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1998-0407_BLUE SKY PROPERTIES, LTD_Purchase and Sale Agreementi 0 PURCHASE AND SALE AGREEMENT This Purchase and Sale Agreement (the "Agreement") is made this"day of Jr 1998, by and between the CITY OF SAN JUAN CAPISTRANO (hereinafter referred to as either "Seller" or "City"), and BLUE SKY PROPERTIES, LTD. (hereinafter referred to as "Buyer"). RECITALS: WHEREAS, Seller is the fee owner of certain real property, commonly referred to as Parcel Nos. 133.2, 133.4 and 133.8 (hereinafter the "Property"); and WHEREAS, Seller is a municipal corporation lawfully existing under the law of the State of California; and WHEREAS, Buyer desires to purchase said parcels under the below -stated terms and conditions for the purpose of development of a motor vehicle sales facility affiliated with the existing Capistrano Ford dealership; and WHEREAS, by this Agreement, Seller desires to sell the Property to Buyer; NOW, THEREFORE, BE IT RESOLVED between Seller and Buyer as follows: Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property, more particularly described as Assessor's Parcel Nos. 133.2, 133.4 and 133.8, upon the terms and conditions set forth in this Agreement. M 9611 • .. The purchase price for the Property shall be Seven Hundred Thirty -Five Thousand Dollars ($735,000.00) (the "Purchase Price"). Buyer acknowledges that Seller will pay a ten percent (10%) commission (i.e., Seventy -Three Thousand Five Hundred Dollars [$73,500.001) which shall be the sole responsibility of Seller and may be paid by Seller to the sales agent from escrow. 52741.4 -1- • SECTION III. PAYMENT OF PURCHASE PRICE. The Purchase Price shall be payable as follows: A. Upon the opening of Escrow, Buyer shall fund a refundable deposit (the "Deposit") in the total sum of Twenty-five Thousand Dollars ($25,000) as follows: (i) by deposit into Escrow of the sum of Fifteen Thousand Dollars ($15,000) in cash, and (ii) by Seller's acknowledgment herein that the sum of Ten Thousand Dollars ($10,000.00) has already been paid to Seller outside of Escrow. Seller's execution of this Agreement hereby acknowledges that Seller has received said sum outside of Escrow from Buyer. Seller shall insure that such funds of the Deposit are placed in an interest bearing account by Seller or Escrow Holder. The Deposit, including all accrued interest, shall be refundable to Buyer should any contingency or condition, as provided in Section VII, not be met, or should Seller breach this Agreement. The Deposit shall become non-refundable and shall serve as liquidated damages in the event Buyer fails to close escrow after accepting any contingency or waiving any condition, except in the event of a breach of this Agreement by Seller. At the Close of Escrow, the entire Deposit shall be applied and credited toward payment of the Purchase Price. Seller and Buyer agree that said "non-refundable" deposit, and interest thereon, if any, constitute liquidated damages for the breach of Buyer's agreement to purchase the property, in lieu of all other damages; that actual damages would be extremely difficult to calculate; and that the foregoing represents the parties best estimate of the damages to be suffered by Seller in the event of Buyer's breach of the Agreement to purchase the Property. The parties here b initialing below expressl agree to this provision. Buyer B. On or before the Closing Date (as provided in Section VI.B below), Buyer shall deposit into Escrow cash or cash equivalent in the amount of the balance of the Purchase Price. SECTION IV. ESCROW INSTRUCTIONS. The terms of this Agreement shall serve as escrow instructions to the appointed Escrow Holder. 52741.4 -2- 0 SECTION V. CONDITION OF TITLE. At the Close of Escrow, Seller shall convey to Buyer marketable fee simple title to the Property by the Grant Deed, subject only to the following matters ("Approved Title Conditions"): (a) a lien for real property taxes, not then delinquent; (b) matters of title respecting the Property approved by Buyer in accordance with Section VII below; and (c) matters affecting the condition of title to the Property created by or with written consent of Buyer. A. Opening of Escrow. An escrow account ("Escrow") shall be opened by Buyer with First American Title Company of Santa Ana or other title escrow holder mutually acceptable to the parties ("Escrow Holder") not later than fifteen (15) days after full execution and approval of this Agreement. Escrow Holder shall notify Buyer and Seller in writing that the Escrow has been opened as soon as