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HomeMy WebLinkAboutZHU, SILONG; SALONE DEVELOPMENT CORPORATION; SUNSHINE VILLAGE MOTEL INSURMCE NOT RE=QI ZED 4V0RK N,AY PROCEED N-2026-220 CITY CLERK DATF- AUG 2 5 2026 SUNSHINE VILLAGE MOTEL SETTLEMENT AGREEMENT AND RELEASE OF ALL CLAIMS This Settlement Agreement and Release (hereinafter "AGREEMENT") is made and entered into by and between Plaintiff CITY OF SANTA ANA ("CITY"), on the one side, and SILONG ZHU, an individual; SALONE DEVELOPMENT CORPORATION, a California Corporation; and SUNSHINE VILLAGE MOTEL, an unknown business entity (collectively, "PROPERTY OWNERS"), on the other side. CITY and PROPERTY OWNERS are sometimes individually referred to herein as a "Party" and collectively referred to herein as the "Parties." This AGREEMENT is made with reference to the following facts: RECITALS A. WHEREAS, Santa Ana is a city organized under the laws of the State of California, with a duty and interest in protecting the public health, safety, and welfare within the CITY; B. WHEREAS, PROPERTY OWNERS is the legal owners of 1427 E. 1 st Street, Santa Ana, California 92701, Assessor's Parcel Number 398-441-07 ("PROPERTY"); C. WHEREAS, over the past three (3) years, the PROPERTY has been the source of 491 calls for service by the Santa Ana Police Department ("SAPD"). Many of the calls for service involved the investigation and enforcement of narcotics violations; D. WHEREAS, the CITY was authorized by its City Council to commence a Drug Den Abatement action against PROPERTY OWNERS pursuant to Health and Safety Code §§ 11570 et seq. for the narcotics related public nuisance conditions at the PROPERTY and Penal Code §§ 11225 et seq. under the Red Light Abatement Act; E. WHEREAS, the CITY filed an action against Defendants, in the Superior Court of the State of California, County of Orange, Central Justice Center known as THE PEOPLE OF THE STATE OF CALIFORNIA, by the City Attorney for the CITY OF SANTA ANA; THE CITY OF SANTA ANA v. SUNSHINE VILLAGE MOTEL, SILONG ZHU, an individual; SALONE DEVELOPMENT CORPORATION, a California Corporation, and DOES 1 through 50, inclusive, Case No. 30-2026-01539762-CU-MC-CJC (the "ACTION"). The City's complaint in the Action includes a prayer for injunctive relief, civil penalties, attorneys' fees and costs, and other equitable relief against Defendants; E. WHEREAS, the Parties desire to avoid the expense, inconvenience, and uncertainties of litigation and, therefore, the Parties have agreed, with no admission of liability by any Party, to enter into a complete and final settlement of all disputes, Claims (as defined in paragraph 4 below), and differences between them with respect to the dispute; and NOW THEREFORE, IN CONSIDERATION of the above recitals, the covenants, conditions, and agreements made herein by the Parties, and other good and valuable -1- 4908-0137-3075.3 consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: TERMS OF SETTLEMENT AGREEMENT I. Closure/Sale of Property and Business(es). a. PROPERTY OWNERS stipulate and agree to use best efforts to sell the PROPERTY to a bona fide purchaser as soon as reasonably practicable after the execution of this AGREEMENT. "Best efforts" means actively listing the PROPERTY for sale with a licensed real estate broker, making reasonable accommodations for showings, and engaging in good faith negotiations with prospective purchasers consistent with standard real estate practice in Orange County for similarly situated distressed hospitality assets. PROPERTY OWNERS shall provide the CITY with monthly written updates regarding the status of the sale effort, including copies of listing agreements and marketing materials. Nothing herein requires acceptance of an offer below fair market value or to agree to commercially unreasonable contingencies as reasonably determined by PROPERTY OWNERS. If the PROPERTY is not sold within 18 months, the Parties shall meet and confer in good faith regarding modification or termination of closure obligations. b. Upon execution of this AGREEMENT, PROPERTY OWNERS stipulate and agree they will not re-open the PROPERTY as a motel, hotel, inn, lodge or other public lodging operation and there will be no new or renewal of rentals of any rooms at the PROPERTY, unless and until the PROPERTY is reopened by new owner(s). The term. "NEW OWNER(S)" as used in this AGREEMENT shall mean individual(s) or entity(ies) who have newly acquired legal title to the PROPERTY through a recorded deed or transfer granting them rights to use, lease, sell, or occupy the PROPERTY. The terms "Closure" or "Closed" as used in this AGREEMENT shall mean (i) no longer use the PROPERTY for any business operations; (ii) ensure all buildings/structures on the PROPERTY are locked, boarded up and properly secured in a manner that renders the PROPERTY inaccessible to unauthorized persons; and (iii) maintain the PROPERTY consistent with the terms and conditions set forth in section 2 of this AGREEMENT. C. PROPERTY OWNERS shall make the execution of a compliance agreement ("COMPLIANCE AGREEMENT") between the CITY and NEW OWNER(s), in a form acceptable to the CITY, an express condition precedent to the close of escrow and transfer of title to the PROPERTY. PROPERTY OWNERS shall include this requirement in any purchase and sale agreement, escrow instructions, or other transfer documents executed in connection with the sale of PROPERTY. PROPERTY OWNERS acknowledge the CITY shall have the right to negotiate the specific terms of the COMPLIANCE AGREEMENT directly with the NEW OWNER(s) and that any negotiations between CITY and NEW OWNER(s) as to the terms of the COMPLIANCE AGREMMENT shall not constitute an -2- 4908-0137-30753 amendment to this SETTLEMENT AGREEMENT or otherwise affect PROPERTY OWNERS' obligations hereunder. d. PROPERTY OWNERS shall include in all escrow instructions a written directive to the escrow holder that escrow shall not close, and title shall not be transferred, in the absence of written confirmation from the CITY that the COMPLIANCE AGREEMENT as contemplated in Section 1(c), above, has been fully executed and accepted by the CITY. A copy of such escrow instructions reflecting this directive shall be provided to the CITY directly from the escrow holder within five (5) days of their execution. e. Concurrently with this AGREEMENT, CITY will execute COMPLIANCE AGREEMENT, substantially in the form of the compliance agreement attached hereto as Exhibit A and incorporated by reference. The COMPLIANCE AGREEMENT is a condition precedent to satisfy the release of Defendants in the ACTION as contemplated by this AGREEMENT. f. In the event the PROPERTY is transferred to NEW OWNER(s) without a fully executed COMPLIANCE AGREEMENT in place as required by this Section, such transfer shall constitute a material breach of this SETTLEMENT AGREEMENT by PROPERTY OWNERS. In such event, the CITY shall retain all rights and remedies available at law and in equity, including but not limited to: (i)reinstatement of the nuisance abatement litigation dismissed or stayed pursuant to this SETTLEMENT AGREEMENT, without prejudice and as if no dismissal or stay had occurred; (ii) pursuit of all civil and administrative remedies available under the Santa Ana Municipal Code; and(iii) any other relief allowed by law. g, Until the close of escrow and transfer of title to a bona fide purchaser, PROPERTY OWNERS shall not recommence or permit any motel, hotel, inn, lodge or other public lodging operations, or any other business operations at the PROPERTY except as expressly permitted in a signed writing by CITY. The PROPERTY shall remain closed as provided in this Section and all requirements for closure, maintenance, and security set forth in this AGREEMENT shall continue in full force and effect until the sale is finalized and title is transferred. h. In the event the NEW OWNER(s) cannot close escrow and PROPERTY OWNERS retain ownership of the PROPERTY, this AGREEMENT shall be null and void and the ACTION shall continue. 2. Property Maintenance. PROPERTY OWNERS stipulate and agrees that for the closure period pursuant to section 1 of this AGREEMENT, PROPERTY OWNERS shall maintain the PROPERTY as follows: a. PROPERTY OWNER shall paint any boarded-up windows to match existing wall colors. No unfinished plywood board-ups are allowed. b. Install and maintain commercial grade fencing that allows visual inspections through the fencing (including any chaining/padlocking) around the PROPERTY. -3- 4908-0137-3075.3 Board-up and lock doors, windows and/or other openings in a manner that renders the PROPERTY inaccessible to unauthorized persons. Any fencing installed shall comply with all local and state building standards. C. Retain a properly licensed and insured security company to conduct periodic patrol sweeps of the PROPERTY no less than once every three (3) hours, twenty- four (24) hours per day, seven (7) days per week, unless otherwise agreed in writing by CITY. Security personnel shall actively patrol the PROPERTY during each sweep and maintain written or electronic logs documenting the date, time, observations made, and any action taken. Such logs shall be retained for a minimum of one (1) year and shall be made available to the SAPD upon lawful request. The security vendor shall be subject to SAPD approval, which shall not be unreasonably withheld, conditioned, or delayed. d. Install and maintain security cameras at the PROPERTY with appropriate and clear resolution. At a minimum, cameras shall cover the front desk (office), all common areas and the parking lot(s) including the front and rear of the PROPERTY. Camera placement and general specifications shall be subject to reasonable consultation with the SAPD, and any approval required shall not be unreasonably withheld, conditioned, or delayed. PROPERTY OWNERS shall provide SAPD with the technical ability to access live ("real-time") video surveillance footage for exterior and common areas of the PROPERTY. Such access shall be limited to law enforcement purposes only and shall not include access to interior guest room