Desert Cities-Mazzella-RDA/Assign & Assumption 07ASSIGNMENT AND ASSUMPTION OF AGREEMENT FOR PURCHASE AND SALE AND
ESCROW INSTRUCTIONS
FIRST AMENDMENT TO AGREEMENT FOR PURCHASE AND SALE AND
ESCROW INSTRUCTIONS
THIS ASSIGNMENT AND ASSUMPTION OF AGREEMENT FOR PURCHASE
AND SALE AND ESCROW INSTRUCTIONS & FIRST AMENDMENT TO AGREEMENT
FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS ("Assignment &
Amendment") is entered into to be effective as of March j5:'2007 ("Effective Date"), by and
among Desert Cities Development, Inc., a California corporation ("Assignor"), the La Quinta
Redevelopment Agency, a public body, corporate and politic ("Assignee") and Anne J. Mazzella
("Seller").
RECITALS
A. Assignor, as "Buyer," and Seller have entered into that certain Agreement for
Purchase and Sale and Escrow Instructions dated as of December 1, 2006 (the "Agreement"),
pursuant to which Seller agrees to sell to Assignor and Assignor agrees to purchase from Seller
certain real property consisting of approximately 19.9 acres or real property located in the City of
La Quinta, County of Riverside, State of California, as more particularly described in the
Agreement. Capitalized terms that are otherwise not defined in this Assignment & Amendment
shall have the meaning attributed to them in the Agreement.
B. Assignee and the City of La Quinta ("City") have the power of eminent domain.
Assignee and City desire to develop the Property for, among other things, very low, low and
moderate income housing and commercial uses. Assignee is seeking the cooperation of Assignor
and Seller to allow Assignee to acquire the Property for such development purposes and
Assignor and Seller have agreed to accommodate Assignee's request to avoid condemnation
proceedings relating to the Property.
C. As part of the plans for improvement of a public highway abutting the Property,
the City, after Buyer and Seller were already in Escrow, sought a portion of the Property be
dedicated (the "Dedication") to the City to facilitate highway improvements. The City, Buyer
and Seller resolved to approach the Dedication through the means of a charitable land donation
by Seller to the City, a tax exempt entity, to enable Seller to receive a tax deduction on Seller's
income tax return.
D. Assignor desires to assign to Assignee and Assignee desires to assume all of
As rights and obligations under the Agreement. Additionally, Assignor and Assignee
desire to provide payment to Assignor to reimburse it for (i) the Deposit and (ii) certain other
expenses incurred by Assignor in connection with its performance under the Agreement.
E. Additionally, Assignee and Seller desire to amend the Agreement as provided in
this Assignment & Amendment.
2156/015610-0047
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OU234728.1
NOW THEREFORE, the parties agree as follows:
ASSIGNMENT
1. Assignment. Assignor hereby assigns to Assignee all of Assignor's rights and
interests and delegates to Assignee all of its duties and obligations under the Agreement. To
evidence Assignee's acknowledgement to all duties and obligations under the Agreement,
Assignee shall initial each and every page of a copy of the fully executed Agreement (attached
hereto as Exhibit "A") and forward same to Seller within seven (7) days of the execution of this
Assignment & Amendment. All references to Buyer in the Agreement and in this Assignment &
Amendment going forward after the Effective Date of this Assignment & Amendment shall
mean the La Quinta Redevelopment Agency, unless referred to as Assignor. Except as expressly
set forth in the First Amendment provisions of this Assignment & Amendment, the provisions of
the Agreement shall prevail.
2. Assumption. Assignee hereby accepts the foregoing assignment and assumes and
agrees to timely keep, perform and discharge all of the duties and obligations of Assignor under
the Agreement.
3. Insurance. To the extent Assignee or any Consultants of Assignee will be
entering the Property to inspect or otherwise form an Assessment, Assignee and any such
Consultants shall in particular keep, observe and maintain all of the obligations under Section
2.2.2 including providing Seller with evidence of insurance prior to such entry pursuant to the
provisions of the Agreement.
4. Notification of Seller and Third Parties and Conformity of Agreement Exhibits:
Pursuant to Section 16.1 of the Agreement, this provision constitutes Seller's notice of
assignment. Asssignee shall promptly transmit fully executed copies of this Assignment to the
Escrow Holder (as defined in the Agreement) and all exhibits contained in the Agreement shall
be conformed to reflect the assignment effected in this Assignment. Contact information for the
purpose of notices under Section 16.4 the Agreement shall be as follows:
7156/015610-0047
789969.01 .03/14/07
To Seller: Anne J. Mazzella
104 South Newport Drive
Napa, California 94559
Facsimile: (707) 259-0773
Copy to: Bingham McCuthen LLP
Plaza Tower
600 Anton Boulevard, I Sth Floor
Costa Mesa, CA 92626
Attn: Geoffrey K. Wills, Esq.
Facsimile: (714) 830-0720
To Buyer: La Quinta Redevelopment Agency
78-495 Calle Tampico
La Quinta, CA 92253
-2-
OC234728.1
Attn: Executive Director
Facsimile No.: (760) 777-7107
With Copy to: Rutan & Tucker, LLP
611 Anton Boulevard, Suite 1400
Costa Mesa, California 92628-1950
Attn: M. Katherine Jenson, Esq.
Michael R.W. Houston, Esq.
Facsimile No.: (714) 546-9035
5. Reimbursement of Certain Expenses. Within twenty (20) days of the full
execution of this Assignment & Amendment, Assignee shall reimburse Assignor for (i) the
Deposit and (ii) certain other expenses incurred by Assignor in connection with its performance
under the Agreement. The amount paid by Assignee to reimburse Assignor shall be One
Hundred Eleven Thousand, One Hundred Fifteen Dollars and Twenty -Nine Cents ($111,115.29).
6. Dedication Obligations. Within twenty-eight (28) days of the fiill execution of
this Assignment & Amendment, Seller shall receive from Assignee, Assignor or the City (or any
combination thereof) a letter of opinion from a qualified independent appraiser to Seller relating
to the Dedication reflecting an estimated value of the Dedication. Seller shall pay the cost for
said appraisal opinion letter upon receipt of appraiser's invoice for said service. Assignee and
Assignor shall work with the City in cooperation with Seller at no liability to Assignee, Assignor
or the City, by arranging for the City to execute and acknowledge receipt of the Dedication as a
donation from Seller in Part IV (donee acknowledgement) of Internal Revenue Form 8283 (Non -
Cash Charitable Contributions) attached hereto as Exhibit "B", and arranging for the City to
provide any other tax -related forms or documents reasonably requested by Seller relating to the
Dedication. Although the City is not a signatory hereto, Seller's willingness to enter into this
Assignment & Amendment, is conditioned, among other things, Assignor's and Assignee's
representations to Seller that Assignee and Assignor can work with the City to make
commercially reasonable efforts to satisfy all of Seller's needs and requirements relating to
Seller's tax deduction for the Dedication and receiving in a timely and prompt manner any
executed documents by the City needed by Seller in addition to Form 8283 and the appraisal
opinion letter relating to the deduction for the Dedication.
7. Inurement. This Assignment & Amendment shall inure to the benefit of Assignor
and Assignee, and their respective successors, heirs, and successors -in -interest.
FIRST AMENDMENT
8. Purchase Price. Section 1.1 of the Agreement is modified as follows: The
Purchase Price for the Property shall be NINETEEN MILLION NINE HUNDRED THIRTY-
SEVEN THOUSAND, FOUR HUNDRED AND TWELVE DOLLARS AND FIFTY-TWO
CENTS ($19,937,412.52). [Initials]
9. Environmental Condition, Confidentiality, Section 2.2.1 is hereby amended by
inserting "except as" in the third full sentence at the top of page 6 of the Agreement such that
this sentence shall now read as follows (with additional language being shown in underline):
21561015610-0047
789969.01 203/14/07
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OC/234728.1
VVJ 1.,4-V1 IJ JJ IA/,
WJ V V 4 r V I G-
Attn: hxecuuve DinMctor
raesini le No.; (760) 777-71()7
With Copy to: Rutan St Tacker, I,I,P
611 Anton 8oulavard, Sufic 1400
Costa Mesa, calilianra 92628-1950
Attn: M. Katharine Jenson, Fsq.
Michael R.W. liuustott_ riq.
Facsimile No.: (714) 546-9035
5. ReimburscmentofC'erlain l;xpenses. Within twenty (20) days of the lint
execution of this Assipnicnt & Amendment. Assigner shall reimbut.c Assignor fur (i) thv
Deposit and (ii) evrlain odicr expenses incurred by Assi+ aor is connection with its perl'ontumcc
under the Agreement. The amount paid by Assignee to reimburse Assignvr shall) be One
Ilcmdred Eleven.'l'housand; One I'Iundred hiftvun Dv1lars mitl Twenty -Nine Cents ($I I I,1 15.29).
6. Dedication_(7iiliaatiom. Within twenty-riLht (2t3) days of the lull a tccutivn of
this Assignment & Amendment, Seller shall receive from Assigrwvc. Assignor or the City (or any
combinal ion theist',!) a letter of opinion. fiunu a i)uatilieeE ittdependunt appruiscr to ticllcr Iv sting
to the Dedication relic-cting an estimated value ol'(hc Di-dicatiom Stiller shall pay ilie cost ii+r
said appraisal opinion laltcr uri on receipt of appraiser's invoice for said service. Assii;ncc and
Assignor shall work with the City in cooperation with Seller at no liability to Assignee. Assignor
or the City. by arranging for the City to executc and acknowludgc receipt of the Dedication as a
donation from Seiler in flirt IV (dears ackuuwlcdgcntcnt) of Internet) Revenue corn) 8283 (Noa-
(.'ash Charitable COittrihatratr ) :utuct)W hereto us Exhibit " Ii". and arranging for the City to
providc any other tax-reiatod forms or documents reasonably requested by Seller relating to the
Dedication. Although the City is not a signatory hereto, Svlivr% willitign ss to enter into this
Assil:.tinicitt & Amendment, ix conditioned, among od)cr driril;s. Assit nl+r's and Assi,,nco's
represcntaiiom to seller that Assignee :end Assignor can work with the City to make
connmercially rcisonahlc cf3ixtx to satisfy ail of Sellcr's needs and requirements rchtting w
Sa)ter's tax deduction for the Dedication and receiving in a timely and prompt manner any
execuicd documents by the (:'ity needed by Seller in addition to Form 8293 and the appraisa
opinion letter relating to the deduction for the Dcdication.
7. Inurement. This Assignment R Ainendnicnt shall inure to the benefit of Assignor
and Assignee. tuner their respective succcssvrs, hcira. and saecessurs-in-intcresl..
FIRST AMI:Nl)MFN'f
8. Purchase Price. Section 1.1 ot'thu Agreement is modified :Is follows: The
Purchase Price forthe Property shall he NINFTEEN MiLLION NINi: HUNDRED THIRTY-
SIsVEN THOUSAND. FOUR Iik)NI)R ;D AND'l-Wi.,im DOLLARS AND FIFI'Y-TWO
CENTS (S19,937.412.5Z). _ (Initials)
9. tt v rgnhtgt)t_I! (:vnciition,ConliticntialilY. section 2.2.1 is hereby rmtended by
insertinsi "ex(xpt as ' in the third i'u1i sanlcnec at the tap of page G ol'tltc Agrecn)cnt such th;,t
this scmuncc shall now read as li)ilow. (with additional language being shown in underline);
'4990.01
IPVl11:
-3-
All information acquired as a result of Buyer's investigation,
evaluation, negotiation and Assessment of the Property and all
communications with the Seller regarding the purchase of the
Property shall be held confidential except as required by law.
10. Close of Escrow: Closing; Closing Date. The second independent clause in the
first sentence of Section 4.1 (following the semicolon) shall be deleted in its entirety and
replaced with the following:
; provided, however, in no event shall the Closing occur, if at all,
no later than 6:OOPM, Friday, March 161h, 2007 ("Outside Closing
Date") unless otherwise extended pursuant to the mutual written
agreement of the parties. Notwithstanding any provisions in the
Agreement to the contrary, the Outside Closing Date is an absolute
and firm date which under no circumstances may be circumvented
by Buyer seeking to extend further though any potential objections
relating to the Property or any potential contingencies. Although,
the Outside Closing Date is a firm date, neither Buyer or Seller
will be deemed in default if Escrow cannot close due to issues
beyond the control of either party (e.g. title cannot timely record
grant deed).
11. Buyer's Obligations. Section 5.1.1 of the Agreement is hereby deleted in its
entirety and is replaced with the following:
5.1.1 the Purchase Price, less the Deposit, less the Seller
Financed Amount (if applicable), in full compliance with
Section 1.4 by the deadline in Section 1.4 and not the deadline in
Section 5.1.
12. Release. The following provisions are deleted in their entirety from
Section 11.9.1 of the Agreement: The last sentence in the third paragraph, the fourth paragraph
(the bold capitalized language).
13. Default. The second paragraph of Section 16.22 (Default) of the Agreement is
deleted in its entirety and is replaced with the following:
21561015610-0047
789969.01 .03/14/07
IF BUYER DEFAULTS HEREUNDER, SELLER MAY
TERMINATE THIS AGREEMENT BY GIVING WRITTEN
NOTICE TO BUYER AND ANY DEPOSIT OR TOTAL
DEPOSIT SHALL BE PAID TO SELLER, WHO SHALL BE
ENTITLED TO RECEIVE AND RETAIN THE SAME AS
AND FOR LIQUIDATED DAMAGES; AND THIS
AGREEMENT SHALL THEREUPON BECOME NULL AND
VOID, IT BEING THE UNDERSTANDING AND
AGREEMENT OF THE PARTIES THAT THE ACTUAL
DAMAGES SUSTAINED BY THE SELLER IN THE EVENT
KIM
00234728.1
OF BUYER'S DEFAULT ARE DIFFICULT, IF NOT
IMPOSSIBLE, TO ASCERTAIN AND THAT SUCH
LIQUIDATED DAMAGES ARE FAIR AND EQUITABLE.
IT IS AGREED THAT SAID LIQUIDATED DAMAGES ARE
THE SELLER'S EXCLUSIVE REMEDY FOR BUYER'S
FAILURE TO PERFORM ANY OF ITS OBLIGATIONS
UNDER THIS AGREEMENT.
Seller Initials Buyer Initials
14. 1033 Treatment. The following provision is hereby added as Section 16.27 of the
Agreement:
16.27 Tax Deferral Pursuant to 1033 Exchange. Buyer and the
City have the power of eminent domain and the Buyer is pennitted
to use low and moderate income housing funds to acquire this
Property. In the event Seller had determined not to sell the
Property to Buyer, staff for Buyer and the City would have
recommended to the Board of Directors of Buyer or to the City
Council of the City that Buyer and/or the City, after providing
notice to Seller and holding a hearing as required by applicable
law, consider adopting a resolution of necessity and thereafter
commencing proceedings to acquire the Property by the exercise of
its power of eminent domain. Within seven (7) days of the full
execution of this Assignment & Amendment, Buyer shall provide a
letter from the City and/or Buyer relating to the threatened
condemnation to substantiate Seller's eminent domain claim.
It is the intent of Buyer to have this acquisition completed as a tax
deferred exchange pursuant to Sections 1031 or 1033 of the
Internal Revenue Code of 1986, as amended, and Section 18662 of
the California Revenue and Taxation Code.
Seller may desire to defer the payment of taxes on any gain made
in said sale of Property by putchasing similar replacement property
and reducing the basis of the replacement property by any gain
made by the sale of the Property under Section 1033 of the Internal
Revenue Code of 1986, Seller intends to prepare and file Internal
Revenue Service Form 4797. In the event that further
documentation or other action may be required in order to
effectuate the claim, Buyer agrees to cooperate to the extent
permitted by law with Seller by taking such proper action as may
be necessary. In so cooperating, Buyer shall in no event be
responsible for, or in any way guarantee, the tax consequences of
Seller's 1033 claim.
1156/01561M047
799969.01 .03114/07 -5-
OC/214728.1
vV, I., Lvvr I JV .Mn
tm vvvj V r4
OF BUYER'S VEFAUIJ ARE DIFFICULT, IF NOT'
IMPOSSIBLE, TO ASCERTAIN AND THAT SUCH
LIQUIDATED DAMAGES ARE FAIR AND EQUITABLE.
IT IS AC:REED THAT SAID LIQUIDATED DAMAGES ARE
THE SELLER'S EXCLUSIVE REMEDY FUR BUYER'S
FAILURE. TO PtRFORM ANY OF iTS ORLIGAT'IONS
UNDER TTIIS AGREEMENT.
ficUcr initials Dover Initials
14, 1033 Treaunent. The fuflowing provision Is hcrcbv added as Section 10.27 of the
Agreement:
16.27 Tux Qclerral Pursuant to 1013 i:xt Santa. Buyer :utd tltts
City have the power of cmincnt domain and the Buyer is pernitted
to use low and moderate income housing, ftinds to acquire this
Property. In the event SCIIcr had determined not to sell the
Properly to Buyer, stall" for Buyer and the City would have
rccornrncndcd to the Hoard Uf f)irectors of Buyer or to the City
Council of ilic City that Buyer and/or the City, after providiu¢
notice to Seller and holding a hearing as required by applicable
Law. consider adopting a resolution of titcessny and tht:rvaller
commencing proceedings to ucquirc the Property by the exercise of
its power of eminenT domain. Within sevtai (7) flays of the full
execution of this Assignment & Amendment. Buyer shall provide it
Inter from [tic City and/or Buyer relating to the threatened
condemnation to substantiate Seller's cmint:nt domain claim.
It is if c. intent of fiuycr to have this acquisition cwnplcicd as a tux
deferred exchange pursuant to Sections 1031 or 1033 of the
Internal Revenue Code of t9 slr, as :mtcndt d, :and Section I X062 of
the; California lCevcnue and Taxation Code.
Seller may desire in defer the payment of taxes; on any gain made
in said sate of Property by purchasing similar replacement property
and educing the basis of the replacement property by any gain
mails by the sale of the Property under Suction 1033 of the internal
Revenuc'Code. of 1986. Seller intends to prepare and file Internal
Revenue Service Form 4797. In the event that further
docunxntation or other action may be required in Ur&r to
effectuate the claim, Huyer 2%re s to cunperaw to the extent
permitted by law with Seller by taking such proper action as may
be necessary. 1n so cooperating. Ruver shall in no Uvcnt be
responsible for, or in any way gvarantvr, the tax consequences of
Seller's 1033 claim.
r Rpat Alwnnq
�s�rxrnu �.mror nr � -5-
LIC;2.47N.1
Because it is the intent of Buyer to have this acquisition completed
pursuant to Section 18662 of the California Revenue and Taxation
Code, Seller will seek exemption from the requirement that 3 1/3
percent of the total Purchase Price be withheld from Seller for the
payment of California income tax on any gain made in the sale of
the Property under Section 18662. In accordance with the
recording requirements, Seller will execute a Withholding
Exemption Certificate (California Form 593-C ) and an Affidavit
declaring that the sale was made in consideration of the use of
condemnation. These documents shall be provided to Escrow
Agent prior to the Close of Escrow in order to prevent the
California withholding, and shall be retained in the Seller's records
thereafter.
Buyer agrees in each such event to cooperate with Seller and any
other involved investor parties in order to effectuate such an
exchange or exchanges. Buyer's agreement to cooperate to effect
any such exchange or exchanges shall not require Buyer to incur
any cost, expense or liability or acquire title to any property as a
consequence of such cooperation.
In no event shall any such exchange transaction delay the Close of
Escrow as contemplated in this Agreement. Notwithstanding the
foregoing, Buyer makes no representation, warranty, or guaranty to
Seller or to any other person, firm, or entity concerning the tax
treatment by any taxing authority, including but not limited to, the
Internal Revenue Service, of the conveyance of Seller's real
property to Buyer, including the tax treatment and tax
consequences of an acquisition under the threat of condemnation.
