exv10w36



 





EXHIBIT 10.36




DEVELOPMENT PARCEL DISPOSITION AGREEMENT




     THIS DEVELOPMENT PARCEL DISPOSITION AGREEMENT (this “Agreement”) is
entered into as of the    day of    , 2004 (the “Effective Date”)
by HILLWOOD/SAN BERNARDINO, LLC, a Delaware limited liability company
(“Hillwood”), and Stater Bros. Markets, a California corporation (“Purchaser”).



     The Inland Valley Development Agency (“IVDA”), a joint powers authority
formed by the County of San Bernardino and the Cities of Colton, Loma Linda and
San Bernardino exercising governmental functions and powers and organized and
existing under Article I, Chapter 5, Division 7, Title I of the California
Government Code and the Community Redevelopment Law of the State of California
(Health & Safety Code § 33000, et seq.), is the fee owner of a certain parcel
of improved land (the “Land”), described on the attached EXHIBIT A located in
the City of San Bernardino, County of San Bernardino, State of California, the
location of which is generally shown on the attached EXHIBIT B;



     Hillwood has certain rights with respect to the Property pursuant to that
certain Master Disposition and Development Agreement between IVDA and Hillwood
dated November 6, 2002, as amended (the “DDA”); and



     Purchaser desires to acquire the Property from IVDA as a Third Party
designee of Hillwood under the DDA for the purpose of developing the Project.
Hillwood desires for Purchaser to acquire the Property as a Third Party under
the DDA for the purpose of developing the Project. Accordingly, the purpose of
this Agreement is to set forth the terms on which Hillwood will deliver the
Disposition Request to IVDA for Purchaser’s acquisition of the Property.



     NOW, THEREFORE, in consideration of the covenants contained herein,
Purchaser and Hillwood agree as follows:



ARTICLE 1




CERTAIN DEFINITIONS




     1.1 Definitions. When used in this Agreement, the following terms have
the respective meanings set forth opposite each such term (other terms are
defined elsewhere in this Agreement):



	 	 	 
	AFFILIATE:

	 	Any entity directly or indirectly controlling, controlled by or under common control with Purchaser.
	 
	 	 
	AGREEMENT:

	 	This Development Parcel Disposition Agreement, including the following Exhibits, each of which is
incorporated herein by this reference:







	 	 	 
	Exhibit A:

	 	Legal Description of the Land
	Exhibit B:

	 	General Location Drawing of the Land
	Exhibit C:

	 	Hillwood’s Special Conditions
	Exhibit D:

	 	Post-Closing Agreement
	Exhibit E:

	 	Form of Disposition Request
	Exhibit F:

	 	Tri-Party Agreement
	Exhibit G:

	 	Westgate Property







 









 






	 	 	 
	CITY:

	 	The City of San Bernardino, California.
	 
	CLOSING DATE:

	 	August 1, 2004, as such may be extended and designated as provided in Section 6.1 below, or such other
date as Purchaser and Hillwood may agree; provided, however, if the transaction contemplated by this
Agreement closes on any day other than the Closing Date, the date on which this transaction closes shall
be deemed to be the Closing Date for purposes of this Agreement.
	 
	DEVELOPMENT PARCEL:

	 	As defined in the DDA.
	 
	DISPOSITION:

	 	As defined in the DDA.
	 
	DISPOSITION REQUEST:

	 	As defined in the DDA.
	 
	OWNER PARTICIPATION

AGREEMENT:

	 	An agreement between Purchaser and IVDA pursuant to which IVDA commits to sell the Property to Purchaser
and Purchaser commits to construct and develop the Project.
	 
	PROJECT:

	 	A consolidated warehouse, distribution and office facility for Purchaser’s grocery store operations and
business, to be constructed on the Property and certain adjacent tracts at development and construction
cost in excess of $160,000,000, as provided for in the Owner Participation Agreement.
	 
	PROPERTY:

	 	The Land described on the attached Exhibit A.
	 
	THIRD PARTY:

	 	As defined in the DDA.
	 
	TRI-PARTY AGREEMENT:

	 	The Agreement among Hillwood, Purchaser and IVDA in the form of attached Exhibit F.







