HomeMy WebLinkAboutStaff Report 2506-4806CITY OF PALO ALTO
CITY COUNCIL
Tuesday, June 17, 2025
Council Chambers & Hybrid
5:30 PM
Agenda Item
8.Approval of and Authorization for the City Manager or Designee to Negotiate and Execute
a Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property Located at
2575 East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million, with
Six-Month Leaseback to Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month ; CEQA
Status – Exempt Under CEQA Guidelines Section 15301 Title Updated, Late Packet Report
Added, Supplemental Report Added, Public Comment
City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: June 17, 2025
Report #:2506-4806
TITLE
Approval of a Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property
Located at 2575 East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million,
with Six-Month Leaseback to Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month
This will be a late packet report to be published on June 12, 2025.
APPROVED BY:
Lauren Lai, Administrative Services Director
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City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: Administrative Services
Meeting Date: June 17, 2025
Report #:2506-4764
TITLE
Approval of and Authorization for the City Manager or Designee to Negotiate and Execute a
Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property Located at 2575
East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million, with Leaseback to
Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month; CEQA Status – Exempt Under CEQA
Guidelines Section 15301
RECOMMENDATION
Staff recommends that the Council approve the Purchase and Sale Agreement in Attachment A
and authorize the City Manager or their designee to take all actions necessary, including
negotiating and executing the final Purchase and Sale Agreement, including necessary exhibits,
in Attachment A, to acquire the industrial property at 2575 East Bayshore Road (Assessor’s
Parcel Number 008-03-015) in an amount not to exceed $8.5 million plus typical closing costs
and lease back the property to the existing tenant for $12,600 per month for up to six months.
EXECUTIVE SUMMARY
Utilities staff have had an ongoing need for storage space and contractor office workspace for
capital improvement projects (CIPs). The property at 2575 East Bayshore Road is listed for sale
and ideally situated between the Municipal Service Center (MSC) and the Regional Water
Quality Control Plant for Utilities’ needs. Staff recommend to acquire the property in an
amount not to exceed $8.5 million plus typical closing costs and lease the property back to the
existing tenant for up to six months. The terms of the Purchase and Sale Agreement have been
finalized in Attachment A, while the Lease Agreement is pending minor revisions.
BACKGROUND
The Utilities Department has many CIPs, such as recurring gas main replacement, sewer main
replacement, and water main replacement projects, that require a contractor to independently
acquire access to space to store and stage construction materials, equipment, and vehicles.
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Given the limited availability and high cost of leasing commercial space in or near Palo Alto, the
cost is generally passed through to the City by the contractor at $100,000 - $200,000 per CIP.
1 The parties were unable to
reach an agreement and staff continued to explore other options.
ANALYSIS
•Zoning: ROLM (E)(D)(AD) [Research, Office and Limited Manufacturing Subdistrict –
Embarcadero (Site and Design Review) (Automobile Dealership)]
•Comp Plan: RO (Research/Office Park)
•Flood Zone: AE; flood insurance required.
•Building Area: +/- 14,640 square feet plus 2,000 – 3,000 square feet of mezzanine
storage
•Age: 65 years (built 1960)
1 City Council, August 19, 2024; Agenda Item #10;
https://cityofpaloalto.primegov.com/Portal/viewer?id=0&type=7&uid=fdbb3b9b-bb6f-4362-9d5c-1a55454ecd2a
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•Buildout: 20% office, balance manufacturing/warehouse space
•Land area: +/- 1 acre; A southeastern portion of the parking lot encroaches on the
adjacent City parcel, as shown on the aerial image below.
•Parking: +/- 46 parking spaces as currently striped
•Features: 4 – 14’ roll up doors (one door currently covered), sprinklered, 3 space heaters
in manufacturing/warehouse area, +/-23’8” clear height
Staff toured the property at 2575 East Bayshore Road in March 2025. The property is attractive
to Utilities because of its proximity to the MSC, Warehouse, Operations, and Elwell Engineering
offices (less than one mile); the size of the lot; indoor warehouse capacity; and office space.
Utilities will be able to utilize this space for multiple CIPs concurrently. In the next seven to 10
years, Utilities will be purchasing $20M - $40M of equipment which can be stored indoors for
the modernization of the electric grid. Because the lead time for some of the materials required
ranges from eight to 24 months, Utilities needs to place the orders in advance to secure
reasonable delivery dates and prices. The new warehouse will enable Utilities to pre-order and
secure materials required for grid modernization and prevent future project delays due to
potential supply chain issues.
The property has eight offices and a conference room which can serve as a satellite office for
staff and contractors during projects. Given the property’s proximity to MSC and Elwell, it can
also serve as another location for Engineering and Operations staff to convene and collaborate
if conference rooms are not available in either facility. With these offices, Utilities could also
reduce the cost of leasing mobile offices for contractors during multi-year construction
projects, which is generally a pass-through cost to the City. Given the location, size, existing
improvements, general condition, and price of 2575 East Bayshore Road, as well as storage
requirements for planned critical long-term CIPs, staff believe this is a cost-effective
investment.
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After several conversations with the sellers, parties reached agreement on $8.5 million. Staff
engaged an outside attorney to draft the purchase and sale agreement and lease agreement in
Attachment A. Below is a summary of the key provisions.
•Purchase Price: $8,500,000
•Refundable Deposit: $255,000 (3% of Purchase Price)
•Contingencies: City has 35 days from the execution of the purchase and sale agreement
to conduct due diligence and remove contingencies
•Close of Escrow: Within 10 days from the buyer’s removal of contingencies
•Lease: Month to month, up to six months, at $12,600.33 per month, industrial gross
FISCAL/RESOURCE IMPACT
Funds are available in the FY 2025 Electric Grid Modernization for Electrification CIP budget (EL-
24000). Due to lengthy lead time for materials and delay of construction contracts, there is $23
million remaining in the FY 2025 Grid Mod CIP budget. Instead of returning $23 million back to
Electric CIP reserves, Staff will reassign $8.5 million to the warehouse purchase. Staff will
return the remaining $14.5 million to CIP reserves at fiscal year-end. The FY 2025 and proposed
FY 2026 electric rates will not be impacted by the warehouse purchase.
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Staff recommend use of the Grid Modernization CIP budget for the initial purchase, with
reimbursement of the CIP to replenish it to be completed through the initial debt financing of
the Grid Modernization capital project estimated to cost $300 million over the life of the
project. This strategy would have no initial rate impact on customers and allow for the
smoothing of the costs to the rate payers. With the new warehouse, Utilities will avoid paying
contractors $100,000 - $200,000 per CIP project for leasing a staging area and warehouse for
materials and equipment. Should equipment or projects from utilities other than the electric
utility need warehouse space, staff would appropriately allocate a rental cost to ensure
compliance with the restricted nature of enterprise funds.
STAKEHOLDER ENGAGEMENT
ENVIRONMENTAL REVIEW
ATTACHMENTS
APPROVED BY:
PURCHASE AND SALE AGREEMENT
between
CITY OF PALO ALTO,
a California chartered municipal corporation
(“Buyer”)
and
C H LLC,
a California limited liability company
(“Seller”)
June 18, 2025
2575 East Bayshore Road
Palo Alto, California
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TABLE OF CONTENTS
Page
ARTICLE 1 Purchase and Sale....................................................................................................... 1
1.1 The Property............................................................................................................ 1
1.2 Buyer’s Due Diligence. ........................................................................................... 2
1.3 Title Review. ........................................................................................................... 4
ARTICLE 2 Purchase Price ............................................................................................................ 5
2.1 Amount and Payment .............................................................................................. 5
2.2 Deposit .................................................................................................................... 5
2.3 Independent Consideration ..................................................................................... 5
2.4 Liquidated Damages ............................................................................................... 6
2.5 Seller Default. ......................................................................................................... 6
2.6 1031 Exchange Cooperation ................................................................................... 7
ARTICLE 3 Completion of Sale ..................................................................................................... 7
3.1 Place and Date......................................................................................................... 7
3.2 Post-Closing Lease.................................................................................................. 7
ARTICLE 4 Title and Condition .................................................................................................... 8
4.1 Title to the Property ................................................................................................ 8
4.2 “AS IS” Sale ........................................................................................................... 8
4.3 No Implied Warranties ............................................................................................ 8
4.4 Environmental Laws; Hazardous Materials ............................................................ 8
4.5 Release of Seller ..................................................................................................... 9
4.6 California Waiver Provision ................................................................................... 9
ARTICLE 5 Representations and Warranties ............................................................................... 10
5.1 Seller ..................................................................................................................... 10
5.2 Buyer ..................................................................................................................... 13
ARTICLE 6 Covenants ................................................................................................................. 14
6.1 Seller Covenants ................................................................................................... 14
6.2 Eminent Domain ................................................................................................... 15
6.3 Casualty Damage .................................................................................................. 15
6.4 City Council Approval at June 17, 2025 Meeting ................................................ 15
ARTICLE 7 Conditions Precedent; Default ................................................................................. 16
7.1 Seller ..................................................................................................................... 16
7.2 Buyer ..................................................................................................................... 16
7.3 Buyer’s Default ..................................................................................................... 17
ARTICLE 8 Closing ..................................................................................................................... 18
8.1 Closing Deliveries ................................................................................................. 18
8.2 Procedure .............................................................................................................. 19
8.3 Possession ............................................................................................................. 19
8.4 Closing Costs ........................................................................................................ 19
8.5 Prorations .............................................................................................................. 19
8.6 Closing Statements................................................................................................ 20
8.7 Post-Closing Deliveries ........................................................................................ 21
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ARTICLE 9 General ..................................................................................................................... 21
9.1 Notices .................................................................................................................. 21
9.2 Attorneys’ Fees ..................................................................................................... 22
9.3 Brokers .................................................................................................................. 22
9.4 Governing Law ..................................................................................................... 22
9.5 Construction .......................................................................................................... 22
9.6 Terms Generally.................................................................................................... 23
9.7 Further Assurances................................................................................................ 23
9.8 Partial Invalidity.................................................................................................... 23
9.9 Waivers ................................................................................................................. 23
9.10 Miscellaneous ....................................................................................................... 23
9.11 Electronic Signatures ............................................................................................ 24
EXHIBITS
Exhibit A Legal Description of Real Property
Exhibit B Grant Deed
Exhibit C General Assignment
Exhibit D Post-Closing Lease
SCHEDULES
Schedule 1 List of Service Contracts
Schedule 2 List of Environmental and Engineering Reports
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PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated for reference
purposes as of June 18, 2025, is entered into by and between CITY OF PALO ALTO, a
California chartered municipal corporation (“Buyer”), and C H LLC, a California limited
liability company (“Seller”), with reference to the following facts:
RECITALS
A. Seller owns that certain real property commonly known by its mailing address as
2575 East Bayshore Road, Palo Alto, California (APN: 008-03-015) and more particularly
described in Exhibit A attached hereto (the “Real Property”), which includes an approximately
14,640 square foot commercial building on the site (the “Building”).
