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HomeMy WebLinkAbout15 - Agreement to Purchase Balboa Theatre - 707 East Balboa BoulevardCITY OF NEWPORT BEACH COiNUMUNITY AND ECONOiNIIC DEVELOPMENT PLANNING DEPARTMENT 3300 NEWPORT BOULEVARD NEWPORT BEACH, CA 926=5 (713) 644 -3200; FAX (714) 643 -3250 Hearing Date: Agenda Item No.: Staff Person: REPORT TO THE NIAYOR AND CITY COUNCIL PROJECT: Agreement to Purchase Balboa Theatre 707 East Balboa Boulevard SUGGESTED ACTION: Approve and Authorize Mayor to Execute Agreement BACKGROUND October 12. 1998 15 Sharon Z. Wood 644 -3222 The City has had a long- standing interest in revitalizing the Balboa Village area, and has taken actions including adoption of the Central Balboa Specific Plan, improvements to Main Street, and completion of the Balboa Peninsula Planning Study to facilitate revitalization. Likewise, the Balboa merchants have worked to strengthen the area through formation of the Business Improvement District and its activities. All of these efforts could be assisted by a major project in the area. such as rehabilitation and reuse of the Balboa Theatre. Therefore, the City Council gave staff direction to negotiate the City's acquisition of the Theatre. DISCUSSION Agreement Terms The City Attorney and I have discussed terms of the City's purchase of the Theatre with John Wortmann, President of C.J.W., Inc., the Theatre owner. Mr. Wonmann indicated that he and his partners are supportive of the City purchasing the property because they believe this action will facilitate rehabilitation of the Theatre as a cultural and community center, which was their goal in purchasing the property. We have reached the attached agreement, which we believe is consistent with the City Council's direction to us. The purchase price is $480,000. which is the value established in an appraisal done by Richard Fuller, MAI in July 1998. The City is to deposit $24,000 within five days of executing the agreement, and this amount is applicable to the purchase price. Escrow is to close within thirty days of the agreement's execution. The City has a due diligence period of twenty days to review all the seller's information on the property, to conduct additional investigations, and to notify the seller of disapproval of any due diligence matters. The City already has a significant amount of information on the property as a result Of our review of seismic retrofit plans for the building and inspection of the work done to date. Staff intends to obtain a Phase I environmental review of the buildin_ to help the City understand the extent of any issues relative to asbestos or other conditions. The agreement provides that the City is acquiring the property in its "as is" condition. The City also has ten days after receiving the preliminary title report and survey from the seller to notify them of any disapproved exceptions. The seller is required to remove disapproved exceptions or obtain title insurance against their effects on the City. The seller is to pay the title insurance premium, the City is to pay any fees for recording the deed, and the seller and City will share the remaining escrow and closing costs (estimated to be $2.500). This is standard practice for real estate transactions. Fundine City acquisition of the Balboa Theatre is an eligible activity for the use of Community Development Block Grant (CDBG) funds. Because the City Council elected not to give further consideration to changes to Via Lido and 32 "d Street, and because of the Council's recent transfer of unexpended CDBG funds from previous years to the Balboa Peninsula Revitalization account, sufficient funds are available to purchase the Theatre without affecting other projects to be funded with CDBG funds. Impacts of City Acquisition of the Theatre The Balboa Theatre is a key building in Balboa Village. If operated successfully, it could draw foot traffic from off the Peninsula with significant disposable income, and could bring evening activity that could support restaurants and other quality commercial uses in the area. Eliminating the Theatre vacancy and improving the fagade of a building at such a visible location would create a more positive. vibrant image in the Village. The City's financial participation in this project would demonstrate the Citv's stated commitment to revitalize the Peninsula. All of this could stimulate other owners to upgrade their businesses or properties, and new businesses to invest in the area. Although City acquisition of the Theatre could be a significant first step in revitalization, it is not likely that the City itself would undertake the rehabilitation or operation of the Theatre. Rather, the City is likely to seek another organization to follow up with these activities. The Balboa Performing Arts Theatre Foundation, for example, is organized for this purpose and has begun significant fund- raising efforts. With the City's acquisition of the property, private fund - raising should be more successful, and all the proceeds would be available for rehabilitation and reopening of the Theatre. It should be recognized that no City funds have been identified for rehabilitation or operation of the facility. If private efforts to accomplish this are not successful, the City still would control the property and have the option to rehabilitate the building as a theater or use the property in other ways that would benefit Balboa Village. SHARON Z. WOOD Assistant City Manag Page 2 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THE CITY OF NEWPORT BEACH, A CHARTERED CITY AND MUNICIPAL CORPORATION ( "BUYER ") AN D C.J.W., INC., A CALIFORNIA CORPORATION ( "SELLER ") October _, 1998 2. 