HomeMy WebLinkAboutPRE 2019-0016; RAF PACIFICA GROUP FU; Preliminary Review (PRE)CITY OF CARLSBAD APPLICATION FORM FOR PREUII
CITY U8E OHL Y
Pn,Ject Number: -oo\ h
I PROJECT NAME: RAF Paclfca Group fu•slon
Assessor's Parcel Number(s): 212-o93-0S, 12 ----------------------------/ Description of proposal (add attachment If necessary): Site modification to Include proposed amenity area In area that
Is currently parkln1 and drive aisle and straddles two lots.
I Would you llke to orally present your proposal to your assigned staff planner/engineer? Yes ~ No
Please 11st the staff members you have previously spoken to regarding this project. If none, please so state.
None
OWNER NAME (Print): f.Af ?(M,,~tA C.to"f, ~~ ~ ~ .J2
MAILING ADDRESS: '31~ 5. c()d\~t Bw1 tor , S\t U-ll.
c 1TY, STATE, ZIP: e:"""1:ina:P,,1 , C.A 4 2..oz.'-{
TELEPHONE: $'5j-3f4-31\ (e
EMAIL ADDRESS: MWM '1 oJeAc.i-HWJCo"f • ~~
"Owner'• algnaturw indlcatH permission to conduct a prwllmlnary
review for a development propoul.
OWNER AND THAT ALL THE
E AND CORRECT TO THE BEST
MAILING ADDRESS: 13280 Evening Creek Drive, Suite 125
APPLICANT NAME (Print): f<eo-1 t6"fn J" Fvnd 1E" l.J.L
MAILING ADDRESS: "31-5" s. w~+ t½t, lol, 5it o-(2..
c1TY. sTATE, ZIP: G,c w.i:w. CA qzo-z...Lf
· TELEPHONE: 8Si-'3(l/-~(/t,
EMAIL ADDRESS: flc:ku'::4 <i:,~i:tiC~,r'Pf·lD1ti\.
CITY, STATE, ZIP: San Diego, CA 92128 __ ....;;. _____________________________ _
TELEPHONE: (858) 793-4777 ~.;;,!..,;,.;;.:_~;__-------------~rf.:~rcH~:-1:::='~---
E MA IL ADDRESS: andrewt@sca-sd.com
RECEIVED BY:
P-14'
JUL 1 0 2019
CITY OF CARLSBAD
PLANNING DIVISION
EW2Wlilffi-:JHIS APPLICATION IT MAY BE NECESSARY FOR MEMBERS OF CITY STAFF TO INSPECT
TY THA S THE SUBJECT OF THIS APPUCA 110N. I/WE CONSENT TO ENTRY FOR THIS PURPOSE.
EFEEPAID: J 774. l!90 fl,~
Page 3 of3 Reviled 07/17
♦
I
CHICAGO TITLE COMPANY
COMMERCIAL DIVISION
RECORDING REQUESTED BY
Chicago Title Insurance Company
WHEN RECORDED MAIL TO:
RAF PACIFICA GROUP -REAL ESTATE
FUNDIV,LLC
111 C Street, Suite 200
Encinitas, California 92024
Attention: Adam Robinson
MAIL TAX STATEMENTS TO:
RAF PACIFICA GROUP -REAL ESTATE
FUNDIV,LLC
111 C Street, Suite 200
Encinitas, California 92024
Attention: Adam Robinson
Documentary Transfer Tax $ 22,220.00
GRANT DEED
I!! Computed on full value of property conveyed, or
DOC# 2019-0245624
111mn 111111111111111m11111111111 IIU 11111m1111m111111111 IW
Jun 21, 2019 04:59 PM
OFFICIAL RECORDS
Ernest J. Dronenburg, Jr.,
SAN DIEGO COUNTY RECORDER
FEES: $22,243.00 (SB2 Atkins: $0.00)
PCOR:YES
PAGES:4
(Above Space for Recorder's Use Only)
□ Computed on full value less Hens and encumbrances remaining at time of sale.
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
undersigned, BSP CACC, LLC, a Delaware limited liability company, hereby grants to RAF PACIFICA
GROUP -REAL ESTATE FUND IV, LLC, a California limited liability company, for an undivided
fifteen percent (15%), ARKA MONTEREY PARK, LLC, a Utah limited liability company, for an
undivided sixty-seven percent (67%), and 170 ARROWHEAD PARTNERS, LLC, a California limited
liability company, for an undivided eighteen percent (18%), all as tenants in common, that certain real
property in the City of Carlsbad, County of San Diego, State of California described in Exhibit A attached
hereto and incorporated herein, together with all buildings and improvements located thereon and any and
all improvements, easements, privileges and rights appurtenant thereto.
THE PROPERTY IS CONVEYED TO GRANTEE SUBJECT TO:
(a) A Hen not yet delinquent for taxes for real property and any non-delinquent general
or special assessments against the Property; and
(b) All encumbrances, easements, covenants, conditions and restrictions of record or
that would be shown by an accurate survey of the Property.
Dated: June .61, 2019
[Next page is signature page]
/f;//;)... 7-~ "'I
MAIL TAX STATEMENTS AS SET FORTH ABOVE
S72798Slv.4
I
GRANTOR:
BSP CACC, LLC,
a Delaware limited liability company
By: BSP CACC Holdings, LLC,
a Delaware limited liability company
its Sole Member
By: Buchanan Street Partners, L.P .,
a Delaware limited partnership
its Manager
57279851 v.4
By: BSP General Partner, Inc.,
a Delaware corporation
its Managing General Partner
!~~
Title: President
2
A notary public or other officer completing this certificate verifies only the identity of the individual who
signed the document to which this certificate is attached, and not the truthfulness, accuracy, or validity
of that document.
