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C-5889 - Monrovia, 1499 - Purchase and Sale Agreement for Real Property and Escrow Instructions 2014
TICOR TITLE - 18302 Irvine Blvd., Suite 100 Tustin, CA 92780 Escrow Branch Phone: (714) 289-3300 Escrow Officer's Direct Line: (714) 289-3300 Ext. 3327 Fax: (949)809-0685 ADDITION AND/OR AMENDMENT TO ESCROW INSTRUCTIONS TO: Ticor Title Company of California Escrow No.: 00256875 - 001 - KDH Escrow Officer: Kim Hernandez Date: September 9, 2014 Property: 1499 Monrovia Avenue Newport Beach, CA The instructions in this escrow are hereby modified, amended and/or supplemented in the following particulars only: Buyer and Seller state and agree that the date of Close of Escrow is hereby extended to occur on or before September 30, 2014. All other terms and conditions remain the same. END OF INSTRUCTIONS IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below. BUYER: Kobe, Inc., a California Corporation By: Andrea Fairchild, President SELLER: City of Newport Beach, a Municipal c oration and Charter City �� Date By " ve Kiff, City Manager Date APPROVED AS TO Y Os: City Attorney Attest. City Clerk �IPORW SCA0001816 In TICOR TITLC 18302 Irvine Blvd- Suite Ino f todin. CA 92780 Escrow Branch Phone: (714) 289-3300 [,,wro%N 01'rjccr*s Direct Linc: (714) 289-3300 FIxt. 3327 Fax: (949) 80941685 ADDITION AND/OR AMENDMENT TO ESCROW INSTRUCTIONS TO: Ticor Title Company of California Escrow No.: 00256875 - 001 - K DI I Escrow Officer: Kim Hernandez Date: September 9, 2014 Property: 1499 Monrovia Avenue Newport Beach, CA I'he instructions in this escrow are hereby modified, amended andlor supplemented in the following particulars only: Buver and Seller state and agree that the date of Close of Escrow is hereby extended to occur on or before September 30, _20i4. All other terms and conditions remain the same. END OF INSTRUCTIONS IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below. BUYER: SELLER: City of Newport Beach, a Municipal q1wcorporation and Charter City 11t D / / By: Dave Kiff, City Manager Date SCAN01816 RECORDING REQUESTED BY FIDELITY NATIONAL TITLE AND WHEN RECORDED MAIL TO: Kobe, Inc., a California Corporation 341 BAYSIDE DRIVE, STE. 4 Newport Beach, CA 92660 ORDER NO.: 997-23050607-PP2 ESCROW NO.: 00256875-001-KDII Recorded in Official ords, Orange County 9111iIIIIIIIIV,IIPkIIV,IIIIJlll9111111n11!IIIiII�iIIPllI!°� pia�mmr�iaam�iaaria` 105 409 G02 2 Non -lis 0.00 0.00 0.00 0.00 3.00 0.00 0.00 0.00 SPACE ABOVE THIS LINE FOR RECORDER'S USE GRANT DEED TIIE UNDERSIGNED GRANTOR(S) hereby request that the tax declaration not be made a part of the permanent record in the office of the -county recorder pursuant to section 11932 of the revenue and taxation code. City of Newport Beach Parcel No. A Portion of ##424-401-14 FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, City of Newport Beach, a Municipal corporation and Charter City hereby GRANT(s) to Kobe, Inc., a California Corporation the following real property in the City of Newport Beach County of Orange, State of California: SEE EXIIIBIT "A" ATTACHED HERETO AND MADE A PART HEREOF Dated: September 8, 2014 City of Newport Beach, a Municipal corporation and Charter City By: 01"ff, City Manager STATE OF CALIFORNIA COUNTY OF D(Z A►,l G SS: APPROVED AS TO YORM ��VV\WL__ "NN Attorney �ti4 I t � On _ auj 29 ;2C>1�i before me ]i5VNq-Et2. 124NN Cy1L)1_ti e—( a Notary Public, personally appeared 1�4:N14VE y=k F F who proved to me on the basis of satisfactory evidence to be the person(s)whose name(&) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies) and that by his/her/their signature(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. JENNIEfR ANN-MULVEY Commission # 2045022 IL Signature AJ�\Z ,-s Notary Public - California z 4 Orange County My Comm. Expires Oct t2, 2017 __U WWV I I I I MAIL TAX STATEMENTS AS DIRECTED ABOVE Page I GRANTDEE Escrow No.: 00256875 - 001 - Kim Hernandez EXHIBIT "A" (� I] IL; LAND RLI'L:RRL-D'1'0 IIEREIN BL'LO44' IS SITUAT'FD INTI IL, CITY OF NEWPORT BEACH, COUNTY OF ORANGE,, STATF. OF CALIFORNIA, AND 1S DFSCRIBED AS FOLLOWS: ' PARCEL 2, OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, RECORDED OCTOBER 4, 2007, AS INSTRUMENT NO. 2007-598931, OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPTING THEREFROM THE NORTHERLY 60.00 FEET, BEING MORE PARTICULARLY DESCRIBED AS THAT PORTION OF 15TH STREET (60.00 FEET 'VIDE), VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF TIIE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801, OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. APN: 424-401-14 Page 2 GRANTDFF REVOCABLE LICENSE AGREEMENT BETWEEN THE CITY OF NEWPORT BEACH AND KOBE, INC. FOR THE USE OF CITY PROPERTY THIS REVOCABLE LICENSE AGREEMENT FOR USE OF CITY PROPERTY ("Agreement") is made and entered into as of this �t day of , 2014 ("Effective Date"), by and between the CITY OF NEWPORT BEACH, a California Municipal corporation ("City"), and KOBE, INC., a California corporation ("Licensee"), and is made with reference to the following: 1 C� RECITALS 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 the City. B. City is the owner of real property in the City of Newport Beach located at 1499 Monrovia Avenue, County of Orange, State of California, and further depicted in Exhibit "A" and incorporated herein by this reference ("Premises"). C. Licensee is the owner of the adjacent real property acquired pursuant to the Grant Deed recorded �C.1�te.1/ , 2014, by the County Recorder of Orange County, California as Instrument No U��t Q�3 FJT° +?) , and further depicted in Exhibit "B" and incorporated herein by this reference ("Property"). D. Licensee has requested that it be allowed to use a portion of the Premises ("License Area") for parking of vehicles and other uses to the benefit of the Property as those uses exist pursuant to that certain Agreement For Purchase And Sale Of Real Property And Escrow Instructions dated July 24, 2014 between City and Licensee ("Purchase Agreement"). E. City and Licensee desire to enter into this Agreement to allow Licensee to use the License Area on an exclusive basis, subject to the covenants and conditions set forth in this Agreement and pursuant to the Purchase Agreement. F. In consideration of the mutual promises and obligations contained in this Agreement, the receipt and sufficiency of which is hereby acknowledged, City hereby grants to Licensee the revocable right to occupy and use the License Area, and Licensee accepts the same on the following terms and conditions. NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as follows: 1. LICENSE City grants an exclusive license ("License") to Licensee for the term of this Agreement for Licensee -to use the License Area, which is twelve thousand seven hundred seventy (12,770) square feet in size, for the uses and activities set forth in Section 6 of this Agreement. The LA2380366.2 223603-10001 License granted herein is subject to the terms, covenants and conditions hereinafter set forth, and Licensee covenants, as a material part of the consideration for this License, to keep and perform each and every term, covenant and condition of this Agreement. 2. USE OF THE LICENSE AREA Licensee's use of the License Area shall be limited to the uses set forth in Section 6 of this Agreement. No expansion or change of uses of the License Area from that existing as of the date of the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated July 24, 2014, shall be permitted. 3. PERMITS AND LICENSES Licensee, at its sole expense, shall obtain and maintain during the term of this Agreement, all appropriate permits, licenses and certificates that may be required by any governmental agency including Licensor. 4. TERM The term of this License shall commence on the Effective Date, and continue until such time as the License Area is developed, the expiration of the Abatement Period (February 1, 2022) related to the Property; or unless terminated earlier as set forth herein, whichever occurs first. 5. LICENSE FEE/CONSIDERATION Pursuant to the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated July 24, 2014, there shall be no fee for this License Agreement during the entire term of the License because adequate consideration was received by Licensor pursuant to the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated July 24, 2014. 6. THE PURPOSE OF THIS LICENSE 6.1 The purpose of this License is to provide for the use of the License Area within the Premises pursuant to the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated July 24, 2014. Licensee agrees to use the License Area only for the activities described herein, and not to use or permit the use of the License Area for any other purpose without first obtaining the prior written consent of City, which consent may be withheld in City's sole discretion. Acceptable activities include: 6.1.1 For the parking of vehicles associated with, and to meet the parking needs of, the existing office building located on the Property. 6.1.2 Circulation of vehicles between the public right-of-way, the Premises, and the Property; LA2380366.2 223603-10001 2 6.1.3 Sidewalk and pedestrian access from the public right-of-way, the Premises, and the Property; and 6.1.4 Replacement/Re-Use of the existing monument sign located on the Premises, for the benefit of the Property. 6.1.5 Maintenance, repair and replacement of all surfaces, coatings and paints, landscaping, lighting, parking barriers and stops, walkways, and planters currently existing on the Premises. 6.1.6 The provision of security on the Premises. 7. CONDITIONS OF LICENSE 7.1 Licensee shall comply with the following conditions prior to the commencement of use of the License Area. 7.1.1 Prohibited Activities: Parking and storage of construction vehicles or equipment is expressly prohibited. Except as set forth in Sections 6.1.5 and 7.1.2, no improvements to the License Area are permitted without prior written approval of the City Manager. 7.1.2 Maintenance: Licensee shall be responsible for maintenance of the License Area including, but not limited to, the routine removal of foreign material, waste, and debris. Licensee's obligation to maintain the License Area shall include a regular preventative maintenance program, together with routine repairs caused by normal wear and tear, to be provided by a licensed service company acceptable to City. Licensee shall obtain approval from the City Manager for projects valued at more than five thousand dollars ($5,000), and shall obtain all required Building permits necessary for such repair. 7.1.2.1 City shall be entitled, with a Licensee representative, to inspect the License Area for compliance with the terms of this Agreement, and with all applicable Federal, State and local (including those of the City) government regulations. 7.1.3 Licensee shall be bound to the agreed upon and acknowledged conditions of the License Area as set forth in the Agreement For Purchase And Sale Of Real Property And Escrow Instructions, dated July 24, 2014. 7.1.4 Security: Licensee shall be solely responsible for security of the Premises, as it relates to the ownership and operation of the Property. 8. TERMINATION OF LICENSE 8.1 Notwithstanding the tenn of this License, this License may be terminated during the term or any extended term in the following manner: 8.1.1 By Licensee: At any time, without cause upon the giving of ninety (90) days written notice of termination to City; LA2380366.2 223603-10001 3 8.1.2 By City: At any time, without cause upon the giving of ninety (90) days written notice of termination to Licensee; or 8.1.3 If, after written notice of default to Licensee of any of the terms or conditions of this License, Licensee fails to cure or correct the default within twenty (20) business days of receipt of written notice, City may immediately terminate the License. 8.1.4 Upon termination of License all improvements installed by Licensee after the date of this License, if any, shall be removed by Licensee upon request by the City. 9. ADMINISTRATION This Agreement will be administered by the Community Development Department. The Community Development Director or his/her designee shall be the Project Administrator and shall have the authority to act for City under this Agreement. The Project Administrator or his/her authorized representative shall represent City in all matters pertaining to this License. 10. INDEMNITY AND LIABILITY FOR DAMAGES 10.1 Licensee shall indemnify, defend and hold harmless City, its City Council, boards and commissions, officers, agents, volunteers, and employees (collectively, the "Indemnified Parties") from and against any and all claims (including, without limitation, claims for bodily injury, death or damage to property), demands, obligations, damages, actions, causes of action, suits, losses, judgments, fines, penalties, liabilities, costs and expenses (including, without limitation, attorney's fees, disbursements and court costs) of every kind and nature whatsoever (individually, a Claim; collectively, "Claims"), which may arise from or in any manner relate (directly or indirectly) to any breach of the terms and conditions of this License by Licensee, its agents, employees, vendors, etc., any work performed or services provided under this License by Licensee, its agents, employees, vendors, etc., including, without limitation, defects in workmanship or materials or Licensee's presence or activities conducted that relate in any way to this License (including the negligent and/or willful acts, errors and/or omissions of Licensee, employees, vendors, suppliers, and anyone employed directly or indirectly by any of them or for whose acts they may be liable or any or all of them). Notwithstanding the foregoing, nothing herein shall be construed to require Licensee to indemnify the Indemnified Parties from any Claim arising from the sole negligence or willful misconduct of the Indemnified Parties. Nothing in this indemnity shall be construed as authorizing any award of attorney's fees in any action on or to enforce the terms of this License. This indemnity shall apply to all claims and liability regardless of whether any insurance policies are applicable. The policy limits do not act as a limitation upon the amount of indemnification to be provided by the Licensee. 10.2 Licensee shall be liable and responsible for the security, repair and maintenance of the License Area to the extent necessitated by Licensee's use of the License Area under this License, for such time as this License is in effect. Licensee shall use care to protect the License Area and restore it to its original condition to the satisfaction of the City when the License Area is not in use by Licensee. 11. PROHIBITION AGAINST ASSIGNMENT AND TRANSFER LA2380366.2 223603-10001 4 This License shall not be assigned, transferred contracted or subcontracted out without the prior written approval of City which approval may be withheld in the City's sole discretion. 12. CONFLICT OF INTEREST The Licensee or its employees may be subject to the provisions of the California Political Reform Act of 1974 ("Act"), which (a) requires such persons to disclose any financial interest that may foreseeably be materially affected by the work performed under this License, and (b) prohibits such persons from making, or participating in making, decisions that will foreseeably financially affect such interest. If subject to the Act, Licensee shall conform to all requirements of the Act. Notwithstanding Section 9.1.3, failure to conform to the requirements of the Act constitutes a material breach and is grounds for immediate termination of this License by City. Licensee shall indemnify and hold harmless City for any and all claims for damages resulting from Licensee's violation of this Section. 13. NOTICE 13.1 All notices, demands, requests or approvals to be given under the terms of this License shall be given in writing, and conclusively shall be deemed served when delivered personally, or on the third business day after the deposit thereof in the United States mail, postage prepaid, first-class mail, addressed as hereinafter provided. All notices, demands, requests or approvals from Licensee to City shall be addressed to City at: Attn: Real Property Administrator City of Newport Beach Community Development 100 Civic Center Drive P.O. Box: 1768 Newport Beach, CA, 92658 Phone: (949) 644-3309 13.2 All notices, demands, requests or approvals from City to Licensee shall be addressed to Licensee at: Attn: Andrea Fairchild, President Kobe, Inc. 341 Bayside Drive, Suite 4 Newport Beach, CA 92660 Phone: (708) 203-5433 14. STANDARD PROVISIONS 14.1 Compliance with all Laws. Licensee shall at its own cost and expense comply with all statutes, ordinances, regulations and requirements of all governmental entities, including federal, state, county or municipal, whether now in force or hereinafter enacted. In addition, all work prepared by Licensee shall conform to applicable City, county, state and federal laws, rules, regulations and permit requirements and be subject to approval of the Project Administrator. LA2380366.2 223603-10001 5 14.2 Waiver. A waiver by either party of any breach, of any term, covenant or condition contained herein shall not be deemed to be a waiver of any subsequent breach of the same or any other term, covenant or condition contained herein, whether of the same or a different character. 14.3 Integrated Agreement. This Agreement represents the full and complete understanding of every kind or nature whatsoever between the parties hereto, and all preliminary negotiations and agreements of whatsoever kind or nature are merged herein. No verbal agreement or implied covenant shall be held to vary the provisions herein. 14.4 Interpretation. The terms of this Agreement shall be construed in accordance with the meaning of the language used and shall not be construed for or against either party by reason of the authorship of the License or any other rule of construction which might otherwise apply. 14.5 Amendments. This Agreement may be modified or amended only by a written document executed by both Licensee and City and approved as to form by the City Attorney. 14.6 Severability. If any term or portion of this Agreement is held to be invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions of this Agreement shall continue in full force and effect. 14.7 Controlling Law and Venue. The laws of the State of California shall govern this Agreement and all matters relating to it and any action brought relating to this Agreement shall be adjudicated in a court of competent jurisdiction in the County of Orange. 14.8 Taxes. Licensee acknowledges that the License granted herein may be subject to possessory interest taxes. Licensee shall have the sole obligation to pay any taxes, fees and assessments, plus applicable penalties and interest, which may be imposed by law and arise out of Licensee's License hereunder. Licensee shall indemnify, defend and hold harmless City against any and all such taxes, fees, penalties or interest assessed, or imposed against City hereunder. 14.9 No Third Party Rights. The Parties do not intend to create rights in or grant remedies to, any third party as a beneficiary of this Agreement, or of any duty, covenant, obligation or undertaking established herein. 14.10 No Attorneys' Fees. In the event of any dispute under the terms of this Agreement the prevailing party shall not be entitled to attorneys' fees. 14.11 Counterparts. This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument. [SIGNATURES ON NEXT PAGE] LA2380366.2 223603-10001 6 IN WITNESS WHEREOF, the parties have caused this License to be executed on the dates written below. APPROVED AS TO FORM: OFFIC�F THE CITY ATTORNEY Date: Byr- -- ; Aaron C. Harp City Attorney ATTEST: Date: By: ( l . 