footage. Access credentials shall be maintained securely and used solely by authorized SAPD personnel. CITY shall be solely responsible for compliance with applicable federal, state, and local laws relating to its access to and use of video surveillance data. Footage must be retained for a minimum. of 90 days. Security cameras that are broken, damaged or malfunctioning must be repaired within forty-eight (48) hours after discovery. Documentation confirming such repairs shall be maintained by PROPERTY OWNERS and provided to SAPD upon lawful request. Temporary outages due to vandalism, power interruption, network failure, force majeure, or other events beyond PROPERTY OWNERS' reasonable control shall not constitute a breach provided corrective action is diligently pursued. e. Maintain PROPERTY in conformance with the standards generally applicable to comparable commercial businesses located in Santa Ana. Comply with operational conditions of the Santa Ana Municipal Code (SAMC) applicable during any period(s) of construction or major repair (e.g., proper screening and securing of the construction site; implementation of proper erosion control, dust control and noise mitigation measure; adherence to approved project phasing, etc.). f. Provide ongoing maintenance, repair and upkeep and all improvements located on the PROPERTY, including but not limited to controls on the proliferation of trash and debris; proper and timely removal of graffiti; landscaping and related landscape improvements. Keep PROPERTY free of weeds, dry brush, dead -4- 4908-0137-3075.3 vegetation, trash, junk, debris, building materials, papers, and/or abandoned property, "Abandoned Property" shall mean movable property or belongings, (e.g., furniture, appliances) exclusive of land and buildings. g. Any materials, products or equipment that is stored outdoors on the PROPERTY shall not be piled higher than the height of any fence/wall and must not be visible anywhere in the public right-of-way. Public right-of-way means that area of the street, roadway, parkway or sidewalk, that is owned, maintained, or controlled by Santa Ana. h. Keep exterior surfaces of all structures, fixtures or other improvements free and clear of graffiti, tagging or similar markings. Graffiti, tagging or similar markings shall be removed within forty-eight(48)hours after discovery and shall be painted over with paint that matches the color of the exterior of the structures on the PROPERTY. i. Install security lighting that illuminates all common areas of the PROPERTY, including the parking lots and the front and rear of the PROPERTY. The wattage and specifications of lighting installed shall comply with applicable municipal code requirements, and PROPERTY OWNERS shall reasonably consult with the CITY's Planning and Building Agency prior to installation; provided that any required approval shall not be unreasonably withheld, conditioned, or delayed. Lighting that is broken, damaged or malfunctioning must be repaired within forty- eight (48) hours after discovery. Temporary outages due to vandalism, power interruption, or force majeure shall not constitute a breach provided corrective action is diligently pursued. j. Retain a property management company within thirty (30) days of Closure pursuant to Section I of this AGREEMENT, to perform weekly inspections to verify that the PROPERTY is maintained. PROPERTY shall be posted with the name and 24-hour contact phone number of the property management company. Posting shall be no less than eighteen (18) inches X twenty-four (24) inches, shall be of a font that is legible from a distance of forty-five (45) feet, and shall contain the following verbiage: "THIS PROPERTY MANAGED BY ," and "TO REPORT PROBLEMS OR CONCERNS CALL (name and phone number)." The posting shall be placed on the interior of a window facing the street to the front of the PROPERTY such that is visible from the street, or secured to the exterior of the building/structure facing the street of the front of the PROPERTY so it is visible from the street. If no such area exists,posting shall be on a stake of sufficient size to support the posting, in a location that is visible from the street to the front of the PROPERTY, and to the extent possible, not readily subject to potential vandalism. Exterior posting must be constructed of, and printed with weather resistant materials. -5- 4908-0137-3075.3 3. Sale of Property. In the event PROPERTY OWNERS sell or otherwise transfer the PROPERTY to a bona fide third-party purchaser in an arms-length transaction, the terms and conditions of this AGREEMENT shall automatically terminate upon the recordation of the grant deed transferring title, except as expressly provided below. Notwithstanding the foregoing, all obligations set forth in Section 2 (Property Maintenance) of this AGREEMENT shall run with the land and shall be binding upon any subsequent owner of the PROPERTY. Such obligations shall remain in effect only until the issuance of a certificate of occupancy (or equivalent final inspection approval) and all permits required for lawful occupancy and lawful operation of the PROPERTY for its intended use. Upon satisfaction of the foregoing, all obligations under this AGREEMENT shall automatically terminate in their entirety without further action by the Parties. CITY agrees to execute and record, within ten (10) business days of written request and reasonable documentation of such permit issuance a Release of Settlement Agreement in a form suitable for recordation. All provisions of this AGREEMENT shall not run with the land and shall not be binding upon any subsequent purchaser. Upon recordation of grant deed, PROPERTY OWNERS shall have no further liability except for pre-transfer breaches. CITY shall look solely to the NEW PROPERTY OWNER(S) for performance of obligations running with the land. CITY may record a copy of this AGREEMENT to provide notice to potential purchasers of PROPERTY as to the obligations that expressly run with the land, provided that such recordation of this AGREEMENT shall not create a lien, encumbrance, or monetary obligation against the PROPERTY. 4. Penalties, Reasonable_Attorney's Fees, Abatement Costs. a. In consideration for the final settlement of this matter, and in accordance with the terms of this AGREEMENT, PROPERTY OWNERS stipulate and agrees to pay the CITY a total of Forty Thousand U.S. Dollars ($40,000) consisting of penalties (Health & Safety Code §11 SS 1(b)(2)), abatement costs, and reasonable attorney's fees incurred, within thirty (30) days of the execution of this AGREEMENT. This settlement payment shall be made to "City of Santa Ana" as follows: City of Santa Ana, Santa Ana City Attorney's Office, 20 Civic Center Plaza, M29, P.O. Box 1988, Santa Ana, California 92702. Upon timely payment and compliance, CITY waives any additional civil penalties arising from pre-execution conduct. b. The Parties acknowledge that the PROPERTY has been boarded up and secured in connection with the abatement of the nuisance conditions at the PROPERTY. The PROPERTY OWNERS shall be solely responsible for all costs associated with the boarding up, securing, and related protective measures, including the placement of security guards, incurred prior to or subsequent to the execution of this AGREEMENT undertaken at the PROPERTY. These costs shall be separate and distinct from any other abatement costs imposed or incurred under this AGREEMENT or applicable law and shall not reduce, offset, or otherwise affect the PROPERTY OWNERS' obligation to pay fees and costs as set forth in subsection 4(a) or elsewhere in this AGREEMENT. C. Upon timely payment of the settlement amount set forth in Section 4(a) and compliance with the terms of this AGREEMENT, CITY waives and releases any and all administrative fines, civil penalties, nuisance abatement penalties, code -6- 4908-0137-3075.3 enforcement penalties, or cost recovery claims arising prior to the execution date of this AGREEMENT. 5. Release. Except for the obligations and covenants provided herein, PROPERTY OWNERS, on behalf of themselves and their past, present, and future predecessors, successors, affiliates, heirs, assigns, officers, officials, directors, shareholders, members, managers, agents, employees, servants, trustees, fiduciaries, parent and subsidiary organizations, partners, attorneys, insurers, representatives, accountants, and all persons acting by, through, under, or in concert with them, or any of them, and each of them (collectively referred to herein as the "Releasing Parties"), hereby release, relinquish, acquit, remise, and discharge Santa Ana, and its past, present, and future predecessors, successors, affiliates, heirs, assigns, officers, officials, directors, managers, agents, employees, servants, trustees, fiduciaries, subsidiary organizations, partners, attorneys, insurers, representatives, accountants, and all persons acting by, through, under, or in concert with them, or any of them, and each of them (collectively referred to herein as the "Released Parties"), from any and all past, present, or future rights, claims, demands, obligations, losses, debts, liabilities, offsets, promises, acts, omissions, agreements, costs and expenses, damages, injuries, suits, allegations, appeals, actions and causes of action for damages, equitable relief, and compensation of every kind and nature whatsoever, whether known or unknown, suspected or unsuspected, contingent or fixed, whether past, present, or future, whether based in contract, tort, statute, or other legal or equitable theory of recovery, which, as of the date of this AGREEMENT, the Releasing Parties have, or had, or which may later accrue to or be acquired by the Releasing Parties against any of the Released Parties, arising out of the specific allegations asserted in the Drug Den Abatement action filed by CITY as of the date of this AGREEMENT. These released claims are collectively referenced herein as the "Claims." CITY releases PROPERTY OWNERS from all claims arising from the alleged nuisance conditions existing prior to the execution date. 6. California Civil Code Section 1542 Waiver. With respect to the released Claims set forth herein, each Party acknowledges that it has been advised or has had the opportunity to be advised by legal counsel and is familiar with the provisions of California Civil Code Section 1542, which provides as follows; "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR ITS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." EACH PARTY BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVE ANY RIGHTS IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT PERTAINING TO THE RELEASED CLAIMS. The Parties, and each of them, represent and warrant to the other that they execute this AGREEMENT with full knowledge of any and all rights which they may have by reason of any of the matters described herein and they have received herein. Each Party hereby further assumes the risk of mistake of fact in connection with the true facts involved in connection with _7_ 4908-0137-3075.3 the matters described herein., and with respect to any facts which are now unknown to them relating thereto, and agrees that this AGREEMENT shall be in all respects enforceable and not subject to termination or rescission by any such difference in facts. 