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EXHIBIT 10.4
OPTION AGREEMENT AND
ESCROW INSTRUCTIONS
BETWEEN
XXXXXXX XXXX HOMES, INC.,
a California corporation
AND
LATHROP INVESTMENT, L.P.,
a California limited partnership
October 24, 2000
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OPTION AGREEMENT
AND
ESCROW INSTRUCTIONS
This Option Agreement and Escrow Instructions ("Agreement") is made and
entered into as of the 24th day of October, 2000, between LATHROP INVESTMENT,
L.P., a California limited partnership ("Seller"), and XXXXXXX XXXX HOMES, INC.,
a California corporation ("Buyer"). The parties agree as follows:
1. Definitions. As used in this Agreement, the terms set forth below
shall have the following meanings:
"Additional Purchase Price" means the portion of the purchase
price for a Phase specified in subsection 4.4 [entitled "Additional Purchase
Price and Payment"].
"Adjusted Gross Proceeds" means, with respect to the sale,
transfer, or disposition of any Residential Lot, an amount equal to (a) the
Gross Proceeds generated by such sale, transfer or other disposition (including,
without limitation, any amounts generated as a result of any Extras), minus (b)
the actual costs incurred for any sales concessions and other sales incentives
in connection with such sale, transfer or other disposition.
"Authorities" means the various governmental and
quasi-governmental bodies and agencies having jurisdiction over the Property,
including, without limitation, the County, courts, special taxing districts,
administrative tribunals and public and private utilities.
"Base Purchase Price" means the portion of the purchase price for
a Phase as determined pursuant to subsection 4.3(a) [entitled "Base Purchase
Price"].
"Buyer's Minimum Profit" means, with respect to each Unit, an
amount equal to six percent (6%) of Buyer's Adjusted Gross Proceeds from the
sale of Residential Lots in such Unit.
"Buyer's Title Policy" means the policy of title insurance
described in subsection 4.7 [entitled "Title Insurance"].
"County" means the County of San Xxxxxxx, California.
"Default" means each of the events so designated in Section 11
[entitled "Events of Default"].
"Design Center Fees" means all fees paid to Buyer by the design
center for the Project in connection with options and/or extras sold by such
design center to homebuyers in the Project.
"Entitlements" means all permits, authorizations, consents,
orders, certificates, licenses, general, specific and other plans, subdivision
maps, environmental impact report certifications, approvals, registrations,
qualifications and other entitlements
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granted, issued or otherwise enacted by any of the Authorities pertaining or
relating to the Property and all statutory and other rights, credits and
entitlements benefiting the Property.
"Extras" means, collectively, all options and extras sold to
homebuyers by Buyer. "Extras" does not include options or extras sold to
homebuyers by the third party operated design center for the Project or by any
other third party.
"Escrow Holder" means Fidelity National Title Company or, in the
event such corporation ceases to exist or fails or refuses to act as escrow
holder for the transactions contemplated by this Agreement, any other escrow
holder selected by Seller which is not affiliated with either party.
"Final Map" means a final subdivision map covering a Phase and
recorded in the Official Records of the County.
"GAAP" means those generally accepted accounting principles and
practices which are recognized as such by the American Institute of Certified
Public Accountants acting through its Accounting Principles Board or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial conditions, and the results
of operations and cash flows, except that any accounting principle or practice
required to be changed by the Accounting Principles Board or Financial
Accounting Standards Board (or other appropriate board or committee of such
boards) in order to continue as a generally accepted accounting principle or
practice may so be changed. In the event of a change in GAAP, this Agreement, to
the extent GAAP applies, shall continue to be construed in accordance with GAAP
as in existence on the date hereof; provided, however, Buyer and Seller will
thereafter negotiate in good faith to revise any affected covenants to make such
covenants consistent with GAAP as then in effect, and, after any such revision,
this Agreement will be construed in accordance with GAAP as then in effect.
"General Provisions" of Escrow Holder shall mean any general or
standard escrow instructions supplemental to this Agreement which are prepared
by Escrow Holder and approved by both Seller and Buyer. In the event of any
conflict between the terms of any such General Provisions and the terms hereof,
the terms hereof shall control.
"Grant Deed" shall mean a grant deed in the form of Exhibit C
hereto.
"Gross Proceeds" means, with respect to any Residential Lot, the
sum of all amounts directly or indirectly paid or payable to Buyer by or on
behalf of the first owner of such Residential Lot sold by Buyer, as
consideration for the sale, including without limitation all amounts payable for
Extras. Gross Proceeds does not include Design Center Fees.
"Hazardous Material" means (a) any "hazardous substance" as
deemed in Section 101(14) of the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended from time to time [42 U.S.C.
Sections 9601 et seq.]; (b) petroleum and petroleum products (including, without
limitation, crude oil, natural gas, natural gas liquids, liquefied natural gas
and synthetic gas); (c) polychlorinated biphenyls (PCBs); (d) asbestos; (e) urea
formaldehyde; (f) radon gas; and (g) any additional substances, materials or
waste
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which are classified or considered to be hazardous or toxic under the Laws of
California or any other applicable Laws.
"Hazardous Material Law" means all Laws, orders, licenses and
permits relating to Hazardous Material.
"Improvements" means the improvements to the Property, or
portions thereof, completed by Buyer as contemplated in subsection 8.2 below.
"Laws" means all federal, state and local laws, rules,
regulations, ordinances and codes. The term "Laws" includes Hazardous Material
Laws.
"Net Profits" means, with respect to any Unit, net profits
computed under GAAP with respect to Adjusted Gross Proceeds from the sale of all
Residential Lots within such Unit, with the following adjustments:
(i) Costs deducted from Adjusted Gross Proceeds in
determining Net Profits for a Unit shall include a warranty reserve expense
equal to the following:
(A) If the Adjusted Gross Proceeds for a Residential
Lot exceed Two Hundred Fifty Thousand Dollars ($250,000), then the warranty
reserve expense will be equal to three-quarters of one percent (0.75%) of
Adjusted Gross Proceeds from such Residential Lot; and
(B) If the Adjusted Gross Proceeds for a Residential
Lot do not exceed Two Hundred Fifty Thousand Dollars ($250,000), then the
warranty reserve expense will be equal to one percent (1.00%) of Adjusted Gross
Proceeds from such Residential Lot.
The warranty reserve expense under this part (i) shall be in lieu of any other
cost deduction from Adjusted Gross Proceeds for warranty costs for such Unit.
(ii) Costs deducted from Adjusted Gross Proceeds in
determining Net Profits for a Unit shall include a general and administrative
expense deduction equal to three percent (3%) of Adjusted Gross Proceeds from
such Unit, which shall be in lieu of any other cost deduction from Adjusted
Gross Proceeds for general or administrative expenses for such Unit;
(iii) The actual costs of all Extras in such Unit (but
excluding the costs for any sales concessions and other sales incentives which
have already been deducted in calculating the Adjusted Gross Proceeds) shall be
deducted from Adjusted Gross Proceeds for such Unit in determining Net Profits
for such Unit;
(iv) Costs deducted from Adjusted Gross Proceeds in
determining Net Profits for a Unit shall include a financing (interest) expense
equal to the Prime Rate plus 1% on all costs (other than the costs referenced in
this subparagraph (iv)) deducted from Adjusted Gross Proceeds in determining Net
Profits for such Unit, which shall be in lieu of any other cost deduction for
financing costs for such Unit;
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(v) Costs consisting of direct selling expenses paid to
outside brokers representing Buyer, as a homeseller, shall be limited to one and
one-half percent of the Adjusted Gross Proceeds for such Unit. The parties
acknowledge that such direct selling expenses do not include, and the foregoing
limitation does not apply to, brokerage commissions payable to outside brokers
representing homebuyers, if any;
(vi) Closing costs for the Unit shall not exceed the
amount of closing costs that are customarily paid by sellers of similar new
residential units in San Xxxxxxx County;
(vii) To the extent that any amounts are paid to
affiliates of Buyer for services or materials rendered in connection with such
Unit, such costs shall not exceed the lesser of (A) the amounts actually
incurred by Buyer, or (B) the costs for such services and/or materials that is
customarily charged in an "arms-length" transaction in San Xxxxxxx County; and
(viii) Net Profits for a Unit shall include all Design
Center Fees paid to Buyer for such Unit.
"Options" means the options to purchase Phases granted to Buyer
in subsection 3.1 [entitled "Grant of Options"].
"Options Price" shall have the meaning set forth in subsection
3.2 [entitled "Payment of Options Price"].
"Permitted Exceptions" means real property taxes and assessments,
a lien not yet delinquent, and all items and exceptions approved by Buyer under
subsection 3.3(b)(vi).
"Person" means any entity, whether an individual, trustee,
corporation, partnership, limited liability company, joint stock company, trust,
unincorporated organization, bank, business association or firm or otherwise.
"Phase" means each group of Residential Lots designated as a
Phase pursuant to subsection 4.1(b).
"Prime Rate" means a floating rate per annum (calculated on the
basis of a 360 day year, actual days elapsed) equal to the "Prime Rate" quoted
by The Wall Street Journal from time to time, or at Seller's election, the
"Prime Rate" announced from time to tame by any money center bank selected by
Seller from time to time.
"Project" means the 579 unit for sale residential project
contemplated by Buyer on the Property.
"Property" means the following described lands, improvements,
personalty and assets (collectively referred to as the "Property"):
(i) "Land." The land located in Lathrop, California, and
described more fully on Exhibit A attached;
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(ii) "Existing Improvements." All structures and
improvements now situated on the Land;
(iii) "Personalty." All equipment, tools, supplies,
materials and personal property (whether or not stored on the Land), used in
connection with the Land or the Existing Improvements, and now owned or acquired
before closing by Seller; and
(iv) "Intangible Assets." All intangible assets used in
connection with the Land, the Existing Improvements, the Personalty or the
business conducted on the Land, and now owned or acquired before closing by
Seller, including, without limitation:
(A) All project contracts, development agreements,
development rights, utility agreements, warranties, guarantees, and bonds
(including construction, performance and payment bonds) and all deposits held by
any party with respect to any portion of the Property;
(B) All site plans, surveys, governmental
entitlements, soil and substrata studies, environmental studies and reports,
toxic waste data, architectural renderings, plans and specifications,
engineering plans and studies, floor plans, landscape plans and other plans,
diagrams or studies of any kind;
(C) All market studies and like material of any kind;
(D) All rights which Seller may have in any reciprocal
easement agreements, mutual egress and ingress agreements, mutual covenants,
conditions and restrictions, and any like rights or agreements in respect of the
Property; and
(E) All other rights, privileges, entitlements and
appurtenances owned by Seller which in any way relate to the ownership,
management or operation of the Property.
