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HomeMy WebLinkAboutItem 21 - Real Property Purchase Agreement: 1815 East Carnegie Avenue Community Development Agency www.santa-ana.org/community-development Item # 21 City of Santa Ana 20 Civic Center Plaza, Santa Ana, CA 92701 Staff Report June 20, 2023 TOPIC: Real Property Purchase Agreement: 1815 East Carnegie Avenue AGENDA TITLE Approve Purchase and Sale Agreement with Property Owner Dyer 18 LLC for the Acquisition of Real Property and Improvements located at 1815 East Carnegie Avenue, Santa Ana, CA 92705 (APN 430-021-02) RECOMMENDED ACTION 1. Authorize the City Manager to execute a Purchase and Sale Agreement with Property Owner Dyer 18 LLC for the Acquisition of Real Property and Improvements located at 1815 East Carnegie Avenue, Santa Ana, CA, 92705, also identified as APN 430-021-02 (Property), in the amount of $12,750,000, subject to non-substantive changes approved by the City Manager and City Attorney. 2. Approve an appropriation adjustment to recognize $1,100,000 in Opioid Settlement Funding from the State of California’s Department of Health Care Services and appropriate the same amount into the Community Development Agency, Buildings and Building Improvement expenditure account. (Requires five affirmative votes) 3. Approve an appropriation adjustment to utilize prior year fund balance in the amount of $3,753,571 to the Inclusionary Housing Fund, Buildings and Building Improvement expenditure account. (Requires five affirmative votes) DISCUSSION On March 1, 2021, the City entered into a 15-year Lease Agreement with the Property Owner for the Property located at 1815 East Carnegie Avenue. The Property is approximately 1.7 acres in size and is improved with a 30,000 square foot industrial building. The building contains the City’s 200-bed homeless shelter, known as the Carnegie Navigation Center. Pursuant to the Lease Agreement, the Property Owner completed all the tenant improvements necessary for the City to operate a homeless shelter on the Property. The City has operated and continues to operate its homeless shelter on the Property under the Lease Agreement. Real Property Purchase Agreement: 1815 East Carnegie Avenue Page 2 3 5 5 6 The acquisition of the Property will ensure the City’s ability to use the Property as a homeless shelter for the long term if desired and provide the highest degree of control over the Property for future renovation or alternative uses, as appropriate. Additionally, when negotiating the Lease Agreement with the Property Owner, it was the City’s original intent to exercise the option to purchase the Property that was embedded in the Lease Agreement. Upon the purchase of the Property, the Lease Agreement will be extinguished, as the City will own the Property outright. FISCAL IMPACT If the City Council approves the requested appropriation adjustments, budgeted funds totaling $12,750,000 will be available in the following accounts for the required property acquisition expenditures in FY 2022-23. Fiscal Year Accounting Unit-Account Fund Description Accounting Unit, Account Description Amount FY 22-23 11114002-57996 Opioid Remediation Opioid Remediation, Settlements $1,100,000 Total Revenue $1,100,000 Fiscal Year Accounting Unit-Account Fund Description Accounting Unit, Account Description Amount FY 22-23 18118013-66200 ARPA ARPA, Buildings & Building Improvements $1,000,000 FY 22-23 11118800-66200 Opioid Remediation Opioid Remediation, Buildings & Building Improvements $1,100,000 FY 22-23 12218715-66200 HHAP - Round 1 HHAP, Buildings & Building Improvements $ 100,000 FY 22-23 41718820-66200 Inclusionary Housing Fund Inclusionary Housing, Buildings & Building Improvements $3,753,571 FY 22-23 1581870X-66200 PLHA - Round 1, 2, and 3 PLHA Administrative, Buildings & Building Improvements $ 500,000 FY 22-23 1581870X-66200 PLHA - Round 1, 2, and 3 PLHA Round 1, 2 & 3, Buildings & Building Improvements $6,296,429 Total Expenditure $12,750,000 EXHIBIT(S) 1. Purchase and Sale Agreement Submitted By: Michael L. Garcia, Executive Director of Community Development Approved By: Kristine Ridge, City Manager 5489135.1 PURCHASE AND SALE AGREEMENT between DYER 18 LLC Seller and THE CITY OF SANTA ANA Purchaser EXHIBIT 1 5489135.1 2 THIS PURCHASE AND SALE AGREEMENT (this “Contract”), dated as of June __, 2023 (the “Effective Date”), is made by and between DYER 18 LLC, a Delaware limited liability company, having an address at 240 Newport Center Drive, Suite 200, Newport Beach, CA 92660 (“Seller”) and THE CITY OF SANTA ANA, a California municipal corporation, having an address at 20 Civic Center Plaza, Santa Ana, California 92701 (“Purchaser”). W I T N E S S E T H : WHEREAS, concurrently herewith, Seller and Purchaser have entered into that certain Settlement Agreement with Mutual Releases (the “Settlement Agreement”); WHEREAS, capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Settlement Agreement; WHEREAS, pursuant to the Settlement Agreement, Seller has agreed to sell and Purchaser has agreed to purchase the “Property” (as hereinafter defined) upon the terms and conditions set forth herein; NOW, THEREFORE, intending to be legally bound hereby, the parties agree as follows: 1. Intentionally Omitted. 2. Subject of Sale. 2.1. Seller agrees to sell and convey to Purchaser the Property and Purchaser agrees to purchase from Seller the Property subject to the terms and conditions contained in this Contract. 2.2. This sale includes all right, title and interest of Seller, in and to the following (collectively, the “Property”): a) The “Real Property” collectively consisting of the following: i) that certain parcel of land, as the same is more particularly described on Exhibit A attached hereto (the “Land”); ii) the buildings and other improvements (together with all fixtures) erected on the Land (collectively, the “Improvements”, and together with the Land, the “Premises”); iii) any land lying in the bed of any street, road or avenue opened or proposed, adjacent to the Land, to the center line thereof, and all right, title and interest of Seller in and to any award made or to be made in lieu thereof and in and to any unpaid award for damage to the Property by reason of change of grade of any street; iv) rights of way, appurtenances, easements, sidewalks, alleys, gores, or strips of land adjoining or appurtenant to the Land and used in connection therewith; EXHIBIT 1 5489135.1 3 v) all minerals, oil, gas and other hydrocarbon substances on and under the real property and all rights related thereto; and vi) all development rights, air rights, water, water rights, riparian rights and water stock relating to the real property. b) (i) that certain personal property located on and used in connection with the Real Property, if any, consisting of (a) all keys and combinations to all doors, cabinets, safes, enclosures and other locking items or areas on or about the Real Property in Seller’s possession; and (b) all tangible personal property, including, without limitation, all tools, supplies, electric switch gear, telephone systems, office equipment, safety gear and fire safety equipment fixtures, in each case to the extent owned by Seller, located on the Real Property and used exclusively in connection with the occupation or operation of the Real Property and (ii) all construction contracts, design contracts, labor contracts, proposals, as-built plans and specifications (the “Construction Documents”), and indemnities and warranties related to the Work as defined in the Lease Agreement (collectively, the “Personal Property”). 2.3. At Closing, Purchaser shall succeed to Seller’s interest in, and shall otherwise assume and take title to the Property. 3. Purchase Price. 3.1. The purchase price (the “Purchase Price”) for the Property is the sum of Twelve Million Seven Hundred Fifty Thousand and 00/100 Dollars ($12,750,000.00), payable by Purchaser to Seller as follows: 3.2. Within no later than one (1) Business Day (as hereinafter defined) following the Open Date , TIME BEING OF THE ESSENCE, the sum of Six Hundred Thousand and 00/100 Dollars ($600,000.00) (the “Deposit”) to be paid by electronic wire transfer of immediately available funds to an account designated by the Title Company (as hereinafter defined) (in such capacity, “Escrowee”); and 3.3. The balance of the Purchase Price, subject to adjustment and proration as provided in this Contract, at Closing by wire transfer of immediately available funds to Escrowee for payment to Seller upon Closing. 