Seller acknowledges that Buyer is not providing tax advice to
Seller or to any person, firm, or entity and Seller further
acknowledges and agrees that Seller must consult Seller's own tax
advisor concerning the tax treatment, tax implications, and tax
consequences of the sale of Seller's real property to Buyer.
15. Legal Description; Permitted Exception: Buyer
acknowledges the conveyance and easement described in the
instruments attached to this Assignment & Amendment as Exhibit
"C" and agrees that the Property shall not include the real property
conveyed by the deed in Exhibit "C", and title to the Property shall
be conveyed and accepted subject to the easement in Exhibit "C".
16. Effect of Amendment. Except as specifically set forth herein, the Agreement
shall continue in full force and effect as previously written.
21561015610.0047
789969.01 .03/14/07
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OC/234728.1
GENERAL PROVISIONS
17. Governing Law. This Assignment & Amendment shall be governed by and
construed in accordance with the laws of the State of California.
18. Counterparts; Facsimile Delivery. This Assignment & Amendment may be
executed in counterparts which, when taken together, shall constitute a fully executed original.
Signatures may be delivered by facsimile which shall be binding upon the parties as if they were
originals.
IN WITNESS WHEREOF, the parties have executed this Assignment &
Amendment as of the day and year first above written.
2156/015610-0047
789969.01 .03/14/07
"ASSIGNOR"
DESERT CITIES DEVELOPMENT, INC.,
a California corporation
[Signatures continued on next page]
_7-
�
OC/234728.1
ATTEST:
APPROVED AS TO FORM:
RUTAN & TUCKER, LLP
m
M. Katherine Jenson, Agency Counsel
"ASSIGNEE"
LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporateandpolitic
Agency Executive Director
"SELLER"
2156/015610-0047 ]POO ffl CAI M 7 -O_
"ASSIGNEE"
LA QUINTA REDEVELOPMENT AGENCY, a
public body, corporate and politic
0
Agency Executive Director
ATTEST:
Veronica J. Montecino, CMC, Agency Secretary
APPROVED AS TO FORM: .
RUTAN & TUCKER, LLP
By: % Katherine Jenson, Jenson, Agency Counsel
"SELLER"
EMM
2156/015610,0047
'Rn n1 .mrtami -g-
AGREEMENT FOR PURCHASE AND SALE
AND ESCROW INSTRUCTIONS
BY AND BETWEEN
ANNEJ.MAZZELLA
("SELLER")
WNE)
DESERT CITIES DEVELOPMENT, INC.,
a California Corporation
("BUYER")
TABLE OF CONTENTS
Page
TABLE OF CONTENTS
1. PURCHASE PRICE....
Page
1.1 Amount. Payment of Purchase Price............................................................................
1
1.2 Deposit ...................................... ....................................................................................
I
1.3 Seller Carrvback Financing...........................................................................................
2
1.4 Payment of Balance of Purchase Price.........................................................................
3
2. DUE DILIGENCE......................................................................................................................
3
2.1 TitletSurvev...................................................................................................................3
2.2 Environmental Condition..............................................................................................
5
3. ESCROW........................................................................:...........................................................
8
3.1 Opening of Escrow.......................................................................................................
8
3.2 Escrow Instructions.......................................................................................................
8
4. CLOSE OF ESCROW................................................................................................................
8
4.1 Close of Escrow: Closing: Closing Date......................................................................
9
4.2 Recordation: Release of Funds and Documents...........................................................
9
5. DELIVERY OF DOCUMENTS REQUIRED FROM 13UYER AND SELLER ....................... 9
5.1 Buyer's Obligations ......................................................................................................
9
5.2 Seller's Obligations.....................................................................................................
10
6. TITLE INSURANCE POLICY................................................................................................
10
6.1 Title Policv..................................................................................................................
10
6.2 Carrvback Lender's Title Policy.................................................................................
11
6.3 Payment for Title Policies...........................................................................................
11
7. REAL PROPERTY TAXES.....................................................................................................
11
8. CONDITIONS PRECEDENT TO CLOSING.........................................................................
11
8.1 Conditions Precedent to Buyer's Obligations.............................................................
11
8.2 Conditions Precedent to Seller's Obligations.............................................................
12
9. POSSESSION...........................................................................................................................
13
10. ALLOCATION OF COSTS...................................................................................................
13
10.1 Buyer's Costs..............................................................................................................
13
10.2 Seller's Costs..............................................................................................................
14
11. RELEASE AND INDEMNITY..............................................................................................
14
11.1 General Release With Respect To The Agreement
.................................................... 14
11.2 Environmental Agency ...............................................................................................
14
11.3 Environmental Requirements......................................................................................
15
11.4 Hazardous Substances.................................................................................................
15
11.5 Released Partv.............................................................................................................
16
11.6 Other Contamination...................................................................................................
16
11.7 Other Real Property....................................................................................................16
11.8 Remediation Work......................................................................................................
16
11.9 Buyer's Post -Closing Indemnity..................................Error!
Bookmark not defined.
11.10 Buyer's Post -Closing Releases And Waivers.......................................................
16
12. CONDEMNATION................................................................................................................
18
13. TAX DEFERRAL...................................................................................................................
19
14. COVENANTS........................................................................................................................
19
Table of Contents
(Continued)
14.1 Covenants of Seller................................................................
14.2 Covenants of Buyer ................................................................
15. REPRESENTATIONS AND WARRANTIES ..................................
15.1 Seller's Representations.........................................................
15.2 Buyer's Representations. Warranties and Disclosures ..........
16. MISCELLANEOUS..........................................................................
16.1 Assignment............................................................................
16.2 Not For Benefit of Third Parties ............................................
16.3 Attorney's Fees......................................................................
16.4 Notices...................................................................................
16.5 Fair Meaning ........................................ ............... .... ...............
16.6 Headings..........................................................................0.....
16.7 Choice of Laws: Litigation Matters...............................0.......
16.8 Gender: Number... ................................................ 0.................
16.9 Survival.......................................................0..........................
16.10 Time of Essence..................................0............. 0..............
16.11 Waiver or Modification ......................0....... 0.....................
16.12 Broker's/Consulting Fees......................................0..........
16.13 DunlicateOrbdnnals..........................................................
16.14 Severability......................................................................
16.15 Memorandum of Purchase Agreement ............................
16.16 Exhibits ........ .... :... ................................................. 0..........
16.17 Authority to Enter Agreement .........................................
16.18 Entire Agreement; Amendment .................. 0..............0.....
16.19 Time.................................................................................
16.20 Relations..........................................................................
16.21 Facsimile Signatures........................................................
Page
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AGREEMENT FOR PURCHASE AND SALE
THIS AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS
("Agreement") is made and entered into as of December 1, 2006 by and between ANNE J.
MAZZELLA an individual (the "Seller"), and DESERT CITIES DEVELOPMENT, INC., a
California corporation ("Buyer").
RECITALS:
A. Seller is the fee title owner of that certain unimproved real property located on the
south side of Highway 111, between Dune Palms Road and Jefferson Avenue in the City of La
Quinta, County of Riverside, State of California, consisting of approximately 19.9 acres, with
Assessor's parcel numbers 649-030-016 and 649-030-017 which is more particularly described
in the legal description attached hereto as Exhibit "A" ("Property") and is depicted on the
constraints map attached hereto as Exhibit "B".
B. Buyer desires to purchase the Property from Seller and Seller desires to sell the
Property to Buyer, on the terms and conditions set forth herein.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing recitals and mutual covenants
herein contained, the parties hereto agree as follows:
1.PURCHASE PRICE.
1.1 Amount Payment of Purchase Price. Subject to the terms of this Agreement,
Buyer hereby agrees to purchase the Property from Seller and Seller agrees to sell the Property to
Buyer, for the purchase price of Twenty Million Four -Hundred Forty -Five Thousand Five -
Hundred Sixty -One Dollars and Eighteen cents ($20,445,561.18) (the "Purchase Price"). The
Purchase Price shall be paid in accordance with the terms and conditions set forth in this Section
1.
1.2 Deposit. Within two business days after the Effective Date, Buyer shall make a
deposit with "Escrow Holder" (as that term is defined in Section 3.1) in "Good Funds" (as used
in this Agreement, the term "Good Funds" shall mean a confirmed wire transfer of immediately
available funds, cashier's or certified check drawn on or issued by the office of a financial
institution located in Orange, Los Angeles or Riverside County, or cash) in the sum of One
Hundred Thousand Dollars and No Cents ($100,00.00) as a good faith deposit (the "Deposit").
"Effective Date" means the date the Buyer receives this Agreement sikned by the Seller.
1.2.1 Requirements for Deposit. The Deposit shall be placed into an interest
bearing account at an FDIC insured bank or trust company, and all interest accruing thereon shall
be for the benefit of the Buyer at the "Close of Escrow" (as that term is defined in Section 4.1).
1 ��
In the event the "Escrow" (as that term is defined in Section 3.1) closes, Escrow Holder shall
apply the Deposit and accrued interest towards the Purchase Price. Except as otherwise
expressly provided in this Agreement, if Buyer elects (or is deemed to have elected) to terminate
this Agreement at anytime,.before or after the end of the Due Diligence Period (defined in
Section 2), Seller shall be entitled to that portion of the Deposit and all interest accrued thereon
according to the following schedule ("Deposit Schedule'): (i) $25,000.00 if this Agreement is
terminated by Buyer during the first 30 days after the Effective Date; (ii) $50,000.00 if this
Agreement is temtinated by Buyer during the next succeeding 30 days after the Effective Date;
(iii) $75,000.00 if this Agreement is terminated by Buyer during the next succeeding 30 days
after the Effective Date; (iv) $100,000.00 if this Agreement is terminated by Buyer during the
next succeeding 30 days after the Effective Date; and (v) the entire Deposit plus accrued interests
if Buyer Defaults at anytime during the Due Diligence Period. Despite anything in this
Agreement to the contrary, Seller shall have no right to any part of the Deposit and Buyer shall
be entitled to a complete and prompt refund of the Deposit and payment of all accrued interest
thereon, upon the Buyer's demand, if any of the following circumstances exist: (a) the Seller is in
Default under this Agreement and Buyer gives Seller and Escrow Agent notice of Buyer's
election to terminate this Agreement; (b) any of the conditions of the Buyer's obligation to
consummate the Closing in Section 8.1 below are not satisfied by the Outside Closing Date and
Buyer gives Seller and Escrow Agent notice of Buyer's election to terminate this Agreement; (c)
Seller fails to provide Buyer with a Heritage Suit Dismissal (as defined in Section 2.1.4 below)
within two (2) weeks following the Effective Date and Buyer gives Seller and Escrow Agent
notice of Buyer's election to terminate this Agreement prior to the date a Heritage Suit Dismissal
is received by Buyer; or (d) Seller fails to provide Buyer by noon Pacific Time on December 4,
2006, with a fully executed agreement unequivocally providing for a Heritage Suit Dismissal
and Buyer gives Seller and Escrow Agent notice of Buyer's election to terminate this Agreement
prior to the date a Heritage Suit Dismissal is received by Buyer. Notwithstanding any other
rights the parties may have in law or in equity, except as otherwise provided in the preceding
sentence, in the event either party terminates this Agreement or Escrow does not close for any
reason, Buyer understands and acknowledges that in such event, Buyer shall not be entitled to a
refund of the portion of the Deposit Seller is entitled to under the Deposit Schedule ("Earned
Deposit"), nor the interest earned thereon and Buyerconsents to Escrow Holder making
arrangements for payment of the Earned Deposit and all accrued interest thereon to Seller
pursuant to the Deposit Schedule; provided, however, that prior to making any Earned Deposit
payment to or for the account of Seller, Escrow Agent shall give Buyer at least five business
days prior notice of the Escrow Agent's proposed payment and if Escrow Agent receives Buyer's
written objection prior to the expiration of such period of time, Escrow Agent shall continue to
hold the Earned Depositor pay the Earned Deposit into a court of competent jurisdiction. If the
Earned Deposit and accrued interest thereon, are paid to Seller; then at the same time the Escrow
Agent shall pay any remaining balance of the Deposit, together with the interest accrued thereon,
to Buyer.
1.3 Seller Carryback Financing. Buyer, in its sole discretion may pay Ten Million
Dollars ($10,000,000) toward the Purchase Price at Closing either (a) in full in Good Funds, or
(b) pursuant to the terms set forth in that certain promissory note ("Carryback Note") in the
principal amount of Ten Million Dollars ($10,000,000) ("Seller Financed Amount"). A true
and correct copy of the Carryback Note is attached hereto as Exhibit "C". Repayment of the
Carryback Note shall be secured by that certain deed of trust and assignment of rents
2 �/j�J
("Carryback Deed of Trust") in the form of Exhibit "D" attached hereto. Buyer agrees,
acknowledges and understands that the aforesaid Carryback Deed of Trust shall constitute a first
and paramount lien superior to any other liens of any nature except real estate taxes and
assessments imposed by a governmental agency ("Government Taxes"), including, without
limitation, liens for amounts which have been or may be advanced to Buyer for purchase and/or
development of the Property, and all of the claims and rights of the Buyer are hereby
subordinated to the lien of said Carryback Deed of Trust, should Buyer elect to finance a portion
of the purchase price with the Carryback Note. At least one business day prior to Closing,
should Buyer elect to apply the Seller Financed Amount to the Purchase Price, Buyer agrees to
deliver to Seller through Escrow the fully executed Carryback Deed of Trust, and the fully
executed Carryback Note which shall be credited against the Purchase Price on the Closing Date
and the Carryback Deed of Trust shall thereafter be recorded as a senior and paramount lien and
encumbrance against the Property, junior only to Government Taxes.
1.4 Payment of Balance of Purchase Price. On or before noon on the "Closing Date"
(as that term is defined in Section 4.1), Buyer shall deposit with Escrow Holder in Good Funds
the Purchase Price, less the Deposit, less the Seller Financed Amount should Buyer so elect to
use such funds, and, such additional funds as may be required to meet Buyer's portion of the
closing costs and apportionments as hereinafter provided.
2. DUE DILIGENCE.
As used herein, the term "Due Diligence Period" shall refer to a period of time to expire
upon the date that is one hundred twenty (120) days after the Effective Date. Buyer's obligation
to consummate the transactions contemplated by this Agreement is subject to and conditioned
upon Buyer's approval, deemed approval or waiver of the right to approve of the following
contingencies set forth in this Section 2 (collectively, the "Contingencies"):
2.1 Title/Survey. Buyer acknowledges a preliminary title report shall be prepared by
and delivered to Buyer and Seller by Commonwealth Land Title.Company ("Title Company"),
located at, 275 W. Hospitality Lane, Suite 200, San Bemadino CA 92408, describing the state
of title of the Property together with copies of all underlying documents referred to as
exceptions in the report (collectively the "Preliminary Title Report"). Buyer may, at its sole
cost and expense, obtain a current survey of the Property (the "Survey") provided it does so
within thirty (30) days after the Effective Date. Notwithstanding anything herein to the contrary,
Seller shall be obligated to remove all monetary encumbrances (excluding non -delinquent real
property taxes recorded on title to the Property prior to the "Close of Escrow" (as that term is
defined in Section 4.1).
2.1.1 Buyer shall notify Seller in writing of any objections Buyer may have to
title exceptions contained in the Preliminary Title Report or matters shown on the Survey ("Title
Objections") no later than the date which is fifteen (15) days after the later of (i) Buyer's receipt
of the Preliminary Title Report (ii) the Effective Date; or (iii) Buyer's receipt of the Survey
within the time period set forth above ("Buyer's Objection Notice"). Buyer's approval or
disapproval of the matters set forth in the Preliminary Title Report and the Survey may be
granted or withheld in Buyer's sole and absolute discretion. Buyer's failure to provide Seller
3
with a Buyer's Objection Notice within said period shall constitute Buyer's approval of all
exceptions to title shown on the Preliminary Title Report and all matters shown on the Survey.
2.1.2 Seller shall have a period of fifteen (15) days after receipt of Buyer's
Objection Notice in which to deliver written notice to Buyer ("Seller's Notice") of Seller's
election to either (i) agree to remove the Title Objections prior to the "Close of Escrow" as that
term is defined in Section 4.1), or (ii) decline to remove any Title Objections and terminate the
Escrow and the obligations of Buyer and Seller to purchase and sell the Property under this
Agreement. Seller's failure to provide Buyer with Seller's Notice within said period shall
constitute Seller's election not to remove the Title Objections. If Seller is deemed to have
elected not to remove the Title Objections, or if Seller notifies Buyer of its election to terminate
rather than remove the Title Objections, Buyer shall have the right, by written notice delivered to
Seller within fifteen (15) days after (i) Buyer's receipt of Seller's Notice, or (ii) the date Seller is
deemed to have elected not to remove the Title Objections which Seller elected or is deemed to
have elected not to remove, to agree by notice given to Seller, to accept the Property subject to
the Title Objections Seller elected or is deemed to have elected not to remove ("Objection
Notice Waiver"), in which event Seller's election, or Seller's deemed election, to terminate shall
be of no effect, and Buyer shall take title at the Close of Escrow subject to the Title Objections
which Seller elected or is deemed to have elected not to remove without any adjustment to or
credit against the Purchase Price. All exceptions to title shown on the Preliminary Title Report,
other than those which Seller may agree to remove pursuant to this Section 2.1, shall be deemed
to have been approved by Buyer if and to the extent either: (a) Buyer fails to include them in an
Objection Notice, or (b) Buyer waives them in an Objection Notice Waiver.
2.1.3 Upon the issuance of any amendment or supplement to the Preliminary
Title Report which adds additional exceptions, including any survey exceptions, the foregoing
right of review and approval shall also apply to said amendment or supplement; provided,
however, that Buyer's initial period of review and approval or disapproval of any such additional
exceptions shall be limited to fifteen (15) days following receipt of notice of such additional
exceptions. The process set forth above for Buyer's review and Seller's response shall apply to
any review and response with respect to any amendment or supplement to the Preliminary Title
Report, and the Closing shall be extended for such period as is necessary to allow for that review
and response process to be completed.
2.1.4 There is a pending appeal in the action entitled Heritage Community
Housing, Inc., et al. v. Mazzella, U.S. District Court, Central District Cal., CV-04-01088-VAP
("Heritage Suit") and Buyer shall have no obligation to take title subject to the Heritage Suit nor
any claim or cloud on title arising out of or related to the Heritage Suit. Within fourteen (14)
days of the Effective Date, Seller shall provide Buyer with a copy of a dismissal with prejudice
of the Heritage Suit ("Heritage Suit Dismissal") along with a copy of any settlement agreement
entered into fully and finally resolving the Heritage Suit. While Buyer has no right of approval
over the settlement agreement for the Heritage Suit, in the event that the Heritage Suit Dismissal
or the settlement agreement do not satisfactorily clear title to the Property in Buyer's sole and
absolute discretion the Buyer may terminate this Agreement within thirty (30) days of receipt of
the Heritage Suit Dismissal and any settlement agreement and Seller will refund any Earned
Deposits and Escrow Agent shall refund the balance of the Deposit. In the event that Buyer does
4
not provide notice to Seller to terminate, the Buyer shall be deemed to have accepted the
dismissal of the Heritage Suit and its settlement as satisfactory.
2.1.5 Notwithstanding the requirements of Section 2.1 of this Agreement, Buyer
agrees that Seller will not pay anything to release that certain deed of trust dated May 17, 1973 in
the amount of $41,000.00 executed by Theodore Sparks, et al, as trustor, to Consolidated Escrow
Company as trustee, for Ralph J. Arcadi and Alberta N. Arcadi, as beneficiaries, recorded on
May 30, 1973, as No. 69527 of the Official Records in the county of Riverside, California (the
"Arcadia Lien'). If the Closing is consummated, Buyer shall indemnify, defend and hold Seller
harmless from any claim or action of any kind attempting to collect from or enforce the Arcadia
Lien against the Property only or title to the Property.
