Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS
(Township 9 Project - All Townhouses)

 

THIS PURCHASE AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS, dated for
reference purposes as of July 25, 2017 (this “Agreement”), is entered into by
and between CAPITOL STATION 65 LLC, a California limited liability company
(“Seller”), and ANTHEM UNITED HOMES, INC., a Washington corporation (“Buyer”).
In consideration of the mutual promises contained in this Agreement, Buyer and
Seller (sometimes referred to individually as a “Party” and collectively
referred to as “Parties”) agree as follows:

 

RECITALS

 

A.           Seller owns that certain real property located in the City of
Sacramento (“City”), County of Sacramento (“County”), State of California,
together with the Current Entitlements (as defined in Section 1 below),
comprised of the parcels of land identified on the attached Exhibit A, together
with the common area driveways, streets and park paseos appurtenant thereto
(collectively, “Land”), as such parcels are further identified on the approved
Tentative Map Subdivision Modification for Township 9 dated March 3, 2015
(“Tentative Map”), and the Final Map of Township 9-Phase 1, Subdivision No
P10_036, recorded on November 13, 2012, all as attached on Exhibit B hereto. The
Land is located within the Seller’s overall project commonly known as Township 9
(“Overall Project”).

 

B.           The Land including (i) all improvements, equipment, fixtures and
any and all other articles of personal property attached or affixed to said
Land, (ii) all assignable intangible personal property to the extent owned by
Seller and arising directly out of or in connection with Seller’s ownership of
the Land and pertaining only to the Land (with the understanding that most such
plans and drawings were prepared for the Overall Project and are not capable of
being assigned solely as to the Land), (iii) all development building permit fee
credits in the approximate amount of Eight Thousand Eight Hundred and Sixty-Five
Dollars ($8,865) per residential unit to the extent that the City approves the
same in accordance with its procedures for transferring such building permit fee
credits upon payment of the Fee Credits Price (as defined below) (collectively,
the “Intangible Property”), (iv) any and all remaining grant money pertaining to
the Land, which shall be assigned to Buyer, and (v) the Current Entitlements (as
defined in Section 1 below), which shall be assigned to Buyer, are referred to
collectively in this Agreement as the “Property.”

 

C.           Buyer intends to develop the Land into a residential project
comprised of townhouses, condominiums and apartments (collectively, “Project”).
Buyer is an experienced developer and builder of residential projects such as
the Project and is familiar with the kinds of land use and development issues
that impact the construction and development of property into residential use.

 

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D.           The Property subject of this Agreement is not currently comprised
of legal parcels and will require three or more final maps to be processed and
recorded. In addition, each parcel is in a different stage of mapping. For
example, as to Parcels 8A, 8B, 15A and 15B, Seller commenced processing a final
map, which has yet to be finalized and recorded (“Parcel 8/15 Final Map”), while
the final maps for the remaining parcels, which may also require a lot line
adjustment, have yet to be prepared and processed, and are subject to full
design review and approval of the City, which maps must be recorded in order to
create the parcels comprising the Property (collectively, “Final Maps”). It is
expected that it will take approximately six (6) months for the City to process
and approve each of the Final Maps.

 

E.           The Property subject of this Agreement also does not constitute
final buildable parcels due to the offsite improvements and park work that have
yet to be completed.

 

F.           The development of the intended Project on the Land will require
construction of parks and park paseos, specifically Peach Paseo, Victory Park,
and Victory Promenade, as set forth on Schedule 1 attached hereto (“Park Work”).
All construction and improvement work to complete the Park Work will be the
responsibility and at the direction of the Buyer; provided that Seller shall
assign to Buyer the grant funds allocated for the Park Work in the amount of
Seven Hundred Thousand Dollars ($700,000) (“Park Grant Amount”).

 

G.           The development of the Project and the City’s approval of the Final
Maps may be conditioned on the construction of North 5th Street, Can Ave and
Cannery Ave, which constitute roads servicing the Buyer’s Project (collectively,
“Street Work”). The cost of the Street Work is estimated to be Two Million Two
Hundred Fifty Thousand Dollars ($2,250,000) (“Street Cost”). Buyer’s Project
will require that the Street Work be completed. Seller has indicated to Buyer
that it has received a grant for funds to complete the Street Work in the
estimated amount of the Street Cost (“Street Grant”). Seller agrees to assign
and transfer over to Buyer the Street Grant. The Street Grant shall be assigned
to Buyer concurrently with the Closing on Phase 1; provided that Seller shall
use all commercially reasonable efforts to deliver the City’s consent or similar
documentation evidencing its agreement to transfer all grants contemplated under
this Agreement no later than three (3) business days prior to the expiration of
the Due Diligence Period. Seller agrees to execute a cost sharing agreement to
be recorded with the First Closing (as defined in Section 5.2) upon the other
parcels fronting North 5th Street, Can Ave and Cannery Ave, providing for a
proportionate (based on acreage) cost sharing of all actual costs of completing
the Street Work to the extent such amounts exceed the actual Street Grant amount
funded by the City.

 

H.           In addition to the Street Work, the Property will also require the
construction of Chill Ave at such time as the parcels fronting said street will
be developed. The cost of completing Chill Ave is estimated to be Five Hundred
Thousand Dollars ($500,000), which will be the responsibility of the Buyer at
such time as the City requires the same in conjunction with the preparation and
approval of the Final Maps. Finally, the Phase 3 parcels serve as frontage to
Township 9 Ave, along with other parcels owned by Seller on the south side of
Township 9 Ave that are not the subject of this Agreement, which road has yet to
be constructed. Buyer agrees to enter into a cost sharing agreement with Seller,
to be recorded upon the applicable parcels with the First Closing, providing for
a 50/50 allocation of all costs of constructing Township 9 Ave at such time as
the first constructing party commences development of its parcels.

 

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I.           Buyer is pricing the Property with the assumption that the parcels
comprising the Property are final ready-to-build lots subject only to the
recordation of the Final Maps, completion of Chill Ave, and completion of
on-site improvements by Buyer. In the event the City requires construction of
additional offsite improvements or the payment of additional impact or
mitigation fees (offsite), as a condition to approving Buyer’s Final Maps,
building permits or site improvement plans, such requirements may render Buyer’s
Project infeasible. As such, Buyer, with cooperation from Seller, shall use
commercially reasonable efforts to determine all such requirements during the
Due Diligence Period.

 

J.           The Property is encumbered by a Deed of Trust (“Lender’s Lien”)
made in favor of Seller’s existing lender COPIA LENDING, LLC (formerly known as
ISIS Lending LLC) (“Lender”), which serves as security for the loan made by
Lender in the original principal amount of Twenty Million Dollars ($20,000,000)
pursuant to a promissory note dated on or about December 23, 2008 (“Loan”). The
Loan is now in default.

 

K.          Seller sought relief under Title 11 of the United States Code
(“Bankruptcy Code”) by filing a voluntary petition for reorganization in the
U.S. Bankruptcy Court for the Eastern District of California (“Bankruptcy
Court”) on May 30, 2017, case number 17-23627-B-11 (“Bankruptcy Case”). As such,
the terms of this Agreement and the obligations of the Parties are subject to
certain terms of the Bankruptcy Code and approval by the Bankruptcy Court.

 

L.           The Parties desire to effect the purchase and sale transactions
contemplated by this Agreement pursuant to Seller’s Chapter 11 plan of
reorganization, and that the sale of the Property shall be free and clear of all
monetary liens and encumbrances (collectively, “Monetary Liens”), other claims
(as defined in Section 101 of the Bankruptcy Code), and interests of Seller’s
creditors, equity holders and partners.

 

M.          For purposes of this Agreement, the “Effective Date” shall mean the
date the last Party hereto executes this Agreement.

 

NOW, THEREFORE, in consideration of the foregoing recitals, the promises and
covenants of the Parties in this Agreement, and other good and valuable
consideration, the receipt and sufficiency of which the Parties acknowledge, the
Parties agree as follows:

 

1.            Definitions; Recitals: Capitalized terms that are not defined when
first used in this Agreement have the meanings set forth below. The Recitals set
forth above are hereby incorporated by reference and shall serve as obligations
of the Parties hereto.

 

1.1.          Approval: “Approval” means the approval of any applications,
permits, environmental reviews, certifications and/or new entitlements, and the
expiration of all applicable appeal periods, reconsideration periods or statutes
of limitation for reconsidering, challenging, questioning, appealing or
attacking such approval, without an appeal, request for reconsideration or legal
challenge having been filed.

 

1.2.          Authorities: “Authorities” means all federal, state and local
governmental and quasi-governmental agencies, bodies, entities, boards and
authorities that have jurisdiction over the Property, the furnishing of
utilities or other services to the Project, or the subdivision, improvement,
development, occupancy, sale or use of the Property, other than the Bankruptcy
Court.

 

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1.3.          Buyer’s Self-Help Right: “Buyer’s Self-Help Right” shall be as
defined in Section 3.3.

 

1.4.          Chapter 11 Plan: “Chapter 11 Plan” means the plan proposed by
Seller in the Bankruptcy Case pursuant to Sections 1121 through 1129 of the
Bankruptcy Code and providing for the sale of the Property to Buyer pursuant to,
and the transactions contemplated by, the terms of this Agreement.

 

1.5.          Closing or Close of Escrow: “Closing” “Closing Date” or “Close of
Escrow” means the act of settlement of the purchase and sale of the Property, or
a portion thereof, at which Seller conveys exclusive possession and title to
Buyer by delivery of a Grant Deed transferring good and marketable title to the
Property, free and clear of all liens and encumbrances, except Permitted
Exceptions, and records the Grant Deed with the County Recorder, and Buyer
delivers the Purchase Price for the applicable Phase to Seller along with other
obligations as provided herein.

 

1.6.          Confirmation Order: “Confirmation Order” means an order entered in
the Bankruptcy Case confirming the Seller’s Chapter 11 Plan.

 

1.7.          Current Entitlements: “Current Entitlements” means and includes
all discretionary Approvals and permits in effect for the Land as of the
Effective Date, including, but not limited to, the Tentative Map, the approved
plans processed by Seller, and any other entitlements that were previously
processed by Seller applicable to the Property or the Project.

 

1.8.          Deposit: “Deposit” means the First Deposit and the Second Deposit,
together with all interest earned thereon, together with the other deposits
delivered pursuant to this Agreement and constituting “Deposit” pursuant hereto.

 

1.9.          Development Approvals: “Development Approvals” shall be as defined
in Section 4.4.

 

1.10.         Documents: “Documents” means all engineering, geotechnical, soils,
and other studies, tests, investigations, surveys, grading plans, maps,
drawings, plans and reports that reasonably relate to the Property, described on
Exhibit C. Documents do not include appraisals or any agreement(s) by which
Seller acquired the Property, or any confidential, privileged or proprietary
documents of Seller.

 

1.11.         Due Diligence Period: “Due Diligence Period” means the period
commencing on the Effective Date and expiring on the date that is forty-five
(45) calendar days from the Effective Date (the “Due Diligence Expiration
Date”).

 

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1.12.         Environmental Laws: “Environmental Laws” means all federal, state
and local environmental laws, rules, statutes, ordinances and regulations issued
by any Authority and in effect as of the date of this Agreement with respect to
or which otherwise pertain to or affect the Property, or any portion thereof,
the use, ownership, occupancy or operation of the Property, or any portion
thereof, or any owner of the Property, and as the same have been amended,
modified or supplemented from time to time prior to the date of this Agreement,
including, but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. § 9601 et seq.), the Hazardous
Substances Transportation Act (49 U.S.C. § 1802 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Water Pollution
Control Act (33 U.S.C. § 1251 et seq.), the Safe Drinking Water Act (42 U.S.C. §
300f et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Solid Waste
Disposal Act (42 U.S.C. § 6901 et seq.), the Toxic Substances Control Act (15
U.S.C. § 2601 et seq.), the Emergency Planning and Community Right-to-Know Act
of 1986 (42 U.S.C. § 11001 et seq.), the Radon and Indoor Air Quality Research
Act (42 U.S.C. § 7401 note, et seq.), the Superfund Amendment Reauthorization
Act of 1986 (42 U.S.C. § 9601 et seq.), comparable state and local laws, and any
and all rules and regulations which have become effective prior to the date of
this Agreement under any and all of the aforementioned laws.

 

1.13.         Environmental Permits: “Environmental Permits” means all permits,
consents, certifications, permission, agreements or other authorizations
required by or from any state, federal, or local regulatory entity or agency,
including all Authorities, to enable, permit and/or authorize development of the
Property with single-family residences along with subdivision improvements.
Environmental Permits includes, without limitation, those issued by the U.S.
Army Corps of Engineers, U.S. Fish & Wildlife Service, California Regional Water
Quality Control Board, California Department of Fish & Game, and any
Conservation and Development Commission or Flood Protection Board, as
applicable.

 

1.14.         Escrow Agent: “Escrow Agent” means First American Title Insurance
Company, Attention: Diane Burton, 4750 Willow Road, Suite 100, Pleasanton, CA
94588, Telephone: (925) 201-6603 and Fax: (866) 648-7806 (also referred to as
“Title Company”).

 

1.15.         Final Order: “Final Order” means an order of the Bankruptcy Court
(i) for which the time to appeal has expired and no appeal was filed, or (ii) if
an appeal was filed, (A) the order has not been stayed and the appeal is subject
to statutory or equitable mootness, or (B) the appeal has been dismissed or
denied and the time for further appeal has expired or no right of further appeal
exists.

 

1.16.         First Deposit: “First Deposit” means the amount of Fifty Thousand
Dollars ($50,000), payable in accordance with the terms of this Agreement.

 

1.17.         Hazardous Materials: “Hazardous Materials” means any pollutants,
contaminants, hazardous or toxic substances, materials or wastes (including
petroleum, petroleum by-products, radon, asbestos and asbestos containing
materials, polychlorinated biphenyls (“PCBs”), PCB-containing equipment,
radioactive elements, infectious agents, and urea formaldehyde), as such terms
are used in or regulated by any Environmental Laws (excluding solvents, cleaning
fluids and other lawful substances used in the ordinary operation and
maintenance of the Property, to the extent in closed containers and in
accordance with Environmental Laws).

