HomeMy WebLinkAbout25A - AGMT - SALE OF YMCA PROPERTYal
CITY COUNCIL MEETING DATE:
CLERK OF COUNCIL USE ONLY:
NOVEMBER 3, 2015
TITLE: APPROVED
OPTION AGREEMENT FOR SALE AND ❑ As Recommended
SUBSEQUENT RENOVATION AND ❑ As Amended
REUSE OF THE YMCA PROPERTY ❑ Ordinance on I" Reading
❑ Ordinance on 2ntl Reading
{STRATEGIC PLAN NO. 3,5A) ❑ Implementing Resolution
❑ Set Public Hearing For
CONTINUED TO
FILE NUMBER
CITY MANAGE
Authorize the City Manager and City Attorney to approve an Option to Purchase Agreement on
behalf of the City of Santa Ana with St. Joseph Health System for the sale and subsequent
renovation and reuse of the YMCA property located at 205 W. Civic Center Drive, subject to non -
substantive changes approved by the City Manager and City Attorney.
DISCUSSION
The YMCA building, located at 205 West Civic Center Drive was purchased by the City in 1992
and has been vacant since that time. The building is in serious disrepair due to age, vandalism
and deferred maintenance. Addressing the exterior appearance of the YMCA building and
enhancing building security is one important interim measure that was accomplished shortly after
the September 2014 approval of the Exclusive Negotiating Agreement (ENA) with St. Joseph
Health.
Since entering into the ENA, St. Joseph Health and their team of consultants have made
significant progress in the following areas: 1) project economic feasibility; 2) environmental
reviews; 3) entitlements; 4) historic rehabilitation requirements; 5) project budget; 6) assembling
an experienced rehabilitation team; and 7) parking assessment.
Guiding principles associated with the YMCA project management work of St. Joseph Health
remain as follows:
The City Council's stated objective to implement a strong economic development program
in the Downtown which provides a linkage between the Civic Center and related
professional office and nonprofit organizations.
The St. Joseph team proposal to share operating revenues and expenses, lending
strength to their financial proposal while ensuring the long term viability of the project.
25A -1
YMCA Option Agreement
November 3, 2015
Page 2
St. Joseph Health operating a wellness center onsite and Taller San Jose being a tenant of
the building, thereby providing a more secure venue than a speculative commercial
development.
The St. Joseph team proposing to complete the project within three years.
City staff and the developer have worked diligently over the past year to negotiate a strong
agreement that comprehensively takes into account all of the project deal points. There remain
three areas where additional work remains necessary including: 1) resolution of title issues
identified subsequent to the approval of the ENA; 2) resolution of easement issues associated
with the adjacent parking structure; and 3) environmental remediation of the building. Given the
progress that has occurred during the term of the ENA, staff is recommending that the City enter
into an option agreement to sell the former YMCA building to St. Joseph Health, subject to certain
conditions. It is anticipated that this option agreement will lead to a separate development
agreement being brought before the City Council for final consideration within one year's time.
It should also be noted that as a direct result of the St. Joseph team's environmental studies, staff
anticipates requesting separate City Council action in the near future to remediate the
environmental hazards present in the YMCA building. The Santa Ana Public Works Agency with
the assistace of an environmental consultant is in the process of determining the final scope of
the project and preparing the necessary documents. The YMCA environmental clean -up project
is expected to be sent out to bid in early 2016.
STRATEGIC PLAN ALIGNMENT
Approval of this item supports the City's efforts to meet Goal #3 Economic Development,
Objective #5 (Leverage private investment that results in tax base expansion and job creation
Citywide), Strategy A (Identify and market underutilized properties (City and non -City owned) for
new development that will create new jobs and expand the City's tax base).
FISCAL IMPACT
There is no fiscal impact associated with this action.
wi-,V
Kelly Reender
Executive Direc or
Community Development Agency
KR/SK/II
Exhibit: 1. Option Agreement
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PURCHASE OPTION AGREEMENT
THIS PURCHASE OPTION AGREEMENT (this "Agreement "), made as of November
[], 2015 (the "Effective Date "), by and between the City of Santa Ana, a public body,
corporate and politic ( "Optionor "), and St. Joseph Health System, a California nonprofit public
benefit corporation ( "Optionee "). As used herein, Optionee and Optionor may be referred to
collectively as the "Parties ", and each individually as a "Party."
RECITALS
A. Optionor is the fee simple owner of that certain land consisting of approximately 1.01
acres, located at 205 West Civic Center Drive, Santa Ana, California described in
Exhibit A attached to this Agreement and incorporated into this Agreement in its entirety
by this reference (the "Land ").
B. The Parties entered into that certain Exclusive Right to Negotiate Agreement, dated
September 17, 2014, as amended, regarding the Property (as defined below).
C. The Property is in need of Remediation Work (as defined below).
D. Optionor is commencing the Remediation Work which is anticipated to be completed on
or before December 31, 2016.
E. Optionee has proposed the development of the Property as multipurpose wellness center,
(the "Project ").
F. The development of the Project on the Property will be of benefit to Optionor and
community by reducing blight, increasing the economic viability of the community, and
providing needed health and community services to the residents of Santa Ana,
California.
G. Optionee desires to acquire and Optionor desires to grant to Optionee the sole and
exclusive right to purchase, without being obligated to purchase, the Property (as defined
below), subject to the terns of this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of Ten and no /100 Dollars ($10.00) (the "Option
Fee "), the mutual covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
1. Incorporation of Recitals. The recitals of fact set forth above are true and correct and are
incorporated into this Agreement in their entirety by this reference.
2. Grant of Option. Optionor hereby grants to Optionee the sole and exclusive right to
purchase, upon the terms and conditions set forth in this Agreement (the "Option "), the
following property (collectively, the "Property "): (a) the Land, together with all improvements
( "Improvements "), as such improvements may be altered in comiection with the Remediation
Work (as defined below). located thereon (collectively, the "Real Property "); (b) all of
Optionor's right, title and interest in all tangible personal property owned by Optionor located
upon, attached to, or necessary for the operation of the Real Property (collectively, the
"Tangible Personal Property "), to the extent the delivery of such Tangible Personal Property is
accepted, in writing by Optionee; and (c) all of Optionor's right, title and interest in all intangible
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personal property related to the Real Property and the Improvements (collectively, the
"Intangible Personal Property ") to the extent the delivery of such, Intangible Personal Property
is accepted, in writing by Optionee. The Option Fee is non - refundable but shall be applied to the
Purchase Price (as defined below), if any, on the date of Closing (as defined below), if any.