"Purchase Escrow" means an escrow established pursuant to the
terms of subsection 4.7(a) [entitled "Opening of Purchase Escrows and Escrow
Instructions"].
"Residential Lot" means each of the numbered and lettered lots
designated for residential use, as shown on any recorded Final Map covering all
or any part of the Property, together with all residential structures and
related improvements.
"Title Company" means Chicago Title Company or, in the event such
corporation ceases to exist or fails or refuses to timely issue Buyer's Title
Policy on terms and at a price acceptable to both Seller and Buyer, any other
title company selected by Seller and Buyer which is not affiliated with either
party.
"Unit" shall mean each of the seven tentative map units described
on Exhibit D hereto.
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2. Recitals.
2.1. Ownership of Property. Seller is the owner of the Property.
2.2. Acquisition of Options. Buyer desires to acquire the Options
to purchase the Property, in Phases, from Seller for the purpose of building and
marketing residential dwellings on Residential Lots within the Phases.
3. Options.
3.1. Grant of Options/Term. In consideration of the payment to
Seller of the Options Price as set forth in subsection 3.2 [entitled "Payment of
Options Price"], and for other good and valuable consideration, the receipt and
sufficiency of which are acknowledged by Seller, Seller grants to Buyer the
exclusive, irrevocable and separate right and option to purchase the Property,
in Phases, at the price and upon and subject to the terms set forth in this
Agreement. Subject to the earlier termination or expiration of this Agreement or
the Options as set forth elsewhere in this Agreement, the term of the Options
shall commence on the date the Memorandum of Options is recorded in the Official
Records of the County and shall finally expire on the last date for the exercise
of any Option set forth on Exhibit E hereto.
3.2. Payment of Options Price. Concurrently with the execution of
this Agreement, Buyer shall deposit in cash into Escrow One Million Dollars
($1,000,000). The deposit shall be invested by Escrow as directed by Buyer (the
deposit, and all interest earned thereon, are collectively referred to herein as
the "Options Price"). The Options Price shall be released to Seller at the time
provided in subsection 3.3(c) below. Buyer shall receive a credit for the
Options Price against the Base Purchase Price of certain Phases of the Property
as specified on Exhibit G hereto. Following the end of the feasibility review
specified in subsection 3.3 below, except in the event of Seller's breach
hereunder and except as provided in subsection 4.7 hereof regarding failure of
conditions to close, no part of the Options Price shall be refundable to Buyer
for any reason. Without limiting the foregoing, if Buyer does not exercise its
Option to acquire a Phase of the Property with respect to which Buyer would have
received a credit for all or a portion of the Options Price pursuant to Exhibit
G hereof, no part of such unused credit amount shall be refundable to Buyer.
3.3. Information and Approval of Buyer.
(a) Within three (3) days after the date of this
Agreement, Seller shall deliver to Buyer copies of: (i) any documents in
Seller's possession which relate to or concern the physical condition or the
development of the Land, and (ii) any documents in Seller's possession which
relate to or concern the Intangible Assets (collectively, the "Seller Work
Product"). Buyer hereby acknowledges its receipt of a preliminary title report
for the Property issued by the Title Company.
(b) Buyer's obligations under this Agreement are subject
to the approval or confirmation by Buyer of each of the following items by no
later than October 31, 2000:
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(i) Buyer shall in writing approve or disapprove the
availability, on conditions acceptable to Buyer, of all financing necessary for
Buyer's purchase and intended development of the Property;
(ii) Buyer shall in writing approve or disapprove:
(A) zoning, subdivision maps, and all other
development entitlements, restrictions, and conditions;
(B) engineering, soils, geological, biological,
and hazardous substances investigations and reports, to be procured by Buyer at
its sole cost and expense;
(C) the availability of public utilities; and
(D) the amount and availability of sufficient
credits and other fee credits to service the single family residential units
proposed for development on the Property;
(iii) Buyer shall in writing approve or disapprove the
terms and conditions of the Seller Work Product, including, without limitation,
all contracts, leases, plans, studies, and reports, which are applicable to the
Property;
(iv) Buyer shall in writing approve or disapprove the
necessity for and availability of any governmental or third party approvals
required for Buyer's intended development of the Property;
(v) Buyer shall in writing approve or disapprove the
terms and conditions of all Xxxxx-Xxxx, Improvement District, and other bonded
assessments which encumber the Property; and
(vi) Buyer shall in writing approve or disapprove the
preliminary title report issued by Title Company, and at Buyer's option and
expense, an ALTA survey ("Survey"), for the Land. If Title Company issues any
supplements to the preliminary title report, then Buyer shall approve or
disapprove such supplements within ten (10) days after receipt.
(c) Buyer's failure to either disapprove or approve in
writing any of the items described at subparagraphs (b)(i)-(v) within the time
period allotted to such item shall be deemed to constitute Buyer's disapproval
of same. All of the above approvals may be granted or withheld in the sole
discretion of Buyer. If Buyer disapproves any of the items described at
subparagraphs (b)(i)-(v), then such disapproval or failure shall, without any
further notice, constitute a termination of this Agreement by Buyer. If Buyer
disapproves any exception to title disclosed by the preliminary title report or
the Survey, as described at subparagraph (b)(vi), then, within five (5) days
following the date of Buyer's disapproval, Buyer and Seller shall confer and
attempt to formulate a method or manner in which any disapproved title
exceptions may be removed or cured. If, for any reason, in the sole discretion
of Buyer, Buyer rejects any such proposed cure, then, at the end of such five
(5) day period, Buyer's disapproval shall constitute a termination of this
Agreement by Buyer.
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If Buyer so terminates this Agreement, then, on such date, this Agreement and
all of the obligations, duties, rights, and entitlements of Buyer and Seller
under this Agreement shall terminate, and the Options Price shall be disbursed
to Buyer (less Buyer's share of any escrow cancellation costs). If Buyer does
not so terminate this Agreement, then, on such date, Buyer's right of
termination under this subsection shall expire, and Buyer shall be deemed to
have approved all of the above items, and the Options Payment shall be released
to Seller.
(d) From the date of this Agreement and until the date
Escrow closes on the last Phase of the Property or the date of termination of
this Agreement, Seller shall send Buyer a copy of any correspondence concerning
the Property which Seller receives from any governmental agency or which Seller
sends to any governmental agency.
(e) In addition to the above conditions, this Agreement
shall terminate, on written notice from Buyer to Seller, if prior to the
expiration of the feasibility review period described in subsection 3.3(b)
above, (i) a majority of the disinterested members of the Board of Directors of
Xxxxxxx Xxxx Homes, Inc., a Delaware corporation, and of Buyer, fail to approve
this Agreement; or (ii) Buyer is unable to procure a written determination of
value or appraisal by a real estate appraisal firm, which is of regional
standing in the region in which the Property is located and is MAI certified, of
the Property at least equal to the Purchase Price for all Phases. In the event
Buyer terminates this Agreement pursuant to this subsection (e), the Options
Payment shall be returned to Buyer (less Buyer's share of any escrow
cancellation costs) and all of the obligations, duties, rights, and entitlements
of Buyer and Seller under this Agreement shall terminate.
3.4. Exercise of Options and Conditions.
(a) Exercise of Options. Once Buyer's feasibility review
under subsection 3.3 above is complete, and provided that this Agreement has not
terminated as provided therein, Buyer may exercise an Option to purchase a Phase
by delivering written notice of such exercise (the "Notice of Exercise") to
Seller and Escrow Holder on or before the date for the exercise of the Option
for such Phase specified on Exhibit E hereto. Buyer's Notice of Exercise for
each Phase shall set forth the date on which Buyer shall close Escrow on such
Phase, which shall in any event (i) be on a day other than a Saturday, Sunday or
legal holiday, and (ii) be no later than five (5) days after the date of the
Notice of Exercise.
(b) Conditions to Exercise of Options. The right of Buyer
to exercise an Option for a Phase is subject to the satisfaction on the date of
exercise ("Date of Exercise") (unless otherwise provided) of the following
conditions:
(i) Buyer shall not be in Default under the terms of
this Agreement; and
(ii) Buyer's representations and warranties set forth
in this Agreement shall be true and correct in all material respects as of the
Date of Exercise.
The foregoing conditions are solely for the benefit of
Seller and may be waived only by Seller. Seller shall at all times have the
right to waive any condition, which waiver or waivers must be in writing to be
effective.
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3.5. Memorandum of Options. Upon execution of this Agreement, (a)
the parties shall promptly execute and cause to be recorded in the Official
Records of the County, a Memorandum of Options to Purchase ("Memorandum of
Options") in the form of and upon the terms set forth in Exhibit B, (b) the
parties shall deliver a fully executed copy of this Agreement to Escrow Holder
and (c) Buyer shall execute, acknowledge and deposit with Escrow Holder a
quitclaim deed for the Property in recordable form and otherwise in form and
substance satisfactory to Seller. Escrow Holder is authorized and directed to
open a special holding escrow for the deposit of the quitclaim deed. The costs
of the holding escrow shall be borne one-half by Seller and one-half by Buyer.
Escrow Holder is authorized and directed to deliver to Seller the quitclaim deed
for the Property (other than any Phase whose Purchase Escrow is already open or
has previously closed) in the event this Agreement is terminated by Buyer or
Seller pursuant to a right of termination under this Agreement.
4. Terms of Purchase and Escrow.
4.1. Purchase and Sale of Phases.
(a) Purchase and Sale. Upon the exercise of an Option for
a Phase by Buyer in accordance with this Agreement, Seller agrees to sell to
Buyer, and Buyer agrees to purchase from Seller, the Phase upon the terms and
subject to the conditions set forth in this Agreement.
(b) Determination of Phases. Exhibit E to this Agreement
identifies the number of Residential Lots, broken down by Unit and calendar
month, which will comprise each Phase. All Residential Lots specified in Exhibit
E to be taken down in the same calendar month, even if in different Units, shall
be part of the same Phase. For any Phases for which Seller and Buyer have
already approved the specific Residential Lots to be included in such Phases,
Exhibit E specifies those Phases and the Residential Lots included therein. For
any Phases for which Seller and Buyer have not already approved the specific
Residential Lots to be included in such Phases, Seller shall have a reasonable
right of approval over Buyer's proposed Phases. No less than forty-five (45)
days prior to the outside delivery date of the Notice of Exercise for any Option
for a Phase for which Seller and Buyer have not already approved the specific
Residential Lots to be included therein, Buyer shall deliver to Seller for its
review and approval a proposed Phasing schedule for the remainder of the Unit in
which such Phase is located. In all events (i) successive Phases must be
contiguous so that there are no intervening Residential Lots between any two
Phases which have Notice of Exercise dates which are closest in time, and (ii)
all Residential Lots within a Phase must be contiguous or separated by only a
street or streets. Seller's approval of Buyer's proposed Phasing Schedule shall
not be unreasonably withheld or delayed.