7. Successors and Assigns. This AGREEMENT and all terms, conditions, and obligations contained here, including, but not limited to, the release of Claims set forth herein, are binding upon all persons having or acquiring any right or title to the PROPERTY, including any leasehold interest, or any part thereof, and any assigns and successors-in-interest of the Parties, except as expressly set forth in Section 4 of this AGREEMENT. 8. Representations. Each Party further represents and warrants, as to itself, but not as to any other Party, as follows: a. Each Party is the sole and lawful owner of all right, title, and interest in and to every Claim and other matter that each such Party releases herein, and that each such Party has not heretofore assigned or transferred, or purported to assign or transfer, to any person, firm, or entity any Claims or other matters herein released. b. Each Party has received or has had the opportunity to receive independent legal. advice from attorneys of such Party's choice with respect to the advisability of executing this AGREEMENT and the releases provided for herein, and prior to the execution of this AGREEMENT by each Party, that Party's attorney, if any, reviewed this AGREEMENT and discussed the AGREEMENT with such Party, and the Party has made all desired changes. C. Except as expressly stated in this AGREEMENT, each Party represents and warrants that it has not made any statement or representation to any other Party regarding any facts relied upon by said other Party in entering into this AGREEMENT, and each Party specifically does not rely upon any statement, representation, or promise of any other Party in executing this AGREEMENT or in making the settlement provided for herein, except as expressly stated in this AGREEMENT. d. Each Party and its attorney(s), if any, has had a full and fair opportunity to investigate and evaluate the transactions, documents, facts, circumstances, and disputes out of which this AGREEMENT arises prior to entering into this AGREEMENT, and each Parry hereto and their respective attorney(s), if any, have made such investigation of the facts pertaining to this AGREEMENT, and all of the matters appertaining thereto, as they deem necessary. e. The terms of this AGREEMENT are contractual and not a mere recital. f. By signing this AGREEMENT, each Party represents and warrants that such Party has carefully read this AGREEMENT, that the contents hereof are known and understood by such Party, and that this AGREEMENT is signed freely by such Party. -8- 4908-0137-3075.3 g. Each Party executing this AGREEMENT in a representative capacity represents and warrants that it is empowered to do so. 9. Dismissal of Action• Enforcement of Settlement. Within ten (10) court days following (i) full execution of this AGREEMENT by all Parties and (ii) receipt by CITY of the settlement payment described in Section 4(a), CITY shall file a Request for Dismissal of the Drug Den Abatement action filed against PROPERTY OWNERS. The Parties agree that the Orange County Superior Court will have jurisdiction pursuant to Code of Civil Procedure §664.6 over the parties to enforce this AGREEMENT and the terms of this AGREEMENT until performance in full of the terms of the AGREEMENT. Each Party shall bear its own costs and attorney's fees except as expressly provided in this AGREEMENT. 10. Notice and Opportunity to Cure. Except in the case of an emergency condition posing an inu-nediate threat to health or safety, CITY shall provide written notice of any alleged breach of this AGREEMENT, and PROPERTY OWNERS shall have thirty (30) days from receipt of such notice to cure the alleged breach. In the event the alleged breach constitutes an emergency condition requiring immediate action to protect public health or safety, PROPERTY OWNERS shall have forty-eight (48) hours from receipt of written notice to cure, or to - commcnce and diligently pursue corrective action. No enforcement action or proceeding to enforce this AGREEMENT shall be initiated unless and until the applicable cure period has expired without cure. No administrative citation, civil penalty, nuisance abatement fine, cost recovery assessment, or similar monetary penalty shall be imposed, assessed, or accrue against PROPERTY OWNERS unless and until the applicable cure period set forth herein has expired without cure. 11. Written Assurances. CITY shall, within ten (10) business days following written request by a prospective purchaser or its lender, execute and deliver an assurance in writing certifying (i) that this AGREEMENT is in full force and effect, (ii) whether there are any uncured defaults by PROPERTY OWNER (or stating that none exist), and (iii) any other information reasonably requested and customarily included in similar instruments. 12. Limitation of Liability. CITY shall not be responsible for any damage to the PROPERTY resulting from lawful law enforcement, fire, or code enforcement activities conducted in accordance with applicable law. PROPERTY OWNERS shall not be responsible or liable for the acts or omissions of the Santa Ana Police Department, Fire Department, Code Enforcement, or any other CITY personnel. Nothing in this AGREEMENT shall be construed as creating a partnership, joint venture, agency relationship, or assumption of liability between the Parties. 13. Attorney's Fees. Should any Party hereto institute any legal action or proceeding to enforce any provision of this AGREEMENT or for damages by reason of any alleged breach of any provision of this AGREEMENT, the prevailing Party shall be entitled to receive from the losing Party all of its costs and expenses, including, without limitation, reasonable attorney's fees, court costs, and disbursements actually and reasonably incurred in connection with said proceeding. -9- 4906-0137-3075.3 14. No Admission. This AGREEMENT is executed pursuant to a compromise and settlement entered into by each of the Parties hereto without any admission of liability to each other, but solely for the purpose of avoiding costly litigation on disputed claims and avoiding further uncertainty, controversy, and legal expense. Without limiting the foregoing, neither the settlement of the dispute nor any consideration provided by any Party, nor anything contained in this AGREEMENT, shall be taken or construed to be an inference or admission by any of the Parties or as evidencing or indicating in any degree the truth or correctness of any claims or defenses. 15. Choice of Law/Venue. This AGREEMENT shall be governed by and construed under the laws of the State of California. Any action arising out of this AGREEMENT, or the matters addressed herein, shall be brought within the Superior Court for the State of California, County of Orange. 16. Integrated Agreement. This AGREEMENT and the Exhibits attached hereto constitute a single integrated written contract expressing the entire agreement of the Parties. There are no other agreements, written or oral, express or implied, between the Parties, and/or their successors and assigns, with respect to the matters released herein, except the AGREEMENT set forth herein. Each Party to this AGREEMENT has substantial experience with the subject matter of this AGREEMENT and each has fully participated in the negotiation and drafting of this AGREEMENT and has been advised by counsel of its choice with respect to the subject matter hereof. Accordingly, this AGREEMENT shall be construed without regard to the rule that ambiguities in a document are to be construed against the drafter. 17. Section Headings. The section headings contained in this AGREEMENT are for convenience only and shall in no way enlarge or limit the scope or meaning of the various and several sections hereof. 18. Gender and Number. Within this AGREEMENT, words of any gender shall be held and construed to include any other gender, and words in the singular number shall be held and construed to include the plural, unless the context otherwise requires. 19. Counterpart Execution_ . This AGREEMENT may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which together shall constitute one document. 20. Severability. If any material portion of this AGREEMENT is held to be unenforceable by a court of competent jurisdiction, the remainder of this AGREEMENT shall remain in full force and effect. Nothing contained herein shall be construed so as to require the commission of any acts contrary to law, and wherever there is a conflict between any provisions of this AGREEMENT and any present or future statute, law, ordinance, or regulation, the former shall be curtailed and limited only to the extent necessary to make it comply with such statute, law, ordinance, or regulation. 21. Amendments. This AGREEMENT may be amended only by written agreement signed by all of the Parties hereto, or their respective successors or assigns. -10- 4909-0I37-3075.3 22. Exhibits. All exhibits attached hereto are hereby incorporated into this AGREEMENT as though fully set forth herein. 