04p, Leilani I. Browny City Clerk -.vf CITY OF NEWPORT BEACH, A Califo is municipal corporation Date: SO , By: Rush N. Hill, II Mayor LICENSEE: Kobe, Inc., a California corporation Date: By:_ Name Title: Date: By: Name: Title: Andrea Fairchild President [END OF SIGNATURES] Attachments: Exhibit A: License Area Exhibit B: Adjacent Property Exhibit C: Insurance Requirements LA2380366.2 223603-10001 IN WITNESS WHEREOF, the parties have caused this License to be executed on the dates written below. APPROVED AS TO FORM: OFFICE OF THE CITY ATTORNEY Date: By: Aaron C. Harp City Attorney ATTEST: Date: Bv: Leilani I. Brown City Clerk Attachments CITY OF NEWPORT BEACH, A California municipal corporation Date: By: Rush N. Hill, II Mayor LICENSEE: Kobe, Inc., a California corporation Date: By: ' // Name( Andrea Fairchild Title: Presiders Date: By:.ame: _ Title: [END OF SIGNATURES] Exhibit A: License Area Exhibit B: Adjacent Property Exhibit C: Insurance Requirements LA2380366.2 223603-10001 EXHIBIT A LICENSE AREA LA2380366.2 223603-10001 Exhibit A Coast Sun eving, Inc. July 14, 2014 EXHIBIT A-1 LEGAL DESCRIPTION THE NORTHERLY 60.00 FEET OF PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO. 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, BEING MORE PARTICULARLY DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. CONTAINING 12,770 SQUARE FEET, MORE OR LESS. ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT A-2 ATTACHED HERETO AND MADE A PART HEREOF. DATED THIS 14TH DAY OF JULY, 2014. \_ AANDDEL S��y Lu r O - VagLnL.S. 5108 Q GWEN-VERA DEL CASTILLO, PLS 5108 9�F Fo4� OF CALF JN 114-031 R3 o 222/138=39 N89'23'40"E 229.34' o A i o _ -cQ i 0 �--N89-23'40"E 196.32' 2 v O C) Zo,o y `J < � O c� F QO OOp�00 � CSS � 60,00 O O 6'. 30' 30' o STREET n 0 30,130 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. A-2 ' \ ,o N89'23'40"E 229.34' o A i o _ -cQ i 0 �--N89-23'40"E 196.32' 2 v O C) Zo,o y `J < � O c� F QO OOp�00 � CSS � 60,00 O O 6'. 30' 30' o STREET n 0 30,130 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. A-2 ' I ADJACENT PROPERTY LA2380366.2 223603-10001 Exhibit B CoaSL Surveying, Inc. July 10, 2014 EXHIBIT B-1 LEGAL DESCRIPTION PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO. 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM THE NORTHERLY 60.00 FEET, BEING MORE PARTICULARLY DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. CONTAINING 35,021 SQUARE FEET, MORE OR LESS. ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT B-2 ATTACHED HERETO AND MADE A PART HEREOF. DATED -THIS 14TH DAY OF JULY, 2014. AND sG�G L.S. 5108 GWEN-VERA DEL CASTILLO, PLS 5108 �F CAL\ JN 114-0;1 ROB 222130 - 39 1 30' 30' I N89'23'40"E 229.34' -� OA o 0 � _ O -� o 0 cfl C-N89'23'40"E 196.32' - i� LD I I 15TH STREET { w z Lu Q IQ 0 0 30'130' 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. JOB #: 114-031 DATE: 7/14/141 EXHIBIT B-2 ST SURVEYING, INC. SCALE: T 100' 15031 PARKWAY LOOP, SUITE 8 SHEET 1 OF 1 1 TUSTIN. CA 92780-6527 (714) 918-6266 \ �3 N89'23'40"E 229.34' -� OA o 0 � _ O -� o 0 cfl C-N89'23'40"E 196.32' - i� LD I I 15TH STREET { w z Lu Q IQ 0 0 30'130' 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. JOB #: 114-031 DATE: 7/14/141 EXHIBIT B-2 ST SURVEYING, INC. SCALE: T 100' 15031 PARKWAY LOOP, SUITE 8 SHEET 1 OF 1 1 TUSTIN. CA 92780-6527 (714) 918-6266 EXHIBIT C INSURANCE REQUIREMENTS 1. Provision of Insurance. Without limiting Licensee's indemnification of City, and prior to commencement of work, Licensee shall obtain, provide and maintain at its own expense during the term of this Agreement, policies of insurance of the type and amounts described in the attached Exhibit B 2. Acceptable Insurers. All insurance policies shall be issued by an insurance company currently authorized by the Insurance Commissioner to transact business of insurance in the State of California, with an assigned policyholders' Rating of A- (or higher) and Financial Size Category Class VII (or larger) in accordance with the latest edition of Best's Key Rating Guide, unless otherwise approved by the City's Risk Manager. 3. Coverage Requirements. A. Workers' Compensation Insurance. Licensee shall maintain Workers' Compensation Insurance, statutory limits, and Employer's Liability Insurance with limits of at least one million dollars ($1,000,000) each accident for bodily injury by accident and each employee for bodily injury by disease in accordance with the laws of the State of California, Section 3700 of the Labor Code. B. Licensee shall submit to City, along with the certificate of insurance, a Waiver of Subrogation endorsement in favor of City, its officers, agents, employees and volunteers. C. General Liability Insurance. Licensee shall maintain commercial general liability insurance, and if necessary umbrella liability insurance, with coverage at least as broad as provided by Insurance Services Office form CG 00 01, in an amount not less than one million dollars ($1,000,000) per occurrence, two million dollars ($2,000,000) general aggregate. The policy shall cover liability arising from premises, operations, products -completed operations, personal and advertising injury, and liability assumed under an insured contract (including the tort liability of another assumed in a business contract) with no endorsement or modification limiting the scope of coverage for liability assumed under a contract. D. Automobile Liability Insurance. Licensee shall maintain automobile insurance at least as broad as Insurance Services Office form CA 00 01 covering bodily injury and property damage for all activities of the Licensee arising out of or in connection with Work to be performed under this Agreement, including coverage for any owned, hired, non -owned or rented vehicles, in an amount not less than one million dollars ($1,000,000) combined single limit each accident. E. Property Insurance — Construction. In the event Licensee installs any improvements, this coverage will be required in the amounts requested by City. LA2380366.2 223603-10001 Exhibit C 4. Other Insurance Requirements. The policies are to contain, or be endorsed to contain, the following provisions: A. Waiver of Subro ation. All insurance coverage maintained or procured pursuant to this agreement shall be endorsed to waive subrogation against City, its elected or appointed officers, agents, officials, employees and volunteers or shall specifically allow Licensee or others providing insurance evidence in compliance with these requirements to waive their right of recovery prior to a loss. Licensee hereby waives its own right of recovery against City, and shall require similar written express waivers from each of its contractors. B. Additional Insured Status. All liability policies including general liability, excess liability, pollution liability, and automobile liability, if required, but not including professional liability, shall provide or be endorsed to provide that City and its officers, officials, employees, and agents shall be included as insureds under such policies. C. Primary and Non Contributory. All liability coverage shall apply on a primary basis and shall not require contribution from any insurance or self-insurance maintained by City. D. Notice of Cancellation. All policies shall provide City with thirty (30) calendar days notice of cancellation (except for nonpayment for which ten (10) calendar days notice is required) or nonrenewal of coverage for each required coverage. Additional Agreements Between the Parties. The parties hereby agree to the following: A. Evidence of Insurance. Licensee shall provide certificates of insurance to City as evidence of the insurance coverage required herein, along with a waiver of subrogation endorsement for workers' compensation and other endorsements as specified herein for each coverage. Insurance certificates and endorsement must be approved by City's Risk Manager prior to commencement of performance. Current certification of insurance shall be kept on file with City at all times during the term of this Agreement. City reserves the right to require complete, certified copies of all required insurance policies, at any time. B. City's Right to Revise Requirements. The City reserves the right at any time during the term of the Agreement to change the amounts and types of insurance required by giving the Licensee sixty (60) days advance written notice of such change. If such change results in substantial additional cost to the Licensee, the City and Licensee may renegotiate Licensee's compensation. C. Enforcement of Agreement Provisions. Licensee acknowledges and agrees that any actual or alleged failure on the part of the City to inform Licensee of non- compliance with any requirement imposes no additional obligations on the City nor does it waive any rights hereunder. LA2380366.2 223603-10001 Exhibit C D. Requirements not Limiting. Requirements of specific coverage features or limits contained in this Section are not intended as a limitation on coverage, limits or other requirements, or a waiver of any coverage normally provided by any insurance. Specific reference to a given coverage feature is for purposes of clarification only as it pertains to a given issue and is not intended by any party or insured to be all inclusive, or to the exclusion of other coverage, or a waiver of any type. E. Self-insured Retentions. Any self-insured retentions must be declared to and approved by City. City reserves the right to require that self-insured retentions be eliminated, lowered, or replaced by a deductible. Self-insurance will not be considered to comply with these requirements unless approved by City. F. City Remedies for Non -Com lip ance. If Licensee or any subcontractor fails to provide and maintain insurance as required herein, then City shall have the right but not the obligation, to purchase such insurance, to terminate this agreement, or to suspend Licensee's right to proceed until proper evidence of insurance is provided. Any amounts paid by City shall, at City's sole option, be deducted from amounts payable to Licensee or reimbursed by Licensee upon demand. G. Timely Notice of Claims. Licensee shall give City prompt and timely notice of claims made or suits instituted that arise out of or result from Licensee's performance under this Agreement, and that involve or may involve coverage under any of the required liability policies. H. Licensee's Insurance. Licensee shall also procure and maintain, at its own cost and expense, any additional kinds of insurance, which in its own judgment may be necessary for its proper protection and prosecution of the Work. LA23 803 66.2223603-10001 Exhibit C ASSIGNMENT AND ASSUMPTION AGREEMENT This ASSIGNMENT AND ASSUMPTION AGREEMENT" this Assi nment" ( g ) is entered into as of December 31, 2014, by and between KOBE, INC., a California corporation ("Assignor"), and KOBE STUDIOS, LLC, a Delaware limited liability company ("Assignee"). RECITALS (� A. Assignor acquired the real property in the City of Newport Beach located at 1499 Monrovia Avenue, County of Orange, State of California "Property"), from the City of Newport C, Beach, a Municipal corporation ("City") by Grant Deed recorded October 1, 2014 as Instrument No. 2014000398343. B. At the time of acquisition of the Property by Assignor from the City, Assignor and City entered into that certain Revocable License Agreement between the City and Assignor, dated October 1, 2014, ("License Agreement"), which granted Assignor an exclusive license over certain real property adjoining the Property as described in the License Agreement ("License Area"), on the terms and conditions provided therein. C. Concurrently herewith, Assignor is conveying the Property to Assignee by Grant Deed to effectuate a restructuring of ownership of the Property among related entities. D. In connection with such conveyance, Assignor desires to assign to Assignee all right, title and interest it has under the License Agreement, including the License to use the License Area as provided therein. NOW, THEREFORE, in consideration of the benefits set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: I. DEFINITIONS 1.1 Defined Terms. Capitalized terms used in this Assignment and not otherwise defined herein are used herein as defined in the License Agreement. II. ASSIGNMENT OF LICENSE AGREEMENT 2.1 Assignment. Assignor hereby grants, conveys, assigns, and transfers to Assignee, its successors and assigns, all of the right, title, and interest, legal or equitable, of Assignor in and to the License Agreement, including the License to use the License Area as provided therein. 2.2 Assumption of Liabilities. Assignee hereby assumes all of the obligations and liabilities of Assignor constituting under the License Agreement. Without limitation, Assignee agrees to comply with and perform the obligations of Licensee under the License Agreement. 2.3 Assignee hereby agrees to be bound to the agreed upon and acknowledged conditions of the License Area as set forth in the Agreement for Purchase and Sale of Real Property And Escrow Instructions, dated July 24, 2014, between the City and Assignor, which is incorporated herein by this reference as though fully set forth herein. 2.4 No Modification of License Agreement. Nothing in this Assignment shall be construed to enlarge, restrict, or otherwise modify the terms of the License Agreement, or constitute a waiver or release by Assignee or Assignor of any liabilities, duties, or obligations imposed upon any of them by the terms of the License Agreement. In the event of any conflict or ambiguity between the provisions of this Assignment and the License Agreement, the provisions in the Purchase Agreement shall control to the extent of the conflict. 2.5 Enforceability. This Assignment is being executed by Assignee and Assignor and shall be binding upon each of them, and their respective successors and assigns, for the uses and for the purposes above set forth and referred to, and shall be effective as of the date hereof. 2.6. Governing Law. This Assignment shall be governed by and enforced in accordance with the laws of the State of California, without regard to the conflict of laws principles thereof. 2.7 Counterparts. This Assignment may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. Facsimile and e-mailed signatures shall be treated as if they were originals. [Signatures on following page] 2 IN WITNESS WHEREOF, this Assignment is executed and delivered as of the date first written above. ASSIGNOR: ASSIGNEE: KOBE, INC. By: Name: Kobe Bryant Title: Chief Executive Officer KOBE STUDIOS, LLC By: Kobe Investments, LLC, a Delaware limited liability company, its Sole Member By: Name: A.6. gr fie'. A Title: /►'�an.ge, [Signature Page to Assignment and Assumption Agreement] CONSENT TO ASSIGNMENT In connection with the attached Assignment and Assumption Agreement dated as of December 31, 2014 (the "Assi nim Hent") between KOBE, INC., a California corporation ("Assignor"), and KOBE STUDIOS, LLC, a Delaware limited liability company ("Assignee"), the undersigned, CITY OF NEWPORT BEACH, a municipal corporation, hereby consents to the assignment of all of Assignor's right, title and interest under that certain Revocable License Agreement between the City and Assignor, dated October 1, 2014 ("License Agreement") to Assignee, including the License (as defined in the License Agreement) to use the License Area (as defined in the License Agreement) as provided in the License Agreement. APPROVED AS TO FORM: OFFIC F ?E CITY ATTORNEY Date: B Aaron C. Harp (Am uiIZaIiS City Attorney ATTEST: Date: By: hM-1— Leilam I. Brown City Clerk CITY OF NEWPORT BEACH, A California municipal corporation Date: a By. Dave Kiff City Manager [Signature Page to Consent to Assignment] KOBEIA OP ID: GO CERTIFICATE OF LIABILITY INSURANCE DATE (MM/DD/YYY11 03/09/2015 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER. THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW. THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER, AND THE CERTIFICATE HOLDER. IMPORTANT: If the certificate holder is an ADDITIONAL INSURED, the policy(ies) must be endorsed. If SUBROGATION IS WAIVED, subject to the terms and conditions of the policy, certain policies may require an endorsement. A statement on this certificate does not confer rights to the certificate holder in lieu of such endorsement(s). PRODUCER Momentous Insurance Brokerage 5990 Sepulveda Blvd, Suite 550 CONTACT Steve Rivera NAME PHONE FAX • 818-933-2700 A/c No: 818-933-2701 ADDRESS: Van Nuys, CA 91411 Graham Orleans X X INSURERS AFFORDING COVERAGE NAIC # INSURERA: New York Marine & General Ins. 07/03/2015 INSURED Kobe, Inc 341 Bayside Drive, Suite 4 Newport Beach, CA92660 INSURER e: General Star National INSURER C INSURER D: INSURER E: INSURER F: rnVFRAr;FC rF=PTIPICATF AIIIMRFR- DMINZlniki nnineQco. THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED. NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES. LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS. INSR LTR TYPE OFINSURANCE ADDL SUB 12. POLICYNUMBER MM/DDYYY MMIDD EXP LIMITS A X COMMERCIAL GENERAL LIABILITY CLAIMS -MADE 1 OCCUR X X PK201400004708 07/03/2014 07/03/2015 EACHOCCURRENCE $ 1,000,000 DAMAGE TO RENTED $ 100,000 MED EXP (Any oneperson) $ 5,000 PERSONAL&ADV INJURY $ 1,000,000 GEN'LAGGREGATE LIMITAPPLIES PER: PRO X JECT LOC GENERAL AGGREGATE $ 2,000,000 PRODUCTS-COMP/OPAGG $POLICY❑ 1,000,000 AUTOMOBILE LIABILITY COMBINED SINGLE LIMIT $ 1,000,000 A ANY AUTO X X AU201400005008 07/03/2014 07/03/2015 BODILY INJURY (Per person) $ ALLOWNEDSCHEDULED AUTOS AUTOS BODILY INJURY P$ (Per accident) ( X NON -OWNED HIREDAUTOS X AUTOS PROPERTY$DAMAGE $ X UMBRELLA LIAB X OCCUR EACHOCCURRENCE $ 5,000,000 AGGREGATE $ 5,000,000 B EXCESS LIAB CLAIMS -MADE NUG419293 07/03/2014 07/03/2015 WORKERS COMPENSATION PER OTH- A AND EMPLOYERS' LIABILITY Y� ANY PROPRIETOR/PARTNER/EXECUTIVE OFFICER/MENBER EXCLUDED? (Mandatory in NH) Ifyes, describe under r)FRQ.R1PT1QI`J OF OPERATIONS hPlow N / A X WC201400006563 EVIDENCE OF INSURANCE 07/03/2014 07/03/2015 E.L. EACHACCIDENT $ 1,000,000 E.L. DIS EASE -EA EMPLOYEE $ 1,000,000 E.L. DISEASE -POLICY LIMIT 1,000,000 DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (ACORD 101, Additional Remarks Schedule, may be attached if more space is required) City of Newport Beach, its officers, agents, employees and volunteers are included as Additional Insured as respects to claims arising out of the negligence of the Named Insured's operations. Waiver of Subrogation applies as respects to General Liability and Workers' Compensation; coverage is primary and non-contributory. City of Newport Beach, its officers, agents, employees, volunteers 100 Civic Center Drive LLA SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN ACCORDANCE WITH THE POLICY PROVISIONS. AUTHORIZED REPRESENTATIVE ©1988-2014ACORD CORPORATION. All rights reserved. ACO RD 25 (2014/01) The ACORD name and logo are registered marks ofACORD POLICY NUMBER: PK201400004708 COMMERCIAL GENERAL LIABILITY CG 24 04 05 09 WAIVER OF TRANSFER OF RIGHTS OF RECOVERY AGAINST OTHERS TO US This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART PRODUCTS/COMPLETED OPERATIONS LIABILITY COVERAGE PART SCHEDULE Name Of Person Or Organization: City of Newport Beach, Its officers, agents, employees, volunteers 100 Civic Center Drive Newport Beach, CA 92660 As respects to revocable license agreement between the City of Newport Beach and Kobe, Inc. for the use of city property located at: 1499 Monrovia Avenue Newport Beach, CA 92663 Information required to complete this Schedule, if not shown above, will be shown in the Declarations. The following is added to Paragraph 8. Transfer Of Rights Of Recovery Against Others To Us of Section IV — Conditions: We waive any right of recovery we may have against the person or organization shown in the Schedule above because of payments we make for injury or damage arising out of your ongoing operations or "your work" done under a contract with that person or organization and included in the "products - completed operations hazard". This waiver applies only to the person or organization shown in the Schedule above. CG 24 04 05 09 © Insurance Services Office, Inc., 2008 Page 1 of 1 ❑ POLICY NUMBER: COMMERCIAL GENERAL LIABILITY CG 20 11 01 96 THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. ADDITIONAL INSURED - MANAGERS OR LESSORS OF PREMISES This endorsement modifies insurance provided under the following: COMMERCIAL GENERAL LIABILITY COVERAGE PART SCHEDULE 1. Designation of Premises (Part Leased to You): Per Locations on Dec Page 2. Name of Person or Organization (Additional Insured): As per written contract 3. Additional Premium: None (If no entry appears above, the information required to complete this endorsement will be shown in the Declara- tions as applicable to this endorsement.) WHO IS AN INSURED (Section II) is amended to include as an insured the person or organization shown in the Schedule but only with respect to liability arising out of the ownership, maintenance or use of that part of the premises leased to you and shown in the Schedule and subject to the following additional exclusions: This insurance does not apply to: 1. Any 'occurrence" which takes place after you cease to be a tenant in that premises. 