3. Remediation Work.
3.1. Within sixty (60) days after the full execution of this Agreement, Optionor will
deliver to Optionee, for Optionee's review a Remediation Work plan (as mutually agreed by the
Parties as provided in this Agreement, the "Remediation Work Plan "). Within forty -five (45)
days after Optionor delivers to Optionee the Remediation Work Plan, Optionee will advise
Optionor in writing of Optionee's comments, suggestions and requirements therefor. If
applicable, within fifteen (15) days after Optionee advises Optionor of Optionee's comments,
suggestions and requirements for the Remediation Work Plan, Optionor will submit to Optionee,
for Optionee's review a revised Remediation Work Plan. The procedures of set forth above shall
continue until the Parties mutually agree upon a Remediation Work Plan or until a Party provides
notice to the other that a Remediation Work Plan cannot be agreed (a "Remediation Work Plan
Termination Notice "). In the event that either party delivers a Remediation Work Plan
Termination Notice, either this Agreement shall terminate and the Parties shall have no further
rights or obligations under this Agreement, except for rights and obligations which, by their
terms, survive the termination of this Agreement, or the Party receiving the Termination Notice
may accept, in writing, the last Remediation Work Plan submitted by the Terminating Party.
Upon the mutual agreement of a Remediation Work Plan, neither party shall have the right to
deliver a Remediation Work Plan Termination Notice.
3.2. Within fifteen (15) days after a Remediation Work Plan has been mutually
agreed by the Parties, Optionor shall, at its sole cost and expense, promptly begin and thereafter
diligently prosecute to completion all steps required to complete all Remediation Work (defined
below) pursuant to the Remediation Work Plan. Optionor shall use its best efforts to
Substantially Complete the Remediation Work not later than December 31, 2016. Upon
Substantial Completion of the Remediation Work, Optionor will deliver to Optionee notice that it
has substantially performed all of the Remediation Work, other than minor items and
adjustments which do not materially interfere with Optionor's use of the ( "Notice of Substantial
Completion "). Within fifteen (15) days after Optionor delivers to Optionee the Notice of
Substantial Completion, Optionor and Optionee will conduct a walk - through inspection of the
Property. Within fifteen (15) days after the walk - through inspection of the Premises, Optionee
shall provide to Optionor a written punch -list specifying those items which Optionee requires to
be completed, are defective, incomplete, or do not conform to the Remediation Work or any
applicable laws, which items Optionor will thereafter diligently complete or Optioner shall
provide, within seven (7) days, notice to Optionee of Optioner's intent to not complete any or all
of Optionee's identified items. If Optionor chooses not to perform the Optionee identified items,
Optionee may terminate this Agreement and the Parties shall have not further rights or
obligations under this Agreement. Optionor acknowledges and agrees that time is of the essence
with respect to the completion of the Remediation Work.
3.3. Subject to the development of the Remediation Work Plan, "Remediation Work"
may include, all investigation, sampling, monitoring, testing, reporting, removal (including,
excavation, transportation and disposal), response, storage, remediation, treatment and other
activities or other remedial action as defined under Section 101(25) of CERCLA (as defined
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below), and similar actions with respect to Hazardous Materials (as defined below) as defined
under comparable state and local laws, and any other cleanup, removal, containment, abaternent,
recycling, transfer, monitoring, storage, treatment, disposal, closure, restoration or other
mitigation or remediation of Hazardous Materials or releases required by any environmental
agency or within the purview of any Environmental Laws. "Hazardous Materials" means any
and all substances, materials and wastes which are regulated as hazardous or toxic under
applicable local, state or federal law or which are classified as hazardous or toxic under local,
state or federal laws or regulations, including, without limitation, (i) those substances included
within the definitions of "hazardous substances," "hazardous materials," "toxic substances,"
"solid waste," "pollutant" or "contaminant" as such terms are defined by or listed in the
Comprehensive Environmental Response Compensation and Liability Act of 1980 (42 U.S.C. §
9601 et seq.) ( "CERCLA "), as amended by Superfund Amendments and Reauthorization Act of
1986 (Pub. L. 99 -499 100 Stat. 1613) ( "SARA "), the Hazardous Materials Transportation Act
(49 U.S.C. § 1801 et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C. §
6901 et seq.) ( "RCRA "), the Toxic Substance Control Act (15 U.S.C. § 2601 et seq.), the
Federal Insecticide, Fungicide and Rodenticide Control Act (7 U.S.C. § 136 et seq.), the
Occupational Safety and Health Act of 1970 (29 U.S.C. § 651 et seq.), the Emergency Planning
and Community Right to Know Act of 1986 (42 U.S.C. § 11001 et seq.), the Hazardous and
Solid Waste Amendments of 1984 (Public Law 86 -616 Nov. 9, 1984), the Federal Clean Air Act
(42 U.S.C. § 7401 et seq.), and in the regulations promulgated pursuant to such laws, all as
amended, (ii) those substances listed in the United States Department of Transportation Table
(49 CFR 172.101) or 40 CFR Part 302, both as amended, and (iii) any material, waste or
substance which is (A) oil, gas or any petroleum or petroleum by- product, (B) asbestos, in any
form, (C) polychlorinated biphenyls, (D) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act (33 U.S.C. § 1251 et seq.), as amended, (E) flammable
explosives, or (F) radioactive materials (collectively, "Environmental Laws ").
"Environmental Conditions" shall mean the presence upon the Property of any Hazardous
Materials, or condition on the Property giving rise to any required action to be taken by any
governmental body or agency in relation to any Hazardous Materials or Environmental Laws.
3.4. Optionor shall not place, or allow to be placed, on its interests in the Property,
Improvements, or any portion thereof, any mortgage or encumbrance of lien. Optionor shall,
within thirty (30) calendar days following receipt of notice thereof, cause to be removed or
bonded against (such bonding to be by the provision of bonds satisfying California statutory
requirements) any and all mechanic's liens, stop notices and /or bonded stop notices that are
recorded and /or served by contractors, subcontractors (of all tiers) and suppliers in connection
with the portion of the Property.
4. Optionor Conditions Precedent
4.1. Not later than January 15, 2016, Optionee will deliver to Optionor, for Optionor's
review a Project development plan (as mutually agreed by the Parties as provided in this
Agreement, the "Development Plan "). Within thirty (30) days after Optionee delivers to
Optionor the Development Plan, Optionor will advise Optionee in writing of Optionor's
comments, suggestions and requirements therefor. If applicable, within fifteen (15) days after
Optionor advises Optionce of Optionor's comments, suggestions and requirements for the
Development Work Plan, Optionee will submit to Optionor, for Optionor's review a revised
Development Plan. The procedures of set forth above shall continue until the Parties mutually
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agree upon a Development Plan or until a Party provides notice to the other that a Development
Plan cannot be agreed (a "Development Plan Termination Notice "). In the event that either
party delivers a Development Plan Termination Notice, this Agreement shall terminate and the
Parties shall have no further rights or obligations under this Agreement, except for rights and
obligations which, by their terms, survive the termination of this Agreement. Upon the mutual
agreement of a Development Plan, neither party shall have the right to deliver a Development
Plan Termination Notice.
4.2. Beginning not later than the Effective Date, Optionor shall, at its sole cost and
expense, promptly begin and thereafter diligently prosecute to completion all steps required to
complete all Conditions Precedent (defined below) to the transfer of the Property not later than
December 31, 2016. Optionor acknowledges and agrees that time is of the essence with respect
to the satisfaction of the Conditions Precedent of the Optionor to the transfer of the Property to
Optionee. Optionor represents and warrants that the only conditions precedent of the Optionor to
the transfer of the Property to Optionee are as follows (the "Conditions Precedent "):
4.2.1. Optionor has satisfied all legal requirements for disposition of the
Property, including any legally required noticing or hearings, and adoption of a
resolution approving the sale.