2.2 Environmental Condition. During the Due Diligence Period, Buyer shall have
access to the Property, as described in this Section 2.2, in order to permit (i) Buyer and (ii)
Buyer's, the City of La Quinta's and the La Quinta Redevelopment Agency's proposed mortgage
lenders, underwriters, engineers, surveyors, environmental consultants, scientists, geologists,
archaeologists, attorneys, appraisers and other experts and advisors (collectively, the
"Consultants") to evaluate, survey, study, appraise and investigate the Property and form an
assessment of the title, condition and value of the Property (the "Assessment").
2.2.1 During the Due Diligence Period, Seller shall permit Buyer and the
Consultants, at the sole cost and expense of Buyer, to conduct physical inspections of the
Property, including the site work, soil, subsurface soils, drainage, seismic and other geological
and topographical matters, location of asbestos, toxic substances, hazardous materials or wastes,
if any, and any other investigations as Buyer deems prudent with respect to the title, physical
condition and value of the Property in order to determine the Property's suitability for Buyer's
intended development. In no event shall Buyer or Consultant conduct any test or inspection or
carry out any activity at the Property which damages the Property or which is physically
intrusive into the soil or groundwater beneath the Property, without Seller's prior written
consent, which consent shall not be unreasonably withheld, delayed or conditioned. Such consent
shall be deemed granted unless Seller gives Buyer notice within three days after Buyer's request
for consent, specifying Seller's objections to the test, inspection or other activity. Such
investigations may be made by Buyer and/or Consultants during any normal business hours.
Buyer shall ensure that Consultants engaged by Buyer for work on the Property are qualified and
licensed if licensing is required by Law for such work undertaken on the Property with all
necessary licenses, insurance, documentation, and qualifications in place to engage in such work
prior to entry on the Property. Buyer hereby acknowledges that the Property is unimproved,
undeveloped, and unoccupied other than Seller's night watchman. Buyer hereby assumes all
risks of injury to person or property associated with the condition of the Property, excepting
injuries arising solely out of the negligent conduct of Seller. All materials and equipment, if any,
shipped or brought to the Property for purposes of the Assessment shall be unloaded, checked
and stored at no expense or risk to Seller. Buyer shall retain full responsibility and risk of loss
for its materials, equipment and supplies stored on the Property. Buyer shall have present on the
Property only such equipment, materials and personnel reasonably necessary for conducting the
Assessment. If such equipment, materials or personnel has served or performed its function and
its presence is not required to continue the Assessment, such equipment, materials or personnel
shall promptly be removed from the Property. Seller shall cooperate to assist Buyer ir
t/,,/{/�
completing such inspections and special investigations at no cost or expense to Seller. Such
inspections and investigations shall be conducted only upon no less than twenty-four (24) hours'
notice to Seller. Seller shall have the right, but not the obligation, to accompany Buyer during
such investigations and/or inspections. All information acquired as a result of Buyer's
investigation, evaluation, negotiation and Assessment of the Property and all communications
with the Seller regarding the purchase of the Property shall be held confidential as required by
law. Nothing in this Agreement shall prohibit disclosure required by Law. Buyer shall also be
allowed to make disclosure reasonably required to effect the purchase of the Property, mortgage
financing, governmental approvals or enforcement of this Agreement as long as such disclosures
are made in a way that in good faith should preclude disclosure not authorized in this sentence.
The provisions in this Section 2.2.1 shall survive the termination of this Agreement. Nothing in
this Section 2.2.1 shall prevent disclosure after Closing.
2.2.2 As a condition to any such entry, Buyer and Consultants shall (i) conduct
all work or studies in a diligent, expeditious and safe manner and not allow any dangerous or
hazardous conditions to occur on the Property arising out of such work or studies, during or after
such investigation; (ii) comply with all applicable laws and governmental regulations; (iii) keep
the Property free and clear of all mechanic's, materialmen's and other liens or encumbrances,
and lis pendens arising out of any work or other activities performed by or on behalf of Buyer in
its Assessment; (iv) maintain or assure maintenance of workers' compensation insurance (or
state approved self-insurance) on all Consultants entering the Property in the amounts required
by the State of California, if any; (v) provide to Seller prior to initial entry a certificate of
insurance evidencing that Buyer and/or the Consultants entering the Property have procured and
have in effect an a commercial general liability insurance policy (or similar policy as
appropriate) meeting the following requirements: (A) the insurance shall be written on a per
occurrence and not claims -made basis; (B) the amount of insurance shall be a combined single
limit of not less than Two Million Dollars ($2,000,000.00) for the Buyer's policy, and One
Million Dollars ($1,000,000.00 for the Consultants' policies, each with a deductible or self -
insured retention amount of not more than One Hundred Thousand Dollars (M 00,000); (C) the
Buyer's policy shall name or be endorsed to name Seller as an additional insured; (D) the
insurance shall not contain any special limitations on the scope of protection afforded to Seller;
(E) prior to the cancellation of the Buyer's policy, the issuing insurer of the Buyer's policy will
endeavor to mail thirty (30) days prior written notice to Seller of such cancellation, but failure to
do so shall impose no obligation or liability of any kind upon the insurer; (F) Buyer's insurer
shall waive subrogation rights against the Seller; (G) the insurance shall be primary insurance
and not contributory with any other insurance Seller may have; and (H) the insurance shall apply
separately to each insured against whom a claim is made or suit is brought, subject to the
policy's limits of liability (the "CGL Policy"); (vi) agree to repair any and all damage to the
Property (including any improvements, equipment and personal property thereon) caused by the
Assessment activities, inspections and investigations in a timely manner, whether such activities,
inspections and investigations were consented to by Seller or not; and (vii) agree to at all times
keep the Property free from accumulations of waste materials and rubbish caused by the
Assessment activities and shall be responsible for removal of all tools, equipment and surplus
materials used for the Assessment and Buyer shall be deemed the owner and generator of any
water, soil equipment, or waste that is installed, discharged, generated, released or otherwise
created in performing the Assessment and shall complete or sign any manifests or other
documents necessary for proper storage, transportation, treatment, or disposal of any said waste
6
in accordance with applicable laws. Prior to the Close of Escrow (as defined below), Buyer shall
only be responsible for water, soil, equipment or waste that is installed, discharged, generated,
released or otherwise created in performing the Assessment. Buyer shall indemnify, defend and
hold Seller harmless with regard to any harm to the Property or condition of Hazardous
Substances (as defined below) to the extent worsened or exacerbated during the Assessment or
resulting therefrom.
2.2.3 Buyer shall promptly pay and discharge all demands for payment relating
to Buyer's or Consultants' entry on and investigation of the Property and take all other steps to
avoid the assertion of claims of lien against the Property. In the event a claim of lien is recorded
by reason of Buyer's or Consultants' entry on the Property or the Assessment activities, Buyer,
within twenty (20) days of such recordation, shall either (i) record or deliver a surety bond
sufficient to release such claim or lien in accordance with applicable law; (ii) pay the lien in full;
or (iii) provide Seller with such other assurance as Seller may require for the payment of the
claim or lien. Seller may elect to record and post notices of non -responsibility from time to time
on and about the Property. Buyer shall indemnify, protect and defend with counsel reasonably
acceptable to Seller, and hold Seller harmless from all claims (including all mechanic's,
materialman's and other liens or encumbrances upon the Property and claims relating to such
liens arising out of the Assessment activities performed by or on behalf of Buyer including
claims for work or labor performed or materials or supplies furnished), demands, liabilities,
losses, damages, costs, fees, and expenses, including Seller's reasonable attorney fees, costs, and
expenses, arising from the acts or activities of Buyer or Buyer's Representatives in, on, or about
the Property during or arising in connection with the Assessment and Buyer's inspections of the
Property, except any arising out of the negligent or other tortious acts of the Seller.
2.2.4 Prior to expiration of the Due Diligence Period, Buyer shall notify Seller
in writing (i) of Buyer's election to terminate the Escrow and this Agreement, if Buyer
disapproves of the Property and, as a result, does not wish to proceed with purchasing the
Property ("Buyer's Termination Notice"), or (ii) of any objections Buyer may have (the
"Disapproved Property Matters") to any physical or environmental conditions of the Property
("Buyer's Property Objection Notice"). Buyer's approval or disapproval of the Property may
be granted or withheld in Buyer's sole and absolute discretion. In the event Buyer terminates
this Agreement pursuant to this Section, 2.2.4, Buyer and Seller shall be relieved of all further
liability under this Agreement. Buyer's failure to provide Seller with a Buyer's Termination
Notice or a Buyer's Property Objection Notice prior to the expiration of the Due Diligence
Period shall constitute Buyer's approval of the condition of the Property. If Buyer provides to
Seller Buyer's Property Objection Notice, Seller shall have a period of fifteen (15) days after
receipt of Buyer's Property Objection Notice in which to deliver written notice to Buyer
("Seller's Response") of Seller's election to either (i) agree to remove the Disapproved Property
Matters prior to the Close of Escrow, or (ii) decline to remove the Disapproved Property Matters
and terminate Escrow and the obligations of Buyer and Seller to purchase and sell the Property
under this Agreement. Seller's failure to provide Buyer with Seller's Response within said
period shall constitute Seller's election not to remove the Disapproved Property Matters prior to
the Close of Escrow. If Seller is deemed to have elected not to remove the Disapproved Property
Matters, or if Seller notifies Buyer of its election to terminate rather than remove the
Disapproved Property Matters, Buyer shall have the right, by written notice delivered to Seller
within fifteen (15) days after (i) Buyer's receipt of Seller's Response, or (ii) the date Seller is
7 id
deemed to have elected not to remove the Disapproved Property Matters, as applicable, to agree
to accept the Property subject to the Disapproved Property Matters, in which event Seller's
election, or deemed election, to terminate shall be of no effect, and Buyer shall take title at the
Close of Escrow subject to such Disapproved Property Matters without any adjustment to or
credit against the Purchase Price. Buyer's inspections and investigations of the Property shall be
conducted upon the terms and conditions set forth in this Agreement.
2.2.5 Subject to the other provisions of this Agreement, Buyer agrees, that by its
acceptance or waiver of the contingencies in this Article 2, it assumes the risk that an adverse
condition of the Property may not have been revealed during the Due Diligence Period. On
Buyer's acceptance or waiver of the contingency in this Article 2, Seller shall have no obligation
to repair, correct, or compensate Buyer for any condition of the Property, including defects in the
physical condition of the Property, noncompliance with applicable laws and regulations,
including without limitation zoning laws, and building codes, whether or not such condition of
the Property would have been disclosed by Buyer's investigation and Assessment during the Due
Diligence Period; provided, however, that nothing in this Article 2 shall excuse any breach of or
limit Buyer's remedies for any breach of any of the Seller's express representations or warranties
in this Agreement; nor for Seller's failure to correct Disapproved Property Matters if Seller has
elected to do so.
2.3 Due Diligence Documents
To the extent in Seller's possession, ownership or control, within five business days after
the date the Deposit is paid to the Escrow Agent, the Seller shall furnish the Buyer with each of
the following documents: (i) any report regarding the Property soils; (ii) any report regarding
Hazardous Substances or Other Contamination on the Property or Other Property; any report
regarding any underground storage tank now or formerly on the Property or Other Property; (iii)
any land title survey; and (iv) any outstanding notice regarding a Violation.
3.ESCROW.
3.1 Opening of Escrow. Closing of the sale of the Property shall take place through an
escrow ("Escrow") to be established on the Effective Date with Commonwealth Land Title
Company ("Escrow Holder") at its office located at, 78-982 Highway 111, #1-B, La Quinta CA
92253. The opening of the Escrow (the "Opening of Escrow") shall be deemed to be the date
that a fully executed copy of this Agreement is delivered to the Escrow Holder. Escrow Holder
is instructed to notify Buyer and Seller in writing of the date of the Opening of Escrow.
3.2 Escrow Instructions. This Agreement, once deposited in Escrow, shall constitute
the joint escrow instructions of Buyer and Seller to Escrow Holder. Additionally, if Escrow
Holder so requires, Buyer and Seller agree to execute the form of escrow instructions that
Escrow Holder customarily requires in real property escrows administered by it. In the event of
any conflict or inconsistency between Escrow Holder's standard instructions and the provisions
of this Agreement, the provisions of this Agreement shall supersede and be controlling.
4.CLOSE OF ESCROW.
4.1 Close of Escrow: Closing: Closing Date. Provided that all of the conditions of this
Agreement precedent to the "Close of Escrow" (as hereinafter defined) have been satisfied (or
waived by the appropriate party) prior to or on the Closing Date, the Closing of this transaction
for the sale and purchase of the Property shall take place on the date which is one (1) day after
the date on which all of "Buyer's Conditions to Closing" and all of "Seller's Conditions to
Closing" (as those terms are defined in Section 8) have been satisfied (or waived by the
appropriate party); provided, however, in no event shall the Closing occur, if at all, no later than
one hundred twenty (120) days after the Effective Date ("Outside Closing Date") unless
otherwise extended pursuant to this Agreement or by the mutual written agreement of the parties.
"Closing Date" means the date the Closing occurs. The terms "Close of Escrow" and the
"Closing" are used herein to mean the time Seller's grant deed conveying fee title to the Property
to Buyer in accordance with this Agreement, is recorded in the Official Records of the Office of
the County Recorder of Riverside ("Official Records'). If Escrow is not in a condition to close
by the Outside Closing Date, either party not then in default hereunder may, upon ten (10) days
advance written notice to the other party and Escrow Holder, elect to terminate this Agreement
and the Escrow. No such termination shall release either party then in default from liability for
such default. If neither party so elects to terminate this Agreement and the Escrow, Escrow
Holder shall close the Escrow as soon as possible.
4.2 Recordation: Release of Funds and Documents
4.2.1 Escrow Holder is directed, on the Closing Date, to record in the Official
Records, the following documents in the order listed: (i) the grant deed in the form of the
attached Exhibit "E" transferring title to the Property to Buyer ("Grant Deed"); and (ii) such
other and further documents as maybe directed jointly by Buyer and Seller.
4.2.2 Upon the Closing, Escrow Holder shall deliver (i) the Purchase Price, less
any of Seller's closing costs and apportionments, to Seller, and (ii) conformed copies of all
recorded documents to both Buyer and Seller.
5.DELIVERY OF DOCUMENTS REQUIRED FROM BUYER AND SELLER.
5.1 Buyer's Obligations. Buyer agrees that on or before 5:00 p.m. of the last business
day immediately preceding the Closing Date, Buyer shall deposit or cause to be deposited with
Escrow Holder the following:
5.1.1 full compliance with Section 1.4 by the deadline in Section 1.4 and not
the deadline in this Section 5.1;
5.1.2 if applicable, the Carryback Note, duly executed by Buyer, in the form of
Exhibit "C" attached hereto;
5.1.3 if applicable, the Carryback Deed of Trust, duly executed and
acknowledged by Buyer, in the form of Exhibit "D" attached hereto; and
5.1.4 any and all additional instruments or other documents required from Buyer
(executed and acknowledged where appropriate) as may be reasonably necessary in order for the
Escrow Holder to comply with the terms of this Agreement.
9 � ►1• IIJ
5.2 Seller's Obligations. Seller agrees that on or before 5:00 p.m. of the last business
day immediately preceding the Closing Date, Seller shall deposit or cause to be deposited with
Escrow Holder each of the following:
5.2.1 the executed and acknowledged Grant Deed, in the form of Exhibit "E"
attached hereto;
5.2.2 a Certificate of Non -Foreign Status (the "Non -Foreign Affidavit")
executed and acknowledged by Seller in the form attached hereto as Exhibit "F"; .
5.2.3 A settlement statement with customary prorations in accordance with this
Agreement, as of 11:59 PM on the date immediately preceding the date of Closing;
5.2.4 Such affidavits and any and all of the documents as maybe reasonably
required by the Title Company in order to issue the Title Policy to Buyer subject only to the
Permitted Exceptions including any affidavit customarily required by the Title Company to
remove the standard printed and typed exceptions from the Title Policy.
5.2.5 A certificate signed by Seller confirming that: (i) all of the
representations and warranties made by the Seller in this Agreement are to the best of Seller's
knowledge true and correct as of the Closing, except as may be specified therein; and (ii) Seller
has complied with and discharged (a) all notices, if any, that either Seller or its agents received
concerning violations of Law concerning or affecting the Property or any part thereof.
5.2.6 Provide Escrow Agent with any information with respect to Seller or its
agents, in connection with the conveyance of the Property by the Seller to the Buyer required by
either (i) Internal Revenue Code Sec. 6045 or Treas. Regs. Sec. 1.6045, or (ii) Treas. Form 1099
or its instructions. If required thereby, the Escrow Agent shall timely (x) prepare and file a Form
1099 in accordance with the provisions of Treas. Regs. Sec. 1.6045, and (y) furnish the parties
with copies. All declarations, returns, affidavits and other instruments required to record the
Grant Deed or otherwise required to be filed by the Seller by applicable Law; and any items, and
instruments required from Seller (executed and acknowledged where appropriate) as maybe
reasonably necessary in order for Escrow Holder to comply with the provisions of this
Agreement.
6.TITLE INSURANCE POLICY.
6.1 Title Policy. At the Closing Date, the Title Company, as insurer, shall issue a
standard form California Land Title Association ("CLTA") owner's standard coverage policy of
title insurance, or if Buyer obtains at Buyer's expense an ALTA/ACSM land title survey
("ALTA Survey") an American Land Title Association ("ALTA") extended coverage owner's
policy ("Title Policy"), in favor of Buyer, as insured, with liability in the amount of the Purchase
Price, insuring Buyer that title to the Property shall be vested in Buyer at Closing, subject only to
(i) non -delinquent real property taxes, (ii) title exceptions approved or deemed approved by
Buyer pursuant to Section 2.1 above, (iii) title exceptions, if any, resulting from Buyer's entry
onto the Property pursuant to the provisions of Section 2.2 above, (iv) unless Buyer obtains an
ALTA Survey and pays the additional premium for an ALTA extended coverage policy, the
10 e $,, � -
standard printed conditions and exceptions contained in the CLTA standard coverage owner's
policy of title insurance regularly issued by the Title Company, (v) if applicable, the Carryback
Deed of Trust, and (vi) any other items approved by Buyer in writing (collectively, the
"Permitted Encumbrances"). Buyer shall pay the cost of all endorsements to the Title Policy
reasonably requested by Buyer except those.which address Buyer's Title Objections which Seller
has elected to remove.
6.2 Carryback Lender's Title Policy. If applicable at Closing, Buyer shall pay the
premium for an American Land Title Association ("ALTA") Lender's Policy of Title Insurance
("Carryback Lender's Title Policy") in the face amount of the Caryback Note, insuring Seller
that title to the Property is vested in Buyer at Closing and that the lien of the Carryback Deed of
Trust constitutes a senior lien and encumbrance on the Property, subject only to the Permitted
Encumbrances. Buyer shall pay the cost of all endorsements to the Carryback Lender's Title
Policy reasonably required by Seller
6.3 Payment for Title Policies. Seller shall be responsible for the premium for the
CLTA Title Policy with coverage up to the amount of the Purchase Price. Buyer shall pay the
cost for any additional coverage or endorsements it requests. Buyer may, at its election, request
an ALTA extended policy of title insurance. Buyer shall pay the difference for the charges
between the premium for the extended coverage title policy and the premium for the standard
coverage title pplicy that Seller is responsible for hereunder. Buyer shall also pay for the ALTA
survey, if applicable. If applicable, Buyer shall pay the cost for the Carryback Lender's Title
Policy along with any required endorsements to such policy.
7.REAL PROPERTY TAXES.