ARTICLE 2




DISPOSITION




     2.1 Disposition Request. Subject to the conditions and on the terms
contained in this Agreement, Hillwood shall deliver to IVDA a Disposition
Request for the purpose of Purchaser acquiring the Property from IVDA as a
Disposition of a Development Parcel to Purchaser as a Third Party under the
DDA, subject to the waivers in the Tri-Party Agreement, executed by Hillwood,
Purchaser and IVDA simultaneously with the execution of this Agreement.



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA




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ARTICLE 3




THE DDA




     3.1 General. Notwithstanding anything to the contrary herein, Purchaser
acknowledges and agrees that Hillwood’s obligation to perform under this
Agreement shall be contingent upon the performance by IVDA of its obligations
under the DDA and IVDA’s consummation, pursuant to the DDA, of the Disposition
of the Property to Purchaser on the Closing Date, subject to the waivers in the
Tri-Party Agreement. Hillwood shall use good faith efforts to cause the IVDA to
perform its obligations under the DDA to make such Disposition but shall not be
required to incur any cost to do so or to initiate any litigation to do so. If
this condition precedent is not fully satisfied, this Agreement shall
terminate, and neither party shall have any further rights or obligations under
this Agreement except as otherwise expressly provided in this Agreement.



     3.2 IVDA Rights. IVDA owns the Property, but Hillwood has certain rights
with respect to the Property as set forth in the DDA. Hillwood consents to
IVDA granting Purchaser the right to enter onto the Property for the purpose of
conducting due diligence studies and investigations regarding Purchaser’s
contemplated use of the Property.



     3.3 IVDA Performance. Hillwood shall not have any liability to Purchaser
for, and Purchaser releases Hillwood from, all claims, damages, expenses or
liabilities of any kind or nature resulting from or related to any failure of
IVDA to perform (a) its obligations under the DDA or under any agreement
between Purchaser and IVDA, or (b) any other act or omission of IVDA, except to
the extent such failure was caused by a default of Hillwood under this
Agreement. This Section 3.3 shall survive the Closing or any termination of
this Agreement.



ARTICLE 4




REPRESENTATIONS OF HILLWOOD




     4.1 Representations and Warranties of Hillwood. Hillwood represents and
warrants to Purchaser on and as of the Effective Date as follows:




     (A) Authorization. Hillwood has full capacity, right, power and
authority to execute, deliver and perform this Agreement and all
documents to be executed by Hillwood pursuant hereto, and all required
action and approvals therefor have been duly taken and obtained. The
individuals signing this Agreement and all other documents executed or to
be executed pursuant to this Agreement on behalf of Hillwood are and
shall be duly authorized to sign the same on Hillwood’s behalf and to
bind Hillwood thereto. This Agreement and all documents to be executed
pursuant hereto by Hillwood are and shall be binding upon and enforceable
against Hillwood in accordance with their respective terms.




     (B) Bankruptcy. Hillwood has not (i) made a general assignment for
the benefit of creditors, (ii) filed any voluntary petition in bankruptcy
or suffered the filing of any involuntary petition by Hillwood’s
creditors, (iii) suffered the appointment of a receiver to take
possession of all or substantially all of Hillwood’s assets, (iv)
suffered the attachment or other judicial seizure of all, or
substantially all, of Hillwood’s assets, (v) admitted in writing its
inability to pay its debts as they come due, or (vi) made an offer



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA






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     of
settlement, extension or composition to its creditors generally.




     (C) Litigation. To the best of Hillwood’s current actual knowledge,
there is no litigation pending or threatened against Hillwood with
respect to the Property.




     (D) Non-Foreign Status. Hillwood is not a “foreign person” within
the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended.




     (E) The DDA. The DDA is in full force and effect. Hillwood has
received no notice of default from IVDA under the DDA.




     (F) Encumbrances. Hillwood has not placed on the Property or any
portion thereof any mortgage trust deed, encumbrance, lien, easement or
other matter affecting title to the Property, other than the DDA and the
recorded memorandum thereof.



