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Home My WebLink About2011/11/15 Item 18 :I ITEM TITLE: SUBMITTED BY: REVIEWED BY: . SUMMARY NOVEMBER 15, 2011, ItemK RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE CITY MANAGER TO ENTER INTO A PURCHASE AND SALE AGREEMENT FOR A 1.89-ACRE PARCEL ("MCCUNE") TO BE EXCHANGED FOR A PARCEL IN THE LOWER SWEETWATER VALLEY FOR PARK PURPOSES FOR THE NEGOTIATED PRlCE OF $940,000, APPROVING AN INTERFUND LOAN IN THE AMOUNT OF . $310,000 FROM THE EASTERN PARKLAND ACQUISITION . AND DEVELOPMENT FEE FUND TO THE WESTERN PARKLAND ACQUISITION AND DEVELOPMENT FEE FUND TO PARTIALLY FUND THE ACQUISITION OF THE SITE, AND APPROPRIA TING . FUNDS FROM THE EASTERN AND WESTERN PARKLAND ACQUISITION AND DEVELOPMENT FUNDS THEREFOR RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORlZING THE CITY MANAGER TO ENTER INTO AN AGREEMENT TO EXCHANGE THE 1.89- ACRE MCCUNE PARCEL (APN# 644-041-41) FOR A l.89-ACRE PARCEL ("FLOlr) LOCATED IN THE LOWER SWEETWATER VALLEY FOR PARK PURPOSES RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ENTERlNG INTO AN OPTION AGREEMENT TO EXCHANGE A 6.1-ACRE PARCEL LOCATED ADJACENT TO SR-125 AND EASTLAKE DRIVE FOR AN APPROXIMATE 3.85 ACRE PARCEL LOCATED IN THE LOWER SWEETWATER VALLEY FOR PARK PURPOSES I.IV ASSISTANT CITY MANAGE~VELOPMENT SERVICES DIRECTOR CITY MANAGER 4/5THS VOTE: YES 0 NO D 18-1 November 15, 2011, Item ~ Page 2 of 5 The City ofChula Vista has proactively planned for the development and expansion of the Auto Park along the Main Street corridor east of the I-80S freeway between Brandywine A venue and Maxwell . Road for almost twenty years. When McCune Chrysler Jeep Dodge closed its doors in 2009, staff began working with Mr. Richard S. McCune to assist him in finding an automobile dealer to purchase and occupy his developed dealership lot. After months of discussions, it has been determined that the best way to assist Mr. McCune and the other auto dealers is to acquire the 1.89- acre vacant lot (Attachment "A") owned by McCune and located north of his dealership. Then, the City intends to exchange the McCune site for a 1.89-acre parcel (Attachment "B") owned by Mid- City LLC and located in the Lower Sweetwater Valley. The exchange will expand the amount of park acreage in the Lower Sweetwater Valley to approximately 16 acres (Attachment "C"), while the financing structure of the McCune acquisition will allow Mr. McCune time to fmd a replacement auto dealership Western Chula Vista suffers from an imbalance of parkland, in relation to the number of residents living west of Interstate 805. The General Plan Update (2005) designated over 20 acres in the lower Sweetwater Valley as parkland, with the intention of later building a community park. In 2010, the City acquired 14.25 acres of parkland in that area. Now, additional privately held land has become available. ENVIRONMENTAL REVIEW The Director of Development Services has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that there is no possibility that the activity, consisting of the purchase of a 1.89 acre lot, may have a significant effect on the environment. Therefore, pursuant to Section 15061 (b)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. Although environmental review is not necessary at this time, additional environmental review and determination will be required as applicable, prior to the approval of any future project specific development entitlements including, but not limited to, site development plans, building permits, land development permits, and conditional use permits. RECOMMENDATION Council adopts the resolutions. BOARDS/COMMISSION RECOMMENDATION Not applicable DISCUSSION For almost twenty years, the City of Chula Vista has proactively planned for the development and expansion of the Auto Park along the Main Street corridor east of the I-80S freeway between Brandywine A venue and Maxwell Road. The first dealerships to occupy the Auto Park were Fuller Ford, Fuller Honda and People's Chevrolet, businesses that were relocated from various. locations along Broa)iway Avenue in the mid 1990's. These three' dealerships established the Chula Vista Auto Park and were the only dealerships in the Auto Park for ten years. In 2004, additional dealerships became interested in locating new points in the Auto Park, and soon came the development of Toyota Chula Vista in 2006 and McCune Chrysler Jeep Dodge in 2007. Following the opening of the McCune Chrysler Jeep Dodge dealership, the nation entered into the worst recession since the Great Depression. In December 2007, the nation experienced the collapse of the Housing market followed by the banking and auto industries. Due to the economic 18-2 November 15, 2011, ItemJL Page 3 of 5 crisis of the banking and auto industry, several dealerships had to close due to the adverse economic conditions of their parent corporations. Chula Vista experienced the closing of People's Chevrolet in 2008 followed by McCune Chrysler Jeep Dodge in 2009. Fortunately for the Auto Park, Doug Fuller purchased the site of the fonmer Chevrolet Dealership and opened a new point for KIA. However, the McCune Chrysler Jeep Dodge site has yet to attract a new dealership point. In order to provide support for the Chula Vista Auto Park's remaining dealers, it has been detenmined that City will acquire Mr. McCune's 1.89-acre lot located north of his dealership. Then, the City intends to exchange the McCune site for a 1.89-acre parcel owned by Mid-City LLC and located in the Lower Sweetwater Valley. The exchange will expand the amount of park acreage in the Lower Sweetwater Valley to approximately 16 acres, while the fmancing structure of the McCune acquisition will allow Mr. McCune time to find a replacement auto dealership. The section below outlines the financial transaction between the City, Mr. McCune and Mid-City LLC, describes the positive impact of these agreements on the community, and identifies the role the option agreement plays in potentially securing the balance of the park acreage located in the lower Sweetwater Valley. Purchase Agreement with Richard S. McCune and Exchange Agreement between the City and Mid-City LLC: The tenms of the agreements are as follows: I. The City will acquire the 1.89-acre parcel owned by Richard S. McCune for the appraised value of $940,000 dollars. . 2. The City will make payments in eleven monthly installments of approximately $85,000 dollars each, using park acquisition and development funds. 3. Through escrow and upon payment of the first installment, the City will assign ownership rights to the site to Mid-City LLC, in exchange for a 1.89-acre parcel located in the Lower Sweetwater Valley. The purchase and exchange transactions have several key effects: 1. The financing structure on the purchase of the McCune site will gIve Mr. McCune additional time to find a replacement dealership 2. The transfer of the site to the adjacent owner will allow the operation of the Enterprise Dealership to expand 3. The exchange will provide Western Chula Vista with additional park acreage in the Lower Sweetwater Valley. 18-3 Option Agreement: The terms of the option agreement are as follows: I. The Managing Member of Mid-City LLC, Mr. Dan Floit, will have three years (and two one-year options to extend) to pursue entitlements on a City-owned 6.I-acre remnant parcel located adjacent to SR-12S and Eastlake Drive (Attachment "0"). 2. Provided Mr. Floit is able to achieve the entitlements he desires, he has the right to exercise his option to aC!1uire the City site by exchanging a 3.8S-acre site located in the Lower Sweetwater Valley for park purposes (Attachment "E"), . 3. Mr. Floit is responsible for all costs associated with pursuing his entitlements, The Option Agreement will allow the city the opportunity to exchange a remnant parcell of little civic value for ownership of an approximately 3.8S-acre parcel of land that can be used for public park purposes in Western Chula Vista. Provided the Purchase and Sale Agreement and the Exchange Agreement are approved and the Option Agreement is exercised by Mr. Floit, the City will 'have compiled almost twenty acres of land that will be dedicated to the future development ofa Community Park for Western Chula Vista as envisioned in the 200S,General Plan, DECISION MAKER CONFLICT Staff has reviewed the property'holdings of the City Council and has found no property holdings within SOO feet of the boundaries of the properties which are the subject of this action. CURRENT YEAR FISCAL IMPACT The acquisition of the 1.89-acre parcel will be financed using Parkland Acquisition and Development Fee funds in the amount of $940,000 dollars. Approximately $630,000 will come from the available balance of the Western Parkland Acquisition and Development Fee ("Western PAD") fund, requiring a loan from the Eastern Parkland Acquisition and Development Fee ("Eastern PAD") fund for the remaining $310,000. The proposed $310,000 loan is an addition to the previously approved $9,6 million loan from the Eastern PAD to the Western PAD for the purchase of 14.41 acres of parkland in the Lower Sweetwater Valley, increasing the total debt between the funds to $9.9 million. The Redevelopment Agency pledged to purchase PAD fund credits if western development did not occur before the $9.6 million in loaned funds were needed for their original park purposes in Eastern Chula Vista (City Council Resolution 20 10-OS2, RDA Resolution 20 I 0-20 18). No such pledge is made by the Redevelopment Agency for the proposed additional $310,000 loan. Repayment of this additional loan will be based solely upon the collection of PAD fees from future development in western Chula Vista. Payment of the site purchase funds will occur over an eleven-month period, with seven payments anticipated in the current fiscal year. At approximately, $8S,000 per monthly payment, the current fiscal year impact totals $S98,000. This amount is recommended for appropriation in the current fiscal year. ONGOING FISCAL IMPACT The Lower Sweetwater Valley park site will serve and be funded by Chula Vista residents, including residents of the Urban Core Specific Planning Area. However, the Western PAD fund has not yet collected sufficient funds to finance this purchase, necessitating the previous and proposed interfund loans, $9.6 million and $310,000, respectively. These interfund loans will be repaid as funds become available as a result of the payment of PAD fees by developers in western I The 6,l-acre parcel was dedicated to the City of Chula Vista by CalTrans as part of the SR-125 construction. 18-4 November 15,2011, ltemJL Page 5 of 5 Chula Vista. Slow development in western Chula Vista may impact the ability of the Western PAD fund to repay the Eastern PAD fund, potentially impacting the timing of Eastern PAD project construction. Payment of the site purchase funds will occur over an eleven-month period, with four payments anticipated in fiscal year 2012-13. At approximately $85,500 per monthly payment, the fiscal year 2012-13 impact totals $342,000. Appropriations in this amount will be included in the proposed fiscal year 2012-13 budget. ATTACHMENTS A. Map of McCune Parcel (1.89 Acres) B. Map ofFloit Parcel A (1.89 Acres) C. Map of Lower Sweetwater Valley parkland area D. Map of City Parcel (6.1 Acres) E. Map ofFloit Parcel B (3.85 Acres) Prepared by: Eric C. Crockett, Redevelopment Manager 18-5 ell .. ... <:J -< 0\ ~ _. o o ..... ..,. ..... ..,. o ..,. ..,. \0 Z p.., -< f- ,- I !' L~ 0\ ~ QJ e.J ~ ~ ~ QJ = = U e.J ~ ~~~~~ o~ ~~~~~ 6~ u '" ~ .. '" -< Q\ 0C1 "'" 0 >> 0 M .. "'" ~ 0 "0 II) C M = M 0 \0 i:I:l II) >> Z .... ~ 0 -< u < ~ ~ ~ .. ~ ~ ........ .~ o ~ ~ ~ ~~~lf g> ~~~If u~ u ~\ft- -~- ~~ ---- -~ Future Parkland CITY OF (HULA VISTA City Boundary Aggregate Parcel: 20.12 Acres '" ... ... '" ~ .-\ .-\ ~ o o I(') t- O t- O I(') 0\ I(') Z ~ ~ ~ QJ ~ .. ~ ~ c .,..,.. u ." ~~~l~o~ ~~~~~ 6~ :I: U '" OJ .... '" < ~ ~ o o C' ~ ~ l"1 "0 .... C .... = \0 o \0 ~ on >, Z := ~ U < ~ ~ QJ ~ .. ~ ~ ~ .~ o ~ ~ ~ ~~~1: o~ , ~MI~15~ u RESOLUTION NO.2011- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORIZING THE CITY MANAGER TO ENTER INTO A PURCHASE AND SALE AGREEMENT FOR A I.89-ACRE PARCEL ("MCCUNE") TO BE EXCHANGED FOR A PARCEL IN THE LOWER SWEETWATER VALLEY FOR PARK PURPOSES FOR THE NEGOTIATED PRICE OF $940,000, APPROVING AN INTERFUND LOAN IN THE AMOUNT OF $310,000 FROM THE EASTERN PARKLAND ACQUISITION AND DEVELOPMENT FEE FUND TO THE WESTERN PARKLAND ACQUISITION AND DEVELOPMENT FEE FUND TO PARTIALLY FUND THE ACQUISITION OF THE SITE, AND APPROPRIATING FUNDS FROM THE EASTERN AND WESTERN PARKLAND ACQUISITION AND DEVELOPMENT FUNDS THEREFOR WHEREAS, the City of Chula Vista has proactively planned for the development and expansion of the auto park along the Main Street corridor east of the 1-805 freeway between Brandywine Avenue and Maxwell Road; and WHEREAS, recently the City of Chula Vista Redevelopment Agency paid for the construction of an auto park directional sign to improve the visibility of the Chula Vista Auto Park; and . WHEREAS, the City was approached by Tony McCune to purchase a 1.89-acre parcel (APN# 644-041-41) located in the Chula Vista Auto Park; and WHEREAS, the Agency prepared an appraisal for the site that determined the value to be $940,000 dollars; and WHEREAS, the seller agrees to accept monthly payments over a period of eleven months, at "no interest", from the City until the balance has been paid; and WHEREAS, the City proposes to use Park Acquisition and Development funds to purchase the1.89-acre parcel; and' WHEREAS, the City will exchange the 1.89-acre parcel for property of equal size in the Lower Sweetwater Valley that will be used for public park purposes. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City ofChula does hereby approves a purchase and sale agreement for a 1.89-acre parcel (APN #644-041-41) in the Chula Vista Auto Park, in substantially the form presented with such minor modifications as may be required and approved by the City Attorney and authorize the Mayor to execute the agreements or any other necessary agreement necessary to implement the agreements. BE IT FURTHER RESOLVED that the City Council of the City ofChula does hereby appropriate $310,000 to the Transfers Out expense category of the Eastern Parkland Acquisition and Development Fee Fund for a loan to the Western Parkland Acquisition and Development Fee 18-11 Resolution 2011- Page 2 Fund, and $598,000 to the Capital expenses category of the Western Parkland Acquisition and Development Fee Fund for the purchase ofland. Presented by Approved as to form by '" ~Ien R:Doogin L:ity-Att6rney 18-12 RESOLUTION NO. 2011- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AUTHORlZING THE CITY MANAGER TO ENTER INTO AN AGREEMENT FOR THE EXCHANGE OF A 1.89-ACRE PARCEL (APN# 644-041-41) LOCATED IN THE CHULA VISTA AUTO PARK FOR A 1.89-ACRE PARCEL LOCATED IN THE LOWER SWEETWATER VALLEY TO BE USED FOR PARK PURPOSES WHEREAS, Western Chula Vista suffers from an imbalance of parkland in relation to the number of residents living west ofInterstate 805; and WHEREAS, the 2005 General Plan update identified the Lower Sweetwater Valley as an appropriate location to site a new twenty (20)-acre community park; and WHEREAS, the City of Chula Vista has been proactive in securing available acreage for the development of a new community park in the Lower Sweetwater Valley; and WHEREAS, the City of Chula Vista, in 20 I 0, acquired 14.25 acres of parkland in the Lower Sweetwater Valley; and WHEREAS, the City was approached by Tony McCune to purchase a 1.89-acre parcel (APN# 644-041-41) located in the Chula Vista Auto Park; and WHEREAS, the Agency prepared an appraisal for the site that determined the value to be $940,000 dollars; and WHEREAS, the City proposes to use Park Acquisition and Development funds to purchase of the 1.89-acre parcel; and WHEREAS, the City will exchange the 1.89-acre parcel for a property of equal size in the Lower Sweetwater Valley that will be used for public park purposes. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula does hereby authorize the City Manager to enter into an Agreement for the Exchange ofthe1.89- acre parcel (APN #644-041-41) for a 1. 89-acre parcel located in the Lower Sweetwater Valley to be used for Park Purposes, in substantially the form presented with such minor modifications as may be required and approved by the City Attorney and authorize the Mayor to execute the agreements or any other necessary agreement necessary to implement the agreements. 18-13 Resolution 2011-_ Page 2 Presented by Approved as to form by . ~~'\ '. ' Gary Halb ,P.E., AlCP Assistant it Manager Development Services Director .. -...... "'" plen R. Googms\ '..) ~mey '-----./ 18-14 RESOLUTION NO. 2011- RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA ENTERING INTO AN OPTION AGREEMENT TO EXCHANGE A 6. I-ACRE PARCEL LOCATED ADJACENT TO SR-125 AND EASTLAKE DRIVE FOR AN APPROXIMATE 3.85 ACRE PARCEL LOCATED IN THE LOWER SWEETWATER V ALLEY FOR PARK PURPOSES WHEREAS, Western Chula Vista suffers from an imbalance of parkland, in relation to the number of residents living west ofInterstate 805; and WHEREAS, the 2005 General Plan update identified the Lower Sweetwater Valley as a appropriate location to site a new twenty (20)-acre community park; and WHEREAS, the City of Chula Vista has been proactive in securing available acreage for the development of a new community park in the Lower Sweetwater Valley; and WHEREAS, the City of Chula Vista in 2010 acquired 14.41 acres of parkland in the Lower Sweetwater Valley; and WHEREAS, the City approached Dan Floit, the owner of the 3.85-acre parcel, concerning his desire to exchange his property located in the Lower Sweetwater Valley for a 6.1- acre City-owned remnant parcel located adjacent to SR-125 and Eastlake Drive; and WHEREAS, Mr. Floit is interested in the exchange, provided he is able to secure entitlements for the development of the Eastlake Drive site; and WHEREAS, the City proposes to allow an option to Mr. Floit for the 6.l-acre parcel, which shall be exchanged for the 3.85 acre parcel, if exercised, so that he may pursue the General Plan Amendment and rezone of the city-owned parcel necessary for his development; and WHEREAS, Mr. Floit understands and agrees that all costs associated with the processing of a General Plan amendment and rezone are his; and WHEREAS, the City of Chula Vista has made no representations concerning Mr. Floit's ability to secure his desired entitlements, but the City will process his application and present it to the appropriate legislative bodies for review and consideration. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of Chula Vista does hereby enter into an Option Agreement to exchange a 6.1-acre parcel located adjacent to SR-125 and Eastlake Drive for an approximately 3.85-acre parcel located in Lower Sweetwater Valley for Park Purposes. 18-15 Resolution No. 2011- Page 2 Presented by: Gary Halbert Assistant Ci anagerl Development Services Director Approved as to form by 18-16 r I THE ATTACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY OUNCI ) ---.----. Dated: /I h II / I PURCHASE AND SALE AGREEMENT BETWEEN THE CITY OF CHULA VISTA, AND RICHARD S. MCCUNE, JR. 18-17 I. , , DRAFT /11/09/11 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS SELLER: BUYER: DATED: DRAFT Richard S. McCune Jr. City of Chula Vista November 15,2011 18-18 Effective Date: Property: Seller: Seller's Address: Buyer: Buyer's Address: Purchase Price: Outside Closing Date (or Closing) Tit]e Company: Escrow Holder: DOCSOC/1494229v3/024212-0005 BASIC TERMS The effective date shall be deemed to be November 15,2011 Real property generally known as: 1877 Auto Park Place Chula Vista, California 9]910 Richard S. McCune Jr. 736 Rosecrans Street San Diego. CA 92106 Fax No. 619-477-8123 City of Chula Vista, a chartered municipal corporation 276 Fourth Avenue Chu]a Vista, California 91911 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 $940,000.00. December 31, 2011 Stewart Title of California, Inc. 7676 Hazard Center Drive San Diego, California 92108 Stewart Title of California, Inc. 18-19 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS This PURCHASE AND SALE AGREEMENT. AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into this _ day of _,2011 ("Effective Date"), by and between the CITY OF CHULA VISTA, a chartered municipal corporation ("City" or "Buyer"), and RICHARD S. MCCUNE JR., ("Seller") for acquisition by Buyer of all of Seller's interests, tangible and intangible, in that certain Property defined and described below. The Effective Date shall be the date on which the City's governing body duly considered and took action to approve this Agreement. c > RECITALS A. Seller owns fee title to approximately 1.89 acres of real property located in the City of Chula Vista, California, commonly known as 1877 Auto Park Place, Chula Vista, California and . legally described in Exhibit A and depicted in Exhibit A-I, both attached hereto and incorporated herein by these references, ("Property" as more fully described in Section I, below). B. Buyer desires to acquire a contractual interest to purchase the Property in order to assign such rights to Mid-City,LLC ("Floit") in exchange for other real property that Buyer desires to acquire for public purposes. C. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows: 1. Purchase and Sale. Seller hereby agrees to sell the Property to Buyer, and Buyer hereby agrees to purchase the Property from Seller, on the terms and conditions set forth in this Agreement. Seller shall convey to Buyer fee simple, marketable title with the condition of title for the .Property meeting the requirements of Section 3 herein for which Seller is responsible. The term "Property" is defined inclusively and collectively for and under this Agreement as the following: (a) The fee interest in the Property; (b) All improvements, if any, to the Property; (c) All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the Property. "Property" shall be deemed to include, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived from the Property that are owned by Seller; (d) All moveable and immovable personal property, equipment, supplies, furniture, and fixtures owned by Seller and located at the Property, if any, as of Closing, as set forth in Section 2( d) below; and (e) All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the Property and the improvements thereon. 2 DOCSOC/1494229v310242] 2-0005 18-20 2. Purchase Price: Pavment of Purchase Price: Settlement. Release and Waiver. (a) All Inclusive Purchase Price. The Purchase Price far the Property shall be the sum .of Nine Hundred Farty Thausand Dallars ($940,000). The purchase price ta be paid ,by Buyer pursuant ta this Sectian is hereinafter referred ta as the "Purchase Price." (b) Installment Payments. The Purchase Price is to be paid in twelve, equal, manthly installments, with na interest charged: each installment shall be in the amaunt .of $85,454.55. , The first payment shall be paid upan clase .of escrow and each subsequent payment shall be made at ane-manth intervals, payable an the first day .of the first full manth after clase bf escra w. (i) The abligatian ta pay the 12 equal manthly installments shall be an unsecured abligatian ta the City. There shall be na lien against .or ather encumbrance an the praperty securing the lien, nar shall any assignment .of this Agreement .obligate the assignee ta make such payments and they shall remain the sale abligatian .of the City, unless such assignee has expressly agreed in writing ta became sa .obligated. (c) Deposit of First Installment of Purchase Price in Escrow. As cansideratian far the sale .of the Property from Seller ta Buyer, Buyer shall, .one business day priar ta Clasing, depasit with the escrow .officer ("Escrow Halder") immediately available funds in the amaunt .of $85,454.55, tagether with funds necessary ta caver all .of the Buyer's Charges described in Sectian ll(b). (d) Full and Complete Settlement, Release and Waiver. The Purchase Price is all-inclusive and shall remain tatal campensatian paid by Buyer ta Seller far all .of Seller's interests in the Praperty, inclusive .of any and all rights .or abligatians which exist .or may arise .out .of Buyer's acquisitian .of the Property, including withaut limitatian, Seller's fee interest in the land, all improvements pertaining ta the realty, all ather improvements, 'furnishings, fixtures, and equipment lacated therean, severance damages, if any, alleged pre-candemnatian damages, if any, alleged lass .of business gaadwill, if any, eligible casts directly attributed ta the develapment .of the Property, relacatian benefits and assistance, if any, casts, interest, attarney's fees, and any claim whatsaever .of, by, .or thraugh Seller that may arise aut .of .or relate in any respect ta Buyer's acquisitian .of the Property from Seller. In this regard Seller acknawledges that based en the advice .of ceunsel, as and if Seller elects te .obtain the advice .of ceunsel, Seller is and will be fully satisfied that the Purchase Price is fair and adequate cansideratien far all interests in the Praperty and that it is all-inclusive campensatian far the Praperty . In furtherance .of the faregaing paragraph, Seller understands that Buyer wauld nat have entered inta this Agreement witheut Seller's agreement ta (i) sell the Preperty fer an all- inclusive Purchase Price and (ii) knawingly, valuntarily, and intentianally waive accarding te the terms set farth herein, any and all .of Seller's interest in .or right ta any relacatian assistance .or benefits under the Relacatian Laws and far any ather .or further campensatian .or cansideratian far the Property and all interests therein .or arising therefrom. Therefare, the Purchase Price has been determined by and is inclusive .of Seller's agreement hereunder 'ta fully release and discharge Buyer fram all and any manner .of rights, demands, liabilities, abligatians, claims, .or causes .of actian, in law .or equity, .of whatever kind .or nature, whether knawn .or unknawn, whether naw existing .or hereinafter arising ("Claims"), which arise from 3 18-21 or relate in any manner to (i) the sale of the Property to the extent such claims are based on the fact that Buyer is a public entity; (ii) the relocation of any person or persons or other occupant or occupants located on the Property, including the specific waiver and release of any right to any relocation benefits, advisory or other assistance, and/or payments under the Relocation Laws as to whom this waiver and release is effective, notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under said Relocation Laws or other state or federal law; and (iii) compensation for any interest in the Property or income from the Property including, but not limited to, land and improvements, fixtures, furniture, or equipment thereon, goodwill, severance damage, leases or other contracts relating to the Property, attorneys' fees, or any other compensation of any nature whatsoever. By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with, the items set out in Section 2(c) above, the Seller expressly waives any rights under California Civil Code Section 1542, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WillCH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN ins OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WillCH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED illS OR HER SETTLEMENT WITH THE DEBTOR." Seller's Initials 3. Escrow and Title Matters. (a) Escrow and Closing. (i) Ooening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened ("Opening of Escrow") on the date that Escrow Holder receives a copy of this Agreement fully executed by Seller and executed and attested by Buyer. Buyer and Seller shall use reasonable efforts to cause the Opening of Escrow to occur on or before five (5) business days after the Effective Date. Escrow Holder shall promptly notify Buyer and Seller in writing of the date of the Opening of Escrow. Buyer and Seller agree to execute, deliver and be bound by any reasonable or customary supplemental Escrow instructions or other instruments' reasonably required by Escrow Holder to consummate the transaction contemplated by this Agreement; provided, however, that no instrument shall be inconsistent or in conflict with, amend or supersede any portion of this Agreement. If there is any conflict or inconsistency between the terms of an instrument and the terms of this Agreement, then the terms of this Agreement shall control. Without limiting the generality of the foregoing, no instrument shall extinguish any obligations imposed by this Agreement or any other contract between Seller and Buyer. (ii) Closing. For purposes of this Agreement, the "Closing" or "Closing Date" shall be the date the Grant Deed (as defined below) is recorded pursuant to applicable law in the Official Records of San Diego County. Unless changed in writing by Buyer and Seller, the Closing shall occur on or before December 31, 20 II ("Outside Closing 4 18-22 Date"). If the Closing has not, for any reason, occurred by the Outside Closing Date (as it may be extended pursuant to the immediately preceding sentence), then either Buyer or Seller may terrninate this Agreement by delivering written notice to the other at any time after the Outside Closing Date; provided, however, that if there is a Seller Default or a Buyer Default under this Agreement at the time of the terrnination, then the termination shall not affect the rights and remedies of the non-defaulting party against the defaulting party. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon thereafter as Buyer's and Seller's Conditions Precedent to Closing are satisfied pursuant to Sections 7(a) and 7(b) of this Agreement. (b) Title Matters. (i) Buver's Title Policv. Concurrently with the Closing, the Title Company shall issue to Buyer a 2006 CLTA or ALTA, at the option of Buyer, owner's policy of title insurance (amended 6/1 7/06) without arbitration provisions in the amount of the Purchase Price, showing fee title to the Property vested solely in the City of Chula Vista, a chartered municipal corporation, or City's designee, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated as of September 20, 20 II, issued by Stewart Title of California, Inc. with respect to the Property ("Title Report"), attached hereto as Exhibit c: [lli~]~II)B.Q1gillfxG~P.:TIQN'~IT'ttJfr':I.;:@!'.9.KI] (collectively, "Buyer's Title Policy"). The premium for the Buyer's Title Policy and any endorsements required by Buyer shall be charged to Seller and Buyer as described in Section II, subdivisions (a) and (b). Buyer may require, as a Buyer's Condition Precedent to the Closing, that Seller execute an estoppel agreement and/or a subordination agreement in a forrn acceptable to Buyer, confirming that, as of the Closing, (a) the Seller shall nave no further interest in the Property or any portion thereof or any improvements thereon. (ii) No New Liens or Exceptions. Buyer hereby objects to any and all liens and exceptions to title not shown on the Title Report. Further, during the period commencing on the Effective Date and continuing until the Closing, Seller agrees it shall not cause any new or modified lien or encumbrance to title to become of record against the Property, unless such lien or encumbrance is approved in writing by Buyer. Each and every new lien or encumbrance shall be subject to Buyer's prior written consent and unless and until approved by Buyer shall be deemed a disapproved exception to title that shall be removed by Seller at Seller's sole cost as a condition to Closing. 4. Seller's Delivery of Property Documents. (a) Seller's Delivery of Property Documents: Within three (3) days after the Effective Date, Seller shall deliver to Buyer complete, true, and legible copies of the following items (collectively, "Property Documents"): (i) Copies of tax bills, including assessments, if any. (ii) Proof of Sellers' authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Buyer and the Title Company. 5 18-23 (iii)Each and every contract, agreement, license and lease relating to and/or affecting the Property, specifying which of such contracts, agreements, licenses, and/or leases are anticipated to bind Buyer or affect the Property following the Close of Escrow, if any, with the exception of the Title Report which shall be handled as set forth in Section 3(b). (b) Property Documents delivered to Buyer as of Effective Date. As of the Effective Date, Seller has delivered to Buyer the following Property Documents: (i) The Title Report (ii) Polanco Redevelopment Act Remediation and Conditional Immunity Agreement ("Polanco Documents") (iii) Substitution of Trustee and Partial Reconveyance, recorded 9/5/2008 (c) Deliveries to Floit. Any and all documents delivered to Buyer pursuant to this Agreement shall also be delivered to Floil. . 5. Buver's Ril!ht of Entry and Tests of Prooertv. From and after the Effective Date through the earlier to occur of the termination of ihis Agreement or the Closing Date, Seller shall permit Buyer and Buyer's employees, agents, consultants and contractors to enter upon the Property during normal business hours, provided 24 hours prior notice has been given to Seller, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as Buyer in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports; environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of adverse soils conditions, adverse groundwater c.onditions, asbestos, lead based paint, and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, "Tests"). (a) Conditions to Right of Entry for Tests. As a condition to conducting any Tests, Buyer shall (i) prior to entry, notify Seller not less than 24 hours in advance of the purpose of the intended entry and provide to Seller the names and affiliations of the entity or person(s) entering tbe Property; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the Property free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the Property for such Tests performed by or on behalf of Buyer; (v) Buyer to maintain, or Buyer to cause to be maintained by Buyer's contractor(s), workers' compensation insurance on all persons entering the Property for such Tests in the amounts required by the State of California; (vi) Buyer to maintain, or Buyer to cause to be maintained by Buyer's contractor who will be entering the Property, commercial general liability insurance policy with a financially responsible insurance company (or as to Buyer its membership in a joint powers insurance authority with comparable coverage) covering any and all liability of Buyer and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the Property, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly 6 18-24 repair any and all damage to the Property from such Tests caused by Buyer, its agents, employees, contractors, or consultants and retum the Property to its original condition (subject to the Tests conducted) following Buyer's entry. Buyer shall indemnify, defend, and hold harmless Seller and its agents from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of Buyer, its agents, contractors, consultants, and employees upon the Property for and related to such entry and Tests or from Buyer's failure to comply. with the conditions to Buyer's entry onto the Property for such Tests. Such indemnity shall survive the Close of Escrow or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the Property and/or the Tests. 6. Due Dilil.!ence Notices. (a) Buyer's Due DiligenceNotice. Buyer shall notify Seller in writing on or before on or before a date['lli~fI3:I}#2Pl'i~J)&y:~j following the opening of Escrow ("Contingency Date") of Buyer's approval or disapproval in its sole and absolute discretion of the Property Documents and of the condition of the Property as disclosed by the Tests ("Buyer's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action Seller would be required to take to remediate or cure the objectionable matters to Buyer's satisfaction. (i) Provided that Seller has delivered the Property Documents to Buyer within the time set forth in Section 4(a), Buyer's failure to deliver the Buyer's Due Diligence Notice on or before the Contingency Date shall be deemed Buyer's disapproval of the Property Documents and condition of the Property. In such event of Buyer's failure to deliver its Buyer's Due Diligence Notice, then such failure shall be deemed Buyer's election to terminate this Agreement. (b) Seller's Due Diligence Notice. In the event Buyer timely delivers its Buyer's Due Diligence Notice disapproving any Property Documents or any condition Of the Property, Seller shall have ten (10) days from receipt of Buyer's Due Diligence Notice to deliver written notice to Buyer ("Seller's Due Diligence Response Notice") of Seller's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable conditions at its sole cost prior to the Close of Escrow; or .(iii) correct and/or remediate all objectionable conditions at its sole cost prior to the Close of Escrow. (i) If Seller's Due Diligence Response Notice informs Buyer of Seller's election to terminate Escrow (choice (i) in subsection (b) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights or obligations hereunder. Seller's failure to deliver Seller's Due Diligence Response Notice shall be deemed Seller's election to terminate this Agreement (choice (i) of subsection (b ) above) and the parties shall have no further rights or obligations hereunder. (ii) If Seller's Due Diligence Response Notice informs Buyer of Seller's election to correct certain of the objectionable conditions (choice (ii) in subsection (b) above), then Buyer shall have the right, by a second written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Due Diligence Response Notice, to agree to accept the Property subject to one or more of the objectionable conditions that Seller will not correct 7 18-25 ("Buyer's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that Buyer is willing to accept, in which event Seller may elect, in its sole discretion, to either (A) accept Buyer's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the sale of the Property to Buyer, with Buyer taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credit against the Purchase Price (subject to Seller's correction of certain conditions to be corrected as listed in Seller's Due Diligence Response Notice), or (B) reject Buyer's Second Due Diligence Notice and terminate the Escrow. (A)]f Seller accepts Buyer's Second Due Diligence Notice, then the correction of and/or completion of the remediation or removal of objectionable conditions listed in the Seller's Due Diligence Notice shall be deemed to be one ofthe Buyer's Conditions Precedent to Closing under Section 7 below, and Buyer and Seller shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed. (iii) If Selier's Due Diligence Response Notice informs Buyer of Seller's election to correct all of the objectionable conditions (choice (iii) in subsection (b) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of the Buyer's Conditions Precedent to Closing under Section 7 below, and Buyer and Seller shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. (c) Prior to Assignment. ]n the event that Buyer has not assigned this Agreement to Floit prior to the commencement of any due diligence period hereunder, for the purpose of this section, the term "Buyer" shall include Floil. 7. Conditions Precedent to Close of Escrow and Termination Rights. (a) Buyer's Conditions Precedent. The Closing and Buyer's obligation to buy the Property and to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Buyer's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Buyer's benefit only. (I) No Termination as a Result of Buver's Due Diligence Review. This Agreement shall not have terminated pursuant to Sections 3(a)or 6.as a result of Buyer's review and inspection of the Title Report, the Property Documents to, and/or the Tests on the Property. (2) Seller Title. Seller shall have fee title to the Property. (3) Buver's Title Policv. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide Buyer's Title Policy for the Property upon the Closing, in accordance with Section 3(a). 8 18-26 (4) Representations and Warranties. All representations and warranties of Seller contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. (5) No Seller Default. As of the Closing, there shall be no Seller Default under this Agreement. (6) Termination of Agreements: Vacancv of Property. Except to the extent expressly disclosed in writing to Buyer (and approved by Buyer) in Exhibit D, Seller shall have terminated any and all contracts affecting and/or relating to the Property and any and all leases and licenses for space at the Property, and all tenants, licensees, or other occupants shall have permanently vacated the Property. McCune shall cause to be removed and/or terminated, at McCune's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting the Property, except to the extent such instruments are permitted and approved by City pursuant to Sections 3(b )(ii) and 6, above and as expressly disclosed to City in Exhibit D. (7) Satisfaction of Conditions. All conditions precedent for the Closing of Escrow have been satisfied or waived pursuant to the terms of that certain Purchase and Sale Agreement and .Joint Escrow Instructions between Floit and City dated concurrently herewith. (b) Seller's Conditions Precedent. The Closing and Seller's obligation to sell the Property and consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Seller's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Seller's benefit only: (I) No Buver Default. As of the Closing, there shall be no Buyer Default under this Agreement. (2) Representations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. . (3) Deliverv of Funds and Documents. Buyer shall have delivered all funds and documents and other items described in Section 9. (c) Waiver. Buyer may at any time or times, at its election in its sole and absolute discretion, waive any of the Buyer's Conditions Precedent set forth in Section 7(a), but any such waiver shall be effective only if contained in a writing signed by Buyer and delivered to Seller and Escrow Holder. Seller may at any time or times, at its election in its sole and absolute discretion, waive any of the Seller's Conditions Precedent set forth in Section 7(b) above, but any such waiver shall be effective only if contained in a writing signed by Seller and delivered to Buyer and Escrow Holder. (d) Termination. In the event that each of the Buyer's Conditions Precedent set forth in Section 7(a) is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Buyer pursuant to Section 7(c), and provided there is no Buyer Default under this Agreement, Buyer may at its option terminate this Agreement and 9 18-27 the Escrow opened hereunder. In the event each of the Seller's Conditions Precedent set forth in Section 7(b) is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Seller pursuant to Section 7(c), and provided there is no Seller Default under this Agreement, Seller may at its option terminate this Agreement and the Escrow opened hereunder. Notwithstanding the foregoing, if Escrow is not in a position to close due to a party's failure to deposit into Escrow any documents or funds required for the Closing of Escrow, the non-defaulting party shall not have the right to terminate this Agreement without first having given the defaulting party notice of the default and five (5) days to cure the default, with the understanding that it is the parties' desire that this Agreement not terminate as a result of a technicality such as if party's inadvertent failure to timely make a deposit of a document or money into Escrow. No termination under this Agreement shall release either party then in default from liability for such default. In the event this Agreement is terminated, (i) all documents and funds delivered by Seller to Buyer or Escrow Holder shall be returned immediately to Seller, provided there is no Seller Default, and likewise (ii) all documents and funds delivered by Buyer to Seller or Escrow Holder shall be returned immediately to Buyer. (i) If Escrow fails to close due to a party's default or breach, the defaulting or breaching party shall pay all Escrow Cancellation Charges. If Escrow fails to close for any other reason, each party shall pay one-half of all Escrow Cancellation Charges. The term "Escrow Cancellation Charges" shall mean all fees, charges and expenses actually charged by Escrow Holder and the Title Company to the parties in connection with the cancellation of the Escrow and the title order, if any. 8. Seller's Deliveries to Escrow Holder. At least two (2) business days prior to the Closing Date, except as to possession of the Property which shall be delivered as of Closing, Seller shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged: (a) Seller's Charges. Immediately available funds in the amount necessary to pay Seller's Charges as set forth in Section I I (a) herein; provided, however, that instead of depositing such funds into Escrow Seller shall have the right to have Seller's Charges deducted from the sale proceeds due to Seller. (b) Grant Deed. The Grant Deed in the form attached hereto as Exhibit B CGrant Deed"), duly executed by Seller and acknowledged. (c) Bill of Sale. Ifrequired by Buyer, the Bill of Sale, in the form attached hereto as Exhibit F, duly executed by Seller, with a list of all FF&E relating to the Property appended thereto, as required by Section 2(d). (d) Licenses, Certificates, and Permits. To the extent the same are within the actual or constructive knowledge of, or in the possession, custody or control of, Seller and are applicable and/or transferable to Buyer, all original licenses, certificates and permits pertaining to the Property and beneficial for, or necessary for, or affecting the use or occupancy thereof. 10 18-28 (e) FIRPTAlTax Exemption Forms. Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit E ("FIRPT A Certificate") (unless Seller is a "foreign person," as defined in Section I 445 in the Internal Revenue Code of I 986), together with any . necessary tax withholding forms, and a duly executed California Form 593-C, as applicable ("California Exemption Certificate"). . (f) Authority. Such proof of Seller's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Buyer and the Title Company. (g) Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 9. Buver's Deliveries to Escrow. At least two (2) business days prior to the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder the following, each duly executed and acknowledged, by Buyer as appropriate: (a) Purchase Price. The first installment of the Purchase Price (as provided in Section 2(b) hereof), and any additional funds necessary to pay Buyer's Charges set forth in Section II(b) herein. In the event Seller does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code, as evidenced by the delivery at Closing of the California Exemption Certificate duly executed by Seller, Title Company shall withhold three and one-third percent (3 113%) of the Purchase Price on behalf of Buyer for payment to the California FranchiseTax Board in accordance with Section I I (d) hereof. In the event Seller is not exempt from such withholding or does not otherwise deliver the California Exemption Certificate at Closing, Buyer shall execute and deliver three (3) originals of California Form 597 to Title Company at or immediately after Closing. (b) Final Escrow Instructions. Buyer's final written Escrow instructions to close Escrow in accordance with the terms of this Agreement. (c) Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 10. Tax Adiustment Procedure. Escrow Holder is authorized and is instructed to comply with the following tax adjustment procedure: (a) Delinquent Taxes. Pay and charge Seller for any unpaid delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the Property. (b) Proration. Escrow is not to be concerned with proration of Seller's taxes for the current fiscal year. Seller's prorala portion of taxes due at close of Escrow, shall be cleared and paid by Seller, outside Escrow, pursuant to provisions of Section 5082 through 5090 of the Revenue and Taxation Code of the State of California. II 18-29 (c) Refund of Taxes. After the Closing of the Escrow, Seller shall have the right in Seller's sole . . discretion to apply to the San Diego County Tax Collector for refund of any excess property taxes paid by Seller with respect to the Property, so long as no proration or credit for such taxes was provided to Seller through the Escrow. This refund would apply to the period after the Closing Date and Buyer's acquisition of the Property pursuant to Revenue and Taxation Code Section 5096.7. 11. Escrow Holder Authorization. Escrow Holder is authorized to and shall pay, charge and perform the following: (a) Seller Charges. (i) Removal of Title Exceptions. Pay and charge Seller for any amount necessary to cause the removal of any title matters that Seller agreed to remove pursuant to Section 3(b) and to convey fee simple, marketable title pursuant to the requirements of this Agreement. (ii) Seller's Share of Charges of Escrow. Pay and charge Seller for one half (1/2) of the Escrow fee, any documentary transfer taxes, and all title insurance premiums for the Buyer's Title Policy premium which would be incurred for a CL TA standard owner's form policy and the endorsements described in Section 3(b)(i). (iii)The charges set forth in this Section 11 (a) are herein referred to as the "Seller's Charges." (b) Buyer Charges. Pay and charge Buyer for one half (1/2) of the Escrow fees, all charges for recording the Grant Deed, and any additional title coverage requested by Buyer, including the difference between a CL T A standard owner's policy (which CL TA policy and the endorsements described in Section 3(b)(i)) are and shall remain Seller's Charges) and an AL T A extended owner's policy (collectively, "Buyer's Charges"). (c) Tax Requirements. Escrow Holder shall prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099 S form, and be responsible for withholding taxes, if any such forms and/or withholding is provided for or required by law. . (i) California WithholdinQ. In the event Seller does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code ("Tax Code") as evidenced by the delivery to Buyer at Closing of the California Exemption Certificate duly executed by Seller, (i) Escrow Holder shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of Buyer at Closing for payment to the California Franchise Tax Board in accordance with the Tax Code, (ii) Buyer shall deliver three (3) duly executed originals of California Form 597 to Escrow Holder at or immediately after Closing, (iii) two (2) executed originals of California Form 597 shall be delivered by Escrow Holder to Seller, and (iv) on or before the 20th day of the month following the month title to the Property is transferred to Buyer (as evidenced by the recording of the Grant Deed), Escrow Holder shall remit such funds withheld from the Purchase Price, together with one (I) executed original of California Form 597 to the California Franchise Tax Board on behalf of Buyer. Buyer and Seller hereby appoint Escrow Holder as a reporting entity under the Tax Code, authorized to withhold and remit the withholding tax contemplated under the Tax Code, together with 12 18-30 such other documents required by the Tax Code (including, without limitation, California Form 597), to the California Franchise Tax Board. (ii) FIRPT A Withholding. If Seller is a "foreign person" under the Foreign Investment in Real Property Transfer Act or an exemption applies, the Escrow Holder shall deduct and withhold from Seller's proceeds ten percent (10%) of the gross sales price and shall otherwise comply with all applicable provisions of the Foreign Investment in Real Property Act and any similar state act. Seller agrees to execute and deliver Exhibit E, as directed by Escrow Holder, or any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of the Foreign Investment in Real Property Act and any similar state act and regulation promulgated thereunder. (d) Closing Statement. Escrow Holder is instructed to prepare and provide copies of a proposed closing statement and thereafter the final closing statement ("Closing Statement") to both Seller and Buyer. Escrow Holder shall deliver the estimated Closing Statement to Seller and Buyer no later than three (3) business days prior to the Closing Date. (e) Escrow Holder Responsibility. The responsibility of the Escrow Holder under this Agreement is limited to Sections 1 through 12, and 18(b) and (c), and to its liability under any policy oftitle insurance issued in regard to this transaction. 12. Closing Procedure. On the Closing Date, and provided all of the Buyer's Conditions Precedent and Seller's Conditions Precedent set forth in Sections 7(a) and 7(b), respectively, of this Agreement have been satisfied or waived in writing by the appropriate party (per Section 7(c)), Escrow Holder shall immediately close Escrow in the manner and order provided below. (a) Recording. Escrow Holder shall cause the Grant Deed to be recorded pursuant to applicable law in San Diego County and obtain conformed copies thereof for distribution to Seller and Buyer. (b) Disburse Funds. Escrow Holder shall debit or credit (as provided herein) all charges to Buyer and Seller and withhold funds pursuant to Section 11. The Purchase Price (less any amounts required to be withheld as provided in Section 11 (d)) shall be distributed by check payable to Seller unless Escrow Holder is instructed otherwise in writing signed by Seller (and, in such event, in accordance with such instructions). (c) Documents to Seller. Escrow Holder shall deliver to Seller, a conformed copy of the Grant Deed, and a copy of all other documents deposited into Escrow by Buyer pursuant to this Agreement. (d) Documents to Buyer. Escrow Holder shall deliver to Buyer the original FIRPTA Certificate, the original California Exemption Certificate (as applicable), a conformed copy of the Grant Deed, the Title Report, and each other document (or copies thereot) deposited into Escrow by Seller pursuant hereto, including, without limitation, those documents referenced in Section 8. . (e) Title Company. Escrow Holder shall cause the Title Company to issue the Buyer's Title Policy to Buyer. 13 18-31 (I) Closing Statement. Escrow Holder shall forward to both Buyer and Seller a separate accounting of all funds received and disbursed for each party in the form of the Closing Statement prepared pursuant to Section II(e). (g) Informational Reports. Escrow Holder shall file any informational reports required by Internal Revenue Code Section 6045( e), as amended. (h) Possession. Possession of the Property shall be delivered to Buyer at the Closing. 13. Representations and Warranties. (a) Seller's Representations and Warranties. In consideration of Buyer entering into this Agreement and as an inducement to Buyer to purchase the Property, Seller makes the following representations and warranties as of the Effective Date and continuously as of the Closing, each of which is material and is being relied upon by Buyer (and the truth and accuracy of which shall constitute a condition precedent to Buyer's obligations hereunder), and all of which shall survive Closing: (i) Seller has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby. (ii) All requisite action (corporate, trust, partnership or otherwise) has been taken by Seller in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any individual, director, manager, shareholder, partner, member, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party shall be required for Buyer to consummate the transaction contemplated by this Agreement.- (A) In this regard, if applicable, Seller shall deliver or cause delivery to Buyer of true and complete copies of each requisite action or authorization (corporate, trust, partnership or otherwise) that has been taken by Seller or will be taken (immediately after taking such action prior to Closing) when in connection with entering into this Agreement and execution of the instruments referenced herein. (iii) The individuals executing this Agreement and the instruments referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof and thereof. (iv) Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms ofthis Agreement or the documents or instruments referenced herein or therein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, lease or other agreement or instrument (a) to which Seller is a party, or (b) that affect the Property of which Seller has actual or constructive knowledge, including, but not limited to, any of the Property Documents. 14 18-32 (v) To the best of Seller's actual or constructive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the Property or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. (vi) To the best of Seller's actual or constructive knowledge; there are no actions or proceedings pending or threatened against Seller, before any court or administrative agent in any way connected with or relating to the Property, or affecting Seller's ability to fulfill all of its obligations under this Agreement. (vii) Seller has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the Property, or any part thereof, or any interest therein, which will survive the Closing. Seller has entered into no understanding or agreement with any taxing or assessing authority respecting the imposition or deferment of any taxes or assignments respecting the Property . (viii)To the best of Seller's actual or constructive knowledge, Seller is not in default of its obligations under any contract, agreement or instrument to which Seller is a party pertaining to the Property. To the best of Seller's knowledge, no document supplied to Buyer by Seller contains any untrue statement of a material fact, and to the best of Seller's actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. (ix) To the best of Seller's actual or constructive knowledge, there are no encroachments onto the Property by improvements on any adjoining property, nor do any buildings or improvements located on the Property encroach on other properties. (x) There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the Property for work performed or commenced for Seller or on Seller's behalf prior to the Effective Date of this Agreement. Seller agrees to indemnify, defend, and hold Buyer and its elected and appointed officials, officers, employees, contractors, and agents harmless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar lien claims against the Property and arising from work performed or commenced for Seller or on Seller's behalf at any time priorto Closing. (xi) Except as may be revealed in the Title Report and the Property Documents delivered to Buyer by Seller, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or management of the Property that will be binding upon Buyer or the Property after the Closing. There are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management ofthe Property to which Seller is a party or of which Seller has actual knowledge and/or constructive knowledge. (xii) Except as revealed in the Title Report and the Property Documents delivered to Buyer by Seller, or as listed in Exhibit D attached hereto, there are not any written or oral contracts, leases, licenses, or contractual rights or options to lease, purchase, or 15 18-33 otherwise enjoy possession, rights or interest of any nature in and to the Property or any part thereof, and except to the extent expressly otherwise agreed by Buyer, no person other than Buyer and Seller shall have any right of possession to the Property or any part thereof as of the Closing. (A) As of the Effective Date, Seller agrees not to enter into any leases, licenses or easements in the Property (or any part thereof), or grant any other rights of access, use or occupancy to the Property (or any part thereof) without the prior written approval of Buyer, which may be granted or denied in Buyer's sole and complete discretion. . (xiii) Except as revealed in the Title Report and the Property Documents delivered to Buyer by Seller pursuant to Section 4(a), Seller shall not allow, consent to, or otherwise permit any encumbrance,lien, or other exception to title to become of record or affect title to the Property during the period from the Effective Date through the Closing Date, unless such encumbrance, lien, or other exception is expressly pre-approved by Buyer in its sole and. absolute discretion. (xiv) Neither Seller nor, to the best of Seller's knowledge, any previous owner, tenant, occupant, or user of the Property used, generated, released, discharged, stored, or disposed of any Hazardous Materials on, under, in, or about the Property, or transported any Hazardous Materials to or from the Property, except as discussed on Exhibit F attached hereto and incorporated herein. (xv) To Seller's actual knowledge no Hazardous Materials exist on, under, in or about the Property, nor have Hazardous Materials ever been transported to or from the Property, except as discussed on Exhibit F attached hereto and incorporated herein.. (xvi) Until the Closing, Seller shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escro}", immediately give written notice of such fact or condition to Buyer. (xvii) Seller represents to Buyer, and Buyer acknowledges the representation of Seller that Seller has never operated, occupied or developed the Property. As used herein, the term "actual knowledge" shall mean the actual, current knowledge of Seller and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge due to any notice or other document addressed to and evidenced to have been sent to Seller, and any other document in the Seller's possession and control. (b) Subsequent Changes to Seller's Representations and Warranties. If, prior to the Closing, Buyer or Seller should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Seller set forth herein incorrect or untrue in any respect (collectively, the "Seller Representation Matter"), then the party who has learned, discovered or become aware of such Seller Representation Matter shall promptly give written notice thereofto the other party and Seller's representations imd warranties shall be automatically limited to account for the Seller Representation Matter. Buyer shall have the right to approve or disapprove any such change and to terminate this Agreement by 16 18-34 written notice to Seller if Buyer reasonably disapproves any such change; provided, however Seller shall first have the opportunity to cure the Seller Representation Matter. If Buyer does not elect to terminate this Agreement, Seller's representation shall be qualified by such Seller Representation Matter and Seller shall have no obligation to Buyer for such Seller Representation Matter. If Buyer does not provide written notice to Seller indicating its approval or disapproval of the change(s), the absence of such notice shall be deemed to be Buyer's disapproval of such changes, and in the event the Seller fails to cure, Buyer shall be deemed to have exercised its right to terminate this Agreement. (c) Buyer's Representations and Warranties. ]n consideration of Seller entering into this Agreement and as an inducement to Seller to sell the Property, Buyer makes the following representations and warranties as of the date hereof and at and as of the Closing, each of which is material and is being relied upon by Seller, the truth and accuracy of which shall constitute a condition precedent to Seller's obligations hereunder, and all of which shall survive Closing: (i) Buyer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby, subject to this representation not becoming effective unless, until, and subject to this Agreemen't being placed on an agenda of the Buyer's governing board for consideration and action at a duly noticed, open public meeting of the Buyer's governing board, and, if approved, then such representation shall be effective as of the Effective Date. Buyer's execution of this Agreement after the Effective Date shall be conclusive evidence that Buyer's governing board has approved this Agreement at a duly noticed, open public meeting. (ii) Subject to (c lei) above, as of the Effective Date, all requisite governmental action has been taken by Buyer in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing Date, no additional consent of any individual, judicial or administrative body, governmental authority or other party shall be required for Seller to consummate the transaction contemplated by this Agreement, subject to no material change in the terms or provisions hereof. (iii)Subject to (c)(i) above, as of the Effective Date, the individuals executing and attesting this Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof. (iv)Neither the execution and delivery of this Agreement and the documents and instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement and the documents and instruments referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreement or instrument to which Buyer is a party or by which any of Buyer's properties are bound, ]7 18-35 (d) Subsequent Changes to Buyer's Representations and Warranties. If, prior to the Closing, Seller or Buyer should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Buyer set forth herein incorrect or untrue in any respect (collectively, the "Buyer's Representation Matter"), then the party who has learned, discovered or become aware of such Buyer's Representation Matter shall promptly give written notice thereof to the other party and Buyer's representations and warranties shall be automatically limited to account for the Buyer's Representation Matter. Seller shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Buyer if Seller reasonably disapproves any such change; provided, however Buyer shall first have the opportunity to cure the Buyer's Representation Matter. If Seller does not elect to terminate this Agreement, Buyer's representation shall be qualified by such Buyer's Representation Matter and Buyer shall have . no obligation to Seller for such Buyer's Representation Matter. 