3. 4. 5. 6. 7. 8. 9. 10. 12 TABLE. OF CONTENTS Page EXHIBITS EXHIBIT A LEGAL DESCRIPTION EXHIBIT B FORM OF GRANT DEED FXHIBIT C FORM OF SELLER'S NON - FOREIGN AFFIDAVIT N B1:)66l63A 1Bnne r/ PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ( "Agreement ") is dated as of October _. 19986 by and between THE CITY OF NEWPORT BEACH6 a charter city and municipal corporation ("Buyer"), and C.J.W., INC., a California corporation ( "Seller" ). RECITALS A. Seller is the owner of certain real property located in the City of Newport Beach, County of Orange (the "County "), State of California. as more particularly described in Exhibit attached hereto (the "Land "). B. The Property is improved with a theater building commonly Icnown as The Balboa Theater, located at 707 East Balboa Boulevard. Balboa, California 92661, and related on -site improvements (the "Theater "), C. Pursuant to the terms of this Agreement. Seller desires to sell to the Buyer. and Buyer desired to buy from the Seller. the Property. AGREEMENT NOW, THEREFORE, taking into account the foregoing Recitals and in consideration of the mutual cowcnants. agreements and conditions set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged. Buyer and Scller agree as follows: Agreement to Purchase /Sell. Seller hereby agrees to sell, convey and assign to Buyer. and Buyer agrees to buy and accept from Seller. under the terms and conditions and for the purchase price hereinafter set forth: (a) the Land and the Theater: (b) all of Seller's interest in the land lying in the bed of any street or highway adjoining the Land and all other appurtenances to the PropeM (the "Appurscnanees "): and (c) all of Seller's interest in all rights, warranties, guaranties. business names. logos. agreements. utility contracts. approvals (governmental or otherwise). licenses, permits. authorizations. entitlements. surveys. plans and specifications and other rights relating to the construction. ownership, operation, use and management of the Land and the Theater (the "Intangible Property "). The Land. the Appurtenances and the Improvements are referred to collectively herein as the "Real Property ". The Real Property and the Intangible Property are referred to collectively herein as the "Property ". 2. Purchase Price. The purchase price to be paid by Buycr at the Close of Escrow (as defined in Section 3) for the Property and repayment of the Loan (thc "Purchase Price ") is Four Hundred Eighty Thousand Dollars ($480.000). 3. Escrow (a) Escrow Holder. Escrow No. 18929 -LH for the purchase and sale of the Property (the "Escrow ") has been established at Commonwealth Land Title Insurance Company (the "Escrow Holder "). (b) Opening of Escrow. The Escrow shall be deemed open (the "Opening of Escrow ") upon the date of this Agreement. (c) Escrow Instructions. This Agreement shall constitute the escrow instructions of Buyer and Seller to the Escrow Holder. N131:336863 4 arna AAD (d) Initial Deposit.. Within five (5) business days following the execution of this Agreement by both Buyer and Seller, Buyer shall deposit with Escrow Holder an gamest money deposit in the amount of Twenty -Four Thousand Dollars (524,000) (the "Deposit "). The Deposit .shall be held by Escrow Holder in one or more federally insured interest bearing investments approved by Buyer and. if the transaction contemplated by this Agreement is consummated, the Deposit and all interest earned thereon shall be credited on Buyer's account against the Purchase Price. In the event this Agreement is terminated for any reason other than Buyer's default hereunder, the Deposit, together with all interest earned thereon but afler deduction of Buyer's share of any escrow cancellation fees, shall be released by Escrow Holder to Buyer upon demand by Buyer. In the event the purchase of ncc Property is not consummated because of a default under this Agreement by Buyer. the Deposit and all interest earned thereon shall be delivered to Seiler and shall constitute liquidated damages of Seller pursuant to Section 9. (c) Seller Deposits into Escrow. Seller shall deliver or cause to be delivered to Escrow Holder in a timely manner to permit the closing of the transaction contemplated hereby by the Close of Escrow, the