanding the foregoing, in the event Seller
executes a New Contract without first seeking the City's prior written consent and which
New Contract obligates the City to cover expenses or make payments after Closing, the
City may at its option elect to deduct the amount of such expenses and payments from
the Purchase Price or elect not to accept assignment of such New Contract and Seller
shall remain responsible for same in accordance with Section 4.3.
6.6 Leases. Subsequent to the expiration of the Due Diligence Period and
assuming this Agreement has not been terminated, and assuming City has not delivered
notice of its disapproval of the condition of the Property, Seller will not enter into new
Leases or any amendments or any extensions of existing Leases for a period that will
survive Closing or otherwise affect the use, operation or enjoyment of the Property after
Closing (collectively, "New Leases"), without City's written consent, which consent may
be withheld in City's sole and absolute discretion.
6.7 City Financing. Seller shall cooperate with City in its efforts to obtain bond
financing, such as by providing documents and information to City's counsel and
consultants as reasonably requested by City.
7. TITLE POLICY.
oo119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 10
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7.1 Approval of Title. Following execution of this Agreement but in no event later
than five (5) calendar days following Opening of Escrow, Seller shall deliver to City a
preliminary title report issued through First American Title Insurance Company ("Title
Company"), describing the state of title of the Property ("Preliminary Title Report"),
together with Schedule B exceptions. City shall notify Seller in writing of any objections
City may have to title exceptions or other matters ("Disapproved Exceptions") contained
in the Preliminary Title Report within fifteen (15) calendar days after City's receipt of the
Preliminary Title Report ("City's Objection Notice"). If City fails to deliver City's Objection
Notice within said fifteen (15) calendar day period, City shall be conclusively deemed to
have approved the Preliminary Title Report and all matters shown thereon. In the event
City delivers City's Objection Notice within said period, Seller shall have a period of ten
(10) calendar days after receipt of City's Objection Notice in which to notify City of Seller's
election to either (i) agree to remove any such Disapproved Exceptions prior to the Close
of Escrow; or (ii) decline to remove any such Disapproved Exceptions ("Seller's Notice").
It shall be incumbent upon City to obtain a "pro forma" or similar commitment for the Title
Policy (the "Pro Forma") prior to the expiration of the Due Diligence Period, If City does
not approve such Pro Forma prior to the expiration of the Due Diligence Period, City shall
have the right to terminate this Agreement (in which case City shall be entitled to a return
of the Deposit). If City fails to so terminate this Agreement, City shall be deemed to have
approved such Pro Forma. City agrees that it will take title to the Property subject to the
items set forth in the Pro Forma and any other Permitted Exceptions. Notwithstanding
anything in this Agreement to the contrary, Seller shall remove from title of the Property,
at or before the Close of Escrow, any (a) deeds of trust or mortgages securing loans made
to Seller, and (b) other Monetary Liens or encumbrances encumbering the Property,
Upon the issuance of any amendment or supplement to the Preliminary Title
Report which adds additional exceptions, the foregoing right of review and approval shall
also apply to said amendment or supplement, provided, however, that City's initial period
of review and approval or disapproval of any such additional exceptions shall be limited
to ten (10) calendar days following receipt of notice of such additional exceptions along
with a legible copy of the underlying document comprising the }oasis for each such
additional exception.
"Monetary Liens" shall mean all (i) liens secured by deeds of trust securing loans
which are secured by an interest in the Property, (ii) federal tax liens due to failure to
timely pay taxes which have been imposed on or secured by the Property, and (iii)
mechanics' or materialmens' liens relating to work contracted for and performed at the
Property and recorded against title to the Property. Such Monetary Lien amounts may be
up to and including the total amount of unpaid principal and interest on note(s) secured
by mortgage(s) or deed(s) of trust, if any, and all other amounts due and payable in
accordance with the terms and conditions of said trust deed(s) or mortgage(s) or liens
including late charges, if any.
7.2 Title Policy to be Issued to City. When Escrow Holder holds for City the
Grant Deed in favor of City executed and acknowledged by Seller covering the Property,
oo11goio-4 Agreement far Purchase and Sale of Real Property and Escrow Instructions Page 11
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Escrow Holder shall cause to be issued and delivered to City and Seller as of the Closing
a CLTA standard coverage policy of title insurance, or, upon City's request therefor, an
ALTA standard coverage policy of title insurance ("Title Policy"), issued by Title Company,
with liability in the amount of the Purchase Price, covering the Property and showing title
vested in City free of all liens and encumbrances, except (collectively, "Permitted
Exceptions"):
(a) All nondelinquent general and special real property taxes and
assessments for the current fiscal year;
(b) Easements, encumbrances, covenants, conditions, restrictions,
reservations, rights -of -way and other matters of record, as approved or deemed
approved by City pursuant to Section 7.1 above;
(c) The standard printed exceptions and exclusions contained in the
CLTA or ALTA form policy;
(d) Any exceptions created or consented to in writing by City, including
without limitation, any exceptions resulting from City's possession of or entry on
the Property;
(e) if City fails to provide an ALTA survey for the Property acceptable to
the Title Company for purposes of issuing the Title Policy, a general survey
exception; and
(f) such other exceptions as Title Company shall commit to insure over,
with City's prior written consent or approval of same, without any additional cost to
City, whether such insurance is made available in consideration of payment,
bonding, indemnity by Seller or otherwise.
8. CONDITIONS PRECEDENT TO CLOSE OF ESCROW.
8.1 Conditions Precedent to City's Obligations. The obligations of City under
this Agreement to proceed with Close of Escrow shall be subject to the satisfaction or
written waiver, in whole or in part, by City of each of the following conditions precedent:
(a) Seller is not in material default with the terms of this Agreement.
(b) Seller has satisfied the Estoppel Delivery Requirement.
(c) Subject to Section 10.3, all representations and warranties specified
in Section 10.1 are true and correct in all material respects as if made on and as
of the Closing Date except to the extent such representations and warranties
expressly relate to an earlier date.
ooit3olo-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 12
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(d) Seller shall have duly performed in all material respects every
covenant of Seller required to be performed by Seller hereunder prior to the Close
of Escrow.
(e) Title Company has irrevocably committed to issue an ALTA Title
Policy, consistent in all material respects with the Pro Forma, as required by
Section 7 of this Agreement insuring title to the Property vested in City or other
vestee designated by City far vesting purposes only, subject to payment of the Title
Policy premium as provided herein.
8.2 Conditions Precedent to Seller's Obligations. The obligations of Seller
under this Agreement to proceed with Close of Escrow shall be subject to the satisfaction
or written waiver, in whole or in part, by Seller of the following condition precedent:
(a) City is not in default in any material respect under the terms of this
Agreement.
(b) City shall have timely delivered the balance of the Purchase Price
pursuant to the provisions of Section 2 above and all other items set forth in
Section 4.1 above.
(c) All representations and warranties specified in Section 10.4 are true
and correct in all material respects as if made on and as of the Closing Date except
to the extent such representations and warranties expressly relate to an earlier
date.
8.3 Return of Deposit; Seiler Default. In the event Seller fails to satisfy any of
the conditions specified in Section 8.1, above, and those conditions are not waived by
City or cured within two (2) business days after Seller's receipt of a written notice from
City specifying such default in writing prior to Closing, this Agreement shall terminate
automatically without further action by any Party or Escrow Holder and Escrow Holder
shall promptly return the Deposit together with any and all interest accrued thereon to
C ity.
9. ESCROW PROVISIONS.
9.1 Escrow Instructions. This Agreement, when signed by City and Seller, shall
also constitute escrow instructions to Escrow Holder. Escrow Holder, to whom these
instructions are delivered, is hereby authorized, directed, and empowered to act under
and in strict accordance with this Agreement. If required by Escrow Holder, City and Seller
agree to execute Escrow Holder's standard escrow instructions, provided that the same
are consistent with and do not conflict with the provisions of this Agreement. In the event
of any such conflict, the provisions of this Agreement shall prevail.
9.2 General Escrow Provisions, Escrow Holder shall cause the Grant Deed to
be recorded (but in no event after the expiration of the Closing Period) when Title
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 13
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Company is in a position to issue the Title Policy in the form described in Section 7 below,
and Escrow Holder will hold for the account of Seller and City, respectively, the items
described in Sections 4.1 and 4.2 above, to be delivered to Seller and City, respectively,
through Escrow, less costs, expenses and disbursements chargeable to Seller and City,
respectively, pursuant to the terms hereof. Escrow Holder shall deliver the Title Policy to
the City and instruct the Orange County Recorder to mail the Grant Deed to City at the
address set forth in Section 28 after recordation. All funds received in this Escrow shall
be deposited in one or more general escrow accounts of the Escrow Holder with any bank
doing business in Orange County, California, and may be disbursed to any other general
escrow account or accounts. All disbursements shall be made by Escrow Holder's check
or wire transfer.
9.3 Proration of Real Property Taxes; Rents. All nondelinquent general and
special real property taxes applicable to the Property shall be prorated to the Close of
Escrow on the basis of a thirty (30) day month and a three hundred sixty day (3E0) year.
In the event that property taxes are assessed on a parcel of real property which includes
land other than the Property, such proration shall include only taxes attributable to the
Property, calculated in terms of total gross square feet of land assessed pursuant to the
tax statement versus total gross square footage of the Property. Any supplemental tax
bills received after Close of Escrow shall be paid by Seiler to the extent they relate to a
period prior to Close of Escrow, and by City, to the extent they relate to a period after
Close of Escrow. If a supplemental tax bill covers a period commencing before and
continuing after Close of Escrow, the Party named in the bill will pay the tax and the other
Party shall reimburse the first Party its pro rata share of the portion of such supplemental
tax bill that pertains to the Property within thirty (30) calendar days after receipt of a copy
of the tax bill and evidence of the second Party's payment of same. The provisions of this
Section 9.3 shall survive Close of Escrow. If either Party fails to pay its pro rats share of
taxes by the times herein provided, interest shall accrue on all unpaid amounts from when
owing until paid at five percent (5%) over the Federal Discount Rate quoted by the Federal
Reserve Bank of San Francisco on the 25th day of the month preceding the date interest
commences to accrue. Rents of tenants under Leases, if any, shall be prorated to the
Closing Date based on rents actually collected. Any such rents collected after the Closing
Date by City which are attributable to the period prior to the Closing Date shall be paid to
Seller upon collection. Rents collected after the Closing Date from tenants whose rent
was delinquent at Closing and/or constituting reimbursements for operating expenses
paid by Seller shall be deemed to first apply to costs of collecting such rents, second to
the rental period in which closing occurred, third to rents which accrued after the Closing
and fourth to rents accruing prior to the Closing Date. City shall have no obligation to
commence litigation or to collect rents or to terminate the tenant's right to occupancy
based upon tenant's failure to pay rentals which were delinquent at Closing and/or such
reimbursements; however, City shall use reasonable efforts to collect such delinquent
rents and shall reasonably and in good faith cooperate with Seller's attempts to collect
such rents at no cost or expense to City.