2. Structural alterations, new construction or demolition operations performed by or on behalf of the person or organization shown in the Schedule. CG 20 11 01 96 Copyright, Insurance Services Office, Inc., 1994 Page 1 of 1 ❑ PCJ TICOR TITLE" 18302 Irvine Blvd., Suite 100 Tustin, CA 92780 Escrow Branch Phone: (714) 289-3300 Escrow Officer's Direct Line: (714) 289-3300 Ext. 3327 Fax: (949) 809-0685 ADDITION AND/OR AMENDMENT TO ESCROW INSTRUCTIONS TO: Ticor Title Company of California Escrow No.: 00256875 - 001 - KDH Escrow Officer: Kim Hernandez Date: August 27, 2014 Property: 1499 Monrovia Avenue Newport Beach, CA The instructions in this escrow are hereby modified, amended and/or supplemented in the following particulars only: Buyer and Seller state and agree that the date of the Expiration of the Due Diligence Period is hereby extended to September 5, 2014. All other terms and conditions remain the same. END OF INSTRUCTIONS IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below. BUYER: Kobe, Inc. By: Andrea Fairchild, President Date Dqq .2 1CRY 0e* SELLER: City of Newport Beach, a Municipal corporation and Charter City By: Dave f, City Manager Date APPROVED ♦ ED AS TO IFORM: Pa 4 City Attomev i (-N SCA0001816 18302 Irvine Blvd., Suite 100 Tustin, CA 92780 Escrow Branch Phone: (714) 289-3300 Escrow Officer's Direct Line: (714) 289-3300 Ext. 3327 Fax: (949) 809-0685 ADDITION AND/OR AMENDMENT TO ESCROW INSTRUCTIONS TO: Ticor Title Company of California Escrow No.: 00256875 - 001 - KDH Escrow Officer: Kim Hernandez Date: August 27, 2014 Property: 1499 Monrovia Avenue Newport Beach, CA The instructions in this escrow are hereby modified, amended and/or supplemented in the following particulars only: Buyer and Seller state and agree that the date of the Expiration of the Due Diligence Period is hereby extended to September 5, 2014. All other terms and conditions remain the same. END OF INSTRUCTIONS IN WITNESS WHEREOF, the undersigned have executed this document on the date(s) set forth below. BUYER: SELLER: Kobe, I City of Newport Beach, a Municipal corporation and Charter City By: ndrea Fair 1 1d, Presides Da By: Dave Kiff, City Manager Date SCA0001816 Escrow No. v0d To: Ticor Title ("Escrow Holder") 18302 Irvine Blvd., Suite 100 Tustin, CA 92780 Attn: Kim Hernandez Telephone: 714-289-3300 Date of Opening of Escrow: K j Wm_ `A , 2014 THIS AGREEMENT FOR PURCHASE AND SALE.�/OF REAL PROPERTY AND ESCROW INSTRUCTIONS (this "Agreement") is made thiI day of TU IU . _ _, 2014, by and between the City of Newport Beach, a Municipal corporation and Charterit�y ("City") and Kobe, Inc. ("Buyer"). RECITALS: A. City is the owner of that certain real property commonly known as 1499 Monrovia Avenue, located in the City of Newport Beach, County of Orange, State of California, and depicted on the map attached hereto as Exhibit "A" and by this reference incorporated herein. The property depicted in Exhibit "A" includes an office building and a parking area. The parking area is located in the area historically referred to as the 60 -foot wide 15th Street right-of-way, which was abandoned pursuant to Resolution No. 67-863 of the Board of Supervisors of Orange County, California. B. Notwithstanding the abandonment, The Master Plan of Arterial Highways as approved by the Orange County Transportation Authority and the Circulation Element of the City's General Plan identifies the future development of the 15th Street right-of-way to serve future traffic circulation needs. The development of the 15th Street right-of-way is contemplated to be located in that area more particularly described on Exhibit "B" attached hereto and by this reference incorporated herein (hereafter, referred to as the "15th Street Right -of -Way Parcel"). C. The portion of 1499 Monrovia Avenue exclusive of the 15th Street Right -of -Way is more particularly described on Exhibit "C" attached hereto and by this reference incorporated herein, together with all improvements now or hereafter constructed thereon, all easements, licenses and interests appurtenant thereto and all intangible property owned or held by City in connection with the land, including without limitation, development rights, governmental approvals and land entitlements (collectively referred to herein as the "Property"). D. City desires to sell to Buyer, and Buyer desires to purchase from City, the Property, all on the terms and conditions set forth in this Agreement. NOW, THEREFORE, the parties hereto agree as follows: A14-004877,16.144403119.3 x07116114 TERMS AND CONDITIONS 1. PURCHASE AND SALE OF PROPERTY, Buyer hereby agrees to purchase from City, and City agrees to sell to Buyer the Property, upon the terms and conditions hereinafter set forth. 2. PAYMENT OF PURCHASE PRICE. 2.1 Amount of Purchase Price. The purchase price for the Property will be FIVE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($5,800,000.00) ("Purchase Price"). 2.2 Payment of Purchase Price. (a) Not later than two (2) days following the Opening of Escrow, Buyer shall deposit in Escrow in good funds, the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (the "Deposit"), which Deposit shall be applicable to the Purchase Price upon the closing of escrow. In the event this Agreement is terminated by Buyer on or before the expiration of the Due Diligence Period or Buyer disapproves of any of the items requiring approval of Buyer hereunder on or before the expiration of the Due Diligence Period, the Deposit shall be promptly returned to Buyer. Buyer shall have the unqualified and unrestricted right to terminate its obligations under this Agreement on or before the expiration of the Due Diligence Period. (b) Not later than five (5) days following the expiration of the Due Diligence Period, Buyer shall deposit ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (the "Second Deposit"), which shall be nonrefundable. (c) On or before the Closing Date, Buyer shall deposit the balance of the Purchase Price, subject to any other credits or debits hereunder, with Escrow Holder in "good funds." "Good funds" shall mean a wire transfer of 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. 2.3 Interest Bearing Account. Escrow Holder shall deposit the funds specified in Section 3.2 above in an interest bearing account. All interest earned on said funds shall be credited to Buyer. 3. OPENING OF ESCROW. Within five (5) business days after the execution of this Agreement by City, 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 City delivers this executed Agreement to Escrow Holder. 4. ADDITIONAL FUNDS AND DOCUMENTS REQUIRED FROM BUYER AND CITY. 4.1 Buyer. Buyer agrees that on or before 1:00 p.m. on the business day preceding the Closing Date, Buyer will deposit with Escrow Holder all additional funds and/or 2551066751-0092 4403119.3 a07116114 -2- documents (executed and acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement, including without limitation, the following: (a) The Purchase Price; (b) A Preliminary Change of Ownership Statement completed in the manner required in Orange County; and (c) Such funds and other items and instruments as maybe necessary in order for Escrow Holder to comply with this Agreement. 4.2 City. City agrees that on or before 1:00 p.m. on the business day preceding the Closing Date, City will deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged, if appropriate) as may be necessary in order for the Escrow Holder to comply with this Agreement, including without limitation, the following: (a) A grant deed conveying the Property to Buyer on Escrow Holder's standard form ("Grant Deed"). (b) A Non -Foreign Affidavit on Escrow Holder's Standard form or a form substantially similar thereto ("Non -Foreign Affidavit"); (c) Such funds and other items and instruments as may be necessary in order for Escrow Holder to comply with this Agreement; and (d) The License (defined in Paragraph 10.2). Escrow Holder will cause the Grant Deed to be recorded when (but in no event after the date specified in Section 6.1 below) it can issue the Title Policy in the form described in Section 7 below, and holds for the account of City the items described above to be delivered to City through Escrow, less costs, expenses and disbursements chargeable to City pursuant to the terms hereof. 4.3 Due Diligence Period. Commencing upon the Opening of Escrow and continuing thereafter for thirty (30) days (the, "Due Diligence Period"), Buyer, its agents, and employees shall: (a) examine and inspect the Property and will know and be satisfied with the physical condition quality, quantity and state of repair of the Property in all respects and by proceeding to Closing, Buyer shall be deemed to have determined that the same is satisfactory to Buyer; (b) review all instruments, records and documents which Buyer 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 and reports, and Buyer, by proceeding to Closing, shall be deemed to have determined that the same and the information and data contained therein and evidenced thereby are satisfactory to Buyer; 255/066751-0092 4403119.3 a07F1644 -3- (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, and Buyer, by proceeding to Closing, shall be deemed to have determined that the same are satisfactory to Buyer; and (d) at its own cost and expense, made its own independent investigation respecting the Property and all other aspects of this transaction, and shall have relied thereon and on the advice of its consultants in entering into this Agreement, and Buyer, by proceeding to Closing, shall be deemed to have determined that the same are satisfactory to Buyer; and (e) review the License, a draft of which will be provided by City to Buyer within 10 days after opening of Escrow, to determine that it is satisfactory to the Buyer. If during the Due Diligence Period, Buyer determines that the condition of the Property is such that Buyer no longer desires to acquire the Property, Buyer shall provide written notice of its election to terminate this Agreement, which written notice must be received by the City on or before the expiration of the Due Diligence Period. Should Buyer fail to provide written notice of its election to terminate this Agreement Buyer shall be conclusively determined to have accepted the condition of the Property and Buyer shall pay the Second Deposit within five (5) days of the expiration of the Due Diligence Period. 4.4. Preliminary Title Report. Within ten (10) business days after the Opening, the City, at the City's expense, shall fiunish Buyer with a Preliminary Title Report on the Property issued by Fidelity National Title Insurance Company (the "Title Company") and dated within thirty (30) calendar days of the Opening. The Preliminary Title Report shall be accompanied by legible copies of all underlying documents for all exceptions ("Exceptions") set forth in the Preliminary Title Report. Buyer shall have thirty (30) business days from receipt of the Preliminary Title Report within which to give written notice to the City of the Buyer's approval or disapproval of any of such Exceptions. The Buyer's failure to provide such written notice of the Preliminary Title Report within such time limit shall be deemed approval of the Preliminary Title Report. If Buyer notifies the City of its disapproval of any Exceptions in the Preliminary Title Report, or is deemed to have disapproved the Preliminary Title Report, the City shall have the right, but not the obligation, to remove any disapproved Exceptions within ten (10) days after receiving written notice of the Buyer's disapproval or provide assurances satisfactory to the reviewing party that such Exception(s) will be removed on or before the Closing. If the City cannot or does not elect to remove any of the disapproved Exceptions within that period, the Buyer shall have ten (10) days after the expiration of such fifteen (15) day period to either give the City written notice that the Buyer elects to proceed with the acquisition subject to the disapproved Exceptions or to give the City written notice that the Buyer elects to terminate this Agreement. The Buyer shall have the right to approve or disapprove any Exceptions reported by the Title Company after the City has approved the condition of title for the Property. Neither party shall voluntarily create any new exceptions to title following the date of this Agreement. 4.5. Miscellaneous Documents. On or before five (5) business days following the opening of escrow, City shall deliver to Buyer all documents relating to the Property which 255/066751-0092 4403119.3 a016/14 -4- City may have in its possession including but not limited to copies of all copies of a Phase I Environmental Report, together with engineering reports, soils studies, environmental audits and reports, environmental impact report, and all other documents relating to the Real Property for Buyer's review. If Buyer does not acquire the Property, all said documents shall be promptly returned to City. In addition, City shall deliver to Buyer (or cause Escrow Holder to deliver to Buyer), natural hazard disclosure reports covering the Property in such form as required by law, which shall be countersigned and returned to City and Escrow Holder. 4.6 Entry for Investigation. Subject to the conditions hereafter stated and the rights of tenants in possession, City grants to Buyer, its agents and employees a limited Iicense to enter upon any portion of the Property 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 Buyer's sole cost and expense. Buyer shall (a) notify City prior to each entry of the date and purpose of intended entry and provide to City 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 City prior to initial entry a certificate of insurance evidencing that Buyer 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 Buyer as additional insured entitled to not less than thirty (30) days cancellation notice and is primary and non- contributing with insurance carried by Buyer; and (g) return the Property to its original condition following Buyer's entry. Buyer agrees to indemnify, defend, protect and hold City and the Property free and harmless from any and all loss, liability, claims, damages and expenses (including but not limited to attorneys' fees and costs) arising directly or indirectly from the exercise of said license, or from Buyer's failure to comply with the conditions to Buyer's entry onto the Property provided herein. Such undertaking of indemnity shall survive Close of Escrow or the termination of this Agreement for any reason. The limited license herein granted shall be co -extensive with the term of this Agreement or any extension thereof. 4.7 Independent Contract Consideration. Contemporaneously with the execution of this Agreement, Buyer shall deliver to City a check in the amount of $100.00 (One Hundred Dollars) (the "Independent Contract Consideration! ), which amount the parties bargained for and agreed to as consideration for the City's grant to Buyer of Buyer's right to purchase the Property pursuant to the terms hereof and for City's execution, delivery and performance of this Agreement. The Independent Contract Consideration is in addition to and independent of any other consideration or payment provided in this Agreement, is nonrefundable under any circumstances, will be retained by City notwithstanding any other provisions of this Agreement and will be applied against the Purchase Price in the event the Closing occurs hereunder. 255/066751-0092 4403119.3 a07/16/14 -5- 5. BROKERS. Buyer represents and warrants to City that it has used Jones Lang LaSalle Brokerage, Inc. ("Buyer's Broker's in connection with this transaction, and that Buyer's Broker is entitled to payment in the amount of One Hundred Forty -Five Thousand Dollars and no/100 ($145,000.00) in full satisfaction of all brokerage commissions or finder's fees and claims payable to Buyer's Broker in connection with the acquisition of the Property. The City did not use a broker and no brokerage fees have been incurred by City. 6. CLOSING DATE. 6.1 Initial Closing Date. Escrow shall close on or before September 15, 2014, ("Closing Date"), The terms "the Close of Escrow", and/or the "Closing' are used herein to mean the time City's Grant Deed is filed for record by the Escrow Holder in the Office of the County Recorder of Orange County, California. City and Buyer 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 City and Buyer shall have the right, but not the obligation, to extend the Closing Date by mutual written agreement. 6.3 Distribution of Documents. Following Close of Escrow, Escrow Holder shall distribute the documents as follows: (a) To Buyer: (i) One certified conformed copy of the Grant Deed, the original to be mailed to Buyer following recordation thereof; (ii) One duplicate original of the Non -Foreign Affidavit; and (iii) One certified copy, conformed if recorded, of any other document delivered to Escrow Holder by City or Buyer pursuant to the terms hereof. (b) To City: (i) One certified conformed copy of the Grant Deed, the original to be mailed to Buyer following recordation thereof; and (ii) One certified copy, conformed if recorded, of any other document delivered to Escrow Holder by City or Buyer pursuant to the terms hereof. 2551066751-0092 4403119.3 e07IINl4 —6- 7. TITLE POLICY. 7.1 Title Policy to be Issued by City. When Escrow Holder holds for City the Chant Deed in favor of Buyer executed and acknowledged by City covering the Property, Escrow Holder shall cause to be issued and delivered to City and Buyer as of the Closing a CLTA standard coverage policy of title insurance C Title Policy"), or, upon Buyer's request therefore, an ALTA standard coverage policy of title insurance, issued by Title Company, with liability in the amount of the Purchase Price, covering the Property and showing title vested in Buyer free of encumbrances, except: (a) All nondelinquent general and special real property taxes and assessments for the current fiscal year; (b) Easements, encumbrances, covenants, conditions, restrictions, reservations, tights -of -way and other matters of record, as approved or deemed approved by City pursuant to Section 6.1 above; (c) The standard printed exceptions and exclusions contained in the CLTA or ALTA form policy; and (d) Any exceptions created or consented to by Buyer, including without limitation, any exceptions arising by reason of Buyer's possession of or entry on the Property. 