4.2. Purchase Price. The purchase price for each Phase shall
consist of the Base Purchase Price for the Phase plus the Additional Purchase
Price for the Unit of which such Phase is a part.
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4.3. Base Purchase Price.
(a) Base Purchase Price. The Base Purchase Price for each
Phase shall equal the sum of (i) the Base Purchase Price for all Residential
Lots in that Phase as shown on Exhibit E hereto (such amount herein referred to
as the "Base Amount"), plus (ii) the "Increase Amount" for such Phase. The
Increase Amount for any particular Phase shall equal the product of (i) the Base
Amount for such Phase, multiplied by (ii) a percentage equal to the Prime Rate
plus 1%, compounded annually, from the date of this Agreement to the date of the
Closing of such Phase.
(b) Payment of Base Purchase Price. The Base Purchase
Price for each Phase shall be paid by Buyer on or before the closing date for
the Purchase Escrow, or sooner if so required under the General Provisions of
the Escrow Agent, in immediately available funds. For Phases of the Property for
which some or all of the Options Price is to be credited against the Base
Purchase Price of such Phase as provided on Exhibit G hereto, such credit shall
be made on the Close of Escrow for such Phase.
4.4. Additional Purchase Price and Payment.
(a) General. Within ninety (90) days following the close
of the last Residential Lot to a member of the homebuying public within the last
Phase purchased by Buyer within any Unit, Buyer shall pay an additional purchase
price ("Additional Purchase Price") to Seller in an amount equal to one-half
(1/2) of the amount by which Buyer's Net Profits from such Unit exceed Buyer's
Minimum Profit with respect to such Unit. Such payment shall be accompanied by a
report prepared by Buyer in such detail as Seller may reasonably request,
specifying the Gross Proceeds, Adjusted Gross Proceeds, Net Profits and Buyer's
Minimum Profit with respect to such Unit.
(b) No Partnership or Joint Venture Created. Neither the
execution and delivery of this Agreement by Seller and Buyer, the obligations
imposed upon Buyer under this Agreement to pay to Seller the amounts described
in this Agreement, nor the payment by Buyer to Seller of the amounts described
in this Agreement, shall (a) create a partnership, joint venture or other
business arrangement between Seller and Buyer, (b) create any lender/borrower or
debtor/creditor relationship between Seller and Buyer or (c) impose any
fiduciary or other duties or obligations upon Seller or Buyer.
4.5. Condition of Title and Grant Deed. At the close of each
Purchase Escrow, Seller shall convey fee simple title to the Phase which is the
subject of the Purchase Escrow to Buyer by a Grant Deed, subject to (a) real
property taxes and assessments not delinquent as of the date of this Agreement,
(b) the Permitted Exceptions and any other matters of title approved in writing
by Buyer, (c) matters affecting the condition of title to the Phase suffered or
created by or with the written consent of Buyer, and (d) subdivision agreements,
subdivision improvement agreements, grants, easements, rights of way and other
interests in, or restrictions on, the Phase, created by Seller, and approved by
Buyer, pursuant to, or in connection with the satisfaction of, the terms and
conditions of the Final Map or other Entitlements affecting the Phase.
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4.6. Title Insurance. Seller shall use reasonable efforts to
cause the Title Company to issue or commit to issue to Buyer at the close of
each Purchase Escrow a policy of title insurance as described in subsection 4.7.
4.7. Escrow and Conditions.
(a) Opening of Purchase Escrows and Escrow Instructions.
Concurrently with the delivery to Escrow Holder by Buyer of a Notice of
Exercise, Escrow Holder shall open an escrow for the purpose of consummating the
purchase by Buyer of the Phase which is the subject of such Notice of Exercise
and consummating any other transactions to be consummated through such Purchase
Escrow pursuant to the terms of this Agreement. This Agreement shall constitute
instructions to the Escrow Holder with respect to each Purchase Escrow and any
such transactions. The Escrow Holder immediately shall notify Buyer and Seller
of the date of opening of each Purchase Escrow. Buyer and Seller shall execute
such additional General Provisions as reasonably may be required to consummate
the transactions contemplated by this Agreement, as Buyer and Seller may
approve, which approval shall not be unreasonably withheld. To the extent the
General Provisions of Escrow Holder conflict with any provisions of this
Agreement, the provisions of this Agreement shall control.
(b) Close of Purchase Escrows. For purposes of this
Agreement, the close of a Purchase Escrow shall he deemed to be the date that
the Grant Deed for the Phase which is the subject of the Purchase Escrow is
recorded in the Official Records of the County. The Close of a Purchase Escrow
shall take place on the date therefore (the "Closing Date") set forth in Buyer's
Notice of Exercise.
(c) Buyer's Conditions to Close of Purchase Escrows. The
close of each Purchase Escrow, and Buyer's obligations to close each Purchase
Escrow, are subject to the satisfaction or waiver, not later than the Closing
Date (unless otherwise provided), of the following conditions:
(i) Seller's Representations. Seller's representations
and warranties set forth in Section 6 [entitled "Seller's Representations and
Warranties"] shall be true and correct in all material respects as of the close
of the Purchase Escrow.
(ii) Seller's Deliveries and Default. Seller shall
have delivered to Buyer and Escrow Holder all funds and documents required to be
delivered by Seller to Buyer and Escrow Holder, respectively, pursuant to the
terms of this Agreement, Seller shall not be in Default under the terms of this
Agreement and no event shall have occurred which would constitute a Default by
Seller under the terms of this Agreement but for the requirement that notice be
given or time elapse or both.
(iii) Buyer's Title Insurance. The Title Company has
committed to issue to Buyer its standard form ALTA (10-17-92) owner's extended
coverage policy of title insurance ("Buyer's Title Policy"), with liability
equal to the Purchase Price, with such endorsements as Buyer may reasonably
request, showing title vested in Buyer SUBJECT ONLY TO:
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(A) The printed exceptions contained in Title
Company's standard policy of title insurance;
(B) General and special taxes and assessments not
then delinquent, and supplemental taxes, if any, assessed pursuant to Chapter
3.5, commencing with Section 75 of the California Revenue and Taxation Code,
which are a lien not yet due or payable (all delinquent taxes and assessments
shall be paid by Seller on or before the Closing);
(C) If Buyer does not elect to obtain the Survey,
the Title Company's standard "survey" exceptions; and
(D) All other items specified in Section 4.5
above.
(iv) Final Map. The Final Map for the Phase shall have
been duly recorded in the Official Records of the County.
The foregoing conditions are solely for the
benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have
the right to waive any condition, which waiver or waivers must be in writing to
be effective. Neither the waiver by Buyer of any condition nor the satisfaction
of any condition shall relieve Seller of any liability or obligation as respects
any representation, warranty or covenant of Seller under this Agreement unless
Buyer shall so agree in writing. Any acknowledgments given by Buyer of the
satisfaction or failure of any conditions set forth in this subsection must be
in writing to be effective.
(d) Seller's Conditions to Close of Purchase Escrows. The
close of each Purchase Escrow, and Seller's obligations to close each Purchase
Escrow, are subject to the satisfaction or waiver, not later than the Closing
Date (unless otherwise provided), of the following conditions:
(i) Buyer's Representations. Buyer's representations
and warranties set forth in Section 5 [entitled "Buyer's Representations and
Warranties"] shall be true and correct in all material respects as of the close
of the Purchase Escrow.
(ii) Buyer's Deliveries and Default. Buyer shall have
delivered to Seller and Escrow Holder all funds and documents required to be
delivered by Buyer to Seller and Escrow Holder, respectively, pursuant to the
terms of this Agreement, Buyer shall not be in Default under the terms of this
Agreement and no event shall have occurred which would constitute a Default by
Buyer under the terms of this Agreement but for the requirement that notice be
given or time elapse or both.
(iii) Final Map. The Final Map for the Phase shall
have been duly recorded in the Official Records of the County.
The foregoing conditions are solely for the
benefit of Seller and may be waived only by Seller. Seller shall at all times
have the right to waive any condition, which waiver or waivers must be in
writing to be effective. Neither the waiver by Seller of any condition nor the
satisfaction of any condition shall relieve Buyer of any
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liability or obligation as respects any representation, warranty or covenant of
Buyer under this Agreement unless Seller shall so agree in writing. Any
acknowledgments given by Seller of the satisfaction or failure of any conditions
set forth in this subsection must be in writing to be effective.
(e) Cooperation Regarding Conditions. Neither Seller nor
Buyer shall act or fail to act for the purpose of causing any condition to fail.
Each party shall cooperate with the other party, at the written request of the
other party, in the other party's efforts with respect to the satisfaction of
the conditions.
(f) Failure of Conditions to Close of Escrow.
(i) If any of Buyer's Conditions to Close of Purchase
Escrows or Seller's Conditions to Close of Purchase Escrows are not satisfied
for a reason other than the Default of Buyer or Seller under this Agreement, and
not waived, the Purchase Escrow shall terminate. Escrow Holder is instructed
promptly to return to Seller and Buyer all funds and documents deposited by
them, respectively, into the Purchase Escrow which are held by Escrow Holder on
the date of termination (unless the party entitled to such funds is required to
pay cancellation and other charges under the following subsection (g), in which
case the Escrow Holder shall deduct the amount of the charges from the funds to
which such party is entitled), and to record Buyer's quitclaim deed as to such
Phase. Any portion of the Options Price applicable to any unclosed Phases shall
also be returned to Buyer.
(ii) If Escrow fails to close because of a Default by
Seller, or because of a Default by Buyer, the terms of Section 11 [entitled
"Default"] shall be applicable and shall control. Buyer acknowledges its
obligation under Section 8.1 of this Agreement to use commercially reasonable
efforts to obtain a Final Map for each Unit, and that if the condition to its
obligation to close set forth in subsection 4.7(c)(iv) above fails to occur
because of Buyer's Default in performing such obligation, then the terms of
Section 11 below shall be applicable and shall control.
(g) Cancellation Fees and Expenses. If the Purchase Escrow
terminates because of the Default of Seller, the payment of the cancellation and
other charges required to be paid by and to Escrow Holder and the Title Company
shall be paid by Seller. If the Purchase Escrow terminates because of the
Default of Buyer, the payment of the cancellation and other charges required to
be paid by and to Escrow Holder and the Title Company shall be paid by Buyer. If
Escrow terminates because any of the other conditions are not satisfied, for a
reason other than the Default of Buyer or Seller, Buyer and Seller shall each be
responsible for the payment of one-half of the cancellation and other charges
required to be paid by and to the Escrow Holder and the Title Company.
