exv10w37



 





EXHIBIT 10.37




PURCHASE AND SALE AGREEMENT




BETWEEN




NUEVO ENERGY COMPANY




AND




TONNER HILLS SSP, LLC AND TONNER HILLS 680 LLC




(Tonner Hills Surface Fee Interest

with Shea Program Obligations)




 









 









AGREEMENT

TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	DESCRIPTION
	 	 	 	PAGE NO.

	RECITALS	 	 	 	 	1	 
	ARTICLE 1 Land and Maps	 	 	2	 
	

	 	Section 1.1
	 	Definitions
	 	 	2	 
	

	 	Section 1.2
	 	Governmental Approvals, Including A Level Map
	 	 	8	 
	

	 	Section 1.3
	 	Approval Conditions
	 	 	8	 
	

	 	Section 1.4
	 	Agreement Conditions
	 	 	9	 
	ARTICLE 2 Purchase Price; Esscrow	 	 	9	 
	

	 	Section 2.1
	 	Purchase of the Land
	 	 	9	 
	

	 	Section 2.2
	 	Purchase Price, Development Reimbursement Monies, Buyer Tax Responsibility
	 	 	9	 
	

	 	Section 2.3
	 	Deposit; Opening of Escrow; Close of Escrow
	 	 	12	 
	

	 	Section 2.4
	 	Liquidated Damages/Losses
	 	 	13	 
	

	 	Section 2.5
	 	Buyer’s DD Period; Return of Documents
	 	 	14	 
	

	 	Section 2.6
	 	Conditions to Close of Escrow
	 	 	16	 
	

	 	Section 2.7
	 	Bankruptcy - Insolvency
	 	 	17	 
	ARTICLE 3 Representations and Warranties; AS IS Purchase; Disclaimers and
Required Disclosures; Governmental Approvals; Development Costs,
Taxes and Assessments; Insurance; Indemnities
	 	 	17	 
	

	 	Section 3.1
	 	Authorization of Buyer
	 	 	17	 
	

	 	Section 3.2
	 	Covenants by Nuevo
	 	 	21	 
	

	 	Section 3.3
	 	Covenants by Buyer;
	 	 	22	 
	

	 	Section 3.4
	 	Governmental Approvals
	 	 	25	 
	

	 	Section 3.5
	 	Development Costs Requirements, Conditions, Taxes and Assessments
	 	 	26	 
	

	 	Section 3.6
	 	Insurance
	 	 	27	 
	

	 	Section 3.7
	 	Indemnity
	 	 	31	 
	

	 	Section 3.8
	 	Survival of Covenants
	 	 	34	 
	

	 	Section 3.9
	 	No Hazardous Substances
	 	 	34	 
	

	 	Section 3.9
	 	Resolution of Indemnity Obligations
	 	 	38	 
	ARTICLE 4 Further Documentation	 	 	39	 
	

	 	Section 4.1
	 	Grant Deed; Title Insurance
	 	 	39	 
	

	 	Section 4.2
	 	PAPA TDs and Buyer Grant of Easements to Nuevo
	 	 	41	 
	

	 	Section 4.3
	 	Development Declaration
	 	 	41	 
	

	 	Section 4.4
	 	Natural Hazard Zones
	 	 	41	 
	

	 	Section 4.5
	 	Corporate Guaranty
	 	 	41	 
	

	 	Section 4.6
	 	Rights of Way and Contracts; Non-Exclusive Assignment of Contract
Rights and Bill of Sale; Aera Agreement
	 	 	41	 
	ARTICLE 5 General Provisions	 	 	41	 
	

	 	Section 5.1
	 	Notices
	 	 	41	 






 Agreement



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	 	Section 5.2
	 	Payments; Interest
	 	 	43	 
	

	 	Section 5.3
	 	Condemnation
	 	 	43	 
	

	 	Section 5.4
	 	Signing of Maps and Documents
	 	 	44	 
	

	 	Section 5.5
	 	Captions
	 	 	44	 
	

	 	Section 5.6
	 	Governing Law and Venue
	 	 	44	 
	

	 	Section 5.7
	 	Time of the Essence; Successors and Assigns
	 	 	44	 
	

	 	Section 5.8
	 	Remedies
	 	 	45	 
	

	 	Section 5.9
	 	ARBITRATION OF DISPUTES/ATTORNEYS’ FEES
	 	 	46	 
	

	 	Section 5.10
	 	Severability
	 	 	47	 
	

	 	Section 5.11
	 	Gender and Number
	 	 	48	 
	

	 	Section 5.12
	 	Real Estate Brokerage Commission
	 	 	48	 
	

	 	Section 5.13
	 	Waiver of Jury Trial
	 	 	48	 
	

	 	Section 5.14
	 	Survival of Certain Covenants
	 	 	48	 
	

	 	Section 5.15
	 	Assignment of Warranties and Plans
	 	 	48	 
	

	 	Section 5.16
	 	Recording
	 	 	48	 
	

	 	Section 5.17
	 	Conflicts
	 	 	48	 
	

	 	Section 5.18
	 	Independent Obligations
	 	 	49	 
	

	 	Section 5.19
	 	Assignment of Agreement; Preauthorized Transfers
	 	 	49	 
	

	 	Section 5.20
	 	No Partnership or Agency
	 	 	50	 
	

	 	Section 5.21
	 	Resolution of Contractual Uncertainties
	 	 	50	 
	

	 	Section 5.22
	 	Confidentiality
	 	 	50	 
	

	 	Section 5.23
	 	Assignment of Unrecorded License Agreements/Leases/Consultants’
Contracts
	 	 	51	 
	

	 	Section 5.24
	 	Notice on Approved Transfer
	 	 	51	 
	

	 	Section 5.25
	 	Entire Agreement; Exhibits; Counterparts
	 	 	52	 
	

	 	Section 5.26
	 	Stand Alone Insurance
	 	 	52	 
	

	 	Section 5.27
	 	Further Assurances and Cooperation
	 	 	53	 
	

	 	Section 5.28
	 	Intent of Definitions
	 	 	54	 
	

	 	Section 5.29
	 	Exclusive Relationship
	 	 	54	 
	

	 	Section 5.30
	 	Assignment, Assumption and Substitution
	 	 	54	 
	

	 	Section 5.31
	 	Assumption of Obligations Under the Agreement
	 	 	55	 
	

	 	Section 5.32
	 	Unocal Asset Purchase Agreement
	 	 	56	 
	

	 	Section 5.33
	 	Like-Kind Exchange
	 	 	56	 
	

	 	Section 5.34
	 	Oil Well Exhibit
	 	 	56	 
	

	 	Section 5.35
	 	Permit Program
	 	 	56	 
	

	 	Section 5.36
	 	Aera Program (Wildcatter Park)
	 	 	57	 
	

	 	Section 5.37
	 	Hover Program (Adjacent Parcel)
	 	 	57	 
	

	 	Section 5.38
	 	Oil Assets/Oil Operations
	 	 	57	 
	

	 	Section 5.39
	 	Satisfaction of Conditions (Section 2.3)
	 	 	57	 
	

	 	Section 5.40
	 	Constructive Meaning of Certain Provisions
	 	 	57	 
	

	 	Section 5.41
	 	Alternate Discharge of Program Responsibilities
	 	 	58	 
	

	 	Section 5.42
	 	Option to Convert PAPA TD’s Into SPC Guaranty (“SPC Guaranty”)
	 	 	58	 
	

	 	Section 5.43
	 	No Participation by Bred Tonner Investors, L.P. (“BTI”); Waiver
Release, Defense and Indemnity
	 	 	59	 
	

	 	Section 5.44
	 	Mineral PAPA Cooperation
	 	 	59	 






 Agreement

ii









 






EXHIBIT DESCRIPTION




	 	 	 	 	 
	EXHIBIT “A”

	 	-
	 	LEGAL DESCRIPTION OF THE LAND
	EXHIBIT “B”

	 	-
	 	DEPICTION OF THE LAND
	EXHIBIT “C”

	 	-
	 	TONNER HILLS AREA PLAN (INCORPORATED BY

REFERENCE)
	EXHIBIT “D”

	 	-
	 	ESCROW INSTRUCTIONS
	EXHIBIT “E”

	 	-
	 	PM NOTE AND PM TD
	EXHIBIT “F”

	 	-
	 	NON-EXCLUSIVE ASSIGNMENT OF NUEVO’ S CONTRACT

RIGHTS AND BILL OF SALE
	EXHIBIT “G”

	 	-
	 	GRANT DEEDS
	EXHIBIT “H”

	 	-
	 	PRELIMINARY TITLE REPORTS FOR THE LAND

(DEVELOPMENT AREAS AND REMAINDER PARCELS)
	EXHIBIT “I”

	 	-
	 	DEVELOPMENT DECLARATION
	EXHIBIT “J”

	 	-
	 	NATURAL HAZARD ZONES
	EXHIBIT “K”

	 	-
	 	PAPA AND PAPA TDs (BUYER’S/NUEVO’S IMPROVEMENTS
AND SATISFACTION OF CONDITIONS, PROGRAM AND
BUYER’S FURTHER PAYMENTS AND PERFORMANCE)
	EXHIBIT “L”

	 	-
	 	DD SUBORDINATION AGREEMENT (DEVELOPMENT

DECLARATION – WITH SPC GUARANTY)
	EXHIBIT “M”

	 	-
	 	EASEMENT AGREEMENT
	EXHIBIT “N”

	 	-
	 	OPERATOR’S OIL WELLS AND CHANGING HOUSE
	EXHIBIT “0”

	 	-
	 	AERA AGREEMENT
	EXHIBIT “P”

	 	-
	 	CORPORATE GUARANTY
	EXHIBIT “Q”

	 	 	 	UNRECORDED CONTRACTS, AGREEMENTS, EASEMENTS

AND LICENSES
	EXHIBIT “R”

	 	-
	 	OPTION B PAPA
	EXHIBIT “S”

	 	 	 	SPC GUARANTY
	 
	IMPORTANT:	 	THIS INSTRUMENT, THE
CONFIDENTIALITY AGREEMENT
BETWEEN THE PARTES, DATED MARCH 6 2003, AND THE
ACCESS AGREEMENT BETWEEN THE PARTIES, DATED MARCH
6, 2003, REPRESENT THE ENTIRE AGREEMENT OF THE PARTES
CONCERNING THE SUBJECT MATTER HEREOF AND ALL OTHER
PREVIOUS COMMUNICATIONS AND WRITINGS ARE MERGED
HEREIN AND SHALL HAVE NO EFFECT.







Agreement





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PURCHASE AND SALE AGREEMENT




     THIS PURCHASE AND SALE AGREEMENT (“PSA” or “Agreement”) is made this 8th
day of December, 2003, by and between NUEVO ENERGY COMPANY, a Delaware
corporation (“Nuevo” or “Seller”), and TONNER HILLS SSP, LLC, a Delaware
limited liability company (“Shea”) and TONNER HILLS 680 LLC, a Delaware limited
liability company (“TH 680”) (collectively and individually, “Buyer”), upon the
following terms and conditions:

RECITALS



     A. Seller is the owner of the surface fee interest in that certain real
property (“Land” or “Property”), consisting of approximately 810 acres, located
in the Sphere of Influence of the City of Brea, County of Orange, State of
California, more fully described in Exhibits “A” and “B,” which will be conveyed
to Shea and TH 680 as two separate parcels as more specifically described in
Exhibit “G.” Buyer acknowledges that Seller has previously sold to BlackSand
Partners, L.P., a Texas limited partnership (“Operator” or “BlackSand”) all
oil, gas and other minerals (collectively, “Oil Assets”) from the Property and
the right (i) to produce the Oil Assets from currently existing wells and those
which shall be newly drilled after the Close of Escrow and (ii) to remove the
Oil Assets below five hundred feet (500’), all as more fully described in that
certain purchase and sale agreement between Seller and Operator, dated February
28, 2003 (“BlackSand PSA”). Buyer has been provided with a copy of the
BlackSand PSA.



     B. Buyer and Seller agree that the completion of the well abandonment and
oil field accommodation program pursuant to the BlackSand PSA and Mineral PAPA
will be accomplished by Buyer as set forth therein and as required by Section
5.30 hereof.



     C. Buyer and Seller agree that the permit program (“Permit Program”) and
well abandonment and oil field accommodation program for Wildcatter Park
(“Aera Program”) and the Hover Parcel (“Hover Program”)will be accomplished as
set forth respectively in Sections 5.35, 5.36 and 5.37, and the PAPA attached
as Exhibit “K.”



     D. Seller has already taken steps toward the preparation of the Property
for development, including certain work in connection with the Program and
including the submission of certain Governmental Approval Documents for
approval. Upon the execution hereof, Seller, with Buyer’s assistance, shall
retain all rights and responsibilities for the continued processing of such
Governmental Approval Documents until the Close, at which time Buyer, with
Seller’s assistance, shall assume such responsibilities; and the responsible
party shall obtain the other’s approval for any Material Change in the
Governmental Approval Documents, all as further described herein.



     E. Subject to A, B, C and D above, Buyer desires to purchase the Property
from Seller, improve and develop the Development Areas and other portions of
the Property as described in this Agreement; and Seller desires to sell the
Property to Buyer, all on the terms and conditions hereinafter set forth.



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     F. Buyer and Seller intend that this Agreement and the Escrow Instructions
attached as Exhibit “D” shall constitute joint escrow instructions to First
American Title Insurance Company as Escrow Holder for the purchase and sale of
the Property.



ARTICLE 1

Land and Maps




          Section 1.1 Definitions.



               1.1.1 “A Final Map” or “Level A Final Map” shall mean a final tract map of
the Property, substantially in conformance with Tentative Tract Map No. 16178
as shown in Exhibit “B,” for finance and conveyance purposes only, showing the
Development Areas, Retained Properties and Remainder Parcels as separate, legal
parcels under the Map Act.



               1.1.2 “Adjacent Property,” “Adjacent Parcel” or “Hover Parcel” shall mean
Parcel 2 of Exhibit “B” of Lot Line Adjustment LL-2000-054 recorded on August
13, 2001 as Instrument No. 20010557229 in the Official Records of the County.



               1.1.3 “Aera” shall mean Area Energy LLC.



               1.1.4 “Aera Program” shall have the meaning prescribed in Section 5.36 and
the PAPA.



               1.1.5 “Area Plan” shall mean the Tonner Hills Area Plan approved by the
County on November 19, 2002, in conjunction with the EIR.



               1.1.6 “BlackSand PSA” shall have the meaning prescribed in Section 5.30.



               1.1.7 “City” shall mean Brea, California.



               1.1.8 County of Orange” or “County” shall mean Orange County, California,
and any City within the County, as applicable.



               1.1.9 “DD Period” shall mean that certain due diligence (“DD”) period
during which Buyer has satisfied itself as to the suitability of the Property
for its intended purpose and use.



               1.1.10 “Development Areas” shall mean those portions of the Property
designated for Improvements by Buyer in connection with the Project, and which
are to be owned by Shea pursuant to the Transaction, all as shown in the final
Area Plan or the A Final Map.



               1.1.11 “Development Documents” as used in this Agreement or in any of the
documents described in this Section or in the Article hereof entitled “Further
Documentation” shall mean this Agreement (including all its Exhibits), and each
and every document described herein and in such Article, and shall include
without limitation the (a) Escrow Instructions, (b) Non-Exclusive Assignment of
Nuevo’s Contract Rights and Bill of Sale, (c) Grant Deeds, (d)



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Title Reports, (e) Development Declaration, (f)PAPA and PAPA TDs, (g) Easement
Agreement, (h) Aera Agreement, (i) Hover Agreement, (j) Mineral PAPA, (k)
Purchase Money Documents, (1) SPC Guaranty and DD Subordination Agreement, if
applicable, under Section 5.42, (m) Corporate Guaranty, and (n) that certain
Development Declaration between Seller and BlackSand Partners, L.P.recorded on
February 28, 2003 as Instrument No. 2003000226057 in the Official Records of
Orange County, California, together with all the rights and privileges accorded
to, as well as all the duties, obligations and responsibilities assumed by, the
Parties, respectively, pursuant thereto; provided, however, that the separate,
independent environmental indemnity relating hereto shall not be considered a
Development Document. All of the definitions contained in any of the
Development Documents, unless stated otherwise in this Agreement, are
incorporated herein by reference.



               1.1.12 “Development Reimbursement Monies” shall mean, for all work
performed on and after the Effective Date until the Close of Escrow (a)
one-half of all the costs (“Governmental Approval Costs”) incurred by Seller in
processing or participating in the processing of the Governmental Approval
Documents and Governmental Approvals, including the cost of obtaining the
Permits (see also Section 3.5.1), and including the costs of all Seller’s
consultants and lawyers incurred in assisting Seller in processing and/or
defending (before or after approval) any litigation or other formal or informal
controversy, including the Lawsuit and any other litigation, arbitration or
mediation involving such Governmental Approval Documents and Governmental
Approvals; (b) in addition to the costs to be reimbursed pursuant to (a),
above, one-half (1/2) of all costs incurred by Seller pursuant to work done by
John Ullom and Bob Odle and invoiced by Ullom Associates; and, (c) all costs
incurred by Seller relating to or in connection with the performance of the
Program, including environmental clean-up undertaken pursuant to EIR
Remediation and those Long Lead Items specified in Section 2.2.4 (“Program
Expenses”), as all such matters in (a) (b) and (c) are more fully described in
Sections 3.4 and 3.5 hereof and in Exhibit “K.”



               1.1.13 “Effective Date” shall mean January 1, 2003.



               1.1.14 “EIR Remediation ” shall mean those remediation activities
described in the approved Remedial Action Plan submitted to the County on
December 16, 1999, as amended October 3, 2001,
December 27, 2001 and January
13, 2003.



               1.1.15 “Entitlement(s)” shall mean the EIR, Tonner Hills Area Plan and
Planned Community Text (as defined below under “Project”).



               1.1.16 “Environmental Laws” shall mean “Environmental Laws” as defined in
Section 3.9.



               1.1.17 Intentionally Omitted.



               1.1.18 Subject to Exhibit “K,” “Exclusive Use Areas” for individual wells
shall mean those areas around and immediately contiguous to the existing
Operator wells and/or newly drilled wells after the Close of Escrow which are
for the exclusive use of Operator for its Oil Operations, including, but not
limited to, the operating, pulling and reworking of Operator’s wells and for
the repair, maintenance or other operations on any pipeline, electrical
facilities or



3









 





any other facility used in connection with Operator’s Oil Operations. Said
Exclusive Use Areas are each anticipated to be approximately (a) ten feet (10’)
by ten feet (10’) in the Development Areas and (b) sixty feet (60’) by ninety
feet (90’) in the Open Space Areas.



               1.1.19 INTENTIONALLY OMITTED.



               1.1.20 “Governmental Agency” or “Governmental Body” shall mean the State
of California (“State”) and any governmental body of the State, and shall also
include all “public” and “quasi-governmental” entities within the State; and,
any federal agency or body with jurisdiction over the Land, or any portion
thereof, for any reason or purpose.



               1.1.21 “Governmental Approvals” means any governmental approvals, permits
or entitlements requested or granted in connection with or relating to the
Project and/or the Land (including any work thereon required by the Development
Documents) from any Governmental Agency.



               1.1.22 “Governmental Approval Costs” shall have the meaning prescribed in
the definition of Development Reimbursement Monies.



               1.1.23 “Governmental Approval Documents” shall mean any documents,
applications, requests, submissions, correspondence and/or writings of any
nature submitted to, and/or approved by, a Governmental Agency for the purpose
of or in connection with obtaining Governmental Approval(s).



               1.1.24 “Grant Deed” shall mean the executed and recordable deeds conveying
the Property to Buyer, or either of them, attached as Exhibit “G.”



               1.1.25 “Hazardous Substance” shall mean Hazardous Substance as described
in Section 3.9.



               1.1.26 “Home,” “Residence” or “Residential Unit” shall mean any unit
constructed on the Land for the purpose of providing a dwelling (residential
living space), regardless of type (its constitution legally), and/or a Lot upon
which such unit is constructed.



               1.1.27 “Hover Program” shall have the meaning prescribed in Section 5.37
and the PAPA.



               1.1.28 “Hover Agreement” shall mean that certain agreement for the
purchase and sale of the Adjacent Parcel between Nuevo and Hover Development
Company, Inc., dated September 28, 2001, assigned to Brea Walden, LLC
(“Brea Walden”) and the Agreement Between Adjacent Landowners (Exhibit “I”
thereto), between Nuevo and Brea Walden, dated October 9, 2001 and recorded in
the Official Records of Orange County, California on October 9, 2001, as
Instrument No. 20010710857.



               1.1.29 “Improvements” shall mean Homes and any other improvements
constructed on the Land pursuant to Governmental Approvals.



4









 





               1.1.30 “Information” shall mean those items of information and materials
described in Section 2.5.1.



               1.1.31 Subject to Exhibit “K,” “Joint Use Areas” for individual wells in
the Development Areas shall mean those areas around and immediately contiguous
to the existing wells and/or newly drilled wells after the Close of Escrow
which are for the joint use of Buyer, or Buyer’s successors in interest, and
Operator and which may be used by Operator for its Oil Operations e.g., among
other things, to pull and rework Operator’s wells, lay, construct, maintain,
operate, repair, renew, change the size of and remove pipelines and electrical
facilities, together with valves and other necessary appurtenances, for the
transportation of oil, petroleum, gas, gasoline, water and other substances,
over, across, along, through, in and under the Property. Said Joint Use Areas
are each anticipated to be approximately sixty feet (60’) by ninety feet (90’)
in the Development Areas. Exclusive Use Areas are included within the
boundaries of the Joint Use Areas).



               1.1.32 “Land” or “Property” shall mean the surface, fee interest in the
real property, consisting of approximately 810 acres described in Exhibit “A,”
and depicted in Exhibit “B.”



               1.1.33 “Lawsuit” shall mean that certain CEQA lawsuit, Hills for Everyone
v. County of Orange, Respondent, Nuevo Energy, Real Party in Interest and Does
1 through 100 Inclusive, Real Parties in Interest, Case No. 02CC18652, Superior
Court for the County of Orange, California, filed December 18, 2002, settled
and dismissed with prejudice by the Court on June 20, 2003.



               1.1.34 “Lot” shall mean a residential lot at the Project subdivided
pursuant to the Map Act.



               1.1.35 “MapAct” shall mean the California Subdivision Map Act (Cal. Gov.
Code § §66410 et seq.).



               1.1.36 “Mass Grading” or “Grading” shall mean the rough excavation and
grading of the Property, as required by Buyer’s development of the Project
(including temporary water and power, fencing, demolition, clearing and
grubbing, and erosion, dust and vector control during the period of such
grading work), but not the finished grading of Lots and streets. Such Grading
shall include bringing all Lots to “blue top” staked, rough grade elevations and
street sections to the established rough grade sections, ready for utilities.



               1.1.37 “Mass Grading Plan” or “GradingPlan” shall mean Buyer’s final plan
for Mass Grading the Property, as approved by the appropriate Governmental
Agencies.



               1.1.38 “Mineral PAPA” shall have the meaning prescribed in Section 5.30.



               1.1.39 “Oil Operations” shall mean “to operate and service” each of
Operator’s or Aera’s (individually, as applicable) oil wells and related oil field facilities which shall include, without limitation, now and in the
future, the right to drill for, explore, re-drill,



5









 





work, rework and/or complete or re-complete wells for oil, gas and other
hydrocarbon substances, water and minerals, of every type and nature
(collectively, “Oil Assets”), together with the right to produce, store
and inject water and other substances for secondary and/or tertiary recovery
operations or to use other techniques, whether now known or unknown, and to
produce, take, treat, store and sell oil, gas and other hydrocarbon substances
from the Land together with the right to permanently place, locate, relocate,
construct, reconstruct, maintain, operate, use, repair, replace, remove, move,
change the size of, increase the number of and remove: all wells, pipelines,
utilities (including water lines and power lines), buildings, facilities,
equipment and fixtures necessary or desirable for Operator’s or Aera’s
(individually, as applicable) continued operation of the oil and gas field
(collectively, “Facilities”),on, over, under, in and through the Land, together
with the right of ingress and egress from the Land to all Exclusive and Joint
Use Areas, Retained Properties and all Facilities wheresoever located on the
Land.



               1.1.40 “Operator” shall mean BlackSand Partners, L.P., a Texas limited
partnership and all of its authorized successors and assigns.



               1.1.41 “PAPA” shall mean the Payment and Performance Agreement attached as
Exhibit “K.”



               1.1.42 “PAPA TDs,” “PAPA Trust Deeds” or “PAPA Deeds of Trust” shall mean
the trust deeds, in the form of Exhibit “K,” executed by Buyer in favor of
Seller, as beneficiary, securing certain Buyer’s obligations hereunder and
under the PAPA.



               1.1.43 “Party” shall mean Seller or Buyer. “Parties” shall mean Seller and
Buyer collectively.



               1.1.44 “Permits” shall mean collectively (a) the California Regional Water
Quality Control Board 401 clean water certification, (b) the United States Army
Corps of Engineers 404 permit and (c) the California Department of Fish & Game
1603 Streambed Alteration Agreement, relating to the Project.



               1.1.45 “Permit Program” shall have the meaning prescribed in Section 5.35
and the PAPA.



               1.1.46 “Program” means the well abandonment and oil field accommodation
program to be completed by Buyer, as described and defined in, and pursuant to,
the BlackSand PSA and Mineral PAPA.



               1.1.47 “Project” shall mean that certain project described in
Environmental Impact Report No. 581, SCH No. 2001031137, for the Tonner Hills
Planned Community, dated April 2002, with the County as lead Agency, approved by
the County on November 19, 2002, as amended and/or modified from time to time
(“EIR”), and (a) all of Nuevo’s right, title and interest therein and in all
Governmental Approvals relating to such project, including without limitation
the (i) Area Plan approved by the County on November 19, 2002, (ii) Planned
Community 2001-01 (and text) approved by the County on November 19, 2002, (iii)
County Development Agreement ZC01-01, approved by the County on November 19,



6









 





2002, (iv) Biological Opinion dated December 30, 2002, as amended, used by the
Corps of Engineers in issuing its 404 Permit, and (v) except in all cases for
any matters relating to Oil Operations or as specifically provided to the
contrary elsewhere in the Development Documents (including without limitation,
the matters provided herein and in the exhibits to this Agreement), all other
rights, entitlements and privileges that relate directly or indirectly to the
development of such Project, also including without limitation, all licenses,
permits, entitlements, approvals, rights to develop, deposits, refunds,
reimbursements, credits, agreements with Governmental Agencies, warranties,
plans, maps, marketing materials, architectural drawings, soil studies,
environmental reports, site maps, mitigation agreements, studies, reports,
files, records, and other documents, as well as those contracts with Seller’s
consultants specifically named and described elsewhere herein; and (b) all work
required by Seller pursuant thereto and/or all work (to the extent completed at
the Close) required pursuant to any of the Development Documents, Governmental
Approvals and/or Governmental Approval Documents.



               1.1.48 “Purchase Price” shall mean (a) the Initial Purchase Price and (b)
the Additional Purchase Price. The “Purchase Money Documents” or “PM Documents,”
securing a portion of the Initial Purchase Price, are comprised of the “PM
Note” in the amount specified in Section 2.2.1 and the PM TD, the forms of both
of which are attached as Exhibit “E.”



               1.1.49 “Release” shall mean and include any accidental or intentional
spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, migrating, dumping or disposing into the air,
land, surface water, ground water or the environment of any Hazardous Substance
(including, without limitation, the abandonment or discarding of receptacles
containing any Hazardous Substance).



               1.1.50 “Remainder Parcels” shall mean all those portions of the Land not
shown as Development Areas on the final Area Plan or the A Final Map.



               1.1.51 “Seller’s Account” shall mean Seller’s Account identified in
Section 5.2



               1.1.52 “Torch” shall mean collectively Torch Energy Advisors,
Incorporated, and Torch Operating Company, Novistar, Inc. and Torch Energy
Marketing, Inc., or any affiliate thereof or successor thereto.



               1.1.53 “Transaction” shall mean the transaction between Nuevo and Buyer
contemplated by this Agreement.



               1.1.54 “Transfer” shall mean any sale or transfer by Buyer, whether
voluntary or involuntary, of any portion of or interest in the Land. Transfer
shall include (a) any long term lease (over ten years), exchange, conveyance,
divestiture, alienation, hypothecation (except a loan for the acquisition of
all or a portion of the Property), pursuant to a deed, contract of sale,
mortgage, deed of trust or otherwise, and (b) any indirect transfer by way of
merger, consolidation, stock sale, assignment, or pledge, corporate
reorganization or other conveyance by business arrangement of any ownership
interest, of any sort whatsoever, in the Land, this Agreement, the Development
Documents described therein and/or any entity with an ownership



7









 





interest herein, including the sale, assignment, pledge or other conveyance of
any partnership or limited liability company interests or membership.