8. CONDITIONS PRECEDENT TO CLOSE OF ESCROW. 8.1 Conditions to Buyer's Obligations. The obligations of Buyer under this Agreement shall be subject to the satisfaction or written waiver, in whole or in part, by Buyer of each of the following conditions precedent: (a) Title Company will issue the Title Policy as required by Section 7 of this Agreement insuring title to the Property vested in Buyer or other vestee designated by City for vesting purposes only; (b) Escrow Holder holds and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this Agreement; (c) City has delivered all documents required to be delivered under Section 4.2 above; (d) All representations and warranties specified in Section 9.1 are true and correct; and (e) Buyer's approval of any other conditions specified in this Agreement. 2551066751-0092 4403119.3 a07116114 -7- 8.2 Conditions to City's Obligations. The obligations of City under this Agreement shall be subject to the satisfaction or written waiver, in whole or in part, by City of each of the following conditions precedent: (a) Escrow Holder holds and will deliver to City the instruments and funds accruing to City pursuant to this Agreement. 9. ESCROW PROVISIONS. 9.1 Escrow Instructions. This Agreement, when signed by City and Buyer, shall also constitute escrow instructions to Escrow Holder. If required by Escrow Holder, City and Buyer 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 deliver the Title Policy to the Buyer and instruct the Orange County Recorder to mail the Grant Deed to Buyer at the address set forth in Section 15.16 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. This Agreement and any modifications, amendments, or supplements thereto may be executed in counterparts and shall be valid and binding as if all of the parties' signatures were on one document. 9.3 Proration of Real Property Taxes. All nondelinquent general and special real property taxes 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 tax statement versus total gross square footage of the Property. Any supplemental tax bills received after Close of Escrow shall be paid by City to the extent they relate to a period prior to Close of Escrow, and by Buyer, 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 within thirty (30) 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 8.3 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°/6) 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. 9.4 Payment of Costs. City shall pay one-half (1/2) of the Escrow fee, title insurance premiums for that portion of the Title Policy premium which would be incurred for a CLTA form policy, and the charge for drawing the Grant Deed. Buyer shall pay the one-half (1/2) of the Escrow fee, charges for recording the Grant Deed, and that portion of the Title Policy premium which is attributable to the additional cost of obtaining any additional coverage 255/066751.0092 4403119.7 a07/16/14 -8- requested by City, including the difference between CLTA and ALTA coverage. City shall pay $145,000.00 towards satisfaction of the Buyer's Broker fees identified in this Section 5. All other costs of Escrow not otherwise specifically allocated by this Agreement shall be apportioned between the parties in a manner consistent with the custom and usage of Escrow Holder. This transaction is exempt from payment of documentary transfer taxes. 9.5 Termination and Cancellation of Escrow. Time is of the essence of this Agreement. Unless otherwise agreed to as provided by Paragraph 6.2, if Escrow fails to close by November 14, 2014, as provided above, Escrow shall terminate automatically without further action by Escrow Holder or any party, and Escrow Holder is instructed to return all funds and documents then in Escrow to the respective depositor of the same with Escrow Holder. Cancellation of Escrow, as provided herein, shall be without prejudice to whatever legal rights City or City may have against each other arising from the Escrow or this Agreement. 10. REPRESENTATIONS AND WARRANTIES, 10.1 Representations and Warranties. City hereby makes the following representations and warranties to Buyer, each of which (i) is material and relied upon by Buyer in making its determination to enter into this Agreement; (ii) is true in all respects as of the date hereof and shall be true in all respects on the date of Close of Escrow on the Property; and (iii) shall survive the Close of Escrow of the purchase and sale of the Property as well as any fixture transfer of the Property to Buyer or any transferee, successor or assignee of Buyer: (a) City has received no notice or has no actual knowledge that any governmental authority or any employee or agent thereof considers any construction of the proposed improvements on the Property or the present or proposed operation, use or ownership of the Property to violate or have violated any ordinance, rule, law, regulation or order of any government or agency, body or subdivision thereof, or that any investigation has been commenced or is contemplated respecting such possible violations. (b) There are no pending or threatened litigation, allegations, lawsuits or claims, whether for personal injury, property damage, landlord -tenant disputes, property taxes, contractual disputes or otherwise, which do or may affect the Property or the operation or value thereof, and there are no actions or proceedings pending or, to the best of City's knowledge, threatened against City before any court or administrative agency in any way connected with the Property and 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 City 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 City 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 department, commission, board, bureau, agency or other governmental instrumentality. 255/066751-0092 4403119.3 e07116114 -9- (c) There are no contracts, leases, claims or rights affecting the Property and no agreements entered into by or under City shall survive the Close of Escrow that would adversely affect Buyer's rights with respect to the Property except as heretofore disclosed in writing by City to Buyer. (d) City has the unimpeded power and authority to execute, deliver and perform City's obligations under this Agreement and the documents executed and delivered by City pursuant hereto. (e) City is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1956, as amended. 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 City by law. The representations and warranties of City set forth in Section 9.1 hereof shall survive Closing for a period of one year. City shall have no liability to Buyer for a breach of any representation or warranty unless written notice (the `Breach Notice") containing a description of the specific nature of such breach shall have been given by Buyer to City prior to the expiration of said one year period and an action shall have been commenced by Buyer against City within sixty (60) days following the expiration of such one year period (the "Outside Date'. 10.2 Disclaimer of Representations and Warranties. Buyer 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, Buyer 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. Buyer acknowledges that, except as specifically provided herein, neither City nor any of its employees, agents, or representatives has made any representations, warranties or agreements to or with Buyer on behalf of City as to any matters concerning the Property, the present use thereof, or the suitability of Buyer's intended use of the Property. The foregoing disclaimer includes, without limitation, topography, climate, air, water rights, utilities, present and future zoning, soil, subsoil, the acreage of the Property or square footage of buildings located thereon, the purpose to which the Property is suited, drainage, and access to public roads, Buyer fiuther acknowledges and agrees that the Property is to be purchased, conveyed, and accepted by Buyer 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. Buyer 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. Buyer has neither received nor relied upon any representations concerning such laws and regulations made by City, City's employees, agents, or any other person acting on behalf of City. Any agreements, warranties or representations not expressly contained in this Agreement shall in no way bind City. 255/056751-0092 4403119.3 a07116114 -10- IN ADDITION TO BUYER'S ACCEPTANCE OF THE PROPERTY IN AN "AS IS" CONDITION, BUYER EXPRESSLY ACKNOWLEDGES AND AGREES TO THE FOLLOWING CONDITIONS UNDER WHICH THE PROPERTY IS BEING TRANSFERRED TO BUYER: BUYER ACKNOWLEDGES AND AGREES THAT THE PURCHASE IS FOR PROPERTY THAT CONSISTS OF A NON -CONFORMING USE AND NON -CONFORMING STRUCTURE THAT IS DEFICIENT AS TO PARKING. BUYER ACKNOWLEDGES THAT THE PROPERTY IS CURRENTLY ZONED MULTIPLE RESIDENTIAL (RM) UNDER THE CITY'S CURRENT ZONING CODE. AN ABATEMENT ORDER WAS APPROVED ON FEBRUARY 12012, ALLOWING USE OF THE PROPERTY UNDER THE PREVIOUS ZONING OF COMMERICAL OFFICE/INDUSTRIAL TO CONTINUE UNTIL FEBRUARY 1, 2022, AT WHICH TIME ALL NONRESIDENTIAL USE OF THE PROPERTY SHALL CEASE UNLESS AN ADDITIONAL ABATEMENT PERIOD IS GRANTED; OR AN APPROPRIATE CHANGE IN THE ZONING DISTRICT AND GENERAL PLAN LAND USE DESIGNATION ARE APPROVED AND ADOPTED; OR A CHANGE TO THE ZONING REGULATIONS PERTAINING TO NONCONFORMING USES OR THEIR ABATEMENT ARE APPROVED AND ADOPTED PRIOR TO THAT DATE. BUYER FURTHER ACKNOWLEDGES THAT THE 15TH STREET RIGHT-OF-WAY IS EXPRESSLY DESIGNATED ON THE ORANGE COUNTY MASTER PLAN OF ARTERIAL HIGHWAYS AND IS INCORPORATED INTO THE CIRCULATION ELEMENT OF THE CITY'S GENERAL PLAN. THERFORE, BUYER UNDERSTANDS THAT THE CITY MAY, AS DEEMED APPROPRIATE IN CITY'S SOLE AND ABSOLUTE DISCRETION, IMPROVE OR REQUIRE THE IMPROVEMENT OF THE 15' STREET RIGHT-OF-WAY PARCEL. BUYER UNDERSTANDS THAT THE CITY HAS ALREADY IDENTIFIED THE DEVELOPMENT OF THE 15TH STREET RIGHT-OF-WAY CONCURRENT WITH THE DEVELOPMENT OF THE NEWPORT BANNING RANCH PROPERTY, WHICH IS CURRENTLY UNDERGOING REVIEW BY THE CALIFORNIA COASTAL COMMISSION. BUYER ALSO UNDERSTANDS THAT, EVEN IF THE COASTAL COMMISSION DOES NOT APPROVE DEVELOPMENT ON THE NEWPORT BANNING RANCH PROPERTY THE CITY'S GENERAL PLAN CONTEMPLATES THE EXTENSION OF 15TH STREET AND THE IMPROVEMENT OF THE 15TH STREET RIGHT-OF-WAY. BUYER ALSO UNDERSTANDS THAT THE ADJACENT NEWPORT BANNING RANCH PROPERTY MAY NOT BE AVAILABLE , FOR OFF-SITE PARKING. THIS AGREEMENT IS THEREFORE EXPRESSLY CONDITIONED UPON BUYERS AGREEMENT TO THE DEVELOPMENT OF THE 15"' STREET RIGHT-OF-WAY PARCEL. 25VW751.0092 4403119.3 n07116114 -11- UNTIL SUCH TIME AS THE 15TH STREET RIGHT-OF-WAY PARCEL IS DEVELOPED, CITY SHALL PERMIT, SUBJECT TO THE EXECUTION OF A NO -FEE LICENSE AGREEMENT MIE, "LICENSE") BETWEEN BUYER AND CITY, BUYER TO CONTINUE TO USE THE 15H' STREET RIGHT-OF-WAY PARCEL FOR PARKING AND OTHER USES TO THE BENEFIT OF THE PROPERTY AS THOSE USES EXIST AS OF THE DATE OF THIS AGREEMENT. NO EXPANSION OR CHANGE OF USES OF 15t1i STREET RIGHT-OF-WAY PARCEL FROM THAT EXISTING AS OF THE DATE OF THIS AGREEMENT WILL BE PERMITTED. THE LICENSE SHALL EXPIRE IF THE PROPERTY IS SOLD AND ALL SUCCESSORS -IN -INTEREST SHALL BE REQUIRED TO OBTAIN A NEW LICENSE TO USE THE 15TH STREET RIGHT-OF-WAY. THE CITY IS UNDER NO OBLIGATION TO GRANT A NEW LICENSE TO THE SUCCESSORS -IN - INTEREST AND APPROVAL OF A NEW LICENSE MAY BE WITHHELD IN CITY'S SOLE AND ABSOLUTE DISCRETION. BUYER FURTHER ACKNOWLEDGES THAT BUYER'S USE OF 15`h STREET RIGHT-OF- WAY PARCEL SHALL BE FREELY REVOCABLE BY CITY UPON SUCH TIME AS CITY DEEMS IN ITS SOLE AND ABSOLUTE DISCRETION TO BE NECESSARY FOR THE DEVELOPMENT OF THE 15TH STREET RIGHT-OF-WAY. THERFORE, IN ADDITION TO THE FOREGOING, BUYER HEREBY EXPRESSLY ACKNOWLEDGES, UNDERSTANDS AND AGREES THAT AT THE TIME THAT CITY TERMINATES BUYER'S USE OF 159 STREET RIGHT-OF-WAY PARCEL, BUYER WILL NO LONGER HAVE ANY RIGHTS TO USE THE 15' STREET RIGHT-OF-WAY PARCEL FOR ANY PURPOSE AND APPROXIMATELY 21 PARKING SPACES WILL BE ELIMINATED. UPON THIS EVENT, BUYER'S OPERATIONS ON THE PROPERTY WILL BE SUBJECT TO COMPLIANCE WITH ALL PARKING REGULATIONS IN EXISTENCE AT THAT TIME: THE CURRENT PARKING REQUIREMENT FOR THE GENERAL OFFICE USE ON THE PROPERTY IS ONE PARIUNG SPACE PER 250 SQUARE FEET OF NET FLOOR AREA. SHOULD BUYER NOT BE ABLE TO SATISFY THE PARKING REQUIREMENTS FOR ALL USES ON THE PROPERTY ON SITE, BUYER ACKNOWLEDGES THAT THE PROPERTY WILL REMAIN NON -CONFORMING, IF NOT ABATED, AND SUBJECT TO ALL PROVISIONS OF THE ABATEMENT ORDER AND THE NEWPORT BEACH MUNICIPAL CODE INCLUDING BUT NOT LIMITED TO CHAPTER 20.64, AS THE SAME MAY BE AMENDED FROM TIME TO TIME.TO THE EXTENT PARKING FOR THE PROPERTY IS NONCONFORMING AS A RESULT OF THE IMPROVEMENT THE 15TH STREET RIGHT- OF-WAY PARCEL, REPLACEMENT PARKING EITHER ON-SITE OR OFF-SITE WOULD BE REQUIRED FOR THE EXISTING USE TO CONTINUE. IN THE ABSENCE OF REPLACEMENT PARKING, THE SQUARE FOOTAGE OF THE BUILDING NOT SUPPORTED BY PARKING WILL BECOME NON -OCCUPIABLE UNLESS REPLACEMENT PARKING IS PROVIDED ON-SITE OR OFF-SITE. IN THE ALTERNATIVE, OTHER OPTIONS INCLUDE MODIFICATION OF THE ON-SITE USE CONFORMING TO THE AVAILABLE PARKING SPACES; AN ADJUSTMENT TO THE PARKING REQUIREMENT UNDER ZONING CODE SECTION 20.14.110 PURSUANT TO APPROVAL OF A CONDITIONAL USE PERMIT, OR SITE IMPROVEMENTS TO FACILITATE ADDITIONAL ON-SITE PARKING SUCH AS SUBTERRANEAN PARKING AND/OR AN AT -GRADE PARKING STRUCTURE. ANY SUCH IMPROVEMENT SHALL REQUIRE ALL NECESSARY AND REQUIRED APPROVALS, WHICH INCLUDE, BUT ARE NOT LIMITED TO, DISCRETIONARY APPROVALS BY THE CITY'S PLANNING 255/066751-0092 44031193 n07/16/14 -12- COMMISSION AND/OR CITY COUNCIL, WHICH MAY BE WITHHELD IN THE CITY'S SOLE AND ABSOLUTE DISCRETION, BUYER FURTHER ACKNOWLEDGES THAT THE PROPERTY IS IMPROVED WITH STRUCTURES THAT DO NOT COMPLY WITH CURRENT BUILDING STANDARDS REQUIRED UNDER THE AMERCANS WITH DISABILITIES ACT OF 1990 OR ITS IMPLEMENTING REGULATIONS AND CITY'S ENERGY CODE. ALL FUTURE DEVELOPMENT OF THE PROPERTY WILL REQUIRE COMPLIANCE WITH ALL FEDERAL, STATE AND LOCAL BUILDING STANDARDS AND CODES APPLICABLE TO THE IMPROVEMENTS. BUYER REPRESENTS AND WARRANTS THAT BUYER IS A KNOWLEDGABLE, EXPERIENCED, AND SOPHISTICATED BUYER OF REAL ESTATE AND THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER HAS RELIED AND SHALL RELY SOLELY ON (A) BUYER'S OWN EXPERTISE AND THAT OF BUYER'S CONSULTANTS PERTAINING TO DUE DILIGENCE AND OTHERWISE RELATING TO EVALUATING THE PURCHASE OF THE PROPERTY AND ITS OPERATIONS, AND (B) BUYER'S OWN KNOWLEDGE OF THE PROPERTY BASED ON BUYER'S INVESTIGATIONS AND INSPECTIONS OF AND DUE DILIGENCE REGARDING THE PROPERTY AND ITS OPERATIONS. CITY AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING PROVISIONS OF THIS SECTION 10 HAVE BEEN FREELY BARGAINED FOR BY THE PARTIES AND CONSTITUTES A MATERIAL CONSIDERATION TO CITY FOR THE SALE OF THE PROPERTY AND BUT FOR THIS PROVISION CITY WOULD NOT SELL THE PROPERT}ITU—YE CITY'S INITIALS BUYERkS INITIALS 10.3 Changed Circumstances. If City becomes aware of any fact or circumstance which would change or render incorrect, in whole or in part, any representation or warranty made by City under this Agreement, whether as of the date given or any time thereafter through the Close of Escrow and whether or not such representation or warranty was based upon City's knowledge and/or belief as of a certain date, City will give immediate written notice of such changed fact or circumstance to Buyer, but such notice shall not release City of its liabilities or obligations with respect thereto. City shall issue a certificate as of the Close of Escrow stating that all the representations and warranties contained in Section 10.1 are true and correct as of said date, or setting forth in detail which of such matters are not true and correct. 10.4 Indemnit by Buyer. Buyer shall hold harmless, indemnify and defend City, and the Property from and against (i) except for obligations, liabilities, claims, liens and encumbrances disclosed herein or which Buyer specifically agrees by the terms of this Agreement to assume or take subject, any and all obligations, liabilities, claims, Iiens or enetunbrances, whether direct, contingent or consequential and no matter how arising, in any way related to the Property and arising or accruing on or before the date first above written, or in any way related to or arising from any negligent act, conduct, or omission by Buyer in any way 255/066751-0092 44G3119.3 x07/16/14 -13- related to the Property or Buyer's breach or default under this Agreement at any time or times on or before the date of the Close of Escrow for the purchase and sale of the Property, including without limitation, any damage to the Property or injury to or death of any person, employees or agents of Buyer; (ii) all costs and expenses, including attorneys' fees, relating to any actions, suits or judgments incident to any of the foregoing; provided that in no event shall any of the indemnities described above in this Section 10.4 arise from any obligations, liabilities, claims, liens or encumbrances that arise from City's gross negligence, willful misconduct or breach or default under this Agreement. Should Buyer fail to discharge or undertake to defend City or the Property pursuant to the indemnities set forth in this Section 10.4 within thirty (30) days after having received written notice from City, then City may settle such liability and Buyer's liability to City 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 City in effecting such settlement. 11. SETTLEMENT OF CLAIMS. 11.1 Release of Claims by Buyer. In exchange for the promises contained in this Agreement, and except as to City's obligations set forth in this Agreement or arising from City's gross negligence or willful misconduct, Buyer hereby waives, releases and forever discharges, and agrees to the extent permitted by law that he 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 he 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, councilmen, agents, representatives, employees, successors and assigns with respect to any event, matter, claim, damage or injury, of any kind related to the Property or the claims made thereunder or in connection therewith as of the date of this Agreement. 11.2 Waiver of Unknown Claims. With respect to the release of claims by Buyer set forth in Section 11.1it is agreed and understood that the releases being provided by each of the Parties above apply to all injuries and damages, whether now known or unknown, and whether now existing or which may result in the future due to the actions or omissions of the Parties on or before the Effective Date, With respect to the subject matter of this Agreement, the Parties acknowledge that they have each been fully advised of and understand the provisions of Section 1542 of the California Civil Code which reads: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing this release, which if known by him or her must have materially affected his or her settlement with the debtor." 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 him, her or 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 any Party as to any of its obligations or rights under this Agreement. 255!066751.0092 4403119.3 e07116114 -14- deed. The foregoing provisions shall survive the Closing hereunder and the recordation of the 12. DAMAGE, DESTRUCTION AND CONDEMNATION. 12.1 Risk of Physical Loss. Risk of physical loss to the Property shall be borne by City prior to the Close of Escrow and by Buyer thereafter. In the event that the Property shall be damaged by fire, flood, earthquake or other casualty and the estimated cost to repair same exceeds FIVE HUNDRED THOUSAND DOLLARS ($500,000), Buyer may, at its option, elect not to acquire the Property. If Buyer does not so elect or the estimated cost to repair the damage is less than FIVE HUNDRED THOUSAND DOLLARS ($500,000), Buyer shall complete the acquisition of the Property, in which case City shall assign to Buyer the interest of City in all insurance proceeds relating to such damage. In the event that such damage shall occur and Buyer elects not to purchase the Property as above provided, then this Agreement shall be terminated and Buyer shall be entitled to the return of all funds and documents deposited hereunder. 