14. Convevance of Property in its Existing Condition. As of the Closing Date, and subject to its rights under Section 5, Buyer acknowledges that Buyer will have been given an adequate opportunity to conduct the Tests at the Property. Except as otherwise expressly provided in this Agreement and except as required to be disclosed or otherwise action taken pursuant to federal, state or local laws and regulations, Seller makes no representation or warranty of any kind as to the physical or environmental condition of the Property or in connection with any matter, report or information relating to the condition of the Property, its value, fitness, use, zoning, entitlements, the existence of Hazardous Materials thereon, moratoriums, economic feasibility, developability or any other matter relating to Buyer's proposed use or development of the Property. 15. Seller's Covenants during Escrow Period. (a) New Liens or Encumbrances. Seller shall not further encumber or place any further liens or encumbrances on the Property from the Effective Date and during the Escrow period to the Closing Date without the express, prior written authorization of Buyer in its sole and complete discretion. Further, if the Buyer does consent to a new lien or encumbrance, then such lien or encumbrance on the Property shall not survive the Closing Date, including, but not limited to, right of entry, covenants, conditions, restrictions, easements, liens, options to purchase, options to lease, leases, tenancies, or other possessory interests or rights of use or rights of entry relating to or affecting the Property without the prior written consent of Buyer which consent may be withheld by Buyer in its sole and complete discretion. (b) Hazardous Materials. Seller shall not cause or permit the presence, use, generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Property; provided, however, the foregoing shall not apply to Hazardous Materials that migrate onto the Property "from other property or from sources other than Seller or a party acting under the direction or control of Seller. Seller shall comply with all applicable Environmental Laws in Seller's use, ownership and operation of the Property. (i) As used in this Agreement, the term "Hazardous Materials" or "Hazardous Material" shall mean any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," 18 18-36 "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), . (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 ofthe California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) lead based paint (viii) polychlorinated biphenyls, (ix) methyl tertiary butyl ether, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. 91317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.c. 996901, et seq. (42 U.S.C. 96903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.c. 999601, et seq. (ii) As used in this Agreement, the term "Environmental Laws" shall mean any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.c. Section 1317), (vi) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901et seq. (42 U.S.C. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., or (viii) any state or federal lien or "superIien" law, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction. 16. Default and Remedies. (a) Seller Default. The term "Seller Default" shall mean Seller's failure to timely perform a material obligation of Seller under this Agreement within five (5) business days following written notice from Buyer describing Seller's failure to perform. In the event of a Seller Default, Buyer, as its sole and exclusive remedies: (i) may terminate this Agreement, or (ii) . shall be entitled to the remedy of specific performance. (b) Buyer Default. The term "Buyer Default" shall mean Buyer's failure to timely perform a material obligation of Buyer under this Agreement within five (5) business days following written notice from Seller describing Buyer's failure to perform. In the event of a Buyer Default, Seller, as its sole and exclusive remedy, may terminate this Agreement. 19 18-37 17. General Provisions. (a) Loss or Damage to Improvements. Loss or damage to the Property including any improvements thereon, by fire, other casualty, or acts of God, occurring at any time prior to the Closing of Escrow shall be at the sole risk of Seller. (b) Notices. All notices, demands, requests or other communications requi"red or permitted hereunder (collectively, "Notices") shall be in writing, shall be addressed to the receiving party, and shall be personally delivered, sent by overnight mail (Federal Express or another carrier that provides receipts for all deliveries), or sent by certified mail, postage prepaid, return receipt requested, to the address listed below: If to Seller: Richard S. McCune Jr. Fax No.: With a copy to: San Diego, CA 92101 Attention: Fax No.: (619) 696-7124 If to Buyer: City ofChula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 With copies to: Dan Floit 3565 7th Avenue. 2nd Floor San Diego. CA 92103 (619) 294-3465 (facsimile) Keenev Waite & Stevens Attn: Richard R. Waite 125 North Acacia Ave.. Suite 10 1 Solana Beach. CA 92075 (858) 523-2135 (facsimile) All Notices shall be effective upon receipt at the appropriate address. Notice of change of address shall be given by written Notice in the manner detailed in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no Notice in accordance with this Section was given shall be deemed to constitute receipt of such Notice. The providing of copies of Notices to the parties' respective counsels is for information only, is not required for valid Notice and does not alone constitute Notice hereunder. (c) Brokers. Buyer and Seller each represent to the other that no brokerage commISSIon, finder's fee or other compensation of any kind is due or owing to any person or entity in connection with this Agreement. Each party agrees to and does hereby indemnify and hold 20 18-38 the other free and harmless from and against any and all costs, liabilities or causes of action or proceedings which may be instituted by any broker, agent or finder: licensed or otherwise, claiming through, under or by reason of the conduct of the indemnifying party in connection with this Agreement. (d) Waivers and Consents. Each provision of this Agreement to be performed by Buyer and Seller shall be deemed both a covenant and a condition and shall be a material consideration for Seller's and Buyer's performance hereunder, as appropriate, and any breach thereof by Buyer or Seller shall be deemed a material default hereunder; provided however that failure of a condition hereunder shall not be deemed or determined to be a default unless such condition is also a covenant. Either party may specifically and expressly waive in writing any portion of this Agreement or any breach thereof, but no such waiver shall constitute a further or continuing waiver of a preceding or succeeding breach of the same or any other provision. A waiving party may at any time thereafter require further compliance by the other party with any breach or provision so waived. , The consent by one party to any act by the other for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or any similar acts in the future. No waiver or consent shall be implied from silence or any failure of a party to act, except as otherWise specified in this Agreement. All rights, remedies, undertakings, , obligations, options, covenants, conditions and agreements contained in this Agreement shall be cumulative and no one of them shall be exclusive of any other. (e) Construction. The parties acknowledge and agree that (a) each party is of equal bargaining strength; (b) each party has actively participated in the drafting, preparation and negotiation of this Agreement; (c) each party has consulted with such party's own independent counsel and such other professional advisors, if at all, as each party has deemed appropriate, relating to any and all matters contemplated under this Agreement; (d) each party and such party's counsel and advisors, ifso elected by the party, have reviewed this Agreement; (e) each party has agreed to enter into this Agreement following such review and the rendering of such advice, if so elected by the party; and (I) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. (I) Cooperation. Buyer and Seller agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the purchase and sale herein,contemplated and shall use all reasonable efforts to accomplish the Closing in accordance with the provisions hereof. (g) Attorney's Fees. ]n the event any declaratory or other legal or equitable action is instituted between Seller, Buyer and/or Escrow Holder in connection with this Agreement, then as between Buyer and Seller the prevailing party shall be entitled to recover from the losing party all of its costs and expenses including court costs and reasonable attorney's fees, and all fees, costs and expenses incurred on 'any appeal or in collection of any judgment. (h) Time. Time is of the essence of every provision herein contained. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from which said period of time runs shall be excluded, and the last day of such period shall be included, unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until 5 :00 p.m. of the next day that is not a Saturday, Sunday, or legal holiday. 2] 18-39 Except as otherwise expressly provided herein, all time periods expiring on a specified date or period herein shall be deemed to expire at 5 :00 p.m. on such specifie"d date or period. (i) Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. "A facsimile signature shall be deemed an original signature. Ul Captions. Any captions to, or headings of, the sections or subsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. (k) No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the parties hereto. (I) Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. (m)City Manager Authority. City's City Manager, or his or her designee shall have the authority to sign closing documents, issue interpretations, waive provisions, and enter into amendments of or supplements to this Agreement on behalf of City, so long as such actions do not substantially or substantively change the terms and conditions of the purchase and sale of the Property as set forth herein and as agreed to by the City in its approval of this Agreement. All other waivers or amendments shall require the consideration and written consent of City's governing board. (n) Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this Agreement, against City unless a claim has first been presented in writing and filed with City and acted upon by City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by City in the implementation of same. Upon request by City, Consultant shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. (0) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. (p) Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated herein by this niference for all purposes. Exhibit A Legal Description Exhibit A-I Diagram - McCune Parcel Exhibit B Grant Deed 22 18-40 Exhibit C Preliminary Report - McCune Exhibit D List of Current Contracts, Leases and Licenses Exhibit E FIRPT A Certificate Exhibit F Polanco Documents (q) Entire Agreement. This Agreement supersedes any prior agreements, negotIatIons and communications, oral or written, and contains the entire agreement between, and the final expression of, Buyer and Seller with respect to the subject matter hereof. The parties hereto expressly agree and confirm that this Agreement (along with the Interim Operating Agreement and the Exhibits hereto) is executed without reliance on any oral or written statements, representations or promises of any kind, which are not expressly contained in this Agreement. No subsequent agreement, representation m promise made by either party hereto, or by or to an employee, officer, agent or representative of either party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. (r) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit ofthe permitted successors and assigns of the parties hereto. (s) Assignment. Buyer may assign its rights under this Agreement, subject to Seller's reasonable approval. Notwithstanding the foregoing, Seller pre-approves City's assignment of its interest in this Agreement to Floit and agrees to cooperate in order to implement same. Such cooperation shall include, without limitation executing an Assignment Agreement consistent herewith on terms reasonably approved thereby. Notwithstanding such assignment, City shall retain the obligations of "Buyer" under Section 2 to pay Seller the . Purchase Price. In the event of such assignment, Seller shall deed the Property directly to Floit or Floil's designee. (t) Like-Kind Exchange. If either party desires to enter into a like kind exchange pursuant to Internal Revenue Code Section 1031, the other party agrees to reasonably cooperate with same, provided that the party desiring such exchange bears all costs related thereto. IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement and Joint Escrow Instructions as of the day and year first written above. "SELLER" RICHARD S. MCCUNE JR. By: Richard S. McCune Jr. 23 18-41 "BUYER" CITY OF CHULA. VISTA, a chartered municipal corporation By: Cheryl Cox, Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 24 18-42 Acceptance by Escrow Holder: r 1, on behalf of Escrow Holder, hereby acknowledges that Escrow Holder has received a fully executed copy of the foregoing Purchase and Sale Agreement and Joint Escrow Instructions by and between Richard S. McCune Jr., a married man holding title as his sole and separate property, as Seller, and the City of Chula Vista, a public body corporate and politic, as Buyer, and agrees to act as Escrow Holder thereunder and to be bound by and strictly perform the terms thereof as such terms apply to Escrow Holder. Dated: ,2011 [NAME AND COMPANY] Escrow Holder 18-43 EXHIBIT A LEGAL DESCRIPTION - MCCUNE PARCEL All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: PARCEL I: THAT PORTION OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF SECTION 162 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDfNG TO MAP THEREOF NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHEASTERLY CORNER OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF SAID QUARTER SECTION 162; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID NORTHEASTERLY QUARTER OF TH NORTHWESTERLY QUARTER 180.00 FEET; THENCE NORTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWESTERLY QUARTER 470.00 FEET, MORE OR LESS TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OF SAID QUARTER SECTION 162, BEING THE TRUE POINT OF BEGINNING; THENCE WESTERLY PARALLEL WITH NORTHERLY LINE OF. SAID QUARTER SECTION 162, BEING ALONG THE SOUTHERLY LINE OF SAID NORTHERLY 190.00 FEET, A DISTANCE OF 50.00 FEET; THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWESTERLY QUARTER A DISTANCE OF 150.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF NORTHERLY 40.00 FEET OF SAID QUARTER SECTION 162; THENCE EASTERLY ALONG SAID SOUTHERLY LINE, A DISTANCE OF 100.00 FEET TO AN INTERSECTION WITH THE WESTERLY LINE OF THE EASTERLY 130.00 FEET OF SAID NORTHWESTERLY QUARTER; THENCE SOUTHERLY ALONG SAID WESTERLY LINE OF 150.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OFSAID-QUARTER SECTION 162; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID QUARTER SECTION 162; BEING ALONG THE SOUTHERLY LINE OF SAID NORTHERLY 190.00 FEET, A DISTANCE OF 50.00 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 2: THAT PORTION OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF QUARTER SECTION 162 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA. COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHEASTERLY CORNER OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF SECTION 162; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID NORTHEASTERLY QUARTER OF THE. NORTHWESTERLY QUARTER 180.00 FEET; THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWESTERLY QUARTER 320.00 FEET, MORE OR EXHIBIT A LEGAL DESCRIPTION Purchase Agreement 18-44 LESS, TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 340.00 FEET OF SAID QUARTER SECTION ]62; TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING NORTHERLY ALONG SAID PARALLEL LINE 150.00 FEET TO AN INTERSECTION WITH. THE SOUTHERLY LINE OF THE NORTHERLY] 90.00 FEET OF SAID QUARTER SECTION ]62; THENCE EASTERLY, PARALLEL WITH THE NORTHERLY LINE OF SAID QUARTER SECTION 162; BEING ALSO THE SOUTHERLY LINE OF SAID NORTHERLY ]90.00 FEET, A DISTANCE OF ]50.00 FEET TO AN INTERSECT]ON W]TH THE WESTERLY LINE OF THE EASTERLY 30.00 FEET OF SAID NORTHWESTERLY QUARTER; THENCE SOUTHERLY ALONG SAID WESTERLY LINE ]50.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 340.00 FEET OF SAID QUARTER SECTION 162; THENCE WEST ALONG SAID SOUTHERLY LINE ]50.00 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 3: ALL THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF QUARTER] SECTION 162, OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MAY 11, 1869, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHERLY LINE OF SAID NORTHEAST QUARTER OF THE NORTHWEST WEST DISTANT THEREON ]80.00 FEET WESTERLY FROM THE SOUTHEASTERLY CORNER THEREON; THENCE NORTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID NORTHEAST QUARTER OF THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OF THE SAID QUARTER SECTION; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID QUARTER SECTION, A DISTANCE OF 50.00 FEET; THENCE NORTHERL Y PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWEST QUARTER, 190.00 FEET TO THE NORTHERLY LINE OF SAID QUARTER SECTION; THENCE WESTERLY ALONG SAID NORTHERLY LINE TO THE EASTERL Y LINE OF THE WESTERLY 387 FEET OF SAID NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SAID QUARTER SECTION ]62; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID WESTERLY 387.00 FEET 660.00 FEET TO THE SOUTHERLY LONE OF SAID NORTHEAST QUARTER OF SAID NORTHWEST QUARTER; THENCE EASTERLY ALONG SAID SOUTHERLY LINE, 100.00 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THE NORTHWESTERLY ]80.00 FEET OF SAID NORTHEAST QUARTER OF THE NORTHWEST QUARTER. ALSO EXCEPTING THEREFROM THE WESTERLY 3.00 FEET OF THE SOUTHERLY 320.00 FEET THEREOF. EXHIBIT A LEGAL DESCRIPTION Purchase Agreement 18-45 EXHIBIT A-I DIAGRAM - MCCUNE PARCEL [INSERT DIAGRAM] EXHIBIT A-I DIAGRAM Purchase Agreement 18-46 EXHIBIT B GRANT DEED RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Chula Vista 276 Fourth A venue Chula Vista, California 91910 Attn: City Clerk APN: 644-041-41 (Space above this line for Recorder's Use Only) This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, RICHARD S. MCCUNE, JR., a married man holding title as his sole and separate property ("Grantor"), hereby grants to the CITY OF CHULA VISTA, a chartered municipal corporation, or its designee, fee simple title to that certain real property located in the County of San Diego, State of California, more particularly described on Schedule 1 attached hereto and incorporated herein by this reference. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ,2011. RICHARD S. MCCUNE, JR., a married man holding title as his sole and separate property By: Richard S. McCune, Ir. EXHIBIT B GRANT DEED Purchase Agreement 18-47 SCHEDULE 1 TO GRANT DEED LEGAL DESCRIPTION. All that certain real property situated in the City of Chula Vista, County of San Diego, State of Califomia, described as follows: PARCEL I: THAT PORTION OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUA.RTER OF SECTION 162 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHEASTERLY CORNER OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF SAID QUARTER SECTION 162; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID NORTHEASTERLY QUARTER OF TH NORTHWESTERLY QUARTER 180.00 FEET; THENCE NORTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWESTERLY QUARTER 470.00 FEET, MORE OR LESS TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OF SAID QUARTER SECTION 162, BEING THE TRUE POINT OF BEGINNING; THENCE WESTERLY PARALLEL WITH NOR THERL Y LINE OF SAID QUARTER SECTION 162, BEING ALONG THE SOUTHERLY LINE OF SAID NORTHERLY 190.00 FEET, A DISTANCE OF 50.00 FEET; THENCE NORTHERLY, PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWESTERL Y QUARTER A DISTANCE OF 150.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF NORTHERLY 40.00 FEET OF SAID QUARTER SECTION 162; THENCE EASTERLY ALONG SAID SOUTHERLY LINE, A DISTANCE OF 100.00 FEET TO AN INTERSECTION WITH THE WESTERLY LINE OF THE EASTERLY 130.00 FEET OF SAID NORTHWESTERLY QUARTER; THENCE SOUTHERLY ALONG SAID WESTERLY LINE OF 150.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OF SAID QUARTER SECTION 162; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID QUARTER SECTION 162; BEING ALONG THE SOUTHERLY LINE OF SAID NORTHERLY 190.00 FEET, A DISTANCE OF 50.00 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 2: THA T PORTION OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF QUARTER SECTION 162 OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA. COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, DESCRIBED AS FOLLOWS: COMMENCING AT THE SOUTHEASTERLY CORNER OF THE NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER OF SECTION 162; THENCE WESTERLY ALONG THE SOUTHERLY LINE OF SAID NORTHEASTERLY QUARTER OF THE NORTHWESTERLY QUARTER 180.00 FEET; THENCE NORTHERLY, PARALLEL WITH EXHIBIT B - SCHEDULE I-I LEGAL DESCRIPTION K:\Current Projects\Floit Properties\5 - Purchase Agreement City - McCune\ATTACHMENTS\B- Purchase Agreement - GRANT DEED.doc 18-48 THE EASTERLY LINE OF SAID NORTHWESTERLY QUARTER 320.00 FEET, MORE OR LESS, TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 340.00 FEET OF SAID QUARTER SECTION 162; TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING NORTHERLY ALONG SAID PARALLEL LINE 150.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OF SAID QUARTER SECTION 162; THENCE EASTERLY, PARALLEL WITH THE NORTHERLY LINE OF SAID QUARTER SECTION 162; BEING ALSO THE SOUTHERLY LINE OF SAID NORTHERLY 190.00 FEET, A DISTANCE OF 150.00 FEET TO AN INTERSECTION WITH THE WESTERLY LINE OF THE EASTERLY 30.00 FEET OF SAID NORTHWESTERLY QUARTER; THENCE SOUTHERLY ALONG SAID WESTERLY LINE 150.00 FEET TO AN INTERSECTION WITH THE SOUTHERLY LINE OF THE NORTHERLY 340.00 FEET OF SAID QUARTER SECTION 162; THENCE WEST ALONG SAID SOUTHERLY LINE 150.00 . FEET TO THE TRUE POINT OF BEGINNING. PARCEL 3: ALL THAT PORTION OF THE NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF QUARTER I SECTION 162, OF RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MAY II, 1869, DESCRIBED AS FOLLOWS: BEGINNING AT A POINT IN THE SOUTHERLY LINE OF SAID NORTHEAST QUARTER OF THE NORTHWEST WEST DISTANT THEREON 180.00 FEET WESTERLY FROM THE SOUTHEASTERLY CORNER THEREON; THENCE NORTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID NORTHEAST QUARTER OF THE SOUTHERLY LINE OF THE NORTHERLY 190.00 FEET OF THE SAID QUARTER SECTION; THENCE WESTERLY PARALLEL WITH THE NORTHERLY LINE OF SAID QUARTER SECTION, A DISTANCE OF 50.00 FEET; THENCE NORTHERLY PARALLEL WITH THE EASTERLY LINE OF SAID NORTHWEST QUARTER, 190.00 FEET TO THE NORTHERLY LINE OF SAID QUARTER SECTION; THENCE WESTERLY ALONG SAID NORTHERLY LINE TO THE EASTERLY LINE OF THE WESTERLY 387 FEET OF SAID NORTHEAST QUARTER OF THE NORTHWEST QUARTER OF SAID QUARTER SECTION. 162; THENCE SOUTHERLY ALONG THE EASTERLY LINE OF SAID WESTERLY 387.00 FEET 660.00 FEET TO THE SOUTHERL Y LONE OF SAID NORTHEAST QUARTER OF SAID NORTHWEST QUARTER; THENCE EASTERLY ALONG SAID SOUTHERLY LINE, 100.00 FEET TO THE POINT OF BEGINNING. EXCEPTING THEREFROM THE NORTHWESTERLY 180.00 FEET OF SAID NORTHEAST QUARTER OF THE NORTHWEST QUARTER. ALSO EXCEPTING THEREFROM THE WESTERLY 3.00 FEET OF THE SOUTHERLY 320.00 FEET THEREOF. EXHIBIT B - SCHEDULE 1-2 LEGAL DESCRIPTION Purchase Agreement 18-49 STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s) acted, executed the instrument. [ 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. Notary Public [SEAL] STATEOFCALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their 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. Notary Public [SEAL] EXHIBIT B GRANT DEED CERTIFICATE OF ACKNOWLEDGEMENT Purchase Agreement 18-50 Purchase Agreement EXHIBIT C PRELIMINARY REPORT - MCCUNE PARCEL [REPORT ATTACHED] EXHIBIT C PRELIMINARY REPORT - MCCUNE 18-51 ~!~~erf ..0'., 'u' "W.~ < . . "0"," ~ Stewart Title of California, Inc 7676 Hazard Center Dr., 14th Floor San Diego, CA 92108 (619) 692-[600 Phone Order Number Title Unit Number PRELIMINARY REPORT 114699 7034 Buyer/Borrower Name: Seller Name: A VCAM Inc. Richard S. McCune Jr. Property Address: 1877 Auto Park Place, Chula Vista, Califomia In response to the above referenced application for a Policy of Title Insurance, Stewart Title of Califomia, Inc. hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referenced to as an Exception on Schedule B or not excluded from coverage pursuant to the printed Schedules, Conditions, and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CL T A and AL T A Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limits of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters, which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note thai this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report, (and any supplements or amendments thereto) is issued solely. for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance a binder or commitment should be requested. Dated as of: September 20, 2011 at 7:30 a.m. Update No. One Frank Green, Title Officer When replying, please contact Rhonda Bernardini, Escrow Officer Stewart Title of Cali fomi a, Inc. 7676 Hazard Center Dr. 14th Floor San Diego, CA 92108 (619) 692-1600 File Number: 114699 Page 1 of9 18-52 PRELIMINARY REPORT The form of Policy of Title Insurance contemplated by tbis report is: Il9 California Land Title Association Standard Coverage Policy o American Land Title Association Owners Policy o American Land Title Association Residential Title Insurance Policy o American Land Title Association Loan Policy o CL T AI AL T A Homeowners Policy o ALTA Short Form Residential Loan Policy (06/16/07) o 2006 AL T A Loan Policy SCHEDULE A The estate or interest in the land hereinafter described or referred to covered by this report is: A fee as to Parcel(s) A. An easement more particularly described below as to Parcel(s) Band C. . Title to said estate or interest at the date hereof is vested in: Richard S. McCune, Jr., a married man as his sole and separate propertY , File Number: 114699 Page 2 of9 18-53 LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, City of Chula Vista, and described as follows: Parcel A: Parcel 9, in the City of Chula Vista, County of San Diego, State of California, according to Map thereof No. 19306, filed in the office of the county recorder of San Diego County. Parcel B: A non-exclusive easement, pursuant and subject to that certain "Grant of Easements and Declaration of Covenants Running With Land", recorded July 26, 1996 as File No. 1996-0377361 of Official Records, for purposes stated therein, on, over and under lands as more particularly described therein. Parcel C: A non-exclusive easement, pursuant and subject to paragraph 3 of exhibit "B" to Grant Deed recorded May 5; 1997 as File No. 1997-0208990 of Official Records, for purposes stated therein, on lands as more particularly described therein. (End of Legal Description) File Number: 114699 Page 3 of9 18-54 SCHEDULE B At the date hereof, exceptions to coverage in addition to the printed exceptions and exclusions contained in said policy or policies would be as follows: Taxes: A. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes, to be levied for the fiscal year 20 II - 2012 which are a lien not yet payable. B. General and Special City and/or County taxes, including any personal property taxes and any assessments collected with taxes, for the fiscal year 2010 - 2011: I" Installment: $6,040.82 Paid 2"d Installment: $6,040.82 Paid Land: $1,064,418.00 Improvements: $0.00 Exemption: $0.00 Code Area: 01126 Assessment No.: 644-041-41-00 Subject to the condition that at the time of closing, proof of payment must be submitted to this Company. Any delinquency or Supplemental Taxes or funds will be held for a period of sixty (60) days from the date of payment. C. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the revenue and taxation code of the State of California. Exceptions: I. Easements and rights of way for road and public utilities and incidental purposes, over, under, along and across those easement parcels herein described, as conveyed and reserved by various deeds of record. 2. An easement for the purpose shown below and rights incidental thereto as set forth in a document to the Pacific Telephone and Telegraph Company, for the purpose of access and utilities, recorded December 15,1910 in Book 506, Page 329 of Deeds. Location of said easement cannot be plotted from record. 3. An agreement to which reference is made for full particulars dated October 10, 1986, by and between The City of Chula Vista, a Municipal Corporation and the Darling Delaware Company, a Delaware Corporation, regarding "Ongoing Monitoring of Waste Disposal Site", recorded November 17, 1986, as Instrument/File No. 86-526881 of Official Records. 4. A document subject to all the terms, provisions and conditions therein contained entitled "Grant of Easements and Declaration of Covenants Running With Land", dated July 17, 1996 executed by Fask Land, Inc., a California Corporation and the Borst Revocable Declaration of Trust dated March 20, 1990 by Frederick Borst and Ruth Ann Borst, Trustees on the one hand, and Darling International Inc., a Delaware Corporation on the other, recorded June 26, 1996 as File No. 1996-0377361 of Official Records. File Number: 114699 Page 4 of9 18-55 5. Covenants, Conditions, and Restrictions as set forth in instrument recorded May 5,1997, as Instrument No.fFile No. 1997-0208990, of Official Records; but omitting any covenant, condition or restriction, if any, based on race, color, religion, sex, handicap, familial status, or national origin, sexual orientation, marital status, ancestry, disability or source of income l)nless and only to the extent that the covenant, condition or restriction (a) is exempt under Title 42 of the United States Code, or (b) relates to handicap, but does not discriminate against handicapped persons. Note: Section 12956.1 of the Government Code provides the following: If this document contains any restrictions based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void. Any person holding an interest in this property may request that the county recorder remove the restrictive language pursuant to subdivision (c) of Section 12956.1 of the Government Code. 6. A covenant and agreement, upon the terms and conditions therein executed by Darling International, Inc., a Delaware Corporation, in favor ofOtay Partners, L.P., a California Limited Partnership, recorded May 5,1997, as InstrumentlFile No. 1997-0208994 of Official Records. 7. Covenants, Conditions, and Restrictions as set forth in instrument recorded December 30,1999, as Instrument No.fFile No. 1999-0843011, of Official Records, but omitting any covenant, condition or restriction, if any, based on race, color, religion, sex, handicap, familial status, or national origin, sexual orientation, marital status, ancestry, disability or source of income unless and only to the extent that the covenant, condition or restriction (a) is exempt under Title 42 of the United States Code, or (b) relates to handicap, but does not discriminate against handicapped persons. Note: Section 12956.1 of the Government Code provides the following: If this document contains any restrictions based on race, color, religion, sex; familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void. Any person holding an interest in this property may request that the county recorder remove the restrictive language pursuant to subdivision (c) of Section 12956.1 of the Government Code. 8. An easement for the purpose shown below and rights incidental thereto as set forth in a document for the purpose of ingress and egress, recorded December 30, 1999, as Instrument/File No. 1999-08430 II of Official Records. Location of said easement cannot be plotted from record. 9. The following recital as contained on Map 11632 "Limits of City Water Quality Control Board, . Approved Clay Lined Disposal Pit Containing Class I Hazardous Waste", I O. An easement affecting the portion of said land a~d for the purposes stated herein and incidental purposes, shown or dedicated by Parcel Map No.: 19306, for: tree planting and landscaping, affects: As shown on said Map. 11. An agreement to which reference is made for full particulars dated August 25, 2003, by and between Knowlton Realty Advisors, LLC and Otay Mesa Ventures II, LLC, regarding "Agreement Providing for Easements, Covenants, Conditions and Restrictions", recorded August 26, 2003, as Instrument/File No. 2003-1039782 of Official Records. 12. An agreement to which reference is made for full particulars dated August 22,2003, by and between the City of Chula Vista and Knowlton Realty Advisors, LLC, regarding "Parcel Map Improvement File Number: 114699 Page 5 of 9 18-56 Agreement", recorded August 26, 2003, as InstrumentlFile No. 2003-1039783 of Official Records. 13. An agreement to which reference is made for full particulars dated August 22, 2003, by and between the City ofChula Vista and Knowlton Realty Advisors, LLC, regarding "Supplemental Parcel Map Improvement Agreement for Auto Park North", recorded August 26, 2003, as Instrument/File No. 2003-1039784 of Official Records. 14. An agreement to which reference is made for full particulars dated July 22, 2003, by and between The Redevelopment Agency of the City of Chula Vista and Knowlton Realty Advisors, LLC, regarding "Owner Participation Agreement", recorded August 26, 2003, as Instrument/File No. 2003-1039785 of Official Records. 15. Covenants, Conditions, and Restrictions as set forth in instrument recorded August 26,2003, as Instrument No./File No. 2003-1039786, of Official Records, but omitting any covenant, condition or restriction, If any, based on race, color, religion, sex, handicap, familial status, or national origin, sexual orientation, marital status, ancestry, disability or source of income unless and only to the extent that the covenant, condition or restriction (a) is exempt under Title 42 of the United States Code, or (b) relates to handicap, but does not discriminate against handicapped persons. Note: Section 12956.1 of the Government Code provides the following: If this document contains any restrictions based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void. Any person holding an interest in this property may request that the county recorder remove the restrictive language pursuant to subdivision (c) of Section 12956.1 of the Government Code. Said Covenants, Conditions, and Restrictions provide that a violation thereof shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value. Said Covenants, Conditions and Restrictions have been modified by an instrument recorded March 6, 2008, as InstrumentlFile No. 2008-0118480 of Official Records. 16. Deed of Trust to secure an indebtedness in the amount shown below, and any other obligations secured thereby: Amount: $3,525,000.00 Dated: August 15, 1003 Trustor: Richard S. McCune, Jr. Trustee: Chicago Title Company Beneficiary: DaimlerChrysler Services North America, LLC Recorded: August 26, 2003, as File No. 2003-1039792 and re-recorded August 29, 2003 as File No. 2003-1061324, both of Official Records Affects: The herein described land and other land. A document entitled "Assignment and Assumption of Deed of Trust with Assignment of Rents, Security Agreement, and Fixture Filing", wherein Chrysler Financial Services Americas LLC (f/k/a DaimlerChrysler Financial Services Americas LLC), a Michigan limited liability company (successor by merger to DaimlerChrysler Services North America LLC) assigns and transfers it's interest to Corepointe Capital Finance LLC, a Delaware limited.liability company recorded July 5, 20 II as file no. 2011-0337896 of Official Records. 17. An agreement to which reference is made for full particulars dated July 22, 2003, by and between the Redevelopment Agency of the City ofChula Vista, a public body corporate and politic and Knowlton File Number: 114699 Page 60f9 18-57 Realty Advisors, LLC, a Utah Limited Liability Company, regarding "Owner Participation Agreement", recorded September 4,2003, as InstrumentlFile No. 2003-1079393 of Official Records. 18. Deed of Trust to secure an indebtedness in the amount shown below, and any other obligations secured thereby: Amount $4,000,000.00 Dated: November 4, 2004 Trustor: Richard S. McCune, Jr. Trustee: LandAmericalCommonwealth Title Company, a Corporation Beneficiary: Daimler Chrysler Services North America, LLC Recorded: November 10, 2004, as InstrumentlFile No. 2004-1069891 of Official Records. Affects: The herein described land and other land. An Agreement to modify the terms and provisions of said Deed of Trust as therein provided, executed by Richard S. McCune, Jr. and DaimlerChrysler Services North America, LLC, Michigan Limited Liability Company, recorded, December 22,2005 as Instrument/File No. 2005-1098141 of Official Records. The beneficial interest of Chrysler Financial Services Americas LLC (f/k/a DaimlerChrysler Financial Services Americas LLC), a Michigan limited liability company (successor by merger to DaimlerChrysler Services North America LLC) under said deed oftrust was assigned to Corepointe Capital Finance LLC, a Delaware limited liability company, by assignment recorded July 5, 2011 as File No. 2011-0337900 of Official Records. (End of Exceptions) File Number: 114699 Page 70f9 18-58 NOTES AND REQUIREMENTS There are no conveyances affecting said land, recorded with the County Recorder within 24 months of the date of this report. The Company is not aware of any matters which would cause it to decline to attach CL T A Endorsement 116, indicating that there is located on said land Vacant known as 1877 Auto Park Place, Chula Vista, California, to an extended coverage policy. None of the items in this report will cause the Company to decline to attach CL T A Endorsement Form 100 to an AL T A Loan Policy, when issued. Requirements: A. ]t is our Company policy that all title fees due are deducted from available proceeds. ]n addition, all title charges are due and payable at the time ofrecording. B. All funds necessary to fulfill payoff requirements, including of taxes, must be received and available for disbursement at the time of closing. C. This Company will require the following documents, in order to insure a conveyance or encumbrance by the corporation or unincorporated association named below: Corporation: A VCAM Inc. (a) A copy of the corporation By-Laws or Articles. (b) An original or certified copy of the Resolution authorizing the subject transaction. (c) ]fthe Articles or By-Laws require approval by a "parent" organization, we will also require a copy of those By-Laws or Articles. (d) ]f an unincorporated association, a statement pursuant to applicable law (such as California Corporation Code Section 20002). The right is reserved to add requirements or additional items after completion of such review. File Number: 114699 Page8of9 18-59 CALIFORNIA "GOOD FUNDS" LAW California Insurance Code Section 12413.1 regulates the disbursement of escrow and sub-escrow funds by title companies. The law requires that funds be deposited in the title company escrow account and available for withdrawal prior to disbursement. Funds received by Stewart Title of California, Inc. via wire transfer may be disbursed upon receipt. Funds received via cashier's checks or teller checks drawn on a California Bank may be disbursed on the next business day after the day of deposit. If funds are received by any other means, recording and/or disbursement may be delayed, and you should contact your title or escrow officer. All escrow and sub-escrow funds received will be deposited with other escrow funds in one or more non- interest bearing escrow accounts in a financial institution selected by Stewart Title of California, Inc.. Stewali Title of California, Inc. may receive certain direct or indirect benefits from the financial institution by reason of the deposit of such funds or the maintenance of suc~ accounts with the financial institution, and Stewart Title of California, Inc. shall have no obligation to account to the depositing party in any manner for the value of, or to pay to such party, any benefit received by Stewart Title of California, Inc.. Such benefits shall be deemed additional compensation to Stewart Title of California, Inc. for its services in connection. with the escrow or sub-escrow. If any check submitted is dishonored upon presentation for payment~ you are authorized to notify all principals and/or their respective agents of such nonpayment. Wire Instructions If you anticipate having funds wired to Stewart Title of California, Inc., our wiring information is as follows: Additional Note: Direct wire transfers to: Union Bank 530 "B" Street San Diego, CA 92101 Routing Number: 122-000-496 Credit to Stewart Title of California, Inc. Account Number: 9120054632 Reference Order Number: 114699 Title Unit Number: 2259 Title Officer Name: Frank Green When instructing the financial institution to wire funds, it is very important that you reference Stewart Title of California, Inc.'s order number. Should you have any questions in this regard please contact your title officer immediately. File Number: 114699 Page 9 of9 18-60 EXHIBIT D LIST OF CURRENT CONTRACTS. LEASES AND LICENSES - MCCUNE PARCEL NONE. EXHIBIT D LIST OF CONTRACTS - MCCUNE Purchase Agreement 18-61 EXHIBIT E FIRPTA CERTIFICATE TRANSFEROR'S CERTIFICATE OF NON-FOREIGN STATUS To inform the CTIY OF CIIULA VISTA ("Transferee"), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended ("Code") will not be required upon the transfer of that certain real property to the Transferee by RICHARD S. MCCUNE, JR., a married man holding title as his sole and separate property ("Transferor"), the undersigned hereby cerofies the following: 1. The Transferor, .Richard S. McCune, Jr., is not a foreign person or cItIzen, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Inct>me Tax Regulations promulgated thereunder); 2. follows: The Transferor's social security nwnber or U.S. employer identification number is as for Richard S. McCune, Jr., 547-42-4073, 3. The Transferor's home or office address is: 736 Rosecrans Street San Diego, CA 92106 The Transferor understands that the Transferee may disclose this certification to the Internal Revenue Service and that any false statement contained herein could be punished by fine, imprisonment or both. Under penalty of perjury, I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct and complete, and I further declare that I have authority to sign this document. RICHARD S. MCCUNE, a married man holding title as h~d sepf"te property ~ \J B\: \ LvJ'- ~ \V\ . ~~ Richard S. McCune, Jr.. ' EXHIBIT E FIRPTA CERTIFICATE Purchase Agreement l 18-52 EXHIBIT F POLANCO AGREEMENT [AGREEMENT ATTACHED]. EXHIBIT F POLANCO Purchase Agreement 18-63 O_8.!1}jO....3~ ~,~v~.og....vF:"'b\ .l...n.3- In..;;," ... f Q ;,J.;I).U \,;,HULA v l;::f.L~. ....Ulrllll. .LI'~..c........ POLANCO REDEVELOPMENT ACT REMEDIATION AND CONDITIONAL IMMUNITY AGREEMENT This Polanco Redevelopment Act Remediation and Conditional Immllllity Agreement \,AgreEmIent") is entered into between the California Regional Water Quality Control Board, San Diego Region ("Regional Board") and the Redevelopment Agency of the City of Chul,l Vista ("Agency") as a result of the following facts and circUIWiUmces: 1.1 Deposits of waste including releases .of hazardous substances at, Oll. beneath and arouud certain real property formerly referred to as the "Omar Rendering Company Site" ("Site") located within the Redevelopment Area of the City of Chula Vista ("City") have causec. discharges of waste to ground water and have caused and threaten to cause conditions of pollution, contamination and nuisance. The cur:rent owner of the Site is Otay Mesa Venrures n. LL.C., a Louisiana limited liability company ("Owner"), which is a Wholly OWIled subsidiary of The LandB:mk Group, Inc., a Lcl:l.isiana cOIpomtion ("LandBank"). (The Site ~haD be more particularly described in the Conceptual Remedial Action PIan ("Conceptoal RAP") refened to below in Secti0'll1.4.) 1.2 The Regio,nal Board has issued to Owner Waste Discharge Requirements (WDRs) for closure and post-closure maintenance of the Class I waste management unit ('landfill cell") constrUcted in 1981 to contain hazardcus waste from prior activities at the Site. (Regional Board Order No. 80-06, "Closure Requirern.en&s for the Omar Rendering Company Dumpsue in the Otay River Valley," as amended and updated by Orders Nos. 87-141 and 97-40.) The WDRs include on-going monitoring llIid reporting requirements. In addition, the Regional Board has issued Cleanup and Abatcroent Order No. R9-2003-0080 ~uiring OWDer to undextak.e cleanup and abatement :for waste dcpo:sited in soil and diSCharged to grou:nd water at the Site. (Regional Board Orders applicable to the Site are attached hereto as Exhibits A,B,C, andD.) 1.3 The Agency is a duly fOlIll.ed redevelopment agency entitled io "take any actions that the agency determines are necessary and that are consistent with other state and federal laws to remedy or remove .a release of hazardous substances ou,. Wlder, or from pruperty within a project area..." (Health and Safety Code 933459.1(a)(1).) The Agency has the authority to require persons responsible for Sites associated with conditions of pollution or nuisance and releases of hazardous substances.. l"l)cluding Owner, to unde.rtake and complete remedial action on properties throughout the redevelopment ai-eas of the City of Chu)a Vista, including at the Sjre. . The Agency has proposed this Agreement with the Regional Board to fa"jJitafe sale of the Site to. a prospective purchaser for redevelopment. The Agency has approved plans for the development of the Site (the "Approved Project"), as proposed by Knowlton Realty Advisors. lLC (''Developer''). The plans fOt the Approved Project were developed ill consultation with tlIe Agency and the Owner to ensure that the Approved Project would be compatible with any activities or facilities needed by Owner to complete the RAP. and comply with appliC"dble Regional Board orders. 1.4 In contemplation of this Agrec;menr, the Agency has required the preparation of a Conceplu.aI RAP that provides a framework for the investigation and cleanup lllJd abatement of . 1 SFI27425J.1 18""64 O.8jlJ!.O}_. IjU.P9....f:~.... . ~ V.J.'" 'f:10 .iJ..,)J..LJ ~HULa Yl~~ft ~U~. v~~~~. conditions of pollurion, contamination and nuisance associated with discharges of waste aDd . releases of hazardous substances at the Site, The Conceptual RAP is attaclJed hereto as Exhibit E. The Conceprnal RAP includes: (1) the grading and soil management plan for the shalloV' soils at the Site necessary for redevelopment (the ~SoiI RequiIements"); (2) a summ~ry of acti.= needed to comply with existing environmental requirements currently applicable to !hI> Site, including WDRs issued by the Regional Bo~ and (3) a framewOI:k for responding W Cleanup and Abatement Order No. R9-2003-OO80 (CAO) and any addenda to the CAO that !ht: Regional Board will issue to Owner requi1iDg Owner to finalize assessment and cleanup an,: abatement related to groundwater contamination at the Site. Plans for remedial Or cleanup anc abatement activities developed by Owner (or by Develope1" where remedial effects arcleanu~ and abarement will be integrated with or incidental to redevelopment) with the concurrence of the Agency will be incorporated into the Conceptual. RAP upon approval by the Regional Board Once all of the plans necessary to address all RegioIl.al Boan:! orders applicable to the Site have been submitted and approved by the Regional Bom:d, the Conceptual RAP shall b:=come the approved Remedial Action Pl&1 ("RAP"} for the Site, as contemplated by Section 33459.3 of the Health & Safety Code. It is intended that the Soil Requirements will be implemented by Developer collCtlUently with or prior to Owner's I"CSpl:!nse to the RegiOllid Board's CAO in a manner that will not impede compliance v;'ith any regulatory requirements the Regionil Board may impose upon the Owner related to conditions at the Site. . 1.5 On April 1, 2003 the Agency adopted a Resolution approving an Agreement with the Regional Board to proceed with remedial action at the Site as provided for in the Polanco Redevelopmenr Act, Health & Safety Code ~33459, et seq. (the "Act"). 'The Agency relies on the understanding that completion of the RAP to the satisfactiOD of the Regional Board will satisfy the requirements of the Act and trigger imm1JIlity under the Act as set forth in ~933459.1 and 33459.3 of the Health ll11d Safety Code. Prior to completion of the RAP, the Agency has arranged for the Regional Board to provide conditional inununity from responsibility for clemup and abatement for Developen; (defined below), as specified below in Section 3.0. 1.6 Concmrent with its approval of this Agreement, the Agency approved that certain Risk Allocation Agreement between the Agency, LandBanlc, Owner, and. Developer ("Risk Allocation Agreement"). Agency would not have entered into this Agreement but for the agreement of LandBank, Owner, and Developer to enter into the Risk Allocation Agreement and their fulfillment of their respective obligations thereunder. In addition, die Agency and the Developer will enter into an agreement for redevelopmenr of the Site. NOW, THER.EFO~, Agency and the Regional.Board agree as follows: 2.1 J'he AgeDcy shall assist the Regional Board in overseeing Owner's development and implementation of the RAP and shall c90perate with the Regional Board in overseeing CAO No, R9-Z0Q3-Q080, WDRs in Order No. 97-40, md lUly lllDCDdments Oi: addenda to these orders and plans is.ued or approved by the Regional Board, together with any other administralive .'=<luuements the Regional Board may impose OIl Owner related to environmental conditions at the Site, other than Soil Requirement> (c;:ollectively, the uRemedi.al RequiremeEts").. Agency's assistance and cOOJ?eration shall include Agency review of any work plan or report submitted by Owner or Developer tha.t is required by the COnceptual RAP or RAP, and, (b) upon request of the Regional Board project manager, reports to the Regional Board on the progress of .:l Sfl27~I.1 18-65 08/18/03 13.:)..O_.f:4J......;";' .......'-" -.:, V <.I.au l.;JiULA V.1::iT...-'\ GUmm.. lJJ:!;y.l;:;J.... -= _... L implementation of Remedial Requirements to the. extent such reports are wilhiIl Agency':: expertise. After reviewing work plans or reports Agency shall notify the Regional Board as te, whether or not such work plans and reports are consistent with the :requirements of the Approve<. Project and the Remedial Requirements, to the extent such wmk plans and reports all: within the expertise of the Agency.. or other responsible agencies of the City. The Agency's notific.a.tior shall identify the scope of the Agency's review and shall identify iSBues that require independenl technical review by the Regional Board. In order [0 assist the Regional Board with groundwate! oversight, the Agency agrees to meet and confer With property owners near the Site to the extent reasonably necessary to facilitate off-site placement' and inspections of m.onitoring wells, or other reasonable non-invasive teating, as JIDlY be required by the Regional' Board. 2.2 Once Owner has' provided Agency with certification that Owner has cCDlplctcd all =edial action requii:ed by the RAP and Agency has detemlined that, to the best of Agency's knowledge and belief, Owner has completc:d au remedial action required by the RAP, or, in the case of long-term treatment or extraction facilities, that Owner has installed and is operating all necessary facilities, che Agency shall notify che Regional Board of its determination. The Agency's notice shall identify the scope of the Agency's review and shall identify matters that require independent teclmical review by the Regional Board. Within sixty (60) days fallowing the date on which the Regional Board finds that the =edial actions required '\l11der the RAl' have been completed, the Regional Board shall notify the Agency in writing that the statutory immunity set forth iII g33459.3 of the Health and Safety Code is applicllble to the Agency and all othet parties entitled to such immmuty. 'The Regional Board acknowledges that: (1) any Jong- term operations and maintenance activities ('O&M") will be undert.aken subsequent to the Regional Board's detenninllt.i.on that the remedial actions required under the RAP have been completed; and (2) the existence of any such O&i\.f obligations shall not affect the applicability of statutory i=unity under the Act. 2.3 The Agency has arranged for the County of San Diego's Department of Environmental Health (the "Health Department'') to oversee implementation and completion of the Soil Requirements .by the Developer in a manner consistent with the grading plan and soil management plan iII the Conceptual RAP. The Agency shall cooperate with the Healrh DepartIOent in this regard. When the Agency. in consultation with the Health Depamnent, delennines to the best of Agency' s knowledge and helief, that the Developer has completed the Soil Requirements in a manner consistent with the grading plan and soil management:plan in the Conceptual RAP. the Agency will notify the Regional Board that the Soil Requirements of the RAP have been completed and provide the Regional Board with an cndorsed copy of the notice to that effect from' the Health Department, identifying the scope of any technical reView llI1dertalcen by Agency and Eealth Department and identifying any issues that requiIe independent technical revie~' by the Regional Board. Within thirty (30) days of the Regional Boani's determination that .the Soil Reqnil'c=nts have been satisfactorily completed, the Regional Board shall send a letter to the Developer stating that no further action is necessary with respecl to the Soil RequirementS. The Regional Board shall make sucl) detennination promptly following receipt of the Agency's and the Health DepnrtnJent's notification and endorsement. .' . 2.4 The Agency shall cause Owner to reimburse the Regional Board for actual costs incurred by the Regional Board for regulatory oversight of development and implementatioll of 3 SPI2742SJ.l 18-66 08/13/03 J.....3_:.1U_.t':1\A. .~-... _...._ ........ o.IO....u ~ttULA Vl~~4 ~vnm. .U~'bL. ~UUOJ the RAP fur the Site. The Regional Board shall ~nminlster cost recovery pursuant to this Agreement in accordance with the State Water Resources Control Board Cost Recovery Program for Spills, Leaks, Invl::stigations, and Cleanups (SUe). 3.0 Conditional Tmml.nity 3.1 As a result oi, and in reliauce upon, this Agreement, the Regional Board shall nOl require .the Develap"" future owners of all or any portion of the Site, or any person who providi:s financing to Devl::loper or such future owners ("Developers") to undertake further investigation or remediation of releases or d;sch3:l"ges at the Site, provided that: 3.1.1 Owner ha.s provided assurances of financial responsibility, guaranteed by The LandBaukGroup, Inc. (by executing this Agr=enI, the Regional Board acknowledges receipt of such assurances satisfactory to it) Dntil Owner can auange for alternative assurances, for satisfaction of Owner's obligations for closure and post-closure mamteIUlnce of the landfill cell and for further investigation and cleanup and abatement or remedial work at the Site required by the RAP and Regional Board orders applicable to the Site; and 3.1.2 Developers include only those p=ons who will be entitled to immllIlity Wider the Act once the Regional Board has approved completion of the remedial actions required by the RAP and no pexson who, prior to the date of this Agreement, could have been required to undertake cre.a;,up or abatement under S 13304 of the Wa1cr Code for the discharge or deposit of waste or release of hazardous substances at the Site; and 3.1.3 Developers, their affiliates, assigns, and successors, and their agents, employees, and coutractors, shall cODsult with Owner and Agency, as needed, to ensure that the Approved Project will Dot exacerbate either the discharge of hazardous substances from the Site to waters of the state or any known or threatened condition of pollution Or nuisance associ~ with prior discharge or deposit of waste Or hazardous substllnces at or from Site; and shall not-modify the Approved Project at the Site in any IDllIUJeI' that could exacerbate either the discharge of hazardous substances from the Site to waters of the state or any mown or threatened condition of pollution or nuisance associated with prior discharge or deposii of waste or hazardous substances at or from the Site; and 3.1.4 . Developeu;, their affiliate:!, assigIl8, and successors, and their agents, employee>;, and contnlctors, shaU not unreasonahly prevent, delay, impair, or interfere with current or prospective closure or post-Closure maintenance activities or investigation or cleanup and abatement activities, if any, but shall rather cooperate to achieve the goals of the RAP; and 3.1.5 Developers, their affiliates. assigns, and successors, and their agents, employees. and contractors. shall allow tlie Agency and the Regional Board, iu; employees and agents, access to the Site during no.nna1 business hour~ or npon request to investigate the conditioll~ described in the Conceptual RAP, CAO, or WDR(s), that co1Jld affect warer quality, to :monitor ground water, and to obtain samples of soil and ground water at this Site; and 4 SFI214Z5U. 18-67 U.~.I .l.::..I)Ju.-t !..C!..:..1.-!:..,r.'1f~ ~........ "u........ ... v........... t...nu.L..t\. YJ,;;I.1.'" II,,;U1D..l". V.cfD.t.... 't:ofUUQ 3.1.6 Developer and any subsequent owner of all or any' portion of the Site shall ac\cnowledge responsibility for cleanup and abatement of any discharge or deposit of waste, including hazardous substan<:es, at or from Site which exist as a result of such party's own activities at the Site that causes or threarens ro canse conditions of pollution or nuisance; and 3.1.7 1'he Agency shall, in consultation with the Regional lloard, ovmsee implemen~tion of the RAP in accordance with the Policies and Procedures for Investigation, Qeanup, and Abatement of Unauthorized Releases of Hazardous Substances Under Section 13304 of the Water Code, Stare Water Resources Control Board Resolution No. 92-49, as amended- 3.2 Once the Regional Board has approved completion of the remedial actions required under the RAP, the Agency and all parties entitled to immunity under the Act, including Developers, shall be entitled to statutory illlD1unity under the Act, aud this Conditional Immunity shall tenninate and be of no further force or effect. 