following: W A duly executed and acknowledged Grant Deed in the form attached hereto as Exhibit D (the "Grant Deed "); (ii) A duly executed Assignment of Intangibles in a form mutually acceptable to Buyer and Seller (the "Assignment of Intangibles "); (iii) A duly executed Non- Foreign Affidavit in the form of Exhibit E attached hereto (the "Non- Foreign Affidavit "): and (iv) Any other executed or other documents reasonably required by the Title Company to consummate this transaction. (f) Buyer Deposits into Escrow. Buyer shall deliver or cause to be delivered to Escrow Holder in a timely manner to permit the closing of the transaction contemplated hereby by the Close of Escrow. the following: 0) The Purchase Price (after taking the Deposit into account). together with such other funds required for costs to be paid by Buyer pursuant to the terms of this Agreement: (ii) Executed preliminary change of ownership statement (the "PCO Sta(ement"): and (iii) Anv other executed or other documents reasonably required by the Title Company for the issuance of the Title Policy and the Closing of Escrow. (g) Close of Escrow. Escrow shall close on or before thirty (30) days following the date hereof (the "Close of Escrow "). Escrow shall be deemed to have closed at the time the Grant Deed is filed for record in the Official Records of the County. (h) Authorization to Close Escrow. Provided that Buyer and Seller have deposited into the Escrow the items required by this Agreement, all Buyer's Closing Conditions have been satisfied. and the Title Company can and will issue the Title Policy (as defined in Section 5). concurrently with the Close of Escrow, Escrow Holder shall: 0) Deliver to Buyer the Grant Deed by causing it to be recorded in the Official Records of the County and requesting that it be mailed to Buyer after it has been recorded: (ii) Deliver to Seller or to Seller's order the cash portion of the Purchase Price: (iii) Deliver to Buyer the Non - Foreign Affidavit: (iv) Cause the Title Policy to be issued to Buyer by Title Company; and (v) Cause the PCO Statement to be delivered to the Tax Assessor for the County or with any other governmental official or agency as required by applicable law. 0) Interpleader. The parties hereto expressly agree that if the parties give the Escrow Holder contradictory instructions, the Escrow Holder shall have the right at its election to file an action in interpleader requiring the parties to answer and litigate their several claims and rights N11IOe6863A tarAS 2 AO bet syecn themselves and the Escrow HoIdcr is authorized to deposit with the clerk of the court all documents and funds held in the Escrow. In the event such action is filed. the parties each agree to pay one -half (12) of the total of Escrow Holder's cancellation charges and costs, expenses and reasonable attomev's fees which Escrow Holder is required to expend or incur in the interpleader action. the amount thereof to he fixed and judgment therefor to be rendered by the court: provided, however. if the court determines that the instructions gi%en to Escrow Holder by one of the parties were improper, then such party shall bear all of such costs and expenses. Upon [lie filing of such an action, Escrow Holder shall thereupon be fully released and discharged from all obligations to perform further any duties or obligations otherwise imposed by the terns of the Escrow. 0) U.S. Treasury Regulations. The purchase and sale of the Property is the sale of "reportable real estate" within time meaning of U.S. Treasury Regulations Section 1.6045 -4 (the "Regulation "). Ewross Holder is the "real estate reportine person' within the meaning of the Regulation and shall make all reports to the federal government as required by the Regulation. Due Diligence Period. (a) Seller will deliver true and complete copies of the follosvine to Buyer within five day's of this Agreement: 0) All surveys of the Real Property in Sellers possession (ii) To the extent in Sellers possession or reasonably available to Seller. as -built plans, soils reports, grading plans. topographical maps, emimmmental studies, including any soils, toxic and hazardous waste reports. engineering studies. maps. warranties. guaranties, drawings. specifications, licenses. engineering and architectural studies. building, grading and other permits, the certificate of occupancy or equivalent document. and all other permits. approvals and licenses for any portion of the Property; (iii) Information regarding all pending or. to Seller's kno%%ledge. threatened litigation matters and insurance claims currently affecting the Property or Seller's ownership thereof. including. without limitation. a loss run from all liability insurance carrier(s) covering operations at the Theater for all ,years for sshich such loss runs are in Seller's possession. but in no event less than the past five (5) years, indicating all general liability claims. (iv) Seller shall promptly provide