23. Cooperation Regardiniz Redevelopment. The CITY acknowledges that a NEW OWNER may seek to redevelop the PROPERTY. and the CITY agrees that the COMPLIANCE AGREEMENT executed with any NEW OWNER shall include a redevelopment accommodation provision in substantially the form of Section 24 of the form COMPLIANCE AGREEMENT attached as Exhibit A to this AGREEMENT; provided however, that nothing in this Section shall obligate CITY to approve any particular redevelopment project, entitlement, application, or change of use, nor shall this Section be construed to limit CITY's police power, code enforcement authority, or rights under the COMPLIANCE AGREEMENT. The CITY shall negotiate the terms of any such redevelopment accommodation provision with the NEW OWNER in good faith. Signature Page Follows -1 t- 4908-0137-3075.3 IN WITNESS WHEREOF, this AGREEMENT is executed on the dates set forth below. PARTIES: SANTA ANA: CITY OF SANTA ANA, a charter law city and municipal corporation, duly organized and existing and r the Const' ution and laws of the State of Cal ornia Dated: --[ALt- 'av By: A/`" Alaaro Nuiiez, City na r ATTEST: CITY OF SANTA ANA, a charter law city and municipal corporation, duly organized and existing; under the Constitution and laws of the State of Calif Dated: O By: J nifer Ha ity Clti-k PROPERTY OWNERS: Dated: 2— C? SII,ONG ZFiU � Dated: ( SALONET,EVELOPMENT CORPORATION SUNSHINE VIL GE MOTEL, an unknown business entity r Dated: / By: Name: Its: Signatures Continued on Next Page I -1z_ -l908-01P-3075. ! APPROVED AS TO FORM: Dated: 8/19/2026 TAMARA BOGOSIAN Senior Assistant City Attorney Attorney for CITY OF SANTA ANA Dated: 8/19/2026 DOROTHY GR ZA Attorneys for SILONG ZHU; SALONS DEVELOPMENT CORPORATION SUNSHINE VILLAGE MOTEL -I3- 4906-0137-3075.3 EXHIBIT A COMPLIANCE AGREEMENT -1A- 4908-0137-3075.3 CITY OF SANTA ANA COMPLIANCE AGREEMENT FOR REAL PROPERTY LOCATED AT 1427 E 1st STREET, SANTA ANA, CALIFORNIA 92701 This Compliance Agreement(hereinafter "COMPLIANCE AGREEMENT") is made and entered into on this day of[Month] [Year] ("Effective Date") by and between CITY OF SANTA ANA, a charter City and municipal corporation, (hereinafter"CITY"), and [Name of New Owner] (hereinafter "BUYER'). CITY and BUYER are also collectively referred to as "the Parties"herein. RECITALS WHEREAS, the subject property is located at 1427 E I" Street, Santa Ana, CA 92701, identified with Assessor's Parcel Number(APN) 398-441-07 ("PROPERTY"), as further detailed in the legal description attached as Exhibit A; WHEREAS, the CITY has determined the PROPERTY to be a public nuisance requiring immediate rehabilitation and/or repairs; WHEREAS, PROPERTY is currently owned by Salone Development Corporation, ("PRIOR PROPERTY OWNER"); WHEREAS, PROPERTY is currently the subject of a civil nuisance abatement action filed by the CITY in the Superior Court of the State of California, County of Orange, Central Justice Center against the PRIOR PROPERTY OWNER, Silong Zhu, and Sunshine Village Motel (collectively "DEFENDANTS") in a case known as THE PEOPLE OF THE STATE OF CALIFORNIA, by the City Attorney for the CITY OF SANTA ANA; THE CITY OF SANTA ANA v. SUNSHINE VILLAGE MOTEL, SILONG ZHU, an individual; SALONE DEVELOPMENT CORPORATION, a California Corporation, and DOES 1 through 50, inclusive, Case No. 30-2026-01539762-CU-MC-CJC (the "ACTION"). The CITY's complaint in the ACTION includes a prayer for injunctive relief, civil penalties, attorneys' fees and costs, and other equitable relief; WHEREAS, PRIOR PROPERTY OWNER intends to sell PROPERTY to BUYER. BUYER understands and agrees it will assume all liabilities and claims associated with the ACTION as set forth in this COMPLIANCE AGREEMENT: WHEREAS, BUYER acknowledges the conditions at the PROPERTY violate the Santa Ana Municipal Code ("SAMC"), and understands and acknowledges the violations must be abated; -15- 4408-0137-3075.3 WHEREAS, to avoid costly litigation, the Parties seek to enter into this AGREEMENT to ensure that BUYER(s) will bring the PROPERTY into compliance with the SAMC and all applicable state laws; WHEREAS, DEFENDANTS have entered into an agreement ("SETTLEMENT AGREEMENT") with CITY to settle the ACTION as set forth in Exhibit B and incorporated herein by reference; WHEREAS, this COMPLIANCE AGREEMENT is a condition precedent to settle all disputes with DEFENDANTS/PRIOR PROPERTY OWNER in connection with the ACTION; and WHEREAS, CITY acknowledges it has not placed any liens or other encumbrances against the PROPERTY other than the Notice of Pendency of Action filed with the Orange County Clerk Recorder's Office filed on [insert date]. NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, the Parties hereby agree as follows: SECTION 1. RECITALS. The Recitals above are true and correct and incorporated into the body of this COMPLIANCE AGREEMENT by this reference. SECTION 2. TERMS AND CONDITIONS. BUYER, on behalf of itself, its successors and assigns and any subsequent owner(s) of the PROPERTY,hereby agrees to comply with all obligations set forth in this COMPLIANCE AGREEMENT. SECTION 3. ACKNOWLEDGMENT OF PRIOR NUISANCE ACTION. A. BUYER acknowledges the ACTION was filed against the DEFENDANTS/PRIOR OWNER as a result of conditions at the PROPERTY that violated the SAMC and applicable state laws. BUYER further acknowledges the ACTION was resolved by a SETTLEMENT AGREEMENT between the CITY and the DEFENDANTS/PRIOR PROPERTY OWNER, the terms of which require BUYER to execute this COMPLIANCE AGREEMENT as a condition of the transfer of the PROPERTY. B. BUYER acknowledges that nothing in the SETTLEMENT AGREEMENT or the dismissal of the ACTION limits or waives CITY's legal authority to pursue nuisance abatement proceedings, code enforcement, or any other legal or equitable remedies against the PROPERTY or BUYER in the event of a Default as defined herein or any future violation of the SAMC or applicable state laws. C. BUYER further acknowledges CITY is entering into this COMPLIANCE AGREEMENT in reliance on BUYER's representations and agreements, and the dismissal of DEFENDANTS/PRIOR OWNER from the ACTION shall not be construed as a waiver or release of any of CITY's rights against BUYER or the PROPERTY. -16- 4908-0137-3075.3 SECTION 4. COMPLIANCE WITH STATE AND LOCAL LAW. A. Submission of Compliance Plans. Within 90 days of the Effective Date ("Plan Submission Deadline"), BUYER shall prepare and submit to CITY's Planning and Building Agency("PBA") complete and approvable plans and specifications ("Compliance Plans") sufficient to bring the PROPERTY into compliance with all applicable federal, state, and local codes, ordinances, and regulations, including but not limited to the California Building Code, California Fire Code, California Health and Safety Code, California Electrical Code, California Plumbing Code, California Mechanical Code, International Property Maintenance Code, and the SAMC (collectively, "Applicable Codes"). 1. The Compliance Plans shall be prepared by a licensed architect or engineer duly licensed in California, and shall address: (i) all violations identified in Exhibit C; (ii) any other deficiencies identified by CITY upon inspection of the PROPERTY following the Effective Date; and(iii) all work necessary to bring the PROPERTY's structural, electrical, plumbing, mechanical, fire and life safety, and other systems into conformance with Applicable Codes, regardless of whether such work is expressly referenced in Exhibit C. 2. CITY shall review the Compliance Plans and provide BUYER with written notice of acceptance, rejection, or requests for revision within 30 days of receipt of a complete submission. If CITY requests revisions, BUYER shall submit revised Compliance Plans within 30 days of receipt of CITY's written comments. The Plan Submission Deadline shall be tolled while CITY's review is pending, provided BUYER has timely submitted complete Compliance Plans. 3. If BUYER fails to submit the Compliance Plans by the Plan Submission Deadline, such failure shall constitute a default as defined herein. B. Permit Attainment. Within 60 days of CITY's written acceptance of the Compliance Plans ("Permit Attainment Deadline"), BUYER shall obtain all required permits necessary to perform the work described("Required Permits"). BUYER shall diligently respond to any requests for additional information or correction from CITY's PBA within 15 days of receipt of any such request. If a delay in the issuance of Required Permits is attributable solely to CITY's permitting process and is beyond BUYER's reasonable control, BUYER may seek an extension. Failure by BUYER to obtain all Required Permits by the Permit Attainment Deadline (as may be tolled or extended) shall constitute a default under Section 8. C. Full Compliance Deadline. BUYER shall complete all work required to bring the PROPERTY into full compliance with Applicable Codes within 180 days of the Effective Date("Compliance Deadline"). -17- 4M-0137-3M.3 D. Extension of Compliance Deadline. 1. Grounds for Extension. BUYER may request an extension of the Compliance Deadline upon a good faith showing that full compliance cannot be achieved within the initial 180-day period due to one or more of the following: (i) The scope or complexity of required repairs or improvements is greater than could have been reasonably anticipated as of the Effective Date, as evidenced by documentation from a licensed contractor or design professional; (ii) Delays caused by CITY's permitting or inspection process that are beyond BUYER's reasonable control, based on the sole discretion of CITY; (iii)lnability.to obtain necessary materials, labor, or subcontractors due to circumstances beyond BUYER's reasonable control, including supply chain disruptions or declared states of emergency, provided that such inability is not attributable to BUYER's failure to adequately budget, allocate sufficient funds, or undertake reasonable financial planning for the procurement of said materials, labor, or subcontractors; or (iv)Discovery of latent conditions, including but not limited to hazardous materials, structural deficiencies, or concealed code violations not reasonably identifiable prior to the Effective Date. 2. Extension Request Procedure. Any request for an extension shall be submitted in writing to CITY's PBA no later than 15 business days prior to the expiration of the then-applicable compliance deadline. The request shall include: (i) a detailed description of the basis for the extension request; (ii) supporting documentation from a licensed contractor or design professional; (iii) a revised project schedule identifying all remaining work and estimated completion dates; and(iv) a sworn declaration by BUYER attesting to the good faith basis for the request. 