STATE OF CALIFORNIA
COUNTY OF 0~/Hv I, e:
On June /0 2019, before me, L1rv~~ b, M~ a Notary Public, personally
appeared r IM o Dt ~ J . 8A t.,L-~O , who proved to me on the basis of satisfactory
evidence to be the person whose name(.r, is/al}! subscribed to the within instrument and acknowledged
to me that he/s))6'theyexecuted the same in his/hfJi'/th,tr authorized capacity(~. and that by his/hef/tl)eir
signature<A on the instrument the person~ or the entity upon behalf of which the person.(ir acted, executed
the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing
paragraph is true and correct.
WITNESS my hand and official seal. 1············ e LAL.II£" G. MAEHLEII ' I-Neta~ ll~llc • C.llftmi~
o,,,..county i
Commfssi1n , 2250976 -
' My Comm. Ex,iirtt Aul 21, 2022
(Seal)
3
572798Slv.4
EXHIBIT"A"
TO
GRANT DEED
THE LAND REFERRED TO HEREIN BELOW IS SITUATED IN THE CITY OF CARLSBAD, IN THE
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, AND IS DESCRIBED AS FOLLOWS:
PARCEL A:
LOT 32 OF CARLSBAD TRACT NO. 81-46 UNIT NO. 2, IN THE CITY OF CARLSBAD, COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11288, FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 16, 1985.
EXCEPTING THEREFROM AN UNDNIDED 50% INTEREST OF ALL OIL, MINERALS, GAS AND
OTHER HYDROCARBON SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER THE REAL
PROPERTY, WITHOUT RIGHT OF HYDROCARBON SUBSTANCES BELOW DEPTH OF 500 FEET
UNDER THE REAL PROPERTY, WITHOUT RIGHT OF SURFACE ENTRY AS RESERVED BY
CARLSBAD PROPERTIES, A PARTNERSHIP RECORDED JULY 5, 1978 AS FILE NO. 1978-279136
OF OFFICIAL RECORDS. . ..
PARCELB:
LOTS 33 AND 34 OF CARLSBAD TRACT NO. 81-46 UNIT NO. 2, IN THE CITY OF CARLSBAD,
COUNTY OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11288,
FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 16, 1985
AND CERTIFICATE OF COMPLIANCE RECORDED MARCH 05, 1990 AS FILE NO. 90-116039 OF
OFFICIAL RECORDS.
EXCEPTING THEREFROM AN UNDNIDED 50% INTEREST OF ALL OIL, MINERAL, GAS AND
OTHER HYDROCARBON SUBSTANCES BELOW A DEPTH OF 500 FEET UNDER THE REAL
PROPERTY, WITHOUT RIGHT OF SURFACE ENTRY AS RESERVED BY CARLSBAD
PROPERTIES, A PARTNERSHIP RECORDED JULY 5, 1978 AS FILE NO. 1978-279136 OF
OFFICIAL RECORDS.
PARCELC:
AN EASEMENT FOR PRN ATE DRAINAGE PURPOSES OVER THE WESTERLY 15.00 FEET OF
LOT 32 OF CARLSBAD TRACT NO. 81-46 UNIT NO. 2, IN THE CITY OF CARLSBAD, COUNTY
OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO MAP THEREOF NO. 11288, FILED IN
THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY, JULY 16, 1985.
EXCEPTING THEREFROM THAT PORTION OF SAID LOT 32 LYING EASTERLY AND
NORTHEASTERLY OF THE FOLLOWING DESCRIBED LINE; BEGINNING AT THE
NORTHWESTERLY CORNER OF SAID LOT 32 SOUTH 10°20'19" EAST, 7.24 FEET ALONG THE
WESTERLY LINE OF SAID LOT 32; THENCE LEAVING SAID WESTERLY LINE SOUTH 23°43'52"
EAST 64.76 FEET TO THE EASTERLY LINE OF SAID WESTERLY 15.00 FEET.
APN: 212-093-05 AND 212-093-12
4
5727985lv.4
(
TENANCY-IN-COMMON AGREEMENT
(1950 Camino Vida Roble)
THIS TENANCY-IN-COMMON AGREEMENT (this 0Agreemenf'), dated as of June 21,
2019 (the "Effective Date"), is made and entered into by and between RAF Pacifica Group -
Real Estate Fund IV, LLC, a California limited liability company ("REFIV"), ARKA Monterey
Park, LLC, a Utah limited liability company ("ARKA"}, and 170 Arrowhead Partners, LLC, a
California limited liability company ("AROW1), each hereinafter referred to individually as a
"Tenanf' or, collectively, as the "Tenants."
Recitals
A. The Tenants are or will become the owners and holders of the fee simple title to
the real property described in Exhibit A attached hereto and incorporated herein by this
reference, which property is commonly known as 1950 Camino Vida Roble, Carlsbad, California
92008 (the "Property"}, as tenants-in-common, subject to the terms and conditions of this
Agreement.
B. The Tenants desire to enter into this Agreement to govern the tenancy-in-common
(the "Tenancy-in-Common") under which they own the Property in order to coordinate all actions
taken with respect to the Property on behalf of the Tenants.
C. The Tenants intend to hold the Property for investment and subject to leases with
third-parties, and intend at all times to hold the Property as tenants-in-common, subject to such
leases and any other leases the Tenants enter into for the Property (collectively, the 0 Leases"},
all of which Leases are, and shall be, with independent lessees/tenants, such that the Tenants do
not actively operate the Property, either directly or indirectly, as a business, partnership or other
venture and shall be entered into by the Tenants in accordance with the terms and conditions of
Section 4.1.
Agreement
The Tenants therefore declare that the Property is and shall be held, occupied,
encumbered, leased, rented, used, conveyed and improved only upon and subject to the following
covenants, conditions, restrictions and limitations, all of which are hereby declared, established
and agreed to be for the purpose of enhancing and protecting the value of the Property. All of
said covenants, conditions and agreements shall be binding upon and inure to the benefit of the
Tenants and each holder having or acquiring any right, title or interest in the Property or any part
thereof and are imposed upon the Property and every part thereof in favor of each and every part
and undivided interest therein, as covenants running with the Property.