to Buyer any supplement. addition or new information received or discovered by Seller relating to any of the items delivered in this Section 4(a) or such other documents or information regarding the Property as Buyer shall reasonably request. (b) Buyer shall have until menty (20) days from the date this agreement is executed by both Buyer and Seller (the "Due Diligence Period ") to review the materials provided by Seller pursuant to Section 4(a) above and to conduct such other due diligence, studies. tests. and inspections of the Properry (collectively. "Due Diligence Matters') as Buyer deems appropriate under the circumstances. Prior to the expiration of the Due Diligence Period. Buyer shall, except as provided in Section 5 hereof. notify Seller of its disapproval of any Due Diligence Matters. During the Due Diligence Period. Buyer and its agents and contractors shall have the right. at Buyer's sole cost and expense. to enter onto the Real Propem at reasonable times and in a reasonable manner for the purpose of making such tests and inspections as Buyer deems necessary or desirable in connection with this Agreement. After making any such tests and inspections. Buyer shall restore the Real Property to its condition prior to such tests and inspections. Buyer hereby agrees to indemnify. defend and hold Seller harmless from any loss. damage, cost or expense incurred by Seller by reason of any physical damage to the Real Property or injury to persons caused by Buyer or its agents or contractors in exercising its rights under this Section 4(b). If Buyer fails to notify Seller of its disapproval of any Due Diligence Matters prior to the expiration of the Due Diligence Period. all such Due Diligence Matters shall be deemed approved by Buyer, and Buyer shall be deemed to have waived any and all contingencies with respect to such Due Diligence Matters. express or implied. to its obligation to purchase the Property. (c) During the Due Diligence Period. Buyer and its agents. consultants and contractors will be afforded access to all documents and information relating to the Property and in Seller's possession or control. Seller has not made, and does not make, any representations or warranties as to the accuracy or completeness of such information except as expressly set forth in this Agreement. and Seller shall have no liability if any such information is inaccurate, misleading or incomplete. Buyer shall conduct its own investigation of the Property. make all inquiries. N91:386963.4 INri9! 3 inspections. tests. audits, studies and analyses that it deems necessary or desirable in connection with purchasing the Property (subject to the provisions of this Agreement), and approve or disapprove in its sole discretion the results of its investigations regarding the Property (including engineering. structural and other tests with respect to the physical condition of the Properly. economic feasibility studies. soils and geological reports. zonine. entitlement and other land use matters. the status of title to the Property, survey matters. parking rights, reviews of books. records and financial statements. and documents obtained or prepared by or for Buyer in connection with its review). In determining whether to purchase the Property. Buyer is relving solely on the express representations and warranties of Seller set forth in Section 6(a), and on its own inspections, tests. audits. studies and investigations of the Property, and on Buyer's own judgment with respect thereto. (d) EXCEPT AS EXPRESSLY SET FORTH IN SECTION 6fa), BUYER IS BUYING THE PROPERTY WITHOUT ANY REPRESENTATIONS OR WARRANTIES. EXPRESS. IMPLIED OR STATUTORY. OF ANY KIND WHATSOEVER. BY SELLER. ITS AGENTS, BROKERS. ADVISORS. CONSULTANTS. COUNSEL. EMPLOYEES. OFFICERS. DIRECTORS. SHAREHOLDERS. OR AFFILIATES. AS A MATERIAL INDUCEMENT TO SELLER M AGREEING TO SELL THE PROPERTY TO BUYER, BUYER IS PURCHASING THE PROPERTY IN ITS "AS -IS" CONDITION. WITH ALL FAULTS. AND SELLER WOULD NOT HAVE .AGREED TO SELL THE PROPERTY TO BUYER WITHOUT BUYER'S EXPRESS AGREEMENT TO THE FOREGOING. Title Matters. (a) As soon as possible following the execution of this Agreement, but in no event later than the date which is five (5) business days following the execution of this Agreement by both Buyer and Seller. Buyer shall order and obtain from Commonwealth Land Title Insurance Company ( "Title Company ") a standard coverage preliminary title report or commitment on the Property (the -'PTR "). together with legible copies of all documents relating to the title exceptions referred to in such PTR. (b) As soon as possible following the execution of this Agreement, but in no event later than the date which is five (5) business days following the execution of this Agreement by both Buyer and Seller. Seller shall deliver to Buyer and to Title Company a copy of any surveys of the Real Properi in Seller's possession or control. (c) Within ten (10) business days after receiving