4.2.2. Optionor has completed all Remediation Work in accordance with all
Environmental Laws and to Optionee's reasonable Satisfaction.
4.2.3. The final adoption, approval or certification of all documentation required
for the Project under the California Environmental Quality Act, Public Resources
Code Sections 21000, et seq. ( "CEQA ") and the period for challenge of such
CEQA Approval has passed.
4.2.4. The City planning commission finds, pursuant to Government Code
Section 65402, that the Project is consistent with the City's General Plan.
4.2.5. Optionor has taken all steps, at Optionor's sole expense, to remove any
encroachments affecting the Property.
4.2.6. Optionor has obtained a mutually agreeable Disposition Agreement (as
defined below).
4.2.7. The Parties have mutually agreed upon a Development Plan
4.3. Upon completion of the Conditions Precedent, Optionor shall deliver to Optionee
evidence of satisfaction of the same (`Notice of Satisfaction of Conditions Precedent "). In the
event that Optionor does not complete the Conditions Precedent described in Sections 4.2.1
through and including 4.2.4 on or prior to December 31, 2016, the same shall be an Optionor
Breach (as defined below) an subjection to the provisions of Section 24 of this Agreement. In
the event that Optionor does not complete the Conditions Precedent described in Sections 4.2.5
on or prior to December 31, 2017, the same shall be an Optionor Breach and subject to the
provisions of Section 24 of this Agreement. Upon Optionee's receipt of a Notice of Satisfaction
of Conditions Precedent, Optionee shall have no have the right to terminate this Agreement
pursuant to this Section 4.3.
5. Option Period; Exercise of Option; Conditions Precedent. The Option shall commence
on the Effective Date and will remain in effect until 11:59 p.m., Los Angeles time, on the date
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that is one hundred eighty (180) days following receipt by Optionee of a Notice of Satisfaction of
Conditions Precedent (the "Option Period "). Optionee may exercise the Option during the
Option Period by delivering to Optionor an executed instrument substantially in the form
attached to this Agreement and incorporated herein by reference as Exhibit B ( "Option Exercise
Notice ").
6. Purchase Price; Terns of Purchase. The purchase of the Property pursuant to the Option
will be consummated pursuant to a commercially reasonable development and disposition
agreement in a form reasonably acceptable to Optionee and Optionor (the "Disposition
Agreement ") which Disposition Agreement shall contain the Optionee's commitment to develop
the Property consistent with the Project, the Development Plan, and those development
covenants, operating covenants and associated restrictions agreed to by the Parties therein. The
purchase price ( "Purchase Price ") for the Property shall be the fair market value on the date of
receipt of the Option Exercise Notice. Sixty (60) days prior to any exercise of the option by
Optionee, upon notice by Optionee thereof to Optionor (i) the Parties shall nominate and appoint
a single appraiser, or, failing that, (ii) the Optionee and Optionor shall each nominate and appoint
one appraiser. If two appraisers are appointed as provided in clause (ii) above, the two
appraisers so appointed shall, within fifteen (15) days after the appointment of the second
appraiser and before exchanging views as to the questions at issue, appoint a third appraiser and
give written notice of such appointment to the Parties. In the event that a Party fails to appoint
an appraiser within the twenty two (22) day period specified above, then the appraiser appointed
by the other Party shall make the appraisal. If the two appraisers selected by the Parties shall fail
to appoint or agree upon the third appraiser within the fifteen (15) day period specified above,
then a third appraiser may be selected by the Parties if they can agree upon such third appraiser
within a further period of ten (10) additional days; otherwise, any Party may apply to any federal
or state court of or sitting in the State of California having jurisdiction for the appointment of any
appraiser not appointed or agreed upon within the time periods herein provided. The appraisers
selected pursuant hereto shall be sworn faithfully and fairly to determine expeditiously the fair
market value. The three appraisers (or the one or two appraisers, if only one or two appraisers
are appointed) shall, with all possible speed, make the appraisal contemplated herein, set forth
their (or its) results in writing, and give notice of the same to the Parties. If two of the three
appraisers shall render a concurring deternination, then that concurring determination shall be
conclusive and binding on the Parties. If no two of the three appraisers shall render a concurring
determination, then the determination of the third appraiser appointed by the two appraisers
appointed by the Parties shall be conclusive and binding upon the Parties; except that if the
determination of the third appraiser shall be lower than the lowest determination of the other two
appraisers, or higher than the highest determination of the other two appraisers, the final
deternination shall be the median determination of the three appraisers. Each Party shall pay the
fees and expenses of the appraiser selected by or on behalf of it and the fees and expenses of the
third appraiser, and any general expenses incurred by the appraisers in connection with the
appraisal, shall be home equally between the Parties. Any appraiser appointed hereunder shall
be an appraiser with at least five (5) years' experience in appraising property of the same type as
the Property.
7. Due Diligence; Inspections.
7.1. Within ten (10) days following the Effective Date, and from time to time
thereafter upon receipt of the same, Optionor shall provide or make available to Optionee copies
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of all existing documents, agreements, contracts, leases, reports, studies, drawings and /or plans
relating to the operations and physical condition of the Property in Optionor's possession,
including without limitation engineering studies, surveys, energy reports, soils reports,
geotechnical reports, traffic studies, leases, governmental correspondence, environmental
reports, planning consultant reports, and plans and specifications (the "Due Diligence
Materials ").
7.2. Optionor hereby grants Optionee and its agents, consultants, contractors,
subcontractors, employees, representatives, and attorneys (collectively, " Optionee's Agents ") a
license and permission to enter upon, over, under and /or across the Property in order to conduct
visual inspections, physical testing, air samplings, borings, and other samplings, including but
not limited to, observing and documenting the Property's as-built conditions, exposing and
documenting hidden conditions at the Property, by limited removal of interior non - historic
fixtures and finishes, performing certain non - destructive testing of materials at the Property,
extracting concrete core samples in interior non - historically sensitive locations, in connection
with the proposed rehabilitation and reuse of the Property (the "Inspections "). The Inspections
shall be completed at Optionee's sole cost and expense. Optionee or Optionee's Agent shall
contact Optionor within one (1) day prior to the time of actual entry onto the Property and
provide notice of the date and time when entry will be made. Optionor may refuse access to
Optionee if the Remediation Work makes it unsafe or inappropriate, in Optionor's reasonable
discretion, for Optionee or Optionee's Agents to be on the Property at the desired time. Optionor
shall make the Property available as soon as reasonably practical thereafter. The license and
permission to enter upon, over, under and /or across the Property shall commence on the
Effective Date and shall expire upon termination of this Agreement.
7.3. Prior to entry onto the Property, Optionee shall secure, and shall require its
contractors, if any, to secure an insurance policy or policies, as described below.