3.4. Upon the payment of the Deposit by Purchaser, such amount shall be non-refundable under any circumstances except in the case that both (A) Seller is in default of its obligation to close the purchase and sale of the Property in accordance with this Contract, and (B) Purchaser is not in default under the Settlement Agreement or this Contract. 4. Deposit Provisions. 4.1. Upon delivery of the Deposit to Escrowee in accordance with Section 3.2, Escrowee shall disburse (and in all events within five (5) Business Days) the entire Deposit to Seller in accordance with wiring instructions provided by Seller without any further action by, or approval of, Purchaser. The Deposit shall be retained by Seller in all circumstances except as provided in Section 3.4, but the Deposit shall be applied to the Purchase Price at Closing. EXHIBIT 1 5489135.1 4 4.2. In the event Seller shall be entitled to the Deposit pursuant to Section 10.1, Escrowee shall pay the Deposit to Seller, and Seller shall retain the Deposit in accordance with Section 10.1 below. 4.3. In the event this Contract is terminated by Purchaser as a result of a default by Seller pursuant to Section 10.2, then, and only then, shall Escrowee (if it is holding the Deposit) pay the Deposit to Purchaser within three (3) Business Days. If Escrowee has delivered the Deposit to Seller in accordance with Section 4.1, in the event of such termination Seller shall pay the Deposit to Purchaser within three (3) Business Days. 4.4. Purchaser may instruct the Escrowee to invest the Deposit in such short term, high grade securities, interest bearing bank accounts, bank certificates of deposit or bank repurchase agreements as mutually agreed by Escrowee, Seller and Purchaser, and all interest and income thereon shall belong to Purchaser and shall be remitted to Purchaser as and when received, irrespective of the disposition of the Deposit itself. 4.5. Escrowee, by signing this Contract where indicated, signifies its agreement to hold and disburse the Deposit for the purposes as provided in this Contract. Except for liability resulting from the negligence or willful misconduct of Escrowee, Escrowee shall not incur any liability by reason of any action or non-action taken by it in good faith or pursuant to the judgment or order of a court of competent jurisdiction. Escrowee shall have the right to reasonably rely upon the genuineness of all certificates, notices and instruments delivered to it pursuant hereto, and all the signatures thereto or to any other writing received by Escrowee purporting to be signed by any party hereto, and upon the truth of the contents thereof. 4.6. Except as otherwise provided for in Section 4.1, Escrowee shall not pay or deliver the Deposit to any party. 4.7. Escrowee shall be entitled to consult with counsel in connection with its duties hereunder. Seller and Purchaser, jointly and severally, agree to reimburse Escrowee, upon demand, for the reasonable out of pocket costs and expenses including attorneys’ fees incurred by Escrowee in connection with its acting in its capacity as Escrowee. In the event of litigation relating to the subject matter of the escrow, whichever of Seller or Purchaser is not the prevailing party shall reimburse the prevailing party for any costs and fees paid by the prevailing party or paid from the escrowed funds to Escrowee. 4.8. To the extent required to consummate the transactions contemplated hereby, each party agrees to execute and deliver to Escrowee closing escrow instructions to implement and coordinate the Closing in accordance with the terms of this Contract. 5. “As-Is”. “Where-Is”. 5.1. Disclaimer. Purchaser acknowledges and agrees that it has been provided the opportunity to thoroughly inspect, investigate and exercise due diligence, and the opportunity to fully and independently become familiar with, and fully satisfy itself regarding, any and all matters relating to the Property. Without limiting the foregoing, pursuant to that certain Standard Industrial/Commercial Single-Tenant Lease - Net dated as of July 13, 2020, by and between Seller, as lessor, and The Illumination Foundation, a California nonprofit public benefit corporation (“Previous Lessee”), as lessee (the “Previous Lease”), that EXHIBIT 1 5489135.1 5 certain Guaranty of Lease, dated as of July 13, 2020, made by Purchaser for the benefit of Seller (the “Lease Guaranty”) with respect to Previous Lessee’s obligations under the Previous Lease, and that certain Standard Industrial/Commercial Single-Tenant Lease - Net dated as of March 1, 2021, by and between Seller, as lessor, and Purchaser, as lessee (the “Existing Lease”), Purchaser has been in possession or control of the entire Property since the date of the Previous Lease and comprehensive improvements in connection with its occupancy and use of the Property have been completed in accordance with the terms and conditions of the Existing Lease and have been approved by Purchaser. As such, Purchaser’s knowledge of the current condition of the Property exceeds that of Seller. PURCHASER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY AND ALL REPRESENTATIONS, WARRANTIES, PROMISES, COVENANTS, AGREEMENTS OR GUARANTIES OF ANY KIND OR CHARACTER WHATSOEVER, WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, OF, AS TO, CONCERNING OR WITH RESPECT TO THE PROPERTY OR ITS CONDITION, INCLUDING, WITHOUT LIMITATION, (I) THE VALUE OF THE PROPERTY; (II) THE INCOME BEING, OR THAT MAY BE DERIVED FROM THE PROPERTY; (III) THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES AND USES WHICH PURCHASER MAY CONDUCT THEREON, INCLUDING, WITHOUT LIMITATION, THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE PROPERTY; (IV) THE HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY (PURCHASER AFFIRMING THAT PURCHASER HAS NOT RELIED ON SELLER’S SKILL OR JUDGMENT TO SELECT OR FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT SELLER MAKES NO WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE); (V) THE MANNER, QUALITY, STATE OF REPAIR OR LACK OF REPAIR OF THE PROPERTY INCLUDING, WITHOUT LIMITATION, ANY PATENT OR LATENT DEFECTS OR DEFICIENCIES WITH RESPECT TO THE PROPERTY; (VI) THE NATURE, QUALITY OR CONDITION OF THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY OF OR BELOW THE SURFACE OF THE PROPERTY; (VII) THE COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES, ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY INCLUDING, WITHOUT LIMITATION, THE AMERICANS WITH DISABILITIES ACT OR ANY SIMILAR STATE LAWS; (VIII) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS INCORPORATED INTO THE PROPERTY, INCLUDING ANY IMPROVEMENTS THERETO AND THE WORK (AS DEFINED IN THE SETTLEMENT AGREEMENT) PERFORMED THEREON AND/OR THERETO; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL REQUIREMENTS (DEFINED BELOW), ENVIRONMENTAL PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATIONS, ORDERS OR OTHER REQUIREMENTS; (X) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS (AS DEFINED BELOW) AT, ON, UNDER, OR ADJACENT TO THE PROPERTY; (XI) THE CONTENT, COMPLETENESS OR ACCURACY OF ANY OF THE DUE DILIGENCE DELIVERIES; (XII) THE CONFORMITY OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO PURCHASER; (XIII) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE EXHIBIT 1 5489135.1 6 APPLICABLE ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY OF ANY UNDERSHORING; (XV) DEFICIENCY OF ANY DRAINAGE; (XVI) THE FACT THAT ALL OR A PORTION OF THE PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (XVII) THE EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY; (XVIII) THE AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR ANY PORTION THEREOF, INCLUDING, WITHOUT LIMITATION, WATER, SEWAGE, GAS, AND ELECTRICITY; (XIX) USAGES OF ANY ADJOINING PROPERTY; (XX) ACCESS TO, AND EASEMENTS AND RIGHTS OF WAY WHICH ARE A BURDEN UPON OR WHICH BENEFIT, THE PROPERTY OR ANY PORTION THEREOF; (XXI) ANY EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS, OR CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF; (XXII) THE EXISTENCE OR NON EXISTENCE OF UNDERGROUND STORAGE TANKS UPON OR BENEATH THE SURFACE OF THE PROPERTY; (XXIII) ANY MATTERS ARISING FROM OR RELATING TO SELLER’S ALLEGED SUPERIOR KNOWLEDGE OR BREACH OF ANY DUTY TO DISCLOSE; AND (XXIV) ANY OTHER MATTER WITH RESPECT TO THE PROPERTY. 