12.2 Condemnation. In the event that, prior to the Close of Escrow, any governmental entity shall commence any actions of eminent domain or similar type proceedings to take any portion of the Property, Buyer shall have the option either to (i) elect not to acquire the Property, or (ii) complete the acquisition of the Property, in which case Buyer shall be entitled to all the proceeds of such taking. 13. POSSESSION. Possession of the Property shall be delivered to Buyer 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. 14. LIQUIDATED DAMAGES. IF BUYER SHOULD DEFAULT FOR ANY REASON WHATSOEVER UNDER THIS AGREEMENT (EXCEPTING ONLY MATERIAL DEFAULT BY CITY HEREUNDER), THEN AND IN SUCH EVENT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, CITY AND BUYER AGREE THAT CITY WILL INCUR DAMAGES BY REASON OF SUCH DEFAULT BY BUYER, WHICH DAMAGES SHALL BE IMPRACTICAL AND EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE, TO ASCERTAIN. CITY AND BUYER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT CITY'S DAMAGES WOULD BE IN THE EVENT OF SUCH DEFAULT BY BUYER HAVE AGREED BY PLACING THEIR INITIALS BELOW THAT THE SUM OF FIFTY THOUSAND DOLLARS ($50,000) SHALL BE DEEMED TO CONSTITUTE A REASONABLE ESTIMATE OF CITY'S DAMAGES UNDER THE PROVISIONS OF SECTION 1671 OF THE CALIFORNIA CIVIL CODE. IN THE EVENT OF AND FOR SUCH DEFAULT BY BUYER, BUYER SHALL DELIVER SAID SUM IN GOOD FUNDS TO CITY WITHIN FIVE (5) DAYS AFTER CITY'S WRITTEN DEMAND THEREFOR AS CITY'S SOLE MONETARY REMEDY THEREFOR, UNLESS BUYER WRONGFULLY REFUSES TO CAUSE ESCROW HOLDER TO CANCEL THE ESCROW OR TO RELEASE THE DEPOSIT TO CITY, IN WHICH INSTANCE CITY SHALL ALSO BE ENTITLED TO ALL COSTS AND EXPENSES, INCLUDING ACTUAL ATTORNEYS' FEES INCURRED BY CITY WITH RESPECT TO THOSE CONSEQUENTIAL DAMAGES, IF ANY, WHICH MAY BE INCURRED BY CITY, AFTER THE CLOSING DATE BY 255/066751-0092 4403119.3 a07/16/14 -15- REASON OF THE CLOUD ON TITLE TO THE PROPERTY WHICH MAY RESULT FROM BUYER WRONGFUL FAILURE TO CANCEL TH ESCROW AND THIS AGREEMENT, CITY'S I 0P BUYER' ITIALS 15. MISCELLANEOUS. 15.1 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 the Lease. 15.2 Assignment. Buyer 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 City, which City may withhold in City's sole discretion. In no event shall Buyer be released of liability in the event of an assignment or nomination, 15.3 Affixation of Revenue Stamps. Escrow Holder is hereby specifically instructed to attach documentary transfer and/or revenue stamps to the Grant Deed only after recordation of the Grant Deed. 15.4 Cooperation. City and Buyer agree to cooperate with one another, at no cost or expense to the cooperating party, in satisfying the conditions to Close of Escrow. City shall be responsible for proceeding with diligence and in good faith to satisfy the conditions, if any, to City's performance set forth in Section 8.1 and Buyer shall be responsible for proceeding with diligence and in good faith to satisfy the conditions, if any, to City's performance set forth in Section 8.2. 15.5 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. 15.6 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 recover from the other party its attorneys' fees. 15.7 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 at the time of the execution 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. 2557066751-0092 4403119.3 a07/16/14 -16- 15.8 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 succeeding breach of the same or other covenants, agreements, restrictions or conditions hereof. 15.9 Modifications. Any alteration, change or modification of or to this Agreement, 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. 15.10 Severabilitv. 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 instrument, 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. 15.11 Merger of Prior Agreements and Understandings. This Agreement and other documents incorporated herein by reference contain the entire understanding between the parties relating to the transaction contemplated hereby and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect. 15.12 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 15.2 above, shall be binding upon and inure to the benefit of the parties hereto and their representatives, heirs, successors and assigns. 15.13 No Withholding Because Non -Foreign City. City represents and warrants to Buyer that City is not, and as of the Close of Escrow will not be, a foreign person within the meaning of Internal Revenue Code Section 1445 and that it will deliver to Buyer on or before the Close of Escrow the Non -Foreign Affidavit as described hereinabove, pursuant to Internal Revenue Code Section 1445(b)(2) and the Regulations promulgated thereunder. 15.14 Time is of the Essence. Time is hereby expressly made of the essence of this Agreement. 15.15 Execution in Counterpart. This Agreement may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart. 15.16 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 back up sent by first class mail); when personally delivered, if sent postage prepaid by registered or certified mail, return receipt requested; three (3) business days after deposit in the United 255/066751-0092 4403119.3 a07116/14 -17- States mail, registered, certified, postage fully prepaid and 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 parties hereto: To City: Dave Kiff, City Manager City of Newport Beach 100 Civic Center Drive PO Box 1768 Newport Beach, CA 92658 (949) 644-3309 dkiff@newportbeachca.gov Copy to: City of Newport Beach 100 Civic Center Drive PO Box 1768 Newport Beach, CA 92658 Attn: Aaron Harp, City Attorney (949) 644-3131 (949) 644-3139 (fax) aharp@newportbeachea.gov To Buyer: Andrea Fairchild, President Kobe, Inc. 341 Bayside Dr, Suite 4 Newport Beach, CA 92660 (708) 203-5433 (mobile) andrea.fairchild(a*obeinc.com Copy to: Andrea Fairchild, President Kobe, hie. 341 Bayside Dr, Suite 4 Newport Beach, CA 92660 (708) 203-5433 (mobile) andrea.fairchild(a.kobeinc.com [SIGNATURES ON FOLLOWING PAGE] 2551066751-0092 4403119.3 x07/16114 -1 8- IN WITNESS WHEREOF, the parties hereto have executed this Agreement of Purchase and Sale of Real Property and Escrow Instructions as of the date set forth above. "BUYER" r "CITY" CITY OF NEWPORT BEACH a Municipal corporation and Charter City 0 ATTEST: AL14- zholul- Leilani I. Brown, City Clerk APPROVED AS TO FORM: OA �- Ah aron C. Harp, City Attorn y .i�I�� 255 D66751-0092 44031193 a07 1&14 -19- Rush N. Hill, Exhibit A 1499 Monr LL to rH 5r•N In z h 3111 FIN CT I P10,5f - HALYARD'.. i.ipG�.:At eAl ' 3- n yo Fr a�' c C04 (r4�R/qS d► Y` ,Y: - _ .HOSPITAL RD _ Nco k? i a� y sr �Oqg iii.: F+O�y, p• __. � a 3 Jry Newport Beach Disclaimer: Every reasonable effort has been made to assure the accuracy of the data provided, however, The City of GIS Newport Beach and its employees and agents disclaim any and all responsibility from or relating to 'Wp0?, any results obtained in its use. / 1 .n 0 417 833 • Imagery: 2009-2013 photos provided by Eagle Y` Feet Imaging www.eagleaedal.com -o n 7/102014 Coastline Collegell i ng Ranch V99 Vonlovia Property 18 61 52 63 30 31 32 213 29 28 27 26 1500 O N O 2 3 4 w Newport m 1484 > I West ee,,:ipolI Community Center Disclaimer: Every made assure cyoftereasonable taeffort provided, ho The Cityo accuracy of the data provided, however, The City of GIS c 1481{A•0) X11 disclaim any and all responsibility from or relating to e•+'�-r,,, _ 1478 (1-31 0 100 200 Imagery: 2009-2013 photos provided by Eagle _= zi }` Feet Imaging www.eagleaerial.com 886 896 892 894 mm mm mm mm 896 a 898 'm J1'!f VN VVl mm ccm am Newport Beach Disclaimer: Every made assure cyoftereasonable taeffort provided, ho The Cityo accuracy of the data provided, however, The City of GIS Newport Beach and its employees and agents disclaim any and all responsibility from or relating to e•+'�-r,,, _ any results obtained in its use. 0 100 200 Imagery: 2009-2013 photos provided by Eagle _= zi }` Feet Imaging www.eagleaerial.com Exhibit B Coast Surveying, Inc. July 14,2Q14 EXHIBIT "B-1" LEGAL DESCRIPTION THE NORTHERLY 60,00 FEET OF PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO. 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, BEING MORE PARTICULARLY DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. CONTAINING 12,770 SQUARE FEET, MORE OR LESS. ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT "B-2" ATTACHED HERETO AND MADE A PART HEREOF. DATED THIS 14TH DAY OF JULY, 2014. e GWEN-VERA DEL CASTILLO, PLS 5108 JN 11"31 RSB 222; MEMO] 3J \ q \ r- N89'23'40"E 229.34' 0 V7 9 2a9 yO 20 0 Aon °oos o a �q(po100 s o ❑A 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 57-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. 30' I 15TH STREET I 'r 1 r` n 0 n 30' 15031 CA INC. I Exhibit C Coot Surveying, Inc. July 10, 2014 EXHIBIT "C-1" LEGAL DESCRIPTION PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO, 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM THE NORTHERLY 60.00 FEET, BEING MORE PARTICULARLY DESCRIBED AS 16TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. CONTAINING 35,021 SQUARE FEET, MORE OR LESS. ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT "C-2" ATTACHED HERETO AND MADE A PART HEREOF. DATED THIS 14TH DAY OF JULY, 2014. s Ls, 5108 Q � 3 GWEN-VERA DEL CASTILLO, PLS 5108 iN IIA -031 R93 2221X38 -X39 \ q �- N89'23'40"E 229.34' o M I M 15TH STREET _ o r7 s 9 < 29 15 o�y n ; I z 1 a oo 3 M 14 0 N r !0. o i zvi rn. 30 30' ® 15TH STREET (50.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY, GATE, 7/14 14 EXHIBIT ""C-2"" 100' COAST SURVEYING, INC. SCALE: 1m 15031 PARKWAY lOOp, SUITE 9 SHEET 1"OF 1 TUSTIN, CA 92780-8527 (718) 91a-8266 CITY OF NEWPORT BEACH City Council Staff Report July 22, 2014 Agenda Item No. 13. TO: HONORABLE MAYOR AND MEMBERS OF THE CIN COUNCIL FROM: Kimberly Brandt, Community Development Director — (949) 644-3226, kbrandt@newportbeachca.gov PREPARED BY: Lauren Wooding, Real Property Administrator / Seimone Jurjis, Chief Building Official PHONE: (949) 644-3236 TITLE: Sale of 1499 Monrovia Avenue — Approve a Purchase and Sale Agreement and Enter into Escrow for the Sale of 1499 Monrovia with Kobe, Inc. ABSTRACT: Kobe, Inc. has submitted an offer to purchase the City property at 1499 Monrovia Avenue, for $5,800,000 pursuant to the negotiated terms of a purchase and sale agreement. RECOMMENDATION: a) Approve and authorize the Mayor and City Clerk to execute a Purchase and Sale Agreement and Escrow Instructions (Staff Report Attachment CC 1) with Kobe, Inc. for disposition of the City property located at 1499 Monrovia Avenue for a sale price of $5.8 million and to enter into escrow; b) Authorize the City Manager to execute all documents approved as to form by the City Attorney that are necessary to implement the Purchase and Sale Agreement and complete the sale transaction and transfer ownership of the property to Kobe, Inc., through escrow; and c) Approve a waiver of City Council Policy F-7 based on the findings in this staff report, that converting the property to another use would result in excessive vacancy, which would outweigh the financial benefits. FUNDING REQUIREMENTS: The revenue for the property, $5,800,000 (less title, escrow, and broker fees), will be deposited into the West Newport Capital Projects Fund (416-9416-6800). DISCUSSION: Background Located in the West Newport area, the 1.097 -acre property is immediately west of the terminus of West 15th Street. The proposed Newport Banning Ranch project is located to the west of the property, and the new Coastline College campus is located to the north (Attachment CC 2). The property is improved with a 16,550 square -foot office building. In 2010, the City rezoned the property from M -1-A (Industrial zone now classified as IG) to RM (Multiple Residential). In 2012, the previous owner obtained approval from the City for a ten-year abatement order allowing use of the parcel under the previous zoning of commercial/office industrial. The abatement order expires February 1, 2022, at which time the non-residential use of the site must cease. In November 2012, the City purchased the property for $4,300,000. In compliance with California Government Code subsection 54222, the City issued a Notice of Surplus Land on February 21, 2014; no interest letters have been received from the County of Orange or any housing sponsor for development of low to moderate income housing, the Orange County Park and Recreation Department, the California Resources Agency, or the Newport -Mesa Unified School District. On May 22, 2014, the City received an offer from Andrea Fairchild, President of Kobe, Inc. (Buyer) for acquisition of the property for $5,800,000, with no loan contingencies, and a 30 -day escrow period (Attachment CC 4). In response to this offer, a Purchase and Sale Agreement (Attachment CC 1) for sale of the property has been drafted between Kobe, Inc. and the City. There have been comments expressed that this site may be appropriate for the new West Newport Community Center. Staff has reviewed it as a potential community center location, but believes that its small size and triangular shape will limit the type and number of amenities that can be constructed on the property. If the site were to be a successful community center, property adjacent to it to the west on Banning Ranch would be needed to support and complement the facility (for parking, fields, a community garden, pool, etc.). Additionally, a busy City facility adjacent to the Newport Crest community will be well- received by some, but not by all residents there. The sale of this property to Kobe, Inc. creates a situation where its current non -conforming use will either havice to end as of 2022 or be extended past that period by an additional land use action. Staff has determined that, if a portion of the property is used for the extension of 15th Street, the property will be non -conforming in terms of parking unless other parking arrangements are made or some type of covenant is applied to the remaining parcel that could limit full office use of the building. We acknowledge that neither of these consequences is ideal. Summary of Purchase and Sale Agreement. The proposed terms of the Purchase and Sale Agreement are summarized below: 1. Purchase price of $5,800,000. City to pay Buyer's broker fees of 2.5% of the purchase price, $145,000, and remaining title, escrow, and closing costs to be split between the parties; 2. City to transfer approximately 35,021 square feet of the existing 47,791 square -foot parcel, reserving ownership of the residual 12,770 square feet for future development and extension of the West 15th Street right-of-way; 3. Buyer acknowledges the property is zoned RM (Multiple Residential), and an abatement allowing use of the property under the previous zoning of commercial office/industrial was approved by the City in 2012, and expires on February 1, 2022, at which time all non-residential use of the property shall cease or the building be demolished, unless an additional extension of the abatement period is granted, or appropriate changes in the Zoning District and General Plan Land Use Designation are approved and adopted; or a change to the Zoning Regulations pertaining to non -conforming uses or their abatement is approved and adopted prior to that date; 4. Buyer further acknowledges that the 15th Street right-of-way is designated on the Orange County Master Plan of Arterial Highways and is incorporated into the Circulation Element of the City's General plan. Therefore, Buyer understands that the City may, as deemed appropriate in its sole and absolute discretion, improve or require the improvement of the 15th Street right-of-way parcel (Attachment CC 3); 5. Until such time as the 15th Street right-of-way parcel is developed, City shall permit, subject to the execution of a no -fee license agreement between Buyer and City, Buyer to continue to use the 15th Street right-of-way parcel for parking and other uses to the benefit of the property as those uses exist as of the date of this agreement; 6. To the extent parking for the property is nonconforming as a result of the improvement of the 15th Street right-of-way parcel, replacement parking either on-site or off-site would be required for the existing use to continue. In the absence of replacement parking, the square footage of the building not supported by parking will become non -occupiable unless replacement parking is provided on-site or off-site. In the alternative, other options include modification of the on-site use to conform to the available parking spaces; an adjustement to the parking requirement under Zoning Code Section 20.14.110 pursuant to approval of a conditional use permit, or site improvements to facilitate additional on-site parking such as subterranean parking and/or an at -grade parking structure. Any such improvement shall require all necessary and required approvals, which include, but are not limited to, discretionary approvals by the City's Planning Commission and/or City Council, which may be withheld in the City's sole and absolute discretion; 7. Escrow shall be opened within two days of execution of the Agreement, and Buyer shall deposit $100,000 earnest money which shall be applicable to the purchase price, and refundable upon cancellation of the Agreement (less $100 consideration to the City); 8. Buyer shall have 30 days from opening of escrow to inspect and evaluate the property, and waive any contingencies. Buyer shall deposit an additional $100,000 earnest money within five days of waiver of contingencies, which money shall be applicable to the purchase price, and $50,000 of the additional earnest money would be refundable upon cancellation of the Agreement, and $50,000 would be paid to the City in liquidated damages; and 9. Escrow shall close within 30 days from waiver of contingencies. This agreement has been reviewed by the City Attorney's office and has been approved as to form. Pursuant to City Council Policy F-7, Income Property (Attachment CC 5), the City conducted an open bid by listing the property for sale on multiple on-line real estate industry listing services, but did not obtain a current appraisal. The $5.8 million offer price is the highest bid received and exceeds the City's purchase price of $4.3 million and the appraised value conducted prior to the City's acquisition of the site in 2012. Staff believes the following findings can be made: 1) converting the property to a residential use would result in excessive vacancy which would outweigh the financial benefits of the pending offer to purchase; 2) the current offer price is higher then any proposed offer received for a residential use. ENVIRONMENTAL REVIEW: Staff recommends the City Council find that the sale of this property 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: Description Attachment CC 1 - Purchase and Sale Agreement and Escrow Instructions Attachment CC 2 - Maps Attachment CC 3 - Extension of 15th Street Attachment CC 4 - Kobe. Inc. Purchase Offer Attachment CC 5 - City Council Policy F-7, Income Property ATTACHMENT CC1 AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS Escrow No. Date of Opening of Escrow: , 2014 To: Ticor Title ("Escrow Holder") 18302 Irvine Blvd., Suite 100 Tustin, CA 92780 Attn: Kim Hernandez Telephone: 714-289-3300 THIS AGREEMENT FOR PURCHASE AND SALE OF REAL PROPERTY AND ESCROW INSTRUCTIONS (this "Agreement") is made this day of 2014, by and between the City of Newport Beach, a Municipal corporation and Charter City ("City") and Kobe, Inc. (`Buyer"). RECITALS: A. City is the owner of that certain real property commonly known as 1499 Monrovia Avenue, located in the City of Newport Beach, County of Orange, State of California, and depicted on the map attached hereto as Exhibit "A" and by this reference incorporated herein. The property depicted in Exhibit "A" includes an office building and a parking area. The parking area is located in the area historically referred to as the 60 -foot wide 15th Street right-of-way, which was abandoned pursuant to Resolution No. 67-863 of the Board of Supervisors of Orange County, California. B. Notwithstanding the abandonment, The Master Plan of Arterial Highways as approved by the Orange County Transportation Authority and the Circulation Element of the City's General Plan identifies the future development of the 15th Street right-of-way to serve future traffic circulation needs. The development of the 15th Street right-of-way is contemplated to be located in that area more particularly described on Exhibit `B" attached hereto and by this reference incorporated herein (hereafter, referred to as the "15th Street Right -of -Way Parcel"). C. The portion of 1499 Monrovia Avenue exclusive of the 15th Street Right -of -Way is more particularly described on Exhibit "C" attached hereto and by this reference incorporated herein, together with all improvements now or hereafter constructed thereon, all easements, licenses and interests appurtenant thereto and all intangible property owned or held by City in connection with the land, including without limitation, development rights, governmental approvals and land entitlements (collectively referred to herein as the "Property"). D. City desires to sell to Buyer, and Buyer desires to purchase from City, the Property, all on the terms and conditions set forth in this Agreement. NOW, THEREFORE, the parties hereto agree as follows: A14-00487 7.16.144403119.3 a07/16/14 TERMS AND CONDITIONS I. PURCHASE AND SALE OF PROPERTY. Buyer hereby agrees to purchase from City, and City agrees to sell to Buyer the Property, upon the terms and conditions hereinafter set forth. 