ARTICLE I
Declaration of Intention and Acquisition of the Property
1.1. The relationship of the Tenants in the Property is as the above-referenced
Tenancy-in-Common, each holding the following separate and undivided interests (the "Interest'
or, collectively, the "Interests") in and to the Property:
875603¥3 -1 -
REFIV
ARKA
AROW
Tenant: Interest:
15.00%
67.00%
18.00%
The Tenants shall have all the rights and privileges of such relationship as tenants-in-common in
accordance with the laws of the State of California, subject, however, to the terms and conditions
of this Agreement.
1.2. No Tenant shall have the right to bind any other Tenant, except as expressly set
forth herein.
1.3. Notwithstanding any other term of this Agreement, but subject to any prohibitions
set forth in any third-party, institutional loan documents encumbering the Property, each Tenant
shall have the absolute right, power and authority to seek a partition of the Property at any time
during the term of this Agreement. In addition, prior to bringing any partition claim, the Tenant
desiring to bring such an action must first offer its Interest to the other Tenants who shall have
the right to purchase the offering Tenant's Interest as if the offering Tenant is an Insolvent Tenant
under Section 6.2.
1.4. Nothing contained herein shall be deemed to create the relationship of partner or
partnership or any relationship other than that of the Tenancy-in-Common. The Tenants have
filed or will file an election to be excluded from the partnership provisions of the Internal Revenue
Code of 1986, as amended (collectively, the "Code"), and to report their respective share of
income, deductions and credit from the Property on their respective tax returns, commencing with
the taxable year ending December 31, 2019, and will file any further election required under the
Code, as subsequently amended, to preserve such exclusion, including, but not limited to, Section
1.761-2 of the Code (Subchapter K).
1.5. The Tenants may hold the Property for 10 years or more. However, the Tenants
shall have the right to require a sale of the Property as set forth in this Agreement.
1.6. The total purchase price for the Property is $20,200,000.00, and the total
acquisition cost for the Property, including the purchase price, acquisition fee (described in
Section 1. 7), due diligence and closing costs and capital reserves is $20,894,000.00. The
Tenants partially financed the acquisition by obtaining an unsecured loan in the principal amount
of $12,500,000.00 from Wells Fargo Bank, N.A. The Tenants hereby unanimously approve the
foregoing financing. Such financing shall be shared in the same proportion of their respective
Interests, and any subsequent financing of the Property shall require the unanimous approval of
the Tenants.
1.7. The Tenants shall pay to RAF Pacifica Group, a California corporation ("RAF
Pacifica"), at the close of escrow for the acquisition of the Property a one-time fee in an amount
equal to 1.00% of the total purchase price for the Property, paid by the Tenants in the same
proportion as their Interests, to compensate RAF Pacifica for its services in acquiring the Property.
Such fee may be split with others according to the terms of a separate agreement.
1.8. Prior to the close of escrow for the acquisition of the Property, the Tenants
contributed the total amount of $8,394,000.00 {the "Contribution") to cover the balance of the
acquisition cost. The Contribution was divided among the Tenants as follows:
875603\13 -2-
REFIV: $1,259,100.00
ARKA: $5,623,980.00
AROW: $1,510,920.00
The Tenants shall reconcile the Contribution among themselves in order to have each Tenant
contribute the portion of the Contribution equal to its percentage Interest.
1.9. RAF Pacifica may receive from the Tenants a fee of up to 5.00% of the total cost
of any tenant improvement work or other construction activity on the Property performed on behalf
of such owners, as a fee to compensate RAF Pacifica for services rendered in supervising such
construction activity. Such fee shall be paid by the Tenants in the same proportion as their
Tenancy-in-Common Interests and shall be payable monthly as such construction work
progresses.
ARTICLE II
Income and Expenses of the Property;
Additional Contributions of Capital: Distributions: Indemnification
2.1. All income and expenses from the operation, leasing or refinancing of the Property
and all profits or shortfalls upon the sale or other disposition of the Property shall be allocated and
distributed, or charged, to each Tenant pro-rata in accordance with its Interest.
2.2. All ownership and operation costs associated with the Property, including, but not
limited to, costs and expenses incurred in connection with payment of taxes, insurance premiums,
utilities, maintenance services, management services, repair services, improvement services,
debt service, if any, and all other costs and expenses that may be reasonably necessary in
connection with the ownership, operation, sale or leasing of the Property, shall be charged to and
paid by each Tenant pro-rata in accordance with its Interest. Such payments shall be made, in
the first instance, from revenues produced by the Property before any revenues are distributed to
the Tenants. In the event that revenue is insufficient to cover the above-described costs, each
Tenant shall pay its pro-rata share of such uncovered costs within 10 days after written demand
therefor from the Managing Tenant. In the event that a non-managing Tenant believes that a
demand for additional contributions should be made and the Man·aging Tenant refuses to make
such demand, such dispute shall be resolved in accordance with Article V.
2.3. If any Tenant fails to timely pay its share of uncovered costs, the other Tenants
(each, an "Advancing Tenant") shall have the following options:
(a) to advance the funds necessary to make the payment due from the non-
paying Tenant who has failed to make it. Such advances, with interest thereon at 10% per annum
or, if greater and allowed by applicable law, at the maximum rate permitted by applicable law (but
in no event greater than 18% per annum), shall be repaid to the Advancing Tenant from the first
available revenues produced from the Property and available for distribution with respect to the
Interest held by the non-paying Tenant. Such repayment shall be in the proportion that each of
the Advancing Tenant's Interest bears to each other; or
(b) to not make an advance to cover the non-paying Tenant's share of such
uncovered costs, but to reduce from the first available funds produced from the Property and
available for distribution to the non-paying Tenant, such amount of funds as to pay all interest,
876603v3 -3-
penalties, costs, expenses and damages related to or resulting from such non-paying Tenant's
failure to pay such uncovered costs; or.