9A Payment of Costs. Seller shall pay charges for drawing the Grant Deed and
one-half (1/2) of the escrow fee. City shall pay charges for recording the Grant Deed, the
oo119oio-4 Agreement far Purchase and Sale of Real Property and Escrow Instructions Page 14
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entire title insurance premium for the Title Policy, whether CLTA or ALTA coverage,
including all premiums and other costs for any endorsements, and one-half (1 /2) of the
escrow fee. All other costs of Escrow not otherwise specifically allocated by this
Agreement shall be apportioned between the Parties in a manner consistent with the
custom and usage of Escrow Holder. This transaction is exempt from payment of
documentary transfer taxes.
9.5 Termination and Cancellation of Escrow, Remedies. Time is of the essence
of this Agreement. If Close of Escrow fails to occur within the Closing Period, then Escrow
shall terminate automatically without further action by Escrow Holder or any Party. Upon
such termination, Escrow Holder is hereby instructed, without further notice or instructions
from either Party to (i) disburse the Deposit and any interest earned on the Deposit, and
all other funds then in Escrow, if any, to City if Closing did not occur because of Seller's
uncured default or nonperformance or to Seller if Closing did not occur because of City's
uncured default or nonperformance; and (ii) return all documents deposited into Escrow,
if any, to the Party that deposited the same with Escrow Holder. Cancellation of Escrow,
as provided herein, and return of such funds and documents shall be without prejudice to
whatever legal rights City or Seller may have against each other arising from the Escrow
or this Agreement.
9.6 Information Report. The "Reporting Person" within the meaning of Treasury
Regulation Section 1.6045-4(e)(5) with respect to the transactions contemplated by this
Agreement shall be Escrow Holder. It is agreed that Escrow Holder is an eligible person
under Section 1.6045-4(e)(5)(ii) of said Regulations. Escrow Holder hereby agrees to be
responsible for complying with the reporting and other requirements of Internal Revenue
Code Section 6045(e) and the income tax regulations promulgated thereunder. Pursuant
to said regulations, the address for the transferor and transferee are as set forth for Seller
and City below, and the identifying information regarding the real estate transferred is the
legal description for the Property set forth herein. Escrow Holder agrees to file the form
required by said regulations between the end of the calendar year in which the Close of
Escrow occurs and February 28 of the following calendar year. City and Seller agree (i)
to cooperate with Escrow Holder and with each other in completing any report and/or
other information required to be delivered to the Internal Revenue Service pursuant to
Internal Revenue Code Section 6045(e) regarding the real estate sales transaction
contemplated by this Agreement, including without limitation, Internal Revenue Service
Form 1099-S as such may be hereinafter modified or amended by the Internal Revenue
Service, or as may be required pursuant to any regulation now or hereinafter promulgated
by the Treasury Department with respect thereto; (ii) that City and Seller, their respective
employees and attorneys, and Escrow Holder and its employees may disclose to the
Internal Revenue Service, any information regarding this Agreement or the transaction
contemplated herein as such Party reasonably deems to be required to be disclosed to
the Internal Revenue Service by such Party pursuant to Internal Revenue Code Section
6045(e); (iii) that neither City nor Seller shall seek to hold any such Party liable for the
disclosure to the internal Revenue Service of any such information; and (iv) to retain this
Agreement for at least four (4) years following the close of the calendar year in which the
Close of Escrow occurs.
Doi 1go10-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 15
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1D. REPRESENTATIONS AND WARRANTIES.
1 D.1 Representations and Warranties. Seller hereby makes the following
representations and warranties to City, each of which (i) is material and relied upon by
City in making its determination to enter into this Agreement; and (ii) is true in all material
respects as of the date hereof and shall be true in all material respects on the date of
Close of Escrow on the Property (except to the extent any such representation and
warranty expressly relates to an earlier date); and (iii) is subject to disclosures by Seller
and provided in writing to the City, contained in the Due Diligence Items transmitted to
City pursuant to the documents outlined in Exhibit G, and matters of public record:
(a) Seller has received no written notice that any governmental authority
or any employee or agent thereof considers the Property or the operation, use or
ownership of the Property to violate in any material respect any ordinance, rule,
law, regulation or order of any government or agency, body or subdivision thereof
(including, without limitation, environmental laws), or that any investigation has
been commenced or is contemplated respecting possible violations.
(b) As of the Effective Date, Seller has not received written notice of any
pending or, to Seller's knowledge, threatened litigation or lawsuits or claims,
whether for personal injury, property damage, landlord -tenant disputes, property
taxes, contractual disputes or otherwise, which do or may materially and adversely
affect the Property or the operation or value thereof, and there are no actions or
proceedings pending or, to the best of Seller's knowledge, threatened against
Seller before any court or administrative agency in any way connected with the
Property that would materially and adversely affect the Property or the market
value of the Property. Neither the entering into of this Agreement nor the
consummation of the transactions contemplated hereby will constitute or result in
a violation or breach by Seller of any judgment, order, writ, injunction or decree
issued against or imposed upon it. There is no action, suit, proceeding or
investigation pending or threatened against Seller which would became a cloud on
City's title to and have a material adverse impact upon the Property or any portion
thereof or which questions the validity or enforceability of the transaction
contemplated by this Agreement or any action taken pursuant hereto in any court
or before or by any federal, district, county, or municipal agency, entity,
department, commission, board, bureau, agency or other governmental
instrumentality.
(c) There are no contracts, leases, claims or rights affecting the Property
and no agreements entered into by or under Seller that would be binding on the
City after the Close of Escrow, or materially and adversely affect City's rights with
respect to the Property except as heretofore disclosed in writing by Seller to City
or disclosed in the Preliminary Title Report, and/or which City has elected to
assume pursuant to the terms of this Agreement.
OG119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 16
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(d) Seller has the unimpeded power and authority to execute, deliver
and perform this Agreement, the Seller's obligations under this Agreement, and
the documents executed and delivered by Seller pursuant hereto.
(e) Seller is not a "foreign person" within the meaning of Section 1445 of
the Internal Revenue Code of 1986, as amended.
(f) This Agreement is the legal, valid and binding obligation of Seller,
enforceable against Seller in accordance with its terms.
(g) To Seller's knowledge, there is not present in, on, or under the
Property and Seller has not used, stored or disposed of, on, under, or about the
Property or transported to or from the Property any "Hazardous Materials" at the
Property in violation of environmental laws during the period of Seller ownership
of the Property. "Hazardous Materials" shall mean and include any hazardous
substance, pollutant, contaminant, material, waste, by-product or constituent
which is or becomes regulated by any local government authority, the State of
California or the United States Government, including, without limitation, any
substance, material, waste, or by-product regulated by any governmental laws. To
Seller's actual knowledge, but without duty of investigation, Seller, as of the
Effective Date, is not required by any applicable laws and/or governmental
regulations to take any action to remediate any environmental condition affecting
the Property.
For purposes of this Section 10.1 and the Seller's obligation to notify the City of
the representations and warranties as outlined in this Agreement, a breach of such shall
be considered material when the associated cost, loss, expense, liability, and/or
obligation is equivalent to or in an amount of at least twenty-five thousand dollars
($25,000) or more.
All representations and warranties made hereunder are in addition to any
representations and warranties implied by law and in no event shall this Section 10.1 be
construed to limit, diminish, or reduce any obligation of disclosure implied upon Seller by
law. The representations and warranties of Seller set forth in Section 10.1 hereof shall
survive Closing until December 27, 2023. Seller shall have no liability to City for a breach
of any representation or warranty (a) unless written notice containing a description of the
specific nature of such breach shall have been given by City to Seller prior to December
27, 2023 and an action shall have been commenced by City against Seller within sixty
(60) calendar days following December 27, 2023, or (b) if the breach in question results
from or is based on a condition, state of facts or other matter that was Known by City prior
to Closing. For purposes hereof, any condition, state of facts or other matter shall be
"Known by City" if it was (A) actually known by City, (B) contained in any Due Diligence
Items and reasonably discoverable by City, (C) disclosed as a result of City's due
diligence (including, without limitation, in any reports obtained by any representative,
agent or consultant of City), (D) disclosed in writing by Seller or Seller's agents and
employees, or (E) a matter of public record.
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10.2 Disclaimer of Representations and Warranties. City acknowledges that as
of Close of Escrow it will have had an adequate opportunity to inspect the Property and
to investigate its physical characteristics and conditions. Upon the Close of Escrow, City
shall be deemed to have waived any and all objections to the physical characteristics and
conditions of the Property which would be disclosed by a reasonable and diligent
inspection subject to City's right to rely upon Seller's express representations and
warranties set forth in this Agreement and/or the other documents signed and delivered
by Seller hereunder. City acknowledges that, except as specifically provided herein,
neither Seller nor any of its employees, agents, or representatives has made any
representations, warranties or agreements to or with City on behalf of Seller as to any
matters concerning the Property, the present use thereof, or the suitability of City's
intended use of the Property.
The foregoing disclaimer includes, without limitation, topography, climate, air,
water rights, utilities, present and future zoning, soil, subsoil, the acreage of the Property
or square footage of buildings located thereon, the purpose to which the Property is
suited, drainage, and access to public roads. City further acknowledges and agrees that
the Property is to be purchased, conveyed, and accepted by City in its present condition,
"AS -IS," and that no patent or latent physical condition of the Property, whether or not
known or discovered„ shall affect the rights of either Party hereto. City has investigated
and has knowledge of operative or imposed governmental laws and regulations
(including, but not limited to, zoning, environmental, including specifically the regulations
of the Environmental Protection Agency, and land use laws and regulations) to which the
Property may be subject, and is acquiring the Property on the basis of its review and
determination of the application and effect of such laws and regulations. City has neither
received nor relied upon any representations concerning such laws and regulations made
by Seller, Seller's employees, agents, or any other person acting on behalf of Seller. Any
agreements, warranties or representations not expressly contained in this Agreement
shall in no way bind Seller.