the PTR and Survey, respectively, Buyer shall notify Seller of any disapproved title exceptions or survey matters ( "Disapproved Matters "). All other title exceptions set forth in the PTR shall constitute the "Permitted Encumbrances ". In addition. Seller shall be obligated to remove or cute, prior to Closing, any title or survey matters affecting the PropeM- which are caused or created by Seller after the date hereof, unless otherwise approved by Buyer. which approval shall not be unreasonably withheld, delayed or conditioned. As a condition precedent to the Closing, Seller shall use commercially reasonable efforts, without requiring any material expenditure by Seller, to remove, or cause to be removed, all other Disapproved Matters or, in the alternative. obtain title insurance in a form reasonably satisfactory to Buyer insuring against the effect of such Disapproved Matters (and any Disapproved Matter which is so insured against also shall be deemed to be a Permitted Encumbrance). Seller agrees to pay and discharge on or before the Closing Date, or obtain an endorsement to the Title Policy from the Title Company in form and substance acceptable to Buyer removing the exception for any monetary lien on the Property. Not less than ten (10) days prior to the Closing. Seller shall notifv Buyer in writing of any Disapproved Matters which Seller is unable or unwilling to cause to be removed or satisfactorily insured against and Buyer shall then, within five (5) days thereafter. elect, by giving written notice to Seller and Escrow Holder. 0) to terminate this Agreement, or (ii) to waive its disapproval of such exceptions or survey matters (such exceptions or survey matters shall then be deemed to be Permitted Encumbrances). Buyer's failure to give such notice in a timely manner shall be deemed a disapproval of such exceptions or survey matters. In the event Buyer disapproves or is deemed to have disapproved the PTR or the survey, and Seller shall have used commercially reasonable efforts, without requiring any material expenditure by Seller, to remove, or cause to be removed, all Disapproved Matters or, in the alternative, to obtain title insurance in a form reasonably satisfactory to Buyer insuring against the effect of such Disapproved Matters, this Agreement shall be deemed terminated and shall thereafter be null and void with no further obligation on the part of either party except that (i) any money or documents in escrow shall be returned to the party depositing the same, including the Deposit, and any interest earned thereon, which shall be returned to Buyer, and (ii) Buyer and Seller each shall be responsible for one -half of any title or escrow cancellation fee. Nm.186863 4 IMN! 4 /% (d) Upon the Closing, Buycr's tit lc to the Fee Land and Improvements shall be insured by an ALTA extended coverage owner's policy of title insurance, showing title vested in Buyer as of the Closing Date, subject only m the Permitted Exceptions, and issued by the Title Company with aggregate liability in the amount of the Purchase Price, with such endorsements as Buyer may require (collectively, the "Title Policy'). 6. Representations and Warranties. (a) Seller hereby represents, warrants and covenants to Buyer that the following matters are true and correct as of the execution of this Agreement and will also be true and correct as of the Close of Escrow: (i) This Agreement and all the documents and items to be executed and delivered by Seller to Buyer pursuant to the terms of this Agreement (i) have been or will be duly .authorized, executed and delivered by Seller, (ii) are or will be legal, valid and binding obligations of Seller as of the dale of their respective executions, (iii) are or will be enforceable in accordance with their respective terms (except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, moratorium and other principles relating to or limiting the rights of contracting panics generally): (iv) do not and will not, at the Close of Escrow, violate any provisions of any agreement to which Seller is a parry. (ii) This Agreement in no way interfered with or directly or indirectly materially affected the terns or provisions of that certain Purchase : \greement and Joint Escrow Instructions For the Property between Seller and The Balboa Performing Arts Theatre Foundation. (iii) Seller has no interest in anv and all tangible personal property, Furniture and equipment owned or leased by Seller and located on or used in connection with the ownership, operation and management of the Theater. (iv) Seller has not entered into any contracts, agreements or other documents affecting the Proper which will survive the Closing, including any service contracts, equfpment (eases, maintenance contracts, management contracts. employment contracts, union contracts and warranties which would be binding upon the Property or Buyer after the Closing or under ss'hich goods, services or equipment are sold, rendered