4.0 Circumsfances'SuIlPortinl! Determination 4.1 The following circumatances support the determination that it is not against the public interest for the Regional Board to refrain hom asserting its authority under S 13304 of the Water Code over the Develope11l, in this case. 42 The RegiowU Board has identified persons, including Owner. none of whom are . the Developers, who have assumed responsibility for the disch:u-ge Or deposit of hazardous substances at and from the Site and has directed Owner to propose and implement all necessary measures to clean up waste causing or threatening to cause conditions of pollution or nuisance, and to mitigate and to abate existing or threatened pollution or nuisance associated witlJ the discharge or deposit of hazardoua substances. 4.3 Owner has been identified as a responsible party and remains responsible for any investigation, clean up, or abatement tI1l1t may be required IlIldet ~13304 of the Water Code in the future. 4.4 Owner has provided assurance of financial responsibility, guaranteed by The LflIIdBank Group, Inc. until Owner = llIrange alternative assurances that will ensure there are adequate resources available to complete further investigatory and rel!ledial work at the Site. 4.5 Uncertainty regarding the potential liability for cleanup or abatement of envi.ronmental condi.tions ar this Site has hindered redevelopment and economic revitalization of such properties in City's redevelopment area, 5.0 General Provisions 5.1 The Agency's obligations undet this Agreement are undertaken for the benefit of the Regional Board and the Developers only, and no righrs of any other tbird p!lrties to enforce . these obligations are createcI hereby. 5 SFI2742SI.! 18-68 ~~~~~ .~u~~ wvam. ue.~~. @007 5_2 Except as expressly provided herein, neither the Regional Board nor the Agency shan have any obligations with respect to the Site, or any physical condition existing thereon. Agency's and Regional Board's obligations under this Agreement 2re limited by the scope of the proVisions herein, and nothing herein is intended to create the status of '"respOlLSible party" or "discharger" as a result of this exercise of either party's authority hereunder. 5.3 hereof This Agreement shall be effective as of the date of Regional Board approval [NEXT PAGE IS SIGNAllJRE PAGEl 6 SP/2742S1.1 18-69 ._.:;;:';;;';;'':'' M.;;....-::;:.-;-.."i: ,.~ ......::r "t10 Q.3J,V lil:1ULA. v l.:iTA COD. DEVEL. @oos .. SIGNATURE PAGE TO POLANCO REDEVELOPMENT ACT REMEDIATION AND CONDITIONALlMMUNITY AGREEMENT IN WITNESS WHEREOF, each if the parties hereto have caused th.io Agreement to be executed. Redevelopment Agency of the City 0 Chula Vista ~. bainnan ATrEST: ~PM~~"'~ . Madigan, Age Y See APPROVED AS TO FORM: _D~? {j ~ 01= R. Googins, Agency Attorney Califomia Regional Wawr Quality Control Board, sanD~vq' ~ . ,/ ../ ,~ . B . { / -:;,. "" y / ~- ~ ohn RoberttG, .&ec:utive Officer r 7 SFm4251.1 18-70 THE A TT ACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'.S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY C UNCIL Dated: 11 ~ /, I I AGREEMENT FOR THE EXCHANGE OF REAL PROPERTY AND ESCROW INSTRUCTIONS BETWEEN THE CITY OF CHULA VISTA, AND MID-CITY, LLC 18-71 DRAFT 11/09/11 AGREEMENT FOR THE EXCHANGE OF REAL PROPERTYJOINT ESCROW INSTRUCTIONS DRAFT FLOIT: Mid-City, LLC CITY: City of Ch ula Vista DATED: 11/15/2011 K:\Cur.rent Projects\Floit Properties\6 - Exchan!!c Agreement ;-vlcCune - Floit\Exchan!!.e Agreement CLEAN.doc . - - 18-72 - - Effective Date: Parties: Floit: Flail's Address: City: City's Address: Property Interests: Floit: City: Exchange Value: Outside Closing Date (or Closing) Title Companv: Escrow Holder: BASIC TERMS The effective date shall be deemed to be November 15, 20 II Mid-City, LLC c/o Dan Floit 3565 7th Avenue. 2nd Floor San Diego. CA 92103 Fax No. (619) 294-3465 Facsimile_ City of ChuIa Vista, a chartered municipal corporation 276 Fourth Avenue Chula Vista, California 91911 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 Fee Ownership in Parcel recorded as APN# 56335012, located in the City of Chula Vista, County of San Diego, California Assignment of Purchase Rights in real property located at 1877 Auto Park Place, Chula Vista, California 91910 $940,000 December 31, 20 II Stewart Title of California, Inc. 7676 Hazard Center Drive San Diego, California 92108 Stewart Title of California, Inc. Address as above I 18-73 Exhibit List: Exhibit A Legal Description - Floit Parcel Exhibit A-l Diagram - Floit Parcel Exhibit B Purchase and Sale Agreement - McCune Parcel Exhibit C Assignment Agreement Exhibit D Preliminary Report - Floit Exhibit E List of Current Contracts, Leases and Licenses Exhibit F Option Agreement Exhibit G Grant Deed Exhibit H FIRPT A Certificate AGREEMENT FOR THE EXCHANGE OF REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS This AGREEMENT FOR THE EXCHANGE OF REAL PROPERTY AND JOINT ESCROW INSTRUCTIONS ("Agreement"), dated November 15,2011, for reference purposes only, is by and between the CITY OF CHULA VISTA, a chartered municipal corporation ("City"), and Mid-City, LLC, a California Limited Liability Corporation ("Floit"). Floit and City may be referred to herein individually as "Party" and together as "Parties." The Effective Date shall be the date on which the Authority's governing body duly considered and- took action to approve this Agreement. RECITALS A. WHEREAS, Floit owns fee title to approximately 1.89 acres of real property located in the City Of Chula Vista, California, legally described in Exhibit A and depicted in Exhibit A-l, both attached hereto and incorporated herein by these references, ("Floit Parcel" or the "Property"). B. WHEREAS, City, under separate contract ("McCune Agreement"), attached hereto and incorporated herein by these references as Exhibit B. has the ability to purchase 1.89 acres of real property located in the City of Chula Vista, California, commonly known as 1877 Auto Park Place ("McCune Parcel"). C. WHEREAS, City desires to acquire all rights, title and interest in and to the Floit Parcel for open space, public park, and other public purposes. -2- 18-74 D. WHEREAS, Floit desires to acquire all rights, title and interest In and to the McCune Parcel by acquiring City's interest in the McCune Agreement. E WHEREAS, the fair market value of the Floit Parcel and the McCune Parcel are approximately equal. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Floit and City agree as follows: ARTICLE 1. - EXCHANGE OF REAL PROPERTY 1.1 Floit Parcel. Floit agrees to transfer all rights, title and interests in and to the Floit Parcel to the City. Such rights, title and interests shall include: a. Fee. Fee simple, marketable title to the Floit Parcel with the condition of title meeting the requirements of Section 2.2; b. Improvements. All improvements, if any, to the Floit Parcel; c. Appurtenances. All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the Floit Parcel, including, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived therefrom; d. Other. All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the Floit Parcel. 1.2 Assignment of Rights. In consideration of the transfer of the Floit Parcel, the City shall assign all of its rights, title and interests as "Buyer" in the McCune Agreement to Floil. Notwithstanding the foregoing, the City shall remain obligated to pay the "Purchase Price" required under the McCune Agreement in accordance with the terms and conditions thereof. Floit shall accrue to all other rights and obligations. This assignment shall be implemented pursuant to the terms of an Assignment Agreement in substantially the form attached hereto as Exhibit C. 1.3 Exchange Value. Floit and City agree that the respective values of the Floit Parcel and City's rights to acquire the McCune Parcel under the McCune Agreement (the "Exchange Values") are approximately equal, in the amount of $940,000, and no further consideration shall be exchanged between the parties in connection with this Agreement. 1.4. Full and Complete Settlement, Release and Waiver. The value obtained by Floit through the assignment of the McCune Agreement shall be deemed full and complete compensation for the value of the Floit Parcel and such shall remain total compensation paid by City for all of Floil's interests in the Floit Parcel inclusive of any and all rights, claims, or obligations which may exist or may arise out of City's acquisition thereof. Accordingly, Floit, on his own behalf, and on behalf of any and all successors or assigns, hereby fully releases and discharges City from all and -3- 18-75 any manner of rights, demands, liabilities, obligations, claims, or causes of action, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising ("Claims"), which may arise from or relate in any manner to (i) the transfer of the Floit Parcel to the extent such claims are based on the fact that City is a public entity; (ii) the relocation of any person or persons or other occupant or occupants located on the Floit Parcel, including the specific waiver and release of any right to any relocation benefits, advisory or other assistance, and/or payments under applicable federal, state or local relocation laws ("Relocation Laws") as to whom this waiver and release is effective, notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under said Relocation Laws or other state or federal law; and (iii) any other form of interest, value or claim in the Floit Parcel or income from the Floit Parcel including, but not limited to, land and improvements, fixtures, furniture, or equipment thereon, goodwill, severance damage, leases or other contracts relating to the Floit Parcel, attorneys' fees, or any other compensation of any nature whatsoever. By releasing and forever discharging Claims both known and unknown which are related to or which arise under or in connection with, the items set out in Section 21.4 above, Floit expressly waives any rights under California Civil Code Section 1542, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST . HAVE MA TERIALL Y AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." Floil's Initials In this regard Floit has had. the opportunity to obtain advice from counsel. Based on the advice of such counsel, Floit acknowledges that he is and will be fully satisfied that the assignment of the McCune Agreement constitutes full, fair and adequate. consideration for the interests acquired by the City in the Floit Parcel and Floil's waiver and release of any additional compensation. and claims in connection therewith. In furtherance of the foregoing paragraph, Floit understands that City would not have entered into this Agreement without Floil's agreement to (i) exchange the Floit Parcel for no monetary remuneration or consideration other than that identified above in Section 1.2; and (ii) Floit's knowing, voluntary, and intentional waiver and release according to the terms set forth herein, of any and all of Floil' s interest in or right to any relocation assistance or benefits under the Relocation Laws and for any other or further compensation or consideration for the Property and all interests therein or arising therefrom. ARTICLE II. - ESCROW AND TITLE 2.1 Opening and Closing Escrow. a. Opening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened ("Opening of Escrow") on the date that Escrow Holder receives a copy of -4- 18-76 this Agreement fully executed by Floit and executed and attested by City. City and Floit shall use reasonable efforts to cause the Opening of Escrow to occur on or before five (5) business days after the Effective Date. Escrow Holder shall promptly notify City and Floit in writing of the date of the Opening of Escrow. City and Floit agree to execute, deliver and be bound by any reasonable or customary supplemental Escrow instructions or other instruments reasonably required by Escrow Holder to consummate the transaction contemplated by this Agreement; provided, however, that no instrument shall be inconsistent or in conflict with, amend or supersede any portion of this Agreement. If there is any conflict or inconsistency between the terms of an instrument and the terms of this Agreement, then the terms of this Agreement shall control. Without limiting the generality of the foregoing, no instrument shall extinguish any obligations imposed by this Agreement or any other contract between Floit and City. b. Closing. For purposes of this Agreement, the "Closing" or "Closing Date" shall be the date the Grant Deed (as defined below) is recorded pursuant to applicable law in the Official Records of San Diego County. Unless changed in writing by City and Floit, the Closing shall occur on or before December 31, 20 II ("Outside Closing Date"). If the Closing has not, for any reason, occurred by the Outside Closing Date (as it may be extended pursuant to the immediately preceding sentence), then either City or Floit may terminate this Agreement 'by delivering written notice to the other at any time after. the Outside Closing Date; provided, however, that if there is a Floit Default or a City Default under this Agreement at the time of the termination, then the termination shall not affect the rights and remedies of the non-defaulting party against the defaulting party. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon thereafter as City's and Floit's Conditions Precedent to Closing are satisfied pursuant to Sections 5.1 and 5.2 of this Agreement, respectively. The Closing Date and Outside Closing Date shall be identical to the Closing Date and Outside Closing Date identified in the McCune Agreement, and the Closing of this Agreement and the McCune Agreement shall occur. concurrently. 2.2 Title Matters. a. Citv's Title Policv. Concurrently with the Closing, the Title Company shall issue to City a 2006 CLTA or ALTA, at the option of City, owner's policy of title insurance (amended 6117/06) without arbitration provisions in the amount of the Exchange Value, showing fee title to the Floit Parcel vested solely in the City of Chula Vista, a chartered municipal corporation, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated September 26, 2011, issued by Stewart Title of Cali!o'!'.i~'.}E.~::,:}.t~.!:':spec.~_to .t_~,:,_I2.op!r:t~ ("Title Report"), attached hereto as Exhibit D: [INSERTPROPER':EXc::EPTIONS IN lfrT1J:~Ml'QRtf (collectively, "City's Title Polici):-'Th~-.p~i~;;';' i~~-th~Ciiy~-:"Titi~ Policy and any endorsements required by City shall be charged to Floit and City as described in Section 7.1 subdivisions (a) and (b). City may require, as a City's Condition Precedent to the Closing, that Floit execute an estoppel agreement and/or a subordination agreement in a form acceptable to City, confirming that, as of the Closing, (a) the Floit shall nave no further interest in the Floit Parcel or any portion thereof or any improvements thereon. b. No New Liens or Exceptions. City hereby objects to any and all liens and exceptions to title not shown on the Title Report. Further, during the period commencing on the Effective Date -5- 18-77 and continuing until the Closing, Floit agrees it shall not cause any new or modified lien or encumbrance to title to become of record against the Property, unless such lien or encumbrance is approved in writing by City. Each and every new lien or encumbrance shall be subject to City's prior written consent and unless and until approved by City shall be deemed a disapproved exception to title that shall be removed by Floit at Floil's sole cost as a condition to Closing. ARTICLE III. - DELIVERY OF PROPERTY DOCUMENTS 3.1 Floit's Delivery of Property Documents. Within three (3) days after the Effective Date, Floit shall deliver to City complete, true, and legible copies of the following items (collectively, "Property Documents"): a. Copies of tax bills, including assessments, if any. b. Proof of Floil's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by City and the Title Company. c. Each and every contract, agreement, license and lease relating to and/or affecting the Property, specifying which of such contracts, agreements, licenses, and/or leases are anticipated to bind City or affect the Property following the Close of Escrow, if any.. 3.2 McCune's Delivery of McCune Documents. McCune Documents shall be those documents identified in Section 4(a) of the McCune Agreement ("McCune Documents"), which shall be delivered to Floit by McCune as provided in the McCune Agreement. ARTICLE IV. - DUE DILIGENCE. 4.1 City's Due Diligence a. Right of Entrv. I. Entry for Inspection and Testing. From and after the Effective Date through the earlier to occur of the termination of this Agreement or the Closing Date, Floit shall permit City, and City's employees, agents, consultants and contractors to enter upon the Property during normal business hours, provided 24 hours prior notice has been given to Floit, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as City in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports; environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of adverse soils conditions, adverse groundwater conditions, asbestos, lead based paint, and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, "Tests"). 2 Conditions to Right of Entry for Tests. As a condition to conducting any Tests, City shall (i) prior to entry, notify Floit not less than 24 hours in advance of the purpose of the -6- 18-78 intendec:l entry and provide to Floit the names and affiliations of the entity or person(s) entering the Property; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the Property free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the P~operty for such Tests performed by or on behalf of City; (v) City to maintain, or City to cause to be maintained by City's contractor(s), workers' compensation insurance on all persons entering the Property for such Tests in the amounts required by the State of California; (vi) City to maintain, or City to cause to be maintained by City's contractor who will be entering the Property, commercial general liability insurance policy with a financially responsible insurance company (or as to City its membership in ajoint powers insurance authority with comparable coverage) covering any and all liability of City and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the Property, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly repair any and all damage to the Property from such Tests caused by City, its agents, employees, contractors, or consultants and return the Property to its original condition (subject to the Tests conducted) following City's entry. City shall indemnify, defend, and hold harmless Floit and its agents from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of City, its agents, contractors, consultants, and employees upon the Property for and related to such entry and Tests or from City's failure to comply with the conditions to City's entry onto the Property for such Tests. Such indemnity shall survive the Close of Escrow or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the Property and/or the Tests. b. Due Diligence Notices. 1. City's Due Diligence Notice. City shall notify Floit in writing on or before a date that is [lliSER1)!;QF!26Y~] following the opening of Escrow ("Contingency Date") of City's approval or disapproval in its sole and absolute discretion of the Property Documents and of the condition of the Property as disclosed by the Tests ("City's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action Floit would be required to take to remediate or cure the objectionable matters to City's satisfaction. I. Failure to Provide. Provided that Floit has delivered the Property Documents 'to City within the time set forth in Section 3.1, City's failure to deliver the City's Due Diligence Notice on or before the Contingency Date shall be deemed City's disapproval of the Property Documents and condition of the Property. 2. Response Notice. In the event City timely delivers its City's Due Diligence Notice disapproving any Property Documents or any condition of the Property, F10it shall have ten (lO)days from receipt of City's Due Diligence Notice to deliver written notice to City ("Response Notice") of F1oil's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable -7- 18-79 conditions at its sole cost prior to the Close of Escrow; or (iii) correct and/or remediate all. objectionable conditions at its sole cost prior to the Close of Escrow. I. Election to Terminate. If Floil's Due Diligence Response Notice informs City of Floil's election to terminate Escrow (choice (i) in subsection (2) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights or obligations hereunder. Floit's failure to deliver Floil's Due Diligence Response Notice shall be deemed Floit's election to terminate this Agreement (choice (i) of subsection (2) above) and the parties shall have no further rights or obligations hereunder. 11. Election to Correct Some Objectional Conditions. If the Response Notice informs City of Floil's election to correct certain of the objectionable conditions (choice (ii) in subsection (2) above), then City shall have the right, by a second written notice delivered to Floit within five (5) days after City's receipt of the Response Notice, to agree to accept the Property subject to one or more of the objectionable conditions that Floit will not correct ("City's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that City is willing to accept, in which event Floit may elect, in its sole discretion, to either; (A) Accept City's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the sale of the Property to City, with City taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credit against the Purchase Price (subject to Floit's correction of certain conditions to be corrected as listed in Floil's Response Notice). The correction of and/or completion of the remediation or removal of objectionable conditions listed in the Floit's Response Notice shall be deemed to be one of the City's Conditions Precedent to Closing under Section 5.1 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed; or (B) Reject City's Second Due Diligence Notice and terminate the Escrow. III. Election to Correct All. If Floit's Response Notice informs City of Floit's election to correct all of the objectionable conditions (choice (iii) in subsection (2) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of the City's Conditions Precedent to Closing under Section 5.1 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. -8- 18-80 4.2 Floit's Due Diligence. With respect to Due Diligence for the McCune Parcel, Floit shall have all of the rights and obligations of the City as if Floit were "in the shoes of' the City, that are identified in Sections 5 and 6 of the McCune Agreement. ARTICLE V. - CONDITIONS PRECEDENT TO THE CLOSE OF ESCROW 5. I City's Conditions Precedent. The Closing and City's obligation to assign its interest in the McCune Agreement in exchange for the Floit Parcel and to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "City's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for City's benefit only. a. Related to the Floit Parcel. I. No Termination as a Result of City's Due Diligence Review. This Agreement shall not have terminated pursuant to any provision in Section 4.1, above or as a result of City's review and inspection of title to, the Property Documents relating to, and the Tests on the Floit Parcel. 2. Floit Title. Floit shall have fee title to the Floit Parcel. 3. City's Title Policy. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide City's Title Policy for the Property upon the Closing, in accordance with Section 2.2(a). 4. Representations and Warranties. All representations and warranties of Floit contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. 5. No Floil Default. As of the Closing, there shall be no Floit Default under this Agreement. 6. Termination of Agreements; Vacancy of Property: . Except to the extent expressly disclosed in writing to City (and approved by City) in Exhibit E, Floit shall have terminated any and all contracts affecting and/or relating to the Floit Parcel and any and all leases and licenses for space at the Floit Parcel and all tenants, licensees, or other occupants shall have permanently vacated the Property. Floit shall cause to be removed and/or terminated, at Floit's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting the Property, except to the extent such instruments are permitted and approved by City pursuant to Sections 2.2(b) and 4.1(b) above and as expressly disclosed to City in Exhibit E. b. Related to the McCune Agreement. I. No Termination of Agreement. There has been no termination of the McCune Agreement for whatever reason. -9- 18-81 2. McCune Conditions Satisfied. All of the conditions precedent for the. transfer of the McCune Parcel to Floit and the payment of the purchase price to McCune in the McCune Agreement have been satisfied or waived in accordance with the terms thereof. c. Deliverv of Funds and Documents. Floit shall have delivered and City shall have approved all documents and other items described in Section 3.1. 5.2 Floit's Conditions Precedent. The Closing and Floit's obligation to transfer the title of the Floit Parcel to the City and consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Floil's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Floil's benefit only: a: Related to the Floit Parcel. 1. No Termination as a Result of City's Due Diligence Review. This Agreement shall not have terminated pursuant to Section 4.1, above or as a result of City's review and inspection of title, the Property Documents, and the Property. 2. No City Default. As of the Closing, there shall be no City Default under this Agreement. 3. Representations and Warranties. All representations and warranties of City contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. b. Related to the McCune Agreement. I. Assignment Agreement. All parties shall have executed the Assignment Agreement in substantially the form attached hereto as Exhibit C and such agreement shall be in full force and effect. 2. No Termination of Agreement. There has been no termination of the McCune Agreement for whatever reason. 3. McCune Conditions Satisfied. All of the conditions precedent for the transfer of the McCune Parcel to Floit and the payment of the purchase price to McCune in the McCune. Agreement have been satisfied or waived in accordance with the terms thereof. c. Related to the Ootion Agreement. The City and Floit shall have executed the Option Agreement attached hereto as Exhibit F, pursuant to which City shall have granted an option to Floit to acquire certain real property owned by City located at the southwest comer of the intersection between State Route 125 and Eastlake Drive, comprised of approximately 6.1 acres in exchange for certain real property owned by Floit, comprised of approximately 3.85 acres, and located immediately adjacent to the Floit Parcel. 5.3 Waiver. City may at any time or times, at its election in its sole and absolute discretion, waive any of the City's Conditions Precedent set forth in Section 5.1, but any such waiver shall be -10- 18-82 effective only if contained in a writing signed by City and delivered to Floit and Escrow Holder. Floit may at any time or times, at its election in its sole and absolute discretion, waive any of the Floil's Conditions Precedent set forth in Section 5.2 above, but any such waiver shall be effective only if contained in a writing signed by Floit and delivered to City and Escrow Holder. 5.4 Termination. In the event that each of the City's Conditions Precedent set forth in Section 5.1 is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by City pursuant to Section 5.3, and provided there is no City Default under this Agreement, City may at its option terminate this Agreement and the Escrow opened hereunder. In the event each of the Floil's Conditions Precedent set forth in Section 5.2 is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Floit pursuant to Section 5.3, and provided there is no Floit Default under this Agreement, Floit may at its option terminate this Agreement and the Escrow opened hereunder. Notwithstanding the foregoing, if Escrow is not in a position to close due to a party's failure to deposit into Escrow any documents or funds required for the Closing of Escrow, the non-defaulting party shall not. have the right to terminate this Agreement without first having given the defaulting party notice of the default and five (5) days to cure the default, with the understanding that it is the parties' desire that this Agreement not terminate as a result of a technicality such as a party's inadvertent failure to timely make a deposit of a document or money into Escrow. No termination under this Agreement shall release either party then in default from liability for such default. In the event this Agreement is terminated, (i) all documents and funds delivered by Floit to City or Escrow Holder shall be returned immediately to Floit, provided there is no Floit Default, and likewise (ii) all documents and funds delivered by City to Floit or Escrow Holder shall be returned immediately to City. 5.5 Costs. If Escrow fails to close due to a party's default or breach, the defaulting or breaching party shall pay all Escrow Cancellation Charges. If Escrow fails to close for any other reason, each party shall pay one-half of all Escrow Cancellation Charges. The term "Escrow Cancellation Charges" shall mean all fees, charges and expenses actually charged by Escrow Holder and the Title Company to the parties in connection with the cancellation of the Escrow and the title order, if any. ARTICLE VI. - DELIVERIES TO ESCROW 6.1 Floit's Deliveries to Escrow Holder. At least two (2) business days prior to the Closing Date, except as to possession of the Floit Parcel, which shall be delivered as of Closing, Floit shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged: a. Floil's Charges. Immediately available funds in the amount necessary to pay Floil's Charges as set forth in Section 7.1(a) herein. b. Grant Deed. The Grant Deed in the form attached hereto as Exhibit G ("Grant Deed"), duly executed by Floit and acknowledged. c. Estoppel/Subordination Agreement. The Estoppel/Subordination Agreement in a form approved by City, in City's sole and exclusive discretion, duly executed by Floit and acknowledged. -11- 18-83 d. Licenses. Certificates. and Permits. To the extent the same are _ within the actual or constructive knowledge of, or in the possession, custody or control of, Floit and are applicable and/or transferable to City, all original licenses, certificates and permits pertaining to the Property and beneficial for, or.necessary for, or affecting the use or occupancy thereof. e. FIRPTNTax Exemption Forms. Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit. H ("F1RPTA Certificate") (unless Floit is a "foreign person," as defined in Section 1445 in the Internal Revenue Code of 1986), together with any necessary tax withholding forms, and a duly executed California Form 593-C, as applicable ("California Exemption Certificate"): f. Authoritv. Such proof of Floit's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by City and the Title Company. g. Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 6.2 City's Deliveries to Escrow. At least two (2) business days prior to the Closing Date, City shall deposit or cause to be deposited with Escrow Holder the following, each duly executed and acknowledged, by City as appropriate: a. Citv Charges. Funds necessary to pay City's Charges set forth in Section 7. I (b) herein. b. Certificate of Acceptance. One (I) original Certificate of Acceptance executed by City to be attached to the Grant Deed. c. Estoppel/Subordination Agreement. The Estoppel/Subordination Agreement in a form approved by City, in City's sole and exclusive discretion, duly executed by City and acknowledged. d. Final Escrow Instructions. City's final written Escrow instructions to close Escrow In accordance with the terms of this Agreement. e. Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. ARTICLE VII. - ESCROW HOLDER 7.1 Escrow Holder Authorization. Escrow Holder is authorized to and shall pay, charge and perform the following: -12- 18-84 a. Floit Charges. The charges set forth in this Section 7(a) are herein referred to as the "Floil's Charges." 1. Removal of Title Exceptions. Pay and charge Floit for any amount necessary to cause the removal of any title matters that Floit agreed to remove pursuant to Section 3(b) and to pay for th~ CL T A portion of City's Title Policy as provided in Section 2.2 hereof. 2.. Encumbrances. Pay and charge Floit for any unpaid or delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the Floit Parcel such that all such amounts related to the time period prior to the closing are fully paid and satisfied. b. City Charges. Pay and charge City for all of the Escrow fees, all charges for recording the Grant Deed for the Floit Parcel, and any additional title coverage requested by City, including the difference between a CLTA standard owner's policy (which CLTA policy and the endorsements described in Section 3(b)(i)) are and shall remain Floil's Charges) and an AL T A extended owner's policy. 1. Other Charges Paid. Pursuant to the McCune Agreement, the recording fees for the McCune Grant Deed, a standard CTLA owner's policy, removal of"any title exceptions, and amount of any unpaid delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the McCune Parcel are being paid by and collected from McCune. 7.2 Tax Requirements. Escrow Holder shall prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099 S form, and be responsible for withholding taxes, if any such forms and/or withholding is provided for or required by law. 7.3 Closing Statement. Escrow Holder is instructed to prepare and provide copies of a proposed closing statement and thereafter the final closing statement ("Closing Statement") to both Floit and City. Escrow Holder shall deliver the estimated Closing Statement to Floit and City no later than three (3) business days prior to the Closing Date. 7.4 Closing Procedure. On the Closing Date, and provided all of the City's Conditions Precedent and Floil's Conditions Precedent set forth in Sections 5.1 and 5.2, respectively, of this Agreement have been satisfied or waived in writing by the appropriate party (per Section 5.3), . Escrow Holder shall immediately close Escrow in the manner and order provided below. 7.5 Recording. Escrow Holder shall cause the Grant Deed for the Floit Parcel to be recorded pursuant to applicable law in San Diego County and obtain. conformed copies thereof for distribution to City and Floit. 7.6 Delivery of Documents. Escrow Holder shall deliver document as follows: a, . To Floit. Escrow Holder shall deliver to Floit, a conformed copy of the Grant Deed for the McCune Parcel, and a copy of all other documents deposited into Escrow by City pursuant to this Agreement. -13- 18-85 b. To City. Escrow Holder shall deliver to City the original FIRPT A Certificate, the original California Exemption Certificate (as applicable), a conformed copy of the Grant Deed for the Floit Parcel, the Title Report, and each other document (or copies thereof) deposited into Escrow by Floit pursuant hereto, including, without limitation, those documents referenced in Section 6.1. 7.7 Title Company. Escrow Holder shall cause the Title Company to issue the Title Policy for the Floit Parcel to City.. 7.8 Closing Statement. Escrow Holder shall forward to both City and Floit a separate accounting of all funds received and disbursed for each party in the form of the Closing Statement prepared pursuant to Section 7.3. 7.9 Informational Reports. Escrow Holder shall file any informational reports required by Internal Revenue Code Section 6045( e), as amended. 7.10 Possession. Possession of the Floit Parcel shall be delivered to City (and pursuant to the McCune Agreement, the McCune Parcel to Floit) at the Closing. ARTICLE VII!. - REPRESENTATIONS, WARRANTIES AND COVENANTS 8.1 Floit's Representations, Warranties and Covenants. In consideration of City entering into this Agreement and as an inducement to City to purchase the Floit Parcel,. Floit makes the following representations, warranties and/or covenants as of the Effective Date and continuously as of the Closing, each of which is material and is being relied upon by City (and the truth and accuracy of which shall constitute a condition precedent to City's obligations hereunder), and all of which shall survive Closing: a. Floit has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby. b. All requisite action (corporate, trust, partnership or otherwise) has been taken by Floit in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action (including Floit's exercise of its option to purchase the Floit Parcel from the Current Owner) will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any individual, director, manager, shareholder, partner, member, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party shall be required for City to consummate the transaction contemplated by this Agreement. c. In this regard, if applicable, Floit shall deliver or cause delivery to City of true and complete copies of each requisite action or authorization (corporate, trust, partnership or otherwise) that has been taken by Floit or will be taken (immediately after taking such action prior to Closing) when in connection with entering into this Agreement and execution of the instruments referenced herein. d. The individuals executing this Agreement and the instruments referenced herein on behalf of Floit have the legal power, right and actual authority to bind Floit to the terms and conditions hereof and thereof. -14- 18-86 e. Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or. instruments referenced herein or therein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, lease or other agreement or instrument (a) to which Floit is a party, or (b) that affect the Floit Parcel of which Floit has actual or constructive knowledge, including, but not limited to, any of the Floit Parcel Documents. f. To the best of Floit's actual or constructive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the Floit Parcel or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. g. To the best of Floil's actual or constructive knowledge, there are no actions or proceedings pending or threatened against Floit, before. any court or administrative agent in any way connected with or relating to theFloit Parcel, or affecting Floil's ability to fulfill all of its obligations under this Agreement. h. Floit has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the. Floit Parcel, or any part thereof, or any interest therein, which will survive the Closing. Floit has entered into no understanding or agreement with any taxing or assessing authority respecting the imposition or deferment of any taxes or assignments respecting the Floit Parcel. 1. To the best of Floil's actual or constructive knowledge, Floit is not in default of its obligations under any contract, agreement or instrument to which Floit is a party pertaining to the Floit Parcel. To the best of Floil's knowledge, no document supplied to City by Floit contains any untrue statement of a material fact, and to the best of Floit's. actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. J. To the best of Floit's actual or constructive knowledge, there are no encroachments onto the Floit Parcel by improvements on any adjoining property, nor do any buildings or improvements located on the Floit Parcel encroach on other properties. k. There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the Floit Parcel for work performed or commenced for Floit or on Floil's behalf prior to the Effective Date of this Agreement. Floit agrees to indemnify, defend, and hold City and its elected and appointed officials, officers, employees, contractors, and agents harmless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar lien claims against the Floit Parcel and arising from work performed or commenced for Floit or on Floil's behalf at any time prior to Closing. I. Except as may be revealed in the Title Report and the Property Documents for the Floit Parcel delivered to City by Floit, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or ma~agement of the Floit Parcel that will be -15- 18-87 binding upon City or the Floit Parcel after the Closing. There are no .oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the Floit Parcel to which Floit is a party or of which Floit has actual knowledge and/or constructive knowledge. m. Except as revealed in the Title Report and the Floit Parcel Documents delivered to City by Floit, or as listed in Exhibit E attached hereto, there are not any written or oral contracts, leases, licenses, or contractual rights or options to lease, purchase, or otherwise enjoy possession, rights or interest of any nature in and to the Floit Parcel or any part thereof, and except to the extent expressly otherwise agreed by City, no person other than City and Floit shall have any right of possession to the Floit Parcel or any part thereof as of the Closing. n. As of the Effective Date, Floit agrees not to enter into any leases, licenses or easements in the Floit Parcel (or any part thereof), or grant any other rights of access, use or occupancy to the Floit Parcel (or any part thereof) without the prior written approval of City, which may be granted or denied in City's sole and complete discretion. o. Except as revealed in the Title Report and the Property Documents related to the Floit Parcel delivered to City by Floit pursuant to Section 4(a), Floit shall not allow, consent to, or otherwise permit any encumbrance, lien, or other exception to title to become of record or affect title to the Floit Parcel during the period from the Effective Date through the Closing Date, unless such encumbrance, lien, or other exception is expressly pre-approved by City in its sole and absolute discretion. p. Neither Floit nor, to the best of Floil's knowledge, any previous owner, tenant, occupant, or user of the Floit Parcel used, generated, released, discharged, stored, or disposed of any "Hazardous Materials" on, under, in, or about the Floit Parcel, or transported any Hazardous Materials to or from the Floit Parcel. q. To Floit's actual knowledge no Hazardous Materials exist on, under, in or about the Floit Parcel, nor have Hazardous Materials ever been transported to or from the Floit Parcel. r. Floit shall not further encumber or place any further liens or encumbrances on the Floit Parcel from the Effective Date and during the Escrow period to the Closing Date without the express, prior written authorization of City in its sole and complete discretion. Further, if the City does consent to a new lien or encumbrance, such lien or encumbrance on the Floit Parcel shall not survive the Closing Date, including, but not limited to, right of entry, covenants, conditions, restrictions, easements, liens, options to purchase, options to lease, leases, tenancies, or other possessory interests or rights of use or rights of entry relating to or affecting the Floit Parcel without the prior written consent of City which consent may be withheld by City in its sole and complete discretion. s. Until the Closing, Floit shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escrow, immediately give written notice of such fact or condition to City. t. Floit represents to City, and City acknowledges the representation of Floit that Floit has never operated, occupied or developed the Floit Parcel. -16- 18-88 u. As used herein, the term "actual knowledge" shall mean the actual, .current knowledge of Floit and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge due to any notice or other document addressed to and evidenced to have been sent to Floit, and any other document in the Floil'spossession and control. 8.2 Subsequent Changes to Floit's Representations and Warranties.. If, prior to the Closing, City or Floit should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Floit set forth herein incorrect or untrue in any respect (collectively, the "Floit Representation Matter"), then the party who has learned, discovered or become aware of such Floit Representation Matter shall promptly give written notice thereof to the other party and Floil's representations and warranties shall be automatically limited to account for the Floit Representation Matter. City shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Floit if City reasonably disapproves any such change; provided, however Floit shall first have the opportunity to cure the Floit Representation Matter. If City does not elect to terminate this Agreement, Floil's representation shall be qualified by such Floit Representation Matter and Floit shall have no obligation to City for such Floit Representation Matter. If City does not provide written notice to Floit indicating it approval or disapproval of the change(s), the absence of such notice shall be deemed to be City's disapproval of such changes, and in the event the Floit fails to cure, City shall be deemed to have exercised its right to terminate this Agreement. 8.3 City's Representations and Warranties. In consideration ofFloit entering into this Agreement and as an inducement to Floit to sell the Floit Parcel, City makes the following representations and warranties as of the date hereof and at and as of the Closing, each of which is material and is being relied upon by Floit, the truth and accuracy of which shall constitute a condition precedent to Floit's obligations hereunder, and all of which shall survive Closing: a. City has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby, subject to this representation not becoming effective unless, until, and subject to this Agreement being placed on an agenda of the City's governing board for consideration and action at a duly noticed, open public meeting of the City's governing board, and, if approved, then such representation shall be effective as of the Effective Date. City's execution of this Agreement after the Effective Date shall be conclusive evidence that City's governing board has approved this Agreement at a duly noticed, open public meeting. Notwithstanding the foregoing, the parties acknowledge that the Governor of the State of California has submitted a proposal to the State Legislature that, if enacted, would prevent the Agency from providing the tax increment Authority needs to pay the Purchase Price described in this Agreement to Floit and thereby prevent the City from performing its obligations under this Agreement. b. Subject to 8.3.a above, as of the Effective Date, all requisite governmental action has been taken by City in connection with entering into this Agreement and the instruments referenced herein; and, 'by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing Date, no additional consent of any individual, judicial or administrative body, governmental authority or other party shall be required for Floit to consummate the transaction contemplated by this Agreement, subject to no material change in the terms or provisions hereof. -17- 18-89 c. Subject to 8.3.a above, as of the Effective Date, the individuals executing and attesting this Agreement and the instruments referenced herein on behalf of City have the legal power, right and actual authority to bind City to the terms and conditions hereof and thereof. d. Neither the execution and delivery of this Agreement and the documents and instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement and the documents and instruments referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreement or instrument to which City is a party or by which any of City's properties are bound. 8.4 Subsequent Changes to City's Representations and Warranties. If, prior to the Closing, Floit or City should learn, discover or become aware of any existing or new item, fact or circumstance 'which renders a representation or warranty of City set forth herein incorrect or untrue in any respect (collectively, the "City's Representation Matter"), then the. party who has learned, discovered or become aware of such City's Representation Matter shall promptly give written notice thereof to the other party and City's representations and warranties shall be automatically limited to account for the City's Representation Matter. Floit shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to City if Floit reasonably disapproves any such change; provided, however City shall first have the opportunity, to cure the City's Representation Matter. If Floit does not elect to terminate this Agreement, City's representation shall be qualified by such City's Representation Matter and City shall have no obligation to Floit for such City's Representation Matter. 8.5 Warranties with Respect to McCune Parcels. Any warranties related to the McCune Parcel are those made by McCune pursuant to the McCune Agreement.' The City makes no such warranties with respect to the McCune Parcel, nor does the City vouch for the accuracy of any statement, representations or warranties that have been included in the McCune Agreement, that have been previously made, or that may be made by McCune. The City shall not be held liable for any misrepresentations or breaches thereof. City has not, and expressly does not, make any representation or warranty of any kind as to the physical or environmental condition of the McCune Parcel, or in connection with any matter, report or information relating to the condition of the McCune Parcel, its value, fitness, use, zoning, entitlements, the existence of Hazardous Materials thereon, moratoriums, economic feasibility, developability or any other matter relating to Floit's proposed use or development of the McCune Parcel. Floit acknowledges and agrees that he has been given adequate opportunity . to conduct tests at the McCune Parcel and is not relying on any representation by City, oral or written, in connection with acquisition thereof. Furthermore, Floit waives and releases any and all claims against the City in connection with the legal, contractual or physical condition of the McCune Parcel. ARTICLE IX. -HAZARDOUS MATERIALS 9.1 Definitions. As used in this Agreement, the term "Hazardous Materials" or "Hazardous Material" shall mean any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State, or the United States Government, including, but not -18- 18-90 limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazarqous . substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) lead based paint (viii) polychlorinated biphenyls, (ix) methyl tertiary butyl ether, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.c. 91317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. 996901, et seq. (42 U.S.C. 96903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.c. 999601, et seq. As used in this Agreement, the term "Environmental Laws" shall mean any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials. Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.c. Section 1317), (vi) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq. (42 U.S.c. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., or (viii) any state or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or. permission required by any governmental authority having jurisdiction. 9.2 Hazardous Materials. F10it shall not cause or permit the presence, use, generation, release, discharge, storage, covenant or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Floit Parcel; provided, however, the foregoing shall not apply to Hazardous Materials that migrate onto the Floit Parcel from other property or from sources other than Floit or a party acting under the direction or control of Floil. Floit shall comply with all applicable Environmental Laws in Floil's use, ownership and operation of the Floit Parcel. 9.3 Hazardous Materials Indemnification. Floit agrees to and hereby does indemnify, defend and hold City, the Chula Vista Redevelopment Agency ("Agency") , their respective appointed and elected officials, officers, employees, volunteers and agents harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees and expert witness fees) (hereinafter collectively referred to as the "Claims"), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, -19- 18-91 under, in, or about, or the transportation of any such materials to or from, the Floit Parcel in violation of applicable Environmental Laws, whenever discovered and/or (ii) the environmental, soils, or physical condition of the Floit Parcel, and/or (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the presence, use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Floit Parcel whenever discovered, to the extent the occurrences described in clauses (i), (ii), and (iii) occur or originate from actions or inactions occurring prior to the Closing. This indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation or lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. This indemnity shall not include any Claim directly resulting from, arising out of, or based upon the grossly negligent activities of Agency or City, or any of their elected or appointed officials, officers, employees, volunteers or agents. This indemnity shall survive the termination of this Agreement and the Close of Escrow.ARTICLE X. - DEF AUL T AND REMEDIES 10.1 Floit Default. The term "Floit Default" shall mean Floil's failure to timely perform a material obligation of Floit under this Agreement within five (5) business days following written notice from City describing Floil's failure to perform. In the event of a Floit Default, City, as its sole and exclusive remedies: (i) may terminate this Agreement, or (ii) shall be entitled to the remedy of specific performance. In the event that Flait breaches any of its representations, warranties or indemnities, as provided hereunder, City shall also have the right to pursue claims for damages, and/or any other remedy available at law or in equity. 10.2 City Default. The term "City Default" shall mean City's failure to timely perform a material obligation of City under this Agreement within five (5) business days following written notice from Floit describing City's failure to perform. In the event of a City Default, Floit, as its sole and exclusive remedy, may terminate this Agreement. ARTICLE XI. - GENERAL PROVISIONS 11.1 Loss or Damage to Improvements. Loss or damage to the Floit Parcel including any improvements thereon, by fire, other casualty, or acts of God, occurring at any time prior to the Closing of Escrow shall be at the sole risk ofFloit. 11.2 Notices. All notices, demands, requests or other communications required or permitted hereunder (collectively, "Notices") shall be in writing, shall be addressed to the receiving party, and shall be personally delivered, sent by overnight mail (Federal Express or another carrier that provides receipts for all deliveries), or sent by certified mail, postage prepaid, return receipt requested, to the address listed below: If to Floil: Mid-City, LLC c/o Dan Floit 3565 7r}, Avenue. 2nd Floor San Diego, CA 92103 Fax No.: (619) 294-3465 -20- 18-92 With a copy to: Keenev Waite & Stevens Attn: Richard R. Waite 125 North Acacia Ave.. Suite 101 Solana Beach. CA 92075 (858) 523-2135 (facsimile) If to City:City ofChula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 All Notices shall be effective upon receipt at the appropriate address. Notice of change of address shall be given by written Notice in the manner detailed in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no Notice in accordance with this Section was given shall be deemed to constitute receipt of such Notice. The providing of copies of Notices to the parties' respective counsels is for information only, is not required for valid Notice and does not alone constitute Notice hereunder. 11.3 Brokers. City and Floit each represent to the other that no brokerage commission, finder's fee or other compensation of any kind is due or owing to any person or entity in connection with this Agreement. Each party agrees to and does hereby indemnify and hold the other free and harmless from and against any and all costs, liabilities or causes of action or proceedings which may be instituted by any broker, agent or finder, licensed or otherwise, claiming through, under or by reason of the conduct of the indemnifying party in connection with this Agreement. llA Mutual Indemnity. City shall indemnifY, protect, defend and hold Floit, its officers, employees, representatives and agents harmless from and against any and all claims, losses, damages, costs and expenses (including attorneys fees and court costs) arising out of any accident or occurrence after Close of Escrow (collectively, "Losses") excluding those Losses resulting from Floit's negligence or willful misconduct or the invalidity of Floit's express representations and warranties hereunder. Floit shall indemnify, protect, defend and hold City, its officers, employees, representatives and agents, harmless from and against any and all claims, losses, damages, costs and expenses (including attorneys fees and court costs) arising out of any accident or occurrence after Close of Escrow (collectively, "Losses") excluding those Losses resulting from City's negligence or wilful misconduct. 11.5 Like-Kind Exchange. If either party desires to enter into a like kind exchange pursuant to Internal Revenue Code Section 1031, the other party agrees to reasonably cooperate with same, provided that the party desiring such exchange bears all costs related thereto. 11.6 Waivers and Consents. Each provision of this Agreement to be performed by City and Floit shall be deemed both a covenant and a condition and shall be a material consideration for Floit's and City's performance hereunder, as appropriate, and any breach thereof by City or Floit shall be deemed a material default hereunder; provided however that failure of a condition hereunder shall not be deemed or determined to be a default unless such condition is also a covenant. Either party may specifically and expressly waive in writing any portion of this Agreement or any breach thereof, but no such waiver shall constitute a further or continuing waiver of a -21- 18-93 preceding or succeeding breach of the same or any other provision. A waiving party may at any time thereafter require further compliance by the other party with any breach or provision so waived. The consent by one party to any act by the other for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or any similar acts in the future. No waiver or consent shall be implied from silence.or any failure of a party t.o act, except as otherwise specified in this Agreement. All rights, remedies, undertakings, .obligations, options, covenants, c.onditions and agreements contained in this Agreement shall be cumulative and no one of them shall be exclusive .of any .other. Il.7 Construction. The parties acknowledge and agree that (a) each party is of equal bargaining strength; (b) each party has actively participated in the drafting, preparati.on and negotiation of this Agreement; (c) each party has consulted with such party's own independent counsel and such other professional advisors, if at all, as each party has deemed appropriate, relating to any and all matters contemplated under this Agreement; (d) each party and such party's counsel and advisors, if so elected by the party, have reviewed this Agreement; ( e) each party has agreed to enter into this Agreement following such review and the rendering of such advice, if so elected by the party; and (I) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. 11.8 Cooperation. City and Floit agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the exchange of real property herein contemplated and shall use all reasonable efforts to accomplish the Closing in acc()rdance with the provisions hereof. .11.9 Attorney's Fees. In the event any declaratory or other legal or equitable action is instituted between Floit, City and/or Escrow Holder in connection with this Agreement, then as between City and Floit the prevailing party shall be entitled to recover from the losing party all. of its costs and expenses including court costs and reasonable attorney's fees, and all fees, costs and expenses incurred on any appeal or in collection of any judgment. 11.10 Time. Time is of the essence of every provision herein contained. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from which said period of time runs shall be excluded, and the last day of such period shall be included, .unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until 5:00 p.m. of the next day that is not a Saturday, Sunday, or legal holiday. Except as otherwise expressly provided herein, all time periods expiring on a specified date or period herein shall be deemed to expire at 5 :00 p.m. on such specified date or period. 11. I I Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. A facsimile signature shall be deemed an original signature. 11.l2 Captions. Any captions to, or headings of, the sections or subsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. -22- 18-94 11.13 No Obligations to Third Parties. Except as otherwise expressly. provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the parties hereto. 1l.14 Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. II.IS City Manager Authority. City's Executive Director or his or her designee shall have the authority to sign this Agreement, closing documents, issue interpretations, waive provisions, and enter into amendments of or supplements to this Agreement on behalf of City, so long as such actions do not substantially or substantively change the terms and conditions of the exchange of the real property as set forth herein and as agreed to by the City in its approval of this Agreement. All other waivers or amendments shall require the consideration and written consent of City's goveming board. 11.16 Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this Agreement, against City unless a claim has first been presented in writing and filed with City and acted upon by City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time' to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by City in the implementation of same. Upon request by City, Consultant shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. 1l.1? Applicable Law. This Agreement shall be governed by and construed in accordance with the. laws of the State of California. 