ARTICLE 5




REPRESENTATIONS OF PURCHASER




     5.1 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Hillwood on and as of the Effective Date that
Purchaser has full capacity, right, power and authority to execute, deliver and
perform this Agreement and all documents to be executed by Purchaser pursuant
to this Agreement, and all required actions and approvals therefor have been
duly taken and obtained. The individuals signing this Agreement and all other
documents executed or to be executed pursuant hereto on behalf of Purchaser are
and shall be duly authorized to sign the same on Purchaser’s behalf and to bind
Purchaser thereto. This Agreement is and all documents to be executed pursuant
hereto by Purchaser are and shall be binding upon and enforceable against
Purchaser in accordance with their respective terms.



ARTICLE 6




HILLWOOD’S SPECIAL CONDITIONS




     6.1 Hillwood’s Special Conditions. Notwithstanding any other provision in
this Agreement, Hillwood’s obligations are conditioned upon, in addition to the
satisfaction of other conditions set forth in this Agreement and to the
performance by Purchaser of its obligations under this Agreement, the
satisfaction (or waiver in writing by Hillwood) of the conditions precedent set
forth on the attached Exhibit C (“Hillwood’s Special Conditions”). In the
event that all of Hillwood’s Special Conditions are not satisfied (or waived in
writing by Hillwood) on or before the Closing Date, the Closing Date shall be
extended as provided below. If Hillwood’s Special Conditions are not satisfied
or waived in writing by Hillwood by November 1, 2004, either party shall have
the right to terminate this Agreement by delivering a written termination
notice to the other party by no later than November 1, 2004, in which event,
this Agreement shall terminate, and neither Hillwood nor Purchaser shall have
any further right or obligation under this Agreement, except as otherwise
expressly provided herein. If all of Hillwood’s Special Conditions are
satisfied or waived in writing by Hillwood before November 1, 2004 (but after
August 1, 2004), the Closing Date shall be the date mutually agreed to by
Hillwood and Purchaser, and if there is no such agreement, on a date designated
by Purchaser in a written notice given to Hillwood, such date to be not less
than 15 days after such notice is given and not later than November 15, 2004.



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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ARTICLE 7




CLOSING




     7.1 Closing. Subject to the term and conditions set forth in this
Agreement, at the consummation of the Disposition of the Property to Purchaser
by IVDA under the DDA (the “Closing”), which Closing shall commence by 11:00
a.m., California time, on the Closing Date at the offices of IVDA or at such
other place as Purchaser and Hillwood may agree, the following shall occur:




     (A) Hillwood will deliver the Disposition Request to IVDA;




     (B) Hillwood will deliver to Purchaser a certificate confirming that
the representations and warranties of Hillwood in this Agreement are true
and correct in all material respects on and as of the Closing Date except
as otherwise provided in that certificate;




     (C) Purchaser will deliver to Hillwood a certificate signed by
Purchaser confirming that the representations and warranties of Purchaser
in this Agreement are true and correct in all material respects on and as
of the Closing Date; and




     (D) Purchaser shall deliver to Hillwood (i) the Post-Closing
Agreement in the form of the attached EXHIBIT D signed by Purchaser, and
(ii) the Letter of Credit (as defined in the Post-Closing Agreement) in
compliance with the requirements set forth in the Post-Closing Agreement,
issued by a bank acceptable to Hillwood and Purchaser, in a form
acceptable to Hillwood and Purchaser, and in an amount set forth in such
Post-Closing Agreement.



     7.2 Conditions. In addition to Hillwood’s Special Conditions, the
obligations of Hillwood to submit the Disposition Request to IVDA are
conditioned on the following:




     (A) Purchaser, at the Closing, acquiring title to the Property from
IVDA;




     (B) Purchaser complying with all of its covenants under this
Agreement;




     (C) The Restrictive Covenants (hereinafter defined) having been made
applicable to the Property at or before the Closing by documentation
reasonably acceptable to Hillwood; and




     (D) IVDA providing the release and estoppel certificate referenced
in the Tri Party Agreement.