At the Closing the parties shall apportion real estate taxes for the fiscal or tax year which
includes the Closing date, with the Seller paying all real estate taxes accruing through the date of
Closing and Buyer paying all real estate taxes accruing after the date of Closing. Upon Buyer's
acquisition of fee title to the Property, Buyer shall be become responsible for the payment of all
property taxes and assessments on the Property which accrue after the Closing. Seller shall be
responsible for paying for all property taxes or assessments assessed against the Property for any
period prior to the Closing. Any assessments (excluding ordinary real estate taxes) against the
Property as of the Closing date (excluding ordinary real estate taxes) which are payable
installments, shall be paid in full by the Seller at Closing. If there is any increase in real estate
tax liability which arises after the Closing and is applicable to the period prior to the date of
Closing, the parties' shall reapportion the real estate tax liability accordingly. To the extent that
the apportionments and adjustments at the Closing are not based upon final figures or there are
any errors or omissions in the calculation or determination thereof, promptly after notice of such
final figures or errors or omissions (including the calculations used to arrive at the final figures,
errors or omissions), the parties shall readjust or reapportion and make the payment required as a
result thereof..
&CONDITIONS PRECEDENT TO CLOSING.
8.1 Conditions Precedent to Buyer's Obligations. The obligations of Buyer under this
Agreement to purchase the Property and close the Escrow shall be subject to the satisfaction or
signed written waiver by Buyer of each and all of the following conditions precedent
(collectively "Buyer's Conditions to Closing'):
8.1.1 Buyer shall have approved the Property, in accordance with Section 2.2
hereof;
8.1.2 on the Closing Date, the Title Company shall be irrevocably committed to
issue the Title Policy pursuant to Section 6 above insuring fee title to the Property as being
vested in Buyer (i) subject only to the Permitted Encumbrances (y) fulfillment of any
requirements imposed on the Buyer in the Preliminary Title Report; and (z) payment of the
premiums for the Title Policy; and (ii) with such endorsements as the Title Company has
committed to provide;
8.1.3 Escrow Holder holds all instruments and funds required for the Closing
and will deliver to Buyer the instruments and funds, if any, accruing to Buyer pursuant to this
Agreement and record the Grant Deed;
8.1.4 all representations and warranties by the Seller in this Agreement shall be
true and correct in all material respects as of the Closing Date as though made at that time and all
covenants of Seller pursuant to this Agreement shall have been fulfilled by the Closing Date;
8.1.5 Seller is not in material breach or default of any term or condition of this
Agreement;
8.1.6 Seller has performed pursuant to Section 2.1.4; and
8.1.7 Seller shall have executed, acknowledged where required, deposited or
caused to be deposited into Escrow, not less than one (1) business day prior to the Closing, each
of the documents, instruments, and attached exhibits required of Seller by this Agreement.
In the event that any of Buyer's Conditions to Closing are not satisfied, deemed satisfied, or
waived in a writing signed by Buyer prior to the expiration of the applicable period for
satisfaction or waiver, Buyer may terminate this Agreement with no liability whatsoever.
8.2 Conditions Precedent to Seller's Obligations. The obligations of Seller under this
Agreement to sell the Property and close the Escrow shall be subject to the satisfaction or signed
written waiver by Seller of each and all of the following conditions precedent ("Seller's
Conditions to Closing"):
8.2.1 Escrow Holder holds the Purchase Price and all other funds required from
the Buyer for the Closing and will deliver to Seller the Purchase Price (less Seller's closing costs
plus and/or minus apportionments) accruing to Seller pursuant to this Agreement;
8.2.2 all representations and warranties by the Buyer in this Agreement shall be
true and correct in all material respects as of the Closing Date as though made at that time and all
covenants of Buyer pursuant to this Agreement shall have been fulfilled by the Closing Date;
8.2.3 Buyer is not in material default of any term or condition of this
Agreement; and
8.2.4 Buyer shall have executed, acknowledged where required, deposited or
caused to be deposited into Escrow, not less than one (1) business day prior to the Closing, each
of the documents, instruments, and attached exhibits required of Buyer by this Agreement,
including a resolution of the Buyer's board of directors evidencing the corporation's approval of
to enter into this Agreement and have a duly appointed officer execute this Agreement and any
supporting documents, instruments and exhibits on behalf of Buyer.
8.2.5 In the event that any of Seller's Conditions to Closing are not satisfied,
deemed satisfied, or waived in a writing signed by Seller prior to the expiration of the applicable
period for satisfaction or waiver, Seller may terminate this Agreement with no liability
whatsoever.
9.POSSESSION.
Exclusive possession of the Property shall be delivered by Seller to Buyer on the Closing
Date.
1 O.ALLOCATION OF COSTS.
10.1 Buyer's Costs. Buyer shall pay the following costs:
10.1.1 fifty percent (50%) of Escrow Holder's escrow fee;
10.1.2 Buyer's own attorney's fees incurred in connection with this Agreement
and the transactions contemplated hereby;
10.1.3 all the charges for recording the Grant Deed;
10.1.4 the premium difference between any extended policy of title insurance and
the CLTA standard coverage policy of title insurance, if Buyer requests an extended policy;
10.1.5 if applicable, the premium for the Carryback Lender's Title Policy;
10.1.6 any additional title insurance coverages and any title endorsements
requested by Buyer except those provided to address Title Objections which Seller has elected to
remove;
10.1.7 any additional or alternative survey necessary for Buyer to acquire any
additional title insurance coverages or policy endorsements desired by Buyer;
10.1.8 all of Buyer's survey costs associated with this Agreement;
10.1.9 all costs associated with Buyer's investigation and inspection of the
Property pursuant to Section 2.1; and
10.1.10 if applicable, any sales tax.
13
10.2 Seller's Costs. Seller shall pay:
10.2.1 fifty percent (50%) of the Escrow Holder's escrow fee;
10.2.2 Seller's own attorney's fees in connection with this Agreement and the
transactions contemplated hereby;
10.2.3 all documentary stamps and transfer taxes associated with the conveyance;
10.2.4 the premium for the standard CLTA Title Policy that Seller is required to
pay pursuant to this Agreement; and
10.2.5 accrued property taxes and assessments on the Property up_ to Closing.
11. RELEASE AND INDEMNITY
11.1 General Release With Respect To The Agreement.
11.1.1 Buyer's General Release With Respect To The Agreement. Except as
otherwise specified in this Agreement, Buyer agrees to release Seller, Seller's spouse, and,
Seller's respective officers, directors, shareholders, employees, agents, representatives, brokers,
attorneys, heirs, personal representatives, successors and assigns from any and all losses,
damages, injuries to persons or property, obligations, liabilities, costs (including, but not limited
to, attorneys' fees, costs and expenses, and expert witness fees) arising out of or directly or
indirectly relating to: (a) any breach or default by Buyer under this Agreement; (b) any material
misrepresentation made by Buyer in this Agreement; or (c) any failure to perform any covenant
or condition by Buyer of this Agreement. Provided, however, the obligations under this Section
11.1 shall not extend to matters directly caused by the gross negligence or willful misconduct of
the other party. The provisions of this Section 11.1 shall survive the expiration or termination of
this Agreement and shall survive the Closing Date.
11.1.2 Seller's General Release With Respect To The Agreement. Except as
otherwise specified in this Agreement, Seller agrees to release Buyer, Buyer's spouse, and
Buyer's respective officers, directors, managers, members, shareholders, employees, agents,
representatives, brokers, attorneys, heirs, personal representatives, successors and assigns from
any and all losses, damages, injuries to persons or property, obligations, liabilities, costs
(including, but not limited to, attorneys' fees, costs and expenses, and expert witness fees)
arising out of or directly or indirectly relating to: (a) any breach or -default by Seller under this
Agreement; (b) any material misrepresentation made by Seller in this Agreement; or (c) any
failure to perform any covenant or condition by Seller of this Agreement. Provided, however,
the obligations under this Section 11.1 shall not extend to matters directly caused by the gross
negligence or willful misconduct of the other party, The provisions of this Section 11.1 shall
survive the expiration or termination of this Agreement and shall survive the Closing Date.
11.2 Enviromental Agency. For purposes of this Agreement, the term "Environmental
Agency" shall mean any state, federal, regional or local governmental agency having jurisdiction
over the Property, including but not limited to the United States Environmental Protection
Agency, the California Environmental Protection Agency, the Department of Toxic Substances
14
Control, the California Air Resources Board, the California Integrated Waste Management
Board, the Office of Environmental Health Hazard Assessment, the California State Water
Resources Control Board, the Colorado River Basin Regional Water Quality Control Board, the
Riverside County Department of Environmental Health, and the South Coast Air Quality
Management District.
11.3 Environmental Requirements. For purposes of this Agreement, the term
"Environmental Requirements" means all applicable present and future laws, statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals, plans, authorizations,
judicial, administrative and regulatory decrees, directives and judgments of all governmental
agencies, departments, commissions and boards having jurisdiction over the Property, relating to
the protection of human health or the environment, including, without limitation, all
requirements and regulations pertaining to reporting, licensing, permitting, investigating and
remediating emissions, discharges, releases or threatened releases of Hazardous Substances,
whether solid, liquid or gaseous in nature, into the air, surface water, or land, or relating to the
manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances, whether solid, liquid or gaseous in nature.
11.4 Hazardous Substances. For purposes of this Agreement, the term "Hazardous
Substances" means any hazardous or toxic substance, material, or waste or chemical that is or
becomes regulated by any local or regional governmental authority, the State of California, or the
United States Government. Hazardous Substances include, without limitation, any material or
substance: (a) now or hereafter defined as a "hazardous substance," "hazardous waste,"
"hazardous material," "extremely hazardous waste," "restricted hazardous waste" or "toxic
substance" or words of similar import under any applicable local, regional, state or federal law or
under the regulations adopted or promulgated pursuant thereto, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,42 U.S.C.
§§9601 et seq. ("CERCLA"); the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
§§6901 et seq.; the Hazardous Materials Transportation Act, 49 U.S.C. §§1801 et seq.; the Clean
Air Act, 42 U.S.C. §§7401 et seq.; the Clean Water Act, 33 U.S.C. §§1251 et seq.; the Toxic
Substance Control Act, 15 U.S.C. §§2601 et seq.; the Federal Insecticide, Fungicide, and
Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act of 1954, 42 U.S.C. §§2014 et
seq.; the Nuclear Waste Policy Act of 1982, 42 U.S.C. §§10101 et seq.; the California Hazardous
Waste Control Law, Cal. Health and Safety Code §§25100 et seq.; the Porter -Cologne Water
Quality Control Act, Cal. Water Code §§13000 et seq.; the Carpenter -Presley -Tanner Hazardous
Substance Account Act (Health and Safety Code, §§25300 et seq.); and the Medical Waste
Management Act (Health and Safety Code, §§25015 et seq.); or (b) which is toxic, explosive,
corrosive, flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous,
and is now or hereafter regulated as a Hazardous Substance by any governmental authority,
agency, department, commission, board, agency or instrumentality of the United States, any
State of the United States, or any political subdivision thereof, or (c) which is a, pollutant,
contaminant or waste, whether solid, liquid or gaseous in nature; or (d) the presence of which on
the Property or any structures or improvements that may or may not exist on the Property causes
or threatens to cause a nuisance or trespass upon the Property or any structures or improvements
that may or may not exist on the Property or Other Real Property or poses or threatens to pose a
hazard to the health or safety of persons on or about the Property or any structures or
improvements that may or may not exist on the Property or Other Real Property or to the
15
,/
environment; or (e) which contains gasoline, diesel fuel or other petroleum hydrocarbons; or (f)
which contains lead -based paint or other types of lead, or hazardous substances", PCBs or
asbestos or asbestos -containing materials or urea formaldehyde foam insulation; or which
contains radon gas.
11.5 Released Party. For purposes of this Agreement, the term "Released Party" and
"Released Parties" means Seller, Seller's spouse, and Seller's heirs, personal representatives,
successors and assigns.
11.6 Other Contamination. For purposes of this Agreement, the term "Other
Contamination" means any Hazardous Substances which are on and after the Closing Date,
discovered to: (a) be present on, in or under the soil or groundwater of the Property; or (b) be
present on, in or under any structures or improvements which may or may not exist on the
Property; or (c) have migrated to the Property from any Other Real Property; or (d) have
migrated from the Property to any Other Real Property and were not located on, in or under the
Property prior to the Closing.
11.7 Other Real Property. For purposes of this Agreement, the term "Other Real
Property" means any real property other than the Property, regardless of where located which is
directly or indirectly impacted by Hazardous Substances or Other Contamination coming from
the Property.
11.8 Remediation Work. For purposes of this Agreement, the term "Remediation
Work" means any obligation or requirement imposed on or after the Closing Date by any
Environmental Agency, or by the final judgment of any court of competent jurisdiction, to: (a)
investigate or reduce (via remediation or otherwise) the specific soil and groundwater
concentrations of any Hazardous Substances or Other Contamination in, on or under the Property
or any structures or improvements that may or may not exist on the Property; (b) monitor the
movement of or remediate any Hazardous Substances or Other Contamination in the
groundwater under the Property or any structures or improvements that may or may not exist on
the Property; (c) monitor the movement of or remediate any Hazardous Substances or Other
Contamination in the soil underlying the Property or any structures or improvements that may or
may not exist on the Property, or (d) monitor the movement of or remediate any Hazardous
Substances or Other Contamination that may have migrated to the Property from any Other Real
Property; (e) monitor the movement of or remediate any Hazardous Substances or Other
Contamination that may have migrated from the Property or any structures or improvements that
may or may not exist on the Property to any Other Real Property.
11.9 Buyer's Post -Closing Indemnity Releases And Waivers• Subject to first applying
and exhausting the proceeds from the CGL Policy or any other insurance policy of Buyer, Buyer
hereby agrees to and shall save, indemnify, defend, protect and hold the Released Parties free and
harmless from and against any and all suits, actions, legal or administrative proceedings, claims,
demands for actual damages, fines, punitive damages, losses, costs, liabilities, interest, attomy's
fees, expenses, injuries to persons or property, obligations, judgments, including,. but not limited
to, any such attorneys' fees, costs and expenses, and expert witness fees incurred in enforcing this
Section 11.9 arising therefrom or related thereto set forth in: (i) any claim or cause of action
brought by any third party or entity or brought by any Environmental Agency for breach or
16 fJj`/+.I
violation of any Environmental Requirements, which claims or causes of action directly or
indirectly relate to or arise out of the presence of any Hazardous Substances or Other
Contamination in, on or under the Property or any structures or improvements that may or may
not exist on the Property or Other Real Property; or (ii) or any claims or causes of action against
the Released Parties first resulting after the Closing from or first arising after the Closing out of,
and in any way connected with injury to or the death of any persons (including, without limitation,
any Released Party) or physical damage to property of any kind wherever located and by
whomever owned (including, without limitation, that of any Released Party) first arising after the
Closing out of and in any way connected with Seller's ownership, use or operation of the
Property, notwithstanding any acts or omissions of the Released Parties or the active or passive
negligence of the Released Parties. Despite the immediately preceding clause (ii), nothing in the
preceding clause (ii) shall limit the indemnity in the preceding clause (i) with respect to any
claims or causes of action as described in preceding clause (i). The Parties intend this Section 11.9
to apply to any loss, liability, damage, injury or expense for the Property or any structures or
improvements that may or may not exist on the Property or other Real Property. Seller shall notify
Buyer in writing promptly upon obtaining knowledge of any claim, litigation, administrative
proceeding, action, or demand or threatened claim, litigation, administrative proceeding, action, or
demand which may be the subject of an indemnification claim under this Section 11.9 and,
notwithstanding anything herein to the contrary, Buyer shall have the right to require Seller to
tender the defense of such claim, litigation, administrative proceeding, action, or demand to Buyer
and to allow Buyer to defend the same with counsel reasonably satisfactory to Seller (provided
Buyer shall have agreed to pay in full the cost of such defense). Conditioned upon and subject to
the Closing of Escrow and conveyance of the Property to Buyer, and subject to first applying and
exhausting the proceeds, if any, from Buyer's CGL Policy, Buyer hereby agrees to and shall
release the Released Parties from and against any and all losses, damages, injuries to persons or
property, obligations, liabilities, costs (including, but not limited to, attorneys' fees, costs and
expenses, and expert witness fees) set forth in any claim, proceeding, or cause of action brought
by any thud party or entity or brought by any Environmental Agency for breach or violation of
any Environmental Requirements, or for Remediation Work, which claims or causes of action
directly or indirectly relate to or arise out of the presence of any Hazardous Substances or Other
Contamination in, on or under the Property or any structures or improvements that may or may
not exist on the Property. Buyer hereby releases, waives and forever relinquishes all (100%) of
its right to make, file or pursue any claim(s) or cause(s) of action against any of the Released
Parties with respect to any Hazardous Substances or Other Contamination in, on or under the
Property or any structures or improvements that may or may not exist on the Property. The
provisions of this Section 11.9 shall survive the Closing.
11.9.1 Release. From and after Closing, Buyer hereby waives, releases, remises, acquits,
relinquishes and forever discharges all (100%) of its right to make, file or pursue any claim(s) or
cause(s) of action against any of the Released Parties with respect to the presence of any
Hazardous Substances or Other Contamination on, in or under the soil or groundwater
underlying the Property, or on, in or under any structures or improvements that may or may not
exist on the Property or on, in or under any Other Real Property, and Buyer hereby waives,
releases, remises, acquits, relinquishes and forever discharges the Released Parties of and from
any and all suits, causes of action, legal or administrative proceedings, claims, demands, actual
damages, punitive damages, losses, costs, liabilities, interest, attorney's fees, and expenses of
whatever kind and nature, in law or in equity, known or unknown, which Buyer ever had, now
17 V
has, hereafter can, shall or may have or acquire or possess, or arising out of or in any way
connected with, (i) Seller's use, maintenance, ownership, and operation of the Property and any
structures or improvements that may or may not exist on the Property prior to Closing, or (ii) the
condition, status, quality, nature, contamination, if any, of and environmental state of the
Property, or (iii) the presence of any Hazardous Substances or Other Contamination on, in or
under the soil or groundwater underlying the Property, or on, in or under any structures or
improvements that may or may not exist on the Property or on, in or under any Other Real
Property.
Despite anything in this Section 11.9 to the contrary: (a) Buyer does not waive, release remise,
acquit, relinquish or discharge any claims or rights of any nature, arising out of any breach of the
representations and warranties of the Seller in this Agreement or the documents to be signed and
delivered by Seller in connection with the Closing; (b) Buyer does not agree to indemnify,
defend, hold Seller harmless against, waive release, remise, acquit, relinquish or discharge any
claims or rights of any nature, arising out of the migration or release of Hazardous Substances
from the Property to any Other Real Property if such Hazardous Substances migrated to Other
Real Property prior to the Closing and was not discovered by Buyer despite Buyer conducting a
thorough and complete Assessment; and (c) Buyer does not agree to indemnify, defend, hold
Seller harmless against, waive release, remise, acquit, relinquish or discharge any claims or
rights of any nature, arising out of third -party personal injury claims associated with the prior use
of the Property as a mobile home park.
It is the intention of this Section 11.9 that except as otherwise provided in this Section 11.9, any
and all responsibilities and obligations of Seller, and any and all rights or claims of Buyer, its
successors and assigns and affiliated entities or agencies, arising by virtue of any physical or
environmental condition of the Property or any structures or improvements that may or may not
exist on the Property are by this release provision declared null and void and of no present or
future effect as to such parties. Buyer agrees to waive the benefits of Section 1542 of the
California Civil Code, which provides as follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM
MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR.
Seller and Buyer have each initialed below this Article 11 to further indicate their
awareness and acceptance of each and every provision of this Agreement and the sections within
Article 11. The provisions of the sections of this Article 11 shall survive Closing.
Seller's Initials: Buyer's Initials?7��
12.CONDEMNATION.