 

1.18.         Legal Requirements: “Legal Requirements” means the rules,
regulations, laws, ordinances, standards, approved plans and other requirements
of the Authorities.

 

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1.19.         Notice of Approval: “Notice of Approval” means a written notice
that Buyer, in its sole and absolute discretion, may elect to give to Seller
indicating Buyer’s willingness to proceed with the transaction, as set forth in
Section 4.1 of this Agreement.

 

1.20.         Opening of Escrow: “Opening of Escrow” is defined in Section 3.1
below.

 

1.21.         Outside Conditions Date: “Outside Conditions Date” shall mean
January 15, 2018, and is further described in Section 5.4 hereof.

 

1.22.         Outside Map Date: “Outside Map Date” shall mean ninety (90)
calendar days following entry of the Sale Order and is further described in
Section 10.4 hereof.

 

1.23.         Permitted Exceptions: “Permitted Exceptions” means those matters
of record or otherwise affecting the Property subject to which Buyer expressly
approves prior to the Due Diligence Expiration Date pursuant to Section 4.3.

 

1.24.         Phases: As used herein “Phase 1,” “Phase 2,” and “Phase 3” shall
mean the parcels comprising the Property identified as such on the attached
Exhibit A hereto. Phase 1, Phase 2 and Phase 3 are hereinafter individually
referred to as a “Phase” and collectively as the “Phases.”

 

1.25.         Purchase Price: The “Purchase Price” for each of the parcels
constituting the Property is that certain amount (not based upon a presumed
yield calculation or any formula) set forth on Exhibit A attached hereto.

 

1.26.         Sale Order: “Sale Order” means the Bankruptcy Court order
approving the purchase and sale of the Property and the other transactions
contemplated herein. The Sale Order may be either the Confirmation Order or an
order entered by the Bankruptcy Court pursuant to Sections 363(b) and 363(f) of
the Bankruptcy Code entered outside the context of a plan confirmation approving
the purchase and sale of the Property (“363 Sale”).

 

1.27.         Second Deposit: The amount of One Hundred Fifty Thousand Dollars
($150,000) payable in accordance with the terms of this Agreement.

 

2.            Purchase and Sale.

 

2.1.          Property. Subject to the terms and conditions of this Agreement,
Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, all of
Seller’s right, title and interest in and to the Property.

 

2.2.          Fee Credits. As part of the overall master planned development
activities that have been carried out by Seller with respect to the Overall
Project, certain building permit fee credits were created for Seller’s account
(collectively, “Fee Credits”) by the governing agency that will issue building
permits for the Property. Buyer has agreed to purchase the Fee Credits in an
amount ultimately approved by the City for transfer and assignment to Buyer,
which is estimated to be Eight Thousand Eight Hundred and Sixty-Five Dollars
($8,865) per residential unit, which amount shall not in any event exceed the
City’s (or applicable agency’s) calculation of the amount that may be assigned
to Buyer (“Fee Credits Price”). Following the Closing, at such time as Buyer
pulls building permits for the units, Buyer will provide written notice thereof
to Seller, in which event Seller shall execute all necessary documents and
assignments to assign the Fee Credits for the number of units for which Buyer
has requested building permits no later than five (5) calendar days after
Buyer’s notice, and Buyer will pay the Fee Credits Price based on the number of
building permits and the Fee Credits being assigned to Buyer in accordance with
the City’s calculation thereof, upon receipt of such assignment.

 

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2.3.          Bankruptcy Sale Process.

 

2.3.1           Plan Sale. Unless the Parties agree otherwise, the purchase and
sale of the Property and the other transactions contemplated by this Agreement
will be effectuated pursuant to the Chapter 11 Plan. Seller agrees to prepare
and file the Chapter 11 Plan as soon as practicable, and in any event no later
than September 29, 2017. The Chapter 11 Plan must be in a form and contain such
terms as are consistent with the terms of this Agreement and as are reasonably
satisfactory to Buyer. If for any reason the Parties agree that the purchase and
sale of the Property and the other transactions contemplated hereby should be
effected pursuant a 363 Sale and not pursuant to the Chapter 11 Plan, then
Seller shall prepare an appropriate motion for approval of the purchase and sale
and other transactions pursuant to Sections 363(b) and 363(f) of the Bankruptcy
Code, which motion must be in a form and containing such terms as are consistent
with the terms of this Agreement and otherwise reasonably satisfactory to Buyer.

 

2.3.2           Sale as Part of Chapter 11 Plan. The Parties agree that this
transaction provides a foundation to the overall structure and viability of the
Chapter 11 Plan. Unless otherwise required by the Court, Seller agrees not to
accept or enter into any competing overbids or back-up bids while seeking
approval of this Agreement through its Chapter 11 Plan, given the circumstances
of the Bankruptcy Case, including, without limitation, the following: the
complexity of the sale transaction and scope of the due diligence required to be
performed by Buyer; the need for Buyer to advance substantial expenses prior to
the Bankruptcy Court’s approval of the terms set forth in this Agreement; and
Buyer’s unwillingness to enter into this Agreement, undertake the due diligence
and incur the expenses if its Agreement is subject to Seller accepting or
entering into competing bids.

 

2.3.3           Motion to Approve Sale Process. Notwithstanding the foregoing
reasons as to why the Parties agree that an auction sale process is not in the
best interest of Seller’s creditors and bankruptcy estate, if the Parties
mutually agree, or the Bankruptcy Court requires that an auction sale process of
any kind must be used for the sale of the Property either through a Chapter 11
Plan or through a 363 Sale, then the Parties shall use all commercially
reasonable efforts and cooperate to prepare amendments to this Agreement to
provide for mutually satisfactory bidding procedures and compensation to Buyer
if there is competitive bidding for the Property. Such compensation is subject
to Bankruptcy Court approval and may include among other things
(i) reimbursement of all of Buyer’s expenses relating to the preparation and
negotiation of this Agreement and other transaction documents and Buyer’s due
diligence investigation, and (ii) a “break-up” fee equal to one percent (1%) of
the consideration to be paid to Seller in the winning bid for the Property.
Seller agrees that the failure to obtain Bankruptcy Court approval of the terms
of the preceding sentence shall allow Buyer to terminate this Agreement and
receive immediate return of any Deposit.

 

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3.            Escrow and Deposit.

 

3.1.          Opening of Escrow. Upon its receipt of a duly executed original
counterpart of this Agreement from Seller, Buyer shall open an escrow at the
offices of Escrow Agent, by delivering an executed copy of this Agreement to
Escrow Agent. Escrow Agent shall promptly execute the “Acceptance by Escrow
Agent” attached hereto (the date of execution of the “Acceptance by Escrow
Agent” by the Escrow Agent may be referred to as the “Opening of Escrow”) and
shall notify Buyer and Seller in writing of the date of the Effective Date of
this Agreement, which is defined in Section 1.11 of this Agreement and shall
constitute joint escrow instructions to Escrow Agent. The Parties shall execute
such additional instructions, not inconsistent herewith, reasonably requested by
Escrow Agent; provided, however, that as between the Parties, if any conflict
between the provisions of this Agreement and the provisions of such additional
instructions exists or arises, then the provisions of this Agreement shall
control. Escrow Agent is designated the “real estate reporting person” for
purposes of Section 6045 of the Internal Revenue Code of 1996, as amended, and
Treasury Regulation 1.6045-4, and any instructions or settlement statement
prepared by Escrow Agent shall so provide. Escrow Agent shall be responsible for
filing Form 1099-S with the Internal Revenue Service. The period between the
Opening of Escrow and the Closing Date shall be the “Escrow Period.”

 

3.2.          Deposits. The Deposit and any other cash held by Escrow Agent
shall be held for Buyer’s benefit in accordance with the terms and conditions of
this Section 3.2.

 

3.2.1           First Deposit. Within three (3) business days following the
Effective Date, Buyer shall place into escrow the First Deposit. This First
Deposit shall be fully refundable through the date when the Sale Order is
entered.

 

3.2.2           Second Deposit. Within five (5) business days following entry of
the Sale Order, Buyer shall place into escrow the Second Deposit. The Second
Deposit shall be non-refundable once made except in the event of a material
breach by Seller or the failure of a condition to Closing for Buyer’s benefit.

 

3.2.3           Independent Consideration. Concurrently with delivery of the
First Deposit, Buyer shall deposit into escrow as independent consideration for
this Agreement the sum of One Hundred Dollars ($100) (the “Independent
Consideration”), which Independent Consideration shall be fully earned by
Seller, is non-refundable under any circumstances and not applicable to the
Purchase Price. Escrow Agent shall release the Independent Consideration to
Seller upon receipt of the Deposit. The Independent Consideration constitutes
independent consideration for the rights extended to Buyer hereunder, including,
without limitation, the right and option to terminate this Agreement as provided
herein. In all instances under this Agreement in which Buyer elects to terminate
or is deemed to have terminated this Agreement, Seller shall retain the
Independent Consideration whether or not the Deposit is returned to Buyer.

 

3.2.4           Applicability of Deposit. The Deposit shall be maintained in
Escrow and shall be fully applicable to the Purchase Price at the First Closing.

 

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3.2.5           Maintenance of Deposits. Escrow Agent shall hold the Deposit and
all other funds deposited by Buyer with it pursuant to this Agreement,
including, without limitation, the balance of the Purchase Price if and when
deposited in accordance herewith. Escrow Agent shall place the Deposit into an
interest bearing account at a depository acceptable to Buyer, with the interest
accruing for the benefit of Buyer.

 

3.2.6           Subsequent Phase Deposits.

 

(a)              Concurrently with the First Closing, Buyer shall deposit with
Escrow Holder the sum of Two Hundred Thousand Dollars ($200,000), which shall
serve as the deposit for the amounts due upon the Closing of Phase 2, which
shall be non-refundable once made except in the event of a default by Seller or
the failure of a condition to Closing for Buyer’s benefit, and shall be applied
to the Purchase Price at the Closing of Phase 2, and for purposes of this
Agreement shall constitute the “Deposit” under this Agreement following the
consummation of the First Closing.

 

(b)              Concurrently with the Second Closing (as defined in Section
5.2), Buyer shall deposit with Escrow Holder the sum of Two Hundred Thousand
Dollars ($200,000), which shall serve as the deposit for the amounts due upon
the Closing of Phase 3, which shall be non-refundable once made except in the
event of a default by Seller or the failure of a condition to Closing for
Buyer’s benefit, and shall be applied to the Purchase Price at the Closing of
Phase 3, and for purposes of this Agreement shall constitute the “Deposit” under
this Agreement following the consummation of the First and Second Closings.

 

3.3.          Buyer’s Right to Terminate or Pursue Self-Help. Assuming the Sale
Order is entered, in the event that the Parcel 8/15 Final Map is not recorded by
the Outside Map Date, or any other conditions to each Closing for Buyer’s
benefit are not timely satisfied by Seller after notice and opportunity to cure
in accordance with this Agreement, then Buyer may either (i) terminate the
escrow, or (ii) proceed to complete all such Seller requirements utilizing its
own consultants and Buyer shall receive a credit against the Purchase Price for
all actual and reasonable costs, expenses, fees, taxes, map processing fees,
bonding costs, and costs of any work that was to be completed by Seller under
this Agreement in order to deliver the Property to Buyer at Closing in
accordance herewith free of any monetary encumbrances and any delinquent taxes
subject to the Permitted Exceptions only (“Buyer’s Self-Help Right”). If Buyer
exercises Buyer’s Self-Help Right, then the time periods for Closing under this
Agreement shall be extended automatically for each day that Buyer exercises such
right in order to allow for time to satisfy any remaining conditions to Closing.
Notwithstanding any provision contained herein to the contrary, Buyer’s
Self-Help Right shall not include the right to initiate litigation, arbitration
or any other adversary proceeding unless Seller consents to the same in writing,
such consent not to be unreasonably withheld, conditioned or delayed; provided
that if Seller fails to respond within ten (10) calendar days of Buyer’s request
therefor then Seller shall be deemed to have consented to the same.

 

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4.             Inspections, Title Review, and Development Review.

 

4.1.          Due Diligence Period; Notice of Approval. Seller shall cooperate
with Buyer and shall provide to Buyer within five (5) calendar days after the
Effective Date, all Documents in Seller’s possession as set forth on Exhibit C
attached hereto. Buyer expressly acknowledges that, except as expressly set
forth in Section 14.2 below, Seller makes no representation or warranty of any
kind with respect to the Documents or any additional Documents referenced below,
including their accuracy, completeness or suitability for reliance thereon by
Buyer. Seller shall, within two (2) business days after receipt, deliver to
Buyer copies of any additional Documents received by Seller before the Close of
Escrow. Subject to the provisions of this Agreement, Buyer shall have the right
during the Due Diligence Period to investigate title and to conduct any
feasibility, economic, environmental, political, title or engineering studies,
or make such other investigations, studies and tests with respect to the
Property as Buyer deems necessary or appropriate to determine the feasibility of
purchasing and developing the Property. If Buyer elects to proceed with the
purchase of the Property, then at any time prior to the expiration of the Due
Diligence Period, Buyer may, in its sole discretion, deliver a “Notice of
Approval.” If Buyer gives the Notice of Approval, then, subject to the terms,
covenants and conditions set forth in this Agreement and Seller’s express
representations and warranties set forth in Section 14.2 below, such notice
shall be Buyer’s acceptance and approval of the Property and conditions related
thereto, including, without limitation, (i) soils and geology reports;
(ii) title issues, subject to Disapproved Exceptions (as defined in Section 4.3
below); (iii) the Documents; (iv) Buyer’s inspection of the Property; (v) any
survey of the Property; and (vi) zoning and other land use controls. Buyer’s
failure to give the Notice of Approval prior to the expiration of the Due
Diligence Period shall be deemed Buyer’s election not to proceed with the
purchase of the Property and to terminate this Agreement, whereupon the Deposit
(except for the Independent Consideration) shall be immediately returned to
Buyer without the need for further instructions from either Party, and no Party
hereto shall have any further obligation or liability to the other with respect
to the transactions contemplated by this Agreement, except for obligations which
expressly survive termination.

