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09-0116_CONTINUING LIFE COMMUNITIES LLC_Option Agreement & Escrow InstructionsOPTION AGREEMENT AND ESCROW INSTRUCTIONS Between Continuing Life Communities Management, LLC, a California limited liability company ("Optionor") and City of San Juan Capistrano, a Public Body, corporate and politic ("Optionee") 1W41 San Juan Capistrano Community Redevelopment Agency, a Public Body, corporate and politic January 16, 2009 OPTION AGREEMENT AND ESCROW INSTRUCTIONS THIS OPTION AGREEMENT AND ESCROW INSTRUCTIONS (referred to herein as this "Agreement" or this "Option") is made and entered into as of this 16th day of January, 2009 by and between CONTINUING LIFE COMMUNITIES MANAGEMENT, LLC, a California limited liability company, ("Optionor"), and the CITY OF SAN JUAN CAPISTRANO, a California municipal corporation and the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic (referred to jointly hereinafter as "Optionee"). RECITALS A. Optionor is in escrow with Crystal Cathedral Ministries, a California non- profit religious corporation ("CCM") to acquire from CCM that certain unimproved real property containing approximately 116 f acres more particularly described and depicted on Exhibit "A" attached hereto (the "Property"). It is uncertain whether or not Optionor will acquire the Property and the Optionor's CCRC Property (as defined below) and this Option is contingent upon Optionor acquiring the Property and the Optionor's CCRC Property. B. In addition to the Property, Optionor also is in escrow with CCM to acquire the approximately 34 acre parcel of Property depicted on Exhibit "A" hereto ("Optionor's CCRC Property") on which Optionor intends to construct and operate a continuing care retirement community ("Optionor's CCRC") as described on Exhibit "B" hereto. C. CCM intends to retain approximately 20 acres contiguous to the Property and Optionor's CCRC Property as depicted on Exhibit "A" hereto (the "CCM Property"). CCM has undertaken as a condition to Optionor acquiring the Property and Optionor's CCRC Property to process a lot line adjustment or parcel map causing the Property, Optionor's CCRC Property and the CCM Property to be separate legal parcels as depicted on Exhibit "A" hereto. D. Optionor is willing to grant Optionee an option to acquire the Property subject to all of the terms, conditions and provisions of this Agreement. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE I OPTION TO ACQUIRE 1.1 Grant of Option. Optionor hereby grants Optionee a contingent option to acquire the Property (the "Option") for a purchase price of Ten Million Dollars ($10,000,000.00) ("Purchase Price") upon all of the terns, covenants and conditions contained in the form of Purchase Agreement and Escrow Instructions attached hereto as Exhibit "C" (the "Purchase Agreement"). This Option is contingent upon Optionor acquiring the Property. In the event Optionor does not acquire the Property for any reason whatsoever, this Option shall terminate and be of no force or effect. 1.2 Initial Option Period. (a) Optionee's right to exercise this Option shall commence on the date Optionor acquires the Property (the "Initial Exercise Date") and shall continue for a period through and including 4:00 p.m. Pacific Coast Time on the date that is one (1) year following the receipt by Optionor of a Certificate of Occupancy for Optionor's CCRC (the "Initial Expiration Date" and such period being referred to herein as the "Initial Option Period"). (b) The consideration for the Initial Option Period shall be the sum of One Hundred Dollars ($100.00) (the "Initial Option Consideration"). Concurrently herewith Optionor and Optionee have opened an escrow (the "Escrow") with First American Title Insurance Company (FATCO), 5 First American Way, Santa Ana, CA 92707, Attn: Dawn Niehaus, telephone (714) 250-8401 ("Escrow Holder") by delivering a fully executed copy of this Agreement to Escrow Holder and by Optionee depositing the Initial Option Consideration with Escrow Holder by wire transfer or certified or cashier's check payable to Escrow Holder's account for the benefit of Optionor. The Initial Option Consideration shall be delivered to Optionor by Escrow Holder as the consideration for the grant of the Option and shall be nonrefundable subject only to Optionor's performance of its obligations hereunder and pursuant to the Purchase Agreement. The Initial Option Consideration shall be applicable to the Purchase Price in the event the acquisition of the Property is consummated. (c) In the event Optionee does not extend the Option in accordance with Section 1.3 or exercise the Option in accordance with Section 1.4 on or before the Initial Expiration Date, then Optionor shall provide written notice ("Optionor's Reminder Notice") to Optionee of the Initial Expiration Date. Optionee shall have 30 days from the receipt of Optionor's Reminder Notice to extend the Option in accordance with Section 1.3 or exercise the Option in accordance with Section 1.4, otherwise all rights of Optionee in and to the Property shall then and there cease. The election to exercise this Option shall be made by Optionee in its sole and absolute discretion. 1.3 Extension Periods. (a) Provided Optionee is not in default hereunder, Optionor grants to Optionee the right to extend the Option Period as herein provided for six (6) consecutive monthly periods (the "Monthly Extension Periods") following the Initial Expiration Date. (b) Optionee may exercise each Monthly Extension Period by sending written notice (the "Monthly Extension Notice") of such exercise to Optionor and Escrow Holder together with the Monthly Extension Consideration to Escrow Holder prior to the 2 Initial Expiration Date in the case of the first Monthly Extension Period and thereafter prior to the expiration of the current Monthly Extension Period. (c) The consideration for each Monthly Extension Period shall be the sum of Thirty Three Thousand Dollars ($33,000.00), payable to Escrow Holder's account for the benefit of Optionor by cashier's or certified check or wire transfer (the "Monthly Extension Consideration"). Each Monthly Extension Consideration shall be delivered by Escrow Holder to Optionor immediately upon receipt by Escrow Holder and shall be non-refundable and not applicable to the Purchase Price in the event the acquisition of the Property is consummated. (d) In the event Optionee has not exercised the Option to acquire the Property in the manner set forth in Section 1.4 as set forth in this Section 1.3, then the Option shall automatically terminate, without any further notice to Optionee and all rights of Optionee in and to the Property shall then and there cease. The final date Optionee may exercise the Option hereunder is referred to herein as the "Final Expiration Date." 1.4 Exercise of Option. (a) In the event Optionee desires to exercise this Option and has performed all acts in the time and manner as required by the terms hereof and is not in default under any provision of this Agreement, Optionee shall exercise the Option by delivering to Escrow Holder on or before the Final Expiration Date three (3) duplicate originals of the Purchase Agreement each executed by Optionee, together with a deposit of One Thousand Dollars ($1,000.00) ("Purchase Deposit") in the form of a cashier's check or wire transfer made payable to Escrow Holder. Escrow Holder shall complete the date of its exercise of the Option at the top of the Purchase Agreement as the date of the Purchase Agreement. The date Optionee exercises the Option is referred to herein as the "Option Exercise Date". (b) Upon receipt of the three (3) executed Purchase Agreements and the Purchase Deposit from Optionee within the Initial Expiration Date or Monthly Extension Period, Escrow Holder shall notify Optionor of the exercise of the Option. Upon receipt of such notification from Escrow Holder, Optionor shall thereupon promptly execute and return to Escrow Holder three (3) copies of the Purchase Agreement. Escrow Holder shall promptly collate the signature pages of the executed Purchase Agreement and forward to Optionor and Optionee a signed copy of the fully executed Purchase Agreement. 1.5 Escrow Instructions To Escrow Holder. (a) Upon receipt of a fully executed copy of this Agreement, Escrow Holder shall open an escrow (the "Escrow") to accommodate this transaction and this Agreement shall also constitute escrow instructions to Escrow Holder. Escrow Holder shall sign a copy of this Agreement, insert the Escrow number and return a signed copy 3 to each of Optionor and Optionee. If required by Escrow Holder, Optionor and Optionee agree to execute Escrow Holder's standard escrow instructions, provided that they are consistent with and do not conflict with the provisions of this Agreement and do not impose any additional responsibility on Optionor or Optionee. In the event of any such conflict, the provisions of this Agreement shall prevail. (b) Upon receipt of three (3) executed copies of the Purchase Agreement from Optionee pursuant to Section 1.4, Escrow Holder shall follow the instructions set forth in Section 1.4(b) above. (c) In the event Optionee fails to exercise the Option in the manner set forth in Section 1.4(a), the Option shall automatically expire. In the event of such termination, neither Optionor nor Optionee shall have any further liability or obligation to the other hereunder except for those obligations hereunder which expressly survive termination. 1.6 Close of Escrow, Closing Date. The "Close of Escrow" shall be the date the Grant Deed to the Property in favor of Optionee or its nominee is recorded in the Official Records of Orange County, California. Close of Escrow shall occur on or before the Closing Date. The "Closing Date" shall be fifteen (15) days after the exercise of the Option. 1.7 Termination. This Option shall terminate pursuant to Section 1.2(c) above. The termination of the Option shall not release Optionee from its obligations to pay sums due and owing pursuant to the terms hereof up to and including the date of such termination nor relieve either party from obligations pursuant to Sections 1.8, 1.9, 2.4, 2.7, 2.8, 4.1 and 4.2 hereof. 1.8 Delivery of Reports. Within five (5) days after the expiration or termination of the Option for any reason other than Optionor's default, Optionee shall, at no cost to Optionor, provide Optionor with duplicate originals or copies of any surveys, soil tests, engineering reports, investigative reports and research, all governmental applications and all written governmental responses thereto, including without limitation, staff reports, and other data and information which Optionee has obtained pertaining to the Property. 