18j
2-¢6-19% 8:56PM FROM P.2
aamee
has, tm ilcrcm, sW array have oraVdmmpare", or arising ou ofa in my wey
a n" lees � (i) Seller's we, mammtemnee, ownership, and apantion of the Property end my
lmpmvemoou that rusty or Only not exist on the
condhue Pion. som,, qua6ly, mtum, cmmmiostloq if any, of and mykammmW so" ofibe (il) the
�P my. or Get) the prueoca of any Hazadous Substances a Otha Con
rmpc hemp tlrat the soff Or water underlying the FmPenY, or on, In a under O �,w or
P may a may not exist On the Property n, in a under
Prop sty a o my Oi6a ROOT
. Deep .m anything in this Socdon 11.9 to the contrary: (a) Soya does not waive, mlase re
•aR calltimqudahtdah ordischa�o any claims arights of my nshoe."Lag 00 Cray broach ofemise,
he
mD 4wsoxntiea of the Seger In this Agmemmt or the documents m be signed and
skliv wed by Sella in cdm madon with the Nosing; (b) Buyer door not agree to hu lmonscluklfy, defa d, hold Sollahmmless aga(osi, waive release,
stair t a y tnme out olthe [emle, �f. rellnquith w di
fmm iw> y m say filler R s v��tioa amlease ofHamadaeSo
Rat 'roperty pria to the Closing sudiw�e &wvmu ya d' I migrated m Other
thorn tab and complete Aueummr, and (e) Buyer does notYa Btrycr deIF to Boyacoodatting ■
ScOe luamleu agalast, two m'asac, remise, mguit. MUD aree dts�0artic any defend, hold
righh of my oamnq adsing out of ehnlge dw derma ri
Of tht Propony as a mobile home p PutYpawoal injury clime uaodsted with
the prier use
It Is t a: intmdon of this Section It .9 tbat except u otherwise provided to this Section 11.9 my,
and a 1 rWponabilitles and obligrtioma of Seller, and my and all righte a c1®es of Buyer, its
anviit eaKntal condition of E enYdties a+Smeia, arising by vittae ofaryphyetal a
aria m the Property Or my smmtaW a Improvements thin may or may not
axfst effect a P� emta a pmvlsios doclarmd null and void and arm pre3em a
CA" min Civil Code, which vi green a waive the bep� of Section 1542 of the
providW u follows:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WEIICH THE
CREDITOR DOES NOT KNOW OR SUSPECT -TO EX/STIN HIS FAVOR AT
THE TIME OF EXECUTING THE RELEASE, WHICH pF KNOWN BY HIM
DMUST HAVE MATERIALLY APPECI
EBTOR ED EBS SETTLEMENTSETTLEMENTWITH THE:
Sella ead Buyer hove Well imhislod below this Article I m fmther Indbate their
'"'re
tars and acchpumce of each end every prov{siom oftbia
Ardel :11. The pmvWoW of the seetioW of this Artick 11 ibaB�m end the sections withinsurvive Closing.
Seller's imiiaL: hm Suym'a luitials: —
18
f
In the event that, prior to the Close of Escrow, any governmental entity shall threaten in
writing, commence any proceedings of or leading to eminent domain or similar type proceedings
to take all or any portion of the Property, or make any offer to Seller to purchase the Property or
any portion thereof in lieu of such a taking; the Seller shall give prompt notice thereof to Buyer,
whereupon Buyer and Seller shall promptly meet and confer in good faith to evaluate the effect
of such action on the purposes of this Agreement and within ten days following such meeting
either Buyer may terminate this Agreement and receive a full refund of the Deposit together with
payment all interest accrued thereon. If Buyer does not elect to terminate this Agreement, Buyer
shall be paid all compensation for the taking or sale, or an assignment of the Seller's rights to the
same if not yet paid.
13JAX DEFERRAL.
Buyer is aware that it is the intent of Seller to have this acquisition completed as a tax
deferred exchange pursuant to Sections 1031 of the Internal Revenue Code of 1986, as amended.
Buyer agrees to an assignment of this Agreement by Seller in connection with Seller's tax -
deferred exchange, and Buyer agrees to cooperate with Seller and any other involved investor
parties in order to effectuate such an exchange or exchanges at no cost or liability to Buyer.
Similarly, Seller agrees to cooperate with Buyer and any other involved investor parties in order
to effectuate such an exchange or exchanges by Buyer at no cost or liability to Seller.
14.COVENANTS.
14.1 Covenants of Seller. Seller agrees that during the period between the Effective
Date of this Agreement and the Closing Date:
14.1.1 Seller shall maintain the Property in not less than the state of repair as that
existing on the Effective Date (excepting ordinary wear and tear);
14.1.2 Seller shall not convey, grant, lease, rent, license, concession, assign,
mortgage, hypothecate, encumber; sell, grant an option, right of first refusal, exchange or
otherwise transfer or dispose (on or off record) the Property or any part thereof or interest
therein; nor agree to do so;
14.1.3 Seller shall not alter the physical condition of the Property or introduce or
release, or permit the introduction or release, of any Hazardous Substances in, from, under, or on
the Property;
14.1.4 Prior to Closing, Seller shall maintain Seller's existing insurance on the
Property.
14.2 Covenants of Buyer. Buyer agrees that during the period between the Effective
Date of this Agreement and the Closing Date:
14.2.1 With respect any damage to the Property resulting from the Buyer's
Assessment, Buyer shall substantially restore the Property to 1 condition (excepting ordinary
wear and tear) which existed prior to the Buyer's Assessment within fifteen (15) days of
termination of this Agreement by either party; and
19
14.2.2 Buyer shall not alter the physical condition of the Property except to
conduct Buyer's Assessment under the terms and conditions provided in Section 2.2 and Buyer
shall reasonably restore the Property to its pre-existing physical condition pursuant to Section 2.2
following Buyer's Assessment.
14.2.3 Buyer shall indemnify, defend and hold Seller harmless from any
environmental claims to the extent arising on account of Buyer or Consultants alteration of the
physical condition of the Property or introduction or release, or causing the introduction or
release, exacerbation, or causing the release of any Hazardous Substances or Other
Contamination in, from, under, or on the Property or any Other Real Property resulting from
Buyer's Assessment, or the Buyer's or Consultants' physical access onto the Property, or
investigation activities pursuant to the provisions of Section 2.2. Nothing contain in this
Agreement shall obligate the Buyer to indemnify, defend or hold the Seller harmless from any
environmental claim asserted by third parties, except as otherwise expressly provided for in this
Agreement.
15.REPRESENTATIONS AND WARRANTIES
15.1 Seller's Representations. There are no representations, agreements, arrangements,
or circumstances, oral or written, between the parties relating to the subject matter contained in
this Agreement that are not fully expressed in the Agreement, and Seller has not made and does
not make any representation or warranty concerning any matter or thing affecting or relating to
the Property not expressed in this Agreement or the documents, if any, to be delivered by Seller
at Closing.
15.1.1 Based on Seller's and Seller's spouse's personal and hearsay knowledge
only, Seller makes the following representations and warranties concerning the Property, all of
which are true as of the Effective Date of this Agreement and will be true and correct as of the
Closing and none of which shall survive the Closing:
15.1.2 Physical Condition of Property. Except as specifically set forth in this
Agreement, Seller has not made and does not make any representations as to the physical
condition of the Property and Seller makes no express or implied warranty with respect to the
condition of the Property or any structures or improvements which may or may not exist on the
Property. Seller makes no oral or written representation regarding the precise size and square
footage of the Property or the location of the Property boundary lines.
15.1.3 Title. Seller makes no representation as to potential clouds on title and
Buyer agrees, to the extent necessary, to investigate such matters to satisfy itself concerning
these issues. Buyer is deemed to have knowledge (actual, constructive and implied) of any lis
pendens or other cloud or potential cloud to title against the Property if reflected in the
Preliminary Title Report and any such cloud or encumbrance relating to the Heritage Suit. Buyer
shall have no obligation to take title subject to the Heritage Suit, should Seller fail to obtain and
'1
26
consummate the Heritage Suit Settlement Agreement, unless Buyer elects to not terminate this
Agreement pursuant to. Section 2.1.4.
15.1.4 Seller's Disclaimer. Except as otherwise expressly set forth in this
Agreement, Seller makes no representation, warranty or covenant, express or implied, regarding
the Property or matters affecting the Property.
15.2 Buyer's Representations. Warranties and Disclosures. As a material inducement to
Seller to execute this Agreement and to sell the Property to Buyer, Buyer makes the following
representations, warranties and disclosures to Seller upon which Seller has relied and will
continue to rely, all of which are true as of the Effective Date of this Agreement and will be true
and correct as of the Closing and each of which shall survive the Closing Date and recordation of
the Grant Deed. In the event that, during the term of this Agreement, a change in circumstance
should occur that Buyer is made aware of which would then cause any of Buyer's below
covenants, representations, warranties and disclosures to be materially inaccurate if they were
made as of that date, Buyer shall advise Seller in writing of such change in circumstance within
ten (10) days from the date upon which Buyer discovers such material inaccuracy.
Notwithstanding anything to the contrary set forth elsewhere in this Agreement, Seller shall have
the right, within ten (10) days from receipt of such notification from Buyer to notify Buyer in
writing of Seller's election to terminate this Agreement without any liability to Seller.
15.2.1 Investigation. Buyer has conducted or will conduct an independent
investigation with respect to zoning and subdivision laws, ordinances, resolutions, and
regulations of all governmental authorities having jurisdiction over the Property, and any
planned use and improvement of the Property, and Seller has not made representations to Buyer
on any of these matters.
15.2.2 "AS IS WHERE IS". BUYER ACKNOWLEDGES THAT IT HAS
AGREED TO ACCEPT POSSESSION OF THE PROPERTY ON THE CLOSING DATE ON
AN "AS IS" BASIS. SELLER AND BUYER AGREE THAT THE PROPERTY SHALL BE
SOLD "AS IS, WHERE IS, WITH ALL FAULTS" WITH NO RIGHT OF SET-OFF OR
REDUCTION IN THE PURCHASE PRICE AND EXCEPT AS EXPRESSLY SET FORTH IN
THIS AGREEMENT OR THE DOCUMENTS TO BE DELIVERED BY THE SELLER AT
CLOSING, SUCH SALE SHALL BE WITHOUT REPRESENTATION OR WARRANTY OF
ANY KIND, EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION,
WARRANTY OF INCOME POTENTIAL, OPERATING EXPENSES, USES,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), AND SELLER
DISCLAIMS AND RENOUNCES ANY SUCH REPRESENTATION OR WARRANTY.
Buyer acknowledges that it is purchasing the Property in its "AS IS" condition which exists at
the Closing Date, in part in reliance on Buyer's own investigation and inspection of the Property,
and no representations or warranties of any kind whatsoever, express or implied, have been
made by Seller or Seller's agents except as expressly set forth in this Agreement or the
documents to be delivered by the Seller at Closing,. Buyer represents and warrants that (a) it
assumes the risk that Buyer's investigation and Assessment may not have revealed an adverse
condition (including, but not limited to, the presence of Hazardous Substances and Other
Contamination) relating to the Property, and (b) after the Closing Buyer shall be deemed to
have waived any and all objections to the condition of the Property, and to the presence of any
` r
21
Hazardous Substances or Other Contamination on, in or under the soil or groundwater
underlying the Property, or on, in or under any structures or improvements that may or may not
exist on the Property or on, in or under any Other Real Property, except any objections arising
from a breach of the representations and warranties of the Seller in this Agreement or the
documents to be delivered by Seller at Closing. Buyer acknowledges that (i) Buyer or its
principal is a sophisticated investor, knowledgeable and experienced in the financial and
business risks attendant to an investment in real property and completely capable of evaluating
the merits and risks of entering into this Agreement and purchasing the Property; (ii) Buyer is
planning to hire a Environmental Professional (as defined in 40 CFR 312.10[b]) knowledgeable
about Hazardous Substances and Environmental Requirements and is experienced in acquiring
real property and evaluating whether such real property may be contaminated with Hazardous
Substances and in complying with Environmental Requirements; and (iii) Buyer has not received
from Seller any accounting, tax, legal, architectural, engineering, environmental, property
management or other advice regarding this transaction or the Property and Buyer is relying upon
the advice of its own advisors.
15.2.3 No Representations Regarding Laws. Buyer is purchasing the Property
subject to all existing and future laws, ordinances, rules and regulations, Seller nor any of
Seller's employees, agents, heirs, personal representatives, successors, assigns, beneficiaries,
and/or attorneys have made any warranties, representations or statements regarding (a) the
availability of any development approvals, or (b) except as expressly set forth in this Agreement
or the documents to be delivered by the Seller at Closing, the effect of laws, or regulations of any
governmental entity or agency having authority with respect to the ownership, possession,
development, occupancy, condition and/or use of the Property.
15.2.4 No Representations Regarding Property Information. Buyer confirms that
except as expressly set forth in this Agreement or the documents to be delivered by the Seller at
Closing, Seller has made no representations or warranties regarding the accuracy or
completeness of any information relating to the Property.
15.2.5 Buyer to Rely on Own Consultants. Buyer is in part relying upon its own
experts with respect to the physical, environmental, economic and legal condition of the
Property, including, without limitation, the compliance of the Property with laws and
governmental regulations.
15.2.6 Confidentiality. All information acquired as a result of Buyer's
investigation, Assessment and contemplated purchase of the Property and all communications
with the Seller regarding the purchase of the Property shall be held confidential and not
otherwise disclosed to third parties except for disclosures as required by Law or pursuant to the
provisions of Section 2.2.1. Buyer shall inform all Consultants that he or she is subject to the
provisions of this Section 15.2.6 and Section 2.2.1, which provisions shall survive the
termination of this Agreement but shall not survive the Closing.
15.2.7 Physical Condition of Property. Buyer warrants that Buyer is a
sophisticated owner of real property and familiar and experienced with requirements for the
ownership of large parcels of real property. Buyer will examine the Property, and its physical,
condition, and accepts the Property in an as is condition. Buyer understands that Seller has not
22
made and does not make any representations as to the physical condition of the Property except
as expressly set forth in this Agreement and the documents to be delivered by Seller at Closing.
The Property and any structures or improvements which may or may not exist on the Property
have been subject to normal wear and tear. Buyer understands that Seller makes no express or
implied warranty with respect to the condition of the Property or any structures or improvements
which may or may not exist on the Property except as expressly set forth in this Agreement and
the documents to be delivered by Seller at Closing. Buyer understands that Seller makes no oral
or written representation regarding the precise size and square footage of the Property or the
location of the Property boundary lines. Apparent boundary line indicators such as driveways,
fences, hedges, walls, or other barriers, if any, may not represent the true boundary lines. Only a
surveyor can determine the actual boundary lines. If any of these issues are important to Buyer's
decision to acquire, then Buyer should investigate the Property independently. Buyer
acknowledges that it has not relied upon any representations by Seller with respect to the
condition of the Property or any structures or improvements which may or may not exist on the
Property, the status of permits, zoning, or code compliance. Buyer is to satisfy itself concerning
these issues.
15.2.8 Title. Buyer is deemed to have knowledge (actual, constructive and
implied) of the cloud or potential cloud to title against the Property arising out of the Heritage
Suit, to the extent such is not resolved and Buyer elects to not terminate this Agreement pursuant
to Section 2.1.4.
16.MISCELLANEOUS.
16.1 1 Assignment. Buyer shall have the right, prior to Closing, without the necessity of
obtaining the consent of the Seller, to assign its rights, duties and obligations hereunder, in whole
but not in part, (a) to any entity in which the Buyer's principals, directly or indirectly, control the
assignee, (b) any entity designated by the City of La Quints or the La Quinta Redevelopment
Agency, or (c) to any third party or entity either of which must have (as of the date of said
assignment) a net worth at least equal to or greater than the net worth of Buyer on the same date,.
However, Buyer shall deliver written notice of said assignment to Seller not less than ten days in
advance of Closing. Said notice must (i) identify the name, principal business address, phone
number, facsimile number, and name of the main contact person of the assignee, and (ii) if made
pursuant to the preceding clauses must contain: (x) a copy of the proposed assignee's unaudited
financial statements for the most recent period for which such statement is available, certified to
be true and correct by an authorized representative of the assignee, and (y) a certificate of the
Buyer signed by an authorized representative of Buyer that the net worth of the assignee, as
indicated in the financial statements submitted with the notice, is equal to or greater than the net
worth of the Buyer as of said date. In the event of any such assignment, Buyer shall not be
relieved of any obligation or liability under this Agreement. Notwithstanding the foregoing,
Buyer and Seller shall have the right to assign their respective interest in this Agreement at any
time, without the consent of the other to any qualified intermediary to effect an Internal Revenue
Code Section 1031 tax deferred exchange.
16.2 Not For Benefit of Third Parties. No provision of this Agreement is intended nor
shall in any way be construed to benefit any party not a signatory hereto or to create a third party
beneficiary relationship; provided, however, that notwithstanding the foregoing, the Released
23
Parties shall be express third party beneficiaries with respect to the matters set forth in this
Agreement which specifically and expressly run to the Released Parties' benefit.
16.3 Attorney's Fees. In the event of any action between Buyer and Seller seeking
enforcement of any of the terms and conditions to this Agreement or the Escrow or otherwise in
connection with the Property, the prevailing party in such action shall be awarded, in addition to
damages, injunctive or other relief, its reasonable costs and expenses, including without
limitation its expert witness fees and reasonable attorney's fees.
16.4 Notices. All notices, demands, consents and approvals under this Agreement shall
be in writing and effective upon personal delivery if a signed receipt is obtained; by overnight or
second business day delivery to the designated address by Fed Ex or other nationally recognized
courier service, or via facsimile so long as the sender receives confirmation of successful
transmission from the sending machine, or three (3) business days after deposit in the United
States mail, registered or certified, postage fully prepaid and addressed to the respective parties
as set forth below or as to such other address within the United States or Canada as the parties
may from time to time designate in writing:
To Seller:
Anne J. Mazzella
104 South Newport Drive
Napa, California 94559
Facsimile: (707) 259-0773
Copy to:
Sedgwick, Detert, Moran & Arnold LLP
3 Park Plaza, 17th Floor
Irvine, CA 92614-8540
Attn: Geoffrey K. Wills, Esq.
Facsimile: (949) 852-8282
To Buyer:
Desert Cities Development, Inc.
46-735 Adams Street
La Quinta, CA 92253
Attn: Michael J. Shovlin
Facsimile: (760) 771-0686
Copy to:
Mark Tipperman, Esq.
1108 Adams Avenue
La Grande OR 97850
Facsimile: (541) 962-6230
16.5 Fair Meaning. This Agreement shall be construed according to its fair meaning
and as if prepared by both parties hereto.
16.6 Headings. The headings at the beginning of each numbered Section of this
Agreement are solely for the convenience of the parties hereto and are not a part of this
Agreement.
�V
24
16.7 Choice of Laws: Litigation Matters. This Agreement shall be governed by the
internal laws of the State of California and any question arising hereunder shall be construed or
determined according to such law. The Municipal and Superior Courts of the State of California
in and for the County of Riverside, or such other appropriate court in such county, shall have
exclusive original jurisdiction of any litigation between the parties concerning this Agreement.
Service of process on Buyer and Seller shall be made in accordance with California law. Service
of process on Seller shall be made in any manner permitted by California law and shall be
effective whether served inside or outside California.
16.8 Gender: Number. As used in this Agreement, masculine, feminine, and neuter
gender and the singular or plural number shall be deemed to include the others wherever and
whenever the context so dictates.
16.9 Survival. This Agreement and all exhibits attached hereto, all covenants to be
performed by Buyer after the Closing, and, except as otherwise expressly set forth herein, all
indemnities, representations and warranties of Buyer contained herein other than those of Seller,
shall survive the Closing Date and shall remain a binding contract between the parties hereto.
16.10 Time of Essence. Time is of the essence of this Agreement and of each and every
term and provision hereof, it being understood that the parties hereto have specifically negotiated
the dates for the completion of each obligation herein.
16.11 Waiver or Modification. A waiver of a provision hereof, or modification of any
provision herein contained, shall be effective only if said waiver or modification is in writing,
and signed by both Buyer and Seller. No waiver of any breach or default by any party hereto
shall be considered to be a waiver of any breach or default unless expressly provided herein or in
the waiver.