ARTICLE 8




CERTAIN COVENANTS




     8.1 Encumbrances. Hillwood, prior to the earlier of the Closing Date or
the termination of this Agreement, shall not (a) voluntarily record create any
liens or encumbrances upon the Property, except to the extent the Property is
subject to the DDA, or (b) grant to any person or entity any interest in
Hillwood’s rights under the DDA to the Property or any part



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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thereof in any manner that is inconsistent with the terms of this Agreement.




     8.2 Title. Hillwood, prior to the Closing, shall use its good faith
efforts to assist Purchaser in dealing with any objectionable title conditions
affecting the Property; provided, however, Hillwood shall not be obligated to
incur any expense or participate in litigation regarding same.



     8.3 Reports. If this Agreement terminates, Purchaser shall furnish
Hillwood copies of all third-party reports of studies and investigations
regarding the Property conducted or received by Purchaser. In addition,
Purchaser shall furnish Hillwood copies of all hydrology reports and analyses
that affect the formulation of the area drainage plan conclusions for the
contemplated improvements on the Property, whether or not the Closing occurs.
This covenant shall survive the Closing or the termination of this Agreement.



     8.4 Purchaser Compliance. Purchaser shall comply with the provisions of
the DDA relating to any activities of Purchaser on the Property prior to the
Closing. This covenant shall survive the Closing.



     8.5 Indemnity. Purchaser shall indemnify and hold Hillwood (and its
agents, employees, representatives, successors and assigns) harmless from and
against any and all claims and liabilities of any nature relating to (a)
Purchaser’s actions to acquire or acquisition of the Property or any other
properties for the Project, or (b) any claims by third party occupants of
buildings on the Property or on or near the Project related to the remediation
of or the demolition of buildings on the Property or other properties for the
Project, to the extent such arise from acts or omissions of Purchaser or its
affiliates, agents, employees, representatives or contractors or of IVDA acting
to prepare such property for the Project. This covenant shall survive the
Closing or termination of this Agreement.



     8.6 Vehicle Trip Credits. At the Closing, Hillwood shall consent to the
assignment by IVDA to Purchaser of a number of Vehicle Trip Credits (as defined
in the DDA) that are mutually acceptable to Hillwood and Purchaser regarding
Purchaser’s development of the Project on the Property, by form of assignment
mutually acceptable to Hillwood and Purchaser, if, and only if, Hillwood, in
its discretion, has determined that such number of Vehicle Trip Credits are not
needed with respect to the future development of land (other than the Property)
that is subject to the DDA.



     8.7 Westgate Demolition Payment. Upon the earlier of (a) Purchaser
receiving a firm commitment from IVDA to provide grant funding for demolition
of existing improvements on, or remediation of, the Property in the amount of
$2,500,000, or (b) at the Closing, Purchaser shall pay to Hillwood, in good
funds, the sum of $2,500,000 (the “Westgate Demolition Payment”). Actual
commencement of remediation or demolition work on the Property after receipt of
a grant designated for that purpose shall be deemed a “firm commitment from
IVDA” referenced in the first sentence of this Section 8.7. Hillwood agrees to
use the Westgate Demolition Payment only for the purpose of remediation of and
demolition of existing improvements on and under the Property in the area
identified by Hillwood as “Westgate” and generally shown on the attached
Exhibit G. This covenant shall survive the closing or termination of this
Agreement.



     8.8 Post-Closing Agreement Costs. Hillwood shall notify Purchaser of any
expenditures Hillwood intends to incur prior to the Closing for which it may
seek reimbursement from Purchaser under the Post-Closing Agreement. Such
notice shall include the scope of work



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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and a reasonably detailed description of the cost.