4.8. Closing Costs. If a Purchase Escrow closes, (a) one-half of
the cost of a CLTA owner's policy of title insurance for the Phase which is the
subject of the Purchase Escrow shall be paid by Seller; (b) any amounts in
excess of one-half of the cost of a CLTA owner's policy of title insurance for
the Phase which is the subject of the Purchase Escrow shall be paid by Buyer;
(c) the documentary transfer taxes shall be paid by Seller; (d) the escrow fee
of Escrow Holder shall be paid one half by Buyer and one half by Seller; and
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(e) all other costs shall be allocated between Buyer and
Seller in accordance with customary practice in the County.
4.9. Deliveries to Escrow Holder.
(a) Deliveries by Seller. Prior to the close of each
Purchase Escrow (unless otherwise provided), Seller shall deposit the following
documents and funds into the Purchase Escrow:
(i) Grant Deed. The Grant Deed for the Phase which is
the subject of the Purchase Escrow, duly executed by Seller, notarized and in
recordable form;
(ii) Seller's Proof of Authority. Such proof of
Seller's authority to enter into this Agreement and to perform the transactions
contemplated by this Agreement as reasonably may be required by the Title
Company and/or Buyer;
(iii) FIRPTA. A certification as to the nonforeign
status of Seller, completed and executed by Seller; and,
(iv) Form 597-W. A Withholding Exemption Certificate
on California Franchise Tax Board Form 597-W, duly executed by Seller.
(b) Deliveries by Buyer. Prior to the close of each
Purchase Escrow (unless otherwise provided), Buyer shall deposit the following
documents and funds into the Purchase Escrow:
(i) Buyer's Proof of Authority. Such proof of Buyer's
authority to enter into this Agreement and to perform the transactions
contemplated by this Agreement as reasonably may be required by the Title
Company and/or Seller; and
(ii) Purchase Price and Other Funds. An amount equal
to Base Purchase Price for the Phase which is the subject of the Purchase Escrow
in immediately available funds, together with any other funds necessary to pay
Buyer's share of prorations, closing and escrow costs.
4.10. Disbursements and Other Actions by Escrow Holder. Upon the
close of each Purchase Escrow, Escrow Holder promptly shall undertake all of the
following:
(a) Disburse all funds deposited with Escrow Holder by
Buyer in payment of the Base Purchase Price of the Phase which is the subject of
the Purchase Escrow as follows:
(i) Deduct all items chargeable to the account of
Seller, and pay the amount of such items to the Persons entitled to the items;
and
(ii) Disburse the remaining balance of the funds to
Seller, or in accordance with Seller's written instructions, promptly upon the
close of the Purchase Escrow;
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(b) Xxxx Buyer for or cause Buyer to pay all items
chargeable to Buyer;
(c) Cause the Grant Deed (with documentary transfer tax
information to be affixed after recording) to be recorded in the Official
Records of the County;
(d) Prepare and deliver to each of Buyer and Seller two
(2) conformed copies of the Grant Deed for the Phase which is the subject of the
Purchase Escrow;
(e) Cause the Title Company to issue Buyer's Title Policy
for the Phase which is the subject of the Purchase Escrow to Buyer;
(f) Deliver to Buyer the proof of authority deposited into
Escrow by Seller;
(g) Deliver to Buyer the FIRPTA Certification and
California Withholding Exemption Certificate deposited into Escrow by Seller;
and
(h) Deliver to Seller the proof of authority deposited
into Escrow by Buyer.
5. Buyer's Representations and Warranties. Buyer represents and
warrants to Seller as follows:
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of California. Buyer
has the right, power, legal capacity and authority to enter into and perform its
obligations under this Agreement. Those individuals executing this Agreement on
behalf of Buyer have the right, power, legal capacity and authority to enter
into this Agreement on behalf of Buyer and to execute all other documents and
perform all other acts as may be necessary to perform all of Buyer's obligations
under this Agreement;
(b) No approval or consent not previously obtained by any
Buyer is necessary in connection with the execution of this Agreement by Buyer
or the performance of Buyer's obligations under this Agreement;
(c) Neither this Agreement nor anything provided to be
done under this Agreement violates or shall violate any contract, document,
understanding, agreement or instrument to which Buyer is a party or by which it
may be bound;
(d) The Agreement constitutes the legally valid and
binding obligation of Buyer and is enforceable against Buyer in accordance with
its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws, or by equitable principals relating
to or limiting the rights of creditors generally;
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(e) The consummation of the transactions contemplated by
this Agreement do not violate any Law with which Buyer must comply;
(f) No broker, salesman or finder has been engaged by
Buyer in connection with the transactions contemplated by this Agreement; and
(g) Subject to subsection 3.3 above, Buyer has the
financial ability and currently available financial resources to perform its
obligations under this Agreement.
Each of the foregoing representations and warranties
shall be, and Buyer shall cause them to be, true in all material respects on and
as of the date of exercise of each Option and the date of close of each Purchase
Escrow as though made at those times.
Buyer shall indemnify, defend, and hold Seller
harmless from all damages, costs, losses, and expenses (including, but not
limited to, actual attorney's fees) arising from or attributable to any breach
by Buyer of any of its warranties or representations in this Agreement and such
obligations of Buyer shall survive the Closing of each Phase.
6. Seller's Representations and Warranties. Seller represents and
warrants to Buyer as follows:
(a) Seller has the right, power, legal capacity and
authority to enter into and perform its obligations under this Agreement. Those
individuals executing this Agreement on behalf of Seller have the right, power,
legal capacity and authority to enter into this Agreement on behalf of Seller
and to execute all other documents and perform all other acts as may be
necessary to perform all of Seller's obligations under this Agreement;
(b) No approval or consent from any Person holding any
interest in Seller and not previously obtained is necessary in connection with
the execution of this Agreement by Seller or the performance of Seller's
obligations under this Agreement;
(c) Neither this Agreement nor anything provided to be
done under this Agreement violates or shall violate any contract, document,
understanding, agreement or instrument to which Seller is a party or by which it
may be bound;
(d) The Agreement constitutes the legally valid and
binding obligation of Seller and is enforceable against Seller in accordance
with its terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws, or by equitable principals relating
to or limiting the rights of creditors generally;
(e) The consummation of the transactions contemplated by
this Agreement do not violate any Law with which Seller must comply;
(f) No broker, salesman or finder has been engaged by
Seller in connection with the transactions contemplated by this Agreement;
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(g) Except as otherwise disclosed to Buyer, to Seller's
best knowledge, Seller is not involved in or aware of any pending or threatened
litigation which may adversely affect the Property;
(h) To Seller's best knowledge, there are no actions or
proceedings pending or threatened against Seller before any administrative
agency which may adversely affect the Property;
(i) To Seller's best knowledge, there are no commitments
to or agreements with any governmental authority or agency (federal, state, or
local) affecting the Property which have not been disclosed by Seller to Buyer
in writing;
(j) There are no contracts or other obligations
outstanding for the sale, exchange, or transfer of the Property, or any portion
thereof, or the business operated thereon;
(k) Except as otherwise disclosed to Buyer, to Seller's
best knowledge (i) there are no Hazardous Materials present at, on, in, under or
about the Property (including, without limitation, the air, land, soil, surface
water, and ground water); (ii) there has not been any generation,
transportation, storage, treatment, or disposal of any Hazardous Materials at,
on, in, under or about the Property, or within one-half mile thereof, or any
migration of Hazardous Materials to or from the Property, now or in the past;
(iii) there is no pending or threatened litigation in which any person or entity
alleges, or threatens to allege, the presence, release, threat of release,
placement at, on, in, under or about, or migration from or to, the Property, or
the generation, transportation, storage, treatment, or disposal on the Property,
of any Hazardous Materials; (iv) Seller has not received any notice of any
governmental authority or any employee or agent thereof has determined or
alleged, or is investigating the possibility, that there is the presence,
release, threat of release, placement at, on, in, under or about, the Property,
or the generation, transportation, storage, treatment, or disposal on the
Property, of any hazardous substance; and (v) there are no communications or
agreements with any governmental authority or agency (federal, state, or local)
or any private person or entity (including, without limitation, any prior owner
of the Property or any present or former occupant of the Property) relating in
any way to the presence, release, threat of release, placement at, on, in, under
or about, or migration from or to, the Property, or the generation,
transportation, storage, treatment, or disposal at, on, in, under or about, the
Property, of any Hazardous Materials;
(l) Seller is a limited partnership, duly organized,
validly existing and in good standing under the laws of the State of California.
Lyon Realty, Inc., a California corporation, is the only general partner in
Seller, and Xxxxxxx Xxxx and The Xxxxxxx Xxxxxxx Lyon 1976 Trust are the only
limited partners in Seller; and
(m) Seller shall not cause any change in the physical
condition of the Property from that which existed on the date of this Agreement.
Each of the foregoing representations and warranties
shall be true in all material respects on and as of the date of exercise of each
Option and the date of the close of each Purchase Escrow as though made at those
times.
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Seller shall indemnify, defend, and hold Buyer
harmless from all damages, costs, losses, and expenses (including, but not
limited to, actual attorney's fees) arising from or attributable to any breach
by Seller of any of its warranties or representations in this Agreement and such
obligations of Seller shall survive the Closing of each Phase.
Reference to the "best knowledge" or "knowledge" or
words to that effect in connection with a representation or warranty of Seller
shall mean the current actual knowledge of General Xxxxxxx Xxxx and Xxxxxxx X.
Xxxx without any duty of inquiry or investigation.
7. Limitations. Except as set forth in Section 6 [entitled
"Seller's Representations and Warranties"], Buyer acknowledges and agrees that
upon the exercise of an Option for a Phase, it will purchase the Phase "as-is"
in its condition existing as of the date of close of the Purchase Escrow for the
Phase (including, without limitation, subject to all latent and patent defects
and the presence of any and all Hazardous Materials) and based on its own
inspection, investigation and evaluation. Buyer also acknowledges and agrees
that (a) except as set forth in Section 6 above, neither Seller nor any agent or
other representative of Seller has made any representation or warranty, express,
implied or statutory, concerning the Property or which induced Buyer to execute
this Agreement, and no such agent or representative is authorized to make any
such representation or warranty; (b) the exercise of an Option for a Phase shall
constitute Buyer's further acknowledgment and agreement that neither Seller nor
any agent or other representative of Seller has made any representation or
warranty, express, implied or statutory, concerning the Phase or which induced
Buyer to exercise the Option for the Phase, except as set forth in Section 6
[entitled "Seller's Representations and Warranties"], and no such agent or
representative is authorized to make any such representation or warranty; and
(c) except as set forth in Section 6 above, all such representations and
warranties are expressly disclaimed by Seller.