11.18 Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated herein by this reference for all purposes. 11.19 Entire Agreement. This Agreement supersedes any prior agreements, negotIatIOns and communications, oral or written, and contains the entire agreement between, and the final expression of, City and Floit with respect to the subject matter hereof. The parties hereto expressly agree and confirm that this Agreement is executed without reliance on any oral or written statements, representations or promises of any kind, which are not expressly contained in this Agreement. No subsequent agreement, representation or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. 11.20 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. 11.21 Assignment. Neither party may assign its interest in this Agreement without the prior written consent of the other party in such party's sole discretion. IN WITNESS WHEREOF, the parties hereto have executed this Agreement for the Exchange of Real Property and Joint Escrow Instructions as of the day and year first written above. -23- 18-95 "FLOIT" Mid-City, LLC, a California Limited Liability Company By: Dan Floit, Managing Member "CITY" CITY OF CHULA VISTA, a chartered municipal corporation By: Cheryl Cox, Mayor ATTEST: Donna Norris, City Clerk APPROVED AS TO FORM: Glen R. Googins, City Attorney -24- 18-96 Acceptance by Escrow Holder: r 1, on behalf of Escrow Holder, hereby acknowledges that Escrow Holder has received a fully executed. copy of the foregoing Purchase and Sale Agreement and Joint Escrow Instructions by and between Dan Floil., a married man holding title as his sole and separate property, as Floit, and the City of Chula Vista, a public body corporate and politic, as City, and agrees to act as Escrow Holder thereunder and to be bound by and strictly perform the terms thereof as such terms apply to Escrow Holder. Dated: ,2011 Stewary Title of California, Inc. . Escrow Holder -25- 18-97 EXHIBIT A LEGAL DESCRIPTION - FLOIT PARCEL All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: PARCEL "A" COMMENCING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING TO SAID MAP NO. 166; THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID SECTION 126, SOUTH 72013'01" WEST 187.50 FEET; THENCE CONTINUING ALONG SAID SOUTHERLY BOUNDARY, SOUTH 72013'01" WEST 66.46 FEET TO THE SOUTHWESTERLY INTERSTATE 805 RIGHT OF WAY BOUNDARY; THENCE LEAVING SAID SOUTHERLY BOUNDARY AND CONTINUING ON SAID RIGHT OF WAY BOUNDARY NORTH 49028'03" WEST 64.64 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID RIGHT OF WAY BOUNDARY NORTH 4902B'03" WEST 523.B3 FEET TO AN ANGLE POINT ON SAID RIGHT OF WAY BOUNDARY; THENCE CONTINUING ON THE SOUTHERLY INTERSTATE 805 RIGHT OF WAY BOUNDARY SOUTH 80002'00" WEST 46.B1 FEET TO THE WESTERLY BOUNDARY OF LOT "F" OF SAID MAP NO. 1607; THENCE ALONG WESTERN BOUNDARY OF LOTS "F" AND "Q" SOUTH 17041'02" EAST 452.12 FEET TO A POINT ON THE WESTERLY BOUNDARY OF LOT "Q"; THENCE LEAVING SAID WESTERLY BOUNDARY NORTH 72013'01" EAST 322.29 FEET TO THE TRUE POINT OF BEGINNING. EXHffiIT A LEGAL DESCRIPTION - FLOIT Exchange Agreement 18-98 EXHIBIT A-I DIAGRAM - FLOIT PARCEL [INSERT DIAGRAM] EXHIBIT A-I DIAGRAM - FLOIT Exchange Agreement 18-99 EXHIBIT B PURCHASE AND SALE AGREEMENT - MCCUNE PARCEL [DRAFT AGREEMENT ATTACHED] EXHIBIT B PURCHASE AND SALE AGREEMENT Exchange Agreement 18-100 DRAFT /11/09/11 PURCHASE AND SALE AGREEMENT AND JOINT ESCROW IN~TRUCTIONS DRAFT SELLER: Richard S. McCune Jr. BUYER: City of Chula Vista DATED: November 15,2011 18-101 Effective Date: Property: Seller: Seller's Address: Buyer: Buyer's Address: Purchase Price: . Outside Closing Date (or Closing) Title Company: Escrow Holder: DOCSOC!1494229v3/024212-0005 BASIC TERMS The effective date shall be deemed to be November 15, 2011 Real property generally known as: 1877 Auto Park Place Chula Vista, California 91910 Richard S. McCune Jr. 736 Rosecrans Street San Diego. CA 92106 Fax No. 619-477-8123 City of Chula Vista, a chartered municipal corporation 276 Fourth Avenue Chula Vista, California 91911 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 $940,000.00. December 3 I , 20 II Stewart Title of California, Inc. 7676 Hazard Center Drive San Diego, California 92108 Stewart Title of California, Inc. 18-102 PURCHASE AND SALE AGREEMENT. AND JOINT ESCROW INSTRUCTIONS This PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into this _ day of _,2011 ("Effective Date"), by and between the CITY OF CHULA VISTA, a chartered municipal corporation ("City" or "Buyer"), and RICHARD S. MCCUNE JR., ("Seller") for acquisition by Buyer of all of Seller's interests, tangible and intangible, in that certain Property defined and described below. The Effective Date shall be the date on which the City's governing body duly considered and took action to approve this Agreement. RECITALS A. Seller owns fee title to approximately 1.89 acres of real property located in the City of Chula Vista, California, commonly known as 1877 Auto Park Place, Chula Vista, California and legally described in Exhibit A and depicted in Exhibit A-I, both attached hereto and incorporated herein by these references, ("Property" as more fully described in Section I, below). B. Buyer desires to acquire a contractual interest to purchase the Property in order to assign such rights to Mid-City,LLC ("Floil") in exchange for other real property that Buyer desires to acquire for public purposes. C. NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer agree as follows: 1. Purchase and Sale. Seller hereby agrees to sell the Property to Buyer, and Buyer hereby agrees to purchase the Property from Seller, on the terms and conditions set forth in this Agreement. Seller shall convey to Buyer fee simple, marketable title with the condition of title for the Property meeting the requirements of Section 3 herein for which Seller is responsible. The term "Property" is defined inclusively and collectively for and under this Agreement as the following: (a) The fee interest in the Property; (b) All improvements, if any, to the Property; (c) All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the Property. "Property" shall be .deemed to include, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived from the Property that are owned by Seller; (d) All moveable and immovable personal property, equipment, supplies, furniture, and fixtures owned by Seller and located at the Property, if any, as of Closing, as set forth in Section 2( d) below; and (e) All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the Property and the improvements thereon. 2 DOCSOC/1494229v3/024212-0005 18-103 2. Purchase Price; Pavment of Purchase Price; Settlement, Release and Waiver. (a) All Inclusive Purchase Price. The Purchase Price for the Property shall be the sum of Nine Hundred Forty Thousand Dollars ($940,000). The purchase price to be paid by Buyer pursuant to this Section is hereinafter referred to as the "Purchase Price." , (b) Installment Payments. The Purchase Price is to be paid in twelve, equal, monthly installmenis, with no interest charged: each installment shall be in the amount of $85,454.55. The first payment shall be paid upon close of escrow and each subsequent payment shall be made at one-month intervals, payable on the first day of the first full month after close of escrow. (i) The obligation to pay the 12 equal monthly installments shall be an unsecured obligation to the City. There shall be no lien against or other encumbrance on the property securing the lien, nor shall any assignment of this Agreement obligate the assignee to make such payments and they shall remain the sole obligation of the City, unless such assignee has expressly agreed in writing to become so obligated. (c) Deposit of First Installment of Purchase Price in Escrow. As consideration for the sale of the Property from Seller to Buyer, Buyer shall, one business day prior to Closing, deposit with the escrow officer ("Escrow Holder") immediately available funds in the amount of $85,454.55, together with funds necessary to cover all of the Buyer's Charges described in Section 11 (b). (d) Full and Complete Settlement, Release and Waiver. The Purchase Price is all-inclusive and shall remain total compensation paid by Buyer to Seller for all of Seller's interests in the Property, inclusive of any and all rights or obligations which exist or may arise out of Buyer's acquisition of the Property, including without limitation, Seller's fee interest in the land, all improvements pertaining to the realty, all other improvements, furnishings, fixtures, and equipment located thereon, severance damages, if any, alleged pre-condemnation damages, if any, alleged loss of business goodwill, if any, eligible costs directly attributed to the development of the Property, relocation benefits and assistance, if any, costs, interest, attorney's fees, and any claim whatsoever of, by, or through Seller that may arise out of or relate in any respect to Buyer's acquisition of the Property from Seller. In this regard Seller acknowledges that based on the advice of counsel, as and if Seller elects to obtain the advice of counsel, Seller is and will be fully satisfied that the Purchase Price is fair and adequate consideration for all interests in the Property and that it is all-inclusive compensation for the Property. In furtherance of the foregoing paragraph, Seller understands that Buyer would not have entered into this Agreement without Seller's agreement to (i) sell the Property for an all- inclusive Purchase Price and (ii) knowingly, voluntarily, and intentionally waive according to the terms set forth herein, any and all of Seller's interest in or right to an'y relocation assistance or benefits under the Relocation Laws and for any other or further compensation or consideration for the Property and all interests therein or arising therefrom. Therefore, the Purchase Price has been determined by and is inclusive of Seller's agre,ement hereunder to fully release and discharge Buyer from all and any, manner of rights, demands, liabilities, obligations, claims, or causes of action, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising ("Claims"), which arise from 3 18-104 or relate in any manner to (i) the sale of the Property to the extent such claims are based on the fact that Buyer is a public entity; (ii) the relocation of any person or persons or other occupant or occupants located on the Property, including the specific waiver and release of any right to any relocation benefits, advisory or other assistance, and/or payments under the Relocation Laws as to whom this waiver and release is effective, notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under said Relocation Laws or other state or federal law; and (iii) compensation for any interest in the Property or income from the Property including, but not limited to, land and .improvements, fixtures, furniture, or equipment thereon, goodwill, severance damage, leases or other contracts relating to the Property, attorneys' fees, or any other compensation of any nature whatsoever. By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with; the items set out in Section 2(c) above, the Seller expressly waives any rights under California Civil Code Section 1542, which provides: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF. EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." Seller's Initials 3. Escrow and Title Matters. (a) Escrow and Closing. (i) Opening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened ("Opening of Escrow") on the date. that Escrow Holder receives a copy of this Agreement fully executed by Seller and executed and attested by Buyer. Buyer and Seller shall use reasonable efforts to cause the Opening of Escrow to occur on or before five (5) business days after the Effective Date. Escrow Holder shall promptly notify Buyer and Seller in writing of the date of the Opening of Escrow. Buyer and Seller agree to execute, deliver and be bound by any reasonable or customary supplemental Escrow instructions or other instruments reasonably required by Escrow Holder to consummate the transaction contemplated by this Agreement; provided, however, that no instrument shall be inconsistent or in contlict with, amend or supersede any portion of this Agreement. If there is any contlict or inconsistency between the terms of an instrument and the terms of this Agreement, then the terms of this Agreement shall control. Without limiting the generality of the foregoing, no instrument shall extinguish any obligations imposed by this Agreement or any other contract between Seller and Buyer. (ii) Closing. For purposes of this Agreement, the "Closing" or "Closing Date" shall be the date the Grant Deed (as defined below) is recorded pursuant to applicable law in the Official Records of San Diego County. Unless changed in writing by Buyer and Seller, the Closing shall occur on or before December 31, 20 II ("Outside Closing 4 18-105 Date"). If the Closing has not, for any reason, occurred by the Outside Closing Date (as it may be extended pursuant to the immediately preceding sentence), then either Buyer or Seller may terminate this Agreement by delivering written notice to the other at any time after the Outside Closing Date; provided, however, that if there is a Seller Default or a Buyer Default under this Agreement at the time of the termination, then the termination shall not affect the rights and remedies of the non-defaulting partY against the defaulting party. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon thereafter as Buyer's and Seller's Conditions Precedent to Closing are satisfied pursuant to Sections 7(a) and 7(b) of this Agreement. (b) Title Matters., (i) Buver's Title Policv. Concurrently with the Closing, the Title Company shall issue to Buyer a 2006 CLTA or ALTA, at the option of Buyer, owner's policy of title insurance (amended 6/17/06) without arbitration provisions in the amount ofthe Purchase Price, showing fee title to the Property vested solely in the City of Chula Vista, a chartered municipal corporation, or City's designee, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated as of September 20, 20 II, issued by Stewart Title of California, Inc. with respect to the Property ("Title Report"), attached hereto as Exhibit C:@SERjj>RQPFjD~x~[PJjbN~j.NfI:rL~j~'g;~6Rlj (collectively, "Buyer's Title Policy"). The premium for the Buyer's Title Policy and any endorsements required by Buyer shall be charged to Seller and Buyer as described in Section II, subdivisions (a) and (b). Buyer may require, as a Buyer's Condition Precedent to the Closing, that Seller execute an estoppel agreement and/or a subordination agreement in a form acceptable to Buyer, confirming that, as of the Closing, (a) the Seller shall nave no further interest in the Property or any portion thereof or any improvements thereon. (ii) No New Liens or Exceptions. Buyer hereby objects to any and all liens and exceptions to title not shown on the Title Report. Further, during the period commencing on the Effective Date and continuing until the Closing, Seller agrees it shall not cause any new or modified lien or encumbrance to title to become ofrecord against the Property, unless such lien or encumbrance is approved in writing by Buyer. Each and every new lien or encumbrance shall be subject to Buyer's prior written consent and unless and until approved by Buyer shall be deemed a disapproved exception to title that shall be removed by Seller at Seller's sole cost as a condition to Closing. 4. Seller's Delivery of Prooerty Documents. (a) Seller's Delivery of Property Documents. Within three (3) days after the Effective Date, Seller shall deliver to Buyer complete, true, and legible copies of the following items (COllectively, "Property Documents"): (i) Copies of tax bills, including assessments, if any. (ii) Proof of Sellers' authority and authorization to enter into ihis Agreement and to consummate this transaction as may be reasonably requested by Buyer and the Title Company. 5 18-106 (iii)Each and every contract, agreement, license and lease relating to and/or affecting the Property, specifying which of such contracts, agreements, licenses, and/or leases are anticipated to bind Buyer or affect the Property following the Close of Escrow, if any, with the exception of the Title Report which shall be handled as set forth in Section 3(b). (b) Property Documents delivered to Buyer as of Effective Date. As of the Effective Date, Seller has delivered to Buyer the following Property Documents: (i) The Title Report (ii) Polanco Redevelopment Act Remediation. and Conditional Immunity Agreement ("Polanco Documents") (iii) Substitution of Trustee and Partial Reconveyance, re~orded 9/5/2008 (c) Deliveries to Floil. Any and all documents delivered to Buyer pursuant to this Agreement shall also be delivered to Floil. 5. Buver's Ril!ht of Entrv and Tests of Prooertv. From and after the Effective Date through the earlier to occur of the termination of this Agreement or the Closing Date, Seller shall permit Buyer and Buyer's employees, agents, consultants and contractors to enter upon the Property during normal business hours, provided 24 hours prior notice has been given to Seller, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as Buyer in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports; environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of'adverse soils conditions, adverse groundwater conditions, asbestos, lead based paint, and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, 'Tests"). (a) Conditions to Right of Entry for Tests. As a condition to conducting any Tests, Buyer shall (i) prior to entry, notify Seller not less than 24 hours in advance of the purpose of the intended entry and provide to Seller the names and affiliations of the entity or person(s) entering the Property; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the Property free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the Property for such Tests performed by or on behalf of Buyer; (v) Buyer to maintain, or Buyer to cause to be maintained by Buyer's contractor(s), workers' compensation insurance on all persons entering the Property for such Tests in the amounts required by the State of California; (vi) Buyer to maintain, or Buyer to cause to be maintained by Buyer's contractor who will be entering the Property, commercial general liability insurance policy with a financially responsible insurance company (or as to Buyer its membership in a joint powers insurance authority with comparable coverage) covering any and all liability of Buyer and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the Property, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly 6 18-107 repair any. and all damage to the Property from such Tests caused. by Buyer, its agents, employees, contractors, or consultants and return the Property to its original condition (subject to the Tests conducted) following Buyer's entry. Buyer shall indemnif'y, defend, and hold harmless Seller and its agents from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of Buyer, its agents, contractors, consultants, and employees upon the Property for and related to such entry and Tests or from Buyer's failure to comply with the conditions to Buyer's entry onto the Property for such Tests. Such indemnity shall survive the Close ofEscrciw or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the Property and/or the Tests. 6. Due Dilil!:ence Notices. (a) Buyer's~!l'!.~})J.l!g!II~!l!~~i~",: Buyer shall notify Seller in writing on or before on or before a date [lliSI':R.I:.iI:,f().lmAX~] following the opening of Escrow ("Contingency Date") of Buyer's approval or disapproval in its sole and absolute discretion ofthe Property Documents and of the condition of the Property as disclosed by the Tests ("Buyer's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action Seller would be required to take to remediate or cure the objectionable matters to Buyer's satisfaction. (i) Provided that Seller has delivered the Property Documents to Buyer within the time set forth in Section 4(a), Buyer's failure to deliver the Buyer's Due Diligence Notice on or before the Contingency Date shall be deemed Buyer's disapproval of the Property Documents and condition of the Property. In such event of Buyer's failure to deliver its Buyer's Due Diligence Notice, then such failure shall be deemed Buyer's election to terminate this Agreement. (b) Seller's Due Diligence Notice. In the event Buyer timely delivers its Buyer's Due Diligence Notice disapproving any Property Documents or any condition of the Property, Seller shall have ten (10) days from receipt of Buyer's Due Diligence Notice to deliver written notice to Buyer ("Seller's Due Diligence Response Notice") of Seller's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable conditions at its sole cost prior to the Close of Escrow; or (iii) correct and/or remediate all objectionable conditions at its sole cost prior to the Close of Escrow. (i) If Seller's Due Diligence Response Notice informs Buyer of Seller's election to terminate Escrow (choice (i) in subsection (b) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights or obligations hereunder. Seller's failure to deliver Seller's Due Diligence Response Notice shall be deemed Seller's election to terminate this Agreement (choice (i) of subsection (b) above) and the parties shall have no further rights or obligations hereunder. (ii) If Seller's Due Diligence Response Notice informs Buyer of Seller's election to correct certain of the objectionable conditions (choice (ii) in subsection (b) above), then Buyer shall have the right, by a second written notice delivered to Seller within five (5) days after Buyer's receipt of Seller's Due Diligence Response Notice, to agree to accept the Property subject to one or more of the objectionable conditions that Seller will not correct 7 18-108 ("Buyer's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that Buyer is willing to accept, in which event Seller may elect, in its sole discretion, to either (A) accept Buyer's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the sale of the Property to Buyer, with Buyer taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credit against the Purchase Price (subject to Seller's correction of certain conditions to be corrected as listed in Seller's Due Diligence Response Notice), or (B) reject Buyer's Second Due Diligence Notice and terminate the Escrow. (A) If Seller accepts Buyer's Second Due Diligence Notice, then the correction of and/or completion of the remediation or removal of objectionable conditions listed in the Seller's Due Diligence Notice shall be deemed to be one of the Buyer's Conditions Precedent to Closing under Section 7 below, and Buyer and Seller shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed. (iii) If Seller's Due Diligence Response Notice informs Buyer of Seller's election to correct all of the objectionable conditions (choice (iii) in subsection (b) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of the Buyer's Conditions Precedent to Closing under Section 7 below, and Buyer and Seller shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. (e) Prior to Assignment. In the event that Buyer has not assigned this Agreement to Floit prior to the commencement of any due diligence period hereunder, for the purpose of this section, the term "Buyer" shall include Floil. 7. Conditions Precedent to Close of Eserow and Termination Riehts. (a) Buyer's Conditions Precedent. The Closing and Buyer's obligation to buy the Property and to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Buyer's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Buyer's benefit only. (I) No Termination as a Result ofBuver's Due Diligence Review. This Agreement shall not have terminated pursuant to Sections 3(a)or 6 as a result of Buyer's review and inspection of the Title Report, the Property Documents to, and/or the Tests on the Property. (2) Seller Title. Seller shall have fee title to the Property. (3) Buver's Title Policv. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide Buyer's Title Policy for the Property upon the Closing, in accordance with Section 3(a). 8 18-109 (4) Reoresentations and Warranties. All representations and warrantie~ of Seller contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. (5) No Seller Default. As of the Closing, there shall be no Seller Default under this Agreement. (6) Termination of Agreements: Vacancv of Prooertv. Except to the extent expressly disclosed in writing to Buyer (and approved by Buyer) in Exhibit D, Seller shall have terminated any and all contracts affecting and/or relating to the Property and any and all leases and licenses for space at the Property, and all tenants, licensees, or other occupants shall have permanently vacated the Property. McCune shall cause to be removed and/or . terminated, at McCune's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting the Property, except to the extent such instruments are permitted and approved by City pursuant to Sections 3(b )(ii) and 6, above and as expressly disclosed to City in Exhibit D. (7) Satisfaction of Conditions. All conditions precedent for the Closing of Escrow have been satisfied or waived pursuant to the terms of that certain Purchase and Sale Agreement and Joint Escrow Instructions between Floit and City dated concurrently herewith. (b) Seller's Conditions Precedent. The Closing and Seller's obligation to sell the Property and consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Seller's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Seller's benefit only: (1) No Buyer Default. As of the Closing, there shall be no Buyer Default under this Agreement. (2) Reoresentations and Warranties. All representations and warranties of Buyer contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. (3) Deliverv of Funds and Documents. Buyer shall have delivered all funds and documents and other items described in Section 9. (e) Waiver. Buyer may at any time or times, at its election in its sole and absolute discretion, waive any of the Buyer's Conditions Precedent set forth in Section 7(a), but any such waiver shall be effective only if contained in a writing signed by Buyer and delivered to Seller and Escrow Holder. Seller may at any time or times, at its election in its sole and absolute discretion, waive any of the Seller's Conditions Precedent set forth in Section 7(b) above, but any such waiver shall be effective only if contained in a writing signed by Seller and delivered to Buyer and Escrow Holder. (d) Termination. In the event that each of the Buyer's Conditions Precedent set forth in Section 7(a) is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Buyer pursuant to Section 7( c), and provided there is no Buyer Default under this Agreement, Buyer may at its option terminate this Agreement and 9 18-110 the Escrow opened hereunder. In the event each of the Seller's Conditions Precedent set forth in Section 7(b) is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Seller pursuant to Section 7(c), and provided there is no Seller Default under this Agreement, Seller may at its option terminate this Agreement and the Escrow opened hereunder. Notwithstanding the foregoing, if Escrow is not in a position to close due to a party's failure to deposit into Escrow any documents or funds required for the Closing of Escrow, the non-defaulting party shall not have the right to terminate this Agreement without first having given the defaulting party notice of the default and five (5) days to cure the default, with the understanding that it is the parties' desire that this Agreement not terminate as a result of a technicality such as a party's inadvertent failure to timely make a deposit of a document or money into Escrow. No termination under this Agreement shall release either party then in default from liability for such default. In the event this Agreement is terminated, (i) all documents and funds delivered by Seller to Buyer or Escrow Holder shall be returned immediately to Seller, provided there is no Seller Default, and likewise (ii) all documents and funds delivered by Buyer to Seller or Escrow Holder shall be returned immediately to Buyer. (i) If Escrow fails to close due to a party's default or breach, the defaulting or breaching party shall pay all Escrow Cancellation Charges. If Escrow fails to close for any other reason, each party shall pay one-half of all Escrow Cancellation Charges. The term "Escrow Cancellation Charges" shall mean all fees, charges and expenses actually charged by Escrow Holder and the Title Company to the parties in connection with the cancellation of the Escrow and the title order, if any. 8. Seller's Deliveries to Escrow Holder. At least two (2) business days prior to the Closing Date, except as to possession of the Property which shall be delivered as of Closing, Seller shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged: (a) Seller's Charges. Immediately available funds in the amount necessary to pay Seller's Charges .as set forth in Section] lea) herein; provided, however, that instead of depositing such funds into Escrow Seller shall have the right to have Seller's Charges deducted from the sale proceeds due to Seller. (b) Grant Deed. The Grant Deed in the form attached hereto as Exhibit B ("Grant Deed"), duly . executed by Seller and acknowledged. (c) Bill of Sale. If required by Buyer, the Bill of Sale, in the form attached hereto as Exhibit F, duly executed by Seller, with a list of all FF&E relating to the Property appended thereto, as required by Section 2(d). (d) Licenses, Certificates, and Permits. To the extent the same are within the actual or constructive knowledge of, or in the possession, custody or control of, Seller and are. applicable and/or transferable to Buyer, all original licenses, certificates, and permits pertaining to the Property and beneficial for, or necessary for, or affecting the use or occupancy thereof. ]0 18-111 (e) FIRPTAffax Exemption Forms. Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit E ("F1RPT A Certificate") (unless Seller is a "foreign person," as defined in Section 1445 in the Internal Revenue Code of I 986), together with any necessary tax withholding forms, and a duly executed California Form 593-C, as applicable ("California Exemption Certificate"). (I) Authority. Such proof of Seller's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Buyer and the Title Company. (g) Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 9. Buver's Deliveries to Escrow. At least two (2) business days prior to the Closing Date, Buyer shall deposit or cause to be deposited with Escrow Holder the following, each duly executed and acknowledged, by Buyer as appropriate: (a) Purchase Price. The first installment of the Purchase Price (as provided in Section 2(b) hereol), and any additional funds necessary to pay Buyer's Charges set forth in Section II(b) herein. In the event Seller does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code, as evidenced by the delivery at Closing of the California Exemption Certificate duly executed by Seller, Title Company shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of Buyer for payment to the California Franchise Tax Board in accordance with Section 11 (d) . hereof. In the event Seller is not exempt from such withholding or does not otherwise deliver the California Exemption Certificate at Closing, Buyer shall execute and deliver three (3) originals of California Form 597 to Title Company at or immediately after Closing. (b) Final Escrow Instructions. Buyer's final written Escrow instructions to close Escrow in accordance with the terms ofthis Agreement. (c) Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 10. Tax Adiustment Procedure. Escrow Holder is authorized and is instructed to comply with the following tax adjustment procedure: (a) Delinqnent Taxes. Pay and charge Seller for any unpaid delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the Property . (b) Proration. Escrow is not to be concerned with proration of Seller's taxes for the current fiscal year. Seller's pro rata portion of taxes due at close of Escrow, shall be cleared and paid by Seller, outside Escrow, pursuant to provisions of Section 5082 through 5090 of the Revenue and Taxation Code of the State of California. 11 18-112 (c) Refund of Taxes. After the Closing of the Escrow, Seller shall have the right in Seller's sole discretion to apply to the San Diego County Tax Collector for refund of any excess property taxes paid by Seller with respect to the Property, so long as no proration or credit for such taxes was provided to Seller through the Escrow. This refund would apply to the period after the Closing Date and Buyer's acquisition of the Property pursuant to Revenue and Taxation Code Section 5096.7. 11. Escrow Holder Authorization. Escrow Holder is authorized to and shall pay, charge and perform the following: (a) Seller Charges. (i) Removal of Title Exceptions. Pay and charge Seller for any amount necessary to cause the removal of any title matters that Seller agreed to remove pursuant to Section 3(b) and to convey fee simple, marketable title pursuant to the requirements of this Agreement. (ii) Seller's Share of Charges of Escrow. Pay and charge Seller for one half (1/2) of the Escrow fee, any documentary transfer taxes, and all title insurance premiums for the Buyer's Title Policy premium which would be incurred for a CL TA standard owner's form policy and the endorsements described in Section 3(b lei). (iii)The charges set forth in this Section I I (a) are herein referred to as the "Seller's Charges." (h) Buyer Charges. Pay and charge Buyer for one half (J /2) of the Escrow fees, all charges for recording the Grant Deed, and any additional title coverage requested by Buyer, including the difference between a CL T A standard owner's policy (which CL T A policy and the endorsements described in Section 3 (b )(i)) are and shall . remain Seller' s Charges) and an ALTA extended owner's policy (collectively, "Buyer's Charges"). (c) Tax Requirements. Escrow Holder shall prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099 S form, and be responsible for withholding taxes, if any such forms and/or withholding is provided for or required by law. (i) California Withholding. In the event Seller does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code ("Tax Code") as evidenced by the delivery to Buyer at Closing of the California Exemption Certificate duly executed by Seller, (i) Escrow Holder shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of Buyer at Closing for payment to the California Franchise Tax Board in accordance with the Tax Code, (ii) Buyer shall deliver three (3) duly executed originals of California Form 597 to Escrow Holder at or immediately after Closing, (iii) two (2) executed originals of California Form 597 shall be delivered by Escrow Holder to Seller, and (iv) on or before the 20th day of the month following the month title to the Property is transferred to Buyer (as evidenced by the recording of the Grant Deed), Escrow Holder shall remit such funds withheld from the Purchase Price, together with one (J) executed original of California Form 597 to the California Franchise Tax Board on behalf of Buyer. Buyer and Seller hereby appoint Escrow Holder as a reporting entity under the Tax Code, authorized to withhold and remit the withholding tax contemplated under the Tax Code, together with 12 18-113 such other documents required by the Tax Code (including, without limitation, Califomia Form 597), to the Califomia Franchise Tax Board. (ii) FIRPTA Withholding. If Seller is a "foreign person" under the Foreign Investment in Real Property Transfer Act or an exemption applies, the Escrow Holder shall deduct and withhold from Seller's proceeds ten percent (10%) of the gross sales price and shall otherwise comply with all applicable provisions Of the Foreign Investment in Real Property Act and any similar state act. Seller agrees to execute and deliver Exhibit E, as directed by Escrow Holder, or any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of the Foreign Investment in Real Property Act and any similar state act and regulation promulgated thereunder. (d) Closing Statement. Escrow Holder is instructed to prepare and provide copies of a proposed closing statement and thereafter the final closing statement ("Closing Statement") to both Seller and Buyer. Escrow Holder shall deliver the estimated Closing Statement to Seller and Buyer no later than three (3) business days prior to the Closing Date. (e) Escrow Holder Responsibility. The. responsibility of the Escrow Holder under this Agreement is limited to Sections I through 12, and 18(b) and (c), and to its liability under any policy of title insurance issued in regard to this transaction. 12. C1osinl! Procedure. On the Closing Date, and provided all of the Buyer's Conditions Precedent and Seller's Conditions Precedent set forth in Sections 7(a) and 7(b), respectively, of this Agreement have been satisfied or waived in writing by the appropriate party (per Section 7( c)), Escrow Holder shall immediately close Escrow in the manner and order provided below. (a) Recording. Escrow Holder shall cause the Grant Deed to be recorded pursuant to applicable law in San Diego County and obtain conformed copies thereof for distribution to Seller and Buyer. (b) Disburse Funds. Escrow Holder shall debit or credit (as provided herein) all charges to . Buyer and Seller and withhold funds pursuant to Section II. The Purchase Price (less any amounts required to be withheld as provided in Section II (d)) shall be distributed by check payable to Seller unless Escrow Holder is instructed otherwise in writing signed by Seller (and1 in such event, in accordance with such instructions). (c) Docnments to Seller. Escrow Holder shall deliver to Seller, a conformed copy of the Grant Deed, and a copy of all other documents deposited into Escrow by Buyer pursuant to this Agreement. (d) Documents to Buyer. Escrow Holder shall deliver to Buyer the original FIRPT A Certificate, the original Califomia Exemption Certificate (as applicable), a conformed copy of the Grant Deed, the Title Report, and each other document (or copies thereof) deposited into Escrow by Seller pursuant hereto, including, without limitation, those documents referenced in Section 8. (e) Title Company. Escrow Holder shall cause the Title Company to issue the Buyer's Title Policy to Buyer. 13 18-114 (I) Closing Statement. Escrow Holder shall forward to both Buyer and Seller a separate accounting of all funds received and disbursed for each party in the form of the Closing Statement prepared pursuant to Section II (e). (g) Informational Reports. Escrow Holder shall file any informational reports required by Internal Revenue Code Section 6045( e), as amended. (h) Possession. Possession of the Property shall be delivered to Buyer at the Closing. 13. Reoresentations and Warranties. (a) Seller's Representations and Warranties. In consideration of Buyer entering into this Agreement and as an inducement to Buyer to purchase the Property, Seller makes the following representations and warranties as of the Effective Date and continuously as of the Closing, each of which is material and is being relied upon by Buyer (and the truth and accuracy of which shall constitute a condition precedent to Buyer's obligations hereunder), and all of which shall survive Closing: (i) Seller has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby. (ii) All requisite action (corporate, trust, partnership or otherwise) has been taken by Seller in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any individual, director, manager, shareholder, partner, member, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party shall be required for Buyer to consummate the transaction contemplated by this Agreement. (A) In this regard, if applicable, Seller shall deliver or cause delivery to Buyer of true and complete copies of each requisite action or authorization (corporate, trust, partnership or otherwise) that has been taken by Seller or will be taken (immediately after taking such action prior to Closing) when in connection with entering into this Agreement and execution of the instruments referenced herein. (iii) The individuals executing this Agreement and the instruments referenced herein on behalf of Seller have the legal power, right and actual authority to bind Seller to the terms and conditions hereof and thereof. (iv) Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or instruments referenced herein or therein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, lease or other agreement or instrument (a) to which Seller is a party, or (b) that affect the Property of which Seller has actual or constructive knowledge, including, but not limited to, any of the Property Documents. 14 18-115 (v) To the best of Seller's actual or constructive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the Property or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. (vi) To the best of Seller's actual or constructive knowledge, there are no actions or proceedings pending or threatened against Seller, before any court or administrative agent in any way connected with or relating to the Property, or affecting Seller's ability to fulfill all of its obligations under this Agreement. (vii) Seller has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the Property, or any part thereof, or any interest therein, which will survive the Closing. Seller has entered into no understanding or agreement with any taxing or assessing authority respecting the imposition or deferment of any taxes or assignments respecting the Property. (viii)To the best of Seller's actual or constructive knowledge, Seller is not in default of its obligations under any contract, agreement or instrument to which Seller is a party pertaining to the Property. To the best of Seller's knowledge, no document supplied to Buyer by Seller contains any untrue statement of a material fact, and to the best of , Seller's actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. (ix) To the best of Seller's actual or constructive knowledge, there are no encroachments onto the Property by improvements on any adjoining property, nor do any buildings or improvements located on the Property encroach on other properties. (x) There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the Property for work performed or commenced for Seller or on Seller's behalf prior to the Effective Date of this Agreement. Seller agrees to indemnify, defend, and hold Buyer and its elected and appointed officials, officers, employees, contractors, and agents harmless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar lien claims against the Property and arising from work performed or commenced for Seller or on Seller's behalf at any time prior to Closing. (xi) Except as may be revealed in the Title Report and the Property Documents delivered to Buyer by Seller, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements 'for services, supplies or materials concerning the use, operation, maintenance, or management of the Property that will be binding upon Buyer or the Property after the Closing. There are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the Property to which Seller is a party or of which Seller has actual knowledge and/or constructive knowledge. . (xii) Except as revealed in the Title Report and the Property Documents delivered to Buyer by Seller, or as listed in Exhibit D attached hereto, there are not any written or oral contracts, leases, licenses, or contractual rights or options to lease, purchase, or 15 18-116 otherwise enjoy possession, rights or interest of any nature in andto the Property or any part thereof, and except to the extent expressly otherwise agreed by Buyer, no person other than Buyer and Seller shall have any right of possession to the Property or any part thereof as of the Closing. (A) As of the Effective Date, .Seller agrees not to enter into any leases, licenses or easements in the Property (or any part thereof), or grant any other rights of access, use or occupancy to the Property (or any part thereof) without the prior written approval of Buyer, which may be granted or denied in Buyer's sole and complete discretion. (xiii) Except as revealed in the Title Report and the Property Documents delivered to Buyer by Seller pursuant to Section 4(a), Seller shall not allow, consent to, or otherwise permit any encumbrance, lien, or other exception to title to become of record or affect title to the Property during the period from the Effective Date through the Closing Date, unless such encumbrance, lien, or other exception is expressly pre-approved by Buyer in its sole and absolute discretion. (xiv) Neither Seller nor, to the best of Seller's knowledge, any previous owner, tenant, occupant, or user of the Property used, generated, released, discharged, stored, or disposed of any Hazardous Materials on, under, in, or about the Property, or transported any Hazardous Materials to or from the Property, except as discussed on Exhibit F attached hereto and incorporated herein. (xv) To Seller's actual knowledge no Hazardous Materials exist on, under, in or about the Property, nor have Hazardous Materials ever been transported to or from the Property, except as discussed on Exhibit F attached hereto and incorporated herein.. (xvi) Until the Closing, Seller shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escrow, immediately give written notice of such fact or condition to Buyer. (xvii) Seller represents to Buyer, and Buyer acknowledges the representation of Seller that Seller has never operated, occupied or developed the Property. As used herein, the term "actual knowledge" shall mean the actual, current knowledge of Seller and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge due to any notice or other document addressed to and evidenced to have been sent to Seller, and any other document in the Seller's possession and control. (b) Subsequent Changes to Seller's Representations and Warranties. If, prior to the Closing, Buyer or Seller should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Seller set forth herein incorrect or untrue in any respect (collectively, the "Seller Representation Matter"), then the party who has learned, discovered or become aware of such Seller Representation Matter shall promptly give written notice thereof to the other party and Seller's representations and warranties shall be automatically limited to account for the Seller Representation Matter. Buyer shall have the right to approve or disapprove any such change and to terminate this Agreement by 16 18-117 written notice to Seller if Buyer reasonably disapproves any such change; provided, however Seller shall first have the opportunity to cure the Seller Representation Matter. If Buyer does not elect to terminate this Agreement, Seller's representation shall be qualified by such Seller Representation Matter and Seller shall have no obligation to Buyer for such Seller Representation Matter. If Buyer does not provide written notice to Seller indicating its approval or disapproval of the change(s), the absence of such notice shall be deemed to be . . Buyer's disapproval of such changes, and in the event the Seller fails to cure, Buyer shall be deemed to have exercised its right to terminate this Agreement. (c) Buyer's Representations and Warranties. In consideration of Seller entering into this Agreement and as an inducement to Seller to sell the Property, Buyer makes the following representations and warranties as of the date hereof and at and as of the Closing, each of which is material and is being relied upon by Seller, the truth and accuracy of which shall constitute a condition precedent to Seller's obligations hereunder, and all of which shall survive Closing: (i) Buyer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby, subject to this representation not becoming effective unless, until, and subject to this Agreement being placed on an agenda of the Buyer's governing board for consideration and action at a duly noticed, open public meeting of the Buyer's governing board, and, if approved, then such representation shall be effective as of the Effective Date. Buyer's execution of this Agreement after the Effective Date shall be conclusive evidence that Buyer's governing board has approved this Agreement at a duly noticed, open public meeting. (ii) Subject to (c )(i) above, as of the Effective Date, all requisite governmental action has been taken by Buyer in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing Date, no additional consent of any individual, judicial or administrative body, governmental authority or other party shall be required for Seller to consummate the transaction contemplated by this Agreement, subject to no material change in the terms or provisions hereof. (iii)Subject to (c)(i) above, as of the Effective Date, the individuals executing and attesting this Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof. (iv)Neither the execution and delivery of this Agreement and the documents and instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement and the documents and instruments referenced herein conflict with or result in the material breach. of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreement or instrument to which Buyer is a party or by which any of Buyer's properties are bound. 17 18-118 (d) Subsequent Changes to Buyer's Representations and Warranties. If, prior to the Closing, Seller or Buyer should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Buyer set forth herein incorrect or untrue in any respect (collectively, the "Buyer's Representation Matter"), then the party who has learned, discovered or become aware of such Buyer's Representation Matter shall promptly give written notice thereof to the other party and Buyer's representations and warranties shall be automatically limited to account for the Buyer's Representation Matter. Seller shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Buyer if Seller reasonably disapproves any such change; provided, however Buyer shall first have the opportunity to cure the Buyer's Representation Matter. If Seller does not elect to terminate this Agreement, Buyer's representation shall be qualified by such Buyer's Representation Matter and Buyer shall have no obligation to Seller for such Buyer's Representation Matter. 14. Convevance of Property in its Existin!! Condition. As of the Closing Date, and subject to its rights under Section 5,. Buyer acknowledges that Buyer will have been given an adequate opportunity to conduct the Tests at the Property. Except as otherwise expressly provided in this Agreement and except as required to be disclosed or otherwise action taken pursuant to federal, state or local laws and regulations, Seller makes no representation or warranty of any kind as to the physical or environmental condition of the Property or in connection with any matter, report or information relating to the. condition of the Property, its value, fitness, use, zoning, entitlements, the existence of Hazardous Materials thereon, moratoriums, economic feasibility, developability or any other matter relating to Buyer's proposed use or development of the Property . 15. Seller's Covenants durin!! Escrow Period. (a) New Liens or Encumbrances. Seller shall not further encumber or place any further liens or encumbrances on the Property from the Effective Date and during the Escrow period to the. Closing Date. without the express, prior written authorization of Buyer in its sole and complete discretion. Further, if the Buyer does consent to a new lien or encumbrance, then such lien or encumbrance on the Property shall not survive. the Closing Date, including, but not limited to, right of entry, covenants, conditions, restrictions, easements, liens, options to purchase, options to lease, leases, tenancies, or other possessory interests or rights of use or rights of entry relating to or affecting the Property without the prior written consent of Buyer which consent may be withheld by Buyer in its sole and complete discretion. (b) Hazardous Materials. Seller shall not cause or permit the presence, use, generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Property; provided, however, the foregoing shall not apply to Hazardous Materials that migrate onto the Property from other property or from sources other than Seller or a party acting under the direction or control of Seller. Seller shall comply with all applicable Environmental Laws in Seller's use, ownership and operation of the Property. . (i) As used in this Agreement, the term "Hazardous Materials" or "Hazardous Material" shall mean any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," 18 18-119 "extremely hazardous waste," or "restricted hazardous waste". under Sections 25115, . - 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) lead based paint (viii) polychlorinated biphenyls, (ix) methyl tertiary butyl ether, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. S 1317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. SS6901, et seq. (42 U.S.c. S6903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.c. SS9601, et seq. (ii) As used in this Agreement, the term "Environmental Laws" shall mean any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117, 25122.7 or 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (vi) Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq. (42 U.S.c. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.c. Sections 9601 et seq., or (viii) any state or federal lien or "superlien" law, any environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction. 16. Default and Remedies. (a) Seller Default. The term "Seller Default" shall mean Seller's failure to timely perform a material obligation of Seller under this Agreement within five (5) business days following written notice from Buyer describing Seller's failure to perform. In the event of a Seller Default, Buyer, as its sole and exclusive remedies: (i) may terminate this Agreement, or (ii) shall be entitled to the remedy of specific performance. (b) Buyer Default. The term "Buyer Default" shall mean Buyer's failure to timely perform a material obligation of Buyer under this Agreement within five (5) business days following written notice from Seller describing Buyer's failure to perform. In the event of a Buyer Default, Seller, as its sole and exclusive remedy, may terminate this Agreement. 19 18-120 17. General Provisions. (a) Loss or Damage to Improvements. Loss or damage to the Property including any improvements thereon, by fire, other casualty, or acts of God, occurring at any time prior. to the Closing of Escrow shall be at the sole risk of Seller. (b) Notices. All notices, demands, requests or other communications required or permitted hereunder (collectively, "Notices") shall be in writing, shall be addressed to the receiving party, and shall be personally delivered, sent by overnight mail (Federal Express or another carrier that provides receipts for all deliveries), or sent by certified mail, postage prepaid, return receipt requested, to the address listed below: If to Seller: Richard S. McCune Jr. Fax No.: With a copy to: San Diego, CA 92101 Attention: Fax No.: (619) 696-7124 If to Buyer: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 With copies to: Dan Floit 3565 7th Avenue. 2nd Floor San Diego. CA 92103 (619) 294-3465 (facsimile) Keenev Waite & Stevens Attn: Richard R. Waite 125 North Acacia Ave.. Suite 101 Solana Beach. CA 92075 (858) 523-2135 (facsimile) All Notices shall be effective upon receipt at the appropriate address. Notice of change of address shall be given by written Notice in the manner detailed in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no Notice in accordance with this Section was given shall be deemed to constitute receipt of such Notice~ The providing of copies of Notices to the parties' respective counsels is for information only, is not required for valid Notice and does not alone constitute Notice hereunder. (c) Brokers. Buyer and Seller each represent to the other that no brokerage commISSIon, finder's fee or other compensation of any kind is due or owing to any person or entity in connection with this Agreement. Each party agrees to and does hereby indemnify and hold 20 18-121 . the other free and harmless from and against any and all costs, liabilities or causes of action or proceedings which may be instituted by any broker, agent or finder, licensed or otherwise, claiming through, under or by reason of the conduct of the indemnifying party in connection with this Agreement. (d) Waivers and Consents. Each provision of this Agreement to be performed by Buyer and Seller shall be deemed both a covenant and a condition and shall be a material consideration for Seller's and Buyer's performance hereunder, as appropriate, and any breach thereof by Buyer or Seller shall be deemed a material default hereunder; provided however that failure of a condition hereunder shall not be deemed or determined to be a default unless such condition is also a covenant. Either party may specifically and expressly waive in writing any portion of this Agreement or any breach thereof, but no such waiver shall constitute a further or continuing waiver of a preceding or succeeding breach of the same or any other provision. A waiving party may at any time thereafter require further compliance by the other party with any breach or provision so waived. The consent by one party to any act by the. other for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or any similar acts in the future. No waiver or consent shall be implied from silence or any failure of a party to act, except as otherwise specified in this Agreement. All rights, remedies, undertakings, obligations, options, covenants, conditions and agreements contained in this Agreement shall be cumulative and no one of them shall be exclusive of any other. (e) Construction. The parties acknowledge and agree that (a) each party is of equal bargaining strength; (b) each party has actively participated in the drafting, preparation and negotiation of this Agreement; (c) each party has consulted with such party's own independent counsel and such other professional advisors, if at all, as each party has deemed appropriate, relating to any and all matters contemplated under this Agreement; (d) each party and such party's counsel and advisors, if so elected by the party, have reviewed this Agreement; (e) each party has agreed to enter into this Agreement following such review and the rendering of such advice, if so elected by the party; and (f) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. (I) Cooperation. Buyer and Seller agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the purchase and sale herein contemplated and shall use all reasonable efforts to accomplish the Closing in accordance with the provisions hereof. (g) Attorney's Fees. In the event any declaratory or other legal or equitable action is instituted between Seller, Buyer and/or Escrow Holder in connection with this Agreement, then as between Buyer and Seller the prevailing party shall be entitled to recover from the losing party all of its costs and expenses including court costs and reasonable attorney's fees, and all fees, costs and expenses incurred on any appeal or in collection of any judgment. (h) Time. Time is of the essence of every provision herein contained. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from' which said period of time runs shall be excluded, and the last day of such period shall be included, unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until 5:00 p.m. of the next day that is not a Saturday, Sunday, or legal holiday. 21 18-122 Except as otherwise expressly provided herein, all time periods expiring on a specified date or period herein shall be deemed to expire at 5 :00 p.m. on such specified date or period. (i) Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. A facsimile signature shall be deemed an original signature. (j) Captions. Any captions to, or headings of, the sections or subsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. (k) No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the parties hereto. (I) Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. (m)City Manager Authority. City's City Manager, or his or her designee shall have the authority to sign closing documents, issue interpretations, waive provi~ions, and enter into amendments of or supplements to this Agreement on behalf of City, so long as such actions do not substantially or substantively change the terms and conditions of the purchase and sale of the Property as set forth herein and as agreed to by the City in its approval of this i\greement. All other waivers or amendments shall require the consideration and written consent of City's governing board. (n) Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this Agreement, against City unless a claim has first been presented in writing and filed with City and acted upon by City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by City in the implementation of same. Upon request by City, Consultant shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. (0) Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. (p) Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated herein by this reference for all purposes. Exhibit A Legal Description Exhibit A-I Diagram - McCune Parcel Exhibit B Grant Deed 22 18-123 Preliminary Report - McCune. Exhibit C Exhibit D List of Current Contracts, Leases and Licenses Exhibit E FIRPTA Certificate Exhibit F Polanco Documents (q) Entire. Agreement. This Agreement supersedes any prior agreements, negotIatIons and communications, oral or written, and contains the entire agreement between, and the final expression of, Buyer and Seller with respect to the subject matter hereof. The parties hereto expressly agree and confirm that this Agreement (along with the Interim Operating Agreement and the Exhibits hereto) is executed without reliance on any oral or written statements, representations or promises of any kind, which are not expressly contained in this Agreement. No subsequent agreement, representation or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. (r) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. (s) Assignment. Buyer may assign its rights under this Agreement, subject to Seller's reasonable approval. Notwithstanding the foregoing, Seller pre-approves City's assignment. of its interest in this Agreement to Floit and agrees to cooperate in order to implement same. Such cooperation shall include, without limitation executing an Assignment Agreement consistent herewith on terms .reasonably approved thereby. Notwithstanding such assignment, City shall retain the obligations of "Buyer" under Section 2 to pay Seller the Purchase Price. In the event of such assignment, Seller shall deed the Property directly to Floit or Floil's designee. (t) Like-Kind Exchange. If either party desires to enter into a like kind exchange pursuant to Internal Revenue Code Section 103 I, the other party agrees to reasonably cooperate with same, provided that the party desiring such exchange bears all costs related thereto. IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement and Joint Escrow Instructions as of the day and year first written above. "SELLER" RICHARD S. MCCUNE JR. By: Richard S. McCune Jr. \ 23 18-124 "BUYER" CITY OF CHULA VISTA, a chartered municipal corporation By: Cheryl Cox, Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 24 18-125 Acceptance by Escrow Holder: r 1, on behalf of Escrow Holder, hereby acknowledges that Escrow Holder has received a fully executed copy of the foregoing Purchase and Sale Agreement and Joint Escrow Instructions by and between Richard S. McCune Jr., a married man holding title as his sole and separate property, as Seller, and the City of Chula Vista, a public body corporate and politic, as Buyer, and agrees to act as Escrow Holder thereunder and to be bound by and strictly perform the terms thereof as such terms apply to Escrow Holder. Dated: ,2011 [NAME AND COMPANY] Escrow Holder 18-126 EXHIBIT C ASSIGNMENT AGREEMENT [INSERT AGREEMENT] EXHIBIT C ASSIGNMENT AGREEMENT Exchange Agreement 18-127 Exc hange Agreement EXHmIT D PRELIMINARY REPORT - FLOIT PARCEL [REPORT ATTACHED] EXHIBIT D PRELIMINARY REPORT - FLOIT 18-128 ~!