5.1.1. Certain Definitions. a) For purposes of this Contract, “Hazardous Materials” shall mean any hazardous or toxic materials, substances, or wastes, including, without limitation, (A) substances defined as “hazardous substances,” “hazardous materials,” “hazardous waste,” “pollutant,” “infectious waste,” or “toxic substances,” or words of similar meaning or regulatory effect under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.) (“CERCLA”), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901 et seq.) (“RCRA”), the Hazardous Materials Transportation Act (49 U.S.C. § 1801, et seq.), the Federal Water Pollution Control Act (33 U.S.C. § 1251, et seq.), the Clean Air Act (42 U. S. C. § 740 1, et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601, et seq.), the Refuse Act (33 U.S.C. § 407), Carpenter-Presley-Tanner Hazardous Substance Account Act, California Health and Safety Code §§ 25300, et seq., Hazardous Substance Cleanup Bond Act of 1984, California Health and Safety Code §§ 25385, et seq., and related statutes including sections 25356.1-25356.4 of the California Health and Safety Code, Porter-Cologne Water Quality Control Act, California Water Code §§ 13000 et seq., as any or all of such acts are amended from time to time; (B) those materials identified in §§ 66680 through 66685 and §§ 66693 through 66740 of Title 22 of the California Administrative Code, Division 4, Chapter 30, as amended from time to time; (C) any substance defined as a “hazardous substance”, “hazardous waste”, “extremely hazardous waste”, “RCRA hazardous waste”, “waste” or “hazardous material” in §§ 25115, 25117, 25122.7, 25120.2, 25124, 25281, 25316 or 25501 of the California Health and Safety Code, as amended, or listed pursuant to § 25140 of the California Health and Safety Code, as amended; (D) any chemical or other substance regulated by the California Safe Drinking Water and Toxic Enforcement Act of 1986, California Health and Safety Code § 25249.5, et seq., as amended; (E) any substance defined as a “waste” or “hazardous substance” in § 13050 of the California Water Code, as amended; (F) any substance listed in California Labor Code §§ 6501.7 or 9004, as amended; (G) any materials, substances, or wastes which are toxic, ignitable, corrosive, or reactive, and which are regulated EXHIBIT 1 5489135.1 7 by any local governmental authority, any agency of the State of California, or any agency of the United States of America; (H) any substance the presence of which at the Property causes, or threatens to cause, a nuisance and/or a trespass upon the Property, or to adjacent properties, or poses, or threatens to pose, a hazard to the health or safety of human beings; (I) asbestos (including, without limitation, asbestos containing materials), petroleum and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (PCBs), Freon and other chlorofluorocarbons, flammable, explosive, infectious, carcinogenic, mutagenic, or radioactive materials, petroleum or any substance containing or consisting of petroleum hydrocarbons (including, without limitation, gasoline, diesel fuel, motor oil, waste oil, grease or any other fraction of crude oil), paints and solvents, lead, cyanide, DDT, printing inks, acids, pesticides, ammonium compounds, polychlorinated biphenyls, radon and radon gas, and electromagnetic or magnetic materials, substances, or emissions; and (J) those substances defined as any of the foregoing in the regulations adopted and publications promulgated pursuant to each of the aforesaid laws. b) For purposes of this Contract, the term “Environmental Requirements” shall mean all laws, ordinances, statutes, codes, rules, regulations, agreements, judgments, orders, and decrees, now or hereafter enacted, promulgated, or amended, of the United States, the states, the counties, the cities, or any other political subdivisions in which the Property is located, and any other political subdivision, agency or instrumentality exercising jurisdiction over the owner of the Property, the Property, or the use of the Property, relating to pollution, the protection or regulation of human health, natural resources, or the environment, or the emission, discharge, release or threatened release of pollutants, contaminants, chemicals, or industrial, toxic, or hazardous substances or waste or Hazardous Materials into the environment (including, without limitation, ambient air, surface water, ground water or land or soil). 5.2. “As-Is”. Seller is not liable or bound in any manner by any oral or written statements, representations or information pertaining to the Property, or the operation thereof, furnished by any real estate broker, agent, employee, servant or other person. Purchaser further acknowledges and agrees that Purchaser will purchase and accept the Property in its condition as of Closing , and the Property is and shall be transferred by Seller to Purchaser, in an “AS IS, WHERE IS, WITH ALL FAULTS, LIABILITIES, DEFICIENCIES, AND DEFECTS, PATENT, LATENT OR OTHERWISE, KNOWN OR UNKNOWN” condition, whatever that condition may be, and that Seller has no obligations to make repairs, replacements or improvements, whether before or after the Closing. Purchaser represents, warrants and covenants to Seller that, Purchaser will solely rely upon Purchaser’s own investigation and knowledge of the Property and all other matters relating to the Property, and not on any information provided or to be provided by Seller or anyone acting on Seller’s behalf. Except as otherwise provided in this Contract, Purchaser further assumes all risk of loss, damage, expense, and liability whatsoever in connection with the Property (or any portion thereof) from and after the Closing, and Seller shall not be liable for any lack of repair, maintenance, or improvements to the Property. 5.3. Purchaser Indemnity. EXCEPT AS OTHERWISE PROVIDED HEREIN, PURCHASER HEREBY AGREES TO INDEMNIFY, PROTECT, DEFEND, SAVE, AND HOLD EXHIBIT 1 5489135.1 8 HARMLESS SELLER, AND, ITS PAST, PRESENT, AND FUTURE DIRECT AND INDIRECT PARENTS, SUBSIDIARIES, AND AFFILIATES AND EACH OF THEIR RESPECTIVE DIRECT AND INDIRECT SHAREHOLDERS, PARTNERS, MEMBERS, AND LEGAL AND BENEFICIAL OWNERS, AND EACH OF THEIR RESPECTIVE DIRECTORS, OFFICERS, PRINCIPALS, MANAGERS, MEMBERS, CONTRACTORS, EMPLOYEES (INCLUDING, WITHOUT LIMITATION, INDIVIDUALLY, RYAN OGULNICK, JEREMEY OGULNICK, RACHEL OGULNICK, CHRIS LEE, RAY WIRTA, AND DUROSS O’BRIAN), TRUSTS, TRUSTEES, AGENTS, REPRESENTATIVES, HEIRS, BENEFICIARIES, ALTER EGOS, ATTORNEYS, INSURERS, AND UNDERWRITERS AND THE PREDECESSORS, SUCCESSORS AND ASSIGNS OF THE FOREGOING AND EACH OF THEM, AND ALL PERSONS ACTING BY, THROUGH, UNDER OR IN CONCERT WITH SUCH PERSONS (COLLECTIVELY, THE “SELLER PARTIES”), FROM AND AGAINST ANY AND ALL DEBTS, DUTIES, OBLIGATIONS, LIABILITIES, SUITS, CLAIMS, DEMANDS, CAUSES OF ACTION, DAMAGES, LOSSES, FEES AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND EXPENSES AND COURT COSTS) IN ANY WAY ARISING OUT OF, RELATING TO, OR IN CONNECTION WITH, PURCHASER’S INSPECTION, ACQUISITION, OWNERSHIP, LEASING, USE, OPERATION, MANAGEMENT, AND/OR MAINTENANCE OF THE PROPERTY AT ANY TIME, AND ANY OTHER MATTERS WITH RESPECT TO THE PROPERTY, INCLUDING, WITHOUT LIMITATION, THOSE ARISING OUT OF ANY SELLER PARTY’S OWN ACTS OR OMISSIONS, WHETHER NEGLIGENT OR INTENTIONAL (“LIABILITIES”). 5.4. Waiver and Release. 5.4.1. AS PART OF PURCHASER’S AGREEMENT TO PURCHASE AND ACCEPT THE PROPERTY ON AN “AS IS, WHERE IS, WITH ALL FAULTS, LIABILITIES, DEFICIENCIES, AND DEFECTS, PATENT, LATENT OR OTHERWISE, KNOWN OR UNKNOWN” BASIS, AND NOT AS A LIMITATION ON SUCH AGREEMENT, PURCHASER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL ACTUAL OR POTENTIAL RIGHTS PURCHASER MIGHT HAVE REGARDING ANY FORM OF WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE, RELATING TO THE PROPERTY. SUCH WAIVER IS ABSOLUTE, COMPLETE, TOTAL, AND UNLIMITED IN EVERY WAY. SUCH WAIVER INCLUDES, BUT IS NOT LIMITED TO, A WAIVER OF EXPRESS WARRANTIES, IMPLIED WARRANTIES, WARRANTIES OF FITNESS FOR A PARTICULAR USE OR PURPOSE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF HABITABILITY, STRICT LIABILITY RIGHTS, AND CLAIMS, LIABILITIES, DEMANDS, OR CAUSES OF ACTION OF EVERY KIND AND TYPE, WHETHER STATUTORY, CONTRACTUAL, ADMINISTRATIVE, OR UNDER TORT PRINCIPLES, AT LAW OR IN EQUITY, INCLUDING, BUT NOT LIMITED TO, CLAIMS REGARDING DEFECTS WHICH MIGHT HAVE BEEN DISCOVERABLE, CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE, PRODUCT LIABILITY CLAIMS, PRODUCT LIABILITY TYPE CLAIMS, ALL OTHER EXTANT OR LATER CREATED OR CONCEIVED OF STRICT LIABILITY OR STRICT LIABILITY TYPE CLAIMS EXHIBIT 1 5489135.1 9 AND RIGHTS, AND ANY AND ALL CLAIMS UNDER CERCLA AND RCRA OR ANY OTHER ENVIRONMENTAL REQUIREMENT. 