1.9 Document to Remove Cloud. This Agreement constitutes only an Option to acquire the Property, and although the Option granted hereby and all extensions thereof shall terminate with respect to the Property unless exercised within the time provided for herein, or shall otherwise terminate as provided in this Article I above, Optionee nonetheless in all events agrees following a termination of this Agreement for any reason other than Optionor's default that upon the request of Optionor, Optionee agrees to execute, acknowledge and deliver to Optionor within ten (10) days after Optionor's request therefore, a quit claim deed or any other documents required by a reputable title company of Optionor's choice, which said title company might require to remove any AM cloud from the title of Optionor to the Property that might arise as a result of the Option herein granted if such Option is not exercised prior to expiration or termination, or if Optionee defaults hereunder. If Optionee fails to deliver such quitclaim deed or other documents as herein required, Optionor shall have all rights and remedies granted by law or equity, including without limitation, filing suit against Optionee seeking actual damages arising from Optionee's breach of this covenant, which covenant shall survive termination of this Agreement for any reason. ARTICLE II ENTRY AND INVESTIGATION OF PROPERTY, AND OTHER MATTERS 2.1 Title Review and Approval. (a) Within fifteen (15) days after the date Escrow is opened, Optionor shall obtain and deliver to Optionee a preliminary title report for the Property from First American Title Insurance Company (FATCO) ("Title Company"), together with full copies of all written instruments creating exceptions to the title shown thereon ("Title Report"). (b) If Optionee exercises the Option to purchase the Property, Optionee shall be deemed to have agreed to accept the Property subject to the matters shown in the Title Report, and Optionee shall be deemed to have approved the Title Report and all matters shown therein. Optionor agrees without further notice or objection from Optionee to remove at or prior to the Close of Escrow all deeds of trust, security agreements, mechanic's liens (other than those for which Optionee is responsible hereunder) and similar monetary liens encumbering the Property and the Property shall be delivered to Optionee free of all leases. 2.2 Review of Property Documents. (a) During the period Escrow is open hereunder, Optionor agrees to deliver to Optionee (or provide access to Optionee), documentation and other relevant information concerning the Property which are in the possession of Optionor. (b) All documentation and other information concerning the Property shall be delivered to Optionee without representation or responsibility of Optionor as to the truth, accuracy or quality of material contained in such documents. Optionor shall not be required to obtain any documents not in Optionor's possession, provided that Optionor agrees to reasonably cooperate with Optionee, at Optionee's sole cost and expense, in attempting to obtain from any private third parties and/or federal, state or local governmental agencies any such items which Optionee specifically identifies in writing to Optionor. 5 2.3 Other Investigations by Optionee. Following the Initial Exercise Date, Optionee shall have the right, at its sole cost and expense, to make an analysis of the Property consisting of such engineering, environmental, soils, feasibility and other studies, tests, investigations and inquiries as are sufficient to permit Optionee to determine the suitability of the Property for Optionee's contemplated uses and to initiate such other review and investigation which Optionee deems appropriate to satisfy itself to enter into an unconditional escrow to acquire the Property. 2.4 License to Enter. (a) Subject to the provisions of this Article II, Optionor grants Optionee, its agents and employees, a license to enter upon any portion of the Property for the purpose of conducting engineering surveys, investigations, soils tests and other studies, which studies, surveys, investigations and tests shall be done at Optionee's sole cost and expense. (b) As a condition to any such entry, inspection or testing, Optionee shall (i) conduct all studies in a diligent, expeditious and safe manner and not allow any dangerous or hazardous conditions to occur on the Property during or after such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep the Property free and clear of all materialmen's liens, lis pendens and other liens arising out of the entry and work performed under this paragraph; (iv) maintain or assure maintenance of workers' compensation insurance (or state approved self-insurance) on all persons entering the property in the amounts required by the State of California; (v) provide to Optionor prior to initial entry a certificate of insurance evidencing all-risk public liability insurance on a per occurrence and not claims made basis in a combined single limit of not less than Two Million Dollars ($2,000,000.00) which insurance names Optionor as additional insured entitled to not less than thirty (30) days cancellation notice and is primary and non-contributing with insurance carried by Optionor; and (vi) return the Property to substantially its original condition following Optionee's entry. 2.5 Cooperation byOptionor. Optionor agrees to cooperate with Optionee in Optionee's efforts to investigate the Property provided that such cooperation shall be at no cost or expense to Optionor nor require any technical assistance from Optionor. 2.6 Costs of Investigation. All sums incurred by Optionee in connection with this Article II shall be borne by Optionee. No sums expended by Optionee pursuant to this Article II shall be applicable to the Purchase Price in the event the acquisition of the Property is consummated. In the event the acquisition of the Property is not consummated for any reason other than Optionor's default, Optionee shall not be entitled to reimbursement of any of said sums. 2.7 Liens. Optionee shall promptly pay and discharge all demands for payment relating to the construction of any improvements on the Property authorized by Optionee and/or the conduct of other activities on the Property under the authority of Optionee for 101 which a claim of lien against the Property might be asserted, and take all other steps to avoid the assertion of claims or lien against the Property or said improvements. In the event a claim or lien is recorded with respect to any improvement or the Property, Optionee, within twenty (20) days of such recordation, shall either (i) record or deliver a surety bond sufficient to release such claim or lien in accordance with applicable law; or (ii) provide Optionor with such other assurance as Optionor may require for the payment of the claim or lien. Optionor may elect to record and post notices of non -responsibility from time to time on and about the Property. 2.8 Indemnity. Optionee hereby agrees to indemnify, defend and hold Optionor free and harmless from and against any and all losses, damages (whether general, punitive or otherwise), liabilities, claims, causes of action (whether legal, equitable or administrative), judgments, court costs and legal or other expenses (including attorneys' fees) which Optionor may suffer or incur as a direct or indirect consequence of Optionee's exercise of the license granted pursuant to Section 2.4 above or any act or omission by Optionee, any contractor, subcontractor or material supplier, engineer, architect or other person or entity, except Optionor, with respect to the Property occurring during the term of this Option and Escrow period if the Option is exercised. Optionor's rights of indemnity shall not be directly or indirectly limited, prejudiced, impaired or eliminated in any way by any finding or allegation that Optionor's conduct is active, passive or subject to any other classification or that Optionor is directly or indirectly responsible under any theory of any kind, character or nature for any act or omission by Optionee or any other person or entity, except Optionor. Optionee's duty to indemnify Optionor shall survive the exercise of the Option or the termination, expiration or lapse thereof. ARTICLE III NO REPRESENTATIONS AND WARRANTIES; AS -IS 3.1 Disclaimer of Representations or Warranties; AS -IS. Optionee is aware that Optionor does not presently own the Property. Therefore, Optionor is making no representations or warranties concerning the Property, and should Optionee elect to exercise the Option to acquire the Property, Optionee shall, upon exercise of the Option, be deemed to have waived any and all objections to the physical characteristics and conditions of the Property which would have been disclosed by reasonable inspection and inquiry. Optionee acknowledges that neither Optionor nor any of its partners, employees, agents, or representatives has made any representations, warranties, or agreements to or with Optionee on behalf of Optionor as to any matters concerning the Property, the present use thereof, or the suitability of Optionee's intended or contemplated use of the Property. The foregoing disclaimer includes, without limitation, topography, climate, air, water rights, utilities, present and future zoning, soil, subsoil, the purpose to which the Property is suited, acreage or size of the Property, drainage, access to public roads, 7 proposed routes of roads or extensions thereof or the availability of governmental permits or approvals of any kind. Optionee represents and warrants to Optionor that it and its representatives and employees have made or will make their own independent inspection and investigation of the Property. Optionee further acknowledges and agrees that the Property is to be purchased, conveyed, and accepted by Optionee in its present condition, "AS -IS," and that no patent or latent physical condition of the Property, whether or not known or discovered, shall affect the rights of either party hereto. During the Option Period, Optionee will have had the opportunity to investigate and acquire knowledge of operative or imposed governmental laws and regulations (including, but not limited to, zoning, environmental, hazardous waste, and land use laws and regulations) to which the Property may be subject, and will, assuming exercise of the Option, acquire the Property on the basis of its review and determination of the application and effect of such laws and regulations. Optionee has neither received nor relied upon any representations concerning such laws and regulations made by Optionor, Optionor's employees, agents, or any other person acting on the behalf of Optionor. Any agreements, warranties or representations not expressly contained in this Agreement shall in no way bind Optionor. Without limiting the generality of the foregoing, Optionee understands and agrees that it takes the Property without any representations or warranties by