7.3.1. Notwithstanding any inconsistent statement in the insurance policy or any
subsequent endorsement attached thereto, the protection afforded by these policies
shall be written on an occurrence basis in which Optionor, and its respective
elected and appointed officials, officers, employees, agents and representatives
(together, "Additional Insureds ") are named as additional insureds on all
coverage, except for workers' compensation coverage, and shall (on or prior to
the Effective Date, Optionee shall provide to Optionee the complete legal names
of all Additional Insureds):
(a) Name Additional Insureds as additional insureds on a Commercial General
Liability policy;
(b) Provide a combined single limit of broad form commercial general liability
insurance in the amount of Two Million Dollars ($2,000,000) per occurrence,
which will be considered equivalent to the required minimum limits, and such
insurance shall (i) be written on an occurrence form, (ii) be written with a primary
policy form with limits of not less than $1,000,000 per occurrence; (iii) be written
with one or more excess layers to bring the total of primary and excess coverage
limits to not less than $2,000,000 per occurrence, (iv) not be written with a
deductible greater than $25,000 per occurrence, (v) contain a waiver of
subrogation in favor of Optionor;
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(c) Provide automobile liability insurance for owned, non - owned, and hired
vehicles, as applicable to, or for any use related to, the Work, in an amount not
less than One Million Dollars ($1,000,000) combined single limit, with excess
insurance coverage to bring the total amount of automobile liability insurance
coverage to an amount not less than Two Million Dollars ($2,000,000) per
accident for bodily injury and property damage;
7.3.2. Optionee shall notify Optionor not less than thirty (30) days before any
expiration, cancellation, or non - renewal of such policy or policies; and
7.3.3. Optionee shall famish certificates of insurance and endorsements to
Optionor prior to entry onto the Property pursuant to this Section.
7.3.4. Optionee shall comply with Sections 3700 and 3800 of the Labor Code by
securing, paying for and maintaining in full force and effect during the Term, and
continuing prior to entry onto the Property pursuant to this Section, with the
earlier to occur of expiration of the Term complete workers' compensation
insurance, to statutory limits, with employer's liability limits not less than One
Million Dollars ($1,000,000) per occurrence, and shall furnish a Certificate of
Insurance to Optionor prior to entry onto the Property pursuant to this Section,
before the commencement of Work. All Additional Insureds shall not be
responsible for any claims in law or equity occasioned by the failure of Optionee
to comply with this section. Every workers' compensation insurance policy shall
bear an endorsement or shall have attached a rider providing that, in the event of
expiration or proposed cancellation of such policy for any reason whatsoever,
Optionor shall be notified, giving Optionee a sufficient time to comply with
applicable law, but in no event less than thirty (30) days before such expiration,
cancellation, or reduction in coverage is effective or in the event of nonpayment
of premium.
7.3.5. Should any of the required insurance coverage required be written with an
annual aggregate such aggregate shall be disclosed in writing to Optionor.
7.3.6. If Optionee fails or refuses to produce or maintain the insurance required
by this section or fails or refuses to furnish Optionor with required proof that
insurance has been procured and is in force and paid for, Optionor shall have the
right, at its election, to forthwith tenninate this the right of entry provided in this
Section.
7.3.7. Notwithstanding any requirements contained in this Section, Optionee
shall have the right to satisfy its insurance obligations under this Agreement by
means of self-insurance. Self- insurance shall mean that Optionee itself is acting
as though it were the third -party insurer providing the insurance required under
the provisions of this Agreement, and Optionee shall pay any amounts due in lieu
of insurance proceeds because of self-insurance, which amounts shall be treated
as insurance proceeds for all purposes under this Agreement. To the extent
Optionee chooses to provide any required insurance by self - insurance, the
protection afforded Optionor and the applicable properties shall be the same as if
provided by a third -party insurer under the coverages required by this Agreement.
In the event that Optionee elects to self- insure and an event or claim occurs for
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which a defense and /or coverage would have been available from a third -party
insurer, Optionee shall undertake the defense of any such claim, including a
defense of Optionor, at Optionee's sole cost and expense to pay any claim or
replace any property or otherwise provide the funding that would have been
available from insurance proceeds.
7.4. Optionee shall not pen-nit any mechanics', materialmen's or other liens of any
kind or nature ( "Liens ") to be filed or enforced against the Property. Optionor reserves the right,
at its sole cost and expense, at any time and from time to time, to post and maintain on the
Property, or any portion thereof, or on the improvements on the Property, any notices of non-
responsibility or other notice as may be desirable to protect Optionor against liability. In
addition to, and not as a limitation of Optionor's other rights and remedies under this Section,
should Optionee fail, within thirty (30) days of written request from Optionor, either to discharge
any Lien (to the extent such Lien is prohibited pursuant to this Section) or to bond for any Lien
(to the extent such Lien is prohibited pursuant to this Section), or to defend, indemnify, and hold
harmless Optionor from and against any loss, damage, injury, liability or claim arising out of a
Lien (to the extent such Lien is prohibited pursuant to this Section), then Optionor, at its option,
may elect to pay such Lien, or settle or discharge such Lien and any action or judgment related
thereto and all costs, expenses and attorneys' fees incurred in doing so shall be paid to Optionor,
as applicable, by Optionee upon written demand.
8. Compliance; Property Maintenance and O erp ation. From the Effective Date, Optionor
agrees to act in respect of the Property in the following manner:
8.1. Optionor agrees that it will not enter into any leases, licenses or other occupancy
permits for the Property without the prior written consent of Optionee in each instance, which
consent shall not be unreasonable withheld, conditioned or delayed.
8.2. Optionor will timely perform its obligations under any service contracts affecting
the Property in accordance with the terns and conditions contained therein. Optionor agrees that
it will not enter into amend or terminate any service contracts affecting the Property without the
prior written consent of Optionee in each instance, which consent shall not be unreasonable
withheld, conditioned or delayed.
8.3. Optionor will not enter into any contract or agreement that will be an obligation
affecting the Property except for contracts entered into in the ordinary course of business that are
tenninable without cause and without payment of a fee or penalty on not more than thirty (30)
days' notice.
8.4. Optionor will continue to operate and maintain the Property in accordance with
past practices and, except as agreed in the Remediation Work Plan, will not make any material
alterations or changes thereto. Optionor will not remove any Tangible 'Personal Property except
as may be required for necessary repair or replacement, and replacement shall be of
approximately equal quality and quantity as the removed item of Tangible Personal Property.
8.5. Optionor shall not do anything, nor authorize anything to be done, which would
adversely affect the condition of title of the Property.
9. Optionor's Representations and Warranties. Optionor hereby represents and warrants to
Optionee that, as of the Effective Date:
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9.1. Optionor is a municipal corporation incorporated within and existing pursuant to
the laws of the State of California.
9.2. Optionor has (or will have prior to the date by which a particular step is required
to be taken or performance of a particular obligation is required to be commenced pursuant to
this Agreement) all requisite power and authority required to enter into this Agreement and the
instruments referenced in this Agreement, to consummate the transaction contemplated hereby
and to take any steps contemplated thereby or hereby, and to perform its obligations hereunder
and thereunder.