5.4.2. PURCHASER HEREBY FULLY AND FOREVER RELEASES, ACQUITS AND DISCHARGES SELLER AND EACH OF THE SELLER PARTIES, OF AND FROM, AND HEREBY FULLY AND FOREVER WAIVES ANY AND ALL CLAIMS, ADMINISTRATIVE CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, DISPUTES, OBLIGATIONS, JUDGMENTS, VERDICTS, DAMAGES, LIABILITIES, FEES (INCLUDING ATTORNEYS’ FEES), COSTS, EXPENSES, COMPENSATION, DUES, AND DEBTS, IN EACH CASE, WHETHER ACTUAL OR POTENTIAL, WHETHER KNOWN OR UNKNOWN, DIRECT OR INDIRECT, FORESEEABLE OR UNFORESEEABLE, ABSOLUTE OR CONTINGENT, THAT PURCHASER NOW HAS OR MAY HAVE OR WHICH MAY ARISE IN THE FUTURE ARISING OUT OF, DIRECTLY OR INDIRECTLY, OR IN ANY WAY CONNECTED WITH THE PROPERTY OR ANY OTHER MATTERS RELATING TO THE PROPERTY, INCLUDING, WITHOUT LIMITATION: (A) ANY CONDITION OF ENVIRONMENTAL CONTAMINATION OR POLLUTION AT THE PROPERTY, HOWEVER AND WHENEVER OCCURRING (INCLUDING, WITHOUT LIMITATION, THE CONTAMINATION OR POLLUTION OF ANY SOILS, SUBSOIL MEDIA, SURFACE WATERS OR GROUNDWATERS AT THE PROPERTY) INCLUDING, BUT NOT LIMITED TO, HAZARDOUS MATERIALS; (B) TO THE EXTENT NOT ALREADY INCLUDED IN (A) ABOVE, THE PRIOR, PRESENT OR FUTURE EXISTENCE, RELEASE OR DISCHARGE, OR THREATENED RELEASE, OF ANY HAZARDOUS MATERIALS AT THE PROPERTY, HOWEVER AND WHENEVER OCCURRING; (C) THE VIOLATION OF, OR NON-COMPLIANCE WITH, ANY APPLICABLE LAW NOW OR HEREAFTER IN EFFECT, HOWEVER OR WHENEVER OCCURRING; (D) THE CONDITION OF THE SOIL AT THE PROPERTY; (E) THE CONDITION OF IMPROVEMENTS INCLUDING, WITHOUT LIMITATION, THE STRUCTURAL INTEGRITY AND SEISMIC COMPLIANCE OF SUCH IMPROVEMENTS AND ALL “WORK” PERFORMED TO THE PROPERTY (AS DEFINED IN THE EXISTING LEASE); (F) THE INACCURACY, UNRELIABILITY, OR INCOMPLETENESS OF, OR ANY DEFECT OR MISTAKE IN, ANY DELIVERIES MADE BY SELLER IN CONNECTION WITH THIS CONTRACT OR THE SETTLEMENT AGREEMENT; (G) TO THE EXTENT NOT ALREADY COVERED BY ANY OF THE FOREGOING CLAUSES (A) THROUGH (F), ABOVE, THE USE, MAINTENANCE, DEVELOPMENT, CONSTRUCTION (INCLUDING WITHOUT LIMITATION ANY AND ALL DEFECTS, PATENT, LATENT OR OTHERWISE, KNOWN OR UNKNOWN), CONVERSION OF USE, OWNERSHIP OR OPERATION OF THE PROPERTY BY SELLER OR ANY OF SELLER’S PREDECESSOR(S)-IN-INTEREST IN THE PROPERTY; (H) ANY MATTERS ARISING FROM OR RELATING TO ANY LEASES (INCLUDING WITHOUT LIMITATION, CLAIMS, DAMAGES, LIABILITIES, OR OTHERWISE ASSERTED BY ANY THIRD PARTIES); OR (I) ANY MATTERS BASED ON SELLER’S ALLEGED SUPERIOR KNOWLEDGE OR FAILURE TO DISCLOSE. AS PART OF THE PROVISIONS OF THIS SECTION 5.4.2, BUT NOT AS A LIMITATION THEREON, PURCHASER HEREBY AGREES, REPRESENTS, AND WARRANTS THAT THE MATTERS RELEASED HEREIN ARE NOT LIMITED EXHIBIT 1 5489135.1 10 TO MATTERS WHICH ARE KNOWN OR DISCLOSED, AND PURCHASER HEREBY WAIVES ANY AND ALL RIGHTS AND BENEFITS WHICH IT NOW HAS, OR IN THE FUTURE MAY HAVE CONFERRED UPON IT, BY VIRTUE OF THE PROVISIONS OF FEDERAL, STATE, OR LOCAL LAW, RULES, OR REGULATIONS, INCLUDING WITHOUT LIMITATION, SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA (“SECTION 1542”), WHICH PROVIDES AS FOLLOWS: “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.” PURCHASER HEREBY ACKNOWLEDGES, AND REPRESENTS AND WARRANTS TO SELLER THAT IT HAS READ, IS FAMILIAR WITH, AND FULLY UNDERSTANDS THE PROVISIONS OF SECTION 1542. IN ACCORDANCE WITH THE FOREGOING, AND TO THE MAXIMUM EXTENT PERMITTED BY LAW, PURCHASER HEREBY AGREES, REPRESENTS, AND WARRANTS THAT IT UNDERSTANDS THAT FACTUAL MATTERS NOW UNKNOWN TO PURCHASER MAY HAVE GIVEN, OR MAY HEREAFTER GIVE, RISE TO CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES, OR EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED, AND UNSUSPECTED, AND PURCHASER FURTHER AGREES, REPRESENTS, AND WARRANTS THAT THE WAIVERS AND RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION, AND THAT PURCHASER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE, AND ACQUIT SELLER FROM ANY SUCH UNKNOWN CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES, AND EXPENSES WHICH MIGHT IN ANY WAY BE INCLUDED IN THE WAIVERS AND MATTERS RELEASED AS SET FORTH IN THIS SECTION 5.4.2. THE PROVISIONS OF THIS SECTION 5.4.2 ARE MATERIAL AND INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION GIVEN TO SELLER BY PURCHASER IN EXCHANGE FOR SELLER’S PERFORMANCE HEREUNDER AND THE SETTLEMENT AGREEMENT. SELLER HAS GIVEN PURCHASER MATERIAL CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR PURCHASER AGREEING TO THE PROVISIONS OF THIS SECTION 5.4.2. PURCHASER HAS INITIALED THIS SECTION 5.4.2 TO FURTHER INDICATE ITS AWARENESS AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF. PURCHASER HEREBY WAIVES THE PROVISIONS OF SECTION 1542, AND OF ANY STATUTE, PRINCIPLE OF COMMON LAW OR CASE LAW WHICH WOULD LIMIT THE SCOPE OF THE FOREGOING WAIVER AND RELEASE, IN CONNECTION WITH MATTERS WHICH ARE THE SUBJECT OF THE FOREGOING WAIVER AND RELEASE. EXHIBIT 1 5489135.1 11 PURCHASER’S INITIALS: ___________ 5.5. Survival. The provisions of this Section 5 shall survive the Closing. 6. Purchaser’s Representations. Purchaser represents that as of the Effective Date and as of the Closing: a) The execution, delivery and performance of this Contract in accordance with its terms, do not violate any organizational document of Purchaser, or any contract, agreement, commitment, order, judgment or decree to which Purchaser is a party or by which it is bound; b) Purchaser has the right, power and authority to make and perform its obligations under this Contract; c) Purchaser is a municipal corporation duly formed under the laws of the State of California; and d) This Contract is a valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms. 7. Seller’s Representations. Seller represents that as of the Effective Date and as of the Closing: a) The execution, delivery and performance of this Contract in accordance with its terms do not violate or any organizational document of Seller, or any contract, agreement, commitment, order, judgment or decree to which Seller is a party or by which it is bound; b) Seller has the right, power and authority to make and perform its obligations under this Contract; and c) This Contract is a valid and binding obligation of Seller enforceable against Seller in accordance with its terms; d) Seller is not a foreign person, nonresident alien, foreign corporation, foreign partnership, foreign trust or foreign estate, as those terms are defined in the Internal Revenue Code and the Income Tax Regulations promulgated thereunder; e) Seller is not, and shall not become, a person or entity with whom Purchaser is restricted from doing business under, without limitation, Executive Order No. 13224 (Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism), the list of Specially Designated and Blocked Persons promulgated by the Department of Treasury Office of Foreign Assets Control or any other similar laws, orders, regulations or other directive. . EXHIBIT 1 5489135.1 12 8. Title. 8.1. Title Commitment. Promptly following the Effective Date, Seller shall request to be issued and delivered to Purchaser a title commitment for a CLTA standard coverage owner’s policy of title insurance for the Property (the “Title Commitment”) issued by Commonwealth Land Title Company (the “Title Company”), whose address is set forth in Section 13.4 below. Within ten (10) days following Purchaser’s receipt of the Title Commitment but in no event later than thirty (30) days prior to Closing Date (the “Title Objection Date”), Purchaser shall furnish Seller with notice of any objection Purchaser has to the Title Commitment which are not Permitted Exceptions; provided, however, Seller shall have no obligation to cure any such objections except for Required Cure Items. Any matters reflected on the Title Commitment (as it may be revised from time to time) as of the Title Objection Date to which Purchaser does not object, shall be deemed Permitted Exceptions. Following the Title Objection Date, Purchaser shall notify Seller within five (5) Business Days of becoming aware of any other defects, encumbrances, encroachments or other objections to title that are not Permitted Exceptions and were not previously disclosed on the Title Commitment, of any objection thereto. Any defects, encumbrances, encroachments or other objections to title that are reflected on the Title Commitment or that would be disclosed by an accurate land title survey of the Property and that are not timely objected to in accordance with this Section 8.1 shall be deemed Permitted Exceptions. Seller shall notify Purchaser in writing within five (5) Business Days after receipt of a timely delivered notice from Purchaser (“Seller’s Notice Period”) as to whether or not Seller elects to remove or cure such matters to which Purchaser has timely objected and which do not constitute Permitted Exceptions. If Seller notifies Purchaser that Seller has determined not to remove any such matters or fails to state that Seller has determined to remove any such matters, Purchaser shall have the right to elect, within three (3) Business Days after receipt of such notice from Seller or lapse of Seller’s Notice Period, as applicable, but in no event later than thirty (30) days prior to Closing Date , either (i) to accept such title as Seller is able to convey, without any reduction of the Purchase Price or any credit or allowance on account thereof or any other claim against Seller, in which case all objections shall be deemed Permitted Exceptions, or (ii) to terminate this Contract, whereupon Purchaser and Seller shall have no further rights or obligations under this Contract except with respect to the provisions hereof which by their terms expressly survive the termination of this Contract. If Purchaser does not notify Seller of its election within such three (3) Business Day period (or, if earlier, on or before thirty (30) days prior to Closing Date) then Purchaser shall be deemed to have elected (i) above. 