               1.1.55 “Unocal” shall mean Union Oil Company of California and Unocal
California Pipeline Company; and “Unocal Asset Purchase Agreement” shall mean
that certain agreement between Unocal and Nuevo, dated February 16,1996.



               1.1.56 “Work” means any and all work, construction, improvements, and/or
Buyer’s Improvements (defined in Exhibit “K”) required of, or authorized to be
done or constructed by, Buyer pursuant to this Agreement, any Exhibit hereto or
any other Development Document; “work” means all work,
construction and/or
improvements required of, or authorized to be done or constructed by, the Party
identified as responsible therefor.



Except only as specifically provided to the contrary elsewhere in this
Agreement, the Property, except for Oil Assets and Oil Operations, shall be
deemed to include all of Seller’s duties and obligations, of any kind and/or
type whatsoever, relating thereto, except those which Seller is prohibited or
restricted, in whole or in part, by any statute, law, ordinance, rule,
regulation, order, determination or notice of any Governmental Agency or by any
contractual arrangement or agreement, from transferring, selling or conveying.



Unless defined to the contrary therein, all terms defined in this Agreement
shall have the same meaning in all the Development Documents, and vice-versa.



          Section 1.2 Governmental Approvals, Including A Level Map. Prior to the
Close of Escrow, Seller agrees, as described elsewhere herein, to diligently
continue processing, in the ordinary course of business, any and all
Governmental Approval Documents (including the Level A Tentative Map, Level A
Final Map, California Department of Fish & Game 1603 Streambed Alteration
Agreement, U.S. Army Corps of Engineers 404 permit, California Regional Water
Quality Control Board 401 clean water certification, any County/City Memorandum
of Understanding, Impact Mitigation Agreement with the Brea Olinda Unified
School District and City Pre-Annexation Agreement).



          Buyer expressly acknowledges and agrees that Seller shall continue to
operate the Property and Project in the ordinary course of business and may
grant exclusive and non- exclusive easements, rights-of-way and other rights
pertaining to the Land, outside of the residential portions of Development
Areas that will contain Lots, including to (a) Aera or its affiliates, as more
fully described in the Aera Agreement and (b) BlackSand for purposes of its
continued use, possession and operation of the Changing House depicted on
Exhibit “N,” in connection with its Oil Operations. TH 680 shall, promptly
after the Close, grant an exclusive easement to BlackSand similar to the
easement granted for the Main Oil Operations Area shown on Attachment “B” to
Exhibit “K’ under the BlackSand PSA. The area to be covered by the new easement
is described and depicted as the “Changing House” in Exhibit “N.”



          Section 1.3 Approval Conditions. Subject to Buyer’s right to contest
described in Section 3.5.5, and except as expressly set forth to the contrary
elsewhere herein, Buyer agrees to use commercially reasonable efforts (a) prior
to the Close of Escrow, at its sole cost and expense, to replace in its name,
and obtain the release of Seller from, all subdivision,



8









 





improvement, monument, tax, full and faithful performance and other bonds
(“bonds”) then currently securing any obligation of Seller with respect to the
Project, and if any such bond is not so replaced and Seller not fully released
from the obligations secured thereby prior to the Close, Buyer, at its sole
cost and expense, will continue to use commercially reasonable efforts to
obtain such replacement and release at the earliest possible time after the
Close and (b) from and after the Close and prior to the full reconveyance by
Seller of the PAPA TDs, to comply with and satisfy all conditions and
requirements of Governmental Approvals with respect to the Land and the
Project. The obligations in (a) above, shall include the following bonds: Bond
No. 140419 securing work pursuant to Grading Permit No. GA010014 in the amount
of $7,000, and Monumentation Bond No. RLB0006499 securing monumentation work to
be performed in connection with the A Final Map in an amount not to exceed
$100,000. All such efforts on Buyer’s part and all Government Approval Costs
from and after the Close shall be at Buyer’s sole cost and expense, and shall
specifically include all costs associated with the posting of bonds in
connection with the matters described in Subsection (a), above, and Nuevo’s
work required in Sections 5.35, 5.36 and 5.37 of this Agreement. Buyer shall
reimburse Nuevo, upon ten (10) days written request therefor, for all amounts
expended by Nuevo if Nuevo posts such bonds on Buyer’s behalf. Provided
however, that Nuevo (and not Buyer) shall be responsible for posting and paying
all the cost and expense of any bond required in connection with Nuevo’s work
described in Section 2.2.2(b) hereof. Buyer shall also satisfy all other of
Buyer’s obligations imposed herein, at Buyer’s sole cost and expense, including
any described in the PAPA. Notwithstanding the foregoing, Buyer shall not be
required to satisfy those conditions of approval or requirements for which
Seller is responsible, as more fully described in the PAPA.



          Section 1.4 Agreement Consideration. Buyer hereby acknowledges and agrees
that Buyer is a sophisticated purchaser of real estate and projects for
development, has sought and received advice regarding this Transaction from
legal, environmental and other experts, professionals, and consultants
regarding the matters contained herein, and otherwise in the Development
Documents, including without limitation the general and environmental
indemnities in Section 3.7 and Section 3.9 hereof, respectively, and the
Assumption of Obligations provisions, and understands that Seller is relying on
such representation by Buyer as part of its material consideration and
bargained for exchange for the Transaction.



ARTICLE 2

Purchase Price; Escrow




          Section 2.1 Purchase of the Land. Nuevo agrees to sell and Buyer agrees to
purchase the Land and Project, through escrow (“Escrow”), as raw land,
unimproved, according to all the terms of this Agreement, including the Escrow
Instructions attached as Exhibit “D” (“Escrow Instructions”).



          Section 2.2 Purchase Price and Development Reimbursement Monies, Buyer Tax
Responsibility.



          The Purchase Price shall consist of:



                       2.2.1 Initial Purchase Price. The Initial Purchase Price for the Land in
the amount of (a) a non-refundable (except as described in Section 2.3 below),
Five Million



9









 





Dollar ($5,000,000) deposit (“Deposit”) to be paid into Seller’s Account
specified in Section 5.2, outside of Escrow, as more fully described in Section
2.3, and (b) Nine Million Dollars ($9,000,000) in cash and the fully executed
PM Note in the face amount of Twenty-Two Million Five Hundred Thousand Dollars
($22,500,000) payable ninety (90) days after Close of Escrow and secured by the
fully executed and acknowledged PM TD, both in the form of Exhibit “E”
(collectively, “Purchase Money Documents” or “PM Documents”), to be paid and
delivered to Nuevo through Escrow at the Close.



               2.2.2 Additional Purchase Price. Nuevo has agreed to undertake certain
work at its expense for which it shall be reimbursed as “Additional Purchase
Price.” The Additional Purchase Price reimburses Seller for certain expenses
incurred by Seller and is not consideration for the Land. Additional Purchase
Price is sometimes hereinafter referred to as “Work Reimbursement Amount. “ The
Additional Purchase Price, secured by the PAPA TDs, shall consist of and be
paid by Buyer to Seller upon the occurrence of each “Event,” in the “Amount”
and utilizing the “Method” reflected below, as follows:



	 	 	 	 	 	 	 
	EVENT	 	AMOUNT	 	METHOD
	(a) Close of Escrow

Reimbursement for procurement
and payment by Nuevo of the
Stand-Alone (Environmental)
Insurance Policy required of Buyer
in Section 5.26

	 	$	212,695	 	 	Cash through Escrow
	 
	 	 	 	 	 	 
	(b) Permit Program: Later of
Close of Escrow OR

	 	 	 	 	 	Cash at Close of Escrow;
and/or within four (4)
business days of Event
	 
	 	 	 	 	 	 
	   (i) Provision by Seller to
Shea of a copy of the approval by
the United States Fish & Wildlife
Service (“USFWS”) of the Habitat
Mitigation and Monitoring Plan
(“Restoration Plan”)

	 	$	2,000,000	 	 	Wire transfer to Seller’s
Account
	 
	 	 	 	 	 	 
	   (ii) Provision by Seller to
Shea of a copy of the written
certification (“Certification”) by the
permitted wildlife biologist
designated as the monitor within
the Restoration Plan stating that the

	 	$	3,000,000	 	 	Wire transfer to Seller’s
Account







10









 






	 	 	 	 	 	 	 
	Development Planning Area 7
habitat restoration area (“HRA”) is
being utilized by the California
gnatcatcher in accordance with the
USFWS Biological Opinion
Standard (“BOS”).
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	   (iii) Provision by Seller
to Shea of the Certification by the
permitted wildlife biologist
designated as the monitor within
the Restoration Plan stating that the
Development Planning Area 4
HRA is occupiable by California
gnatcatchers in accordance with the
USFWS BOS.

	 	$	1,500,000	 	 	Wire transfer to Seller’s
Account
	 
	 	 	 	 	 	 
	   (iv) One (1) year after
Nuevo’s completion of the initial
scope of work required by the
Restoration Plan for the Remaining
Habitat Restoration Area.

	 	$	2,000,000	 	 	Wire transfer to Seller’s
Account







The payment of the Additional Purchase Price described in Section 2.2.2(b)
shall be secured by the Corporate Guaranty in the form of Exhibit “P,” to be
delivered by Buyer to Seller through Escrow. Notwithstanding the foregoing,
should any Event set out in Section 2.2(b)(i)-(iv) resulting in payment under
the Permit Program being due prior to the Close, forty percent (40%) of the
Amount allocable thereto shall be paid to Seller through Escrow at the Close
and the balance (sixty percent (60%) of the Amount) shall be added to the
amount due under the Purchase Money Documents.



               2.2.3 Development Reimbursement Monies: General. Separate and distinct
from the Purchase Price, Buyer shall also pay Nuevo the Development
Reimbursement Monies through Escrow at the Close.



               Any Development Reimbursement Monies substantiated by invoices dated not
later than sixty (60) days after the Close (which were not previously paid by
Buyer to Nuevo at the Close or otherwise), shall be paid to Nuevo in cash upon
fifteen (15) days written demand therefor from Nuevo to Buyer, accompanied by
reasonable supporting documentation, so long as such demand is received by
Buyer within ninety (90) days after the Close. Notwithstanding the foregoing,
in the event Nuevo has, prior to the Close, placed an order for materials and or
equipment necessary to implement the Program and such invoice(s) for payment
thereof are received by Nuevo more than sixty (60) days after the Close, Shea
shall pay directly to the vendor the amounts set forth in any such invoice(s)
within fifteen (15) days from receipt of such invoice(s) from Nuevo.



11









 





               2.2.4 Development Reimbursement Monies: Long Lead Items. Seller agrees to
order on or about the estimated order date (set forth below) the following
equipment (“Long Lead Items”). All monies paid by Seller on account of Long
Lead Items prior to the Close are Development Reimbursement Monies and
classified as Program Expenses to be reimbursed in full to Seller at Close.
Buyer shall pay all amounts due after Closing directly to the vendor within
fifteen (15) days from receipt of such invoices from Nuevo. At Close, Buyer
shall assign its rights to the Long Lead Items as provided in Exhibit “F” and
Buyer shall make commercially reasonable efforts after Close to cause the
vendors of the Long Lead Items to invoice Buyer directly for the balances due
for said Long Lead Items. The Long Lead Items and the estimated costs (by both
Parties) of same are as follows:



	 	 	 	 	 	 	 	 	 
	 	 	Estimated	 	 
	Item
	 	Order Date
	 	Estimated Cost

	2 Free Water Knockouts
	 	Dec. 3, 2003	 	$	732,000	 
	1 Flotation Cell
	 	Dec. 3, 2003	 	 	169,000	 
	1 Lot of 12Kv electrical equipment
	 	Dec. 3, 2003	 	 	585,500	 
	 
	 	 	 	 	 	 	
 	 
	Total
	 	 	 	 	 	$	1,486,500	 







          Section 2.3 Deposit; Opening of Escrow; Close of Escrow. In consideration
for the sale of the Land by Nuevo to Buyer, Buyer shall pay Nuevo the Deposit
outside of Escrow within five (5) business days of the last to occur of the
following:



               (a) the execution by Buyer and Seller of this Agreement;



               (b) notice to Buyer that the A Level Final Map has been filed for record
by Seller with the Recorder of Orange County, California;



               (c) all the Permits have been issued in writing by the cognizant
Governmental Agency, or in the case of the 1603 Streambed Alteration Agreement,
the thirty (30) day statutory timeframe for notice has passed without response;
and



               (d) the Aera Agreement has been fully executed by Aera and Nuevo,
substantially in the form of Exhibit “O.”



          The Deposit shall be paid by wire transfer to Seller’s Account as
described in Section 5.2; and shall be applied to the Purchase Price at the
Close.



          WITHIN TWO (2) BUSINESS DAYS AFTER THE EXECUTION HEREOF, SELLER SHALL OPEN
ESCROW BY DEPOSITING A FULLY EXECUTED COPY OF THE AGREEMENT AND THE ESCROW
INSTRUCTIONS INTO ESCROW.



          THE CLOSE OF ESCROW SHALL TAKE PLACE PRIOR TO NOON CALIFORNIA TIME, ON THE
LATER TO OCCUR OF DECEMBER 19, 2003 OR FIVE (5)



12









 





BUSINESS DAYS AFTER THE RECORDATION OF THE LEVEL A FINAL MAP BY THE COUNTY
RECORDER.



               2.3.1 If Escrow fails to Close because of a default of Seller under this
Agreement, then Seller will pay all the Escrow cancellation fees and costs and
shall return the Deposit to Buyer if Buyer does not pursue Specific Performance
as provided in Section 5.8 hereof. Buyer shall thereupon be limited to the
remedies described in, and prescribed by, Section 5.8.2.



               2.3.2 If Escrow fails to Close because of a default of Buyer under this
Agreement, then Buyer shall pay all the Escrow cancellation fees and costs and
the Deposit shall be retained by Seller as liquidated damages, as provided in
Section 2.4.



               2.3.3 If Escrow fails to Close for any reason other than Seller’s or
Buyer’s default, then the Parties shall share equally the Escrow cancellation
fees and costs and the Deposit shall be retained by Seller as consideration for
holding the Property off the market from March 2003 until the failure to Close;
provided however, the Deposit shall be returned to Buyer within five (5)
business days of Buyer’s written notice to Seller requesting such repayment if
Sections 2.3.1 and 2.3.2, above, do not apply because no default of either
Party has occurred, but events have transpired engendering legal theories
recognized by the common or statutory law of the State of California as giving
rise to “Impossibility (but not “Impracticability”) of Performance,” and may
include such events as: acts of nature, terrorism, war, explosion, any Material
Change (as defined in Section 3.4.3) including any (a) order of Governmental
Agency amounting to a Material Change (e.g., a moratorium enacted to prevent or
materially limit Governmental Approvals or the issuance of water, sewer,
grading or other permits, or a Condemnation, either of which has the effect
described in Section 3.4.3(a) or (b)) or (b) similar causes beyond the control
of the responsible party; provided further however, nothing herein shall excuse
the performance of any act rendered difficult because of the financial
condition of a Party.



          Section 2.4
Liquidated Damages/Losses. SUBJECT TO SECTIONS 2.3.3 AND
5.8.2, IF ESCROW FAILS TO CLOSE AS A RESULT OF BUYER’S DEFAULT, NUEVO WILL BE
DAMAGED AND SUFFER LOSSES AND WILL BE ENTITLED TO COMPENSATION FOR THOSE
DAMAGES/LOSSES, BUT SUCH DAMAGES/LOSSES WILL BE EXTREMELY DIFFICULT AND
IMPRACTICAL TO ASCERTAIN FOR THE FOLLOWING REASONS: (A) THE DAMAGES/LOSSES TO
WHICH NUEVO WOULD BE ENTITLED IN A COURT OF LAW WILL BE BASED IN PART ON THE
DIFFERENCE BETWEEN THE ACTUAL VALUE OF THE PROPERTY AT THE TIME SET FOR THE
CLOSE OF ESCROW AND THE PURCHASE PRICE FOR THE PROPERTY AS SET FORTH IN THIS
AGREEMENT TAKING INTO CONSIDERATION, AMONG OTHER THINGS, NUEVO’S REQUIREMENT TO
FIND A SUBSTITUTE BUYER WHICH CAN EFFECTIVELY PERFORM THE PROGRAM FOR THE
OPERATOR; AND PROOF OF THE AMOUNT OF SUCH DAMAGES WILL BE BASED ON OPINIONS OF
VALUE OF THE PROPERTY, WHICH CAN VARY IN SIGNIFICANT AMOUNTS, AND (B) BECAUSE
OF THE UNCERTAIN ECONOMIC AND POLITICAL CLIMATE IN THE CITY, COUNTY, REGION,
AND STATE OF CALIFORNIA, IT IS IMPOSSIBLE TO PREDICT AS OF THE



13









 





DATE ON WHICH THIS AGREEMENT IS ENTERED IN TO WHETHER THE VALUE OF THE PROPERTY WILL
INCREASE OR DECREASE AS OF THE DATE SET FOR THE CLOSE OF ESCROW.



     EXCEPT AS STATED OTHERWISE IN THIS AGREEMENT, BUYER HAS ASSUMED ALL RISKS
FOR THE NON-CLOSURE OF ESCROW, AND BUYER DESIRES TO LIMIT (C) THE AMOUNT OF ITS
RISK GENERALLY AND (D) THE DAMAGES/LOSSES FOR WHICH BUYER MIGHT BE LIABLE
SHOULD THE ESCROW CONTEMPLATED HEREIN NOT CLOSE FOR ANY REASON OTHER
THAN SUCH A
SELLER’S DEFAULT. BUYER AND NUEVO WISH TO AVOID THE COSTS AND LENGTHY
DELAYS WHICH WOULD RESULT IF NUEVO FILED A LAWSUIT TO COLLECT ITS DAMAGES FOR A
BREACH OF THIS AGREEMENT OR LOSSES FROM THE OCCURRENCE OF A BUYER-ASSUMED
RISK(INCLUDING THOSE INCURRED BY SELLER FROM HOLDING THE PROPERTY OFF THE MARKET
FOR A PERIOD OF TIME IN CONTEMPLATION OF A SALE TO BUYER).



     BUYER SPECIFICALLY AGREES THAT BUYERS DEPOSIT SHALL,
THEREFORE, BE DEEMED TO CONSTITUTE A REASONABLE ESTIMATE OF NUEVO’S
DAMAGES/LOSSES UNDER THE PROVISIONS OF THIS AGREEMENT AND THE LAWS
OF THE STATE OF CALIFORNIA AND SHALL NOT CONSTITUTE A PENALTY OR FORFEITURE.



     NUEVO’S SOLE AND EXCLUSIVE REMEDY IN THE EVENT OF THE FAILURE OF ESCROW TO
CLOSE FOR ANY REASON OTHER THAN SELLERS DEFAULT SHALL BE LIMITED TO COLLECTION
OF SUCH LIQUIDATED DAMAGES/LOSSES AND ATTORNEYS’ FEES AND COSTS OF COLLECTION.



	 	 	 	 	 	 	 
	BUYER
‘S INITIALS  -s- [ILLEGIBLE]

	 	 
	 	NUEVO’S
INITIAL  -s- [ILLEGIBLE]
	 	 







          Section 2.5 Buyer’s DD Period; Return of Documents.



               2.5.1 Nuevo has previously delivered or made reasonably available to Buyer
written and other oral, printed and tangible materials relating to the Property
(including the Project) (collectively, “Information”), including those located
at (a) its Brea Data Room, 500 North Kraemer Boulevard, Brea, California, (b)
its regional headquarters at 1200 Discovery Drive, Bakersfield, California, and
other, related facilities in Bakersfield (including Information from its field
office at 201 South Broadway, Orcutt, California, and other related facilities
in Orcutt) and (c) its company headquarters at 1021 Main Street, Houston,
Texas. Seller makes no representation or warranty regarding the accuracy or
effectiveness of the Information so provided to Buyer. Buyer has previously
satisfied itself during the DD Period with respect to, and has approved, the
Information. The DD Period commenced as of the Effective Date and ended
simultaneously with the execution of this PSA.



               2.5.2 Buyer had the DD Period to determine whether the Development Areas
(and all matters pertaining thereto, including the use of all or a portion
thereof and including the development of the Project) are suitable for the uses
for which they are contemplated to be used, and to obtain any final approval
from Buyer’s board of directors, any



14









 






partner, co-venturer, parent, affiliated entity, financial institution or the
like (“Feasibility Matters”). Buyer has satisfied and approved the Feasibility
Matters. During the DD Period, Buyer entered upon the Property from time to
time for the purposes of its physical inspection and testing (“Inspection”)
thereof, among other things described as follows: for the purpose of conducting
customary soil, geological, seismic, archaeological, biological, hydrological,
drainage and other engineering and/or environmental or other physical tests and
to inspect the condition of and survey the Property (including the Development
Areas); reviewed title to the Property (including the Development Areas) and
any underlying documents appearing of record against such title and
investigated all other portions of the Development Areas and/or interviewed
(“Investigation”) any other relevant sources of information about the Property
(including the Development Areas) and Project, including Governmental Agencies
(with Seller’s designee) and was required to (a) conduct the Inspection
(including any survey of the Land (including the Development Areas)) and
Investigation according to and in compliance with the provisions of that
certain Access Agreement regarding the same by and between Buyer and Seller
(“Access Agreement”), (b) defend and indemnify Nuevo for its Inspection and
Investigation pursuant to the Access Agreement, and (c) vacate the Property in
substantially the same condition, without defects, as it existed prior to its
entrance thereon. The Inspection and Investigation were conducted in lieu of
any notice required by Section 25359.7 of the California Health and Safety
Code, and Buyer hereby waives any requirement for a notice pursuant to that
provision.



          Buyer has approved the Inspection and Investigation, including without
limitation, all soil and other physical and ALL OTHER CONDITIONS comprising the
Feasibility Matters pertaining to the Property (including the Development
Areas) and the intended development thereof.



          Within five (5) days of receipt (or completion if preparedly Buyer)
thereof, Buyer shall provide Seller with copies of all reports, materials,
documents and other writings prepared by or for Buyer in connection with
Buyer’s Inspection, Investigation and review of the Feasibility Matters, except
for marketing and other proprietary, financial information.



          Buyer shall continue to have access to the Land and Information after the
execution of this PSA, upon twenty-four (24) hours prior notice to John Ullom
and David Leach at the phone and fax numbers and email address shown in Section
5.1.



               2.5.3 If this Escrow fails to Close for any reason, to the extent in
Buyer’s possession and not previously delivered to Seller, the Information
shall be returned to Seller within ten (10) days of Escrow’s failure to Close.



               2.5.4 Additionally, except to the extent they are both proprietary in
nature and generate a distinct and material economic advantage to Buyer or
consist of any architect’s design renderings, the ownership of which is
retained by such architect, if Escrow fails to Close, Buyer will provide Nuevo
within ten (10) days thereof the Knowledge (as defined in Section 5.22) and all
other written materials, notes, documents, and writings of every nature
whatsoever, including without limitation, plans and specifications
(“Materials”), generated by Buyer in connection with the Inspection,
Investigation, other Feasibility Matters and the proposed development of the
Property (including the Development Areas) and the



15









 





Project. Buyer will make no representation or warranty regarding the accuracy
or effectiveness of the Materials so provided to Nuevo.



          Section 2.6 Conditions to Close of Escrow. Unless waived by Seller in
writing or otherwise provided herein, Buyer must meet all of the following
conditions prior to the Close of Escrow:



               2.6.1 Buyer must pay to Nuevo the Purchase Price as set forth herein by
(a) depositing into Escrow the cash portion of the Initial Purchase Price and
the fully executed PM Note securing the remainder of the Initial Purchase Price
as described in 2.2.1, (b) depositing into Escrow in cash the amount described
in Section 2.2.2(a) and any other Additional Purchase Price then due under
Section 2.2.2(b), and (c) depositing into Escrow in cash the amount of all
Development Reimbursement Monies described in Sections 2.2.3 and 2.2.4 then due.
Buyer shall also have obtained and deposited into Escrow a fully executed and
binding Corporate Guaranty in the form of Exhibit “P,” securing payment of the
Additional Purchase Price and the Guaranteed Obligations (as defined in the
Corporate Guaranty).



               2.6.2 The Easement Agreement in the form of Exhibit “M” shall be executed
and acknowledged and deposited into Escrow, along with the Insurance Policy or
Binder required by Section 3.6.5.



               2.6.3 The PM TD in the form of Exhibit “E,” the Non-Exclusive Assignment
of Nuevo’s Contract Rights and Bill of Sale in the form of Exhibit “F,” the
Development Declaration in the form of Exhibit “I,” and the PAPA and the PAPA
TDs in the form of Exhibit “K” shall be executed (and acknowledged where
applicable) and deposited into Escrow.



               2.6.4 If Buyer exercises its rights pursuant to Section 5.42 prior to the
Close, Buyer shall deliver to Escrow, a fully executed SPC Guaranty in the form
of Exhibit “S.”



               2.6.5 Buyer shall have provided the Release/Indemnity to Nuevo described
in Section 5.42 (either outside of or through Escrow).



               2.6.6 Buyer shall not be in material default of any of its obligations
under the Agreement.



     Unless waived by Buyer in writing or otherwise provided herein, Nuevo must
meet all of the following conditions at the Close of Escrow, as follows:



               2.6.7 Nuevo shall have executed and acknowledged the Grant Deeds in the
form of Exhibit “G,” and the Development Declaration in the form of Exhibit
“I,” executed the Non-Exclusive Assignment of Contract Rights and Bill of Sale
in the form of Exhibit “F,” the PAPA and PAPA TDs in the form of Exhibit “K,”
and the Aera Agreement in the form of Exhibit “0,” and deposited them into
Escrow, and otherwise have delivered to Buyer all the Development Documents
required to be so delivered to Buyer pursuant to this Agreement.



16









 





               2.6.8 Nuevo shall have caused the Title Company to deliver the Title
Policy into Escrow.



               2.6.9 The Land must be comprised of one or more legal parcel(s) as
required by the California Subdivision Map Act.



               2.6.10 If Buyer complies with Section 2.6.4, Nuevo shall comply with
provisions of Section 5.42 through Escrow, to the extent required by that
section.



               2.6.11 Nuevo is not in material default under the Agreement.



          Section 2.7 Bankruptcy - Insolvency. Buyer agrees that in the event that
(a) all or substantially all of Buyer’s assets are placed in the hands of a
receiver or trustee, and such receivership or trusteeship continues for a
period of sixty (60) days, (b) Buyer makes an assignment for the benefit of
creditors, (c) Buyer is adjudicated a bankrupt, (d) Buyer institutes any
proceeding under any law relating to bankruptcy wherein Buyer seeks to be
adjudicated a bankrupt, or to be discharged of its debts, or to effect a plan of
liquidation, composition or reorganization, (e) an involuntary proceeding is
filed against Buyer under any bankruptcy laws and Buyer consents thereto or
acquiesces therein by pleading, or by default if such involuntary proceeding is
not dismissed within sixty (60) days, or (f) substantially all of Buyer’s
assets are attached or seized by judicial order where such seizure is not
discharged within sixty (60) days, then (i) Buyer shall be deemed to be in
default hereunder, (ii) this Agreement shall not become an asset in any of such
proceedings, (iii) in addition to all other available remedies, it shall be
lawful for Nuevo to declare this Agreement terminated, and (iv) Buyer shall
have no further claim on the Property (including the Development Areas) and the
Project hereunder or otherwise and no right to the return of any payments or
expenses including the Deposit, taxes, assessments, costs, expenses and fees
incurred or paid pursuant to this Agreement.



ARTICLE 3

Representations and Warranties; AS IS Purchase; Disclaimers and

Required Disclosures; Governmental Approvals; Development Costs,

Taxes and Assessments; Insurance; Indemnities




          Section 3.1 A. Authorization of Buyer. Buyer shall provide Nuevo with a
written instrument executed by an officer of Buyer and certified by its
secretary or assistant secretary that (i) Buyer is in “good standing” and
authorized to conduct its business in California, (ii) the Transaction
contemplated by this Agreement has been duly authorized by its Board of
Directors (or constituent members) in accordance with its Articles and By-Laws
(or Operating Agreement); (iii) the undersigned have the duly constituted
authority to execute, deliver and perform this Agreement on behalf of Buyer;
and (iv) all information provided by Buyer to Nuevo as required herein, is
accurate and correct as of the Close of Escrow.