9.3. Optionor has obtained (or will have obtained prior to the date by which a
particular step is required to be taken or performance of a particular obligation is required to be
commenced pursuant to this Agreement) all required consents in connection with entering into
this Agreement and the instruments and documents referenced in this Agreement to which
Optionor is or shall be a party and the consummation of the transactions contemplated hereby.
9.4. The individual executing this Agreement and the individual that will execute the
instruments referenced in this Agreement on behalf of Optionor have, or will have upon
execution thereof, the legal power, right and actual authority to bind Optionor to the terms and
conditions hereof and thereof.
9.5. This Agreement is duly authorized, executed and delivered by Optionor and all
documents required in this Agreement to be executed by Optionor pursuant to this Agreement
shall be, at such time as they are required to be executed by Optionor, duly authorized, executed
and delivered by Optionor and are or shall be, at such time as the same are required to be
executed hereunder, valid, legally binding obligations of and enforceable against Optionor in
accordance with their terms, except as enforceability may be limited by bankruptcy laws or other
similar laws affecting creditors' rights.
9.6. Neither the execution or delivery of this Agreement or the documents referenced
in this Agreement, nor the incurring of the obligations set forth in this Agreement, and the
certificates, declarations and other documents referenced in this Agreement, nor the
consummation of the transactions in this Agreement contemplated, nor compliance with the
terms of this Agreement and the documents referenced in this Agreement, will violate any
provision of law, any order of any court or governmental authority or conflict with or result in
the breach of any terms, conditions, or provisions of, or constitute a default under any bond, note
or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan,
partnership agreement, lease or other agreements or instruments to which Optionor is a parry or
which affect any of the Property or the transactions contemplated by this Agreement.
9.7. Other than as disclosed by Optionor to Optionee in writing, there are no legal
proceedings either pending or, to the knowledge of the Optionor Representatives, threatened, to
which Optionor is or may be made a party, or to which the Property, is or may become subject or
which could reasonably affect the ability of Optionor to carry out its obligations hereunder or
which would affect the Property.
9.8. Optionor holds, and can cause the conveyance of, fee title to the Property. The
transfer of the Property is not subject to any right of first refusal or similar purchase or other
options.
9
51528687.8 25A-1 1
9.9. There are no brokerage fee, cormnission, or finders' fee is payable to any person
or entity in connection with the transaction contemplated by this Agreement ( "Commissions ").
Optionor shall promptly advise Optionee in writing if Optionor becomes aware that any
representation or warranty made by Optionor is or becomes untrue in any material respect prior
to any Close of Escrow. Optionors' representations and warranties set forth in this Section shall
be deemed to be restated at consummation of any purchase contemplated in this Agreement and
shall survive any such purchase and shall not be merged with any deed.
10. Optionee's Representations and Warranties. Optionee hereby represents and warrants to
Optionor that, as of the Effective Date:
10.1. Optionee has all requisite corporate power and authority to execute and deliver,
and to perform all its obligations under, this Agreement. Optionee is duly organized, validly
existing and in good standing under the laws of the state of its formation, with fall power to enter
into this Agreement.
10.2. Optionee has (or will have prior to the date by which a particular step is required
to be taken or performance of a particular obligation is required to be commenced pursuant to
this Agreement) all requisite power and authority required to enter into this Agreement and the
instruments referenced in this Agreement, to consurmnate the transaction contemplated hereby
and to take any steps contemplated thereby or hereby, and to perform its obligations hereunder
and thereunder.
10.3. Optionee has obtained (or will have obtained prior to the date by which a
particular step is required to be taken or performance of a particular obligation is required to be
commenced pursuant to this Agreement) all required consents in connection with entering into
this Agreement and the instruments and documents referenced in this Agreement to which
Optionee is or shall be a party and the consurmation of the transactions contemplated hereby.
10.4. The individual executing this Agreement and the individual that will execute the
instruments referenced in this Agreement on behalf of Optionee have, or will have upon
execution thereof, the legal power, right and actual authority to bind Optionee to the terms and
conditions hereof and thereof.
10.5. This Agreement is duly authorized, executed and delivered by Optionee and all
documents required in this Agreement to be executed by Optionee pursuant to this Agreement
shall be, at such time as they are required to be executed by Optionee, duly authorized, executed
and delivered by Optionee and are or shall be, at such time as the same are required to be
executed hereunder, valid, legally binding obligations of and enforceable against Optionee in
accordance with their terms, except as enforceability may be limited by bankruptcy laws or other
similar laws affecting creditors' rights.
10.6. Neither the execution or delivery of this Agreement or the documents referenced
in this Agreement, nor the incurring of the obligations set forth in this Agreement, and the
certificates, declarations and other documents referenced in this Agreement, nor the
consummation of the transactions in this Agreement contemplated, nor compliance with the
terms of this Agreement and the documents referenced in this Agreement, will violate any
provision of law, any order of any court or governmental authority or conflict with or result in
the breach of any terms, conditions, or provisions of, or constitute a default under any bond, note
or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan,
to
51528687.8 25A-1 2
partnership agreement, lease or other agreements or instruments to which Optionee is a party or
which affect any of the Property or the transactions contemplated by this Agreement.
10.7. Other than as disclosed by Optionor in writing to Optionee, there are no legal
proceedings either pending or, to the knowledge of the Optionee Representatives, threatened, to
which Optionee is or may be made a party, or to which the Property, is or may become subject or
which could reasonably affect the ability of Optionee to carry out its obligations hereunder or
which would affect the Property.
Optionee shall promptly advise Optionee in writing if Optionee becomes aware that any
representation or warranty made by Optionee is or becomes untrue in any material respect prior
to any Close of Escrow. Optionee's representations and warranties set forth in this Section shall
be deemed to be restated at consummation of any purchase contemplated in this Agreement and
shall survive any such purchase.
11. Destruction/Condemnation of Property: Other Notices. In the event that all or any
portion of the Land or Improvements is damaged or destroyed by any casualty or is subject to a
taking or condemnation under the provisions of applicable law after the Effective Date but prior
to the date of Closing, Optionor shall give Optionee immediate written notice of the same.
Optionor shall promptly notify Optionee of any building code violation notices or actions
pending, and of any event that causes the representation of Optionor under this Agreement to no
longer be true or correct.
12. Notices. Any notice, request, demand, instruction or other document required or
permitted to be given or served hereunder or under any document or instrument executed
pursuant hereto will be in writing and will be delivered personally or sent by United States
registered or certified mail, return receipt requested, postage prepaid or by overnight express
courier, postage prepaid and addressed to the parties at their perspective addresses set forth
below, and the same will be effective upon receipt if delivered personally or via overnight
express courier or on the third Business Day after deposit if mailed. A party may change its
address for receipt of notices by service of a notice to such change in accordance herewith.
If to Optionee: St. Joseph Health System
3345 Michelson Drive, Suite 100
Irvine, California 92612
Attn: Annette Walker
with a copy to: St. Joseph Health System
3345 Michelson Drive, Suite 100
Irvine, California 92612
Attn: General Counsel
If to Optionor:
Atm.:
with a copy to:
t1.