Optionor, or by any official, employee or agent of Optionor, regarding the existence, use, generation, manufacture, storage, transportation, release or disposal of Hazardous Materials (as such term is herein defined) and/or oil wells and/or underground storage tanks and/or pipelines on, under or about the Property, or regarding that the Property is or may be in violation of any federal, state or local law, ordinance or regulation relating to Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines on, under or about the Property, including without limitation, soil and ground water conditions. Optionee acknowledges and understands that it must perform its own "due diligence" with respect to all environmental matters relating to the Property, inclusive of any environmental audits or assessments, and that Optionee is not relying on any environmental audits or assessments performed by or on behalf of Optionor. Optionee further understands and agrees that in the event Optionee incurs any loss or liability concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines attributable to conduct prior to Optionee's acquisition of the Property, then except for a breach of an express representation or warranty by Optionor hereunder, Optionee may look to current or prior owners or lessees of the Property (if any), but under no circumstances shall Optionee look to Optionor for any liability or indemnification regarding Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines except for such release or disposal of Hazardous Materials directly caused by Optionor or the activities of Optionor or that of Optionor's officers, employees, contractors and agents. Except as otherwise expressly provided herein, Optionee further understands and agrees that in the event it acquires the Property pursuant to this Agreement, such acquisition will be done without any representations or warranties by Optionor regarding responsibility for loss or liability incurred with respect to the use, generation, manufacture, storage, transportation, release or disposal of any Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines. 3.2 Optionee's Release of Optionor. Except for direct Optionor liability as hereinafter provided for, Optionee, from and after the Close of Escrow, hereby waives, releases, remises, acquits and forever discharges Optionor, its directors, officers, shareholders, employees, affiliates and agents, and their respective heirs, successors, personal representatives and assigns, of and from any and all Environmental Claims, Environmental Cleanup Liability and Environmental Compliance Costs (as those terms are defined below) and from any and all actions, suits, legal or administrative orders or proceedings, demands, actual damages, punitive damages, loss, costs, liabilities and expenses, which concern or in any way relate to the physical or environmental conditions of the Property, the existence of any Hazardous Material thereon, or the release or threatened release of Hazardous Materials therefrom, whether existing prior to, at or after the Close of Escrow. It is the intention of the parties pursuant to this release that any and all responsibilities and obligations of Optionor, and any and all rights, claims, rights of action, causes of action, demands or legal rights of any kind of Optionee, its successors, assigns or any affiliated entity of Optionee, arising by virtue of the physical or environmental condition of the Property, the existence of any Hazardous Materials thereon, or any release or threatened release of Hazardous Material therefrom, whether existing prior to, at or after the Close of Escrow, are by this release provision declared null and void and of no present or future force and effect as to the parties. Optionee expressly waives any and all rights which Optionee have under Section 1542 of the California Civil Code which provides as follows: "A general release does not extend to claims which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by hien must have materially affected his settlement with the debtor." Optionee's Initials The foregoing shall not release Optionor from any liability directly caused by Optionor or Optionor's activities, or that of Optionor's directors, officers, shareholders, employees, affiliates contractors and agents, or for any liability for any fraud, breach of representation or warranty hereunder, or other material default by Optionor under the terms of this Agreement, the Purchase Agreement, or any obligations contained in any closing documents executed pursuant thereto. 3.3 Definitions. For purposes of this Article III, the following terms shall have the following meanings: (a) "Environmental Claim" means any claim for personal injury, death and/or property damage made, asserted or prosecuted by or on behalf of any third party, Z including without limitation, any governmental entity, employee or former employee, or their respective legal representatives, heirs, beneficiaries and estates, relating to the Property or its operations and arising or alleged to arise under any Environmental Law. (b) "Environmental Cleanup Liability" means any cost or expense of any nature whatsoever incurred to contain, remove, remedy, clean up, or abate any contamination by any Hazardous Material from or on any part of the Property, including without limitation, (i) any direct costs or expenses for investigation, study, assessment, legal representation, cost recovery by governmental agencies, or ongoing monitoring in connection therewith and (ii) any cost, expense, loss or damage incurred with respect to the Property or its operation as a result of actions or measures necessary to implement or effectuate any such containment, removal, remediation, treatment, cleanup or abatement. (c) "Environmental Compliance Cost" means any cost or expense of any nature whatsoever necessary to enable the Property to comply with all applicable Environmental Laws in effect. "Environmental Compliance Cost' shall include all costs necessary to demonstrate that the Property is capable of such compliance. (d) "Environmental Law" means any federal, state or local statute, ordinance, rule, regulation, order, consent decree, judgment or common-law doctrine, and provisions and conditions of permits, licenses and other operating authorizations relating to (i) pollution or protection of the environment, including natural resources, (ii) exposure of persons, including employees, to Hazardous Materials or other products, raw materials, chemicals or other substances, (iii) protection of the public health or welfare from the effects of by-products, wastes, emissions, discharges or releases of chemical substances from industrial or commercial activities, or (iv) regulation of the manufacture, use or introduction into commerce of chemical substances, including without limitation, their manufacture, formulation, labeling, distribution, transportation, handling, storage and disposal. (e) "Hazardous Material' is defined to include any chemical or hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California, or the United States Government. The term "Hazardous Material' includes, without limitation, any material or substance which is: (i) petroleum or oil or gas or any direct or derivative product or byproduct thereof; (ii) 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); (iii) 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); (iv) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Sections 255010) and (k) and 25501.1 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory); (v) defined as a "hazardous substance" under 10 Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances); (vi) "used oil" as defined under Section 25250.1 of the California Health and Safety Code; (vii) asbestos, polychlorinated biphenyls, radon or petroleum or petroleum-based products; (viii) listed under Chapter 11 of Division 4.5 of Title 22 of the California Code of Regulations or defined as hazardous or extremely hazardous pursuant to Chapter 10 of Division 4.5 of Title 22 of the California Code of Regulations; (ix) defined as waste or a hazardous substance pursuant to the Porter Cologne Act, Section 13050 of the California Water Code; (x) designated as a "toxic pollutant" pursuant to the Federal Water Pollution Control Act, 33 U.S.C. § 1317; (xi) defined as a "hazardous waste" pursuant to the Federal Resource Conservation and Recovery Act, 42 U.S.C. § 6901 et seq. (42 U.S.C. § 6903); (xii) defined as a "hazardous substance" pursuant to the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. § 9601 et seq. (42 U.S.C. § 9601); (xiii) defined as "hazardous material" pursuant to the Hazardous Materials Transportation Act, 49 U.S.C. § 5101 et seq.; (xiv) defined as such or regulated by any "superfund" or "superlien" law, or any other federal, state or local law, statute, ordinance, code, rule, regulation, order or decree regulating, relating to, or imposing liability or standards of conduct concerning Hazardous Materials and/or oil wells and/or underground storage tanks and/or pipelines, as now, or at any time hereafter, in effect; and/or (xv) substances known by the State of California to cause cancer and/or reproductive toxicity. 3.4 Survival. Notwithstanding any other provision of this Agreement, Optionee's release as set forth in the provisions of this Article III, as well as all provisions of this Article III shall survive the Close of Escrow and shall continue permanently. ARTICLE IV OTHER AGREEMENTS OF THE PARTIES 4.1 Agreements to be Entered into Prior to Initial Exercise Date. Prior to the Initial Exercise Date (i.e. prior to Optionor's acquisition of the Property), Optionor, Optionee and CCM shall have agreed upon and executed the following agreements, which shall be binding upon Optionor only if Optionor acquires the Property and Optionor's CCRC Property, and shall be binding upon Optionee only if Optionee exercises the Option as described herein: (a) An approved Joint Access Agreement (the UAA") that will describe the access improvements to the Property, Optionor's CCRC Property, the CCM Property and the costs thereof and allocate maintenance costs between the parties. It is understood that Optionor will be responsible for design, permitting and construction costs associated with the at grade railroad crossing. Optionee shall be responsible for submitting the JAA to various governmental agencies having jurisdiction over such improvements and obtaining their approvals or permits. Optionor shall provide assistance to Optionee as required or appropriate. 