HomeMy WebLinkAbout37 - Agreement for Purchase and Sale and Escrow Instructions with 3848 Campus L.P. for the Purchase of Real Property at 3848 Campus DriveQ �EwPpRT
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TO:
FROM:
CITY OF
NEWPORT BEACH
City Council Staff Report
August 26, 2025
Agenda Item No. 37
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
Seimone Jurjis, Assistant City Manager/Community Development
Director - 949-644-3232, sjurjis@newportbeachca.gov
PREPARED BY: Lauren Wooding Whitlinger, Real Property Administrator - 949-644-
3236, Iwooding@newportbeachca.gov
TITLE: Agreement for Purchase and Sale and Escrow Instructions with 3848
Campus L.P. for the Purchase of Real Property at 3848 Campus
Drive
ABSTRACT:
The City of Newport Beach owns a variety of real estate assets that support public
facilities, municipal operations, and community amenities. With significant redevelopment
activity in the area surrounding John Wayne Airport (Airport Area), including the addition
of new housing units, the City anticipates an increased need for publicly owned properties
to meet future operational demands.
The property at 3848 Campus Drive presents an opportunity to secure a centrally located
site in the Airport Area for future municipal use, including the potential relocation of the
Newport Transportation Center in partnership with the Orange County Transportation
Authority (OCTA). For the City Council's consideration is an Agreement for Purchase and
Sale of Real Property and Escrow Instructions (Attachment A) to acquire the property for
$11.5 million, funded through the Fiscal Year 2024-25 year-end General Fund surplus.
RECOMMENDATIONS:
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;
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 3848 Campus L.P., to
purchase the property at 3848 Campus Drive, for a price of $11,500,000 in a form
substantially similar to the agreement attached to the staff report; and
c) Approve Budget Amendment No. 26-018 to appropriate $11,936,500 in increased
expenditures from the unappropriated General Fund balances.
37-1
Agreement for Purchase and Sale and Escrow Instructions with
3848 Campus L.P. for the Purchase of Real Property at 3848 Campus Drive
August 26, 2025
Page 2
DISCUSSION:
The Airport Area of Newport Beach is a less than one -square -mile section in the
northernmost quadrant of the city, bounded by John Wayne Airport to the west,
Campus Drive to the north, Jamboree Road to the east, and State Highway 73 to the
south, as shown in the map in Figure 1 below. The area is mostly commercial, zoned
under several planned communities approved by the City since the 1970s. The Airport
Area submarket has historically been home to many office buildings, car dealerships, light
industrial uses, hospitality uses and commercial retail businesses.
Figure 1 — A map showing the Airport Area submarket.
Significant changes to State law in recent years and a push to develop housing led to the
City's approval of the 6th Cycle Housing Element in 2022. As part of the Housing Element
and in response to the Regional Housing Needs Assessment's requirement to plan for an
allocation of 4,845 new housing units, properties all over the city were identified as
potential housing opportunity sites, including over 2,800 dwelling units in the Airport Area.
3 7-2
Agreement for Purchase and Sale and Escrow Instructions with
3848 Campus L.P. for the Purchase of Real Property at 3848 Campus Drive
August 26, 2025
Page 3
With the potential of new residential units in this area of the city, staff has closely tracked
property sales for opportunities that will support the City's needs.
Staff identified an opportunity to acquire the site at 3848 Campus Drive in the Airport
Area, which can be operated in its current condition and redeveloped at a future time to
address the City's needs for transportation. Providing public transportation routes through
the Airport Area will be important as that part of the city is built with additional housing.
3848 Campus Drive — Property
3848 Campus Drive (Property), located at the southeast corner of Campus Drive and
Quail Street across from the southern end of John Wayne Airport (Attachment C), is a
53,297-square-foot (1.22-acre) site currently developed with a 32,283-square-foot
two-story multi -tenant mixed -use building with surface parking. The building was
constructed in the mid-1960s and has undergone various upgrades and maintenance
projects, and tenant improvements since then. The zoning designation for the Property is
Office -Airport (OA). The Property is owned by 3848 Campus L.P. (Seller), who acquired
the site in 2003.
Staff commissioned an appraisal of the fair market value of the Property from
Curtis -Rosenthal, Inc. The appraiser, using several assumptions about the development
limits for the site, returned an estimated value at $9,860,000 (Attachment D).
Oranae Countv Transit District (OCTA)
The City has discussed with the Orange County Transportation Authority (OCTA) the
potential relocation of the Newport Transportation Center (NTC) from 1550 Avocado
Avenue to 3848 Campus Drive. In a letter to the City dated August 5, 2025, OCTA
expressed interest in partnering on a feasibility study, provided it evaluates all potential
relocation sites including 3848 Campus Drive, and the study is jointly managed and
equally cost -shared (Attachment E).
OCTA also emphasized compliance with State and federal environmental review
processes, the need for public input, and the OCTA Board of Directors' approval. Because
the current NTC was developed with federal funds and is subject to restrictions under an
agreement with The Irvine Company, any relocation will require Federal Transit
Administration compliance and the Irvine Company's concurrence.
Opening - Closing Escrow and Due Diligence
Upon execution of the Agreement and opening of escrow, staff will proceed with a
180-day due diligence period to investigate the condition of the Property. Staff anticipates
due diligence to cost approximately $150,000 and will likely include, but not be limited to,
a Phase I environmental report and a Phase II assessment, a survey of the property and
improvements, a building condition inspection, a hazardous materials survey of the
building, an ADA compliance inspection, and preparation of a relocation plan. Due
diligence will be handled by professional consultants that specialize in tenant lease review
and property inspections.