16.12 Broker's/Consulting Fees. Seller and Buyer represent and warrant to the other that
neither Buyer nor Seller has employed any real estate broker or finder to represent its interest in
this transaction. Each party severally agrees to indemnify, defend and hold the other free and
harmless from and against any and all liability, loss, cost, or expense (including court costs and
reasonable attorney's fees) in any manner connected with a claim asserted by any individual or
entity for any broker's commission in connection with the sale contemplated by this Agreement
arising out of agreements by the indemnifying party to pay any commission or other
compensation to any third party.
16.13 Duplicate Originals. This Agreement may be executed in any number of duplicate
originals, all of which shall be of equal legal force and effect.
16.14 Severability. If any term, covenant or condition of this Agreement or the
application thereof to any person, entity, or circumstance shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such term, covenant, or
condition to persons, entities, or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby and each term, covenant or condition of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
25
16.15 Memorandum of Purchase Agreement. Substantially concurrent with the execution
of this Agreement, Buyer and Seller shall execute, acknowledge and deliver to Escrow for
recordation a Memorandum of Purchase Agreement in the form attached hereto as Exhibit "G"
(the "Memorandum"). Escrow Holder is hereby instructed by Buyer and Seller to immediately
record the Memorandum in the Official Records of Riverside County following receipt thereof
and to provide conformed copies of the recorded Memorandum to Buyer and Seller. In the event
this Agreement is terminated for any reason other than Seller's default hereunder, Buyer shall,
within three (3) business days from written request, execute, acknowledge and deliver to Seller
for recordation a quitclaim deed or other documentation as may be reasonably required by Seller
and/or Title Company in order to terminate the Memorandum and eliminate Buyer's interest in
the Property pursuant to this Agreement from the public record.
16.16 Exhibits. The following exhibits are attached hereto and incorporated herein by
this reference:
Exhibit "A"
Legal Description of Property
Exhibit "B"
Constraints Map
Exhibit "C"
Carryback Note
Exhibit "D"
Carryback Deed of Trust
Exhibit "E"
Grant Deed
Exhibit "F"
Non -Foreign Affidavit
Exhibit "G"
Memorandum of Purchase Agreement
16.17 Authority to Enter Agreement. The parties hereto represent and warrant that (i)
such party is duly organized and existing, (ii) the individuals signing this Agreement on behalf of
such party are duly authorized to execute and deliver this Agreement on behalf of said party, (iii)
by so executing this Agreement such party is formally bound to the provisions of this
Agreement, and (iv) the entering into this Agreement does not violate any provision of any other
agreement to which such party is bound.
16.18 Entire Agreement: Amendment. Except as set forth above, this Agreement and the
exhibits incorporated herein contain the entire agreement of Buyer and Seller with respect to the
matters contained herein, and no prior agreement or understanding pertaining to any such matter
shall be effective for any purpose. No provisions of this Agreement may be amended or
modified in any manner whatsoever except by an agreement in writing signed by duly authorized
officers or representatives of each of the parties hereto.
16.19 Time. Time is of the essence in the performance of the parties' respective
obligations under this Agreement.
16.20 Relations. Notwithstanding anything to the contrary contained herein, this
Agreement shall not be deemed or construed to make the parties hereto partners or joint
venturers, or to render either party liable for any of the debts or obligations of the other, it being
the intention of the parties to merely create the relationship of Buyer and Seller with respect to
the Property as contemplated hereby.
26 /�
16.21 Facsimile Signatures. Signatures of the parties transmitted by facsimile shall be
deemed binding. However, each party agrees to submit their original signature to the other party
within five (5) business days after execution hereof.
16.22. Default.
"Default" means unless the context clearly indicates otherwise, means (x) a party
("Defaulting Party") breaches one or more of its material obligations, representations or
warranties in this Agreement, (y) the other party who is not in Default ("Non -Defaulting
Party") gives the Defaulting Party notice specifying the breach ("Notice Of Breach"), and (z)
the Defaulting Party fails to cure the breach specified in the Notice of Breach within ten days
after the date the Notice of Breach is given; provided, however if the breach consists of the
failure to fulfill an obligation to be performed at Closing or a breach of a representation or
warranty as of the scheduled Closing Date, the Defaulting Party fails to cure the breach specified
in the Notice of Breach within two business days.
If Buyer Defaults hereunder, Seller may terminate this Agreement by giving written
notice to Buyer and any Deposit or Total Deposit shall be paid to Seller, who shall be entitled to
receive and retain the same as and for liquidated damages; and this Agreement shall thereupon
become null and void, it being the understanding and the agreement of the parties that the actual
damages sustained by the Seller in the event of Buyer's default are difficult, if not impossible, to
ascertain and that such liquidated damages are fair and equitable. It is agreed that said liquidated
damages are the Seller's exclusive remedy for Buyer's failure to perform any of its obligations
under this Agreement.
In the event that Seller refuses or fails to close or perform its obligations under this
Agreement, Buyer may either (a) seek monetary damages, prevailing party's attorneys fees and
related out of pocket expenses; or (b) declare this Agreement null and void and receive the return
of the Deposit or Total Deposit and any interest earned thereon, plus Buyer's actual out of pocket
expenses not to exceed $50,000.00 in the aggregate. Notwithstanding the foregoing Buyer may
seek specific performance, prevailing party's attorneys fees and related out of pocket expenses in
the event Seller: (i) fails to deliver to the Escrow Agent, any of the documents required of the
Seller in Section 5.2, by the date and time required in Section 5.2; (ii) after the date of this
Agreement, Seller encumbers the Property; or (iii) Seller sells or conveys the Property to any
third party. Any action for specific performance must be filed within thirty (30) days after the
Buyer receives notice that the applicable grounds for specific performance exist. All costs and
expenses, including reasonable attorney's fees incurred by the prevailing party of an action for
specific performance, shall be home by the unsuccessful party.
16.21. Expiration And Acceptance. This offer shall remain open for acceptance until
noon. Pacific time on December 4, 2006, and a signed copy shall be returned to Buyer upon and
to constitute acceptance.
16.22. Attorneys' Authority. Without the signature of either party, the attorneys for the
parties may by an express agreement between the attorneys, evidenced in an exchange of
correspondence, a -mails or letter agreement, shorten or extend any deadline in this Agreement,
or modify or waive any provision of this Agreement in any instance or outright, and bind their
27
respective clients for the purposes of agreeing in writing on exhibits not appended to this
Agreement; provided, however, that the parties' attorneys shall have no authority to waive or
modify any economic terms.
16.23. OFAC Certification Under penalty of perjury, each party ("Certifying
Party") severally certifies that neither the Certifying Party nor any of the Certifying Party's
respective affiliated persons and entities is or will be an entity or person (i) that is listed in the
Annex to, or is otherwise subject to the provisions of Executive Order 13224 issued on
September 24, 2001 ("EO13224"), (ii) whose name appears on the United States Treasury
Department's Office of Foreign Assets Control ("OFAC") most current list of "Specifically
Designated National and Blocked Persons" (which list may be published from time to time in
various mediums including, but not limited to, the OFAC website,
http:www.treas.gov/ofac/tl lsdn.pdf), (iii) who commits, threatens to commit or supports
"terrorism", as that term is defined in EO 13224, or (iv) who is otherwise affiliated with any
entity or person listed above (any and all entities or persons described in the preceding clauses [i]
- [iv] above are collectively referred to as a "Prohibited Person"). Certifying Party covenants and
agrees that neither Certifying Party nor any of Certifying Party's respective affiliated persons
and entities will knowingly (i) conduct any business, nor engage in any transaction or dealing,
with any Prohibited Person, including, but not limited to, the making or receiving of any
contribution of funds, goods, or services to or for the benefit of a Prohibited Person, or (ii)
engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of
evading or avoiding, or attempts to violate, any of the prohibitions set forth in EO13224.
Certifying Party shall upon the request of the other party, deliver (from time to time and at
Closing) to the other party any such certification or other evidence as may be reasonably
requested by the other party, confirming that (x) neither Certifying Party nor any of Certifying
Party's respective affiliated entities and persons is a Prohibited Person, and (y) Certifying Party
has not engaged in any business, transaction or dealings with a Prohibited Person, including, but
not limited to, the making or receiving of any contribution of funds, goods, or services, to or for
the benefit of a Prohibited Person.
16.24 Deadlines. If the date for performance of any actor any deadline under this
Agreement falls on a Saturday, Sunday or federal holiday, the date for such performance or
deadline shall automatically be extended to the first succeeding weekday which is not a federal
nor a West Virginia holiday. If either party ("Tarim Party') fails to perform any act required of
the Tardy Party by this Agreement by the date performance is due, the other party shall have the
right to delay performance of any act (including without limitation intended, its obligation to
consummate the Closing) which was in any manner dependent upon the Tardy Party's
performance, for a period of time equal to the number of days that elapsed between the date that
Tardy Party's performance was due and the date the Tardy Party's performance was rendered.
16.25. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together, shall constitute one and the same
instrument.
16.26. Limitations of Liability. Despite any other provision of this Agreement to the
contrary (i) except for the express indemnity obligations of the Buyer in this Agreement, under
no circumstances shall the Buyer have any liability arising out of any default except the Earned
28
Deposit and (ii) no principal, officer, manager member, agent or representative of the Buyer
shall have any liability or obligation arising out of this Agreement or the sale of the Property.
IN WITNESS WHEREOF, Buyer and Seller each hereby represents that they have
read this Agreement, understands it, and hereby executes this Agreement to be effective as
of the day and year first written above, in Riverside County, California.
Date:
Date:
2006
"Seller"
ANNE J. MAZZELLA
"Buyer"
2006 DESERT CITIES DEVELOPMENT, INC.,
a California corporation
By
Name: NMRAELJ O IN
Title: President
[SIGNATURE PAGE CONTINUES ON FOLLOWING PAGE]
29
2-eG—t995 8.66AM FROM P.3
9 UU4
DW nit and (ri) no Principal, Of -It manager member, tyont or rePteeente6ve of the Buyer
thaf lave any liability Or obGgetion arising out of this Agreement Or the sale of the Property.
read ihfa W1TNM ViaMOF, Buyer end Salter each hereby ropresents that they have
Agreement, medentaada It, and hereby make to thb of th s day and year tint written above, to Rhualde G Agreecnty, Callferate. Agreement to be e6ectlre as
"Seller"
"Buyer"
Date: 2006 DESERT CITtE3 DEVELOPMENT, INC,
- a Cdifomia corporation
By
Nwa: MICHAffi, 1. SHOVLrR
Title: President
iSIGNATURE PAGE CONI MM ON FOLLOWDVG FAGPl
29
ESCROW AGENT ACKNOWLEDGEMENT:
Escrow Number 1 ` Al ' '
Escrow Agent acknowledges receipt of a copy of this Agreement, and the Deposit in the amount
of One Hundred Thousand Dollars and No Cents ($100,000.00), and agrees to act as Escrow
Agent for the transaction on the terms set forth in this Agreement.
Commonwealth Land Title Company
78-982 Highway 111, #1-B
La Quinta CA 92253
Telephone: (760) *
Facsimilg: 760) *
Email: 1: ) 0 P ill (' I'd (C I )1,
By: ��'' C_'
Print Name: - ` 1/
Title:i-"f !—
Date: 2006
IVY
30
EXHIBIT "A"
LEGAL DESCRIPTION OF PROPERTY
The land situated in the City of La Quinta, in the County of Riverside, State of California,
described as follows:
[Title to Provide],
File No: 07550538
EXHIBIT "A"
All that certain real property situated in the County of Riverside, State of
California, described as follows:
Parcel 1
The West half of the East half of the Northwest Quarter of the Southeast Quarter
of Section 29, Township 5 South, Range 7 East, San Bernardino Base and
Meridian, as shown by United States Government Survey, approved July 15,
1856.
Excepting therefrom that portion deeded to the State of California by deed
recorded May 23, 1968 as Instrument No. 48111.
Said property is also shown on Records of Survey on file in Book 15, Page 12 of
Records of Survey, Riverside County Records.
Parcel 2•
The East 1/2 of the West'/2 of the Northwest 1/4 of the Southeast 1/4 of Section 29,
Township 5 South, Range 7 East, San Bernardino Meridian, according to the
Official Plat thereof.
Except that portion described in Deed to the State of California recorded May 20,
1968 as Instrument No. 46897 of Official Records of Riverside County, California.
Page 3
EXHIBIT `B"
CONSTRAINTS MAP
[SEE FOLLOWING PAGES]
ME
EXHIBIT "C"
CARRYBACK NOTE
[SEE FOLLOWING PAGES]
PROMISSORY NOTE SECURED BY DEED OF TRUST
$10,000,000.00 NAPA, CALIFORNIA
,200 ("EFFECTIVE DATE")
FOR VALUE RECEIVED, DESERT CITIES DEVELOPMENT, INC, a California
corporation ("Maker"), hereby promises to pay in lawful money of the United States to the order
of ANNE J. MAZZELLA , an individual and her successors and assigns ("Payee"), at 104 South
Newport Drive, Napa, California 94559, or at such other place as may be designated in writing
by Payee, the principal sum of TEN MILLION AND NO/100 DOLLARS ($10,000,000.00),
together with interest on the unpaid principal balance hereof as determined below, from the date
hereof until paid in full.
I. MATURITY DATE: All unpaid principal plus accrued but unpaid interest due and
owing on this Promissory Note Secured by Deed of Trust ("Note") shall be due and payable one
year (comprised of 365 calendar days) from the Effective Date ("Maturity Date").
2. SECURITY. Repayment of this Note is secured by that certain Deed of Trust and
Assignment of Rents of even date herewith, by and between Maker (as Trustor) and Payee (as
Beneficiary) (the "Deed of Trust"). The Deed of Trust is recorded as a first and paramount
mortgage lien and encumbrance against those certain two (2) parcels of unimproved real
property located on the south side of Highway 111, between Dune Palms Road and Jefferson
Avenue in the City of La Quinta, County of Riverside, State of California, consisting of
approximately 19.9 acres, with Assessor's parcel numbers 649-030-016 and 649-030-017 ("Real
Property"). The Real Property is more particularly described in the Deed of Trust. Capitalized
terms not defined herein shall have the same meaning as in the Deed of Trust.
3. INTEREST. Interest shall accrue from and including the Effective Date hereof on the
principal balance of this Note remaining from time to time unpaid at the rate per annum equal to
the Variable Interests Rate (defined immediately below). For purposes of this Note, the
following terms shall have the following meaning:
(a) "Prime Rate" means, on any day, the prime bank lending rate per annum quoted by
The Wall Street Journal in its "Money Rates" table on the business day immediately prior to the date
of this Note, and adjusted thereafter monthly, on the first day of each successive month from the
Effective Date thereafter until the Maturity Date of this Note. If the first day of each successive
month is a business day, the prime rate per annum shall be such prime rate that is quoted in that day's
edition of The Wall Street Journal in it "Money. Rates" table; or, if the first day of each successive
month, is not a business day, then such prime rate that is quoted in the immediately preceding
business day's edition of The Wall Street Journal.
(b) "Variable Interest Rate" means, on any day, a simple rate of interest per annum
equal to one and one-half percent (1.5%) in excess of the Prime Rate for that day. Without notice to
Maker or anyone else, the Variable Interest Rate shall automatically fluctuate upward and downward
as and in the amount by which the Prime Rate fluctuates.
(c) "Default Rate" means, on any day, a rate of interest which is five percentage points
(5%) per annum above the Variable Interest Rate that would otherwise be applicable hereunder.
4. PAYMENTS OF INTEREST AND PRINCIPAL.
a. Monthly Payments of Interest Only. All unpaid principal outstanding hereunder
shall bear interest at the Variable Rate with interest -only payments for such accrued interest due
and payable monthly, commencing on the first day of the month immediately following the
Effective Date and continuing on the first (Ist) day of each consecutive month thereafter until the
unpaid principal balance is paid in full on the Maturity Date. The Variable Interest Rate as it
adjusts each month shall be multiplied by the unpaid principal balance of the Note on the last
business day of each month during the twelve (12) month period between the Effective Date and
the Maturity Date to establish the amount of the next month's interest -only payment which shall
be due and payable to Payee on the first business day of each successive month.
b. Payments of Principal. The unpaid principal balance of this Note, together with
all accrued but unpaid interest thereon, shall be due and payable in full on the Maturity Date,
unless earlier due, owing or paid pursuant to the provisions of this Note.
THIS NOTE HAS A BALLOON PAYMENT ON THE MATURITY DATE.
This Note does not evidence a line of credit and Maker shall not be permitted to repay
and reborrow any amounts hereunder.
5. LATE PAYMENT CHARGE. If all or any portion of any payment shall not be received
by Payee by its due date, Maker shall pay an additional charge equal to five percent (5.00%) of
the delinquent portion of such payment to defray the expense incurred by Payee in handling and
processing such delinquent payment and to compensate Payee for the loss of the use of such
delinquent payment.
6. APPLICATION OF PAYMENTS. Each payment received by Payee shall be applied,
first, to any charges, fees, or costs or expenses associated with any delinquent payments which
may be past due and owing hereunder, then to current interest then accrued and due on the
amount outstanding under this Note, and, last, any additional sum shall be applied to the
principal amount outstanding under this Note.
7. PREPAYMENT. This Note may be prepayable in full or in part from at anytime and
time to time without penalty or premium. Amounts paid or prepaid may not be reborrowed.
Any such prepayment shall be applied first; to any fees or charges due hereunder, second, to any
accrued interest, and third, to the unpaid principal balance.
8. EVENTS OF DEFAULT. The occurrence of any of the following shall constitute an
"Event of Default" under this Note:
a. Maker fails to make any payment due under this Note within ten days after notice
given by the Payee to the Maker specifying the payment past due; or
b. Other than the failure to make any payment due under this Note, Maker breaches
or defaults under any term or provision of this Note and the same is not cured within within ten
days after notice given by the Payee to the Maker specifying the breach or default.
C. Maker admits in writing Maker's inability to pay its debts as they mature; or
d. Maker (i) makes a general assignment for the benefit of creditors, or (ii) applies
for, consents to, or acquiesces in, the appointment of a trustee, receiver, or other custodian for
Maker or the property of Maker or any part thereof, or in the absence of such application,
consent, or acquiescence, a trustee, receiver, or other custodian is appointed for Maker or the
property of Maker or any part thereof, and such appointment is not discharged within ninety (90)
days; or
e. Commencement of any case under the Bankruptcy Code, Title 11 of the United
State Code, or commencement of any other bankruptcy arrangement, reorganization,
receivership, custodianship, or similar proceeding under any federal, state, or foreign law by or
against Maker and with respect to any such case or proceeding that is involuntary, and such case
or proceeding is not dismissed with prejudice within ninety (90) days of the filing thereof; or
Maker becomes insolvent as that term is defined in Title 11 of the United States
Code; or
g. Maker shall fail to pay all amounts due and payable under the Deed of Trust as
and when due and payable and fails to cure such breach or default within ten days after notice
given by Payee to Maker specifying the payments past due; or
h. Maker commits an Event of Default under the Deed of Trust; or
i. Maker assigns, delegates, or otherwise transfers any of its obligations under this
Note without the prior written consent of Payee.
9. REMEDIES UPON EVENT OF DEFAULT.
a. Upon the occurrence of an Event of Default, then, without presentment, notice,
demand for payment, dishonor, notice of dishonor, protest, and any other notice or formality, or
other action of any kind by Payee, all of which are hereby waived, Payee may in its sole and
absolute discretion declare the entire amount of unpaid principal of and accrued and unpaid
interest on this Note, and the same shall thereupon become automatically accelerated and
immediately due and payable.
b. In addition to the foregoing remedies upon the occurrence of an Event of Default,
Payee shall have all of the rights and remedies provided to Payee, as beneficiary, and secured
party in the Deed of Trust, , or as provided to Payee in any other agreement, document or
instrument executed by Maker and Payee or executed by Maker in favor of Payee or for the
benefit of Payee, and at law or in equity.