8.2. Status of Title. Purchaser shall accept title to the Premises and consummate the transaction contemplated by this Contract subject to (a) all defects, exceptions, restrictions, easements, rights of way and encumbrances that are of record, or which would otherwise be disclosed in an accurate land title survey of the Property other than, in each case, Required Cure Items; (b) encumbrances for water charges, sewer rates, assessments and other governmental charges; (c) statutory liens for taxes; (d) mechanics’, carriers’, workers’, or repairers’ liens, and similar encumbrances other than Required Cure Items; (e) zoning ordinances, building codes, entitlements and other land use regulations promulgated by any governmental or quasi-governmental authority, including Environmental Requirements, or any nonconformity or violation of the Property therewith or thereof; (f) all defects, irregularities, exceptions, restrictions, easements, rights of way and encumbrances of title created by or EXHIBIT 1 5489135.1 13 through Purchaser or Previous Lessee or any of their respective affiliates, subsidiaries, agencies, departments or instrumentalities, or any employee, agent, representative, officer director, contractor, member, or manager of any of the foregoing; (g) all matters disclosed by any existing title insurance policies or title reports, copies of which have been made available to Purchaser; and (h) all matters shown as printed exceptions in the standard form of owners policy of title insurance to be obtained by Purchaser upon the Closing (the title exceptions whether liens, encumbrances, defects, encroachments or other objections described in clauses (a) through (h), inclusive, of this sentence, collectively, “Permitted Exceptions”). Notwithstanding anything in this Contract to the contrary, Seller shall be obligated to discharge, on or prior to Closing, any of the following to the extent created by or through Seller: (i) any mortgages and deeds of trust encumbering the Property or any monetary encumbrance of title which was created or placed of record by or through the acts or omissions of Seller (but expressly excluding, without limitation, any encumbrance of title which was created or placed of record by or through the acts or omissions of Purchaser or Previous Lessee), and (ii) any mechanics, materialman’s and similar liens arising from any of the Work as defined in the Existing Lease (“Required Cure Items”). 9. Closing. 9.1. Closing Date. The closing of the transaction contemplated hereby (the “Closing”) shall occur by no later than the 90th day after the Effective Date, or on such earlier date as mutually agreed upon by the parties hereto (the “Closing Date”). 9.2. Closing Expenses. a) Seller’s Expenses. Seller shall pay (i) one-half (1/2) of any escrow or closing charge of the Title Company; (ii) one-half (1/2) of the cost of the standard CLTA coverage portion of the title premium for the Title Policy in the amount of the Purchase Price; (iii) one-half (1/2) of the cost of recording the Deed (as herein defined); (iv) one-half (1/2) of any city or county documentary or transfer taxes payable on account of the conveyance of the Property; and (v) all costs in connection with curing any Required Cure Items, although Seller shall not be responsible or pay for any mechanics, materialman’s and similar liens arising from anything other than the Work as defined in the Existing Lease. b) Purchaser’s Expenses. Purchaser shall pay (i) one-half (1/2) of any escrow or closing charge of the Title Company; (ii) one-half (1/2) of the cost of the standard CLTA coverage portion of the title premium for the Title Policy in the amount of the Purchase Price; (iii) the cost of the premium for extended coverage portion of the Title Policy along with the costs of any endorsements; (iv) one-half (1/2) of the cost of recording the Deed; - (v) one-half (1/2) of any city or county documentary or transfer taxes payable on account of the conveyance of the Property; and (vi) all costs in connection with curing any mechanics, materialman’s and similar liens arising from anything other than the Work as defined in the Existing Lease. c) The provisions of this Section 9.2 shall survive the Closing or earlier termination of this Contract. 9.3. Closing Deliveries. EXHIBIT 1 5489135.1 14 a) On or before the Business Day preceding the Closing Date, Seller shall deliver to Escrowee (unless otherwise provided below): i) the Grant Deed (the “Deed”) executed by Seller being a California statutory grant deed in the form of Exhibit 3 attached; ii) the Assignment and Assumption of the Existing Lease executed by Seller in the form annexed hereto as Exhibit 1; iii) duly executed certificate of Seller in the applicable form set forth in Treasury Regulations §1.1445-2(b)(2) and California Form 593; iv) the General Assignment and Bill of Sale, executed by Seller in the form of Exhibit 2 annexed hereto; v) keys, combinations and codes to all locks and security devices to the Premises in Seller’s possession (which may be left at the Premises or available for pickup at Seller’s offices), to the extent in the possession of Seller; vi) any other documents, affidavits and other deliveries required by applicable law or local custom in order to close the transactions contemplated herein which do not create any further liability or obligations on the part of Seller. b) On or before the Business Day preceding the Closing Date (unless otherwise provided below), Purchaser shall deliver to Title Company, as the case may be: i) the balance of the Purchase Price as provided in Section 3 hereof, delivered to Title Company by wire transfer of immediately available funds no later than 11:00 a.m. Pacific Time on the Closing Date; ii) the Assignment and Assumption of the Existing Lease executed by Purchaser in the form annexed hereto as Exhibit 1; iii) if required, evidence of Purchaser’s authority to consummate the transaction, reasonably satisfactory to Escrowee; and iv) Any and all documents, affidavits and other deliveries required by applicable law or local custom in order to effectuate this transaction. 9.4. Adjustments and Costs. The following items shall be credited, debited and otherwise adjusted as of the date of Closing, and the resulting calculation shall be an adjustment to the Purchase Price payable at Closing pursuant to this Contract (where appropriate, such adjustments shall be made on the basis of an actual year of 365/366 days, Seller to have the last day (i.e. with Seller to have revenues and to be responsible for expenses through and including the day prior to the date of Closing, and Purchaser to have the revenues and to be responsible for expenses on and after the date of Closing), unless otherwise provided): a) Rents and other amounts payable by the tenant under the Existing Lease. Purchaser EXHIBIT 1 5489135.1 15 shall pay to Seller any rents, fees or other amounts actually due and which are attributable to any period prior to the Closing Date. b) Seller and Purchaser acknowledge that Purchaser is responsible for the payment of real and personal property taxes, water, electricity, and other utility services, pursuant to the terms of the Existing Lease. Accordingly, at Closing, there shall be no adjustment or apportionment with respect to any such obligations. c) In the event, on the date of Closing, the precise figures necessary for any of the foregoing adjustments are not capable of determination, the adjustments shall be made on the basis of the good faith estimates of Purchaser and Seller (using currently available information), which shall be final and binding on the parties. d) The provisions of this Section 9.4 shall survive the Closing. 