51528687.8 25A-1 3
Attn.:
13. Memorandum of Agreement. At Optionee's request, Optionor shall execute a
memorandum of this Agreement in a form satisfactory to Optionee and Optionee may record
such memorandum in the real estate records of the County in which the Real Property is located.
14. Assi mgmment. Optionor may not assign its interest in this Agreement, or any of its rights
or obligations hereunder, without the prior written consent of Optionee, which shall not be
unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing paragraph,
Optionee may, without the prior written consent of Optionor assign its interest in this Agreement,
or any of its rights or obligations hereunder to a Permitted Transferee (as defined below). As
used herein, the teen "Permitted Transferee" means (a) any affiliate of Optionee, being a person
or entity who, directly or indirectly, controls, is controlled by, or is under common control with,
Optionee, including any partner, member, stockholder or other equity holder of Optionee (for
purposes of this definition, "control" shall mean the power, direct or indirect, to direct or cause
the direction of the management and policies of Optionee, whether through ownership of voting
securities, membership, partnership or other ownership interests, by contract or otherwise; and
the terns "controlling" and "controlled" shall have correlative meanings); or (b) a successor
related to Optionee by merger, consolidation, non - bankruptcy reorganization or government
action. No transfer or assignment in violation of the provisions hereof shall be valid or
enforceable. Subject to the foregoing, this Agreement and the terms and provisions hereof shall
inure to the benefit of and shall be binding upon the successors and assigns of the parties.
15. Further Instruments. Each Party will, whenever and as often as it shall be reasonably
requested to do so by the other, cause to be executed, acknowledged or delivered any and all
such further instruments and docuuments as may be necessary or proper, in the reasonable opinion
of the requesting party, in order to carry out the intent and purpose of this Agreement.
16. Calculation of Time Periods; Business Day; Time of Essence. Unless otherwise
specified, in computing any period of time described herein, the day of the act or event after
which the designated period of time begins to run is not to be included and the last day of the
period so computed is to be included, unless such last day is not a Business Day, in which event
the period shall run until the end of the next day which is a Business Day. The last day of any
period of time described herein shall be deemed to end at 5:00 p.m. local time in the state in
which the Real Property is located. As used herein, the term "Business bay" means any day that
is not a Saturday, Sunday or legal holiday for national banks in the city in which the Real
Property is located. Subject to the foregoing provisions, time is of the essence of this
Agreement.
17. Entire Agreement; Amendments. This Agreement (including the documents delivered
pursuant to this Agreement), constitutes the entire agreement of the Parties pertaining to the
subject matter of this Agreement and supersedes all prior agreements or letters of intent of the
Parties. This Agreement may not be amended, modified, or supplemented except by a written
instrument signed by azi authorized representative of each of the Parties.
12
51528687.8 25A-14
18. Binding Effect; Enforcement. The covenants, agreements, representations, and
warranties contained herein will be binding upon, be enforceable by and inure to the benefit of
the representatives, successors, and permitted assigns of the respective parties hereto.
19. Applicable Law. This Agreement will be construed and interpreted wider, and governed
and enforced according to, the laws of the State of California applicable to contracts made and to
be performed entirely therein.
20. Counterparts. This Agreement may be executed in any number of counterparts and by
different Parties to this Agreement in separate counterparts, each of which when so executed and
delivered will be deemed original, but all such counterparts, together, will constitute but one and
the same instrument. Signature pages may be detached from multiple separate counterparts and
attached to a single counterpart so that all signature pages are physically attached to the same
document. This Agreement will become effective upon the execution and delivery of a
counterpart hereof by each Party to this Agreement. A signature of a Party to this Agreement
sent by facsimile, electronic mail (including a scanned portable document format copy sent by
electronic mail), or other electronic transmission will have the same force and effect as delivery
of an original signature of such Party.
21. Interpretation. The paragraph and section headings in this Agreement are solely for
convenience and will not be deemed to limit or otherwise affect the meaning or construction of
any part of this Agreement. Any pronoun used in this Agreement will be deemed to cover all
genders. The terns "include," "including," and similar terms will be construed as if followed by
the phrase "without being limited to." The tern "or" has, except where otherwise indicated, the
inclusive meaning represented by the phrase "and /or." The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a whole and not to
any particular provision or section of this Agreement. Words in this Agreement importing the
singular number will mean and include the plural number, and vice versa.
22. Severability of Provisions. Wherever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement will be prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
23. Condemnation. From the Effective Date through and until the earlier of Closing or the
termination of this Agreement, Optionor shall not exercise the power of eminent domain or
similar powers on any portion of the Property, except to the extent required in order for Optionor
to satisfy its obligations in connection with Section 4.2.6 of this Agreement.
24. Optionor's Breach. In the event of a breach by Optionor of its obligations under this
Agreement that continues without cure beyond the applicable cure period, if any, or, if none, for
more than thirty (30) days after Optionee shall have given Optionor written notice thereof
( "Optionor Breach "), Optionee may elect to terminate this Agreement, in which event: (a) this
Agreement shall terminate and the Parties shall have no further rights or obligations under this
Agreement, except for rights and obligations which, by their terms, survive the termination of
this Agreement; and (b) Optionor shall reimburse Optionce for Optonee's reasonable costs
incurred in performing Optionee's due diligence (as provided in this Agreement), inspections of
the Property (as provided in this Agreement) and design of the Project, not to exceed $50,000.00,
forty -five (45) days of Optionee's notice of such termination.