37-3
Agreement for Purchase and Sale and Escrow Instructions with
3848 Campus L.P. for the Purchase of Real Property at 3848 Campus Drive
August 26, 2025
Page 4
Subject to working with OCTA on a feasibility study, the soonest that escrow may close
is the first quarter of calendar year 2026. If further time is needed, closing may be
extended for up to two consecutive 90-calendar-day periods, at the City's election, by
depositing additional earnest money in escrow at $86,000 per extension. The funds would
be applicable to the purchase price of the Property.
Purchase Price and Closina Costs
The City and the Seller have negotiated a Purchase and Sale Agreement for the Property
at a price of $11.5 million. Staff proposes to fund the acquisition, along with related closing
and relocation costs, using the FY 2024-25 year-end General Fund surplus.
In addition to the purchase price, estimated costs include $150,000 for due diligence,
$15,000 in closing costs, $11,500 for title insurance policy endorsements, and
approximately $35,000 for prorated property taxes for the remainder of the fiscal year.
The prorated property taxes will be refunded to the City after closing by the County of
Orange.
Relocation Costs
In accordance with the California Relocation Assistance Law (Government Code §7260
et seq.), the City must provide relocation assistance when the acquisition of property for
a public project displaces existing commercial tenants. Once the City takes possession
of the Property and a final use and implementation timeline is established, staff will retain
a relocation planning consultant to prepare the required relocation plan, issue formal
notices, document and administer relocation payments, and coordinate the vacating of
the premises. Consultant fees are estimated at $175,000.
Relocation assistance for current tenants will include support for moving expenses and
leasing costs for a comparable commercial space. A formal relocation plan will be
presented to the City Council for approval prior to its implementation and before any
relocation payments are made.
Proposed Agreement
The City and Seller have negotiated terms of an Agreement for Purchase and Sale of
Real Property and Escrow Instructions, for the City to purchase the Property from the
Seller.
The proposed terms of the purchase are summarized below:
1. City will pay the Seller a purchase price of $11,500,000;
2. City will deposit $180,000 in initial earnest money upon the opening of escrow,
which money will become non-refundable as outlined below, unless of an event of
default by the Seller as outlined in the Agreement;
a. $50,000 of the initial deposit will become non-refundable, but remain
applicable to the purchase price, and will be released to the Seller
3 7-4
Agreement for Purchase and Sale and Escrow Instructions with
3848 Campus L.P. for the Purchase of Real Property at 3848 Campus Drive
August 26, 2025
Page 5
45 calendar days after opening of escrow;
b. The remaining $130,000 of the initial deposit will become non-refundable,
but remain applicable to the purchase price, and will be released to the
Seller 90 calendar days following the opening of escrow;
3. City will have a 180 calendar 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. Escrow will close one business day from the City's approval of or expiration of the
due diligence period;
5. City has the option to extend the closing for two consecutive periods of 90 calendar
days each by depositing an additional $86,000 in earnest money with escrow, per
extension. This money will be applicable to the purchase price and become
immediately non-refundable unless of an event of default by the Seller as outlined
in the Agreement;
6. City and Seller will each pay half of the closing costs; and
7. The Seller will pay for a standard owner's policy of title insurance for the City, with
the cost of an upgraded policy and endorsements paid for by the City.
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, and their
signatures are included on Attachment A.
Expenditure and Total Budget Amendment
The capital outlay for the first six months is the cost of earnest money deposit and due
diligence for a total of $330,000. If escrow is extended for an additional 90 to 180 days,
then an additional $86,000 to $172,000 will need to be spent. As part of this staff report,
a budget amendment is included for the City Council's consideration. Staff is also
requesting additional funds of $50,000 for unanticipated expenses during the escrow and
due diligence process. The total budget amendment for the final purchase of the Property
is as follows:
Purchase Price
$11,500,000
Due Diligence
$
150,000
Relocation Consultant
$
175,000
Closing Costs
$
61,500
Unanticipated Expenses
$
50,000
TOTAL $11,936,500
37-5
Agreement for Purchase and Sale and Escrow Instructions with
3848 Campus L.P. for the Purchase of Real Property at 3848 Campus Drive
August 26, 2025
Page 6
FISCAL IMPACT:
Approval of this item will increase General Fund expenditures to cover the purchase of
the property, due diligence investigations, the City's share of closing costs and recording
fees, an owner's policy of title insurance, prorated property taxes, and tenant relocation
costs. Upon purchase, the City will increase General Fund revenues by collecting rental
income from existing tenants during the relocation process.
Budget Amendment No. 26-018 (Attachment B) requests an appropriation of $11,936,500
in increased expenditures from unappropriated General Fund balances to fund the
purchase of the property utilizing a portion of the General Fund surplus for Fiscal Year
2024-25.
The third quarter budget update reflected a General Fund operating surplus of
approximately $19 million for Fiscal Year 2024-25. Of this amount, about $2 million is
required to fully fund the contingency reserve, leaving roughly $17 million available for
City Council appropriation. As in prior years, additional savings are anticipated, which are
expected to increase the final year-end surplus.
If approved, the budget amendment will appropriate $11.94 million from the General Fund
Operating Fund (Fund 10) and transfer it to the General Fund Capital Improvement Fund
(Fund 12). The purchase of the property and related expenditures will be recorded in
account no. 01201925-911047-26F12. Rental income from the property in FY 2025-26
will be posted to the Rental of Property account in the Community Development
Department (01050505-551115) and included in future fiscal year budgets.
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 and Escrow
Instructions
Attachment B —
Budget Amendment No. 26-018
Attachment C —
Location Map
Attachment D —
Appraisal Report
Attachment E —
OCTA Letter
37-6
Attachment A
Agreement for Purchase and Sale of Real Property and Escrow Instructions
37-7
AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND ESCROW INSTRUCTIONS
Escrow No.