2. PAYMENT OF PURCHASE PRICE. 2.1 Amount of Purchase Price. The purchase price for the Property will be FIVE MILLION EIGHT HUNDRED THOUSAND DOLLARS ($5,800,000.00) ("Purchase Price"). 2.2 Payment of Purchase Price. (a) Not later than two (2) days following the Opening of Escrow, Buyer shall deposit in Escrow in good funds, the sum of ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (the "Deposit"), which Deposit shall be applicable to the Purchase Price upon the closing of escrow. In the event this Agreement is terminated by Buyer on or before the expiration of the Due Diligence Period or Buyer disapproves of any of the items requiring approval of Buyer hereunder on or before the expiration of the Due Diligence Period, the Deposit shall be promptly returned to Buyer. Buyer shall have the unqualified and unrestricted right to terminate its obligations under this Agreement on or before the expiration of the Due Diligence Period. (b) Not later than five (5) days following the expiration of the Due Diligence Period, Buyer shall deposit ONE HUNDRED THOUSAND DOLLARS ($100,000.00) (the "Second Deposit"), which shall be nonrefundable. (c) On or before the Closing Date, Buyer shall deposit the balance of the Purchase Price, subject to any other credits or debits hereunder, with Escrow Holder in "good funds." "Good funds" shall mean a wire transfer of 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. 2.3 Interest Bearing Account. Escrow Holder shall deposit the funds specified in Section 3.2 above in an interest bearing account. All interest earned on said funds shall be credited to Buyer. 3. OPENING OF ESCROW. Within five (5) business days after the execution of this Agreement by City, 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 City delivers this executed Agreement to Escrow Holder. 4. ADDITIONAL FUNDS AND DOCUMENTS REQUIRED FROM BUYER AND CITY. 4.1 Buyer. Buyer agrees that on or before 1:00 p.m. on the business day preceding the Closing Date, Buyer will deposit with Escrow Holder all additional funds and/or 255/066751-0092 4403119.3 a07/16/14 -2- documents (executed and acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement, including without limitation, the following: (a) The Purchase Price; (b) A Preliminary Change of Ownership Statement completed in the manner required in Orange County; and (c) Such funds and other items and instruments as may be necessary in order for Escrow Holder to comply with this Agreement. 4.2 Com. City agrees that on or before 1:00 p.m. on the business day preceding the Closing Date, City will deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged, if appropriate) as may be necessary in order for the Escrow Holder to comply with this Agreement, including without limitation, the following: (a) A grant deed conveying the Property to Buyer on Escrow Holder's standard form ("Grant Deed"). (b) A Non -Foreign Affidavit on Escrow Holder's Standard form or a form substantially similar thereto ("Non -Foreign Affidavit"); (c) Such funds and other items and instruments as may be necessary in order for Escrow Holder to comply with this Agreement; and (d) The License (defined in Paragraph 10.2). Escrow Holder will cause the Grant Deed to be recorded when (but in no event after the date specified in Section 6.1 below) it can issue the Title Policy in the form described in Section 7 below, and holds for the account of City the items described above to be delivered to City through Escrow, less costs, expenses and disbursements chargeable to City pursuant to the terms hereof. 4.3 Due Diligence Period. Commencing upon the Opening of Escrow and continuing thereafter for thirty (30) days (the, "Due Diligence Period"), Buyer, its agents, and employees shall: (a) examine and inspect the Property and will know and be satisfied with the physical condition, quality, quantity and state of repair of the Property in all respects and by proceeding to Closing, Buyer shall be deemed to have determined that the same is satisfactory to Buyer; (b) review all instruments, records and documents which Buyer 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 and reports, and Buyer, by proceeding to Closing, shall be deemed to have determined that the same and the information and data contained therein and evidenced thereby are satisfactory to Buyer; 255/066751-0092 4403119.3 a07/I6/14 -3- (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, and Buyer, by proceeding to Closing, shall be deemed to have determined that the same are satisfactory to Buyer; and (d) at its own cost and expense, made its own independent investigation respecting the Property and all other aspects of this transaction, and shall have relied thereon and on the advice of its consultants in entering into this Agreement, and Buyer, by proceeding to Closing, shall be deemed to have determined that the same are satisfactory to Buyer; and (e) review the License, a draft of which will be provided by City to Buyer within 10 days after opening of Escrow, to determine that it is satisfactory to the Buyer. If during the Due Diligence Period, Buyer determines that the condition of the Property is such that Buyer no longer desires to acquire the Property, Buyer shall provide written notice of its election to terminate this Agreement, which written notice must be received by the City on or before the expiration of the Due Diligence Period. Should Buyer fail to provide written notice of its election to terminate this Agreement Buyer shall be conclusively determined to have accepted the condition of the Property and Buyer shall pay the Second Deposit within five (5) days of the expiration of the Due Diligence Period. 4.4. Preliminary Title Report. Within ten (10) business days after the Opening, the City, at the City's expense, shall furnish Buyer with a Preliminary Title Report on the Property issued by Fidelity National Title Insurance Company (the "Title Company") and dated within thirty (30) calendar days of the Opening. The Preliminary Title Report shall be accompanied by legible copies of all underlying documents for all exceptions ("Exceptions") set forth in the Preliminary Title Report. Buyer shall have thirty (30) business days from receipt of the Preliminary Title Report within which to give written notice to the City of the Buyer's approval or disapproval of any of such Exceptions. The Buyer's failure to provide such written notice of the Preliminary Title Report within such time limit shall be deemed approval of the Preliminary Title Report. If Buyer notifies the City of its disapproval of any Exceptions in the Preliminary Title Report, or is deemed to have disapproved the Preliminary Title Report, the City shall have the right, but not the obligation, to remove any disapproved Exceptions within ten (10) days after receiving written notice of the Buyer's disapproval or provide assurances satisfactory to the reviewing party that such Exception(s) will be removed on or before the Closing. If the City cannot or does not elect to remove any of the disapproved Exceptions within that period, the Buyer shall have ten (10) days after the expiration of such fifteen (15) day period to either give the City written notice that the Buyer elects to proceed with the acquisition subject to the disapproved Exceptions or to give the City written notice that the Buyer elects to terminate this Agreement. The Buyer shall have the right to approve or disapprove any Exceptions reported by the Title Company after the City has approved the condition of title for the Property. Neither party shall voluntarily create any new exceptions to title following the date of this Agreement. 4.5. Miscellaneous Documents. On or before five (5) business days following the opening of escrow, City shall deliver to Buyer all documents relating to the Property which 255/066751-0092 4403119.3 a07/I6/14 -4- City may have in its possession including but not limited to copies of all copies of a Phase I Environmental Report, together with engineering reports, soils studies, environmental audits and reports, environmental impact report, and all other documents relating to the Real Property for Buyer's review. If Buyer does not acquire the Property, all said documents shall be promptly returned to City. In addition, City shall deliver to Buyer (or cause Escrow Holder to deliver to Buyer), natural hazard disclosure reports covering the Property in such form as required by law, which shall be countersigned and returned to City and Escrow Holder. 4.6 Entry for Investigation. Subject to the conditions hereafter stated and the rights of tenants in possession, City grants to Buyer, its agents and employees a limited license to enter upon any portion of the Property 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 Buyer's sole cost and expense. Buyer shall (a) notify City prior to each entry of the date and purpose of intended entry and provide to City 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 City prior to initial entry a certificate of insurance evidencing that Buyer 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 Buyer as additional insured entitled to not less than thirty (30) days cancellation notice and is primary and non- contributing with insurance carried by Buyer; and (g) return the Property to its original condition following Buyer's entry. Buyer agrees to indemnify, defend, protect and hold City and the Property free and harmless from any and all loss, liability, claims, damages and expenses (including but not limited to attorneys' fees and costs) arising directly or indirectly from the exercise of said license, or from Buyer's failure to comply with the conditions to Buyer's entry onto the Property provided herein. Such undertaking of indemnity shall survive Close of Escrow or the termination of this Agreement for any reason. The limited license herein granted shall be co -extensive with the term of this Agreement or any extension thereof. 4.7 Independent Contract Consideration. Contemporaneously with the execution of this Agreement, Buyer shall deliver to City a check in the amount of $100.00 (One Hundred Dollars) (the "Independent Contract Consideration"), which amount the parties bargained for and agreed to as consideration for the City's grant to Buyer of Buyer's right to purchase the Property pursuant to the terms hereof and for City's execution, delivery and performance of this Agreement. The Independent Contract Consideration is in addition to and independent of any other consideration or payment provided in this Agreement, is nonrefundable under any circumstances, will be retained by City notwithstanding any other provisions of this Agreement and will be applied against the Purchase Price in the event the Closing occurs hereunder. 255/066751-0092 4403119.3 a07/I6/14 -5- 5. BROKERS. Buyer represents and warrants to City that it has used Jones Lang LaSalle Brokerage, Inc. ("Buyer's Broker") in connection with this transaction, and that Buyer's Broker is entitled to payment in the amount of One Hundred Forty -Five Thousand Dollars and no/100 ($145,000.00) in full satisfaction of all brokerage commissions or finder's fees and claims payable to Buyer's Broker in connection with the acquisition of the Property. The City did not use a broker and no brokerage fees have been incurred by City. 6. CLOSING DATE. 6.1 Initial Closing Date. Escrow shall close on or before September 15, 2014, ("Closing Date"). The terms "the Close of Escrow", and/or the "Closing" are used herein to mean the time City's Grant Deed is filed for record by the Escrow Holder in the Office of the County Recorder of Orange County, California. City and Buyer 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 City and Buyer shall have the right, but not the obligation, to extend the Closing Date by mutual written agreement. 6.3 Distribution of Documents. Following Close of Escrow, Escrow Holder shall distribute the documents as follows: (a) To Buyer: (i) One certified conformed copy of the Grant Deed, the original to be mailed to Buyer following recordation thereof; (ii) One duplicate original of the Non -Foreign Affidavit; and (iii) One certified copy, conformed if recorded, of any other document delivered to Escrow Holder by City or Buyer pursuant to the terms hereof. (b) To City: (i) One certified conformed copy of the Grant Deed, the original to be mailed to Buyer following recordation thereof; and (ii) One certified copy, conformed if recorded, of any other document delivered to Escrow Holder by City or Buyer pursuant to the terms hereof. 255/066751-0092 4403119.3 a07/I6/14 -6- TITLE POLICY. 7.1 Title Policy to be Issued by City. When Escrow Holder holds for City the Grant Deed in favor of Buyer executed and acknowledged by City covering the Property, Escrow Holder shall cause to be issued and delivered to City and Buyer as of the Closing a CLTA standard coverage policy of title insurance ("Title Policy"), or, upon Buyer's request therefore, an ALTA standard coverage policy of title insurance, issued by Title Company, with liability in the amount of the Purchase Price, covering the Property and showing title vested in Buyer free of encumbrances, except: (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 6.1 above; (c) The standard printed exceptions and exclusions contained in the CLTA or ALTA form policy; and (d) Any exceptions created or consented to by Buyer, including without limitation, any exceptions arising by reason of Buyer's possession of or entry on the Property. S. CONDITIONS PRECEDENT TO CLOSE OF ESCROW. 8.1 Conditions to Buyer's Obligations. The obligations of Buyer under this Agreement shall be subject to the satisfaction or written waiver, in whole or in part, by Buyer of each of the following conditions precedent: (a) Title Company will issue the Title Policy as required by Section 7 of this Agreement insuring title to the Property vested in Buyer or other vestee designated by City for vesting purposes only; (b) Escrow Holder holds and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this Agreement; (c) City has delivered all documents required to be delivered under Section 4.2 above; (d) All representations and warranties specified in Section 9.1 are true and correct; and (e) Buyer's approval of any other conditions specified in this Agreement. 255/066751-0092 4403119.3 a07/I6/14 -7- 8.2 Conditions to City's Obligations. The obligations of City under this Agreement shall be subject to the satisfaction or written waiver, in whole or in part, by City of each of the following conditions precedent: (a) Escrow Holder holds and will deliver to City the instruments and funds accruing to City pursuant to this Agreement. 9. ESCROW PROVISIONS. 9.1 Escrow Instructions. This Agreement, when signed by City and Buyer, shall also constitute escrow instructions to Escrow Holder. If required by Escrow Holder, City and Buyer 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 deliver the Title Policy to the Buyer and instruct the Orange County Recorder to mail the Grant Deed to Buyer at the address set forth in Section 15.16 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. This Agreement and any modifications, amendments, or supplements thereto may be executed in counterparts and shall be valid and binding as if all of the parties' signatures were on one document. 9.3 Proration of Real Property Taxes. All nondelinquent general and special real property taxes 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 tax statement versus total gross square footage of the Property. Any supplemental tax bills received after Close of Escrow shall be paid by City to the extent they relate to a period prior to Close of Escrow, and by Buyer, 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 within thirty (30) 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 8.3 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. 9.4 Payment of Costs. City shall pay one-half (1/2) of the Escrow fee, title insurance premiums for that portion of the Title Policy premium which would be incurred for a CLTA form policy, and the charge for drawing the Grant Deed. Buyer shall pay the one-half (1/2) of the Escrow fee, charges for recording the Grant Deed, and that portion of the Title Policy premium which is attributable to the additional cost of obtaining any additional coverage 255/066751-0092 4403119.3 a07/I6/14 '8' requested by City, including the difference between CLTA and ALTA coverage. City shall pay $145,000.00 towards satisfaction of the Buyer's Broker fees identified in this Section 5. All other costs of Escrow not otherwise specifically allocated by this Agreement shall be apportioned between the parties in a manner consistent with the custom and usage of Escrow Holder. This transaction is exempt from payment of documentary transfer taxes. 9.5 Termination and Cancellation of Escrow. Time is of the essence of this Agreement. Unless otherwise agreed to as provided by Paragraph 6.2, if Escrow fails to close by November 14, 2014, as provided above, Escrow shall terminate automatically without further action by Escrow Holder or any party, and Escrow Holder is instructed to return all funds and documents then in Escrow to the respective depositor of the same with Escrow Holder. Cancellation of Escrow, as provided herein, shall be without prejudice to whatever legal rights City or City may have against each other arising from the Escrow or this Agreement. 10. REPRESENTATIONS AND WARRANTIES. 