10.3 Changed Circumstances. If Seller becomes aware of any fact or
circumstance which would materially and adversely change or render incorrect, in whole
or in part, any representation or warranty made by Seller under this Agreement (a
"Material Exception Matter", whether as of the date given or any time thereafter until the
Close of Escrow and whether or not such representation or warranty was based upon
Seller's knowledge and/or belief as of a certain date, Seller will give written notice of such
changed fact or circumstance to City within three (3) business days of becoming aware
of such, but such notice shall not release Seller of its liabilities or obligations with respect
thereto. Upon City becoming aware of any Material Exception Matter (other than if City
became aware from a Seller notice pursuant to the immediately preceding sentence), City
shall notify Seller of same within ten (10) business days after obtaining such knowledge
(but, in any event, prior to the Closing). If any Material Exception Matter is capable of
being cured, Seller shall have the right to cure such Material Exception Matter and be
entitled to extend the Closing Date for up to fifteen (15) business days for purposes of
such cure. Should Seller not cure such Material Exception Matter to the City's reasonable
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 18
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satisfaction, City shall, as its sole and exclusive remedy, have the right to terminate this
Agreement and the Deposit shall be returned to City within seven (7) days of such
termination and neither City nor Seller shall have any further obligations to the other,
except for those obligations, which as outlined in this Agreement, expressly survive
termination. In no event shall any change in circumstance with respect to a tenant or a
Lease (e.g., default, termination, bankruptcy, or other adverse matter) constitute a
Material Exception Matter, subject to Seiler providing updated rent roll reports, accounts
receivable reports, and notice of any change in tenant status that Seller becomes aware
of (including, but not limited to, defaults, terminations, notice of bankruptcy, or other
adverse matter) at regular intervals during the Due Diligence Period, and five (5) business
days before the expiration of the Due Diligence Period.
10.4 City represents and warrants to Seller as of the Effective Date as follows:
(a) California Constitution Article 11, Section 5, and Article 2 of the
Newport Beach Charter authorize the City to execute, deliver and perform this
Agreement.
(b) Subject to City Council approval of this Agreement and compliance
with applicable local, state, and federal laws, this Agreement is the legal, valid and
binding obligation of City, enforceable against City in accordance with its terms.
11. INDEMNITY BY SELLER AND CITY.
11.1 Seller ("Indemnitor") shall hold harmless, indemnify and defend City
("lndemnitee") from and against any and all obligations, liabilities, claims, damages, costs,
expenses, suits, judgments, liens or encumbrances and all expenses related thereto,
including reasonable attorney's fees ("Indemnification Claim") (i) arising out of or in any
way related to the Property and to the extent within the scope of coverage under any title
policy issued for the Property, whether direct, contingent or consequential, and arising or
accruing on or before the Effective Date; (ii) arising out of or in any way related to Seller's
active negligence or willful misconduct related to the Property regardless whether covered
under any title policy, whether direct, contingent or consequential, including those
reflected by the Preliminary Title Report unless otherwise waived or approved by City
pursuant to Section 7, above, and arising or accruing from or after Seller's acquisition of
the Property until the Effective Date; (iii) arising out of or in any way related to Seller's
active negligence or willful misconduct, whether an act, omission, or commitment,
including any contract disclosed pursuant to Section 10.1, above, any obligation of Seller
to any third party, any damage to the Property, or injury to or death of any person,
employees or agents of Seller, that occurred or was entered into on or before the date of
the Close of Escrow, except for obligations, liabilities, claims, liens and encumbrances
disclosed herein or which City specifically agrees to assume or take subject to; (Iv)
resulting from any material inaccuracy or material breach of any representation or
warranty of Seller contained in this Agreement; and (v) resulting from any breach or
default by Seller under this Agreement, or any other agreements relating to this
transaction.
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 19
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11.2 As a condition to the Indemnitor's obligation to provide indemnification
under this Section 11, Indemnitee will give written notice to Indemnitor of any
Indemnification Claim actually brought stating in reasonable detail the basis for which
indemnification is being sought hereunder as soon as reasonably possible after
Indemnitee's knowledge thereof ("Indemnification Notice"); provided, however,
Indemnitee's failure to provide such Indemnification Notice to Indemnitor will not relieve
Indemnitor of or from any of its obligations hereunder unless and only to the extent that
Indemnitor suffers prejudice as a result of such failure. Notwithstanding anything in this
Agreement to contrary, Indemnitor's indemnification obligations under this Section 11
shall expire four (4) years from the Close of Escrow except that any Indemnification Claim
based upon fraud and/or misrepresentation shall extend an additional three (3) years after
the facts alleging fraud and/or misrepresentation are discovered.
11.3 Should Indemnitor fail to discharge or undertake to defend Indemnitee
against an Indemnification Claim where Indemnitee provides Indemnification Notice
pursuant to this Section 11, then Indemnitee may settle such Indemnification Claim and
Indemnitor's liability to Indemnitee shall be conclusively established by such settlement,
the amount of such liability to include both the settlement consideration and the
reasonable expenses, including attorney's fees, incurred by Indemnitee in effecting such
settlement. Indemnitor shall otherwise have the right to control and direct the
investigation, preparation, defense, trial and settlement of each such Indemnification
Claim and Indemnitee shall reasonably cooperate in the defense of such claim and shall
furnish such records, information and testimony and attend to such proceedings as may
be reasonably requested in connection therewith, provided Indemnitor has received
Indemnitee's prior written consent, which consent shall not be unreasonably withheld or
delayed. Indemnitor shall make no admission or settlement of any such Indemnification
Claim which would give rise to liability on the part of Indemnitee without its prior written
consent, which consent shall not be unreasonably withheld or delayed.
12. SETTLEMENT OF CLAIMS.
12.1 Release of Claims by Seller. In exchange for the promises contained in this
Agreement, and except as to the obligations provided for in this Agreement, Seller hereby
waives, releases and forever discharges, and agrees to the extent permitted by law that
it will not in any manner institute, prosecute or pursue, any and all complaints, charges,
claims for relief, demands, damages, suits, actions or causes of action, of any kind,
whether in law or in equity, which it asserts or could assert, at common law or under any
statute, rule, regulation, order or law, whether federal, state or local, or on any grounds
whatsoever, against the City and/or any of its current or former officers, council members,
agents, representatives, employees, successors and assigns with respect to any event,
matter, claim, damage or injury, of any kind related to the Property as of the Effective
Date and/or the Closing Date.
12.2 Release of Claims by City. In exchange for the promises contained in this
Agreement, and except as to the obligations, representations, and warranties expressly
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 20
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made by Seller contained in this Agreement, and/or in the other documents, instruments,
and agreements signed and delivered by Seller in connection with the transaction in this
Agreement, and as otherwise expressly set forth herein that survive the Close of Escrow,
effective upon Close of Escrow, City hereby waives, releases and forever discharges, and
agrees to the extent permitted by law that it will not in any manner institute, prosecute or
pursue, any and all complaints, charges, claims for relief, demands, damages, suits,
actions or causes of action, of any kind, whether in law or in equity, which it asserts or
could assert, at common law or under any statute, rule, regulation, order or law, whether
federal, state or local, or on any grounds whatsoever, against Seller and/or any of its or
their current or former owners, trusts, trustees, officers, directors, shareholders, affiliates,
agents, representatives, employees, attorneys, successors, predecessors, insurers, and
assigns with respect to any event, matter, claim, damage or injury of any kind related to
the Property as of the Effective Date and/or the Closing Date.
12.3 Waiver of Unknown Claims. With respect to the subject matter of this
Agreement, including, but not limited to the Property, it is agreed and understood that the
releases being provided by each of the Parties above apply to all injuries and damages,
whether now known or unknown, and whether now existing or which may result in the
future due to the actions or omissions of the Parties on or before the Effective Date. With
respect to the subject matter of this Agreement, the Parties acknowledge that they have
each been fully advised of and understand the provisions of Section 1542 of the California
Civil Code which reads:
'R general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing the
release and that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party. "
In further consideration of the promises and payments pursuant to this Agreement,
each Party agrees to, and does hereby, waive and relinquish all rights afforded to it under
California Civil Code Section 1542, or any similar law of any State ar territory of the United
States or otherjurisdiction with respect to the matters of this Agreement. Notwithstanding
the above, nothing in this Agreement shall be deemed to waive or release either Party as
to (i) any of its obligations or rights under this Agreement and/or any other documents,
instruments, or agreements signed and delivered by City or Seller pursuant to the terms
of this Agreement, or (ii) any claims arising from such Party's own actual or alleged fraud,
gross negligence, or wrongful conduct of the other Party, or (iii) claims for personal injury
or property damage occurring on the Property during that Party's ownership of the
Property, or claims against a Party based on a breach of contract by that Party concerning
the Property and/or its own property and occurring during such Party's ownership of the
Property.
The foregoing provisions shall survive the Close of Escrow.
SELLER'S INITIALS CITY'S INITIALS
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 21
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13. DAMAGE, DESTRUCTION AND CONDEMNATION.
13.1 Risk of Physical Loss. Risk of physical loss to the Property shall be borne
by Seller prior to the Close of Escrow and by City thereafter. In the event the Property
shall be damaged by fire, flood, earthquake or other casualty, and the estimated cost to
repair same exceeds ONE MILLION FIVE HUNDRED TWENTY-FIVE THOUSAND
DOLLARS and 001100 ($1,525,000.00), City may, at its option, elect not to acquire the
Property. If City does not so elect or the estimated cost to repair the damage is less than
ONE MILLION FIVE HUNDRED TWENTY-FIVE THOUSAND DOLLARS and 001100
($1,525,000.00), City shall complete the acquisition of the Property, and Seller shall
assign to City the interest of Seller in all insurance proceeds relating to such damage.
Seller shall maintain property insurance against all risks of loss (including earthquake). In
the event that such damage occurs and City elects not to purchase the Property as above
provided, then this Agreement shall be terminated and City shall be entitled to the return
of all funds and documents (including the entirety of the Deposit) that City deposited into
the Escrow hereunder.