 

4.2.          Inspection of Property. During the Due Diligence Period and
thereafter until this Agreement is terminated or until the Close of Escrow, and
subject to the provisions set forth below, Buyer shall be permitted to (i) fully
inspect and test the Property, including, but not limited to, soils,
geotechnical and Hazardous Materials testing by qualified, and where applicable,
licensed professionals, and (ii) meet with such Authorities as Buyer shall deem
necessary in connection with its inspection of the Property or its subsequent
contemplated development. Buyer and its contractors, agents and employees shall
have the right to enter upon the Property for such inspection and testing,
including, without limitation, the conducting of invasive and non-invasive soil,
geotechnical and environmental testing, subject to the following conditions.

 

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4.2.1           Upon at least twenty-four (24) hours’ prior written notice to
Seller, Buyer and its agents, employees and representatives shall have a right
of reasonable access to the Property for the purpose of conducting surveys,
engineering, geotechnical and environmental inspections and tests (including
invasive inspection, testing and sampling), which activities are hereafter
referred to as the “Work,” and any other inspections, studies or tests required
by Buyer. As a condition precedent to access to the Property by Buyer, its
agents, employees or representatives, Buyer shall (i) provide Seller with proof
of liability insurance relating to such inspections and testing by third parties
(which insurance shall be reasonably satisfactory to Seller, shall name Seller
as an additional insured, shall be for minimum coverage of One Million Dollars
($1,000,000) per occurrence, and shall be the primary insurance with respect to
Seller, and any insurance or self-insurance maintained by Seller shall be excess
of the insurance required hereunder and shall not contribute with it), (ii) keep
the Property free and clear of any liens resulting from or related to the Work,
and (iii) indemnify, defend and hold Seller harmless from and against any and
all liability, damages, costs, fees or expenses for injuries to or death of
persons or damage to property to the extent caused by or resulting from Buyer’s
exercise of its rights hereunder, any such entry by Buyer, its agents,
contractors or consultants, employees or representatives, or any Work by Buyer,
its agents, employees or representatives; provided, however, that in no event
shall Buyer have any obligations under this indemnification with respect to
liability, damages, costs, fees or expenses resulting from Buyer’s discovery of
any pre-existing conditions (except to the extent exacerbated by the negligence
or willful misconduct of Buyer). As a condition precedent to the commencement of
any invasive Work, however, Buyer shall describe in its notice, with reasonable
detail, the contemplated invasive Work and shall identify the parties who will
perform the Work and their qualifications. Such contemplated invasive Work shall
be subject to approval by Seller, which approval shall not be unreasonably
withheld, conditioned or delayed. If any inspection or test disturbs the
Property, Buyer shall promptly restore the Property to substantially the same
condition as existed prior to any such inspection or test and Buyer shall at all
times obey all applicable laws, rules and regulations. The obligations of the
Buyer under this paragraph shall survive the termination of the Agreement.

 

4.2.2           Buyer shall use reasonable care to prevent any unreasonable
interference with Seller’s activities on the Property during Buyer’s
investigation thereof. Buyer shall not permit the Property or any portion
thereof to become subject to any lien for claims for work or materials arising
out of Buyer’s activities on the Property, and Buyer shall immediately remove or
cause to be removed any such lien.

 

4.2.3           In order to minimize disagreements over the physical status of
the Property, Buyer and Seller shall conduct a joint walk-through of the
Property, within five (5) business days after the Effective Date. Each Party
shall have the right to have its engineer present for such walk-through. The
Parties shall prepare a list of any conditions or discrepancies found at the
Property.

 

4.3.          Documents/Title Review. Within five (5) calendar days after the
Effective Date, Buyer shall request that Title Company deliver to Buyer a
commitment for issuance of a standard coverage owner’s title insurance policy
(“Title Commitment”) covering the Property, together with complete and legible
copies of all documents referenced therein as exceptions to the Title
Commitment. No later than fifteen (15) calendar days following the Effective
Date, Buyer shall notify Seller of Buyer’s objections to title, if any
(“Disapproved Exceptions”). Seller shall notify Buyer in writing within ten (10)
calendar days after receipt of Buyer’s notice of Disapproved Exceptions as to
which, if any, of the Disapproved Exceptions Seller or Title Company will
eliminate. If Seller does not agree to eliminate each of the Disapproved
Exceptions, then unless Buyer delivers the Notice of Approval to Seller and
Escrow Agent on or before the expiration of the Due Diligence Period (in which
case Buyer shall be deemed to have approved the same and elected to proceed with
the Closing subject to such exceptions), Buyer shall be deemed to have
disapproved title, Escrow shall terminate, Escrow Agent shall immediately return
the Deposit (except for the Independent Consideration) to Buyer without any
additional instructions from Seller and without any imposed conditions and
Escrow Agent shall immediately return all other documents, instruments and
monies to the Party which deposited same.

 

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4.3.1           Except as to current real property taxes and assessments not yet
due and payable, all Monetary Liens shall automatically be deemed to be
Disapproved Exceptions. Permitted Exceptions shall include, without limitation,
(i) a lien for non-delinquent taxes, assessments, special taxes and similar
impositions, and the lien of supplemental taxes assessed pursuant to Chapter 3.5
commencing with Section 75 of the California Revenue and Taxation Code to the
extent relating to events occurring from and after the Close of Escrow; (ii) the
covenants, conditions and restrictions encumbering the Property as of the
Effective Date; (iii) any community facilities or assessment districts
encumbering the Property as of the Effective Date; and (iv) any matter created
or caused by Buyer or its agents or approved in writing by Buyer. Seller shall
be obligated to remove all Monetary Liens on or before Closing. Any exception to
title appearing in the Title Commitment, which is not expressly identified as a
Disapproved Exception by Buyer and which Seller does not also expressly agree to
eliminate in writing shall be a “Permitted Exception.”

 

4.3.2           No later than fifteen (15) calendar days prior to each Closing,
Escrow Agent shall obtain from Title Company and deliver to Seller and Buyer an
updated Title Commitment for the Property for the issuance of an ALTA standard
coverage owners’ policy of title insurance and legible copies of all instruments
listed in the report as exceptions to title (collectively, the “Updated Title
Documents”). Buyer shall be deemed to object to any new matters set forth on the
Updated Title Documents. Seller shall have ten (10) calendar days from issuance
of the Updated Title Documents to cure the objections or to obtain the
commitment of the Title Company to insure against such title exceptions in a
manner acceptable to Buyer; Seller shall be required to cure any new Monetary
Liens on or prior to Closing. If Buyer requires an extended form of owner’s
policy, then Buyer shall obtain and deliver to the Title Company within thirty
(30) calendar days of the date of entry of the Sale Order an ALTA/ACSM Land
Title Survey of the Property acceptable to the Title Company (“Survey”). Any
request for an extended form of title policy shall not delay the Close of
Escrow.

 

4.4.          Development Approval. During the term of this Agreement, at
Buyer’s cost and expense, Buyer shall have the right to pursue any new
entitlements and all Authority approvals and Permits necessary for Buyer’s
development of the Project, including, without limitation, all subdivision
mapping approvals, land use and zoning approvals, architectural approvals,
including, but not limited to, building plans, renderings, specifications,
drawings, elevations, and prototypes, and any other approvals and permits
required to permit Buyer to immediately commence construction of its intended
development of Buyer’s proposed Project and for the issuance of certificates of
occupancy for such residences or buildings upon their completion in the ordinary
course (collectively, the “Development Approvals”), all as Buyer may deem
necessary for its Project. Furthermore, Buyer shall prepare and process the
remaining Final Maps using commercially reasonable efforts in order to meet the
proposed Closing Dates set forth in this Agreement. Seller agrees to fully
cooperate with Buyer in connection with its Development Approvals and the Final
Maps, and shall execute, upon request of Buyer any and all maps, documents and
agreements which are reasonably necessary to accomplish such purposes, including
appointment of Buyer as agent of Seller for purposes of Buyer’s development of
the Property, provided that Seller incurs no material cost or liability as a
result of such cooperation and provided that the document appointing Buyer as
Seller’s agent expressly prohibits Buyer from binding the Property or recording
any documents relating to the Property without the prior written consent of
Seller, which consent shall not be unreasonably withheld. In the event that the
City requires that Seller, as the owner of the Property, execute any development
applications or subdivision improvement agreements with the City, Seller shall
execute and return such development applications and agreements to Buyer within
five (5) calendar days after the date on which such items are delivered to
Seller.

 

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4.4.1           Except as otherwise set forth in the Agreement, Buyer shall have
the right to prepare any site plans for the Property, including all engineering
and landscaping plans and drawings, the architectural materials, utility plans
for the Project, and all applications and submittals necessary to obtain its
Development Approvals as it may deem necessary during the Due Diligence Period.
At no out-of-pocket cost to Seller, Seller shall, for no additional
consideration or payment, upon request by Buyer (i) execute and promptly deliver
to such appropriate Authorities such applications, submittals, documents,
instruments and other items reasonably requested by Buyer in connection with the
Development Approval process for the Property; (ii) as reasonably requested by
Buyer, appear at any public hearings or other, meetings for or with Authorities
or neighborhood meetings in connection with, and support of the Development
Approvals for the Property; and (iii) otherwise cooperate as reasonably
requested by Buyer in connection with Buyer’s obtaining the Development
Approvals of the Property. Except as set forth in Section 4.6 below, nothing
herein contained shall be deemed to grant Seller and Seller hereby confirms that
Seller has no right, and it hereby waives any right, to object to the
Development Approval matters relating to the Property.

 

4.5.          Inquiry. Subject to the provisions of Section 10 below, Buyer and
its representatives, employees, agents and independent contractors shall have
the right, at its sole cost and expense, to (i) meet with all City, County,
district and other Authorities; and (ii) discuss with any such entities and
agencies the condition of the Property and Buyer’s proposed development of the
Property. Seller shall have the right to participate in any such meetings
arranged by Buyer with Authorities.

 

4.6.          Design Review. Buyer’s design and improvement plans for Phase 2
and Phase 3 of the Property shall be subject to Seller’s reasonable approval
thereof, which approval shall not be unreasonably withheld, delayed or
conditioned. Buyer agrees to submit its plans to Seller prior to submission to
the City, and Seller shall have fifteen (15) calendar days to submit any
objections to the same. Failure to approve or disapprove Buyer’s plans within
such time period shall be deemed an approval. This right shall be personal to
the Seller named in this Agreement, and shall not run to the benefit of any
other parties, whether successors or assigns or otherwise.

 

5.             Closing.

 

5.1.          Timing. The Closing on the Property shall take place in three
Phases as set forth herein to provide the time needed to create the legal
parcels comprising the Property. Closing shall occur at the offices of Escrow
Agent during normal business hours or at such other location as Buyer and Seller
may mutually agree.

 

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5.2.          Phased Closings. Subject to Buyer’s contingencies to Closing under
this Agreement, including the Sale Order being a Final Order, and assuming that
the Parcel 8/15 Final Map is recorded on or prior to the First Closing, the
Closing on (i) Phase 1 shall occur no later than four (4) months following entry
of the Sale Order (“First Closing”); (ii) Phase 2 shall occur no later than
twelve (12) months following entry of the Sale Order (“Second Closing”); and
(iii) Phase 3 shall occur no later than twenty (20) months following entry of
the Sale Order (“Third Closing”). The consummation of a prior Closing shall be a
condition precedent to the consummation of any subsequent Closing under this
Agreement.

 

5.3.          Closing Extensions.

 

5.3.1           Seller’s. Notwithstanding the foregoing, if the
Parcel 8/15 Final Map is not recorded by the Outside Map Date notwithstanding
Seller’s use of all commercially reasonable and diligent efforts, then unless
Buyer exercises Buyer’s Self-Help Right, Seller shall have the right to extend
the Outside Map Date by a period of up to thirty (30) days to allow Seller time
to record the Parcel 8/15 Final Map.

 

5.3.2           Buyer’s. Notwithstanding the foregoing, if the Final Maps are
not recorded by the dates set forth above for the Second Closing or the Third
Closing, respectively, notwithstanding Buyer’s use of all commercially
reasonable and diligent efforts, then Buyer shall have the right to extend each
such date for the Second Closing and/or the Third Closing by a period of thirty
(30) days for each affected Closing to allow Buyer time to record the Final
Maps.

 

5.4.          Outside Conditions Date. Notwithstanding anything to the contrary
contained in this Agreement, in the event Seller is not able, on or before
January 15, 2018, to obtain entry of the Sale Order or satisfy the other
conditions to Closing for Buyer’s benefit hereunder, or if the Sale Order has
not become a Final Order by such date, in each case through no fault of Seller
and Seller shall have used all commercially reasonable efforts to satisfy the
foregoing conditions by such date (“Outside Conditions Date”), then Seller shall
have the right to extend the Outside Conditions Date for a period of up to sixty
(60) calendar days; and following such extension if the foregoing conditions
have not been satisfied during such sixty (60) day period, then Buyer shall have
the right to terminate this Agreement and receive a refund of the Deposit, and
the Parties shall have no further obligations to each other hereunder.

 

5.5.          Payment of Purchase Price Balance. Provided that (i) Seller has
deposited all of the items required by this Section 5.5 no later than two (2)
business days prior to the Closing Date, (ii) all conditions precedent set forth
in this Agreement have been satisfied or waived, and (iii) the Title Company has
confirmed to Buyer in writing that it is in receipt of all items required to be
deposited by Seller and is unconditionally prepared to issue the Title Policy
(defined below) to Buyer upon consummation of the Closing subject only to the
Permitted Exceptions, and payment of the applicable policy premium, Buyer shall
deposit with Escrow Agent the Purchase Price for the applicable Phase less the
Deposit already in Escrow and adjusted by Buyer’s share of prorations and
Closing costs pursuant to Sections 5.8 and 5.9 below, together with the other
adjustments provided for under this Agreement.

 

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5.6.          Delivery of Closing Documentation.