or leased to the Theater. (v) Seller has not entered into any rental agreements, leases and subleases affecting the Property which will survive the Closing, including any contracts, operating leases, rental agreements, licenses or similar instruments creating a possessory interest in the Real Property. (b) Buyer hereby represents, warrants and covenants to Seller that the Following is true and correct as of the execution of this Agreement and will also be true and correct as of the Close of Escrow: 0) This Agreement and all the documents and items to be executed and delivered by Buyer to Seller pursuant to the terms of this Agreement, (i) have been or will be duly authorized, executed and delivered by Seller, (ii) are or rill be legal, valid and binding obligations of Seller as of the date of their respective executions, (iii) are or will be enforceable in accordance with their respective terms (except to the extent that such enforcement may be limited by applicable bankruptcy, insolvency, moratorium and other principles relating to or limiting the rights of contracting panics generally); (iv) do not and will not, at the Close of Escrow, violate any provisions of any agreement to which Buyer is a party. 7. Buyer's Closing Conditions. Buyer shall have no obligation to acquire the Property unless the Following additional conditions ( "Buyer's Closing Conditions ") have been satisfied or waived in writing by Buyer at or prior to the Closing: (a) Seller shall have timely performed, in all material respects, all of the obligations required to be performed by Seiler by the terms of this Agreement; (b) Buyer shall have received all necessary consents and approvals in connection with the purchase of the Property From the City Council of the City of Newport Beach: NH I: 7868677.4 tonne 5 AO (c) The representations and warranties of Seller. as set forth in Section 6(a), shall be we and correct. in all material respects, as of the date made. and as of the Closing Date; (d) The Title Companv shall issue the Tide Policy insuring Buycr's title to the Real Property subject only to the Pemtittcd Exceptions; (e) There shall be no material damage to. or adverse change in. the physical condition of the Improvements and the Personal Property from the condition as on the date of this Agreement. reasonable wear and tear excepted: (f) All instruments and documents required on the pan of Seller to be executed and delivered to effect the Closing shall be in form and substance reasonably satisfactory to Buyer; and (k) Seller shall have executed and delivered, or caused to be executed and delivered. the Seller's closing documents (as described in Section 3(e) above). 8. Closing Costs. Seller shall pay any documentary transfer tar. bulk sales tax, revenue tar or excise tar (and any surtax thereon) due in connection with the consummation of this transaction, the premium for the Title Policy up to the amount of the premium for a CLTA standard coverage owner's policy of title insurance, the cost of title endorsements which are used for title curative purposes under Section 5 above if customarily pan of a standard coverage title policy or which can be obtained at no additional cost. and fifty percent (50 °.10) of all ether escrow and closing costs. Buyer shall pay any fees for recording the Deed, the cost differential of the premium for the CLTA standard owner's policy of title insurance and any coverage or endorsements included in any title policy purchased by Buyer, the cost of any title endorsements other than endorsements for title curative purposes under Section 5 above except those customarily part of a standard coverage title policy or which can be obtained at no additional test. and fifty percent (50 %) of all other escrow and closing costs. Each party shall bear the expense of its osvn counsel and other consultants. The parties acknowledge that this allocation of closing costs is in accordance with standard custom and practice in Orange County. California. 9. Default of Buyer. PRIOR TO ENTERING INTO THIS TRANSACTION. BUYER AND SELLER HAVE BEEN CONCERNED WITH THE FACT THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IN THE EVENT OF BUYER'S DEFAULT UNDER THIS AGREEMENT. WITH THE FLUCTUATION IN LAND VALUES, THE UNPREDICTABLE STATE OF THE ECONOMY AND OF GOVERNMENTAL REGULATIONS. THE FLUCTUATING MONEY MARKET FOR REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS WHICH DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTY, IT IS REALIZED BY THE PARTIES THAT IT WOULD BE EXTREMELY DIFFICULT AND LMIPRACTICABLE, IF NOT IMPOSSIBLE, TO ASCERTAIN WITH ANY DEGREE OF CERTAINTY THE AMOUNT OF DAMAGES WHICH WOULD BE SUFFERED BY SELLER IN THE EVENT OF BU1 -ER'S DEFAULT UNDER THIS AGREEMENT. THEREFORE. IN THE EVEN BUYER DEFAULTS IN ITS OBLIGATION TO CLOSE THE PURCHASE OF THE PROPERTY FOR ANY REASON OTHER THAN SELLER'S DEFAULT. THE DEPOSIT. IN ADDITION TO ANY ACCRUED INTEREST ON THE DEPOSIT, SHALL BE PAID OR DELIVERED TO AND