13.2 Condemnation. In the event that, prior to the Close of Escrow, any
governmental entity (other than City or any agencies that City controls) shall commence
any actions of eminent domain or similar type proceedings to take any material portion of
the Property, or if any other governmental entity (other than City or any agencies that City
controls) shall commence any efforts toward a conveyance in lieu of a condemnation
action as to a material portion of the Property, City shall have the option either to (i) elect
not to acquire the Property, or (ii) complete the acquisition of the Property, in which case
City shall be entitled to all the proceeds of such taking. In the event that City elects not to
purchase the Property as above provided, then this Agreement shall be terminated and
City shall be entitled to the return of all funds and documents (including the entirety of the
Deposit) that City deposited into the Escrow hereunder. In the event that either (x) a
taking is not for a material portion of the Property or (y) City elects to purchase the
Property as above provided, then City shall complete the acquisition of the Property, in
which case City shall be entitled to all the proceeds of such taking.
14. DEFAULT.
14.1 Default by City. IN THE EVENT CITY FAILS TO TENDER THE
PURCHASE PRICE, INITIAL DEPOSIT, SECOND DEPOSIT, OR EXTENDED DEPOSIT
AS REQUIRED IN SECTIONS 2, 2.1(a), 2.1(b), OR 5.3, OR INDEMNIFY SELLER
RELATED TO CITY'S INVESTIGATIONS ON THE PROPERTY AS REQUIRED IN
SECTION 5.4 HEREINAFTER DEFINED AS "MONETARY DEFAULT," CITY AND
SELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT
TO ESTIMATE THE DAMAGES THAT SELLER MAY SUFFER, THEREFORE CITY
AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE
TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT OF A
MONETARY DEFAULT BY CITY HEREUNDER SHALL BE AN AMOUNT EQUAL TO
THE DEPOSIT; AND, AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 22
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LAW OR IN EQUITY), SAID AMOUNT SHALL BE DISBURSED TO SELLER AS THE
FULL, AGREED AND LIQUIDATED DAMAGES FOR SUCH A BREACH OF THIS
AGREEMENT BY CITY, ALL OTHER CLAIMS TO DAMAGES OR OTHER REMEDIES
IN RESPECT OF CITY'S BREACH OF THIS AGREEMENT BEING HEREIN
EXPRESSLY WAIVED BY SELLER. SUCH PAYMENT OF THE DEPOSIT IS NOT
INTENDED AS A PENALTY, BUT AS FULL LIQUIDATED DAMAGES.
14.2 Limited Liability. Notwithstanding anything to the contrary herein, City on
its own behalf and on behalf of its agents, employees, representatives, successors and
assigns (collectively (but excluding City), the "City Parties") hereby agrees that in no event
or circumstance shall any of the members, partners, employees, representatives, officers,
directors, agents, property management company, affiliated or related entities of Seller or
Seller's property management company have any personal liability under this Agreement.
Notwithstanding anything to the contrary contained herein: (a) the maximum aggregate
liability of Seller, and the maximum aggregate amount that may be awarded to and
collected by City (including, without limitation, for any breach of any representation,
warranty and/or covenant of Seller) under this Agreement or any documents executed
pursuant hereto or in connection herewith, including, without limitation, the exhibits and
schedules attached hereto (collectively, the "Other Documents") shall, under no
circumstances whatsoever, exceed $1,067,500 (the "CAP Amount"), and (b) no claim by
City alleging a breach by Seller of any representation, warranty and/or covenant of Seller
contained herein or any of the Other Documents may be made, and Seller shall not be
liable for any judgment in any action based upon any such claim, unless and until such
claim, either alone or together with any other claims by City alleging a breach by Seller of
any such representation, warranty and/or covenant, is for an aggregate amount in excess
of $25,000 (the "Floor Amount"), in which event Seller's liability respecting any final
judgment concerning such claim or claims shall be for the entire amount thereof, subject
to the CAP Amount set forth in clause (a) above. Notwithstanding anything to the contrary
contained in this Agreement, Seller shall have no liability with respect to any of the Seller's
representations, warranties and covenants herein if (i) the breach in question results from
or is based on a condition, state of facts or other matter that was reasonably discoverable
by City or Known by City prior to Closing that contradicts any of Seller's representations
and warranties herein, and (ii) City nevertheless consummates the transaction
contemplated by this Agreement.
15. POSSESSION. Possession of the Property shall be delivered to City as of
Close of Escrow. In the event any personal property remains on the Property following
the Close of Escrow, it shall automatically become the property of City.
16. RESERVED.
1T ASSIGNMENT. City shall not have the right to assign this Agreement or any
interest or right hereunder or under the Escrow or to nominate another party to take title
to the Property without the prior written consent of Seller, which Seller may withhold in
Seller's sole discretion. In no event shall City be released of liability in the event of an
assignment or nomination.
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 23
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1 & RESERVED.
19. COOPERATION. City and Seller agree to cooperate with one another, at
no cost or expense to the cooperating Party, in satisfying the conditions precedent to
Close of Escrow. City shall be responsible for proceeding with diligence and in good faith
to satisfy the conditions to City's performance set forth in Section 8.1 and Seller shall be
responsible for proceeding with diligence and in good faith to satisfy the conditions to
Seller's performance set forth in Section 8.2.
20. QUALIFICATION; AUTHORITY. Each Party represents and warrants that it
is duly formed, is authorized to do business in the state in which the Property is located
and that it has been duly authorized to enter into and perform this Agreement.
21, NO ATTORNEYS' FEES. In any action between the Parties hereto seeking
enforcement of any of the terms and provisions of this Agreement or the Escrow, or in
connection with the Property, the prevailing Party in such action shall not be entitled to
have and to recover from the other Party its reasonable attorneys' fees and other
expenses and costs in connection with such action or proceeding.
22. INTERPRETATION; GOVERNING LAW. This Agreement shall be
construed according to its fair meaning and as if prepared by both Parties hereto. This
Agreement shall be construed in accordance with the laws of the State of California in
effect on the Effective Date of this Agreement. Titles and captions are for convenience
only and shall not constitute a portion of this Agreement. As used in this Agreement,
masculine, feminine or neuter gender and the singular or plural number shall each be
deemed to include the others wherever and whenever the context so dictates.
23. NO WAIVER. No delay or omission by either Party hereto in exercising any
right or power accruing upon the compliance or failure of performance by the other Party
hereto under the provisions of this Agreement shall impair any such right or power or be
construed to be a waiver thereof. A waiver by either Party hereto of a breach of any of
the covenants, conditions or agreements hereof to be performed by the other Party shall
not be construed as a waiver of any contemporaneous or succeeding breach of the same
or other covenants, agreements, restrictions or conditions hereof.
24. MODIFICATIONS. Any alteration, change or modification of or to this
Agreement, or any time limits contained herein, in order to become effective, shall be
made by written instrument or endorsement thereon and in each such instance executed
on behalf of each Party hereto.
25. SEVERABILITY. If any term, provision, condition or covenant of this
Agreement or the application thereof to any Party or circumstances shall, to any extent,
be held invalid or unenforceable, the remainder of this Agreement, or the application of
such term, provision, condition or covenant to persons or circumstances other than those
as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and
ooiigolo-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 24
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each term and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
26. COVENANTS TO SURVIVE ESCROW. The covenants and agreements
contained herein shall survive the Close of Escrow and, subject to the limitations on
assignment contained in Section 17 above, shall be binding upon and inure to the benefit
of the Parties hereto and their representatives, heirs, successors and assigns. Without
limitation of the foregoing, all indemnity obligations set forth herein shall survive the Close
of Escrow or termination of this Agreement with respect to the claims that have accrued
thereunder prior to such Close of Escrow or termination, as applicable.
27. RESERVED.
28. TIME IS OF THE ESSENCE. Time is hereby expressly made of the essence
of this Agreement.
29. EXECUTION IN COUNTERPART. This Agreement may be executed in
several counterparts, and all so executed shall constitute one (1) agreement binding on
all Parties hereto, notwithstanding that all Parties are not signatories to the original or the
same counterpart.
30. NOTICES. Any notice which either Party may desire to give to the other
Party or to the Escrow Holder must be in writing and shall be effective upon delivery if
sent via overnight mail with tracking; upon delivery, if delivered by confirmed facsimile or
email (with a backup sent by first class mail); when personally delivered, if sent by
messenger service; or when delivered if sent postage prepaid by registered or certified
mail, return receipt requested; three (3) business days after deposit in the United States
mail, registered, certified, postage fully prepaid; and in each case addressed to the
respective Parties as set forth below or to such other address and to such other persons
as the Parties may hereafter designate by written notice to the other Party hereto and
Escrow Holder:
To Seller: AG Dove Owner, L.P.
c/o Angelo, Gordon & Co., L.P.
Attn: Louis Friedel
2000 Avenue of the Stars, Suite 1020
Los Angeles, California 90067
With Copies to its Property Manager:
LPC West, Inc.
Attn: Parke Miller
4041 MacArthur Boulevard
Suite 250
Newport Beach, CA 92660
oo119oio-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 25
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And to: Sutton, Pakfar & Courtney LLP
Attn: Nader Pakfar, Esq.
450 N. Roxbury Drive, Suite 700
Beverly Hills, CA 90210
To City: City of Newport Beach
Attn: City Manager
100 Civic Center Drive
Newport Beach, CA 92660
With Copies to: City of Newport Beach
Attn: City Attorney
100 Civic Center Drive
Newport Beach, CA 92660
City of Newport Beach
Attn: Real Property Administrator
100 Civic Center Drive
Newport Beach, CA 92660
31. NO BROKERS. City and Seller each acknowledge and represent to the
other that licensed California real estate brokers Lauren Wooding Whitlinger (License No.
01943711) and Seimone Jurjis (License No. 01876897) employed by the City, and Parke
Miller (License No. 01958898) employed by LPC West, Inc., have been involved with the
transaction provided in this Agreement, and that no broker commissions shall be paid.
City and Seller agree to indemnify one another against any claims, suits, damages, and
costs incurred or arising or resulting from the claims of any person for any commission,
fee, ar other remuneration that such person claims is owed in respect with this transaction
pursuant to a written agreement made with said claimant.