 

(a)          Seller’s Delivery. No later than two (2) business days prior to
Closing, Seller shall execute, acknowledge, and deliver to Escrow Agent,
(i) Seller’s grant deed transferring good and marketable title to the Property,
free and clear of all liens and encumbrances, except Permitted Exceptions in the
form attached hereto as Exhibit D (the “Grant Deed”), (ii) a non-foreign person
affidavit in the form attached hereto as Exhibit E (“FIRPTA”), (iii) a bill of
sale and assignment in the form of attached hereto as Exhibit F (“Bill of
Sale”), (iv) evidence that Seller is exempt from the withholding obligations
imposed by California Revenue and Taxation Code Sections 18805, 18815, and
26131, and (v) such other bills of sale, assignments, and other documents or
instruments of transfer or conveyance as Buyer or Escrow Agent may reasonably
request or as may be otherwise necessary to evidence and effect the sale,
assignment, transfer, conveyance and delivery of the Property to Buyer at no
material additional cost, obligation or liability to Seller. Seller shall, at no
cost or liability to Seller, cooperate with Buyer by providing to the Title
Company, at or prior to Closing, any customary affidavits, agreements and
documents reasonably required by the Title Company to issue the Title Policy
together with any extended coverage desired by Buyer.

 

(b)          Buyer’s Delivery. No later than two (2) business days prior to
Closing, Buyer shall execute, acknowledge, and deliver to Escrow Agent (i) the
Bill of Sale and (ii) such other documents or instruments as Escrow Agent may
reasonably request or as may be otherwise necessary to evidence and effect the
sale, assignment, transfer, conveyance and delivery of the Property.

 

5.7.          Agreement to Cooperate. Each Party shall execute, acknowledge and
deliver, after the Effective Date, including at or after Closing, such further
assurances, instruments and documents as the other may reasonably request in
order to fulfill the intent of this Agreement and the transactions contemplated
hereby. Following a reasonable request for further assurances, instruments
and/or documents from one Party to the other, the requested Party shall
reasonably respond to the request within two (2) business days, and shall not
unreasonably withhold compliance with the request. The provisions of this
Section 5.7 shall survive each Closing and delivery of the Grant Deed and shall
not be merged with such deed. Buyer shall cooperate with Seller so that any
density transfers for units allowed for the Property in excess of those used by
Buyer in its sole and absolute discretion for its Project may be allocated to
Seller.

 

5.8.          Prorations. All non-delinquent real estate taxes, and all other
public or governmental charges and public or private assessments against the
Property, if any, shall be adjusted and prorated, on the basis of a three
hundred sixty-five (365) day year, between the Parties as of the day of Closing
and shall thereafter be assumed and paid by Buyer, whether or not assessments
have been levied as of the date of Closing. Seller shall be responsible for
paying all delinquent taxes, and if Seller is not able to do so by the Closing,
then Buyer agrees to pay such amounts, in which event such amount shall be
credited against the Purchase Price for Buyer’s benefit. Any tax proration based
on an estimate shall be subsequently readjusted upon receipt of a tax bill. The
obligation to adjust shall survive Closing. After Closing, Seller shall remain
solely responsible for and shall promptly pay before delinquency any real estate
taxes and assessments for the Property relating to periods prior to the Closing
Date. The provisions of this Section 5.8 shall survive each Closing and delivery
of the Grant Deed for a period of twelve (12) months.

 

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5.9.          Closing Costs. Seller shall pay the cost of the Title Policy
(standard coverage) and any endorsements requested by Buyer as agreed to by
Seller in order to remove a Disapproved Exception. Seller shall pay the County
transfer taxes and any City transfer taxes. Buyer shall pay any premium
increment for the extended form of Title Policy (if so elected by Buyer) and the
cost of any survey obtained by Buyer, if any. Seller and Buyer shall equally pay
any recording fees. Seller and Buyer shall equally pay the Escrow Agent’s escrow
fees. All other Closing costs, escrow fees, and other fees shall be allocated
between the Parties as is customary in the County.

 

6.             Condemnation and Damage.

 

6.1.          Condemnation. If after the Buyer has given its Notice of Approval
and prior to Closing all or any part of the Property is taken or threatened to
be taken by eminent domain or condemnation, Buyer may elect either (a) to
terminate this Agreement, in which event Escrow Holder shall immediately return
all documents, instruments and monies (including, without limitation, the
Deposit) to the Party which deposited same in respect of the Closing and this
Agreement shall terminate and be of no further force or effect except for those
matters that expressly survive the termination hereof; or (b) to consummate
Closing as herein provided, in which event Seller shall pay or assign to Buyer
all condemnation awards or payments in respect of the Property. If Buyer elects
to proceed under clause (b) above, Seller shall not compromise, settle or adjust
any claims to such award without Buyer’s prior written consent. If this
Agreement is terminated pursuant to this Section 6.1, neither Party shall have
any further rights, duties, obligations or liabilities, at law or in equity,
arising out of or relating to this Agreement except for those that specifically
survive termination of this Agreement pursuant to other sections hereof.

 

6.2.          Damage. If any damage or destruction to any of the Property occurs
prior to Closing, Seller shall immediately give Buyer written notice of such
damage or destruction, and Buyer shall have the option, exercisable within ten
(10) days after notice of such damage, either to (i) terminate the Escrow, in
which case Escrow Holder shall immediately return all documents, instruments and
monies (including, without limitation, the Deposit) to the Party which deposited
same in respect of the Closing and this Agreement shall terminate and be of no
further force or effect except for those matters that expressly survive the
termination hereof, or (ii) accept the Property in its condition at that time,
and receive an assignment of all of Seller’s rights to any insurance proceeds
payable by reason of such damage or destruction together with a credit against
the Purchase Price equal to Seller’s insurance deductible. If Buyer elects to
proceed under clause (ii) above, Seller shall not compromise, settle or adjust
any such insurance claims without Buyer’s prior written consent.

 

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7.             Conditions Precedent to Closing.

 

7.1.          Buyer’s Conditions. Buyer’s obligation to complete each Closing
(unless a different date is set forth below) shall be conditioned upon the
satisfaction (or Buyer’s written waiver thereof) of each of the conditions
precedent set forth in this Section 7.1 below. If these conditions are not
satisfied or affirmatively waived by Buyer in Buyer’s sole and absolute
discretion (except that the recording of any maps to create legal parcels may
not be waived by either Party), then, without limiting any other remedies Buyer
may have hereunder, and subject to Section 11, Buyer shall have the right to
terminate this Agreement, in which case the Deposit shall be promptly returned
from Escrow Agent to Buyer without further instruction from Seller, and neither
Party shall have any duty, obligation or liability to the other except as
expressly provided for herein.

 

(a)          Title Policy. Seller, at its sole expense, shall cause Title
Company to deliver to Buyer an ALTA owner’s coverage policy of title insurance
issued by the Title Insurer, with such endorsements as Buyer may reasonably
request, insuring Buyer in the amount of the Purchase Price of the applicable
Phase and showing the Property to be subject to no exceptions to title other
than the Permitted Exceptions and such other exceptions as may expressly be
approved by Buyer in writing (the “Title Policy”).

 

(b)          Notice of Approval. Buyer shall have given the Notice of Approval.

 

(c)          Seller’s Performance. Seller shall have performed all material
obligations to be performed by Seller pursuant to this Agreement prior to
Closing.

 

(d)          Seller’s Representations and Warranties. Seller’s representations
and warranties set forth herein shall be true and correct as of the Closing.

 

(e)          Sale Order. The Sale Order shall have been entered and shall be a
Final Order.

 

(f)          Monetary Liens. Pursuant to the Sale Order, the portion of the
Property subject to a Closing shall be free and clear of Monetary Liens,
including, without limitation, the Lender’s Lien and all liens for delinquent
taxes.

 

(g)          Assignment of Grants. As of the First Closing, Seller (and the City
as such written consent may be required under the applicable grant agreements)
shall have transferred and assigned to Buyer the Park Grant Amount and the
Street Grant.

 

(h)          Parcel 8/15 Final Map. As to Phase 1, Seller shall have recorded
the Parcel 8/15 Final Map by the Outside Map Date.

 

(i)          Final Maps. As to each of Phase 2 and Phase 3, the Final Maps shall
have been approved and recorded.

 

(j)          Cost Sharing Agreements. As of the First Closing, Seller shall have
duly executed the cost sharing agreements required under this Agreement to be
recorded concurrently therewith.

 

(k)          Development Agreements. Seller shall have caused all of the
development agreements affecting the Property (applicable to the master
development of the Overall Project) to be released from the Property on or prior
to the Closing for each Phase.

 

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(l)          Other Conditions. Seller shall have satisfied its covenants under
this Agreement by the Outside Conditions Date.

 

7.2.          Seller’s Conditions. Seller’s obligation to complete each Closing
(unless a different date is set forth below) shall be conditioned upon the
satisfaction (or its written waiver thereof) of each of the conditions precedent
set forth in this Section 7.2. If these conditions are not satisfied or
affirmatively waived by Seller in its sole and absolute discretion (except that
the recording of any maps to create legal parcels may not be waived by either
Party), then, without limiting any other remedies Seller may have hereunder, and
subject to Section 11, Seller shall have the right to terminate this Agreement,
upon which the Deposit shall be promptly returned from Escrow Agent to Buyer,
and neither Party shall have any duty, obligation or liability to the other
except as expressly provided for herein.

 

7.2.1           Purchase Price. Buyer shall have delivered the balance of
Purchase Price in immediately available funds in accordance with the terms of
this Agreement.

 

7.2.2           Seller’s Performance. Buyer shall have performed all material
obligations to be performed by Buyer pursuant to this Agreement prior to
Closing.

 

7.2.3           Seller’s Representations and Warranties. Buyer’s representations
and warranties set forth herein shall be true and correct as of the Closing.

 

7.2.4           Sale Order. The Sale Order shall have been entered and shall be
a Final Order.

 

7.2.5           Lender’s Lien. If not otherwise addressed in the Sale Order,
Seller shall have received a release of the Lender’s Lien as to the portion of
the Property being acquired by Buyer.

 

7.2.6           Assignment of Grants. On or prior to the First Closing, Seller
shall have obtained the City’s written agreements for the transfer and
assignment of the Park Grant Amount and the Street Grant to Buyer.

 

7.2.7           Development Agreements. On or prior to the Closing for each
Phase, Seller shall have obtained the City’s written release of all development
agreements affecting the Property (applicable to the master development of the
Overall Project).

 

8.            Closing.

 

8.1.          Escrow Agent’s Actions. Upon the Closing Date, when Escrow Agent
holds the items required to be deposited by Seller and Buyer as described above
and Title Company is prepared to issue and deliver to Buyer the Title Policy for
the applicable Phase, Escrow Agent is instructed and authorized to perform the
following actions:

 

(a)          record the Grant Deed in the office of the County Recorder of the
County;

 

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(b)          pay any transfer taxes (to the extent the sale is not exempt from
transfer taxes pursuant to Section 1146(a) of the Bankruptcy Code pursuant to
the terms of the Sale Order);

 

(c)          pay any pro-rated real estate taxes and assessments and any other
charges to be paid by Buyer, out of proceeds deposited into Escrow by Buyer;

 

(d)          unless otherwise provided in the Sale Order, pay any pro-rated real
estate taxes and assessments and any other charges to be paid by Seller, out of
the proceeds deposited into Escrow by Buyer and held for the account of Seller;

 

(e)          instruct the County Recorder to return the recorded Grant Deed;

 

(f)          unless otherwise provided in the Sale Order, disburse to Seller
from the funds deposited into Escrow by Buyer, the Purchase Price including the
Deposit not previously released to Seller, if any, less Seller’s escrow and cash
charges as prorated in accordance with Section 5.8 and Section 5.9;

 

(g)          disburse from funds deposited by Buyer amounts toward payment of
all other items chargeable to the account of Buyer hereunder, and disburse the
balance of such funds if any, to Buyer, and promptly deliver (1) to Buyer the
Bill of Sale and the Title Policy; (2) to Seller a copy of the recorded Grant
Deed and the Bill of Sale; and (3) to Buyer and Seller conformed copies of all
recorded documents.

 

8.2.          Escrow Cancellation Charges. Responsibility for the payment of
escrow cancellation charges shall be borne as follows: (i) If the Closing does
not occur because of the default of a Party, then, notwithstanding anything to
the contrary contained herein, the defaulting Party shall bear all escrow
cancellation charges. (ii) If the Closing does not occur because of the failure
to obtain timely entry of the Sale Order, or because the Sale Order does not
timely become a Final Order, then Seller shall bear all escrow cancellation
charges. (iii) If the Closing does not occur for any reason other than the
reasons in clause (i) or (ii) of this Section 8.2, then Buyer and Seller shall
each pay one-half of any escrow cancellation charges, if so charged by Escrow
Agent. As used herein, “escrow cancellation charges” means all fees, charges and
expenses actually incurred by Escrow Agent, as well as all expenses related to
the services of the Title Company in connection with the issuance of the Title
Commitment and other title matters.

 

8.3.          Possession. Upon Closing, Seller shall deliver to Buyer exclusive
possession of the Property, subject to any and all Permitted Exceptions.

 

9.             Condition and Inspection of Property. Except as provided in this
Agreement, Seller makes no representation or warranty regarding the condition of
the Property, its past use, or its suitability for Buyer’s intended use.

 

 19 

 

 

(A)         Unless otherwise expressly provided in this Agreement, neither
Seller nor any employee or agent of Seller has made or will make, either
expressly or impliedly, any representations, guaranties, promises, statements,
assurances or warranties of any kind concerning any of the following matters
(collectively referred to herein as the “Property Conditions”): (i) the
suitability or condition of the Property for any purpose or its fitness for any
particular use, (ii) the profitability and/or feasibility of owning, developing,
operating and/or improving the Property, (iii) the physical condition of the
Property, including, without limitation, the current or former presence or
absence of environmental hazards or Hazardous Materials, asbestos, radon gas,
underground storage tanks, electromagnetic fields, or other substances or
conditions which may affect the Property or its current or future uses,
habitability, value or desirability, (iv) the rentals, income, costs or expenses
thereof, (v) the net or gross acreage, usable or unusable, contained therein,
(vi) the zoning of the Property, (vii) the condition of title, (viii) the
compliance by the Property with applicable zoning or building laws, codes or
ordinances, or other laws, rules and regulations, including, without limitation,
environmental and similar laws governing or relating to environmental hazards or
Hazardous Materials, asbestos, radon gas, underground storage tanks,
electromagnetic fields, or other substances or conditions which may affect the
Property or its current or future uses, habitability, value or desirability,
(ix) water or utility availability or use restrictions, (x) geologic/seismic
conditions, soil and terrain stability, or drainage, (xi) sewer, septic, and
well systems and components, (xii) other neighborhood or Property conditions,
including, schools, proximity and adequacy of law enforcement and fire
protection, crime statistics, noise or odor from any sources, landfills,
proposed future developments, or other conditions or influences which may be
significant to certain cultures or religions, or (xiii) any other past, present
or future matter relating to the Property which may affect the Property or its
current or future use, habitability, value or desirability.