               B. Buyer Approvals. Buyer and its environmental and other consultants,
including its lawyers, have reviewed and approved the EIR, Development
Agreement, Area Plan and Planned Community text relating thereto and Biological
Opinion, dated December 30, 2002, draft Impact Mitigation Agreement between
Seller and the Brea Olinda Unified School District, dated as of October 28,
2002, Memorandum of Understanding



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with the City of Brea and all other matters referred to in Section 1.2 (and
otherwise herein) regarding the Project and have participated with Nuevo’s
consultants, in meetings and discussions with the County and other Governmental
Agencies regarding the same and all other development rights and Governmental
Approvals for the Project, including the proposed Pre- Annexation Agreement
with the City.



               C. Nuevo Representations and Warranties. Except (a) for the Information or
as otherwise disclosed to Buyer (or provided for herein), for which no
representation or warranty is made, and (b) for all representations and
warranties made “to the best of Nuevo’s knowledge” or “actual knowledge” which
shall be true and correct as of the execution of this Agreement and at the
Close of Escrow only, Nuevo makes the following representations and warranties
which shall be true and correct as of the Close of Escrow and for a period of
one (1) year thereafter. As used herein, the phrase “to the best of Nuevo’s
knowledge” or “actual knowledge” means the actual knowledge of George Nilsen,
Philip Gobe, David Leach, Phillip Sorbet, Thomas Calhoun, Michael Handren and/or
Bruce Laverty, without any independent investigation.



               3.1.1 Organization. Nuevo is a corporation validly existing under the laws
of the State of Delaware. Nuevo owns the Property and Nuevo has no actual
knowledge of any claims of others to ownership thereof.



               3.1.2 Authorization. Nuevo has full power and authority to enter into this
Agreement and to perform all of its obligations hereunder, and has taken all
action required by law and its governing instruments to authorize the
performance of this Agreement by Nuevo. Each individual who has executed this
Agreement on behalf of Nuevo has the right, power, legal capacity and authority
to execute, deliver and perform this Agreement on behalf of Nuevo. To the best
of Nuevo’s knowledge, no material consent, approval, order, or authorization
of, or declaration, filing, or registration with, any court or Governmental
Agency is required to be obtained or made by Seller in connection with the
execution, delivery, or performance by Seller of this Agreement, each other
agreement, instrument, or document executed or to be executed by Seller in
connection with the Transaction.



               3.1.3 Conflicting Agreements. To the best of Nuevo’s knowledge, neither
the execution or delivery of this Agreement, nor the consummation of the
Transaction contemplated herein, will materially conflict with, or result in a
significant breach of any material contract, license, lease, easement,
document, instrument, undertaking or order to which Nuevo is a party or by
which Nuevo is bound, or constitute a default thereunder, or except as
contemplated herein, result in the creation of any lien or encumbrance upon the
Property.



               3.1.4 Violation of Law. To the best of Nuevo’s knowledge, there is no
condition affecting the Property in material violation, nor will the Property
be in material violation at the Close of Escrow, of any applicable law, statute
or ordinance.



               3.1.5 Required Work. With the exception of conditions to approval of the
Governmental Approval Documents, Nuevo has not received, nor is Nuevo aware of,
any written notification from any city, county, or state Governmental Agency
having jurisdiction over the Project requiring any work to be done on or
affecting the Project.



18









 





               3.1.6 Litigation. Nuevo has not been served with a complaint initiating
litigation or legal proceedings against Nuevo or the Property or Project which
would materially and adversely affect Nuevo’s or Buyer’s ability to perform
their respective obligations hereunder or Buyer’s use of the Property or
Project or proposed development of the Project as a residential development.
Buyer acknowledges that Buyer has been specifically informed about, is aware of
and has reviewed the Lawsuit and is aware that other legal, equitable and
regulatory actions and other opposition against the Project could be asserted
by members of City government and others, which are expressly excluded from
this representation.



               3.1.7 Unrecorded Leases; Title. To the best of Nuevo’s knowledge, there
are no unrecorded leases burdening the Property that would have a material,
adverse effect upon Buyer’s proposed use thereof or development of the Project
as a residential development. Seller is the sole, fee owner of the Property,
and has good and marketable title thereto, all as set forth in the Title
Report.



               3.1.8 Property Defects. To the best of Nuevo’s knowledge, there are no
material, adverse latent defects or conditions, including, without limitation
any environmental conditions, wetlands or endangered species on or about the
Property which would cause injury or damage to persons or property, or which
would have a material adverse effect on Buyer’s marketing, development and/or
construction of improvements or residences at the Project.



               3.1.9 No Created Rights to Acquire Property. Nuevo has not created any
right to acquire the Property or Project or any part thereof, in any person,
firm or entity other than Buyer (except for Oil Operations) and except as may
be otherwise provided in this Agreement, as long as this Agreement remains in
force, Seller will not, without Buyer’s prior written consent, lease, transfer,
option, mortgage, pledge, or convey its interest in the Property or Project or
any portion thereof, nor shall Seller enter into any agreement granting to any
person or entity any option to purchase or rights superior to Buyer with
respect to its right to purchase the Property or Project or any part thereof.



               3.1.10 Access; Possession. To the best of Nuevo’s knowledge, there are no
facts or conditions which would prevent access to and from the Property on
existing highways and roads.



               3.1.11 Offsite Improvements. Other than as called for in the mitigation
measures within the EIR for the Project, the Hover Program, the Aera Program
and/or under the Blacksand PSA, to the best of Nuevo’s knowledge, there are no
existing and outstanding requirements specifically imposed against the Property
engendering any obligations on the owner thereof to construct any offsite
improvements as a condition to the development of the Property.



               3.1.12 Payment of Expenses. All expenses relating to the ownership or
operation of the Property, have been, and are being, paid in the ordinary
course of business by Seller, except such expenses and taxes as are disputed in
good faith by Seller.



               3.1.13 No Alienation. Except as otherwise expressly provided herein,
within 120 days of the date hereof, Seller has not sold, assigned, conveyed, or
transferred or



19









 





contracted to sell, assign, convey or transfer any right or title to any
material portion of the Property.



               3.1.14 No Oral Contracts. To the best of Nuevo’s knowledge, Seller has not
entered into any material oral contract with respect to the Property which is
still in force and effect.



               3.1.15 Preferential Rights and Consents to Assign. To the best of Nuevo’s
knowledge, there are no material consents to assignment or waivers of
preferential rights to purchase that must be obtained from third parties in
order for Seller to consummate the Transaction without violating or breaching a
material duty or obligation of Seller.



               3.1.16 Remediation Obligations. With respect to the Land, including the
Development Areas, each of Unocal and Nuevo has completed all its obligations
under the Unocal Asset Purchase Agreement to perform Remedial Work and has
performed all of the obligations assumed by it under the Unocal Asset Purchase
Agreement in connection with Seller Environmental Liabilities, Buyer
Environmental Liabilities, Environmental Claims and Environmental Permits, or
any other environmental matters, conditions, or concerns relating to the Land,
including the Development Areas. Capitalized terms in this Section 3.1.16 shall
have the meaning set forth in the Unocal Asset Purchase Agreement.



               3.1.17 Stand Alone Insurance (Section 5.26). As of the execution of this
Agreement and at the Close, Nuevo has made no claim for reimbursement or the
payment of insurance proceeds pursuant to the terms of the SA Insurance, nor to
the best of its knowledge, has any event occurred giving rise to the right to
make any such claim.



               D. Buyer’s Representations and Warranties. Buyer (which, for purposes of
this subsection D, shall include each entity constituting Buyer) represents and
warrants to Seller the following, as of the execution of this Agreement and at
the Closing:



               (a) Buyer is a limited liability company duly organized, validly existing
and in good standing under the laws of the State of California and has all
requisite powers to carry on its business as it is now being conducted.



               (b) Buyer has the power and authority to make and carry out this Agreement
and to be bound by any and all terms and conditions hereof. All necessary
action on the part of Buyer required for the authorization of the Transaction
has been duly taken.



               (c) Buyer is qualified to do business in the State of
California.



               (d) Notwithstanding anything to the contrary herein, Buyer will have
sufficient, non-contingent financial resources to pay the Purchase Price and to
fulfill its obligations as specified in this Agreement, as of the Closing.



               (e) Buyer is and has been since its inception engaged primarily in the
business of real estate development and home building.



20









 





               (f) Buyer and/or all its members are experienced and knowledgeable
investors in the real estate business. Prior to entering into this Agreement,
Buyer was advised by its own legal, tax, environmental, entitlement and other
professional counsel and other consultants concerning this Agreement, the
Property (including the Development Areas and Oil Operations), the Project and
the value thereof. Buyer is aware of the risks and uncertainties of an
investment in real estate business.



               (g) Buyer is aware of no litigation or legal proceeding pending or
threatened against Buyer and/or all its members which would materially and
adversely affect their ability to perform their respective obligations under
this Agreement.



          Section 3.2 Covenants by Nuevo.



               3.2.1 As required by this Agreement, Nuevo will continue processing the
Governmental Approvals for the development of the Project, the cost of which is
to be reimbursed to Seller as described herein and in Exhibit “K.”



               3.2.2 Nuevo has made no representations that any Governmental Approvals
already applied for or obtained by Nuevo are not subject to denial or reversal
by reason of challenges thereto by private parties or Governmental Agencies
(including Moratorium, Initiative or Referendum), and Buyer specifically
assumes the risk of such an occurrence. Until the Close, the defense to and/or
settlement of any such challenge shall, in Nuevo’s sole discretion, be
controlled solely by Nuevo. Nuevo shall have no obligation to defend any such
challenge, except to the extent Buyer requests such defense in writing and pays
for all costs thereof, including without limitation all attorneys’,
consultants’, experts’ and other fees and costs, in a manner satisfactory to
Nuevo. By accepting payment under this Agreement, Nuevo is not warranting that
it has obtained any or all Governmental Approvals for the development of the
Land (including Development Areas) and/or the Project, or any neighborhood,
village or community which is a part thereof or of which it is a part, nor is
Nuevo warranting its or Buyer’s ability to obtain any future Governmental
Approvals for the development of the Land (including Development
Areas) and or
the Project or any neighborhood, village or community which is a part thereof
or of which it is a part. In no event shall Nuevo’s failure to obtain any such
approvals entitle Buyer to the refund of any payments or expenses incurred
pursuant to this Agreement, including the Deposit, taxes, assessments, costs,
expenses and/or fees.



               3.2.3 From the execution date of this Agreement through the Close, Seller
shall promptly notify Buyer of any Material Change with respect to the Land
(including Development Areas) and the Project or to any Governmental Approval
Documents heretofore or hereafter furnished to Buyer with respect to the Land
(including Development Areas) and the Project, of which it becomes aware to the
best of its knowledge, including specifically, any Material Change which would
make any portion of this Agreement, including the representations, warranties,
covenants and agreements contained in this Article, untrue or materially
misleading; and will provide Buyer copies of all correspondence or other
written materials relating thereto and access to all such materials.
Additionally, Seller will proceed, in



21









 





the manner described in Section 3.4 upon the occurrence of any Material Change
(as defined in Section 3.4.3).



          Section 3.3 Covenants by Buyer; “AS IS” Purchase.



               3.3.1 As of the execution of this Agreement, Buyer is familiar with the
Land (including Development Areas) and the Project and has made such
independent investigations as Buyer deems necessary or appropriate concerning:
the Information, the Inspection, the Investigation, Governmental Approval
Documents, Governmental Approvals, the use, sale, development or suitability
for development of all or a portion of the Property (including Development
Areas) and the Project, including but not limited to any desired investigations
or analyses of present or future laws, statutes, rules, regulations,
ordinances, notices or orders by Governmental Agencies, limitations,
restrictions or requirements concerning the use, density, location or
suitability of all ora portion of the Property (including the Development
Areas) and the Project or any existing or proposed use, development or
condition thereof (collectively “Regulations”), including but not limited to
general plan, zoning, subdivision, environmental or other such Regulations; the
necessity or availability for the Property (including Development Areas) and
the Project of any general or specific plan amendments, rezoning, zone
variances, conditional use permits, development permits, building permits,
environmental impact reports, parcel or subdivision maps, public reports by the
California Department of Real Estate under the Subdivided Lands Act, or any
other permits, approvals or acts by Governmental Agencies for the Property
(including Development Areas) and the Project (collectively, the “Permits”);
the necessity or existence for the Property (including Development Areas) the
Project of any dedications, fees, charges, costs or assessments that may be
imposed in connection with any Regulations or the obtaining of any required
Permits; the effect of and limitations imposed by any City, County or other
Governmental Agency; the economic value of the Property (including Development
Areas) and the Project or the ground water or other minerals relating thereto;
the size, dimensions, location or topography of all or a portion of the
Property (including Development Areas) and the Project; the availability or
adequacy of access to all or a portion of the Property (including Development
Areas) and the Project, or of water, sewage or any other utilities serving the
Property (including Development Areas) and the Project; the presence or
adequacy of infrastructure, subdrain or other improvements on, near or
concerning all or a portion of the Property (including Development Areas) and
the Project; the extent or condition of any grading, compaction or other site
work already performed or hereafter required for Buyer’s proposed development
for the Property (including the Development Areas) and the Project; any
surface, subsurface, soil, subsoil, geologic or ground water conditions or
other physical conditions of or affecting all or a portion of the Property
(including Development Areas) and the Project, such as climate, drainage, air,
water or minerals and the existence of contaminants, naturally occurring
radioactive material (“NORM”) or Hazardous Substances on or in all or a
portion of the Property (including Development Areas) and the Project or in the
ground water; and the extent or condition, use, development or sale of all or a
portion of the Property (including the Development Areas) and the Project.



               Buyer acknowledges that the Land (including the Development Areas) has
been a producing/operating oil field, and that the Land (including the
Development Areas) and



22









 





other surrounding property may have been farmed or used for agricultural
purposes, and that in connection therewith fertilizers, pesticides, weed killer
and other chemicals may have been used thereon and that storage tanks
(including underground storage tanks) have been installed in the Land (including the
Development Areas). Buyer expressly agrees that it is solely responsible for
having determined the existence or non-existence of any such materials, tanks
and lines and the Oil Operations and, if Buyer purchases the Property
(including the Development Areas), for dealing with the existence of any such
materials, tanks and lines and the Oil Operations and all consequences arising
in connection therewith.



               Buyer agrees that Nuevo has not warranted and will not warrant the
accuracy or completeness of any reports, plans and specifications referred to
in the Development Documents, including without limitation, the Information or
other materials required to be delivered or made available to Buyer and Buyer
agrees it has independently verified and established the accuracy and
completeness thereof to Buyer’s own satisfaction.



               3.3.2 Unless and except as otherwise specifically provided to the contrary
in this Agreement, Buyer is relying solely upon its own Inspection,
Investigation and analyses of the foregoing matters in entering into this
Agreement and is not relying in any way upon any representations, statements,
agreements, warranties, studies, reports, descriptions, guidelines or other
information or materials furnished by Nuevo or its representatives, whether
oral or written, express or implied, of any nature whatsoever regarding any
such matters, including without limitation, anything provided in connection
with the Information and Feasibility Matters and/or the Project, Property
(including the Development Areas) and Oil Operations.



               3.3.3 Unless and except as otherwise specifically provided to the contrary
in this Agreement, Buyer expressly acknowledges that Nuevo has not made and
will not make any representations or warranties regarding the results or
enforceability of any entitlements of any nature whatsoever, including without
limitation, the Governmental Approval Documents and Governmental Approvals.



               3.3.4 Unless and except as otherwise specifically provided to the contrary
in this Agreement: (a) Buyer will acquire the Property (including the
Development Areas) and the Project “AS IS,” without representation by Nuevo or
its representatives as to any matter and (b) no patent or latent condition
affecting the Property (including the Development Areas) and the Project in any
way, such as but not limited to the matters listed above in this Section 3.3,
whether or not known or discoverable or hereafter discovered, shall affect
Buyer’s obligations contained in this Agreement, nor shall give rise to any
right of damages, rescission or other remedies against Nuevo.



               Notwithstanding the above, Buyer may, in its reasonable discretion,
maintain a lawsuit or other action against construction entities hired by Nuevo
to perform work on the Land pursuant to a written contract (“Construction
Entities”), to obtain damages for losses suffered as a result of the matters
described in Sections 3.3.1 to 3.3.3 to the extent caused by such Construction
Entities. In that regard, to the extent it possesses and may assign same, Nuevo
hereby conveys to Buyer a non-exclusive assignment of its rights and interests
in and to any relevant contracts or subcontracts, for the limited purposes
stated herein, without any obligation



23









 





by
Nuevo to participate in such lawsuit or action, as a party or otherwise, and
without any responsibility, warranty, representation or liability for any
outcome pursuant thereto or damages awarded therein. Construction Entities
include contractors, subcontractors, materialmen or other independent entities,
but not Nuevo and/or Torch, or their partners, officers, employees or any other
related entities. Upon ten (10) days written request, Nuevo will provide Buyer
with a list of such Construction Entities which have (a) supplied Nuevo with
the Preliminary Notice prescribed by the California Civil Code for the
maintenance of mechanic’s lien rights or (b) have an independent (direct)
contract with Nuevo with respect to such work.



               3.3.5 Without in any way limiting the generality of the foregoing
provisions of this Section 3.3, Buyer expressly agrees to cause certain
disclosures described below (“Disclosures”) to be inserted in the Final
Subdivision Public Reports (“Public Report”) obtained by Buyer (and/or any
builder/developer purchasing from Buyer) from the Department of Real Estate
relating to the Project or, in the absence of a requirement for a Public
Report, in a separate Disclosure instrument; Buyer shall cause each purchaser
of a Home constructed at the Project to sign, prior to or contemporaneously
with the execution of a purchase agreement for such Home, a Disclosure notice
and a specific “assumption of risk” with respect thereto in such agreement. The
Disclosure shall contain all information required by California law, including
the ordinances, rules and regulations of any Governmental Agency and any other
information that would be disclosed by a prudent developer/builder of homes in
the same geographical area, including those relating to nuisance (of any sort)
noise, glare, traffic, transmission lines, magnetism associated therewith or
otherwise, hazard zones, potential acts of God or nature, habitat restoration,
protection of species (wildlife and vegetation), the existence of landfills and
other man-made alterations to the Land, the existence of the Project; and, that
the Land (including the Development Areas) and the Adjacent Parcel have had a
number of historical uses including oil, gas and power production and
associated residential and commercial, structures and habitation and may
contain contamination and buried trash and debris as a result of such use; and,
there will be abandoned oil wells at the Project, and continuing Oil Operations
(including, in Operator’s sole discretion, additional wells), as well as the
construction and development of a master-planned community.



               3.3.6 Without in any way limiting the generality of the foregoing
provisions of this Section 3.3, Buyer expressly acknowledges it is aware of and
has satisfied itself with respect to the following:



                    3.3.6.1 Unocal Gas Plant. That (a) the Project contains certain real
property that was formerly used by Unocal as a gas plant for the commercial
production of natural gas, (b) the Unocal gas plant has been shut down and its
operations discontinued, (c) Nuevo has caused the areas surrounding the Unocal
gas plant to be cleaned up and remediated (“clean-up”) pursuant to a remedial
action plan established by the Orange County Health Care Agency (“OCHCA”) which
has issued a Conditional Closure Letter indicating its inspection and
acceptance of such remediation efforts, (d) Buyer has received and reviewed to
its satisfaction the Conditional Closure Letter and other written materials
concerning the Unocal gas plant, its operation and the clean-up as part of the
Information and (e) Nuevo does not warrant, represent or guarantee that the
Unocal gas plant or surrounding areas are free from contamination or any other
conditions whatsoever, as a result of its operations or otherwise.



24









 





                    3.3.6.2 Faults. Buyer acknowledges that Nuevo has made Buyer aware that
there are earthquake and other faults which exist on or near the Project.
Further, Buyer acknowledges that there may be faults, unknown to Nuevo, which
exist on or near the Project.



                    3.3.6.3 Lessees on the Property. Buyer acknowledges that there (a) are
surface leases on a portion of the Land and the Project, between Nuevo, as
successor to Unocal, and Brea Green Recycling, Inc., dated February 1, 1997,
and with Haynes Apiaries, dated December 29, 1992, as amended, for the keeping
of bees, and (b) is an oil and gas lease between Seller and Aera Energy LLC,
commonly referred to as the Indenture, as amended, by and between Unocal and
Columbia Oil Producing Company dated February 26, 1901,affecting a portion of
the Land. Buyer has been provided copies of such leases as part of the
Information.



                    3.3.6.4 Water Storage Tanks. The Property surrounds two (2) large,
domestic water storage tanks currently in operation. The tanks are owned and
operated by the City.



                    3.3.6.5 Oil Wells and Change House. As part of the AS IS purchase of the
Property (including the Development Areas) and the Project, Buyer understands
and agrees that the wells and Change House (shown as “Changing House”) shown on
Exhibit “N” have been identified “to the best of Nuevo’s knowledge” (as defined
in Section 3.1C).



          FOR PURPOSES OF THIS SECTION 3.3, ALL REFERENCES TO“LAND” AND/OR
“PROPERTY” SHALL MEAN AND INCLUDE OIL OPERATIONS.



          NUEVO SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR ASSURANCE THAT THE
PROJECT OR ANY HOMES CONSTRUCTED THEREIN WILL ENJOY ANY VIEW.



          Section 3.4 Governmental Approvals



               3.4.1 Until the Close of Escrow, Seller shall have the right to process
all Governmental Approval Documents and all related Governmental Approvals
which may from time to time be required with respect to the orderly development
of the Project contemplated under this Agreement, including as applicable and
without limitation, the A Final Map all other maps, final subdivision public
reports from the Department of Real Estate (“DRE”), FHA/VA approvals, a property
report from the Office of Interstate Land Sales Registration, conditional use
permits, final site plan approvals, appropriate zoning, building and other
permits and like approvals. In processing such Governmental Approvals, Seller
may prepare as necessary and without limitation, environmental impact reports,
tentative and subdivision maps, engineering studies and other supporting
materials; subject however, to Buyer’s involvement and assistance and prior
approval of Material Changes, to be given in Buyer’s reasonable discretion.
After the Close of Escrow, Buyer shall be responsible for such processing (and
until the full reconveyance of the PAPA TDs, with Seller’s involvement,
assistance and prior approval of Material Changes, to be given in Seller’s
reasonable discretion; thereafter, Buyer shall promptly give Seller written
notice of any such Material Change). All such processing, whether by Seller or
Buyer (individually as provided herein, “Processing Party”), shall be
continuous so as to effect the



25









 





Governmental Approvals at the earliest possible time. Notwithstanding the
above, Buyer acknowledges and agrees that (a) Seller’s relationships and
“standing” with the City are very significant elements in the viability of the
Project and the opportunity to procure the Governmental Approvals therefor, and
that its reasonable decisions regarding the processing of such Governmental
Approvals and the Governmental Approval Documents will be made taking this into
consideration, and (b) the method of payment of the Additional Purchase Price
involves Seller in considerable risk, and, by necessity, therefore, in the
timing and substance of such processing.



               3.4.2 Except as provided otherwise in Section 3.4.1, the Processing Party
shall submit all applications for Governmental Approvals which involve Material
Changes to and coordinate with the other Party; such applications must be
approved in writing by the other Party, in its reasonable discretion, prior to
filing with the appropriate Governmental Agency. The other Party shall have a
period of seven (7) business days from receipt to disapprove, in its reasonable
discretion, any applications provided by the Processing Party. In the event of
such disapproval, the other Party shall specify the reasons therefor and the
Processing Party shall then revise and resubmit such applications and the other
Party shall again have seven (7) business days for the
approval/disapproval process. Failure to so disapprove within any time period described herein shall
be deemed approval thereof. The Processing Party shall provide the other Party
with copies of all written (and material) communications with the Governmental
Agency processing such applications.



               3.4.3 “Material Change” or “material change” shall mean a change to a
Governmental Approval Document after the date of execution of this PSA, which
significantly (a) reduces the chance of obtaining a material Governmental
Approval or (b) diminishes or dilutes the potential rights or entitlements of
the owner of the Project, and shall include, without limitation, a diminution
in the number of residential Lots in the Area Plan, increased costs of, or
increased restrictions on, the timing of development of the Project, and
increased requirements for on or off site Improvements, if such diminution,
increases or restrictions will have a substantial, adverse effect upon the
economic viability of the Project.



          Section 3.5 Development Requirements, Conditions, Costs, Taxes and
Assessments. Except as expressly provided elsewhere herein or in Exhibit “K,”
from and after the Close of Escrow and until the full reconveyance of the PAPA
TDs, (a) Buyer shall use commercially reasonable efforts to satisfy all
conditions and requirements of Governmental Agencies and/or with respect to
Governmental Approval Documents and (b) Buyer shall pay and be responsible
therefor and for all other costs and expenses, of every nature whatsoever,
incurred in developing the Project. Such costs and expenses incurred after the
Close of Escrow, shall include, without limitation, the following:



               3.5.1 Buyer shall be responsible for all Governmental Approval Costs (as
defined in Section 1.1.12(a)), including those bond costs described in Section
1.3. If any such Governmental Approval Costs, pursuant to the terms of any
agreement between Nuevo and any Governmental Agency with jurisdiction over the
Project or any ordinance, administrative procedure or other regulation adopted
by such Governmental Agency or otherwise, are charged to and paid by Nuevo,
then Buyer shall reimburse Nuevo for the portion of such fees allocable to



26









 





the Project and/or the Improvements to be constructed in connection therewith,
as described in Section 1.3 and in Exhibit “K.”



               3.5.2 Buyer shall be responsible for the cost of construction of all
Buyer’s Improvements, as more fully described on Exhibit “K,” and for all other
charges and costs for the Project and development pursuant to the Governmental
Approval Documents and Governmental Approvals, including the costs of any bonds
required in connection therewith.



               3.5.3 Buyer shall be responsible for all taxes and assessments for the
Land after the Close; such amounts shall be prorated by Escrowholder at the
Close.



               3.5.4 Buyer shall pay and be solely responsible to the Governmental Agency
as may be applicable, all fees, including street, transportation, connection or
similar types of fees due for the Project and for the discharge of all
conditions to the Governmental Approvals, including all maps. To the extent
such fees continue to be required by any Governmental Agency or authority,
Buyer agrees that all such fees shall be payable by Buyer whether or not the
applicable enabling ordinance or other legislation is repealed, invalidated,
terminated or revoked or if the Governmental Agency’s participation in funding
or constructing such facilities is prohibited. In no event shall Buyer be
entitled to a refund from Seller of any portion of any such fees or any portion
of the Purchase Price due to a failure by the Governmental Agency to construct
the facilities relating thereto or for any other reason.



               3.5.5 Should Buyer fail to satisfy, pay and/or discharge, or cause to be
satisfied, paid and/or discharged prior to delinquency, any tax, assessment or
other condition, requirement, charge, cost or expense upon or in connection
with the Land and/or Project, or its or their development, as otherwise
required herein, and if Buyer after ten (10) days’ written notice from Nuevo
shall fail to pay and discharge the same, then Nuevo may, at its option,
satisfy and/or pay any such conditions or amounts, respectively, or settle or
discharge any action therefor or satisfy any judgment thereon, and all
reasonable costs, expenses and other sums incurred or paid by Nuevo in
connection therewith, including, without limitation, attorneys’ fees and court
costs, shall be paid to Nuevo by Buyer within ten (10) days of a request
therefor by Nuevo, which request shall be accompanied by an invoice for such
fee or charge and reasonable supporting documentation. Any such reimbursement
shall not relieve Buyer of its obligation to reimburse Nuevo for any subsequent
billing.



               Notwithstanding the above, Buyer may contest such matters in good faith
and postpone such satisfaction and/or payment until resolution of the contested
matter, or as required by law, whichever is sooner. If Buyer contests such
matters in good faith and Nuevo exercises its rights hereunder, Nuevo may pay
such amounts under protest and reimburse Buyer for any amounts paid from Buyer
to Nuevo to the extent of any reduction resulting from such contest, to the
extent Nuevo receives a refund thereof.



          Section 3.6 Insurance.