3
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10. GOVERNING LAW: JURISDICTION. This Note shall be construed and enforced in
accordance with the internal laws of the State of California, irrespective of its choice of law
principles. Except as set forth below, Maker and Payee hereby agree that any suit to enforce any
provision of, or to collect, this Note shall be brought in the County of Riverside, State of
California. Except as set forth below, each party hereby agrees that such courts shall have
exclusive in personam jurisdiction and venue with respect to such party; and each party hereby
submits to the exclusive in personam jurisdiction and venue of such courts.
11. OBLIGATION UNCONDITIONAL. No provision in this Note or any other agreement
shall alter, impair or render conditional the obligation of Maker, which is absolute and
unconditional, to pay the principal of and interest on this Note at the place, at the time, and in the
currency herein prescribed.
12. WAIVERS. Maker hereby agrees that Payee may in its sole discretion: (a) extend the
time for payment of the amounts outstanding or due under this Note; (b) reduce the payments
thereon; (c) release anyone liable for any of the amounts outstanding or due under this Note; (d)
accept a renewal of this Note; (e) agree in writing with Maker, modify the terms and time of
payment of the amounts outstanding or due under this Note; (f)join in any extension or
subordination agreement with respect to the indebtedness evidenced by this Note; (g) take or
release any security given herefor; or, (h) agree in writing with Maker to modify the rate of
interest of this Note. Maker hereby agrees that none of actions specified in the preceding
sentence shall: (i) affect the obligation of Maker to pay the outstanding principal balance of this
Note and to observe the covenants of Maker contained in this Note; (ii) require the giving notice
to, or the obtaining the consent from, Maker, or the successors or assigns of Maker; or (ii) result
in the incurrence of any liability on the part of Payee.
13. LOSS OR MUTILATION. On receipt by Maker of evidence of the loss, theft,
destruction or mutilation of this Note and, in the case of any such loss, theft or destruction of this
Note, and an indemnity from the Payee therefor reasonably acceptable to Maker, Maker will
execute and deliver, in lieu thereof, a replacement Note of like tenor.
14. NOTICES. All notices referred to in this Note shall be in writing and shall be delivered
under the terms more specifically set forth in the Deed of Trust.
15. ENTIRE AGREEMENT. This Note and the Deed of Trusucontain the complete
understanding and agreement of Maker and Payee concerning the subject matter hereof and
supersede all prior representations, warranties, agreements, arrangements, understandings, and
negotiations regarding the subject matter hereof.
16. ASSIGNMENT. Maker may not and shall not assign, delegate, or otherwise transfer any
of its obligations under this Note without the prior written consent of Payee, which consent may
be granted or withheld in Payee's sole and absolute discretion.
17. WAIVER OF JURY TRIAL. To the extent permitted by applicable law, Maker and Payee
expressly (a) acknowledges that the right to trial byjury is a constitutional right, but that this right
may be waived: (b) hereby knowingly, voluntarily and without coercion, waives all rights to a trial
by jury of all disputes arising out of or in relation to this Note, or under any amendment, instrument,
document or agreement delivered or which may in the future be delivered in connection therewith
or arising from any relationship existing in connection with this Note, and agrees that any such
action or proceeding shall be tried before a court and not before a jury; (c) acknowledges that the
waiver of the right to trial by jury is not effective unless such waiver is in a written instrument
signed by the party waiving such right; (d) acknowledges that it has been given the opportunity to
consult with counsel and other advisors of its choice, and after consulting with such counsel and
advisors, knowingly, voluntarily and without duress, coercion, unlawful restraint, intimidation or
compulsion, has. executed this Note, based upon such advice and counsel and in the exercise of its
business judgment; (e) acknowledges and agrees that this Note has been given in exchange for good
and valuable consideration, the receipt and sufficiency of which are acknowledged; and (0
acknowledges and agrees that it has carefully and completely read all of the terms and provisions of
this Note. Maker acknowledges and agrees that it is not relying on the opinion or advice of Payee
or any of its agents or representatives in entering into this Note.
18. TIME OF ESSENCE. Time is of the essence for the payment and performance of all of
Maker's obligations hereunder.
19. MISCELLANEOUS.
a. The headings in this Note are for purposes of convenience in reference only, and
shall not be deemed to constitute a part hereof.
b. This Note shall bind Maker and its successors and assigns and inure to the benefit
of Payee and its successors and assigns.
C. Maker represents and warrants to Payee that Maker has taken all necessary
corporate action and any necessary shareholder action to (i) authorize the execution, delivery and
performance of this Note and the Deed of Trust, (ii) to execute, deliver and perform such other
agreements, instruments and documents, and to provide such certificates as Payee shall
reasonably request from time to time to effectuate the transaction contemplated hereby and by
the Deed of Trust, and (iii) the person executing and delivering this Note has been duly
authorized by Maker to do so.
e. If there is any default under this Note or any dispute between the Maker and
Payee regarding the interpretation of this Note, and any legal action or proceeding is brought by
Maker against Payee to enforce or interpret any term or provision of this Note, the prevailing
party shall be entitled to recover its reasonable attorneys' fees and costs incurred in connection
with the prosecution or defense of such action or proceeding, including court costs and the fees
and expenses of counsel to the prevailing party and expert witnesses, including without
limitation, any such fees and expenses incurred in any bankruptcy proceeding or on appeal.
f. The failure of Payee at any time or times to require performance of any provision
hereof shall in no manner affect its right at a later time to enforce the same. No waiver by Payee
of any condition or of any breach of any term, covenant, representation or warranty contained in
this Note shall be effective unless in writing, and no waiver in any one or more instances shall be
deemed to be a further or continuing waiver of any such condition or breach in other instances or
. , ,
a waiver of any other condition or breach of any other term, covenant, representation or
warranty.
g. Each party acknowledges and confines that each party had the opportunity to
consult with counsel of each party's choice in order to understand the legal consequences of this
Note and the Deed of Trust. Neither party shall be deemed to be responsible for the preparation
of this Note or the Deed of Trust and this Note and the Deed of Trust, shall not be construed
against either party by reason of such preparation.
h. All agreements between Maker and Payee (including but not limited to this Note and
the Deed of Trust), whether now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of demand or acceleration of the Maturity Date
of this Note or otherwise, shall the interest contracted for, charged, received, paid or agreed to be
paid to Payee exceed the maximum amount permissible under applicable law. If, from any
circumstance whatsoever, interest would otherwise be payable to Payee in excess of the maximum
amount permissible under applicable law, the interest payable to Payee shall be reduced to the
maximum amount permissible under applicable law; and if from any circumstance Payee shall ever
receive anything of value deemed interest by applicable law in excess of the maximum amount
permissible under applicable law, an amount equal to the excessive interest shall be applied to the
outstanding principal balance hereof, or if such excessive amount of interest exceeds the unpaid
balance of principal hereof, such excess shall be refunded to Maker. All interest paid or agreed to
be paid to Payee shall, to the extent permitted by applicable law, be amortized, prorated, allocated,
and spread throughout the full period (including any renewal or extension) until payment in full of
the principal so that the interest hereon for such full period shall not exceed the maximum amount
permissible under applicable law. Payee expressly disavows any intent to contract for, charge or
receive interest in an amount which exceeds the maximum amount permissible under applicable
law. This paragraph shall control all agreements between Maker and Payee (including but not
limited to this Note and the Deed of Trust).
i. All notices required by this Note shall be given in the manner required and to the
persons designated by or pursuant to the Deed of Trust.
IN WITNESS WHEREOF, Maker has executed and delivered this Note to Payee on the
date first above written.
"Maker"
DESERT CITIES DEVELOPMENT, INC.,
a California corporation
By:
Name: MICHAEL J. SHOVLIN
Title: President
6 O
EXHIBIT "D"
CARRYBACK DEED OF TRUST
[SEE FOLLOWING PAGES]
Recording Requested By Mail To:
Sedgwick,.Detert, Moran & Arnold, LLP
3 Park Plaza, Suite 1700
Irvine, CA 92614
Attn: Geoffrey Willis, Esq.
Title Order No.:
Escrow No.:
SPACEABOVE THIS
DEED OF TRUST AND ASSIGNMENT OF RENTS
THIS DOCUMENT SECURES FUTURE ADVANCES WHICH MAY BE MADE PURSUANT TO THE
PROMISSORY NOTE (AS DEFINED IN THIS DOCUMENT) OR THIS DEED OF TRUST.
THIS DEED OF TRUST AND ASSIGNMENT OF RENTS (the "Deed Of Trust") is made as of
200, by and between DESERT CITIES DEVELOPMENT, INC., a California corporation with
offices at 46-735 Adams Street, La Quinta, CA 92253 ("Trustor" and/or "Borrower" as the context dictates),
CHICAGO TITLE COMPANY (and in such capacity herein called "Trustee"), whose address is 700 South Flower
Street, Suite 800, Los Angeles, California 90017, and ANNE J. MAZZELLA, an individual with an address at 104
South Newport Drive, Napa, California 94559 (and in such capacity herein called "Beneficiary").
RECITALS:
A. Pursuant to that certain Purchase and Sale Agreement and Joint Escrow Instructions dated
December I, 2006 ("Sale Agreement") by and between Trustor (as Buyer) and Beneficiary (as Seller), Trustor
purchased from Beneficiary that certain unimproved real property located on the south side of Highway I11,
between Dune Palms Road and Jefferson Avenue in the City of La Quinta, County of Riverside, State of California,
consisting of approximately 19.9 acres, with Assessor's parcel numbers 649-030-016 and 649-030-017 which is
more particularly described in the legal description attached hereto as Exhibit "A" ("Property").
B. Trustor (as Buyer) paid to Beneficiary (as Seller) a portion of the purchase price for the Property
by executing and delivering to Beneficiary that certain Promissory Note of even date herewith ("Note") in the
original principal amount of Ten Million and No/100 Dollars (S10,000,000.00) ("Loan"). The Note, this Deed Of
Trust, and all other agreements, documents, and instruments evidencing and/or securing the payment or performance
of the Secured Obligations (as hereinafter defined) are hereinafter collectively sometimes referred to as the "Loan
Documents."
C. This Deed Of Trust is given, inter alia, for the purpose of securing repayment of the Loan made
by Beneficiary, as lender, to Borrower, as borrower, and the Secured Obligations.
D. It is intended by Beneficiary and Trustor that the foregoing Recitals are intended to be made a part
of this Deed Of Trust and the agreements made hereunder.
GRANTING CLAUSES:
FOR GOOD AND VALUABLE CONSIDERATION, INCLUDING THE INDEBTEDNESS HEREIN RECITED,
THE TRUST HEREIN CREATED AND THE SECURITY INTEREST AND THE LIEN HEREIN GRANTED,
THE RECEIPT OF WHICH IS HEREBY ACKNOWLEDGED, TRUSTOR HEREBY IRREVOCABLY GRANTS,
CONVEYS, TRANSFERS AND ASSIGNS:
A. To Trustee, IN TRUST, WITH POWER OF SALE, for the benefit and security of Beneficiary,
under and subject to the terms and conditions hereinafter set forth, all of Trustor's right, title and interest, in and to
the Property;
Together with any and all buildings and improvements now existing or hereafter erected on the Property,
including, without limitation fixtures, tenements, attachments, appliances, building equipment, building systems,
machinery, and other articles now or hereafter attached to said buildings and improvements (collectively,
"Improvements");
Together with all interests, estates or other claims, both in law and in equity, which Trustor now has or may
hereafter acquire in the Property or Improvements;
Together with all easements, tenements, hereditaments, appurtenances, rights -of -way and rights now owned
or hereafter acquired by Trustor which are used or useful in connection with the Property or as a means of access
thereto, including, without limiting the generality of the foregoing, all rights pursuant to any trackage agreement and
all rights to the nonexclusive use of common drive entries, all oil and gas and other hydrocarbons and all other
minerals and water and water rights and shares of stock evidencing the same;
Together with all right, title and interest of Trustor in and to all rents and/or subrents, royalties, issues,
profits, revenues, license fees, income, space rents, parking facility rents, conference or other room rents, proceeds
and other benefits rents, leases, subleases, subtenancies, licenses, franchises, occupancy agreements and other
agreements covering the Property, Improvements or any portion thereof now or hereafter existing or entered into,
subject however, to the right, power and authority hereinafter given to and conferred upon Beneficiary by paragraph
10 (below) to collect, retain and apply any of the foregoing; and all right, title and interest of Trustor thereunder,
including, without limitation, all cash or security deposits, prepaid or advance rentals, and deposits or payments of
similar nature;
Together with all right, tide and interest of Trustor now or hereafter acquired, in and to any land lying
within the right-of-way of any street, open or proposed, adjoining the Property, and any and all sidewalks, vaults,
alleys and strips and gores of land adjacent to or used in connection with the Property;
Together with all the estate, interest, right, title, other claims or demands, both in law and in equity,
including claims or demands with respect to the proceeds of insurance in effect with respect to the Property or
Improvements, which Trustor now has or may hereafter acquire in the Property or Improvements, and any and all
awards made for the taking by eminent domain, or by any proceeding of purchase in lieu thereof, of the whole or
any part of the Estate (as hereinafter defined), including, without limitation, any awards resulting from a change of
grade of streets and awards for severance damages.
SECURING CLAUSES
FOR THE PURPOSE OF SECURING:
(a) Repayment of the Loan, with variable interest thereon, as evidenced by the Note, executed by
Borrower pursuant to the Loan Documents;
(b) payment of all sums advanced by Beneficiary as permitted under the Loan Documents to Trustor
or its successors and assigns, or to Trustee to protect the Property, with interest thereon (as defined in the Note);
(c) . performance of every obligation, covenant or agreement of Trustor contained herein or in the Note
or the Loan Documents;
(d) performance of every obligation, covenant and agreement of Trustor contained in any document,
instrument or agreement now or hereafter executed by Trustor which recites that the obligations thereunder are
secured by this Deed Of Trust, including, without limitation payment of all other sums, with interest thereon, which
may hereafter be loaned to Trustor, or its successors or assigns, by Beneficiary, or its successors or assigns, when
evidenced by a promissory note or notes reciting that they are secured by this Deed Of Trust; and
(e) payment and compliance with and performance of each and every material provision of any
declaration of covenants, conditions and restrictions pertaining to the Property or any portion thereof, and all
encumbrances of record which have a priority senior to the lien created hereunder.
All initially capitalized terms used herein which are defined in the Sale Agreement shall have the same
meaning herein unless the context otherwise requires.
AGREEMENT
To protect the security of this Deed Of Trust, Trustor agrees
1. To complete or restore promptly and in good and workmanlike manner any building which maybe
constructed, damaged or destroyed thereon and to pay when due all claims for labor performed and materials
furnished therefor, to comply with all laws affecting said Property or requiring any alterations or improvements to
be made thereon, not to commit or permit waste thereof; not to commit, suffer or permit any act upon said Property
in violation of law; and do all other acts which from the character or use of said Property may be reasonably
necessary, the specific enumerations herein not excluding the general.
2. If there are any insurable Improvements hereafter constructed on the Property, to provide, maintain and
deliver to Beneficiary Fire Insurance reasonably satisfactory to and with loss payable to Beneficiary. The amount
collected under any fire or other insurance policy may be applied by Beneficiary upon any indebtedness secured
hereby and in such order as Beneficiary may determine, or at option of Beneficiary the entire amount so collected or
any part thereof may be released to Trustor. Such application or release shall not cure or waive any default or notice
of default hereunder or invalidate any act done pursuant to such notice.
3: To appear in and defend any action or proceeding purporting to affect the security hereof or the rights or
powers of Beneficiary or Trustee; and to pay all reasonable costs and expenses, including cost of evidence of title
and attorney's fees in a reasonable sum, in any such action or proceeding in which Beneficiary or Trustee may
appear, and in any suit brought by Beneficiary to foreclose this Deed Of Trust after an Event of Default
4. To pay before delinquency all taxes and assessments affecting said Property, including assessments on
appurtenant water stock; when due, all encumbrances, charges and liens, with interest, on said Property or any part
thereof, which appear to be prior or superior hereto; all reasonable costs, fees and expenses of this Trust
Should Trustor fail to make any payment or to do any act as herein provided, then Beneficiary or
Trustee, but without obligation so to do and without notice to or demand upon Trustor and without
releasing Trustor from any obligation hereof, may; make or do the same is such manner and to
such extent as either may deem necessary to protect the security hereof, Beneficiary or Trustee
being authorized to enter upon said Property for such purposes; appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or
Trustee; pay, purchase, contest or compromise any encumbrance, charge or lien which in the
reasonable judgment of either appears to be prior or superior hereto; and, in exercising any such
powers, pay necessary expenses, employ counsel and pay his reasonable fees.
-3--
5. To pay immediately and without demand all reasonable sums so expended by Beneficiary or Trustee, with
interest from date of expenditure at the amount allowed by law in effect at the date hereof, and to pay for any
statement provided for by law in effect at the date hereof regarding the obligation secured hereby any reasonable
amount demanded by the Beneficiary not to exceed the maximum allowed by law at the time when said statement is
demanded.
6. That any award of damages in connection with any condemnation for public use of or injury to said
Property or any part thereof is hereby assigned and shall be paid to Beneficiary who may apply or release such
moneys received by him in the same manner and with the same effect as above provided for disposition of proceeds
of fire or other insurance.
7. That by accepting payment of any sum secured hereby after its due date, Beneficiary does not waive his
right either to require prompt payment when due of all other sums so secured or to declare default for failure so to
pay.
8. That at any time or from time to time, without liability therefor and without notice, upon written request of
Beneficiary and presentation of this Deed Of Trust and said Note for endorsement, and without affecting the
personal liability of any person for payment of the indebtedness secured hereby, Trustee may: reconvey any part of
said Property; consent to the making of any map or plat thereof; join in granting any easement thereon, or join in any
extension agreement or any agreement subordinating the lien or charge hereof.
9. That upon written request of Beneficiary stating that all sums secured hereby have been paid, and upon
surrender of this Deed Of Trust and said Note to Trustee for cancellation and retention or other disposition as
Trustee in its sole discretion may choose and upon payment of its fees, Trustee shall reconvey, without warranty, the
Property then held hereunder. The recitals in such reconveyance of any matters or facts shall be conclusive proof of
the truthfulness thereof. The Grantee in such reconveyance may be described as "the person or persons legally
entitled thereto".
10. That as additional security, Trustor hereby gives to and confers upon Beneficiary the right, power and
authority, during the continuance of these Trusts, to collect all rents and/or subrents, royalties, issues, profits,
revenues, license fees, income, space rents, parking facility rents, conference or other room rents, proceeds and other
benefits rents, leases, subleases, subtenancies, licenses, franchises, occupancy agreements and other agreements
covering the Property, Improvements or any portion thereof now or hereafter existing or entered into of said
Property, reserving unto Trustor the right, prior to any Event of Default, to collect and retain such rents and/or
subrents, royalties, issues, profits, revenues, license fees, income, space rents, parking facility rents, conference or
other room rents, proceeds and other benefitsrents, leases, subleases, subtenancies, licenses, franchises, occupancy
agreements and other agreements covering the Property, improvements or any portion thereof now or hereafter
existing or entered into as they become due and payable. "Event of Default" means: (i) Trustor breached an
obligation to make a payment required by the Note and failed to cure the breach after notice and prior to the
expiration of the applicable grace period in the Note; or (ii) Trustor breach an obligation in this Trust Deed or
another Loan Document (except the Note) and failed to cure the breach within thirty (30) days after notice
specifying the breach is given by the Beneficiary to the Trustor; provided, however, that if the breach is not
reasonably susceptible of being cured within such thirty (30) day period, if the Trustor takes steps towards the cure
of the breach prior to the expiration of the thirty (30) day period and thereafter pursues the cure with diligence until
completion, then the cure period shall automatically be extended for such period of time -as is reasonably required to
cure the breach.
a. Upon any Event of Default, Beneficiary may at any time without notice, either in person, by agent,
or by a receiver to be appointed by a court, and without regard to the adequacy of any security for
the indebtedness hereby secured, enter upon and take possession of said Property or any part
thereof, in her own name sue for or otherwise collect such rents and/or subrents, royalties, issues,
profits, revenues, license fees, income, space rents, parking facility rents, conference or other
room rents, proceeds and other benefits rents, leases, subleases, subtenancies, licenses, franchises,
occupancy agreements and other agreements covering the Property, Improvements or any portion
thereof now or hereafter existing or entered into, including those past due and unpaid, and apply
the same, less costs and expenses of operation and collection, including reasonable attorney's fees,
upon any indebtedness secured hereby, and in such order as Beneficiary may determine.
b. The entering upon and taking possession of said Property, the collection of such rents and/or
subrents, royalties, issues, profits, revenues, license fees, income, space rents, parking facility
rents, conference or other room rents, proceeds and other benefits rents, leases, subleases,
subtenancies, licenses, franchises, occupancy agreements and other agreements covering the
Property, Improvements or any portion thereof now or hereafter existing or entered into and the
application thereof as aforesaid, shall not cure or waive any Event of Default or notice of default
hereunder or invalidate any act done pursuant to such notice.