 

(B)         Buyer is strongly encouraged to conduct its own inspection and
investigation of the Property Conditions referred to above and is further
encouraged to obtain, at its expense, expert advice as to such matters from
professional inspectors and others. Buyer acknowledges that as of the Closing,
it has been given the full opportunity to inspect and investigate such Property
Conditions to its own satisfaction or cause such an inspection and investigation
by experts engaged by Buyer. Buyer represents to Seller that it is relying
solely upon such inspection and investigation in connection with its purchase of
the Property and not upon any express or implied representations, guaranties,
promises, statements, assurances or warranties of Seller or any of Seller’s
employees or agents as to such Property Conditions, unless otherwise expressly
provided under this Agreement and that subject to Seller’s expressed
representations and warranties and post-Closing obligations of Seller set forth
in this Agreement, and Buyer’s inspection of the Property made during the Due
Diligence Period, Buyer is acquiring the Property “AS IS.”.

 

(C)         Effective upon the Closing of the Property or any portion thereof,
by initialing below, Buyer, for itself and its agents, affiliates, successors
and assigns, hereby waives, releases and forever discharges Seller and its
agents, affiliates, successors and assigns from any and all rights, claims and
demands at law or in equity, whether known or unknown at the time of this
Agreement or at Closing, which Buyer has or may have in the future, arising out
of the physical, environmental or economic condition or suitability of the
Property, but specifically excluding (i) the representations, warranties and
covenants of Seller under this Agreement, (ii) any intentional
misrepresentation, or (iii) fraud. Buyer specifically waives the provision of
California Civil Code Section 1542, which specifically provides as follows:

 

 20 

 

 

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
EXPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN TO HIM OR HER MUST HAVE MATERIALLY AFFECTED THE SETTLEMENT WITH THE
DEBTOR.

 

Buyer                          _______________

 

10.           Additional Covenants and Agreements. Notwithstanding anything to
the contrary contained in this Agreement, the following additional covenants and
agreements shall apply to the Parties:

 

10.1.          Right to Contact Government Officials. In conjunction with
Buyer’s due diligence review and obtaining any entitlements, Buyer shall have
the right to contact local, state and federal officials (“Government
Officials”).

 

10.2.          Master Association. Buyer is advised, and acknowledges and agrees
that the Project, including the Property, is subject to covenants, conditions,
and restrictions recorded in the Official Records of the County Recorder’s
Office, which, inter alia, authorize the formation of an owners’ association,
certain use requirements and restrictions and the imposition of assessments. If
within the reasonable control of Seller at the applicable time, Buyer shall be
entitled to a proportionate number of seats on the board of the owner’s
association at such time as it is formed. The provisions of this Section shall
survive and shall continue in full force and effect after Closing.

 

10.3.          Costs of Approvals. Except as expressly set forth in this
Agreement, including, without limitation, the costs related to the Parcel 8/15
Final Map and satisfaction of the related conditions imposed by the City and
payment of all fees in order to finalize and record such map and such other
amounts as described in this Agreement (which shall be Seller’s sole
responsibility), Buyer assumes all other costs, duties, risks, liabilities and
obligations for improving the Property and obtaining all required Permits and
Approvals (including the Final Maps for Phase 2 and Phase 3, and the related
conditions thereto, but specifically excluding the Parcel 8/15 Final Map and its
related costs or conditions) for Buyer’s intended use thereof for the Project,
and paying all costs and fees in connection therewith, including, but not
limited to, building permit fees.

 

10.4.          Parcel 8/15 Final Map. Seller shall process and obtain final
approval of the Parcel 8/15 Final Map and record it as a condition to the First
Closing for Buyer’s benefit. Seller shall process and record the Parcel 8/15
Final Map no later than ninety (90) calendar days following entry of the Sale
Order (“Outside Map Date”). Seller shall be responsible for all costs and
expenses for preparing, approving and recording the Parcel 8/15 Final Map,
including, without limitation, all bonding and warranty costs, and conditions
thereto.

 

10.5.          Park Work. The provisions of the Recitals pertaining to the Park
Work are hereby incorporated by reference.

 

10.6.          Street Work. The provisions of the Recitals pertaining to the
Street Work are hereby incorporated by reference.

 

 21 

 

 

10.7.          Buyer’s Self-Help Right. In the event that Seller fails to
complete processing and recording the Parcel 8/15 Final Map by the Outside Map
Date, or completing any obligations required in connection therewith such as the
payment of any delinquent taxes, or any other material obligations required of
Seller under this Agreement, and Buyer shall have given written notice of such
failure and the opportunity to cure the same within ten (10) calendar days of
such notice (collectively, “Incomplete Work”), then Buyer shall have the right
to elect to complete the Incomplete Work in accordance with the following
provisions affecting Buyer’s Self-Help Right. Buyer may exercise Buyer’s
Self-Help Right with respect to any portion of the Incomplete Work, and any
partial exercise shall not relieve Seller of Seller’s obligation to complete the
remainder of the Incomplete Work with respect to which Buyer has not exercised
Buyer’s Self-Help Right.

 

10.7.1           Direct Payment. In exercising Buyer’s Self-Help Right, Buyer
shall have the right to use Buyer’s contractors and consultants to complete any
Incomplete Work. To the extent Buyer exercises Buyer’s Self-Help Right, Buyer
shall have the right to pay all contractors and consultants directly. The
amounts paid by Buyer for the actual and reasonable costs to complete any
Incomplete Work shall be the self-help costs (collectively, the “Self-Help
Costs”).

 

10.7.2           Credit to Purchase Price. All Self-Help Costs shall be credited
against and reduce the amount of the Purchase Price on a dollar-for-dollar basis
for Buyer’s benefit.

 

10.7.3           Ongoing Assignment of Seller’s Rights.

 

(a)                Assignment of Plans and Contracts. Concurrently with the
Closing, Seller shall sign and deliver to Buyer that certain Assignment of Plans
and Contracts in the form attached hereto as Exhibit G (“Assignment of Plans and
Contracts”). Pursuant to the Assignment of Plans and Contracts and this
Agreement, Seller shall and does hereby assign to Buyer, to the extent
assignable, on a non-exclusive basis, without representation or warranty, all of
its rights and interests in, to and under all of the following whether now or
hereafter existing: (a) all plans, drawings, specifications, surveys, reports,
data and similar documents relating to Seller’s development of the Property and
construction of the offsite and onsite improvements together with all express or
implied warranties related thereto (collectively, “Plans”); (b) all Intangible
Property owned by Seller in connection with Seller’s development of any portion
of the Property, and all other governmental permits, entitlements, approvals and
licenses, including, without limitation, all applications for any of the
foregoing (collectively, “Permits”); and (c) all agreements and contracts
relating to the preparation, issuance, ownership or use of the Plans and Permits
and the construction of all improvements contemplated thereby with respect to
the Property (collectively, “Contracts”).

 

 22 

 

 

(b)               Consents. It is the intention of the Parties that, subject to
the requirements of this Section 10.7.3, by virtue of the Assignment of Plans
and Contracts, Buyer will have full rights, power and authority to use, re-use
or rely upon all of the Plans, Permits and Contracts in connection with its
development of the Property in connection with Buyer’s Self-Help Right, but
without any obligation to cure any default or breach on Seller’s part
thereunder. Seller shall use commercially reasonable efforts to obtain (a) all
necessary written consents to said assignment of Plans, Permits and Contracts
(“Necessary Consents”) from the firms preparing or entering into the Plans,
Permits and Contracts, and (b) written acknowledgments (“Right to Use
Acknowledgment”) from the firms preparing or entering into the Plans, Permits
and Contracts that each of them have read the terms and conditions of this
Section and agrees to comply with its terms and recognize Buyer’s rights, power
and authority to use, re-use or rely upon all of the Plans, Permits and
Contracts, which shall be obtained during the Due Diligence Period. The form by
which Seller will obtain Necessary Consents and Right to Use Acknowledgments in
substantial conformance therewith is attached hereto as Exhibit H. Further,
Seller shall immediately advise Buyer of such inability to obtain any of the
Necessary Consents and/or Right to Use Acknowledgments so that Buyer may
directly discuss said request with such non-consenting parties. Seller shall
also use commercially reasonable efforts to obtain all Necessary Consents and
Right to Use Acknowledgments for the Plans, Permits and Contracts from all
appropriate Authorities. If Seller is unable to obtain any or all Necessary
Consents and Right to Use Acknowledgments, then upon request by Buyer, Seller
will promptly (and in any event within fourteen (14) days thereafter) prepare
and file a motion pursuant to Sections 363, 365 and/or 525 of the Bankruptcy
Code to approve the assignment to Buyer (subject to the Closing of the sale of
the portion of the Property to which the Plans, Permits and Contracts relate) of
all of Seller’s right, title and interest in and to the Plans, Permits and
Contracts, which motion may be included within the Chapter 11 Plan or other
motion for entry of the Sale Order.

 

(c)               Run with the Land. Notwithstanding anything to the contrary
contained herein, to the fullest extent permitted by law, all Plans, Permits and
Contracts shall run with the Property and, to the extent agreed upon by the
applicable party, firm, consultant, agency or regulatory authority, no party,
firm, consultant, agency or regulatory authority (other than Seller and Buyer)
shall have any ownership interest therein or legal or other claim or rights
thereto.

 

10.8.          No Opposition. By purchasing the Property, Buyer acknowledges
Seller’s right to obtain the consent of all governing agencies to develop the
remaining portions of the real property within the Overall Project (not
including the subject Property) in whatever reasonable manner Seller shall
choose (but specifically excluding the development of the remaining Overall
Project into townhouses which may be opposed by Buyer provided that the Closing
for each Phase of the Property has timely occurred). Buyer, on behalf of itself
and its officers, partners, directors, employees, agents, partners, members,
successors and assigns, agrees that it will not in any way challenge, contest,
oppose, litigate, or seek to hinder or delay, directly or indirectly,
administratively, judicially, publicly or privately, including by referenda or
initiative, and will not in any way assist, support, encourage or provide
cooperation, direct or indirect, to others who challenge, contest, oppose,
litigate, or seek to hinder or delay; (i) the processing and issuance of
entitlements for the development, use, occupancy, and/or sale of the Overall
Project or any matter in any way related thereto (but specifically excluding the
development of the remaining Overall Project into townhouses which may be
opposed by Buyer provided that the Closing for each Phase has timely occurred);
(ii) any governing agency ordinances, permits, approvals or determinations in
any way related to the development, construction, use, occupancy, and/or sale of
any portion of the Overall Project, including, but not limited to, any
development agreement, tentative or final map, or the conditions applicable
thereof, (iii) ordinances, permits, approvals or determinations in any way
related to the construction of public works, and/or offsite improvements related
to the Overall Project; (iv) matters related to the implementation of the
Overall Project ordinances, permits, approvals, determinations or other
entitlements, (v) financial agreements with governing agencies and community
facilities districts or bonds issued pursuant thereto, (vi) any other
documentation related to development, construction, use, occupancy, and/or sale
of any portion of the Overall Project, or (vii) any modification, renewal,
extension, or amendment of any of the foregoing. Buyer shall execute and
acknowledge such documents, agreements, consents, waivers, or other instruments
and shall take such other actions as Seller, in the exercise of its sole
discretion, may deem necessary, expedient or appropriate to confirm Buyer’s
consent to the development of the Overall Project in accordance with the
provisions of this paragraph. Seller alone shall have the right to enforce, all
restrictions, covenants and agreements imposed by this paragraph, including the
right to prevent the violation of any such restrictions, covenants, or
agreements; order the abatement of any activity undertaken by Buyer in violation
of any such restrictions, covenants, or agreements; and the right to recover
damages or other amounts due for such violation. All rights, options and
remedies of Seller are cumulative, and no one of them shall be exclusive of any
other. Seller (and/or its assignee) shall have the right to pursue any one or
all of such rights and remedies or any other remedy or relief which may be
available at law or in equity, whether or not stated in this paragraph. The
provisions of this paragraph shall survive and shall continue in full force and
effect after the First Closing for a period of sixty (60) months.

 

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10.9.          SWPPP Indemnity. TO THE MAXIMUM EXTENT PERMITTED BY LAW, SELLER
SHALL INDEMNIFY AND HOLD HARMLESS BUYER AND ANY OF ITS AFFILIATES FROM AND
AGAINST ANY CLAIMS, DEMANDS, DAMAGES, FINES, PENALTIES, VIOLATIONS, NOTICES OF
VIOLATIONS, REASONABLE ATTORNEYS’ FEES, COSTS, OR EXPENSES OF ANY TYPE OR NATURE
TO THE EXTENT ARISING FROM OR RELATED TO, DIRECTLY OR INDIRECTLY, THE FAILURE OF
SELLER TO (i) SATISFY SELLER’S STORM WATER OBLIGATIONS DURING THE PERIOD OF
SELLER’S OWNERSHIP, OR (ii) OTHERWISE FAIL TO PROPERLY PERFORM ANY STORM WATER
RELATED ACTIONS REQUIRED ON THE PART OF SELLER PRIOR TO THE CLOSING ON THE
PROPERTY (OR ANY PORTION THEREOF) BY BUYER.