               3.6.1 Insurance Types. From and after the Close, Buyer shall, at its sole
cost and expense, as required by this Agreement, maintain in full force and
effect with companies satisfying the requirements specified below, the
following insurance:



27









 





                    3.6.1.1 Comprehensive General Liability Insurance. Buyer shall maintain
Comprehensive or Commercial General Liability Insurance on an “occurrence”
basis, with reasonably acceptable deductibles, and excess umbrella coverage,
with a combined single limit for bodily injury and property damage of
Twenty-Five Million Dollars ($25,000,000.00), reduced automatically to Three
Million Dollars ($3,000,000) (a) with respect to the portion Transferred, upon
the Transfer or Transfers in the aggregate (in a single or multiple
transactions) to the same or a related Transferee of the fee interest in any
portion of the Remainder Parcels constituting less than thirty (30) acres or
(b) with respect to the rest of the Remainder Parcels, after the sale of the
last Home at the Project to the Home buying public (or an amount equal to the
limit from time to time carried by Buyer, if greater), covering the following:



                         3.6.1.1.1. Operations, Independent Contractors and Products and Completed
Operations (which Buyer shall maintain in effect on at least an annual renewal
basis for at least ten (10) years following the completion of the last Home at
the Project;



                         3.6.1.1.2. Owners’ and Contractors’ Protective
Liability;



                         3.6.1.1.3. Severability of Interest and Cross Liability clauses;



                         3.6.1.1 .4. Contractual Liability, including without limitation coverage
for Buyer’s contractual indemnities in this Agreement;



                         3.6.1.1.5. Personal Injury and Explosions, Collapse and Underground
Hazards (X, C, U);



                         3.6.1.1.6. Broad Form Property Damage Liability, including completed
operations.



The limits of liability of the insurance coverage specified in this subsection
may be provided by any combination of primary and excess liability insurance
policies.



                    3.6.1.2 Automobile Liability Insurance. Buyer shall maintain owned, hired
and non-owed automobile liability insurance covering all use of all
automobiles, trucks and other motor vehicles utilized by Buyer in connection
with the requirements or obligations specified in any Development Document with
a combined single limit for bodily injury and property damage of Five Million
Dollars ($5,000,000.00) as to the Development Areas and One Million Dollars
($1,000,000.00) as to the Remainder Parcels (or in an amount equal to the limit
from time to time carried by Buyer if greater).



               3.6.2 Waiver of Subrogation. Buyer hereby waives all rights against Nuevo
and the Indemnitees (as that term is defined below in Section 3.7 hereof) for
damages caused by fire and other perils and any other risk.



               3.6.3 Named and Additional Insured. Each of the entities constituting
Buyer shall be named insureds on the policy required by this Section 3.6. Nuevo
shall be included as an additional insured under the coverage specified in
subsections 3.6.1 above with



28









 





the following provisions included within each applicable policy: “It is
understood and agreed that coverage afforded by this Policy shall also apply to
Nuevo Energy Company and Torch Energy Advisors Inc. and Torch Operating Company
(collectively, “Torch”), and their members, partners and their constituent
members, their parent companies, subsidiaries, and all of their respective
officers, directors, shareholders, agents, representatives, employees and
professional consultants, and all of their respective successors and assigns,
as additional insureds, but only with respect to legal liability or claims
caused by, arising out of or resulting from the acts or omissions of the named
insured or others performing acts on behalf of the named insured in connection
with their ownership, use and development of the Property (including the
Development Areas) and the Project. This insurance is primary and any other
insurance by such additional insureds is non-contributing with this insurance
as respects claims or liability arising out of or resulting from the acts or
omissions of the named insured, or of others performing on behalf of the named
insured.”



               3.6.4 Insurance Policies. Each insurance policy required under this
Section shall:



                    3.6.4.1 Be issued by insurance carriers licensed and approved to do
business in California, having a general rating of not less than an “A-” and
financial rating of not less than “VIII” in the most current Best’s Insurance
Report. Should Buyer wish to maintain insurance issued by an Affiliate of
Buyer, Buyer shall provide Seller with sufficient financial information to
demonstrate that the financial ability of such Affiliate is comparable to other
insurance companies having the forgoing Best’s Insurance Report ratings. Such
information shall include but not be limited to such Affiliate’s balance sheet
and income statement, loss reserves and contingencies, and reinsurance
arrangements.



                    3.6.4.2 Contain a provision that the policy shall not be subject to
material alteration to the detriment of Nuevo or Buyer or cancellation without
at least thirty (30) days prior written notice given to Nuevo by registered
mail;



                    3.6.4.3 Provide that such policy or policies and the coverage evidenced
thereby are primary and Nuevo’s insurance is noncontributing with such primary
coverage; and,



                    3.6.4.4 Contain severability of interest and cross
liability clauses.



          Buyer may provide the insurance described in this Section 3.6 in whole or
in part through a policy or policies covering other liabilities and projects of
Buyer; provided, however, that any such policy or policies shall (a)
specifically allocate to this Agreement the full amount of insurance required
hereunder and (b) be subject to, without limitation, and contain, permit or
otherwise unconditionally authorize the waiver contained in subsection 3.6.2
above; and provided further that any such policy or policies shall not
otherwise dilute or impair the rights of Nuevo or in any way negate the
requirements of this Agreement.



               3.6.5 Evidence of Insurance. As confirmation and evidence of each type of
insurance coverage required by section 3.6.1 and section 5.26 (if applicable)
of this Agreement, Buyer shall satisfy the following requirements:



29









 





                    3.6.5.1 Buyer shall provide Nuevo with policy binder letters by the Close
of Escrow for each type of insurance coverage, confirming the subject coverage
is in place and effective as of the Close of Escrow;



                    3.6.5.2 Buyer shall comply with all payment obligations of each type of
insurance, as specified in the subject policy quote or binder, whichever is
relevant to the specific type of insurance coverage;



                    3.6.5.3 Buyer shall comply with all terms and conditions of each subject
quote or binder that require additional information be provided to the insurer
prior to binding;



                    3.6.5.4 In addition to binder letters, Nuevo shall be provided with
certificates issued by Buyer’s insurance carrier acceptable to Nuevo showing
such policies in force for the specified period. Nuevo has the right to review
certified policies as it may deem necessary. Such evidence shall be delivered
to Nuevo promptly upon execution of this Agreement. Evidence of any renewal
insurance including specifically without limitation, the Products and Completed
Operations insurance, shall be delivered to Nuevo not less than thirty (30)
days prior to the expiration date on the term of the policy. Each policy and
certificate shall be subject to reasonable approval by Nuevo. Should any policy
expire or be cancelled before the expiration of this Agreement, or such later
period as Buyer is required to carry such insurance as set forth herein, and
Buyer fails immediately to procure other insurance as specified, Nuevo, upon
ten (10) days written notice to Buyer, shall have the right, but shall have no
obligation, to procure such insurance and to charge Buyer with one hundred ten
percent (110%) of the cost to Nuevo of procuring such insurance. Buyer shall
pay Nuevo any such amount within ten (10) days of written demand therefor.



               3.6.6 Damages. Nothing contained in these insurance requirements is to be
construed as limiting the type, quality or quantity of insurance Buyer should
maintain or the extent of Buyer’s responsibility for payment of damages
resulting from its operations.



               3.6.7 Nuevo’s Election to Insure. Should Buyer fail to do so, Nuevo
reserves the right (but shall have no obligation), upon ten (10) days notice to
Buyer to effect a cure and procure such insurance, to procure the insurance
itself, or any portion thereof. As provided above, Nuevo shall notify Buyer if
Nuevo exercises its right, whereupon Buyer’s responsibility to carry such
duplicative insurance shall cease. Nuevo further reserves the right at any
time, upon thirty (30) days notice to Buyer, to require that Buyer resume the
maintenance of any insurance for which Nuevo has elected to become responsible
pursuant to this subsection 3.6.7.



               3.6.8 Contractors. Buyer shall not permit any architect, engineer or
contractor to commence work on or relating to the Property (including
Development Areas) or the Project until such parties have complied with Buyer’s
customary insurance requirements. Buyer shall use commercially reasonable
efforts to cause each such party to name Nuevo and Torch as additional insureds
to such party’s general liability insurance policies. Buyer shall also include
Nuevo and Torch in any indemnity provisions with such parties for defense and
indemnification to the same extent Buyer is defended and indemnified. Failure
by Buyer to



30









 





discharge its obligations under this Section 3.6.8 shall not give rise to a
right in Seller to exercise a remedy at law or equity, except to the extent
Seller suffers Losses or Environmental Losses as a result thereof.



          Section 3.7 Indemnity. To the maximum extent permitted by law, and except
to the limited extent provided to the contrary herein or in Exhibit “K,” Nuevo,
Torch and their members, partners and their constituent members, their parent
companies and subsidiaries and their employees, officers, directors,
shareholders, agents and representatives and all of their respective successors
and assigns (collectively, the “Indemnitees”) shall not be liable for any
Losses (as defined below) of any kind or character to any person or property
arising from, caused by or relating to, with or without fault or negligence of
an Indemnitee (a) the Property, the development or use of the Property, the
performance of the Work or work at, relating to or in connection with the
Property, and/or the construction, use or sale or other conveyance of
Improvements or other improvements at, relating to or in connection with the
Property, including, without limitation, any loss, damage, injury or claim
arising from or caused by or alleged to have arisen from or have been caused by
(i) the use of the Property during grading or other activities by Buyer or any
of Buyer’s Representatives (as that term is defined in subsection 3.9 below) in
a manner that impacts operations relating to oil and gas or any other mineral
or hydrocarbon or substance, or any related and/or any other operations, (ii) a
defect in the design or construction of, or material in, any structure or other
improvement at, relating to or in connection with the Property, or in any Work
performed by Buyer or any of Buyer’s Representatives, or by Seller; (iii) the
condition of the Property including any earthquake or other faults, or other
natural hazards, disclosed or undisclosed, a defect in soils or in the
preparation of soils (including any grading performed at, relating to or in
connection with the Property prior to the date hereof by Nuevo or any other
party), (iv) the presence or existence of any Hazardous (or toxic) Substances
(including any methane gas and/or tar seeps), materials or waste (including any
landfill) in, on or near the soil or groundwater at, relating to or in
connection with the Property, whether known or unknown and whether resulting
from occurrences prior to, on the date of or after the acquisition of the
Property, including without limitation any liability under the Comprehensive
Environmental Response, Compensation and Liability Act, the California
Environmental Quality Act or any other law, (v) claims made by third parties
for matters at, relating to or in connection with the Property and/or the
Adjacent Property (in equity, tort or strict liability and/or rising out of,
relating to or in connection with all agreements and contracts assumed by Buyer
pursuant to this Agreement, including the Aera Agreement, Hover Agreement and
the Agreement between Adjacent Landowners between Seller and Brea Walden, LLC,
dated October 9, 2001, and recorded on October 9, 2001, as Instrument No.
20010710857 in the Official Records of Orange County, California), including
any matter disclosed in 3.3.5 and/or 3.3.6 herein, (vi) any act or omission of
Buyer or any of Buyer’s Representatives, (vii) any accident or casualty at,
relating to or in connection with the Property after the Close of Escrow,
(viii) a material misrepresentation by Buyer or any of Buyer’s Representatives,
(ix) a violation or alleged violation by Buyer or any of Buyer’s
Representatives of any law now or hereinafter enacted, (x) a slope erosion,
sluffing or failure or subsurface geologic or groundwater condition at,
relating to or in connection with the Property, as well as the effect on such
slopes and subsurface areas of Buyer’s development at, relating to or in
connection with the Property and use of the improvements at, relating to or in
connection with the Property (including watering), (xi) the application of the
principles of equity or strict liability



31









 





with respect to any act or omission of Buyer or an Indemnitee or their
respective licensees, invitees or contractors at, relating to or in connection
with the Property, including without limitation the grading thereof and/or the
existence of any contaminants or Hazardous Substances or materials in or on the
soil or groundwater, or (xii) any other cause whatsoever at, relating to or in
connection with the Property, Buyer’s use of the Property or Buyer’s
performance under the Development Documents (including its covenants,
representations and warranties made pursuant thereto and specifically including
those of it and its Transferees made in Paragraphs 1 through 4, and otherwise
in, the Assumption of Obligations); (b)the negligence or willful misconduct of
Buyer or any of Buyer’s Representatives in the development, construction,
grading or other work performed off the Land or Project by Buyer, or otherwise
in connection with the development of the Property, or any defect in any such
Work; or (c) the Default by Buyer of any of its obligations under the
Development Documents.



          As a material part of the consideration of this Agreement, except as
prohibited by law and/or as provided to the contrary below or in Exhibit “K,”
Buyer hereby releases the Indemnitees from and waives on its behalf, and on
behalf of its successors and assigns, all claims, demands and causes of action
against the Indemnitees for any such loss, liability, damage, cost, expense,
injury or claim, including court costs and attorneys’ fees, arising out of,
relating to or in connection with the matters in (a), (b) and (c) of the
preceding paragraph (collectively, “Losses”) and agrees to indemnify, defend
and hold harmless Nuevo and all of the Indemnitees and their property from all
such Losses whether incurred or made by Buyer, Nuevo, any Indemnitee or any
third parties/person(s). The foregoing release, waiver, indemnity and
obligation to defend and hold harmless shall apply to any claim or action
brought by a private party or by a Governmental Agency or entity under any
statute or common law now or hereinafter in effect and is intended to apply
with respect to Losses before or after the conveyance of all of the Homes
and/or other improvements at, relating to or in connection with the Property.
The foregoing release, waiver, indemnity and obligation to defend and hold
harmless, and any similar covenants by Buyer elsewhere in the Development
Documents, are intended to apply to Losses incurred directly by Nuevo or any
Indemnitee, or their property, as well as by Buyer or any third party or their
property. With respect to design, construction methods, materials, locations
and other matters for which Nuevo has given or will give its approval,
recommendation or other direction, the foregoing release, waiver, indemnity and
obligation to defend and hold harmless shall apply irrespective of Nuevo’s
approval, recommendation or other direction.



          Notwithstanding anything to the contrary above, nothing contained in this
Section shall operate to relieve any Indemnitee to the extent of any Losses
found by a court of competent jurisdiction to have been caused (a) solely by
the reckless behavior, willful behavior or gross negligence or (b) by the
intentional misconduct of such Indemnitee.




	 	 	 
	          BUYER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:






	 	“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE
CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE




32









 







	 	 	 	TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY
AFFECTED HIS SETTLEMENT WITH THE DEBTOR.”





                    BUYER BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT
IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTE OR COMMON LAW
PRINCIPLE OF SIMILAR EFFECT.



	 	 	 	 	 	 	 
	BUYER’S
INITIALS  -s- [ILLEGIBLE]

	 	NUEVO’S
INITIALS  -s- [ILLEGIBLE]








This indemnity and release shall not apply to the extent (a) of any material
breach by Nuevo of (i) its representations set forth in Section 3.1 C, (ii) its
covenants set forth in 3.2 and/or (iii) its other obligations under the
Development Documents (taking into account, all provisions therein expanding,
limiting or otherwise altering or modifying the legal and equitable rights and
duties of the Parties); (b) attributable to civil or criminal penalties imposed
upon Nuevo before the Close, but not paid or Nuevo taxes delinquent before the
Close, but not paid; (c) any claims, demands, causes of action, loss,
liability, damage, cost, expense or injury including court costs and attorneys
fees (collectively, “employment losses”), of Seller resulting from or relating
to the employment relationship between Seller and any of Seller’s present or
former employees or the termination of any such employment relationship,
including without limitation OSHA claims, matters relating to employee health,
severance pay and other similar benefits, if any, and any employment losses on
behalf of any such present or former employee relating to the employment or
termination of employment of any such employee by Seller prior to the Closing,
including without limitation any claim for wrongful discharge, breach of
contract, unfair labor practice, employment discrimination, unemployment
compensation, or workers’ compensation or any employment losses of Seller in
respect of any agreement, trust, plan, fund, or other arrangement under which
benefits or employment is provided for any of Seller’s present or former
employees; (d) any Losses, whether incurred or made by Nuevo, Buyer, or
Indemnitee or any third party, in connection with or arising out of any
off-site activities (i.e., Seller’s actions performed off of the Property),
including but not limited to, storage, handling, transportation, disposal or
discharge, by Seller, of any materials, substances, and wastes from the
Property (including without limitation produced water, drilling fluids, NORM,
and other wastes); or (e) any Losses to the extent they have been acknowledged
and accepted by Operator as its responsibility or there is a final judgment or
other non-appealable resolution of the issues allocating such responsibility
solely to Operator.


Except as provided in the preceding sentence, this Indemnity and release shall
apply to the extent of all Losses at, relating to or in connection with the
Property, regardless of when they occur.



For purposes of this Section 3.7, the term Property (which includes the
Development Areas) shall include the Project.



Notwithstanding the above, Buyer may, in its reasonable discretion, maintain a
lawsuit or other action against Construction Entities, to obtain damages for
losses suffered as a result of its




33









 








indemnification and release given herein, to the extent caused by such
Construction Entities. In that regard, to the extent it possesses and may
assign same, Nuevo hereby conveys to Buyer a non-exclusive assignment of its
rights and interests in and to any relevant contracts or subcontracts, for the
limited purposes stated herein, without any obligation by Nuevo to participate
in such lawsuit or action, as a party or otherwise, and without any
responsibility, warranty, representation or direct or indirect liability for
any outcome pursuant thereto or damages awarded therein. Construction Entities
include contractors, subcontractors, materialmen or other independent entities,
but not Nuevo, or Torch, their constituent partners, their officers, employees
or any other related entities. Upon ten (10) days written request, Nuevo will
provide Buyer with a list of such Construction Entities which (a) have supplied
Nuevo with the Preliminary Notice prescribed by the California Civil Code for
the maintenance of mechanic’s lien rights or (b) have an Independent (direct)
Contract with Nuevo with respect to such Work, and a copy of any such contract.



          Section 3.8 Survival of Covenants. A11 of Buyer’s indemnification, defense
and hold harmless covenants in any of the Development Documents, including
without limitation the covenants in the Sections hereof entitled “Indemnity”
and “No Hazardous Substances,” and Buyer’s obligation to maintain completed
operations insurance pursuant to the Section hereof entitled “Insurance,” shall
survive the conveyance of all or any of the improvements built by Buyer at,
relating to or in connection with the Property and shall be binding on Buyer
until the last to occur of (a) such date as any action against the Indemnitees
is absolutely barred by the applicable statute of limitations or (b) such date
as any claim or action for which indemnification may be claimed under said
Section is fully and finally resolved and, if applicable, any compromise
thereof or judgment or award thereon is paid in full by Buyer and the
Indemnitees are reimbursed by Buyer for any amounts paid by the Indemnitees in
compromise thereof or upon a judgment or award thereon and in defense of such
action or claim, including attorneys’ fees. Neither payment nor a finding of
liability or of an obligation to defend shall be a condition precedent to the
enforcement of any indemnity or duty to defend provision herein or elsewhere in
any Development Document, and if any action or proceeding shall be brought
against any Indemnitee alleging any fact or circumstances for which Buyer is to
provide indemnification, Buyer upon notice from such Indemnitee shall defend
the same at Buyer’s expense by counsel approved in writing by such Indemnitee.
Buyer waives as defenses to its obligations in the Development Documents the
pleading or defense of any statute of limitations.



          Section 3.9 No Hazardous Substances. Except as specifically allocated to
Nuevo elsewhere in this Agreement, the responsibility for Hazardous Substances
shall accrue solely to Buyer. Buyer shall use commercially reasonable efforts
to comply with the following:



               3.9.1 Buyer shall not engage in any “Hazardous Substance Activity” (as
hereinafter defined) or allow Buyer, Buyer’s contractors, its or their
respective subcontractors, agents, employees, licensees, invitees or
representatives, or any other parties directly or indirectly employed by any
one of the foregoing or reasonably under the control of any of the foregoing or
for whose acts any of the foregoing maybe liable (collectively, “Buyer’s
Representatives”), to do so in violation of any “Environmental Law” (as
hereinafter defined at
3.9.8).



34









 





          3.9.2 Buyer shall keep and maintain, and cause Buyer’s Representatives to
keep and maintain, the Property in compliance with, and Buyer shall not cause
or permit the Property to be in violation of, any Environmental Law. Buyer
shall keep and maintain and cause Buyer’s Representatives to keep and maintain
its Work in compliance with, and Buyer shall not cause any such Work or the
Property to be in violation of, any Environmental Law.



          3.9.3 Buyer shall immediately advise Nuevo in writing of (a) any and all
“Hazardous Substance Claims” (as hereinafter defined) against Buyer or the
Property; (b)any remedial action taken by Buyer in response to any (i)
“Hazardous Substance” (as hereinafter defined) in, on, under or about the
Property or (ii) Hazardous Substance Claims; (c) Buyer’s discovery of any
occurrence or condition at, relating to or in connection with the Property that
could cause the Property to be subject to any restrictions on the ownership,
occupancy, transferability or use of the Property under any Environmental Law;
and (d) Buyer’s discovery of any occurrence or condition on the Adjacent
Property or on any real property adjoining or in the vicinity of the Property
that could cause the Property or any part thereof to be classified as
“border-zone property” under the provisions of California Health and Safety
Code Sections 25220 et seq., or any regulation adopted in accordance therewith,
or to be otherwise subject to any restrictions on the ownership, occupancy,
transferability or use of the Property under any Environmental Law. Buyer will
provide Nuevo with copies of all communications with federal, state and local
governments or Governmental Agencies relating to Hazardous Substance Claims.



          3.9.4 In the event any investigation, site monitoring, containment,
cleanup, removal, restoration or other remedial work of any kind or nature (the
“Remedial Work”) is required under any Environmental Law or any judicial order
or notice by any Governmental Agency or in response to any Hazardous Substance
Claims because of, or in connection with, the breach by Buyer of any of its
obligations under the Development Documents or the current or future presence,
suspected presence, threatened or existing Release or suspected Release of a
Hazardous Substance in or into the air, soil, groundwater, surface water or
soil vapor at, on, under or about the Property, or transportation of a
Hazardous Substance to or from the Property, Buyer shall, within such period of
time as may be required under applicable law, regulation or order, commence to
perform, or cause to be commenced, and thereafter diligently prosecute to
completion all such Remedial Work on any portion of the Property.



          3.9.5
Should Buyer at any time default in or fail to perform or observe any
of its obligations under this Section entitled “No Hazardous Substances,” Nuevo
shall have the right but not the obligation, without limitation to any of
Nuevo’s other rights hereunder, upon twenty (20) days’ written notice to Buyer,
to perform the same, and Buyer shall pay to Nuevo, immediately upon demand, One
Hundred Ten Percent (110%) of all costs and expenses incurred by Nuevo in
connection therewith, including without limitation actual attorneys’ fees.



          3.9.6 Without limiting the generality of any Section of any of the
Development Documents dealing with Buyer’s indemnities, as of the date of
execution of this Agreement, Buyer agrees to indemnify, defend and hold
harmless Nuevo and all of the Indemnitees and their property, from and against
any claim, action, suit, proceeding, loss, cost (including court costs and any
clean-up costs), damage (including, without limitation, any consequential
damage), liability, deficiency, fine, penalty, punitive damage or expense



35









 





(including, without limitation technical consulting fees and attorneys’ fees)
(collectively, the “Environmental Losses”), directly or indirectly, resulting
from, arising out of, or based upon, with or without fault (a) the presence,
release, use, generation, discharge, storage, disposal or clean-up of any
Hazardous Substance to, on, in or from the Property, or any residual
contamination therefrom affecting any natural resource or the environment, (b)
the violation, or alleged violation by Buyer or Buyer’s Representatives of any
statute, ordinance, notice, order, rule, regulation, permit, judgment or
license relating to the use, generation, Release, discharge, storage, disposal
or transportation of any Hazardous Substance in, on, under or about, to or from
the Property or (c) any breach of the agreements and obligations of Buyer under
this Section entitled “No Hazardous Substances”; provided, however that no
Indemnitee shall be entitled to indemnification under this paragraph for any
Environmental Loss as and to the extent established by a court of competent
jurisdiction to have been caused (d) solely by its reckless behavior, willful
behavior and/or gross negligence or (e) by the intentional misconduct of such
Indemnitee. This waiver, indemnity and obligation to defend and hold harmless
shall include, without limitation, any damage, liability, fine, penalty,
punitive damage, cost or expense arising from or out of any claim, action, suit
or proceeding for personal injury (including sickness, disease or death),
tangible or intangible property damage, compensation for lost wages, business
income, profits or other economic loss, damage to the natural resources or the
environment, nuisance, pollution, contamination, leak, spill, release or other
adverse effect upon the environment. Except as prohibited by law or as provided
to the contrary below or in Exhibit “K,” the above indemnification applies to
all matters involving the Property or a portion thereof.



This indemnity and release shall not apply to the extent (a) of any material
breach by Nuevo of (i) its representations set forth in Section 3.1 C, (ii) its
covenants set forth in 3.2 and/or (iii) its other obligations under the
Development Documents (taking into account, all provisions therein expanding,
limiting or otherwise altering or modifying the legal and equitable rights and
duties of the Parties); (b) attributable to civil or criminal penalties imposed
upon Nuevo before the Close, but not paid; (c) any Environmental Losses,
whether incurred or made by Nuevo, Buyer, or Indemnitee or any third party, in
connection with or arising out of any off-site activities (i.e., Seller’s actions
performed off of the Property), including but not limited to, storage, handling
or transportation by Seller, of any materials, substances, and wastes produced
from the Property (including without limitation produced water, drilling fluids
and NORM); or(d) any Environmental Losses to the extent they have been
acknowledged and accepted by Operator as its responsibility or there is a final
judgment or other non-appealable resolution of the issues allocating such
responsibility solely to Operator.



Except as provided in the preceding sentence, this Indemnity and release shall
apply to the extent of all Environmental Losses at, relating to or in
connection with the Property, regardless of when they occur.



For purposes of this Section 3.9, the term Property (which includes the
Development Areas) shall include the Project.




36









 








Notwithstanding the above, Buyer may, in its reasonable discretion, maintain a
lawsuit or other action against Construction Entities, to obtain damages for
losses suffered as a result of its indemnification and release given herein, to
the extent caused by such Construction Entities. In that regard, to the extent
it possesses and may assign same, Nuevo hereby conveys to Buyer a non-exclusive
assignment of its rights and interests in and to any relevant contracts or
subcontracts, for the limited purposes stated herein, without any obligation by
Nuevo to participate in such lawsuit or action, as a party or otherwise, and
without any responsibility, warranty, representation or direct or indirect
liability for any outcome pursuant thereto or damages awarded therein.
Construction Entities include contractors, subcontractors, materialmen or other
independent entities, but not Nuevo, or Torch, their constituent partners,
their officers, employees or any other related entities. Upon ten (10) days
written request, Nuevo will provide Buyer with a list of such Construction
Entities which (a) have supplied Nuevo with the Preliminary Notice prescribed
by the California Civil Code for the maintenance of mechanic’s lien rights or
(b) have an independent (direct) contract with Nuevo with respect to such Work,
and a copy of any such contract.



               3.9.7 Without limiting the generality of any Section of any of the
Development Documents dealing with Buyer’s Indemnities, and without limiting
the generality of Section 3.9.6 above, Buyer agrees to indemnity, defend and
hold harmless Seller and all of the Indemnitees who are “secured lenders” as
that term is used in Section 736 of the California Code of Civil Procedure and
their property, from and against any and all claims, costs and damages that a
secured lender is. authorized and allowed to bring and recover pursuant to said
Section 736 of the California Code of Civil Procedure. Buyer shall not
indemnify the Indemnitees under this Section 3.9.7 and the Indemnitees shall
not proceed against Buyer under this Section 3.9.7 with respect to any claims
or costs Indemnitees are not authorized or allowed to recover from Buyer under
Section 736 of the California Code of Civil Procedure. All rights of
Indemnitees under this Section 3.9.7 shall survive following the foreclosure of
any deed of trust, including, without limitation, the PM TD, the PAPA Trust
Deeds, the repayment of any sums payable pursuant to the PAPA, any other
Development Document or the PM Note or any promissory note (or which are
secured by any deed of trust), the reconveyance or termination of the
Development Declaration or the PM TD, PAPA Trust Deeds, or any other deed of
trust as an encumbrance upon the Property, and Buyer’s transfer of the Property
to and until the last to occur of the dates specified in Section 3.8 entitled
“Survival of Covenants.”