ARTICLE 9




DEFAULT




     9.1 Purchaser’s Failure to Close. IN THE EVENT THAT PURCHASER FAILS TO
ACQUIRE THE PROPERTY BY THE CLOSING DATE FOR ANY REASON OTHER THAN A DEFAULT BY
HILLWOOD AND SUCH FAILURE CONTINUES FOR A PERIOD OF TEN DAYS AFTER HILLWOOD
NOTIFIES PURCHASER IN WRITING OF SUCH FAILURE, HILLWOOD’S SOLE AND EXCLUSIVE
REMEDY FOR SUCH FAILURE TO CLOSE SHALL BE THE RIGHT TO CANCEL AND TERMINATE
THIS AGREEMENT AND TO RECOVER FROM PURCHASER AN AMOUNT EQUAL TO THIRD PARTY OUT
OF POCKET COSTS INCURRED BY HILLWOOD DIRECTLY RELATED TO THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT NOT TO EXCEED $100,000 IN THE AGGREGATE,
TOGETHER WITH ALL REASONABLE ATTORNEYS FEES AND COSTS AND COURT COSTS INCURRED
BY HILLWOOD IN SEEKING RECOVERY OF THOSE COSTS, IT BEING UNDERSTOOD AND AGREED
THAT HILLWOOD IS HEREBY RELEASING AND WAIVING ANY RIGHT IT MIGHT HAVE EITHER TO
SPECIFICALLY ENFORCE THIS AGREEMENT OR TO SUE PURCHASER OR ANY PERSON OR ENTITY
AFFILIATED WITH PURCHASER FOR DAMAGES UNDER THIS AGREEMENT OTHER THAN THOSE
DESCRIBED ABOVE AND IN SECTION 9.3 BELOW. THE PARTIES HAVE AGREED THAT
HILLWOOD’S ACTUAL DAMAGES, IN SUCH EVENT WOULD BE EXTREMELY DIFFICULT OR
IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE
PARTIES ACKNOWLEDGE THAT THE REIMBURSEMENT AND COSTS DESCRIBED ABOVE HAVE BEEN
AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF
HILLWOOD’S DAMAGES AND AS HILLWOOD’S SOLE AND EXCLUSIVE REMEDY AGAINST
PURCHASER, AT LAW OR IN EQUITY, IN THE EVENT OF SUCH FAILURE TO CLOSE.
HILLWOOD HEREBY WAIVES ANY AND ALL BENEFITS IT MAY HAVE UNDER CALIFORNIA CIVIL
CODE SECTION 3389 WITH RESPECT TO SUCH FAILURE TO CLOSE. THIS SECTION 9.1
SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.



	 	 	 	 	 	 	 
	HILLWOOD’S INITIALS

	 	   
	 	PURCHASER’S INITIALS
	 	   







     9.2 Default by Hillwood. In the event Hillwood defaults under any of
Hillwood’s obligations under this Agreement and such failure continues for a
period of ten days after Purchaser notifies Hillwood in writing of such event,
Purchaser may, at its option, pursue either one of the following remedies as
its sole and exclusive remedy:




(i) terminate this Agreement, in which event neither party shall have
any further rights or obligations under this Agreement, except as
otherwise provided in this Agreement and except that Purchaser shall be
entitled to recover from Hillwood an amount equal to third party
out-of-pocket costs incurred by Purchaser directly related to the
transaction contemplated by this Agreement up to but not exceeding
$300,000 in the aggregate, together with all reasonable attorneys fees
and costs and court costs incurred by Purchaser in seeking recovery of
those costs; or


(ii) enforce specific performance of Hillwood’s obligations hereunder and
recover all reasonable attorneys fees and costs and court costs incurred
by Purchaser to enforce



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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specific performance; provided, however,
Purchaser’s failure to file a lawsuit for specific performance within 120
days after the scheduled Closing Date shall constitute an irrevocable
election by Purchaser not to pursue its remedy of specific performance,
in which event this Agreement shall automatically terminate, and neither
party shall have any further rights or obligations under this Agreement
except as otherwise expressly provided in this Agreement.




PURCHASER IS HEREBY RELEASING AND WAIVING ANY RIGHTS IT MIGHT HAVE TO SUE
FOR DAMAGES UNDER THIS AGREEMENT OTHER THAN AS SPECIFICALLY PROVIDED WITH
RESPECT TO THE LIMITED COST RECOVERY SET FORTH IN SECTION 9.2(i) AND AS
PROVIDED IN SECTION 9.3 BELOW. This Section 9.2 shall survive the
termination of this Agreement.