Date of Opening of Escrow: 2025
To: Mariners Escrow Corporation ("Escrow Holder")
270 Newport Center Drive
Suite 150
Newport Beach, California 92660
Attention: Rozelle Miyamoto
Telephone: 949-721-6491
Email: rmiyamotogmarinersescrow.com
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY
AND ESCROW INSTRUCTIONS ("Agreement") is made this day of August, 2025
("Effective Date"), by and between 3848 Campus L.P., a Nevada 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 3848
Campus Drive, located in the City of Newport Beach, County of Orange, State of
California, having County Assessor's Parcel Number 427-151-08, which, on the Effective
Date, consists of a two story office building containing approximately 32,283 rentable
square feet upon an approximately 53,297 square foot parcel, as more particularly
described on Exhibit "A" and depicted on Exhibit "B" attached hereto and by this reference
incorporated herein, togetherwith 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.
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 1
37-8
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 ELEVEN MILLION FIVE HUNDRED
THOUSAND DOLLARS and 00/100 ($11,500,000.00) ("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
ONE HUNDRED EIGHTY THOUSAND DOLLARS and 00/100 ($180,000.00)
("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 Sections 7.1, 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.
"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.
(i) After forty-five (45) calendar days following the
Opening of Escrow, FIFTY THOUSAND DOLLARS and , 00/100
($50,000.00) of the Initial Deposit shall be distributed to Seller from Escrow.
Prior to the forty-five (45) calendar days, this sum shall be reimbursable to
City. Upon release to Seller, this portion of the Initial Deposit shall become
immediately non-refundable.
(ii) After ninety (90) calendar days following the Opening
of Escrow, the remaining amount of ONE HUNDRED THIRTY THOUSAND
DOLLARS and 00/100 ($130,000.00) of the Initial Deposit shall be
distributed to Seller from Escrow. Prior to the ninety (90) calendar days, this
sum shall be reimbursable to City. Upon release to Seller, this portion of the
Initial Deposit shall become immediately non-refundable.
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 2
37-9
(iii) After ninety (90) calendar days following the Opening
of Escrow, the Initial Deposit shall be immediately nonrefundable and be
applied 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 Initial
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 in accordance with either Sections
7.1, 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 party hereto shall have
any further rights or obligations hereunder other than those that expressly
survive the termination of this Agreement, or (ill) as otherwise expressly
provided in this Agreement.
(b) 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.
(c) The Initial Deposit, and Extension Deposits, as defined in Section
6.2, 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.
3.1 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;
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 3
37-10
(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 Seller;
(d) Pay and charge to Seller all premiums, fees, and charges for any
CLTA owner's title policy and endorsements;
(e) Pay and charge to City all premiums, fees, and charges for any
extended coverage ALTA owner's title policy or additional endorsements that may
be requested by the City, that the City may wish to purchase for the Property;
(f) Pay and charge Seller and City for escrow fees, recording fees,
charges, and costs payable under Section 7, in accordance with Section 9.4 below,
except as otherwise expressly provided in this Section;
(g) 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
(h) Disburse the Purchase Price, less any Deposits released to the
Seller during escrow, 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 1:00 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;
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 4
37-11
(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 T" 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;
(e) Two duplicate originals of a letter written on behalf of the City and in
favor of the Seller, affirmatively stating that it is the City's intention to acquire the
property for public agency use, with input from Seller ("Public Agency Use Letter");
and
(f) 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 1:00 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:
(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 BIII of Sale in a form substantially similar to the form of Exhibit T"
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, if any, and other items and instruments as may be
reasonably necessary in order for Escrow Holder to comply with this Agreement.
In the event an Assignment of Leases, an Assignment of Contracts, or a Bill of Sale is
unnecessary, 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
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 5
37-12
City with the Property, including any and all (i) building service, management, supply and
maintenance contracts ("Existing Contract(s)"), 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 Seller 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 provided 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 so 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 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 two (2) calendar
days prior to the Closing Date, Seller shall deliver 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
ninety (90) calendar days of the Closing Date), from tenants leasing no less than 75% of
the aggregate square footage 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
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 6
37-13
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 entitle City to terminate this Agreement and have its Deposits returned.
4.6 Following the opening of Escrow, Seller acknowledges that the City will be
providing Property Tenants with a General Information Notice to inform Tenants of the
laws protecting tenant rights under the California Relocation Assistance Law,
Government Code 7260, et. seq., and implementing regulations, 25 Cal Code Regs
§6000, et seq. ("CRAL") and, if applicable, the federal Uniform Relocation Assistance and
Real Property Acquisition Policies Act of 1970, as amended, and implementing
regulations and notices ("URA").
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. Within five (5) calendars days from the Opening of Escrow,
Seller shall deposit with Escrow the Due Diligence Items identified in Exhibit "G" ("Due
Diligence Items") that are within Seller's possession or control. Seller will provide any
additional documents or information relating to the Property reasonably requested by the
City as are in Seller's possession or control. Commencing from the Opening of Escrow
and continuing thereafter for one hundred eighty (180) 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.
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5.3 Approval or Disapproval of Property After Inspection. On or before the
expiration of the Due Diligence Period, City may notify Seller and 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, and subject to the terms of
Section 2.1 above, 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
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 27) 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, in the event that City's "Phase I"
environmental site assessment recommends air sampling or intrusive or destructive
testing of the Property, including, without limitation, a "Phase II" environmental
assessment (collectively, the "Intrusive Tests"), City shall be permitted to undertake such
Intrusive Tests with advance notice to the Seller. If requested by Seller in writing, City
hereby agrees to provide 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 Seller and its Property Manager (and their
respective principals, members, partners, directors, officers, employees, attorneys and
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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 gross 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.
6. CLOSING DATE.
6.1 Closing. Close of Escrow shall occur on or before one (1) business day from
the expiration of the Due Diligence Period ("Closing Period"), unless the City invokes is
right to extend the Closing Period as provided in this Section 6. 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.