               3.9.8 As used in this Agreement the following terms shall have the
following meanings:



               “Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601, seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901, et
seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq., the Clean Water
Act, 33 U.S.C. Section 1251 et seq., the Safe Drinking Water and Toxic Enforcement
Act of 1986 (Cal. H&S Code Sections 25249.5- 25249.13), the
Carpenter-Presley-Tanner Hazardous Substance Account Act (Cal. H&S Code Sections
25300 et seq.), and the Porter-Cologne Water Quality Control Act, California
Water Code Sections 13000, et seq., the California Health and Safety Code
generally and any and all



37









 





other present and future federal, state or local laws (whether under common
law, statute, ordinance, rule, regulation or otherwise), permits, orders,
determinations, notices and any other requirements of Governmental Agencies
relating to the environment or to any Release, Hazardous Substance or Hazardous
Substance Activity, as heretofore or hereafter amended from time to time.



               “Hazardous Substance” means (a) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, or otherwise
classified pursuant to, any Environmental Law as a “hazardous substance,”
“hazardous material,” “hazardous waste,” “extremely hazardous waste,”
“infectious waste,” “toxic substance,” “toxic pollutant” or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or “EP toxicity” and (b) ash
produced by a resource recovery facility utilizing a municipal solid waste
stream. Oil and natural gas are expressly excluded from the definition of
Hazardous Substances.



               “Hazardous Substance Activity” means any actual, proposed or threatened
storage, use, holdings, existence, release, emission, discharge, generation,
processing, abatement, removal, disposition, handling or transportation of any
Hazardous Substance from, under, into or on the Land or surrounding property;
provided, however, that the use, installation, storage and maintenance by Buyer
in compliance with all applicable laws, ordinances, notices, orders and
regulations, of materials reasonably necessary and normally used in the
development of the Land as contemplated in the Development Documents, shall not
be considered a Hazardous Substance Activity.



               “Hazardous Substance Claims” shall mean any and all enforcement,
investigation, clean-up, removal or other Governmental Agency notices, actions,
proceedings of any kind or nature, or orders threatened, instituted or
completed pursuant to any Environmental Law, together with all claims made or
threatened by any third party against Buyer, Nuevo, the other Indemnitees or
the Property, relating to damage, construction, cost recovery compensation,
loss or injury resulting from any Hazardous Substance.



          Section 3.10
Resolution of Indemnity Obligations. The following shall
apply to Buyer and all its successors and assigns to any portion of the Land,
with respect to the Indemnity obligations from Buyer in favor of Seller
regarding Losses and Environmental Losses, respectively, more fully described
in Sections 3.7 and 3.9 hereof (“Indemnity Sections”).



               (a) In the event of any mediation, arbitration, reference proceeding,
litigation or any other dispute resolution method, procedure and/or endeavor
(“Indemnity Controversy”) for which defense and indemnity may be claimed by
Seller against Buyer, Seller may demand defense and indemnity against Buyer,
Shea and/or TH 680 jointly and severally, at Seller’s sole discretion. Upon
such demand, the entity to whom such demand is made shall immediately tender to
Seller defense and indemnity pursuant to the terms of the Agreement.



               (b) In any Indemnity Controversy, Buyer, Shea and/or TH 680 may make a
written request of any trier of fact (“Trier”) therein for a specific, special
finding (“Finding”) that any liability of Seller for which defense and
indemnity applies under the



38









 






Agreement shall be identified and allocated in whole or in part by such
Trier, in its sole discretion, to the various Property interests owned by
Buyer, Shea and/or TH 680 (“Allocation”). For purposes hereof, a “Finding” does
not occur and is not effective until there is a final judgment or other final,
non-appealable resolution of the dispute concerning the Allocation.



               (c) In the event a Finding is made pursuant to this Section 3.10, the
entities owning the various Property interests, to the extent specified in the
Finding, shall have the sole responsibility to Seller, from the date of the
Finding forward, for their portion of the Allocation. In the absence of a
Finding or prior to the effectiveness of a Finding, Buyer, Shea and/or TH 680
shall be jointly and severally responsible for the full amount of liability of
Seller for which defense and indemnity applies under the Agreement. In no event
shall Buyer, Shea and/or TH 680 have the right to recover from Seller any
defense and/or indemnity payments made to Seller under this Section 3.10 or the
Agreement.



               (d) To the extent any disputes arise between or among Buyer, Shea and/or
TH 680 regarding the matters described in this Section 3.10, Buyer, Shea and/or
TH 680 shall resolve such disputes among themselves. Any such disputes shall
not be a matter for which Seller shall be concerned or in which Seller shall be
a party or participant, or have any liability whatsoever.



	 	 	 	 	 
	 	 	 	 	 
	-s- [ILLEGIBLE]	 	-s- [ILLEGIBLE]	 	-s- [ILLEGIBLE]
	
 
	 	
 
	 	
 
	Buyers
	 	Shea
	 	TH 680
	Initials
	 	Initials
	 	Initials







ARTICLE 4




Further Documentation




          Section 4.1 Grant Deed; Title Insurance.



               4.1.1 Upon the Close of Escrow, Nuevo shall convey title to the Land to
Buyer by means of Grant Deeds in the form of Exhibit “G.”



               4.1.2 Buyer shall receive, at Nuevo’s expense (except to the extent of any
survey which shall be at Buyer’s sole expense), policies of title insurance
covering the Land (collectively and individually, “Title Policy”), issued by
First American Title Insurance Company (“Title Company”) and containing the
terms and provisions set forth in this Article. The Title Policy shall be a
CLTA Standard Coverage Owner’s Policy of Title Insurance consistent with Title
Company’s preliminary title report No. 0-SA-922260, dated November 18, 2003 at
7:30 a.m., as supplemented, and Title Company’s preliminary title report No.
0-SA- 1028199, dated as of November 18, 2003 at 7:30 a.m., as supplemented, in
the form of the corresponding portion of Exhibit “H” (“Title Report”), covering
the fee interest in the surface of the Land in an amount equal to Thirty-Six
Million Dollars ($36,000,000) and Five Hundred Thousand Dollars ($500,000),
respectively, showing title to the Land vested in Buyer, subject only to:



39









 





                    4.1.2.1 Standard printed exceptions contained in the Title Policy (Title
Company’s “Regional Exceptions” and survey exception);



                    4.1.2.2 Taxes and assessments not yet payable;



                    4.1.2.3 All items shown on the Grant Deeds and in the Development
Declaration attached as Exhibit “I”;



                    4.1.2.4 The PM TD in the form of Exhibit “E” and the PAPA TDs in the form
of Exhibit “K”;



                    4.1.2.5 The Easement Agreement in the form of Exhibit
“M”;



                    4.1.2.6 All covenants, conditions, restrictions, easements, reservations,
rights, rights-of-way, encumbrances and other matters then of record as shown
on the Title Report. Buyer expressly agrees to accept title to the Land subject
to such Title Report exceptions and any other exceptions added to the Title
Report due to the processing and/or recording of any Governmental Approval
Documents and/or such other matters as are specified herein or therein, except
for (a) private, monetary encumbrances against the Land and (b) any exceptions
which later appear of record as a result of Seller’s actions;



                    4.1.2.7 All exceptions caused by the acts or omissions of Buyer; and



                    4.1 -2.8 All other exceptions to which Buyer consents
in writing.



               4.1.3 Nuevo expressly agrees at its sole cost and expense to cause the
removal of all exceptions to title for mechanics’, materialmen’s, contractors’
or subcontractors’ or other liens or claims, or possible liens or claims, or
similar exceptions arising from Nuevo’s work on the Land, and to take
commercially reasonable steps to assist Buyer to cause the Title Company to
issue a lien-free endorsement to any Title Policy insuring Buyer against loss
due to such exceptions. Notwithstanding anything to the contrary herein or
elsewhere in the Development Documents, all increased costs of said policies or
of the policy insuring Buyer arising from or due to the removal of such
exceptions and/or issuance of such lien free endorsement shall be borne by
Nuevo.



               4.1.4 Buyer acknowledges that the Title Company issuing the policies of
title insurance may include additional exceptions to the title coverage as a
result of any Buyer’s Work or Investigation on the Land. Notwithstanding
anything to the contrary in the foregoing, Buyer expressly agrees at its sole
cost and expense to cause the removal of all exceptions to title for
mechanics’, materialmen’s, contractors’ or subcontractors’ or other liens or
claims, or possible liens or claims, or similar exceptions arising from Buyer’s
Work or Investigation on the Land, and take whatever steps are necessary to
cause the title company to issue a lien-free endorsement to the Title Policy or
policies insuring Nuevo against loss due to such exceptions including, without
limitation, execute an indemnification agreement in favor of the Title Company
or any other documents requested by the Title Company. Notwithstanding anything
to the contrary herein or in the Development Documents, all increased
costs of the owner’s Title Policy arising



40









 





from or due to the removal of such exceptions and/or issuance of such lien-free
endorsement shall be borne by Buyer.



          Section 4.2 PM Note, PM TD, PAPA, PAPA TDs and Buyer Grant of Easements to
Nuevo. Buyer and Nuevo will record against the Land (a) the PM TD securing the
portion of the Initial Purchase Price (and, if applicable pursuant to Section
2.2.2, a portion of the Additional Purchase Price) represented by the PM Note,
(b) PAPA TDs securing certain Buyer’s obligations under the Agreement, and its
obligations under the PAPA in the form of Exhibit “K,” and (c) an Easement
Agreement in the form of Exhibit “M,” at the Close of Escrow. Buyer
acknowledges that it has received and read a copy of the PM Note, the PM TD, the
PAPA, PAPA TDs, and Easement Agreement, and agrees to abide by each and every
provision thereof. Buyer’s agreement to abide by the PM Note, the PM TD, the
PAPA, PAPA TDs and Easement Agreement is a material consideration for the
execution of this Agreement by Nuevo.



          Section 4.3 Development Declaration. Nuevo has recorded against the Land,
or will record prior to the conveyance of the Land to Buyer, the Development
Declaration. Buyer acknowledges that it has received and read a copy of the
Development Declaration and agrees to abide by each and every provision
thereof. Buyer’s agreement to abide by the Development Declaration is a
material consideration for the execution of this Agreement by Nuevo.



          Section 4.4 Natural Hazard Zones. Seller has submitted to Buyer and Buyer
acknowledges that it has received, read and approved the natural hazard zones
(“Natural Hazard Zones”) disclosure materials attached as Exhibit “J,” which
have been provided by the Title Company. Buyer agrees that Seller has thereby
fully discharged all of its obligations to Buyer, if any, under California law
with respect to Natural Hazards Zones disclosures.



          Section 4.5 Corporate Guaranty . Buyer has provided Nuevo the Corporate
Guaranty, in the form of Exhibit “P” to this Agreement, securing the payment of
the Additional Purchase Price, and the performance of the Guaranteed
Obligations (as defined in the Corporate Guaranty). The Corporate Guaranty
shall secure the Guaranteed Obligations and shall remain in effect until
released, as provided for in the Corporate Guaranty.



          Section 4.6
Rights of Way and Contracts; Non-Exclusive Assignment of
Contract Rights and Bill of Sale; Aera Agreement. Buyer has received, read and
approved the (a) the Rights of Way and Contracts described in Exhibit “Q,” (b)
Non-Exclusive Assignment of Contract Rights and Bill of Sale in the form
attached as Exhibit “F,” and (c) Aera Agreement in the form of Exhibit
“0”and,’subject to Sections 5.35,5.36 and 5.37, hereby accepts and assumes all
of Seller’s obligations referenced therein.



ARTICLE 5




General Provisions




          Section 5.1 Notices. Any notice to be given or other document to be
delivered by any Party to the other or others hereunder, and any payments from
Buyer to Nuevo, may be delivered in person to an officer of any party, or may
be delivered by Federal Express, private commercial



41









 





delivery or courier service for next business day delivery, or may be deposited
in the United States mail, duly certified or registered, return receipt
requested, with postage prepaid, and addressed to the party for whom intended,
as follows:



	 	 	 	 	 	 	 
	

	 	If to Nuevo:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Nuevo Energy Company
	 	 	 	 	1021 Main, Suite 2100
	 	 	 	 	Houston, Texas 77002
	

	 	 	 	Attn:
	 	David A.Leach
	

	 	 	 	Fax:
	 	(713) 374-4899
	

	 	 	 	Phone:
	 	(713) 374-4802
	

	 	 	 	Email:
	 	leachd@nuevoenergy.com
	 
	 	 	 	 	 	 
	

	 	 	 	and	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	Attn:
	 	George B. Nilsen
	

	 	 	 	Fax :
	 	(713) 374-4981
	

	 	 	 	Phone:
	 	(713) 374-4973
	

	 	 	 	Email:
	 	nilseng@nuevoenergy.com
	 
	 	 	 	 	 	 
	

	 	Copy to:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Ullom Associates
	 	 	 	 	16149 Redmond Way, Ste. 401
	 	 	 	 	Redmond, Washington 98052
	

	 	 	 	Fax:
	 	(425) 836-2870
	

	 	 	 	Phone:
	 	(425) 836-2728
	

	 	 	 	Email:
	 	ullomiw@aol.com
	 
	 	 	 	 	 	 
	

	 	 	 	and	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Nossaman, Guthner, Knox & Elliott, LLP
	 	 	 	 	18101 Von Karman Avenue, Suite 1800
	 	 	 	 	Irvine, California 92612-1047
	

	 	 	 	Attn:
	 	William P. Tanner, 111
	

	 	 	 	Fax:
	 	(949) 833-7878
	

	 	 	 	Phone:
	 	(949) 833-7800
	

	 	 	 	Email:
	 	wtanner@nossaman.com
	 
	 	 	 	 	 	 
	

	 	To Buyer:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	Tonner Hills SSP, LLC
	 	 	 	 	603 S. Valencia Avenue
	 	 	 	 	Brea, CA 92823
	 	 	 	 	Attention: Alan Toffoli
	 	 	 	 	Fax: (714)985-3605
	 	 	 	 	Phone: (714) 792-2504
	 	 	 	 	Attn: Alan Toffoli
	 	 	 	 	Email:alan.toffoli@sheahomes.com







42









 






	 	 	 	 	 
	 	 	and	 	 
	 	 	 	 	 
	 	 	Tonner Hills 680 LLC
	 	 	603 S. Valencia Avenue
	 	 	Brea, CA 92823
	 	 	Attn:
	 	Joe Fleischaker
	 	 	Fax:
	 	(714) 985-3605
	 	 	Phone:
	 	(714) 792-2592
	 	 	Email:
	 	joe.fleischaker@sheahomes.com
	 	 	 	 	 
	copy to:	 	 	 	 
	 	 	 	 	 
	 	 	Landmark Law Group, L.L.P.
	 	 	10350 Santa Monica Boulevard, Suite 295
	 	 	Los Angeles, CA 90025-5074
	 	 	Attn:
	 	Gulwinder S. Singh
	 	 	Fax:
	 	(310) 300-2310
	 	 	Phone:
	 	(310) 300-2300 Ext. 101
	 	 	Email:
	 	gss@llgllp.com







Notice may also be given by facsimile transmission (“Fax”) to any party at the
respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which shall
be substituted for the one above specified. If any notice or other document is
sent by mail as aforesaid, the same shall be deemed served or delivered
seventy-two (72) hours after the mailing thereof as above provided. Notice by
any other method shall be deemed served or delivered upon actual receipt at the
address or Fax number listed above.



          Section 5.2 Payments; Interest. Any amounts which are due and owing to
Nuevo or Buyer pursuant to the various terms of this Agreement or any other
Development Document shall be paid in cash, bank cashier’s check or wire
transfer and, if to Nuevo, to the Nuevo account (“Seller Account” or
“Account”), as follows: JP Morgan Bank, Bank No. 113000609, Account No. 00103291226, Payee, Nuevo Energy Company, Reference, Tonner Hills.



          If any amounts are not paid when due, all such amounts shall bear interest
as specified in the particular Section requiring such payment or, if not so
specified, then at the rate of the lesser of ten percent (10%) per annum or the
maximum allowable rate under then existing California law, from the due date
until fully paid.



          Section 5.3 Condemnation.



               5.3.1 As used in this Section, “condemnation” or “condemned” shall mean
the exercise of, or intent to exercise, the power of eminent domain expressed
in writing, or the filing of any action or proceeding for such purpose, by any
person, entity, body, agency or



43









 





authority having the right or power of eminent domain (the “Condemning
Authority”), and shall include a voluntary sale by Nuevo to any such Condemning
Authority, either under the threat of condemnation or while condemnation
proceedings are pending, and the condemnation shall be deemed to occur in point
of time upon the actual physical taking of possession pursuant to the exercise
of said power of eminent domain.



               5.3.2 If the Property, Project or any portion thereof are condemned prior
to the Close, resulting in a Material Change (as defined in Section 3.4.3),
Buyer may terminate this Agreement and cancel Escrow by written notice to Nuevo
and Escrowholder prior to the Close and recover the Deposit from Nuevo as
provided in Section 2.3.3; otherwise, the entire award from the Condemning
Authority shall be the sole property of Buyer and Escrow shall Close as
provided herein.



               5.3.3 For the period prior to the full payment by Buyer of the Additional
Purchase Price, Buyer hereby irrevocably appoints Nuevo as its attorney-in-fact
for dealing with the Condemning Authority, for prosecuting any action for
condemnation and for executing any grant deed or other instrument to such
authority. Said appointment is hereby stated to be coupled with an interest.



               5.3.4 The provisions of this Section shall apply equally to an action in
inverse condemnation.



          Section 5.4
Signing of Maps and Documents. Subject to the provisions of this
Agreement and within ten (10) days of submittal to a Party, Nuevo and Buyer
agree to sign any and all maps and documents relating to the Property and/or
Project as necessary in furtherance of the Project and to fulfill the intent of
the Development Documents.



          Section 5.5 Captions. The captions used herein are for convenience only
and are not a part of this Agreement and do not in any way limit or amplify the
terms and provisions hereof.



          Section 5.6 Governing Law and Venue. This Agreement and the documents in
the forms attached as exhibits hereto shall be governed by and construed under
the laws of the State of California. Subject to Section 5.9 hereof, in the
event of any legal action to enforce or interpret this Agreement (including any
of the documents in the forms attached as exhibits hereto), the sole and
exclusive venue shall be a court of competent jurisdiction located in Orange
County, California; and the parties hereto agree to and do hereby submit to the
jurisdiction of such court.



          Section 5.7
Time of the Essence; Successors and Assigns. Time is of the
essence of each and every provision of this Agreement. Each and all of the
covenants and conditions of this Agreement shall inure to the benefit of and
shall be binding upon the successors in interest of Nuevo, and, subject to any
restrictions on Transfers herein provided, the successors, heirs,
representatives and assigns of Buyer. As used in the foregoing, “successors”
shall refer to the successors in interest to all or a portion of the Land
and/or Project, successors to all or substantially all of their assets and
successors by merger or consolidation.



44









 





          Section 5.8 Remedies. Subject to any limitation on damages contained
elsewhere in this Agreement:



               5.8.1 Each of the terms, conditions, covenants and provisions of the
Development Documents is a material consideration for this Agreement, the
breach of which shall be deemed a default hereunder, pursuant to and as
described in, this Section. A “Default” (or “Event of Default”) shall be deemed
to have occurred if a Party has not effected a cure within ten (10) days after
failure to timely perform its obligations to pay money hereunder, and within
thirty (30) days after written notice specifying the breach in the case of
other obligations hereunder; provided, however, except as otherwise specified
herein, in the case of a breach of any obligations hereunder other than for the
payment of money which is not capable of being cured within said thirty (30)
day period, no Default shall be deemed to have occurred so long as the Party
commences to cure such default within ten (10) days after such notice and
thereafter diligently and continuously prosecutes the same to completion.



               5.8.2 EXCEPT AS PROVIDED BELOW, BUYER SHALL NOT BE ENTITLED TO THE REMEDY OF
SPECIFIC PERFORMANCE.



     BUYER EXPRESSLY WAIVES ANY RIGHT UNDER CALIFORNIA STATUTES, AT COMMON LAW OR
OTHERWISE TO RECORD OR FILE A LIS PENDENS OR A NOTICE OF PENDENCY OF ACTION OR
SIMILAR NOTICE AGAINST ALL OR ANY PORTION OF THE LAND AND/OR OTHER PROPERTY IN
CONNECTION WITH ANY ALLEGED DEFAULT BY NUEVO HEREUNDER, INCLUDING, BUT NOT LIMITED TO
SUCH RIGHTS AS THEY ARE PRESENTLY CODIFIED IN THE CALIFORNIA CODE OF
CIVIL PROCEDURE, PART II, TITLE 4.5 (SECTIONS 405 - 405.24), AND ANY
SUBSEQUENT AMENDMENT, MODIFICATION OR SUBSTITUTION OF OTHER STATUTORY PROVISIONS
IN PLACE OF SAID SECTIONS.



     NOT WITH STANDING THE FOREGOING PROVISIONS OF THIS SECTION 5.8.2, BUYER SHALL
HAVE THE RIGHT TO AN ACTION FOR SPECIFIC PERFORMANCE OF THIS AGREEMENT AND THE
ESCROW IN ADDITION TO OR AS AN ALTERNATIVE REMEDY AND TO RECORD A NOTICE OF
PENDENCY OF ACTION IF, AND ONLY IF: (A) THE ESCROW HAS NOT THERETOFORE BEEN
TERMINATED BY BUYER AND (B) PRIOR TO FILING ANY ACTION TO SPECIFICALLY ENFORCE THIS
AGREEMENT BUYER HAS PAID NUEVO IN CASH OUTSIDE OF ESCROW BY WIRE TRANSFER TO SELLER’S
ACCOUNT THE FULL DEPOSIT OF FIVE MILLION DOLLARS ($5,000,000) IN
IMMEDIATELY AVAILABLE FUNDS, ALONG WITH POSTING A BOND IN AN AMOUNT DETERMINED BY THE
COURT. IF BUYER HAS NOT PAID SUCH DEPOSIT OR DOES NOT POST SUCH BOND,
THEN ANY ACTION BY BUYER SHALL BE LIMITED TO MONETARY DAMAGES (BUT
NOT INCIDENTAL DAMAGES, “LOST PROFITS” OR OTHER CONSEQUENTIAL DAMAGES).



     BUYER
ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES
AS FOLLOWS:



45









 






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





     BUYER BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT IT
MAY HAVE THERE UNDER, AS WELL AS UNDER ANY OTHER STATUTE OR COMMON LAW PRINCIPLE OF
SIMILAR EFFECT.



	 	 	 	 	 	 	 
	BUYER’S
INITIALS  -s- [ILLEGIBLE]

	 	NUEVO’S
INITIALS  -s- [ILLEGIBLE]








               5.8.3 Except as limited elsewhere in this Agreement, all rights, options and remedies contained in this Agreement shall be construed and held to be cumulative, and no one of them
shall be exclusive of the other, and the parties shall have the right to pursue
any one or all of such remedies or to seek damages, specific performance in the
event of any default hereunder by the other or to pursue any other remedy or
relief which may be provided by law or equity, whether or not stated in this
Agreement.



               5.8.4 No waiver by a party of a breach of any of the terms, covenants or
conditions of this Agreement shall be construed or held to be a waiver of any
succeeding or preceding breach of the same or any other term, covenant or
condition herein contained. No waiver of any default by a party hereunder shall
be implied from any omission by the other to take any action on account of such
default if such default persists or is repeated, and no express waiver shall
affect the default other than as specified in such waiver. No consent or
approval obtained from a party shall be deemed to waive or render unnecessary
the further consent or approval to any subsequent similar acts by the other.



          Section 5.9 ARBITRATION OF DISPUTES/ATTORNEYS’ FEES. EXCEPT FOR THE RIGHT OF
EITHER PARTY TO APPLY TO A COURT OF COMPETENT JURISDICTION FOR TEMPORARY RESTRAINING ORDERS, PRELIMINARY
INJUNCTIONS, WRITS OF ATTACHMENT, WRITS OF POSSESSION OR OTHER EQUITABLE OR
PROVISIONAL RELIEF, ANY CONTROVERSY, DISPUTE OR CLAIM OF ANY KIND OR NATURE
ARISING OUT OF, IN CONNECTION WITH, OR IN RELATION TO THE
INTERPRETATION, PERFORMANCE OR BREACH OF THIS
AGREEMENT, ANY DEVELOPMENT DOCUMENT AND/OR THE USE OR DEVELOPMENT OF THE PROPERTY
OR PROJECT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM BASED ON CONTRACT, TORT OR STATUTE, SHALL BE SETTLED BY
FINAL AND BINDING ARBITRATION BY THREE (3) ARBITRATORS IN ACCORDANCE WITH THE
RULES OF THE AMERICAN ARBITRATION ASSOCIATION THEN IN EFFECT (THE “RULES”).
EACH PARTY SHALL, IN ACCORDANCE WITH THE RULES, NOMINATE ONE (1) ARBITRATOR TO THE
ARBITRATIONAL TRIBUNAL AND THE TWO (2) ARBITRATORS SO APPOINTED SHALL APPOINT THE
THIRD ARBITRATOR IN ACCORDANCE WITH THE RULES, THE THREE (3) ARBITRATORS
CONSTITUTING THE ARBITRATION TRIBUNAL; PROVIDED HOWEVER, IF THE AMOUNT IN
CONTROVERSY IS LESS THAN ONE MILLION DOLLARS ($1,000,000), THE PARTIES WILL
APPOINT ONE (1) ARBITRATOR UNDER THE RULES WHO WILL CONSTITUTE THE ARBITRATION
TRIBUNAL. THE ARBITRATION SHALL BE HELD




46









 




IN ORANGE COUNTY, CALIFORNIA. REASONABLE DISCOVERY SHALL BE ALLOWED IN
CONNECTION WITH SUCH ARBITRATION. AT THE REQUEST OF A PARTY, THE
ARBITRATION TRIBUNAL MAY ISSUE ORDERS FOR INTERIM RELIEF AS DEEMED NECESSARY TO
SAFEGUARD PROPERTY THAT IS THE SUBJECT OF THE ARBITRATION OR IN ORDER TO
ACCOMPLISH THE OBJECTIVES OF THIS AGREEMENT. SUCH INTERIM MEASURES MAY ALSO BE
SOUGHT FROM JUDICIAL AUTHORITY HAVING JURISDICTION. THE DECISION OF
THE MAJORITY
OF THE ARBITRATORS SHALL BE REDUCED TO WRITING, SHALL BE THE SOLE AND
EXCLUSIVE REMEDY BETWEEN THE PARTIES REGARDING ANY AND ALL SUCH
DISPUTES OR DIFFERENCES,
AND SHALL BE FINAL AND BINDING ON ALL PARTIES TO
THE ARBITRATION; AND, APPLICATION MAY BE MADE TO ANY COURT OF
COMPETENT JURISDICTION
FOR AN ORDER OF ENFORCEMENT AND SHALL BE ENFORCEABLE IN ANY COURT OF
COMPETENT JURISDICTION. THE PARTIES AGREE TO EXCLUDE ANY RIGHT OF APPLICATION OR
APPEAL TO THE COURTS OF ANY JURISDICTION IN CONNECTION WITH ANY QUESTIONS OF LAW
ARISING IN THE COURSE OF ARBITRATION OR WITH RESPECT TO ANY AWARD
MADE, EXCEPT FOR
ENFORCEMENT PURPOSES. CONSEQUENTIAL, PUNITIVE, OR INCIDENTAL OR OTHER SIMILAR
DAMAGES SHALL NOT BE ALLOWED.




     IN
THE EVENT ANY SUCH ARBITRATION (OR OTHER PROCEEDING) IS BROUGHT TO
ENFORCE OR INTERPRET ANY OF THE COVENANTS, TERMS OR PROVISIONS OF THIS AGREEMENT,
ANY DEVELOPMENT DOCUMENT AND/OR USE OR DEVELOPMENT OF THE PROPERTY OR PROJECT,
THE PREVAILING PARTY IN ANY AND ALL SUCH ARBITRATION(S) OR
OTHER PROCEEDING(S), INCLUDING ANY BANKRUPTCY PROCEEDINGS, SHALL BE ENTITLED TO
RECOVER FROM THE NON-PREVAILING PARTY ALL OF THE ATTORNEYS’ FEES AND COSTS INCURRED
BY SUCH PARTY IN EACH AND EVERY SUCH ARBITRATION OR OTHER PROCEEDING, INCLUDING ANY
AND ALL APPEALS OR PETITIONS THERE FROM. AS USED IN THIS AGREEMENT,
ATTORNEYS’ FEES SHALL
BE DEEMED, TO THE EXTENT ALL OWED BY LAW, TO MEAN THE FULL AND ACTUAL COSTS OF ANY
LEGAL SERVICES ACTUALLY PERFORMED IN CONNECTION WITH THE MATTERS
INVOLVED, CALCULATED ON THE BASIS OF THE USUAL FEE CHARGED BY THE
ATTORNEYS PERFORMING SUCH SERVICES, AND SHALL NOT BE LIMITED TO “REASONABLE
ATTORNEYS FEES” AS DEFINED IN ANY STATUTE OR RULE OF COURT. THE ABOVE APPLIES TO ALL
MATTERS WHICH ARE THE SUBJECT OF THE ARBITRATION PROVIDED FOR HEREIN.