     9.3 Other Remedies. If the Closing occurs, each party shall have the
right to pursue all available remedies against the other party (i) for a breach
of any covenant contained herein that is performable after or that survives the
Closing (including the indemnification obligations contained this Agreement),
and (ii) for a breach of any representation or warranty made by the other party
in this Agreement. If the Closing does not occur, (A) each party shall have
its respective rights and remedies under Section 9.1 and Section 9.2, as
applicable, and (B) each party shall have all available remedies against the
other party for a breach of the other party’s obligations contained in this
Agreement that are expressly provided herein as surviving the termination of
this Agreement. In no event shall either party be liable for any speculative,
consequential or punitive damages or shall Hillwood have any liability for any
acts or omissions of IVDA. This Section 9.3 shall survive the Closing or
termination of this Agreement.



ARTICLE 10




CERTAIN RELEASES AND INDEMNITIES




     10.1 Ownership of the Property. Purchaser acknowledges that Hillwood does
not and has not ever owned the Property. Purchaser further acknowledges the
disclaimers of IVDA regarding the Property and its condition set forth in the
DDA, specifically that the Property was part of a former United States Air
Force Base and contains materials and chemicals in violation of applicable
environmental laws.



     10.2 Purchaser’s Releases.




     (A) Purchaser acknowledges that no warranties, either expressed or
implied, or representations are given or made by Hillwood with regard to
the environmental or other condition of the Property including whether
the Property does or does not contain petroleum products, asbestos,
lead-based paint or other hazardous materials or is not safe for any
particular purpose. Purchaser covenants and agrees that in its use and
occupancy of the Property, it will comply with all applicable
environmental laws relating to the Property or Purchaser’s activities
thereon. No statement of fact, promise, representation, affirmation or
other indication has been made by Hillwood with respect to the quality or
condition of the Property or the compliance of the Property with any law
or regulation. Furthermore, to the extent that Hillwood has provided
Purchaser with information relating to the condition of the Property, including
information and reports prepared by, for or on behalf of the City, the
Air Force, Hillwood or IVDA, Hillwood makes no representation or warranty
with respect to the accuracy, completeness or




	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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methodology or content of
such reports or information. Purchaser further acknowledges that
Hillwood makes no representations whatsoever with respect to (i) any
Environmental Impact Report or similar matter or other environmental
review documents previously prepared or approved in connection with the
Property or any portion thereof, or (ii) whether or not additional
environmental review may be required in connection with development of
any portion of the Property.




     (B) Without limiting the above, Purchaser, on behalf of itself and
its successors and assigns, waives and releases Hillwood and its
successors and assigns from any and all costs or expenses whatsoever
(including attorneys’ fees and costs), whether direct or indirect, known
or unknown, foreseen or unforeseen, arising from or relating to any of
the following matters and conditions relating to the Property that exist
as of the Closing Date: the physical characteristics and condition of the
Property, the condition of the soils, the suitability of the soils for
any improvement of the Property, or any law or regulation applicable to
the Property.




     (C) Purchaser releases Hillwood from all obligations of any nature
whatsoever arising under the DDA regarding the Property to the extent of
the covenants, releases and waivers of IVDA under the Tri-Party
Agreement. Purchaser acknowledges that it is looking solely to IVDA for
acquisition and conveyance of the Property, except for Hillwood’s
commitment to deliver the Disposition Request to IVDA in accordance with
the provisions of this Agreement.




     (D) Purchaser expressly waives any rights or benefits available to
it with respect to the releases contained in this Agreement under any
provision of applicable law which generally provides that a general
release does not extend to claims which the creditor does not know of or
suspect to exist in his or her favor at the time the release is agreed
to, which, if known to such creditor, would materially affect a
settlement. By execution of this Agreement, Purchaser acknowledges that
it fully understands the foregoing, and with this understanding,
nonetheless elects to and does assume all risk for claims known or
unknown, described in this Section 10.2 or elsewhere in this Agreement
without limiting the generality of the foregoing:




The undersigned acknowledges that it has been advised by
legal counsel and is familiar with the provisions of
California Civil Code Section 1542, which provides as
follows:




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




The undersigned, being aware of this code section, hereby
expressly waives any rights it may have thereunder, as well
as under any other statutes or common law principles of
similar effect.