B. Seller’s affiliate, Insulation Sources, Inc., a California corporation, dba ICO
RALLY (“ICO RALLY”), leases the Building from Seller pursuant to that certain Lease
Agreement dated January 1, 2003 (“Existing Lease”).
C. Seller and Buyer desire to proceed with the sale of the Real Property upon the
terms and conditions contained in this Agreement, including the right for ICO RALLY to retain
possession of the Real Property post-closing pursuant to a short-term lease by and between
Buyer and ICO RALLY.
NOW, THEREFORE, in consideration of the mutual covenants of the parties herein
contained and other valuable consideration, Seller and Buyer hereby agree as follows:
ARTICLE 1
Purchase and Sale
1.1 The Property. Subject to the terms of this Agreement (including approval of this
Agreement by the Palo Alto City Council (“City Council”) pursuant to Section 6.4 below),
Seller agrees to sell to Buyer and Buyer agrees to purchase from Seller, in accordance with and
subject to the terms of this Agreement, all of Seller’s right, title and interest in and to the
following property (collectively, the “Property”):
(a) The Real Property and all rights appurtenant to the Real Property, if any, including
without limitation, any strips and gores abutting the Real Property, and any land lying in the bed
of any street, road, or avenue in front of, or adjoining the Real Property, to the center line
thereof;
(b) The Building, the parking lot, the drive aisles and all other improvements located on
the Real Property, and any and all fixtures attached thereto (collectively, the “Improvements”);
(c) All other rights, privileges, easements, licenses, appurtenances, and hereditaments
relating to the Real Property;
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(d) All building permits, certificates of occupancy, and other certificates, permits,
licenses and approvals (the “Permits”) pertaining to the Real Property, to the extent assignable;
(e) All Approved Service Contracts as defined in Section 1.2(e) below, to the extent
assignable;
(f) All plans, specifications, surveys, architectural, and engineering drawings, and other
rights relating to the construction of the Property (collectively, the “Plans and Surveys”); and
(g) Any warranty, guaranty, or other obligation from any contractor, manufacturer, or
vendor to any improvements, furnishings, fixture, or equipment located at the Property, to the
extent assignable in connection with the sale of the Property (collectively, the “Assumed
Warranties and Guaranties”).
1.2 Buyer’s Due Diligence.
(a) The “Effective Date” shall mean the date that the parties mutually execute and
deliver copies of this Agreement. During the period commencing on the Effective Date and
expiring at 5:00 p.m., California local time, on the date thirty-five (35) days after the Effective
Date (the “Property Approval Period”), Buyer shall, at Buyer’s sole cost and expense, review
and investigate the physical and environmental condition of the Property, the character, quality
and general utility of the Property, the zoning, land use, environmental and building
requirements and restrictions applicable to the Property and the state of title to the Property.
Buyer shall determine whether or not the Property is acceptable to Buyer within the Property
Approval Period. If, during the Property Approval Period, Buyer determines in Buyer’s sole and
absolute discretion (and for any or no reason) that the Property is not acceptable to Buyer, Buyer
shall have the right, by giving written notice (the “Termination Notice”) to Seller on or before
the expiration of the Property Approval Period, to terminate this Agreement. If Buyer is satisfied
with the due diligence investigation, it shall notify Seller by giving written notice (the
“Approval Notice”) on or before the expiration of the Property Approval Period. If Buyer
delivers a Termination Notice, this Agreement shall terminate and the Deposit (defined below)
shall be immediately returned to Buyer. If Buyer delivers the Approval Notice, or fails to
provide any notice by the expiration of the Property Approval Period, this Agreement shall
continue in full force and effect, and Buyer shall have no further right to terminate this
Agreement pursuant to this Section 1.2(a).
(b) Upon the Effective Date, Seller shall deliver to Buyer all material documents related
to the ownership, operation and use of the Property, that are in the possession or control of
Seller, including, without limitation, the following items (collectively, the “Diligence
Documents”):
(i) Copies of all service contracts and agreements entered into by Seller
related to the Property including without limitation those described in Schedule 1
attached hereto (the “Service Contracts”).
(ii) Copies of all environmental and engineering reports prepared for and/or
provided to Seller (including the reports disclosed on Schedule 2) in connection with
Seller’s purchase, ownership or management of the Property.
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(iii) Copy of the Existing Lease, including all amendments and modifications
thereto.
(iv) Copies of all of Seller’s books and records relating to the operation of the
Property including, without limitation:
(A) all building plans, licenses, permits, authorizations, approvals and
other documents associated with any entitlements issued by all governmental authorities
having jurisdiction over the Property;
(B) copies of each bill for current real estate, personal property and
possessory interest taxes, water charges and other utilities; and
(C) all records, documents and files relating to the operation and
maintenance of the Property.
(v) Surveys and site plans.
(vi) Maintenance reports.
(c) Seller is required to disclose if any of the Property lies within the following
natural hazard areas or zones: (i) a special flood hazard area designated by the Federal
Emergency Management Agency; (ii) an area of potential flooding; (iii) a very high fire hazard
severity zone; (iv) a wild land area that may contain substantial forest fire risks and hazards; (v)
an earthquake fault or special studies zone; or (vi) a seismic hazard zone. Seller shall promptly
engage the services of a natural hazard consultant to examine the maps and other information
specifically made available to the public by government agencies and within five (5) days of the
Effective Date Seller shall cause such consultant to deliver to Buyer a natural hazard report and
disclosure statement prepared by the consultant containing the results of its examination.
(d) Following the Effective Date Buyer and its agents, employees and contractors
shall be afforded full and complete access to the Property during normal business hours
following at least one (1) business day’s prior written or telephonic notice from Buyer to Seller,
accompanied by evidence reasonably acceptable to Seller that Buyer has named Seller as an
additional insured on Buyer’s general liability, worker’s compensation and/or property insurance
(as applicable), for the purpose of making such investigations as Buyer deems prudent with
respect to the physical condition of the Property, including, without limitation, engineering
studies, seismic tests, environmental studies (including, without limitation, surface and
subsurface tests, borings, samplings (including, without limitation, soil, groundwater and
asbestos sampling) and measurements) and a survey of the Property. Buyer may conduct such
feasibility studies and environmental investigations (including a Phase I environmental report) as
Buyer deems necessary and investigate all matters relating to the zoning, use and compliance
with other applicable laws which relate to the use and occupancy of the Property and any
proposed impositions, assessments or governmental regulations affecting the Property. Seller
shall reasonably cooperate to assist Buyer in completing such inspections. Buyer shall
indemnify and hold Seller harmless from any damage to the Property resulting from the entry
onto the Property of Buyer and its agents, employees and contractors pursuant to this Section
1.2(d), except that Buyer shall have no obligation to indemnify Seller as a result of damage to the
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Property caused by the negligence or wrongful misconduct of Seller or as a result of the
discovery or presence of any preexisting conditions, including any Hazardous Materials (as
defined below) on the Property. The provisions of this Section 1.2(d) will survive the termination
of this Agreement and will not be deemed to have merged into any of the documents executed or
delivered at Closing.
(e) On or before the expiration of the Property Approval Period, Buyer shall have the
right to disapprove, by written notice to Seller, any of the Service Contracts that are not
terminable upon no more than thirty (30) days prior notice. If Buyer desires to have any Service
Contract terminated that is not expressly terminable upon no more than thirty (30) days’ notice
without penalty (each a “Non-Terminable Service Contract”), then Buyer shall notify Seller in
writing of any such Non-Terminable Service Contract that it desires to have terminated, and
Seller shall terminate the same at or before Closing (as defined below). All of the Service
Contracts which are either terminable on no more than thirty (30) days’ notice without penalty or
which are not disapproved by Buyer, are referred to as the “Approved Service Contracts”.
(f) No later than twenty (20) days after the Effective Date, Seller shall deliver to
Buyer an agreement executed by Seller and ICO RALLY (in a form reasonably approved by
Buyer in advance), pursuant to which Seller and ICO RALLY agree to (i) terminate the Existing
Lease effective as of the Closing and (ii) release Buyer of any and all liability arising under the
Existing Lease (the “Lease Termination Agreement”).
1.3 Title Review.
(a) Within five (5) days following the Effective Date, Seller shall (i) cause Title
Company (as defined below) to deliver to Buyer a current preliminary title report covering the
Property, together with true, legible (to the extent available), and complete copies of any
exceptions to title to the Property (the “Title Report”) and (ii) deliver Seller’s most recent
survey of the Property (the “Survey”) which Buyer may cause to be updated at Buyer’s expense.
(b) No later than twenty (20) days after the date Buyer receives the Title Report and
Survey (“Title Objection Date”) or if additional exceptions to title are first identified by Title
Company after Buyer’s receipt of the Title Report, then Buyer shall have until the later of: (i) the
Title Objection Date; and (ii) that day which is five (5) days following Buyer’s receipt of an
amendment or supplement of the Title Report (unless an additional matter shown on such
subsequent update first arises on the Closing Date, in which event notice of same may be given
on the Closing Date and the Closing Date shall be extended day for day without need for
additional action by either party), Buyer shall deliver to Seller, in writing (the “Title Objection
Notice”), any objections to those matters set forth in the Title Report or the Survey (collectively,
“Title Objections”). Buyer hereby acknowledges and agrees that TIME IS OF THE ESSENCE
with respect to all time periods relating to Buyer’s delivery of the Title Objection Notice. Buyer
shall be deemed to have unconditionally waived its right to object to all matters shown in the
Title Report and the Survey, unless Buyer objects to any title exception in accordance with this
Section 1.3. If Buyer makes any such objection, Seller may, by giving notice to Buyer on or
before the date that is five (5) days after the Title Objection Notice, elect either to remove such
objections or not to remove such objections. Seller shall be deemed to have elected not to
remove any such Title Objection unless Seller elects to remove any such Title Objection in
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accordance with this Section 1.3. If Seller elects to remove any such Title Objection, Seller shall
remove the title exception in question on or before the Closing Date. If Seller elects (or is
deemed to have elected) not to remove any such Title Objection, Buyer shall have the right, by
giving notice to Seller on or before the date that is five (5) days after Seller’s election not to cure
(or deemed election not to cure), either to terminate this Agreement (in which case the Deposit
shall be returned to Buyer) or to withdraw such Title Objection and accept title to the Property
subject to the title exception in question. If Buyer does not exercise the right to terminate this
Agreement in accordance with this Section 1.3, Buyer shall be deemed to have approved title to
the Property subject to the title exception in question and to have withdrawn such objection;
provided that, notwithstanding anything to the contrary contained in this Agreement, Seller shall
be obligated to cure those matters affecting title to the Property, whether or not objected to by
Buyer that are described in any of the following clauses: (i) that are mortgage or deed of trust
liens or security interests against the Property; (ii) taxes and assessments other than taxes and
assessments not yet delinquent; (iii) that have been placed against the Property by Seller after the
Effective Date and that are not otherwise permitted pursuant to the provisions hereof; or
(iv) judgment or other liens arising from actions of Seller.