          Section 5.10 Severability. If any portion of this Agreement is or becomes
illegal, null or void or against the public policy of the State of California,
for any reason, or shall be held by any court of competent jurisdiction to be
illegal, null or void or against the public policy of the State of California,
the remaining portions of this Agreement shall remain in force and effect to
the fullest extent permissible by law and the Agreement, as a whole, shall then
be interpreted in the manner fairest to both Parties taking into consideration
the “bargained for exchange” contemplated by each of them in executing the
Agreement.





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          Section 5.1 1 Gender and Number. In this Agreement (unless the context
requires otherwise), the masculine, feminine and neuter genders and the
singular and the plural include one another, as appropriate.



          Section 5.12 Real Estate Brokerage Commission. Neither Buyer nor Seller is
obligated to pay any real estate, brokerage or other commission or fee in
connection with the matters contained in this Agreement or the conveyance of
the Property and/or Project to Buyer. The parties hereby indemnify and hold
each other free and harmless from and against any and all costs and liabilities
including, without limitation attorneys’ fees, for causes of action or
proceedings which may be instituted by any broker, agent or finder, licensed or
otherwise, claiming through, under or by reason of the conduct of the other in
connection with this Transaction. The foregoing representation and indemnity
shall survive the delivery of Nuevo’s Grant Deeds.



          Section 5.13
Waiver of Jury Trial. Nuevo and Buyer each acknowledges that
it has had the advice of counsel of its choice with respect to rights to trial
by jury under the Constitutions of the United States and the State of
California. Each Party expressly and knowingly waives and releases all such
rights to trial by jury in any action, proceeding or claim brought by either
Party against the other on any matters arising out of or in any way connected
with this Agreement or any other Development Document, Buyer’s use or
development of the Property and/or Project, and/or any claim for injury or
damage.



          Section 5.14 Survival of Certain Covenants. Those covenants of the Parties
which are not capable of being performed before the conveyance of the Property
and/or Project to Buyer or which may be capable of or require performance after
such conveyance shall survive such conveyance and the delivery of Nuevo’s Grant
Deeds. The foregoing shall apply whether or not such covenant is expressly
stated to survive.



          Section 5.15
Assignment of Warranties and Plans. If this Agreement is
terminated for a Buyer default, all warranties in which Buyer may then have an
interest relating to Work, labor, skill or materials furnished in connection
with the construction of any improvements at, relating to or in connection with
the Property and/or Project shall thereupon be deemed assigned to and the
property of Nuevo without further act or consideration. Also in the event of
such expiration or termination, all Information and Materials, including all
Governmental Approval Documents, maps, environmental reports, civil and soil
engineering reports, site plans, plans and specifications related to
improvements at, relating to or in connection with the Property and/or Project
and all other plans, reports or other documents or Work relating to the Land
and/or Project and/or other property which have been prepared by or for Buyer
in connection therewith shall be deemed assigned to Nuevo without consideration
or expense to Nuevo. Buyer agrees to execute, within ten (10) days of a request
by Nuevo, such documents as Nuevo reasonably requests to memorialize the
foregoing assignments.



          Section 5.16 Recording. Neither this Agreement, nor any Memorandum hereof
shall be recorded against the Property, except as specifically provided
elsewhere herein.



          Section 5.17 Conflicts. Except to the extent specifically provided to the
contrary elsewhere in the Development Documents, if there is a conflict among
the provisions of



48









 




the Development Documents, the interpretation thereof shall be conclusively
determined by reference to the following documents in the order listed below:





	(a)	 	Agreement (including only Exhibits “A,” “B,” “D,” “E,” “H,” “K”
“L,” if applicable, “N,” “P” and “S” if applicable) and the Mineral
PAPA;
	 
	(b)	 	Development Declaration;
	 
	(c)	 	Grant Deed;
	 
	(d)	 	Easement Agreement, Aera Agreement and Hover Agreement;
	 
	(e)	 	The remainder of the Development Documents (including the
remaining Exhibits to the Agreement).





          Section 5.18 Independent Obligations. Nothing contained in this Agreement
shall in any way be deemed to relieve Buyer of the duty to make any payments
pursuant to any other agreement, or any other agreement executed with Nuevo for
any other lands of Nuevo, or otherwise.



          Section 5.19
Assignment of Agreement; Preauthorized Transfers. Nuevo may
assign its rights and interests under this Agreement, but Buyer shall not
voluntarily or by operation of law assign or transfer any rights, interests
and/or obligations hereunder without Nuevo’s express prior consent in writing,
which consent may be withheld by Nuevo in its sole and absolute discretion;
provided however, that without Nuevo’s approval, Buyer may assign such rights
to Shea Homes Limited Partnership and/or Standard Pacific Corp., or to a
corporation, limited liability company, partnership or other entity (a) in
which Buyer (i) owns and maintains in excess of a twenty-five percent (>25%)
interest in profits, (ii) is responsible as a general partner, managing member
or otherwise for the day-to-day development activities for the Land and
Project, and (iii) Nuevo, in its sole discretion, approves the limited
liability company or partnership operating agreement or Articles of
Incorporation and By-Laws, as the case may be, and other formation and
operational documents, if any, but not, however, the economic terms contained
in any such documents which may be redacted in providing the document to Seller
pursuant to the terms hereof, or (b) which results from a merger or
consolidation with such an entity, if the current operating personnel of Buyer
remain responsible for the day-to-day development activities for the
Land and
Project (or new operating personnel are approved by Nuevo in its sole
discretion) (collectively, “Preauthorized Transfers”); provided that if Buyer
is not in Default hereunder, TH 680 may designate any entity to take title to
the Remainder Parcels at the Close of Escrow and such Transfer shall be deemed
a Preauthorized Transfer so long as the transferee assumes all of the duties
and obligations of transferor set out in this Agreement. In the event of any
assignment authorized by this Section, Buyer expressly agrees (c) that any such
assignee shall assume in writing, pursuant to the Assumption of Obligations
attached below which is a part of this Agreement, all of Buyer’s obligations
under this Agreement pertaining to the Property and Project which are the
subject of the assignment, and (d) that Buyer shall, nonetheless, remain bound
by this Agreement and all of its obligations and performance requirements
hereunder, and to reimburse Nuevo for all costs and expenses incurred by Nuevo
in






49









 







connection with any such assignment including without limitation, all
reasonable attorneys’ fees and other costs incurred in preparing and/or
reviewing assignment documentation.



Any attempted assignment made in violation of this Section shall be void.



This Section 5.19 is not intended by the Parties as a limitation on Buyer’s
right to transfer the Land, or portions thereof, after the Close.




          Section 5.20 No Partnership or Agency.



               5.20.1 Buyer and Nuevo expressly acknowledge and agree that they are not
joint venturers, partners, or agents of each other and do not have fiduciary
duties with respect to one another, in any manner whatsoever, in the
acquisition, development or conveyance of the Property and/or Project. Neither
anything in this Agreement or in any other Development Document, nor any
communication or other action between the Parties relating to the Property
and/or Project, is intended or shall be construed to create a joint venture,
partnership, agency or fiduciary relationship between Buyer and Nuevo or their
respective owners, regardless of any common identity of ownership in Nuevo and
Buyer.



               5.20.2 Except as provided to the contrary elsewhere in the Development
Documents, without limiting the generality of the foregoing subsection
5.20.1,Nuevo shall not be liable to any contractor, subcontractor, supplier,
laborer, architect, engineer, consultants, purchaser, or any other entity for
services performed or materials supplied or for any causes of action arising
out of or in connection with the construction, sale or other conveyance of
improvements on any of the Property and/or Project by Buyer; Nuevo shall not be
liable for any debts or claims accruing in favor of any such entities against
Buyer or others or against the Property and/or Project. Buyer is not and shall
not be an agent of Nuevo for any purposes. Nuevo shall not be deemed to be in
privity of contract with any contractor or provider of services at, relating to
or in connection with the Property and/or Project or any purchaser or transferee
thereof or any portion thereof, nor shall any payment of funds directly to a
contractor, subcontractor or provider of services be deemed to create any third
party beneficiary status or recognition of same by Nuevo under any of the
Development Documents. Approvals or consents granted by a Party for any matters
covered under this Agreement or any Development Document shall be construed to
be solely for the benefit of the other Party.



          Section 5.21 Resolution of Contractual Uncertainties. Nuevo and Buyer
waive the effect of California Civil Code Section 1654 which interprets
uncertainties in a contract against the party which drafted the contract.



          Section 5.22 Confidentiality. Except as necessary to effect the
Transaction contemplated by this Agreement or as otherwise provided in this
Agreement, or the Development Documents, Buyer will hold in strictest
confidence, and will at no time prior to the Close disclose the existence of
the Transaction, or disclose to others, directly or indirectly, any of the
Knowledge, which shall include, the Information, or any other knowledge,
information or matters however obtained, in any way relating to the
Transaction, Investigation, Inspection, Development Documents or Feasibility
Matters described in this Agreement (“Knowledge”), all of which Knowledge shall
be deemed to be proprietary and confidential to Nuevo. Necessary



50









 




disclosures and communications of Knowledge shall include those with
prospective investors, partners, and other types of co-venturers, attorneys,
accountants, lenders, the Title Company, Escrowholder, architects, engineers,
contractors and other consultants in connection with the acquisition,
development and sale of the Property and/or Project and of any improvements
thereon, and required by law (including subpoenas). The limitations described
in this Section 5.22 shall no longer apply after the Close of Escrow.




          Buyer shall not be liable for the disclosure of Knowledge that is
disclosed by entities or persons authorized to receive it pursuant hereto if
they have been informed of its confidentiality or that becomes part of the
public domain other than through a breach hereof by Buyer of its obligations
hereunder. All general indemnification provisions of the Agreement apply,
without limitation, to any breach by Buyer of the obligations contained in this
Section 5.22. Notwithstanding the foregoing, such confidentiality restrictions
do not apply to the extent such Knowledge:



               (a) is already known to Buyer as of the Effective Date;



               (b) is already in possession of the public or becomes available to the
public other than through the act or omission of Buyer;



               (c) is required to be disclosed under applicable law or by a governmental
order, decree, regulation or rule or in accordance with the rules of a stock
exchange to which Buyer is a member (provided that the Buyer shall give written
notice to Seller before such disclosure);



               (d) is acquired independently from a third party that represents that it
has the right to disseminate such information at the time it is acquired by the
Buyer; or



               (e) is developed by the receiving party independently of the Knowledge
received from the disclosing party.



          Section 5.23
Assignment of Unrecorded License Agreements/Leases/
Consultants’ Contracts. As of the Close of Escrow, except to the extent
associated with or relating to Oil Operations, Nuevo, to the extent of its
ability to do so without incurring liability therefor, materially breaching any
contract or agreement, or violating any law, ordinance, rule or regulation of a
Governmental Agency, hereby assigns to Buyer all of its right, title and
interest in and to all unrecorded leases, licenses and contracts pertaining to
the Project, as specified in Exhibit “Q”; and Buyer hereby assumes and agrees
to discharge pursuant to the terms thereof, all obligations of Seller
thereunder. To the best of Nuevo’s knowledge (as defined in Section 3.1C), all
unrecorded leases and licenses pertaining to the Property are listed in Exhibit
“Q.”



          Section 5.24 Notice on Approved Transfer. Buyer shall notify Nuevo in
writing ten (10) days prior to any Preauthorized Transfer, or other transfer or
assignment permitted by Section 5.19 hereof, in addition to satisfying any
other obligations or requirements of Buyer in the Development Documents
relating thereto, (a) identifying the Transferee, (b) specifying its relation
to Buyer and/or Buyer’s parent or related entity, (c) confirming Buyer’s (or
the) profit percentage and management authority required by such Section and
(d) confirming the





51









 







Transferee’s commitment in writing to assume all Buyer’s obligations under this
PSA to the extent of the portion of the Property and/or Project which is the
subject of such Transfer, and providing Seller with written evidence thereof
(to be approved in Seller’s reasonable discretion).




          Section 5.25 Entire Agreement; Exhibits; Counterparts. This Agreement, the
Confidentiality Agreement between Seller and Buyer, dated March 6, 2003, and
the Access Agreement between the Parties, dated March 6, 2003, constitute the
entire agreement between the Parties hereto pertaining to the subject matter
hereof and all prior and contemporaneous agreements, representations,
negotiations and understandings of the Parties hereto, oral or written, are
hereby superseded and merged herein. The foregoing sentence shall in no way
affect the validity of any instruments executed by the Parties in the form of
exhibits attached to this Agreement which, although independently executed by
the Parties, are, nonetheless, a part of this Agreement as though fully set
forth herein. All of the exhibits attached hereto are incorporated herein by
this reference (except as stated to the contrary in this Agreement for the
limited purposes described in Section 5.17 “Conflicts”). This Agreement may be
executed by the Parties in one or more counterparts with the same legal effect
as if all signatures appear on the same counterpart/copy of the Agreement, and
each of which shall be deemed an original, but together they shall constitute
one and the same instrument.



          Section 5.26 Stand-Alone Insurance. As a separate and distinct matter, not
covered by the insurance requirements assumed by Buyer and contained elsewhere
in this Agreement, Buyer shall obtain and keep in effect a single premium,
ten-year term, “stand-alone” environmental insurance policy covering the
entirety of the Land (“SA Insurance”) to cover a portion of the risks described
in Sections 3.7(a)(iv) and 3.9 hereof having a combined total limit of Twenty
Million Dollars ($20,000,000), with a self-insurance retention of no greater
than Two Hundred Fifty Thousand Dollars ($250,000), and, at least the
following:



               (a) The
insurance company is rated at least A- VIII in the latest Best’s
Report;



               (b) Buyer (and its members, lenders, successors in interest to all or a
portion of the Land and permitted assigns) and Seller (and all the Indemnitees)
are Named Insureds;



               (c) First party clean-up and third party claims, both on-site and offsite, are covered on a “claims made” basis, to the extent “occurrence” based
insurance is not available in the marketplace;



               (d) Personal
and bodily injury, property damage, health, nuisance (e.g., from
odor) and diminished property value on and off the Land and/or Project are
covered;


               (e) Unknown, pre-existing conditions are covered, including
underground storage tanks;



               (f) No third party claim is necessary to trigger coverage for occurrences
arising from unknown, pre-existing conditions; and, defense and indemnity is
available therefor, including coverage for the assertions of Governmental
Agencies and any





52









 




Home Owners’ Association (including internal costs, bonds to release liens and
attachments, appeal bonds, pre and post judgment interest);




               (g) There is no “retroactive” time limitation on coverage;
and



               (h) Cancellation may be effected only to the limited extent of specific
Named Insured non-compliance.


Buyer shall pay the premium and all other amounts necessary for the procurement
and maintenance in effect of such policy. Each of its entities constituting
Buyer and Nuevo shall be named insureds on the SA Insurance.



Upon discovering any potential claim which may be covered by the SA Insurance,
Buyer shall promptly notify Insurer and Seller in writing, with a description
of the potential claim and circumstances surrounding its assertion, and shall
take all actions required by the SA Insurance, in accordance with all terms and
provisions thereof, to assure full and complete coverage for such potential
claims thereunder.



To the extent any insurance payment under such policy of SA Insurance is
applied to reduce any liability imposed as a result of such a risk (or Buyer’s
indemnity in Section 3.7), Buyer’s payment obligations pursuant to Sections
3.7(a)(iv) and/or 3.9 shall be reduced proportionately; provided however, that
such SA Insurance and/or payment shall not otherwise dilute Buyer’s obligations
under such Sections 3.7(a)(iv) or 3.9, or the Indemnities specified therein.



TO THE EXTENT THE SA INSURANCE HAS ALREADY BEEN PROCURED BY SELLER PRIOR TO THE
EXECUTION OF THIS AGREEMENT, BUYER SHALL BE RELIEVED OF ITS OBLIGATIONS UNDER
THIS SECTION 5.26 TO PROCURE THE ORIGINAL POLICY, BUT MUST REIMBURSE SELLER
FULLY FOR THE COST THEREOF AT THE CLOSE, AS PROVIDED ELSEWHERE IN THIS
AGREEMENT. EXCEPT TO THE EXTENT MODIFIED BY THIS PARAGRAPH, BUYER’S OBLIGATIONS
UNDER THIS SECTION 5.26 SHALL REMAIN UNCHANGED AND IN FULL FORCE AND EFFECT.




          Section 5.27 Further Assurances and Cooperation. Each of the Parties shall
execute and deliver all additional papers, documents and other reasonable
assurances, and shall do all acts and things reasonably necessary in connection
with the performance of its obligations hereunder to carry out the intent of
this Agreement, and shall cooperate with the other Party during the Escrow
Period and after the Close of Escrow, to ensure a smooth transition from Seller
to Buyer regarding the ownership, possession and use of the Property and/or
Project, including Operator’s use of the Land for Oil Operations, Seller’s
conduct of the Permit Program and completion of the Restoration Plan, Aera
Program and Hover Program (and Buyer’s observation and monitoring thereof), and
Buyer’s use of the Property as property under development and needing the
Governmental Approvals therefor, including the following (but limited, however,
to matters arising out of, relating to or in connection with the rights and
obligations of the Parties under the Development Documents): (a) Buyer shall
provide access and make available to Seller and Operator, during normal
business hours, upon reasonable notice, copies of the Knowledge including all
financial and accounting documents and information relating to Seller’s prior
ownership, use and possession of the Property and/or






53









 







Project, among other things, in order for Seller and Operator to (i) submit any
reports to or filings with any Governmental Agency (including taxing
authorities), (ii) wind up certain business activities with respect to the
Property and/or Project and (iii) continue their general, corporate operations
in the ordinary course of their business, as well as Seller’s conduct of the
Permit, Aera and Hover Programs and (b) Seller shall provide reasonable
assistance to Buyer in (i) assuming the role of Developer of the Development
Areas and the Project and (ii) enforcing its rights and discharging its
obligations under the Unocal Asset Purchase Agreement, without however, being
required to spend money, participate in any formal controversy including
litigation or arbitration or spend excessive employee or consultant time and
effort in so doing. Additionally, Seller, in the conduct of the Permit Program,
will keep Buyer informed periodically as to milestone/important events, solicit
and consider from time-to-time comments and advice regarding its conduct of the
Permit Program and provide Buyer the opportunity from time-to-time during
normal business hours to observe its activities with respect to the Permit,
Aera and Hover Programs.




          Section 5.28 Intent of Definitions. The limitations, prohibitions,
restrictions, requirements and obligations of Buyer in this Agreement, when
expressed in respect of, in connection with or in relation to a defined term,
shall mean, include and apply to all or any part or portion of such defined
term. The use of the word “including” shall mean “including without
limitation.”



          Section 5.29 Exclusive Relationship. Seller agrees not to enter into
negotiations with any other party for the sale of the Property and/or Project
prior to the Close of Escrow so long as Buyer is not in default under this
Agreement.



          Section 5.30
Assignment, Assumption and Substitution. Effective upon the
Close of Escrow, Buyer hereby assumes the following (collectively, the
“Obligations”): (a) all of Nuevo’s liabilities, duties and obligations, both in
its individual capacity and as original Developer, with respect to the Program
as defined in the Mineral Payment and Performance Agreement made February 28,
2003 by and between Nuevo Energy Company and BlackSand Partners, L.P.
(“Mineral PAPA”) and (b)those certain Nuevo liabilities, duties and obligations
specified below (the “Assumed BlackSand PSA Obligations) pursuant to that
certain Purchase and Sale Agreement dated February 28, 2003 between Nuevo and
BlackSand Ltd. (“BlackSand PSA”). Effective upon the Close of Escrow, Nuevo
hereby (c) assigns to Buyer, to the full extent assignable without Operator’s
consent, all of its rights and benefits, both in its individual capacity and as
original Developer, under the Mineral PAPA and (d) conveys to Buyer pursuant to
the BlackSand PSA, to the full extent assignable without Operator’s consent,
(i) an exclusive assignment of its rights and benefits to the limited extent
necessary for Buyer to properly complete, in a commercially reasonable manner,
the discharge of the Obligations pursuant to the Mineral PAPA and (ii)
reserving to itself the enjoyment of all the benefits, rights and privileges
therein, a non-exclusive assignment of its other rights and benefits to the
limited extent of affording Buyer contractual protection by BlackSand (but only
to the extent of the contractual protection enjoyed by Nuevo) from any Losses
(as defined therein) as a result of Buyer’s performance in the discharge of
such Obligations, and the rights and benefits under Sections 3.4, 3.5, 3.7,
5.24, 5.25 and 5.29 therein. If Operator challenges Buyer’s right to perform
the



54









 




Program as an assignee of Nuevo, the Parties agree to cooperate in good faith
to resolve this issue. If such efforts do not result in resolution of the
challenge within 90 days, and should either Party in good faith determine that
performance of the Program by Buyer as an independent contractor resolves such
challenge, the Parties agree, at either Party’s request, to
execute an agreement
that provides that Buyer shall perform the Program as an independent
contractor. Such agreement shall in all other respects result in the
performance of the duties, obligations, responsibilities of the Program by
Buyer in the manner contemplated by this Agreement. In such event, the rights
duties, liabilities and obligations of Seller and Buyer under this Agreement
shall remain unchanged.




          The
Assumed BlackSand PSA Obligations are contained in: (a) Section 3.6;
(b) Section 3.1.4; (c) Section 3.7.3; (d) Section 5.4 to the extent that such
actions are required by the Mineral PAPA; (e)Section 5.13; (f) Section 5.17
other than the performance of the Well Abandonment Plan and the dismantling of
two (2) water tanks and the relocation on a temporary basis one (1) water tank
at the East Naranjal Tank Farm; (g) Section 5.24.2; and (h) Section 5.25 other
than Seller’s obligation to make a Contingent Payment.



          Buyer expressly assumes and obligates itself to exercise all rights and
benefits and to undertake, discharge and perform on a timely basis all
Obligations in accordance with the terms and conditions set out in the Mineral
PAPA and BlackSand PSA. For all purposes, Buyer agrees to stand in full
substitution of Nuevo, both as Nuevo individually and as the original Developer
in the Mineral PAPA, in performance of the Obligations whether such right,
benefit, duty, obligation or liability arose before or after the Effective
Date.



          In connection herewith, and without in any way limiting the effect of the
Indemnities in Section 3.7 and 3.9 or of any other obligation, liability or
responsibility of Buyer under this Agreement, Shea shall provide Nuevo with a
guarantee of performance and indemnity by Shea Homes Limited Partnership and
Standard Pacific Corp., affiliates of Shea. Such guarantee shall be in the form
of Exhibit “P” attached hereto.


          Section 5.31 Assumption of Obligations Under
the Agreement. As security for the proper discharge of Buyer’s duties and
obligations under this Agreement after the Close, including without limitation,
those described in Sections 2.2.2, 2.2.3, 3.3, 3.6, 3.7, 3.8 and 3.9 hereof,
and as a material inducement to Seller to execute this Agreement and consummate
the Transaction, Buyer hereby agrees as follows:



               5.31.1 Assumption of Obligations/Guaranties. Buyer will obtain for
Seller’s benefit from any transferee entity to which/whom Buyer makes a
Transfer hereunder, respectively (collectively and individually, “Transferee”
or “Transferee Entities”), and deposit into Escrow, if applicable, a written
assumption (“Assumption”) of all the duties and obligations of Buyer under this
Agreement including without limitation those written Indemnities and related
covenants of Buyer contained in Sections 2.2.2, 2.2.3, 3.3, 3.6, 3.7, 3.8 and
3.9 of this Agreement, in the form specified below immediately after the
signature block hereof and limited only to the extent of the respective
Property interests (or interest in this Agreement) transferred to each entity.



55









 





               5.31.2 Memorandum and/or Restrictions. Seller may, in its sole discretion,
(a) record against the Property (Development Areas and the Remainder Parcels),
the Development Declaration in the form of Exhibit “I” covering the matters in
this Section 5.31, to , secure the proper performance hereof and/or (b) make
the grant of conveyance to Buyer required hereunder subject to restrictions
and/or CC&Rs in the Grant Deeds (collectively, “Restrictions”) ensuring that all
successor owners of all or a portion of the Property, will be bound by the
matters in this Section 5.31; provided however that any such Restrictions shall
automatically be rendered void insofar, but only insofar, as to that portion of
the Property sold to a member of the Home buying public, community association,
property owner association or Governmental Agency.



               5.31.3 Further Covenants. Subject only to the matters in the Assumption
of Obligations agreement attached below immediately after the signature block
hereof, to ensure the performance by Buyer (and its successors and assigns to
all or a portion of the Property), of its obligations under this Agreement,
any hypothecation or recording of claims against the Property, shall be made
expressly subject to the rights of Seller under this Agreement. This
provision shall be included in the Grant Deeds and any subsequent deed or
conveyancing instrument for any of the Property.



          Section 5.32 Unocal Asset Purchase Agreement. Except as described in
Section 3.1.16, all the rights and privileges, as well as all the duties and
obligations, of every nature and type whatsoever, under, in or relating to
the Unocal Asset Purchase Agreement to the extent they relate to the
interests acquired hereunder by Buyer, are hereby assigned by Nuevo to, and
assumed by, Buyer.



          Section 5.33
Like-Kind Exchange. Nuevo shall have the right, on ten days
written notice to Buyer, to consummate the Transaction by means of a
“like-kind exchange” (“Exchange”) pursuant to Section 1031 of the United
States Internal Revenue Code, so long as the Exchange does not delay the
Close of Escrow. Buyer will cooperate with Nuevo in such endeavor as
described in Section 5.27 of this Agreement, without however, taking title to
any real property or incurring costs therefor.



          Section 5.34 Oil Well Exhibit. As a convenience to Buyer, Seller has
attached as Exhibit “N” a list of Operator’s oil wells and the Changing House
on the Land (collectively, “Oil Wells” or “Wells”) which to the best of its
knowledge (as defined in Section 3.1C) is a complete list of such Wells.



          Section 5.35
Permit Program. Receipt of, or waiver of the requirements for,
the Permits is a prerequisite for the payment by Buyer of the Deposit.
Monitoring and follow-up responsibilities/obligations with respect to the
Permits (“Permit Program”) shall be accomplished pursuant to the PAPA and the
payment of the Additional Purchase Price by Buyer satisfied pursuant to
Section 2.2.2(b) hereof. The Permits and all the rights and privileges, as
well as all the duties and obligations thereunder, or associated therewith
(including any future amendments thereto, modifications thereof or actions
necessary to keep them in force and effect) and/or to the Permit Program are
hereby assigned by Nuevo to, and assumed by, Buyer. All matters contained in
this Section 5.35 are subject to the provisions of the PAPA.



56









 





          Section 5.36 Aera Program (Wildcatter Park). In order to assist Buyer in
its efforts to complete the development of that portion of the Development Area
designated as Wildcatter Park (“Park”), Seller has entered into the Aera
Agreement attached as Exhibit “0:” The Aera Agreement contains certain rights
and privileges, as well as duties and obligations attributable to Nuevo and
Aera respectively (referred to herein as the “Aera Program”). Except as to the
consideration payable under Section 2 of the Utility Easement attached as
Exhibit “ G ” to the Aera Agreement, those rights and privileges, as well as
the duties and obligations of Nuevo more fully specified in Exhibit “K,” are
hereby assigned by Nuevo to, and assumed by, Buyer. The parties expressly
understand and agree that to the extent any notice must be given, or consent to
assignment obtained, by Seller pursuant to the terms and provisions of the Aera
Agreement regarding this Transaction and/or any matters pertaining hereto,
including the assignment of the Aera Agreement to Buyer, such matters shall be
the sole responsibility of Buyer, and no such matter shall be a Condition to
the Close of Escrow under this Agreement. All matters contained in this Section
5.36 are subject to the provisions of the PAPA.



          Section 5.37 Hover Program (Adjacent Parcel). Nuevo previously entered
into the Hover Agreement covering the Adjacent Parcel. Buyer has been provided
with a copy of the Hover Agreement. The Hover Agreement and all the rights and
privileges, as well as the duties and obligations of “Nuevo” or “Seller” thereunder are hereby assigned by Nuevo to, and assumed by, Buyer, except for those
specifically retained by Nuevo as described in Section 2.3 of the PAPA.All
matters contained in this Section 5.37 are subject to the provisions of the
PAPA.