6.2 Extension of Closing; Extension Deposit. City shall have the right to extend
the Closing Period up to two (2) additional, consecutive periods of ninety (90) calendar
days each, if both of the following conditions are met: (1) City has approved in writing its
due diligence investigation pursuant to Section 5.3 above; and (2) City delivers to Escrow
Holder the sum of EIGHTY SIX THOUSAND AND 00/100 DOLLARS ($86,000.00) per
extension period ("First Extension Deposit" and "Second Extension Deposit," respectively
and "Extension Deposits" collectively). These Extension Deposits shall be applicable to
the Purchase Price and shall be deemed consideration for such extension of the Closing
Period.
6.3 Notwithstanding the foregoing, the Extension Deposits, shall be promptly
returned to City if (i) Seller, in its sole discretion, elects not to proceed with the purchase
and sale of the Property, (ii) 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) calendar days of such termination
(provided, that City is not in Monetary Default independent of Seller's default as provided
herein), (iii) this Agreement is terminated in accordance with either Sections 7.1, 8.3 or
13.1, in which case, the Extension Deposits shall be returned to City within seven (7)
calendar 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, or (iii) as otherwise expressly provided in this Agreement.
6.4 Distribution of Documents. Following Close of Escrow, Escrow Holder shall
distribute the documents as follows:
(a) To City:
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(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 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;
(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; and
(iii) One (1) duplicate original of the Public Agency Use Letter.
6.5 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) calendar 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) calendar days of such termination.
6.6 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
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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.
6.7 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 alter the use, operation or enjoyment of the Property after Closing
(collectively, "New Leases"), without City's prior written consent, which consent may be
withheld in City's sole and absolute discretion.
6.8 City Financing. If requested by the City, 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.
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 Fidelity National Title, 4400 MacArthur Blvd., Suite
200, Newport Beach, CA 92660, Attention: Ginger McCully, (949) 230-4755,
Ginger.McCully@fnf.corn ("Title Company"), describing the state of title of the Property
("Preliminary Title Report"), together with Schedule B exceptions. Prior to the expiration
of the Due Diligence Period, 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 ("City's Objection Notice"). If City fails to deliver City's Objection
Notice within the Due Diligence 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
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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 fifteen (15) calendar days following receipt of notice of such additional exceptions along
with a legible copy of the underlying document comprising the basis 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,
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;
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(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 falls 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 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.
(d) Title Company has irrevocably committed to issue an CLTA or 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 for vesting purposes only, subject to payment of the Title
Policy premium as provided herein.
8.2 Conditions Precedent to Seder'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.
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(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; Seller 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 ten (10) calendar 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
and Seller shall promptly return the Deposit together with any and all interest accrued
thereon to City; provided, however, that if the nature of Seller's default is such that more
than ten (10) calendar days are reasonably required for its cure, then Seller shall not be
deemed to be in default if Seller commences such cure within said ten (10) calendar day
period and thereafter diligently prosecutes such cure to completion.
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
Company is in a position to issue the Title Policy in the form described in Section 7 above,
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 27 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 (360) 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
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tax statement versus total gross square footage of the Property. Any supplemental tax
bills received after Close of Escrow shall be paid by Seller 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 rata 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.
9.4 Payment of Costs. Seller shall pay charges for drawing the Grant Deed, all
premiums, fees and charges for the CLTA Title Policy and endorsements, and one-half
(1/2) of the escrow fee. City shall pay charges for recording the Grant Deed, any
additional premium or endorsements for ALTA coverage, and one-half (1/2) of the escrow
fee. All other costs of Escrow not otherwise specifically allocated by this Agreement
(including rent) shall be apportioned between the Parties in a manner consistent with the
custom and usage of Escrow Holder, and shall be calculated as of the Closing Date.
Seller and City each shall pay its respective attorney's fees. 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 either
party may terminate Escrow by written notice thereof to Escrow Holder and the other
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 otherfunds 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
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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.
10. REPRESENTATIONS AND WARRANTIES.
10.1 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
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(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 become 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.
(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 Seiler 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
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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. 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 and an action shall have been commenced
by City against Seller 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.
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
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 18
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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
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 Seller 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 1, Section 5, and Article 2 of the
Newport Beach Charter authorize the City to execute, deliver and perform this
Agreement.
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37-26
(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
("Indemnitee") 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 an encumbrance on title to the Property caused by or known to Seller and
not covered by City's 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, and arising or accruing from or after Seller's acquisition of the Property until the
Effective Date; (iii) arisingout 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.
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
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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
lndemnitee'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
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
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each been fully advised of and understand the provisions of Section 1542 of the California
Civil Code which reads:
"A general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing the
release and that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party."
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 or territory of the United
States or other jurisdiction 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
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 TWO HUNDRED FIFTY THOUSAND DOLLARS and 00/100
($250,000.00), 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 TWO HUNDRED FIFTY
THOUSAND DOLLARS and 00/100 ($250,000.00), 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
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each been fully advised of and understand the provisions of Section 1542 of the California
Civil Code which reads:
"A general release does not extend to claims that the creditor or releasing party
does not know or suspect to exist in his or her favor at the time of executing the
release and that, if known by him or her, would have materially affected his or her
settlement with the debtor or released party."
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 or territory of the United
States or other jurisdiction 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 (ill) claims for personal injury
or property damage occurring on the Property during that Parry's ownership of the
Property, or claims against a Party based on a breach of contract by that Party conceming
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.
i
SELLER' ITIALS
CITY'S INITIALS
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 TWO HUNDRED FIFTY THOUSAND DOLLARS and 00/100
($250,000.00), 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 TWO HUNDRED FIFTY
THOUSAND DOLLARS and 001100 ($250,000.00), 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
govemmenta[ 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
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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 (i) a taking
is not for a material portion of the Property, or (ii) 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, OR EXTENDED DEPOSIT(S) AS REQUIRED
IN SECTIONS 2, 2.1(a), 2.1(b), OR 6.2, 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 INITIAL
DEPOSIT; AND, AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT 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.