~~ert -"Ii" "'w'" o . .. ." '-' <'0....."'.. Stewart Title of California, Inc 7676 Hazard Center Dr., 14th Floor San Diego, CA 92108 (619) 692-1600 Phone Order Number Title Unit Number Your File Number BuyerlBorrower Name: Seller Name: PRELIMINARY REPORT 319222 7034 VOYGll Dan Floit In response to the above referenced application for a Policy of Title Insurance, Stewart Title of California, Inc. hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may. be sustained by reason of any defect, lien or encumbrance not shown or referenced to as an Exception on Schedule B or not excluded from coverage pursuant to the printed Schedules, Conditions, and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than that set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CL TA and AL T A Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limits of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefuliy. The exceptions and exclusions are meant to provide you with notice of matters, which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report, (and any supplements or amendments thereto) is issued solely.for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy oftitle insurance a binder or commitment should be requested. Dated as of: September 26, 2011 at 7:30 a.m. Update No. Two Frank Green, Title Officer When replying, please contact Frank Green, Title Officer File Number: 3 19222 Page I of8 18-129 PRELIMINARY REPORT The form of Policy of Title Insurance contemplated by this report is: o California Land Title Association Standard Coverage Policy o American Land Title Association Owners Policy o American Land Title Association Residential Title Insurance Policy o American Land Title Association Loan Policy o CL T AI AL T A Homeowners Policy o AL TA Short Form Residential Loan Policy (06/16/07) 02006 ALTA Loan Policy ~TBD SCHEDULE A The estate or interest in the land hereinafter described or referred to covered by this report is: A Fee Title to said estate or interest at the date hereof is vested in: Dan Floit, a single man File Number: 319222 Page 20f8 18-130 LEGAL DESCRIPTION The land referred to herein is sitnated in the State of California, Connty of San Diego, and described as follows: PARCEL I: LOTS "F", "Q", "R", AND "s" AND THE EAST 580.00 FEET OF LOT "U" OF SWEETWATER ACRES, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 1607, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY,OCTOBER21,1913. TOGETHER WITH THAT PORTION OF 40TH STREET ADJOINING LOTS "Q", "R", AND "s" ON THE SOUTH AS V ACA TED BY THE SAN DIEGO BOARD OF SUPERVISORS BY DOCUMENT RECORDED NOVEMBER 28, 1923 IN BOOK 976, PAGE 235, OFFICIAL RECORDS. EXCEPTING THEREFROM: THOSE PORTIONS OF LOTS "A", "B", "0", "E", "F", "R", "S" AND "U" OF SWEETWATER ACRES, ACCORDING TO MAP THEREOF NO. 1607 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, OCTOBER 21,1913, TOGETHER WITH THAT PORTION OF QUARTER SECTION 125, RANCHO DE LA NACION, ACCORDING TO MAP THEREOF NO. 166 FILED MAY 11, 1869, IN SAID RECORDER'S OFFICE, SAID PORTIONS DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING TO SAID MAP 166; THENCE ALONG THE SOUTHERLY LINE OF SAID QUARTER SECTION 126 SOUTH 72013 '01" WEST, 187.25 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 1704 I '02" WEST, 1,000.93 FEET; THENCE SOUTH 36039'58" WEST 16.86 FEET; THENCE SOUTH 25048'58" WEST, 145.00 FEET; THENCE SOUTH 30012'58" WEST, 134.56 FEET; THENCE SOUTH 30000'58" WEST, 87.75 FEET; THENCE SOUTH 31054'58" WEST 190.12 FEET TO THE NORTHEASTERLY CORNER OF THAT LAND DESCRIBED IN DEED TO ROBERT H.WERDEN AND NANCY L. AMITIN, RECORDED JANUARY 28, 1965 AS INSTRUMENT NO. 16169 OF OFFICIAL RECORDS; THENCE ALONG THE EASTERLY LINE OF SAID WERDEN'S LAND SOUTH 17041 '02" EAST, 107.03 FEET; THENCE LEAVING SAID EASTERLY LINE, NORTH 80002'00" EAST, 46.81 FEET THENCE SOUTH 49028'03" EAST 714.58 FEET; THENCE NORTH 17039'45" WEST 107.31 FEET TO THE SOUTHERLY LINE OF SAID QUARTER SECTION 126; THENCE ALONG SAID SOUTHERLY LINE, NORTH 72013'01" EAST, 0.25 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 2: ALL THAT PORTION OF THE NORTH 5 ACRES OF THE EAST HALF OF THE EAST HALF OF 80 ACRE LOT I OF QUARTER SECTION 125 LYING WEST OF A LINE DRAWN PARALLEL WITH AND 187.50 FEET AT RIGHT ANGLES WESTERLY FROM THE EASTERLY LINE OF SAID QUARTER SECTION 125, RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166 BY MORRILL, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MAY I 1,1869. EXCEPTING THEREFROM: THOSE PORTIONS OF LOTS "A", "B", "0", "E", "F", "R", "S" AND "u" OF SWEETWATER ACRES, ACCORDING TO MAP THEREOF NO. 1607, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, OCTOBER 21, 1913, TOGETHER WITH THAT PORTION OF QUARTER File Number: 319222 pagd of 8 18-131 SECTION 125, RANCHO DE LA NACION, ACCORDING TO MAP THEREOF NO. 166 FILED MAy 11, 1869 IN SAID RECORDER'S OFFICE, SAID PORTIONS DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING TO SAID MAP 166; THENCE ALONG THE SOUTHERLY LINE OF SAID QUARTER SECTION 126 SOUTH 72013'01" WEST, 187.25 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH I T41 '02" WEST, 1,000.93 FEET; THENCE SOUTH 36039' 58" WEST 16.86 FEET; THENCE SOUTH 25048'58" WEST, 145.00 FEET; THENCE SOUTH 30012'58" WEST, 134.56 FEET; THENCE SOUTH' 30000'58" WEST, 87.75 FEET; THENCE SOUTH 31054'58" WEST 190.12 FEET TO THE NORTHEASTERLY CORNER OF THAT LAND DESCRIBED IN DEED TO ROBERT H. WERDEN AND NANCY L. AMITIN, RECORDED JANUARY 28,1965 AS INSTRUMENT NO. 16169 OF OFFICIAL RECORDS; THENCE ALONG THE EASTERLY LINE OF SAID WERDEN'S LAND SOUTH 17041 '02" EAST, 107.03 FEET; THENCE LEAVING SAID EASTERLY LINE, NORTH 80002'00" EAST, 46.81 FEET THENCE SOUTH 49028'03" EAST 714.58 FEET; THENCE NORTH 17039'45" WEST 107.31 FEET TO THE SOUTHERLY LINE OF SAID QUARTER SECTION 126; THENCE ALONG SAID SOUTHERLY LINE, NORTH 72013'01" EAST, 0.25 FEET TO THE TRUE POINT OF BEGINNING. APN: 563-350-12-00; 566-132-55-00 (End of Legal Description) File Number: 319222 Page 40f8 18-132 SCHEDULE B At the date. hereof, exceptions to coverage in addition to the printed exceptions and exclnsions contained in said policy or policies would be as follows: Taxes: A. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes, to be levied for the fiscal year 2011 - 2012. B. Assessments, if any, for Community Facilities Districts or a Mello-Roos District affecting said land which may exist by virtue of assessment maps or notices filed by said districts. Said assessments are collected with the County Taxes. C. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California. Exceptions: 1. An easement or right of way for the construction and maintenance of flumes, canals or aqueducts, conveyed by deed from Frank A. Kimball and Warren G. Kimball to Kimball Brothers Water Company, a Corporation, dated June 9,1869 and recorded October 14,1869, in Book 7, Page 124 of Deeds. The interest of said grantee in and to said easement passed of record to the California Water and Telephone Company, a Corporation. Said deed does not contain the location of said easement. 2. The effect of the following recital or the Map of said Tract: 'That portion designated as Lot "U" is not offered for dedication and is intended to be used as a Street for the purchasers of the property abutting thereon". 3. . The fact that the ownership of said land does not include rights of access to or from a public street or highway abutting said land, such rights having been severed 'from said land by the document recorded September 28, 1971 as Instrument/File No. 220985 of Official Records, which affects the freeway. 4. An easement for the purpose shown below and rights incidental thereto as set forth in a document: Grantee: The State of California Purpose: highway construction purposes Recorded: September 28,1971, as Instrument No. 220986, Official Records Affects: the land 5. An easement for the purpose shown below and rights incidental thereto as set forth in a document: Grantee: Spring Valley Sanitation District Purpose: sewer lines Recorded: September 28,1971, as Instrument No. 221351, Official Records Affects: the land 6. The fact that said land lies within the boundaries of the Merced Chula Vista Redevelopment Project Area as disclosed by instrument recorded May 26, 2004 as File No. 04-483936 of Official Records. File Number: 319222 Page 5 of8 18-133 7. The fact that said land lies within the boundaries of the Chula Vista Redevelopment Agency's Merged Town Centre II original, Town Centre II Amended, Otay Valley, Southwest original, Southwest amended, 2004 added area Redevelopment Project Area as 'disclosed by instrument recorded December 24, 2007 as File No. 2007-0789482 of Official Records. Said document was re-recorded February 6, 2008 as Instrument/File No. 08-00600 I 7 of Official Records. 8. Lack of a right of access to and from the land. 9. Please be advised that our search did not disclose any open deeds of trust of record. If you should have knowledge of any outstan~ing obligation, please contact your title officer immediately for further review. 10. Matters which may be disclosed by an inspection or by a survey of said land satisfactory to this Company, or by inquiry of the parties in possession thereof. 11. Rights of parties in possession. (End of Exceptions) File Number: 319222 Page 6 of8 18-134 NOTES AND REQUIREMENTS Property taxes for the fiscal year 2010 - 2011 shown below are paid. For proration purposes the amounts are: I" Installment: . $2,837.90 2nd Installment: $2,837.90 Parcel No.: 563-350-12-00 Code Area: 01272 Said matter affects: Parcell. Property taxes for the fiscal year 2010 - 2011 shown below are paid. For proration purposes the amounts are: I" Installment: $4,282.72 2nd Installment: $4,282.72 Parcel No.: 566-132-55-00 Code Area:. 01271 Said matter affects: Parcel 2. A. There are no conveyances affecting said land, recorded with the County Recorder within 24 months of the date of this report. B. The Company is not aware of any matters which would cause it to decline to attach CLTA Endorsement 100 and 116, indicating that there is located on said land a (Vacant Land), to an extended coverage policy. File Number: 319222 Page 7 of8 18-135 CALIFORNIA "GOOD FUNDS" LAW California Insurance Code Section 12413.1 regulates the disbursement of escrow and sub-escrow funds by title companies. The law requires that funds be deposited in the title company escrow account and available for withdrawal prior to disbursement. Funds received by Stewart Title of California, Inc. via wire transfer may be disbursed upon receipt. Funds received via cashier's checks or teller checks drawn on a California Bank may be disbursed on the next business day after the day of deposit. If funds are received by any other means, recording and/or disbursement may be delayed, and you should contact your title or escrow officer. All escrow and sub-escrow funds received will be deposited with other escrow funds in one or more non- interest bearing escrow accounts in a financial institution selected by Stewart Title of California, Inc.. Stewart Title of California, Inc. may receive certain direct or indirect benefits from the financial institution by reason of the deposit of such funds or the maintenance of such accounts with the financial institution, and Stewart Title of California, Inc. shall have no obligation to account to the depositing party in any manner for the value of, or to pay to such party, any benefit received by Stewart Title of California, Inc.. Such benefits shall be deemed additional compensation to Stewart Title of California, Inc. for its services in connection with the escrow or sub-escrow. If any check submitted is dishonored upon presentation for payment, you are authorized to noti/)' all principals and/or their respective agents of such nonpayment. File Number: 319222 Page 8 of8 18-136 EXIllBIT E LIST OF CURRENT CONTRACTS. LEASES AND LICENSES - FLOIT PARCEL [lNSERT LIST] None EXHIBIT E LIST OF CONTRACTS - FLOTT Exchange Agreement 18-137 Exchange Agreement EXHIBIT F OPTION AGREEMENT [DRAFT AGREEMENT ATTACHED] EXHIBIT F OPTION AGREEMENT 18-138 OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS FLOIT: CITY: DATED: DRAFT Mid-City, LLC City ofChula Vista November 15,2011 18-139 Effective Date: Transaction: 'Floit Parcel: Floit: F1oit's Address: City: City's Address: City Parcel: Outside Closing Date (or Closing) Title Company: Escrow Holder: DOCSOC!l494229v3/024212-0005 BASIC TERMS The effective date shall be deemed to be November 15,20 II Option to Exchange of Floit Parcel for City Parcel Real property generally shown as: Exhibit B-1 Mid-City, LLC , a California limited liability company c/o Dan Floit 3565 7<11 Avenue San Diego. CA 92103 Fax No. (619) City of Chula Vista, a chartered municipal corporation, organized under the laws of the State of California 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 Real property generally shown as: Exhibit A-I December 31,2011 Stewart Title of California 7676 Hazard Center Drive' San Diego, California 92108 Stewart Title of California Address as above I 18-140 OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS This OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement") dated October _,2011, for reference only, by and between the CITY OF CHULA VISTA, a chartered municipal corporation ("City"), and Mid-City, LLC, a California limited liability company ( "Floit"), for an irrevocable option, exercisable by Floit at any time prior to the expiration of the Option Term, to acquire all of City's interests, tangible and intangible, in the City Property, defined and described below, in exchange for all of Floit's interests, tangible and intangible in the Floit Property. RECITALS Whereas, the City's General Plan identifies the need for parkland for the welfare of the public and to promote the orderly development of the City; and Whereas, the City owns approximately 15 acres of parkland in the Lower Sweetwater Valley, which is legally described in Exhibit A and depicted in Exhibit A-I, ("Parkland"); and Whereas, the City desires to increase the acreage of the Parkland to establish a community park of approximately 20 acres; and Whereas, Floit owns a parcel of approximately 4 acres immediately adjacent to the Parkland, which is legally described in Exhibit B and depicted in Exhibit B-1, ("Floit Parcel"); and Whereas, the acquisition of the Floit Parcel would help the City increasing the acreage ofthe Parkland and establishing the community park; and Whereas the City owns a remnant 6.1 acre parcel located immediately adjacent to SR 125 and East Lake Drive ("City Parcel"); and. Whereas, Floit desires to acquire the City Parcel for future development; and Whereas, Floit would like an opportunity to perform due diligence on the City Parcel to determine whether he can obtain entitlements to develop the City Parcel in a manner consistent with his development plan; and Whereas, the City and Floit agree that the best manner to structure a deal for the exchange of the Floit Parcel for the City Parcel would be to provide Floit an option to acquire the City Parcel if and when Floit obtains the necessary entitlement for such development; and Whereas, this Agreement is not intended to and does not grant any such entitlements, nor does the City, through it or in any other manner, make any representations related to the granting of future entitlements. Any entitlements sought by Floit with respect to the City Parcel shall be applied for at his own cost and expense and shall be subject to the future discretion of the City and any and all procedures, laws, and regulations then in effect. 2 DOCSOC!1494229v3/0242 12-0005 18-141 NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, City and Floit agree as follows: ARTICLE I. OPTION 1.1 Option. a. Grant of Option. The City hereby grants to Floit an exclusive option ("Option") to, prior to the expiration of the Option Term, identified in section 1 (b) below, or any extensions thereto, acquire all of the City's rights title and interest to interest in the City Parcel in exchange for granting all of Floil's rights, title, and interest in the Floit Parcel to the City, subject to the terms and conditions set forth in this Agreement. b. OPtion Term. This Option shall commence on the Effective Date of this Agreement and shall expire three (3) years from such date, unless this Agreement is earlier terminated or this Option Term is modified in a writing agreed to by both Parties. I. Extension of Term. In the event that the City Manager reasonably determines that Floit is pursuing, with due diligence, Entitlements for the City Parcel, he may, at his discretion, extend the option term for two (2) additional one (1) year terms. Any such extension must be in writing executed by both Parties. c. Exercise of Option. At any time during the Option Term or any extension thereof, Floit may exercise the Option by delivering written notice ("Notice of Election") to City to such effect. 1. .Open Escrow. Within five (5) business days of delivery of the Notice of Election, Floit shall open Escrow in accordance with Article III, below. ARTICLE II. EXCHANGE 2.1 Floit Parcel. If Floit exercises the option, Floit agrees to transfer his property interests in the Floit Parcel to the City subject to Floit's Conditions Precedent. Property Interests shall include: a. Fee. Fee simple, marketable title to the Floit Parcel with the condition of title meeting the requirements of Section 3.2'.a; b. Improvements. All improvements, if any, to such Floit Parcel; c. Appurtenances. All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the related Floit Parcel, including, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived from therefrom; d. Other. All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the Floit Parcel. 3 18-142 2.2 City Parcel. If Floit exercises this Option, City agrees to transfer its property interests in the City Parcel to the Floit subject to the City's Conditions Precedent. Property Interests shall include: a. Fee. Fee simple, marketable title to the City Parcel with the condition of title meeting the requirements of Section 3.2.b; b. Imorovements. All improvements, if any, to such City Parcel; c. Aoourtenances. All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the related City Parcel, including, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived from therefrom; d. Other. All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the City Parcel. 2.3 Exchange Value. If Floit exercises this Option, Floit and City shall convey their respective interests, Floit to the Floit Parcel and City to the City Parcel. Both City and Floit agree that the Fair Market Values oftheir respective parcels are equivalent and in this regard, there is no sellout ofthe Floit Parcel or the City Parcel; thus, no additional consideration shall be or need be exchanged between the Parties in connection with this Agreement. The conveyance of the Floit Parcel and the City Parcel shall close concurrently. a. No Entitlements. The Exchange Value is based only upon the real property and those rights associated with the respective parcels as of the Effective Date of this Agreement. The City makes no warranties, promises, whether express or implied, as to the ability of Floit to obtain any development entitlements or approvals from the City that he desires or may desire to obtain with respect to the City Parcel. By executing this Agreement, Floit acknowledges that he has not been induced to sign this Agreement based upon any express or implied statements, whether written or otherwise conveyed, associated with entitlements related to the City Parcel. In addition, Floit acknowledges that in the event that he desires to obtain entitlements for the City Parcel, that the City retains its full discretion to grant entitlements based upon applications submitted; those facts presented therewith; and the law, rules, and. regulation in effect at the time of consideration of such entitlements; and that the City may place conditions, in the event that any such entitlements are granted, on the entitlements in accordance with the law, rules, policies and regulations in effect at such later date. I. Recourse and Remedy. Floit hereby acknowledges that the only recourse he shall have with respect to the denial of any entitlements for the City Parcel shall be to (i) choose not to execute the Option granted under this Agreement in Section l.1(a) or (ii) exercise the Option with the knowledge that the entitlements have been denied. Furthermore, F10it acknowledges that the City shall not be liable for any costs, fees, expenses, including any general or special damages that he may claim are associated with seeking entitlements, including application, consultant fees, development for the City Parcel ("Development. Costs) and in accordance with Section 2.4 executes a General Waiver and Release of Claims for such Development Costs. 4 18-143 2.4 Full and Complete Settlement, Release and Waiver. The value obtained by Floit for the receipt of title to the City Parcel shall be deemed full and complete compensation for the value of the Floit Parcel and such shall remain total compensation paid by City for all of Floit's Property Interests, inclusive of any and all rights or obligations that exist or may arise out of the acquisition of the Property Interests, including without limitation, fee interest in the land, all improvements pertaining to the realty, all other improvements, severance damages, if any, alleged pre-condemnation damages, if any, alleged loss .of business goodwill, if any, eligible costs directly attributed to the development of the Floit Parcel, relocation benefits and assistance, if any, costs, interest, attorney's fees, and any claim whatsoever of, by, or through Floit that may arise out of or relate in any respect to the other City's acquisition of a Floit Parcel. In this regard Flait has had the opportunity to obtain advice from counsel, and that based on the advice of such counsel, acknowledges that he is and will be fully satisfied that the receipt of title to the City Parcel are fair and adequate .consideration for Property Interests acquired by the City and that it is all-inclusive compensation for the Property. In furtherance of the foregoing paragraph, Floit understands that City would not have entered into this Agreement without Floit's agreement to (i) exchange the Floit Parcel for no monetary remuneration or consideration other than that identified above in Section 2.3 and (ii) knowingly, voluntarily, and intentionally waive according to the terms set forth herein, any and all ofFloit's interest in or right to any relocation assistance or benefits under the Relocation Laws and for any other or further compensation or consideration for the Property and all interests therein or arising therefrom. Therefore, the Exchange Value has been determined by and is inclusive of Floit's agreement hereunder to fully release and discharge City from all and any manner of rights, demands, liabilities, obligations, claims, or causes of action, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising ("Claims"), which arise from or relate in any manner to (i) the exchange of the Floit Parcel to the extent such claims are based on the fact that City is a public entity; (ii) the relocation of any person or persons or other occupant or occupants located on the Floit Parcel, including the specific waiver and release of any right to any relocation benefits, advisory or other assistance, and/or payments under the Relocation Laws as to whom this waiver and release is effective, notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under said Relocation Laws or other state or federal law; and (iii) compensation for any interest in the Floit Parcel or income from the Floit Parcel including, but not limited to, land and improvements, fixtures, furniture, or equipment thereon, goodwill, severance damage, leases or other contracts relating to the Floit Parcel, attorneys' fees, or any other compensation of any nature whatsoever. This waiver and settlement of claims shall also include any claims regarding Development Costs as in Section 2.3(a)(1). By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with, the items set out in Section 2.2(c) above, Floit expressly waives any rights under California Civil Code Section 1542, which provides: 5 18-144 "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." Floit's Initials ARTICLE III. ESCROW AND TITLE 3.1 Opening and Closing Escrow. a. Ooening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened ("Opening of Escrow") on the date that Escrow Holder receives a copy of this Agreement fully executed by Floit and executed and attested by City. In accordance with Section l.1(c)(1), above, Floit shall cause the Opening of Escrow to occur on or before five (5) business days after the delivery of the Notice of Election. Escrow Holder shall promptly notify City and Floit in writing of the date of the Opening of Escrow. City and Floit agree to execute, deliver and be bound by any reasonable or 'customary supplemental Escrow instructions or other instruments reasonably required by Escrow Holder to consummate the transaction contemplated by this Agreement; provided, however, that no instrument shall be inconsistent or in conflict with, amend or supersede any portion of this Agreement. Ifthere is any conflict or inconsistency between the terms of an instrument and the terms of this Agreement, then the terms of this Agreement shall control. Without limiting the generality of the foregoing, no instrument shall extinguish any obligations imposed by this Agreement or any other contract between Floit and City. b. Closing. For purposes of this Agreement, the "Closing" or "Closing Date" shall be the date the Grant Deeds (as defined below) are recorded pursuant to applicable law in the Official Records of San Diego County. Unless changed in writing by City and Floit, the Closing shall occur on or before the date being the sixtieth (60) calendar day following the Opening of Escrow ("Outside Closing Date"). If the Closing has not, for any reason, occurred by the Outside Closing Date (as it may be extended pursuant to the immediately preceding sentence), then either City or Floit may terminate this Agreement by delivering written notice to the other at any time after the Outside Closing Date; provided, however, that if there is a Floit Default or a City Default under this Agreement at the time of the termination, then the termination shall not affect the rights and remedies of the non-defaulting party against the defaulting party. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon thereafter as City's and Floit's Conditions Precedent to Closing are satisfied pursuant to Sections 6.1 and 6.2, respectively, of this Agreement. 3.2 Title Matters. a. With Resoect to Floit Parcel. 6 18-145 1. City's Title Policy. Concurrently with the Closing, the Title Company shall issue to City a 2006 CLTA or AL TA, at the option of City, owner;s policy oftiile insurance (amended 6117/06) without arbitration provisions' in the amount of the Exchange Value, showing fee title to the Floit Parcel vested solely in the City of Chula Vista, a chartered municipal corporation, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated July 7, 2011, issued by Stewart Title of California, Inc. with respect to the _:_v,_~".".",___^,~_ ~ Floit Parcel ("Floit Title Report"), attached hereto as Exhibit C: [lliSsR.,J<PR.,QPE.R.c ~x.;g~E.ff6N[ii'.(:'flfJ:.;s.;~EQRIj (collectively, "City's Title Policy"). The premium for the City's Title PoI-icy and any endorsements required by City shall be charged to Floit and City as described in Section 8.1 (b )(3). City may require, as a City's Condition Precedent to the Closing, that Floit execute an estoppel agreement and/or a subordination agreement in a form acceptable to City, confirming that, as of the Closing, (a) the Floit shall nave no further interest in the Floit Parcel or any portion thereof or any improvements thereon. 2. No New Liens or Exceptions. City hereby objects to any and all liens and exceptions to title not shown on the City Title Report. Further, during the period commencing, on the Effective Date and continuing until the Closing, Floit agrees it shall not cause any new or modified lien or encumbrance to title to become of record against the Floit Parcel, unless such lien or encumbrance is approved in writing by City. Each and every new lien or encumbrance shall be subject to City's prior written consent and unless and until approved by City shall be deemed a disapproved exception to title that shall be removed by Floit at Floil's sole cost as a condition to Closing. b. With Respect to City Parcel. 1. Floit's Title Policy. Concurrently with the Closing, the Title Company shall issue to Floit a 2006 CLTA or ALTA, at the option ofFloit, owner's policy of title insurance without arbitration provisions in the amount of the Exchange Value, showing fee title to the City Parcel vested solely in Floit, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated September 26,2011, issued by Stewart Title of California, Inc. with respect to the Property ("City Title Report"), attached hereto as Exhibit D: ~EB-I~PROPE-R--S.gf_EPtf01:'S 11i.5.II.r,.E_REP'OJ3.T] (collectively, "Floit's Title Policy"). The premium for the Floit's Title Policy and any endorsements required by Floit shall be charged to City and Floit as described in Section 8. 1 (a)(3). Floit'may require, as a Floit's Condition Precedent to the Closing, that City execute an estoppel agreement and/or a subordination agreement in a form acceptable to Floit, confirming that, as of the Closing, (a) the City shall have no further interest in the City Parcel or any portion thereof or any improvements thereon. 2. No New Liens or Exceptions. Floit hereby objects to any and all liens and exceptions to title not shown on the Floit Title Report. Further, during the period commencing on the Effective Date and continuing until the Closing, City agrees it shall not cause any new or modified lien or encumbrance to title to become of record against the City Parcel, unless such lien or encumbrance is approved in writing by Floil. Each and every new lien or encumbrance shall be subject to Floil's prior written consent and unless and until 7 18-146 approved by Floit shall be deemed a disapproved exception to title that shall be removed by City at City's sole cost as a condition to Closing. . ARTICLE IV. DELIVERY OF PROPERTY DOCUMENTS 4.1 Floit's Delivery of Property Documents. Within three (3) business days after delivery of the Notice of Election, Floit shall deliver to City complete, true, and legible copies of the following items (collectively, "Floit Property Documents"): a. Copies of tax bills, including assessments, if any. b. Proof of Floits' authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by City and the Title Company. c. Each and every contract, agreement, license and lease relating to and/or affecting the Floit Parcel, specitying which of such contracts, agreements, licenses, and/or leases are anticipated to bind City or affect the Floit Parcel following the Close of Escrow, if any. 4.2 City's Delivery of City Documents. Within three (3) business days after receipt of the Notice of Election, City shall deliver to Floit complete, true, and legible copies of the following items (collectively, "City Property Documents"): a. Copies of tax bills, including assessments, if any. b. Proof of City's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Floit and the Title Company. c. Each and every contract, agreement, license and lease relating to and/or affecting the City Parcel, specitying which of such contracts, agreements, licenses, and/or leases are anticipated to bind Floit or affect the City Parcel following the Close of Escrow, if any. ARTICLE V. DUE DILIGENCE 5.1 City's a. Right of Entrv. 1. Entry for Inspection and Testing. From and after the Effective Date through the earlier to occur of the termination of this Agreement or the Closing Date, Floit shall permit City, and City's employees, agents, consultants and contractors to enter upon the Floit Parcel during normal business hours, provided 24 hours prior notice has been given to Floit, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as City in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports;. environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of adverse soils conditions, adverse groundwater conditions, asbestos, lead based paint, 8 18-147 and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, 'Tests"). 2. Conditions to Right of Entry for Tests. As a .condition to conducting any Tests, City shall (i) prior to entry, notify Floit not less than 24 hours in advance of the purpose of the intended entry and provide to Floit the names and affiliations of the entity or person(s) . entering the Floit; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Floit Parcel; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the Floit Parcel free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the Floit Parcel for such Tests performed by or on behalf of City; (v) City to maintain, or City to cause to be maintained by City's contractor(s), workers' compensation insurance on all persons entering the Property for such Tests in the amounts required by the State of California; (vi) City to maintain, or City to cause to be maintained by City's contractor who will be entering the Floit Parcel, commercial general liability insurance policy with a financially responsible insurance company (or as to City its membership in a joint powers insurance authority with comparable coverage) covering any and all liability of City and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the Floit Parcel, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly repair any and all damage to the Floit Parcel from such Tests caused by City, its agents, employees, contractors, or consultants and return the Floit Parcel .to its original condition (subject to the Tests conducted) following City's entry. City shall indemnify, defend, and hold harmless Floit and its agents from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of City, its agents, contractors, consultants, and employees upon the Floit Parcel for and related to such entry and Tests or from City's failure to comply with the conditions to City's entry onto the Floit Parcel for such Tests. Such indemnity shall survive the Close of Escrow or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the Floit Parcel and/or the Tests. b. Due Diligence Notice. 1. City's Due Diligence Notice. City shall notifY Floit in writing on or before a date that is [INSERT # of Days] following the opening of Escrow ("Contingency Date") of City's approval or disapproval in its sole and absolute discretion of the Floit Property Documents and of the condition of the Floit Parcel as disclosed by the Tests ("City's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action Floit would be required to take to remediate or cure the objectionable matters to City's satisfaction. 1. Failure to Provide. Provided that Floit has delivered the Floit Property Documents to City within the time set forth in Section 4.1, City's failure to deliver the City's Due Diligence Notice on or before the Contingency Date shall be deemed City's disapproval of the Floit Property Documents and condition of the Floit Parcel. In such event of City's failure to deliver its City's Due Diligence Notice, then such failure shall be deemed City's election to terminate this Agreement. 9 18-148 2. Floit's Response Notice." In the event City timely delivers its City's Due Diligence Notice disapproving any Floit Property Documents or any condition of the Floit Parcel, Floit shall have ten (10) days from receipt of City's Due Diligence Notice to deliver written notice to City ("Floit's Response Notice") of Floit's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable conditions at its sole cost prior to the Close of Escrow; or (iii) correct and/or remediate all objectionable conditions at its sole cost prior to the Close of Escrow. I. Election to Terminate. If Floit's Response Notice informs City of Floit's election to terminate Escrow (choice (i) in subsection 5.1 (b)(2) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights or obligations hereunder. Floit's failure to deliver Floit's Response Notice shall be deemed Floit's election to terminate this Agreement (choice (i) of subsection 5.1(b)(2) above) and the parties shall have no further rights or obligations hereunder. 11. Election to Correct Some Objectional Conditions. If Floit's Response Notice informs City of Floit's election to correct certain of the objectionable conditions (choice (ii) in subsection 5.1(b)(2) above), then City shall have the right, by a second written notice delivered to Floit within five (5) days after City's receipt of the Floit's Response Notice, to agree to accept the Floit Parcel subject to one or more of the objectionable conditions that Floit will not correct ("City's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that City is willing to accept, in which event Floit may elect, in its sole discretion, to either; (A) Accept City's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the exchange of the Floit Parcel to City, with City taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credit against the Purchase Price (subject to Floit's correction of certain conditions to be corrected as listed in Floit's Response Notice). The correction of and/or completion of the remediation or removal of objectionable conditions listed in the Floit's Response Notice shall be deemed to be one of the City's Conditions Precedent to Closing under Section 6.1 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed; or (B) Reject City's Second Due Diligence Notice and terminate the Escrow. 111. Election to Correct All. If Floit's Response Notice informs City of Floit's election to correct all of the objectionable conditions (choice (iii) in subsection 5.I(b)(2) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of City's Conditions Precedent to Closing under Section 6.1 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. 10 18-149 5.2 Floits's a. Right of Entrv. I. Entry Jor Inspection and Testing. From and after the Effective Date through the earlierto occur of the termination of this Agreement or the Closing Date, City shall permit Floit, and Floil's employees, agents, consultants and contractors to enter upon the City Parcel during normal business hours, provided 24 hours prior notice has been given to Floit, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as Floit in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports;' environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of adverse soils conditions, adverse groundwater conditions, asbestos, lead based paint, and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, "Tests"). 2. Conditions to Right oj Entry Jor Tests. As a condition to conducting any Tests, Floit shall (i) prior to entry, notify City not less than 24 hours in advance of the purpose of the intended entry and provide to City the names and affiliations of the entity or person(s) entering the City Parcel; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the City Parcel; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the City Parcel free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the City Parcel for such Tests performed by or on behalf of Floit; (v) Floit to maintain, or Floit to cause to be maintained by Floit's contractor(s), workers' compensation insurance on all persons entering the City Parcel for such Tests in the amounts required by the State of California; (vi) Floit to maintain, or Floit to cause to be maintained by Floit's contractor who will be entering the City Parcel, commercial general liability insurance policy with a financially responsible insurance company covering any and all liability of Floit and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the City Parcel, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly repair any and all damage to the City Parcel from such Tests caused by Floit, its agents, employees, contractors, or consultants and return the City Parcel to its original condition (subject to the Tests conducted) following Floil's entry. Floit shall indemnifY, defend, and hold harmless City, its officials, officers, employees, agents, and volunteers from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of Floit, its agents, contractors, consultants, and employees upon the. City Parcel for and related to such entry and Tests or from Floil's failure to comply with the conditions to Floit's entry onto the City Parcel for such Tests. Such indemnity shall survive the Close of Escrow or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the City Parcel and/or the Tests. b. Due Diligence Notice. II 18-150 I. Floit's Due Diligence Notice. Floit shall notify City in writing on.or before a date that is [lliSERT7fOIbay~] following the opening of Escrow ("Contingency Date") of Floit's approval or disapproval in its sole and absolute discretion of the City Property Documents and of the condition of the City Parcel as disclosed by the Tests ("Floil's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action City would be required to take to remediate or cure the objectionable matters to Floil's satisfaction. I. Failure to Provide. Provided that City has delivered the City Property Documents to Floit within the time set forth in Section 4.2, Floit's failure to deliver the Floit's Due Diligence Notice on or before the Contingency Date shall be deemed Floil's disapproval of the City Property Documents and condition of the City Parcel. In such event of Floil's failure to deliver its Floil's Due Diligence Notice, then such failure shall be deemed Floit's election to terminate this Agreement. 2. . City's Response Notice. In the event Floit timely delivers its Floil's Due Diligence Notice disapproving any City Property Documents or any condition of the City Parcel, City shall have ten (10) days from receipt of Floit's Due Diligence Notice to deliver written notice to Floit ("City's Response Notice") of City's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable conditions at its sole cost prior to the Close of Escrow; or (iii) correct and/or remediate all objectionable conditions at its sole cost prior to the Close of Escrow. I. Election to Terminate. If City's Response Notice informs Floit of City's electi.on to terminate Escrow (choice (i) in subsection 5.2(b)(2) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights or obligations hereunder. City's failure to deliver City's Response Notice shall be deemed City's election to terminate this Agreement (choice (I) of subsection 5.2(b)(2) above) and the parties. shall have no further rights or obligations hereunder. II. Election to Correct Some Objectional Conditions. [fthe City's Response Notice informs Floit of City's election to correct certain of the objectionable conditions (choice (ii) in subsection 5.2(b)(2) above), then Floit shall have the right, by a second written notice delivered to City within five (5) days after Floit's receipt of the City Response Notice, to agree to accept the City Parcel subject to one or more of the objectionable conditions that City will not correct ("Floit's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that Floit is willing to accept, in which event City may elect, in its sole discretion; to either; (A) Accept Floil's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the exchange of the City Parcel to Floit, with Floit taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credits due Floit (subject to City's correction of certain conditions to be corrected as listed in City's Response Notice). The correction of and/or completion of the 12 18-151 remediation or removal of objectionable conditions listed in the City's Response Notice shall be deemed to be one of the Floit's Conditions Precedent to Closing under Section 6.2 below, and Floit and City shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed; or (B) Reject Floit's Second Due Diligence Notice and terminate the Escrow. 111. Election to Correct All. If City's Response Notice informs Floit of City's election to correct all of the objectionable conditions (choice (iii) in subsection 5.2(b)(2) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of Floil's Conditions Precedent to Closing under Section 6.2 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. ARTICLE VI. CONDITIONS PRECEDENT TO THE CLOSE OF ESCROW 6.1 City's Conditions Precedent. The Closing and City's obligation to transfer the City Parcel to Floit and to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "City's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for City's benefit only. a. No Termination as a Result of Floil's Due Diligence Review. This Agreement shall not have terminated pursuant to any provision in Section 5.2, above or as a result of City's review and inspection of title to, the Property Documents relating to, and the Tests on the Floit Parcel. b. Floit Title. Floit shall have fee title to the Floit Parcel. c. City's Title Policy. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide City's Title Policy for the Property upon. the Closing, in accordance with Section 3.2(a)(1). d. Reoresentations and Warranties. All representations and warranties of Floit contained in this Agreement shall be true and correct in all respects as of the Effectiye Date and as of the Closing. e. No Floit Default. As of the Closing, there shall be no Floit Default under this Agreement. f. Termination of Agreements: Vacancy of Prooerty. Except to the extent expressly disclosed in writing to City (and approved by City) in Exhibit E, Floit shall have terminated any and all contracts affecting and/or relating to the Floit Parcel and any and all leases and licenses for space at the Floit Parcel, and all tenants, licensees, or other occupants shall have permanently vacated the Property. Floit shall cause to be removed and/or terminated, at Floil's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting the Floit Parcel, except to the extent such instruments are permitted and approved by City pursuant to Sections 3.2(a)(1) and 5.1 above and as expressly disclosed to City in Exhibit E. 13 18-152 g. Deliverv of Funds and Documents. Floit shall have delivered all documents and other items described in Section 4.1. 6.2 Floil's Conditions Precedent. The Closing and Floit's obligation to transfer the title of the Floit Parcel to the City and consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Floil's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Floit's benefit only: a. No Termination as a Result of City's Due Diligence Review. This Agreement shall not have terminated pursuant to any provision in Section 5.1, above or as a result of City's review and inspection of title to, the Property Documents relating to, and the Tests on the Floit Parcel. b. City Title. City shall have fee title to the City Parcel. c. Floits's Title Policv. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide Floil's Title Policy for the City Parcel upon the Closing, in accordance with Section 3.2(b). d. Representations and Warranties. All representations and warranties of City contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. e. No City Default As of the Closing, there shall be no City Default under this Agreement. f. Termination of Agreements: Vacancv of Propertv. Except to the. extent expressly disclosed in writing to Floit (and approved by Floit) in Exhibit F, City shall have terminated any and all contracts affecting and/or relating to the City Parcel and any and all leases and licenses for space at the City Parcel, and all tenants, licensees, or other occupants shall have permanently vacated the City Parcel. City shall cause to be removed and/or terminated, at City's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting the City Parcel, except to the extent such instruments are permitted and approved by Floit pursuant to Sections 3.2(b)(1) and 5.2 above and as expressly disclosed to Floit in Exhibit F. g. Deliverv of Funds and Documents. City shall have delivered all documents and other items described in Section 4.2. 6.3 Waiver. City may at any time or times, at its election in its sole and absolute discretion, waive any of the City's Conditions Precedent set forth in Section 6.1, but any such waiver shall be effective only if contained in a writing signed by City and delivered to Floit and Escrow Holder. Floit may at any time or times, at its election in its sole and absolute discretion, waive any of the Floil's Conditions Precedent set forth in Section 6.2 above, but any such waiver shall be effective only if contained in a writing signed by Floit and delivered to City and Escrow Holder. 6.4 Termination. In the event that each of the City's Conditions Precedent set forth in Section 6.1 is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by City pursuant to Section 6.3, and provided there is no City Default under this Agreement, City may at its option terminate this Agreement and the Escrow opened hereunder. 14 18-153 In the event each of the Floit's Conditions Precedent set forth in Section 6.2 is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Floit pursuant to Section 6.3, and provided there is no Floit Default under this Agreement, Floit may at its option terminate this Agreement and the Escrow opened hereunder. Notwithstanding the foregoing, if Escrow is not in a position to close due to a party's failure to deposit into Escrow any documents or funds required for the Closing of Escrow, the non-defaulting party shall not have the right to terminate this Agreement without first having given the defaulting party notice of the default and five (5) days to cure the default, with the understanding that it is the parties' desire that this Agreement not terminate as a result of a technicality such as a party's inadvertent failure to timely make a deposit of a document or money into Escrow. No termination under this Agreement shall release either party then in default from liability for such default. In the event this Agreement is terminated, (i) all documents and funds delivered by Floit to City or Escrow Holder shall be returned immediately to Floit, provided there is no Floit Default, and likewise (ii) all documents and funds delivered by City to Floit or Escrow Holder shall be returned immediately to City. 6.5 Costs. If Escrow fails to close due to a party's default or breach, the defaulting or breaching party shall pay all Escrow Cancellation Charges. If Escrow fails to close for any other reason, each party shall pay one-half of all Escrow Cancellation Charges. The term "Escrow Cancellation Charges" shall mean all fees, charges and expenses actually charged by Escrow Holder and the Title Company to the parties in connection with the cancellation of the Escrow and the title order, if any. ARTICLE VII. DELIVERIES TO ESCROW 7.1 Floit's Deliveries to Escrow Holder. At least two (2) business days prior to the Closing Date, except as to possession of the Floit Parcel, which shall be delivered as of Closing, Floit shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged: a. Floit's Charges. Immediately available funds in the amount necessary to pay Floit's Charges as set forth in Section 8.1 (a). b. Grant Deed. The Grant Deed for the Floit Parcel in the form attached hereto as Exhibit G CGrant Deed"), duly executed by Floit and acknowledged. c. Certificate of Acceptance. One (1) original Certificate of Acceptance, related to the City Parcel, executed by Floit to be attached to the Grant Deed for the City Parcel. d. Estoppel/Subordination Agreement. The Estoppel/Subordination Agreement in a form approved by City, in City's sole and exclusive discretion, duly executed by Floit and acknowledged. e. Licenses. Certificates. and Permits. To the extent the same are within the actual or constructive knowledge of, or in the possession, custody or control of, Floit and are applicable and/or transferable to City, all original licenses, certificates and permits pertaining to the Floit Parcel and beneficial for, or necessary for, or affecting the use or occupancy thereof. IS 18-154 f. FIRPTA/Tax Exemption Forms. To the extent applicable, Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit H ("FIRPTA Certificate") (unless Floit is a "foreign person," as defined in Section 1445 in the Internal Revenue Code of 1986), together with any necessary tax withholding forms, and a duly executed California Form 593-. C, as applicable ("California Exemption Certificate"). In the event Floit does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code, as evidenced by the delivery at Closing of the California Exemption Certificate duly executed by Floit, Title Company shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of City for payment to the California Franchise Tax Board in accordance with Section II (d) hereof. In the event Floit is not exempt from such withholding or does not otherwise deliver the California Exemption Certificate at Closing, City shall execute and deliver three (3) originals of California Form 597 to Title Company at or immediately after Closing. . g. Tax Pavments. Any tax payments required under law and in accordance with obligations related to encumbrances or other provisions of this Agreement. . h. Authority. Such proof of Floit' s authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by City and the Title Company. I. Final Escrow Instructions. Floil's final written Escrow instructions to close Escrow In accordance with the terms of this Agreement. J. Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 7.2 City's Deliveries to Escrow. At least two (2) business days prior to the Closing Date, City shall deposit or cause to be deposited with Escrow Holder the following, each duly executed and acknowledged, by City as appropriate: a. City Charges. Immediately available funds in the amount necessary to pay City's Charges as set forth in Section 8.1(b). b. Grant Deed. The Grant Deed in the fonn attached hereto as Exhibit I ("Grant Deed"), duly executed by City and acknowledged. c. Certificate of Acceptance. One (I) original Certificate of Acceptance, related to the Floit Parcel, executed by City to be attached to the Grant Deed for the Floit Parcel. d. Estoppel/Subordination Agreement. The Estoppel/Subordination Agreement in a fonn approved by Floit, in City's sole and exclusive discretion, duly executed by City and acknowledged. e. Licenses. Certificates. and Permits. To the extent the same are within the actual or constructive knowledge of, or in the possession, custody or control of, City and are applicable and/or transferable to Floit, all original licenses, certificates and permits pertaining 16 18-155 to the City Parcel and beneficial for, or necessary for, or affecting the use or occupancy thereof. f. FIRPTA/Tax Exemption Forms. To the extent applicable, Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit H ("FIRPT A Certificate") (unless City is a "foreign person," as defined in Section I 445 in the Internal Revenue Code of 1986), together with any necessary tax withholding forms, and a duly executed California Form 593- C, as applicable ("California Exemption Certificate"). g. Tax Pavments. Any tax payments required under law and in accordance with obligations related to encumbrances or other provisions of this Agreement.. h. Authority. Such proof of City's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Floit and the Title Company. l. Final Escrow Instructions. City's final written Escrow instructions to close Escrow In accordance with the terms of this Agreement, J. Further Documents or Items. Any otlier documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. ARTICLE VIII. ESCROW HOLDER 8. I Escrow Holder Authorization. Escrow Holder is authorized to and shall pay, charge and perform the following: a. Floit Charges. The charges set forth in this Section 8. I (a) are herein referred to as the "Floit's Charges." I. Removal of Title Exceptions. Pay and charge Floit for any amount necessary to cause the removal of any title matters that Floit agreed to remove pursuant to Section 3.2(a) and to convey fee simple, marketable title pursuant to the requirements of this Agreement. 2. Encumbrances. Pay and charge Floit for any unpaid delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or. bonds against the Floit Parcel 3. Title Insurance. Pay and charge Floit for any additional title coverage requested by Floit,. including the difference between a CLTA standard owner's policy (which CLTA policy and the endorsements described in Section 3.2(b)(1) are and shall remain City's Charges) and an ALTA extended owner's policy. 4. Recording Fees. Pay and charge Floit all charges for recording the Grant Deed for the City Parcel. 17 18-156 b. City Charges. The charges set forth in this Section 8.I(b) are herein referred to as the "City's Charges." 1. Removal of Title Exceptions. Pay and charge City for any amount necessary to cause the removal of any title matters that City agreed to remove pursuant to Section 3.2(b) and to convey fee simple, marketable title pursuant to the requirements of this Agreement. 2. Encumbrances. Pay and charge City for any unpaid delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the City Parcel 3. Title Insurance. Pay and charge City for any additional title coverage requested by City, including the difference between a CLTA standard owner's policy (which CLTA policy and the endorsements described in Section 3.2(a)(I) are and shall remain Floil's Charges) and an AL T A extended owner's policy. 4. Recording Fees. Pay and charge City all charges for recording the Grant Deed for the Floit Parcel. 8.2 Tax Requirements. Escrow Holder shall prepare and file with all appropriate governmental or taxing. authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099 S form, and be responsible for withholding taxes, if any such forms and/or withholding is provided for or required by law. a. California Withholding. In the event Floit does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code ("Tax Code") as evidenced by the delivery to City at Closing of the California Exemption Certificate duly executed by Floit, (i) Escrow Holder shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of City at Closing for payment to the California Franchise Tax Board in accordance with the Tax Code, (ii) City shall deliver three (3) duly executed originals of California Form 597 to Escrow Holder at or immediately after Closing, (iii) two (2) executed origimlls of California Form 597 shall be delivered by Escrow Holder to Floit, and (iv) on or before the 20th day of the month following the month title to the Property is transferred to City (as evidenced by the recording of the Grant Deed), Escrow Holder shall remit such funds withheld from the Purchase Price, together with one (1) executed original of California Form 597 to the California Franchise Tax Board on behalf of City. City and Floit hereby appoint Escrow Holder as a reporting entity under the Tax Code, authorized to withhold and remit the withholding tax contemplated under the Tax Code, together with such other documents required by the Tax Code (including, without limitation, California Form 597), to the California Franchise Tax Board. b. FIRPT A Withholding. If Floit is a "foreign person" under the Foreign Investment in Real Property Transfer Act or an exemption applies, the Escrow Holder shall deduct and withhold from Floil's proceeds ten percent (10%) of the gross sales price and shall otherwise comply with all applicable provisions of the Foreign Investment in Real Property Act and any similar state act. Floit agrees to execute and deliver Exhibit H, as directed by Escrow Holder, or any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of the Foreign Investment in Real Property Act and any similar state act and regulation promulgated thereunder. 18 18-157 8.3 Closing Statement. Escrow Holder is instructed to prepare and provide copies of a proposed closing statement and thereafter the final closing statement ("Closing Statement") to both Floit and City. Escrow Holder shall deliver the estimated Closing Statement to Floit and City no later than three (3) business days prior to the Closing Date. 8.4 Escrow Holder Responsibility. The responsibility of the Escrow Holder under this Agreement is limited to Sections I through 8, and 12.2 and 12.3, and to its liability under any policy of title insurance issued in regard to this transaction. 8.5 Closing Procedure. On the Closing Date, and provided all of the City's Conditions Precedent and Floit's Conditions Precedent set forth in Sections 6.1 and 6.2, respectively, of this Agreement have been satisfied or waived in writing by the appropriate party (per Section 6.3), Escrow Holder shall immediately close Escrow in the manner and order provided below. 