ARTICLE 2
Purchase Price
2.1 Amount and Payment. The total purchase price for the Property (the “Purchase
Price”) shall be Eight Million Five Hundred Thousand Dollars ($8,500,000). At the Closing on
the Closing Date, Buyer shall pay the total purchase price for the Property (less the amount of the
Deposit and subject to prorations described in this Agreement) to Seller, through escrow, in cash
in immediately available funds.
2.2 Deposit. Within five (5) business days following the Effective Date, Buyer shall
deposit the sum of Two Hundred Fifty-Five Thousand Dollars ($255,000) (the “Deposit”) in
cash in immediately available funds in escrow with Chicago Title Company (“Title Company”)
care of Sherri Keller at the address set forth in Section 9.1 below. The Deposit shall be held by
Title Company in an interest-bearing account reasonably approved by Buyer. If Seller and
Buyer complete the purchase and sale of the Property in accordance with this Agreement, the
Deposit and all interest thereon shall be applied to payment of the Purchase Price for the
Property in accordance with Section 2.1. If the purchase and sale of the Property is not
completed and this Agreement terminates for any reason other than a default by Buyer as
described in Section 2.4 below, then the Deposit and all interest thereon shall be returned to
Buyer upon such termination of this Agreement.
2.3 Independent Consideration. Notwithstanding anything in this Agreement to the
contrary, One Hundred Dollars ($100) of the Deposit is delivered to Title Company for delivery
to Seller as non-refundable “Independent Consideration”, and the Deposit is hereby reduced by
and shall no longer include the amount of the Independent Consideration so delivered to Seller.
Seller and Buyer agree that the Independent Consideration has been bargained for as
consideration for Seller’s execution and delivery of this Agreement and for Buyer’s right to
conduct due diligence regarding the Property, and is independent of any other consideration or
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payment provided for in this Agreement. The Independent Consideration shall be non-
refundable, and shall not be applied to the Purchase Price at the Closing.
2.4 Liquidated Damages. SELLER AND BUYER AGREE THAT, IF THE
PURCHASE AND SALE OF THE PROPERTY IS NOT COMPLETED IN
ACCORDANCE WITH THIS AGREEMENT AS A DIRECT RESULT OF A BUYER
DEFAULT (AS DEFINED IN SECTION 7.3 BELOW), SELLER SHALL BE ENTITLED
TO TERMINATE THIS AGREEMENT AND UPON TERMINATION THE DEPOSIT
SHALL BE PAID TO SELLER AS LIQUIDATED DAMAGES AND AS SELLER’S
SOLE AND EXCLUSIVE REMEDY. SELLER AND BUYER AGREE THAT, UNDER
THE CIRCUMSTANCES EXISTING AS OF THE EFFECTIVE DATE, ACTUAL
DAMAGES MAY BE DIFFICULT TO ASCERTAIN AND THE DEPOSIT IS A
REASONABLE ESTIMATE OF THE DAMAGES THAT WILL BE INCURRED BY
SELLER IF BUYER MATERIALLY DEFAULTS UNDER OR MATERIALLY
BREACHES THIS AGREEMENT AND FAILS TO PURCHASE THE PROPERTY IN
ACCORDANCE WITH THIS AGREEMENT. SUCH RETENTION OF THE DEPOSIT
BY SELLER IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER
PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL
CODE, AND SHALL NOT BE DEEMED TO CONSTITUTE A FORFEITURE OR
PENALTY WITHIN THE MEANING OF SECTION 3275 OR SECTION 3369 OF THE
CALIFORNIA CIVIL CODE OR ANY SIMILAR PROVISION. BY PLACING ITS
INITIALS BELOW, EACH PARTY SPECIFICALLY CONFIRMS THE ACCURACY
OF THE STATEMENTS MADE ABOVE AND THE FACT THAT EACH PARTY WAS
REPRESENTED BY COUNSEL WHO EXPLAINED, AT THE TIME THIS
AGREEMENT WAS MADE, THE CONSEQUENCES OF THIS LIQUIDATED
DAMAGES PROVISION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
SET FORTH IN THIS AGREEMENT, IN NO EVENT WHATSOEVER WILL EITHER
BUYER OR SELLER BE ENTITLED TO RECOVER FROM THE OTHER ANY
PUNITIVE, CONSEQUENTIAL OR SPECULATIVE DAMAGES PURSUANT TO THIS
AGREEMENT.
SELLER’S INITIALS:_____ BUYER’S INITIALS:_____
2.5 Seller Default. If Seller fails to perform any of its covenants or agreements
contained herein and Seller does not cure such failure within five (5) business days after receipt
of written notice from Buyer of such failure or if Seller breaches any of its representations or
warranties (each a “Seller Default”), Buyer shall have the right to exercise any or all of the
following remedies: (i) waive such failure and proceed to the Closing with no reduction in the
Purchase Price; provided, however, that this provision will not limit Buyer’s right to receive
reimbursement for attorneys’ fees in connection with any legal proceedings instituted by either
party or Title Company with respect to the enforcement of this Agreement, nor waive or affect
Seller’s indemnity obligations under this Agreement or Buyer’s rights to enforce those indemnity
obligations, nor waive or affect any of Seller’s other obligations under this Agreement to be
performed after the Closing or Buyer’s rights to enforce those obligations; (ii) exercise any other
rights or remedies Buyer may have at law or in equity, including without limitation the filing of
an action for specific performance to cause Seller to convey the Property to Buyer pursuant to
the terms and conditions of this Agreement; or (iii) terminate this Agreement by written notice to
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Seller and Title Company to that effect, to recover the full amount of the Deposit and all earnings
thereon, and to recover all damages and seek such other relief at law or in equity to which Buyer
may be entitled as a result of Seller’s breach
2.6 1031 Exchange Cooperation. Buyer agrees to cooperate with Seller to accomplish
a tax deferred exchange, provided however that such exchange shall not delay the Closing or
amend or modify any of the terms or provisions of this Agreement and shall be at no cost or
liability to Buyer. Seller shall not be released or relieved of any liability or obligation as a result
of its assignment to exchange or intermediary party (“Seller’s Intermediary”); provided,
further, that notwithstanding Seller’s assignment to Seller’s Intermediary, all warranties,
representations, and obligations of Seller under this Agreement which are intended to survive the
Closing shall continue in full force and effect as Seller’s warranties, representations, and
obligations and shall survive the Closing. Seller shall pay all additional costs (including, without
limitation, reasonable attorneys’ fees) incurred by Buyer as a result of cooperating with any
exchange. Buyer makes no representation regarding and shall have no liability with respect to the
tax treatment of Seller’s attempted exchange transaction. Buyer shall not have to incur any
liability or expense in connection with Seller’s attempt to structure an exchange transaction, nor
shall Buyer have to take title to another property or enter into any other agreements in connection
therewith, and Seller shall indemnify and hold Buyer harmless from and against any such
liability and expense, which indemnity shall survive Closing or any termination of this
Agreement.
ARTICLE 3
Completion of Sale
3.1 Place and Date. The purchase and sale of the Property shall be completed in
accordance with Article 8 hereof (the “Closing”). The Closing shall occur through an escrow
established with Title Company on the date ten (10) calendar days after the expiration of the
Property Approval Period or such other day mutually agreed to by Buyer and Seller (the
“Closing Date”). Prior to the Closing Date, Seller and Buyer each shall give appropriate written
escrow instructions, consistent with this Agreement, to Title Company for the Closing in
accordance with this Agreement provided that, in the event of any conflict between the
provisions of this Agreement and any such escrow instructions, the terms of this Agreement shall
control.
3.2 Post-Closing Lease. The parties acknowledge that ICO RALLY desires to
continue to occupy the Property following the Closing. Therefore, to effectuate ICO RALLY’s
occupancy and to document the parties’ rights and obligations thereto, the Buyer shall execute
and deliver, and Seller shall cause ICO RALLY to execute and deliver to Buyer, a Industrial
Gross lease agreement to be effective at Closing in the form attached hereto as Exhibit D (the
“Post-Closing Lease”) in accordance with Section 8.1 below.
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ARTICLE 4
Title and Condition
4.1 Title to the Property. Seller shall convey to Buyer fee title to the Real Property,
by a duly executed and acknowledged grant deed (the “Grant Deed”) in the form of Exhibit B
attached hereto (or otherwise reasonably acceptable to Buyer), free and clear of liens,
encumbrances, leases, easements, restrictions, rights, covenants and conditions, except the
following (the “Permitted Exceptions”): (a) the title matters approved by Buyer in accordance
with Section 1.3; (b) taxes and assessments which are not past due as of the Closing Date; and
(c) any other matters created, permitted or approved by Buyer (including without limitation the
Post-Closing Lease).
4.2 “AS IS” Sale. Except for those representations and warranties included in this
Agreement and any document delivered by Seller at Closing: (i) Seller makes no representations
or warranties regarding the Property; (ii) Seller hereby disclaims, and Buyer hereby waives, any
and all representations or warranties of any kind, express or implied, concerning the Property or
any portion thereof, as to its condition, value, compliance with laws, status of permits or
approvals, existence or absence of hazardous material on site, occupancy rate or any other matter
of similar or dissimilar nature relating in any way to the Property, including the warranties of
fitness for a particular purpose, tenantability, habitability and use; (iii) Buyer otherwise takes the
Property “AS IS”; and (iv) Buyer represents and warrants to Seller that Buyer has sufficient
experience and expertise such that it is reasonable for Buyer to rely on its own pre-closing
inspections and investigations.
4.3 No Implied Warranties. Except for Seller’s representations, warranties and
covenants set forth in this Agreement (including without limitation Seller’s representations and
warranties in Sections 5.1 and 9.3) or in the documents delivered by Seller at the Closing
(collectively, “Seller’s Warranties”), Seller hereby specifically disclaims all warranties,
promises, covenants, agreements or guaranties of any kind, whether express or implied, oral or
written, concerning or with respect to the income or expenses produced from the Property; the
suitability of the Property for any activities and use; the compliance or non-compliance of the
Property with any laws, rules, ordinances or regulations of any applicable governmental
authority or body, including, without limitation, all zoning, building, health, fire and
environmental matters; the habitability, merchantability, marketability, profitability, or fitness
for a particular purpose of the Property; the manner quality, state of repair or lack of repair of the
Property; or any other matter with respect to the Property. The provisions of this Section will
survive the termination of this Agreement and will not be deemed to have merged into any of the
documents executed or delivered at Closing.