3. City's Discretion. Extensions shall be granted at the sole and reasonable discretion of CITY's PBA Director, or designee, No single extension shall exceed 90 days, absent extraordinary circumstances as determined by CITY in its sole discretion. Any grant of an extension shall be in writing and shall specify the revised compliance deadline. 4. Continued Progress Required. The granting of any extension shall not relieve BUYER of the obligation to diligently and continuously pursue completion of all compliance work during any extension period. CITY retains the right to conduct periodic inspections, upon reasonable notice, to verify continued progress during any extension period. -18- 4908-0137-3075.3 E. Interim Compliance Obligations. From and after the Effective Date and continuing until the PROPERTY is in full compliance with all Applicable Codes,BUYER shall: 1. Maintain the PROPERTY in a safe, clean, and secure condition, and take all reasonable measures to prevent unauthorized access, vandalism, or additional deterioration of the PROPERTY; 2. Immediately abate, any condition that poses an imminent threat to public health or safety within twenty-four (24)hours of discovery, regardless of any pending deadlines under this COMPLIANCE AGREEMENT; 3. Maintain all required business licenses, permits, and certifications in good standing as required by Applicable Codes for any use of the PROPERTY, including the continued operation of any motel or lodging facility during the remediation period; 4. Comply with the SAMC and state laws. SECTION 5. PROPERTY MAINTENANCE ENFORCEMENT BY THE CITY OF SANTA ANA. A. Ongoing Operational/Maintenance Conditions. BUYER, on behalf of itself, its successors and assigns and any subsequent owner of the PROPERTY,hereby agrees to the following: I. PROPERTY shall be maintained in compliance with the requirements of SAMC, the Uniform Code for the Abatement of Dangerous Buildings, the International Property Maintenance Code, and Health& Safety Code §17920.3. 2. PROPERTY shall comply with the SAMC during any period(s) of construction or major repair(e.g., proper screening and securing of the construction site; implementation of proper erosion control, dust control and noise mitigation measures). 3. Provide ongoing maintenance, repair and upkeep, including but not limited to controls on the proliferation of trash and debris; removal of graffiti; landscaping and related landscape improvements. Keep PROPERTY free of weeds, dry brush, dead vegetation, trash,junk, debris,building materials, papers, and/or abandoned property. "Abandoned Property" shall mean movable property or belongings, (e.g., furniture, appliances) exclusive of land and buildings. 4. Materials, products or equipment stored outdoors shall not be higher than the height of any fence/wall and must not be visible anywhere in the public right-of- way. Public right-of-way means that area of the street,roadway,parkway or sidewalk, that is owned, maintained, or controlled by CITY. -i9- 4908-0137-3075.3 5. Repair and paint any damaged or missing segment of perimeter fencing, including wood fences or block walls. B. Notice of Maintenance Deficiencies. Upon any failure by BUYER to perform any of the obligations in Section S.A. (such failure hereinafter referred to as a"Maintenance Deficiency"), CITY shall issue written notice of such Maintenance Deficiency to BUYER, as provided in Section 21. C. Maintenance Deficiencies. BUYER shall comply with any Notice of Maintenance Deficiency within the timeframe specified by the CITY'S Code Enforcement Division ("CED")to cure the Maintenance Deficiency. Within the timeframe specified by CED in the notice of a Maintenance Deficiency, BUYER may submit a written request to CITY seeking additional time to cure the Maintenance Deficiency. Each request for additional time shall provide, in detail (i) the tasks that require additional time to complete the cure of the Maintenance Deficiency and the reason(s) why additional time is needed; and(ii) what steps BUYER has taken to cure of the Maintenance Deficiency. CITY, in its discretion, may grant, conditionally grant, or deny any request for additional time as determined by the Director of PBA, or designee. CITY shall be under no obligation to consider untimely extension requests or requests which fail to provide any of the information required. D. Removal of Graffiti. BUYER, on behalf of itself, its successors and assigns, hereby further covenants and agrees in favor of CITY to keep the exterior of all structures, fixtures, or other improvements on the PROPERTY free and clear of graffiti. Graffiti shall be removed within twenty-four (24)hours following its discovery. Failure by BUYER to remove graffiti within 24 hours following discovery shall be deemed to be a Maintenance Deficiency. E. City May Cure Maintenance Deficiency. 1. If BUYER fails to cure a Maintenance Deficiency within the time allowed, CITY may initiate a hearing under Chapter 3 of the SAMC. The hearing officer shall consider evidence and testimony of interested persons as may be relevant to the matter. If upon the conclusion of a hearing,the hearing officer makes a written finding a Maintenance Deficiency exists and there appears to be non-compliance with the maintenance and repair obligations referenced in Section S.A., CITY shall have the right to record the notice described in Section S.G. and CITY may enter upon or otherwise access the PROPERTY for the purpose of curing the Maintenance Deficiency without further notice to BUYER. 2. CITY, without notice to BUYER, shall have the right to enter the PROPERTY and remove graffiti, solid waste, trash, or other debris if: (i) BUYER has failed to remove graffiti within twenty-four(24)hours following its discovery on any structure, fixture, or other improvement that is visible from the public right-of- way; or(ii) BUYER has failed to remove the accumulation of solid waste,trash, or other debris that is visible for a duration of twenty-four(24)hours from the -20- 4908-0137-3075-3 public right-of-way. Any costs incurred by the CITY to remove graffiti, solid waste, trash, or other debris shall become a lien on the PROPERTY and CITY shall have the right to enforce such lien as provided in Section 5.G. F. City's Lien Authority. Any costs incurred by CITY in enforcing,maintaining, repairing,replacing, or curing any condition on the PROPERTY for which a Maintenance Deficiency has been declared by the CITY to exist, shall become a lien on the PROPERTY. The powers conferred upon CITY are in addition to all other remedies CITY may have to enforce this COMPLIANCE AGREEMENT, including public nuisance abatement proceedings or any other action at law or equity. G. Enforcement of Liens by the City. 1. The rights conferred upon CITY by BUYER expressly include the power to establish and enforce a lien or other encumbrance against the PROPERTY, subject to all then-existing other liens and encumbrances on the PROPERTY, in an amount reasonably necessary to reimburse CITY for its reasonable costs incurred under Section 5.E. to restore the PROPERTY to the maintenance standard required, including reasonable attorneys' fees and costs associated with the correction of the Maintenance Deficiency. If the amount of any such lien is not paid within 3 0 days after written notice by CITY to BUYER demanding such payment, CITY shall have the right to enforce its lien. The prevailing party in a collection or other lien enforcement action shall be entitled to reasonable attorneys' fees, costs, and expenses. 2. In the event CITY makes a written finding a Maintenance Deficiency exists on the PROPERTY, in addition to its lien powers, CITY may cause a notice of correction of Maintenance Deficiency be recorded against the PROPERTY. Such a notice shall refer to Section 5.E. of,be signed by the Director of PBA, and shall remain in effect from the date it is recorded until the date the Maintenance Deficiency is corrected. H. No Approval by Buyer Required. No approval by BUYER shall be necessary for CITY to establish and foreclose a lien for non-payment of amounts expended by CITY to cure a Maintenance Deficiency. No failure by CITY to enforce any default pertaining to the maintenance, repair, or replacement any portion of the PROPERTY shall be deemed to be a waiver of the right or power of CITY to enforce any subsequent default by BUYER. I. Priority of City Ordinances and Other Laws. The approval and acceptance of this COMPLIANCE AGREEMENT by CITY shall not be deemed a waiver or release of any applicable ordinances or laws or general police power of the CITY. In the event of any conflict or inconsistency between any provision in this COMPLIANCE AGREEMENT and any ordinance or law the latter shall prevail. -21- 4909-0137-3075.3 SECTION 6. USE. A. Current Use. BUYER acknowledges the PROPERTY is currently operated as a motel/lodging establishment and that all compliance obligations under this COMPLIANCE AGREEMENT include all applicable hotel/motel licensing and applicable health and safety regulations under state law and the SAMC. B. Permitted Use. BUYER shall be permitted to continue operating the PROPERTY as a motel/lodging establishment, subject to the BUYER's compliance with all obligations of this COMPLIANCE AGREEMENT so long as such use commences within 12 months of October 28, 2025. Such continued operation shall not enlarge, expand, or modify the use beyond the nature and scope of the motel/lodging use existing as of the Effective Date, except as may be expressly authorized in writing by CITY. C. Effect on Compliance Obligations. A change in the use of the PROPERTY shall not extinguish or modify BUYER's obligations under this COMPLIANCE AGREEMENT except to the extent that compliance with certain Applicable Codes becomes moot due to a change of use of the PROPERTY, as determined by the CITY in its discretion.. In the event of a change of use, BUYER and CITY agree to cooperate in good faith to amend the Compliance Plans and revise any applicable deadlines to account for the requirements of the new use, through a written amendment to executed pursuant to Section 20. D. No Implied Approval. Nothing in this COMPLIANCE AGREEMENT shall be construed as CITY's approval of any change of use of the PROPERTY. BUYER shall be responsible for obtaining and maintaining all required discretionary and ministerial approvals for any change of use independent of this COMPLIANCE AGREEMENT. E. Hotel 1 Motel Operational Conditions. So long as the PROPERTY is used as a hotel,motel, lodge, inn or any other public lodging establishment the following shall apply. 