Initials of Purchaser:_____





     (E) The provisions of this Section 10.2 shall survive the Closing.



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA






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     (F) Nothing contained in this Agreement shall be deemed to be a
release by Hillwood or Purchaser of any obligation that the Air Force may
have with respect to the Property.



ARTICLE 11




MISCELLANEOUS




     11.1 Notices.




     (A) All notices, demands, statements and requests required or
permitted to be given under this Agreement must be in writing and shall
be delivered by one of the following methods of delivery:




     (i) personal service, in which event the notice shall
be deemed to have been given upon actual receipt;




     (ii) Federal Express, United Parcel Service, Airborne
Express or another nationally recognized overnight courier
service, in which event the notice shall be deemed to have
been given on the first business day after the notice is
deposited with the courier service (or the next business day
thereafter if the notice is deposited with the courier
service on a day other than a business day);




     (iii) United States registered or certified mail,
postage prepaid and return receipt requested, in which event
the notice shall be deemed to have been given three business
days after the notice is deposited with the United States
Postal Service; or




     (iv) facsimile transmission, in which event the notice
shall be deemed to have been given upon confirmation of the
facsimile transmission provided that the original
counterpart of the notice is sent by (i), (ii) or (iii)
above on the same day.




     (B) Notwithstanding the foregoing, a notice sent by first class mail
shall be effective and deemed to have been given on the date received by
the party to whom it was sent.




     (C) The initial addresses of the parties shall be:



	 	 	 	 	 
	

	 	Purchaser:
	 	Stater Bros. Markets

P.O. Box 150

21700 Barton Road

Colton, CA 92532

Attn: Donald I. Baker

Facsimile: (909) 872-8110
	 
	 	 	 	 
	

	 	 	 	With a copy to:

Varner, Saleson & Brandt, LLP

P.O. Box 12014

Riverside, CA 92502-2214






	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA






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	 	 	 	Attn: Sean S. Varner, Esq.

Facsimile: (909) 274-7770
	 
	 	 	 	 
	

	 	Hillwood:
	 	Hillwood/ San Bernardino, LLC

275 South Memorial Drive

San Bernardino, CA 92408

Attention: Lee Orr

Facsimile: 909-382-0073
	 
	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Hillwood Development Company, LLC

5430 LBJ Freeway, Suite 800

Dallas, Texas 75240

Attention: David Newsom

Facsimile: (972) 201-2889








Each party shall have the right from time to time to change its address
for notice purposes to any other address within the United States of
America upon at least seven days prior written notice to the other party
in accordance with the provisions of this Section 11.1.



     11.2 Brokerage. Hillwood hereby represents and warrants to Purchaser that
Hillwood has not dealt with any broker or finder with respect to the
transaction contemplated hereby. Hillwood hereby agrees to indemnify, defend
and hold Purchaser harmless from and against any claim for brokerage commission
or finder’s fee asserted by any person, firm or corporation claiming to have
been engaged by Hillwood. Purchaser hereby represents and warrants to Hillwood
that Purchaser has not dealt with any broker or finder with respect to the
transaction contemplated hereby. Purchaser hereby agrees to indemnify, defend
and hold Hillwood harmless from and against any claim for brokerage commission
or finder’s fee asserted by any person, firm or corporation claiming to have
been engaged by Purchaser. This Section 11.2 shall survive the Closing or the
termination of this Agreement.



     11.3 Entire Agreement. This Agreement and the documents referenced herein
contain the entire agreement and understanding of the parties with respect to
the subject matter hereof, and all previous negotiations and understandings
between Purchaser and Hillwood or their respective agents and employees with
respect to the transaction set forth herein are merged in this Agreement.



     11.4 Amendments and Waivers. This Agreement may not be amended, modified
or discharged nor may any of its terms be waived except by an instrument in
writing signed by Hillwood and Purchaser.



     11.5 Further Assurances. The parties each agree to perform, execute,
acknowledge and deliver all such further acts, instruments and assurances and
to take all such further action before or after the Closing as shall be
reasonably necessary or desirable fully to carry out this
Agreement.