8. Additional Rights and Obligations.
8.1. Final Map; Bonds. Buyer shall at its cost take all
commercially reasonable actions necessary to record a Final Map for each Unit
before the last date for the delivery by Buyer to Seller of a Notice of Exercise
for the first Phase in such Unit. Seller shall execute, acknowledge and deliver
to the applicable Authorities for recordation such subdivision agreements,
subdivision improvement agreements and similar agreements as such Authorities
may require to evidence the obligation of the owner of the Property to satisfy
any conditions to the recordation of the Final Map which are not satisfied prior
to the recordation of the Final Map. Effective upon the Close of a Purchase
Escrow, Buyer shall assume and perform the obligations of the property owner
under such subdivision agreements, subdivision improvement agreements and
similar agreements as to the Phase purchased, and shall indemnify, defend and
hold Seller harmless therefrom. Buyer shall post all bonds required in
connection with the recordation of any Final Maps for portions of the Property
after the date hereof, and shall pay all premiums therefore at its sole cost.
Within sixty (60) days after the execution of this Agreement, Buyer also agrees
to substitute its own bonds for any bonds now posted by Seller in connection
with existing Final Maps on the Property. In the event of any termination of
Buyer's Option as to any portion of the Property, Seller shall within sixty (60)
days after such termination obtain a release of any bonds Buyer has posted with
respect to such portion of the Property so long as such bonds
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do not also pertain to other real property owned by Buyer. Buyer shall not
modify the size or number of the residential lots shown on the currently
approved tentative maps for the Property without the prior written consent of
Seller, which shall not be unreasonably withheld or delayed.
8.2. License to Enter and Construct Improvements. To facilitate
Buyer's development of the Property, Seller hereby grants Buyer a nonexclusive
license to enter upon the Property for the purpose of grading and constructing
such improvements thereto and completing such work thereon (such improvements
and work hereinafter referred to collectively as the "Improvements") as Buyer
elects to construct in connection with its planned development of the Property.
The terms of such license are further specified on Exhibit F hereto. Such
license shall terminate (i) with respect to any Phase of the Property, upon the
Close of Escrow for such Phase, or (ii) upon the termination of this Agreement.
Seller agrees to execute such documents and agreements and take such other and
further action, at no out-of-pocket cost to Seller, as are reasonably requested
by Buyer in connection with the Improvements.
8.3. Use and Compliance with Laws.
(a) Use. Each Phase purchased by Buyer shall be used only
for the development, construction and occupancy of detached single-family
residential dwellings, and for incidental accessory purposes. Buyer shall not
construct, place, maintain or permit to remain on any Residential Lot more than
one detached single-family residential dwelling, except such temporary
structures as may be necessary and permitted by Law during the course of
construction of the dwelling.
(b) Compliance with Laws. Buyer shall comply with all Laws
in connection with its use of the Property.
8.4. Maintenance; Completion of Residences.
(a) Maintenance of Property. Buyer shall maintain the
Property in a neat, attractive, sanitary and orderly condition and in compliance
with all applicable Laws. All weeds, rubbish, trash, garbage, debris and other
unsightly waste and materials shall be regularly removed from the Property and
shall not be permitted to accumulate upon the Property.
(b) Completion of Residences. Once Buyer has commenced the
construction of a residential structure on the Property, Buyer shall, subject to
force majeure, diligently pursue such construction to completion.
8.5. Periodic Reports. Buyer shall deliver the following reports
to Seller at the times set forth below:
(i) If requested by Seller, within five (5) business
days after the close of escrow for each sale by Buyer of a Residential Lot in a
Phase purchased by Buyer, a copy of the seller's escrow settlement statement and
the sales contract for the sale; and
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(ii) within twenty-five (25) days after the end of
each calendar quarter, a report of Adjusted Gross Proceeds and Net Profits
generated by Buyer during such quarter in such detail as Seller reasonably may
request with respect to Phases purchased by Buyer.
8.6. Books and Records. Buyer shall: (i) maintain full and
complete books of account and other records reflecting, on a Unit by Unit basis,
the Adjusted Gross Proceeds and Net Profits for all Units purchased by it in
accordance with GAAP; and (ii) permit Seller and its agents, from time to time
during normal business hours and at any other reasonable tunes, to inspect and
copy all such books and records.
Seller shall have the right, at any time and from time to
time, to cause an audit of Buyer's books and records with respect to the Phases
purchased by it (including the examination of such federal income tax returns of
Buyer or any affiliate of Buyer as Seller may deem necessary) to be made by a
certified public account or firm of certified public accountants of nationally
recognized standing selected by Seller to verify the accuracy of the statement
of Net Profits required by this Agreement. The cost of any such audit shall be
borne by Seller unless the audit reveals a deficiency of more than two percent
(2%) in the Additional Purchase Price which should have been paid by Buyer, in
which event, Buyer shall pay to Seller, on demand, the costs of such audit plus
the amount of the deficiency, together with two percent (2%) of the amount
underpaid as a late charge.
8.7. Real Estate Taxes and Bond Premiums. During the term of this
Agreement, Buyer shall, before delinquency, pay all real property taxes and
assessments imposed on the Property and attributable to such term. Further,
during the term of this Agreement, Buyer shall pay before delinquency all
premiums on improvement bonds or other like indemnities provided by Seller to
any Authority in connection with the Project. Seller shall give written notice
to Buyer of the amount and due dates of such items not less than thirty (30)
calendar days prior to any due date. If any item covers a period of time either
before the commencement of this Agreement or following its expiration or
termination, then, such item shall be prorated. In the event that Seller pays
any such item, then, Buyer shall reimburse Seller within thirty (30) days
following receipt of a written request for reimbursement together with such
substantiation as Buyer may reasonably request.
8.8. Approval of Plans. Before Buyer commences the construction
of any residences on the Property, Buyer shall submit the plans and
specifications for such residences to Seller for approval. Seller shall either
approve or disapprove such plans and specifications within ten (10) days of
receipt thereof. Seller's approval shall not be unreasonably withheld. If Seller
has not approved or disapproved such plans and specifications within such ten
(10) day period, Seller shall be deemed to have waived its right to approve or
disapprove such plans and specifications. The approval by Seller of any plans
and specifications shall not be deemed approval for architectural or engineering
design nor a representation or warranty as to the adequacy or sufficiency of
such plans and specifications or the construction contemplated thereby. By
approving any such plans and specifications, Seller assumes no liability or
responsibility therefor or for any defect in any structure constructed in
accordance with the items approved by Seller.
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8.9. No Homeowners' Association. Buyer hereby acknowledges that
it has no plans to form a homeowners' association for the Project. Seller's
prior written consent shall be required before Buyer forms a homeowners'
association for the Project. As a condition to granting any such consent, Seller
shall have the right to approve the form and substance of the governing
documents for such association, including any covenants, conditions and
restrictions and the respective rights granted or reserved to Buyer and Seller
thereunder.
9. Entry on Seller's Property.
(a) Purpose. In addition to the license referenced in
Section 8.2 above, during the term of this Agreement and subject to the terms of
this Section, Buyer and its guests, invitees, employees, agents and contractors
shall have the non-exclusive right to enter upon the Property solely for the
following purposes:
(i) making such feasibility and other studies,
inspections, appraisals, audits, tests, evaluations, investigations, surveys and
reports as Buyer may elect to make or obtain in connection with its exercise of
the Options and the purchase of the Phases; and
(ii) the performance by Buyer of its obligations under
this Agreement.
(b) Repair of Damages. Buyer promptly shall repair any
damage resulting from its entry on or use of the Property.
(c) Liens and Claims. Buyer shall not suffer or permit to
be enforced against the Property any mechanics', laborers', materialmen's,
contractors', subcontractors' or other liens or claims arising out of any entry
on or use of the Property, or the construction of the Improvements, by Buyer or
its guests, invitees, employees, agents or contractors. (d) Insurance. Buyer
shall also, at all times during the term of this Agreement, maintain all
insurance described in Paragraph 6 of Exhibit F hereto.
10. Release and Indemnification.
(a) To the maximum extent permitted by law, Seller,
Seller's partners and the officers, directors, shareholders, employees and
agents of Seller and/or Seller's partners shall not be liable for any loss,
damage, injury or claim of any kind or character to any person or property
arising from, caused by or relating to the development of the Project and the
construction or sale or other conveyance of residences or other improvements
thereon including, without limitation, any loss, damage, injury or claim arising
from or caused by or alleged to have arisen from or have been caused by (i) the
use of the Project or any part thereof by Buyer or its agents, employees,
licensees, invitees or contractors, (ii) a defect in the design or construction
of or material in any structure or other improvement on the Project, (iii) the
condition of the Project or, to the extent it affects the Project, the condition
of the land in the vicinity of the Project, including without limitation a
defect in soils or in the preparation of soils or in the design and
accomplishment of grading or other work on the Project or such other land
(including any mass or rough grading,
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construction of retaining or other walls, or installation of infrastructure
performed on the Project or such other land prior to or after the date hereof by
Seller or any other party), (iv) any act or omission of Buyer or its agents,
employees, licensees, invitees or contractors, (v) an accident or casualty on
the Property caused by Buyer or its agents, employees, licensees, invitees or
contractors, (vi) the falsity of any representation by Buyer contained herein,
(vii) a violation or alleged violation by Buyer or its agents, employees,
licensees, invitees or contractors of any law now or hereinafter enacted, (viii)
a slope erosion, sluffing or failure or subsurface geologic or groundwater
condition, on, adjacent to or near the Project, including the effect of such
slope or subsurface condition on the Project and the residences constructed in
the Project, as well as the effect on such slopes and subsurface areas of
Buyer's development on the Project and use of the residences constructed thereon
(including watering), (ix) the design, construction, engineering or other work
with respect to the Project provided or performed by or for Buyer either before
or after the date of this Agreement, (x) any other cause whatsoever resulting
from Buyer's use of the Project, (xi) the application of the principles of
strict liability with respect to any act or omission of Buyer or its agents,
employees, licensees, invitees or contractors in connection with the Property,
including without limitation the grading thereof, or (xii) any act or failure to
act of Seller in reviewing, approving, disapproving, consenting to or joining in
any plans, specifications, application, permit, map or other document relating
to development of the Project or in observing, inspecting or testing any work or
improvement on the Project.
BUYER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, 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."
BUYER BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY
RIGHT IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTE OR COMMON LAW
PRINCIPLE OF SIMILAR EFFECT, WITH RESPECT TO THE ITEMS SPECIFIED IN THIS SECTION
10(a).