reasonably practicable. B. Close of Escrow. The close of Escrow ("Close of Escrow") shall occur within sixty (60) days after the full completion of all conditions required pursuant to Section VII. A., below, (the "Closing Date"). The parties may either accelerate or extend this Closing Date by providing the Escrow Holder with five (5) days' advance written notice of the parties' mutual desire to alter the Closing Date. C. Escrow Instructions. This Agreement shall serve as escrow instructions. Buyer and Seller hereby authorize their respective attorneys to execute and deliver to Escrow Holder any additional or supplementary instructions as Escrow Holder may reasonably request and/or which may be necessary or convenient to implement the terns of this Agreement and close the transaction contemplated hereby. In the event of any conflict or inconsistency between said additional or supplementary instructions and this Agreement, including any printed or typed form prepared by Escrow Holder, no instruction shall be deemed to change the terms, provisions or conditions of this Agreement unless the parties expressly so state and provide in writing. In addition, in the event of any conflict or inconsistency between the provisions of. this Agreement constituting escrow instructions to Escrow Holder (including the provisions of this Paragraph C) and the provisions of this Agreement constituting the Agreement of the parties to purchase and sell the Property, the latter provisions shall control. D. Indemnification. The parties agree to hold Escrow Holder joint and severally free and harmless from any loss or expense, including attorney's fees, that may be suffered by it by reason thereof, excepting that the foregoing shall not release Escrow Holder 52741.4 -3- from any liability for its negligence or misconduct or its breach of any of the provisions of the escrow instructions. E. Nonliability of Escrow Holder. Escrow Holder shall not be liable for the sufficiency or correctness as to form, manner, or validity of this Agreement, or any amendments or supplements added into Escrow at a later point in time. NDITIONS TO THE CLOSE OF ESCROW. A. Conditions Precedent to Buyer's Obligations. The Close of Escrow and Buyer's obligations with respect to the transaction contemplated by this Agreement are subject to the satisfaction of the following conditions, and the obligations of the parties with respect to such conditions are as follows: 1. Tills. Buyer shall have approved the legal description of the Property and any matters of title respecting the Property, including those matters disclosed by the following documents and instruments ("Title Documents"): a. A preliminary title report for an ALTA Extended Policy (the "Title Policy") dated as of the date of this Agreement issued by Escrow Holder with respect to the Property; and b. Copies of all documents, whether recorded or unrecorded, referred to in the preliminary title report for the Property. Seller shall cause Escrow Holder to deliver the Title Documents to Buyer within fifteen (15) days after the opening of Escrow. Buyer shall have at least thirty (30) days to disapprove of the Title Documents. Seller shall, within fifteen (15) days of Buyer's disapproval, give Buyer written notice that Seller intends to eliminate from the Title Policy those exceptions to title to the Property objected to by Buyer. Seller shall then eliminate by the Closing Date those disapproved matters set forth in Seller's title notice from the Title Policy and as exceptions to title to the Property. If Seller does not elect to eliminate any matter disapproved by Buyer or if Buyer disapproves Seller's title notice, then this condition shall be deemed to have failed, unless subsequently waived by Buyer in writing. 2. Review and Approval of Documents. Within fifteen (15) days of Escrow opening, Seller shall deliver to Buyer for Buyer's review and approval the following documents and materials: 52741.4 -4- 0 0 a. Contracts. A list and copies of all contracts relative to the Property. b. Records and Plans. A list and copies of all records and plans in Seller's possession or control. C. Seller's Statement. A written statement executed by Seller providing that, to the best of Seller's knowledge, there are no material defects in and no material adverse facts concerning the Property, except as otherwise disclosed in such statement. G l • • � • • -' ••.tis•! �- •�_ S.