RETAINED BY SELLER AS LIQUIDATED DAMAGES WHICH SHALL BE SELLER'S SOLE REMEDY HEREUNDER BY REASON OF SUCH DEFAULT. THE PARTIES HERETO EXPRESSLY AGREE AND ACKNOWLEDGE THAT THE AMOUNT OF SUCH DEPOSIT REPRESENTS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES 01 THE EVENT OF SUCH DEFAULT. SELLER'S INITIALS: BUYER'S BVITIALS: 10. Broker's Commission Buyer and Seller each represent to the other that they have not entered into any agreement or incurred any obligation which might result in the obligation to pay a sales or brokerage commission or finder's fee with respect to this transaction. Buyer and Seller each agree to indemnify. defend, protect and hold the other harmless from and against any and all losses. claims, damages, costs or expenses (including attorneys' fees) which the other may incur as a result of any claim made by any person to a right to a sales or brokerage commission or finder's fee in connection with this transaction to the extent such claim is based. or purportedly based. on the acts or omissions of Seller or Buyer, as the case may be. The obligations of Buyerand Seller under this Section 10 shall survive the Close of Escrow. ND 13e6e63 J tarAa 6 i� Notices. All notices. requests and demands to be made hereunder to the parties hereto shall be made in writing to the addresses set forth below and shall be given by any of the following means: (a) personal service; (b) certified or registered mail, postage prepaid. return receipt requested: or (c) courier or delivery, service. Such addresses may be changed by notice to the other parties given in the same manner as provided above. Any notice. demand or request sent pursuant to either subsection I Ila) or (c) hereof shall be deemed received upon the actual delivery thereof. and. if sent pursuant to subsection I I(bl shall be deemed received five (5) days following deposit in the mail. Refusal to accept delisen of any notice. request or demand shall be deemed to be delivery thereof. If am party hereto is not an individual. notice may be made on any. officer, general partner or principal thereof Notice to anY one co -party shall be deemed notice to all co- parties. To Seller: C.J W.. Inc. c/o John Wortmann 104 Via Yella Newport Beach. California 9 =668 Facsimile No: (714) 673 -6868 To Buyer: The Citv of Newport Beach O(Tice of the City Attorney P.O. Box 1768 330 Newport Boulevard Newport Beach. California 9:658.8915 Attention: Robert Burnham. Fsq. Facsimile No: (949)644 -31.9 With a O'Melveny 8 Myers LLP copy to: 610 Newport Center Drive. Suite 1700 Newport Beach. California 9660 Attention: Lowell C. Martindale. Jr. Facsimile No: (949) 823 -6994 To Escrow Commonwealth Land Title Insurance Company Holder: 888 West Sixth Street 4th Floor Los Angeles. CA 90017 Attention: Donald A. Boonton Facsimile No: (213)6 =7 -87_2 12. Miscellaneous Provisions. (a) Incorporation of Prior Agreements. This Agreement contains the entire understanding of Buyer and Seller with respect to the subject matter hereof. and supersedes all prior or contemporaneous written or oral agreements and understandings between the parties hereto pertaining to any such matter. No provision of this Agreement may be amended, modified or supplemented or added to except by an agreement in writing, expressly stating that such agreement is an amendment of this Agreement. signed by the parties to this Agreement or their respective successors in interest. (b) Right to Assign. Neither party shall have the right to assign or transfer any of its or their respective rights or responsibilities hereunder to any, person or entity without the other partv's prior written consent. (c) Attorneys' Fees If either party commences an action against the other to interpret or enforce any of the terms of this Agreement or because of the breach by the other party of any of the terms hereof. the losing party shall pay to the prevailine party reasonable attorneys' fees. costs and expenses incurred in connection with the prosecution or defense of such action, whether or not the action is prosecuted to a final judgment. For the purpose of this Agreement, the terms "attorneys' fees" or "attorneys' fees and costs" shall mean the fees and expenses of counsel to the parties hereto, which may include printing. photostating. duplicating and other expenses. air freight charges. and fees billed for law clerks. paralegals. librarians and others not admitted to the bar but performing services under the supervision of an attorney. The terms - attorneys' fees" or "attorneys' fees and costs' shall also include, without limitation, all such fees and expenses incurred with respect to appeals. arbitrations and bankruptcv proceedings. and whether or not any action or proceeding is brought with respect to the matter for which said fees and expenses were incurred. The term "attorney" shall have the same meaning as the term "counsel.