4.4 Environmental Laws; Hazardous Materials. EXCEPT FOR SELLER’S
WARRANTIES, SELLER EXPRESSLY DISCLAIMS ALL WARRANTIES OR
REPRESENTATIONS MADE CONCERNING THE PRESENCE OF ANY HAZARDOUS
MATERIALS (DEFINED BELOW) ON, ABOVE, OR BENEATH THE PROPERTY (OR
ANY PARCEL IN PROXIMITY THERETO) OR ANY WATER OR MINERALS ON OR
UNDER THE PROPERTY.
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4.5 Release of Seller. IN DETERMINING THE PHYSICAL CONDITION OF THE
PROPERTY, BUYER IS AND WILL RELY SOLELY ON BUYER’S OWN KNOWLEDGE
OF THE PROPERTY OBTAINED DURING BUYER’S INVESTIGATION AND
INSPECTION OF THE PROPERTY. SUBJECT TO SELLER’S WARRANTIES, BUYER
HEREBY EXPRESSLY ASSUMES THE RISK THAT ADVERSE MATTERS MAY NOT BE
REVEALED DURING BUYER’S INVESTIGATION OF THE PROPERTY, INCLUDING
BUT NOT LIMITED TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND
ENVIRONMENTAL CONDITIONS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT TO THE CONTRARY AND EXCEPT FOR THE EXCLUDED MATTERS (AS
DEFINED BELOW), BUYER HEREBY RELEASES AND DISCHARGES SELLER, FROM
AND AGAINST ANY AND ALL CLAIMS THAT BUYER OR ANY PARENT OR
AFFILIATE OF BUYER (EACH, A “BUYER AFFILIATE”) HAS OR MAY HAVE
AGAINST SELLER ARISING FROM OR IN CONNECTION WITH ANY MATTER
ARISING OUT OF OR RELATED TO THE PROPERTY, INCLUDING THE DOCUMENTS
AND INFORMATION REFERRED TO HEREIN; ANY CONSTRUCTION DEFECTS,
ERRORS, OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE
IMPROVEMENTS; AND ANY ENVIRONMENTAL CONDITIONS. EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT TO THE CONTRARY AND EXCEPT
FOR THE EXCLUDED MATTERS, NEITHER BUYER NOR ANY BUYER AFFILIATE
MAY LOOK TO SELLER IN CONNECTION WITH THE FOREGOING FOR ANY
REDRESS OR RELIEF. BUYER’S RELEASE AND DISCHARGE OF SELLER
CONTEMPLATED BY THIS SECTION OF THE AGREEMENT WILL BE GIVEN FULL
FORCE AND EFFECT ACCORDING TO EACH OF THE EXPRESS TERMS AND
PROVISIONS HEREIN, INCLUDING THOSE RELATING TO UNKNOWN AND
UNSUSPECTED CLAIMS, DAMAGES, AND CAUSES OF ACTION. TO THE EXTENT
REQUIRED TO BE OPERATIVE, THE DISCLAIMERS AND WARRANTIES CONTAINED
HEREIN ARE “CONSPICUOUS” DISCLAIMERS FOR PURPOSES OF ANY APPLICABLE
LAW, RULE, REGULATION, OR ORDER. THE PROVISIONS OF THIS SECTION WILL
SURVIVE THE TERMINATION OF THIS AGREEMENT AND WILL NOT BE DEEMED
TO HAVE MERGED INTO ANY OF THE DOCUMENTS EXECUTED OR DELIVERED AT
CLOSING. “EXCLUDED MATTERS” SHALL COLLECTIVELY MEAN ANY OF THE
FOLLOWING: (i) A BREACH OF SELLER’S WARRANTIES, (ii) THE GROSS
NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT OF SELLER OR ANY OF ITS
EMPLOYEES, AGENTS OR REPRESENTATIVES, (iii) THE RELEASE OF HAZARDOUS
MATERIALS ONTO THE PROPERTY BY SELLER OR ANY OF ITS EMPLOYEES,
AGENTS OR REPRESENTATIVES, (iv) CLAIMS MADE BY THIRD PARTIES FOR
PERSONAL INJURY OR PROPERTY DAMAGE THAT RESULTED FROM EVENTS THAT
OCCURRED ON THE PROPERTY PRIOR TO THE CLOSING (EXCLUDING ANY INJURY
OR DAMAGE ARISING FROM OR RELATED TO THE ENTRY ONTO THE PROPERTY
BY BUYER AND ITS AGENTS, EMPLOYEES OR REPRESENTATIVES), OR (v)
SELLER’S BREACH OF THIS AGREEMENT.
4.6 California Waiver Provision.
(a) IN FURTHERANCE OF THE WAIVERS AND RELEASES DESCRIBED IN
THIS AGREEMENT, BUYER HEREBY WAIVES ANY AND ALL BENEFITS AND
RIGHTS WHICH IT HAS NOW OR IN THE FUTURE MAY HAVE, CONFERRED UPON IT
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BY VIRTUE OF THE PROVISIONS OF SECTION 1542 OF THE CALIFORNIA CIVIL
CODE, WHICH PROVIDES AS FOLLOWS (OR BY THE PROVISIONS OF ANY SIMILAR
STATUTE):
“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE
CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST
IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND
THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED
HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”
___________________
Buyer’s Initials
(b) Buyer hereby represents and warrants that it is familiar with, has read, understands,
and has consulted legal counsel of its choosing with respect to California Civil Code Section
1542 and the matters now unknown to it which may have given, or which may hereinafter give,
rise to actions, legal or administrative proceedings, claims, demands, debts, controversies,
damages, costs, losses, liabilities and expenses which are presently unknown, unanticipated and
unsuspected, and Buyer further agrees, represents and warrants that the provisions of this Section
4.6 have been negotiated and agreed upon in light of that realization and that Buyer nevertheless
hereby intends to release, discharge and acquit the Seller and any affiliate of Seller, from any
such unknown causes of action, legal or administrative proceedings, claims, demands, debts,
controversies, damages, costs, losses, liabilities and expenses which are in any way related to this
Section 4.6.
ARTICLE 5
Representations and Warranties
5.1 Seller. As a material inducement for Buyer to enter into this Agreement, Seller
represents and warrants to Buyer that the following representations and warranties of Seller in
this Section 5.1 shall be true as of the Effective Date and shall be true and correct as of the
Closing Date. Seller’s representations and warranties under this Section 5.1 shall survive the
Closing provided that such representations and warranties shall terminate on the date which is
one (1) year after the Closing Date.
(a) Seller is a limited liability company duly organized, validly existing and in good
standing in the State of California. Seller has the full power and authority to enter into this
Agreement and to perform this Agreement. The execution, delivery and performance of this
Agreement by Seller have been duly and validly authorized by all necessary action on the part of
Seller, and all required consents or approvals have been duly obtained. This Agreement is a
legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its
terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of creditors generally. The execution,
delivery and performance of the obligations under this Agreement by Seller shall not violate or
conflict with any other material agreement, order, decree, judgment or settlement to which Seller
is a party or by which Seller is otherwise bound.
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(b) Seller has or will deliver or make available to Buyer complete copies of all the
Diligence Documents to the extent in Seller’s possession or under Seller’s control with regard to
the Property. To the best of Seller’s knowledge, without a duty of inquiry or investigation, none
of such Diligence Documents contains any untrue statement of a material fact or omits to state a
fact necessary to make the statement of fact contained therein not misleading in any material
respect.
(c) There is no agreement to which Seller is a party or to Seller’s knowledge binding on
Seller which prevent or impair Seller from performing Seller’s obligations under this Agreement.
Seller has not received written notice from any person (including, without limitation, any
applicable governmental authority) of any pending or threatened action against Seller or the
Property, including condemnation proceedings, which challenges or impairs Seller’s ability to
execute or perform its obligations under this Agreement.
(d) Seller has not received any written notice, addressed specifically to Seller and sent by
any governmental authority or agency having jurisdiction over the Property, that the Property or
its use is in material violation of any law, ordinance or regulation.
(e) The Existing Lease is in full force and effect and there exists no material defaults,
events which, with the giving of notice or passage of time, or both, would constitute a material
default, or default or events with such notice or passage of time, by either party under the
Existing Lease. The Existing Lease shall terminate at Closing in accordance with the Lease
Termination Agreement and Buyer will have no liability whatsoever arising under the Existing
Lease.
(f) Except for the Existing Lease which shall be terminated at Closing and the Post-
Closing Lease to be effective at Closing, there are no leases, licenses and occupancy agreements
affecting the Property.
(g) Except as shown on Schedule 1, there are no service contracts, maintenance
contracts, management contracts, construction contracts, architectural or design contracts or
similar agreements to which Seller is a party and which relate to the Property that will remain in
effect following the Closing or that shall be binding upon Buyer or the Property following the
Closing.
(h) To the knowledge of Seller, there exists no material defaults, events which, with the
giving of notice or passage of time, or both, would constitute a material default, or default or
events with such notice or passage of time, or both, would give rise to a termination right (i) by
Seller under the Service Contracts, or (ii) by the respective other parties to any of the Service
Contracts.
(i) There is no litigation, arbitration, or other legal or administrative suit, action,
proceeding, or investigation pending or threatened against or involving Seller or the ownership
or operation of the Property.
(j) No attachments, execution proceedings, assignments for the benefit of creditors,
insolvency, bankruptcy, reorganization, or other proceedings are pending or threatened against
Seller, nor are any such proceedings contemplated by Seller.
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(k) Seller has delivered or made available to Buyer all material facts, information and
documents relating to the Property that are in Seller’s possession or control. Seller is not aware
of any other material facts, information or documents that have not been delivered or made
available to Buyer.
(l) All permits required for the Property have been duly and validly issued, are in full
force and effect, have been fully paid for (other than normal recurring annual permit or license
fees set forth in the operating statements of the Property provided to Buyer), and Seller has
received no notice of violation of any permit.
(m) To the knowledge of Seller there are no condemnation, environmental or zoning
proceedings instituted or planned to be instituted that would affect the Property and Seller has
not received notice of any special assessment proceedings affecting the Property.
(n) At the time of Closing there will be no outstanding written or oral contracts made by
Seller for any improvements to the Property which have not been fully paid for and Seller shall
cause to be discharged all liens arising from any labor or materials furnished to the Property prior
to the time of Closing.
(o) Except for the Approved Service Contracts (and the Post-Closing Lease), there are no
obligations in connection with the Property which could be binding upon Buyer or affect the
Property after Closing and there are no assessments or bonds assessed or, to the knowledge of
Seller, proposed to be assessed, against the Property. To the knowledge of Seller, there are no
existing or proposed easements, covenants, conditions, restrictions, agreements or other
documents which affect title to the Property and which are not disclosed by the Title Policy.
Seller has not granted any option or right of first refusal or first opportunity to any party to
acquire any interest in any of the Property.