32. CONTINGENCY. It is understood and agreed between the Parties hereto
that the completion of this purchase and sale transaction provided for herein, and Close
of Escrow created hereby, is contingent upon the specific acceptance and approval of
City and Seller. The execution of this Agreement and the other documents required for
Closing, and the delivery of same to Escrow Holder constitute said acceptance and
approval.
33. CEQA. By its execution of this Agreement, the City is not committing itself
or agreeing to undertake any activity requiring the subsequent exercise of discretion by
the City or any department thereof, including, but not limited to, the approval of any CEQA
documents, the approval of any development project or land use regulation governing the
Property, or any other act or approval. The City reserves the right to exercise in good
faith its discretion as to all matters which it is, by law, entitled or required to exercise its
discretion, including, but not limited to, the consideration of CEQA documents, the
consideration of any and all plans, permits, licenses, or regulatory approvals, or any other
acts or activities requiring the subsequent independent exercise of discretion by the City
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 26
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or any agency or department thereof. The City may in good faith, in its sole and absolute
discretion, certify or not certify a CEQA document and approve, approve with
modifications, or not approve, or consider other alternatives, including those presented in
the CEQA documents.
34. ENTIRE AGREEMENT WAIVER AND MODIFICATION. This Agreement is
the entire Agreement between the Parties with respect to the subject matter of this
Agreement. It supersedes all prior agreements and understanding, whether oral or
written, between the Parties with respect to the matters contained in this Agreement. Any
waiver, modification, consent or acquiescence with respect to any provision of this
Agreement shall be set forth in writing and duly executed by or on behalf of the Party to
be bound thereby.
35. CITY AUTHORIZATION. The City Manager of the City of Newport Beach is
hereby authorized, on behalf of the City, to sign all documents necessary and appropriate
to carry out and implement this Agreement and to administer the City's obligations,
responsibilities and duties to be performed under this Agreement and as may be required
for Closing.
3& CONFIDENTIALITY. City agrees that except (a) as otherwise provided or
required by valid law, including the California Public Records Act, Government Code
section 6254 et seq., and the Brown Act, Government Code section 54950 et seq., and
(b) to the extent reasonably necessary to deliver such documents or information to City
and/or its employees, agents, consultants, managers, current or potential investors,
contractors and counsel (collectively, "City Representatives") in connection with City's
(and City's lender's) evaluation of this transaction, City and City Representatives shall
keep (x) the contents of any documents, data, and other materials and information related
to the transaction contemplated hereby, including, without limitation, the Due Diligence
Items, (y) any information obtained, analyzed, or synthesized by City Representatives
arising from any inspections, observations, examinations, surveys, and tests of the
Property conducted by or at the request of City, and (z) all information regarding City's
acquisition or ownership of the Property strictly confidential. City acknowledges that
significant portions of the Due Diligence Items are proprietary in nature and that Sealer
would suffer significant and irreparable harm in the event of the misuse of the Due
Diligence Items. Without affecting any other rights or remedies that either party may have,
City acknowledges and agrees that Seller shall be entitled to seek the remedies of
injunction, specific performance and other equitable relief for any breach, threatened
breach or anticipatory breach of the provisions of this Section 36 pertaining to misuse of
Due Diligence Items by City or any of City Representatives. The provisions of this
Section 36 shall survive any termination of this Agreement but shall not survive the
Closing.
[SIGNATURES ON NEXT PAGE]
oo11go10-4 Agreement for Purchase and Sale of Rea Property and Escrow Instructions Page 27
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement for
Purchase and Sale of Real Property and Escrow Instructions as of the date set forth
above.
APPROVED AS TO FORM:
CITY ATT.ORNEY'S OFFICE
�fi C. Har,
Attorney
ATTEST:
Leilani I. Brown
City Clerk
SELLER: AG Dove Owner, L.P., a Delaware
limited partnership
By: AG OC Portfolio GP, L.L.C., a
Delaware limited liability company
Its: General Partner
Date
Louis Friedel
Vice President
CITY: CITY OF NEWPORT BEACH, a California
municipal corporation and charter city
Date
Grace K. Leung
City Manager
ooilgolo-a Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 28
23-35
JOINDER BY ESCROW HOLDER
Escrow Holder hereby acknowledges that it has received this Agreement executed by the
Seller and City and accepts the obligations of and instructions for the Escrow Holder set
forth herein. Escrow Holder agrees to disburse and/or handle the ❑eposit, the Purchase
Price and all closing documents in accordance with this Agreement.
Dated: November—, 2022 First American Title Insurance Company
ATTACHMENTS: Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H
By: _
Name:
Title:
[END OF SIGNATURES]
Property Legal Description
Property Depiction
Form of Grant ❑eed
Form of Assignment of Leases
Form of Assignment of Contracts
Form of Bill of Sale
Due Diligence Items
Form of Estoppel Certificate
ooii9oio-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 29
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EXHIBIT "A"
PROPERTY LEGAL DESCRIPTION
The land referred to herein below in is situated in the State of California, County of
Orange, City of Newport Beach, and is described as follows:
PARCEL 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILE❑ IN BOOK 57 PAGE 27 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS
RIGHTS, AND OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT
MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED,
TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING
AND OPERA TING THEREFOR AND STORING IN AND REMOVING THE SAME FROM
SAI❑ LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR
❑IRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN THOSE
HEREINABOVE ❑ESCRIBED, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAN❑ HEREIN ABOVE
DESCRIBED AND TO BOTTOM SUCH WHIPSTOCKED ❑R DIRECTIONALLY
❑RILLE❑ WELLS, TUNNELS AN❑ SHAFTS UNDER AND BENEATH OR BEYOND THE
EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN,
REPAIR, ❑EEPEN AN❑ OPERATE ANY SUCH WELLS OR MINES, WITHOUT,
HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE AN❑ OPERATE
THROUGH THE SURF ACE OR THE UPPER 500 FEET OF THE SUB SURF ACE OF
THE LAND HEREINABOVE DESCRIBED, AS RESERVED IN THE ❑EED RECORDE❑
OCTOBER 31, 1974 IN BOOK 11277 PAGE 1355 OF OFFICIAL RECORDS.
AN EASEMENT FOR INGRESS AND EGRESS OVER THAT PORTION OF BLOCK 50
OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP RECORDED IN BOOK I PAGE 88
OF MISCELLANEOUS RECORDS MAP, RECORDS OF ORANGE COUNTY,
CALIFORNIA, DESCRIBE❑ AS FOLLOWS:
BEGINNING AT THE NORTHWESTERLY CORNER OF TRACT NO. 7694, AS SHOWN
ON A MAP RECORDED IN BOOK 294 PAGES 27, 28 AN❑ 29 OF MISCELLANEOUS
MAPS, RECORDS OF SAI❑ ORANGE COUNTY, CALIFORNIA, SAID CORNER ALSO
BEING IN THE WESTERLY RIGHT-OF-WAY LINE OF DOVE STREET, AS SHOWN ON
SAID TRACT NO. 7694; THENCE ALONG SAID WESTERLY RIGHT-OF-WAY LINE
THE FOLLOWING COURSES:
SOUTH 60 59' 41" EAST, 90.00 FEET TO THE BEGINNING OF A TANGENT CURVE,
CONCAVE EASTERLY, HA YING A RADIUS OF 309.00 FEET; THENCE SOUTHERLY
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page A-1
23-37
AND SOUTHEASTERLY 170.49 FEET ALONG SAID CURVE THROUGH A CENTRAL
ANGLE OF 310 36' 46"; THENCE TANGENT TO SAID CURVE, SOUTH 38' 36' 27"
EAST, 132.56 FEET, THENCE SOUTH 400 38' 15" WEST, 275.03 FEET; THENCE
NORTH 490 21' 45" WEST, 389.17 FEET; THENCE NORTH 830 00' 19" EAST, 306.56
FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE
NORTH 400 38' 15" EAST, 44.84 FEET; THENCE NORTH 83° 00' 19" EAST 45.23 FEET
TO A POINT IN SAID WESTERLY RIGHT-OF-WAY LINE OF DOVE STREET, SAID
POINT BEING IN A NON -TANGENT CURVE, CONCAVE EASTERLY AND HA YING A
RADIUS OF 309.00 FEET, A RADIAL BEARING FROM SAID POINT BEARS NORTH
55" 33' 12" EAST; THENCE SOUTHEASTERLY ALONG SAID CURVE AND SAID
RIGHT-OF-WAY LINE, 14.84 FEET THROUGH A CENTRAL ANGLE OF 20 45' 06";
THENCE LEAVING SAID RIGHT-OF-WAY LINE AND NON -TANGENT TO SAID
CURVE, SOUTH 830 00' 19" WEST, 47.35 FEET; THENCE SOUTH 400 38' 15" WEST,
25.55 FEET; THENCE SOUTH 830 00' 19" WEST, 19.29 FEET TO THE TRUE POINT
OF BEGINNING.
APN: 427-221-06
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page A-2
23-38
EXHIBIT "B"
PROPERTY DEPICTION
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 13-1
23-39
EXHIBIT "C"
FORM OF GRANT DEED
RECORDING REQUESTED BY:
CITY OF NEWPORT BEACH
AND WHEN RECORDED MAIL TO:
Attn: City Cleric
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92669
ORDER:
ESCROW NO
Exempt from recording fee per Government Code §§ 8903 and 27383
(Space Above This Line For Recorder's Use Only)
Parcel No: 427-221-06
GRANT DEED
THE UNDERSIGNED GRANTOR(S) DECLARE(s):
City of Newport Beach Documentary Transfer Tax is $0.00
unincorporated area City Transfer Tax is $M0
computed on full value of interest or
property conveyed, or
full value less value of liens or
encumbrances remaining at the time of sale
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
AG Dove Owner, L.P., a Delaware limited partnership ("Grantor"), hereby GRANTS in
fee simple interest to the City of Newport Beach, a municipal corporation and charter
city ("Grantee"), all of that certain real property located at 1201 Dove Street in the City of
Newport Beach, County of Orange, State of California ("Land") as more particularly
described in EXHIBIT "A" and depicted on EXHIBIT "B," which exhibits are attached
hereto and incorporated herein by reference and are made a part of this Grant Deed, all
of Grantor's right, title and interest in and to the rights, benefits, privileges, easements,
tenements, hereditaments, and appurtenances to the extent belonging or appertaining to
the Land with any and all structures, improvements and fixtures, together with equipment
and personal property, if any, located on or under the Land (collectively the "Property").