9.5. Conditions to Closing. a) Notwithstanding anything to the contrary contained in this Contract, the obligation of Purchaser to close and pay the Purchase Price in accordance with the terms of this Contract is expressly conditioned upon the fulfillment by and as of the time of the Closing of each of the conditions listed below, provided that Purchaser, at its election, evidenced by written notice delivered to Seller at or prior to the Closing, may waive all or any of such conditions: i) The Title Company shall have issued, or shall have irrevocably committed to issue, a standard coverage CLTA Owner’s Policy of Title Insurance insuring the title and interest of Purchaser in and to the Premises in the amount of the Purchase Price (the “Title Policy”), without endorsement, upon receipt of payment of the premium therefor, subject only to the Permitted Exceptions; ii) The representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects as of the Closing; and iii) Seller shall not be in default in any material respect of any of its material obligations under this Contract; provided, however, that if the Closing does not occur solely by reason of Seller’s default under this Contract, Seller shall have the right, within five (5) Business Days following written notice of such default from Purchaser, to cure the applicable default, and the scheduled Closing Date shall be automatically extended to allow for the passage of such five (5) Business Day period. b) Notwithstanding anything to the contrary contained in this Contract, the obligation of Seller to close in accordance with this Contract is expressly conditioned upon Purchaser’s representations and warranties contained in Section 6 of this Contract being true and correct in all material respects and Purchaser shall have complied in all material respects with all of its material obligations under the Contract. 10. Default. EXHIBIT 1 5489135.1 16 10.1. Purchaser’s Default. If Purchaser should default on any of its obligations under this Contract and Purchaser fails to cure such default within five (5) Business Days following receipt of written notice from Seller (with the Closing Date being extended for a like period if required to effectuate such cure), the same shall constitute a material default hereunder and under the Settlement Agreement. The parties hereto agree that while the Deposit may be applied against the Purchase Price at Closing, such Deposit constitutes a partial payment of Purchaser’s total obligations under the Settlement Agreement and shall be retained by Seller under all circumstances except as set forth in Section 3.4. As such, the Seller and Purchaser acknowledge and agree that Deposit will not be deemed either a a penalty or liquidated damages with respect to Purchaser’s breach or default hereunder. 10.2. Seller’s Default. If the transactions contemplated by this Contract shall not be closed solely by reason of Seller’s default of any of its material obligations under this Contract and Seller fails to cure such default within five (5) Business Days following receipt of written notice from Purchaser (with the Closing Date being extended for a like period if required to effectuate such cure), the same shall constitute a material default hereunder and under the Settlement Agreement. 11. Purchaser’s Obligations. Notwithstanding anything to the contrary set forth in in this Contract, Purchaser’s right to terminate the Contract shall be limited to the failure of a condition precedent for the benefit of Purchaser in accordance with Section 9.5(a), or as a result of a default by Seller pursuant to Section 10.2. Except for the foregoing, Purchaser shall have no contingencies to its obligations at Closing, including, with out limitation, any financing contingency or any contingency based on the grant, allocation, distribution, assignment or appropriation of public or private funds. 12. Time of the Essence. Time shall be of the essence with respect to each and every provision of this Contract. 13. Casualty or Condemnation. If, prior to the Closing, all or any material portion of the Property is damaged as the result of fire or other casualty or there is a loss or threatened loss of all or any portion of the Property by condemnation (a “Casualty”), Seller shall promptly notify Purchaser in writing of such event. Upon the occurrence of a Casualty, Purchaser, in its sole discretion, shall have the option to (i) accept title to the Property without any abatement of the Purchase Price, in which event at the Closing all of the insurance proceeds or condemnation awards shall be assigned by Seller to Purchaser and any monies theretofore received by Seller in connection with such Casualty shall be paid over to Purchaser; or (ii) terminate this Agreement and thereafter neither party shall have any further liability to the other. Purchaser’s election to terminate this Agreement in connection with a Casualty pursuant to this Section 13 shall constitute Purchaser’s absolute and irrevocable waiver of any right or option of any kind or nature to purchase the Property under the Existing Lease or otherwise, and all such rights and options shall forever terminate and be of no further force or effect upon Purchaser’s termination of this Agreement pursuant to this Section 13. 14. Miscellaneous. 14.1. Broker. Seller and Purchaser represent to each other that neither party has dealt with any broker or real estate consultant in connection with the transaction contemplated by this Contract. Seller and Purchaser shall indemnify, defend and hold the other free and harmless from and against any liabilities, damages, costs or expenses (including, but EXHIBIT 1 5489135.1 17 not limited to, reasonable attorneys’ fees and disbursements) suffered by the indemnified party arising from a misrepresentation or a breach of any covenant made by the indemnifying party pursuant to this Section. The provisions of this Section shall survive the Closing or termination of this Contract. 14.2. Assignment of this Contract. This Contract may not be assigned by Seller without the consent of Purchaser, which consent may be withheld in Purchaser’s sole and absolute discretion, except to effectuate a tax-deferred like-kind exchange (in which case Purchaser’s consent shall not be required). Except as provided in this Section or Section 14.20 hereinbelow, Purchaser may not assign this Contract and/or its rights hereunder without the written consent of Seller, which consent may be withheld in Seller’s sole and absolute discretion. No assignment of this Contract by Purchaser, whether or not approved by Seller shall relieve the entity named as Purchaser herein from its obligations hereunder. 14.3. Attorneys’ Fees. If either party institutes a legal proceeding against the other party in connection with this Contract, the losing party in such proceeding shall reimburse the prevailing party all reasonable attorneys’ fees paid by the prevailing party in connection with such proceeding. The provisions of this Section shall survive the Closing or termination of this Contract. 