(p) Neither Seller nor, to the knowledge of Seller, any prior owner or occupant of the
Property has engaged in or permitted any activity on the Property involving the handling,
manufacture, treatment, storage, use, release, or disposal of any Hazardous Materials. Seller has
not received written notice, and otherwise Seller has no knowledge, that removal or other
remedial action with respect to Hazardous Materials in, on, under or about the Property is
required by any governmental authority having jurisdiction over the Property. For purposes of
this Agreement, the term “Hazardous Materials” shall mean any toxic or hazardous waste,
material or substance, including, without limitation, asbestos, asbestos containing materials,
petroleum, petroleum products, underground storage tanks now or previously containing any
other Hazardous Materials, substances defined as “hazardous substances”, “hazardous waste” or
“toxic substances” in the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Sec. 9601, et seq.; Hazardous Materials Transportation Act,
49 U.S.C. Sec. 5101 et seq.; and Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901
et seq.; and other substances defined as hazardous waste and/or hazardous substances in
applicable state or local laws and/or in any regulations and publications promulgated pursuant to
said laws and shall also include mold (which has been or is proven to be harmful to human
beings), fungus (which has been or is proven to be harmful to human beings) and toxic and
mycotoxin spores.
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(q) Seller is not a “foreign person” as defined in section 1445 of the Internal Revenue
Code of 1986, as amended, and the Income Tax Regulations thereunder.
(r) Neither Seller nor any holder of a direct or indirect interest in Seller, or any person,
group, entity or nation that Seller is acting, directly or indirectly for, or on behalf of, is named by
any Executive Order (including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated
National and Blocked Person,” or is otherwise a banned or blocked person, group, entity, or
nation pursuant to any law that is enforced or administered by the Office of Foreign Assets
Control (“OFAC”), and Seller is not engaging in the transaction contemplated under this
Agreement, directly or indirectly, on behalf of, or instigating or facilitating such transaction,
directly or indirectly, on behalf of, any such person, group, entity or nation. Seller is not
engaging in the transaction contemplated under this Agreement, directly or indirectly, in
violation of any laws relating to drug trafficking, money laundering or predicate crimes to money
laundering.
5.2 Buyer. As a material inducement for Seller to enter into this Agreement, Buyer
represents and warrants to Seller that the following representations and warranties of Buyer in
this Section 5.2 shall be true as of the Effective Date and shall be true and correct as of the
Closing Date. Buyer’s representations and warranties under this Section 5.2 shall survive the
Closing provided that such representations and warranties shall terminate on the date which is
one (1) year after the Closing Date.
(a) Buyer has full power and authority to enter into this Agreement and to perform this
Agreement. The execution, delivery and performance of this Agreement by Buyer have been
duly and validly authorized by all necessary action on the part of Buyer and all required consents
or approvals have been duly obtained or will be obtained. This Agreement is a legal, valid and
binding obligation of Buyer, enforceable against Buyer in accordance with its terms, subject to
the effect of applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or
other similar laws affecting the rights of creditors generally. The execution, delivery and
performance of the obligations under this Agreement by Buyer shall not violate or conflict with
any other material agreement, order, decree, judgment or settlement to which Buyer is a party or
by which Buyer is otherwise bound. There are no actions, lawsuits, litigation, or proceedings
pending or threatened in any court or before any governmental or regulatory agency that affect
Buyer’s power or authority to enter into or perform this Agreement
(b) The execution, delivery and performance of the obligations under this Agreement by
Buyer shall not violate or conflict with any other material agreement, order, decree, judgment or
settlement to which Buyer is a party or by which Buyer is otherwise bound.
(c) Neither Buyer nor any holder of a direct or indirect interest in Buyer, or any person,
group, entity or nation that Buyer is acting, directly or indirectly for, or on behalf of, is named by
any Executive Order (including the September 24, 2001, Executive Order Blocking Property and
Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support
Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated
National and Blocked Person,” or is otherwise a banned or blocked person, group, entity, or
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nation pursuant to any law that is enforced or administered by OFAC, and Buyer is not engaging
in the transaction contemplated under this Agreement, directly or indirectly, on behalf of, or
instigating or facilitating such transaction, directly or indirectly, on behalf of, any such person,
group, entity or nation. Buyer is not engaging in the transaction contemplated under this
Agreement, directly or indirectly, in violation of any laws relating to drug trafficking, money
laundering or predicate crimes to money laundering.
ARTICLE 6
Covenants
6.1 Seller Covenants. Seller covenants and agrees with Buyer as follows:
(a) After the execution of this Agreement, Seller (i) shall not execute any contract, lease
or agreement affecting the Property without the prior approval of Buyer, which approval may be
withheld by Buyer in its sole discretion, provided that Seller will not be obligated to obtain
Buyer’s written approval if Seller is contractually or legally obligated to take such action, but
Seller shall promptly provide Buyer with notice of such action; and (ii) shall maintain the
Property in the ordinary course of business; comply with all laws, statutes, rules, regulations and
ordinances that are applicable to the Property and the use, occupation, ownership, and
conveyance thereof; pay, before delinquency, all indebtedness secured by any portion of the
Property, taxes assessments, charges and other expenses affecting the Property.
(b) During the period between the Effective Date and the Closing Date, Seller (i) shall
promptly deliver to Buyer a copy of any tax bill, notice of assessment, or notice of change in a
tax rate affecting the Property; any notice or claim of violation from any governmental authority;
any notice of any taking affecting or relating to the Property; any notice by any party to a
reciprocal easement, lease or operating agreement relating to the Property; or any other similar
notice affecting or relating to the Property; and (ii) shall not apply for or consent to any change
or modification with respect to zoning, development or use of the Property without Buyer’s prior
written consent, nor cause any liens or other encumbrances to be placed on the Property.
(c) Between the Effective Date and the Closing Date, Seller shall (i) continue to keep or
cause to be kept in force property insurance covering all buildings, structures, improvements,
machinery, fixtures and equipment included in the Real Property insuring against risks of
physical loss or damage, subject to standard exclusions, with such policy limits as Seller has
maintained prior to the entry into this Agreement and (ii) maintain the Property in compliance
with all applicable laws, rules and regulations and in good order, condition and repair, and in at
least substantially the same manner as at present, reasonable wear and tear excepted, and shall
not materially alter the condition of the Property or make any material changes or alterations to
the Improvements without Buyer’s prior written consent, which consent may be withheld by
Buyer in its sole discretion.
(d) Seller shall promptly notify Buyer of any change in any condition with respect to the
Property or of any event or circumstance which makes any representation or warranty of Seller
to Buyer under this Agreement materially untrue or misleading, and of any covenant of Seller
under this Agreement which Seller will be incapable of performing or less likely to perform.
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6.2 Eminent Domain. If, before the Closing Date, proceedings are commenced for
the taking by exercise of the power of eminent domain of any part of the Property which, as
reasonably determined by Buyer, would render the Property unsuitable for Buyer’s intended use,
Buyer shall have the right, by giving notice to Seller within thirty (30) days after Seller gives
notice of the commencement of such proceedings to Buyer, to terminate this Agreement, in
which event this Agreement shall terminate and the Deposit shall be returned to Buyer. If,
before the Closing Date, proceedings are commenced for the taking by exercise of the power of
eminent domain of less than such a material part of the Property, or if Buyer has the right to
terminate this Agreement pursuant to the preceding sentence but Buyer does not exercise such
right, then this Agreement shall remain in full force and effect and, on the Closing Date, the
condemnation award (or, if not theretofore received, the right to receive such award) payable to
Seller on account of the taking shall be transferred to Buyer. Seller shall give notice to Buyer
reasonably promptly after Seller’s receiving notice of the commencement of any proceedings for
the taking by exercise of the power of eminent domain of all or any part of the Property. If
necessary, at Buyer’s election, the Closing Date shall be postponed until Seller has given any
notice to Buyer required by this Section 6.2 and the period of thirty (30) days described in this
Section 6.2 has expired.
6.3 Casualty Damage. If, before the Closing Date, the improvements on the Property
are damaged by any casualty and the cost to restore such improvements, as reasonably agreed by
Seller and Buyer, is more than One Hundred Thousand Dollars ($100,000), Buyer shall have the
right, by giving notice to Seller within thirty (30) days after Seller gives notice of the occurrence
of such casualty to Buyer, to terminate this Agreement, in which event this Agreement shall
terminate and the Deposit shall be returned to Buyer. If, before the Closing Date, the
improvements on the Property are damaged by any casualty and Buyer elects to proceed with the
acquisition of the Property, then this Agreement shall remain in full force and effect and, on the
Closing Date, any insurance proceeds (or, if not theretofore received, the right to receive such
proceeds) payable to Seller on account of the damage shall be transferred to Buyer and the
amount of any deductible under Seller’s insurance policy (or, if less, the restoration cost as
reasonably determined by Seller and Buyer) shall be a credit to Buyer against the total purchase
price for the Property. Seller shall give notice to Buyer promptly after the occurrence of any
damage to the improvements on the Property by any casualty.
6.4 City Council Approval at June 17, 2025 Meeting. The parties acknowledge and
agree that the parties’ obligations are contingent upon the approval of this Agreement by the City
Council at its council meeting scheduled for June 17, 2025. To facilitate the City Council’s
approval of this Agreement, Seller shall execute and deliver to Buyer a copy of this Agreement
provided that such delivery will not create a binding contractual obligation of Seller until the
City Council approves the Agreement and the authorized representative of Buyer executes and
delivers to Seller a copy of this Agreement. If this Agreement is not approved by the City
Council in accordance with the foregoing, this Agreement shall be deemed void and the parties
shall have no further rights or obligations hereunder. If this Agreement is approved by the City
Council in accordance with the foregoing, Buyer shall promptly deliver a counter-signed copy of
this Agreement to Seller.
6.5 Confidentiality.
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(a) Except as may be required under applicable law, court order, or regulation, or to the
extent required to perform and enforce this Agreement, both parties shall (and shall cause their
employees and contractors to) keep all Information (defined below) confidential and shall not
disclose it to any third party, from the Effective Date until the Closing Date.
(b) As used in this Agreement, the term “Information” shall mean all information and
documents relating to the Property. Information excludes information that: (i) was publicly
known at the time it was provided; or (ii) was rightfully in a party’s possession free of any
obligation of confidence prior to receipt of Information; (iii) is rightfully obtained by a party
from a third party without breach of any confidentiality obligation outlined this Agreement; (iv)
is independently developed by employees of Seller or the Buyer; or (v) either party has written
consent to disclose.
(c) Notwithstanding anything else to the contrary contained in this Agreement, Seller
hereby acknowledges and expressly agrees, that Buyer is subject to the California Public Records
Act (Cal. Gov. Code Section 7920.000 et seq., as amended from time to time) and the Brown Act
(Cal. Gov. Code Section 54950 et seq., as amended from time to time) and is required, upon
request, to disclose information, unless such information is protected from disclosure.