8.6 Recording. Escrow Hoider shall cause the Grant Deed for the Floit Parcel and the Grant Deed for the City Parcel to be recorded pursuant to applicable law in San Diego County and obtain conformed copies thereoffor distribution to City and Floil. 8.7 Delivery of Docnments. Escrow Holder shall deliver documents as follows: a. To Floil. Escrow Holder shall deliver to Floit, a conformed copy of the Grant Deed to the City Parcel, the Title Report, and each other document (or copies thereof) deposited into Escrow by City pursuant hereto, including, without limitation, those documents referenced in Section 7.2. b. To Citv. Escrow Holder shall deliver to City the original FIRPT A Certificate, the original California Exemption Certificate (as applicable), a conformed copy of the Grant Deed for the Floit Parcel, the Title Report, and each other document (or copies thereof) deposited into Escrow by Floit pursuant hereto,'including, without limitation, those documents referenced in Section 7.1. 8.8 Title Company. Escrow Holder shall cause the Title Company to,issue the Title Policy for the Floit Parcel to City and, deliver the Title Policy for the City Parcel to Floil. 8.9 Closing Statement. Escrow Holder shall forward to both City and Floit a separate accounting of all funds received and disbursed for each party in the form of the Closing Statement prepared pursuant to Section 8.3. 8.IOInformational Reports. Escrow Holder shall file any informational reports required by Internal Revenue Code Section 6045( e), as amended. 8.IIPossession. Possession of the Floit Parcel shall be delivered to City and possession of the City Parcel shall be delivered to Floit at the Closing. ARTICLE IX. REPRESENTATIONS AND WARRANTIES 9.I'Floit's Representations and Warranties. [n consideration of City entering into this Agreement and as an inducement to City to transfer all rights, title, and interests in the City Parcel in exchange for the all rights, title, and interests in the Floit Parcel, Floit makes the following 19 18-158 representations and warranties as of the Effective Date and continuously as of the Closing; each of which is material and is being relied upon by City (and the truth and accuracy of which shall constitute a condition precedent to City's obligations hereunder), and all of which shall survive Closing: a. Floit has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby. b. All requisite action (corporate, trust, partnership or otherwise) has been taken by Floit in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action (including Floil's exercise of its option to purchase the Floit Parcel from the Current Owner) will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any individual, director, manager, shareholder, partner, member, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party shall be required for City to consummate the transaction contemplated by this Agreement. c. In this regard, if applicable, Floit shall deliver or cause delivery to City of true and complete copies of each requisite action or authorization (corporate, trust, partnership or otherwise) that has been taken by Floit or will be taken (immediately after taking such action prior to Closing) when in connection with entering into this Agreement and execution of the instruments referenced herein. d. The individuals executing this Agreement and the instruments referenced herein on behalf of Floit have'the legal power, right and actual authority to bind Floit to the terms and conditions hereof and thereof. . e. Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or instruments referenced herein or therein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, lease or other agreement or instrument (a) to which Floit is a party, or (b) that affect the Floit Parcel of which Floit has actual or constructive knowledge, including, but not limited to, any of the Floit Parcel Documents. f. To the best of Floit's actual or constructive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the Floit Parcel or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. g. To the best of Floil's actual or constructive knowledge, there are no actions or proceedings pending or threatened against Floit, before any court or administrative agent in any way connected with or.relating to the Floit Parcel, or affecting Floil's ability to fulfill all of its obligations under this Agreement. h. Floit has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the Floit Parcel, or any part thereof, or any interest therein, which will survive the Closing. Floit has entered into no understanding 20 18-159 or agreement with any taxing or assessing authority respecting the imposition or deferment of any taxes or assignments respecting the Floit Parcel. I. To the best of Floit's actual or constructive knowledge, Floit is not in default of its obligations under any contract, agreement or instrument to which Floit is a party pertaining to the Floit Parcel. To the best of Floit's knowledge, no document supplied to City by Floit contains any untrue statement of a material fact, and to the best of Floit's actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. J. To the best of Floit's actual or constructive knowledge, there are no encroachments onto the F10it Parcel by improvements on any adjoining property, nor do any buildings or improvements located on the Floit Parcel encroach on other properties. k. There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the Floit Parcel for work performed or commenced for Floit or on Floit's behalf prior to the Effective Date of this Agreement. Floit agrees to indemnify, defend, and hold City and its elected and appointed officials, officers, employees, contractors, and agents harmless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar lien claims against the Floit Parcel and arising from work performed or commenced for Floit or on Floit's behalf at any time prior to Closing. 1. Except as may be revealed in the Title Report and the Property Documents for the Floit Parcel delivered to City by Floit, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or management of the Floit Parcel that will be binding upon City or the Floit Parcel after the Closing. There are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the Floit Parcel to which Floit is a party or of which Floit has actual knowledge and/or constructive knowledge. m. Except as revealed in the Title Report and the Floit Parcel Documents delivered to City by Floit, or as listed in Exhibit E attached hereto, there are not any written or orar contracts,. leases, licenses, or contractual rights or options to lease, purchase, or otherwise enjoy possession, rights or interest of any nature in and to the Floit Parcel or any part thereof, and except to the extent expressly otherwise agreed by City, no person other than City and Floit shall have any right of possession to the Floit Parcel or any part thereof as of the Closing. n. As of the Effective Date, F10it agrees not to enter into any leases, licenses or easements in the Floit Parcel (or any part thereof), or grant any other rights of access, use or occupancy to the Floit Parcel (or any part thereof) without the prior written approval of City, which may be granted or denied in City's sole and complete discretion. o. Except as revealed in the Title Report and the Property Documents related to the Floit Parcel delivered to City by Floit pursuant to Section 4.1, Floit shall not allow, consent to, or otherwise permit any encumbrance, lien, or other exception to title to become of record or affect title to the Floit Parcel during the period from the Effective Date through the Closing 21 18-160 Date, unless such encumbrance, lien, or other exception is expressly pre-approved by City in its sole and absolute discretion. . p. Neither Floit nor, to the best of Floit's knowledge, any previous owner, tenant, occupant, or user of the Floit Parcel used, generated, released, discharged, stored, or disposed of any Hazardous Materials on, under, in, or about the Floit Parcel, or transported any Hazardous Materials to or from the Floit Parcel. q. To Floil's actual knowledge no Hazardous Materials exist on, under, in or about the Floit Parcel, nor have Hazardous Materials ever been transported to or from the Floit Parcel. r. Until the Closing, Floit shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escrow, immediately give written notice of such fact or condition to City. s. Floit represents to City, and City acknowledges the representation of Floit that Floit has never operated, occupied or developed the Floit Parcel. t. As used herein, the term "actual knowledge" shall mean the actual, current knowledge of Floit and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge due to any notice or other document addressed to and evidenced to have been sent to Floit, and any other document in the Floil's possession and control. 9.2 Subsequent Changes to Floit's Representations and Warranties. If, prior to the Closing, City or Floit should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Floit set forth herein incorrect or untrue in any respect (collectively, the "Floit Representation Matter"), then the party who has learned, discovered or become aware of such Floit Representation Matter shall promptly give written notice thereof to the other party and Floit's representations and warranties shall be automatically limited to account for the Floit Representation Matter. City shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Floit if City reasonably disapproves any such change; provided, however Floit shall first have the opportunity to cure the Floit Representation Matter. If City does not elect to terminate this Agreement, Floit's representation shall be qualified by such Floit Representation Matter and Floit shall have no obligation to City for such Floit Representation Matter. If City does not provide written notice to Floit indicating its approval or disapproval of the change(s), the absence of such notice shall be deemed to be City's disapproval of such changes, and in the event the Floit fails to cure, City shall be deemed to have exercised its right to terminate this Agreement. 9.3 City's Representations and Warranties. In consideration ofFloit entering into this Agreement and as an inducement to Floit to transfer all his rights, title, and interests in the Floit Parcel in exchange for all rights, title and interests in the City Parcel, City makes the following representations and warranties as of the date hereof and at and as of the Closing, each of which is material and is being relied upon by Floit, the truth and accuracy of which shall constitute a condition precedent to Floit's obligations hereunder, and all of which shall survive Closing: a. City has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby, subject to this 22 18-161 representation not becoming effective unless, until, and subject to this Agreement being placed on an agenda of the City's governing board for consideration and action at a duly noticed, open public meeting of the City's governing board, and, if approved, then such representation shall be effective as of the Effective Date. City's execution of this Agreement after the Effective Date shall be conclusive evidence that City's governing board has. approved this Agreement at a duly noticed, open public meeting. b. Subject to 9.3(a) above, as of the Effective Date, all requisite governmental action has been taken by City in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing Date, no additional consent of any individual, judicial or administrative body, governmental authority or other party shall be required for Floit to consummate the transaction contemplated by this Agreement, subject to no material change in the terms or provisions hereof. c. Subject to 9.3(a) above, as of the Effective Date, the individuals executing and attesting this Agreement and the instruments referenced herein on behalf of City have the legal power, right and actual authority to bind City to the terms and conditions hereof and thereof. d. Neither the execution and delivery of this Agreement and the documents and instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement and the documents and instruments referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreement or instrument to which City is a party or by which any of City's properties are bound. e. To the best of City's actual or construCtive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the City Parcel or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. f. To the best of City's actual or constructive knowledge, there are no actions or proceedings pending or threatened against City, before any court or administrative agent in any way connected with or relating to the City Parcel, or affecting City's ability to fulfill all of its obligations under this Agreement. g. City has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the City Parcel, or any part thereof, or any interest therein, which will survive the Closing. City has entered into no understanding or agreement with any taxing or assessing authority respecting the imposition or deferment of any taxes or assignments respecting the City Parcel. . h. To the best of City's actual or constructive knowledge, City is not in default of its obligations under any contract, agreement or instrument to which City is a party pertaining to the City Parcel. To the best of City's knowledge, no document supplied to Floit by City contains any untrue statement ofa material fact, and to the best of City's actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. 23 18-162 I. To the best of City's actual or constructive knowledge, there are no encroachments onto the City Parcel by improvements on any adjoining. property, nor do any buildings or improvements located on the City Parcel encroach on other properties. . J. There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the City Parcel for work performed or commenced for City or on City's behalf prior to the Effective Date of this Agreement. City agrees to indemnify, defend, and hold Floil and its officers, employees, contractors, and agents harmless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar li~n claims against the City Parcel and arising from work performed or commenced for City or on City's behalf at any time prior to Closing. k. Except as may be revealed in the Title Report and the Property Documents for the City Parcel delivered to Floit by City, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or management of the City Parcel that will be binding upon Floit or the City Parcel after the Closing. There are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the City Parcel to which City is a party or of which City has actual knowledge and/or constructive knowledge. I. Except as revealed in the Title Report and the City Parcel Documents delivered to Floit by City, or as listed in Exhibit F attached hereto, there are not any written or oral contracts, leases, licenses, or contractual rights or options to lease, purchase, or otherwise enjoy possession, rights or interest of any nature in and to the City Parcel or any part thereof, and except to the extent expressly otherwise agreed by Floit, no person other than Floit and City shall have any right of possession to the City Parcel or any part thereof as of the Closing. m. As of the Effective Date, City agrees not to enter intoany leases, licenses or easements in the City Parcel (or any part thereof), or grant any other rights of access, use or occupancy to the City Parcel (or any part thereof) without the prior written approval of Floit, which may be granted or denied in Floit's sole and complete discretion. . n. Except as revealed in the Title Report and the Property Documents related to the City Parcel delivered to Floit by City pursuant to Section 4.2, City shall not allow, consent to, or otherwise permit any encumbrance, lien, or other exception to title to become of record or affect title to the City Parcel during the period from the Effective Date through the Closing Date, unless such encumbrance, lien, or other exception is expressly pre-approved by City in its sole and absolute discretion. o. Neither City nor, to the best of City's knowledge, .any previous owner; tenant, occupant, or user of the City Parcel used, generated, released, discharged, stored, or disposed of any Hazardous Materials on, under, in, or about the City Parcel, or transpcirted any Hazardous Materials to o.r from the City Parcel. . p. To City's actual knowledge no Hazardous Materials exist on, under, in or about the City . Parcel, nor have Hazardous Materials ever been transported to or from the City Parcel. 24 18-163 q. Until the Closing, City shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escrow, immediately give written notice of such fact or condition to Floil. r. City represents to Floit, and Floit acknowledges the representation of City that City has never operated, occupied or developed the City Parcel. s. As used herein, the term "actual knowledge" shall mean the actual, current knowledge of City and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge ,due to any notice or other document addressed to and evidenced to have been sent to City, and any other document in the City's possession and control. , 9.4 Subsequent Changes to City's Representations and Warranties. If, prior to the Closing, Floit or City should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of City set forth herein incorrect or untrue in any respect (collectively, the "City's Representation Matter"), then the party who has learned, discovered or become aware of such City's Representation Matter shall promptly give written notice thereof to the. other party and City's representations and warranties shall be automatically limited to account for the City's Representation Matter. Floit shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to City if Floit reasonably disapproves any such change; provided, however City shall first have the opportunity to cure the City's Representation Matter. If Floit does not elect to terminate this Agreement, City's representation shall be qualified by such City's Representation Matter and City shall have no obligation to Floit for such City's Representation Matter. 9.5 Conveyance of Parcels in their Existing Condition. As of the Closing Date, and subject to its rights under Article V and the Warranties in Section 9.1 through 9.4, City acknowledges that City will have been given an adequate opportunity to conduct tests at the Floit Parcel, and Floit acknowledges that Floit has been given an adequate opportunity to conduct tests at the City Parcel. Except as otherwise expressly provided in this Agreement and except as required to be disclosed or otherwise action taken pursuant to federal, state or local laws and regulations, Neither Floit nor City make any representation or warranty of any kind as to the physical or environmental condition of the Floit Parcel or the City Parcel, respectively, or in connection with any matter, report or information relating to the condition of the Floit Parcel or the City Parcel, the respective values, fitness, use, zoning, entitlements, the existence of Hazardous Materials thereon, moratoriums, economic feasibility, developability or any other matter relating to Floit's proposed use or development of the City Parcel or City's proposed use or development of the Floit Parcel. ARTICLE X. - COVENANTS DURING ESCROW PERIOD 10.1 Floit's Covenants during Escrow Period. The following are covenants of Floit that shall apply during the Escrow Period: a. New Liens or Encumbrances. Floit shall not further encumber or place any further liens or encumbrances on the Floit Parcel from the Effective Date and during the Escrow period to the Closing Date without the express, prior written authorization of City in its sole and complete discretion. Further, if the City does consent to a new lien or encumbrance, then, 25 18-164 such lien or encumbrance on the Floit Parcel shall not survive the Closing Date, including, but not limited to, right of entry, covenants, conditions, restrictions, easements, liens, options to purchase, options to lease, leases, tenancies, or other possessory interests or rights of use or rights of entry relating to or affecting the Floit Parcel without the prior written consent of City which consent may be withheld by City in its sole and complete discretion. b. Hazardous Materials. Floit shall not cause or permit the presence, use, generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to. or from, the Floit Parcel; provided, however, the foregoing shall not apply to Hazardous Materials that migrate onto the Floit Parcel from other property or from sources other than Floit or a party acting under the direction or control of Floit. F10it shall comply with all applicable Environmental Laws in Floil's use, ownership and operation of the Floit Parcel. As used in this Agreement, the term "Hazardous Materials" or "Hazardous Material" shall mean any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, et. seq., of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous . substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 2550 I of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) lead based paint (viii) polychlorinated biphenyls, (ix) methyl tertiary butyl ether, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.c. 91317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. 996901, .et seq. (42 U.S.C. 96903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 999601, et seq. As used in this Agreement, the term "Environmental Laws" shall mean any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117,25122.7 or 25140, et. seq., of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.c. Section 1317), (vi) Section 1004 of the Resource Conservation and Recovery Act, 42 V.S.C. Sections 6901 et seq. (42 U.S.C. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., or (viii) any state or federal lien or "superlien" law, any 26 18-165 environmental cleanup statute or regulation, or any permit, approval, authorization, license, variance or permission required by any governmental authority having jurisdiction. I. Hazardous Materials Indemnification. Floit agrees to and hereby does indemnify, defend and hold City, the Chula Vista Redevelopment Agency ("Agency") and the City and their respective officers, employees and agents harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees and expert . witness fees) (hereinafter collectively referred to as the "Claims"), resulting from,' arising out of, or based upon (i) the presence, release; use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Floit Parcel in violation of applicable Environmental Laws, whenever discovered and/or (ii) the environmental, soils, or physical condition of the Floit Parcel, and/or (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating. to the presence, use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Floit Parcel whenever discovered, to the extent the occurrences described in clauses (i), (ii), and (iii) occur or originate from actions or inactions occurring prior to the Closing. This indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation or lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. This indemnity shall not include any Claim directly resulting from, arising out of, or based upon the grossly negligent activities of City, it officials, officers, employees, or agents. 10.2 City's Covenants during Escrow Period. City makes the same covenants with respect to the City Parcel to Floit that shall apply during the Escrow Period as those Floit has made with respect to the Floit Parcel in Section 10.1 above. XI. REMEDIES 11.1 Floit Default. The term "Floit Default" shall mean Floil's failure to timely perform a material obligation of Floit under this Agreement within. five (5) business days following written notice from City describing Floit's failure to perform. In the event of a Floit Default, City, as its sole and exclusive remedies: (i) may terminate this Agreement, or (ii) shall be entitled to the remedy of specific performance. . 11.2 City Default. The term "City Default" shall mean City's failure to timely perform a material obligation of City under this Agreement within five (5) business days following written notice from Floit describing City's failure to perform. In the event of a City Default, Floit, as its sole and exclusive remedies: (i) may terminate this Agreement, or (ii) shall be entitled to the remedy of specific performance. ' XII. GENERAL PROVISIONS 12.1 Loss or Damage to Improvements. Loss or damage to the Floit Parcel, including any improvements thereon, by fire, other casualty, or acts of God, occurring at any time prior to the 27 18-166 Closing of Escrow shall be at the sole risk of Floit. Loss or damage to the City Parcel, including any improvements thereon, by fire, other casualty, or acts of God, occurring at any time prior to the Closing of Escrow shall be at the sole risk of City. 12.2 Notices. All notices, demands, requests or other communications required or permitted hereunder (collectively, "Notices") shall be in writing, shall be addressed to the receiving party, and shall be personally delivered, sent by overnight mail (Federal Express or another carrier that provides receipts for all deliveries), or sent by certified mail, postage prepaid, return receipt requested, to the address listed below: Ifto Floit: Mid-City, LLC c/o Dan Floit 35657"' Avenue San Diego. CA 92103 Fax No.: (619) 294-3465 With a copy to: Keeney Waite & Stevens 125 North Acacia Avenue, Suite 101 Solana Beach, CA 92075 Attention: Richard R. Waite Fax No.: (858) 523"2135 If to City: City ofChula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager_ Fax No.: (619) 409-5997 a. Effective Date of Notices. All Notices shall be effective upon receipt at the appropriate address. Notice of change of address shall be given by written Notice in the manner detailed in this Section. Rejection or other refusal to accept or the inability to .deliver because of changed address of which no Notice in accordance with this Section was given shall be deemed to constitute receipt of such Notice. The providing of copies of Notices to the parties' respective counsels is for information only, is not required for valid Notice and does not alone constitute Notice hereunder. 12.3 Brokers. City and Floit each represent to the other that no brokerage commission, finder's fee or other compensation of any kind is due or owing to any person or entity in connection with this Agreement. Each party agrees to and does hereby indemnify and hold the other free and harmless from and against any and all costs, liabilities or causes of action or proceedings which may be instituted by any broker, agent or finder, licensed or otherwise, claiming through, under or by reason of the conduct of the indemnifying party in connection with this Agreement. 12.4 Waivers and Consents. Each provision of this Agreement to be performed by City andFloit shall be deemed both a covenant and a condition and shall be a material consideration for Floit's and City's performance hereunder, as appropriate, and any breach thereof by City or Floit shall 28 18-167 be deemed a material default hereunder; provided however that failure of a condition hereunder shall not be deemed or determined to be a default unless such condition is also a covenant. Either party may specifically and expressly waive in writing any portion of this Agreement or any breach thereof, but no such waiver shall constitute a further or continuing waiver of a preceding or succeeding breach of the same or any other provision. A waiving party may at any time thereafter require further compliance by the other party with any breach or provisi6n so waived. The consent by one party to any act by the other for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such' consent for the same or any similar acts in the future. No waiver or consent shall be implied from silence or any failure of a party to act, except as otherwise specified in this Agreement. All rights, remedies, undertakings, obligations, options, covenants, conditions and agreements contained in this Agreement shall be cumulative and no one of them shall be exclusive of any other. 12.5 Construction. The parties acknowledge and agree that (a) each party is of equal bargaining strength; (b) each party has actively participated in the drafting, preparation and negotiation of this Agreement; (c) each party has consulted with such party's own independent counsel and such other professional advisors, if at all, as each party has deemed appropriate, relating to any and all matters contemplated under this Agreement; (d) each party and such party's counsel and advisors, if so elected by the party, have reviewed this Agreement; (e) each party has agreed to enter into this Agreement following such review and the rendering of such advice, if so elected by the party; and (I) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. 12.6 Cooperation. City and Floit agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the purchase and sale herein contemplated and shall use all reasonable efforts to accomplish the Closing in accordance with the provisions hereof. 12.7 Attorney's Fees. In the event any declaratory or other legal or equitable action is instituted between Floit, City and/or Escrow Holder in connection with this Agreement, then as between City and Floit the prevailing party shall be entitled to recover from the losing party all of its costs and expenses including court costs and reasonable attorney's fees, and all fees, costs and expenses incurred on any appeal or in collection of any judgment. 12.8 Time. Time is of the essence of every provision herein contained. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from which said period of time runs shall be excluded, and the last day of such period shall be included, unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until 5:00 p.m. of the next day that is not a Saturday, Sunday, or legal holiday. Except as otherwise expressly provided herein, all time periods expiring on a specified date or period herein shall be deemed to expire at 5:00 p.m. on such specified date or period. 12.9 Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. A facsimile signature shall be deemed an original signature. 29 18-168 12.10 Captions. Any captions to, or headings of, .the. sections or sllbsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. 12.11 No Obligations to Third Parties. Except as otherwise expressly provided herein, the execlltion and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the parties hereto. City 12.12 Amendment to this Agreement. The terms of this Agreement may not be modified or amende,d except by an instrument in writing executed by each of the parties hereto. 12.13 Executive Director Authority. City's Executive Director or his or her designee shall have the authority to sign this Agreement, closing documents, issue interpretations, waive provisions, and enter into amendments of or supplements to this Agreement on behalf of City, so long as such actions do not substantially or substantively change the terms and conditions of the purchase and sale of the Property as set forth herein and as agreed to by the City in its approval of this Agreement. All other waivers or amendments shall require the consideration and written consent of City's governing board. 12.14 Administrative Claims Requirements and Procedures. No suit or arbitration shall be brollght arising out of this Agreement, against City unless a claim has first been presented in writing and filed with City and acted llpon by City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by City in the implementation of same. Upon request by City, F10it shall meet and confer in good faith with City for the purpose of resolving any dispute over the terms of this Agreement. 12.15 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12.16 Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated herein by this reference for all purposes. Exhibit A Legal Description - City . Exhibit A-I Diagram - City Exhibit B Legal Description - Floit Exhibit B-1 Diagram - Floit Exhibit C Preliminary Report - Floit Exhibit D Preliminary Report - City Exhibit E List of Current Contracts, Leases and Licenses - Floit 30 18-169 Exhibit F List of Current Contracts, Leases and Licenses -. City Exhibit G Grant Deed. Floit Exhibit H FIRPTA Certificate Exhibit I Grant Deed. City 12.17 Entire Agreement. This Agreement supersedes any prIor agreements, negotiations and communications, oral or written, and contains the entire agreement between, and the final expression of, City and Floit with respect to the subject matter hereof. The parties hereto expressly agree and confirm that this Agreement (along with the Interim Operating Agreement and the Exhibits hereto) is executed without reliance on any oral or written statements, representations or promises of any kind, which are not expressly contained in this Agreement. No subsequent agreement, represe'ntation or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. 12.18 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. 12.19 Assignment. Floit may not assign its interest in this Agreement without the prior written consent of the City. The City's Executive Director is authorized, on behalf of the City, to assign the City's interest in this Agreement to the City of Chula Vista, the Redevelopment Agency of the City of Chula Vista, or Floit at any time, without obtaining Floit's consent but after written notice to Floit of such Assignment. 12.20 Nondiscrimination. There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (I) of subdivision (P) of Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. The foregoing covenants shall run with the land. 12.21 Like.Kind Exchange. If either party desires to enter into a like kind exchange pursuant to Internal Revenue Code Section 1031, the other party agrees to reasonably cooperate with same, provided that the party desiring such exchange bears all costs related thereto. [NEXT PAGE IS SIGNATURE PAGE] 31 18-170 SIGNATURE PAGE FOR OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement and Joint Escrow Instructions as of the day and year first written above. "FLOIT" Mid-City, LLC, a California limited liability corn pany . By: Dan Floit, Managing Member "CITY" CITY OF CHULA VISTA, a chartered municipal corporation By: Cheryl Cox, Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 32 18-171 Acceptance by Escrow Holder: r 1, on behalf of Escrow Holder, hereby acknowledges that Escrow Holder has received a fully executed copy of the foregoing Purchase and Sale Agreement and Joint Escrow Instructions by and between Mid-City, LLC, a California limited liability company, as Floit, and the City of Chula Vista, a chartered municipal corporation, as City, and agrees to act as Escrow Holder thereunder and to be bound by and strictly perform the terms thereof as such terms apply to Escrow Holder. ,2011 Dated: [NAME AND COMPANY] Escrow Holder 18-172 EXHIBIT G GRANT DEED - FLOIT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attn: City Clerk APN: (Space above this line for Recorder's Use Only) This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Mid-City LLC, a California Limited Liability Company ("Grantor"), hereby grants to the CITY OF CHULA VISTA, a chartered municipal corporation, fee simple title to that certain real property located in the County of San Diego, State of California, more particularly described on Schedule 1 attached hereto and incorporated herein by this reference. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ,2011. Mid-City LLC By: Dan Floit, Managing Member EXHIBIT G GRANT DEED- FLOIT Exchange Agreement 18-173 SCHEDULE 1 TO GRANT DEED LEGAL DESCRIPTION All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: PARCEL "A" COMMENCING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING. TO SAID MAP NO. 166; THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID SECTION 125, SOUTH 72013'01" WEST 187.50 FEET; THENCE CONTINUING ALONG SAID SOUTHERLY BOUNDARY, SOUTH 72013'01" WEST 56.46 FEET TO THE SOUTHWESTERLY INTERSTATE 805 RIGHT OF WAY BOUNDARY; THENCE LEAVING SAID SOUTHERLY BOUNDARY AND CONTINUING ON SAID RIGHT OF WAY BOUNDARY NORTH 49028'03" WEST 54.64 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID RIGHT OF WAY BOUNDARY NORTH 49028'03" WEST 523.83 FEET TO AN ANGLE POINT ON SAID RIGHT OF WAY BOUNDARY; THENCE CONTINUING ON THE SOUTHERLY INTERSTATE 805 RIGHT OF WAY BOUNDARY SOUTH 80002'00" WEST 46.81 FEET TO THE WESTERLY BOUNDARY OF LOT "F" OF SAID MAP NO. 1607; THENCE ALONG WESTERN 80UNDARY OF LOTS "F" AND "Q" SOUTH 17041'02" EAST 452.12 FEET TO A POINT ON THE WESTERLY BOUNDARY OF LOT "Q"; THENCE LEAVING SAID WESTERLY BOUNDARY NORTH 72013'01" EAST 322.29 FEET TO THE TRUE POINT OF BEGINNING. EXHIBIT G - SCHEDULE 1 LEGAL DESCRIPTION - FLOIT Exchange Agreement 18-174 STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the entity upon behalf of which the person( s) acted, executed the instrument. [ 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. Notary Public [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their 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. Notary Public [SEAL] EXHIBIT G . CERTIFICATE OF ACKNOWLEDGEMENT Exchange Agreement 18-175 EXHmIT G - SCHEDULE 2 CERTIFICATE OF ACCEPTANCE (Grant Deed) This is to certify that the interest in real property conveyed by the foregoing Grant Deed dated ,2011, executed by MID-CITY, LLC, a California limited liability company, for the benefit of the CITY OF CHULA VISTA, a chartered municipal corporation ("City"), is hereby accepted by the undersigned officer on behalf of Authority pursuant to authority conferred by Resolution of the City adopted on , 2011, and City consents to recordation thereof by its duly authorized officer. Dated: CITY OF CHULA VISTA, a chartered municipal corporation Executive Director EXHIBIT G - SCHED.ULE 2 CERTIFICATE OF ACCEPTANCE Exchange Agreement 18-176 EXHIBIT B FIRPTA CERTIFICATE TRANSFEROR'S CERTIFICATE OF NON-FOREIGN STATUS To inform the CITY OF CBULA VISTA ("Transferee"), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended ("Code") will not be required upon the transfer of that certain real property to the Transferee by MID-CITY, LLC, a California limited liability company ("Transferor"), the undersigned hereby certifies the following: L The Transferor, Mid-City, LLC, is not a foreign person or citizen, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. follows: The Transferor's social security number or U.S. employer identification number is as . . . t). 3&Y~ for Mid-City, LLC, OI(P -058' [insert tax identification number]; 3. The Transferor's home or office address is: c/o Dan Floit 3565 7th Avenue San Diego, CA 92103 The Transferor understands. that the Transferee may disclose this certification to. the Internal Revenue Service and that any. false statement contained herein Co e p d by fine, imprisonment . or both. Un:der penalty ofpeJjury, I declare that I have ex . ed this certificatio and to the best of my knowledge and belief it is true, correct and. complete, and further declare that I ave authority to sign this document. . . By: Dan Floit, Managing Member EXHIBIT H FIRPTA CERTIFICATE Exchange Agreement 18-177 THE A TT ACHED AGREEMENT HAS BEEN REVIEWED AND APPROVED AS TO FORM BY THE CITY ATTORNEY'S OFFICE AND WILL BE FORMALLY SIGNED UPON APPROVAL BY THE CITY OUNCIL //~- ( -.- --. - - - Dated: It I~ ~ { r OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS BETWEEN THE CITY OF CHULA VISTA, AND MID-CITY, LLC 18-178 OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS FLOIT: CITY: DATED: DRAFT Mid-City, LLC City ofChula Vista November 15, 2011 18-179 Effective Date: Transaction: Floit Parcel: Floit: Floil's Address: City: City's Address: City Parcel: Outside Closing Date (or Closing) Title Company: Escrow Holder: DOCSOC!l494229v3/0242] 2-0005 BASIC TERMS The effective date shall be deemed to be November 15,2011 Option to Exchange of Floit Parcel for City Parcel Real property generally shown as: Exhibit B-1 Mid-City, LLC , a California limited liability company c/o Dan Floit 3565 7th Avenue San Diego_ CA 92103 Fax No. (619) City .of Chula Vista, a chartered municipal corporation, organized under the laws of the State of California 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager Fax No.: (619) 409-5997 Real property generally shown as: Exhibit A-I December 31, 2011 Stewart Title of California 7676 Hazard Center Drive San Diego, California 92108 Stewart Title of California Address as above 18-180 OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS This OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS ("Agreement") dated October _,2011, for reference only, by and between the CITY OF CHULA VISTA, a chartered municipal corporation ("City"), and Mid-City, LLC, a California limited liability company ( "Floit"), for an irrevocable option, exercisable by Floit at any time prior to the expiration of the Option Term, to acquire all of City's interests, tangible and intangible, in the City Property, defined and described below, in exchange for all of Floil's interests, tangible and intangible in the Floit Property. RECITALS Whereas, the City's General Plan identifies the need for parkland for the welfare of the public and to promote the orderly development of the City; and Whereas, the City owns approximately 15 acres of parkland in the Lower Sweetwater Valley, which is legally described in Exhibit A and depicted in Exhibit A-I, ("Parkland"); and Whereas, the City desires to increase the acreage of the Parkland to establish a community park of approximately 20 acres; and Whereas, Floit owns a parcel of approximately 4 acres immediately adjacent to the Parkland, which is legally described in Exhibit B and depicted in Exhibit B-1, ("Floit Parcel"); and Whereas, the acquisition of the Floit Parcel would help the City increasing the acreage ofthe Parkland and establishing the community park; and . Whereas the City owns a remnant 6.1 acre parcel located immediately adjacent to SR 125 and East Lake Drive ("City Parcel"); and . Whereas, Floit desires to acquire the City Parcel for future development; and Whereas, Floit would like an opportunity to perform due diligence on the City Parcel to determine whether he can obtain entitlements to develop the City Parcel in a manner consistent with his development plan; and Whereas, the City and Floit agree that the best manner to structure a deal for the exchange of the Floit Parcel for the City Parcel would be to provide Floit an option to acquire the City Parcel if and when Floit obtains the necessary entitlement for such development; and Whereas, this Agreement is not intended to and does not grant any such entitlements, nor does the City, through it or in any other manner, make any representations related to the granting of future entitlements. Any entitlements sought by Floit with respect to the City Parcel shall be applied for at his own cost and expense and shall be subject to the future discretion of the City and any and all procedures, laws, and regulations then in effect. 2 DOCSOC!l494229v3/024212-0005 18-181 NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, City and Floit agree as follows: ARTICLE I. OPTION 1.1 Option. a. Grant of OPtion. The City hereby grants to Floit an exclusive option ("Option") to, prior to the expiration of the Option Term, identified in section I(b) below, or any extensions thereto, acquire all of the City's rights title and interest to interest in the City Parcel in exchange for granting all of Floit's rights, title, and interest in the Floit Parcel to the City, subject to the terms and conditions set forth in this Agreement. b. Option Term. This Option shall commence on the Effective Date of this Agreement and shall expire three (3) years from such date, unless this Agreement is earlier terminated or this Option Term is modified in a writing agreed to by both Parties. I. Extension of Term. In the event that the City Manager reasonably determines that Floit is pursuing, with due diligence, Entitlements for the City Parcel, he may, at his discretion, extend the option term for two (2) additional one (l) year terms. Any such extension must be in writing executed by both Parties. c. Exercise of OPtion. At any time during the Option Term or any extension thereof, Floit may exercise the Option by delivering written notice ("Notice of Election") to City to such effect. I. Open Escrow. Within five (5) business days of delivery of the Notice of Election, Floit shall open Escrow in accordance with Article III, below. ARTICLE II. EXCHANGE 2.1 Floit Parcel. If Floit exercises the option, Floit agrees to transfer his property interests in the Floit Parcel to the City subject to Floil's Conditions Precedent. Property Interests shall include: a. Fee. Fee simple, marketable title to the Floit Parcel with the condition of title meeting the requirements of Section 3.2.a; b. Improvements. All improvements, if any, to such Floit Parcel; c. Appurtenances. All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the related Floit Parcel, including, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived from therefrom; d. Other. All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the Floit Parcel. 3 18-182 2.2 City Parcel. If Floit exercises this Option, City agrees to transfer its property interests in the City Parcel to the Floit subject to the City's Conditions Precedent. Property Interests shall include: a. Fee. Fee simple, marketable title to the City Parcel with the condition of title meeting the requirements of Section 3.2.b; b. Imorovements. All improvements, if any, to such City Parcel; c. Aoourtenances. All rights, privileges, easements, licenses and interests, both tangible and intangible, appurtenant to the related City Parcel, including, without limitation, all royalties, minerals, oil and gas rights and profits, water and water rights (whether or not appurtenant) derived from therefrom; d. Other. All licenses, permits, authorizations and approvals issued by governmental authorities with respect to the City Parcel. 2.3 Exchange Value. If Floit exercises this Option, Floit and City shall convey their respective interests, Floit to the Floit Parcel and City to the City Parcel. Both City and Floit agree that the Fair Market Values of their respective parcels are equivalent and in this regard, there is no sellout of the Floit Parcel or the City Parcel; thus, no additional consideration shall be or need be exchanged between the Parties in connection with this Agreement. The conveyance of the Floit Parcel and the City Parcel shall close concurrently. a. No Entitlements. The Exchange Value is based only upon the real property and those rights associated with the respective parcels as of the Effective Date of this Agreement. The City makes no warranties, promises, whether express or implied, as to the ability of Floit to obtain any development entitlements or approvals from the City that he desires or may desire to obtain with respect to the City Parcel. By executing this Agreement, Floit acknowledges that he has not been induced to sign this Agreement based upon any express or implied statements, whether written or otherwise conveyed, associated with entitlements related to the City Parcel. In addition, Floit acknowledges that in the event that he desires to obtain entitlements for the City Parcel, that the City retains its full discretion to grant entitlements based upon applications submitted; those facts presented therewith; and the law, rules, and regulation in effect at the time of consideration of.such entitlements; and that the City may place conditions, in the event that any such entitlements are granted, on the entitlements in accordance with the law, rules, policies and regulations in effect at such later date. I. Recourse and Remedy. Floit hereby acknowledges that the only recourse he shall have with respect to the denial of any entitlements for the City Parcel shall be to (i) choose not to execute the Option granted under this Agreement in Section 1.1(a) or (ii) exercise the Option with the knowledge that the entitlements have been denied. Furthermore, Floit acknowledges that the City shall not be liable for any costs, fees, expenses, including any general or special damages that he may claim are associated with seeking entitlements, including application, consultant fees, development for the City Parcel ("Development Costs) and in accordance with Section 2.4 executes a General Waiver and Release of Claims for such Development Costs. 4 18-183 2.4 Full and Complete Settlement, Release and Waiver. The value obtained by Floit for the receipt of title to the City Parcel shall be deemed full and complete compensation for the value of the Floit Parcel and such shall remain total compensation paid by City for all of Floit's Property Interests, inclusive. of any and all rights or obligations that exist or may arise out of the acquisition of the Property Interests, including without limitation, fee interest in the land, all improvements pertaining to the realty, all other improvements, severance damages, if any, alleged pre-condemnation damages, if any, alleged loss of business goodwill, if any, eligible costs directly attributed to the development of the Floit Parcel, relocation benefits and assistance, if any, costs, interest, attorney's fees, and any daim whatsoever of, by, or through Floit that may arise out of or relate in any respect to the other City's acquisition of a Floit Parcel. In this regard Floit has had the opportunity to obtain advice from counsel, and that based on the advice of such counsel, acknowledges that he is and will be fully satisfied that the receipt of title to the City Parcel are fair and adequate consideration for Property Interests acquired by the City and that it is all-inclusive compensation for the Property. In furtherance of the foregoing paragraph, Floit understands that City would not have entered into this Agreement without Floit's agreement to (i) exchange the Floit Parcel for no monetary remuneration or consideration other than that identified above in Section 2.3 and (ii) knowingly, voluntarily, and intentionally waive according to the terms set forth herein, any and all ofFloil's interest in or right to any relocation assistance or benefits under the Relocation Laws and for any other or further compensation or consideration for the Property and all interests therein or arising therefrom. Therefore, the Exchange Value has been determined by and is inclusive of Floit's agreement hereunder to fully release and discharge City from all and any manner of rights, demands, liabilities, obligations, claims, or causes of action, in law or equity, of whatever kind or nature, whether known or unknown, whether now existing or hereinafter arising ("Claims"), which arise from or relate in any manner to (i) the exchange of the Floit Parcel to the extent such claims are based on the fact that City is a public entity; (ii) the relocation of any person or persons or other occupant or occupants located on the Floit Parcel, including the specific waiver and release of any right to any relocation benefits, advisory or other assistance, and/or payments under the Relocation Laws as to whom this waiver and release is effective, notwithstanding that such relocation assistance, benefits and/or payments may be otherwise required under said Relocation Laws or other state or federal law; and (iii) compensation for any interest in the Floit Parcel or income from the Floit Parcel including, but not limited to, land and improvements, fixtures, furniture, or equipment thereon, goodwill, severance damage, leases or other contracts relating to the Floit Parcel, attorneys' fees, or any other compensation of any nature whatsoever. This waiver and settlement of claims shall also include any claims regarding Development Costs as in Section 2.3(a)(I). By releasing and forever discharging claims both known and unknown which are related to or which arise under or in connection with, the items set out in Section 2.2(c) above, Floit expressly waives any rights under California Civil Code Section 1542, which provides: 5 18-184 "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." Floit's Initials . ARTICLE III. ESCROW AND TITLE 3.1 Opening and Closing Escrow. a. Opening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened ("Opening of Escrow") on the date that Escrow Holder receives a copy of this Agreement fully executed by Floit and executed and attested by City. In accordance with Section 1.1 (c)(I), above, Floit shall cause the Opening of Escrow to occur on or before five (5) business days after the delivery of the Notice of Election. Escrow Holder shall promptly notify City and Floit in writing of the date of the Opening of Escrow. City and Floit agree to execute, deliver. and be bound by any reasonable or customary supplemental Escrow instructions or other instruments reasonably required by Escrow .Holder to consummate the transaction contemplated by this Agreement; provided, however, that no instrument shall be inconsistent or in conflict with, amend or supersede any portion of this Agreement. If there is any conflict or inconsistency between the terms of an instrument and the terms of this Agreement, then the terms of this Agreement shall control. Without limiting the generality of the foregoing, no instrument shall extinguish any obligations imposed by this Agreement or any other contract between Floit and City. b. Closing. For purposes of this Agreement, the "Closing" or "Closing Date" shall be the date the Grant Deeds (as defined below) are recorded pursuant to applicable law in the Official Records of San Diego County. Unless changed in writing by City and Floit, the Closing shall occur on or before the date being the sixtieth (60) calendar day following the Opening of Escrow ("Outside Closing Date"). If the Closing has not, for any reason, occurred by the Outside Closing Date (as it may be extended pursuant to the immediately preceding sentence), then either City or Floit may terminate this Agreement by delivering written notice to the other at any time after the Outside Closing Date; provided, however, that if there is a Floit Default or a City Default under this Agreement at the time of the termination, then the termination shall not affect the rights and remedies of the non-defaulting party against the defaulting party. If neither party so elects to terminate this Agreement and the Escrow, Escrow Holder shall close the Escrow as soon thereafter as City's and Floit's Conditions Precedent to Closing are satisfied pursuant to Sections 6.1 and 6.2, respectively, of this Agreement. 3.2 Title Matters. a. With Respect to Floit Parcel. 6 18-185 I. City's Title Policy. Concurrently with the Closing, the Title Company shall issue to City a 2006 CLTA or AL TA, at the option of City, owner's policy of title insurance (amended 6/17/06) without arbitration provisions in the amount of the Exchange Value, showing fee title to the Floit Parcel vested solely in the City of Chula Vista, a chartered municipal corporation, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated July 7, 2011, issued by Stewart Title of California, Inc. ,with respect to the Floit Parcel ("Floit Title Report"), attached hereto as Exhibit C: tlliSE"E,'t~:r~Qr]"R j;X.QE.ETI9B.~.JN;iTI1J;~ @.i:QB-.IJ (collectively, "City's Title Policy"). The premium for the City's Title Policy and any endorsements required by City shall be charged to Floit and City as described in Section 8.I(b)(3). City may require, as a City's Condition Precedent to the Closing, that Floit execute an estoppel agreement and/or a subordination agreement in a form acceptable to City, confirming that, as of the Closing, (a) the Floit shall nave no further interest in the Floit Parcel or any portion thereof or any improvements thereon. 2. No New Liens or Exceptions. City hereby objects to any and all liens and exceptions to title not shown on the City Title Report. Further, during the period commencing on the Effective Date and continuing until the Closing, Floit agrees it shall not cause any new or modified lien or encumbrance to title to become of record against the Floit Parcel, unless such lien or encumbrance is approved in writing by City. Each and every new lien or encumbrance shall be subject to City's prior written consent and unless and until approved by City shall be deemed a disapproved exception to title that shall be removed by Floit at Floit's sole cost as a condition to Closing. b. With Respect to City Parcel. I. Floit's Title Policy. Concurrently with the Closing, the Title Company shall issue to Floit a 2006 CL T A or AL T A, at the option of Floit, owner's policy of title insurance without arbitration provisions in the amount of the Exchange Value, showing fee title to the City Parcel vested solely in Floit, with all property taxes and assessments shown as paid, and subject to removal of the following exceptions shown on Schedule B of that certain Preliminary Report dated September 26, 20 II, issued by Stewart Title of California, Inc. with respect to the Property ("Cit)' Title Report"),attached hereto as Exhibit D: tTN~l:Rtf~Qfi:R~2i.-CE:1'_tIQN.~J-r{Il:IIjU~g~6~lj (collectively, "Floit's Title Policy"). The premium for the Floil's Title Policy and any endorsements required by Floit shall be charged to City and F10it as described in Section 8. I (a)(3). Floit may require, as a Floit's Condition Precedent to the Closing, that City execute an estoppel agreement and/or a subordination agreement in a form acceptable to Floit, confirming that, as of the Closing, (a) the City shall have no further interest in the City Parcel or any portion thereof or any improvements thereon. 2. No New Liens or Exceptions. Floit hereby objects to any and all liens and exceptions to title,not shown on the Floit Title Report. Further, during the period commencing on the Effective Date and continuing until the Closing, City agrees it shall not cause any new or modified lien or encumbrance to title to become of record against the City Parcel, unless such lien or encumbrance is approved in writing by Floil. Each and every new lien or encumbrance shall be subject to Floil's prior written consent and unless and until 7 18-186 approved by Floit shall be deemed a disapproved exception to title that shall be removed by City at City's sole cost as a condition to Closing. ARTICLE IV. DELIVERY OF PROPERTY DOCUMENTS 4.1 Floit's Delivery of Property Documents. Within three (3) business days after delivery of the Notice of Election, Floit shall deliver to City complete, true, and legible copies of the following items (collectively, "Floit Property Documents"): a. Copies of tax bills, including assessments, if any. b. Proof of Floits' authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by City and the Title Company. c. Each and every contract, agreement, license and lease relating to and/or affecting the Floit Parcel, specifying which of such contracts, agreements, licenses, and/or leases are anticipated to bind City or affect the Floit Parcel following the Close of Escrow, if any. 4.2 City's Delivery of City Documents. Within three (3) business days after receipt of the Notice of Election, City shall deliver to Floit complete, true, and legible copies of the following items (collectively, "City Property Documents"): a. Copies of tax bills, including assessments, if any. b. Proof of City's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Floit and the Title Company. c. Each and every contract, agreement, license and lease relating to and/or affecting the City Parcel, specifying which of such contracts, agreements, licenses, and/or leases are anticipated to bind Floit or affect the City Parcel following the Close of Escrow, if any. ARTICLE V. DUE DILIGENCE 5.1 City's a. Right of Entrv. I. Entry for Inspection and Testing. From and after the Effective Date through the earlier to occur of the termination of this Agreement or the Closing Date, Floit shall permit City, and City's employees, agents, consultants and contractors to enter upon the Floit Parcel during normal business hours, provided 24 hours prior notice has been given to Floit, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as City in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports; environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of adverse soils conditions, adverse groundwater conditions, asbestos, lead based paint, 8 18-187 and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, "Tests"). 2. Conditions to Right of Entry for Tests. As a condition to conducting any Tests, City shall (i) prior to entry, notify Floit not less than 24 hours in advance of the purpose of the intended entry and provide to Floit the names and affiliations of the entity or person(s) entering the Floit; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Floit Parcel; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the Floit Parcel free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the Floit Parcel for such Tests performed by or on behalf of City; (v) City to maintain, or City to cause to be maintained by City's contractor(s), workers' compensation insurance on all persons entering the Property for such Tests in the amounts required by the State of California; (vi) City to maintain, or City to cause to be maintained by City's contractor who will be entering the Floit Parcel, commercial general liability insurance policy with a financially responsible insurance company (or as to City its membership in a joint powers insurance authority with comparable coverage) covering any and all liability of City and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the Floit Parcel, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly repair any and all damage to the Floit Parcel from such Tests caused by City, its agents, employees, contractors, or consultants and return the Floit Parcel to its original condition (subject to the Tests conducted) following City's entry. City shall indemnify, defend, and hold harmless Floit and its agents from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of City, its agents, contractors, consultants, and employees upon the Floit Parcel for and related to such entry and Tests or from City's failure to comply with the conditions to City's entry onto the Floit Parcel for such Tests. Such indemnity shall survive the Close of Escrow or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the Floit Parcel and/or the Tests. b. Due Diligence Notice. I. City's Due Diligence Notice, City shall notify Floit in writing on or before a date that is [INSERT # of Days] following the opening of Escrow ("Contingency Date") of City's approval or disapproval in its sole and absolute discretion of the Floit Property Documents and of the condition of the Floit Parcel as disclosed by the Tests ("City's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action Floit would be required to take to remediate or cure the objectionable matters to City's satisfaction. I. Failure to Provide, Provided that Floit has delivered the Floit Property Documents to City within the time set forth in Section 4, I, City's failure to deliver the City's Due Diligence Notice on or before the Contingency Date shall be deemed City's disapproval of the Floit Property Documents and condition of the Floit Parcel. In such event of City's failure to deliver its City's Due Diligence Notice, then such failure shall be deemed City's election to terminate this Agreement. 