This conveyance is made and accepted subject to all real property taxes and
assessments that are not yet delinquent, rights of tenants, as tenants only, under
unrecorded leases, all matters of record, and all matters that would be reflected on an
accurate survey or shown by a physical inspection of the Property, as of the date hereof.
[END OF DOCUMENT. SIGNATURES ON NEXT PAGE.]
ooiigolo-a Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-1
23-40
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of
.2022.
GRANTOR:
AG Dove Owner, L.P., a Delaware limited
partnership
By: AG OC Portfolio GP, L.L.C., a Delaware
limited liability company
M
Louis Friedel
Vice President
ACKNOWLEDGMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who
signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
State of California
County of I ss.
On , 20 before me,
Notary Public, personally appeared who
proved to me an the basis of satisfactory evidence to be the person(s) whose name($) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by hislherltheir signatures(s) on the instrument the
persons), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
{seal)
owigolo-4 Agreement for Purchase and Sale of Beal Property and Escrow Instructions Page C-2
23-41
EXHIBIT "A"
PROPERTY LEGAL ❑ESCRIPTION
The land referred to herein below in is situated in the State of California, County of
Orange, City of Newport Beach, and is described as follows:
PARCEL A:
PARCEL 1, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF
CALIFORNIA, AS PER MAP FILED 1N BOOK 57 PAGE 27 OF PARCEL MAPS, IN THE
OFFICE OF THE COUNTY RECORDER OF SAID COUNTY.
EXCEPT ALL OIL, OIL RIGHTS, MINERALS, MINERAL RIGHTS, NATURAL GAS
RIGHTS, AN❑ OTHER HYDROCARBONS BY WHATSOEVER NAME KNOWN THAT
MAY BE WITHIN OR UNDER THE PARCEL OF LAND HEREINABOVE DESCRIBED,
TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING, EXPLORING
AND OPERA TING THEREFOR AN STORING IN AND REMOVING THE SAME FROM
SAID LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO WHIPSTOCK OR
DIRECTIONALLY ❑RILL AN❑ MINE FROM LANDS OTHER THAN THOSE
HEREINABOVE ❑ESCRIBED, OIL OR GAS WELLS, TUNNELS AN❑ SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAN❑ HEREIN ABOVE
DESCRIBED AND TO BOTTOM SUCH WHIPSTOCKED OR ❑IRECTIONALLY
DRILLED WELLS, TUNNELS AND SHAFTS UNDER AND BENEATH OR BEYON❑ THE
EXTERIOR LIMITS THEREOF, AND TO REDRILL, RETUNNEL, EQUIP, MAINTAIN,
REPAIR, ❑EEPEN AND OPERATE ANY SUCH WELLS OR MINES, WITHOUT,
HOWEVER, THE RIGHT TO DRILL, MINE, STORE, EXPLORE AN❑ OPERATE
THROUGH THE SURF ACE OR THE UPPER 500 FEET OF THE SUB SURF ACE OF
THE LAN❑ HEREINABOVE DESCRIBED, AS RESERVE❑ IN THE DEED RECORDED
OCTOBER 31, 1974 IN BOOK 11277 PAGE 1355 OF OFFICIAL RECORDS.
AN EASEMENT FOR INGRESS AND EGRESS OVER THAT PORTION OF BLOCK 50
OF IRVINE'S SUBDIVISION, AS SHOWN ON A MAP RECORDE❑ IN BOOK I PAGE 88
OF MISCELLANEOUS RECORDS MAP, RECORDS OF ORANGE COUNTY,
CALIFORNIA, ❑ESCRIBED AS FOLLOWS:
BEGINNING AT THE NORTHWESTERLY CORNER OF TRACT NO. 7594, AS SHOWN
ON A MAP RECORDED IN BOOK 294 PAGES 27, 28 AND 29 OF MISCELLANEOUS
MAPS, RECORDS OF SAID ORANGE COUNTY, CALIFORNIA, SAID CORNER ALSO
BEING IN THE WESTERLY RIGHT-OF-WAY LINE OF DOVE STREET, AS SHOWN ON
SAID TRACT NO. 7694; THENCE ALONG SAID WESTERLY RIGHT-OF-WAY LINE
THE FOLLOWING COURSES:
00 1190 10-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-3
23-42
SOUTH 6" 59' 41" EAST, 90.00 FEET TO THE BEGINNING OF A TANGENT CURVE,
CONCAVE EASTERLY, HA YING A RADIUS OF 309.00 FEET; THENCE SOUTHERLY
AND SOUTHEASTERLY 170.49 FEET ALONG SAID CURVE THROUGH A CENTRAL
ANGLE OF 310 3646"; THENCE TANGENT TO SAID CURVE, SOUTH 38" 36' 27"
EAST, 132.56 FEET; THENCE SOUTH 40' 38' 15" WEST, 275.03 FEET; THENCE
NORTH 49" 21' 45" WEST, 389.17 FEET; THENCE NORTH 83' 00' 19" EAST, 306.56
FEET TO THE TRUE POINT OF BEGINNING OF THIS DESCRIPTION; THENCE
NORTH 400 38' 15" EAST, 44.84 FEET; THENCE NORTH 830 00' 19" EAST 45.23 FEET
TO A POINT IN SAID WESTERLY RIGHT-OF-WAY LINE OF DOVE STREET, SAID
POINT BEING IN A NON -TANGENT CURVE, CONCAVE EASTERLY AND HA YING A
RADIUS OF 309.00 FEET, A RADIAL BEARING FROM SAID POINT BEARS NORTH
55' 33' 12" EAST; THENCE SOUTHEASTERLY ALONG SAID CURVE AND SAID
RIGHT-OF-WAY LINE, 14.84 FEET THROUGH A CENTRAL ANGLE OF 2° 45' 06";
THENCE LEAVING SAID RIGHT-OF-WAY LINE AND NON -TANGENT TO SAID
CURVE, SOUTH 83" 00' 19" WEST, 47.35 FEET; THENCE SOUTH 400 38' 15" WEST,
25.55 FEET; THENCE SOUTH 830 00' 19" WEST, 19.29 FEET TO THE TRUE POINT
OF BEGINNING.
APN: 427-221-06
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-4
23-43
EXHIBIT "B"
PROPERTY DEPICTION
1�
-,Vve14 '%W M —
IV Li
N
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow instructions Page C-5
23-44
CERTIFICATE OF ACCEPTANCE
This CERTIFICATE OF ACCEPTANCE is to certify that the interest in real property set
forth in that certain Grant Deed by and between the City of Newport Beach, a California
municipal corporation and charter city, as Grantee, and AG Dove Owner, L.P., a
Delaware limited partnership, as Grantor, for property located at 1201 Dove Street [APN:
427-221-06], located in the City of Newport Beach is hereby accepted on
2022, by the undersigned officer on behalf of the City of Newport Beach pursuant to
authority conferred by Resolution No. 1992-82 of the City Council adopted on July 27,
1992. The City of Newport Beach consents to the recordation of said document in the
Office of the Recorder of Orange County, State of California.
APPROVED AS TO FORM:
CITY ATTORNEY'S OFFICE
Date,
By:
Aaron C. Harp
City Attorney
ATTEST:
Date:
By:
Leilani I. Brown
City Clerk
CITY OF NEWPORT BEACH,
a California municipal corporation and
charter city
Date:
By:
Grace K. Leung
City Manager
RECOMMENDED FOR ACCEPTANCE:
COMMUNITY DEVELOPMENT
DEPARTMENT
Date. -
By:
Seimone Jurjis
Community Development Director
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-6
23-45
ACKNOWLEDGEMENT
A notary public or other officer completing this
certificate verifies only the identity of the individual who
signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity
of that document.
State of California
County of ORANGE
On before me, , Notary Public,
personally appeared , who proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his authorized capacity(ies), and that by his signature on the
instrument the person, or the entity upon behalf of which the person(s) acted, executed the
instrument-
1 certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(Seal)
ooilgo10-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-7
23-46
EXHIBIT "D"
FORM OF ASSIGNMENT OF LEASES
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES ("Assignment") is made this day of
, 2022 ("Assignment Date") by and between AG Dove Owner, L,P., a
Delaware limited partnership ("Assignor"), and City of Newport Beach, a California
municipal corporation and charter city ("Assignee"). Assignor and Assignee are
sometimes hereinafter individually referred to as a "Party" and collectively as the "Parties"
to this Assignment.
WITNESSETH:
A. Assignor and Assignee entered into that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions, dated as of ,
2022 ("Agreement"), respecting the sale of the Property (as defined in the Agreement).
Concurrently with the delivery of this Assignment, Assignor has conveyed to Assignee all
of Assignor's interest in the real Property. Capitalized terms used herein and not
separately defined have the meanings ascribed to them in the Agreement.
B. Under the Agreement, Assignor is obligated to assign to Assignee all of
Assignor's right, title and interest in and to the Leases for which Assignee has agreed to
assume, which are listed on Exhibit "A" attached hereto.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Assignment of Contracts. Effective as of the Assignment Date, Assignor
hereby assigns, sells, transfers, conveys, sets over and delivers unto Assignee all of
Assignor's estate, right, title and interest in and to the Leases and Assignee hereby
accepts such assignment. Notwithstanding the foregoing or anything to the contrary
contained herein, Assignor shall retain all rights, title and interest in and to all rentals and
other amounts payable by tenants under the Leases, and other rights and claims against
any parties under the Leases, for the period of time prior to the Assignment Date.
2. Assumption. Assignee hereby accepts the foregoing assignment of the
Leases included on Exhibit "A" and assumes the Leases and agrees to timely keep,
perform and discharge all of the terms, covenants and conditions imposed upon Assignor
as landlord under the Leases accruing or arising on or after the Assignment Date.
3. Assignment Date. The Assignment Date of this Assignment shall be the
date that Assignee acquires the Property, as evidenced by the recordation of a grant deed
to Assignee.
4. No Attorney's Fees. In the event of the bringing of any action or suit by a
party hereto against another party hereunder by reason of any breach of any of the
001190104 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-1
23-4 7
covenants, conditions, agreements or provisions on the part of the other party arising out
of this Assignment, then in that event the prevailing party shall not be entitled to have and
recover of and from the other party any costs and expenses of the action or suit, nor
attorneys' fees.