10.1 Representations and Warranties. City hereby makes the following representations and warranties to Buyer, each of which (i) is material and relied upon by Buyer in making its determination to enter into this Agreement; (ii) is true in all respects as of the date hereof and shall be true in all respects on the date of Close of Escrow on the Property; and (iii) shall survive the Close of Escrow of the purchase and sale of the Property as well as any future transfer of the Property to Buyer or any transferee, successor or assignee of Buyer: (a) City has received no notice or has no actual knowledge that any governmental authority or any employee or agent thereof considers any construction of the proposed improvements on the Property or the present or proposed operation, use or ownership of the Property to violate or have violated any ordinance, rule, law, regulation or order of any government or agency, body or subdivision thereof, or that any investigation has been commenced or is contemplated respecting such possible violations. (b) There are no pending or threatened litigation, allegations, lawsuits or claims, whether for personal injury, property damage, landlord -tenant disputes, property taxes, contractual disputes or otherwise, which do or may affect the Property or the operation or value thereof, and there are no actions or proceedings pending or, to the best of City's knowledge, threatened against City before any court or administrative agency in any way connected with the Property and 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 City 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 City 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 department, commission, board, bureau, agency or other governmental instrumentality. 255/066751-0092 4403119.3 a07/16/14 -9- (c) There are no contracts, leases, claims or rights affecting the Property and no agreements entered into by or under City shall survive the Close of Escrow that would adversely affect Buyer's rights with respect to the Property except as heretofore disclosed in writing by City to Buyer. (d) City has the unimpeded power and authority to execute, deliver and perform City's obligations under this Agreement and the documents executed and delivered by City pursuant hereto. (e) City is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended. 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 City by law. The representations and warranties of City set forth in Section 9.1 hereof shall survive Closing for a period of one year. City shall have no liability to Buyer for a breach of any representation or warranty unless written notice (the "Breach Notice") containing a description of the specific nature of such breach shall have been given by Buyer to City prior to the expiration of said one year period and an action shall have been commenced by Buyer against City within sixty (60) days following the expiration of such one year period (the "Outside Date"). 10.2 Disclaimer of Representations and Warranties. Buyer 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, Buyer 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. Buyer acknowledges that, except as specifically provided herein, neither City nor any of its employees, agents, or representatives has made any representations, warranties or agreements to or with Buyer on behalf of City as to any matters concerning the Property, the present use thereof, or the suitability of Buyer's intended use of the Property. The foregoing disclaimer includes, without limitation, topography, climate, air, water rights, utilities, present and future zoning, soil, subsoil, the acreage of the Property or square footage of buildings located thereon, the purpose to which the Property is suited, drainage, and access to public roads. Buyer further acknowledges and agrees that the Property is to be purchased, conveyed, and accepted by Buyer 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. Buyer 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. Buyer has neither received nor relied upon any representations concerning such laws and regulations made by City, City's employees, agents, or any other person acting on behalf of City. Any agreements, warranties or representations not expressly contained in this Agreement shall in no way bind City. 255/066751-0092 4403119.3 a07/16/14 _10- IN ADDITION TO BUYER'S ACCEPTANCE OF THE PROPERTY IN AN "AS IS" CONDITION, BUYER EXPRESSLY ACKNOWLEDGES AND AGREES TO THE FOLLOWING CONDITIONS UNDER WHICH THE PROPERTY IS BEING TRANSFERRED TO BUYER: BUYER ACKNOWLEDGES AND AGREES THAT THE PURCHASE IS FOR PROPERTY THAT CONSISTS OF A NON -CONFORMING USE AND NON -CONFORMING STRUCTURE THAT IS DEFICIENT AS TO PARKING. BUYER ACKNOWLEDGES THAT THE PROPERTY IS CURRENTLY ZONED MULTIPLE RESIDENTIAL (RM) UNDER THE CITY'S CURRENT ZONING CODE. AN ABATEMENT ORDER WAS APPROVED ON FEBRUARY 12012, ALLOWING USE OF THE PROPERTY UNDER THE PREVIOUS ZONING OF COMMERICAL OFFICE/INDUSTRIAL TO CONTINUE UNTIL FEBRUARY 1, 2022, AT WHICH TIME ALL NONRESIDENTIAL USE OF THE PROPERTY SHALL CEASE UNLESS AN ADDITIONAL ABATEMENT PERIOD IS GRANTED; OR AN APPROPRIATE CHANGE IN THE ZONING DISTRICT AND GENERAL PLAN LAND USE DESIGNATION ARE APPROVED AND ADOPTED; OR A CHANGE TO THE ZONING REGULATIONS PERTAINING TO NONCONFORMING USES OR THEIR ABATEMENT ARE APPROVED AND ADOPTED PRIOR TO THAT DATE. BUYER FURTHER ACKNOWLEDGES THAT THE 15TH STREET RIGHT-OF-WAY IS EXPRESSLY DESIGNATED ON THE ORANGE COUNTY MASTER PLAN OF ARTERIAL HIGHWAYS AND IS INCORPORATED INTO THE CIRCULATION ELEMENT OF THE CITY'S GENERAL PLAN. THERFORE, BUYER UNDERSTANDS THAT THE CITY MAY, AS DEEMED APPROPRIATE IN CITY'S SOLE AND ABSOLUTE DISCRETION, IMPROVE OR REQUIRE THE IMPROVEMENT OF THE 15TH STREET RIGHT-OF-WAY PARCEL. BUYER UNDERSTANDS THAT THE CITY HAS ALREADY IDENTIFIED THE DEVELOPMENT OF THE 15TH STREET RIGHT-OF-WAY CONCURRENT WITH THE DEVELOPMENT OF THE NEWPORT BANNING RANCH PROPERTY, WHICH IS CURRENTLY UNDERGOING REVIEW BY THE CALIFORNIA COASTAL COMMISSION. BUYER ALSO UNDERSTANDS THAT, EVEN IF THE COASTAL COMMISSION DOES NOT APPROVE DEVELOPMENT ON THE NEWPORT BANNING RANCH PROPERTY THE CITY'S GENERAL PLAN CONTEMPLATES THE EXTENSION OF 15' STREET AND THE IMPROVEMENT OF THE 15TH STREET RIGHT-OF-WAY. BUYER ALSO UNDERSTANDS THAT THE ADJACENT NEWPORT BANNING RANCH PROPERTY MAY NOT BE AVAILABLE FOR OFF-SITE PARKING. THIS AGREEMENT IS THEREFORE EXPRESSLY CONDITIONED UPON BUYERS AGREEMENT TO THE DEVELOPMENT OF THE 15`x' STREET RIGHT-OF-WAY PARCEL. 255/066751-0092 4403119.3 a07/16/14 -11- UNTIL SUCH TIME AS THE 15TH STREET RIGHT-OF-WAY PARCEL IS DEVELOPED, CITY SHALL PERMIT, SUBJECT TO THE EXECUTION OF A NO -FEE LICENSE AGREEMENT (THE, "LICENSE") BETWEEN BUYER AND CITY, BUYER TO CONTINUE TO USE THE 15' STREET RIGHT-OF-WAY PARCEL FOR PARKING AND OTHER USES TO THE BENEFIT OF THE PROPERTY AS THOSE USES EXIST AS OF THE DATE OF THIS AGREEMENT. NO EXPANSION OR CHANGE OF USES OF 15" STREET RIGHT-OF-WAY PARCEL FROM THAT EXISTING AS OF THE DATE OF THIS AGREEMENT WILL BE PERMITTED. THE LICENSE SHALL EXPIRE IF THE PROPERTY IS SOLD AND ALL SUCCESSORS -IN -INTEREST SHALL BE REQUIRED TO OBTAIN A NEW LICENSE TO USE THE 15TH STREET RIGHT-OF-WAY. THE CITY IS UNDER NO OBLIGATION TO GRANT A NEW LICENSE TO THE SUCCESSORS -IN - INTEREST AND APPROVAL OF A NEW LICENSE MAY BE WITHHELD IN CITY'S SOLE AND ABSOLUTE DISCRETION. BUYER FURTHER ACKNOWLEDGES THAT BUYER'S USE OF 15`h STREET RIGHT-OF- WAY PARCEL SHALL BE FREELY REVOCABLE BY CITY UPON SUCH TIME AS CITY DEEMS IN ITS SOLE AND ABSOLUTE DISCRETION TO BE NECESSARY FOR THE DEVELOPMENT OF THE 15' STREET RIGHT-OF-WAY. THERFORE, IN ADDITION TO THE FOREGOING, BUYER HEREBY EXPRESSLY ACKNOWLEDGES, UNDERSTANDS, AND AGREES THAT AT THE TIME THAT CITY TERMINATES BUYER'S USE OF 15"' STREET RIGHT-OF-WAY PARCEL, BUYER WILL NO LONGER HAVE ANY RIGHTS TO USE THE 15`x' STREET RIGHT-OF-WAY PARCEL FOR ANY PURPOSE AND APPROXIMATELY 21 PARKING SPACES WILL BE ELIMINATED. UPON THIS EVENT, BUYER'S OPERATIONS ON THE PROPERTY WILL BE SUBJECT TO COMPLIANCE WITH ALL PARKING REGULATIONS IN EXISTENCE AT THAT TIME: THE CURRENT PARKING REQUIREMENT FOR THE GENERAL OFFICE USE ON THE PROPERTY IS ONE PARKING SPACE PER 250 SQUARE FEET OF NET FLOOR AREA. SHOULD BUYER NOT BE ABLE TO SATISFY THE PARKING REQUIREMENTS FOR ALL USES ON THE PROPERTY ON SITE, BUYER ACKNOWLEDGES THAT THE PROPERTY WILL REMAIN NON -CONFORMING, IF NOT ABATED, AND SUBJECT TO ALL PROVISIONS OF THE ABATEMENT ORDER AND THE NEWPORT BEACH MUNICIPAL CODE INCLUDING BUT NOT LIMITED TO CHAPTER 20.64, AS THE SAME MAY BE AMENDED FROM TIME TO TIME.TO THE EXTENT PARKING FOR THE PROPERTY IS NONCONFORMING AS A RESULT OF THE IMPROVEMENT THE 15TH STREET RIGHT- OF-WAY PARCEL, REPLACEMENT PARKING EITHER ON-SITE OR OFF-SITE WOULD BE REQUIRED FOR THE EXISTING USE TO CONTINUE. IN THE ABSENCE OF REPLACEMENT PARKING, THE SQUARE FOOTAGE OF THE BUILDING NOT SUPPORTED BY PARKING WILL BECOME NON -OCCUPIABLE UNLESS REPLACEMENT PARKING IS PROVIDED ON-SITE OR OFF-SITE. IN THE ALTERNATIVE, OTHER OPTIONS INCLUDE MODIFICATION OF THE ON-SITE USE CONFORMING TO THE AVAILABLE PARKING SPACES; AN ADJUSTMENT TO THE PARKING REQUIREMENT UNDER ZONING CODE SECTION 20.14.110 PURSUANT TO APPROVAL OF A CONDITIONAL USE PERMIT, OR SITE IMPROVEMENTS TO FACILITATE ADDITIONAL ON-SITE PARKING SUCH AS SUBTERRANEAN PARKING AND/OR AN AT -GRADE PARKING STRUCTURE. ANY SUCH IMPROVEMENT SHALL REQUIRE ALL NECESSARY AND REQUIRED APPROVALS, WHICH INCLUDE, BUT ARE NOT LIMITED TO, DISCRETIONARY APPROVALS BY THE CITY'S PLANNING 255/066751-0092 4403119.3 a07/I6/14 -12- COMMISSION AND/OR CITY COUNCIL, WHICH MAY BE WITHHELD IN THE CITY'S SOLE AND ABSOLUTE DISCRETION. BUYER FURTHER ACKNOWLEDGES THAT THE PROPERTY IS IMPROVED WITH STRUCTURES THAT DO NOT COMPLY WITH CURRENT BUILDING STANDARDS REQUIRED UNDER THE AMERCANS WITH DISABILITIES ACT OF 1990 OR ITS IMPLEMENTING REGULATIONS AND CITY'S ENERGY CODE. ALL FUTURE DEVELOPMENT OF THE PROPERTY WILL REQUIRE COMPLIANCE WITH ALL FEDERAL, STATE AND LOCAL BUILDING STANDARDS AND CODES APPLICABLE TO THE IMPROVEMENTS. BUYER REPRESENTS AND WARRANTS THAT BUYER IS A KNOWLEDGABLE, EXPERIENCED, AND SOPHISTICATED BUYER OF REAL ESTATE AND THAT, EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, BUYER HAS RELIED AND SHALL RELY SOLELY ON (A) BUYER'S OWN EXPERTISE AND THAT OF BUYER'S CONSULTANTS PERTAINING TO DUE DILIGENCE AND OTHERWISE RELATING TO EVALUATING THE PURCHASE OF THE PROPERTY AND ITS OPERATIONS, AND (B) BUYER'S OWN KNOWLEDGE OF THE PROPERTY BASED ON BUYER'S INVESTIGATIONS AND INSPECTIONS OF AND DUE DILIGENCE REGARDING THE PROPERTY AND ITS OPERATIONS. CITY AND BUYER ACKNOWLEDGE AND AGREE THAT THE FOREGOING PROVISIONS OF THIS SECTION 10 HAVE BEEN FREELY BARGAINED FOR BY THE PARTIES AND CONSTITUTES A MATERIAL CONSIDERATION TO CITY FOR THE SALE OF THE PROPERTY AND BUT FOR THIS PROVISION CITY WOULD NOT SELL THE PROPERTY TO BUYER. CITY'S INITIALS BUYER'S INITIALS 10.3 Changed Circumstances. If City becomes aware of any fact or circumstance which would change or render incorrect, in whole or in part, any representation or warranty made by City under this Agreement, whether as of the date given or any time thereafter through the Close of Escrow and whether or not such representation or warranty was based upon City's knowledge and/or belief as of a certain date, City will give immediate written notice of such changed fact or circumstance to Buyer, but such notice shall not release City of its liabilities or obligations with respect thereto. City shall issue a certificate as of the Close of Escrow stating that all the representations and warranties contained in Section 10.1 are true and correct as of said date, or setting forth in detail which of such matters are not true and correct. 10.4 Indemnity by Buyer. Buyer shall bold harmless, indemnify and defend City, and the Property from and against (i) except for obligations, liabilities, claims, liens and encumbrances disclosed herein or which Buyer specifically agrees by the terms of this Agreement to assume or take subject, any and all obligations, liabilities, claims, liens or encumbrances, whether direct, contingent or consequential and no matter how arising, in any way related to the Property and arising or accruing on or before the date first above written, or in any way related to or arising from any negligent act, conduct, or omission by Buyer in any way 255/066751-0092 4403119.3 a07/16/14 -13- related to the Property or Buyer's breach or default under this Agreement at any time or times on or before the date of the Close of Escrow for the purchase and sale of the Property, including without limitation, any damage to the Property or injury to or death of any person, employees or agents of Buyer; (ii) all costs and expenses, including attorneys' fees, relating to any actions, suits or judgments incident to any of the foregoing; provided that in no event shall any of the indemnities described above in this Section 10.4 arise from any obligations, liabilities, claims, liens or encumbrances that arise from City's gross negligence, willful misconduct or breach or default under this Agreement. Should Buyer fail to discharge or undertake to defend City or the Property pursuant to the indemnities set forth in this Section 10.4 within thirty (30) days after having received written notice from City, then City may settle such liability and Buyer's liability to City 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 City in effecting such settlement. 11. SETTLEMENT OF CLAIMS. 11.1 Release of Claims buyer. In exchange for the promises contained in this Agreement, and except as to City's obligations set forth in this Agreement or arising from City's gross negligence or willful misconduct, Buyer hereby waives, releases and forever discharges, and agrees to the extent permitted by law that he 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 he 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, councilmen, agents, representatives, employees, successors and assigns with respect to any event, matter, claim, damage or injury, of any kind related to the Property or the claims made thereunder or in connection therewith as of the date of this Agreement . 11.2 Waiver of Unknown Claims. With respect to the release of claims by Buyer set forth in Section 11.1it is agreed and understood that the releases being provided by each of the Parties above apply to all injuries and damages, whether now known or unknown, and whether now existing or which may result in the future due to the actions or omissions of the Parties on or before the Effective Date. With respect to the subject matter of this Agreement, the Parties acknowledge that they have each been fully advised of and understand the provisions of Section 1542 of the California Civil Code which reads: "A general release does not extend to claims which the creditor does not know or suspect to exist in his or her favor at the time of executing this release, which if known by him or her must have materially affected his or her settlement with the debtor. " 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 him, her or 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 any Party as to any of its obligations or rights under this Agreement. 255/066751-0092 4403119.3 a07/I6/14 -14- deed. The foregoing provisions shall survive the Closing hereunder and the recordation of the 12. DAMAGE, DESTRUCTION AND CONDEMNATION. 12.1 Risk of Physical Loss. Risk of physical loss to the Property shall be borne by City prior to the Close of Escrow and by Buyer thereafter. In the event that the Property shall be damaged by fire, flood, earthquake or other casualty and the estimated cost to repair same exceeds FIVE HUNDRED THOUSAND DOLLARS ($500,000), Buyer may, at its option, elect not to acquire the Property. If Buyer does not so elect or the estimated cost to repair the damage is less than FIVE HUNDRED THOUSAND DOLLARS ($500,000), Buyer shall complete the acquisition of the Property, in which case City shall assign to Buyer the interest of City in all insurance proceeds relating to such damage. In the event that such damage shall occur and Buyer elects not to purchase the Property as above provided, then this Agreement shall be terminated and Buyer shall be entitled to the return of all funds and documents deposited hereunder. 12.2 Condemnation. In the event that, prior to the Close of Escrow, any governmental entity shall commence any actions of eminent domain or similar type proceedings to take any portion of the Property, Buyer shall have the option either to (i) elect not to acquire the Property, or (ii) complete the acquisition of the Property, in which case Buyer shall be entitled to all the proceeds of such taking. 13. POSSESSION. Possession of the Property shall be delivered to Buyer 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. 14. LIQUIDATED DAMAGES. IF BUYER SHOULD DEFAULT FOR ANY REASON WHATSOEVER UNDER THIS AGREEMENT (EXCEPTING ONLY MATERIAL DEFAULT BY CITY HEREUNDER), THEN AND IN SUCH EVENT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, CITY AND BUYER AGREE THAT CITY WILL INCUR DAMAGES BY REASON OF SUCH DEFAULT BY BUYER, WHICH DAMAGES SHALL BE IMPRACTICAL AND EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE, TO ASCERTAIN. CITY AND BUYER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT CITY'S DAMAGES WOULD BE IN THE EVENT OF SUCH DEFAULT BY BUYER HAVE AGREED BY PLACING THEIR INITIALS BELOW THAT THE SUM OF FIFTY THOUSAND DOLLARS ($50,000) SHALL BE DEEMED TO CONSTITUTE A REASONABLE ESTIMATE OF CITY'S DAMAGES UNDER THE PROVISIONS OF SECTION 1671 OF THE CALIFORNIA CIVIL CODE. IN THE EVENT OF AND FOR SUCH DEFAULT BY BUYER, BUYER SHALL DELIVER SAID SUM IN GOOD FUNDS TO CITY WITHIN FIVE (5) DAYS AFTER CITY'S WRITTEN DEMAND THEREFOR AS CITY'S SOLE MONETARY REMEDY THEREFOR, UNLESS BUYER WRONGFULLY REFUSES TO CAUSE ESCROW HOLDER TO CANCEL THE ESCROW OR TO RELEASE THE DEPOSIT TO CITY, IN WHICH INSTANCE CITY SHALL ALSO BE ENTITLED TO ALL COSTS AND EXPENSES, INCLUDING ACTUAL ATTORNEYS' FEES INCURRED BY CITY WITH RESPECT TO THOSE CONSEQUENTIAL DAMAGES, IF ANY, WHICH MAY BE INCURRED BY CITY, AFTER THE CLOSING DATE BY 255/066751-0092 4403119.3 a07/16/14 -15- REASON OF THE CLOUD ON TITLE TO THE PROPERTY WHICH MAY RESULT FROM BUYER WRONGFUL FAILURE TO CANCEL THE ESCROW AND THIS AGREEMENT. CITY'S INITIALS BUYER'S INITIALS 15. MISCELLANEOUS. 15.1 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 the Lease. 15.2 Assignment. Buyer 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 City, which City may withhold in City's sole discretion. In no event shall Buyer be released of liability in the event of an assignment or nomination. 15.3 Affixation of Revenue Stamps. Escrow Holder is hereby specifically instructed to attach documentary transfer and/or revenue stamps to the Grant Deed only after recordation of the Grant Deed. 15.4 Cooperation. City and Buyer agree to cooperate with one another, at no cost or expense to the cooperating party, in satisfying the conditions to Close of Escrow. City shall be responsible for proceeding with diligence and in good faith to satisfy the conditions, if any, to City's performance set forth in Section 8.1 and Buyer shall be responsible for proceeding with diligence and in good faith to satisfy the conditions, if any, to City's performance set forth in Section 8.2. 15.5 Oualification; 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. 15.6 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 recover from the other party its attorneys' fees. 15.7 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 at the time of the execution 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. 255/066751-0092 4403119.3 a07/I6/14 -16- 15.8 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 succeeding breach of the same or other covenants, agreements, restrictions or conditions hereof. 15.9 Modifications. Any alteration, change or modification of or to this Agreement, 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. 15.10 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 instrument, 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. 