14.4. Notices. All notices hereunder to Seller, Purchaser, Escrowee or the Title Company shall be in writing and sent by certified or registered mail, return receipt requested, or may be sent by Federal Express or other overnight courier which obtains a signature upon delivery, or may be sent via email, or may be delivered by hand delivery addressed to such party at the address of such party set forth below or at such other address as such party shall designate from time to time by notice: SELLER: Dyer 18 LLC 240 Newport Center Drive Suite #200 Newport Beach, CA. 92660 Attn: Chris Lee Email: Chris@arrimus.com with a copy to: Wolf, Rifkin, Shapiro, Shulman & Rabkin, LLP 11400 W. Olympic Blvd., 9th Floor Los Angeles, California 90064 Attn: Chris Muno Email: cmuno@wrslawyers.com Attn: Elsa Horowitz Email: ehorowitz@wrslawyers.com PURCHASER: City of Santa Ana 20 Civic Center Plaza EXHIBIT 1 5489135.1 18 Santa Ana, CA 92702 Attn: City Clerk With a copy at the same address to: John M. Funk, Chief Assistant City Attorney Email: jfunk@santa-ana.org ESCROWEE/ TITLE COMPANY Commonwealth Land Title Company 4100 Newport Place Drive, Suite 120 Newport Beach, CA 92660 Attn: Kelly Ralph Email: kelly.ralph@cltic.com / kjunit@cltic.com Notices shall be deemed given, in the case of mailing, three (3) Business Days after deposited in the United States mail, or, in the case of overnight courier, one (1) Business Day after deposited with the overnight courier (for next Business Day delivery) or, in the case of hand delivery, the date actually delivered to or rejected by the intended recipient, or, in the case of email, upon the transmission of such email. Notices on behalf of the respective parties may be given by their attorneys and such notices shall have the same effect as if in fact subscribed by the party on whose behalf it is given. Notwithstanding the foregoing provisions of this Section, (a) notices served by hand delivery shall be deemed served on the date of delivery if delivered at or prior to 5:00 P.M. Pacific Time on a Business Day and on the next Business Day if delivered after 5:00 P.M. Pacific Time on a Business Day or at any time on a non-Business Day and (b) notices served by email shall be deemed served on the date of transmission if sent at or prior to 5:00 P.M. Pacific Time on a Business Day and on the next Business Day if sent after 5:00 P.M. Pacific Time on a Business Day or at any time on a non-Business Day. 14.5. Further Assurances. The parties each agree to do such other and further acts and things, and to execute and deliver such instruments and documents (not creating any obligations or liabilities additional to those otherwise imposed by this Contract), as either may reasonably request from time to time, whether at or after the Closing, in furtherance of the purposes of this Contract. The provisions of this Section shall survive the Closing for six (6) months. 14.6. Survival and Merger. The acceptance of the Deed by Purchaser shall be deemed to be a full performance and discharge of every agreement and obligation on the part of the Seller to be performed pursuant to the provisions of this Contract, except those which are herein specifically stated to survive the Closing, and Seller shall have no further liability with respect to any such agreement or obligation of Seller. 14.7. Recording. Purchaser shall not record this Contract or any memorandum thereof and any such recording shall be null and void and shall constitute a default hereunder. 14.8. Successors and Assigns. This Contract shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, EXHIBIT 1 5489135.1 19 successors and permitted assigns. 14.9. Entire Agreement. This Contract and the Schedules and Exhibits annexed hereto constitute the entire agreement between the parties hereto with respect to the subject matter hereof, and all understandings and agreements heretofore or simultaneously had between the parties hereto are merged in and are contained in this Contract and said Schedules and Exhibits. 14.10. Waiver and Modifications. The provisions of this Contract may not be waived, changed, modified or discharged orally, but only by an agreement in writing signed by the party against which any waiver, change, modification or discharge is sought. 14.11. Captions and Titles. The captions or section titles contained in this Contract and the Index, if any, are for convenience and reference only and shall not be deemed a part of the text of this Contract. 14.12. Construction. The terms “hereof,” “herein,” and “hereunder,” and words of similar import, shall be construed to refer to this Contract as a whole, and not to any particular article or provision, unless expressly so stated. All words or terms used in this Contract, regardless of the number or gender in which they are used, shall be deemed to include any other number and any other gender as the context may require. 14.13. Non-Business Days. The term “Business Day” shall mean a day that is not a Saturday, Sunday or national holiday. If a party is required to perform an act or give a notice on a date that is not a Business Day, the date such performance or notice is due shall be deemed to be the next Business Day. 14.14. Governing Law and Jurisdiction; Waiver of Jury Trial. This Contract is to be governed and construed in accordance with the laws of the State of California, without regard to its conflicts of law rules. Purchaser and Seller hereby irrevocably submit to the exclusive jurisdiction of the State and United States District courts located within the County in which the Property is located in respect of any suit or other proceeding brought in connection with or arising out of this Contract, and waive all objections to jurisdiction and venue of such courts. PURCHASER AND SELLER HEREBY WAIVE ANY RIGHTS TO TRIAL BY JURY IN ANY ACTION, PROCEEDINGS OR COUNTERCLAIM BROUGHT BY EITHER OF THE PARTIES AGAINST THE OTHER IN CONNECTION WITH ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS CONTRACT, INCLUDING, WITHOUT LIMITATION, THE RELATIONSHIP OF PURCHASER AND SELLER OR ANY CLAIM OF INJURY OR DAMAGE RELATING TO THE FOREGOING OR THE ENFORCEMENT OF ANY REMEDY HEREUNDER. The provisions of this subsection shall survive the Closing or earlier termination of this Contract. 14.15. Counterparts; Electronic Signature. This Contract may be executed in two or more counterparts and each of such counterparts, for all purposes, shall be deemed to be an original but all of such counterparts together shall constitute but one and the same instrument, binding upon all parties hereto, notwithstanding that all of such parties may not have executed the same counterpart. The execution of this Contract may be effected by hand written signatures delivered via facsimile, electronic mail or other electronic means (including pdf), and any signatures so delivered shall be deemed to have been EXHIBIT 1 5489135.1 20 duly and validly delivered and be valid and effective for all purposes. With respect to any signatures delivered via facsimile or other electronic means, each party shall deliver their original ink signatures to the other party promptly following request therefor, provided that failure to deliver such original ink signatures shall not affect the validity of the electronic signatures that were delivered. 14.16. No Third Party Benefits. This Contract is made for the sole benefit of Seller and Purchaser and their respective successors and assigns and no other person shall have any right, remedy or legal interest of any kind by reason of this Contract. 14.17. Submission not an Offer. The submission of this Contract to any party by Seller shall not be construed as an offer, nor shall Purchaser have any rights with respect thereto, unless and until Seller shall execute a copy of this Contract and deliver the same to Purchaser. 14.18. Severability. If any provision of this Contract is determined by a court of competent jurisdiction to be invalid or unenforceable, such determination will not affect the remaining provisions of this Contract, all of which will remain in full force and effect. 14.19. Insurance. Purchaser acknowledges that Seller’s insurance policies will not be transferred to Purchaser. 14.20. Proposed Tax Free Exchange. Either Purchaser or Seller may desire to close this transaction as a part of a transaction that would qualify under Section 1031 of the Internal Revenue Code for non-recognition treatment (the “Exchange”). Such Exchange may take the form of a “forward exchange” or a “reverse exchange,” as such “reverse exchange” is permitted pursuant to Internal Revenue Service Revenue Procedure 2000-37. At the other party’s request, Purchaser or Seller shall execute such documents and take such other action as may reasonably be requested for the purpose of the Exchange. Such cooperation shall not entail any liability to such party beyond its existing obligations under this Contract and neither party will be required to take title to or contract for the purchase of any other property, nor shall the Closing be delayed as the result of any such exchange. 14.21. INDEPENDENT COUNSEL. EACH PARTY TO THIS CONTRACT ADMITS, ACKNOWLEDGES AND REPRESENTS THAT IT HAS HAD THE OPPORTUNITY TO CONSULT WITH AND BE REPRESENTED BY INDEPENDENT COUNSEL OF SUCH PARTY’S CHOICE IN CONNECTION WITH THE NEGOTIATION AND EXECUTION OF THIS CONTRACT. EACH PARTY FURTHER ADMITS, ACKNOWLEDGES AND REPRESENTS THAT IT HAS NOT RELIED ON ANY REPRESENTATION OR STATEMENT MADE BY ANY OF THE ATTORNEYS OR REPRESENTATIVES OF THE OTHER PARTY WITH REGARD TO THE SUBJECT MATTER, BASIS, OR EFFECT OF THIS CONTRACT. 