9 18-188 2. Floit's Response Notice. In the event City timely delivers its City's Due Diligence Notice disapproving any Floit Property Documents or any condition of the Floit Parcel, Floit shall have ten (10) days from receipt of City's Due Diligence Notice to deliver written notice to City ("Floit's Response Notice") of Floit's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable conditions at its sole cost prior to the Close of Escrow; or (iii) correct and/or remediate all objectionable conditions at its sole cost prior to the Close of Escrow. I. Election to Terminate. If Floit' s Response Notice informs City of Floit' s ejection to terminate Escrow (choice (i) in subsection 5.1(b)(2) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights or obligations hereunder. Floit's failure to deliver Floit's Response Notice shall be deemed Floit's election to terminate this Agreement (choiCe (i) of subsection 5.1(b)(2) above) and the parties shall have no further rights or obligations hereunder. 11. Election to Correct Some Objectional Conditions. If Floit's Response Notice informs City of Floit's election to correct certain of the objectionable conditions (choice (ii) in subsection 5.I(b)(2) above), then City shall have the right, by a second written notice delivered to Floit within five (5) days after City's receipt of the Floit's Response Notice, to agree to accept the Floit Parcel subject to one or more of the objectionable conditions that Floit will not correct ("City's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that City is willing to accept, in which event Floit may elect, in its sole discretion, to either; (A) Accept City's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the exchange of the Floit Parcel to City, with City taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credit against the Purchase Price (subject to Floit's correction of certain conditions to be corrected as listed in Floit's Response Notice). The correction of and/or completion of the remediation or removal of objectionable conditions listed in the Floit's Response Notice shall be deemed to be one of the City's Conditions Precedent to Closing under Section 6.1 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed; or (B) Reject City's Second Due Diligence Notice and terminate the Escrow. Ill. Election to Correct All. If Floit's Response Notice informs City of Floit's election to correct all of the objectionable conditions (choice (iii) in subsection 5.1 (b )(2) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of City's Conditions Precedent to Closing under Section 6.1 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. 10 18-189 5.2 Floits's a. Right of Entrv. I. Entry for Inspection and Testing. From and after the Effective Date through the earlier to occur of the termination of this Agreement or the Closing Date, City shall permit Floit~ and Floit's employees, agents, consultants and contractors to enter upon the City Parcel during normal business hours, provided 24 hours prior notice has been given to Floit, for the purpose of conducting any physical and legal inspections, investigations, assessments, tests, and studies as Floit in its sole discretion elects to make or obtain, including, but not limited to, investigations with regard to zoning, building codes and other governmental regulations; engineering tests; surveying; soils, seismic and geologic reports; environmental audits, inspections and studies; environmental investigation or other invasive or subsurface testing; and any other physical or legal inspections and/or investigations, including without limitation the presence, release, and/or absence of adverse soils conditions, adverse groundwater conditions, asbestos, lead based paint, and/or Hazardous Materials, as hereinafter more fully defined and described (collectively, "Tests"). 2. Conditions to Right of Entry for Tests. As a condition to conducting any Tests, Floit shall (i) prior to entry, notify City not less than 24 hours in advance of the purpose of the intended entry and provide to City the names and affiliations of the entity or person(s) entering the City Parcel; (ii) conduct all Tests in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the City Parcel; (iii) comply with applicable laws and governmental regulations in conducting such Tests; (iv) keep the City Parcel free and clear of materialmen's liens, lis pendens and other liens arising out of entry onto the City Parcel for such Tests performed by or on behalf of Floit; (v) Floit to maintain, or Floit to cause to be maintained by Floit's contractor(s), workers' compensation insurance on all persons entering the City Parcel for such Tests in the amounts required by the State of California; (vi) Floit to maintain, or Floit to cause to be maintained by Floit's contractor who will be entering the City Parcel, commercial general liability insurance policy with a financially responsible insurance company covering any and all liability of Floit and its agents, contractors, consultants and employees, with respect to or arising out of the Tests conducted at the City Parcel, written on a per occurrence and not claims made basis in a combined single limit of not less than One Million Dollars ($1,000,000); and (vii) promptly repair any and all damage to the City Parcel from such Tests caused by Floit, its agents, employees, contractors, or consultants and return the City Parcel to its original condition (subject to the Tests conducted) following Floit's entry. Floit shall indemnify, defend, and hold harmless City, its officials, officers, employees, agents, and volunteers from and against any and all loss, cost, liability or expense (including reasonable attorneys' fees) arising from the entry(ies) of Floit, its agents, contractors, consultants, and employees upon the City Parcel for and related to such entry and Tests or from Floit's failure to comply with the conditions to Floit's entry onto the City Parcel for such Tests. Such indemnity shall survive the Close of Escrow or the termination of this Agreement for any reason, but shall be limited to actions and inactions arising from and related to such entry onto the City Parcel and/or the Tests. b. Due Diligence Notice. II 18-190 I. Floit's Due Diligence Notice. Floit shall notify City in writing on or before a date that is @};ERT#;ofDaYli] following the opening of Escrow ("Contingency Date") of Floit's approval or disapproval in its sole and absolute discretion of the City Property Documents and of the condition of the City Parcel as disclosed by the Tests ("Floit's Due Diligence Notice"). Any disapproval shall state the matters objected to and the action City would be required to take to remediate or cure the objectionable matters to Floit's satisfaction. I. Failure to Provide. Provided that City has delivered the City Property Documents to Floit within the time set forth in Section 4.2, Floit's failure to deliver the Floit's Due Diligence Notice on or before the Contingency Date shall be deemed Floit's disapproval of the City Property Documents and condition of the City Parcel. In such event of Floit's failure to deliver its Floit's Due Diligence Notice, then such failure shall be deemed Floit's election to terminate this Agreement. 2. City's Response Notice. In the event Floit timely delivers its Floit's Due Diligence Notice disapproving any City Property Documents or any condition of the City Parcel; City shall have ten (10) days from receipt of Floit's Due Diligence Notice to deliver written notice to "Floit ("City's Response Notice") of City's election in its sole and absolute discretion to any of the following: (i) decline to remediate all such conditions and to terminate Escrow and this Agreement; or (ii) correct and/or remediate certain (but not all) of the objectionable conditions at its sole cost prior to the Close of Escrow; or (iii) correct and/or remediate all objectionable conditions at its sole cost prior to the Close of Escrow. I. Election to Terminate. If City's Response Notice informs Floit of City's election to terminate Escrow (choice (i) in subsection 5.2(b)(2) above) rather than remediate all or certain objectionable conditions, then this Agreement shall immediately terminate and the parties shall have no further rights" or obligations hereunder. City's failure to deliver City's Response Notice shall be deemed City's election to terminate this Agreement (choice (i) of subsection 5.2(b)(2) above) and the parties shall have no further rights or obligations hereunder. 11. Election to Correct Some Objectional Conditions. If the City's Response Notice informs Floit of City's election to correct certain of the objectionable conditions (choice (ii) in subsection 5.2(b)(2) above), then Floit shall have the right, by a second written notice delivered to City within five (5) days after Floit's receipt of the City Response Notice, to agree to accept the City Parcel subject to one or more of the objectionable conditions that City will not correct ("Floit's Second Due Diligence Notice"), which notice shall list the objectionable conditions remaining that Floit is willing to accept, in which event City may elect, in its sole discretion, to either; (A) Accept Floit's Second Due Diligence Notice and proceed to correct the objectionable conditions listed in its notice and proceed with the exchange of the City Parcel to Floit, with Floit taking at the Close of Escrow subject to such remaining objectionable conditions without any adjustment to or credits due Floit (subject to City's correction of certain conditions to be corrected as listed in City's Response Notice). The correction of and/or completion of the 12 18-191 remediation or removal of objectionable conditions listed in the City's Response Notice shall be deemed to be one of the Floit's Conditions Precedent to Closing under Section 6.2 below, and Floit and City shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow those certain conditions to be corrected and completed; or (B) Reject Floil's Second Due Diligence Notice and terminate the Escrow. Ill. Election to Correct All. If City's Response Notice informs Floit of City's election to correct all of the objectionable conditions (choice (iii) in subsection 5.2(b)(2) above), then the completion of the correction and/or remediation or other removal of all objectionable conditions shall be deemed to be one of Floit's Conditions Precedent to Closing under Section 6.2 below, and City and Floit shall exercise good faith efforts to agree in writing on an extended Closing Date, if necessary, to allow all conditions to be corrected and completed. ARTICLE VI. CONDITIONS PRECEDENT TO THE CLOSE OF ESCROW 6. I City's Conditions Precedent. The Closing and City's obligation to transfer the City Parcel to Floit and to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "City's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for City's benefit only. a. No Termination as a Result of Floil's Due Diligence Review. This Agreement shall not have terminated pursuant to any provision in Section 5.2, above or as a result of City's review and inspection of title to, the Property Documents relating to, and the Tests on the Floit Parcel. b. Floit Title. Floit shall have fee title to the Floit Parcel. c. Citv's Title Policv. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide City's Title Policy for the Property upon the Closing, in accordance with Section 3.2(a)(1). d. Reoresentations and Warranties. All representations and warranties of Floit contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. e. No Floit Default. As of the Closing, there shall be no Floit Default under this Agreement. f. Termination of Agreements: Vacancv of Prooertv. Except to the extent expressly disclosed in writing to City (and approved by City) in Exhibit E, Floit shall have terminated any and all contracts affecting and/or relating to the Floit Parcel and any and all leases and licenses for space at the Floit Parcel, and all tenants, licensees, or other occupants shall have permanently vacated the Property. Floit shall cause to be removed and/or terminated, at Floit's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting the Floit Parcel, except to the extent such instruments are permitted and approved by City pursuant to Sections 3.2(a)(1) and 5.1 above and as expressly disclosed to City in Exhibit E. 13 18-192 g. Deliverv of Funds and Documents. Floit shall have delivered all documents and other items described in Section 4.1. 6.2 Floit's Conditions Precedent. The Closing and Floit's obligation to transfer the title of the Floit Parcel to the City and consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Floit's Conditions Precedent") on or before the Closing Date or such earlier time as provided for herein, which are for Floit's benefit only: a. No Termination as a Result of City's Due Diligence Review. This Agreement shall not have terminated pursuant to any provision in Section 5.1, above or as a result of City's review and inspection of title to, the Property Documents relating to, and the Tests on the Floit Parcel. b. City Title. City shall have fee title to the City Parcel. c. Floits's Title Policv. The Title Company shall, upon payment of Title Company's regularly scheduled premium, have agreed to provide Floit's Title Policy for the City Parcel upon the Closing, in accordance with Section 3.2(b). d. Representations and Warranties. All representations and warranties of City contained in this Agreement shall be true and correct in all respects as of the Effective Date and as of the Closing. e. No Citv Default. As of the Closing, there shall be no City Default under this Agreement. f. Termination of Agreements: Vacancv of Propertv. Except to the extent expressly disclosed in writing to Floit (and approved by Floit) in Exhibit F, City shall have terminated any and all contracts affecting and/or relating to the City Parcel and any and all leases and licenses for space at the City Parcel, and all tenants, licensees, or other occupants shall have permanently vacated the City Parcel. City shall cause to be removed and/or terminated, at City's sole cost and expense, any and all contracts, agreements, leases, licenses and easements relating to and/or affecting' the City Parcel, except to the extent such instruments are permitted and approved by Floit pursuant to Sections 3.2(b)(l) and 5.2 above and as expressly disclosed to Floit in Exhibit F. g. Delivery of Funds and Documents. City shall have delivered all documents and other items described in Section 4.2. 6.3 Waiver. City may at any time or times, at its election in its sole and absolute discretion, waive any of the City's Conditions Precedent set forth in Section 6.1, but any such waiver shall be effective only if contained in a writing signed by City and delivered to Floit and Escrow Holder. Floit may at any time or times, at its election in its sole and absolute discretion, waive any of the Floit's Conditions Precedent set forth in Section 6.2 above, but any such waiver shall be effective only if contained in a writing signed by Floit and delivered to City and Escrow Holder. 6.4 Termination. In the event that each ofthe City's Conditions Precedent set forth in Section 6.1 is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by City pursuant to Section 6.3, and provided there is no City Default under this Agreement, City may at its option terminate this Agreement and the Escrow opened hereunder. 14 18-193 In the event each of the Floil's Conditions Precedent set forth in Section 6.2 is not fulfilled by the Outside Closing Date, or such earlier time period as provided for herein or waived by Floit pursuant to Section 6.3, and provided there is no Floit Default under this Agreement, Floit may at its option terminate this Agreement and the Escrow opened hereunder. Notwithstanding the foregoing, if Escrow is not in a position to close due toa party's failure to deposit into Escrow any documents or funds required for the Closing of Escrow, the non-defaulting party shall not have the right to terminate this Agreement without first having given the defaulting party notice of the default and five (5) days to cure the default, with the understanding that it is the parties' desire that this Agreement not terminate as a result of a technicality such as a party's inadvertent failure to timely make a deposit of a document or money into Escrow. No termination under this Agreement shall release either party then in default from liability for such default. In the event this Agreement is terminated, (i) all documents and funds delivered by Floit to City or Escrow Holder shall be returned immediately to Floit, provided there is no Floit Default, and likewise (ii) all documents and funds delivered by City to Floit or Escrow Holder shall be returned immediately to City. 6.5 Costs. If Escrow fails to close due to a party's default or breach, the defaulting or breaching party shall pay all Escrow Cancellation Charges. If Escrow fails to close for any other reason, each party shall pay one-half of all Escrow Cancellation Charges. The term "Escrow Cancellation Charges" shall mean all fees, charges and expenses actually charged by Escrow Holder and the Title Company to the parties in connection with the cancellation of the Escrow and the title order, if any. ARTICLE VII. DELIVERIES TO ESCROW 7. I Floit's Deliveries to Escrow Holder. At least two (2) business days prior to the Closing Date, except as to possession of the Floit Parcel, which shall be delivered as of Closing, Floit shall deposit or cause to be deposited with Escrow Holder the following items, duly executed and, where appropriate, acknowledged: a. Floit's Charges. Immediately available funds in the amount necessary to pay Floil's Charges' as set forth in Section 8.I(a). ' b. Grant Deed. The Grant Deed for the Floit Parcel in the form attached hereto as Exhibit G ("Grant Deed"), duly executed by Floit and acknowledged, c. Certificate of Acceptance. One (I) original Certificate of Acceptance, related to the City Parcel, executed by Floit to be attached to the Grant Deed for the City Parcel. d. Estoppel/Subordination Agreement.' The Estoppel/Subordination Agreement in a form approved by City, in City's' sole and exclusive discretion, duly executed by Floit and acknowledged. e. Licenses. Certificates. and Permits. To the extent the same are within the actual or constructive knowledge of, or in the possession, custody or control of, Floit and are applicable and/or transferable to City, all original licenses, certificates and permits pertaining to the Floit Parcel and beneficial for, or necessary for, or affecting the use or occupancy thereof. 15 18-194 f. FIRPT AI Tax Exemption Forms. To the extent applicable, Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit H ("FIRPTA Certificate") (unless Floit is a "foreign person," as defined in Section 1445 in the Internal Revenue Code of 1986), together with any necessary tax withholding forms, and a duly executed California Form 593- C, as applicable ("California Exemption Certificate"). In the event Floit does not qualify for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code, as evidenced by the delivery at Closing of the California Exemption Certificate duly executed by Floit, Title Company shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of City for payment to ihe California Franchise Tax Board in accordance with Section II(d) hereof. In the event Floit is not exempt from such withholding or does not otherwise deliver the California Exemption Certificate at Closing, City shall execute and deliver three (3) originals of California Form 597 to Title Company at or immediately after Closing. g. Tax Pavments. Any tax payments required under law and in accordance with obligations related to encumbrances or other provisions of this Agreement. h. Authoritv. Such proof of Floil's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by City and the Title Company. I. FinaI' Escrow Instructions. Floit's final written Escrow instructions to close Escrow In accordance with the terms of this Agreement. J. Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. 7.2 City's Deliveries to Escrow. At least two (2) business days prior to the Closing Date, City shall deposit or cause to be deposited with Escrow Holder the following, each duly executed and acknowledged, by City as appropriate: a. Citv Charges. Immediately available funds in the amount necessary to pay City's Charges as set forth in Section 8.1 (b). b. Grant Deed. The Grant Deed in the form attached hereto as Exhibit I ("Grant Deed"), duly executed by City and acknowledged. c. Certificate of Acceptance. One (1) original Certificate of Acceptance, related to the Floit Parcel, executed by City to be attached to the Grant Deed for the Floit Parcel. d. Estoppel/Subordination Agreement. The Estoppel/Subordination Agreement in a form approved by Floit, in City's sole and exclusive discretion, duly executed by City and acknowledged. e. Licenses. Certificates. and Permits. To the extent the. same are within the actual or constructive knowledge of, or in the possession, custody or control of, City and are applicable and/or transferable to Floit, all original licenses, certificates and permits pertaining 16 18-195 to the City Parcel and beneficial for, or necessary for, or affecting the use or occupancy thereof. f. FIRPTA/Tax Exemption Forms. To the extent applicable, Transferor's Certification of Non Foreign Status in the form attached hereto as Exhibit H ("FIRPTA Certificate") (unless City is a "foreign person," as defined in Section 1445 in the Internal Revenue Code of 1986), together with any necessary tax withholding forms, and a duly executed California Form 593- C, as applicable ("California Exemption Certificate"). g. Tax Pavments. Any tax payments required under law and in accordance with obligations related to encumbrances or other provisions of this Agreement. h. Authority. Such proof of City's authority and authorization to enter into this Agreement and to consummate this transaction as may be reasonably requested by Floit and the Title Company. I. Final Escrow Instructions. City's final written Escrow instructions to close Escrow In accordance with the terms of this Agreement, J. Further Documents or Items. Any other documents or items reasonably required to cause the Closing of the transaction contemplated by this Agreement as determined by the Escrow Holder. . ARTICLE VIII. ESCROW HOLDER 8.1 Escrow Holder Authorization. Escrow Holder is authorized to and shall pay, charge and perform the following: a. Floit Charges. The charges set forth in this Section 8.1 (a) are herein referred to as the "Floil's Charges. " I. Removal of Title Exceptions. Pay and charge Floit for any amount necessary to cause the removal of any title matters that Floit agreed to remove pursuant to Section 3.2(a) and to convey fee simple, marketable title pursuant to the requirements of this Agreement. 2. Encumbrances. Pay and charge Floit for any unpaid delinquent property. taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the Floit Parcel 3. Title Insurance. Pay and charge Floit for any additional title coverage requested by Floit, including the difference berween a CL T A standard owner's policy (which CL T A policy and the endorsements described in Section 3.2(b)(l) are and shall remain City's Charges) and an AL T A extended owner's policy. 4. Recording Fees. Pay and charge Floit all charges for recording the Grant Deed for the City Parcel. 17 18-196 . b. City Charges. The charges set forth in this Section 8.I(b) are herein referred to as the "City's Charges." 1. Removal of Title Exceptions. Pay and charge City for any amount necessary to cause the removal of any title matters that City agreed to remove pursuant to Section 3.2(b) and to convey fee simple, marketable title pursuant to the requirements of this Agreement. 2. Encumbrances. Pay and charge City for any unpaid delinquent property taxes and/or penalties and interest thereon, and for any delinquent assessments or bonds against the City Parcel 3. Title Insurance. Pay and charge City for any additional title coverage requested by City, . including the difference between a CLTA standard owner's policy (which CLTA policy and the endorsements described in Section 3.2(a)(1) are and shall remain Floit's Charges) and an ALTA extended owner's policy. 4. Recording Fees. Pay and charge City all charges for recording the Grant Deed for the Floit Parcel. 8.2 Tax Requirements. Escrow Holder shall prepare and file with all appropriate governmental or taxing authorities a uniform settlement statement, closing statement, tax withholding forms including an IRS 1099 S form, and be responsible for withholding taxes, if any such forms and/or withholding is provided for or required by law. a. California Withholding. In the event Floit does not qualifY for an exemption from California withholding tax under Section 18662 of the California Revenue and Taxation Code ("Tax Code") as evidenced by the delivery to City at Closing of the California Exemption Certificate duly executed by Floit, (i) Escrow Holder shall withhold three and one-third percent (3 1/3%) of the Purchase Price on behalf of City at Closing for payment to the California Franchise Tax Board in accordance with the Tax Code, (ii) City shall deliver three (3) duly executed originals of California Form 597 to Escrow Holder at or immediately after Closing, (iii) two (2) executed originals of California Form 597 shall be delivered by Escrow Holder to Floit, and (iv) on or before the 20th day of the month following the month title to the Property is transferred to City (as evidenced by the recording of the Grant Deed), Escrow Holder shall remit such funds withheld from the Purchase Price, together with one (I) executed original of California Form 597 to the California Franchise Tax Board on behalf of City. City and Floithereby appoint Escrow Holder as a reporting entity under the Tax Code, authorized to withhold and remit the withholding tax contemplated under the Tax Code, together with such other documents required by the Tax Code (including, without limitation, California Form 597), to the California Franchise Tax Board. b. FIRPT A Withholding. If Floit is a "foreign person" under the Foreign Investment in Real Property Transfer Act or an exemption applies, the Escrow Holder shall deduct and withhold from Floil's proceeds ten percent (10%) of the gross sales price and shall otherwise comply with all applicable provisions of the Foreign Investment in Real Property Act and any similar . state act. Floit agrees to execute and deliver Exhibit H, as directed by Escrow Holder, or any instrument, affidavit, and statement, and to perform any act reasonably necessary to comply with the provisions of the Foreign. Investment in Real Property Act and any similar state act and regulation promulgated thereunder. 18 18-197 8.3 Closing Statement. Escrow Holder is instructed to prepare and provide copies of a proposed closing statement and thereafter the final closing statement ("Closing Staiement") to both Floit and City. Escrow Holder shall deliver the estimated Closing Statement to Floit and City no later than three (3) business days prior to the Ciosing Date. 8.4 Escrow Holder Responsibility. The responsibility of the Escrow Holder under this Agreement is limited to Sections 1 through 8, and 12.2 and 12.3, and to its liability under any policy of title insurance issued in regard to this transaction. 8.5 Closing Procedure. On the Closing Date, and provided all of the City's Conditions Precedent and Floit's Conditions Precedent set forth in Sections 6.1 and 6.2, respectively, of this Agreement have been satisfied or waived in writing by the appropriate party (per Section 6.3), Escrow Holder shall immediately close Escrow in the manner and order provided below. 8.6 Recording. Escrow Holder shall cause the Grant Deed for the Floit Parcel and the Grant Deed for the City Parcel to be recorded pursuant to applicable law in San Diego County and obtain conformed copies thereoffor distribution to City and Floil. 8.7 Delivery of Documents. Escrow Ho]der shall deliver documents as follows: a. To Floil. Escrow Holder shall deliver to Floit, a conformed copy of the Grant Deed to the City Parcel, the Title Report, and each 'other document (or copies thereof) deposited into '. Escrow by City pursuant hereto, including, without limitation, those documents referenced in Section 7.2. b. To Citv. Escrow Holder shall deliver to City the original FIRPTA Certificate, the original California Exemption Certificate (as applicable), a conformed copy of the Grant Deed for the Floit Parcel, the Title Report, and each other document (or copies thereof) deposited into Escrow by Floit pursuant hereto, including, without limitation, those documents referenced in Section 7.1. 8.8 Title Company. Escrow Holder shall cause the Tit]e Company to issue the Title Policy for the Floit Parcel to City and, deliver the Title Policy for the City Parcel to Floil. 8.9 Closing Statement. Escrow Holder shall forward to both City and Floit a separate accounting of all funds received and disbursed for each party in the form of the Closing Statement prepared pursuant to Section 8.3. 8.1 OInformational Reports. Escrow Holder shall file any informational reports required by Internal Revenue Code Section 6045( e), as amended. 8.] I Possession. Possession of the Floit Parcel shall be delivered to City and possession of the City Parcel shall be delivered to Floit at the Closing. ARTICLE IX. REPRESENTATIONS AND WARRANTIES 9.] Floit's Representations and Warranties. In consideration of City entering into this Agreement and as an inducement to City to transfer all rights, title, and interests in the 'City Parcel in exchange for the all rights, title, and interests in the Floit Parcel, Floit makes the following 19 18-198 representations and warranties as of the Effective Date and continuously as of the Closing, each of which is material and is being relied upon by City (and the truth and accuracy of which shall constitute a condition precedent to City's obiigations hereunder), and all of which shall survive. Closing: a. Floit has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby. b. All requisite action (corporate, trust, partnership or otherwise) has been taken by Floit in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action (including Floil's exercise of its option to purchase the Floit Parcel from the Current Owner) will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any individual, director, manager, shareholder, partner, member, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party shall be required for City to consummate the transaction contemplated by this Agreement. c. In this regard, if applicable, Floit shall deliver or cause delivery to City of true and complete copies of each requisite action or authorization (corporate, trust, partnership or otherwise) that has been taken by Floit or will be taken (immediately after taking such action prior to Clo.sing) when in connection with entering into this Agreement and execution of the instruments referenced herein. d. The individuals executing this Agreement and the instruments referenced herein on behalf of Floit have the legal power, right and actual authority to bind Floit to the terms and conditions hereof and thereof. e. Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or instruments referenced herein or therein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, lease or other agreement or instrument (a) to which Floit is a party, or (b) that affect the Floit Parcel of which Plait has actual or constructive knowledge, including, but not limited to, any of the Floit Parcel Documents. f. To the best of Floil's actual or constructive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the Floit Parcel or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. g. To the best of Floil's actual or constructive knowledge, there are no actions or proceedings pending or threatened against Floit, before any court or administrative agent in any way connected with or relating to the Floit Parcel, or affecting Floit's ability to fulfill all of its obligations under this Agreement. h. Floit has made no written or oral commitments to or agreements with any governmerital authority or agency materially and adversely affecting the Floit Parcel, or any part thereof, or any interest therein, which will survive the Closing. Floit has entered into no understanding 20 18-199 or agreement with any taxing or assessing authority respecting the imposition or defennent of any taxes or assignments respecting the Floit Parcel. I. To the best of Floil's actual or constructive knowledge, Floit is not in default of its obligations under any contract, agreement or instrument to which Floit is a party pertaining to the Floit Parcel. To the best of Floit's knowledge, no document supplied to City by Floit contains. any untrue statement of a material fact, and to the best of Floit's actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. J. To the best of Floil's actual or constructive knowledge, there are no encroachments onto the Floit Parcel by improvements on any adjoining property, nor do any buildings or improvements located on the Floit Parcel encroach on other properties. k. There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the Floit Parcel for work perfonned or commenced for Floit or on Floil's behalf prior to the Effective Date of this Agreement. Floit agrees to indemnify, defend, and hold City and its elected and appointed officials, officers, employees, contractors, and agents hannless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar lien claims against the Floit Parcel and arising from work perfonned or commenced for Floit or on Floil's behalf at any time prior to Closing. I. Except as may be revealed in the Title Report and the Property Documents for the Floit Parcel delivered to City by Floit, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or management of the Floit Parcel that will be binding upon City or the Floit Parcel after the Closing. There are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the Floit Parcel to which Floit is a party or of which Floit has actual knowledge and/or constructive knowledge. m. Except as revealed in the Title Report and the Floit Parcel Documents delivered to City by Floit, or as listed in Exhibit E attached hereto, there are not any written or oral contracts, leases, licenses, or contractual rights or options to lease, purchase, or otherwise enjoy possession, rights or interest of any nature in and to the Floit Parcel or any part thereof, and except to the extent expressly otherwise agreed by City, no person other than City and Floit shall have any right of possession to the Floit Parcel or any part thereof as of the Closing. n. As of the Effective Date, Floit agrees not to enter into any leases, licenses or easements in the Floit Parcel (or any part thereof), or grant any other rights of access, use or occupancy to the Floit Parcel (or any part thereof) without the prior written approval of City, which may be granted or denied in City's sole and complete discretion. o. Except as revealed in the Title Report and the Property Documents related to the Floit Parcel delivered to City by Floit pursuant to Section 4.1, Floit shall not allow, consent to, or otherwise pennit any encumbrance, lien, or other exception to title to become of record or affect title to the Floit Parcel during the period from the Effective Date through the Closing 21 18-200 Date, unless such encumbrance, lien, or other exception is expressly pre-approved by City in its sole and absolute discretion. p. Neither Floit nor, to the best of Floit's knowledge, any previous owner, tenant, occupant, or user of the Floit Parcel used, generated, released, discharged, stored, or disposed of. any Hazardous Materials on, Linder, in, or about the Floit Parcel, or transported any Hazardous Materials to or from the Floit Parcel. q. To Floit's actual knowledge no Hazardous Materials exist on, under" in or about the Floit Parcel, nor have Hazardous Materials ever bee'n transported to or from the Floit Parcel. r. Until the Closing, Floit shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escrow, immediately give written notice of such fact or condition to City. s. Floit represents to City, and City acknowledges the representation of Floit that Floit has never operated, occupied or developed the Floit Parcel. t. As used herein, the term "actual knowledge" shall mean the actual, current knowledge of Floit and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge due to any notice or other document addressed to and evidenced to have been sent to Floit, and any other document in the Floit's possession and control. 9.2 Subsequent Changes to Floit's Representations and Warranties. If, prior to the Closing, City or Floit should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of Floit set forth herein incorrect or untrue in any respect (collectively, the "Floit Representation Matter"), then the party who, has learned, discovered or become aware of such Floit Representation Matter shall promptly give written notice thereof to the other party and Floit's representations and warranties shall be automatically limited to account for the Floit Representation Matter. City shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to Floit if City reasonably disapproves any such change; provided, however Floit shall first have the opportunity to cure the Floit Representation Matter. If City does not elect to terminate this Agreement, Floit's representation shall be qualified by such Floit Representation Matter and Floit shall have no obligation to City for such Floit Representation Matter. If City does not provide written notice to Floit indicating its approval or disapproval of the change(s), the absence of such notice shall be deemed to be City's disapproval of such changes, and in the event the Floit fails to cure, City shall be deemed to have exercised its right to terminate this Agreement. 9.3 City's Representations and Warranties. In consideration of Floit entering into this Agreement and as an inducement to Floit to transfer all his rights, title, and interests in the Floit Parcel in exchange for all rights, title and interests in the City Parcel, City makes the following representations and warranties as of the date hereof and at and as of the Closing, each of which is material and is being relied upon by Floit, the truth and accuracy of which shall constitute a condition precedent to Floit's obligations hereunder, and all of which shall survive Closing: a. City has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transaction contemplated hereby, subject to this 22 18-201 'representation not becoming effective, unless, until, and subject to this Agreement being placed on an agenda of the City's governing board for consideration and action at a duly noticed, open public meeting of the City's governing board, and, if approved, then such representation shall be effective as of the Effective Date. City's execution of this Agreement after the Effective Date shall be conclusive evidence that City's governing board has approved this Agreement at a duly noticed, open public meeting. b. Subject to 9.3(a) above, as of the Effective Date, all requisite governmental action has been , taken by City in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing Date, no additional consent of any individual, judicial or administrative body, governmental authority or other party shall be required for Floit to consummate the transaction contemplated by this Agreement, subject to no material change in the terms or provisions hereof. c. Subject to 9.3(a) above, as of the Effective Date, the individuals executing and attesting this Agreement and the instruments referenced herein on behalf of City have the legal power, right and actual authority to bind City to the terms and conditions hereof and thereof. d. Neither the execution and delivery of this Agreement and the documents and instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement and the documents and instruments referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreement or instrument to which City is a party or by which any of City's properties are bound. e. To the best of City's actual or constructive knowledge, there are no actions, suits, claims, legal proceedings, or any other proceedings affecting the City Parcel or any portion thereof, at law, or in equity before any court or governmental agency, domestic or foreign. f. To the best of City's actual or constructive knowledge, there are no actions or proceedings pending or threatened against City, before any court or administrative agent in any way connected with or relating to the City Parcel, or affecting City's ability to fulfill all of its obligations under this Agreement. g. City has made no written or oral commitments to or agreements with any governmental authority or agency materially and adversely affecting the City Parcel, or any part thereof, or any interest therein, which will survive the Closing. City has entered into no understanding or agreement with any taxing or assessing authority respecting the imposition or deferment of any taxes or assignments respecting the City Parcel. h. To the best of City's actual or constructive knowledge, City is not in default of its obligations under any contract, agreement or instrument to which City is a party pertaining to the City Parcel. To the best of City's knowledge, no document supplied to Floit by City contains any untrue statement of a material fact, and to the best of City's actual or constructive knowledge no document omits any facts that would be necessary, in the circumstances, to make the document supplied not misleading. 23 18.,.202 l. To the best of City's actual or constructive knowledge, there are no encroachments onto the City Parcel by improvements on any adjoining property, nor do any buildings or improvements located on the City Parcel encroach on other properties. J. There are no mechanics', materialmen's or similar claims or liens presently claimed or which will be claimed against the City Parcel for work performed or commenced for City or on City's behalf prior to the Effective Date ofthis Agreement. City agrees to indemnity, defend, and hold Floit and its officers, employees, contractors, and agents harmless from all costs, expenses, liabilities, losses, charges, and fees, including attorney fees, arising from or relating to any such lien or any similar lien claims against the City Parcel and arising from work performed or commenced for City or on City's behalf at any time prior to Closing. k. Except as may be revealed in the Title Report and the Property Documents for the City Parcel" delivered to Floit by City, there are no undisclosed contracts, licenses, commitments, undertakings or other written or oral agreements for services, supplies or materials concerning the use, operation, maintenance, or management of the City Parcel that will be binding upon Floit or the City Parcel after the Closing. There are no oral contracts or other oral agreements for services, supplies or materials, affecting the use, operation, maintenance or management of the City Parcel to which City is a party or of which City has actual knowledge and/or constructive knowledge. 1. Except as revealed in the Title Report and the City Parcel Documents delivered to Floit by City, or as listed in Exhibit F attached hereto, there are not any written or oral contracts, leases, licenses, or contractual rights or options to lease, purchase, or otherwise enjoy possession, rights or interest of any nature in and to the City Parcel or any part thereof, and except to the extent expressly otherwise agreed by Floit, no person other than Floit and City shall have any right of possession to the City Parcel or any part thereof as of the Closing. m. As of the Effective Date, City agrees not to enter into any leases, licenses or easements in the City Parcel (or any part thereof), or grant any other rights of access, use or occupancy to the City Parcel (or any part thereof) without the prior written approval of Floit, which may be granted or denied in Floit's sole and complete discretion. " n. Except as revealed in the Title Report and the Property Documents related to the City Parcel delivered to Floit by City pursuant to Section 4.2, City shall not allow, consent to, or otherwise permit any encumbrance, lien, or other exception to title to become of record or affect title to the City Parcel during the period from the Effective Date through the Closing Date, unless such encumbrance, lien, or other exception is expressly pre-approved by City in its sole and absolute discretion. o. Neither City nor, to the best of City's knowledge, any previous owner, tenant, occupant, or user of the City Parcel used, generated, released, discharged, stored, or disposed of any Hazardous Materials on, under, in, or about the City Parcel, or transported any Hazardous Materials to or from the City Parcel. p. To City's actual knowledge no Hazardous Materials exist on, under, in or about the City Parcel, nor have Hazardous Materials ever been transported to or from the City Parcel. " 24 18-203 q. Until the Closing, City shall, upon learning of any fact or condition, which would cause any of the warranties and representations in the section not to be true as of the close of Escrow, immediately give written notice of such fact or condition to Floil. r. City represents to Floit, and Floit acknowledges the representation of City that City has never operated, occupied or developed the City Parcel. s. As used herein, the term "actual knowledge" shall mean the actual, current knowledge of City and shall not impose any duty of investigation or inquiry and the term "constructive knowledge" shall mean implied knowledge due to any notice or other document addressed to and evidenced to have been sent to City, and any other document in the City's possession and control. 9.4 Subsequent Changes to City's Representations a~d Warranties. If, prior to the Closing, Floit or City should learn, discover or become aware of any existing or new item, fact or circumstance which renders a representation or warranty of City set forth herein incorrect or untrue in any respect (collectively, the "City's Representation Matter"), then the party who .has learned, discovered or become aware of such City's Representation Matter shall promptly give written notice thereof to the other party and City's representations and warranties shall be automatically limited to account for the City's Representation Matter. Floit shall have the right to approve or disapprove any such change and to terminate this Agreement by written notice to City if Floit reasonably disapproves any such change; provided, however City shall first have the opportunity to cure the City's Representation Matter. If Floit does not elect to terminate this Agreement, City's representation shall be qualified by such City's Representation Matter and City shall have no obligation to Floit for such City's Representation Matter. . 9.5 Conveyance of Parcels in their Existing Condition. As of the Closing Date, and subject to its rights under Article V and the Warranties in Section 9.1 through 9.4, City acknowledges that City will have been given an adequate opportunity to conduct tests at the Floit Parcel, and Floit acknowledges that Floit has been given an adequate opportunity to conduct tests at the City Parcel. Except as otherwise expressly provided in this Agreement and except as required to be disclosed or otherwise action taken pursuant to federal, state or local laws and regulations, Neither Floit nor City make any representation or warranty of any kind as to the physical or environmental condition of the Floit Parcel or the City Parcel, respectively, or in connection with any matter, report or information relating to the condition of the Floit Parcel or the City Parcel, the respective values, fitness, use, zoning, entitlements, the existence of Hazardous Materials thereon, moratoriums, economic feasibility, developability or any other matter relating to Floit's proposed use or development of the City Parcel or City's proposed use or development of the Floit Parcel. ARTICLE X. - COVENANTS DURING ESCROW PERIOD 10.1 Floit's Covenants during Escrow Period. The following are covenants of Floit that shall apply during the Escrow Period: a. New Liens or Encumbrances. Floit shall not further encumber or place any further liens or encumbrances on the Floit Parcel from the Effective Date and during the Escrow period to the Closing Date without the express, prior written authorization of City in its sole and complete discretion. Further, if the City does consent to a new lien or encumbrance, then, 25 18-204 such lien or encumbrance on the Floit Parcel shall not survive the Closing Date, including, but not limited to, right of entry, covenants, conditions, restrictions, easements, liens, options to' purchase, options to lease, leases, tenancies, or other possessory interests or rights of use or rights of entry relating to or affecting the Floit Parcel without the prior written consent of City which consent may be withheld by City in its sole and complete discretion. b. Hazardous Materials. Floit shall not cause or permit the presence, use, generation, release, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any Hazardous Materials to or from, the Floit Parcel; provided, however, the foregoing shall not apply to Hazardous Materials that migrate onto the Floit Parcel from other property or from sources other than Floit or a party acting under the direction or control of Floil. Floit shall comply with all applicable Environmental Laws in Floit's use, ownership and operation of the Floit Parcel. As used in this Agreement, the term "Hazardous Materials" or "Hazardous Material" shall mean any substance, material, or waste which is, or becomes, regulated by any local governmental authority, the State, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140, et. seq., of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 2550 I of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code; Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) friable asbestos, (vii) lead based paint (viii) polychlorinated biphenyls, (ix) methyl tertiary butyl ether, (x) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.c. 91317), (xi) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 D.S.C. 99690I,"et seq. (42 D.S.C. 96903) or (xii) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. 999601, et seq. As used in this Agreement, the term "Environmental Laws" shall mean any state or local law, statute, ordinance or regulation pertaining to environmental regulation, contamination or cleanup of any Hazardous Materials, including, without limitation: (i) Sections 25115, 25117,25122.7 or 25140, et. seq., of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) Section 2550 I of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (vi) Section 1004 of the Resource Conservation and Recovery Act, 42 D.S.C. Sections 6901et seq. (42 U.S.c. Section 6903), (vii) Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq., or (viii) any state or federal lien or "superlien" law, any 26 18-205 environmental cleanup statute or regulation, or any permit, approval,. authorization, license, variance or permission required by any governmental authority having jurisdiction. I. Hazardous Materials Indemnification. Floit agrees to and hereby does indemnify, defend and hold City, .the Chula Vista Redevelopment Agency ("Agency") and the City and their respective officers, employees and agents harmless from and against any claim, action, suit, proceeding, loss, cost, damage, liability, deficiency, fine, penalty, punitive damage, or expense (including, without limitation, attorneys' fees and expert witness fees) (hereinafter collectively referred to as the "Claims"), resulting from, arising out of, or based upon (i) the presence, release, use, generation, discharge, storage, or disposal of any Hazardous Materials on, under, in, or about, or the transportation of any such materials to or from, the Floit Parcel in violation of applicable Environmental Laws, whenever discovered and/or (ii) the environmental, soils, or physical condition of the Floit Parcel, and/or (iii) the violation, or alleged violation, of any statute, ordinance, order, rule, regulation, permit, judgment, or license relating to the presence, use, generation, release, discharge, storage, disposal, or transportation of Hazardous Materials on, under, in, or about, to or from, the Floit Parcel whenever discovered, to the extent the occurrences described in clauses (I), (ii), and (iii) occur or originate from actions or inactions occurring prior to the Closing. This indemnity shall include, without limitation, any Claims for personal injury including sickness, disease or death, tangible or intangible property damage, compensation or lost wages, business income, profits or other economic loss, damage to the natural resource or the environment, nuisance, pollution, contamination, leak, spill, release, or other adverse effect on the environment. This indemnity shall not include any Claim directly resulting from, arising. out of, or based upon the grossly negligent activities of City, it officials, officers, employees, or agents. 10.2 City's Covenants during Escrow Period. City makes the same covenants with' respect to the City Parcel to Floit that shall apply during the Escrow Period as those Floit has made with respect to the Floit Parcel in Section 10.1 above. XI. REMEDIES ILl Floit Default. The term "Floit Default" shall mean Floil's failure to timely perform a material obligation of Floit under this Agreement within five (5) business days following written notice from City describing Floit's failure to perform. In the event of a Floit Default, City, as its sole and exclusive remedies: (i) may terminate this Agreement, or (ii) shall be entitled to the remedy of specific performance. 11.2 City Default. The term "City Default" shall mean City's failure to timely perform a material obligation of City under this Agreement within five (5) business days following written notice from Floit describing City's failure to perform. In the event of a City Default, Floit, as its sole' and exclusive remedies: (i) may terminate this Agreement, or (ii) shall be entitled to the remedy of specific performance. XII. GENERAL PROVISIONS 12.1 Loss or Damage to Improvements. Loss or damage to the Floit Parcel, including any improvements thereon, by fire, other casualty, or acts of God, occurring at any time prior to the 27 18-206 Closing of Escrow shall be at the sole risk of Floit. Loss or damage to the City Parcel, including any improvements thereon, by fire, other casualty, or acts o['God, occurring at any time prior to the Closing of Escrow shall be at the sole risk of City. 12.2 Notices. All notices, demands, requests or other communications required or permitted hereunder (collectively, "Notices") shall be in writing, shall be addressed to the receiving party, and shall be personally delivered, sent by overnight mail (Federal Express or another carrier that provides receipts for all deliveries), or sent by certified mail, postage prepaid, return receipt" requested, to the address listed below: If to Floit: Mid-City, LLC c/o Dan Floit 3565 7th Avenue San Diego. CA 92103 Fax No.: (619) 294-3465 With a copy to: Keeney Waite & Stevens 125 North Acacia Avenue, Suite 101 Solana Beach, CA 92075 Attention: Richard R. Waite Fax No.: (858) 523-2135 Ifto City: City of Chula Vista 276 Fourth Avenue Chula Vista, California 91910 Attention: Jim Sandoval, City Manager_ Fax No.: (619) 409-5997 a. Effective Date of Notices. All Notices shall be effective upon receipt at the appropriate address. Notice of change of address shall be given by written Notice in the manner detailed in this Section. Rejection or other refusal to accept or the inability to deliver because of changed address of which no"Notice in accordance with this Section was given shall be deemed to constitute receipt of such Notice. The providing of copies of Notices to the parties' respective counsels is for information only, is not required for valid Notice and does not alone constitute Notice hereunder. 12.3 Brokers. City and Floit each represent to the other that no brokerage commission, finder's fee or other compensation of any kind is due or owing to any person or entity in connection with this Agreement. Each party agrees to "and does hereby indemnify and hold the other free and harmless from and against any and all costs, liabilities or causes of action or proceedings which may be instituted by any broker, agent or finder, licensed or otherwise, claiming through, under or by reason of the conduct of the indemnifying party in connection with this Agreement. 12.4 Waivers and Consents. Each provision of this Agreement to be performed by City and Floit shall be deemed both a covenant and a condition and shall be a material consideration for Floil's and City's performance hereunder, as appropriate, and any breach thereof by City or Floit shall 28 18-207 be deemed a material default hereunder; provided however that failure of a condition hereunder shall not be deemed or determined to be a default unless such condition is also a covenant. Either party may specifically and expressly waive in writing any portion of this Agreement or any breach thereof, but no such waiver shall constitute a further or continuing waiver of a preceding or succeeding breach of the same or any other provision. A waiving party may at any time thereafter require further compliance by the other party with any breach or provision so waived. The consent by one party to any act by the other for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or any similar acts in the future. No waiver or consent shall be implied from silence or any failure of a party to act, except as otherwise specified in this Agreement. All rights, remedies, undertakings, obligations, options, covenants, conditions and agreements contained in this Agreement shall be cumulative and no one of them shall be exclusive of any other. 12.5 Construction. The parties acknowledge and agree that (a) each party is of equal bargaining strength; (b) each party has actively participated in the drafting, preparation and negotiation of this Agreement; (c) each party has consulted with such party's own independent counsel and such other professional advisors, if at all, as each party has deemed appropriate, relating to any and all matters contemplated under this Agreement; (d) each party and such party's counsel and advisors, if so elected by the party, have reviewed this Agreement; (e) each party has agreed to enter into this Agreement following such review and the rendering of such advice, if so elected by the party; and (I) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. 12.6 Cooperation. City and Floit agree to execute such instruments and documents and to diligently undertake such actions as may be required in order to consummate the purchase and sale herein contemplated and shall use all reasonable efforts to accomplish the Closing in accordance with the provisions hereof. 12.7 Attorney's Fees: ,In the event any declaratory or other legal or equitable action is instituted between Floit, City and/or Escrow Holder in connection with this Agreement, then as between City and Floit the prevailing party shall be entitled to recover from the losing party all of its costs and expenses including court costs and reasonable attorney's fees, and all fees, costs and expenses incurred on any appeal or in collection of any judgment. 12.8 Time. Time is of the essence of every provision herein contained. In the computation of any period of time provided for in this Agreement or by law, the day of the act or event from which said period of time runs shall be excluded, and the last day of such period shall be included, unless it is a Saturday, Sunday, or legal holiday, in which case the period shall be deemed to run until 5:00 p.m. ofthe next day that is not a Saturday, Sunday, or legal holiday. Except as otherwise expressly provided herein, all time periods expiring on a specified date or period herein shall be deemed to expire at 5:00 p.m. on such specified date or period. 12.9 Counterparts; Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall constitute but one and the same instrument. A facsimile signature shall be deemed an original signature. 29 18-208' 12.10 Captions. Any captions to, or headings of, the sections or subsections.of this Agreement are . solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. 12.11 No Obligations to Third Parties. Except as otherwise expressly provided herein, the execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the parties hereto. City 12.12 Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. 12.13 Executive Director Authority. City's Executive Director or his or her designee shall have the authority to sign this Agreement, closing documents, issue interpretations, waive provisions, and enter into amendments of or supplements to this Agreement on behalf of City, so long as such actions do not substantially or substantively change the terms and conditions of the purchase and sale of the Property as set forth herein and as agreed to by the City in its approval of this Agreement. All other waivers or amendments shall require the consideration and written consent of City's governing board. 