 

10.10.         Assignment of Declarant Status and Development Agreement. At each
Closing, Seller shall partially assign to Buyer (and/or its assignee) declarant
status under the existing CC&Rs relative to matters concerning the entitlement,
development, improvement and use of the parcels constituting the Property being
acquired at such Closing, by executing and delivering the Assignment of
Declarant Status in the form and content required under the CC&Rs and pursuant
to a written assignment agreement to be prepared and entered into between the
Parties prior to the expiration of the Due Diligence Period. Seller shall use
commercially reasonable efforts to cause any and all development agreements
(applicable to the master development of the Overall Project) to be released
from the Property, with respect to the first Phase concurrently with the
recordation of the Parcel 8/15 Final Map, and prior to the Closing for each
subsequent Phase; provided, that, Seller agrees to partially assign any
incentives or fee reduction programs under such development agreements, if any,
to Buyer.

 

10.11.         Dirt. During the walk-through, the Parties shall assess whether
development of the intended Project will require importation of fill dirt to
cause the parcels to consist of a level pad. In the event that the pads are
determined not to be sufficiently level for construction of Buyer’s Project,
Buyer shall complete all work to compact the sites at Buyer’s cost and expense,
but Seller agrees to make available to Buyer any excess onsite dirt currently
located on the Property at no additional cost to Buyer. The dirt needs for the
Property and availability of onsite excess dirt shall be evaluated by Buyer
during the Due Diligence Period.

 

 24 

 

 

10.12.         No Other Offers. Unless required by the Bankruptcy Court,
following the expiration of the Due Diligence Period and Buyer’s election to
proceed with the transactions contemplated hereby, during the term of this
Agreement Seller shall not accept or enter into any backup offers or other
agreements for the sale of the same Property to any other person or entity.

 

11.           Default.

 

11.1.          Buyer Default. LIQUIDATED DAMAGES: BUYER AND SELLER AGREE THAT
FOLLOWING BUYER’S DELIVERY OF THE NOTICE OF APPROVAL AND ENTRY OF THE SALE
ORDER, IN THE EVENT THE CONDITIONS PRECEDENT TO CLOSING OF THIS AGREEMENT HAVE
BEEN SATISFIED OR WAIVED BY BUYER, AND BUYER DEFAULTS ON ITS OBLIGATION TO
COMPLETE THE CLOSING PURSUANT TO THIS AGREEMENT, SUBJECT TO THE TERMS AND
CONDITIONS OF SECTION 11.3 BELOW, AND PROVIDED THAT SELLER IS NOT IN DEFAULT OF
THIS AGREEMENT BEYOND ANY APPLICABLE NOTICE AND CURE PERIODS, THE DAMAGES TO
SELLER WOULD BE DIFFICULT AND IMPRACTICAL TO DETERMINE. BUYER AND SELLER FURTHER
AGREE THAT THE DEPOSIT REPRESENTS A REASONABLE ESTIMATE OF THE RESULTING DAMAGES
TO SELLER, SUCH DAMAGES INCLUDING COSTS OF NEGOTIATING AND DRAFTING OF THIS
AGREEMENT, COSTS OF COOPERATING IN SATISFYING CONDITIONS TO CLOSING, COSTS OF
SEEKING ANOTHER BUYER UPON BUYER’S DEFAULT, OPPORTUNITY COSTS IN KEEPING THE
PROPERTY OUT OF THE MARKETPLACE, AND OTHER COSTS INCURRED IN CONNECTION
HEREWITH. ACCORDINGLY, BUYER AND SELLER HAVE AGREED TO FIX AS LIQUIDATED DAMAGES
THE AMOUNT OF THE DEPOSIT THEN IN ESCROW, AND SELLER MAY RECOVER AND/OR RETAIN
SUCH AMOUNT WITHOUT RESTRICTION AS LIQUIDATED DAMAGES, AND WHICH SHALL
CONSTITUTE SELLER’S SOLE AND EXCLUSIVE REMEDY FOR SUCH DEFAULT. SELLER’S
RETENTION OF SAID SUMS AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR
PENALTY UNDER CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT INSTEAD, IS
INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO SECTIONS 1671,
1676 AND 1677 OF THE CALIFORNIA CIVIL CODE. SELLER AGREES THAT THESE LIQUIDATED
DAMAGES SHALL BE IN LIEU OF ANY OTHER MONETARY RELIEF OR OTHER REMEDY,
INCLUDING, WITHOUT LIMITATION, SPECIFIC PERFORMANCE, TO WHICH SELLER OTHERWISE
MIGHT BE ENTITLED UNDER THIS AGREEMENT, AT LAW OR IN EQUITY. THE LIMITATIONS
CONTAINED IN THIS SECTION SHALL NOT APPLY TO ANY INDEMNITY OBLIGATIONS CONTAINED
IN THIS AGREEMENT OR TO ANY REMEDY AVAILABLE TO SELLER UNDER SECTION 11 OF THIS
AGREEMENT. BUYER AND SELLER SPECIFICALLY ACKNOWLEDGE THEIR AGREEMENT TO THE
FOREGOING LIQUIDATED DAMAGES PROVISION BY INITIALING THIS PARAGRAPH IN THE
APPROPRIATE SPACES PROVIDED BELOW:

 

Buyer’s Initials: _________         Seller’s Initials: ___________

 

 25 

 

 

11.2.          Seller’s Default. In the event of any default hereunder by Seller
to convey the Property as required under this Agreement upon entry of the Sale
Order (and subject to Seller’s conditions to Closing), or the breach of any
material provisions hereunder, Buyer shall have the right, IN LIEU OF ANY AND
ALL OTHER REMEDIES AVAILABLE AT LAW OR IN EQUITY, to either (i) if reasonably
practical, pursue Buyer’s Self-Help Right and receive a credit against the
Purchase Price for all of Buyer’s costs, expenses, fees and other amounts
expended in satisfaction of Seller’s obligations under this Agreement in order
to complete the purchase of the Property in accordance with this Agreement,
(ii) cancel this Agreement either in its entirety or only as to a given portion
of the Agreement that is not yet performed, or (iii) to pursue an action for
specific performance of this Agreement, and if Buyer shall be the prevailing
Party in such action for specific performance, Seller shall pay the actual and
reasonable cost of Buyer’s attorneys’ fees and other costs of prosecuting such
action. If Buyer cancels this Agreement, then (a) the Deposits shall be
immediately returned to Buyer without further instruction from Seller,
(b) Seller will reimburse Buyer for all of its reasonable and actual
out-of-pocket expenses incurred in connection with the transactions contemplated
by this Agreement up to a maximum amount of $50,000.

 

11.3.          Return of Deposit. For clarity purposes, in addition to any and
all other remedies provided for under this Agreement, the Deposit shall be
returned to Buyer in the event that (i) Buyer elects to terminate this Agreement
during the Due Diligence Period, (ii) Buyer’s conditions to Closing are not
satisfied and Buyer does not otherwise waive the same, (iii) Seller does not
obtain entry of the Sale Order by the Outside Conditions Date, or if the Sale
Order has been entered but is not a Final Order by such date, (iv) a new
Monetary Lien is identified in any Updated Title Documents that Seller is not
able or not willing to remove, or (v) Seller is in breach of this Agreement and
Buyer elects to terminate this Agreement as a result thereof.

 

11.4.          Cure Period. Notwithstanding the provisions of Section 11 above
and any other provisions in this Agreement applicable to a breach or default by
either Party, no default by Buyer or Seller shall result in a termination or
limitation of any rights of Buyer or Seller unless and until the non-defaulting
Party shall have notified the other in writing of said default, in reasonably
sufficient detail, and the defaulting Party shall have failed to cure said
default within five (5) business days after the receipt of said written notice.
This cure period does not apply to the payment of any fees or deposits, which
shall be made timely.

 

12.         Notices. All notices required hereunder shall be in writing, and
shall be delivered by personal delivery, facsimile, commercial courier, or by
mailing such notice by first-class mail, certified, return receipt requested,
postage and fees prepaid, addressed as follows:

 

To Buyer: Anthem United Homes, Inc.   3001 Douglas Blvd., Suite 200   Roseville,
CA 95661   Attention:  Brendan Leonard   Telephone:      916-960-0240  
Facsimile:        916-960-0242   Email:               BLeonard@AnthemUnited.com

 

 26 

 

 

With copies to: Stoel Rives LLP   500 Capitol Mall, Suite 1600   Sacramento, CA
95814   Attention:  Sylvia S. Arostegui   Telephone:      916-447-0700  
Facsimile:       916-447-4781   Email:              Sylvia.Arostegui@stoel.com  
  To Seller: Capitol Station 65 LLC   410 Park Avenue, 14th Floor   New York, NY
10022   Attention:  Suneet Singal   Telephone:     916-213-5272   Facsimile:
      916-914-2487   Email:              s@firstcapitalre.com     With copies
to: Nuti Hart LLP   411 30th Street, Suite 408   Oakland, CA 95609  
Attention:  Gregory C. Nuti   Telephone:     510-507-7152   Email:
             gnuti@nutihart.com     Escrow Agent: First American Title Company  
4750 Willow Road, Suite 100   Pleasanton, CA 94588   Attention:  Diane Burton,
Escrow Holder   Telephone:      925-201-6603   Facsimile:       866-648-7806  
Email:              dburton@firstam.com

 

or to such other address as either Party may designate by written notice to the
other. All notices shall be deemed delivered upon actual receipt or refusal of
delivery. Email addresses are provided herein for convenience only, and are not
deemed to be an acceptable method for delivery of notices, unless otherwise
specifically set forth in this Agreement.

 

13.         Brokers. Seller hereby agrees to indemnify, defend and hold Buyer
free and harmless from and against any and all claims for any real estate
brokerage commission or finder’s commission or fee owed by Seller to any broker,
agent, finder or third party retained by Seller. Buyer hereby agrees to
indemnify, defend and hold Seller free and harmless from and against any and all
claims for any real estate brokerage commission or finder’s commission or fee
owed to any broker, agent, finder or third party retained by Buyer. Each Party
shall be responsible for any finder’s fee agreed to by such party pursuant to
separate agreements that such Party executed in connection with the same.

 

 27 

 

 

14.          Representations, Warranties and Covenants.

 

14.1.          Buyer’s Warranties and Representations. To induce Seller to enter
into this Agreement, Buyer represents and warrants to Seller as follows:

 

(a)          Buyer’s Authority. Buyer has the legal power, right and authority
to enter into this Agreement and the instruments referenced herein, and to
consummate the transactions contemplated hereby.

 

(b)          Actions. All requisite action (corporate, trust, partnership or
otherwise) has been taken by Buyer in connection with the entering into this
Agreement, the instruments referenced herein, and the consummation of the
transaction contemplated hereby.

 

(c)          Signatory. The individuals executing this Agreement and the
instruments referenced herein on behalf of Buyer and the officers of Buyer, if
any, have the legal power, right, and actual authority to execute this Agreement
and consummate the transaction contemplated herein.

 

(d)          Enforceability. Subject to entry of the Sale Order, this Agreement
and all documents required hereby to be executed by Buyer are and shall be
valid, legally binding obligations of and enforceable against Buyer in
accordance with their terms except to the extent that such enforcement may be
limited by applicable bankruptcy, insolvency, moratorium and other principles
relating to or limiting the rights of contracting Parties generally in a case or
proceeding concerning Buyer.

 

(e)          Conflicting Documents. Neither the execution and delivery of this
Agreement and the documents and instruments referenced herein, nor the
occurrence of the obligations set forth herein, nor the consummation of the
transaction contemplated herein, nor compliance with the terms of this Agreement
and the documents and instruments referenced herein conflict with or result in
the material breach of any terms, conditions or provisions of, or constitute a
default under, any bond, note, or other evidence of indebtedness or any
contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease
or other agreement or instrument to which Buyer is a party.

 

(f)          Patriot Act. Buyer is not, and will not be, a person or entity with
whom Seller is restricted from doing business under the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism Act of 2001, H.R. 162 Public Law 107-56 (commonly known as
the “USA Patriot Act”) and Executive Order Number 13224 on Terrorism Financing,
effective September 24, 2001 and regulations promulgated pursuant thereto,
including, without limitation, persons and entities named on the office of
Foreign Asset Control Specially designated Nationals and Blocked Persons List.

 

 28 

 

 

14.2.          Seller’s Representations. Seller hereby makes the following
representations and warranties as of the Effective Date, which representations
and warranties shall be deemed to be remade by Seller to Buyer as of the Closing
Date. All representations and warranties that are expressly qualified “to
Seller’s knowledge” shall be deemed to refer to actual (but not constructive)
knowledge, without any duty of inquiry or personal liability for the same, of Al
Esquivel (“Seller’s Representative”) without Seller’s Representative having any
obligation to make an independent inquiry or investigation. In the event of any
breach of any representation or warranty by Seller above, Seller’s
Representative shall not be personally liable for such breach and recourse may
not be had against Seller’s Representative personally. Seller represents and
warrants that Seller’s Representative is the person charged with the day-to-day
operation of the Property and the person most likely to have knowledge of the
truth and accuracy of the below representations and warranties by Seller. Seller
has not made and shall have no duty to make any special inquiry or investigation
of any of the matters referred to in this Section for purposes of making the
representations and warranties stated below. Seller shall not be deemed to have
breached any warranty or made any misrepresentation if it has disclosed the
truth of the matter in question in a Seller Update Certificate (as defined
below). Except as explicitly set forth in this Agreement, Seller makes no
representation concerning the Property and Buyer agrees that any representation
made by Seller or any of its agents prior to date of this Agreement is not
binding upon Seller, nor may Buyer rely thereto, except to the extent such
representation is explicitly set forth in this Agreement. If, prior to the
Closing Date, Seller acquires actual knowledge of any facts or circumstance
which would cause the representations contained in this Section 14.2 to become
untrue if such representations were made as of the date Seller becomes aware of
such fact or circumstance, Seller shall immediately disclose the same to Buyer
by delivery to Buyer of a written notice duly executed by Seller (herein the
“Seller Update Certificate”) identifying any such representation or warranty
which is not, or no longer is, true and correct and explaining the state of
facts giving rise to the change. If, despite the changes or other matters
described in such Seller Update Certificate, the Closing occurs, Seller’s
representations and warranties set forth in this Agreement shall be deemed to
have been modified by all statements made in such Seller Update Certificate and
Seller shall have no liability to Buyer for any such changes, matters or
statements made in such Seller Update Certificate except to the extent the same
are materially inaccurate when made in such Seller Update Certificate.