(c) to adjust the Interests of the Tenants in the Property to those percentages
calculated by dividing (i) the aggregate contributions (including the Contribution and any
subsequent contributions} of the non-paying Tenant, by (ii) the aggregate contributions made by
all Tenants. Any such adjustment of the Interests shall be evidenced by a quitclaim deed duly
executed and acknowledged by the Tenants and recorded in the office of the County Recorder
for San Diego County, State of California, setting forth the adjusted Interests of the Tenants. In
the event that the non-paying Tenant is the Managing Tenant, the Advancing Tenant shall have
right to designate another Tenant to be the Managing Tenant, subject to acceptance by that
designated Tenant.
(d) Notwithstanding anything to the contrary contained in this Agreement, each
loan under this Section 2.3 shall be due and payable in full on or prior to the 31 st day after any
such loan was made or, if earlier, the disposition of the defaulting Tenant's Interest in the Property
by sale, transfer or otherwise (including, without limitation, to one or more of the other Tenants).
All such loans shall be repaid in reverse order of priority in which they were made (such that loans
made last in time will have a higher repayment priority than those made earlier in time) and all
such loans having the same repayment priority shall be repaid on a pro rata basis. Any such loan
hereunder to a Tenant will be recourse to that Tenant itself, and if any Tenant is a disregarded
entity for federal income tax purposes, then any loan made to such Tenant shall be recourse to
the owner of such Tenant.
2.4. Revenues derived from the Property, less ownership and operation costs incurred
or paid and any reserves for such payments, shall be distributed not less than every three months
to the Tenants, pro-rata in accordance with each Tenant's Interest.
2.5. Each Tenant shall protect, defend (including payment of reasonable attorneys'
fees and costs, and court costs), indemnify and hold harmless each other Tenant:
(a) from and against all debts, liens, judgments or charges of any nature
accruing against the Property by reason of any act of the Tenant; and
(b) if any other Tenant, in excess of the Tenant's respective Interest, incurs
liability for repayment of any loan or indemnifies any lender for a loan obtained and used for the
benefit of the Property and/or all Tenants, or discharges any other obligation of all Tenants and/or
relating to the Property.
ARTICLE Ill
No Obllgatlon of Time Devoted to the Business
Subject to Article IV, each Tenant may, or may not (but with no Tenancy-in-Common
obligation to do so under this Agreement), devote such time and attention to the business of the
Tenancy-in-Common as it may desire, and no Tenant will be entitled to draw a salary or receive
any compensation for such time and attention.
875803v3 -4-
ARTICLE IV
Management and Operation of the Property
4.1. Except for situations in which the approval of all the Tenants is expressly required
by this Agreement, REFIV will be the current and acting managing tenant under this Agreement
(the "Managing Tenantn) and will have the authority to manage and control the business and all
other affairs with respect to the Property. The Managing Tenant shall have the authority to
execute and enter into leases with lessees of the Property on behalf of all Tenants; provided that
any such leases that require approval of all Tenants are approved in accordance with this
Agreement.
4.2. Except as set forth elsewhere in this Agreement, the following situations require
approval of all the Tenants:
(a) Sale of the Property;
(b) Financing and/or any refinance of the Property, including the negotiation,
re-negotiation, and approval thereof;
(c) Entering into a lease for any portion of the Property; and
(d) The hiring of any property manager for the Property, other than as set forth
in Section 4.2, and the negotiation, renegotiation, and approval of any management contract or
agreement with any such property manager (and any extension or renewal of any such contract
or agreement), which term shall be renewable for one or more additional one-year periods upon
the unanimous approval of the Tenants.
4.3. Upon executing this Agreement, the Tenants will retain a property manager (the
"Property Manager") to manage the Property, who will be so re-affirmed and elected, or replaced,
as and if necessary, on an annual basis by the Tenants. The Property Manager shall manage
the Property under the terms and conditions set forth in a separate management agreement,
which separate management agreement will provide, amongst other terms, that the Property
Manager will collect the rent or rents and other amounts from the Property, pay bills and vendors,
and distribute net proceeds to the various Tenants, as and if available, and necessary, on at least
an every 90 day basis. Such management agreement shall provide for a management fee at the
then-current commercially reasonable rate, plus reimbursement of costs and customary leasing
fees.
4.4. [reserved]
4.5. Pursuant to Section 1.1, various Tenancy-in-Common Interests are created by this
Agreement for the Property and will be governed by the terms, covenants and conditions set forth
in this Agreement, with an initial group of four Tenants comprising the total aggregate Interests of
100% as of the date of this Agreement. Notwithstanding anything to the contrary set forth in this
Agreement (including in Article V), however, and at any time during the term of this Tenancy-in-
Common, at least two or more of the Tenants comprising at least 51% or more of the Interests in
this Tenancy-in-Common (for purposes of this Section 4.4 only; and to be collectively defined as
the "Majority Tenants"), may elect to remove and replace either the then-current Managing
Tenant and/or the then-current Property Manager, or both, at the sole and absolute discretion of
the Majority Tenants and for any reason whatsoever, but to be so elected upon no less than five
business days advance written notice to the other Tenants. Any such advance written notice from
875603v3 -5-
the Majority Tenants will include the name or names and other contact information for their
selected replacement of the Managing Tenant and/or the Property Manager, as applicable (with
each to have the same rights, powers and duties as set forth in this Agreement, including to be
affirmed as to their respective positions annually}; provided, however, that the replacement
Managing Tenant, so selected by the Majority Tenants, may actually be one of the
Majority Tenants, although no Majority Tenant, nor any other Tenant itself, may be or become
the Property Manager under Section 4.2; and provided further, that any such removal and
replacement of the then-current Managing Tenant will not reduce nor diminish the so-removed
Managing Tenant's Interest in this Tenancy-in-Common (except as otherwise expressly provided
in this Agreement).