� - ,�� Remediation. a. Before the Closing Date, Buyer shall have approved the results of any and all inspections, investigations, tests and studies (including, without limitation, investigations with regard to zoning, building codes, lot line adjustments, engineering tests, utilities' connections, soils, seismic and geologic reports), if any, or otherwise initiated by Buyer. 4. Title Insurance. As of the Close of Escrow, Escrow Holder shall have issued the Title Policy (as provided in Section X) to Buyer. 5. Land Use Approvals. Buyer shall have received necessary final land use approvals from City for a motor vehicle sale operation on the Site. 6. City Financial Assistance. Seller acknowledges that Buyer is acquiring two adjacent parcels of land from third -party owners in addition to the Property (altogether the "Site") to assemble an adequate development pad for Buyer's intended use. Seller further acknowledges that such assembly and the cost of improving the entire Site will result in extraordinary costs to Buyer. Seller, therefore, shall provide necessary assistance to Buyer to develop a useable pad for the intended use, as follows: a. The parties hereto shall enter into a Sales Tax Guarantee and Right -of -Way Improvement Reimbursement Agreement, in substantially the form attached hereto as Exhibit A and made a part herein by reference. 52741.4 -5- 0 0 B. Conditions Precedent to Seller's Obligations. The Close of Escrow and Seller's obligations with respect to the transactions contemplated by this Agreement are subject to the satisfaction, by the dates specified below, of the following conditions: 1. Buyer's Purchase Price. On or before the Closing Date, Buyer shall have delivered to Escrow Holder for disbursement as provided herein, the Purchase Price and any required backup documents. C. Failure of Conditions to Close Escrow. hi the event any of the conditions set forth in this section are not timely satisfied or waived, for any reason other than the default of Buyer or Seller under this Agreement: 1. This Agreement, the Escrow and the rights and obligations of Buyer and Sellers shall terminate, except as otherwise provided herein; provided, however, no such termination shall occur until the party for whose benefit such condition exists (a) has had the opportunity to waive such conditions within three (3) business days after receipt of written notice from the other party, and (b) does not elect to waive such condition; and 2. Seller, Buyer and Escrow Holder shall promptly return all documents and funds which are held by them on the date of said termination to the party who delivered or deposited them hereunder, including return by Seller of the Deposit and interest thereon to Buyer. D. Cancellation of Fees and Expenses. In the event Escrow terminates because of the nonsatisfaction of any condition for a reason other than the default of Buyer or Seller under this Agreement, the cancellation charges required to be paid by and to Escrow Holder shall be borne one-half ('/z) by Seller and one-half ('/z) by Buyer and all other charges shall be borne by the party incurring same. A. By Seller. Seller hereby covenants and agrees to deliver or cause to be delivered to Escrow Holder on or prior to the Closing Date the following instruments and documents, the delivery of each of which shall be a condition to the performance by Buyer of its obligations under the terms of this Agreement. 1. Grant Deed. The Grant Deed, duly executed and acknowledged in recordable form by Seller, conveying the Property to Buyer subject only to the Approved Title Conditions. 52741.4 -6- 0 0 2. Non -Foreign Certification. A certification duly executed by Seller under penalty of perjury in the form of, and upon the terms set forth in, the Transferor's Certificate of Non -Foreign Status ("FIRPTA Certificate"), setting forth Seller's office address and federal tax identification number and certifying that Seller is a "United States Person" and that Seller is not a "foreign person" in accordance with and/or for the purpose of the provisions of Sections 7701 and 1445 (as may be amended) of the Internal Revenue Code of 1954, as amended, and any regulations promulgated thereunder. 3. Proof of Authority. Such proof of Seller's authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individuals executing and/or delivering any instruments, documents or certificates on behalf of Seller to act for and bind Seller as may be reasonably required by Escrow Holder and/or Buyer. 