11 (b) A Joint Parking Agreement (the "JPA") whereby a portion of the Property as depicted on Exhibit "A" hereto shall be reserved for parking by the public. (c) A water agreement (the "WA") whereby Optionee will be deeded all water rights pertaining to off site water wells, land and easements and water lines pertaining to the Property, Optionor's CCRC Property and the CCM Property. The WA shall be among Optionee, Optionor and CCM for use of the water from the wells. and shall provide for the sharing of non -potable water usage and maintenance expense on a pro rata basis based on acreage. The WA shall also provide that Optionor shall not be required to install or pay for the installation of replacement infrastructure to bring Optionee's water to the Property. 4.2 Development Agreement. Optionee is aware that in connection with Optionor's acquisition of the Property and as a condition thereto, Optionor will be submitting to an agency of Optionee a comprehensive Development Plan ("Optionee's Development Plan") for Optionor's CCRC on Optionor's CCRC Property. In addition to the description set forth on Exhibit "B" of Optionor's CCRC, Optionor's Development Plan will also provide for the following: (a) The CCM Property currently developed as a retreat center and chapel as shown on Exhibit "A" shall retain all current entitlements. (b) Optionor's Development Plan will propose that Oso Creek be retained in a natural state. 4.3 Refund of Property Taxes. Optionee agrees to refund to Optionor any real property taxes paid by Optionor and allocated to Optionee for the land only portion of the Property attributable to the period commencing with the date Optionor acquires the Property and ending on the earlier of the date this Option terminates unexercised or Escrow closes hereunder. Any such refund shall be paid by Optionee to Optionor within thirty (30) days after the amount of such refund can be determined. 4.4 Non -Offensive and Non -Competitive Use of the Property. Optionee agrees that the Property shall not be used in a manner that would create a nuisance or otherwise be unreasonably offensive to the use of Optionor's CCRC Property as a continuing care retirement community, including, without limitation, the use of the Property for animal stables or kennels. This restriction shall not prohibit Optionee from developing the Property to the extent permitted by current zoning, including development of office buildings, nor shall it prohibit Optionee from requesting a change in zoning to permit the development of a hotel. Organized recreational sports that do not incorporate the use of motorized vehicles shall not constitute a nuisance. However, the portion of the Property south of the Optionor's CCRC Property shall be restricted to agricultural and natural open space uses. No senior housing or medical use deemed to be competitive in Optionor's sole determination shall be permitted on any portion of the Property. These restrictions on use shall remain in effect so long as Optionor's CCRC Property is used as 12 a continuing care retirement community and shall be in the grant deed conveying the Property to Optionee. 4.5 Parcelization of Property. As a condition to the exercise of the Option, CCM shall have caused the Property, Optionor's CCRC Property and the CCM Property to be divided into separate legal parcels as depicted on Exhibit "A" hereto. ARTICLE V MISCELLANEOUS 5.1 Attorney's Fees. In the event of any dispute between the parties hereto involving the covenants or conditions contained in this Agreement or arising out of the subject matter of the Option or this Agreement, the prevailing party shall be entitled to recover, and the other party agrees to pay, all reasonable fees, expenses and costs, including but not limited to attorney's fees. 5.2 Broker's Fee. Each party agrees to indemnify, defend and hold the other harmless from and against all liabilities, costs, damages and expenses, including without limitation, attorneys' fees, resulting from any claims or fees or commissions, based upon agreements by it, if any, to pay broker's commissions and/or finder's fees. Optionor and Optionee hereby agree that no broker has been involved in this transaction. 5.3 Assi ng ment. Optionee shall have no right to assign the Option herein granted or any right or privilege Optionee might have in the Option or extension thereof, or otherwise under this Agreement, by operation of law or otherwise, without the prior written consent of Optionor, which consent may be withheld in Optionor's sole and absolute discretion. 5.4 Time of the Essence. Time is of the essence of each of the terms, covenants and conditions of this Agreement. 5.5 No Default by Optionor if it Fails to Acquire the Property. If Optionor fails to acquire the Property and Optionor's CCRC Property for any reason whatsoever, this Option shall terminate and Optionor shall have no liability to Optionee. 5.6 Condemnation. In the event all or any portion of the Property is taken or designated to be taken by condemnation proceedings, or proceedings in lieu thereof, and Optionee exercises the Option, then Optionee shall be entitled to all condemnation proceeds upon consummation of the transaction, and the terms of the Agreement shall remain unmodified. Optionor shall consult with Optionee regarding any proposed settlement with the condemnor and Optionee shall have the reasonable right of approval thereof. Optionor shall hold any such proceeds until the Close of Escrow. In the event Optionee fails to exercise the Option in the manner provided herein, Optionee shall have no right to any condemnation proceeds. 13 5.7 Consent of Parties. Whenever by the terms of this Agreement the consent or approval of Optionor or Optionee is to be given, such consent or approval shall be evidenced by the signature of one person designated for such purpose. Initially such person for Optionor shall be Richard D. Aschenbrenner and such person for Optionee shall be its City Manager and Executive Director. Such designated persons may be changed by the party so designating at any time by the delivery of a written notice to the other party. 5.8 Binding on Heirs. Subject to the limitations set forth. in Section 5.3 above, this Agreement shall be binding upon and inure to the benefit of the heirs, personal representatives, successors and assigns of the respective parties hereto. 5.9 Entire Agreement. This Agreement contains the entire agreement of the parties hereto with respect to the matters covered hereby, and all negotiations and agreements, statements or promises between the parties hereto or their agents with respect to this transaction are merged in this Agreement, which alone expresses the parties' rights and obligations and if not contained herein shall not be binding or valid against either of the parties hereto. 5.10 Modification. Any amendments or modifications to this Agreement or the Purchase Agreement must be in writing and executed by all the parties to this Agreement. 5.11 Interpretation; Governing Law. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. This Agreement shall be construed in accordance with the laws of the State of California in effect at the time of the execution of this Agreement. Titles and captions are for convenience only and shall not constitute a portion of this Agreement. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 5.12 No Waiver. No delay or omission by either party hereto in exercising any right or power accruing upon the compliance or failure of performance by the other party hereto under the provisions of this Agreement shall impair any such right or power or be construed to be a waiver thereof. A waiver by either party hereto of a breach of any of the covenants, conditions or agreements hereof to be performed by the party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions thereof. 5.13 Severability. If any term, provision, condition or covenant of this Agreement or the application thereof to any party or circumstances shall, to any extent, be held invalid or unenforceable, the remainder of this instrument, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 14 5.14 Authority to Execute. Each individual executing this Agreement on behalf of a partnership or corporation represents and warrants that he or she is duly authorized to execute and deliver this Agreement and the Purchase Agreement on behalf of such partnership or corporation in accordance with authority granted under the formation documents of such entity, and, if a corporation, by a duly passed resolution of its Board of Directors, that all conditions to the exercise of such authority have been satisfied, and that this Agreement and the Purchase Agreement are or will be binding upon such. entity in accordance with their respective terms. 5.15 Time Period Computations. All periods of time referred to in this Agreement shall include all Saturdays, Sundays and California state or national holidays unless the reference is to business days, in which event such weekends and holidays shall be excluded in the computation of time and provided that if the last date to perform any act or give any notice with respect to this Agreement shall fall on a Saturday, Sunday or California state or national holiday, such act or notice shall be deemed to have been timely performed or given on the next succeeding day which is not a Saturday, Sunday or California state or national holiday; provided, however, that notwithstanding anything to the contrary herein contained, any notice of extension or exercise of the Option must be actually delivered to and received by Optionor on or before the date specified in this Agreement and if such date is not a business day, then on the last business day which is immediately preceding such date. 5.16 Notices. Any notice which either party may desire to give to the other party or to Escrow Holder must be in writing and may be given by personal delivery, by mailing the same by registered or certified snail, return receipt requested, postage prepaid, or by Federal Express or other reputable overnight delivery service, or by telecopier or other reliable electronic type mail system to the party to whom the notice is directed at the address of such party hereinafter set forth, or such other address and to such other persons as the parties may hereafter designate. Any such notice shall be deemed given upon receipt if by personal delivery, forty-eight (48) hours after deposit in the United States mail, if sent by mail pursuant to the foregoing, or twenty-four (24) hours after deposit with Federal Express or other reputable overnight delivery service, or twenty-four (24) hours after transmission by telecopier or other reliable electronic type mail system. To Optionor: Continuing Life Communities Management, LLC 1940 Levante Street Carlsbad, CA 92009 Attn: Richard D. Aschenbrenner Facsimile No.: (760) 704-6262 15 Copy to: Palmieri, Tyler, Wiener, Wilhelm & Waldron LLP 2603 Main St., Suite 1300 Irvine, CA 92614 Attn: Robert C.Ihrke Phone No.: (949) 851-9400 Facsimile No.: (949) 851-1554 Email: rihrke@ptwww.com To Optionee: City of San Juan Capistrano San Juan Capistrano Community Redev. Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: Dave Adams, City Manager/Executive Director Phone: (949) 493-1171 Facsimile No.: (949) 488-3874 Email: dadams@sanjuancapistrano.org Copy to: Woodruff, Spradlin & Smart 555 Anton Blvd., Suite 1200 Costa Mesa, CA 92626 Attn: Omar Sandoval, Esq. Phone No.: (714) 558-7000 Facsimile No.: (714) 835-7787 Email: osandoval@wss-law.com To Escrow Holder: First American Title Insurance Company (FATCO) 5 First American Way Santa Ana, CA 92707 Attn: Dawn Niehaus, Commercial Escrow Officer Phone No.: (714) 250-8401 Facsimile No.: (714) 200-0114 Email: dniehaus@firstam.com Either party may from time to time, by written notice to the others, designate a different address which shall be substituted for the one above specified, and/or specify additional parties to be notified. 5.17 Counterparts. This Agreement, including any exhibits attached hereto may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original copy. 5.18 Exhibits. Exhibits "A", `B" and "C" attached hereto, are hereby incorporated herein by this reference. 16 5.19 No Relocation Assistance. The total compensation to be paid by Optionee for the Property is the Purchase Price, which consideration covers all land .'and improvements, attached or detached furniture, fixtures and equipment, loss of business goodwill, and relocation assistance and is the full and complete acquisition cost of the Property. Optionee shall have no obligation to Optionor under the California Relocation Assistance and Real Property Acquisition statutes and guidelines. Except for any breach of terms or conditions contained in this Agreement, Optionor waives and forever releases Optionee, including its successors, officers, employees, attorneys, agents, representatives and anyone else acting on Optionee's behalf, of and from any and all claims, demands, actions or causes of action, obligations, liabilities, or claims for further compensation, known or unknown, based upon or relating to the facts or allegations and circumstances arising from Optionee's acquisition of the Property. By such release, Optionor expressly waives its rights, if any, 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 FAVOR AT THE TIME OF EXECUTING THE RELEASE WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR." S:2� Op ons or's Initials 5.20 Change in Condition. If at any time prior to the Close of Escrow, the Property becomes contaminated in any material respect with Hazardous Material, then Optionee may terminate this Agreement. 5.21 Public Disclosure. The Parties acknowledge that upon final approval and full execution of the parties hereof, this Agreement shall become a public document by operation of law. 17 IN WITNESS WHEREOF, the parties hereto have executed this Option Agreement the day and year first above written. CITY OF SAN JUAN CAPISTRANO "Optionee" a California municipal corporation ATTEST: By: Its: City Manager APPROVED AS TO FORM: I F k IF FA 11 � ' t X j SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY a Public Body, corporate and politic By: U4,, - Its: Executive Director APPROVED AS TO FORM ff, ffA v I - ATTEST: CONTINUING LIFE COMMUNITIES MANAGEMENT, LLC "Optionor" a California limited liability company By: Richard D. Aschenbrenner v Its: Chief Executive Officer AGREE ANDA CEPTED AS OF THIS AY OF ' 2009 18 FIRST AMERICAN TITLE INSURANCE COMPANY (FATCO), a California corporation Its: Escrow Number: "Escrow Holder" 19 TABLE OF CONTENTS Page LIST OF EXHIBITS EXHIBIT "A" DEPICTION OF PROPERTY EXHIBIT `B" OPTIONOTS CCRC DEVELOPMENT EXHIBIT "C" PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS EXHIBIT "A" DEPICTION OF PROPERTY I EXHIBIT "B" OPTIONOR'S CCRC DEVELOPMENT EXHIBIT B CONTINUING LIFE f COMMUNITIES July 10, 2008 Tom Lunnen 30220 Rancho Viejo Rd., Suite A San Juan Capistrano, CA 92675 RE: "The Orchards" Project Summary Dear Tom: This letter is to provide a summary of the proposed Continuing Care Retirement Community (CCRC) development ("The Orchards") on a 34 acre parcel of Rancho Capistrano in the City of San Juan Capistrano. The project will contain facilities for independent living in apartment style and attached homes, assisted living facilities including a portion specially designed for memory support, and skilled nursing facilities staffed for 24 hour nursing care. A principal attraction of CCRC's to the elderly population is the state regulated continuing care contract which provides full service retirement for residents and spouses to accommodate aging' in place without the need for disruptive moves from one location to another, without the obligations and responsibilities of home ownership, incorporating the best features of full service long term care insurance. Aspects of the continuing care contract include: an independent residence to occupy as long as the resident is independently capable; a large package of services and amenities including security, food service, transportation, activities; and availability and access to higher levels of nursing care as long and as often as needed with the cost included. The contract obligates the provider for the balance of the resident's natural life. Residents enjoy an enhanced sense of security and peace of mind, a better life and longer life. The entire development will consist of approximately 750,000 square feet of buildings. A breakdown of the different building types within the community is as follows: Independent Living Units (300 units — 360,000 square feet) • Three (3) story apartment buildings (35' height limit). Villas and/or Garden Terraces (115 units — 230,000 square feet) • Villas are one (1) story attached homes (duplex/triplex) with attached garages. • Garden Terraces are two (2) story "stacked flats" with eight (8) units per building, and one elevator with connecting walkways for every two buildings. 1940 Levante Street - Carlsbad, CA 92009 TEL 760.704.6200 - FAx 760.704.6300 www.continvinglife.com Commons Building (40,000 square feet) • Two (2) story building. • Community reception area / administrative offices / conference room. • Resident lounge / gathering area / community rooms (billiards, cards, movie theatre, library, computer/business center, etc.). • Various dining venues (formal dining room, bar/lounge, private dining room, wine dining room). • Commercial kitchen. • Resident (health) services and physical therapy. Recreation Building (10,000 square feet) • One (1) story building. • Auditorium, fitness center, sauna/steam, beauty salon, arts & crafts. Maintenance Building / Central Plant (15,000 square feet) • Two (2) story building(s). • Central plant houses the emergency generator(s) and the mechanical equipment (cooling towers, boilers, pumps, etc.) which facilitate the HVAC and hot water circulation systems. • Maintenance building includes a maintenance bay, offices for maintenance and housekeeping personnel, a commercial laundry facility, and a large storage area. Outdoor Pool / Spa (located in courtyard) Resident Wood Shop (1,500 square feet) Health Care Center (90,000 square feet) • One (1) story skilled nursing facility; two (2) story assisted living facility. • Fifty (50) skilled nursing beds; thirty five (35) assisted living units; fifteen (15) memory support units. • All supporting / required uses, to include nurse stations, offices, central supply, kitchen, dining rooms, etc. Project Information / Sales Office • Located in town and/or on site as soon as possible (State regulations require pre -sales). Any additional information required can be provided upon request. Sincerely, Richard D. Aschenbrenner Chief Executive Officer EXHIBIT "C" PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS Escrow No. Date of Exercise of the Option: 20 To: First American Title ("Escrow Holder") 5 First American Way Santa Ana, CA 92707 Attention: Dawn Niehaus, Commercial Escrow Officer Telephone: (714) 250-8401 Facsimile: (714) 200-0114 Email: dniehaus@firstam.com THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS (this "Agreement") is made this day of 20 , by and between CONTINUING LIFE COMMUNITIES MANAGEMENT, LLC, a California limited liability company ("Seller"), and CITY OF SAN JUAN CAPISTRANO, a California municipal corporation and the SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY, a public body, corporate and politic (referred to jointly hereinafter as "Buyer"). RECITALS 1. Seller has acquired and is the owner of that certain real property more particularly described on Exhibit "A" attached hereto and by this reference incorporated herein (the "Property"). 2. Seller and Buyer have previously executed that certain Option Agreement dated as of January 16, 2009 (the "Option Agreement'), the terms of which are incorporated herein by this reference. Pursuant to the Option Agreement, Escrow has been opened and a copy of the Option Agreement has been delivered to Escrow Holder. By execution and delivery of this Agreement and delivery of other specified performances, Buyer has exercised its option to purchase the Property. NOW, THEREFORE, incorporating the foregoing recitals and in consideration thereof, in consideration of the mutual covenants and conditions contained herein and for 1 other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: TERMS AND CONDITIONS ARTICLE I PURCHASE AND SALE OF PROPERTY Subject to all of the terms, conditions and provisions of this Agreement, and for the consideration herein set forth, Seller hereby agrees to sell the Property to Buyer and Buyer hereby agrees to purchase the Property from Seller. ARTICLE II OPENING OF ESCROW; CLOSING DATE 2.1 Escrow. Pursuant to the Option Agreement, the parties have opened an Escrow with Escrow Holder and have deposited an executed copy of this Agreement with Escrow Holder. 2.2 Closing Date. The terms the "Close of Escrow," and/or the "Closing" are used herein to mean the time the Grant Deed is recorded in the Office of the County Recorder of the county in which the Property is located. Close of Escrow shall occur on or before the Closing Date. The "Closing Date" shall be fifteen (15) days from the date of this Agreement unless such day is on a weekend or holiday in which case the Closing Date shall be the next following business day. If the Closing does not occur on or before the Closing Date, Seller shall have no further obligation to sell the Property to Buyer, except if such failure is by reason of Seller's default hereunder. 2.3 Possession. Possession of the Property shall be delivered to Buyer as of Close of Escrow. In the event any improvements, equipment or other personal property remains on the Property following the Close of Escrow, it shall automatically become the property of Buyer. ARTICLE III PAYMENT OF PURCHASE PRICE 3.1 Amount of Purchase Price. The purchase price for the Property will be Ten Million Dollars ($10,000,000.00) (the "Purchase Price"). 