5. Counterparts. This Assignment may be executed in counterparts (including
facsimile and electronic copies), each of which shall be deemed an original, but all of
which, together, shall constitute one and the same instrument.
fi. Successors and Assigns. This Assignment shall be binding upon and inure
to the benefit of the successors assignees, personal representatives, heirs and legatees
of all the respective parties hereto.
7. Governing Law. This Assignment shall be governed by, interpreted under,
and construed and enforceable in accordance with, the laws of the State of California.
8. Severability. If any terms or provisions of this Assignment is, to any extent,
held to be invalid or unenforceable, the remainder of this Assignment will not be affected,
and each term or provision of this Assignment will be valid and be enforced to the fullest
extent permitted by law.
9. The provisions of Sections 10.2 and 14.2 of the Agreement are incorporated
by reference into this Assignment as if fully set forth herein.
[SIGNATURES ON NEXT PAGE]
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-2
23-48
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered
this Assignment as of the day and year hereinabove written.
"ASSIGNOR" AG DOVE OWNER, L.P.,
a Delaware limited partnership
By: AG OC Portfolio GP, L.L.C.,
a Delaware limited liability company,
its sole member
By:
Name:
Title:
"ASSIGNEE" CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
By:
Name:
Title:
ATTEST:
Leilani I. Brown, City Clerk
APPROVED AS TO FORM:
Aaron C. Harp, City Attorney
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page ❑-3
23-49
Exhibit "A"
LIST OF ASSIGNED LEASES
ooiisoio-d Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-4
23-50
EXHIBIT "E"
FORM OF ASSIGNMENT OF CONTRACTS
ASSIGNMENT OF CONTRACTS AND ASSUMPTION AGREEMENT
This Assignment of Contracts and Assumption Agreement (the "Assignment") is
made and entered into as of this day of , 2022 ("Assignment Date"), by
and between AG DOVE OWNER, L.P., a Delaware limited partnership ("Assignor"), and
City of Newport Beach, a California municipal corporation and charter city ("Assignee"),
with reference to the following facts. Assignor and Assignee are sometimes hereinafter
individually referred to as a "Party" and collectively as the "Parties" to this Assignment.
RECITALS:
A. Assignor and Assignee are parties to that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions, made and entered into as of
2022 (the "Purchase Agreement"), pursuant to which Assignor agreed to
sell to Assignee, and Assignee agreed to purchase from Assignor, the Property (as
defined in the Purchase Agreement). Concurrently with the delivery of this Assignment,
Assignor has conveyed to Assignee all of Assignor's interest in the real Property.
Capitalized terms used but not otherwise defined herein shall have the meanings ascribed
to them in the Purchase Agreement.
B. Assignee has acquired fee title to the Real Property from Assignor on the
Assignment Date. Assignor now desires to assign and transfer to Assignee all of
Assignor's rights and interests in, to and under the Approved Contracts, as hereinafter
defined.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the parties hereto agree as follows:
1. Assignment and Assumption. Effective as of the Assignment Date,
Assignor hereby grants, transfers, conveys, assigns and delegates to Assignee all of its
rights, obligations and interests in, to and under the contracts that are set forth in
Schedule 1 attached hereto and made a part hereof (the "Approved Contracts");
provided, however, such assignment, transfer and sale shall not include any rights or
claims arising prior to the Assignment Date that Assignor may have against any party to
the Approved Contracts. Assignee hereby accepts such assignment and delegation by
Assignor and agrees to fully perform and hereby assumes all the obligations of Assignor
under the Approved Contracts first arising from and after the Assignment Date.
2. No Warranties. Assignee does hereby covenant with Assignor, and
represents and warrants to Assignor, that Assignor is transferring each of the Approved
Contracts to Assignee (t❑ the extent the terms of any of the Approved Contracts do not
limit or restrict such right) without any warranty of any kind or nature. This Assignment
shall not be construed as a representation or warranty by Assignor as to the transferability
or enforceability of the Approved Contracts, and Assignor shall have no liability to
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E-1
23-51
Assignee in the event that any or all of the Approved Contracts (a) are not transferable to
Assignee or (b) are canceled or terminated by reason of this Assignment or any acts of
Assignee.
3. Dispute Costs. In the event of any dispute between Assignor and Assignee
arising out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, each party shall pay its own
costs and expenses of such dispute, including, without limitation, its own attorneys' fees
and costs.
4. Counterparts. This Assignment may be executed in counterparts (including
facsimile and electronic copies), each of which shall be deemed an original, and all of
which shall taken together be deemed one document.
5. Survival. This Assignment and the provisions hereof shall inure to the
benefit of and be binding upon the parties to this Assignment and their respective
successors, heirs and permitted assigns.
6. No Third -Party Beneficiaries. Except as otherwise expressly set forth
herein, Assignor and Assignee do not intend, and this Assignment shall not be construed,
to create a third -party beneficiary status or interest in, nor give any third -party beneficiary
rights or remedies to, any other person or entity not a party to this Assignment.
i. Governing Law. This Assignment shall be governed by, interpreted under,
and construed and enforceable in accordance with, the laws of the State of California.
8. Severability. If any terms or provisions of this Assignment is, to any extent,
held to be invalid or unenforceable, the remainder of this Assignment will not be affected,
and each term or provision of this Assignment will be valid and be enforced to the fullest
extent permitted by law.
9. Limitation. The provisions of Sections 10.2 and 14.2 of the Purchase
Agreement are incorporated by reference into this Assignment as if fully set forth herein.
[SIGNATURES ON NEXT PAGE]
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E-2
23-52
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the Assignment Date.
ASSIGNOR:
AG DOVE OWNER, L.P.,
a Delaware limited partnership
By: AG OC Portfolio GP, L.L.C.,
a Delaware limited liability company,
its sole member
By:
Name:
Title:
1_E-`i-y LH►14=1
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
By:
Name:
Title:
ATTEST:
Leilani I. Brown, City Clerk
APPROVED AS TO FORM:
Aaron C. Harp, City Attorney
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E - 3
23-53
SCHEDULE 1 TO ASSIGNMENT OF CONTRACTS
LIST OF APPROVED CONTRACTS
00119010.4 Agreement for Purchase and Sale of Real Property and Escrow instructions Page E-4
23-54
EXHIBIT "F"
FORM OF BILL OF SALE
BILL OF SALE
For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, AG DOVE OWNER, L.P., a Delaware limited partnership ("Seller"), does
hereby GRANT, SELL, CONVEY, TRANSFER AND DELIVER to CITY OF NEWPORT
BEACH, a California municipal corporation and charter city ("Buyer"), without any
warranty of any kind, all of Seller's rights, title and interest in and to the personal property
described on Exhibit "A" attached hereto (the "Personal Property") owned by Seller and
used exclusively in the operation of the real property at 1201 Dove Street, located in the
City of Newport Beach, County of Orange, State of California, provided, however, such
transfer, assignment and sale shall not include any rights or claims arising prior to the
date hereof which Seller may have against any person with respect to such personal
property nor any right to use the name "Angelo Gordon," "Angelo Gordon Real Estate,"
and/or any other similar name relating to any of such names.
From and after the date of this Bill of Sale, it is intended by the parties that Buyer
and Its successors and assigns shall have the right to use, have, hold and own the
Personal Property forever. This Bill of Sale may be executed in counterparts, each of
which shall be deemed an original, and all of which shall taken together be deemed one
document. Seller and Buyer agree that the delivery of an executed copy of this Bill of
Sale by electronic mail shall be legal and binding and shall have the same full force and
effect as if an original executed copy of this Bill of Sale had been delivered.
Seller does hereby covenant to Buyer that Seller is the lawful owner of such
Personal Property, that such Personal Property is owned and not leased by Seller and
that Seller has good right to sell the same, and that such Personal Property is free of liens
and that Seller will warrant and defend the title thereto unto Buyer, its successors and
assigns, against the claims and demands thereon.
Buyer hereby acknowledges, covenants, represents and warrants that Seller has
made absolutely no representations or warranties (express, implied, or statutory)
concerning the Personal Property including, without limitation, any warranty of
merchantability or condition, or warranty of fitness for a particular purpose.
This Assignment shall be governed by, interpreted under, and construed and
enforceable in accordance with, the laws of the State of California.
The provisions of Sections 10.2 and 14.2 of that certain Agreement for Purchase
and Sale of Real Property and Escrow Instructions, made and entered into as of
, 2022, by and between Seller and Buyer are incorporated by reference into
this Bill of Sale as if fully set forth herein.
[SIGNATURES ON NEXT PAGE]
oo11go10-a Agreement for Purchase and Sale of Real Property and Escrow Instructions Page F-1
23-55
IN WITNESS WHEREOF, this Bill of Sale has been executed as of this day
of , 2022.
SELLER:
AG DOVE OWNER, L.P.,
a Delaware limited partnership
By: AG OC Portfolio GP, L.L.C.,
a Delaware limited liability company,
its sole member
By:
Name:
Title:
BUYER:
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
By:
Name:
Title:
ATTEST:
Leilani I. Brown, City Clerk
APPROVED AS TO FORM-
0
Aaron C. Harp, City Attorney
oo1lso10-a Agreement for Purchase and Sale of Real Property and Escrow Instructions Page F-2
23-56
EXHIBIT A
TO BILL OF SALE
DESCRIPTION OF PERSONAL PROPERTY
00 1190 10-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page F-3
23-57
�, JnIE
f::1;11:1i1mem
DUE DILIGENCE ITEMS
Date modified
p Financials
10/1S/222 11:24 A.NI
p Insurance
10,1612022 11:24 AM
p Physical Reports
10/18/202.2 4:37 Ph1
Tenants
10,E 19 202211 r39 AM
p Title, Survey and Zoning
10,1872022 7:52 AM
o Utility Bills
10l181202.2 11:23 AM
p 'vendors and Contracts
10/14/ZO22 6:47, AM
p z Added MONTH xx, 2022 (for future add...