11. That upon an Event of Default, Beneficiary may declare all sums secured hereby immediately due and
payable by delivery to Trustee of written declaration of default and demand for sale and of written notice of default
and of election to cause to be sold said Property, which notice Trustee shall cause to be filed for record. Beneficiary
also shall deposit with Trustee this Deed Of Trust, said Note and all documents evidencing expenditures secured
hereby.
After the lapse of such time as may then be required by law following the recordation of said
notice of default, and notice of sale having been given as then required by law, Trustee, without
demand on Trustor, shall sell said Property at the time and place fixed by it in said notice of sale,
either as a whole or in separate parcels, and in such order as it may determine, at public auction to
the highest bidder for cash in lawful money of the United States, payable at time of sale. Trustee
may postpone sale of all or any portion of said Property by public announcement at such time and
place of sale, and from time to time thereafter may postpone such sale by public announcement at
the time fixed by the preceding postponement. Trustee shall deliver to such purchaser its deed
conveying the Property so sold, but without any covenant or warranty, express or implied. The
recitals in such deed of any matters or facts shall be conclusive proof of the truthfulness thereof.
Any person, including Trustor, Trustee, or Beneficiary as hereinafter defined, may purchase at
such sale.
b. After deducting all reasonable costs, fees and expenses of Trustee and of this Trust, including cost
of evidence of title in connection with sale, Trustee shall apply the proceeds of sale to payment of
all sums expended under the terms hereof, not then repaid, with accrued interest at the amount
allowed by law in effect at the date hereof; all other sums then secured hereby; and the remainder,
if any, to the person or persons legally entitled thereto.
12. Beneficiary, or any successor in ownership of the Note, may from time to time, by instrument in writing,
substitute a successor or successors to any Trustee named herein or acting hereunder, which instrument, executed by
the Beneficiary and duly acknowledged and recorded in the office of the recorder of the county or counties where
said Property is situated shall be conclusive proof of proper substitution of such successor Trustee or Trustees, who
shall, without conveyance from the Trustee predecessor, succeed to all its title, estate, rights, powers and duties.
Said instrument must contain the name of the original Trustor, Trustee and Beneficiary hereunder, the book and
page where this Deed Of Trust is recorded and the name and address of the new Trustee.
13. That this Deed Of Trust applies to, inures to the benefit of, and binds all parties hereto, their heirs, legatees,
devisees, administrators, executors, successors and assigns. The term Beneficiary shall mean the owner and holder,
including pledgees, of the Note secured hereby, whether or riot named as Beneficiary herein. In this Deed Of Trust,
whenever the context so requires, the masculine gender includes the feminine and/or neuter, and the singular number
includes the plural.
14. That Trustee accepts this Trust when this Deed Of Trust, duly executed and acknowledged, is made a
public record as provided bylaw. Trustee is not obligated to notify any party hereto of pending sale under any other
deed of trust or of any action or proceeding in which Trustor, Beneficiary or Trustee shall be a party unless brought
by Trustee.
5__ z' o
The undersigned Trustor requests that a copy of any notice of default and of any notice of sale hereunder be mailed
to him at his address hereinbefore set forth. Any notice shall be given by either (i) personal delivery in which event
it shall be deemed given on the date of delivery, or (ii) certified mail return receipt requested in which event it shall
be deemed given three business days after the date deposited in the U.S. Mail, or (iii) next or second business day
delivery by nationally recognized overnight courier, in which event it shall be deemed given on the next or second
(whichever is applicable) business day immediately following receipt and acceptance by the courier, or (iv) fax, in
which event it shall be deemed given on the date delivered by fax. Any party may change any address or fax number
for the delivery of notice to such parry to any other address in the United States or Canada, by giving notice in
accordance with the provisions of this paragraph..
TRUSTOR
DESERT CITIES DEVELOPMENT, MC.,
a California corporation
By:
Name: MICHAEL J. SHOVLIN
Title: President
46-735 Adams Street, La Quinta, CA 92253
Facsimile: (561) 395-3911
With a copy to:
John Durso
KD Hooting Partners, Inc
4199 Campus Drive , Suite550
Irvine, California 92612
Facsimilie 949-854-7105
STATE OF CALIFORNIA )
) ss
COUNTY OF RIVERSIDE )
On
personally appeared
before
personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose names)
is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s) or the
entity upon behalf of which the person(s) acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
Notary Public
DO NOT RECORD REQUEST FOR FULL RECONVEYANCE
TO CHICAGO TITLE INSURANCE COMPANY, TRUSTEE:
The undersigned is the legal owner and holder of the Note or notes, and of all other indebtedness
secured by the foregoing Deed Of Trust Said Note or notes, together with all other indebtedness secured by said
Deed Of Trust, have been fully paid and satisfied; and you are hereby requested and directed, on payment to you of
any sums owing to you under the terms of said Deed Of Trust, to cancel said Note or notes above mentioned, and all
other evidences of indebtedness secured by said Deed Of Trust delivered to you herewith, together with the said
Deed Of Trust, and to reconvey, without warranty, to the parties designated by the terms of said Deed Of Trust, all
the estate now held by you under the same.
Dated
Please mail Deed Of Trust,
Note and Reconveyance to
Do Not lose or destroy this Deed Of Trust or the Note which it secures. Both must be delivered to the
Trustee for cancellation before reconveyance will be made.
Date: .200
follows:
EXHIBIT"A"
LEGAL DESCRIPTION OF PROPERTY
The land situated in the City of La Quinta, in the County of Riverside, State of California, described as
[77deto Provide]
9__
EXHIBIT "E"
FORM OF GRANT DEED
[SEE FOLLOWING PAGES]
RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:
]To be provided by Buyer]
,CA
Attn:
SPACE ABOVE THIS LINE FOR RECORDER'S USE
GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
ANNE J. MAZZELLA and LOUIS MAZZELLA, husband and wife (collectively the
"Grantor"), hereby grants to [ 1, a
( 1, ("Grantee"), that certain real property
("Property") located in the City of La Quinta, County of Riverside, State of California,
described in the legal description attached hereto as Attachment No. I and incorporated herein
by this reference, subject to all matters of record.
Dated: 2007 "GRANTOR"
ANNE J. MAZZELLA
LOUIS MAZZELLA
M,W
do
STATE OF CALIFORNIA
) ss
COUNTY OF RIVERSIDE
On
personally appeared
before
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged tome that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
STATE OF CALIFORNIA )
) ss
COUNTY OF RIVERSIDE )
On
personally appeared
before
Notary Public
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
Notary Public
[SEAL]
2
ATTACHMENT NO. 1
LEGAL DESCRIPTION OF PROPERTY
The land situated in the City of La Quinta, in the County of Riverside, State of California,
described as follows:
[title to provide.]
2-09-19M 9a39AM FROM
1C/VJ/6V VY 1It.12j r-A .
ON.FORF1
TO: DESERT CI MS DEVELOPMENT, INC., a Calltbrnls corporation CEnyee)
The Internal Rcvomro Code of 104 CCodd) (26 U.S.C. Sections 1445. 7701) provider
teal s transferee of a U.S. real propcM imomat must withbold tax If the tmosfaor is a imaign
pen m. To inform the transiam that withholding of In is tot tetplirod upon transfer of that
cat in U.& real propeM interest described in Exhibit "AO to the Agreement for Purchase sad
Sale end Eserow faatruerions dated December l . 20K and'mWrporated herein by
refe taco CTraperty'% that the underdgnad Mellor")hemby eetsifies the following
L. Seller is cot a foreign mpontion, fomigd para=sbtp, fumiga ttad or foreign
ate c (era tease terms are claimed in the Internal Revenue Code and Income Tax Regulations);
and
2. The U.S, taxpayer identification number for Seller Is 070-32.5532; and
I. 7ee address for mailingpurposes of Seger is; 704 South NvwportDrive, Napa,
Cali b mis %559; and
4. Sellor understands that this certification may be disclosed to the Intemal Revcuue
Son im by Bayer and that eery fake statement wdteimd heroin could be punished by fine,
imp isoneatme. ar both.
Under penalties ofpc4ury, I detdam that 1 have examined this Centficatiou and to the
best of my Imowledge and belief, it is true, cormc% and complete, and I further declare that 1
have - aothm* to din this doe mam ou behalf of Seller.
a
EXHIBIT "G"
MEMORANDUM OF PURCHASE AGREEMENT
Recording Requested By &
When Recorded Mail To:
Desert Cities Development, Inc.
Attn: Michael J. Shovlin
46-735 Adams Street
La Quinta, CA 92253
ABOVE SPACE FOR RECORDER'S USE
MEMORANDUM OF PURCHASE AGREEMENT
THI EMORANDUM OF PURCHASE AGREEMENT ("Agreement") is made as of
/ , 200.4 , between ANNE J.'MAZZELLA ("Seller"), and DESERT
CITIES DEVELOPMENT, INC., a Califomia corporation ("Buyer"), with reference to the
following facts:
A. Seller is the owner of certain real property located in the County of Riverside
("County"), State of California, as -more particularly described on Exhibit 1 attached hereto (the
"Property").
B. Seller and Buyer have concurrently gp�ered into that certain unrecorded Purchase
Agreement and Escrow Instructions dated as of XUc<__, l 2006 (the "Purchase
Agreement"), pursuant to which Seller agrees to sell, and Buyer agrees to purchase, the
Property, in accordance with the terms and conditions contained in the Purchase Agreement. A
fully executed copy of the Purchase Agreement is attached as Exhibit 2. The terms of the
Purchase Agreement are incorporated herein by this reference. Capitalized terms used and not
otherwise defined in this Agreement are used as defined in the Purchase Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
contained in this Agreement and the Purchase Agreement, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged by Seller, Buyer and
Seller hereby agree as follows:
1. Agreement to Buy and Sell. Subject to the terms and conditions set forth in the
Purchase Agreement, Seller hereby agrees to sell and convey to Buyer, and Buyer hereby agrees
to acquire and purchase from Seller, the Property and all appurtenant rights and privileges and all
improvements thereon as more fully described in the Purchase Agreement. The Purchase
Agreement provides for the Escrow to close on or before the date which is one hundred twenty
(120) days following the Effective Date.
2. No Amendment to Purchase Agreement. This Agreement is solely to put third
parties on notice of Buyer's right to purchase the Property from Seller as provided herein and
nothing contained in this Agreement shall, or shall be deemed to, modify or amend the Purchase
Agreement in any respect. In the event of any conflict between the provisions of the Purchase
Agreement and the provisions of this Agreement, as between Buyer and Seller the provisions of
the Purchase Agreement shall prevail.
3. Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed an original, but all of which taken together, shall constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
Date: 200_ "Seller"
Date: 40�� 1 2006
ANNE J. MAZZELLA
"Buyer"
DESERT CITIES DEVELOPMENT, INC.,
a California corporation
By
Name: MICHAEL J. OVLIN
Title: President
STATE OF CALIFORNIA )
) ss
COUNTY OF d-1A-%D6-
)
On LJ52€1n,
personally appeared
11 -:'d04 , before me, E
Notary Public
personally known to me ( ) to be the
person whose name(Ais/a* subscribed to the within instrument and acknowledged to me that
he/s**y executed the same in his/1)6/th6ir authorized capacity(Ws), and that by his/12&/th6r
signaturek on the instrument the personW or the entity upon behalf of which the person(4
acted, executed the instrument.
Witness my hand and official seal.
.toncE v�N of eom
comnWan r 149t66t
Natay Iub1c CdnaNa
[SEAL]
STATE OF CALIFORNIA
ss
COUNTY OF
On
personally appeared
ublic
before me, Notary Public,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose:name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
Notary Public
[SEAL]
STATE OF CALIFORNIA )
) ss
COUNTY OF )
On
personally appeared
before
Notary Public,
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
[SEAL]
STATE OF CALIFORNIA )
) ss
COUNTY OF
On
personally appeared
before
Notary Public
Notary Public;
personally known to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal.
Notary Public
[SEAL]
2-09-199S 9:39PM FROM
12/Ux/raw la!lY p"
F.Y_RrBiT seer
MOMDUM OF PURCHASE AGREEMENT
Rea adtag Requested By &
VM a Rm*rdtd MsB Tot
Dee rt Cities Development, Inc.
ARa Miohad R. ShMUM
4S, 35 Adores Send
L (vista, CA 92253
P. 3
wvva
o ABOVIIPACEPORRECORDMUSUSE
MEMORANDUM OF
THI3 MEMORANDUM OF FURCHASR AGRBBMENT CAgrewean is made as of
-2q noubar 1 2006, between ANNE 1. MAZZELI.A ("SeBsr" I and DESERT
CIT )IDEVELOPMENT, INC., a Cafifemia cogxwatim ("Bayer"), with rofamnce to the
folk wing facts:
A. Seller is the owner of cumin met property located in the County of Riverside
("C ivaty"). Soto of Califnmis, as more particularly described ou Exhibit 1 attached baeto (the
`Pr va ty-J.
B. Sella and Buyer have coneum oily enmad into that certain umocorded Purchase
Agr xnneru and Escrow InsftWom dated as of Decesher I .20D¢ (tbe "Purchase
Agt m ment-), pursuant to which Seller agrora to sell, and Buyer agees tope chase, the
Pro, eaty, iu accordance with the terms and conditions conleiocd in the Fmohme Agrmucat A
folk • uecuted copy of the Purchase Agreement Is attached as Exhibit 2. The terms of the
Pun horse Agmtencat are incorporated hereto by this reference. Capitalized terms used and not
otla [wise defined in this Agreement as used as defimed in the Purchmo Ageomenl
NOW, THEREFORE, for and in consideration of the mutual covenants and agreements
eon aiaed in this Agreement and the Purchase Agreement, and other good and valuable
con .Ideradtm, the receipt and adequacy of which are hereby acimuwlWgcd by Sella, Buyer and
Sell r hereby agree as follows:
=14
I
2-109-19% 9:4OAM Fl3@t
l NVIUVa la:la rAL
1. Ag�eement m Bu�and Soli. Subject to the tans and conditions set foith in the
Pure urns Agreement, Seller herby agrees to sell and convey to BaYer. and Buyerheeby Agrees
to se bite and purchase from Seller. the Property And ill appurtensnt rights and Privileges and all
lmpr svemmts thereon a mom rally described in tho Pmehere Agreement. the Ptsohm
Agri as mtpmvidea for Oo Escrow to close an orbefom the date which is one hundred twenty
(120: days folbwiog the Effeodvc Data
2. Eja Amendment to Purchase AThis Agreement is solely to pot third
psrd % on node, of Boyar's right to purchase the Property ham Sege a pmvidcd herein and
nosh as eomaiaed to this Agreement ahsA or shall be deemed to, modify or —A the Purchase
Aga ,anent le nay reryxt. In the event of any cont6ctbetween the provisions of the Purchase
Aga emem and the provisions of this Agmemest, at between Buyer and Seller the ptoviaiom of
the) umham Agreement shell pmvaiL -
3. Counkmwa This Agmermmtmay bo executed to eouc tpum. each of wbiob
shal be deemed an original. but all of wblch mkm together, vMH constitute one and the same
inch moot.
IN WITNESS WHESEOP, the parties have mtecuted this Agreement as of the day and
year fast ahovo. tteo.
Dab: ➢e,embe_ r I .200f -saes"
6M
Date ( 2006
d
"Buyer
DESERT C1T1ES DBV LopmENT, INC.,
a Ca0fomta oc"Porom
B�
Name: WCHABL J. OROVLIN
Tide President
P. 4
M.U.
2-09-1996 9rdOAM FROM P.5
LL/V'V/LVVO Le1LV !K WVVO
FLORMA a TORT --FORM II/ DNMUAL ACXNOWLRDGVaMf
State !Florida The Lprelmng mtfiuneot wa+mckm llleddpd bbermer�tl�P
Cow f of P, 8 � me d& d.y of, _AeLS
by � �y �Tr Aff; zEL4N
wbo fy known me m who hee produced
of
n kleadlkadad.
R d, oagm�rm� �.4�if///�ZlfSdA.�'F�rhdc
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Coeawam No.
OMONAL
TbLy a.lefwmpbe V W..rrYu 4 srtnldMbY.. Msn'pnnl.d0r erpeearnybym ecdeemr
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Dees .ptpw ofAK&cbCd Doom.4
Tale, rType ofDocomrnc f roa-loo
Doommtnm:.lfd ( Zoo(,-dnlY,r/� x�/��Numbcr ofPegea: .
Slwra;r) Od- Tlue Nlmtod Abo Al it!14AM aAOVIN-der/A La.�pRE3 E
1 1 4
CALIFORNIA ALL-PURPOSE ACKNOWLEDGMENT
Stale of California
ss.
County of ( k.5'/09
On 6EX before mejOLrCL-iu ;44.e lain +- ,
0.1. (+ Wm Tao a 0 ha..'"m D . Noanfftbin
personally appeared �/Cif/tE�✓ eJ �%J�i n/ ,
L7personally known to me
❑ proved to me on the basis of satisfactory
evidence
to be the person4-whose name04 is/atl
subscribed to the within instrument and
acknowledged to me that he/2t6/th4jc executed
the same in his/hW/th0c authorized
capacity(+gd), and that by his/t)"hbfr
signatureKon the instrument the person(aj.or
the entity upon behalf of which the personpj
acted, executed the instrument.
W ESS my hand and official seal. /n•, y'�/ '
611 `, Grp
s�cmwn a naan Panc
OPTIONAL
Though the kilormedon below Is not required by law. It may prove valuable to persons rolling on the document and could prevent
rreudulent removal and reattachment of this Iorm to another document.
Description of. Attached Document !� n
Title or Type of Document: //111709,9-AII)C 1 Gf
Document Date:6/%IB't.� 6 ,7oa6 �.r NumberofPages: �—
Signer(s) Other Than Named Above: �.� �% //rA ZLf LL-4 ( 1 see &,e
")
Capacity(les) Claimed by Signer /
Signer's Name: AJ
NELUAlLnuum
❑, Individual Top a Mwnb hove
�orporateOfficer—Title(s): Pt&5/pEhJT
❑ Partner —u Limited 0 General
❑ Attorney -in -Fact
❑ Trustee
O Guardian or Conservator
❑ Other: 1
Signer is Representing: D_5E�er LrT/Es
01eee WIMP N. Auoa.IM- 9W N Sae AV... P.p, Sea 2.el- CIwl. . CA 6131}20e- w+rA'.mlM..a. M Prot W. SM7 awes Gil TM.Rn la M&122
EXHIBIT "1" TO MEMORANDUM OF PURCHASE AGREEMENT
LEGAL DESCRIPTION OF REAL PROPERTY
[title to provide]
EXHIBIT "2" TO MEMORANDUM OF PURCHASE AGREEMENT
FULLY EXECUTED COPY OF PURCHASE AGREEMENT
[SEE FOLLOWING PAGES]