     11.6 Assignment. Purchaser may assign its rights and delegate its duties
under this



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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Agreement to an Affiliate, provided that Purchaser shall remain
primarily liable for the obligations of Purchaser under this Agreement.




     11.7 Interpretation and Certain Covenants.




     (A) The headings and captions herein are inserted for convenient
reference only and the same shall not limit or construe the paragraphs or
sections to which they apply or otherwise affect the interpretation
hereof.




     (B) The terms “hereby”, “hereof “, “hereto”, “herein”, “hereunder”
and any similar terms shall refer to this Agreement. The term
“hereafter” shall mean after, and the term “heretofore” shall mean
before, the Effective Date.




     (C) Words of the masculine, feminine or neuter gender shall mean and
include the correlative words of other genders, and words importing the
singular number shall mean and include the plural number and vice versa.




     (D) Words importing persons shall include firms, associations,
partnerships (including limited partnerships), trusts, corporations,
limited liability companies and other legal entities, including public
bodies, as well as natural persons.




     (E) The terms “include”, “including” and similar terms shall be
construed as if followed by the phrase “without being limited to.”




     (F) This Agreement and any document or instrument executed pursuant
to this Agreement may be executed by facsimile and in separate
counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.




     (G) Whenever under the terms of this Agreement the time for
performance of a covenant or condition falls on a Saturday, Sunday or
national bank holiday, the time for performance shall be extended to the
next business day; otherwise all references herein to “days” shall mean
calendar days.




     (H) This Agreement shall be governed by and construed in accordance
with the laws of the State of California. The invalidity or
unenforceability of any provision of this Agreement shall not affect or
impair any other provision.




     (I) This Agreement shall not be construed more strictly against one
party than against the other merely by virtue of the fact that it may
have been prepared primarily by counsel for one of the parties, it being
recognized that both Purchaser and Hillwood have contributed
substantially and materially to the preparation of this Agreement.




     (J) Hillwood and Purchaser each shall use commercially reasonable
efforts to keep the terms of this Agreement confidential except as is
necessary or appropriate
for the conduct of the business of a party, for the financing and
development of the Project, for the satisfaction of Hillwood’s Special
Conditions, as required for public filings or as required by law.



	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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     11.8 Enforcement. If either party brings an action at law or in equity to
enforce or interpret this Agreement, the prevailing party in such action shall
be entitled to recover from the other party reasonable attorney’s fees, court
costs and expert witness fees for all stages of litigation including appellate
proceedings, in addition to any other remedy granted. This Section 11.8 shall
survive the Closing or any termination of this Agreement.



     11.9 Development Controls. The Property, at or prior to the Closing, will
be made subject to and conveyed subject to those certain Covenants, Conditions,
and Restrictions recorded as Instrument No. 00-352470 of the Real Property
Records of San Bernardino County, California and dated September 27, 2000, as
amended, and the Design Guidelines promulgated thereunder (collectively, the
“Restrictive Covenants”). Purchaser shall cause all other properties acquired
by Purchaser for the Project also to be made subject to the Restrictive
Covenants promptly after acquisition thereof. This covenant shall survive the
Closing.



     IN WITNESS WHEREOF, Purchaser and Hillwood have executed this Agreement
effective as of the Effective Date.



HILLWOOD:




HILLWOOD/SAN BERNARDINO, LLC,




a Delaware limited
liability company




	 	 	 
	By:

	 	Hillwood Operating, L.P.,

a Texas limited partnership,

its managing member







	 	 	 
	By:

	 	Hillwood Development Company, LLC,

a Texas limited liability company,

its general partner







	 	 	 
	By:
	 	 
	

	 	
 
	Name:
	 	 
	

	 	
 
	Title:
	 	 
	

	 	
 







PURCHASER:




STATER BROS. MARKETS,




a California
corporation




	 	 	 
	By:
	 	 
	

	 	
 
	Name:
	 	 
	

	 	
 
	Title:
	 	 
	

	 	
 







	 	 	 
	Purchase and Sale Agreement Between

Stater Bros. and Hillwood/San Bemardino, LLC

v13_386862_1	 	Exhibit 10.36 StaterPSA





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