4. Lien Affidavits. Any lien affidavits or mechanic's lien indemnifications as may be reasonably requested by Escrow Holder in order to issue the Title Policy. B. ByBuyer. Buyer hereby covenants and agrees to deliver or cause to be delivered to Escrow Holder on or prior to the Closing Date the following instruments and documents, the delivery of each of which shall be a condition to the Close of Escrow. Purchase Price. The Purchase Price in accordance with Sections II and III of this Agreement. 2. Prorations. The amount due Seller, if any, after the proration are computed in accordance with Section XII below. SECTION D{. DELIVERIES TO BUYER UPON CLOSE OF ESCROW. Seller hereby covenants and agrees to deliver to Buyer, on the Closing Date, exclusive possession of the Property and the following items, the delivery of which shall be a condition to the performance by Buyer of its obligations under the terms of this Agreement: A. Original Documents. Originals of all contracts specifically approved by Buyer herein, and all licenses, permits, or other related documents affecting the Property. B. Termination Agreements. Executed termination agreements or other evidence reasonably satisfactory to Buyer that all contracts, if any, respecting the Property 52741.4 -7- which have been disapproved by Buyer have been terminated effective upon the Close of Escrow at no cost to Buyer or the Property. SECTION X. TITLE INSURANCE. At the Close of Escrow, Seller shall cause the Escrow Holder to issue or commit to issue to Buyer an ALTA Extended Form Owner's Policy of Title Insurance with any title endorsements reasonably requested by Buyer showing fee title to the Property vested in Buyer subject only to the Approved Title Conditions. The Title Policy shall be issued with liability in an amount equal to the Purchase Price. SECTION XI. COSTS AND EXPENSES. All costs and expenses associated with the Escrow shall be shared equally between Buyer and Seller. Seller shall bear the cost of the ALTA Extended Form Owner's Policy of Title Insurance. A. General. Subject to the provisions of Section X111 below, all expenses, if any, affecting the Property shall be paid or shall be prorated as of 11:59 p.m. on the Closing Date. For purposes of calculating prorations, Seller shall be deemed to be in title to the Property, and therefore responsible for the expenses for the entire day upon which the Close of Escrow occurs. Any apportionments and prorations which are not expressly provided for herein shall be made in accordance with customary practice in Orange County. Such adjustments, if and to the extent known and agreed upon as of the Close of Escrow, shall be paid by Buyer to Seller (if the prorations result in a net credit to Seller) or by Seller to Buyer (if the proration result in a net credit to Buyer), by increasing or reducing the cash or cash equivalent to be paid by Buyer at the Close of Escrow. Any such adjustments not determined or not agreed upon as of the Close of Escrow shall be paid by Buyer to Seller, or by Seller to Buyer, as the case may be, in cash or cash equivalent as soon as practicable following the Close of Escrow. B. Taxes and Assessments. All non -delinquent real estate taxes and assessments on the Property shall be prorated based upon the actual current tax and assessment bills; provided, however, if the real estate tax bill has not yet been received by Seller by the Closing Date, then current year's real estate taxes shall be deemed to be One Hundred Two Percent (102%) of the amount of the previous year's tax bill. If, after the Close of Escrow, any supplemental real estate taxes are assessed against the Property pursuant to Revenue and Taxation Code section 75-75.80, inclusive, by reason. of any event occurring prior to the Close of Escrow, Seller shall pay such taxes to Buyer within ten (10) days after demand by Buyer therefor. All liens, all delinquent taxes and all delinquent installments of assessments on the Property shall be paid for by Seller at the Close of Escrow from funds accruing to Seller without contribution or proration from Buyer. 52741.4 -8- 0 0 SECTION XIII. DISBURSEMENTS AND OTHER ACTIONS BY ESCROW HOLDER. At the Close of Escrow, Escrow Holder shall promptly undertake all of the following in the manner hereinbelow indicated: A. Funds. Disburse all funds deposited with Escrow Holder by Buyer in payment of the Purchase Price as follows: Deduct and pay all items chargeable to the account of Seller; 2. If, as the result of the proration and credits, amounts are to be charged to account of Seller, deduct and/or pay the total amount of such charges; Disburse the balance of the Purchase Price to Seller promptly upon the Close of Escrow; 4. Disburse the remaining balance of the funds, if any, to Buyer or other third parties as directed by the terms of