3.2 Payment of Purchase Price. The Purchase Price shall be paid as follows: (a) Concurrently with the exercise of the Option, Buyer has paid into Escrow the Purchase Deposit of One Thousand Dollars ($1,000.00). 2 (b) On or before the Closing Date or such earlier time as required by Escrow Holder in order to close Escrow on the Closing Date, Buyer shall deposit the balance of the Purchase Price, together with all other sums to be paid by Buyer to close the Escrow, in good funds. "Good funds" shall mean a wire transfer of funds, cashier's or certified check drawn on or issued by the offices of a financial institution located in the State of California, or cash. Buyer and Seller each agree to execute and deliver to Escrow Holder such documents as required by Escrow Holder for the reporting of interest credited to each party. ARTICLE IV TITLE POLICY• CONDITIONS PRECEDENT TO CLOSE OF ESCROW 4.1 Title Policy. Escrow Holder shall cause to be issued and delivered to Buyer as of the Close of Escrow a CLTA or ALTA standard coverage (non -extended coverage) owner's policy of title insurance ("Title Policy"), or, upon Buyer's request therefor, an ALTA extended coverage owner's policy of title insurance, issued by Title Company, with liability in the amount of the Purchase Price, covering the Property and showing title vested in Buyer free of encumbrances, except (i) all non -delinquent general and special real property taxes, assessments and bonds for the current fiscal year; (ii) those easements, encumbrances, covenants, conditions, restrictions, reservations, rights, rights-of-way and other matters of record or otherwise approved or deemed approved by Buyer pursuant to the Option Agreement; (iii) the standard printed exceptions and exclusions contained in the CLTA or ALTA form policy; and (iv) any exceptions created or consented to by Buyer, including without limitation, any exceptions arising by reason of Buyer's possession of or entry on the Property. As noted above, Buyer shall have the right, prior to Close of Escrow, to require that the Title Policy be an ALTA extended coverage owner's policy; provided, however, that Buyer shall have the obligation to satisfy in a timely manner and at Buyer's expense all additional requirements of the Title Company for issuance of an ALTA extended coverage owners' policy, including without limitation, the preparation of an ALTA survey of the Property satisfactory to the Title Company and payment of any premiums for such policy that are in excess of premiums for a standard coverage policy; provided further that issuance of an ALTA extended coverage title policy shall not delay the Close of Escrow past the Closing Date; androp vided further that Buyer shall accept as permitted exceptions to title any and all additional title exceptions which may be included as exceptions in the ALTA extended coverage "Title Policy because Buyer is requesting an ALTA extended coverage title policy rather than a standard coverage title policy. Escrow Holder shall cause the original Title Policy to be delivered to Buyer following the Close of Escrow and a copy thereof to be delivered to Seller. 3 4.2 Conditions to Buyer's Obligations. The obligations of Buyer under this Agreement shall be subject to the satisfaction or written waiver, in whole or in part, by Buyer of each of the following conditions precedent: (a) Title Company has committed to issue the Buyer's Title Policy as required by Section 4.1. (b) Escrow Holder holds and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this Agreement. (c) Seller shall not be in breach with respect to any of its representations or warranties incorporated by reference in Section 8.1 hereof. (d) Seller shall not be in default with respect to any of Seller's material covenants and/or obligations under this Agreement or the Option Agreement which are to be performed on or prior to the Closing Date. The conditions for Buyer's benefit described in Sections 4.2 (c) and (d) above shall be deemed fully waived by Buyer unless Buyer shall have delivered to Escrow Holder prior to the Closing Date, written notice of non -satisfaction of either or both of Buyer' conditions to the Closing as set forth in said Sections 4.2 (c) and/or (d) above, which notice shall contain a detailed explanation of why such non -satisfaction exists (any such notice being referred to herein as the "Buyer's Non -Satisfaction Notice"). Unless and until Escrow Holder receives a Buyer's Non -Satisfaction Notice, Escrow Holder shall proceed to process and close the Escrow (subject to the other terms and conditions contained in this Agreement, including without limitation that Escrow is not to close after the Closing Date unless agreed to by the parties) without regard to the conditions for Buyer's benefit set forth in Sections 4.2 (c) and (d) above. If Escrow Holder receives a Buyer's Non -Satisfaction Notice before the Closing Date, and thereafter Escrow does not close by the Closing Date, then the provisions of Section 7.2 hereof shall be applicable if Seller is in breach with respect to its said warranties and representations and/or in default with respect to its said material covenants and/or obligations. Escrow Holder shall have no duty or responsibility for determining the truth or accuracy of Buyer's Non - Satisfaction Notice. 4.3 Conditions to Seller's Obligations. The obligations of Seller under this Agreement shall be subject to the satisfaction or written waiver, in whole or in part, by Seller of each of the following conditions precedent: (a) Escrow Holder holds and will deliver to Seller the instruments and funds accruing to Seller pursuant to this Agreement. (b) Buyer shall not be in breach with respect to any of its representations and/or warranties contained in this Agreement. n (c) Buyer shall not be in default with respect to any of Buyer's material covenants and/or obligations under this Agreement or the Option Agreement which are to be performed on or prior to the Closing Date. The conditions for Seller's benefit described in Sections 4.3(b) and (c) above shall be deemed fully waived by Seller unless Seller shall have delivered to Escrow Holder prior to the Closing Date, written notice of non -satisfaction of either or both of Seller's conditions to the Closing as set forth in said Sections 4.3(b) and/or (c) above, which notice shall contain a detailed explanation of why such non -satisfaction exists (any such notice being referred to herein as the "Seller's Non -Satisfaction Notice"). Unless and until Escrow Holder receives a Seller's Non -Satisfaction Notice, Escrow Holder shall proceed to process and close the Escrow (subject to the other terms and conditions contained in this Agreement, including without limitation the requirement that Escrow not close after the Closing Date without the written agreement of the parties) without regard to the conditions for Seller's benefit set forth in Sections 4.3 (b) and (c) above. If Escrow Holder receives a Seller's Non -Satisfaction Notice before the Closing Date, and thereafter Escrow does not close by the Closing Date, then the provisions of Section 7.1 hereof if Buyer is in breach with respect to its warranties and representations and/or in default with respect to its material covenants and/or obligations. Escrow Holder shall have no duty or responsibility for determining the truth or accuracy of Seller's Non - Satisfaction Notice. ARTICLE V CLOSING FUNDS AND DOCUMENTS REQUIRED FROM BUYER AND SELLER 5.1 Buyer. Buyer agrees that on or before the Closing Date, Buyer will deposit with Escrow Holder all additional funds and/or documents (executed and acknowledged, if appropriate) which are necessary to comply with the terms of this Agreement, including without limitation, the following: (a) The Purchase Price (less the Purchase Deposit); (b) At Buyer's option, a Preliminary Change of Ownership Statement completed in the manner required in the County in which the Property is located (or in lieu thereof Buyer may pay the charge for omission of such statement); and (c) Such funds and other items and instruments as may be necessary in order for Escrow Holder to comply with this Agreement. 5.2 Seller. Seller agrees that on or before the Closing Date, Seller will deposit with Escrow Holder such funds and other items and instruments (executed and acknowledged, if appropriate) as may be necessary in order for the Escrow Holder to comply with this Agreement, including without limitation, the following: 5 (a) Escrow Holder's standard form of grant deed conveying the Property to the City of San Juan Capistrano and/or the San Juan Capistrano Community Redevelopment Agency, as requested in writing by Buyer ("Grant Deed"); (b) An original Non -Foreign Affidavit on Escrow Holder's standard form ("Non -foreign Affidavit"); (c) An original Internal Revenue Service Form 1099-5 and California Franchise Tax Board 597 -RE and 593-W forms ("California Residency Affidavit"); and (d) Such funds and other items and instruments as may be necessary in order for Escrow Holder to comply with this Agreement. 5.3 Recordation Completion and Distribution of Documents. Escrow Holder shall confirm that any documents signed in counterpart are the matching documents and shall combine the signature pages thereof so as to create fully executed documents. Escrow Holder will cause the Grant Deed to be recorded when (but in no event after the Closing Date) it can issue the Title Policy in the form described in Section 4.1, and holds for the account of Buyer and Seller, respectively, the funds and items described above to be delivered to Buyer and Seller, respectively, through Escrow, less costs, expenses and disbursements chargeable to Seller pursuant to the terns hereof. Promptly following Close of Escrow, Escrow Holder shall date all undated documents as of Close of Escrow, and shall distribute Escrow Holder's closing statement and the documents deposited in Escrow as follows: (a) To Buyer: One certified conformed copy of the Grant Deed (the original to be mailed to Buyer following recordation thereof), the original of the Non -Foreign Affidavit, the General Assignment, and the California Residency Affidavit, the original Title Policy, and one certified copy, conformed if recorded, of any other document delivered to Escrow Holder by Buyer or Seller pursuant to the terms hereof. (b) To Seller: One certified conformed copy of the Grant Deed and one certified copy, conformed if recorded, of any other document delivered to Escrow Holder by Buyer or Seller pursuant to the terms hereof. ARTICLE VI ESCROW PROVISIONS 6.1 Escrow Instructions. This Agreement, when signed by Buyer and Seller, shall also constitute escrow instructions to Escrow Holder. If required by Escrow Holder, Buyer and Seller agree to execute Escrow Holder's standard escrow instructions, M provided that the same are consistent with and do not conflict with the provisions of this Agreement and do not impose any additional responsibility on Buyer or Seller. In the event of any such conflict, the provisions of this Agreement shall prevail. 