14.22. Confidentiality. Purchaser and Seller at all times shall keep the terms and conditions of this Contract, and all documents and information received or obtained in connection with the transaction contemplated hereby, confidential, except to the extent necessary to (a) comply with applicable laws and regulations, (b) discuss the same with such party’s consultants, advisors, lenders and investors, and (c) carry out the obligations set EXHIBIT 1 5489135.1 21 forth herein. Any disclosure to consultants, advisors, lenders or investors pursuant to clause (b) of the preceding sentence shall indicate that the information is confidential and shall require it to be so treated by the recipient. Notwithstanding the foregoing, the restrictions set forth in this Section shall not apply to any information that is or becomes generally known or available to the public other than as a result of a disclosure by a party in violation of this Section. The provisions of this Section shall survive the Closing or earlier termination of this Contract. [signature page follows] EXHIBIT 1 5489135.1 22 IN WITNESS WHEREOF, the parties hereto have duly executed this Contract as of the date set forth below such party’s signature. SELLER: DYER 18 LLC, a Delaware limited liability company By: _____________________ Name: Title: Date: _____________________ PURCHASER: THE CITY OF SANTA ANA a California municipal corporation By: _____________________ Name: Title: Date: _____________________ EXHIBIT 1 5489135.1 ACCEPTANCE BY ESCROW HOLDER The undersigned hereby acknowledges that it has received executed counterparts or a fully executed copy of the foregoing Contract of Sale and agrees to act as Escrowee thereunder and to be bound by and perform the terms thereof as such terms apply to Escrowee. Dated: ___________________, 2023 COMMONWEALTH LAND TITLE COMPANY B y: Name: Title: EXHIBIT 1 5489135.1 SCHEDULE A DESCRIPTION OF LAND The Land referred to herein is situated in the State of California, County of Orange, City of Santa Ana, and described as follows: LOT 12 OF TRACT NO. 5771, IN THE CITY OF SANTA ANA, COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP RECORDED IN BOOK 210, PAGES 39, 40 AND 41, OF MISCELLANEOUS MAPS, RECORDS OF ORANGE COUNTY, CALIFORNIA. APN: 430-021-02 EXHIBIT 1 5489135.1 EXHIBIT 1 FORM OF ASSIGNMENT AND ASSUMPTION OF LEASE KNOW ALL MEN that __________ a __________, having an address at _____________ (the “Assignor”) in consideration of Ten and 00/100 ($10.00) Dollars and other good and valuable consideration, received from __________, a ________, having an address at _________ (“Assignee”), does hereby assign, transfer and deliver unto Assignee, all of its right, title and interest in and to that Standard Industrial/Commercial Single-Tenant Lease – Net, dated as of March 1, 2021, by and between Dyer 18 LLC, as lessor, and the City of Santa Ana, as lessee (the “Lease”) at the premises known as 1815 East Carnegie Avenue, Santa Ana, California 92705 (the “Premises”) together with all rents payable under the Lease, and all benefits and advantages to be derived therefrom, to hold and receive them unto Assignee, and together with all rights against guarantors, if any, of the obligations of the tenant under the Lease. TO HAVE AND TO HOLD the same unto Assignee, its successors and assigns, forever, from and after the date hereof, subject to the terms, covenants, conditions and provisions of the Lease and subject as aforesaid. AND Assignee does hereby acknowledge receipt of the Lease, and does hereby (a) accept the within assignment and (b) assume the performance of all the terms, covenants and conditions of the Lease on the part of the lessor which are to be performed under the Lease and which arise from and after the date hereof. This Assignment and Assumption of Lease (this “Assignment”) is made without warranty or representation by Assignor and without recourse to Assignor in any manner whatsoever, express or implied, all as more fully set forth in the Purchase and Sale Agreement dated June __, 2023 (the “Purchase Contract”). Nothing in this Assignment shall be construed to modify or limit any provisions in the Purchase Contract and in the event of any inconsistency between this Assignment and the Purchase Contract, the latter shall govern and control. This Assignment shall inure to the benefit of Assignee and Assignor and their respective successors and assigns, and shall be governed by the laws of the State of California, without regard to its conflicts of law rules. This Assignment may not be modified, altered or amended, or its terms waived, except by an instrument in writing signed by the parties hereto. None of the provisions of this instrument are intended to be, nor shall they be construed to be, for the benefit of any third party. [SIGNATURES ON FOLLOWING PAGE] EXHIBIT 1 5489135.1 IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment this [_____] day of [___________], which Assignment is effective as of the date that Assignee acquires fee simple interest in and to the Premises. ASSIGNOR: By: ________________ Name:______________ Title:______________ ASSIGNEE: By: ________________ Name:______________ Title:______________ EXHIBIT 1 5489135.1 EXHIBIT 2 FORM OF GENERAL ASSIGNMENT AND BILL OF SALE _____________________(“Seller”) in in connection with its conveyance this day of Real Property located at _____________________________, , and for and in consideration of the sum of TEN DOLLARS ($10.00) and other good and valuable consideration to it paid by _______________, having an address at _________(“Purchaser”), the receipt and sufficiency of which are hereby acknowledged, does hereby grant, bargain, sell, transfer, assign and deliver unto Purchaser all of Seller’s right, title and interest in and to the Personal Property, including, but not limited to, the Construction Documents, indemnities and warranties relating to the Work. 1. This General Assignment and Bill of Sale is made without warranties, express or implied. Capitalized terms not otherwise defined herein shall have the meaning ascribed to such terms in the Contract of Sale, dated as of __________ ___, 202_, by and between Seller and Purchaser. 2. TO HAVE AND TO HOLD the Personal Property and Warranties unto Purchaser , its successors and assigns, to its own use and benefit forever. 3. IN WITNESS WHEREOF, the said Seller has hereunto set its hand and seal as of the ___ day of _________, 202_. SELLER: EXHIBIT 1 5489135.1 EXHIBIT 3 RECORDING REQUESTED BY: WHEN RECORDED MAIL TO: [ASSIGNEE] Space above this line for Recorder’s Use MAIL TAX STATEMENTS TO: DOCUMENTARY TRANSFER TAX $ …. Computed on the consideration or value of property conveyed; OR …. Computed on the consideration or value less liens or encumbrances remaining at time of sale. Signature of Declarant or Agent determining tax – Firm Name Order No. Escrow No. GRANT DEED FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, __________ a __________, hereby grants to __________ a __________ (“Grantee”), the real property in the City of Santa Ana, County of Orange, State of California, described on Exhibit “A” attached hereto and incorporated herein by reference (the “Property”). The Property conveyed hereby is subject to (a) all defects, exceptions, restrictions, easements, rights of way and encumbrances that are of record; (b) encumbrances for water charges, sewer rates, assessments and other governmental charges; (c) statutory liens for taxes; (d) zoning ordinances, building codes, entitlements and other land use regulations promulgated by any governmental or quasi- governmental authority, or any nonconformity or violation of the Property therewith or thereof; (e) all defects, irregularities, exceptions, restrictions, easements, rights of way and encumbrances of title created by or through Grantee or The Illumination Foundation, a California non-profit public benefit corporation, or any of their respective affiliates, subsidiaries, agencies, departments or instrumentalities, or any employee, agent, representative, officer director, contractor, member, or manager of any of the foregoing; and (f) all matters that would be disclosed or apparent by a survey and/or inspection of the Property. Dated: ___________________ By: Name: Title: EXHIBIT 1 5489135.1 EXHIBIT 1 5489135.1 A Notary Public or other officer completing this certificate verifies only the identity of the individual who signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity of that document. State of California ) County of ______________________ ) On _________________________, before me, , (insert name and title of the officer) Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their 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. Signature (Seal) EXHIBIT 1