ARTICLEV
Mediation and Arbitration
5.1. If a management decision cannot be reached, or if any dispute arises between the
Tenants, the Tenants hereby agree:
(a) With regard to any and all disputes, claims and/or disagreements
(collectively, the "Claims") by, among or between the Property Manager and the Tenants, or
between the Tenants or any of them, regarding the Property or its operation, management or
disposal, or for any other reason whatsoever, the parties will mediate any Claims between them
before resorting to the arbitration procedures set forth in this Agreement. Mediation is the process
in which the parties attempt to resolve any Claims by submitting such Claims to an impartial,
neutral mediator who is authorized to facilitate the resolution of the Claims, but is not empowered
to impose a settlement on the parties. The mediation fee, if any, shall be divided equally between
or among the parties involved. Before the mediation begins, the parties agree to sign a document
limiting the admissibility in mediation and arbitration of anything said, any admission made and
any documents prepared, in the course of the mediation and arbitration, consistent with California
Evidence Code Section 1152.5. IF ANY PARTY COMMENCES AN ARBITRATION OR COURT
ACTION BASED ON ANY CLAIMS TO WHICH THIS ARTICLE V APPLIES WITHOUT FIRST
ATTEMPTING TO RESOLVE THE MATTER THROUGH MEDIATION, THEN IN THE
DISCRETION OF THE ARBITRATOR($) OR JUDGE, THAT PARTY SHALL NOT BE ENTITLED
TO RECOVER ITS ATTORNEYS' FEES AND COSTS, AND COURT COSTS, EVEN IF THEY
SHOULD OTHERWISE BE AVAILABLE TO THAT PARTY IN ANY SUCH ARBITRATION OR
COURT ACTION. However, the filing of a judicial action to enable the recording of a notice of
pending action, for order of attachment, receivership, injunction, or other provisional remedies
shall not in itself constitute a loss of the right to recover attorneys' fees under this Article V. The
following claims are excluded from the requirement of mediation under this Agreement: (i) a
judicial or non-judicial foreclosure or other action or proceeding to enforce a deed of trust,
mortgage, or installment land sale contract, as defined in California Civil Code Section 2985; (ii)
the filing or enforcement of a mechanic's lien; and/or (iii) any matter which is within the jurisdiction
of a probate court.
(b) BY INITIALING THIS ARTICLE V BELOW, THE PARTIES AGREE TO
NEUTRAL BINDING ARBITRATION OF All CLAIMS CONCERNING OR IN ANY WAY
RELATING TO THE PROPERTY. BY SELECTING ARBITRATION, THE PARTIES
ACKNOWLEDGE THEY ARE GIVING UP THEIR RIGHTS TO A JURY OR COURT TRIAL
CONCERNING THOSE CLAIMS. THE PARTIES FURTHER ACKNOWLEDGE THAT THEIR
JUDICIAL RIGHTS TO DISCOVERY AND APPEAL ARE ALSO AFFECTED. THE PARTIES'
AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. ANY CLAIMS, AS SET
FORTH ABOVE, SHALL BE DECIDED BY NEUTRAL BINDING ARBITRATION PURSUANT TO
875603v3 -6-
THE PROVISIONS OF TITLE IX OF PART 3 OF THE CALIFORNIA CODE OF CIVIL
PROCEDURE, COMMENCING WITH SECTION 1280 OR ANY SUCCESSOR STATUTES OF
SIMILAR EFFECT, AND NOT BY A COURT ACTION, EXCEPT AS PROVIDED BY CALIFORNIA
LAW FOR JUDICIAL REVIEW OF ARBITRATION PROCEEDINGS. THE ARBITRATION SHALL
BE CONDUCTED BY A SINGLE ARBITRATOR WHO IS A RETIRED SUPERIOR COURT
JUDGE. THE PARTIES SHALL ATTEMPT TO AGREE WITHIN 15 DAYS ON THE SELECTION
OF THE ARBITRATOR. IF THEY ARE UNABLE TO AGREE, THE SELECTION OF THE
NEUTRAL ARBITRATOR SHALL BE IN ACCORDANCE WITH THE PROVISIONS OF TITLE IX
OF PART 3 OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. THE AGGRIEVED PARTY
CAN INITIATE ARBITRATION ONLY BY SENDING A WRITTEN •NOTICE OF INTENTION TO
ARBITRATE• BY CERTIFIED MAIL TO THE OTHER PARTY(IES). THE NOTICE MUST
CONTAIN A DESCRIPTION OF THE CLAIMS, AND THE REMEDY SOUGHT. IF AND WHEN
A NOTICE OF ARBITRATION IS MADE BY A PARTY, THE PARTIES AGREE TO EXECUTE A
SUBMISSION AGREEMENT WITHIN 15 DAYS AFTER RECEIPT OF SAME FROM THE
ARBITRATOR. THE SUBMISSION AGREEMENT SHALL SET FORTH THE RIGHTS OF THE
PARTIES IF THE CASE IS ARBITRATED AND THE RULES AND PROCEDURES TO BE
FOLLOWED AT THE ARBITRATION HEARING. NOTWITHSTANDING THE ABOVE, AT LEAST
14 DAYS PRIOR TO THE ARBITRATION HEARING, EACH PARTY MUST MAKE A FULL
DISCLOSURE TO THE OTHER PARTY OF: (i) ALL DOCUMENTS TO BE PRESENTED BY
SUCH PARTY, AND (ii) ANY WITNESSES TO BE CALLED BY SUCH PARTY. JUDGMENT
UPON THE AWARD RENDERED BY THE ARBITRATOR($) MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION THEREOF. THE PARTIES SHALL HAVE THE RIGHT TO
DISCOVERY IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION
1283.05, WHICH SECTION IS INCORPORATED HEREIN BY THIS REFERENCE. THE FILING
OF A JUDICIAL ACTION FOR ORDER OF ATTACHMENT, RECEIVERSHIP, CLAIM AND
DELIVERY, INJUNCTION, TO PERMIT RECORDING OF A LIS PENDENS OR OTHER
PROVISIONAL REMEDIES SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO
ARBITRATE UNDER THIS ARTICLE V; PROVIDED, SAME IS FILED FOR THE SOLE
PURPOSE OF PROTECTING A PARTY'S RIGHTS OR INTERESTS PENDING COMPLETION
OF THE ARBITRATION PROCEEDING.