(b) As a material part of the consideration of this
Agreement, Buyer hereby waives on its behalf all claims and demands it may have
against Seller, Seller's partners and the officers, directors, shareholders,
employees and agents of Seller and/or Seller's partners for any such loss,
damage, injury or claim described in subsection 10(a) and agrees to indemnify,
defend and hold harmless Seller, Seller's partners and the officers, directors,
shareholders, employees and agents of Seller and/or Seller's partners from all
loss, liability, damages, costs and expenses (including attorneys' fees) arising
from or related to any such loss, damage, injury or claim whether incurred or
made by Buyer or any other person(s). The foregoing waiver and indemnity shall
apply to any claim or action brought by a private party or by a governmental
authority under any statute or common law now or hereinafter in effect and is
intended to apply with respect to loss, damage, injury or claim arising before
or after the conveyance of all of the residences
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constructed on the Project. With respect to design, construction methods,
materials, locations and other matters for which Seller has given or will give
its approval or recommendation, the foregoing waiver and indemnity shall apply
irrespective of Seller approval or recommendation.
(c) Without limiting the generality of Subsection 10(b)
above, Buyer agrees to indemnify and protect Seller, and to defend Seller with
counsel reasonably acceptable to Seller, against any and all claims, demands,
liabilities, obligations, damages, causes of action, judgments, losses, costs
and expenses (including, without limitation, reasonable attorneys' fees) which
Seller may incur or suffer by reason of or in connection with (i) any breach of
or failure of Buyer to perform any of its Obligations contained in this
Agreement, and (ii) the development or disposal by Buyer of the Property
(including, without limitation, the construction of residential dwellings and
the sale or lease of such dwellings to the public or any Person). The
obligations of Buyer set forth in Section shall survive any termination of this
Agreement and the close of any Purchase Escrow.
(d) Notwithstanding the provisions of this Section 10
above, Buyer shall be relieved from liability for, and the waivers and
indemnities set forth in subsections (a), (b) and (c) above shall not apply to
the extent of, any loss, damage, liability, injury or claim to the extent the
same is found by reference of controversies under subsection 13.15, below, or by
a court of competent jurisdiction to have been caused solely by the gross
negligence and/or willful misconduct of Seller.
(e) Nothing in this Section 10 shall relieve Seller from
any liability for breach of any of Seller's representations or warranties under
Section 6 above.
11. Default.
11.1. Events of Default. The occurrence of any one or more of
the following events shall constitute a Default by a party under this Agreement:
(a) The failure of (i) either party to pay any amount
within five (5) days after such party receives written notice from the other
party that such amount is overdue, or (ii) Buyer to submit a proposed Phasing
schedule under subsection 4.1(b) of this Agreement within five (5) days after
Buyer receives written notice from Seller that such proposed Phasing schedule
has not been submitted to Seller in accordance with the time requirements set
forth in subsection 4.1(b) hereof;
(b) Other than as provided in subsection 11.1(a) above,
the failure of the party to perform any non-monetary obligation set forth in
this Agreement on its part to be performed if the failure should continue
uncured for a period of thirty (30) days after written notice is given to the
party of the occurrence of the failure; provided, however, that the failure
shall not be deemed to have occurred if the failure relates to a Purchase Escrow
and is of a nature that reasonably requires more than thirty (30) days to cure,
is capable of being cured fully before the close of the Purchase Escrow and the
party is proceeding continuously and diligently to cure the failure and does
cure the failure before close of the Purchase Escrow;
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25
(c) Any representation or warranty made by the party in
this Agreement proves to have been incorrect in any material respect as of the
date made or as of any other date on which the representation and warranty was
required by the terms of this Agreement to be true;
(d) Institution by the party of proceedings under any law
of the United States or of any state or foreign jurisdiction for the relief of
debtors;
(e) A general assignment by the party for the benefit of
creditors or the filing of a voluntary petition in bankruptcy;
(f) The filing of an involuntary petition in bankruptcy
against the party by the creditors of such party, and such petition remaining
undischarged for a period of ninety (90) days after the date the same was filed
(or to the date of the next close of a Purchase Escrow if such date occurs
before the expiration of the ninety (90) day period);
(g) The appointment of a receiver to take possession of
any of the assets of the party, and such receivership remaining undischarged for
a period of thirty (30) days from the date of its appointment (or to the date of
the next close of a Purchase Escrow if such date occurs before the expiration of
the thirty (30) day period); or
(h) The attachment, execution or other judicial seizure of
the party's interest in this Agreement (and, in the case of Seller, in the
Property), such attachment, execution or seizure being in an amount not less
than Fifty Thousand Dollars ($50,000) and remaining undismissed or undischarged
for a period of thirty (30) days after the levy of the attachment, execution or
seizure (or to the date of the next close of a Purchase Escrow if such date
occurs before the expiration of the thirty (30) day period).
11.2. Default by Buyer. If Buyer shall materially Default under
any of the terms of this Agreement, Seller shall have the right, in addition to
any other rights or remedies which it may have at law or in equity, to terminate
this Agreement by giving written notice of such termination to Buyer and Escrow
Holder. Upon the giving of such notice, this Agreement (excluding unclosed
Purchase Escrows), and the rights and obligations of Buyer and Seller under this
Agreement shall terminate.
11.3. Default by Seller. If Seller shall materially Default under
any of the terms of this Agreement, Buyer shall have the right to terminate this
Agreement by giving written notice of such termination to Seller and Escrow
Holder, and shall also have all other rights and remedies available at law or in
equity, including without limitation an action for specific performance or for
monetary damages. Upon the giving of such a notice of termination, this
Agreement (excluding unclosed Purchase Escrows), and the rights and obligations
of Buyer and Seller under this Agreement shall terminate.
12. Indemnification.
12.1. Indemnification of Seller. Buyer agrees to indemnify, hold
harmless and protect Seller, and to defend Seller with counsel reasonably
acceptable to Seller, against any and all claims, demands, liabilities,
obligations, damages, causes of action, judgments, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees and all
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26
fines, charges, penalties and consultants' fees, and all cleanup, repair,
detoxification, removal, remedial, response and abatement costs) (collectively,
the "Claims) which Seller may incur or suffer by reason of or in connection with
the use, generation, production, storage, release, discharge or disposal by
Buyer, or other presence of Hazardous Material caused by Buyer on, under or in
the vicinity of the Property, or the material violation of Hazardous Material
Laws with respect to the Property or property in the vicinity of the Property by
Buyer; provided, however, that Buyer shall not be obligated to indemnify, defend
or hold harmless Seller on account of any Claim caused by Seller's introduction
in, on or under the Property of any Hazardous Materials.
13. General Provisions.
13.1. Legal Fees. Subject to the terms of subsection 13.15
[entitled "Reference of Controversies"], in the event of the bringing of any
action or suit by either party against the other party by reason of any breach
of any of the covenants, conditions, agreements or provisions on the part of the
other party arising out of this Agreement, the party in whose favor final
judgment shall be entered shall be entitled to have and recover of and from the
other party all costs and expenses of suit, including reasonable attorneys'
fees.
13.2. Notices. All notices or other communication provided for
under this Agreement shall be in writing, shall be delivered personally or sent
by registered or certified mail, return receipt requested, postage prepaid,
addressed to the person to receive such notice or communication at the following
address and shall be effective upon receipt or refusal to accept delivery:
To Seller:
Lathrop Investment, L.P.
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Major General Xxxxxxx Xxxx (Retired)
(With copies to:)
Xxxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx, Esq.
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To Buyer:
Xxxxxxx Xxxx Homes, Inc.
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
(With copies to:)
Irell & Xxxxxxx LLP
000 Xxxxxxx Xxxxxx Xxxxx, #000
Xxxxxxx Xxxxx, XX 00000-0000
Attention: Xxxxx X. Caput, Esq.
Notice of change of address shall be given by written notice in the manner set
forth in this subsection.
13.3. Survival Upon Termination. Where the context shall
expressly or otherwise require, the provisions of this Agreement shall survive
the termination of this Agreement and the close of any Purchase Escrow.
13.4. Successors and Assigns. Except to any Person (i) in which
Buyer has no less than a thirty-five percent (35%) interest, and (ii) with
respect to which Buyer has management control, Buyer shall not assign or
otherwise transfer this Agreement or any interest, right or obligation in this
Agreement, without the prior written consent of the Seller, and any such
assignment or other transfer without such written consent shall be null and
void. Subject to the foregoing, this Agreement shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
13.5. Required Actions of Buyer and Seller. Buyer and Seller
agree to execute all instruments and documents and to take all actions as may be
required in order to consummate the transactions contemplated by this Agreement
and shall use their reasonable efforts to accomplish the close of each Purchase
Escrow in accordance with the provisions of this Agreement.
13.6. Entire Agreement. This Agreement contains the entire
agreement between the parties concerning the subject matter of the Agreement and
supersedes any prior agreements, understandings or negotiations. No addition or
modification of any term or provision shall be effective unless set forth in
writing and signed by both Seller and Buyer.
13.7. Time of Essence. Time is of the essence of each and every
term, condition, obligation and provision of this Agreement.
13.8. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
13.9. Severability. If any portion of this Agreement shall be
declared by any court of competent jurisdiction to be invalid, illegal or
unenforceable, such portion shall
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be deemed severed from this Agreement, and the remaining parts of this Agreement
shall remain in full force and effect, as fully as though such invalid, illegal
or unenforceable portion had never been part of this Agreement.
13.10. Headlines. Headings at the beginning of each section and
subsection are solely for convenience of reference and are not a part of this
Agreement.
13.11. Construction. Whenever the context of this Agreement
requires the same, the singular shall include the plural and the masculine,
feminine and neuter shall include the others. Without limitation, any defined
term used in the plural shall refer to all members of the relevant class, and
any defined term used in the singular shall refer to any member of the relevant
class. This Agreement shall not be construed as if it had been prepared by one
of the parries, but rather as if both parties had prepared the same. Unless
otherwise indicated, all references to sections and subsections are to this
Agreement. All exhibits are incorporated in this Agreement by reference. The
term "Agreement" includes such exhibits (as exhibits and, if appropriate, as
subsequently executed agreements and instruments). If the day on which Buyer or
Seller is required to take any action under the terms of this Agreement is not a
business day, the action shall be taken on the next succeeding business day. Any
reference in this Agreement to an agreement or other instrument shall mean such
agreement or instrument as it may from time to time be supplemented, modified,
amended and extended in accordance with any applicable terms of this Agreement.
This Agreement is executed and delivered in the State of California and shall be
construed and enforced in accordance with, and governed by, the laws of the
State of California.
13.12. No Waiver. No waiver by a party of any Default by the
other party under this Agreement shall be implied from any omission or delay by
the nondefaulting party to take action on account of the Default if the Default
persists or is repeated. Any waiver of any covenant, term or condition contained
in this Agreement must be in writing. Any such express written waiver shall not
be construed as a waiver of any subsequent breach of the same covenant, term or
condition, nor shall it affect any Default other than the Default expressly made
the subject of the waiver. Any such express waiver shall be operative only for
the time and to the extent stated in the waiver. The consent or approval by a
party to or of any act by the other party shall not be deemed to waive or render
unnecessary consent or approval to or of any subsequent act.