this Agreement. B. Regordine. Cause the Grant Deed (with documentary transfer tax information to be affixed after recording, and any other documents which the parties hereto may mutually direct to be recorded in the Official Records, and obtain conformed copies thereof for distribution to Buyer and Seller. C. Title Policy. Direct Escrow Holder to issue the Title Policy to Buyer. D. Disbursement of Documents to Buyer. Disburse to Buyer all documents deposited into Escrow by Seller pursuant hereto, including the FIRPTA certificate, executed by Seller. E. Disbursement of Documents to Seller. Disburse to Seller all documents deposited into Escrow by Buyer pursuant hereto. SECTION XIV. SELLEWS REPRESENTATIONSAND WARRANTIES. In addition to any express agreements of Seller contained herein, the following constitute representations and warranties of Seller to Buyer: A. Power and Authority. Seller has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby. The individuals executing this Agreement and the 52741.4 -9- 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. B. Requisite Action. All requisite action (corporate, trust, partnership, or otherwise) has been taken by Seller in connection with entering into this Agreement, the instruments referenced herein, and the consummation of the transactions contemplated hereby. C. Validity. This Agreement and all documents required hereby to be executed by Seller are and shall be valid, legally binding obligations of and enforceable against Seller in accordance with their terms. Neither the execution and delivery of this Agreement and documents referenced herein, nor the consummation of the transactions contemplated herein, conflict with or result in the breach of any terms or provisions of any contract, understanding or agreement to which Seller is a party or affecting the Property. All consents, approvals and authorizations necessary for the execution of this Agreement and the consummation of the transactions contemplated herein by Seller have been obtained. Seller has not sold, conveyed or entered into any contract for the sale of all or any portion of the Property or any rights incidental thereto, nor do there exist any rights of first refusals or options to purchase the Property or any rights incidental thereto, except as provided for in this Agreement. D. Lawsuits and Claims. There are, and at the Close of Escrow there will be, no pending actions, lawsuits, claims or judicial, municipal or administrative proceedings affecting all or any portion of the Property or in which Seller is or will be a party by reason of Seller's ownership of the Property. To the best of Seller's knowledge, there are no threatened or contemplated actions, lawsuits, claims or proceedings, nor the existence of any facts which might give rise to such actions, lawsuits, claims or proceedings. Seller will not commence or defend an action with respect to the Property except upon such terms as are mutually acceptable to Seller and Buyer. E. Taxes and Assessments. Other than the amounts disclosed by the tax bills delivered to Buyer and Seller, no other real property taxes have been or will be assessed against the Property for the current tax year. To the best of Seller's knowledge, no special assessments or charges have been or will be levied against the Property for any existing public improvements or otherwise or will result from work, activities, or improvements done to the Property by Seller. F. Hazardous Materials. Seller hereby represents and warrants that, to the best of Seller's knowledge, and except as otherwise disclosed by those certain environmental reports prepared for Seller with respect to the Property, copies of which are in possession of Seller and Buyer, that no hazardous materials are located on or under the Property; that there 52741.4 -10- has been no release, storage, treatment, generation or disposal of any hazardous materials on, under, or from the Property; and that no hazardous materials have been transported from the Property. G. Leases and Contracts. There are, and prior to the Close of Escrow, will be, no oral or written leases, subleases, licenses, occupancies or tenancies in effect pertaining to the Property, and no persons or entities occupy or have the right to occupy or use all or any portion of the Property. There are no service or maintenance contracts, warranties, guarantees, bonds, insurance policies or other agreements (whether oral or written) which will affect or be obligations of the Buyer or the Property following the Close of Escrow, other than the contracts and