Initials of
Tenants:
ARTICLE VI
Dlapofltlon of Interest
&.1. Right oJ First Offer.
(a) Except as hereinafter provided, if prior to the termination of this Agreement,
any Tenant (the •otrer1ng Tenanf) shall desire to sell or otherwise dispose of its Interest in the
Property (such Interest being hereinafter referred to as the "Offered Interest) to a person not
then a Tenant, It shall first give notice to the non-offering Tenant(s) of Its Intention to do so. The
notice shall specify the amount of the Offered Interest and the price, terms, and conditions of the
intended sale or disposal, and if the sale is for consideration other than cash, the cash equivalent
value of such non-cash consideration.
(b) Within 15 days after the receipt of such notice, the non-offering Tenant(•)
shall have the right to acquire all, but not less than all, of the Offered Interest at the price or upon
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the cash value consideration, and upon the other terms and conditions, specified in the notice
from the Offering Tenant.
(c} If the non-offering Tenant(s} shall desire to acquire the Offered Interest,
such non-offering Tenant(s) shall give the Offering Tenant notice of this intention and shall
thereafter comply with the terms and conditions of sale or disposal specified in the notice given
by the Offering Tenant. If more than two Tenants comprise the Tenancy-in-Common, and more
than one non-offering Tenant elects to purchase the Interest of the Offering Tenant, the Interest
of the Offering Tenant shall then be acquired by the non-offering Tenant(s) in the proportion that
the lnterest(s) of the non-offering Tenant(s) bear to each other.
(d) If none of the non-offering Tenants desire to acquire the Offered Interest,
the Offered Interest may be sold or disposed of to any other party, but not at a price or for
consideration or upon terms and conditions more favorable than those specified in the notice
already given by the Offering Tenant to the other Tenant(s). In addition, any party acquiring the
Offered Interest shall agree to be bound by the terms of this Agreement and shall immediately
execute an amendment to this Agreement, which amendment shall reflect the addition of the new
party as an additional Tenant(s).
(e) Any sale or other type of disposition of a Tenant's Interest made by an
Offering Tenant, upon the failure of any of the non-offering Tenants to exercise their rights under
this Section 6.1, shall be consummated within 180 days after expiration of the 15 day period set
forth in Section 6.1 (b); otherwise, the offering Tenant's Interest shall be offered again to the
Tenant(s) in accordance with the provisions of this Article VI.
(f) If the disposition of any Tenant's Interest is to be accomplished through the
use of a qualified exchange under Section 1031 of the Code, the provisions of Sections 6(a)
through (e) shall apply, and the non-offering Tenants shall cooperate with the disposing Tenant
as may be reasonably necessary; provided, however, that any cooperating Tenant shall not be
obligated to act as an accommodator, take title to any other property or to incur any additional
liability or expense because of such exchange.
(g) The terms of this Article VI shall not apply to sales or transfers of a Tenant's
Interest by way of an assignment of such Interest to any entity owned or controlled by the Tenant
making such assignment where the Tenant's transferee is owned and controlled by the Tenant's
principals in the same manner and proportion as they own Tenant.
6.2. Purchase Upon Insolvency.
(a) If any Tenant (the "Insolvent Tenant") at any time shall commit an Act of
Insolvency (as defined in this Section 6.2), the remaining Tenant(s) shall have the right and option
(but not the obligation), exercisable by notice to the Insolvent Tenant, its successors or
representatives, to acquire the Interest of the Insolvent Tenant in the Tenancy-in-Common at a
price equal to the amount the Insolvent Tenant would have been entitled to receive if the Tenant(s)
had sold the Property for its fair-market value, in accordance with Paragraph 6.2(c), as of the
date that any Act of Insolvency was committed, or the date of the first Act of Insolvency, if more
than one, and the Tenant(s) had immediately paid all typical selling costs (broker fees, transfer
taxes, loan prepayment charges, escrow and title charges, etc.) and all liabilities encumbering or
relating to the Property and distributed the net proceeds to each Tenant in satisfaction of their
respective Interests in the Tenancy-in-Common. The closing of the purchase and sale of the
Insolvent Tenant's Interest in the Tenancy-in-Common shall take place on the closing date
specified in the remaining Tenant's notice, which shall be not more than 60 days after the date of
875803v3 -8-
said notice (the "Closing Date"). Such notice shall be given within 180 days after the Act of
Insolvency becomes known to any remaining Tenant(s). As used in this Agreement, each of the
following shall constitute an "Act of Insolvency" if such act or event is not cured or otherwise
caused ·to be set aside within 60 days after its occurrence:
(i) a bankruptcy case with respect to the Tenant is commenced
under the Bankruptcy Code or under any state or federal statute respecting bankruptcy; or
(ii) a receiver is appointed for all or substantially all of the business
assets of a Tenant on the ground of insolvency; or
(iii) a Tenant makes a general assignment for the benefit of its
creditors.
(b) The purchase price shall be paid by the remaining Tenant(s) to the
Insolvent Tenant in cash on the Closing Date.