1. Tax and License. Buyer shall possess and maintain a valid and current hotel visitor tax registration and all other required business licenses and permits. 2. Security. BUYER shall retain a security company that is (a) licensed by the State of California pursuant to Business and Professions Code §§ 7580 et seq and(b) maintains general commercial liability insurance in an amount no less than One Million Dollars ($1,000,000) per occurrence. The security guard company shall be subject to Santa Ana Police Department ("SAPD") approval. BUYER shall provide CITY with written proof of such licensure and insurance within 15 business days of execution of this COMPLIANCE AGREEMENT and at any time upon CITY's request. i. The security guard company shall patrol the PROPERTY no fewer than 3 times per day,with patrols distributed at reasonable intervals throughout a 24- -22- 4908-0137-3075.3 hour period. At least 1 patrol shall occur between the hours of 10:000 p.m. and 3:00 a.m. ii. If SAPD responds to 10 or more calls for service to the PROPERTY within any 30-day period,the Parties stipulate and agree the security patrols shall be increased to no fewer than 5 times per day,with patrols distributed at reasonable intervals throughout a 24-hour period with at least 2 patrols occurring between the hours of 9:00 p.m. and 4:00 a.m. iii. If, following the above-referenced increase in patrols, SAPD responds to 10 or more calls for service to the PROPERTY within any 30-day period, such security patrols shall be increased to no less than once every 3 hours, 7 days per week, unless otherwise agree in writing by CITY. 3. Security Logs. Security guards retained pursuant to Section 63.1. above, shall maintain a written security patrol log documenting all suspicious or unlawful activities, observations, and interventions made during each patrol. The patrol log shall, at minimum, include: (a)the date, time, and duration of each patrol; (b)the identity of the guard conducting the patrol; (c) a description of any observed suspicious or unlawful activity; (d) any contacts made with guests,visitors, or members of the public; (e) any call for service made to 911,police, fire, or emergency medical response; and(f) any conditions or incidents affecting the safety, security, or order of the PROPPRTY and what the outcome was, if any, of any law enforcement or emergency response at the PROPERTY. BUYER shall retain all patrol logs for a minimum of 1 year and shall produce the logs to any employee of the CITY upon request. 4. Cameras. Install and maintain security cameras at the PROPERTY with appropriate and clear resolution. At a minimum, cameras shall cover the fronts desk(office), all common areas and the parking lots(s), including the front and rear of the PROPERTY. Camera placement and general specifications shall be subject to approval by SAPD. BUYER shall provide SAPD with the technical ability to access live ("real-time") video surveillance footage for exterior and common areas of the PROPERTY. Such access shall be limited to law enforcement purposes only and shall not include access to interior guest room footage. Access credentials shall be maintained securely and used solely by authorized SAPD personnel. Footage must be retained for a minimum of 90-days. Security cameras that are broken, damaged or malfunctioning must be repaired within 48-hours of discovery. Documentation confirming such repairs shall be maintained by BUYER and provided to CITY upon request. BUYER shall add wording to all guest registration cards and post and maintain at least I sign, measuring no less than 11 x 14 inches, with lettering large enough to be clearly read from 10 feet away in all common areas of the PROPERTY that reads: -23- 493-0137-3075.3 "FOOTAGE CAPTURED BY THE SECURITY CAMERAS ON THIS PROPERTY IS ACCESSIBLE BY THE SANTA ANA POLICE DEPARTMENT" 5. Lighting. Install and maintain flood lights in all common areas of the PROPERTY, including the parking lots and the front and rear of the PROPERTY. The wattage and specifications of lighting installed shall comply with applicable municipal code requirements, and BUYER shall reasonably consult with CITY's PBA prior to installation. Lighting that is broken, damaged, or malfunctioning must be repaired within 48 hours of discovery. Documentation confirming such repairs shall be maintained by BUYER and provided to CITY upon request. 6. Signage. In addition to the signage required in Section 6.E.iii., above, BUYER shall post and maintain signs, measuring no less than 11 by 14 inches, with lettering large enough to be clearly read from 10 feet away in all common areas on the PROPERTY which reads: "NO TRESPASSING. VIOLATORS FILL BE CITED AND ARE SUBJECT TO ARREST" BUYER shall provide a"No Trespass"letter to SAPD pursuant to Penal Code § 602. 7. Guests. Require all guests to provide photo ID at the time of registration. Retain copies of all ID cards presented by guests and registration cards for each registered guest for a minimum of 90 days. 8. Record Keeping. BUYER shall maintain daily records reflecting the names and permanent addresses of all occupants, as verified by valid government issued identification, the dates of occupancy, length of state, and room rate. This registration information shall be maintained for at least 1 year past the last day of stay for each guest and shall be made available for review by CITY upon request. 9. Gates. Install locked, video monitored, electronically controlled gates (with a Knox Box accessible to police and fire) at the point of its driveways. CITY's PBA must approve the design and specifications prior to installation. 10. Door Locks. Ensure all door locks are properly functioning per industry standards. Door locks that are broken, damaged, or malfunctioning must be repaired within 48 hours after discovery. 11. Cash/Rentals by Hour. All reservations and payment must be made by a credit card or debit card. Partial days, hourly room rates or cash or cash equivalent payments shall not be accepted. No more than one booking per room within any 24-hour period is allowed. -24- 4908-0137-3075.3 12. Long-Term Rentals. No more than 25% of rooms that the PROPERTY may be rented to the same occupant for 30 days or longer, 13. Vehicles. BUYER shall: i. Require that all vehicles that park on the premises are registered with management which shall include information about the make, model, year, color, and license plate of the vehicle). Provide stickers to registered vehicles that lists the date(s) of the guest's stay. Provide such vehicle registration information to CITY upon request. ii. Tow all vehicles that are not registered and have no legitimate basis to be parked on the PROPERTY(see subsection (iii)below). Provide guests a "Guest Parking Pass"that lists the timeframe for the guests' visit. Such guest parking pass shall not exceed 30 days. iii. Hire a towing company to tow violating vehicles and include towing company's information on signage at the PROPERTY. 14. Inspections. Allow CITY officials to inspect the PROEPRTY without an inspection warrant when police/fire respond to calls for service for 2 years following the execution of this COMPLIANCE AGREEMENT. Except in the case of an emergency condition posing an immediate threat to health or safety, inspections of occupied dwelling units shall be conducted in accordance with applicable law, including providing any notice required by law. If consent to enter an occupied unit is refused, CITY may seek an administrative inspection warrant as permitted by law. Inspections of exterior areas and common areas not exclusively controlled by tenants maybe conducted without an inspection warrant as otherwise permitted by law. In emergency circumstances, entry may occur without prior notice of warrant to the extent authorized by law. Nothing herein is intended to limit the CITY's lawful enforcement authority or to require a waiver of constitutional rights. 15. Convicted Persons. To the extent permitted by applicable law, SAPD may provide BUYER with a written list of persons who have been convicted of criminal offenses on the PROPERTY. Upon receipt of that list, persons on the list shall not be permitted to rent a room. In the event the person on the list has been registered as a guest, management shall take commercially reasonable steps consistent with applicable law to remove such person from the PROPERTY. 16. Bi-Annual Meetings. Participate in bi-annual meetings with CITY staff to: (a) confirm compliance with the terms and conditions of this COMPLIANCE AGREEMENT; (b) evaluate the conditions at the PROPERTY; and(c) obtain any necessary input to ensure the safety of the residents/guests. These bi-annual meetings will be conducted on a mutually agreeable date and time and will be held at City Hall, unless otherwise agreed to in writing by CITY. BUYER shall -25- 4908-0137-3075.3 send representative to the meeting on their behalf so long as the representative have the authority or the means to obtain authority to institute and/or establish new protocols/policies/procedures at the PROPERTY to ensure compliance with this COMPLIANCE AGREEMENT. 