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, 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.
17. 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
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responsible for proceeding with diligence and in good faith to satisfy the conditions to
Seller's performance set forth in Section 8.2.
18, 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.
. 19. 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.
20. 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. The venue
for any litigation shall be the County of Orange, California.
21. 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.
22. 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.
23. 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
each term and provision of this Agreement shall be valid and enforceable to the fullest
extent permitted by law.
24. 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 16 above, shall be binding upon and inure to the benefit
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37-32
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 for a period of five
year (5) years beginning upon the termination or expiration of all contracts or leases which
affect or relate to the Property and were entered into and binding on Seller.
25. TIME IS OF THE ESSENCE. Time is hereby expressly made of the essence
of this Agreement.
26. 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.
27. 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: 3848 Campus, L.P.
Attn: John Saunders
4040 MacArthur Blvd., Suite 300
Newport Beach, CA 92660
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
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37-33
28. NO BROKERS. City and Seller each acknowledge and represent to the
other that licensed California real estate brokers Lauren Wood ing Whitlinger (License No.
01943711) and Seimone Jurjis (License No. 01876897) employed by the City 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, or other remuneration that such person claims is owed in respect with
this transaction pursuant to a written agreement made with said claimant.
29. 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.
30. 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
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.
31. 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.
32. 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.
33. CONFIDENTIALITY. City agrees that except (a) as otherwise provided or
required by valid law, including the California Public Records Act, Government Code
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37-34
section 6250 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 Seller
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 33 pertaining to misuse of
Due Diligence Items by City or any of City Representatives. The provisions of this
Section 33 shall survive any termination of this Agreement but shall not survive the
Closing.
34. 1031 EXCHANGE. The City agrees to reasonably cooperate with Seller in
connection with Seller's intent to effectuate a tax -deferred exchange pursuant to Section
1031 of the Internal Revenue Code of 1986, as amended ("1031 Exchange"). The City
shall execute such documents as may be reasonably required to facilitate the 1031
Exchange; provided, however, that: (a) the City makes no representation or warranty
regarding the qualification of the transaction as a valid 1031 Exchange, (b) the successful
completion of the 1031 Exchange shall not delay the Close of Escrow as set forth herein,
(c) the City shall not be required to incur any additional cost, expense, or liability as a
result of the 1031 Exchange, (d) any documents required of the City in connection with
the 1031 Exchange shall be factually accurate and truthful and shall be delivered to the
City no later than five (5) business days prior to the Close of Escrow, and (e) Seller shall
indemnify, defend, and hold harmless the City from and against any and all claims,
damages, costs, and liabilities (including, without limitation, attorneys' fees and costs)
arising out of or related to the 1031 Exchange.
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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.
SELLER: 3848 Campus L.P., a Nevada limited
partnership
By: Birch Tract, LLC a Nevada limited
liability company
Its: General Partner
Date
John Saunders
Manager
CITY: CITY OF NEWPORT BEACH, a California
municipal corporation and charter city
APPROVED AS TO FORM:
Date
CITY ATTORNEY'S OFFICE
Grace K. Leung
City Manager
Aaron C. Harp '�''
^
City Attorney ��
ATTEST:
Molly Perry
Interim City Clerk
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 28
37-36
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.
SELLER: 3848 Campus L.P., a Nevada limited
partnership
By: Birch Tract, LLC a Nevada limited
liability company
Its: ne al Partner
y f297
Date
John S nders
Manager
CITY: CITY OF NEWPORT BEACH, a California
municipal corporation and charter city
APPROVED AS TO FORM: Date
CITY ATTORNEY'S OFFICE
Grace K. Leung
City Manager
A on C. Harp I h 1',
City Attorney ^ r--�
ATTEST:
Molly Perry
Interim City Clerk
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 28
37-37
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 Deposit, the Purchase
Price and all closing documents in accordance with this Agreement.
Dated: , 2025 Fidelity National Title
By: _
Name:
Title:
[END OF SIGNATURES]
ATTACHMENTS: Exhibit A — Property Legal Description
Exhibit B — Property Depiction
Exhibit C — Form of Grant Deed
Exhibit D — Form of Assignment of Leases
Exhibit E — Form of Assignment of Contracts
Exhibit F — Form of Bill of Sale
Exhibit G — Due Diligence Items
Exhibit H — Form of Estoppel Certificate
00119010-4 Agreement for Purchase and Sale of Real Property and Escrow Instructions Page 30
37-38
EXHIBIT "A"
PROPERTY LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS
DESCRIBED AS FOLLOWS:
LOT 10 OF TRACT NO. 3201, IN THE CITY OF NEWPORT BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 130, PAGES 25 THROUGH 30,
INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL
RIGHTS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM, AND ALL PRODUCTS
DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE
LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING,
EXPLORING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE
SAME FROM THE LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE CONVEYED HEREBY, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH ORACROSS THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS
UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO
REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY
SUCH WELLS OR MINES; WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE,
STORE, EXPLORE, AND OPERATE THROUGH THE SURFACE OR THE UPPER 500
FEET OF THE SUBSURFACE OF THE LAND, AS RESERVED BY THE IRVINE
COMPANY, A MICHIGAN CORPORATION IN THE DEED RECORDED MAY 29, 1992
AS INSTRUMENT NO. 92-358907, OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM ANY AND ALL WATER, RIGHTS OR INTERESTS
THEREIN, NOW MATTER HOW ACQUIRED BY GRANTOR, AND OWNED OR USED
BY GRANTOR 1N CONNECTION WITH OR WITH RESPECT TO THE LAND,
TOGETHER WITH THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL,
REMOVE AND STORE THE SAME FROM THE LAND OR TO DIVERT OR OTHERWISE
UTILIZE SUCH WATER, RIGHTS OR INTERESTS ON ANY OTHER PROPERTY
OWNED OR LEASED BY GRANTOR, WHETHER SUCH WATER RIGHTS SHALL BE
RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL, PERCOLATING,
PRESCRIPTIVE, ADJUDICATED, STATUTORY OR CONTRACTUAL; BUT WITHOUT,
HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF THE LAND IN THE
EXERCISE OF SUCH RIGHTS, AS RESERVED BY THE IRVINE COMPANY, A
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page A-1
37-39
MICHIGAN CORPORATION IN THE DEED RECORDED MAY 29, 1992 AS
INSTRUMENT NO. 92-358907, OFFICIAL RECORDS.