(c) The fair-market value of the Property shall be determined by an
independent appraiser acceptable to all Tenants, who shall be a member of the American Institute
of Real Estate Appraisers, and familiar with properties in the Encinitas, California area. The
appraiser shall be instructed to determine the amount that the Property would be sold for at an all
cash sale, subject to all non-monetary encumbrances of record, including existing lease(s). If all
Tenants do not agree within 10 days upon one such appraiser, then each shall appoint one such
appraiser within 1 O days after written request by a Tenant, and a third ( or fourth, as the case may
be) appraiser shall be selected by the appointed appraisers. If a Tenant shall fail to timely appoint
an appraiser after such written request, the appraiser{s) appointed by any other Tenant(s) shall
select the second (or third, as the case may be) appraiser within 10 days after such Tenant's
failure to appoint, and the two or three appraisers so appointed will appoint a third (or fourth, as
the case may be) having the same minimum qualifications. The fair-market value of the Property
shall be the average of the valuations of the Property as determined by each of such appraisers;
provided, however, if such average deviates more than 10% from the median of such valuations,
the fair-market value shall be the average of the two closest valuations. If the parties agree on
one appraiser, each shall pay its pro-rata share of the fees and costs of such single appraiser, in
proportion to its Interest. Otherwise, each Tenant shall be responsible for the fees and costs of
its separately appointed appraiser (or of the appraiser appointed for such Tenant), and each shall
pay its proportionate share of the fees and costs of the third (or fourth, as the case may be)
appraiser in proportion to its Interest. Once the fair market value of the Property has been
determined, then the purchase price shall be calculated by the Tenants' outside accountant (or if
none, the purchasing Tenant's outside accountant) based on the Property-related liabilities and
obligations of the Tenants, including monetary liens against the Property, that are in existence as
of the month end preceding the closing date.
ARTICLE VII
Buy/Sell Agreement
7 .1. Buy/Sell With Third Party Offer.
Should at any time the Tenancy-in-Common be comprised of two or more Tenants, and a
bona fide offer from a third-party ("Third-Party Offer'') is received by the Managing Tenant to
purchase the Property, then by a vote conducted by the Managing Tenant, and approved by one
or more Tenants with an Interest of 20% or greater, the sale shall be approved; provided that:
B75603v3 -9 -
(a) If the sale is approved, any Tenant(s) not wanting to sell shall have the right
to buy the Interests of those Tenant(s) who voted to sell (and if exercised, then the sale to the
third-party shall not be consummated). In such event, the price and terms of the lnterest(s) being
purchased shall be equal to the price and terms being offered by the Third-Party Offer, adjusted
on a pro rata basis. Any Tenant(s) who voted not to sell must notify in writing those Tenant(s)
who voted to sell (within seven days after receiving written notification by the Managing Tenant
of the outcome of the vote) of their intention to exercise this provision. All terms and conditions
of the Third-Party Offer shall apply; however, notwithstanding any other provision of this Article
VII, a purchasing Tenant shall have a minimum of 90 days from the date of the vote under Section
7 .1 to consummate its purchase.
(b) In order to be valid, the Third-Party Offer must: (i) be from an entity
reasonably capable of consummating the transaction; and (ii) provide for a closing no later than
120 days after acceptance of the Third-Party Offer.
7 .2. Sale, Condemnation or Destruction of Property.
If the Property is sold, condemned or destroyed, then the net proceeds received as a result
of the sale, condemnation or destruction shall be divided and distributed in the following order of
priority:
(a) first, to the payment of debts and liabilities attributable to the Property
(including expenses incurred in collecting such proceeds); and
(b) the balance then remaining will be distributed to the Tenants pro-rata in
accordance with their respective Interests.
7.3. Buy/Sell With No Third-Party Offer.
Should, at any time after the date which is 12 months from the date that the Tenants
acquire title to the Property, the Tenancy-in-Common be comprised of two or more Tenants, and
one Tenant with an Interest equal to or greater than 20% shall desire to cause a sale of the
Property but the other Tenants do not agree to sell the Property, then any Tenant may send a
written notice to the other Tenant(s) electing to sell the Property. Upon receipt of such written
notice, the Tenants shall determine the fair-market value of the Property in accordance with
Paragraph 6.2(c). After the fair-market value of the Property has been determined, the Property
shall be listed for sale at a price not to exceed 105% of the fair-market value and for a period of
six months, unless the Tenant(s) receiving the written notice elect(s) to buy the Interest of the
Tenant sending the notice for the price and on the terms described in Section 6.2 as if the notifying
Tenant had committed an Act of Insolvency on the date that the notice was sent under this Section
7 .3. If the Tenant(s) receiving the written notice do not elect to buy such Interest, then the Tenants
shall sell the Property to the first prospective buyer who submits an offer within the six months
listing period, for a price that is not less than 95% of the fair-market value as determined above,
with the price to be paid all cash, with customary escrow terms and closing costs and through an
escrow that closes no later than 120 days after acceptance of the offer.
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ARTICLE VIII
Term
This Agreement shall take effect on the Effective Date, and shall terminate, except for any
undischarged payments, assessments or other obligations due under this Agreement on the part
of any Tenant, upon the first to occur of the following events:
(a) termination by agreement of all of the Tenants;
(b) the sale or other disposition of all Tenants' undivided Interests in the
Property, such that only one owner of the Property remains; or
(c) the expiration of 30 years from the Effective Date.
ARTICLE IX
Miscellaneous
9.1. Notices. Any and all notices and demands under this Agreement shall be written
and given by (i) personal delivery, (ii) certified mail, return receipt requested, postage prepaid, or
(iii) overnight courier service such as Federal Express or UPS; provided the sender retains proof
of the delivery/transmission thereof and at the same time sends notice by postage prepaid regular
first class mail, to the parties at their respective addresses below, or such addresses as last
requested thereby in writing.