17. Survival. Notwithstanding anything to the contrary, these hotel 1 motel operational requirements set forth in this Section 6. E. shall survive termination of this COMPLIANCE AGREEMENT and shall remain in full force and effect as long as the PROPERTY is operated as a hotel, motel, lodge, inn or any other public lodging establishment. F. General Operational Conditions. These general operational conditions shall apply to the property regardless of its use, unless otherwise agreed to in writing by CITY: 1. Hardscaping. PROPERTY shall provide visibility in all areas intended for the public and patrons of the PROPERTY, landscape open space areas and driveway entrances from public streets, driveway intersections, and parking lots. Block walls and landscaping may not be used to obscure visibility in these areas except when required to screen mechanical equipment, employee break areas, or CITY approved storage areas. 2. Survival. Notwithstanding anything to the contrary. These general operational conditions set forth in this Section 6. F. shall survive termination of this COMPLIANCE AGREMEENT and shall remain in full force and effect. SECTION 7. INSPECTIONS AND REPORTING. A. City Inspection Rights. CITY shall have the right,upon notice of not less than 48 hours (except in an emergency), to inspect the PROPERTY and to verify BUYER's compliance with this COMPLIANCE AGREEMENT and Applicable Codes. BUYER hereby grants CITY a license to enter the PROPERTY during regular business hours. B. Progress Reports. BUYER shall provide CITY with written progress reports on the status of all work no less than once every 30 days following the issuance of the Required Permits. Each progress report shall include: (i) a description of work completed during the preceding thirty(30) day period; (ii) a description of work scheduled for the following thirty(30) day period; (iii) identification of any issues or delays encountered; and(iv) an updated construction schedule. SECTION 8. DEFAULT AND REMEDIES. A. Events of Default. Each of the following shall constitute a"Default"under this AGREEMENT: -26- 4908-0137-3075.3 1. BUYER's failure to submit the Compliance Plans by the Plan Submission Deadline,pursuant to Section 4; 2. BUYER's failure to obtain all Required Permits by the Permit Attainment Deadline, pursuant to Section 4; 3. BUYER's failure to achieve full compliance with Applicable Codes by the Initial Compliance Deadline,pursuant to Section 4; 4. BUYER's failure to meet any interim compliance obligation under Section 4 or any maintenance obligation under Section 5 that is not cured in the timeframe specified by CITY; 5. BUYER's failure to adhere to operational conditions as required under Section 6; 6. BUYER's failure to provide progress reports as required under Section 7; 7. BUYER's transfer of the PROPERTY to a third party without compliance with Section 12; or 8. BUYER's material breach of any other provision of this COMPLIANCE AGREEMENT that is not cured within 15 days of written notice from CITY(or, if breach is not reasonably capable of cure within 15 days, within such additional time as is reasonable, provided.BUYER commences cure within the 15 day period and diligently pursues completion). B. Remedies upon Default. Upon occurrence of a Default, CITY shall be entitled to pursue all available legal and equitable remedies, including but not limited to: 1. Civil nuisance abatement proceedings; 2. Imposition of administrative fines,penalties, and costs as available under the law; 3. Revocation or suspension of any permits, licenses, or certificates of occupancy issued in connection with the PROPERTY; 4. Recordation of a notice of non-compliance against the PROPERTY in the Official Records of Orange County, California; 5. Exercise of CITY's lien authority pursuant to Section 5; and 6. Any other remedies available under the law. C. Cure Period. Prior to exercising its remedies, CITY shall provide BUYER with written notice of Default and a 15-day cure period to remedy any curable Default, except as otherwise specified in this COMPLIANCE AGREEMENT. CITY shall not be required -27- 4908-0137-3075.3 to provide a cure period prior to seeking summary abatement, emergency relief or abating imminent public health or safety hazards. D. Remedies Cumulative. The remedies set forth in this COMPLIANCE AGREEMENT are cumulative and not exclusive of any other remedy available to CITY, including the liquidated damages provisions below. The exercise of any remedy shall not constitute a waiver of any other remedy. E. Survival. Notwithstanding anything to the contrary, remedies for default under this Section shall survive ternnination of this COMPLIANCE AGREEMENT specifically in regard to enforcement of Sections 6. E. &F. SECTION 9. LIQUIDATED DAMAGES. In the event CITY is required to bring legal action based on nuisance conditions on the PROPERTY and/or breach of the terms of this AGREEMENT, the Parties stipulate to the imposition of a Fifty Thousand Dollar($50,000.00) "liquidated damages"provision awarded to CITY, in addition to fees and costs authorized by statute. Such damages shall only be awarded following a judgment that BUYER, or any of its heirs or assignees, is liable and responsible for such nuisance conditions. The Parties agree the damages resulting from a breach of this COMPLIANCE AGREEMENT would be difficult or impossible to calculate with certainty, and the amount set forth constitutes a reasonable pre-estimate of such damages consistent with Civil Code §1671(b). SECTION 10. TERM, TERMINATION, AND EXTENSION. A. Term. This COMPLIANCE AGREEMENT shall commence on the Effective Date and shall remain in full force and effect until CITY determines, in its sole discretion, the PROPERTY is in full compliance pursuant to Section 4.C.,unless sooner terminated or extended ("Term"). B. Termination. CITY agrees that if BUYER performs all of its obligations under Section 4, with no violations that remain uncured following written notice and expiration of any cure period, as determined in the sole discretion of CITY, this AGREEMENT shall terminate upon a signed writing by CITY. C. Extension. Extension of the Term shall be allowed at the sole discretion of CITY upon a signed writing executed by the City Attorney and City Manager, or their designees, . SECTION 11. RECORDATION. A. Recordation of Agreement. The Parties agree this AGREEMENT shall be recorded in the Official Records of Orange County, California, within 15 days of the Effective Date. BUYER shall pay for the costs of recordation and such recordation shall constitute constructive notice to all fature successors in interest to the PROPERTY. -28- 4908-0137-3075.3 B. Withdrawal of Lis Pendens. Upon execution of this COMPLIANCE AGREEMENT, CITY shall withdraw the recorded Notice of Pendency of Action filed at the Orange County Clerk-Recorder's Office against PRIOR PROPERTY OWNER on [insert date]. C. Disclosure Obligation. BUYER shall disclose the existence of this COMPLIANCE AGREEMENT and its recorded status to any prospective purchaser, lessee, or encumbrancer of the PROPERTY prior to the execution of any purchase and sale agreement, lease, or encumbrance instrument. D. Release Upon Compliance. Upon the termination: of this COMPLIANCE AGREEMENT CITY shall, within 15 days thereafter, execute and record a Release in the Official Records of Orange County, California, at BUYER's expense, which release shall acknowledge the termination of the obligations herein. SECTION 12. ASSIGNMENT. A. General Obligation. BUYER shall not assign its ownership interest in the PROPERTY or any interest in any lease, sublease, license, or sublicense, unless the prospective assignee agrees in writing to assume all of the duties, obligations, and responsibilities set forth herein. B. Notice of Proposed Transfer. Prior to any proposed sale, assignment, transfer, or conveyance of the PROPERTY, BUYER shall provide CITY with no less than 30 days' prior written notice that shall identify the proposed transferee and include the proposed terms of any transfer. C. Assumption Agreement. No Transfer shall be effective unless,prior to or concurrently with such transfer, the transferee executes and delivers to CITY a written assumption agreement, in a form acceptable to the CITY, whereby the transferee expressly assumes all of BUYER's obligations under this COMPLIANCE AGREEMENT. Any purported Transfer that does not comply with these express terms shall constitute a Default and shall entitle CITY to pursue all remedies available under Section 8.13. D. Release of Transferring Owner. Upon CITY's written approval of an assumption agreement and the completion of any transfer, the transferring BUYER shall be released from obligations herein after the date of transfer, but shall remain liable for any obligations accruing or Defaults occurring prior to the date of any Transfer. SECTION 13. INDEMNIFICATION. BUYER shall indemnify, defend (with counsel acceptable to CITY), and hold harmless CITY its officers, officials, employees, agents, and volunteers from and against any and all claims, damages, losses, costs, and expenses (including reasonable attorneys' fees) arising out of or related to; (i) BUYER's performance or non-performance of its obligations under this AGREEMENT; (ii) any condition of the PROPERTY during BUYER's period of ownership; or -29- 4908-0137-3075.3 (iii) BUYER's operations on the PROPERTY. This indemnification obligation shall survive the termination of this AGREEMENT. SECTION 14. LEGAL ADVICE. Each Party represents and warrants to the other the following: they have carefully read this COMPLIANCE AGREEMENT, and in signing,they do so with full knowledge of any right which they may have; they have received independent legal advice from their respective