15.11 Mercer of Prior Agreements and Understandings. This Agreement and other documents incorporated herein by reference contain the entire understanding between the parties relating to the transaction contemplated hereby and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect. 15.12 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 15.2 above, shall be binding upon and inure to the benefit of the parties hereto and their representatives, heirs, successors and assigns. 15.13 No Withholding Because Non -Foreign City. City represents and warrants to Buyer that City is not, and as of the Close of Escrow will not be, a foreign person within the meaning of Internal Revenue Code Section 1445 and that it will deliver to Buyer on or before the Close of Escrow the Non -Foreign Affidavit as described hereinabove, pursuant to Internal Revenue Code Section 1445(b)(2) and the Regulations promulgated thereunder. 15.14 Time is of the Essence. Time is hereby expressly made of the essence of this Agreement. 15.15 Execution in Counterpart. This Agreement may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart. 15.16 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 back up sent by first class mail); when personally delivered, if sent postage prepaid by registered or certified mail, return receipt requested; three (3) business days after deposit in the United 255/066751-0092 4403119.3 a07/16/14 -17- States mail, registered, certified, postage fully prepaid and 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 parties hereto: To City: Dave Kiff, City Manager City of Newport Beach 100 Civic Center Drive PO Box 1768 Newport Beach, CA 92658 (949) 644-3309 dkiff@newportbeachca.gov Copy to: City of Newport Beach 100 Civic Center Drive PO Box 1768 Newport Beach, CA 92658 Attn: Aaron Harp, City Attorney (949) 644-3131 (949) 644-3139 (fax) aharp@newportbeachca.gov To Buyer: Andrea Fairchild, President Kobe, Inc. 341 Bayside Dr, Suite 4 Newport Beach, CA 92660 (708) 203-5433 (mobile) andrea. fairchildgkobeinc. com Copy to: Andrea Fairchild, President Kobe, Inc. 341 Bayside Dr, Suite 4 Newport Beach, CA 92660 (708) 203-5433 (mobile) andrea.fairchild(a kobeinc.com [SIGNATURES ON FOLLOWING PAGE] 255/066751-0092 4403119.3 a07/I6/14 -1 �- IN WITNESS WHEREOF, the parties hereto have executed this Agreement of Purchase and Sale of Real Property and Escrow Instructions as of the date set forth above. "BUYER" "CITY" CITY OF NEWPORT BEACH a Municipal corporation and Charter City 0 ATTEST: Leilani I. Brown, City Clerk APPROVED AS TO FORM: Aaron C. Harp, City Attorney 255/066751-0092 4403119.3 a07116/14 -19- Rush N. Hill, Mayor Exhibit A I Rvky, Park •uti Newport Beach Disclaimer: Every reasonable effort has been made to assure the accuracy of the data provided, however, The City of G I S0 Newport Beach and its employees and agents disclaim any and all responsibility from or relating to . any results obtained in its use. 0 417 833Imagery: 0411COIS 200&2013 photos provided by Eagle Imaging www.eagleaedal.comFeet 7/10/2014 Banning Ranch 6 BB < GT I w 4 0 0 N W N N p s I W'01 V Y %NTREPID 37, Newport Beach GIS 0 �-wPo 0 100 200 F, U S Feet �4rOwH� ;29. .28 127 1 26 3! p W p " V V 888 D � W N p VI N `M Q N N 894 y� v West Newport Community Center + _8 �� 1484 _.. ' g>I " 1480(A -D) 1478(1-3) " 888 890 892 `M Q 894 ro at0 CCM CN _ _8 �� Vl:ll VN Vll1 _.. ' Disclaimer: Every reasonable effort has been made to assure the accuracy of the data provided, however, The City of Newport Beach and its employees and agents disclaim any and all responsibility from or relating to any results obtained in its use. Imagery: 2009-2013 photos provided by Eagle Imaging www.eagleaerial.com Exhibit 6 Coast Surveying, Inc. July 14, 2014 EXHIBIT "B-1" LEGAL DESCRIPTION THE NORTHERLY 60.00 FEET OF PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO. 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, BEING MORE PARTICULARLY DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. CONTAINING 12,770 SQUARE FEET, MORE OR LESS. ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT "B-2" ATTACHED HERETO AND MADE A PART HEREOF. DATED THIS 14TH DAY OF JULY, 2014. ZLAi✓i A 'V IffA 1.��.hNW N � LS. 5108 � GWEN-VERA DEL CASTILLO, PLS 5108 JN 114.031 HBO 222136 n 39 30' 130' A \ l N89 -23'40"E 229.34' o A — —co 0 Mme---_ Nft9� 73'40 E 196. 2 9 y0 ZO q 9 aO ! �p O X01 Op�Op? 0 y�9 O >T� �ip� S O 6'. 30130' 30' AQ 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. DATE: 7 14 14 E X H IB I T B- 2" CDA ST SURVEYING, INC. SCALE: 1=100 1so31 PARKWAY LOOP, SUITE B SHEET 1 OF 1 TUSTIN CA 92780-6527 (716) 918-6266 I L- o 115TH STREET to 0 0 — 0 0 UJ M LJ _ Z v a la r � � Z O i� OI ZI 30130' 30' AQ 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. DATE: 7 14 14 E X H IB I T B- 2" CDA ST SURVEYING, INC. SCALE: 1=100 1so31 PARKWAY LOOP, SUITE B SHEET 1 OF 1 TUSTIN CA 92780-6527 (716) 918-6266 Exhibit C Coast Surveying, Inc. July 10.2014 EXHIBIT "C-1" LEGAL DESCRIPTION PARCEL 2 OF LOT LINE ADJUSTMENT NO. LA 2007-002, IN THE CITY OF NEWPORT BEACH, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS PER DOCUMENT RECORDED OCTOBER 4, 2007 AS INSTRUMENT NO. 2007000598931 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY. EXCEPT THEREFROM THE NORTHERLY 60.00 FEET, BEING MORE PARTICULARLY DESCRIBED AS 15TH STREET (60.00 FEET WIDE) AS SAID 15TH STREET WAS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY. CONTAINING 35,021 SQUARE FEET, MORE OR LESS. ALL AS MORE PARTICULARLY SHOWN ON EXHIBIT "C-2" ATTACHED HERETO AND MADE A PART HEREOF. DATED THIS 14TH DAY OF JULY, 2014. -Vere dt - .4.-- GWEN-VERA DEL CASTILLO, PLS 5108 1N 114-031 R8 0 222 /X36 _ 39 \ 9� n� \ l k892340E2290 A OO N89'23'40" E 196.. 30' I 0 15TH STREET oM O _ O O O M � I w L ,6 z :r a la z z O M N � r 01 O Z 30 30' Q 15TH STREET (60.00 FEET WIDE) AS VACATED AND ABANDONED BY RESOLUTION NO. 67-863 OF THE BOARD OF SUPERVISORS OF ORANGE COUNTY, CALIFORNIA, A CERTIFIED COPY OF WHICH WAS RECORDED AUGUST 11, 1967 IN BOOK 8339, PAGE 801 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY, uAIL: //I '+ 14 i F �XY71051 I l —G (�(Jf{,� / SURVEYING, INC. SCALE: 1"7 00' 15031 PARKWAY LOOP, SUITE 8 SHEE 1 DF 1 TUSTIN. CA 92780-6527 (714) 918-6266 A W t ATTACHMENT CC2 � �•-' .�li i jam,,, '� Plan CHANNEL PL_ *,,. % -t♦ ��° - .... °ONES - Newport RRR Beach Disclaimer: Every reasonable effort has been made to assure the accuracy of the data provided, however, The City of GIS Newport Beach and its employees and agents disclaim any and all responsibility from or relating to ��f�'Pogr any results obtained in its use. ° m 0 417 833 _ Imagery: 2009-2013 photos provided by Eagle Feet Imaging www.eagieaerial.com 7/0/2014 ne College 1 j anning Ranch 11499 Monrovia Property ni:lml 1484 15 16 J— 11 12 14 1480 (A -D) 58,.�.�!(( �- 1478(1-3 6rAs 6 ' 07888' W —= ' 89 4 p .. (07` ,—'- - 892 mow m 894 21 896 W 898 r opo. Newport Beach GIS ,r p�'rogr ° m 0 100 200 G Feet C�<IFOP�' Newport munity Center W Disclaimer: Every reasonable effort has been made to assure the accuracy of the data provided, however, The City of Newport Beach and its employees and agents disclaim any and all responsibility from or relating to any results obtained in its use. Imagery: 2009-2013 photos provided by Eagle Imaging www.eagieaerial.com ATTACHMENT CC3 1 5th Street Off -Site Improvements Newport Banning Ranch EIR N w�E s Source: Fuscoe 2011 Exhibit 3-11 C O N S V L T I N G (082511 JCD) R:\Projects\Newpoft\J015\Gmphics\EIR\Ex3.11_l5StOS.pdt ATTACHMENT CC4 CITY OF NEWPORT BEACH COMMUNITY DEVELOPMENT Fp May 22, 2014 TRANSMITIED VIA E-MAIL TO: Lauren Wooding Real Property Administrator CA License No. 01943711 C/O The City of Newport Beach 100 Civic Center Dr Newport Beach, CA 92660 Cc: Seimone Jurjis FROM: Andrea Fairchild Kobe, Inc. C/O Jones Lang LaSalle Brokerage, Inc. Attn: Scott Wetzel 4 Park Plaza, Suite 900 Irvine, CA 92614 s c ott. wetz e l CoD a m .ill . c o m Re: Counter Offer & Proposed Terms Purchase offer for City of Newport Beach owned property at 1499 Monrovia Avenue, Newport Beach, CA Dear Lauren, Thank you for your Counter Offer received May 14, 2014. We are in receipt of your Standard Offer, Agreement and Escrow Instructions for Purchase of Real Estate ('Offer') dated April 30, 2014 wherein Kobe, Inc., or Assignee ('Buyer') submitted proposed terms to the City of Newport Beach ('City' or'Seller') for purchase of the City owned property located at 1499 Monrovia Avenue, Newport Beach, CA [A.P.N. 424-401-141. In consideration of this request the City has undertaken a review of the terms of the proposed purchase and summarily proposes to modify the following sections: 1. Agreement for Purchase and Sale of Real Buyer and Seller agree to negotiate an agreement with Property. AGREED materially the same terms as the Offer, using the City's standard template. 2. Section 2 - Property. AGREED • City to transfer approximately 35,021 square feet of the existing 47,791 square foot parcel. • Appropriate subdivision instrument or irrevocable offer to dedicate shall be prepared by Buyer or included in agreement. • Buyer understands that the residual 12,770 square 100 Civic Center Drive • Post Office Box 1768 • Newport Beach, California 92658-8915 Telephone: (949) 644-3200 • Fax: (949) 644-3229 • www.newportbeachca.gov 100 Civic Center Drive • Post Office Box 1768 • Newport Beach, California 92658-8915 Telephone: (949) 644-3200 • Fax: (949) 644-3229 • www.newportbeachca.gov foot parcel ('Remainder Parcel') created by the subdivision or dedication will be retained and developed by the City as right-of-way, extending 15`h Street from its current terminus along the border of the Property, at the intersection of 15`" Street & Monrovia Avenue to connect to future right-of-way as part of the Newport Banning Ranch project required Environmental Impact Report mitigation measures. 3. Section 3.1 (a) - Purchase Price. AGREED $5,800,000.00 4. Section 9.1 (e) - Governmental Approvals. Buyer acknowledges the Property is currently zoned AGREED Multiple Residential (RM) under the City's zoning code. An abatement allowing use of the Property under the previous zoning of commercial office/industrial was approved by the City February 1, 2012, and expires on February 1, 2022 ('Expiration Date'), at which time all nonresidential use of the property shall cease or the building be demolished, unless an additional extension of the abatement period is granted; or an appropriate change in the Zoning District and General Plan Land Use Designation are approved and adopted; or a change to the Zoning Regulations pertaining to nonconforming uses or their abatement are approved and adopted prior to that date. 5. Section 16 - Attorney's Fees. AGREED Attorney's fees to be paid by each party. 6. Section 22 - Arbitration of Disputes. AGREED City will agree to mediation, if required by Buyer. 7. Section 27.2 - Acceptance. AGREED Seller agrees to pay Buyer's Broker a real estate Brokerage Fee in a sum equal to 2.5% of the Purchase Price. 8. Exhibits. AGREED City proposes to add Exhibit showing photographic depiction of premises, specifically parcel lines and future right-of-way improvements/ easements discussed in the terms. 9. City Council. AGREED This counter offer is subject to and contingent upon the following: • Buyer understands that Seller is a public agency, and as such all terms and conditions and materials related to this deal are a matter of public record. • The agreement and its terms and conditions and are subject to approval by the City of Newport Beach City Council. 10. Expiration. This counter offer shall expire 7 days from the date of this offer, if not accepted in writing. 100 Civic Center Drive • Post Office Box 1768 • Newport Beach, California 92658-8915 Telephone: (949) 644-3200 • Fax: (949) 644-3229 • www.newportbeachca.gov We look forward to receiving the formal Purchase & Sale Agreement. Andrew White Senior Vice President +1949 885 2994 andy.white@am.ill.com Lic. N° 01304645 AGREED AND ACCEPTED: Buyer: KOBE, INC., OR ASSIGNEE ffi""Wlb� Scott Wetzel Associate +1949 885 2994 scott.wetzel@am.ill.com Lic. N2 01902630 100 Civic Center Drive • Post Office Box 1768 • Newport Beach, California 92658-8915 Telephone: (949) 644-3200 • Fax: (949) 644-3229 • www.newportbeachca.gov May 23, 2014 Mr. Simon Jurjis Ms. Lauren Wooding City of Newport Beach Community Development Department — Building Division 100 Civic Center Dr Newport Beach, CA 92660 RE: SUPPLEMENT TO PURCHASE OFFER LOI KOBE, INC. Simon & Lauren: Jones Lang LaSalle 4 Park Plaza, Suite 900 Irvine, CA 92614 tel +1949 885 2900 On behalf of our Kobe, Inc., or Assignee ("Buyer'), please see the following supplement to the Purchase Offer dated May 23, 2014 to the City of Newport Beach ("Seller") for the Property located at 1499 Monrovia Ave, Newport Beach, CA 92663. 1. Purchase Price / Financial $5,800,000.00 all-cash offer with no financial contingencies. Contingency: 2. Escrow / Closing: Buyer hereby offers to purchase the real property from Seller with a thirty (30) day escrow period ("Escrow"). The Escrow Period shall open upon the full -execution of the Purchase & Sale Agreement ('PSA"). Sincerely, Andrew White Scott Wetzel Senior Vice President Associate +1949 B85 2948 +1949 885 2994 andy.white@am.ill.com scott.wetzel@am.ill.com License No 01304645 License No 01902360 Buyer: By: Name: Title: Date: ATTACHMENT CC5 F-7 INCOME PROPERTY The City owns and manages an extensive and valuable assortment of property including streets, parks, beaches, public buildings and service facilities. The City also owns and operates a yacht basin, a mobile home park, a luxury residential development and various other income properties. Most of the income property is tidelands, filled tidelands or waterfront. Unencumbered fee value of income property is estimated at upwards of one hundred million dollars, and income typically contributes ten percent of all City revenues. As owner/manager of property, the City is the steward of a public trust, and state law requires the City to maximize its returns on state -managed property or be subject to a charge of making a gift of public funds. Nevertheless, the City Council recognizes the importance of this property not only as a revenue generator, but also as a means to provide otherwise unfeasible uses and facilities to benefit the community. In managing its property, the City will continually evaluate the potential of all City owned property to produce revenue. This may include leasing unused land, renting vacant space, and establishing concessions in recreation areas or other similar techniques. The City Council will evaluate the appropriateness of establishing new income properties using sound business principles and after receiving input from neighbors and users. The policy of the City Council is that income property be managed in accordance with the following: A. Whenever a lease, management contract, concession, sale or similar action regarding income property is considered by the City, an analysis shall be conducted to determine the maximum or open market value of the property. This analysis shall be conducted using appraisals or other techniques to determine the highest and best use of the property and the highest value of the property. B. All negotiations regarding the lease, management contract, concession, sale or similar action regarding income property shall include review of an appraisal or analysis of the use being considered for the property conducted by a reputable and independent professional appraiser, real estate consultant or business consultant. C. The City shall seek, whenever practical and financially advantageous, to operate or manage all property and facilities directly with City staff or contractors. D. In all negotiations regarding the lease, management contract, concession, sale or similar action regarding a non-residential income property, the City shall seek 1 ION revenue equivalent to the open market value of the highest and best use; and, whenever possible the City shall conduct an open bid or proposal process to insure the highest financial return. E. Whenever less than the open market or appraised value is received or when an open bid process is not conducted, the City shall make specific findings setting forth the reasons thereof. Such findings may include but need not be limited to the following: 1. The City is prevented by tideland grants, Coastal Commission guidelines or other restrictions from selling the property or converting it to another use. 2. Redevelopment of the property would require excessive time, resources and costs which would outweigh other financial benefits. 3. Converting the property to another use or changing the manager, concessionaire or lessee of the property would result in excessive vacancy, relocation or severance costs, which would outweigh other financial benefits. 4. Converting residential property to another use or opening residential leases to competitive bid would create recompensable liabilities and other inequities for long-term residents. 5. The property provides an essential or unique service to the community that might not otherwise be provided were full market value of the property be required. 6. The property serves to promote other goals of the City such as affordable housing, preservation of open space or marine related services. F. Generally, lengths of leases, management contracts, concessions or similar agreements will be limited to the minimum necessary to meet market standards and will contain appropriate reappraisal and inflation protection provisions. Also, all agreements shall contain provisions to assure complete audits periodically through their terms. G. All negotiations regarding the lease, management contract, concession, sale or similar action regarding income property shall be conducted by the City Manager or his/her designee under the direction of any appropriate City committees. H. To provide an accurate accounting of actual net revenues generated by the City's income property, all costs and charges directly attributable to the management of 2 100 a specific income property shall be debited against the gross revenues collected on that property in the fiscal year the costs are incurred. Costs and charges include property repairs and maintenance, property appraisals, and consultant fees, as authorized by the City Council, City Manager or by this Income Property Policy. I. The City Manager or his/her designee is authorized to sign a lease, management contract, concession or similar agreement or any amendment thereto, on behalf of the City. Notwithstanding the foregoing, the City Manager or his/her designee, or a City Council member, may refer any lease, management contract, concession or similar agreement or any amendment thereto, to the City Council for its consideration and/or action. Adopted - July 27,1992 Amended - January 24,1994 Amended - February 27,1995 Amended - February 24,1997 Amended - May 26,1998 Amended - August 11, 2009 Amended - May 14, 2013 Formerly F-24 3 Agenda Item No. 13 July 22, 2014 ®r, 62; 631 32 33Coastline Colle: �9 28 27 26 '.. b 1500 .;1 2' i 3 4 890 , 3 3 161TIsrw T �ak,D i tom' a o BanningRanoh t 1499 Monrovia Property # o p O p< T p iMest Newport 1 Y ICommunity Center j 1484 If w s 11 12 19 15 - 5 1480 (A-D,I B 9 19. r ` - c _- 18 l 'Al. - 1478 (1-3), \\\ 5 moi' 80 t :: 4 u' Q N O i IO :V NO rm (O t?N " 1 i 89'2 21 N p 696 v 698 �' Ot0 CCW :CN w. u-r:n vv, irrn S_. _.__. HALYARD —_ 11 FR Newport Disclaimer: Every reasonable effort has been made to assure the Beach accuracy of the data provided, however, The City of GIS Newport Beach and its employees and agents disclaim any and ail responsibility from or relating to �Eavoq� any results obtained in its use. 0 100 200 ommommommoK�Imagery: 2009-2013 photos provided by Eagle Feet Imaging www.eagleaedal.com ��rrrrt•:YaS