6.2 General Escrow Provisions. Escrow Holder shall deliver the Title Policy to the Buyer and instruct the County Recorder for the County in which the Property is located to mail the Grant Deed to Buyer at the address set forth in Section 8.16 after recordation. All funds received in this Escrow shall be deposited in one or more general escrow accounts of the Escrow Holder with any bank doing business in Los Angeles, Orange, San Francisco or Riverside County, California or in the County in which the Property is located, and may be disbursed to any other general escrow account or accounts. All disbursements shall be made by Escrow Holder's check. 6.3 Affixation of Revenue Stamps. Escrow Holder is hereby specifically instructed to attach documentary transfer and/or revenue stamps to the Grant Deed only after recordation of the Grant Deed. 6.4 Prorations• Security Deposits-, Utility and Governmental Deposits; Credits. (a) All non -delinquent general and special real property taxes and assessments and interest on bonds shall be prorated to the Close of Escrow on the basis of a thirty (30) day month and a three hundred sixty day (360) year. In the event that property taxes are assessed on a parcel of real property which includes land other than the Property, such proration shall include only taxes attributable to the Property, calculated in terms of total gross square feet of land assessed pursuant to the tax statement versus total gross square footage of the Property. Any supplemental tax bills received after Close of Escrow shall be paid by Seller to the extent they relate to a period prior to Close of Escrow, and by Buyer, to the extent they relate to a period after Close of Escrow. If a supplemental tax bill covers a period commencing before and continuing after Close of Escrow, the party named in the bill will pay the tax and the other party shall reimburse the first party its pro rata share within thirty (30) days after receipt of a copy of the tax bill and evidence of the second party's payment of same. Notwithstanding the foregoing, Buyer agrees to refund to Seller certain property taxes as set forth in Section 4.3 of the Option Agreement. (b) Rentals, utilities and other income or expenses of the Property which are payable by or to the owner of the Property shall be prorated to the Close of Escrow on the basis of a thirty (30) day month and a three hundred sixty (360) day year. In the event final amounts with respect to said prorations are not available as of Close of Escrow, the proration shall be done on an estimated basis and the parties shall prepare a final proration within sixty (60) days following Close of Escrow. Any party who is obligated to pay net amounts based on said 7 final proration shall reimburse the other party said amount within thirty (30) days after completion of the final proration. (c) The provisions of this Section 6.4 shall survive Close of Escrow. If either party fails to pay its pro rata share of taxes or other expenses (including any amount due as a result of post -Closing adjustments) by the times herein provided, interest shall accrue on all unpaid amounts from then owing until paid at five percent (5%) over the Federal Discount Rate quoted by the Federal Reserve Bank of San Francisco on the 25th day of the month preceding the date interest commences to accrue. 6.5 Payment of Costs. Seller shall pay one-half (1/2) of the Escrow fee, all documentary transfer taxes, the title insurance premiums for that portion of the Title Policy premium which would be incurred for a CLTA standard form owner's policy, and the charge for drawing the Grant Deed. Buyer shall pay one-half (1/2) of the Escrow fee, all charges for recording the Grant Deed, all title insurance premiums for any title insurance coverage required by any lender and that portion of the Title Policy premium which is attributable to the additional cost of obtaining any additional coverage requested by Buyer, including the difference between CLTA standard and ALTA extended coverage and any endorsements requested by Buyer. Seller and Buyer shall each be responsible for their respective attorneys' fees and costs. All other costs of Escrow not otherwise specifically allocated by this Agreement shall be apportioned between the parties in a manner consistent with the custom and usage of Escrow Holder for transactions closing in the county in which the Property is located. 6.6 Termination and Cancellation of Escrow. If Escrow fails to close as provided above, Escrow shall terminate automatically without further action by Escrow Holder or any party, and Escrow Holder is instructed to return all funds and documents then in Escrow to the respective depositor of the same with Escrow Holder; provided that any document which has been signed by a party who is not to receive the return of such document, shall be marked "void and of no force or effect' by Escrow Holder before it is delivered. Cancellation of Escrow, as provided herein, -shall be without prejudice to whatever legal rights Buyer or Seller may have against each other arising from the Escrow or this Agreement or the Option Agreement. Nothing to the contrary in this Section 6.6 above withstanding, Escrow Holder shall not return funds and documents then in Escrow as aforesaid unless Escrow Holder has received no conflicting instructions or demands from either party within five (5) business days after Escrow Holder has given the parties written notice of Escrow Holder's intention of returning such funds and documents as aforesaid. If conflicting instructions or demands are timely received, Escrow Holder may elect to continue to hold such funds and documents until disposition thereof is mutually approved by the parties in writing or until Escrow Holder has received an order from a court of competent jurisdiction setting forth how such items are to be disbursed by Escrow Holder. M 6.7 Information Report. The "Reporting Person" within the meaning of Treasury Regulation Section 1.6045-4(e)(5) with respect to the transactions contemplated by this Agreement shall be Escrow Holder. The name and address of Escrow Holder is set forth on the first page of this Agreement. It is agreed that Escrow Holder is an eligible person under Section 1.6045-4 (e) (5) (ii) of said Regulations. Escrow Holder hereby agrees to be responsible for complying with the reporting and other requirements of Internal Revenue Code Section 6045(e) and the income tax regulations promulgated thereunder. Pursuant to said regulations, the address for the transferor and transferee are as set forth for Seller and Buyer respectively in Section 8.16, and the identifying information regarding the real estate transferred is the legal description for the Land set forth on Exhibit "A" attached hereto. Escrow Holder agrees to file the form required by said regulations between the end of the calendar year in which the Close of Escrow occurs and February 28 of the following calendar year. Buyer and Seller agree (i) to cooperate with Escrow holder and with each other in completing any report and/or other information required to be delivered to the Internal Revenue Service pursuant to Internal Revenue Code Section 6045(e) regarding the real estate sales transaction contemplated by this Agreement, including without limitation, Internal Revenue Service Form 1099-S as such may be hereafter modified or amended by the Internal Revenue Service, or as may be required pursuant to any regulation now or hereafter promulgated by the Treasury Department with respect thereto; (ii) that Buyer and Seller, their respective employees and attorneys, and Escrow Holder and its employees may disclose to the Internal Revenue Service, any information regarding the Option Agreement, this Agreement or the transaction contemplated herein as such party reasonably deems to be required to be disclosed to the Internal Revenue Service by such party pursuant to Internal Revenue Code Section 6045 (e); (iii) that neither Buyer nor Seller shall seek to hold any such party liable for the disclosure to the Internal Revenue Service of any such information; and (iv) to retain this Agreement for at least four (4) years following the close of the calendar year in which the Close of Escrow occurs. 6.8 Brokerage Commissions. Except as may be noted in the Option Agreement, Buyer and Seller each represent and warrant to the other that no third party is entitled to a broker's commission and/or finder' a fee with respect to the transaction contemplated by this Agreement. Buyer and Seller each agree to indemnify, defend and hold the other harmless from and against all liabilities, costs, damages and expenses, including, without limitation, attorneys' fees, resulting from any other claims or fees or commissions, based upon agreements by it, if any, to pay a broker's commission and/or finder's fee. ARTICLE VII DEFAULT 7.1 DEFAULT OF BUYER; LIQUIDATED DAMAGES. IN THE EVENT CLOSE OF ESCROW SHALL NOT HAVE OCCURRED ON OR BEFORE THE G CLOSING DATE FOR ANY REASON WHATSOEVER (EXCEPTING ONLY MATERIAL DEFAULT BY SELLER HEREUNDER), THEN AND IN SUCH EVENT, NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY, BUYER AND SELLER AGREE TI -IAT SELLER WILL INCUR DAMAGES BY REASON OF SUCH DEFAULT BY BUYER OR FAILURE OF ESCROW TO CLOSE ON OR BEFORE THE CLOSING DATE, WHICH DAMAGES SHALL BE IMPRACTICAL AND EXTREMELY DIFFICULT, IF NOT IMPOSSIBLE, TO ASCERTAIN. BUYER. AND SELLER, IN A REASONABLE EFFORT TO ASCERTAIN WHAT SELLER'S DAMAGES WOULD BE IN THE EVENT OF SUCH DEFAULT BY BUYER OR FAILURE OF ESCROW TO CLOSE ON OR BEFORE THE CLOSING DATE HAVE AGREED BY PLACING THEIR INITIALS BELOW THAT THE INITIAL OPTION CONSIDERATION, MONTHLY EXTENSION CONSIDERATION (IF ANY) AND THE PURCHASE DEPOSIT SHALL BE DEEMED TO CONSTITUTE A REASONABLE ESTIMATE OF SELLER'S DAMAGES UNDER THE PROVISIONS OF SECTION 1671 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. IN THE EVENT OF AND FOR SUCH DEFAULT BY BUYER OR FAILURE OF ESCROW TO CLOSE ON OR BEFORE THE CLOSING DATE, SELLER SHALL BE ENTITLED TO RETAIN THE INITIAL OPTION CONSIDERATION, THE MONTHLY EXTENSION CONSIDERATION (IF ANY) AND THE PURCHASE DEPOSIT AS LIQUIDATED DAMAGES AS SELLER'S SOLE MONETARY REMEDY THEREFOR. SELLER HEREBY WAIVES THE RIGHT TO SPECIFICALLY ENFORCE BUYER'S OBLIGATION TO CLOSE TI -IIS ESCROW. WITHOUT LIMITING THE FOREGOING, SELLER SPECIFICALLY WAIVES THE RIGHTS AND BENEFITS OF CALIFORNIA CIVIL CODE SECTION 3389 AND SIMILAR LAWS. THE FOREGOING LIQUIDATED DAMAGES PROVISION SHALL NOT APPLY TO NOR LIMIT (i) THE COVENANTS OF BUYER AND INDEMNITY PROVISIONS AND DAMAGES RECOVERABLE BY SELLER UNDER SECTIONS 2.4, 2.7, 2.8, ARTICLE III, SECTIONS 5.1 AND 5.2 OF THE OPTION AGREEMENT OR UNDER SECTIONS 6.8 AND 8.7 OF "THIS AGREEMENT; (ii) THE