 

(a)          Seller’s Authority. Seller is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
California and, subject to Bankruptcy Court approval and entry of the Sale
Order, has the legal power, right and authority to enter into this Agreement and
the instruments referenced herein, and to consummate the transaction
contemplated hereby.

 

(b)          Actions. All requisite limited liability company action has been
taken by Seller in connection with the entering into this Agreement, the
instruments referenced herein, and the consummation of the transaction
contemplated hereby and, to Seller’s knowledge, except for entry of the Sale
Order, does not require the consent of any other partner, shareholder, trustee,
trustor, beneficiary, creditor, investor, Authority or other party. Further, to
Seller’s knowledge, other than may be required by a development agreement
affecting the Property, any entitlement or conditions thereto or any other
document disclosed by Buyer to Seller, no action by any Authority is necessary
to make this Agreement a valid instrument binding upon Seller in accordance with
its terms.

 

(c)          Signatory. The individuals executing this Agreement and the
instruments referenced herein on behalf of Seller and the officers of Seller, if
any, have the legal power, right, and actual authority to bind Seller to the
terms and conditions hereof and thereof.

 

 29 

 

 

(d)          Enforceability. Subject to entry of the Sale Order, this Agreement
and all documents required hereby to be executed by Seller are and shall be
valid, legally binding obligations of and enforceable against Seller in
accordance with their terms except to the extent that such enforcement may be
limited by applicable principles relating to or limiting the rights of
contracting Parties generally.

 

(e)          Patriot Act. Seller is not, and will not be, a person or entity
with whom Buyer is restricted from doing business under the USA Patriot Act and
Executive Order Number 13224 on Terrorism Financing, effective September 24,
2001 and regulations promulgated pursuant thereto, including, without
limitation, persons and entities named on the office of Foreign Asset Control
Specially Designated Nationals and Blocked Persons List.

 

(f)          Foreign Person. Seller is not a “foreign person” as that term is
defined in Section 1445 of the Internal Revenue Code of 1986, as amended, and
applicable regulations.

 

(g)          Condemnation. To Seller’s knowledge, there are no pending or
threatened condemnation proceedings affecting the Property, or any part thereof.

 

(h)          Hazardous Materials. To Seller’s knowledge: (i) there is not, and
to the best of Seller’s knowledge has not been, any violation of “Environmental
Laws” related to the Property or the presence or release of “Hazardous
Materials” on or from the Property, (ii) except as may be disclosed in the
Documents delivered to Buyer, to Seller’s knowledge, neither Seller nor any
prior or other occupant has manufactured, introduced, released or discharged
from or onto the Property any “Hazardous Materials” or any toxic wastes,
substances or materials (including, without limitation, asbestos) during the
period of Seller’s ownership. To Seller’s knowledge, Seller has not used the
Property or any part thereof for the generation, treatment, storage, handling or
disposal of any Hazardous Materials, in violation of any Environmental Laws. To
Seller’s knowledge (i) there are no underground storage tanks located on the
Property, (ii) there have been no claims made or threatened in writing by any
third party against Seller or the Property relating to damage, cost recovery
compensation, contribution loss or injury resulting from any Hazardous
Materials, and (iii)  there are no enforcement, cleanup, removal or other
Authority actions instituted, completed or threatened in writing pursuant to any
applicable federal, state or local laws relating to any Hazardous Materials and
affecting the Property. The term “Environmental Laws” includes, without
limitation, the Resource Conservation and Recovery Act and the Comprehensive
Environmental Response Compensation and Liability Act and other federal laws
governing the environment as in effect on the date of this Agreement, together
with their implementing regulations, guidelines, rules or orders as of the date
of this Agreement, and all state, regional, county, municipal and other local
laws, regulations, ordinances, rules or orders that are equivalent or similar to
the federal laws recited above or that purport to regulate Hazardous Materials.
The term “Hazardous Materials” includes petroleum, including crude oil or any
fraction thereof, natural gas, natural gas liquids, liquefied natural gas, or
synthetic gas usable for fuel (or mixtures of natural gas or such synthetic
gas), and any substance, material, waste, pollutant or contaminant listed or
defined as hazardous or toxic under any Environmental Law.

 

 30 

 

 

(i)          Leases. Seller has not entered into any lease, license or other
agreement permitting any person or entity to occupy or use any portion of the
Property or otherwise affect the Property or any part thereof except as
disclosed in the Documents delivered to Buyer.

 

(j)          No Other Contracts. Seller has not granted to any person or entity,
and to Seller’s knowledge, no person or entity has, any conditional or
unconditional right and/or option to purchase the Property, and/or right of
first refusal or right of first offer to purchase the Property.

 

(k)          Title. Seller holds sole fee title to the Property and upon entry
of the Sale Order shall have full rights to convey the same to Buyer, and no
person (including, without limitation, any tenant) has any option to purchase or
first refusal rights with respect to the Property or any part thereof.

 

(l)          No Violations. Except as may be disclosed in the Documents
delivered to Buyer, to Seller’s knowledge, Seller has not received (i) any
written notice of any existing violation of any statute, ordinance, regulation
or administrative or judicial order concerning the Property, nor (ii) any notice
from any Authority that any work of repair, maintenance, or improvement needs to
be performed upon the Property.

 

(m)          Instruments Delivered to Buyer. To Seller’s knowledge, all
instruments, documents, lists, schedules and items, including the Documents,
prepared by Seller and required to be delivered to Buyer fairly present the
information set forth in a manner that is not misleading and will be true,
complete and correct in all respects on the date of delivery and upon each
Closing Date, as they may be updated, modified or supplemented in accordance
with this Agreement; provided, however, that Seller does not warrant the content
or accuracy of any third-party information or report. To Seller’s knowledge,
Seller has provided all Documents in Seller’s possession pertaining to the
Property.

 

(n)          Notification of Change in Condition. Seller shall promptly notify
Buyer of any event or circumstance which makes any representation or warranty of
Seller under this Agreement untrue or misleading, it being understood that the
Seller’s obligation to provide notice to Buyer shall in no way relieve Seller of
any liability for a breach by Seller of any of Seller’s representations,
warranties or covenants under this Agreement.

 

14.3.          Survival. Unless otherwise expressly stated to the contrary in
this Agreement, the representations and warranties of the Parties set forth
herein shall be true as of the Effective Date and the date of each Closing, and
shall survive each Closing and delivery of each Grant Deed for a period of six
(6) months. Seller shall notify Buyer in writing immediately if any
representation made by Seller becomes untrue or misleading in light of
information obtained by Seller after the Effective Date and prior to Closing.

 

 31 

 

 

14.4.          Seller’s Covenants. From and after the date hereof and through
and including the last Closing, Seller shall, at the Seller’s sole cost and
expense: (a) keep in full force and effect, and/or renew to the extent
necessary, all existing licenses, permits, and entitlements for the Property;
and (b) continue to maintain the Property in accordance with Seller’s existing
business practices and in such condition so that the Property shall be in
substantially the same condition on the Closing as of the Effective Date hereof.
Further, so long as this Agreement remains in force, Seller shall not (i) cause,
permit or, through Seller’s acts or omissions, suffer to exist any encumbrance,
charge or lien to be placed or claimed upon the Property which would survive
past Close of Escrow; (ii) lease, convey or otherwise transfer all or any
portion of the Property; (iii) do any act or execute any document which would
affect the Property and Buyer’s rights under this Agreement without the prior
written consent of Buyer, not to be unreasonably withheld; (iv) seek, initiate
or facilitate the creation either before or after Closing of any new or
additional public assessment district, Mello-Roos tax or other assessment
constituting a lien against the Property for any purpose, including, without
limitation, the financing of any off-site improvements under any subdivision
improvement agreement or otherwise; and (v) cause any action to be taken which
would cause any of the representations or warranties made by Seller in this
Agreement to be false on or as of the Closing Date.

 

15.           General.

 

15.1.          Entire Agreement. This Agreement constitutes the final and entire
Agreement between the Parties, and they shall not be bound by any terms,
covenants, conditions, representations or warranties not expressly contained
herein. This Agreement may not be amended except by a written instrument
executed by both Parties.

 

15.2.          Partial Invalidity. If any one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision hereof, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.

 

15.3.          Time of the Essence. Time is of the essence of this Agreement and
the performance of each and every one of the terms and conditions hereof.

 

15.4.          Successors and Assigns. Subject to the limitations set forth
below, this Agreement shall be binding upon and shall inure to the benefit of
the Parties and their respective legal representatives, successors and assigns.
Buyer and Seller shall not assign, hypothecate, or otherwise transfer such
rights hereunder, or delegate such duties hereunder, without the prior written
consent of the other party, which approval shall not be unreasonably withheld,
conditioned or delayed. Notwithstanding the foregoing, Buyer may assign, convey,
or otherwise transfer its rights and obligations hereunder, without Seller’s
consent but upon prior written notice to Seller, to (i) any affiliate,
subsidiary or related entity of Buyer, or (ii) any entity affiliated with Buyer
established to hold title to the Property. No assignment shall relieve Buyer
from its obligations, responsibilities or liabilities under this Agreement.

 

15.5.          Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original and all of which together shall
constitute one and the same instrument.

 

 32 

 

 

15.6.          Headings. The headings of the Sections, subsections, paragraphs
and subparagraphs hereof are provided for convenience of reference only, and
shall not be considered in construing their contents.

 

15.7.          Exhibits and Schedules. Each writing or map or plan referred to
herein as being attached hereto as an exhibit or otherwise designated herein as
an exhibit is incorporated herein by reference and made a part hereof. The
following exhibits and schedules are attached to this Agreement:

 

  Exhibit A Parcels, COE and Pricing   Exhibit B: Tentative and Final Maps  
Exhibit C: List of Documents   Exhibit D: Form of Grant Deed   Exhibit E: Form
of FIRPTA Affidavit   Exhibit F: Form of Bill of Sale   Exhibit G: Assignment of
Plans and Contracts   Exhibit H: Right to Use Acknowledgement   Schedule 1: Park
Work

 

15.8.          Time Periods. Any and all references in this Agreement to time
periods which are specified by reference to a certain number of days refer to
calendar days, unless “business days” is otherwise expressly provided.
Therefore, if (a) the last date by which a Closing is permitted to occur
hereunder, or (b) any date by which a Party is required to provide the other
Party with notice hereunder, occurs on a Saturday or a Sunday or a banking
holiday in the jurisdiction where the Property is located, then and in any of
such events, such applicable date shall be deemed to occur, for all purposes of
this Agreement, on that calendar day which is the next succeeding day, which is
not a Saturday, Sunday or banking holiday. The term “business days” shall have
the meaning ascribed to it in California Civil Code Section 9.

 

15.9.          No Partnership. Nothing in this Agreement shall be deemed in any
way to create between the Parties any relationship of partnership, joint venture
or association, and the Parties disclaim the existence thereof.

 

15.10.         Waivers. No Party shall be deemed to have waived the exercise of
any right which it holds hereunder unless such waiver is made expressly and in
writing (and no delay or omission by any Party hereto in exercising any such
right shall be deemed a waiver of its future exercise). No such waiver made as
to any instance involving the exercise of any such right shall be deemed a
waiver as to any other such instance, or any other such right.

 

15.11.         Choice of Law. This Agreement shall be given effect and construed
by application of California law.

 

15.12.         Attorneys’ Fees. In the event of any legal action or arbitration
proceeding between the Parties regarding this Agreement or the Property, the
prevailing Party shall be entitled to payment by the non-prevailing Party of its
reasonable attorneys’ fees, costs, and litigation or arbitration expenses as
determined in the course of the proceeding.

 

 33 

 

 

15.13.         Cooperation in Exchange. In the event that Seller intends to
enter into a contract with a qualified intermediary for the purpose of effecting
a tax-deferred exchange in accordance with Section 1031 of the U.S. Internal
Revenue Code of 1986, as most recently amended, Buyer shall reasonably cooperate
with Seller; shall execute, acknowledge, and deliver any and all documents which
Seller may reasonably request, provided that such documents are given to Buyer
at least ten (10) business days before such documents are to be so delivered;
and shall deal with any intermediary as Seller may direct; provided, however,
that Buyer shall not be required to (i) incur any escrow or title cost or any
liability in connection with any proposed exchange, (ii) delay the Closing,
(iii) be responsible for locating exchange property, or (iv) take title to any
property other than the Property. Seller shall indemnify and hold Buyer harmless
from and against any liability, including reasonable attorneys’ fees and costs,
in any way related to the exchange, including, but not limited to, any liability
as a result of the exchange being a taxable or non-taxable event. Buyer makes no
representation as to whether or not the transfer of the Property is a
tax-deferred exchange. Seller shall reimburse Buyer for reasonable attorneys’
fees incurred in the review of documents which Seller requests Buyer to execute
pursuant to this Section, whether or not the tax-deferred exchange is in fact
consummated. Seller shall apply the amount to be reimbursed toward payment of
the Purchase Price at the Closing. Seller’s obligation to cause the conveyance
of the Property to Buyer in the time and manner provided in this Agreement is
not contingent upon Seller’s ability to effectuate a tax-deferred exchange. Each
Party agrees to sign a Notice of Assignment prior to Close of Escrow confirming
that such Party has received the Notice of Assignment and consents to the
assignment.

 

15.14.         Publicity. Each of the Parties agrees that it shall not issue or
permit the issuance of a press release regarding this Agreement prior to the
filing of the Chapter 11 Plan (or motion for entry of the Sale Order) without
the prior written consent of the other Party, which consent may be withheld in
the other Party’s sole and absolute discretion; provided, however, that the
foregoing provisions shall not apply to any disclosure requirements under
applicable corporate and securities laws.