APN: 427-151-08
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page A-2
37-40
EXHIBIT "C"
FORM OF GRANT DEED
RECORDING REQUESTED BY:
CITY OF NEWPORT BEACH
AND WHEN RECORDED MAIL TO:
Attn: City Clerk
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
ORDER:
ESCROW NO.:
Exempt from recording fee per Government Code §§ 6103 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 $0.00
❑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,
3848 Campus L.P., a Nevada 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 3848 Campus Drive 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.]
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-1
37-42
IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of
2025.
GRANTOR:
3848 Campus L.P., a Nevada limited
partnership
By: Birch Tract, LLC a Nevada limited liability
company
M
John Saunders
Manager
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 on the basis of satisfactory evidence to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signatures(s) on the instrument the
person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal.
Signature
(seal)
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-2
37-43
EXHIBIT "A"
PROPERTY LEGAL DESCRIPTION
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF
NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA AND IS
DESCRIBED AS FOLLOWS:
LOT 10 OF TRACT NO. 3201, IN THE CITY OF NEWPORT BEACH, COUNTY OF
ORANGE, STATE OF CALIFORNIA,
AS SHOWN ON A MAP RECORDED IN BOOK 130, PAGES 25 THROUGH 30,
INCLUSIVE, OF MISCELLANEOUS MAPS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY.
EXCEPTING THEREFROM ANY AND ALL OIL, OIL RIGHTS, MINERALS, MINERAL
RIGHTS, NATURAL GAS RIGHTS, AND OTHER HYDROCARBONS BY
WHATSOEVER NAME KNOWN, GEOTHERMAL STEAM, AND ALL PRODUCTS
DERIVED FROM ANY OF THE FOREGOING, THAT MAY BE WITHIN OR UNDER THE
LAND, TOGETHER WITH THE PERPETUAL RIGHT OF DRILLING, MINING,
EXPLORING AND OPERATING THEREFOR AND STORING IN AND REMOVING THE
SAME FROM THE LAND OR ANY OTHER LAND, INCLUDING THE RIGHT TO
WHIPSTOCK OR DIRECTIONALLY DRILL AND MINE FROM LANDS OTHER THAN
THOSE CONVEYED HEREBY, OIL OR GAS WELLS, TUNNELS AND SHAFTS INTO,
THROUGH OR ACROSS THE SUBSURFACE OF THE LAND, AND TO BOTTOM SUCH
WHIPSTOCKED OR DIRECTIONALLY DRILLED WELLS, TUNNELS AND SHAFTS
UNDER AND BENEATH OR BEYOND THE EXTERIOR LIMITS THEREOF, AND TO
REDRILL, RETUNNEL, EQUIP, MAINTAIN, REPAIR, DEEPEN AND OPERATE ANY
SUCH WELLS OR MINES; WITHOUT, HOWEVER, THE RIGHT TO DRILL, MINE,
STORE, EXPLORE, AND OPERATE THROUGH THE SURFACE OR THE UPPER 500
FEET OF THE SUBSURFACE OF THE LAND, AS RESERVED BY THE IRVINE
COMPANY, A MICHIGAN CORPORATION IN THE DEED RECORDED MAY 29, 1992
AS INSTRUMENT NO. 92-358907, OFFICIAL RECORDS.
ALSO EXCEPTING THEREFROM ANY AND ALL WATER, RIGHTS OR INTERESTS
THEREIN, NOW MATTER HOW ACQUIRED BY GRANTOR, AND OWNED OR USED
BY GRANTOR IN CONNECTION WITH OR WITH RESPECT TO THE LAND,
TOGETHER WITH THE RIGHT AND POWER TO EXPLORE, DRILL, REDRILL,
REMOVE AND STORE THE SAME FROM THE LAND OR TO DIVERT OR OTHERWISE
UTILIZE SUCH WATER, RIGHTS OR INTERESTS ON ANY OTHER PROPERTY
OWNED OR LEASED BY GRANTOR, WHETHER SUCH WATER RIGHTS SHALL BE
RIPARIAN, OVERLYING, APPROPRIATIVE, LITTORAL, PERCOLATING,
PRESCRIPTIVE, ADJUDICATED, STATUTORY OR CONTRACTUAL; BUT WITHOUT,
HOWEVER, ANY RIGHT TO ENTER UPON THE SURFACE OF THE LAND IN THE
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-3
37-44
EXERCISE OF SUCH RIGHTS, AS RESERVED BY THE 1RVINE COMPANY, A
MICHIGAN CORPORATION IN THE DEED RECORDED MAY 29, 1992 AS
INSTRUMENT NO. 92-358907, OFFICIAL RECORDS.
APN: 427-151-08
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-4
37-45
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 3848 Campus L.P., a Nevada
limited partnership, as Grantor, for property located at 3848 Campus Drive [APN: 427-
151-08], located in the City of Newport Beach is hereby accepted on ,
2025, 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 OF NEWPORT BEACH,
CITY ATTORNEY'S OFFICE a California municipal corporation and
charter city
Date: Date:
By:
Aaron C. Harp
City Attorney
ATTEST:
Date:
By:
Molly Perry
Interim City Clerk
By:
Grace K. Leung
City Manager
RECOMMENDED FOR ACCEPTANCE:
COMMUNITY DEVELOPMENT
DEPARTMENT
Date:
By:
Seimone Jurjis
Assistant City Manager / Community
Development Director
Agreement for Purchase and Sale of Real Property and Escrow -Instructions Page C-6
37-4 7
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.