13.13. Relationship Between Parties. Seller and Buyer agree that
(a) the relationship between them is, is intended to be and shall at all times
remain, in connection with the transactions contemplated by this Agreement, that
of optionor and optionee, and upon exercise of an Option, seller and purchaser
and (b) neither party is, is intended to be or shall be construed as a partner,
joint venturer, trustee, fiduciary, alter ego, manager, controlling person or
other business associate or participant of any kind of the other party or any of
its Affiliates.
13.14. Third Parties Not Benefited. This Agreement is made for
the purpose of defining and setting forth certain rights and obligations of
Buyer and Seller. It is made for the sole protection of Buyer and Seller and
Buyer's and Seller's successors and assigns. No other Person shall have any
rights of any nature under or by reason of this Agreement.
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13.15. Reference of Controversies. Any controversy between Seller
and Buyer under this Agreement which is the subject of an action or proceeding
brought by either Seller or Buyer shall be referred to a referee in accordance
with the provisions of Chapter 6 ("Chapter 6"), Title 8, Part II of California
Code of Civil Procedure ("Code"), (Sections 638 et seq.) as follows:
(a) Seller and Buyer shall submit to the appropriate court
a stipulation ("Stipulation") for a general order of reference to include all
issues in the action or proceeding, whether of fact or of law, including all
issues raised as affirmative defenses or cross-claims. If one party refuses or
fails to join in the submission of a Stipulation within fifteen (15) days after
being requested in writing to do so by the other party, the other party may make
a motion ("Motion") to the appropriate court for a general order of reference,
which the party failing to stipulate shall not oppose.
(b) Not later than ten (10) days after the filing of the
Stipulation, Buyer and Seller shall use their best efforts to agree on the
appointment of a Person to act as referee; provided, however, if a Motion is
made because one party fails or refuses to join in the submission of the
Stipulation, the party making the Motion may select, not later than ten (10)
days after the making of the Motion, any Person as the referee so long as the
Person selected does not have any business or social relationship with either
Seller or Buyer and is a judge or retired judge of the Superior Courts of the
State of California or a justice or retired justice of any appellate court of
the State of California. Any such selection shall be subject to the provisions
of Section 641 of the Code.
(c) If a referee is not selected in accordance with the
preceding subsection, or if the Person selected is not willing to act as
referee, a single referee shall be chosen in the manner set forth in Sections
640 and 641 of the Code. The referee must be a judge or retired judge of the
Superior Courts of the State of California or a justice or retired justice of
any appellate court of the State of California.
(d) Seller and Buyer expressly waive any right to a trial
by jury.
(e) A reporter shall be present at all proceedings before
the referee.
(f) If the reference is commenced by a Stipulation, each
party shall bear its own costs in connection with the reference (including
attorneys' fees) and one half of the referee's fees and reporter's fees. If the
reference is commenced by a Motion, the party against whom judgment is entered
shall bear all costs in connection with the reference (including, without
limitation, reasonable attorneys' fees and the referee's fees and reporters
fees).
(g) The referee shall apply all California roles of
procedure and evidence and shall apply the substantive laws of California in
deciding any and all issues submitted to the referee.
(h) The referee shall have the authority to hear law and
motion matters.
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(i) All discovery which either of the parties may wish to
take shall be commenced within thirty (30) days and completed within sixty (60)
days after the reference is ordered in accordance with Section 638 of the Code.
(j) Section 998 of the Code shall be applicable under the
reference.
(k) The referee's findings and decision under Section 643
and 644 of the Code shall be final and binding on Seller and Buyer and shall not
be subject to appeal or review.
(l) Seller and Buyer desire to have any and all matters
referred to a referee determined as soon as practicable consistent with the
availability of the referee, counsel and witnesses.
(m) Seller and Buyer agree that neither party will be
permitted to defeat the provisions of this subsection 13.15 by including
non-parties to this Agreement as parties to the action or proceeding. If
nonparties to the Agreement are proper parties to the action or proceeding:
(i) The non-parties to the Agreement may, at their
sole option, elect to stipulate to the reference and comply with the terms of
this subsection 13.15.
(ii) If the non-parties do not so agree, Seller and
Buyer shall stipulate that all claims by and against the non-parties be severed
and determined separately.
(iii) The provisions of this subsection 13.15 shall
have no further force or effect in the event Chapter 6 is repealed or amended in
such a manner as to make it materially inconsistent with the provisions of this
subsection.
13.16. Force Majeure. If Buyer is delayed at any time in the
performance of its obligations hereunder (other than any obligation which only
requires the payment of money), by reason or labor disputes, fire, governmental
moratoria, adverse weather conditions or other "acts of God" not reasonably
anticipatable, unavoidable casualties, or any causes beyond the Buyer's
reasonable control, then the time for such performance shall be extended for
such reasonable time as may compensate for such occurrences. Buyer's inability
to obtain financing will not be deemed to constitute an event of force majeure
in any event.
13.17. Assignment on Termination. If this Agreement terminates
prior to Buyer's exercise of all the Options, Buyer shall assign to Seller (on a
non-exclusive basis to the extent possible) any and all entitlements,
development agreement rights and other intangible rights then owned by Buyer and
that relate to the development of the unpurchased portions of the Project.
Notwithstanding the foregoing, Buyer shall have no obligation pursuant to this
subsection 13.17 to assign to Seller any of Buyer's plans, specifications or
other architectural work product with respect to residences planned for the
Property.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
Seller: LATHROP INVESTMENT, L.P.,
a California limited partnership
By: Lyon Realty, Inc.
a California corporation
General Partner
By: /s/ XXXXXXX XXXX
----------------------------------
Title:
-------------------------------
By: /s/ XXXXXXX X. XXXX
----------------------------------
Title:
-------------------------------
Buyer: XXXXXXX XXXX HOMES, INC.,
a California corporation
By: /s/ XXXX X. CABLE
------------------------------------------
Title:
---------------------------------------
By: /s/ XXXXXXX X. XXXXXXXX
------------------------------------------
Title:
---------------------------------------
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EXHIBITS TO OPTION AGREEMENT AND ESCROW INSTRUCTIONS
Exhibit "A"........................................Land/Legal Description
Exhibit "B"........................................Memorandum of Options
Exhibit "C"........................................Grant Deed
Exhibit "D"........................................Description of Units
Exhibit "E"........................................Schedule of Base Purchase Prices and
Option Exercise Dates
Exhibit "F"........................................License Terms
Exhibit "G"........................................Options Price Credits
-31-
33
EXHIBIT A
LEGAL DESCRIPTION
34
EXHIBIT B
MEMORANDUM OF OPTIONS
35
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:
Xxxxxxx Xxxx Homes, Inc.
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xx. Xxxxxxx X. Xxxxxxxx
--------------------------------------------------------------------------------
(Space Above for Recorder's Use)
MEMORANDUM OF OPTION AGREEMENT
This Memorandum of Option Agreement ("Agreement") is made and entered
into as of this ___ day of ______________, 2000 by and between XXXXXXX XXXX
HOMES, INC., a California corporation ("Optionee"), and LATHROP INVESTMENT,
L.P., a California limited partnership ("Optionor").
WITNESSETH
1. Optionor and Optionee are the parties to that certain Option
Agreement and Escrow Instructions dated October 24, 2000 (the "Option
Agreement"), which relates to certain real property located in San Xxxxxxx
County, California and more particularly described in Exhibit "A" attached
hereto and incorporated herein by this reference (the "Property").
2. Optionor hereby grants to Optionee an exclusive and irrevocable
option to purchase the Property from Optionor, in phases, at the price and on
and subject to the terms and conditions set forth in the Option Agreement. The
last day for the exercise of the option with respect to the last phase of the
Property is September 15, 2004, and the option shall expire unless exercised on
or before such date as provided in the Option Agreement. Unless the option as to
a particular phase of the Property is exercised as provided in the Option
Agreement, Optionee will have no further interest in such phase of the Property.
3. Nothing in this Agreement shall in any way amend or alter the Option
Agreement, and in the event of any conflict or inconsistency between the terms
hereof and the terms of the Option Agreement, the terms of the Option Agreement
shall control.
36
IN WITNESS WHEREOF, Optionor and Optionee have executed this Agreement
as of the date first set forth above.
OPTIONEE:
XXXXXXX XXXX HOMES, INC., a California
corporation
By:
-----------------------------------
Its:
-------------------------------
By:
-----------------------------------
Its:
-------------------------------
OPTIONOR:
LATHROP INVESTMENT, L.P., a California
limited partnership
By: Lyon Realty, Inc., a California
corporation, General Partner
By:
-----------------------------------
Its:
-------------------------------
By:
-----------------------------------
Its:
-------------------------------
37
EXHIBIT "A"
Legal Description of the Property
38
STATE OF CALIFORNIA )
) SS
COUNTY OF_________________ )
On ____________________ before me, _______________________, a Notary
Public in and for said County and State, personally appeared
________________________ ____________________________ 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 this instrument.
WITNESS my hand and official seal.
Signature_____________________
FOR NOTARY SEAL OR STAMP
-37-
39
STATE OF CALIFORNIA )
) SS
COUNTY OF_________________ )
On ____________________ before me, _______________________, a Notary
Public in and for said County and State, personally appeared
________________________ ____________________________ 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 this instrument.
WITNESS my hand and official seal.
Signature_____________________
FOR NOTARY SEAL OR STAMP
40
EXHIBIT C
GRANT DEED
41
RECORDING REQUESTED BY:
Xxxxxxx Xxxx Homes, Inc.
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
WHEN RECORDED MAIL TO AND
MAIL TAX STATEMENTS TO:
Xxxxxxx Xxxx Homes, Inc.
0000 Xxx Xxxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx
--------------------------------------------------------------------------------
(Space Above for Recorder's Use)
PARTNERSHIP GRANT DEED
The undersigned Grantor declares that Documentary Transfer Tax is not
shown pursuant to Section 11932 of the California Revenue and Taxation Code, as
amended.
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of
which is hereby acknowledged, LATHROP INVESTMENT, L.P., a California limited
partnership ("Grantor"), hereby grants to XXXXXXX XXXX HOMES, INC., a California
corporation ("Grantee"), that certain real property in the County of San
Xxxxxxx, State of California, more particularly described in Exhibit "A"
attached hereto and incorporated herein by this reference.
SUBJECT TO:
1. Nondelinquent general, special and supplemental real property taxes
and assessments, if any, for the current fiscal year.
2. All covenants, conditions, restrictions, reservations, rights,
rights-of-way, dedications, offers of dedication, easements and other matters of
record or otherwise apparent as of the date hereof.
[signature page follows]
42
IN WITNESS WHEREOF, the Grantor has executed this Partnership Grant Deed
as of the date written below.