 

15.15.         Representation by Counsel. Notwithstanding any rule or maxim of
construction to the contrary, any ambiguity or uncertainty shall not be
construed against either Seller or Buyer based upon authorship of any of the
provisions hereof. Seller and Buyer each hereby warrant, represent and certify
to the other as follows: (a) that the contents of this Agreement have been
completely and carefully read by the representing Party and counsel for the
representing Party; (b) that the representing Party has been separately
represented by counsel and the representing Party is satisfied with such
representation; (c) that the representing Party’s counsel has advised the
representing Party of, and the representing Party fully understands, the legal
consequences of this Agreement; and (d) that no other person (whether a party to
this Agreement or not) has made any threats, promises or representations of any
kind whatsoever to induce the execution hereof, other than the performance of
the terms and provisions hereof.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE]

 

 34 

 

 

IN WITNESS WHEREOF, the Parties hereto have executed under seal this Agreement
as of the Effective Date.

 

  CAPITOL STATION 65 LLC, SELLER: a California limited liability company,   as
Debtor and Debtor in Possession         By: /s/ Suneet Singal   Name: Suneet
Singal   Title: CEO/Chairman   Date: July 27, 2017       BUYER: ANTHEM UNITED
HOMES, INC.,   a Washington corporation         By: /s/ David Ragland   Name:
David Ragland   Title: VP   Date: July 27, 2017

 

 35 

 

 

 

ACCEPTANCE BY ESCROW AGENT

 

The undersigned joins in the execution of the Agreement for the purpose of
agreeing to act as Escrow Agent under the Agreement and to be bound by and
perform the terms thereof as such terms apply to Escrow Agent.

 

  ESCROW AGENT:       FIRST AMERICAN TITLE COMPANY         By: /s/ Barbara
Clarke   Name: Barbara Clarke   Title: Escrow Officer   Date: July 27, 2017

 

 

 36 

 

 

EXHIBIT A TO PURCHASE AGREEMENT

 

PARCELS, coe AND PRICING

 

PHASE  PARCEL  PRESUMED 
YIELD   PURCHASE
PRICE   COE - MONTHS
AFTER ENTRY OF
SALE ORDER     TOWNHOUSES                1  8A - townhouses   22   $1,364,000  
 4  1  8B - townhouses   22   $1,364,000    4  1  15A/B - affordable   16  
$160,000    4  1  15A/B - townhouses   12   $744,000    4  2  7A - townhouses 
 25   $1,650,000    12  2  7B - townhouses   25   $1,650,000    12  2  16A/B -
affordable   9   $90,000    12  2  16A/B - townhouses   19   $1,254,000    12 
2  12A - townhouses   16   $1,056,000    12  2  6A - townhouses   26  
$1,716,000    12  2  6B - townhouses   30   $1,980,000    12     Subtotal Land 
 222   $13,028,000          Fee Credits       $1,968,030          Total
Valuation - Townhouses       $14,996,030                                     
            MULTIFAMILY                3  12C - MF   95   $2,185,000    20  3 
15C - MF   56   $1,232,000    20  3  16C - MF   56   $1,232,000    20    
Subtotal Land   207   $4,649,000          Fee Credits       $1,835,055         
Total Valuation - MF       $6,484,055                              TOTAL Land
Purchase   429   $17,677,000          TOTAL Fee Credits       $3,803,085      
   TOTAL Valuation       $21,480,085      

 

 37 

 

 

EXHIBIT B TO PURCHASE AGREEMENT

 

TENTATIVE AND FINAL MAPS

 

[v472109_img1.jpg]

 

 38 

 

 

[v472109_img2.jpg] 

 39 

 

 

[v472109_img3.jpg] 

 40 

 

 

[v472109_img4.jpg] 

 41 

 

 

 [v472109_img5.jpg]

 

 42 

 

 

[v472109_img6.jpg] 

 43 

 

 

[v472109_img7.jpg] 

 44 

 

 

[v472109_img8.jpg] 

 45 

 

 

[v472109_img9.jpg] 

 46 

 

 

EXHIBIT C TO PURCHASE AGREEMENT

 

LIST OF DOCUMENTS

 

1.All COAs and Design Review approvals;

 

2.EIR – Executive Summary, Draft, Final and the related permits and mitigation;
measures

 

3.Any and all Development Agreements and any Amendments thereto;

 

4.Any plans, maps, soils reports, including Phase I preliminary site
assessments, biological survey assessments, plans, permits and other items in
Seller’s immediate possession;

 

5.Any existing survey of the Property;

 

6.A copy of Seller’s title policy related to the Property;

 

7.Copies of tax bills statements for the Property for tax years 2014, 2015 and
2016 relating to personal and ad valorem taxes and rental and special
assessments;

 

8.Copies of any and all environmental, soils, endangered species, traffic, and
engineering studies and reports;

 

9.Copies of any and all plats, site plans, elevations, topographical maps,
surveys, tentative maps, draft final maps, improvement plans, landscape plans,
utility designs, and architecture;

 

10.Copies of any and all utility documents and agreements, management
agreements, service and maintenance agreements and equipment leases;

 

11.Copies of all permits and licenses;

 

12.Any and all information regarding condemnation notice(s), proceedings and
awards;

 

13.Copies of all publicly recorded or filed financing, commitments, notes,
bonds, mortgages, deeds of trust, financing statements and other indebtedness
securing the Property;

 

14.Copies of all Authority and third-party approvals related to the Property,
including all approvals, permits, and authorizations necessary for development,
construction, use or occupancy of the Property and the subdivision of the land,
and all required public improvement agreements, easements, dedications or other
similar agreements in connection with the Property; and

 

15.Any additional information reasonably requested by Buyer pertaining to the
proposed development of the Property in Seller’s immediate possession.

 

 47 

 

 

EXHIBIT D TO PURCHASE AGREEMENT

 

FORM OF GRANT DEED

 

RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO:

 

Anthem United Homes, Inc.

3001 Douglas Blvd., Suite 200

Roseville, CA 95661

 

    SPACE ABOVE THIS LINE FOR RECORDER’S USE

 

GRANT DEED

 

 

The Undersigned Grantor(s) Declare(s):

Documentary Transfer Tax is $_________________; City Transfer tax
is:$___________________

[__] computed on full value of interest or property conveyed, or
[__] computed on full value less value of liens or encumbrances remaining at
time of sale
[__] unincorporated area, or [__] City of __________________

Tax Parcel No. – See Exhibit A hereto

 

FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
__________________________, a __________ (“Grantor”), hereby grants to
_______________________, a _______ (“Grantee”), the following real property
located in the City of _______________, County of _______________, State of
California (“Property”), as further described on Exhibit A attached hereto,
together with all rights, privileges, easements and appurtenances held by
Grantor, if any, appertaining to the Property. This conveyance is made subject
to the lien of non-delinquent real property taxes and assessments and covenants,
conditions, restrictions, easements, rights-of-way, servitudes, encumbrances and
all other matters of record as of the date hereof, if any.

 

IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of the date set
forth below.

 

GRANTOR: [INSERT]         By:           Its:           Date:           [Notary
Acknowledgment on Next Page]

 

 48 

 

 

 

CALIFORNIA ALL PURPOSE ACKNOWLEDGMENT

 

A Notary Public or other officer completing this certificate verifies only the
identity of the individual who signed the document to which this certificate is
attached, and not the truthfulness, accuracy, or validity of that document.

 

STATE OF CALIFORNIA                                   )

 

COUNTY OF _______________                        )

 

On ____________________, before me, __________________________________________,

Notary Public, personally appeared
_________________________________________________

______________________________________________________________________________
who proved to me on the basis of satisfactory evidence to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signature(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.

 

I certify under PENALTY OF PERJURY under the laws of the State of California
that the foregoing paragraph is true and correct.

 

WITNESS my hand and official seal.

 

Signature:_________________________ (Seal)

 

 49 

 

 

Exhibit A to Grant Deed

 

Legal Description

 

[TO BE ATTACHED BY ESCROW HOLDER]

 

 50 

 

 

EXHIBIT E TO PURCHASE AGREEMENT

 

FORM OF FIRPTA Affidavit

 

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S.
real property interest must withhold tax if the transferor is a foreign person.
For U.S. tax purposes (including section 1445), the owner of a disregarded
entity (which has legal title to a U.S. real property interest under local law)
will be the transferor of the property and not the disregarded entity. To inform
the transferee that withholding of tax is not required upon the disposition of a
U.S. real property interest by CAPITOL STATION 65 LLC, a California limited
liability company (“Seller”), the undersigned hereby certifies the following on
behalf of Seller:

 

1.          Seller is not a foreign corporation, foreign partnership, foreign
trust, or foreign estate (as those terms are defined in the Internal Revenue
Code and Income Tax Regulations);

 

2.          Seller is not a disregarded entity as defined in §
1.1445-2(b)(2)(iii) of the Internal Revenue Code;

 

3.          Seller’s U.S. employer identification number is ___________________;
and

 

4.          Seller’s office address is ________________________________.

 

Seller understands that this certification may be disclosed to the Internal
Revenue Service by transferee and that any false statement contained herein
could be punished by fine, imprisonment or both.

 

Under penalties of perjury I declare that I have examined this certification and
to the best of my knowledge and belief it is true, correct and complete, and I
further declare that I have authority to sign this document on behalf of Seller.

 

  [ENTITY TO BE CONFIRMED],     a __________________________________            
By:       Name:       Its:               DATED: _______________  

 

 51 

 

 

 

EXHIBIT F TO PURCHASE AGREEMENT

 

FORM OF Bill of Sale1

 

This ASSIGNMENT AND BILL OF SALE (this “Bill of Sale”) is made as of
___________, 2017, by CAPITOL STATION 65 LLC, a California limited liability
company (“Assignor”), in favor of ANTHEM UNITED HOMES, INC., a Washington
corporation (“Assignee”), pursuant to that certain Agreement of Purchase and
Sale of Land and Joint Escrow Instructions, by and between Assignor and
Assignee, dated ______________, 2017 (the “Purchase Agreement”). This Bill of
Sale is subject to the terms and provisions of the Purchase Agreement, and in
the event of any inconsistency between the Purchase Agreement and this Bill of
Sale, the terms and provisions of the Purchase Agreement shall control.

 

For good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Assignor hereby sells, conveys, delivers, transfers and
assigns to Assignee, without warranty of any kind, all of Assignor’s right,
title and interest in, to and under, and Assignee assumes all rights, duties and
obligations under, any and all of the following items, only to the extent that
they are related to that certain real property located in the City of
Sacramento, County of Sacramento, State of California, which is more
particularly described in the Purchase Agreement (the “Land”):

 

(a)          all zoning, use, occupancy, and operating permits, and all other
Authority permits, licenses, approvals, applications, subdivision maps,
entitlements, conditions of approval, Environmental Permits, certificates,
rights and obligations under any development agreement, cost sharing agreements,
environmental impact reports and mitigation monitoring programs, school fee
mitigation agreements, building permits, development allocations, and
development rights relating to the Land;

 

(b)          all utility and other permits relating to the Land;

 

(c)          all fee credits and license tax credits; all prepaid expenses,
fees, and deposits applicable to the Land, and the right to any refunds
thereunder or rebates thereof, including, without limitation, all refunds of
utility deposits;

 

(d)          all plans and specifications for buildings, structures and fixtures
located on the Land, whether existing or anticipated;

 

(e)           all tax and assessment protest actions and claims to seek
reductions in the valuation of the Land for property tax purposes, and rights to
prosecute same, for any period after the Closing Date, including, without
limitation, all of Assignor’s right, title and interest in and to all tax and
assessment refunds or rebates now or hereafter payable for any period after the
Closing Date. Assignor shall not be responsible therefore or entitled to any
refunds resulting therefrom. Assignor agrees to cooperate with Assignee by
executing such documents and providing to Assignee or the appropriate governing
body or agency such items as Assignee or such governing body or agency may
reasonably request, so as to facilitate Assignee’s prosecution of tax and
assessment protest actions and claims, provided such cooperation entails no
material cost or expense to Assignor;

 

 

 

1 NOTE: Bill of Sale to be revised to reflect and conform to terms of Sale
Order.

 

 52 

 

 

(f)          Assignor’s rights to any warranties and indemnities received by
Assignor from third parties affecting the Property conveyed at the Closing, and
Assignor’s rights and/or remedies under any contract it or its predecessors in
interest may have with any design professionals, construction contractors,
construction subcontractors, other contractors involved in the improvement of
the lots, or other aspects of the physical improvement of the Property for
claims, damage or losses directly related to the Property; and

 

(g)          All of Assignor’s right, title and interest in and to the
Intangible Property and entitlements (as such terms are defined in the Purchase
Agreement);

 

(all of the above being referred to herein collectively as the “Personal
Property”).

 

Assignor covenants that, without cost or liability to Assignor, Assignor shall,
at any time and from time to time upon written request therefor, execute and
deliver to Assignee such documents and instruments as Assignee may reasonably
request in order to fully assign, transfer and vest the Personal Property in
Assignee.

 

The covenants, warranties and agreements of Assignor contained herein shall
survive the consummation of the purchase and sale of the Land and the execution
and delivery of the deed and this Assignment and Bill of Sale and shall not be
merged thereby.

 

[SIGNATURES APPEAR ON THE FOLLOWING PAGE.]

 

 53 

 

 

The provisions of this Assignment shall be binding upon and shall inure to the
benefit of the successors and assigns of Assignor and Assignee, respectively.

 

  ASSIGNOR:       CAPITOL STATION 65 LLC,   a California limited liability
company         By:           Name:           Title:           Date:          
ASSIGNEE:       ANTHEM UNITED HOMES, INC.,   a Washington corporation        
By:           Name:           Title:           Date:  

 

 54 

 

 

EXHIBIT G TO PURCHASE AGREEMENT

 

ASSIGNMENT OF PLANS AND CONTRACTS

 

[TO BE PREPARED DURING DUE DILIGENCE PERIOD]

 

 55 

 

 

EXHIBIT H TO PURCHASE AGREEMENT

 

RIGHT TO USE ACKNOWLEDGEMENT

 

[TO BE PREPARED DURING DUE DILIGENCE PERIOD]

 

 56 

 

 

 

SCHEDULE 1 TO PURCHASE AGREEMENT

 

PARK WORK

 

[TO BE ATTACHED DURING DUE DILIGENCE PERIOD]

 

 57