          Section 5.38 Oil Assets/Oil Operations. Buyer acknowledges that Seller has
informed Buyer that Seller has divested itself of the Oil Assets and Oil
Operations to BlackSand Partners, L.P., the Operator, and that Buyer must
conduct its activities subject to (a) the Operator Development Declaration and
other Operator Development Documents executed pursuant to the BlackSand PSA and
the Operator transaction described therein, as well as to (b) Seller’s
agreements with Aera, pursuant to the Aera Agreement and (c) Seller’s
agreements with Hover in the Hover Agreement. Documents means all the
Development Documents identified as such in the BlackSand PSA.



          Section 5.39 Satisfaction of Conditions (Section 2.3). The Parties hereby
acknowledge and agree that conditions 2.3(a), (c) and (d) in this Agreement
have been fully satisfied and completed as of the execution hereof.



          Section 5.40 Constructive Meaning of Certain Provisions. Notwithstanding
anything to the contrary elsewhere in this Agreement or other Development
Documents, where any obligation, covenant, restriction or duty of Buyer is
limited herein to the period of time prior to the full reconveyance of the PAPA
TDs (“Time Period”), that Time Period shall automatically be extended to
include any periods of time during which (a) the PM TD, or any portion thereof,
is extant and not fully reconveyed and/or any amounts secured thereby have not
been fully paid to Nuevo as required herein and (b) the Corporate Guaranty
and/or SPC Guaranty, or any portion thereof, is/are extant and not fully
reconveyed/discharged and/or any amounts secured thereby have not been fully
paid to Nuevo as required herein.



57









 





          Section 5.41
Alternate Discharge of Program Responsibilities. Buyer shall
have the right, to be exercised (“Exercise”), if at all, by written notice to
Seller within five (5) business days after the filing for record of the A Final
Map with the County Recorder, to designate Nuevo (“Designation”) as the Party
responsible (“Responsible Party”) for performing the Program at Buyer’s cost
and expense (such date of designation referred to as the
“Exercise Date”), all
as described more fully in the Option B PAPA attached to this Agreement as
Exhibit “R,” and require Buyer and Seller to enter into the Option B Documents
(as hereinafter defined) to provide for Nuevo to be the Responsible Party.
Following the date of this Agreement, the parties intend to prepare a document
package to reflect such Designation of Nuevo as the Responsible Party (“Option
B Documents”), including, but not limited to a revised and amended version of
this Agreement with all its Exhibits, an adjusted Initial Purchase Price of
Forty Million Dollars ($40,000,000) and, to the extent Buyer requests that
rights of Nuevo be subordinated in connection with financing of the Project,
adequate security to assure Buyer’s performance which security may be a letter
of credit, corporate guarantee or other assurance of payment and performance
satisfactory to Nuevo in its sole reasonable discretion. The Option B Documents
shall reflect the intent of the parties as expressed in the Option B PAPA and
shall provide for continuity and consistency within this Agreement. If the
Parties agree on the Option B Documents in their entirety such that the Option
B Documents are ready for execution and confirm such agreement in writing prior
to the Exercise Date, and Buyer properly and timely Exercises such right of
Designation, the Escrow shall Close pursuant to the terms of the Option B
Documents, the Parties shall be bound by all the terms and provisions thereof,
and this Agreement shall automatically terminate. If the Parties do not for any
reason agree on the Option B Documents in their entirety such that the Option B
Documents are ready for execution and confirm such agreement in writing prior
to the Exercise Date, this Agreement shall remain in full force and effect,
Escrow shall Close pursuant to, and the Parties shall be bound by, all the
terms and provisions hereof, and the Option B Documents shall be void and of no
effect.



          Section 5.42 Option to Convert PAPA TD’s Into SPC Guaranty (“SPC
Guaranty”). If, prior to execution by Shea of the “Lender’s deed of trust”
(defined at Recital B to Attachment “2” of the Shea PAPA Trust Deed which is
Attachment “2” to Exhibit “K’), Shea causes to be duly executed, acknowledged
and delivered to Nuevo the SPC Guaranty in the form attached hereto as Exhibit
“S,” then in such event, subject to Section 5.40 hereof:



          (a) Nuevo shall release and reconvey to Shea the Shea PAPA Trust Deed
within ten (1 0) business days of its receipt of the SPC Guaranty;



          (b) Nuevo shall release and reconvey to TH 680 the TH 680 PAPA Trust Deed
within ten (10) business days of its receipt of the SPC Guaranty;



          (c) Nuevo shall execute, acknowledge and deliver to Shea the DD
Subordination Agreement in the form of Exhibit “L” within ten (1 0) business
days of its receipt of the SPC Guaranty;



          (d) The Parties shall deem the SPC Guaranty and DD Subordination Agreement
to be Development Documents; and



58









 





          (e) The
SPC Guaranty shall remain in effect until released, as provided
therein.



          Section 5.43 No Participation by Brea/Tonner Investors,L.P. (“BTI”);
Waiver, Release, Defense and Indemnity. The Parties acknowledge that BTI,
formerly proposed as one of the entities comprising Buyer, is not a part of
Buyer and has no interest in this Transaction and/or the Land or Project. The
Parties have each provided BTI with monetary consideration and in return
therefor, Buyer has obtained from BTI, for itself and on Seller’s behalf, and
has provided Seller, a full and complete waiver, release, defense (of claims)
and indemnity from BTI, in a form satisfactory to Seller in its reasonable
discretion (“Release/Indemnity”), regarding the
Transaction/Land/Project, and
BTI’s prior proposed participation therein.



          Section 5.44 Mineral PAPA Cooperation. To the extent that the cooperation
or participation of Seller is legally required to enable Buyer to assert rights
to seek remedies under the Mineral PAPA, Seller shall cooperate with Buyer and
reasonably participate, as a party to legal proceedings or otherwise, at the
cost and expense of Buyer who shall defend, indemnify and hold Seller harmless
from losses resulting therefrom.




59










 



     IN WITNESS WHEREOF, this Agreement is executed as of the day and year
first above written.



	 	 	 	 	 	 	 	 	 	 	 
	NUEVO ENERGY COMPANY, a Delaware

corporation	 	TONNER HILLS SSP, LLC, a Delaware

limited liability company
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	-s- [ILLEGIBLE]
	 	By: Standard Pacific of Tonner Hills, LLC, a
Delaware limited liability company, a member
	

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:	 	CEO	 	 	 	By: Standard Pacific Corp., a Delaware 
corporation, its sole member
	

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	-s- [ILLEGIBLE]
	 	 	 	 	 	By:
	 	-s- [ILLEGIBLE]
	

	 	
 
	 	 	 	 	 	 	 	
 
	Title:

	 	[ILLEGIBLE]
	 	 	 	 	 	Title:
	 	AUTHORIZED REP.
	

	 		 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By:
	 	-s- [ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title:
	 	AUTHORIZED REP.
	

	 	 	 	 	 	 	 	 	 	
	“SELLER”	 	By: Shea Tonner Hills, LLC, a Delaware

limited liability company, a member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: Shea Homes Limited Partnership, a

California limited partnership, its sole

member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By: J.F. Shea LLC, a Delaware
limited liability company, its
General Part
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By:
	 	-s- [ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title:
	 	UP
	

	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By:
	 	-s- [ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title:
	 	[ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	







60








 




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	TONNER HILLS 680 LLC, a Delaware limited

liability company
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Tonner Hills SSP, LLC, a Delaware

limited liability company, its sole

member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Standard Pacific of Tonner Hills,
LLC, a Delaware limited liability
company, a member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Standard Pacific Corp., a
Delaware corporation, its sole
member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By:
	 	-s- [ILLEGIBLE]	 	 
	 	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title:
	 	AUTHORIZED REP.	 	 
	 	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By:
	 	-s- [ILLEGIBLE]	 	 
	 	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title:
	 	AUTHORIZED REP.	 	 
	 	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Shea Tonner Hills, LLC, a

Delaware limited liability

company, a member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:	 	Shea Homes Limited

Partnership, a California

limited partnership, its sole

member
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	J.F. Shea LLC, a
Delaware limited liability
company, its General Partner
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	By:	 	-s- [ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	 	 	Title:	 	VP
	

	 	 	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	 	 	By:	 	-s- [ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	 	 	Title:	 	[ILLEGIBLE]
	

	 	 	 	 	 	 	 	 	 	 	 	







61








 




ASSUMPTION OF OBLIGATIONS




     The undersigned acknowledge and agree that they have received valuable
consideration for executing this Assumption of Obligations and assuming all the
obligations of Buyer under the Agreement (including specifically without
limitation those obligations in Sections 2.2.2,2.2.3, 3.3, 3.6, 3.7, 3.8 and
3.9 thereof) as the beneficiary of (a) the further transfer of the Property,
(b) the assignment provisions in Section 5.19 and (c) otherwise in connection
with the recitals, covenants and promises between Seller and Buyer in the
Agreement, and in exchange therefor, hereby assume, in addition to and not in
lieu of the assumption by Buyer of all its duties and obligations under the
Agreement, all of Buyer’s duties and obligations under the Agreement; provided,
however, that each of the undersigned’s potential liability to Seller pursuant
to this Assumption of Obligations shall be limited, to the fair market value of
the Property held by such undersigned entity, except to the extent of any
insurance, surety or other third party proceeds, contributions and/or liability
from which they may benefit relating thereto and which they hereby agree to
pursue in each instance with best efforts on behalf of Seller and for Seller’s
benefit.



     Without in any way limiting the effect of the Indemnity Sections in the
Agreement or of any other obligation, liability, responsibility or indemnity of
Buyer under the Agreement, the following shall apply with respect to this
Assumption of Obligations by the undersigned (jointly and severally,
“Undersigned”) regarding the Indemnities of Buyer in favor of Seller against
Losses and Environmental Losses, respectively, contained in
Sections 3.7 and 3.9
of the Agreement (“Indemnity Sections”):



     (1) In the event of any mediation, arbitration, reference proceeding,
litigation or any other dispute resolution method, procedure and/or endeavor
(“Indemnity Controversy”) for which defense and indemnity may be claimed by
Seller against Buyer, Seller may demand defense and indemnity against Buyer
and/or any or all of the Undersigned, at Seller’s sole discretion.
Upon such
demand, Buyer and/or the Undersigned to whom such demand is made shall
immediately tender to Seller defense and indemnity pursuant to the terms of the
Agreement.



     (2) In any Indemnity Controversy, Buyer and/or any or all of the
Undersigned may make a written request of any trier of fact (“Trier”) therein
for a specific, special finding (“Finding”) that any
liability of Seller for
which defense and indemnity applies under the Agreement shall be identified and
allocated in whole or in part by such Trier, in its sole discretion, to the
various Property interests (“Allocation”). For purposes of this Assumption of
Obligations, a “Finding” does not occur and is not effective until there is a
final judgment or other final, non-appealable resolution of the dispute
concerning the Allocation.



     (3) In the event a Finding is made pursuant to this Assumption of
Obligations, the Undersigned owning the various Property interests, to the
extent specified in the Finding, shall have the sole responsibility to Seller,
from the date of the Finding forward, for their portion of the Allocation. In
the absence of a Finding or prior to the effectiveness of a Finding, Buyer and
the Undersigned shall be jointly and severally responsible for the full amount
of liability of Seller for which defense and indemnity applies under the
Agreement. In no event shall Buyer or the Undersigned have the right to recover
from Seller any defense and/or indemnity payments made to Seller under this
Assumption of Obligations or the Agreement.



62








 



     (4) To the extent any disputes arise between or among Buyer, the
Undersigned, or any of them, regarding the matters described in this Assumption
of Obligations, Buyer and the Undersigned shall resolve such disputes among
themselves. Any such disputes shall not be a matter for which Seller shall be
concerned or in which Seller shall be a party or participant, or have any
liability whatsoever.



	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	, a
	 	 	 	 	 	, a
	
 ,	 	 	 	
 ,	 	 
	
 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	

	 	
 
	 	 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	

	 	
 
	 	 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	

	 	
 
	 	 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	, a	 	 	 	 	 	, a
	
 ,	 	 	 	
 ,	 	 
	
 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	

	 	
 
	 	 	 	 	 	
 	 	 
	

	 	 	 	 	 	Its:	 	 	 	 
	

	 	 	 	 	 	 	 	
 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	By:	 	 	 	 
	

	 	
 
	 	 	 	 	 	
 	 	 
	

	 	 	 	 	 	Its:	 	 	 	 
	

	 	 	 	 	 	 	 	
 	 	 







63








 




Exhibit “A”

Legal Description of the Land



THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10
WEST AND SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE
RANCHO SAN JUAN CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF
THE COUNTY OF ORANGE, AND IN THE CITY OF BREA, IN THE COUNTY OF
ORANGE, STATE OF CALIFORNIA,AS SHOWN ON A MAP FILED IN BOOK 51, PAGE 7 OF
MISCELLANEOUS MAPS, AND RECORD OF SURVEY FILED IN BOOK 12 PAGE 40,
RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133, PAGES 41 THROUGH 46
INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK 187, PAGES
02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY, IN THE OFFICE
OF THE COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN
A
DEED, BILL OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS
INSTRUMENT NO. 19960175928 OF OFFICIAL RECORDS, IN THE OFFICE OF
SAID COUNTY RECORDER, MORE PARTICULARLY DESCRIBED AS FOLLOWS:




PARCEL 1



BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE
NORTHEAST CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO
THE SOUTHEAST CORNER OF THE RANCHO RINCON DE LA BREA;THENCE ALONG THE
PATENT BOUNDARY OF SAID RANCHO RINCON DE LA BREA, NORTH 84'   WEST 107.51
CHAINS TO A SAND STONE MARKED R.B. I N MOUND WITH PITS; THENCE ALONG
SAID PATENT BOUNDARY NORTH 57° 42'   WEST 43.67 CHAINS TO A
WHITE POST 4
INCHES SQUARE IN MOUND OF STONE MARKED S. J. C. S. A. AT INTERSECTION
OF THE PATENT LINES OF SAID RANCHOS SAN JUAN CAJON DE SANTA ANA AND
RINCON DE LA BREA;THENCE ALONG THE PATENT LINES OF SAID RANCHOS SAN JUAN
CAJON DE SANTA ANA, NORTH 76° 25'   WEST 62.67 CHAINS TO A
2" ×  4" POST
MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1° 45'   WEST 58.96 CHAINS
TO A 2" ×  4" POST MARKED 20.60 IN MOUND WITH PITS;
THENCE NORTH 89°
EAST 20.00 CHAINS TO A 4" ×  4" POST I N MOUND WITH PITS; THENCE SOUTH
 1° 45'   WEST 20.00 CHAINS TO A 2" ×  4" POST MARKED 20.60 IN MOUND WITH
PITS; THENCE NORTH 88° 39'   EAST 55.48 CHAINS TO A 2" ×  4" POST MARKED
20 IN MOUND WITH PITS; THENCE SOUTH 0° 30 '  EAST 2 0.00
CHAINS TO A 2 " ×  4" POST IN MOUND WITH PITS; THENCE NORTH
89° 45" EAST
134.63 CHAINS TO
A 2" ×  4" POST MARKED 40.10 IN MOUND WITH PITS UPON THE EASTERN
BOUNDARY OF SAID RANCHO SAN JUAN CAJON DE SANTA ANA; THENCE
ALONG SAME NORTH 4° WEST 47.51 CHAINS TO THE PLACE OF BEGINNING.



EXCEPTING THEREFROM THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED
TRACT.



ALSO EXCEPTING
THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED
BOUNDARY LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28° 30'  EAST
FROM THE WESTERN TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT
BETWEEN THE UNION OIL COMPANY OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL
COMPANY, RECORDED JUNE 10, 1905 IN BOOK 120, PAGE 223 OF DEEDS, IN THE
OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING
THEREFROM THE LAND CONVEYED TO THE METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 I N
BOOK






Page 1 of 4








 





1051, PAGE 301 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER, DESCRIBED AS FOLLOWS:





	 	 	BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED
BY UNION OIL COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE
EASTERLY BOUNDARY OF THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID
UNION OIL COMPANY OF CALIFORNIA TO GEORGE CHAFFEY BY DEED DATED
APRIL 25, 1899, RECORDED JUNE 20, 1899 IN BOOK 44, PAGE 79 OF DEEDS,
WHICH POINT OF BEGINNING IS THE POINT OF INTERSECTION OF THE AFORESAID
WESTERLY BOUNDARY WITH THE EASTERLY PROLONGATION OF THE, CENTER LINE OF
CENTRAL AVENUE AS THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY
STREET AND BREA CANYON ROAD; THENCE NORTHEASTERLY ALONG A LINE
FORMING AN ANGLE OF 73° 32' 24"  WITH THE EASTERLY
PROLONGATION OF THE
CENTER LINE OF SAID CENTRAL AVENUE AT SAID POINT OF INTERSECTION
(ASSUMED AND TAKEN TO BEAR NORTH 15° 11' 16"  EAST), A
DISTANCE OF
839.60 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH
O° 10' 11" EAST A DISTANCE OF 1250 FEET: THENCE SOUTH
89° 49' 49" EAST A
DISTANCE OF 500 FEET; THENCE SOUTH 65° 23' 11"  EAST A
DISTANCE OF 604.15
FEET; THENCE SOUTH 0° 10' 11"  WEST A DISTANCE OF 1000 FEET; THENCE
NORTH 89° 49 '  49"  WEST A DISTANCE OF 1050 FEET TO THE
TRUE POINT OF
BEGINNING.




ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY
DEED RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER DESCRIBED AS FOLLOWS:





	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED
IN DEED FROM THE STEARNS RANCHOS COMPANY,A CORPORATION, TO UNION OIL
COMPANY OF CALIFORNIA,A CORPORATION, DATED AUGUST 31, 1899, RECORDED
SEPTEMBER 2, 1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH
89° 10 '  50 "  WEST ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST
CORNER OF SAID LAND, SAID POINT OF BEGINNING BEING MONUMENTED BY
UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9° 48 '   "  WEST 529.60
FEET TO A 2 "   ×  2 "  STAKE AND THE TRUE POINT OF
BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85° 48 '  16 "  WEST, 380.00
FEET TO A 2 "   ×  2 "
STAKE; THENCE NORTH 4° 11 '  44 "  EAST 1750.00 FEET TO A 2 "   ×  2 "  STAKE;
THENCE SOUTH 85° 48 '  16 "  EAST 380.00 FEET TO A 2 "   ×  2 "  STAKE:
THENCE SOUTH 4° 11 '  44 "  WEST
1750.00 FEET TO A 2 "   ×  2 "  STAKE AND THE TRUE POINT OF
BEGINNING.




ALSO EXCEPTING THEREFROM THAT
PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK
8173, PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT
PORTION DESCRIBED IN DEED TO THE
METROPOLITAN WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY
10, 1967
IN BOOK 8173, PAGE 647 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.



ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.






Page 2 of 4







 





ALSO EXCEPTING THEREFROM THAT
PORTION DESCRIBED IN PARCEL 1 OF THE DEED
TO THE CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF
OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM PARCELS A6471-4, A6471-5, A6471-6 AND A6471-7
OF THAT CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE NO.
156220, A CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29, 1970 IN
BOOK 9417, PAGE 364 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.



ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-
243, FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN
THE OFFICE OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF
ASSOCIATED ROAD, 80.00 FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243,
ADJOINING SAID PARCELS 1 AND 2 ON THE EAST, AND BOUND NORTHEASTERLY BY
THE NORTHEASTERLY LINE OF SAID PARCEL MAP NO. 86-243, AND BOUND
SOUTHERLY BY THE CENTER LINE OF LAMBERT ROAD AS SHOWN ON SAID PARCEL MAP
NO. 86-243.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF
PARCEL MAP NO. 83-1179, AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1
THROUGH 4 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF SAID COUNTY
RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12562,
AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO.
12563, AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 10 THROUGH 15
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY
RECORDER.



ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE DEED TO THE CITY
OF BREA RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF A
COUNTY OF ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054,
RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



PARCEL 2



PARCEL 1 OF A COUNTY OF ORANGE LOT LINE ADJUSTMENT NO. LL
2000-054, RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



EXCEPTING THEREFROM THAT
PORTION CONVEYED TO BREA-OLINDA UNIFIED
SCHOOL DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS
INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID
COUNTY RECORDER.






Page 3 of 4








 





ALSO EXCEPTING THEREFROM THAT
PORTION CONVEYED TO THE COUNTY OF ORANGE
BY GRANT DEED RECORDED JUNE 4, 2003 AS INSTRUMENT NO. 2003000648901 OF
OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



PARCEL 3



THE LAND CONVEYED TO BREA
CHEMICALS, INC ., BY DEED RECORDED JUNE 10, 1957
IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER DESCRIBED AS FOLLOWS:





	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN
DEED FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL
COMPANY OF CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED
SEPTEMBER 2,1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH
89°
10' 50" WEST ALONG SAID LINE 3131.98 FEET FROM THE
SOUTHEAST CORNER OF
SAID LAND, SAID POINT OF BEGINNING. BEING MONUMENTED BY UNION OIL
COMPANY MONUMENT 11B; THENCE NORTH 9° 48' 11" WEST
529.60 FEET TO A 2' × 2' STAKE AND THE TRUE POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE
NORTH 85° 48' 16" WEST, 380.00 FEET TO A 2"×
2" STAKE; THENCE NORTH 4°
11' 44" EAST
1750.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 85°
48' 16" EAST
380.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 4° 11" 44" WEST
1750.00 FEET TO A 2" × 2" STAKE AND THE TRUE POINT OF BEGINNING.




THE ABOVE DESCRIPTION WAS
COMPILED FROM INFORMATION SUPPLIED BY
FIRST AMERICAN TITLE COMPANY PRELIMINARY REPORT NO. 2033661, DATED
JULY 16, 2003.



EXHIBIT “ ‘A1’ SITE
DEPICTION ”, IS FOR INFORMATIONAL PURPOSES ONLY.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS,
RESERVATIONS,EASEMENTS AND RIGHTS-OF-WAY OF RECORD, IF ANY.




	 	 	 
	

	 	PREPARED BY: THE KEITH COMPANIES

UNDER THE DIRECTION OF:
		 	
	 
	 	/s/ KATHLEEN SUSAN TETREAULT
	 

	 	KATHLEEN SUSAN TETREAULT P.L.S.
7297

MY LICENSE EXPIRES 12/31/2004
	 
	 	 
	

	 	August 20, 2003

JN: 13207.00







Page 4 of 4








 










 








 











 








 












 








 












 








 






AGREEMENT

EXHIBIT “C”




TONNER HILLS AREA PLAN

(INCORPORATED BY REFERENCE)




 








 






Revised 11/23/03




AGREEMENT




EXHIBIT “D”




ESCROW INSTRUCTIONS




Exhibit “D”

Escrow Instructions




 








 






ESCROW INSTRUCTIONS




	 	 	 
	TO:

	 	First American Title Insurance Company (“Escrowholder” or
	

	 	“Escrow Agent”)
	

	 	2 First American Way
	

	 	Santa Ana, California 92707
	

	 	Fax No.: (714) 800-4793
	

	 	Phone: (714) 800-4830
	 
	 	 
	Escrow Officer:

	 	Christine Sidney/Dan Estrella
	 
	 	 
	Title Officer:

	 	Ronald Gomez
	 
	 	 
	Escrow No.:

	 	NCS 63040-SAl(CS)
	 
	 	 
	Seller:

	 	Nuevo Energy Company
	 
	 	 
	Seller’s Address:

	 	1021 Main Street
	

	 	Suite 2100
	

	 	Houston, Texas 77002
	

	 	Attn: David A. Leach
	

	 	Fax No.: (713) 374-4899
	

	 	Phone: (713) 374-4802
	

	 	Email: Leachd@nuevoenergy.com
	 
	 	 
	Buyer:

	 	Tonner Hills SSP, LLC and Tonner Hills 680 LLC
	 
	 	 
	Buyer’s Address:

	 	Tonner Hills SSP, LLC (“Shea”)
	

	 	603 S. Valencia Avenue
	

	 	Brea, CA 92823
	

	 	Attention: Alan Toffoli
	

	 	Fax: (714) 985-3605
	

	 	Phone: (714) 792-2504
	

	 	Attn: Alan Toffoli
	

	 	Email: alan.toffoli@sheahomes.com
	 	 	 
	

	 	Tonner Hills 680 LLC (“TH 680”)
	

	 	603 S. Valencia Avenue
	

	 	Brea, CA 92823
	

	 	Attention: Joe Fleischaker
	

	 	Fax: (714) 985-3605
	

	 	Phone: (713) 792-2592
	

	 	Email: joe.fleischaker@sheahomes.com




1





Exhibit “D”

Escrow Instructions





 








 








	 	 	 
	Subject Property or Land:

	 	In the County of Orange,
	

	 	State of California, described as:
	

	 	(See Legal Description in the PSA)







                    Date:
December 8, 2003



Exhibit “D”

Escrow Instructions


2




 








 








          1. The
Escrow. This Escrow is established pursuant to that certain
agreement for the purchase and sale of the Subject Property between Seller and
Buyer, dated December 8, 2003 (“Agreement” or “PSA”), to which these Escrow
Instructions are attached as Exhibit “D.” Contemporaneously with these fully
executed Escrow Instructions, Escrowholder has received an original, executed
Agreement, with all its exhibits.



          The
Initial Purchase Price and Work Reimbursement Amount (defined in
Section 2.2.2 of the Agreement) due from Buyer to Seller at the Close for the
Subject Property shall consist of the following:




	(a)	 	Five Million Dollars ($5,000,000) as a Deposit, which
has previously been paid to Seller as described in Sections
2.2.1 and 2.3 of the Agreement, to be applied as a credit
against the Initial Purchase Price at the Closing;
	 
	(b)	 	Thirty-One Million Five Hundred Thousand Dollars
($31,500,000) to be paid to Nuevo through Escrow, as the
remainder of the Initial Purchase Price as specified in
Section 2.2.1 of the Agreement, consisting of Nine Million
Dollars ($9,000,000) in cash and Twenty-Two Million Five
Hundred Thousand Dollars ($22,500,000) in the form of the
PM Note secured by the PM TD;
	 
	(c)	 	Two Hundred Twelve Thousand Six Hundred Ninety Five Dollars
($212,695) as the Work Reimbursement Amount specified in
Section 2.2.2(a) of the Agreement, in cash to be paid to
Nuevo through Escrow;
	 
	(d)	 	Any Work Reimbursement Amount due and owing from Buyer to
Seller at the Close attributable to the Work Reimbursement
Amount described in Section 2.2.2(b) of the Agreement to be
paid in cash through Escrow, pursuant to a written demand by
Seller deposited therein.





     Separate
and distinct from the Initial Purchase Price and Work
Reimbursement Amount, Buyer shall pay Seller in cash through Escrow the amount
of      Dollars ($      ) as Development Reimbursement Monies, as specified in Sections
2.2.3 and 2.2.4 of the Agreement and      Dollars for taxes, if applicable, pursuant
to Section 4 hereof.


Buyer shall deposit into Escrow the cash on or before the date set for the
Close of Escrow and the PM Note and PM TD, together with all documents required
by the Escrow Agent, at least one (1) day before the date set for the Close of
Escrow herein. Buyer shall deposit the cash in a timely manner such that the
cash shall be both wire transferred from Escrow and deposited in Seller’s
account as designated in Section 5.2 of the PSA on the date of Close. Escrowholder
shall not be concerned with the payment of any other portion of the Work
Reimbursement Amount and/or Development Reimbursement Monies, which shall be
paid by Buyer to Seller outside of Escrow, as described in the Agreement.






Exhibit “D”

Escrow Instructions



3







 







Such funds may be used and, subject to Paragraph 8 below, shall be disbursed to
Seller when Escrow Agent is in a position to obtain a CLTA standard coverage
owner’s policy of title insurance with a 101.4 lien free endorsement consistent
with the Title Report described in Section 4.1 of the Agreement (“Title
Policy”) in favor of Buyer showing title to the Subject Property vested in
Buyer, as follows:





	 	 	 
	(a)	 	Policy
to be issued by First American Title Insurance Company
(“Title Company”), a California corporation, with usual title
company’s preprinted exceptions and the endorsements listed as
follows:




     




	 	 	 
	Endorsement	 	 
	Form Number
	 	Description

	General Endorsements
	 	 
	100

	 	Compliance with CC&Rs, encroachments and
minerals modified
for Owner
	103.7

	 	Access to open streets
	116

	 	Street address
	116.4

	 	Contiguity
	Specific Endorsements
	 	 
	110.7

	 	Ensure against loss from
enforcement of lien for title
exception
number 3.
	103.1

	 	Ensure against loss from use or
maintenance of easement for
title exception numbers 4, 13, 24
	100.29

	 	Ensure against loss from
surface breakage for title
exception
number 20.