RIGHTS OF SELLER AS AGAINST BUYER FOR ANY OTHER BREACH OTHER THAN THE FAILURE OF ESCROW TO CLOSE ON OR BEFORE THE CLOSING DATE; (iii) ANY RIGHTS, REMEDIES OR DAMAGES SELLER MAY HAVE AGAINST BUYER WHICH ACCRUE FOLLOWING CLOSE OF ESCROW; (iv) SELLER'S RIGHT TO RETAIN THE INITIAL OPTION CONSIDERATION AND MONTHLY EXTENSION CONSIDERATION (IF ANY) PAID PURSUANT TO THE OPTION AGREEMENT; OR (v) SELLER'S RIGHT TO OBTAIN SPECIFIC PERFORMANCE FOR ANY BREACH BY BUYER UNDER THIS AGREEMENT OTHER THAN BUYER'S FAILURE TO CLOSE THIS ESCROW. SELLER'S INITIALS BUYER'S INITIALS 10 7.2 Default by Seller. If all conditions precedent to Seller's obligations to sell the Property have been satisfied and Seller thereafter defaults in its obligation to sell the Property on or before the Closing Date for any reason other than the default by Buyer under this Agreement, Buyer shall have all rights and remedies provided for such default under law and equity, including without limitation, bringing an action for specific performance of Seller's obligations or in lieu thereof, bringing an action for damages for breach of Seller's obligations. ARTICLE VIII MISCELLANEOUS 8.1 Representation and Warranties: Disclaimer. The provisions of Article III of the Option Agreement are specifically incorporated herein by reference as if set out in full herein. SELLER'S INITIALS BUYER'S INITIALS 8.2 Assi nig Hent. Buyer shall have no right to assign this Agreement or any right or privilege Optionee might have under this Agreement, by operation of law or otherwise, without the prior written consent of Seller, which consent may be withheld in Seller's sole and absolute discretion. 8.3 Successors and Assigns. Subject to the limitations of Section 8.2, this Agreement shall be binding upon the parties hereto and their respective heirs, representatives, transferees, successors and assigns. The obligations of Seller under this Agreement shall inure to the benefit of Buyer, any purchaser or lessee of Buyer, and their respective heirs, representatives, transferees, successors and assigns, and all such parties shall be deemed third party beneficiaries of Seller's obligations and covenants under this Agreement. The transfer of all or any part of the interest of any party hereunder in the Property shall not release Seller of its obligations under this Agreement. 8.4 Time of Essence. Time is of the essence in this Agreement and with respect to each covenant and condition hereof. Buyer and Seller each specifically agrees to strictly comply and perform its obligations herein in the time and manner specified and waives any and all rights to claim such compliance by mere substantial compliance with the terms of this Agreement. 8.5 Time Period Computations. All periods of time referred to in this Agreement shall include all Saturdays, Sundays and California state or national holidays unless the reference is to business days, in which event such weekends and holidays shall be excluded in the computation of time and provided that if the last date to perform any act or give any notice with respect to this Agreement shall fall on a Saturday, Sunday or California state or national holiday, such act or notice shall be deemed to have been timely performed or given on the next succeeding day which is not a Saturday, Sunday or California state or national holiday. 8.6 Qualification; Authority. Each individual executing this Agreement on behalf of a partnership or corporation represents and warrants that such entity is duly formed and authorized to do business in the State of California and that he or she is duly authorized to execute and deliver this Agreement on behalf of such partnership or corporation in accordance with authority granted under the formation documents of such entity, and, if a corporation, by a duly passed resolution of its Board of Directors, that all conditions to the exercise of such authority have been satisfied, and that this Agreement is binding upon such entity in accordance with their respective terms. Upon request of either party, Escrow Holder or Title Company, Buyer and Seller agree to deliver such documents reasonably necessary to evidence the foregoing. 8.7 Attorneys' Fees. In the event of any dispute between the parties hereto arising out of the subject matter of this Agreement or the Escrow, or in connection with the Property, the prevailing party in such action shall be entitled to have and to recover from the other party its reasonable attorneys' fees and other reasonable expenses in connection with such action or proceeding in addition to its recoverable court costs. 8.8 Interpretation; Governing Law. This Agreement shall be construed according to its fair meaning and as if prepared by both parties hereto. This Agreement shall be construed in accordance with the laws of the state of California in effect at the time of the execution of this Agreement. Titles and captions are for convenience only and shall not constitute a portion of this Agreement. As used in this Agreement, masculine, feminine or neuter gender and the singular or plural number shall each be deemed to include the others wherever and whenever the context so dictates. 8.9 No Waiver. No delay or omission by either party hereto exercising any right or power accruing upon the compliance or failure of performance by the other party hereto under the provisions of this Agreement shall impair any such right or power or be construed to be a waiver, thereof. A waiver by either party hereto of a breach of any of the covenants, conditions or agreements hereof to be performed by the other party shall not be construed as a waiver of any succeeding breach of the same or other covenants, agreements, restrictions or conditions hereof. 8.10 Modifications. Any alteration, change or modification of or to this Agreement, in order to become effective, shall be made by written instrument or endorsement thereon and in each such instance executed on behalf of each party hereto. 12 8.11 Severability. If any term, provision, condition or covenant of this Agreement or the application thereof to any party or circumstances shall, to any extent, be held invalid or unenforceable, the remainder of this instrument, or the application of such term, provision, condition or covenant to persons or circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be affected thereby, and each tern and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 8.12 Merger of Prior Agreements and Understandings. The Option Agreement is hereby incorporated by reference. To the extent that there are any conflicts between the provisions of the Option Agreement and those provisions contained within this Agreement, the provisions in the Option Agreement shall control. This Agreement, the Option Agreement and other documents incorporated herein by reference contain the entire understanding between the parties relating to the transaction contemplated hereby and all prior or contemporaneous agreements, understandings, representations and statements, oral or written, are merged herein and shall be of no further force or effect. All terms not defined herein shall have the meaning as defined in the Option Agreement. 8.13 Covenants to Survive Escrow. The covenants and agreements contained herein shall survive the Close of Escrow and, subject to the limitations on assignment contained in Section 8.2 above, shall be binding upon and inure to the benefit of the parties hereto and their representatives, heirs, successors and assigns. 8.14 Consent of Parties. Whenever by the terns of this Agreement the consent or approval of Buyer or Seller is to be given, such consent or approval shall be evidenced by the signature of one person designated for such purpose. Initially such person for Seller shall be Richard D. Aschenbrenner and such person for Buyer shall be its City Manager and Executive Director. Such designated persons may be changed by the party so designating at any time by the delivery of a written notice to the other party. 8.15 Execution in Counterpart. This Agreement and any modifications, amendments or supplements thereto may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart. 8.16 Notices. Any notice which either party may desire to give to the other party or to the Escrow Holder must be in writing and shall be effective (i) when personally delivered by the other party or messenger or courier thereof; (ii) three (3) business days after deposit in the United States mail, registered or certified; (iii) twenty- four (24) hours after deposit before the daily deadline time with a reputable overnight courier or service; or (iv) upon receipt of a telecopy or fax transmission, provided a hard copy of such transmission shall be thereafter delivered in one of the methods described in the foregoing (i) through (iii); in each case postage fully prepaid and addressed to the 13 respective parties as set forth below or to such other address and to such other persons as the parties may hereafter designate by written notice to the other parties hereto: To Seller: Continuing Life Communities Management, LLC 1940 Levante St Carlsbad, CA 92009 Attn: Richard D. Aschenbrenner Facsimile No. (760) 704-6262 Copy to: Palmieri, Tyler, Wiener, Wilhelm & Waldron LLP 2603 Main St., Suite 1300 Irvine, CA 92614 Attn: Robert C.Ihrke Phone No.: (949) 851-9400 Facsimile No.: (949) 851-1554 Email: rihrke@ptwww.com To Buyer: City of San Juan Capistrano San Juan Capistrano Community Redev. Agency 32400 Paseo Adelanto San Juan Capistrano, CA 92675 Attn: Dave Adams, City Manager/Executive Director Phone: (949) 493-1171 Facsimile No.: (949) 488-3874 Email: dadams@sanjuancapistrano.org Copy to: Woodruff, Spradlin & Smart 555 Anton Blvd., Suite 1200 Costa Mesa, CA 92626 Attn: Omar Sandoval, Esq. Phone No.: (714) 558-7000 Facsimile No.: (714) 835-7787 Email: osandoval@wss-law.com To Escrow Holder: First American Title Insurance Company (FATCO) 5 First American Way Santa Ana, CA 92707 Attn: Dawn Niehaus, Commercial Escrow Officer Phone No.: (714) 250-8401 Facsimile No.: (714) 200-0114 Email: dniehaus@firstam.com 14 8.17 Exhibits. Exhibit "A"," attached hereto, is incorporated herein by this reference. IN WITNESS WHEREOF, the parties hereto have executed this Purchase Agreement and Escrow Instructions as of the date set forth above. CITY OF SAN JUAN CAPISTRANO "Buyer" a California municipal corporation ATTEST: By: Its: City Manager City Clerk APPROVED AS TO FORM: City Attorney SAN JUAN CAPISTRANO COMMUNITY REDEVELOPMENT AGENCY a Public Body, corporate and politic By: Its: Executive Director APPROVED AS TO FORM General Counsel 15 ATTEST: Secretary CONTINUING LIFE COMMUNITIES MANAGEMENT, LLC, "Seller" a California limited liability company By: Richard D. Aschenbrenner Its: Chief Executive Officer AGREED AND ACCEPTED AS OF THIS DAY OF 20 FIRST AMERICAN TITLE, a California corporation In Its: "Escrow Holder" 16