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)
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page C-7
37-48
EXHIBIT "D"
FORM OF ASSIGNMENT OF LEASES
ASSIGNMENT OF LEASES
THIS ASSIGNMENT OF LEASES ("Assignment') is made this day of
2025 ("Assignment Date") by and between 3848 Campus L.P., a
Nevada 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 ,
2025 ("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
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-1
37-49
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.
6. 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 Section 10.2 of the Agreement are incorporated by
reference into this Assignment as if fully set forth herein.
[SIGNATURES ON NEXT PAGE]
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-2
37-50
IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered
this Assignment as of the day and year hereinabove written.
"ASSIGNOR"
3848 Campus L.P., a Nevada
limited partnership
By: Birch Tract, LLC,
a Nevada limited liability company
By:
Name: John Saunders
Title: Manager
"ASSIGNEE" CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
By:
Name:
Title:
ATTEST:
Molly Perry, Interim City Clerk
APPROVED AS TO FORM:
Aaron C. Harp, City Attorney
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-3
37-51
Exhibit "A"
LIST OF ASSIGNED LEASES
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page D-4
37-52
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 , 2025 ("Assignment Date"), by
and between 3848 Campus L.P., a Nevada 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
2025 (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 (to 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
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E-1
37-53
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.
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. Limitation. The provisions of Section 10.2 of the Purchase Agreement are
incorporated by reference into this Assignment as if fully set forth herein.
(SIGNATURES ON NEXT PAGE]
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E-2
37-54
IN WITNESS WHEREOF, the parties hereto have executed this Assignment as
of the Assignment Date.
ASSIGNOR:
3848 Campus L.P.,
a Nevada limited partnership
By: Birch Tract, LLC,
a Nevada limited liability company
Its General Partner
By:
Name: John Saunders
Title: Manager
ASSIGNEE:
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
By:
Name:
Title:
ATTEST:
Molly Perry, Interim City Clerk
APPROVED AS TO FORM:
Aaron C. Harp, City Attorney
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E-3
37-55
SCHEDULE 1 TO ASSIGNMENT OF CONTRACTS
LIST OF APPROVED CONTRACTS
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page E-4
37-56
EXHIBIT "F"
FORM OF BILL OF SALE
BILL OF SALE
For good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, 3848 Campus L.P., a Nevada 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 3848 Campus Drive, 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 Section 10.2 of that certain Agreement for Purchase and Sale of
Real Property and Escrow Instructions, made and entered into as of , 2025,
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]
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page F-1
37-57
IN WITNESS WHEREOF, this Bill of Sale has been executed as of this day
of , 2025.
SELLER:
3848 Campus L.P.,
a Nevada limited partnership
By: Birch Tract, LLC,
a Nevada limited liability company
Its General Partner
By:
Name: John Saunders
Title: Manager
BUYER:
CITY OF NEWPORT BEACH,
a California municipal corporation and charter city
By:
Name:
Title:
ATTEST:
In
Molly Perry, Interim City Clerk
APPROVED AS TO FORM:
Aaron C. Harp, City Attorney
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page F-2
37-58
EXHIBIT A
TO BILL OF SALE
DESCRIPTION OF PERSONAL PROPERTY
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page F-3
37-59
EXHIBIT "G"
DUE DILIGENCE ITEMS
Financial statements and operating statements for last 2 years
Rent roll
Copies of leases
Third party reports in Seller's possession
Tax bills
Utility bills last 12 months
List of service contracts
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page G-1
37-60
EXHIBIT "H"
FORM OF ESTOPPEL CERTIFICATE
TENANT ESTOPPEL CERTIFICATE
[Eel
RE: f 1 (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 a
(the "Landlord"), the following information with respect to that
certain lease agreement, dated 1 , [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:
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page H-1
37-61
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. In accordance with Section 107.6 of the California Revenue and Taxation
Code, Tenant is specifically informed, and hereby acknowledges and agrees, that the
Premises or Project and any fixtures, equipment, or other improvements installed or
constructed thereon shall be subject to possessory interest taxes and assessments, and
that such taxes and assessments shall be paid by Tenant prior to delinquency. Tenant
shall include a statement in all Subleases to the effect that the interests created therein
are derive from the Tenant's interest under this Lease and that Tenant's interest requires
the payment of a possessory interest tax.
11. 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.
12. 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.
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page H-2
37-62
13. 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: .2025
Very truly yours,
a
By:
Its:
Agreement for Purchase and Sale of Real Property and Escrow Instructions Page H-3
37-63
Attachment B
Budget Amendment No. 26-018
37-64
���WpOkr
u
Cg1rF•oa�sr
Department: Community Development
Requestor: Lauren Wooding
City of Newport Beach
BUDGET AMENDMENT
❑ CITY MANAGER'S APPROVAL ONLY
0 COUNCIL APPROVAL REQUIRED
2025-26
ONETIME: ❑ Yes FIN.
BA#: 26-018
Clerk: Date
Finance Director: ifGs<ILfM a-z/ 11 Y 111H Date
EXPLANATION FOR REQUEST:
To transfer budget from the General Fund (010) to General Fund CIP (012) for the purchase of real property at 3848 Campus ❑ from existing budget appropriations
Drive. Estimated costs include the purchase price, due diligence, relocation consultant, closing costs, and unanticipated ❑ from additional estimated revenues
expenses. The due diligence costs does not include the relocation payments to the tenants and will be provided on a future ❑ from unappropriated fund balance
date.