ARTICLE 7
Conditions Precedent; Default
7.1 Seller. The obligations of Seller under this Agreement are subject to satisfaction
of all of the conditions set forth in this Section 7.1. Seller may waive any or all of such
conditions in whole or in part but any such waiver shall be effective only if made in writing.
After the Closing, any such condition that has not been satisfied shall be treated as having been
waived in writing. No such waiver shall constitute a waiver by Seller of any of its rights or
remedies if Buyer defaults in the performance of any covenant or agreement to be performed by
Buyer under this Agreement or if Buyer breaches any representation or warranty made by Buyer
in Section 5.2. If any condition set forth in this Section 7.1 is not fully satisfied or waived in
writing by Seller, this Agreement shall terminate, but without releasing Buyer from liability if
Buyer defaults in the performance of any such covenant or agreement to be performed by Buyer
or if Buyer breaches any such representation or warranty made by Buyer before such
termination.
(a) On the Closing Date, Buyer shall not be materially in default in the performance of
any material covenant to be performed by Buyer under this Agreement.
(b) On the Closing Date, all representations and warranties made by Buyer in Section 5.2
shall be true and correct in all material respects as if made on and as of the Closing Date.
(c) On or before the Closing Date, Buyer and Seller shall have executed the Post-Closing
Lease in accordance with Section 3.2.
7.2 Buyer. The obligations of Buyer under this Agreement are subject to satisfaction
of all of the conditions set forth in this Section 7.2. Buyer may waive any or all of such
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conditions in whole or in part but any such waiver shall be effective only if made in writing.
After the Closing, any such condition that has not been satisfied shall be treated as having been
waived in writing. No such waiver shall constitute a waiver by Buyer of any of its rights or
remedies in the event of a Seller Default. If any condition set forth in this Section 7.2 is not fully
satisfied or waived in writing by Buyer, this Agreement shall terminate and the Deposit shall be
returned to Buyer, but without releasing Seller from liability due to a Seller Default.
(a) On the Closing Date, Seller shall not be materially in default in the performance of
any material covenant to be performed by Seller.
(b) On the Closing Date, all representations and warranties made by Seller in Section 5.1
shall be true and correct in all material respects as if made on and as of the Closing Date.
(c) On or before the Closing Date, Buyer and Seller shall have executed the Post-Closing
Lease in accordance with Section 3.2.
(d) On the Closing Date, Title Company shall be irrevocably and unconditionally (save
for payment of the applicable premium) committed to issue to Buyer an Extended Owner’s Title
Policy (with such endorsements required by Buyer) (the “Title Policy”), with liability equal to
the total purchase price for the Property, insuring Buyer that fee title to the Real Property is
vested in Buyer subject only to the Permitted Exceptions.
7.3 Buyer’s Default. Buyer will be deemed to be in default of this Agreement (a
“Buyer Default”) if: (i) Buyer fails to timely observe or perform any covenant or satisfy any
condition applicable to Buyer under this Agreement and Buyer fails to perform or observe such
covenant or satisfy such condition (as applicable) within ten (10) days from the date that Seller
delivers to Buyer written notice thereof specifying such failure; (ii) Buyer breaches any warranty
made by Buyer under this Agreement; or (iii) if any representation made by Buyer under this
Agreement is false, in any material respect. Upon a Buyer Default, Seller may terminate this
Agreement by providing written notice to Buyer and Title Company and receive the Deposit as
liquidated damages (not as a penalty), without additional instructions to Title Company.
Notwithstanding the provision of Section 2.4, if Buyer creates a cloud on Seller’s title to the
Property (except for a lis pendens filed in connection with a complaint by Buyer for specific
performance as authorized under this Agreement), fails to timely repair any damage to the
Property caused by Buyer or Buyer’s agents, or is obligated to pay any sums related to any claim
for indemnification or attorneys’ fees and court costs hereunder, then in addition to retaining the
Deposit, Seller may pursue all remedies available to Seller under this Agreement, at law, or in
equity to all sums expended and all damages incurred by Seller on account thereof. The terms
and conditions of this Section will survive Closing or the earlier termination of this Agreement
and will not be deemed to have merged into any of the documents executed or delivered at
Closing.
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ARTICLE 8
Closing
8.1 Closing Deliveries. The parties shall deliver the following to Title Company no
later than one (1) business day prior to the Closing Date.
(a) Seller shall deliver to Title Company the following:
(i) The Grant Deed duly executed by Seller with the appropriate
acknowledgment form and otherwise in proper form for recording conveying to Buyer
the Real Property as required by this Agreement.
(ii) A certification that Seller is not a “foreign person” as such term is defined
in Section 1445 of the Internal Revenue Code, as amended, and the regulations
thereunder, and a California Franchise Tax Board (FTB) Form 593, as applicable, each
duly executed by Seller.
(iii) Two (2) original counterpart copies of the assignment and assumption of
contracts, warranties, permits, and licenses (the “General Assignment”) in substantially
the form of Exhibit C attached hereto, duly executed by Seller, assigning to Buyer all of
Seller’s right, title, and interest in the Permits, the Approved Service Contracts, the Plans
and Surveys, and the Assumed Warranties and Guaranties.
(iv) Two (2) original counterpart copies of the Post-Closing Lease, each duly
executed by ICO RALLY.
(v) An owner’s affidavit in a form reasonably acceptable to Buyer and to Title
Company, duly executed by Seller.
(vi) An original or electronically signed copy of the Closing Statement
prepared by Title Company under Section 8.6 for Seller, executed by Seller.
(vii) All other documents necessary or otherwise required by Title Company to
consummate the transaction contemplated by this Agreement.
(b) Buyer shall deliver to Title Company the following:
(i) The balance of the Purchase Price, as adjusted for prorations pursuant to
Section 8.5 of this Agreement.
(ii) Two (2) original counterpart copies of the General Assignment, each duly
executed by Buyer.
(iii) Two (2) original counterpart copies of the Post-Closing Lease, each duly
executed by Buyer.
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(iv) A California Preliminary Change of Ownership Report, duly executed by
Buyer.
(v) An original or electronically signed copy of the Closing Statement
prepared by Title Company under Section 8.6 for Buyer, executed by Buyer.
(vi) All other documents necessary or otherwise required by Title Company to
consummate the transaction contemplated by this Agreement.
8.2 Procedure. Upon satisfaction or waiver of the conditions in Article 7 above and
the parties delivery of the items set forth in Section 8.1, the parties shall direct Title Company, as
escrow holder, to effectuate the following at the Closing:
(a) The Grant Deed for the Real Property, duly executed and acknowledged by Seller,
shall be recorded in the Official Records of the County of Santa Clara, State of California.
(b) Title Company shall disburse all funds in accordance with the Closing Statements
executed by Seller and Buyer.
(c) Title Company shall deliver to Buyer (i) a conformed copy of the Grant Deed
showing the applicable recording information thereon and (ii) the Title Policy.
(d) Title Company shall deliver to each party (i) a copy of their respective final Closing
Statement and (ii) originals (or copies where originals are not available) of each of the other non-
recorded documents submitted into escrow by Buyer and Seller.
8.3 Possession. Seller shall transfer possession of the Property to Buyer on the
Closing Date, subject to ICO RALLY’s interest as tenant pursuant to the Post-Closing Lease.
8.4 Closing Costs. Seller shall pay any county transfer taxes and the parties shall
split equally any transfer taxes imposed by the City of Palo Alto. Seller shall pay that portion of
the Title Policy premium for standard ALTA owner’s title insurance policy coverage and Buyer
shall pay the additional Title Policy premium for ALTA extended coverage and any title
endorsements requested by Buyer. Seller shall pay any escrow fees. Notwithstanding the
foregoing, the parties shall share equally any escrow cancellation fee or other fees due upon a
termination of this Agreement, provided that, if this Agreement is terminated due to the default
of either party, the defaulting party shall bear all such cancellation fees or other fees due upon
the Agreement’s termination. Any other closing costs shall be allocated in accordance with
custom in Santa Clara County. Seller and Buyer shall pay the fees of their respective attorneys,
accountants and other professionals.
8.5 Prorations. The items in subparagraphs (a) and (b) of this Section 8.5 shall be
prorated between Seller and Buyer based on the actual number of days in the applicable period,
as of the end of day immediately preceding the Closing Date, with Seller being entitled to
income and obligated for expenses attributable to the period prior to the Closing Date, and Buyer
being entitled to the income and obligated for expenses attributable to the Closing Date and
thereafter.
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(a) Real Estate Taxes and Assessments. Seller or Buyer, as the case may be, shall be
allocated real estate taxes and assessment installment payments (including, any assessments
imposed by private covenant) (“Taxes”) applicable to Buyer’s period of ownership or applicable
to Seller’s period of ownership, respectively, even if such taxes and assessment installment
payments are not yet due and payable, with Seller being obligated for real estate taxes and
assessments pertaining to the period prior to the Closing Date, and Buyer being obligated for real
estate taxes and assessments attributable to the Closing Date and thereafter. Notwithstanding the
foregoing in this Section, if, on the Closing Date, Seller has paid the Taxes for the current tax
year in which the Closing occurs, Seller will receive a credit at Closing equal to the prorated
amount of Taxes paid by Seller, which is based on the number of days in the year that Seller
owned the Property. If the amount of any installment of Taxes is not known as of the Closing
Date, then a proration shall be made by the parties based on a reasonable estimate of the Taxes
applicable to the Property and the parties shall adjust the proration when the actual amount
becomes known upon the written request of either party made to the other in accordance with
Section 8.5(d).
(b) Utilities. Unreimbursed charges for assessments for sewer and water and other
utilities, including charges for consumption of electricity, steam and gas and any other receipts or
charges, as applicable, shall be apportioned by Buyer and Seller at the Closing based on the last
ascertainable bill issued to Seller, subject to adjustment within four (4) weeks after the Closing
when next bills are available. Seller shall use reasonable efforts to have all meters read as close
to, but before, the Closing as is feasible, and shall be responsible for amounts shown due by
reason of such readings. The parties acknowledge and agree that ICO RALLY shall be
responsible for the payment of utilities after Closing in accordance with the terms of the Post-
Closing Lease.
(c) Base Rent and Security Deposit Under the Post-Closing Lease. At Closing ICO
RALLY shall remit payment to Buyer in the amount of Twenty-Five Thousand Two Hundred &
66/100 Dollars ($25,200.66) constituting the first month’s base rent and the security deposit to be
paid by ICO RALLY, as tenant, pursuant to the Post-Closing Lease.
(d) Post-Closing Reconciliation. The provisions of this Section 8.5 will survive the
consummation of the transaction contemplated by this Agreement. If, within twelve (12) months
following the Closing Date, either party discovers that the estimated prorations at the Closing
Date were not accurate for any reason, it shall notify the other party of such inaccuracy and the
parties shall promptly make any adjustment required. Neither party shall be obligated to adjust
any prorations after such twelve (12) month period. If either Party is entitled to a readjustment or
re-proration, the party responsible for paying such correction must do so by wire transfer of
immediately available funds.