13
51528687.8 25A-1 5
25. Optionee Indemnity. Subject to the teens and conditions set forth in this Section,
Optionee shall indemnify, hold harmless, and defend Optionor and its officers, directors,
employees, agents, affiliates, successors and permitted assigns (collectively, " Optionor
Indemnified Party ") against any and all losses, damages, liabilities, deficiencies, claims,
actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever
kind, including reasonable attorneys' fees, that are incurred by Optionor Indemnified Pa
(collectively, " Optionor Losses "), arising out of any claim alleging: (i) breach or non - fulfillment
of any covenant or any negligent or more culpable act or omission of Optionee or its personnel
(including any reckless or willful misconduct) in connection with this Agreement, (ii) any false
representation of Optionee under this Agreement; or (iii) any claim for payment of Commissions
to any other person or entity claiming by, through or under Optionor. Notwithstanding anything
to the contrary in this Agreement, Optionee is not obligated to indemnify, hold harmless or
defend any Optionor Indemnified Party against any claim (whether direct or indirect) if such
claim or corresponding Optionor Losses arise out of or result from Optionor Indemnified Party's,
(a) any pre - existing facts, circumstances, liabilities for matters merely discovered by Optionee
(i.e., latent environmental contamination to the extent Optionee does not materially exacerbate
same following its initial discovery), (b) or Optionor Indemnified Party's and /or Optionor's
agents' gross negligence or more culpable act or omissions (including recklessness or willful
misconduct), or (c) Optionor Indemnified Party's bad faith failure to materially comply with any
of Optionor's material obligations set forth in this Agreement. Payments by Optionee under this
Section in respect of any Optionor Losses are limited to the amount of any liability or damage
that remains after deducting therefrom any insurance proceeds and any indemnity, contribution
or other similar payment actually received by any Optionor Indemnified Party in respect of any
such indemnity claim. Any Optionor Indemnified Party shall use its best efforts to seek to
recover any insurance proceeds in connection with making a claim under this Section. Promptly
after the realization of any insurance proceeds, indemnity, contribution or other similar
payment, any Optionor Indemnified Party shall reimburse Optionee for such
reduction in Optionor Losses for which any Optionor Indemnified Party was paid under this
Section before the realization of reduction of such Optionor Losses. Any Optionor Indemnified
Party shall give Optionee prompt written notice (a "Claim Notice ") of any Optionor Losses or
discovery of facts on which any Optionor Indemnified Party intends to base a request for
indemnification under this Section. Any Optionor Indemnified Party's failure to provide a Claim
Notice to Optionee under this Section does not relieve Optionee of any liability that Optionee
may have to any Optionor Indemnified Party, but in no event shall Optionee be liable for any
Optionor Losses that result from a delay in providing a Clain Notice. Each Claim Notice must
contain a description of the claim and the nature and amount of the related Optionor Losses (to
the extent that the nature and amouuit of the Optionor Losses are known at the time). Any
Optionor Indemnified Party shall furnish promptly to Optionee copies of all papers and official
docurnents received in respect of any Optionor Losses. Optionee's duty to defend applies
immediately, regardless of whether any Optionor Indemnified Party has paid any sums or
incurred any detriment arising out of or relating, directly or indirectly, to any claim. Optionee
may assume, at its sole option, control of the defense, appeal or settlement of any claim that is
reasonably likely to give rise to an indemnification claim under this Section (an " Optionee
Indemnified Claim ") by sending written notice of the assumption to Optionor on or before
thirty (30) days after receipt of a Claim Notice to ackriowledge responsibility for the defense of
such Optionee Indemnified Claim and undertake, conduct and control, through reputable
14
51528687.8 25A-1 6
independent counsel of its own choosing (which Optionor shall find reasonably satisfactory) and
at Optionee's sole cost and expense, the settlement or defense thereof. If Optionee assumes
control of the defense under this Section, Optionor Indemnified Party (a) shall fully cooperate
with Optionee in connection therewith; and (b) may employ, at any time, separate counsel to
represent it; provided, that Optionor Indemnified Party is solely responsible for the costs and
expenses of any such separate counsel. Notwithstanding anything to the contrary in this Section,
Optionor Indemnified Party may defend an Optionee Indemnified Claim with counsel of its own
choosing and without the Optionee's participation if: (a) the Optionee Indemnified Claim is one
for which Optionor properly gave Optionee a Claim Notice under this Section, and Optionee
fails to assume the defense or refuses to defend the Optionee Indemnified Claim under this
Section; (b) the Optionee Indemnified Claim seeks only an injunction or other equitable relief
against Optionor Indemnified Party; or (c) Optionor Indemnified Party reasonably believes: (i)
that there are one or more legal or equitable defenses available to it that are different from or in
addition to those available to Optionee; and (ii) counsel for Optionee could not adequately
represent the interest of Optionor Indemnified Party because such interest could be in conflict
with those of Optionee; or (iii) such action or proceeding involves, or could have a material
effect on, any material matter beyond the scope of the indemnification or defense obligations of
Optionee. If Optionor Indemnified Party assumes control of the defense under this Section,
Optionee shall: (a) reimburse Optionor Indemnified Party promptly and periodically for the
reasonable costs properly incurred in defending against the Optionee Indemnified Claim
(including reasonable attorneys' fees and expenses); and (b) remain responsible to Optionor
Indemnified Party for any Optionor Losses indemnified under this Section. Optionee shall give
prompt written notice to Optionor of any proposed settlement of a Optionee Indemnified Claim.
Optionee may not, without Optionor's prior written consent, which Optionor shall not
unreasonably withhold, condition or delay, settle or compromise any claim or consent to the
entry of any judgment regarding which indemnification is being sought hereunder unless such
settlement, compromise or consent: (a) includes an unconditional release of Optionor
Indemnified Party from all liability arising out of such claim; (b) does not contain any admission
or statement suggesting any wrongdoing or liability on behalf of Optionor Indemnified Party;
and (c) does not contain any equitable order, judgment or term (other than the fact of payment or
the amount of such payment) that in any manner affects, restrains or interferes with the business
of Optionor Indemnified Party. Optionor Indemnified Party may not settle or compromise any
claim or consent to the entry of any judgment regarding which it is seeking indemnification
hereunder without the prior written consent of Optionee, which Opfionce shall not unreasonably
withhold, condition or delay, unless: (a) if the Optionee Indemnified Claim is one for which
Optionor properly gave Optionee a Claim Notice under this Section, and Optionee fails to
assume the defense or refuses to defend the Optionee Indemnified Claim under this Section; or
(b) such settlement, compromise or consent: (i) includes an unconditional release of Optionee
from all liability arising out of such claim; (ii) does not contain any admission or statement
suggesting any wrongdoing or liability on behalf of Optionee; and (iii) does not contain any
equitable order, judgment or tern (other than the fact of payment or the amount of such
payment) that in any manner affects, restrains or interferes with the business of Optionor
Indemnified Parry. The obligations of Optionee and Optionor Indemnified Party under this
Section shall survive the Closing or earlier termination of the Disposition Agreement and the
expiration or earlier termination of this Agreement.
26, Optionor Indemnity. Subject to the terns and conditions set forth in this Section,
15
5152687.8 25A-1 7
Optionor shall indemnify, hold harmless, and defend Optionee and its officers, directors,
employees, agents, affiliates, successors and permitted assigns (collectively, " Optionee
Indemnified Party ") against any and all losses, damages, liabilities, deficiencies, claims,
actions, judgments, settlements, interest, awards, penalties, fines, costs, or expenses of whatever
kind, including reasonable attorneys' fees, that are incurred by an Optionee Indemnified Party
(collectively, " Optionee Losses "), arising out of any claim alleging, (i) any breach or non-
fulfillment of any covenant or any negligent or more culpable act or omission of Optionee or its
personnel (including any reckless or willful misconduct) in connection with this Agreement; (ii)
any false representation of Optionor under this Agreement; (iii) the existence of any
Environmental Conditions upon the Property or obligations related to such Environmental
Conditions accruing prior to the Closing under the Disposition Agreement; or (iv) any claim for
payment of Commissions to any other person or entity claiming by, through or under Optionor.