REVENUES
Fund #
Org
Object
Project Description
Increase or (Decrease) $
012
01299
691010
INTERFUNDTRANSFERS- TRANSFER IN GENERAL FUND
11,936,500.00
Subtotal
$ 11,936,500.00
EXPENDITURES
Fund #
Org
Object
Project Description
Increase or (Decrease) $
010
01099
991012
GENERAL FUND INTERFUND TRANSFR - TRANSFER OUT CIP FUND
11,936,500.00
012
01201925
911047
26F12 FACILITIES - CAPITAL PROJECT
11,936,500A0
5ubtotal
$ 23,873,000.00
FUND BALANCE
Fund #
Object
Description
Increase or (Decrease) $
010
300000
GENERAL FUND -
FUND BALANCE CONTROL
(11,936,500.00)
012
300000
GENERAL FUND CAPITAL PROJECTS - FUND BALANCE CONTROL
Subtotal
$ (11,936,500.00)
Fund Balance Change Required
37-65
Attachment C
Map
37-66
�1
Attachment D
Appraisal Report
File available via link due to size at:
https://ecros.newportbeachca.gov/WEB/DocView.aspx?id=3179979&dbid=0&repo=CNB
37-68
Attachment E
OCTA Letter
37-69
OCTA
AFFILIATED AGENCIES
Orange County
Transit District
Local Transportation
Authority
Service Authority for
Freeway Emergencies
Consolidated Transporation
Service Agency
Congestion Management
Agency
August 5, 2025
Ms. Grace Leung
City Manager
City of Newport Beach
100 Civic Center Drive
Newport Beach, CA 92660
Subject: Response to June 26, 2025, Letter Regarding Newport
Transportation Center
Dear Ms. Leung:
We are in receipt of the City of Newport Beach's (City) June 26, 2025, letter outlining
the City's interest in relocating the Newport Transportation Center (NTC) to the
property at 3848 Campus Drive and requesting the Orange County
Transportation Authority's (OCTA) support in evaluating the site's feasibility as a
possible transit center.
We appreciate the City's recognition of the importance of ensuring OCTA
continues to meet both current and future regional mobility needs — a
responsibility to the community we have upheld with the NTC for 35 years.
With this understanding and recognizing the many benefits the current NTC
location provides to those who rely upon the county's transit system, OCTA
remains open to partnering with the City to assess long-term transit needs and
potential relocation scenarios. To ensure an objective, transparent, and mutually
beneficial outcome, it is essential to agree on the following principles as we
proceed.
Clarification of Relocation Criteria
While we recognize and appreciate the City's desire to relocate Fire Station
Number 3 to 1550 Avocado Avenue, OCTA must first fully understand and
evaluate the rationale for identifying 3848 Campus Drive as a suitable
replacement for the NTC. To that end, could you provide the detail supporting the
City's site selection criteria, including alternative sites considered and reasons for
not being selected, any studies conducted, anticipated land -use benefits, and
alignment with regional transit and housing objectives. This information will help
OCTA assess potential impacts to current operations, ridership access, and
long-term mobility goals.
Orange County Transportation Authority
550 South Main Street / P.O. Box 14184 / Orange / California 92863-1584 / (714) 560-OCTA (6282)
37-70
Ms. Leung
August 5, 2025
Page 2
Joint and Unbiased Feasibility Analysis
To avoid any bias and pre -determination of a suitable potential relocation site, a
joint approach is critical in defining the scope of work, procuring consultants, and
managing oversight for the feasibility and operational studies. This approach
would allow each agency to leverage its respective areas of expertise. All
potential relocation sites, including but not limited to 3848 Campus Drive, should
be considered as part of this evaluation.
We appreciate the City's offer to cover all study costs; however, OCTA considers
a 50/50 cost -sharing arrangement essential for the comprehensive study of all
candidate sites. This structure would support a balanced analysis and ensure
both agencies are equally invested in the study's outcomes. Given OCTA's long
standing experience with procuring professional services contracts for a variety
of complex studies, we are well -positioned to lead the procurement process.
Environmental Review Parameters
To maintain integrity in the analysis process, and comply with applicable state
and federal environmental regulations, it is also critical that no decisions are
predetermined prior to a formal environmental review process. The scope and
methodology for environmental analysis must be jointly developed and reflect
OCTA's planning, operational, and regulatory requirements.
Governance and Public Input
We also want to emphasize that the study and any potential relocation of the NTC
will require review and consideration by OCTA's Board of Directors. As part of
this process, OCTA will ensure that the transit -riding public has an opportunity to
be informed and provide input. This public engagement and governance process
is essential to maintaining transparency and supporting informed
decision -making.
In closing, NTC remains a vital part of OCTA's transit network, serving as a key
connection point for multiple high -ridership routes and providing critical access to
employment, education, healthcare, and retail destinations throughout Newport
Beach and beyond. Over the past 35 years, the facility has consistently supported
essential travel, including during the pandemic, and continues to serve tens of
thousands of riders annually. Preserving the integrity and functionality of the
37-71
Ms. Leung
August 5, 2025
Page 3
NTC — whether at its current location or through any future alternative — must
remain central to our shared goal of enhancing regional mobility.
OCTA looks forward to continuing dialogue with the City and identifying a
framework that supports both agencies' goals while upholding transparency,
equity, and regulatory integrity. However, the existing NTC site was developed
with federal funding and is subject to restrictions under our agreement with the
Irvine Company. Any proposed relocation would require formal determination of
compliance with Federal Transit Administration property disposition requirements
and concurrence from the property's grantor, the Irvine Company. Please let us
know a convenient time to meet and discuss these principles for advancing.
If you have any questions, please feel free to contact me at djohnson(cD-octa.net or
(714) 560-5343.
Sincerely,
j
Darrell E. John so
Chief Executive Officer
DEJ:dp
c: OCTA Board of Directors
OCTA Executive Management
37-72