8.6 Closing Statements. At least two (2) business days prior to the Closing Date, the
parties shall agree upon all of the prorations to be made and submit that information to Title
Company. At least one (1) business day prior to the Closing Date, Title Company shall prepare
and deliver for Seller’s and Buyer’s review and approval a final closing statement for each party
reflecting the prorations and adjustments agreed to by Seller and Buyer, together with all
remaining charges, credits, and adjustments and the balance of the Purchase Price due Seller
(each, a “Closing Statement”). In the event that any prorations, apportionments, or
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computations made under this Article 8 require final adjustment, then the parties shall make the
appropriate adjustments promptly when accurate information becomes available and either party
hereto shall be entitled to an adjustment to correct the same. Any corrected adjustment or
proration shall be paid in cash to the party entitled thereto. The provisions of this Section shall
survive the Closing.
8.7 Post-Closing Deliveries. Immediately after the Closing, Seller shall deliver to
Buyer:
(a) A notice to each vendor under the Assumed Contracts (if required by the terms of
such Assumed Contracts) in a form and substance acceptable to Buyer advising the recipient of
the sale of the Property to Buyer.
(b) All keys, key cards, and codes relating to the operation of the Property, provided that
ICO RALLY may retain two (2) sets of keys and key cards (if any) in accordance with the Post-
Closing Lease.
(c) Originals or, if originals are not in the possession or control of Seller, copies of Plans
and Surveys, to the extent the same are in Seller’s possession or under Seller’s control.
ARTICLE 9
General
9.1 Notices. All notices and other communications under this Agreement shall be
properly given only if made in writing and (i) mailed by certified mail, return receipt requested,
postage prepaid, or (ii) delivered by hand (including messenger or recognized delivery, courier
or air express service), or (iii) by electronic mail. Such notices and other communications shall
be effective on the date of receipt (evidenced by the certified mail receipt) if mailed, on the date
of such hand delivery if hand delivered, or on the date of electronic mail confirmation if sent on
a business day, provided that if such email transmission is completed after 5 p.m. California local
time or on a non-business day then such notice shall be effective as of 9 a.m. California local
time on the next business day. If any such notice or other communication is not received or
cannot be delivered due to a change in the address of the receiving party of which notice was not
previously given to the sending party or due to a refusal to accept by the receiving party, such
notice or other communication shall be effective on the date delivery is attempted. Any notice or
other communication under this Agreement may be given on behalf of a party by the attorney for
such party.
(a) The address of Seller:
C H LLC
14250 Baleri Ranch Rd.
Los Altos Hills, CA 94022
Attn: Edwina Cioffi
Email: ecioffi@icorally.com
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(b) The address of Buyer is:
City of Palo Alto
250 Hamilton Avenue
Palo Alto, CA 94301
Attn: Manager, Real Property
E-Mail: sunny.tong@paloalto.gov
(c) The address of Title Company is:
Chicago Title Company
675 N. First Street, Suite 300
San Jose, CA 95112
Attn: Sherri Keller
Tel: 408-292-4212
Email: sherri.keller@ctt.com
9.2 Attorneys’ Fees. If there is any legal action or proceeding between Seller and
Buyer arising from or based on this Agreement, the unsuccessful party to such action or
proceeding shall pay to the prevailing party all costs and expenses, including reasonable
attorneys’ fees and expenses, incurred by such prevailing party in such action or proceeding and
in any appeal in connection therewith. If such prevailing party recovers a judgment in any such
action, proceeding or appeal, such costs, expenses and attorneys’ fees and expenses shall be
included in and as a part of such judgment.
9.3 Brokers. Except for Renault & Handley (the “Listing Broker”) who shall be paid
a commission by Seller pursuant to a separate agreement between Seller and Listing Broker,
each of the parties represents and warrants that it has not employed, retained or otherwise
utilized any broker or finder in connection with any of the transactions contemplated by this
Agreement and no other broker or person is entitled to any commission or finder’s fees in
connection with any of these transactions. Listing Broker is an independent contractor and is not
authorized to make any agreement or representation on behalf of either party. Except as
expressly set forth above, the parties each agree to indemnify and hold harmless one another
against any loss, liability, damage, cost, claim or expense incurred by reason of any brokerage
commission or finder’s fee alleged to be payable because of any act, omission or statement of the
indemnifying party. The provisions of this Section 9.3 shall survive the Closing and the delivery
and recordation of the Grant Deed, or the earlier termination of this Agreement.
9.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to principles of conflicts of
laws.
9.5 Construction. Seller and Buyer acknowledge that each party and its counsel have
reviewed and revised this Agreement and that the rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be employed in the
interpretation of this Agreement or any document executed and delivered by either party in
connection with the transactions contemplated by this Agreement. The captions or section titles
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in this Agreement are for convenience of reference only and shall not be used to interpret this
Agreement. Unless the context otherwise requires, all periods terminating on a given day, period
of days, or date shall terminate at 5:00 p.m. (local California time) on such date or dates and
references to “days” shall refer to calendar days except if such references are to “business days”
which shall refer to days which are not a Saturday, Sunday or legal holiday. Notwithstanding the
foregoing, if any period terminates on a Saturday, Sunday or legal holiday, the termination of
such period shall be on the next succeeding business day. The time in which any act provided
under this Agreement is to be done shall be computed by excluding the first day and including
the last day, unless the last day is a Saturday, Sunday or legal holiday under the laws of
California, and then it is also so excluded.
9.6 Terms Generally. The defined terms in this Agreement shall apply equally to
both the singular and the plural forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter forms. The term
“person” includes individuals, corporations, partnerships, limited liability companies, trusts,
other legal entities, organizations and associations, and any government or governmental agency
or authority. The words “include,” “includes” and “including” shall be deemed to be followed
by the phrase “without limitation.” The words “approval,” “consent” and “notice” shall be
deemed to be preceded by the word “written.”
9.7 Further Assurances. From and after the Effective Date, Seller and Buyer agree to
do such things, perform such acts, and make, execute, acknowledge and deliver such documents
as may be reasonably necessary or proper and usual to complete the transactions contemplated
by this Agreement and to carry out the purpose of this Agreement in accordance with this
Agreement.
9.8 Partial Invalidity. If any provision of this Agreement is determined by a proper
court to be invalid, illegal or unenforceable, such invalidity, illegality or unenforceability shall
not affect the other provisions of this Agreement and this Agreement shall remain in full force
and effect without such invalid, illegal or unenforceable provision.
9.9 Waivers. No waiver of any provision of this Agreement or any breach of this
Agreement shall be effective unless such waiver is in writing and signed by the waiving party
and any such waiver shall not be deemed a waiver of any other provision of this Agreement or
any other or subsequent breach of this Agreement.
9.10 Miscellaneous. The Exhibits and Schedules attached to this Agreement are by
this reference incorporated herein and made a part of this Agreement. Buyer shall have the right
to assign this Agreement without the prior consent of Seller. Time is of the essence of this
Agreement. This Agreement may be executed in counterparts, each of which shall be an
original, but all of which shall constitute one and the same Agreement. This Agreement may not
be amended or modified except by a written agreement signed by Seller and Buyer. This
Agreement constitutes the entire and integrated agreement between Seller and Buyer relating to
the purchase and sale of the Property and supersedes all prior agreements, understandings, offers
and negotiations, oral or written, with respect to the sale of the Property.
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9.11 Electronic Signatures. Each party (i) has agreed to permit the use, from time to
time, of telecopied or electronic signatures in order to expedite the transaction contemplated by
this Agreement, (ii) intends to be bound by its telecopied or electronic signature, (iii) is aware
that the other will rely on the telecopied or electronic signature, and (iv) acknowledges such
reliance and waives any defenses (other than fraud) to the enforcement of any document based
on the fact that a signature was sent by telecopy. As used herein, the term “telecopied
signature” shall include any signature sent via facsimile or via email in portable document
format (“.pdf”).
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the
Effective Date.
BUYER:
CITY OF PALO ALTO
By
Name
Title
Date
Approved as to form:
Jennifer Fine
Deputy City Attorney
SELLER:
C H LLC
By
Name
Title
Date
Title Company acknowledges receipt of a copy of this Agreement and hereby executes below to
evidence its agreement to act as escrow holder in accordance with the terms and conditions of
this Agreement.
Date ______________ CHICAGO TITLE COMPANY
By
Its
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EDWINA CIOFFI
6/12/2025
Managing Member
Ed Shikada
1
EXHIBIT A
LEGAL DESCRIPTION OF REAL PROPERTY
(to be attached)
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EXHIBIT B
GRANT DEED
Recorded at Request of and
When Recorded Mail to:
Mail Tax Statements to:
SPACE ABOVE THIS LINE FOR RECORDER’S USE
THE UNDERSIGNED GRANTOR(S) DECLARE(S)
DOCUMENTARY TRANSFER TAX is $__________________________
computed on full value of property conveyed, or
computed on full value less value of liens or encumbrances remaining at time of sale.
unincorporated area
City of Palo Alto
GRANT DEED
For valuable consideration, receipt of which is acknowledged,
[______________________, a __________] (“Grantor”) hereby grants to
[_________________, a _________], the real property located in the City of Palo Alto, County
of Santa Clara, State of California, described in Exhibit A attached hereto and made a part
hereof, together with the tenements, easements, rights of way and appurtenances belonging or in
any way appertaining to the same, and the improvements thereon, subject to all matters of record.
Dated: ____________, 2025
[______________________________], a
__________________
By: ____________________________
Name: _________________________
Title: __________________________
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EXHIBIT C
GENERAL ASSIGNMENT
This General Assignment (this “Assignment”), dated as of _______, 2025 (“Effective
Date”), is by and between C H LLC, a California limited liability company (“Assignor”), and
CITY OF PALO ALTO, a California chartered municipal corporation (“Assignee”).
RECITALS
A. Assignor, as seller, and Assignee, as buyer, have entered into that certain
Purchase and Sale Agreement dated as of June 18, 2025 (the “Purchase Agreement”), for the
purchase and sale of that certain property having an address of 2575 East Bayshore Road, Palo
Alto, California and as more particularly described in the Purchase Agreement (the “Property”).
B. In connection with the purchase and sale of the Property, the Purchase Agreement
obligates Assignor to assign to Assignee, and Assignee to assume from Assignor, the contracts,
warranties, guaranties, permits and licenses each as further defined herein, subject to the terms
and conditions set forth in this Assignment.
NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions set
forth herein, and for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties agree as follows:
1. Assignment. As of the Effective Date Assignor hereby assigns, transfers, and sets
onto Assignee, all of its right, title and interest, in, under and to all benefits and privileges
accruing to Assignor thereunder to each of the following (collectively, the “Assumed
Agreements”):
(a) All Permits (as defined in the Purchase Agreement);
(b) All Approved Service Contracts (as defined in the Purchase Agreement)
and further identified on Attachment 1 attached hereto and made a part hereof;
(c) All Plans and Surveys (as defined in the Purchase Agreement);
(d) All Assumed Warranties and Guaranties (as defined in the Purchase
Agreement) and as further identified on Attachment 2 attached hereto and made a part hereof.