- NB C 7869634 10/7AS 7 � / _ (d) Time is of the Esscncc. Timc is of the esscnce of this Agrccment. (e) Succcsson and Assigns. This Agrcement shall be hinding upon and enure to the benefit of each of the parties hereto and to their respective transferees, successors. and assigns. (f) California Law. This Agreement shall be construed in accordance ss ith and governed by the internal laws of the State of California. without giving effect to any -conflict of law" rulcs of such state. (g) Counterparts. This Agrcemcnt may be executed in any number of counterparts, each of which shall be deemed an original, but all of which. when taken together. shall constitute one and the same instrument. (h) Interpretation. Wherever possible. each provision of this Agreement shall be interpreted in such a manner as to be valid under applicable law, but- if any provision of this Agreement shall be invalid or prohibited thereunder. such invalidity or prohibition shall be construed as if such invalid or prohibited provision had not been inserted herein and shall not affect the remainder of such provision or the remaining provisions of this .-Ngreement. Section headings of this Agreement are solely for convenience of reference and shall not govern the interpretation of any of the provisions of this Agreement. (i) Construction. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly against the party who drafted such language. 6) Recitals and Exhibits. The Recitals to this Agrecment and all Exhibits attached hereto are incorporated herein by reference and made a part hereof for all purposes. IN AN ITN ESS WHEREOF, Buyer and Scllcr have executed this Agreement as of the day and year first above written. "SELLER" C.J.W., INC., a California corporation "BUYER" THE CITY OF NEWPORT BEACH, Approved as to form: a municipal corporation By: Robert H. Burnham City Attorney Mayor Not:Jr6e6J.a tmvs EXHIBIT A LEGAL DESCRIPTION All that real property situated in the City of Newport Beach, County of Orange. State of California and nhore particularly described as follows: N711:786867A i wine A-] EXHIBIT B FORM OF GRANT DEED WHEN RECORDED MAIL TO: AND MAIL TAX STATEMENTS TO: City of Newport Beach Office of the City Attorney 3300 Newport Boulevard Newport Beach. California 92658 Attention: Robert Burnham. Esq. In accordance with Section 11932 of the California Revenue and Taxation Code. Grantor has declared the amount of transfer tax which is due by a separate statement which is not being recorded kith this Grant Deed. GRANT DEED FOR VALUE RECEIVED. the receipt and sufficiency of which are hereby acknowledged. C.J,W., INC.. a California corporation, hereby grants to THE CITY OF NEWPORT BEACH. a charter city and municipal corporation. all of that certain real property more particularly described in Schedule I attached hereto and incorporated herein by this reference. Dated: November , 1998 By: C.J.W., INC., a California corporation By: NB 13!686).4 ]Dave B -1 John Wortmann. President ACKNOWLEDGEMENT STATE OF CALIFORNIA COUNTY OF ORANGE On November_, 1999, before me, personally appeared personally known to me - OR - _ proved to me on the basis of satisfactory evidence to he the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he /shchitcy executed the same in his/her /their authorized capacity(ics), and that by his/her /their signatures(s) on the instrument the persons(s), or the entity upon behalf of which the person(s) acted, executed the instrument. Witness my hand and official seal. Signature of Notary ND I 3868677A tonne B -2 Mil SCHEDULEi Gram Dccd Leteal Description All that real property situated in the City of Newport Beach. County of Orange, State of California and more particularly described as follows: NB 1:]66867.4 IlV]N8 S-1 / EXHIBIT C SELLER'S NON - FOREIGN AFFIDAVIT To inform THE CITY OF NEWPORT BEACH, a chartered city and municipal corporation (the "Transferee"), that %ithholding of tar under Section 1445 of the Internal Revenue Code of 1986, as amended (the "Code ") rr ill not be required upon the transfer of certain real property to the Transferee by CA.W„ INC„ an individual (the "Transferor "), the undersigned hereby certifies the following on behalf of Transferor: I. Transferor is not a foreign corporation, foreign partnership, foreign trust or foreign estate (as those terms are defined in the Code and Income Tax Regulations promulgated thereunder): ?. Transferors U.S. employer identification number is _; and 3. Transferors office address is Transferor understands that this Certification may be disclosed to the Internal Revenue Service b,% Transferee and that an;. false statement contained herein could be punished by fine, imprisonment, or both. Under penalty of perjure. 1 declare that I have examined this Certification and that. to the best of my knowledge and belief. it is true. correct and complete. and I further declare that I have authoritc to sign this document on behalf of the Transferor. Dated: . 1998 By: C.J.".. INC., a California corporation By: NBI:]L6B6U lams C -1 John Wortmann, President