10I19/2022 9:57 AM
Financials
r A Name
10.22 1201 Dave Rent Roll
1201 Dove Rent Rail Leasing 092022
1201 Dove_2021 income Statement
1201 Dove_2022 YTD Income Statement
Insurance
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owigol0-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page G-1
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Physical Reports
Name
18-211165.5 1201 0c,:e ACM 0&h9
1201 Dove Seismic Report July 23 2018
PHASE 1 ESA 1201 Dove,_Newpert_Beach..
Tenants
A Name
169 Alliance Global Partners (Eurc Pacific)A3...
�16 Anti -Defamation League - Commencem...
Anti -Defamation League Al
Anti -Defamation LeagueML
Axis Construction Consulting - Commen...
Axis Construction Consuiting_ML (Fully ...
Axis Construction _A1_FE
Chris Napclitano_AI_FE
Chris Napciitanc_AZ_FE
Chris Napclitanc_ML
Commencement, Acceptance Ltr - 4-1-19
Commencement, Acceptance Ltr - 7-25-...
Commencement Acceptance Ltr - 11-10...
Consent to Assignment of Lease - 12-34-...
Euro Pacific Al
Eurc Pacific A2
Eurc Pacific_ML
�}] First Citizens Bank - 201810-99
® First -Citizens -Al
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�] Gostanian Law -Al 070818
Gostanian Law_A2_021921
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oot19olo-0 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page G-2
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W] Gcstanian Lao,_A3 FE
Gostanian Law Ccmmencement Letter ...
�] Gostanian Law ML
Guaranty - 1-9-2'012
Guaranty - 1D-Z1-2002
IRL Management (Ranch Harbor)_A3_FE
IRP Management (Landmark)_A2_FE
J&G Trading_ML FE
Jeffrey- Verdon Law Group - Al
Jeffrey `v`erdcn Law Group - A2
Jeffrey Verdon Laver Group - Office Lease
JKV Capital Al
�9 JKV Capital -MIL
Lawson Sealeyy - Commencement Letter
Ij Lawscn Sealej - Guaranty cf Lease
ipLawson Sealej - ML
Lease Agreement - 6-12-2012
Minuteman -Al
W{ Minuteman_A2
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00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page G-3
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V
W Park Place Partners - Assignment to Land...
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Peregrine Realty Partners -Al
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Realm Group -Al
IW Realm Group_A2
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ip Realm Group_A4_FE
iP Realm Grcup-ML
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Secada Medical (dba Ventris Medical)Al...
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West One Capita Al (Suite 570)
West One Capital_Al (Suite 580)
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West One Capital_ML (Suite 580)
Trtle. Surrey and Zoning
Name
® 1201 Dove - Commitment - 3-14-18
�] 1201 Dove - PZR - 4-26-18
1201 Dove - Survey- 4-25-18 - S&5
Utility Bills
A Name
j6A 1201 Dcve-12-months Gas
1201 Dove-12-months SCE
iP 1201 Dove-12-months Water
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00 1190 10-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page G-4
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Vendors and Contracts
n
Name
1201 Dove Service Contract - Able Building Services (lanitorial)_ff)
1201 Dove Service Contract - Able Engineering (FE)
1201 Dove Service Contract - Advanced Monitoring (FLS)_(fE)
1201 Dove Service Contract - Alliance Facility Services (Lighting)_(FE)
iW 1201 Dove Service Contract - Allied Universal Security Services-(FE)
�] 1201 Dove Service Contract - Apelinc (Landscaping)_CFE)
] 1201 Dove Service Centract - Clear Water (Water Treatment)_(FE)
® 1201 Dove Service Contract - DC Environmental (Trash)(FE)
® 1201 Rove Service Contract - DTS (EMS Maint.)_(FF) r
1201 Dove Service Contract - HCI Systems (FLS)_(FE)
1201 Dove Service Contract - Nerstines Pest Solutions (FE)
1201 Dove Service Contract - Kelly Fire (Sprinklers)_(FE)
1201 Dave Service Contract - Newport Window Maintenance {FEj
1201 Dove Service Contract - Parking Concepts (FE)
] 1201 Dove Service Contract - SeCal Property Services (Sweeping)-CFE)
1201 Dove Service Contract - Stoddard's (Wood Maint.)_(FE)
IR 1201 Dove Service Contracts Index
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00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page G-5
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EXHIBIT "H"
FORM OF ESTOPPEL CERTIFICATE
TENANT ESTOPPEL CERTIFICATE
TO:
RE: f I (the "Premises")
The undersigned (the "Tenant") hereby certifies to CITY OF NEWPORT BEACH,
a California municipal corporation and charter city, and its successors and assigns (the
"Buyer„} Buyer's lender(s) and to I a
(the "Landlord"), the following information with respect to that
certain lease agreement, dated I , [list any other lease
documents, including any amendments, modifications or side letters, etc.] (collectively,
the "Lease"), and Tenant agrees that Landlord, Buyer and Buyer's lender may rely upon
the same:
1. The Tenant is the tenant under the Lease covering the Premises. A
description of the Lease, with all amendments, is attached hereto as Exhibit A. The Lease
is in full force and effect and has not been assigned, modified, supplemented or amended
except as shown on Exhibit A.
2, The Tenant has accepted possession and now occupies the Premises and
is currently open for business.
3. The Tenant asserts no claim of default or offset or defense against the
payment of rent or other charges payable by the Tenant and asserts no claim against the
Landlord under the Lease in regard to the Premises. To the best of Tenant's knowledge
and belief, there is no default by Landlord under the Lease.
4. All fixed base rental has been paid to the end of the current calendar month,
which is , and no rent under the Lease has been paid more than one
month in advance of its due date except for any security deposits referenced herein.
Current monthly fixed base rental for the Premises is $
5. The Lease term began on and the current
Lease term expires on The Lease provides for an option to renew
the Lease term as follows: . The Lease contains no first right of
refusal to lease or purchase, option to expand, option to terminate, or option to purchase,
except as follows:
00119010-4 Agreement for Purchase and Sale of Rea Property and Escrow instructions Page H-1
23-63
6. Landlord is presently holding a [security deposit][letter of credit] in the
amount of $
7. There are no unfinished tenant improvements required to be completed by
Landlord as of the date hereof or any outstanding and unpaid tenant improvement
allowances owing to Tenant as of the date hereof except:
8. The Tenant is not in default under the Lease. The Tenant is current in the
payment of any taxes, utilities, common area maintenance payments, or other charges
required to be paid by the undersigned.
9. The Tenant certifies that it is required to pay a pro rata share of real property
taxes and insurance, as well as a pro rata share of the common area expenses. The
Tenant currently pays to Landlord $ for real property taxes and operating
expenses [on a monthly/annual basis].
10. The Tenant has not entered into any sublease, assignment or any other
agreement transferring any of its interest in the Lease or the Premises leased by the
Tenant under the Lease.
11. No actions, whether voluntary or otherwise, are pending against Tenant
under the bankruptcy laws of the United States or any state thereof. Tenant has not, at
the Premises, generated, stored, handled or otherwise dealt with any hazardous or toxic
waste or material, radioactive materials, or other contaminants, the removal of which is
required or the maintenance of which is prohibited, regulated or penalized by any local,
state or federal agency, authority or government unit except as expressly permitted in the
Lease and except for those materials that are contained in prepackaged office supplies,
cleaning materials or personal grooming items or other items that are sold for consumer
or commercial use.
12. The Tenant recognizes and acknowledges it is executing this Tenant
Estoppel Certificate with the intent that Landlord, the Buyer and Buyer's lender(s) may
rely hereon.
Dated: 2022
Very truly yours,
If
By:
Its:
oo119olo-4 Agreernent for Purchase and Sale of Real Property and Escrow Instructions Page H-2
23-64
Attachment B
Budget Amendment No. 23-028
23-65
Q SEW PART
z City of Newport Beach
T, BUDGET AMENDMENT
2022-23 BA#: 23-028
Department: Community Development
ONETIME: ❑ Yes ❑ No
Requestor: Seimone lurjis
Approvals
❑ CITY MANAGER'S APPROVAL ONLY
Finance Director: Date
El COUNCIL APPROVAL REQUIRED City Clerk: Date
EXPLANATION FOR REQUEST:
To transfer and appropriate funding from the Facilities Financing Plan (FFP) Fund to the Police Facility Fund in order to ❑� from existing budget appropriations
fund the purchase of a parcel located at 1201 Dove Street, Newport Beach. ❑ from additional estimated revenues
❑Q from unappropriated fund balance
REVENUES
Fund #
Org
Object
Project Description
Increase or (Decrease) $
521
52199
691513
INTERFUND TRANSFERS - TRANSFER IN FFP FUND
S,231,5S9.00
010
01050505
S51115
REAL PROPERTY GEN FUND - RENTAL OF PROPERTY 300,000.00
521
52199
691012
INTERFUND TRANSFERS - TRANSFER IN FUND 012
1,450,000.00
Subtotal $ _ 6,981,559.00
EXPENDITURES
Fund #
Org
Object
Project Description
Increase or (Decrease) $
513
51399
991521
INTERFUND TRANSFERS - TRANSFER OUT POLICE FACILITY
5,231,559.00
S21
52101
911047
POLICE FACILITY NEW CIP - CAPITAL PROJECT
30,775,000.00
012
01299
991521
INTERFUND TRANSFERS - TRANSFER OUT POLICE FACILITY
1,450,000.00
Subtotal $ 37,456,559.00
FUND BALANCE
Fund #
Object
Description
Increase or (Decrease) $
513
300000
FACILITIES FINANCING PLAN - FUND BALANCE CONTROL
(5,231,559.00)
521
300000
POLICE FACILITY NEW - FUND BALANCE CONTROL
(24,093,441.00)
010
300000
GENERAL FUND
- FUND BALANCE CONTROL
300,000.00
012
300000
GENERAL FUND
CAPITAL PROJECTS - FUND BALANCE CONTROL
(1,450,000.00)
Subtotal $ (30,475,000.00)
Fund Balance Change Required
23-66
Attachment C
Map
23-67
ti r
SEW ART
O NjM%M9S
U NEWPO R T BEACH
CRLrFOaH�P
ti
4. { , . � ti
#0
gflWsPRIT DR
0 200 400 Disclaimer:
Every reasonable effort has been made to assure the accuracy of the
Feet data provided, however, The City of Newport Beach and its
employees and agents disclaim any and all responsibility from or
relating to any results obtained in its use.
8/22/2022
23-68