12.14 Administrative Claims Requirements and Procedures. No suit or arbitration shall be brought arising out of this Agreement, against City unless a claim has first been presented in writing and filed with City and acted upon by City in accordance with the procedures set forth in Chapter 1.34 of the Chula Vista Municipal Code, as same may from time to time be amended, the provisions of which are incorporated by this reference as if fully set forth herein, and such policies and procedures used by City in the implementation of same. Upon request by City, Floit shall meet and confer in good faith with City for the purpose of resolving any dispute overthe terms of this Agreement. 12.15 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 12.16 Exhibits and Schedules. The exhibits and schedules attached hereto are incorporated herein by this reference for all purposes. Exhibit A Legal Description - City Exhibit A-I Diagram - City Exhibit B Legal Description - Floit Exhibit B-1 Diagram - Floit Exhibit C Preliminary Report - Floit Exhibit D Preliminary Report - City Exhibit E List of Current Contracts, Leases and Licenses - Floit 30 18-209 Exhibit F List of Current Contracts, Leases and Licenses - City Exhibit G Grant Deed - Floit Exhibit H FIRPTA Certificate Exhibit I Grant Deed -.City 12.17 Entire Agreement. This Agreement supersedes any prior agreements, negotIatIOns and communications, oral or written, and contains the entire agreement between, and the final expression of, City and Floit with respect to the subject matter hereof. The parties hereto expressly agree and confirm that this Agreement (along with the Interim Operating Agreement and the Exhibits hereto) is executed without reliance on any oral or written statements, representations or promises of any kind, which are not expressly contained in this Agreement. No subsequent agreement, representation or promise made by either party hereto, or by or to an employee, officer, agent or representative of either party hereto shall be of any effect unless it is in writing and executed by the party to be bound thereby. 12.18 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. 12.19 Assignment. Floit may not assign its interest in this Agreement without the prior written consent of the City. The City's Executive Director is authorized, on behalf of the City, to assign the City's interest in this Agreement to the City of Chula Vista, the Redevelopment Agency of the City of Chula Vista, or Floit at any time, without obtaining Floit's consent but after written notice to Floit of such Assignment. 12.20 Nondiscrimination. There shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (I) of subdivision (P) of. Section 12955, and Section 12955.2 of the Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure, or enjoyment of the Property, nor shall the grantee or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Property. The foregoing covenants shall run with the land. . 12.21 Like-Kind Exchange. If either party desires to enter into a like kind exchange pursuant to Internal Revenue Code Section 1031, the other party agrees to reasonably cooperate with same, provided that the party desiring such exchange bears all costs related thereto. [NEXT PAGE IS SIGNATURE PAGE] 31 18-210 SIGNATURE PAGE FOR OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement and Joint Escrow Instructions as of the day and year first written above. "FLOIT" Mid-City, LLC, a California limited liability . company By: Dan Floit, Managing Member "CITY" CITY OF CHULA VISTA, a chartered municipal corporation By: Cheryl Cox, Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 32 18-211 Acceptance by Escrow Holder: r 1, on behalf of Escrow Holder, hereby acknowledges that Escrow Holder has received a fully executed. copy of the foregoing Purchase and Sale Agreement and Joint Escrow Instructions by and between Mid-City, LLC, a California limited liability company, as Floit, and the City of Chula Vista, a chartered municipal corporation, as City, and agrees to act as Escrow Holder thereunder and to be bound by and strictly perform the terms thereof as such terms apply to Escrow Holder. ,2011 Dated: [NAME AND COMPANY] Escrow Holder 18-212 EXHffilT A . LEGAL DESCRIPTION - CITY PARCEL All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: [Insert legal description] EXHIBIT A LEGAL DESCRIPTION - CITY Option Agreement 18-213 EXHIBIT A-I DIAGRAM - CITY PARCEL [Insert DIAGRAM] EXHIBIT A-I DIAGRAM Option Agreement 18-214 EXHffiIT B LEGAL DESCRIPTION - FLOIT PARCEL All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: [Insert Legal Description] 18-215 EXHmIT B-1 DIAGRAM - FLOIT PARCEL [INSERT DIAGRAM] EXHIBIT B-1 DIAGRAM - FLOIT Option Agreement 18-216 Option Agreement EXIllBIT C PRELIMINARY REPORT - FLOIT PARCEL [REPORT ATTACHED] EXHlBIT C PRELIMINARY REPORT - FLOIT 18-217 ~!~~erf "'~'" \w ' ON' Stewart Title of California, Inc 7676 Hazard Center Dr., 14th Floor San Diego, CA 92108 (619) 692-1600 Phone PRELIMINARY REPORT Order Number Title Unit Number Your File Number Buyer/Borrower Name: Seller Name: 319222 7034 VOYG11 Dan Floit In response to the above referenced application for a Policy of Title Insurance, Stewart Title of California, Inc, hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referenced to as an Exception on Schedule B or not excluded from coverage pursuant to the printed Schedules, Conditions, and Stipulations of said Policy forms, The printed Exceptions and Exclusions from the coverage and Limitations on covered Risks of said policy or policies are set forth in Exhibit A attached, The policy to be issued .may contain an arbitration clause. When the Amount of Insurance is less than that set forth in.the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CL T A and AL T A Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limits of Liability for certain coverages are also set forth in Exhibit A, Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters, which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. This report, (and any supplements or amendments thereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance a binder or commitment should be requested. Dated as of: September 26, 2011 at 7:30 a.m. Update No. Two Frank Green, Title Officer When replying, please contact Frank Green, Title Officer File Number: 319222 Pagelof8 18-218 . PRELIMINARY REPORT The form of Policy of Title Insurance contemplated by this report is: o California Land Title Association Standard Coverage Policy o American Land Title Association Owners Policy o American Land Title Association Residential Title Insurance Policy o American Land Title Association Loan Policy o CLTAlALTA Homeowners Policy o ALTA Short Form Residential Loan Policy (06/16/07) o 2006 AL T A Loan Policy ~TBD SCHEDULE A The estate or interest in the land hereinafter described or referred to covered by this report is: A Fee Title to said estate or interest at the date hereof is vested in: Dan Floit, a single man \ File Number: 319222 Page 2 of8 18-219 LEGAL DESCRIPTION The land referred to herein is sitnated in the State of California, County of Sa'n Diego, and described as follows: PARCEL 1: LOTS "F", "Q", "R", AND "S" AND THE EAST 580.00 FEET OF LOT "U" OF SWEETWATER ACRES, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAPTHEREOF NO. 1607, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, OCTOBER 21,1913. TOGETHER WITH THAT PORTION OF 40TH STREET ADJOINING LOTS "Q", "R", AND "S" ON THE SOUTH AS VACATED BY THE SAN DIEGO BOARD OF SUPERVISORS BY DOCUMENT RECORDED NOVEMBER 28,1923 IN BOOK 976, PAGE 235, OFFICIAL RECORDS. EXCEPTING THEREFROM: THOSE PORTIONS OF LOTS "A", "B", "D", "E", "F", "R", "S" AND "U" OF SWEETWATER ACRES, ACCORDING TO MAP THEREOF NO. I 607 FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, OCTOBER 21,1913, TOGETHER WITH THAT PORTION OF QUARTER SECTION 125, RANCHO DE LA NACION, ACCORDING TO MAP THEREOF NO. 166 FILED MAY 1 I, 1869, IN SAID RECORDER'S OFFICE, SAID PORTIONS DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING TO SAID MAP 166; THENCE ALONG THE SOUTHERLY LINE OF SAID QUARTER SECTION 126 SOUTH 72013'01" WEST, 187.25 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH . 1704 I '02" WEST, 1,000.93 FEET; THENCE SOUTH 36039' 58" WEST 16.86 FEET; THENCE SOUTH 25048'58" WEST, 145.00 FEET; THENCE SOUTH 30012'58" WEST, 134.56 FEET; THENCE SOUTH 30000'58" WEST, 87.75 FEET; THENCE SOUTH 31054'58" WEST 190.12 FEET TO THE NOR THEASTERL Y CORNER OF THAT LAND DESCRIBED IN DEED TO ROBERT H. WERDEN AND NANCY L. AMITIN, RECORDED JANUARY 28,1965 AS INSTRUMENT NO. 16169 OF OFFICIAL RECORDS; THENCE ALONG THE EASTERLY LINE OF SAID WERDEN'S LAND SOUTH 1704 I '02" EAST, 107.03 FEET; THENCE LEAVING SAID EASTERL YLINE, NORTH 80002'00" EAST, 46.81 FEET THENCE SOUTH 49028'03" EAST 714.58 FEET; THENCE NORTH 17039'45" WEST 107.31 FEET TO THE SOUTHERLY LINE OF SAID QUARTER SECTION 126; THENCE ALONG SAID SOUTHERLY LINE, NORTH 72013'01" EAST, 0.25 FEET TO THE TRUE POINT OF BEGINNING. PARCEL 2: ALL THAT PORTiON OF THE NORTH 5 ACRES OF THE EAST HALF OF THE EAST HALF OF 80 ACRE LOT I OF QUARTER SECTION 125 LYING WEST OF A LINE DRAWN PARALLEL WITH AND 187.50 FEET AT RIGHT ANGLES WESTERLY FROM THE EASTERLY LINE OF SAID QUARTER SECTION 125, RANCHO DE LA NACION, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 166 BY MORRILL, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, MAY 11, 1869. EXCEPTING THEREFROM: THOSE PORTIONS OF LOTS "A", "B", "D", "E", "F", "R", "S" AND "u" OF SWEETWATER ACRES, ACCORDING TO MAP THEREOF NO. .1607, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, OCTOBER 21, 1913, TOGETHER WITH THAT PORTION OF QUARTER File Number: 319222 Page 3 of8 18-220 SECTION 125, RANCHO DE LA NACION, ACCORDING TO MAP THEREOF NO. 166 FILED MAY 11, 1869 IN SAID RECORDER'S OFFICE, SAID PORTIONS DESCRIBED AS FOLLOWS: BEGINNING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING TO SAID MAP 166; THENCE ALONG THE SOUTHERLY LINE OF SAID QUARTER SECTION 126 SOUTH 72013'01" WEST, 187.25 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH 17041 '02" WEST, 1,000.93 FEET; THENCE SOUTH 36039'58" WEST 16.86 FEET; THENCE SOUTH 25048'58" WEST, 145.00 FEET; THENCE SOUTH 30012'58" WEST, 134.56 FEET; THENCE SOUTH 30000'58" WEST, 87.75 FEET; THENCE SOUTH 31054'58" WEST 190.12 FEET TO THE NORTHEASTERLY CORNER OF THAT LAND DESCRIBED IN DEED TO ROBERT H. WERDEN AND NANCY L. AMITIN, RECORDED JANUARY 28,1965 AS INSTRUMENT NO. 16169 OF OFFICIAL RECORDS; THENCE ALONG THE EASTERLY LINE OF SAID WERDEN'S LAND SOUTH 17041 '02" EAST, 107.D3 FEET; THENCE LEAVING SAID EASTERLY LINE, NORTH 80002'00" EAST, 46.81 FEET THENCE SOUTH 49028'03" EAST 714.58 FEET; THENCE NORTH 17039'45" WEST 107.31 FEET TO THE SOUTHERLY LINE OF SAID QUARTER SECTION 126; THENCE ALONG SAID SOUTHERLY LINE, NORTH 72013'01" EAST, 0.25 FEET TO THE TRUE POINT OF BEGINNING. APN: 563-350-12-00; 566-132-55-00 (End of Legal Description) File Number: 319222 Page4of8 18-221 SCHEDULE B At the date hereof, exceptions to coverage in addition to the printed exceptions and exclusions contained in said policy or policies would be as follows: Taxes: A. Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes, to be levied for the fiscal year 2011 - 2012. B. Assessments, if any, for Community Facilities Districts or a Mello-Roos District affecting said land which may exist by virtue of assessment maps or notices filed by said districts. Said assessments are collected with the County Taxes. C. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California. Exceptions: 1. An easement or right of way for the construction and maintenance of flumes, canals or aqueducts, conveyed by deed from Frank A. Kimball and Warren G. Kimball to Kimball Brothers Water Company, a Corporation, dated June 9,1869 and recorded October 14,1869, in Book 7, Page 124 of Deeds. The interest of said grantee in and to said easement passed of record to the California Water and Telephone Company, a Corporation. Said deed does not contain the location of said easement. 2. The effect of the following recital or the Map of said Tract: 'That portion designated as Lot "U" is not offered for dedication and is intended to be used as a Street for the purchasers of the property abutting thereon" . 3., The fact that the ownership of said land does not include rights of access to or from a public street or highway abutting said land, such rights having been severed from said land by the document recorded September 28,1971 as Instrument/File No. 220985 of Official Records, which affects the freeway. 4. An easement for the purpose shown below and rights incidental thereto as set forth in a document: Grantee: The State of California Purpose: highway construction purposes Recorded: September 28, 1971, as Instrument No. 220986, Official Records Affects: the land 5. An easement for the purpose shown below and rights incidental thereto as set forth in a document: Grantee: Spring Valley Sanitation District Purpose: sewer lines Recorded: September 28, 1971, as Instrument No. 221351, Official Records Affects: the land 6. The fact that said land lies within the boundaries of the Merced Chula Vista Redevelopment Project Area as disclosed by instrument recorded May 26, 2004 as File No. 04-483936 of Official Records. File Number: 319222 Page 5 of8 . 18-222 7. The fact that said land lies within the boundaries of the Chula Vista Redevelopment Agency's Merged Town Centre II original, Town Centre II Amended, Otay Valley, Southwest original, Southwest amended, 2004 added area Redevelopment Project Area as disclosed by instrument recorded December 24,2007 as File No. 2007-0789482 of Official Records. Said document was re-recorded February 6, 2008 as Instrument/File No. 08-0060017 of Official Records. 8. Lack of a right of access to and from the land. 9: Please be advised that our search did not disclose any open deeds oftrust of record. If you should have knowledge of any outstanding obligation, please contact your title officer immediately for further review. 10. Matters which may be disclosed by an inspection or by a survey of said land satisfactory to this Company, or by inquiry of the parties in possession thereof. II. Rights of parties in possession. (End of Exceptions) File Number: 319222 Page 6 of8 18-223 NOTES AND REQUIREMENTS Property taxes for the fiscal year 2010 - 2011 shown below are paid. For proration purposes the amounts are: I" Installment: $2,837.90 . 20' Installment: $2,837:90 Parcel No.: 563-350-12-00 Code Area: 01272 Said matter affects: Parcell. Property taxes for the fiscal year 2010 - 201"1 shown below are paid. For proration purposes the amounts are: I" Installment: $4,282.72 20' Installment: $4,282.72 Parcel No.: 566-132-55-00 Code Area: 01271 Said matter affects: Parcel 2. A. There are no conveyances affecting said land, recorded with the County Recorder within 24 months of the date of this report. B. The Company is not aware of any matters which would cause it to decline to attach CLT A Endorsement ]00 and I ]6, indicating that there is located on said land a (Vacant Land), to an extended coverage policy. File Number: 319222 Page 7 0[8 18-224 CALIFORNIA "GOOD FUNDS" LAW California Insurance Code Section ]2413.1 regulates the disbursement of escrow and sub-escrow funds by title companies. The law requires that funds be deposited in the title company escrow account and available for withdrawal prior to disbursement. Funds received by Stewart Title of California, Inc. via wire transfer may be disbursed upon receipt. Funds received via cashier's checks or teller checks drawn on a California Bank may be disbursed on the next business day after the day of deposit. If funds are received by any other means, recording and/or disbursement may be delayed, and you should contact your title or escrow officer. All escrow and sub-escrow funds received will be deposited with other escrow funds in one or more non- Interest bearing escrow accounts in a financial institution selected by Stewart Title of California, Inc.. Stewart Title of California, Inc. may receive certain direct or indirect benefits from the financial institution by reason of the deposit of such funds or the maintenance of such accounts with the financial institution, and Stewart Title of California, Inc. shall have no obligation to account to the depositing party in any manner for the value of, or to pay to such party, any benefit received by Stewart Title of California, Inc.. Such benefits shall be deemed additional compensation to Stewart Title of California, Inc. for its services in connection with the escrow or sub-escrow. If any check submitted is dishonored upon presentation for payment, you are authorized to notify all principals and/or their respective agents of such nonpayment. File Number: 319222 Page8of8 18-225 Option Agreement EXHIBIT D PRELIMINARY REPORT - CITY PARCEL [REPORT ATTACHED] EXHIBIT D PRELIMINARY REPORT - CITY 18-226 ~!~~e!"f '"ii'> .. w ~ 0"0' .' e"," Stewart Title of California, Inc 7676 Hazard Center Dr., 14th Floor San Diego, CA 92108 (619) 692-1600 Phone Order Number Title Unit Number PRELIMINARY REPORT 390948 7034 BuyerlBorrower Name: . Seller Name: Property Address: The City of Chula Vista Eastlake Drive, Chula Vista, California In response to the above referenced application for a Policy of Title Insurance, Stewart Title of California, Inc. hereby reports that it is prepared to issue, or cause to be issued, as of the date hereof, a Policy or Policies of Title Insurance describing the land and the estate or interest therein hereinafter set forth, insuring against loss which may be sustained by reason of any defect, lien or encumbrance not shown or referenced to as an Exception on Schedule B or not excluded from coverage pursuant to the printed Schedules, Conditions, and Stipulations of said Policy forms. The printed Exceptions and Exclusions from the coverage and Limitations on covered Risks of said policy or policies are set forth in Exhibit A attached. The policy to be issued may contain an arbitration clause. When the Amount of Insurance is less than ihat set forth in the arbitration clause, all arbitrable matters shall be arbitrated at the option of either the Company or the Insured as the exclusive remedy of the parties. Limitations on Covered Risks applicable to the CLTA and ALTA Homeowner's Policies of Title Insurance which establish a Deductible Amount and a Maximum Dollar Limits of Liability for certain coverages are also set forth in Exhibit A. Copies of the policy forms should be read. They are available from the office which issued this report. Please read the exceptions shown or referred to below and the exceptions and exclusions set forth in Exhibit A of this report carefully. The exceptions and exclusions are meant to provide you with notice of matters, which are not covered under the terms of the title insurance policy and should be carefully considered. It is important to note that this preliminary report is not a written representation as to the condition of title and may not list all liens, defects, and encumbrances affecting title to the land. . This report, (and any supplements or amendments thereto) is issued solely for the purpose of facilitating the issuance of a policy of title insurance and no liability is assumed hereby. If it is desired that liability be assumed prior to the issuance of a policy of title insurance a binder or commitment should be requested. Dated as of: July 7,2011 at 7:3Q a.m. Frank Green, Title Officer When replying, please contact Rhonda Bernardini, Escrow Officer Stewart Title of Califorrtia, Inc. 7676 Hazard Center Dr. 14th Floor San Diego, CA 92108 (619) 692-1600 File Number: 390948 Page I 0[9 18-227 PRELIMINARY REPORT The form of Policy of Title Insurance contemplated by this report is: o California Land Title Association Standard Coverage Policy o American Land Title Association Owners Policy o American Land Title Association Residential Title Insurance Policy o American Land Title Association Loan Policy o CL T AI AL T A Homeowners Policy o AL T A Short Form Residential Loan Policy (06/I 6/07) 02006 ALTA Loan Policy SCHEDULE A The estate or interest in the land hereinafter described or referred to covered by this report is: Fee Title to said estate or interest at the date hereof is vested in: The City of Chula Vista, a Municipal Corporation File Number: 390948 Page 2 of9 18-228 . LEGAL DESCRIPTION The land referred to herein is situated in the State of California, County of San Diego, and described as follows: THOSE PORTIONS OF THE SOUTHWEST QUARTER OF SECTION 27 AND OF THE NORTHWEST QUARTER OF SECTION 34 IN TOWNSHIP 17 SOUTH, RANGE I WEST, SAN BERNARDINO MERIDIAN, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, L YING EASTERLY OF THE WESTERLY LINE OF THE 120 FOOT WIDE EASEMENT DESCRIBED IN FINAL ORDER OF CONDEMNATION RECORDED APRIL 5, 1983 AS DOCUMENT NO 107938 OF OFFICIAL RECORDS, AND LYING WESTERLY OF THE WESTERLY LINE OF PARCEL MAP NO. 13883, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 26, 1985 EXCEPTING THAT PORTION LYING WITHIN EASTLAKE DRIVE AS DEDICATED ON MAP NO. 11403, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY. ALSO EXCEPTING THEREFROM THOSE PORTIONS THEREOF CONVEYED TO THE STATE OF CALIFORNIA BY DEEDS RECORDED MAY 22, 2003 AS FILE NO 2003-0604639 AND 2003-0604642, BOTH OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION OF LAND CONVEYED TO THE STATE OF CALIFORNIA BY DOCUMENT RECORDED NOVEMBER 16,2007 AS INSTRUMENT NO 2007- 0723402 AND 2007-0723403, BOTH OF OFFICIAL RECORDS. APN 595-070-74-00; 595-070-75-00 (End of Legal Description) File Number: 390948 Page3of9 18-229 ., SCHEDULE B At the date hereof, exceptions to coverage in addition to the printed exceptions and exclusions contained in said policy or policies would be as follows: Taxes: A. General and special city and/or county taxes, bonds or assessments which may become due on said land, if and when title to said land is no longer vested in a governmental or quasi-governmental agency. Tax 'parcel(s) for said land are currently shown as 595-070-74-00. B. General and special city and/or county taxes, bonds or assessments which may become due on said land, if and when title to said land is no longer vested in a governmental or quasi-governmental agency. Tax parcel(s) for said land are currently shown as 595-070-75-00. C. Assessments, if any, for Community Facilities Districts or a Mello-Roos District affecting said land which may exist by virtue of assessment maps or notices filed by said districts. Said assessments are collected with the County Taxes. D. The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (commencing with Section 75) of the Revenue and Taxation Code of the State of California. Exceptions: 1. An easement for road and rights incidental thereto in favor of the Southern California Mountain Water Company as set forth in a document recorded May 22,1906, in Book 389, Page 261, of Deeds. The exact location of the easement is not disclosed by the instrument. 2. Covenants, conditions, and restrictions as set forth in instrument recorded December 28,1939, in Book 981, Page 173, of Official Records, but omitted any covenant, condition or restriction, if any, based on race, color, religion, sex, handicap, familial status or natiol!al ofigin unless and only to the extent that the Covenant, condition or restriction; (a) is exempt under title 42 of the united states code; or (b) relates to handicap, but does not discriminate agairist handicapped persons. Note: section 12956.1 of the government code provides the following: if this document contains any restrictions based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to section 12956.1 of the government code. Lawful restrictions under state and federal law on the age of occupants in senior housing or for older persons shall not be construed as . restrictions based on familial status. Said Covenants, Conditions, and Restrictions provide that a violation thereof shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value. 3. An easement for construction, maintenance and operation and rights incidental thereto in favor of San Diego Gas and Electric Company as set forth in a document recorded April 15, 1983 as InstrumentlFile No. 83-107938, of Official Records, affects as described therein. The terms and provisions contained in the document entitled "Joint Use Agreement", recorded File Number: 390948 Page 4 0[9 18-230 August 14, 1986 as InstrumentlFile No, 86-348494, of Official Records, 4, A document entitled "Ordinance No, 2102", recorded June 5, 1985 as file no, 85-198858 of Official Records, 5, Covenants, conditions, and restrictions as set forth in instrument recorded January 8,1986 as lnstrument No, 86-008611, Official Records, but omitted any covenant, condition or restriction, if any, based on race, color, religion, sex, handicap, familial status or national origin unless and only to the extent that the Covenant, condition or restriction; (a) is exempt under title 42 of the united states code; or (b) relates to handicap, but does not discriminate against handicapped persons, Note: section 12956,1 of the government code provides the following: if this document contains any restrictions based on race, color, religion, sex, familial status, marital status, disability, national origin, or ancestry, that restriction violates state and federal fair housing laws and is void, and may be removed pursuant to section 12956.1 of the government code. Lawful restrictions under state and federal law on the age of occupants in senior housing or for older persons shall not be construed as restrictions based on familial status. Said Covenants, Conditions, and Restrictions provide that a violation thereof shall not defeat or render invalid the lien of any mortgage or deed of trust made in good faith and for value. Said Covenants, Conditions and Restrictions have been modified by an instrument, recorded May 22, 2003 as lnstrumentlFile No. 2003-0604617, of Official Records. 6. An easement for public utilities easement and rights incidental thereto in favor of San Diego Gas and Electric Company as set forth in a document recorded June 4, 1986 as InstrumentlFile No. 86- 222570, of Official Records. The exact location of the easement is not disclosed by the instrument. 7. An easement for a drain sewer and rights incidental thereto in favor of the City of Chula Vista as set forth in a document recorded September 4, 1986 as lnstrumentlFile No. 86-388614, of Official Records, affects as described therein. 8. A document entitled "Authorization For Encroachment [n City Right Of Way Permit No. PE-355", recorded February 26, 1996 as file no. 1966-0090537 of Official Records. Resolution No. 18194 of the City Council of the City of Chula Vista approving Encroachment Permit No. PE-355 for banners placed on street light standards in Eastlake, recorded February 26, 1996 as Instrument/File No. 1996-0090548, of Official Records. 9. The fact that the ownership of said land does not include rights of access to or from a public street or highway abutting said land, such rights having been severed from said land by the document recorded May 22, 2003 as lnstrumentlFile No. 2003-0604639, of Official Records, which affects freeway. 10. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the document recorded May 22, 2003 as InstrumentlFile No. 2003-0604639, of Official Records. 11. The fact that the ownership of said land does not include rights of access to or from a public street or highway abutting said land, such rights having been severed from said land by the document File Number: 390948 Page 5 of9 18-231 recorded May 22, 2003 as InstrumenUFile No. 2003-0604642, of Official Records, which affects freeway. 12. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as ,contained in the document recorded May 22, 2003 as InstrumentfFile No. 2003-0604642, of Official Records. 13. The fact that the ownership of said land does not include rights of access to or from a public street or highway abutting said land, such rights having been severed from said land by the document recorded November 16,2007 as InstrumentlFile No.' 20070723402, of Official Records, which affects freeway. 14. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the document recorded November 16, 2007 as Instrument/File No. 20070723402, of Official Records. IS. The fact that the ownership of said land does not include rights of access to or from a public street or highway abutting said land, such rights having been severed from said land by the document recorded November 16,2007 as Instrument/File No. 2007-0723403, of Official Records, which affects freeway. 16. A waiver of any claims for damages by reason of the location, construction, landscaping or maintenance of a contiguous freeway, highway, roadway or transit facility as contained in the .document recorded November 16, 2007 as InstrumentlFile No. 20070723403, of Official Records. 17. A claim of Mechanic's Lien recorded July 1,2009 as InstrumentlFile No. 20090361516, of Official Records, by Otay River Constructors (A joint venture comprised of Washington Group International, Inc.) and Fluor Enterprises, Inc., Claimant, in the amount of $145,476,376.00, and any other amounts due thereunder. A claim of Mechanic's Lien recorded September 3, 2009 as InstrumentfFile No. 20090496933, of Official Records, by Otay River Constructors (A joint venture comprised of Washington Group International, Inc. and Flour Enterprises, Inc.), Claimant, in the amount of $145,476,376.00, and any other amounts due thereunder. A notice of pendency of action to foreclose a mechanic's lien filed by Otay River Constructors, a joint venture of Washington Group International, Inc. and Flour Enterprises, Inc. Plaintiff, against South Bay Expressway, L.P., California Transportation Ventures, Inc., State of California and its Department of Transportation; Bank Leumi USA, California Commercial Asphaalt, LLC, a California National Bank, a National Banking Association; Chicago Title Company, as trustee, City of Chula Vista; City of San Diego; Commonwealth Land Title Company, as trustee, County of San Diego; CoxCom, Inc. d/b/a Cox Communications, San Diego; Eastlake Village West Association; First American Title Company, as trustee; General Electric Capital Corporation; Pacific bell Telephone Company; the Eastlake Company LLC; San Diego County Water Authority; McMillan Otay Ranch LLC;' Otay Land Company, LLC; San Diego Gas & Electric Company; Sunroad Otay Partners, LP; VWE LLC; Wells Fargo Bank, National Association, as Collateral Agent, on behalf of various lenders, including, Banco Bilbao Vizcaya Argentaria, S.A., DEPFA Bank pIc, and the United States Department of Transportation, acting through the Federal Highway Administration; and does I through 100 Defendant, Case No. 37-2009-00098972-CU-OR-CTL, in the Superior Court of San Diego County, recorded September 25,2009 as InstrumentlFile No. 20090535138, of Official Records. File Number: 390948 Page6of9 18-232 Nole: Thiscompany will require a NOlice of Withdrawal as to said Lis Pendens. 18. Please be advised that our search did not disclose any open deeds of trust ofrecord. If you should have knowledge of any outstanding obligation, please contact your title officer immediately for further review. 19. Rights of tenants in possession of said land by reason of unrecorded leases. Kindly forward said lease, or a current certified tenant rent roll. 20. Rights or claims of parties in possession and easements or claims of easements not shown by the public records, boundary line disputes overlaps, encroachments, and any matters not of record, which would be disclosed by an accurate survey, and inspection of the land. 21. Matters which may be disclosed by an inspection or by a survey of said land satisfactory to this Company, or by inquiry of the parties in possession thereof. 22. Rights of parties in possession. (End of Exceptions) File Number: 390948 Page 7 of9 18-233 NOTES AND REQUIREMENTS This Company will require the following documents, in order to insure a conveyance or encumbrance by the corporation or unincorporated association named below: Entity: The City of Chula Vista (a) A copy of the corporation By-Laws or Articles. (b) An original or certified copy of the Resolution authorizing the subject transaction. (c) If the Articles or By-Laws require approval by a "parent" organization, we will also require a copy of those By-Laws or Articles. (d) If an unincorporated association, a statement pursuant to applicable law (such as California Corporation Code Section 20002). The right is reserved to add requirements or additional items after completion of such review. File Number: 390948 Page8of9 18-234 CALIFORNIA "GOOD FUNDS" LAW Califorma Insurance Code Section 12413.1 regulates the disbursement of escrow and sub-escrow funds by title companies. The law requires that funds be deposited in the title company escrow account and available for withdrawal prior to disbursement. Funds received by Stewart Title of California, Inc. via wire transfer may be disbursed upon receipt. Funds received via caspier's checks or teller checks drawn on a California Bank may be disbursed on the next business day after the day of deposit. If funds are received by any other means, recording and/or disbursement may be delayed, and you should contact your title or escrow officer. All escrow and sub-escrow funds received will be deposited with other escrow funds in one or more non- interest bearing escrow accounts in a financial institution selected by Stewart Title of California, Inc.. Stewart Title of California, Inc. may receive certain direct or indirect benefits from the financial institution by reason of the deposit of such funds or the maintenance of such accounts with the financial institution, and Stewart Title of California, Inc. shall have no obligation to account to the depositing party in any manner for the value of, or to pay to such party, any benefit received by Stewart Title of California, Inc.. Such benefits shall be deemed additional compensation to Stewart Title of California, Inc. for its services in connection with the escrow or sub-escrow. If any check subrnitted is dishonored upon presentation for payment, you are authorized to notify all principals and/or their respective agents of such nonpayment. Wire Instructions I If you anticipate having funds wired to Stewart Title of California, Inc., our wiring information is as follows: Additional Note: Direct wire transfers to: Union Bank 530 "B" Street San Diego, CA 92101 Routing Number: 122-000-496 Credit to Stewart Title of California, Inc. Account Number: 9120054632 Reference Order Number: 390948 Title Unit Number: 7034 Title Officer Name: Frank Green Wheu instructing the financial institution to wire funds, it is very important that you reference Stewart Title of California, Inc.' s order number. Should you have any questions in this regard please contact your title officer immediately. File Number: 390948 Page 9 0[9 18-'235 4 4STG Privacy Notice 1 (Rev 01126/09) Stewart Title Companies WHAT DO THE STEWART TITLE COMPANIES DO WITH YOUR PERSONAL INFORMATION? Federal and applicable state law and regulations give consumers the right to limit some but not all sharing. Federal and applicable state law regulations also require us to tell you how we collect, share, and protect your personal information. Please read this notice carefully to understand how we use your personal information. This privacy notice is distributed on behalf of the Stewart Title Guaranty Company and its affiliates (the Stewart Title Companies), pursuant to Title V of the Gramm-Leach-Bliley Act (GLBA). The types of personal information we collect and share depend on the product or service that you have sought through us. This information can include social security numbers and driver's license number. All financial companies, such as the Stewart Title Companies, need to share customers' personal information to run their everyday business-to process transactions and maintain customer accounts. In the section below, we list the reasons that we can share customers' ersonal information; the reasons that we choose to share; and whether ou can limit this sharing. For our everyday business purposes- to process your transactions and maintain your account. This may include running the business and managing customer accounts, such as .processing transactions, mailing, and auditing services, and responding to court orders and legal investigations. I For our marketing purposes- to offer our products and services to you. I For joint marketing with other financial companies For our affiliates' everyday business purposes- information about your transactions and experiences. Affiliates are companies related by common ownership or control. They can be financial and nonfinancial companies. Our affiliates may include companies with a Stewal1 name; financial companies, such as Stewart Title Company I For our affiliates' everyday business purposes- information about your ! creditworthiness. i For our affiliates to market to you , , I For nonaffiliates to market to you. Nonaffiliates are companies not related by I common ownership or control. They can be financial and nonfinancial companies. , Yes No Yes No No We don't share Yes No No We don't share Yes No No We don't share We may disclose your personal information to our affiliates or to nonaffiliates as permitted by law. If you request a transaction with a nonaffiliate, such as a third party insurance company, we will disclose your personal information to that nonaffiliate. [We do not control their subsequent use of information, and suggest you refer to their privacy notjces.] How often do the Stewart Title Companies notify me about their practices? We must notify you about our sharing practices when you request a transaction. How do the Stewart Title Companies protect my personal information? To protect your personal information from Wlauthorized access and use, we use security measures that comply with federal and state law. These measures include computer, file, and buildino- safe uards. How do the Stewart Title Companies collect my personal information? We collect your personal information, for example, when you . request insurance-related services . provide such information to us We also collect your personal infonnation from others, such as the real estate agent or lender involved in your transaction, credit reporting agencies, affiliates or other companies. What sharing can I limit? Although federal and state law give you the right to limit sharing (e.g., opt out) in certain instances, we do not share your personal infonnation in those instances, If you have any questions about this privacy notice, please contact us at: Stewart Title Guaranty Com any, 1980 Post Oak Blvd., Privacy Officer, Houston, Texas 77056 File No.: 390948 18-236 CL T A Preliminary Report Form Exhibit A (Revised 02-05-10) CALIFORNIA LAND TITLE ASSOCIA TION STANDARD COVERAGE POLICY -1990 EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason o.f: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building or zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to CD the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien, or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. . . 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledg~. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or for the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with the applicable doing business laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate of interest insured by this policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency or similar creditors' rights laws. Rev. 02-05-10 Pagelof9 18-237 CL T APreliminary Report Form EXCEPTIONS FROM COVERAGE - SCHEDULE B, PART I This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments' which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests, or claims which are not shown by the public records but which could be ascertained by an . inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. CLTA HOMEOWNER'S POLICY OF TITLE INSURANCE (01101108) ALTA HOMEOWNER'S POLICY OF TITLE INSURANCE EXCLUSIONS In addition to the Exceptions in Schedule B, You are not insured against loss, costs, attorneys' fees, and expenses resulting from: 1. Governmental police power, and the existence or violation of those portions of any law or government regulation concerning: a. b. c. d. buildino" , 0' zoning; land use; improvements on the Land; land di\'ision; and environmental protection. e. f. This Exclusion does not limit the coverage described in Covered Risk 8.a., 14, 15, 16, 18, 19, 20, 23 or 27. 2. The failure of Your existing structures, or any part of them, to be constructed in accordance with applicable building codes. This Exclusion does not limit the coverage described in Covered Risk 14 or 15. 3. The right to take the Land by condemning it. This Exclusion does not lirrllt the coverage described in Covered Risk 17. Rev. 02-05-10 Page 2 of9 18-238 CLT A PRELIMINARY REPORT FORM 4. Risks: a. that are created, allowed, or agreed to by You, whether or not they are recorded in the Public Records; b. that are Known to You at the Policy Date, but not to Us, unless they are recorded in the Public Records at the Policy Date; c. that result in no loss to You; or d. that first occur after the Policy Date - this does not limit the coverage described in Covered Risk 7, S.e., 25,26,27 or 28. 5. Failure to pay value for Your Title. 6. Lack of a right: a. to any land outside the area specifically described and referred to in paragraph 3 of Schedule A;. and b. in streets, alleys, or waterways that touch the Land. This Exclusion does not limit the coverage described in Covered Risk 11 or 21. LIMITATIONS ON COVERED RISKS Your insurance for the following Covered Risk~ is limited on the Owner's Coverage Statement as follows: . For Covered Risk 16, 18, 19, and 21 Your Deductible Amount and Our Maximum Dollar Limit of Liability shown in Schedule A. The deductible amounts and maximum dollar limits shown on Schedule A are as follows: Your Deductible Amount Our Maximum Dollar Limit of Liabilitv Covered Risk 16: 1 % of Policy Amount Shown in Schedule A or $2,500.00 $10,000.00 (whichever is less) Covered Risk 18: 1 % of Policy Amount Shown in Schedule A or $5,000,00 $25,000.00 (whichever is less) Covered Risk 19: 1 % of Policy Amount Shown in Schedule A or $5,000.00 $25,000.00 (whichever is less) Covered Risk 21: 1 % of Policy Amount Shown in Schedule A or $2,500.00 $5,000.00 (whichever is less) ALTA LOAN POLICY (10-17-92) WITH ALTA ENDORSEMENT-FORM I COVERAGE EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the,effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. Rev. 02-05-10 Page 30f9 18-239 CLTA PRELIMINARY REPORT FORM (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy (except to the extent that this policy insures the priority of the lien of the insured mortgage over any statutory lien for services, labor or material or to the extent insurance is afforded herein as to assessments for street improvements under construction or completed at Date of Policy); or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable doing business laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction e\'idenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any statutory lien for services, labor or materials (or the claim of priority of any statutory lien for services, labor or materials over the lien of the insured mortgage) arising from an improvement or work related to the land which is contracted for and commenced subsequent to Date of Policy and is not financed in whole or in I part by proceeds of the indebtedness secured by the insured mortgage which at Date of Policy the insured has advanced or is obligated to advance. 7. Any claim, which arises out of the transaction creating the interest of the mortgagee insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the interest of the insured mortgagee being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the subordination of the interest of the insured mortgagee as a result of the application of the doctrine or equitable subordination; or (iii) the transaction creating the interest of the insured mortgagee being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgement or lien creditor. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: Rev. 02-05-10 Page 40f9 18-240 CLTA PRELIMINARY REPORT FORM EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. 2006 ALTA LOAN POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will n?t pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, permit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) the occupancy, use; or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion I (a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion I (b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights of eminent domain. This Exclusion does not. modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created. suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk II, 13 or 14); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Insured Mortgage. Rev. 02-05-10 Page 5 of9 18-241 CL T A PRELIMINARY REPORT FORM 4. Unenforceability of the lien of the Insured Mortgage because of the inability or failure- of an Insured to comply with applicable doing-business laws of the state where the Land is situated. 5. Invalidity or unenforceability in whole or in part of the lien of the Insured Mortgage that arises out of the transaction evidenced by the Insured Mortgage and is based upon usury or any consumer credit protection or truth-in-Iending law. 6. Any claim, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that the transaction creating the lien of the Insured Mortgage, is (a) a fraudulent conveyance or fraudulent transfer, or (b) a preferential transfer for any reason not stated in Covered Risk 13(b) of this policy. 7. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the Insured Mortgage in the Public Records. This Exclusion does not modify or limit the coverage provided under Covered Risk II(b). The above policy fonn may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also .include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys. fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency that may result in taxes or assessments, or notices of such proceedings, wh,ether or not shown by the records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown by the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbrances, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. ' 6. Any lien or right to a lien for services, lahar or material not shown by the public :records. ALTA OWNER'S POLICY (10-17-92) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restricting, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a v~olation or alleged violation affecting the land has been recorded in the public records at Date of Policy. Rev. 02-05-10 Page 6 of9 18-242 CLT A PRELIMINARY REPORT FORM (b) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice ofa defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not. recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the estate or interest insured by this policy. 4. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws, that is based on: (i) the transaction creating the estate or interest insured by this policy being deemed a fraudulent conveyance or fraudulent transfer; or (ii) the transaction creating the estate or interest insured by this policy being deemed a preferential transfer except where the preferential transfer results from the failure: (a) to timely record the instrument of transfer; or (b) of such recordation to impart notice to a purchaser for value or a judgement or lien creditor. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage Policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: 1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes 9r assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests or claims which are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens?r encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey wo~ld disclose, and which are not shown by the public records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b) or (c) are shown by the public records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. Rev. 02-05-10 Page 7 of9 18-243 CLTA PRELIMli'lARY REPORT FORM 2006 ALTA OWNER;S POLICY (06-17-06) EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy, and the Company will not pay loss or damage, costs, attorneys' fees, or expenses that arise by reason of: 1. (a) Any law, ordinance, pennit, or governmental regulation (including those relating to building and zoning) restricting, regulating, prohibiting, or relating to (i) . the occupancy, use, or enjoyment of the Land; (ii) the character, dimensions, or location of any improvement erected on the Land; (iii) the subdivision of land; or (iv) environmental protection; or the effect of any violation of these laws, ordinances, or governmental regulations. This Exclusion l(a) does not modify or limit the coverage provided under Covered Risk 5. (b) Any governmental police power. This Exclusion 1 (b) does not modify or limit the coverage provided under Covered Risk 6. 2. Rights-of eminent domain. This Exclusion does not modify or limit the coverage provided under Covered Risk 7 or 8. 3. Defects, liens, encumbrances, adverse claims, or other matters (a) created, suffered, assumed, or agreed to by the Insured Claimant; (b) not Known to the Company, not recorded in the Public Records at Date of Policy, but Known to the Insured Claimant and not disclosed in writing to the Company by the Insured Claimant prior to the date the Insured Claimant became an Insured under this policy; (c) resulting in no loss or damage to the Insured Claimant; (d) attaching or created subsequent to Date of Policy (however, this does not modify or limit the coverage provided under Covered Risk 9 and 10); or (e) resulting in loss or damage that would not have been sustained if the Insured Claimant had paid value for the Title. 4. Any claim, by reason of the operation of federal bankruptcy, state insolvency.' or similar creditors' rights laws, that the transaction vesting the Title as shown in Schedule A, is (a) a fraudulent conveyance or fraudulent transfer; or (b) a preferential transfer for any reason not stated in Covered Risk 9 of this policy. 5. Any lien on the Title for real estate taxes or assessments imposed by governmental authority and created or attaching between Date of Policy and the date of recording of the deed or other instrument oftransfer in the Public Records that vests Title as shown in Schedule A. The above policy form may be issued to afford either Standard Coverage or Extended Coverage. In addition to the above Exclusions from Coverage, the Exceptions from Coverage in a Standard Coverage policy will also include the following Exceptions from Coverage: EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) that arise by reason of: 1. (a) Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the Public Records; (b) proceedings by a public agency Rev. 02-05-10 Page 8 of9 18-244 CLTA PRELIMINARY REPORT FORM that may result in taxes or assessments, or notices of such proceedings, whether or not shown by the . records of such agency or by the Public Records. 2. Any facts, rights, interests, or claims that are not shown in the Public Records but that could be ascertained by an inspection of the Land or that may be asserted by persons in possession of the Land. 3. Easements, liens or encumbranc~s, or claims thereof, not shown by the Public Records. 4. Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the Title that would be disclosed by an accurate and complete land survey of the Land and that are not shown by the Public Records. 5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the Public Records. 6. Any lien or right to a lien for services, labor or material not shown by the public records. Rev. 02-05-10 Page 9 of9 18-245 EXffiBIT "A" LEGAL DESCRIPTION Order No.: 390948 Escrow No: 390948 The land referred to herein is situated in the State of California, County of San Diego, and described as follows: THOSE PORTIONS OF THE SOUTHW~ST QUARTER OF SECTION 27 AND OF THE NORTHWEST QUARTER OF SECTION 34 IN TOWNSHIP 17 SOUTH, RANGE I WEST, SAN BERNARDINO MERIDIAN, IN THE CITY OF CHULA VISTA, COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO THE OFFICIAL PLAT THEREOF, LYING EASTERLY OF THE WESTERLY LINE OF THE 120 FOOT WIDE EASEMENT DESCRIBED IN FINAL ORDER OF CONDEMNATION RECORDED APRIL 5, 1983 AS DOCUMENT NO 107938 OF OFFICIAL RECORDS, AND LYING WESTERLY OF THE WESTERLY LINE OF PARCEL MAP NO. 13883, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 26, 1985 EXCEPTING THAT PORTION LYING WITHIN EASTLAKE DRIVE AS DEDICATED ON MAP NO. 11403, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY. ALSO EXCEPTING THEREFROM THOSE PORTIONS THEREOF CONVEYED TO THE STATE OF CALIFORNIA BY DEEDS RECORDED MAY 22, 2003 AS FILE NO 2003-0604639 AND 2003- 0604642, BOTH OF OFFICIAL RECORDS. ALSO EXCEPTING THEREFROM THAT PORTION OF LAND CONVEYED TO THE STATE OF CALIFORNIA BY DOCUMENT RECORDED NOVEMBER 16,2007 AS INSTRUMENT NO 2007- 0723402 AND 2007-0723403, BOTH OF OFFICIAL RECORDS. APN 595-070-74-00; 595-070-75-00 (End of Legal Description) 18-246 AFFILIATED BUSINESS ARRANGEMENT DISCLOSURE STATEMENT Date: July 14,2011 To: Property: Eastlake Drive Chula Vista, California From: Stewart Title of California, Inc. This is to give you notice that Stewart Title of California, Inc. ("Stewart Title") has a business relationship with Stewart Solutions, LLC, DBA - Stewart Specialty Insurance Services, LLC ("Stewart Insurance"). Stewart Information Services Corporation owns 100% of Stewart Insurance and Stewart Title of California. Because of this relationship, this referral may provide Stewart Title a financial or other benefit. . Set forth below is the estimated charge or range of charges for the settlement services listed. You are NOT required to use the listed provider(s) as a condition for purchase, sale, or refinance of the subject Property. THERE ARE FREQUENTLY OTHER SETTLEMENT SERVICE PROVIDERS A V AILABLE WITH SIMILAR SER VICES. YOU ARE FREE TO SHOP AROUND TO DETERMINE THAT YOU ARE RECEIVING THE BEST SERVICES AND THE BEST RATE FOR THESE SERVICES. Stewart Insurance Settlement Service Charfle or ranfle of charfles Hazard Insurance $400.00 to $6,500.00 Home Warrantv $255.00 to $ 780.00 Natural Hazard Disclosure Renort $ 42.50 to 149.50 ACKNOWLEDGMENT I/we have read this disclosure form, and understand that Stewart Title is referring me/us to purchase the above-described settlement service(s) and may receive a financial or other benefit as the result of this referral. Signature' Signature Or<lor Number: 70J4.J9()l)~8. ABA Oi.dosur~Ti[lc Page 1 of I 18-247 Order No. 390948 A V AILABLE DISCOUNTS DISCLOSURE STATEMENT This is to give you notice that Stewart Title of California, Inc. ("Stewart Title") is pleased to inform you that upon proper qualification, there are premium discounts available upon the purchase of title insurance covering improved property with a one to four family residential dwelling. Such discounts apply to and include: Property located within an area proclaimed a state or federal disaster area; Property purchased from a foreclosing beneficiary or successful bidder at a foreclosure sale; Property being refinanced. Please talk with your escrow or title officer to determine your qualification for any of these discounts. Order Number: 390948 Available Discounts Disclosure Statement 18-248 EXHIBIT E LIST OF CURRENT CONTRACTS. LEASES AND LICENSES - FLOIT PARCEL NONE. EXHIBIT E LIST OF CONTRACTS - FLOIT Option Agreement 18-249 EXIllBIT F LIST OF CURRENT CONTRACTS. LEASES AND LICENSES - CITY PARCEL NONE. EXHIBIT F LIST OF CONTRACTS - CITY Option Agreement 18-250 EXHIBIT G GRANT DEED - FLOIT RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: City ofChula Vista 276 Fourth Avenue Chula Vista,California 91910 Altn: Ci Clerk APN: (Space above this line for Recorder's Use Only) This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, Mid-City LLC, a California Limited Liability Company ("Grantor"), hereby grants to the CITY OF CHULA VISTA, a chartered municipal corporation, fee simple title to that certain real property located in the County of San Diego, State of California, more particularly described on Schedule 1 attached hereto and incorporated herein by this reference. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ,2011. Mid-City LLC By: Dan Floit, Managing Member EXHIBIT G GRANT DEED- FLOIT Option Agreement 18-251 SCHEDULE 1 TO GRANT DEED LEGAL DESCRIPTION All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: PARCEL" A" COMMENCING AT THE SOUTHEASTERLY CORNER OF QUARTER SECTION 126, ACCORDING TO SAID MAP NO. 166; THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID SECTION 126, SOUTH 72013'01" WEST 187.50 FEET; THENCE CONTINUING ALONG SAID SOUTHERLY BOUNDARY, SOUTH 72013'01" WEST 66.46 FEET TO THE SOUTHWESTERLY INTERSTATE 805 RIGHT OF WAY BOUNDARY; THENCE LEAVING SAID SOUTHERLY BOUNDARY AND CONTINUING ON SAID RIGHT OF WAY BOUNDARY NORTH 49028'03" WEST 64.64 FEET TO THE TRUE POINT OF BEGINNING; THENCE CONTINUING ALONG SAID RIGHT OF WAY BOUNDARY NORTH 49028'03" WEST 523.83 FEET TO AN ANGLE POINT ON SAID RIGHT OF WAY BOUNDARY; THENCE CONTINUING ON THE SOUTHERLY INTERSTATE 805 RIGHT OF WAY BOUNDARY SOUTH 80002'00" WEST 46.81 FEET TO THE WESTERLY BOUNDARY OF LOT "F" OF SAID MAP NO. 1607; THENCE ALONG WESTERN BOUNDARY OF LOTS "F" AND "Q" SOUTH 17041'02" EAST 452.12 FEET TO A POINT ON THE WESTERLY BOUNDARY OF LOT "Q"; THENCE LEAVING SAID WESTERLY BOUNDARY NORTH 72013'01" EAST 322.29 FEET TO THE TRUE POINT OF BEGINNING. EXHIBIT G - SCHEDULE I LEGAL DESCRIPTION - FLOIT Option Agreement 18-252 STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , . before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the. within instrument, and acknowledged to me that he/she/they executed the same in hislher/their authorized capacity(ies), and that by hislherltheir 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. Notary Public [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in hislher/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. Notary Public [SEAL] EXHIBIT G CERTIFICATE OF ACKNOWLEDGEMENT Option Agreement 18-253 EXHffiIT G - SCHEDULE 2 CERTIFICATE OF ACCEPTANCE (Grant Deed) This is to certifY that the interest in real property conveyed by the foregoing Grant Deed dated ,2011, executed by MID-CITY, LLC, a California limited liability company, for the benefit of the CITY OF CHULA VISTA, a chartered municipal corporation ("City"), is hereby accepted by the undersigned officer on behalf of Authority pursuant to authority conferred by Resolution of the City adopted on , 2011, and City consents to recordation thereof by its duly authorized officer. Dated: CITY OF CHULA VISTA, a chartered municipal corporation Executive Director EXHIBIT G - SCHEDULE 2 CERTIFICA TE OF ACCEPTANCE Option Agreement 18-254 EXHIBIT H FIRPTA CERTIFICATE TRANSFEROR'S CERTIFICATE OF NON-FOREIGN STATUS To inform the CITY OF CHULA VISTA ("Transferee"), that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as amended ("Code") will not be required upon the transfer of that certain real property to the Transferee by MID-CITY, LLC, a California limited liability company ("Transferor"), the undersigned hereby certifies the following: L The Transferor, Mid-City, LLC, is not a foreign person or citizeo, foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. follows: The Transferor's social security number or U.S. employer identification number is as . .' ~. 3~~~ . for Mid-City, LLC, 0\lt7 -05 g> [insert tax identification number]; 3. The Transferor's home or office address is: c/o Dan Floit 3565 7th Avenue San Diego, CA 92103 The Transferor understands that the Transferee may disclose this certification to the Internal Revenue Service and that any false statement contained herein Co e p d by fine, imprisonment . or both. Under penalty ofpeIjury, I declare that I have ex ed this certificatio and to the best of my knowledge and belief it is true, correct and complete, and further declare that I ave authority to sign this document. MID-CITY~C, a California . By: Dan Floit, Managing Member EXHIBIT H FIRPTA CERTIFICATE ". 18-255 EXHmIT I GRANT DEED - CITY RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: ,........, . .... "" ,CitY of ChulaVista 276 Fourth ),~eiiue 1-, ,,- "_ ',,~~---, Chulli Vista,Calif6inia 91910 t..! . .- I''--"T.W.j'^---' Attn:, C1 . Clerk APN: (Space above this line for Recorder's Use Only) This document is exempt from the payment of a recording fee pursuant to Government Code Section 27383. GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the CITY OF CHULA VISTA, a chartered municipal corporation ("Grantor"), hereby grants to Mid-City LLC, a California Limited Liability Company, fee simple title to that certain real property located in the County of San Diego, State of California, more particularly described on Schedule I attached hereto and incorporated herein by this reference. IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of ,201\. City of Chula Vista By:..... . fusl'rt1:Jame . EXHIBIT I GRANT DEED- CITY Option Agreement 18-256 SCHEDULE 1 TO GRANT DEED LEGAL DESCRIPTION All that certain real property situated in the City of Chula Vista, County of San Diego, State of California, described as follows: Option Agreement [Insert Legal Description] EXHIBIT I - SCHEDULE I LEGAL DESCRIPTION - CITY 18-257 STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their 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. Notary Public [SEAL] STATE OF CALIFORNIA ) ) ss COUNTY OF ) On , before me, , Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument, and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their 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. Notary Public [SEAL] EXHIBIT I CERTIFICATE OF ACKNOWLEDGEMENT Option Agreement 18:"'258 EXHIBIT I - SCHEDULE 2 CERTIFICATE OF ACCEPTANCE (Grant Deed) This is to certify that the interest in real property conveyed by the foregoing Grant Deed dated ,2011, executed by the CITY OF CHULA VISTA, a chartered municipal corporation ("City"), for the benefit of MID-CITY, LLC, a California limited liability company, is hereby accepted by the undersigned officer on behalf of Grantee and Grantee consents to recordation thereof by . its duly authorized officer. Dated: MID-CITY LLC, a California limited liability company By: Dan Floit, Managing Member EXHIBIT 1- SCHEDULE 2 CERTIFICATE OF ACCEPTANCE Option Agreement 18-259