legal counsel as to the matters set forth, or having knowingly chosen not to consult legal counsel as to the matters set forth; and have freely signed this COMPLIANCE AGREEMENT without any reliance upon any agreement, promise, statement, or representation by or on behalf of the other Party, or their respective agents, employees, or attorneys, except as specifically set forth herein, and without duress or coercion, whether economic or otherwise. SECTION 15. REPRESENTATIONS AND WARRANTIES OF BUYER. BUYER represents and warrants for the benefit and reliance of the CITY as follows: A. Entity Status. BUYER validly exists under the laws of the State of California(or, if formed in another state, is duly qualified and authorized to conduct business in California), and is authorized to carry on its business; B. Authority. BUYER has the power and authority to enter into this COMPLIANCE AGREEMENT; and C. Binding Obligation. This COMPLIANCE AGREEMENT shall be a legal, valid, and binding obligation of BUYER, enforceable against BUYER and its successors and assigns in interest in the PROPERTY, and each portion thereof, in accordance with its terms, subject to applicable bankruptcy laws and equitable principles. SECTION 16. TIME OF THE ESSENCE. Time is expressly made of the essence with respect to the performance by CITY and BUYER of each and every obligation and condition herein, SECTION 17. ATTORNEY'S FEES. In addition to any other remedies provided herein or available under applicable laws, if either Party commences an action against the other Party arising out of, or in connection with, this COMPLIANCE AGREEMENT, the prevailing Party shall be entitled to recover from the non- prevailing Party its costs of suit, including, but not limited to, its reasonable attorneys' fees, expert witness fees, and costs of investigation. -30- 4908-0137-3075.3 SECTION 18. INTEGRATION. This COMPLIANCE AGREEMENT contains the entire understanding between the Parties relating to the transaction contemplated, except as otherwise provided. All prior and contemporaneous agreements,understandings, representations, and statements, oral or written, are merged and shall be of no further force or effect. Each Party is entering into this COMPLIANCE AGREEMENT based solely upon the representations set forth herein and upon each Party's own independent investigation of any and all facts such Party deems material. This COMPLIANCE AGREEMENT constitutes the entire understanding and agreement of the Parties, notwithstanding any previous negotiations or agreements between the Parties or their predecessors in interest with respect to all. or any part of the subject matter hereof. SECTION 19. SEVERABILITY. If any portion of this COMPLIANCE AGREEMENT is declared invalid, illegal, or otherwise unenforceable by a court of competent jurisdiction, the remaining provisions shall continue in full force and effect. SECTION 20. AMENDMENT. No amendment, modification, or supplement of this COMPLIANCE AGREEMENT shall be valid or binding unless executed in writing and signed by both Parties, subject to City approval. The requirement for written amendments,modifications, or supplements cannot be waived and any attempted waiver shall be void and invalid. SECTION 21. NOTICES. All notices permitted or required under this COMPLIANCE AGREEMENT shall be given to the respective Parties at the following addresses, or at such other address as the respective Parties may provide in writing for this purpose. Notices shall be in writing and shall be deemed duly given when: (i)personally delivered.; (ii) sent by nationally recognized overnight courier; (iii) sent by certified mail, return receipt requested, postage prepaid; or (iv) sent by email with written confirmation of receipt: BUYER: CITY: [Name of BUYER] City of Santa Ana [Address] City Attorney's Office, M-29 [City, State, Zip] PO Box 1988 Santa Ana, CA 92702 SECTION 22. JURISDICTION—VENUE. This COMPLIANCE AGREEMENT has been executed and delivered in the State of California and the validity, interpretation,performance, and enforcement of any of its clauses shall be determined and governed by the laws of the State of California. Both Parties further agree that -31- 4909-0137-3075.3 Orange County, California shall be the venue for any action or proceeding that may be brought or arise out of, in connection with, or by reason of this COMPLIANCE AGREEMENT. SECTION 23. COUNTERPARTS. This COMPLIANCE AGREEMENT may be executed in multiple counterparts, each of which shall be deemed to be an original and all of which together shall constitute one document. Electronic signatures shall be deemed valid and binding to the same extent as original signatures. SECTION 24. REDEVELOPMENT ACCOMODATION. A. General. The Parties acknowledge that BUYER may seek to redevelop the PROPERTY, including, through demolition and construction of a new mixed-use or other project(the "Redevelopment Project"), and that the entitlement,permitting, and construction timelines for a Redevelopment Project differ substantially from the compliance timelines set forth in Section 4. Nothing in this Section shall be construed to suspend, toll,modify, or otherwise affect any obligation of BUYER under this COMPLIANCE AGREEMENT unless and until BUYER has satisfied all Redevelopment Threshold Conditions defined and set forth in Section 24.B.,below, and the Parties have executed a written amendment pursuant to Section 20. B. Redevelopment Threshold Conditions. BUYER may submit a written request to CITY to initiate a good-faith-meet-and-confer regarding amendment of this COMPLIANCE AGREEMENT to accommodate a Redevelopment Project. Such a request shall only be considered by CITY, and shall only trigger the meet-and-confer process described in Section 24.C., below, upon BUYER's demonstration of all of the following conditions: 1. Project Filing. BUYER has submitted a pre-application, which includes a preliminary project description and draft architectural site plan, or complete Redevelopment Project application,to CITY's Planning and Building Agency describing the proposed Redevelopment Project in reasonable detail, and CITY has confirmed receipt in writing; 2. Financial Commitment. BUYER has provided CITY with a written statement, executed under penalty of perjury by an authorized officer of BUYER, attesting that BUYER has sufficient financial resources or financing commitments reasonable anticipated to be sufficient to fund the Redevelopment Project, together with reasonable supporting documents, which may include but not limited to a term sheet, letter of intent, proof of available equity capital, or written confirmation from a lender or equity partner; 3. Good Standing. BUYER is not in material uncured Default under this COMPLIANCE AGREEMENT as of the date of a request under this Section; and 4. Interim Safety Plan. Concurrently with a request under this Section, BUYER shall submit a proposed Interim Safety Plan("ISP")to CITY, describing in detail -32- 4908-0137-3075.3 how BUYER will maintain the PROPERTY in a safe, secure, and code-compliant condition during all phases of entitlement review, zoning approvals, demolition, site preparation, and construction. The ISP shall address, at minimum: (i) site security measures; (ii) fencing and access controls; (iii) lighting; (iv)hazardous materials handling; (v) dust and erosion control; (vi) graffiti removal; and video monitoring. C. Meet-and-Confer Process. 1. Upon CITY's written confirmation that all Redevelopment Threshold Conditions have been satisfied, the Parties shall meet and confer in good faith to negotiate a written amendment to this COMPLIANCE AGREEMENT addressing the following: i. Reasonable, mutually agreeable adjusted timeframes for plan submission, permitting, and completion of compliance or rehabilitation work,taking into account the scope and phasing of the Redevelopment Project; ii. Identification of any obligations under Sections of this COMPLIANCE AGREEMENT that become genuinely impractical or moot as a result of the Redevelopment Project, and agreed upon substitute or modified obligations, if any; and iii. Incorporation of the CITY-approved ISP into the COMPLIANCE AGREEMENT as the operative standard for interim maintenance, security, and safety obligations during the demolition, site preparation, and constructions phases. 2. The meet-and-confer process shall be completed within sixty (60) days of CITY's written confirmation the Redevelopment Threshold Conditions have been satisfied, subject to extension by mutual written agreement by the Parties. If the Parties are unable to reach an agreement within that period, the obligations of this COMPLIANCE AGREEMENT shall remain in frill force and effect without modification, and BUYER's rights under this Section shall not be deemed waived solely by reason of the failure to reach an agreement,provided BUYER continues to satisfy the Redevelopment Threshold Conditions. [signature page follows] -33- 4908-0137-3075.3 SIGNATURE PAGE FOR COMPLIANCE AGREEMENT FOR REAL PROPERTY LOCATED AT 1427 E 1st STREET, SANTA ANA, CA 92701 IN WITNESS WHEREOF, this Agreement is executed on the dates set forth below. CITY: Dated: CITY OF SANTA ANA, a charter law city and municipal corporation, duly organized and existing under the Constitution and laws of the State of California By: Alvaro Nunez, City Manager ATTEST: CITY OF SANTA ANA, a charter law city and municipal corporation, duly organized and existing under the Constitution and laws of the State of California Dated: By: Jennifer L. Hall, City Clerk BUYER: Dated: Name: Title: [signatures continued on next page] -34- 4908-4137-3075,3 APPROVED AS TO FORM: SONIA R. CARVALHO CITY ATTORNEY City of Santa Ana Dated: TAMARA BOGOSIAN Senior Assistant City Attorney Attorneys for CITY OF SANTA ANA -35- 4908-0137-3075.3 EXHIBIT A LEGAL DESCRIPTION OF PROPERTY Intentionally Omitted -36- 49D6-0137-3D75.3 EXHIBIT B SETTLEMENT AGREEMENT Intentionally Omitted -37- 4908-0137-3075.3 EXHIBIT C VIOLATIONS—INSPECTION REPORTS,NOTICES OF VIOLATION, AND ADMINISTRATIVE CITATIONS Intentionally Omitted -38- A9dB-6137-M75.3