Title Documents approved herein. At the Close of Escrow, Seller shall deliver possession of the Property to Buyer free of actual occupancy and any right of occupancy by any party, and, except as otherwise provided in this Agreement, all contracts and Title Documents disapproved by Buyer will be terminated by Seller, at Seller's sole cost and expense, at or prior to the Close of Escrow. H. Chanties. Seller shall promptly notify Buyer of any change in any condition with respect to the Property or of any event or circumstance which makes any representation or warranty of Seller under this Agreement untrue, misleading, or any covenant of Buyer under this Agreement incapable or less likely of being performed, it being understood that the Seller's obligation to provide notice to Buyer shall in no way relieve Seller of any liability for a breach by Seller of any its representations, warranties, or covenants under this Agreement. MCLU • • • - In addition to any express agreements of Buyer contained herein, the following representations and warranties of Buyer and Seller: A. Power and Authority. Buyer has the right, power, and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby. The individuals executing 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. B. Validity. This Agreement and all documents required hereby to be executed by Buyer are and shall be valid, legally binding obligations of and enforceable against Buyer in accordance with their terms. All consents, approvals and authorizations necessary for the execution of this Agreement and the consummation of the transactions contemplated herein by Buyer will have been obtained at the time of City Council approval of this Agreement. 52741.4 -11- 0 0 SECTION XVI. NOTICES. All notices required under this Agreement shall be personally delivered, or mailed by first class mail, postage prepaid, as follows: SELLER: CITY OF SAN JUAN CAPISTRANO 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: City Manager C BLUE SKY PROPERTIES 11404 E. Imperial Hwy Norwalk, CA 90650 Attn: Orval Paul or Steve Paul SECTION XVII. BROKERS. a broker's commission shall be paid from Seller's sale proceeds as follows: To: Overland Resources Amount: Ten percent (10%) of the Purchase Price. SECTION XVIII.NE TRY. Buyer, or its agents, shall have the right, at reasonable times and upon reasonable notice to Seller to enter upon the Property, for any purpose in connection with its proposed purchase, including but not limited to, inspection of all books, records and files of Seller relating to the Property. In this regard, Buyer hereby indemnifies Seller from any and all liabilities and losses relating to property damage or personal injury arising out of Buyer's, or its agents', inspection of the Property. SECTION XIX. DISPUTES. In the event of a dispute between the parties, each agrees to first formally meet and confer regarding the matter. If the dispute cannot be resolved through a meet and confer session, the matter will then be referred to non-binding mediation. If non-binding mediation is not successful, the parties shall determine in writing whether binding arbitration is appropriate. Thereafter, judicial remedies shall be available to resolve the dispute. C.�T�F�l�ii�u f.`C�I�/lA\► �C�7f7.9 A. Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant, or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act. 527a1A -12- B. Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the heirs, successors, and assigns of each parry to this Agreement. C. Entire Agreement. This Agreement is the final expression of, and contains the entire Agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein. The parties do not intend to confer any benefit hereunder on any person, firm or corporation other than the patties hereto. D. Time of Essence. Time is strictly of the essence to this Agreement. E. Governing Law. The laws of the State of California shall govern the construction and enforcement of this Agreement. 52741.4 -13- I- 0 • F. Negotiated Transaction. The provisions of this Agreement were negotiated, drafted and prepared by all the parties hereto and no party shall be deemed to have been the author of any particular term or conditions contained herein. IN WITNESS WHEREOF, the parties hereto have executed this Purchase and Sale Agreement as of the date and year hereinabove written. ATTEST: By: Cheryl Jo so , City Clerk APPROVED AS TO FORM: By: Jo I Shaw, City Attorney SELLER: CITY OF SAN JUAN CAPISTRANO City Manager BUYER: BLUE SKY PROPERTIES, LTD. By: QiQ � Orval A. faul Managing Partner 52741.4 -14-