2. Assumption. Assignee hereby assumes and agrees to perform any and all of the
obligations and liabilities of Assignor under each of the Assumed Agreements accruing from and
after the Effective Date.
3. Indemnification.
(a) Assignor hereby agrees to indemnify and to hold Assignee harmless from
and against any and all loss, cost, liability, damage or expense, including without limitation,
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reasonable attorneys’ fees, arising from Assignor’s breach or default of its obligations or duties
under any Assumed Agreement before the Effective Date.
(b) Assignee hereby agrees to indemnify and to hold Assignor harmless from
and against any and all loss, cost, liability, damage or expense, including, without limitation,
reasonable attorneys’ fees, arising from Assignee’s breach or default of its obligations or duties
under any Assumed Agreement on or after the Effective Date.
4. Miscellaneous.
(a) This Assignment shall be governed by and construed in accordance with
the laws of the State of California, without regard to conflict of law rules.
(b) No modification, waiver, amendment, discharge or change of this
Assignment shall be valid unless the same is in writing and signed by the party against which the
enforcement of such modification, waiver, amendment, discharge or change is or may be sought.
(c) Assignor shall promptly execute and deliver to Assignee any additional
instrument or other document which Assignee reasonably requests to evidence or better effect
the assignment contained herein.
(d) This Assignment and the obligations of the parties hereunder shall be
binding upon and inure to the benefit of the parties hereto and their respective legal
representatives, successors and assigns.
(e) This Assignment may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original for all purposes, and all such
counterparts shall together constitute but one and the same instrument.
[Signatures on the next page]
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IN WITNESS WHEREOF, the parties have executed this Assignment as of the Effective
Date.
ASSIGNOR:
C H LLC
By
Name
Title
ASSIGNEE:
CITY OF PALO ALTO
By
Name
Title
Approved as to form:
By
Name
Title
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EXHIBIT D
POST-CLOSING LEASE
(to be attached)
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SCHEDULE 1
LIST OF SERVICE CONTRACTS
(to be attached)
None.
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SCHEDULE 2
LIST OF ENVIRONMENTAL AND ENGINEERING REPORTS
(to be attached)
Environmental Data Resources Radius Map with GeoCheck dated August 8, 2001, Inquiry
Number 0666216.1r.
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Item No. 8. Page 1 of 2
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6
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8
City Council
Supplemental Report
From: Lauren Lai, Administrative Services Director
Meeting Date: June 17, 2025
Item Number: 8
Report #:2506-4859
TITLE
Approval of and Authorization for the City Manager or Designee to Negotiate and Execute a
Purchase and Sale Agreement with C H LLC to Acquire the Industrial Property Located at 2575
East Bayshore Road (Assessor’s Parcel Number 008-03-015) for $8.5 million, with Leaseback to
Insulation Sources, Inc. (dba Ico Rally) for $12,600/Month; CEQA Status – Exempt Under CEQA
Guidelines Section 15301
BACKGROUND
This supplemental report is in response to an email from a Palo Alto resident as it relates to
Report #2506-4764, Item #8. The resident is the owner of a property located at 1020 O’Brien
Drive, in Menlo Park, and suggests that property is available for $7,000,000.
ANALYSIS
Staff have reviewed the information provided and recommends no change. As noted in the staff
report, the 2575 East Bayshore property is attractive because of its location, lot size, indoor
warehouse capacity, and office space.
While the 1020 O’Brien property is slightly larger, the building covers a higher percentage of the
site (nearly 42% building to land area coverage ratio compared to just under 34% of the Palo
Alto property). Staff previously evaluated 1020 O’Brien and deemed this property not feasible
due to building access and vehicle maneuverability constraints, posing a turning radius
challenge for large commercial vehicles.
Utilities staff has verified the turning radius at 2575 East Bayshore is sufficient for large
commercial vehicles carrying utility poles. The 1020 O’Brien property also has only one rollup
door in the building, so City staff and contractors would have to reverse their vehicles out of
the building or dedicate space in the warehouse for a turning radius. The 2575 East Bayshore
Item No. 8. Page 2 of 2
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property has four rollup doors with a clear height of 23’8”, compared to 16’6” at 1020 O’Brien,
allowing for more storage space and maneuverability. Other potential complications with the
1020 O’Brien property is its location in another city and county, which can lead to less certainty
in permitting, zoning, or other local requirements when compared to a property within the city
of Palo Alto. The location would also increase inefficiencies, with extra commute of city staff
(Utilities, Stores Warehouse) for regular receipt, testing and delivery of materials.
APPROVED BY:
From:Stephen Reller
To:UAC; Council, City
Cc:Mark Moragne
Subject:2575 Bayshore Purchase
Date:Friday, June 13, 2025 9:00:00 AM
Attachments:1020 O"Brien Dr Flyer (1).pdf
CAUTION: This email originated from outside of the organization. Be cautiousof opening attachments and clicking on links.
To Whom it may Concern:
Hello. I am a Palo Alto resident and am concerned about the property at 2575 E. Bayshore that the City
Council will consider purchasing on Tuesday. $8.5m for 14,640 sf equates to $580 per sf. This is well
above market.
Case in point, I have a property for sale at 1020 O'Brien in Menlo Park, just three miles from 2575 E.
Bayshore (see attached.) The property is larger (1.1 acres,) with a 20,000 sf secured yard, and the
building is much larger (20,000 sf.) If the city/utility can bear traveling a mere 3 miles (the distance from
2575 E. Bayshore to 1020 O'Brien) and would like to save $1,500,000, with very flexible terms, please let
me know.
Irrespective of 1020 O'Brien (and my biased opinion that it's a better option to be considered,) $580 per sf
for an industrial/warehouse building seems well above market. For $7,000,000, 1020 O'Brien would be
$350/sf. Thank you for your consideration.
Steve Reller
SIMON CLARK
Executive Vice President
dre license #01318652
| 650.577.2938
| simon.clark@cbre.com
JAMES MARZONI
Senior Vice President
dre license #01248525
| 650.787.0798
| james.marzoni@prprop.com
For Lease / For Sale
1020 O'Brien Dr, Menlo Park, CA
±20,000 SQ. FT. R&D BUILDING
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P R E M I E R02
propertyoverviews
Address:
APN:
Building Size:
Parcel Size:
Zoning:
Parking:
1020 O’Brien Dr, Menlo Park, CA 94025
055-422-060
±20,000 Sq. Ft.
±48,003 Sq. Ft. / 1.10 Acre
LS (Life Sciences)
±60 spaces (3.00/1000)
Premier Properties and CBRE present a prime opportunity to lease or acquire a versatile
industrial property in Menlo Park, CA. 1020 O'Brien Drive is suitable for industrial, lab, R&D,
or office applications. The ±20,000 SF building is available immediately and features a
16.5-foot clear height, one roll-up door, and 400 amps of power. This is a great site for
investors, developers, or owner-users seeking immediate occupancy or redevelopment
opportunities. The property is positioned near Meta's planned Willow Village--a 59-acre
mixed-use development featuring offices, homes, and retail spaces--and surrounded by
approximately 534,000 square feet of planned office / R&D projects along O'Brien Drive,
placing it at the heart of a thriving innovation hub.
1020 O'Brien Drive represents a great opportunity to purchase or lease an ideally situated
warehouse available for immediate occupancy and with redevelopment potential.
P R E M I E R03
1020 o’brien floor plan 1
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P R E M I E R04
1020 O’BRIEN DR,
MENLO PARK, CA
innovative neighbors MAP
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84
STANFORD
RESEARCH
PARK
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SFO - 17.5 miles
SJC - 19 miles
PLANES
OAK - 27 miles San Francisco - 1 h 38 min
San Jose - 1 hr 21 min
Milbrae - 1 hr 17 min
TRAINS
San Francisco - 29.1 miles
Downtown San Jose - 21.1 miles
AUTOMOBILES
Downtown Oakland - 32.3 miles
Downtown
San Carlos
Bair Island
P R E M I E R05
10182
(74,000 VPD)(74,000 VPD)
(26
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(26
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84
Kaiser Permanente
Medical Center
Baysh
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Downtown
Redwood City
TRANSPORTATION MAP
1020 O’BRIEN DR,
MENLO PARK, CA
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P R E M I E R06
DEMOGRAPHICS
ONE-MILE POPULATION: 25,507
MEDIAN AGE
34.1
AVEAGE HOUSEHOLDSIZE FAMILIES
3.81 4,877
Average Household Income
$173,9214,877FAMILIES
Average
Household Size:3.81 Owner Occupied
Housing Units:3,079 Renter Occupied
Housing Units 3,577 Median
Household Income $119,615 Average
Household Income $173,921
MAJOR EMPLOYERS:
Data for all businesses in area
Total Businesses:
Total Employees:
Total Residential Population:
Average Household Size:
1 mile
480
7,399
25,507
3.8
3 miles
5,861
85,759
102,966
3.0
5 miles
13,185
181,926
239,639
2.8
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P R E M I E R07
CONFIDENTIALITY& DISCLAIMER
The information contained in the following Marketing Brochure is proprietary and strictly
confidential. It is intended to be reviewed only by the party receiving it from Premier
Properties and should not be made available to any other person or entity without the
written consent of Premier Properties. This Marketing Brochure has been prepared to
provide summary, unverified information to prospective purchasers, and to establish only a
preliminary level of interest in the subject property. The information contained herein is not a
substitute for a thorough due diligence investigation. Premier Properties has not made any
investigation, and makes no warranty or representation, with respect to the income or
expenses for the subject property, the future projected financial performance of the
property, the size and square footage of the property and improvements, the presence or
absence of contaminating substances, PCB’s or asbestos, compliance with State and
Federal regulations, the physical condition of the improvements thereon, or the financial
condition or business prospects of any tenant, or any tenant’s plans or intentions to continue
its occupancy of the subject property. The information contained in this Marketing Brochure
has been obtained from sources we believe to be reliable; however Premier Properties has
not verified and will not verify any of the information contained herein, nor has Premier
Properties conducted any investigation regarding these matters and makes no warranty or
representation whatsoever regarding the accuracy or completeness of the information
provided. All potential buyers must take appropriate measures to verify all of the information
set forth herein.
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For Lease / For Sale
1020 O'Brien Dr, Menlo Park, CA
±20,000 SQ. FT. R&D BUILDING
SIMON CLARK
Executive Vice President
dre license #01318652
| 650.577.2938
| simon.clark@cbre.com
JAMES MARZONI
Senior Vice President
dre license #01248525
| 650.787.0798
| james.marzoni@prprop.com