Addresses for Notices:
TO: REFIV
TO: ARKA
TO: AROW
RPG -Real Estate Fund IV, LLC
315 S. Coast Hwy 101, Ste U-12
Encinitas, CA 92024
Attn: Adam Robinson
ARKA Monterey Park, LLC
9350 Wilshire Blvd, Ste #402
Beverly Hills, CA 90212
Attn: Vincent Bohanec
170 Arrowhead Partners, LLC
9350 Wilshire Blvd, Ste #402
Beverly Hills, CA 90212
Attn: Vincent Bohanec
9.2. No Partnership. Nothing in this Agreement shall be construed to consider the
Tenants as partners or joint ventures, nor constitute any Tenant the agent of another or in any
manner limit the parties in the carrying on of their respective businesses or activities.
9.3. Books and Records. The Property Manager shall maintain proper books and
records for the Property and the Leases. The Tenants and their agents shall have the right to
examine and copy the books and records at any time and the Property Manager shall make the
books and records available upon a Tenant's request.
875603v3 -11 -
9.4. Attorneys' Fees. In the event of any arbitration, action, suit, or proceeding
brought under or in connection with this Agreement, the prevailing Tenant shall be entitled to
recover, and the other Tenants agree to pay, the prevailing Tenant's reasonable costs and
expenses in connection therewith, including reasonable attorneys' fees and costs, court costs,
and costs to enter or enforce any arbitration award.
9.5. Successors and Assigns. Each of the tenns, conditions, and provisions of this
Agreement shall be binding upon and inure to the benefit of the pennitted successors and assigns
of the respective parties.
9.6. Further Acts. Each Tenant agrees to perfonn any further reasonable acts and
execute and deliver any reasonable documents which may be reasonably necessary or desirable
to carry out the provisions of this Agreement.
9.7. Direction In WIii. As to each individual Tenant, each agrees to insert in his/her
Will a direction and authorization to his/her executor to fulfill and comply with the provisions
hereof, and to sell his/her Interest in the Property in accordance herewith, but the terms and
provisions of this Agreement shall be binding and controlling, despite the failure of any Tenant to
so do.
9.8. Headings. Article, Section, and Paragraph headings are for convenience only and
shall not be construed as part of this Agreement.
9.9. Severablllty. In the event any provision(s) in this Agreement are, or are for any
reason adjudged to be, unenforceable, such provision(s) shall be disregarded, and the remaining
provisions hereof shall subsist and be carried into effect.
9.10. Waiver of Right to Jury. With respect to any dispute arising under or in
connection with this Agreement, as to which, despite the arbitration requirement set forth above,
legal action nevertheless occurs, no Tenant shall have the right to trial by jury, and each Tenant
hereby irrevocably waives such right.
9.11. Remedies Cumulative; Enforceability. Except as otherwise expressly provided
in this Agreement, no remedy conferred upon or reserved to the Tenants herein shall be exclusive,
and each and every remedy shall be cumulative. The Tenants acknowledge and agree that the
rights granted to the Tenants under this Agreement are of a special and unique kind and character
and that, if there was a breach of any material provision of this Agreement, the non-breaching
Tenants would not have an adequate remedy at law. It is expressly agreed, therefore, that the
rights of the Tenants under this Agreement shall be enforceable by a decree of specific
perfonnance.
9.12. Advice of Counsel. Each Tenant acknowledges that he/she/it has been
represented (or has had the opportunity to be represented) in the preparation and signing of this
Agreement by his/her/its own legal counsel.
9.13. Counterparts. This Agreement may be signed in counterparts (including via
"PDF" or other electronic signature), and all such counterparts together, or a copy of this
Agreement with all of the executed signature pages, shall constitute the fully-executed
Agreement.
875603v3 -12 -
9.14. Authoritv. Each signatory executing this Agreement on behalf of an entity affinns
that he/she/it is authorized and empowered by such entity to execute this Agreement and
represents such entity in the capacity stated.
9.15. Amendments. This Agreement may be amended only in writing signed by all
Tenants.
9.16. Mutual Indemnity Among Tenants. Each Tenant agrees to indemnify, defend
and hold harmless (including reasonable attomeys' fees and costs, and court costs) the other
Tenants because of any debts, liens, judgments or charges of any nature accruing against
him/her/it or the Property, in whole or in part, by reason of any act of such Tenant taken in
contravention of any of the terms of this Agreement.
9.17. Indemnity bv Lessees. The Tenants shall use reasonable efforts to obtain leases
and other agreements for the Property which provide that any lessee or licensee thereunder shall
fully indemnify and hold harmless (including reasonable attorneys' fees and costs, and court
costs) each Tenant, jointly and severally, from any and all damages, claims, liabilities or expenses
arising out of his/herfits use of the Property. Upon the renewal or modification of any existing
Lease, if the Lease does not already have such a provision, the Tenants will use reasonable
efforts to obtain it.
9.18. Tenants' Indemnity of Property Manager. Excluding the negligence and/or
willful misconduct of the Property Manager, the Tenants, jointly and severally, shall indemnify,
defend and hold harmless (including reasonable attorneys' fees and costs, and court costs), and
pay all costs, expenses, losses, damages and liabilities of, and claims and judgments against,
the Property Manager resulting from any act by the Property Manager that was a prudent business
decision done in good-faith and for the benefit of all the Tenants.
[TEXT CONCLUDED WITH SIGNATURES ON NEXT PAGE]
875603v3 -13 -
The Tenants have executed this Agreement as of the Effective Date.
RAF PACIFICA GROUP-_,,_,_STATE FUND IV, LLC,
a California limited liabili~·"""'nn•y
ARKA Monterey Park, LLC, a Utah limited liability company,
By: SMB I Group, L.P., a Delaware limited partnership
Its Sole and Managing Member
By: K Associates, a California general partnership
Its General Partner
~ Its: General Partner
170 ARROWHEAD PARTNERS, LLC
a California limited liability company
By: K Associates, a California general partnership :,ji]~*
Nania: W. ~
Title: ---
875803v3 -14 •
EXHIBIT A
Legal Description of the Property
See attached.
8758D3v3