Payments by Optionor under this Section in respect of any Optionee Losses are limited to the
amount of any liability or damage that remains after deducting therefrom any insurance proceeds
and any indemnity, contribution or other similar payment actually received by any Optionee
Indemnified Party in respect of any such indemnity claim. Any Optionee Indemnified Party shall
use its best efforts to seek to recover any insurance proceeds in connection with malting a claim
under this Section. Promptly after the realization of any insurance proceeds, indemnity,
contribution or other similar payment, any Optionee Indemnified Party shall reimburse Optionor
for such reduction in Optionee Losses for which any Optionee Indemnified Party was paid under
this Section before the realization of reduction of such Optionee Losses. Notwithstanding
anything to the contrary in this Agreement, Optionor is not obligated to indemnify, hold harmless
or defend any Optionee Indemnified Party against any claim (whether direct or indirect) if such
claim or corresponding Optionee Losses arise out of or result from Optionee Indemnified Party's:
(a) gross negligence or more culpable act or omission (including recklessness or willful
misconduct); or (b) bad faith failure to materially comply with any of its material obligations set
forth in this Agreement. Any Optionee Indemnified Party shall give Optionor a prompt Claim
Notice of any Optionee Losses or discovery of facts on which such Optionee Indemnified Party
intends to base a request for indemnification under this Section. Any Optionee Indemnified
Party's failure to provide a Claim Notice to Optionor under this Section does not relieve Optionor
of any liability that Optionor may have to any Optionee Indemnified Party, but in no event shall
Optionor be liable for any Optionee Losses that result from a delay in providing a Claim Notice.
Each Clain Notice must contain a description of the claim and the nature and amount of the
related Optionee Losses (to the extent that the nature and amount of the Optionee Losses are
known at the time). Optionee shall furnish promptly to Optionor copies of all papers and official
documents received in respect of any Optionee Losses. Optionor's duty to defend applies
ininediately, regardless of whether Optionee Indemnified Party has paid any sums or incurred
any detriment arising out of or relating, directly or indirectly, to any claim. Optionor may
assume, at its sole option, control of the defense, appeal or settlement of any claim that is
reasonably likely to give rise to an indemnification claim under this Section (an " Optionor
Indemnified Claim ") by sending written notice of the assumption to Optionee on or before
thirty (30) days after receipt of a Claim Notice to acknowledge responsibility for the defense of
such Optionor Indemnified Claim and undertake, conduct and control, through reputable
independent counsel of its own choosing (which Optionee shall find reasonably satisfactory) and
at Optionor's sole cost and expense, the settlement or defense thereof. If Optionor assumes
control of the defense under this Section, Optionee Indemnified Party (a) shall fully cooperate
16
51528687.8 25A -18
with Optionor in connection therewith; and (b) may employ, at any time, separate counsel to
represent it; provided, that Optionee is solely responsible for the costs and expenses of any such
separate counsel. Notwithstanding anything to the contrary in this Section, Optionee may defend
an Optionor Indemnified Claim with counsel of its own choosing and without the Optionor's
participation if: (a) the Optionor Indemnified Claim is one for which Optionee properly gave
Optionor a Claim Notice under this Section, and Optionor fails to assume the defense or refuses
to defend the Optionor Indemnified Claim under this Section; (b) the Optionor Indemnified
Claim seeks only an injunction or other equitable relief against Optionee Indemnified Party; or
(c) Optionee Indemnified Party reasonably believes: (i) that there are one or more legal or
equitable defenses available to it that are different from or in addition to those available to
Optionor; and (ii) counsel for Optionor could not adequately represent the interest of Optionee
Indemnified Party because such interest could be in conflict with those of Optionor; or (iii) such
action or proceeding involves, or could have a material effect on, any material matter beyond the
scope of the indemnification or defense obligations of Optionor. If Optionee Indemnified Party
assumes control of the defense under this Section, Optionor shall: (a) reimburse Optionee
Indemnified Party promptly and periodically for the reasonable costs properly incurred in
defending against the Optionor Indemnified Claim (including reasonable attorneys' fees and
expenses); and (b) remain responsible to Optionee Indemnified Party for any Optionee Losses
indemnified under this Section. Optionor shall give prompt written notice to Optionee of any
proposed settlement of a Optionor Indemnified Claim. Optionor may not, without Optionee's
prior written consent, which Optionee shall not unreasonably withhold, condition or delay, settle
or compromise any claim or consent to the entry of any judgment regarding which
indemnification is being sought hereunder unless such settlement, compromise or consent: (a)
includes an unconditional release of Optionee Indemnified Party from all liability arising out of
such claim; (b) does not contain any admission or statement suggesting any wrongdoing or
liability on behalf of Optionee Indemnified Party; and (c) does not contain any equitable order,
judgment or term (other than the fact of payment or the amount of such payment) that in any
manner affects, restrains or interferes with the business of Optionee Indemnified Party. Optionee
Indemnified Party may not settle or compromise any claim or consent to the entry of any
judgment regarding which it is seeking indemnification hereunder without the prior written
consent of Optionor, which Optionor shall not unreasonably withhold, condition or delay, wzless:
(a) if the Optionor Indemnified Claim is one for which Optionee properly gave Optionor a Claim
Notice under this Section, and Optionor fails to assume the defense or refuses to defend the
Optionor Indemnified Claim under this Section; or (b) such settlement, compromise or consent:
(i) includes an unconditional release of Optionor from all liability arising out of such claim; (ii)
does not contain any admission or statement suggesting any wrongdoing or liability on behalf of
Optionor; and (iii) does not contain any equitable order, judgment or tern (other than the fact of
payment or the amouuit of such payment) that in any manner affects, restrains or interferes with
the business of Optionee Indemnified Party. The obligations of Optionee Indemnified Party and
Optionor under this Section shall survive the Closing or earlier termination of the Disposition
Agreement and the expiration or earlier termination of this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURES FOLLOW]
17
51528687.8 25A-1 9
IN WITNESS WHEREOF, the Parties have executed this Agreement to be effective as of
the Effective Date.
OPTIONEE:
OPTIONOR:
Exhibits:
ST. JOSEPH HEALTH SYSTEM, a California
nonprofit public benefit corporation
Lm
Nalne:
Its:
CITY OF SANTA ANA, a public body, corporate
and politic
to
Name:
Its:
Exhibit "A" Legal Description of the Property
Exhibit `B" Notice of Exercise of Option
Signature page to
51528687.6
55394.00000\20799743.5
51528687.8
25,E -20
Option Agreement
AS TO FORM
n
Attorney
EXHIBIT A
LEGAL DESCRIPTION
A -1
51528687.6
55394, 0000020799743.5
51528687.8 25A-21
EXHIBIT B
OPTION EXERCISE NOTICE
To:
Pursuant to the provisions of that certain Purchase Option Agreement (this "Agreement "), made
as of November [], 2015 (the "Effective Date "), at Santa Ana, California, by and between
City of Santa Ana, a public body, corporate and politic ( "Optionor "), and St. Joseph Health
System, a California nonprofit public benefit corporation ( "Optionee "), Optionee hereby
exercises the Option. Capitalized terms not defined in this Notice of Exercise shall have the
meanings ascribed to them in the Agreement.
Dated: 1201
OPTIONEE:
ST. JOSEPH HEALTH SYSTEM, a California
nonprofit public benefit corporation
By:
Narne:
Its:
B -1
51528687.8 25A-22