Dated:____________, ____ GRANTOR:
LATHROP INVESTMENT, L.P., a California limited
partnership
By: Lyon Realty, Inc., a California corporation,
General Partner
By:
------------------------------------------
Its:
--------------------------------------
By:
------------------------------------------
Its:
--------------------------------------
43
EXHIBIT "A"
Legal Description
44
STATE OF CALIFORNIA )
) SS
COUNTY OF_________________ )
On ____________________ before me, _______________________, a Notary
Public in and for said County and State, personally appeared
________________________ ____________________________ 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 this instrument.
WITNESS my hand and official seal.
Signature
----------------------
FOR NOTARY SEAL OR STAMP
45
Document No.
--------------------------------------
Recorded ,
----------------------------------- -----
STATEMENT OF TAX DUE AND REQUEST THAT TAX DECLARATION NOT BE
MADE A PART OF THE PERMANENT RECORD IN THE OFFICE OF THE COUNTY
RECORDER (PURSUANT TO SECTION 11932 REVENUE AND TAXATION CODE)
TO: Recorder
County of San Xxxxxxx
Request is hereby made in accordance with the provisions of the
Documentary Transfer Tax Act that the amount of the tax due not be shown on the
original document which names:
Grantor: Lathrop Investment, L.P., a California limited partnership
Grantee: Xxxxxxx Xxxx Homes, Inc., a California corporation
The property described in the accompanying document is located in:
_______ the unincorporated area of the County of San Xxxxxxx.
_______ the City of ____________, County of San Xxxxxxx.
The amount of tax due on the accompanying document is $____________,
computed on the full value of the property conveyed.
(Signature of Grantor or Agent)
---------------------------
---------------------------
Note: After the permanent record is made, this form will be affixed to the
conveying document and returned with it.
46
EXHIBIT D
DESCRIPTION OF UNITS
47
EXHIBIT E
SCHEDULE OF BASE PURCHASE PRICES
AND SCHEDULED EXERCISE DATES
48
EXHIBIT F
LICENSE TERMS
The following terms shall apply to the license to enter the Property
granted to Buyer under subsection 8.2 of this Agreement.
1. License to Enter. Subject to the terms and conditions hereof, Seller
hereby grants to Buyer a nonexclusive license and permission to enter upon and
into the Property for the purpose of grading and constructing such Improvements
thereto as Buyer elects to construct in accordance with its planned development
of the Property (all Improvements or other work completed by Buyer herein
referred to collectively as the "Work"). Buyer shall not allow or cause any
other party, except Buyer's duly authorized contractors, subcontractors,
representatives, agents and employees (collectively, "representatives") to enter
or use the Property during the term of this license without Seller's prior
written consent. As used in this Exhibit "F" only, the term "Property" shall
exclude those Phases of the Property from time to time acquired by Buyer, such
exclusion to be effective as to any such Phase from and after the date the same
is transferred to Buyer. Notwithstanding anything herein to the contrary, other
than with Seller's prior consent, Buyer shall not construct any residential
houses on any Residential Lot that Buyer has not yet acquired title to pursuant
to this Agreement.
2. Term. The term of the license shall commence upon the execution of
this Agreement by both Seller and Buyer. The license shall terminate (i) with
respect to any Phase of the Property, upon the Close of Escrow for such Phase,
or (ii) upon the termination of this Agreement.
3. Hazardous Materials. During the term of this license, Buyer shall not
introduce or release any Hazardous Materials in, to, from, under or on the
Property, or bring any Hazardous Materials onto or across the Property, except
as necessary to complete the Work and then only so long as the same are used,
handled and disposed of in accordance with applicable Laws. If Buyer becomes
aware of the presence of any Hazardous Materials on the Property, it shall
immediately notify Seller in writing of the same.
4. Maintenance of Property; Performance of Work; Alterations.
(a) Buyer shall not, except as required to complete the Work,
alter the physical condition of the Property. During the term of this license,
Buyer shall, at its sole cost, expense and liability, maintain in a safe and
sanitary condition those portions of the Property on which it is performing the
Work or which it is otherwise using. Without limiting the foregoing, Buyer shall
maintain any construction routes in a clean condition and establish and maintain
a regular dust control program. Buyer shall be responsible for any damage done
to the Property or other property of Seller and for any theft of Seller's
property from the Property or other real property of Seller by Buyer or its
representatives.
(b) Buyer shall bear all costs of the Work. Buyer shall obtain at
its cost all permits and approvals required in connection with the Work
(including without limitation
49
those required hereunder from Seller and also any required by any Authorities
with jurisdiction thereover) and shall comply with the requirements of all
Authorities with jurisdiction thereover, including without limitation all
requirements as to noise control, construction traffic and other construction
matters. If required by Seller, any equipment or materials placed or stored on
the Property by Buyer or its representatives shall be placed or stored only in
locations specifically approved by Seller. If required by Seller, any access by
Buyer and its representatives onto, over or across the Property shall be by way
of roads, paths or access points designated by Seller. Upon termination of this
license, Buyer shall remove any equipment or materials stored on the Property
and shall repair and restore every portion of the Property damaged or disturbed
during the term of this license to at least as good condition as existed prior
to Buyer's entry onto the Property; provided, however, Seller shall have the
option to do any necessary repairs and restoration and Buyer shall pay Seller
any and all amounts expended therefore upon demand. Buyer agrees to pay or
reimburse Seller for any utility or water charges allocable to Buyer's use of
the Property.
(c) Buyer shall not use the Property in any manner or conduct any
activities thereon which will interfere with or delay Seller's use or
development of the Property. No Improvements (whether or not a part of the Work)
shall be constructed or installed on the Property until the plans and
specifications therefor have been approved by Seller. Seller's approval right
shall include, without limitation, the right to approve the architectural style
and exterior colors and materials of any structure, as well as landscaping plans
and the exact location of any such structure. All Improvements shall be
completed only in accordance with the approved plans and specifications
therefore, and in a good and workmanlike manner. Upon termination of this
license without an acquisition of the Property by Buyer, all improvements made
by Buyer upon any portion of the Property shall become the sole property of
Seller, without the payment of any consideration to Buyer.
5. Seller Not Liable. All persons who enter onto the Property pursuant
to this license do so at their own risk, and shall comply with all necessary and
reasonable instructions and directions of Seller with respect to use of the
Property. As a material part of the consideration for this license and the
Agreement, Buyer hereby waives and agrees to indemnify, protect, defend and hold
Seller harmless from and against any loss, damage, injury, accident, fire or
other casualty, liability, claim, cost or expense (including but not limited to
actual attorneys' fees) of any kind or character to any person or property
arising from, caused by or related to (i) any use of the Property by Buyer or
its representatives, (ii) any act or omission of Buyer or any of its
representatives, (iii) any bodily injury, property damage, accident, fire or
other casualty on the Property caused by the entry or activities of Buyer or its
representatives, (iv) any violation or alleged violation by Buyer or its
representatives of any law, ordinance or regulation now or hereafter enacted,
(v) any failure of Buyer to maintain the Property in a safe, decent, and
sanitary condition, (vi) the breach or violation of the terms of this license by
Buyer, (vii) any statutory liens for labor or materials or other liens which may
arise out of the Work or Buyer's activities on the Property, and (viii) any
enforcement by Seller of any provision of this license and any costs of duly
removing Buyer from the Property or restoring the same as provided herein. Buyer
acknowledges and agrees that Seller has no responsibility for loss of any
property of Buyer
50
by theft, and Seller has no obligation to provide any security in respect of
Buyer's property. The provisions of this Paragraph 5 shall survive any
termination of this license.
6. Insurance. Prior to and at all times after initially entering upon
the Property for any purpose, Buyer shall at its expense maintain with a
reputable company or companies qualified to do business in California and
acceptable to Seller, a policy or policies of comprehensive or commercial
general liability insurance with respect to the Property and the operations and
activities of or on behalf of Buyer on or about the Property, including, but not
limited to, owned, rented and non-owned automobile (vehicle) liability, personal
injury, blanket contractual, broad form property damage, products liability,
manufacturer's and contractor's basic coverage with X, C and U exclusions
deleted, owners' and contractors' protective liability and products/completed
operations liability coverage. Such policy shall provide that its coverage is
primary to any insurance of Seller (whose insurance shall be excess and
noncontributing) and shall contain a provision stating that the naming of an
additional insured shall not negate any right the additional insured would have
had as a claimant under the policy if not so named. Such policy shall contain
severability of interest and cross liability clauses. Such policy or policies
shall have limits of liability of not less than Ten Million Dollars
($10,000,000) combined single limit per occurrence. The policy shall provide
that it is not cancelable without thirty (30) days prior written notice to
Seller. Seller shall be named as an additional insured on such policy or
policies, and a certificate or certificates of insurance evidencing such policy
or policies shall be delivered to Seller before Buyer's initial entry onto the
Property. Additional certificates evidencing renewal or replacement of such
policy or policies shall be delivered to Seller at least thirty (30) days prior
to the expiration of any such policy or policies. A copy of any such policy
shall also be delivered to Seller upon request. Seller also reserves the right
to require Buyer to maintain a standard "all risk" Builders Risk Policy during
any period of construction for not less than the full replacement cost of the
improvements, which shall include a replacement cost endorsement and otherwise
be in form and substance acceptable to Seller. Buyer shall also maintain workers
compensation insurance as required by law.
7. Liens. Buyer shall not suffer or permit to be filed or enforced
against the Property, or any part thereof, any statutory lien for labor or
materials (including without limitation any mechanics' or materialmen's lien) or
any claim for damages arising from or out of Buyer's use of or activities on the
Property. Buyer shall pay or cause to be paid on a timely basis all bills or
claims which could give rise to any such statutory lien or claim for damages. If
any statutory or other lien is filed or asserted against the Property, Buyer
shall cause the same to be fully discharged, by payment, bonding or otherwise,
within twenty (20) days of such filing or assertion, and upon any failure of
Buyer to do so, Seller shall have the right to do so, by payment, bonding
(including without limitation obtaining and recording a lien release bond
pursuant to California Civil Code Section 3143) or otherwise and Buyer shall pay
Seller on demand all amounts expended in connection with obtaining such release
or discharge. Buyer shall notify Seller no less than five (5) days prior to
doing any Work on the Property in order to allow Seller to post and record, at
Seller's option, appropriate notices of nonresponsibility. The failure by Seller
to post or record such notices shall not affect or negate in any manner Buyer's
obligations under this license.
51
EXHIBIT G
Options Price Credits
Buyer shall receive the following credits against the Base Purchase
Prices for the specified Phases on account of Buyer's payment of the Options
Price:
Phase Credit Amount
----- -------------
September 2003 $154,557
January 2004 $352,268
May 2004 $352,268
September 2004 $140,907