	(b)	 	Liability to be in the amount of the Purchase Price specified in the
Agreement; and,
	 
	(c)	 	Free of encumbrances excepting the items listed below:






	(i)	 	All covenants, conditions, restrictions, easements,
reservations, rights, rights-of-way, encumbrances and other
items shown on the Title Report (and any supplements thereto
approved by Buyer), issued by Title Company or apparent;
	 
	(ii)	 	All other exceptions added to the Title Report for the
Subject Property, due to the acts or omissions of Buyer or
as consented to by Buyer in the Agreement or otherwise in
writing; but excluding any liens, claims or similar
exceptions arising from Seller’s work







Exhibit “D”

Escrow Instructions


4



 








 









		 	on the Subject Property all of which shall be removed
from title by Seller at its sole cost and expense, if
requested in writing by Buyer;
	 
	(iii)	 	Declaration of Development Covenants, Conditions and
Restrictions in the form of Exhibit “I” to the PSA
(“Development Declaration”);
	 
	(iv)	 	Easement Agreement in the form of Exhibit “M” to the PSA
(“Easement Agreement”);
	 
	(v)	 	Items shown on the Grant Deeds from Seller in the form of
Exhibit “G” to the PSA (collectively, “Grant
Deeds” and
individually, “Shea Grant Deed” and “TH 680 Grant Deed,”
respectively);
	 
	(vi)	 	PAPA TDs in the form of Attachments “2” and
“3” to Exhibit
“K” to the PSA (collectively, “PAPA TDs,”
and individually, “Shea PAPA TD” and “TH 680 PAPA TD”);
	 
	(vii)	 	PM TD in the form of Exhibit “E” to the
PSA(“PM TD”).





     2. Close
of Escrow: This Escrow for the transfer of the
Land from Seller to Buyer shall Close on the later to occur of December 19, 2003 or
five (5) days after the recordation of the A Final Map by the County Recorder,
or if such day falls on a weekend or national holiday, then on the first
business day immediately thereafter. If this Escrow has not closed as set forth
in the preceding sentence, this Escrow shall automatically terminate
without further action of Escrowholder or the Parties (“Cancellation’’).



     3. Other
Conditions to Close of Escrow: This
Escrow shall not Close until and unless certain conditions of the Agreement have
been satisfied, as follows:




	(a)	 	The conditions of the Section of the
Agreement entitled “Conditions to Close of Escrow” may be satisfied in
any one or a combination of the following methods:






	(i)	 	Escrow Agent is entitled to rely on Seller’s statement that
any such conditions relating to Buyer have been satisfied
outside of Escrow and Buyer’s statement that any such
conditions relating to Seller have been satisfied outside of
Escrow.
	 
	(ii)	 	Escrow Agent is entitled to rely on
Seller’s and/or Buyer’s statement that any of such conditions
have been waived on its part, and the other party’s consent
to such waiver is not required.
	 
	(iii)	 	At Seller’s or Buyer’s option, any of such conditions
requiring the payment of money or delivery of documents may
be satisfied by









Exhibit “D”

Escrow Instructions



5








 









	 	 	deposit into Escrow of such funds and/or documents
and payment or delivery to Seller or Buyer at Close of
Escrow. Buyer’s deposit of additional funds or Seller’s
or Buyer’s signature on any such document shall be
deemed approval and no further approval or consent will
be required through the Escrow.






	(b)	 	The Agreement provides among other things that Buyer shall have
paid a portion of the Initial Purchase Price to Seller through or
outside of Escrow in the form of a Deposit. Escrow Agent is to
credit the Deposit to Buyer against the Initial Purchase Price, as
described in paragraph l(a).





     4. Prorations.
Escrow Agent is to make the following prorations as of the
date on which the Grant Deeds to Buyer are recorded. Prorations are to be made
on the basis of a thirty- day month.




	 	 	Taxes. All current general and special taxes and assessments on the
Subject Property based upon the latest available tax information as
shown in the statement provided to Escrow Agent by Seller, using
customary escrow procedures. Seller has paid, prior to Close, taxes
due Orange County in the amount of $368,551.40 attributable to the
2003-2004 Fiscal Year, which payment covers a period after the
Close. That portion of the payment attributable to the Property is
$231,336.13 which shall be prorated and the monies allocable to the
period after the Close shall be distributed to Seller at the Close.
Any taxes or assessments levied under the Supplemental Tax Roll as a
result of the sale, whether prior to the normal assessment date or
otherwise, shall be the sole responsibility of Buyer. Buyer and
Seller shall cooperate in good faith to cause the Subject Property
to be separately assessed and segregated in Buyer’s name on the
current tax roll. Any discrepancy in the allocations required
hereunder discovered after the Close of Escrow shall be adjusted
fairly outside of Escrow.





     5. Documents to be Delivered or Recorded Through Escrow. Buyer and Seller
will deposit into Escrow the following executed documents which are to be
recorded and/or delivered at the Close of Escrow as hereinafter provided. Any
such documents in the form of exhibits to the Agreement, which are executed by
Seller and Buyer or are executed by one party to the Escrow and deposited into
Escrow by the other party to the Escrow, shall be deemed approved by Buyer and
Seller and no further approval will be required.




	(a)	 	PM Note and PM TD. Buyer shall deposit into Escrow one (1) fully
executed original and two (2) copies of the PM Note in the form
contained in Exhibit “E” to the PSA and one (1) fully executed and
acknowledged original and two (2) copies of the PM TD. At the Close
(i) the original PM Note shall be sent to Seller and the copies to
Shea and TH 680, respectively and (ii) the original PM TD recorded
and thereafter forwarded to Seller and the copies conformed and
forwarded to Shea and TH 680, respectively.







Exhibit “D”

Escrow Instructions


6



 








 









	(b)	 	PAPA and PAPA TDs. Buyer and Seller shall deposit into escrow
three (3) fully executed originals of the PAPA and one (1) original
and two (2) copies of the fully executed and acknowledged Shea and
TH 680 PAPA TDs. At the Close (i) the original PAPA TDs shall be
recorded and thereafter forwarded to Seller, and one (1) conformed
copy each of the Shea PAPA TD and TH 680 PAPA TD shall be sent to
Shea and TH 680 and (ii) one (1) original PAPA delivered to Seller
and one (1) original each to Shea and TH 680.
	 
	(c)	 	Development Declaration. A condition to the Close in the
Agreement is that Buyer shall take title subject to the Development
Declaration which is to be the first document recorded upon the
Close of this Escrow (prior to the Grant Deeds). Seller and Buyer
shall deposit prior to the Close an executed and acknowledged
Development Declaration to be recorded prior to the recording of any
other documents in this Escrow and thereafter forwarded to Seller,
along with two (2) copies thereof. Conformed copies shall be sent to
Shea and TH 680 at the Close.
	 
	(d)	 	Easement Agreement. Buyer and Seller shall deposit into Escrow
three (3) fully executed and acknowledged originals of the Easement
Agreement. Upon the Close of Escrow, one copy shall be recorded
immediately after the Grant Deed and forwarded to Seller, and two
(2) copies conformed and forwarded, one each to Shea and TH 680.
	 
	(e)	 	Grant Deeds. Seller shall deposit into Escrow one (1) fully
executed and acknowledged Shea Grant Deed and TH 680 Grant Deed to
be recorded at the Close of Escrow immediately after the Development
Declaration and forwarded to Buyer and one (1) copy of each to be
conformed and forwarded to Seller.
	 
	(f)	 	Non-Exclusive Assignment of Contract Rights. Seller and Buyer
shall deposit into Escrow three (3) fully executed copies of the
Non-Exclusive Assignment of Contract Rights in the form attached as
Exhibit “F” to the PSA. One executed copy shall be delivered to
Seller and one executed copy each delivered to Shea and TH 680 at
the Close of Escrow.
	 
	(g)	 	Corporate Guaranty (“Corporate Guaranty”). Buyer shall deposit
into Escrow one (1) fully executed original and two (2) copies of
the Corporate Guaranty in the form attached as Exhibit “P” to the
PSA. At the Close (i) the original Corporate Guaranty shall be sent
to Seller and (ii) the copies to Shea and TH 680, respectively.
	 
	(h)	 	Withholding Exemption Certificate. Seller shall deliver to
Escrowholder written certificates evidencing that no withholding is
required pursuant to §1445 of the Internal Revenue Code and
§§ 18662 and 18668 of




Exhibit
“D”
Escrow Instructions



7








 









	 	 	California Revenue and Taxation Code in the form appended
hereto as Attachment “1.”
	 
	(i)	 	Agreement. Seller and Buyer shall deliver to Escrowholder one (1)
fully executed copy of the Agreement, together with its Exhibits “A”
through “S,” which is forwarded contemporaneously herewith.
	 
	(j)	 	Release/Indemnity. Buyer shall deliver to Escrowholder one (1)
original and one (1) copy of the Release/Indemnity required by
Section 5.43 of the PSA. At the Close, the original shall be sent
to Seller and the copy to Buyer.






	The documents to be recorded shall be recorded in the following order of
priority: Development Declaration, First, then Grant Deeds, Easement Agreement,
PM TD and PAPA TDs.





     6. Buyer’s Costs. Buyer shall deposit, in addition to any other sum
specifically required hereunder, any additional sum required to pay the
following:




	(a)	 	Escrow Agent’s designated fifty percent (50%) Buyer Escrow fee;
	 
	(b)	 	The cost of recording the Grant Deeds, the Development
Declaration, the PM TD, the PAPA TDs and the Easement Agreement;
	 
	(c)	 	The costs of any survey or title endorsements in excess of those
described herein to be provided by Seller and the difference
between the cost of any ALTA Title Policy required by any Lender or
Buyer, and a CLTA standard coverage owner’s policy with the same
endorsements;
	 
	(d)	 	General and special taxes and assessments covering the Subject
Property that are due and owing from Buyer as set forth in
Paragraph 4 above;
	 
	(e)	 	Any Work Reimbursement Amount due pursuant to l(d), above
and/or any Development Reimbursement Monies demanded by Seller in
writing; and,
	 
	(f)	 	Any other cost not specified herein that may be authorized by
Buyer in a separate writing.





     7. Seller’s Costs: From Seller’s proceeds, Escrow Agent is authorized
and instructed to pay/withhold the following:




	(a)	 	Escrow Agent’s designated fifty percent (50%) Seller Escrow
fee;
	 
	(b)	 	The documentary transfer tax;







Exhibit “D”

Escrow Instructions


8









 









	(c)	 	The cost of the Title Policy described above, issued to Buyer,
LESS the costs described in Section 6(c), and excluding any costs
thereof arising from the removal of liens or claims, possible liens
or claims or similar exceptions to coverage thereto which arose
from Work on the Subject Property by Buyer prior to the Close of this
Escrow, or from the addition of the lien-free endorsement thereto in
favor of Seller necessary as a result of such Work, which costs
shall be borne solely by Buyer; and,
	 
	(d)	 	The cost or charge of any other item not specified herein that
may be authorized by Seller in a separate writing.





     8. Time
of the Essence.




	(a)	 	Time is of the essence hereof and if Buyer fails to deposit in
full the amounts required hereunder and in the Agreement (and any
additional consideration referred to in Paragraph 1 above) in the
time and manner set forth herein or to perform any other act when
due, or if the conditions to the Close of Escrow referenced herein
have not been satisfied or waived, then Cancellation shall
automatically occur and Escrowholder shall thereafter provide notice
in writing to Seller and Buyer, and Seller shall thereupon be
released from its obligation to convey the Subject Property to
Buyer. Thereafter, Seller may proceed against Buyer upon any claim
Seller may have in law or equity.
	 
	(b)	 	Upon Cancellation, all documents deposited into Escrow which
have been executed by Seller shall be returned to Seller whether or
not such papers have been executed by Buyer as well, all documents
executed by Buyer alone shall be returned to Buyer and the Deposit as
liquidated damages and any other amounts previously paid by Buyer to
Seller shall be retained by Seller as consideration for holding the
Land off the market during the Transaction negotiations.





     9. Seller’s Proceeds and Accounting. At the Close of Escrow, Escrow Agent
is directed to wire funds representing Seller’s cash proceeds of this sale to
Seller’s Account as specified in Section 5.2 of the Agreement. In addition,
Escrow Agent shall send an accounting of this transaction to Seller and Buyer
at their respective current address for notices hereunder.



     10. Notices. Any notices or other communications between the parties
hereto shall be in writing and shall be personally delivered to an officer of
any party or partner of a party, or may be delivered by Federal Express,
private commercial delivery or courier service for next business day delivery,
or sent by first class mail, postage prepaid, duly registered or certified,
return receipt requested, addressed to the parties at the addresses hereinabove
provided. Notice may also be given by facsimile transmission (“Fax”) to any
party at the respective Fax number given above and marked “RUSH - PLEASE
DELIVER IMMEDIATELY,” provided receipt of such transmission shall be confirmed
by follow-up notice within seventy-two (72) hours by



Exhibit “D”

Escrow Instructions


9


 








 



another method authorized above. Any party may, by written notice to the Escrow
Agent and to the other party, designate a different address which shall be
substituted for the one above specified. If any notice is deposited in
the United
States mail, as aforesaid, the same shall be deemed delivered seventy-two (72)
hours after the mailing thereof as provided above. Notice by any other method
shall be deemed served or delivered upon actual receipt at the address or Fax
number listed above.




     11.
Agreement. These Escrow Instructions are entered into pursuant to the
Agreement and shall not supersede, replace or modify its provisions.
A default
by either party under these Escrow Instructions shall be a default under the
Agreement and a default under the Agreement shall be a default hereunder.
Defined terms in the Agreement shall have the same meaning in these Escrow
Instructions unless specifically indicated to the contrary herein.



     12.Counterparts. These Escrow Instructions may be executed in
counterparts, each of which shall be deemed an original, but together they shall
constitute one and the same instrument.



     13. Opening
of Escrow. “Opening of escrow” shall mean the date specified in
Section 2.3 of the Agreement.




Exhibit “D”

Escrow Instructions


10


 








 








     IN WITNESS WHEREOF, the parties have executed these Escrow Instructions
upon the day and year first above written.



	 	 	 	 	 	 	 	 	 	 	 
	NUEVO ENERGY COMPANY, a Delaware

corporation	 	Tonner Hills SSP,
LLC, a Delaware
limited liability company
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	
 	 	By: Standard Pacific of Tonner Hills, LLC,
a
Delaware limited liability company,
a member
	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	Title:	 	
 	 	 	 	 	 	By: Standard Pacific Corp., a Delaware 
corporation, its sole member
	

	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	 	 	By	 	 
	

	 	
 
	 	 	 	 	 	 	 	
 
	Title:

	 	 	 	 	 	 	 	Title	 	 
	

	 	
 
	 	 	 	 	 	 	 	
 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By	 	 
	

	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title	 	 
	

	 	 	 	 	 	 	 	 	 	
 
	 	 	“SELLER”	 	By: Shea Tonner Hills, LLC, a Delaware

limited liability company,
a member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: Shea Homes Limited Partnership, a

California limited partnership, its sole

member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By: J.F. Shea LLC, a Delaware
limited liability company, its
General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By	 	 
	

	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title	 	 
	

	 	 	 	 	 	 	 	 	 	
 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	 	 	By	 	 
	

	 	 	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	 	 	Title	 	 
	

	 	 	 	 	 	 	 	 	 	
 









Exhibit “D”

Escrow Instructions


11


 








 








	 	 	 	 	 	 	 
	 	 	TONNER HILLS 680 LLC, a Delaware

limited liability company
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 











Exhibit “D”

Escrow Instructions




12





 








 








ATTACHMENT “1” TO ESCROW INSTRUCTIONS




(Certificate of Non-Foreign Status)




Exhibit “D”

Escrow Instructions




 








 








CERTIFICATE OF NON-FOREIGN STATUS



California Revenue and Taxation Code Sections 18662 and 18668 require that a
purchaser of a California real property interest withhold tax if (a) the
seller’s last known street address is located outside the boundaries of
California at the time title to the California property is transferred or (b)
if funds from the transaction will be disbursed to a financial intermediary of
Seller. In addition, 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.” To inform the transferee that withholding of tax is not
required upon the disposition of a California real property interest by NUEVO
ENERGY COMPANY, a Delaware corporation (“Seller”), the undersigned certifies
the following on behalf of Seller:





	(a)	 	Seller is not a foreign person within the meaning of Internal Revenue Code
Section 1445;
	 
	(b)	 	The U.S. employer identification number of Seller is 76-0304436; and
	 
	(c)	 	Seller is a California resident with a permanent place of business
located at 201 S. Broadway, Orcutt, California, 93455.
	 
	(d)	 	Seller shall not instruct the escrow holder to disburse the proceeds of
this sale outside the boundaries of the State of California, nor make use of a
financial intermediary as an agent of Seller.




Seller understands that this certification may be disclosed to the California
Franchise Tax Board and the Internal Revenue Service by transferee.



Under penalty 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.




	 	 	 	 	 
	

	 	SELLER	 	 
	 	 	 	 	 
	Dated: December 8, 2003	 	NUEVO ENERGY COMPANY, a Delaware corporation
	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Its:	 	 
	

	 	 	 	
 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Its:	 	 
	

	 	 	 	
 







Exhibit “D”

Escrow Instructions




 








 






Revised: 11/22/03


EXHIBIT “E”




PURCHASE MONEY

PROMISSORY NOTE

(“PM NOTE”)




PURCHASE MONEY

TRUST DEED




(“PM TD”)




 








 





EXHIBIT “E”




PM NOTE




 








 





PURCHASE MONEY PROMISSORY NOTE (“NOTE” or “PM NOTE”)

SECURED BY PURCHASE MONEY DEED OF TRUST

(TOWER HILLS)


 

	Principal Sum:$______ 	 	Irvine, California










          , 2003          



I. PROMISE TO PAY. For
value received, the undersigned (“Maker”) promises
to pay
to NUEVO ENERGY COMPANY, a Delaware corporation, or order
(“Holder”), at 1021
Main, Suite 2100, Houston, Texas, 77002, or any other place as Holder may from
time to time designate in writing, the remainder of the Initial Purchase Price
due and owing under that certain Agreement between them, dated      (“Agreement” or
“PSA”), which is the Principal Sum of       Million       Hundred
Thousand Dollars ($          ), interest accruing with from the Close of Escrow on the unpaid principal
balance of this Note, from time to time (“Principal Balance”), at a rate of
seven and one-half percent (7.5%) per annum until paid in full.





	II.	 	TERMS OF PAYMENT.





     A. Principal And Interest Payment. The unpaid Principal Balance of this
Note and all interest hereon shall be paid in full on the Maturity Date.



     B. Maturity
Date. The Maturity Date of this PM Note is
      ,      ,
which is ninety
(90) days from the Close of Escrow. On the Maturity Date all Indebtedness (See
definition in VII I below), including the unpaid Principal Balance, accrued
interest and all other amounts due and owing pursuant to the provisions hereof,
to be paid under this PM Note shall be due and payable.



     C. Application of Payments. Notwithstanding anything to the contrary
herein, all payments may be applied by Holder in the following order of
priority: first, to costs and expenses (including attorneys’ fees) payable to
Maker under this Note or under the PM TD (as defined in Paragraph III below);
second, to late payment charges pursuant to Paragraph II F below; third, to
accrued but unpaid interest; and fourth, to remaining Indebtedness. Maker
waives the benefits of California Civil Code Section 1979 (directing
application of payments upon several obligations).



     D. No Setoff. All payments shall be made in lawful money of the United
States of America without setoff, deduction or counterclaim of any kind
whatsoever.



     E. Prepayment. Maker may prepay this Note in whole or in part on any date
without premium or penalty, provided that any such prepayments shall be in
increments of at least Five Hundred Thousand Dollars ($500,000). No partial
payment may extend or postpone the date of any late payment or change the
amount of any late payment.





1








 








     F. Late Payment Charges. IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO
FIX THE AMOUNT OF EXTRA EXPENSES INVOLVED IN HANDLING A DELINQUENT PAYMENT IF
ANY PAYMENT DUE HEREUNDER SHALL NOT BE PAID WHEN DUE. ACCORDINGLY, MAKER AGREES
TO PAY TO HOLDER, TO COVER EXTRA EXPENSES INCURRED BY HOLDER IN HANDLING A
DELINQUENT PAYMENT, A LATE PAYMENT CHARGE EQUAL TO TEN THOUSAND DOLLARS ($1
0,000.00) FOR EACH DELINQUENCY, WHICH MAKER AGREES IS A REASONABLE ESTIMATE OF THE
EXTRA EXPENSES HOLDER WILL INCUR IF THERE IS A LATE PAYMENT. THE LATE PAYMENT
CHARGE SHALL BE IMPOSED IF ALL OR ANY PART OF A PAYMENT IS NOT RECEIVED BY
HOLDER ON THE DATE ON WHICH IT IS DUE. NOTHING IN THIS PARAGRAPH SHALL LIMIT
HOLDER’S (A) RIGHTS UNDER THE PM TD SECURING THIS NOTE, AS DESCRIBED BELOW, OR
OTHERWISE, (B) RIGHT TO COMPEL PROMPT PERFORMANCE UNDER THIS NOTE, OR (C) OTHER
RIGHTS OR REMEDIES CONTAINED IN THIS NOTE OR IN THE PM TD, OR THE OTHER
DEVELOPMENT DOCUMENTS DESCRIBED IN THE AGREEMENT.
 

	 	
	 	
	 
	 	Maker’s Initials	 	Holder’s Initials	 





III. PM TD. This PM Note is secured by a deed of trust with assignment of
rents (“PM TD” or “Deed of Trust”) of even date herewith, signed by Maker, as
Trustor, naming Holder, as Beneficiary, and First American Title Insurance
Company, a California corporation, as Trustee. Reference is made to the PM TD
for a description of the security and for a statement of the terms and
conditions upon which this PM Note is secured.





	IV.	 	DEFAULT.





     A. Acceleration
Upon Default. At Holder’s option, without prior notice, and
regardless of any prior forbearance, all Indebtedness remaining unpaid under
this Note shall become immediately due and payable upon the occurrence of a
default of Maker under this PM Note (See Section VI).



     B. Events of Default. The occurrence of any of the following events shall
constitute a default by Maker under this PM Note: (a) Maker’s failure to make
any payment when due under this PM Note or the PM TD; (b) Maker’s failure to
perform any of Maker’s other agreements contained in this PM Note; (c) the
filing of a petition in bankruptcy by, or the initiation of any proceeding
under any bankruptcy or insolvency laws against, Maker; (d) the making of a
general assignment for the benefit of creditors by Maker; or (e) the occurrence
of an “Event of Default” under the PM TD.



     C. Default Rate of Interest. In addition to any late
payment charges under Section II F, Maker agrees to pay from and after a default
under this PM Note, interest on any payments due under




2








 



this PM Note until such payments are received, at a default rate of interest
equal to the maximum lawful rate that may be charged by non-exempt lenders,
from time-to-time in the State of California.


     D.     General Provisions Regarding Default. No delay or omission on Holder’s
part in exercising any right under this PM Note or the PM TD shall operate as a
waiver of that right on any future occasion or of any other rights under this
PM Note or the PM TD. To the extent permitted by law, Maker waives the right in
any action on this PM Note, to assert that an action was not commenced within the
time required by law for commencement. All rights and remedies of Holder
provided in this PM Note and of Holder in the PM TD, are cumulative and shall
be in addition to all other rights and remedies provided by law or in any
agreement or instrument securing this PM Note.


     E.     Costs
and Attorneys Fees. If this PM Note is not paid when due, or if
any other default described in Section IV B, above, shall occur or any dispute
arise regarding the interpretation of this PM Note or the PM TD,or if
bankruptcy or other legal proceedings are instituted or threatened in
connection with this PM Note or the PM TD, Maker promises to pay all costs and
expenses, including, without limitation, actual attorneys’ and accountants’
fees and legal and administrative (including overhead) costs, incurred by Holder
in collecting amounts due under, or in enforcing or interpreting any of
Holder’s rights provided in, the terms and conditions of this PM Note or the PM
TD, or in connection with such proceedings, all of which shall be secured by
the PM TD.


V.     NOTICES.
Any notice provided for in this PM Note shall
be deemed given when received, if personally delivered (including by a courier or
express service guaranteeing overnight delivery) to an officer or duly
authorized representative of the other party or three (3) days after being
deposited in the United States mail, duly certified or registered (return
receipt requested), postage prepaid, and addressed to the party for whom
intended. All notices to Maker shall be addressed to Maker at the address
stated below, or to any other address as may then appear for Maker on the
records of Holder. All notices to Holder shall be addressed to Holder at the
address stated in the first paragraph of this PM Note, or at any other address
as may have been designated by written notice to Maker. Maker’s address is as
follows: 603 S. Valencia Avenue,Brea, California 92823, Attention:
Alan Toffoli.


VI.     ACCELERATION; COVENANTS AGAINST TRANSFER AND FURTHER ENCUMBRANCES. The PM
TD contains the following covenants (or other language of similar meaning) on
the part of Maker as Trustor, which are incorporated herein by this reference:



		
	 	     “2.5    Acceleration Upon Transfer. If Trustor shall Transfer(as defined
in the PM Note) the Property, or any part thereof, or any interest
therein, or shall be divested of its title or any interest therein in any
manner or way, whether voluntarily or involuntarily, Beneficiary shall
have the right, at its option, except as prohibited by law, to declare
all of the Indebtedness and/or obligations secured hereby, irrespective
of the Maturity Date specified in any document or instrument evidencing
the same, immediately due and payable.


See also Article 5 hereof for a complete description of remedies
on an Event of Default.



3






 







		
	 	     2.6    Restriction
on Further Encumbrance. Subject to Section 2.8
below, Trustor shall not (a) permit any lien, levy, attachment or
restraint to be created or recorded against all, or any part of or any
interest in, the Property (whether senior or junior to this PM TD)
except to the extent such would not be a Transfer, or (b) permit any
receiver, trustee or assignee for the benefit of creditors to be
appointed to take possession of all, or any part of or any interest in
the Property.
	 
	 	     5.2    Acceleration
Upon Default; Additional Remedies. In the event
of any such Event of Default, Beneficiary may declare, by notice given
to Trustor, all Indebtedness secured hereby (including, without
limitation, all Indebtedness evidenced by the Note) to be due and payable
without any further presentment, demand, protest or notice of any kind.
Thereafter, Beneficiary may:




		
	 	         (a)    Either
in person or by agent, with or without bringing any action
or proceeding, or by a receiver appointed by a court and without regard
to the adequacy of any security for the Indebtedness and obligations
hereby secured, (i) enter upon and take possession of all, or any part of
the Property, in its own name or in the name of the Trustee, and do acts
which it deems necessary or desirable to preserve the rentability or
increase the income of such Property or protect the security hereof, and
(ii) with or without taking possession of the Property, sue for or
otherwise collect the Rents, including those past due and unpaid, and
apply the Rents, less costs and expenses of operation and collection (and
administrative overhead allocable thereto), including actual attorneys’
and accountants’ fees, against any Indebtedness, all in such order as
Beneficiary may determine. The entering upon and taking possession of
said Property, the collection of such Rents, and/or the application of
the Rents as provided above shall not cure or waive any default or notice
of default under this Deed of Trust or invalidate any act done under such
notice. Notwithstanding Beneficiary’s or Trustee’s continuance in
possession of the Property or the collection, receipt, and application of
Rents, issues or profits, Trustee or Beneficiary shall be entitled to
exercise every right provided for in this Deed of Trust or by law upon
the occurrence of any default including the right to exercise the power
of sale;
	 
	 	         (b)    Commence an action to foreclose this Deed of Trust as a
mortgage, appoint a receiver, or specifically enforce any of the
covenants hereof;
	 
	 	         (c)    Deliver to Trustee a written declaration of default and demand
for sale, and a written notice of default and election to cause
Trustor’s interest in the Property to be sold, which notice Trustee or
Beneficiary shall cause to be duly filed for record in the Official
Records of the county in which the Property is located.




		
	 	     5.3    Foreclosure
By Power of Sale. Should Beneficiary elect to
foreclose by exercise of the power of sale herein, Beneficiary shall
notify Trustee and shall






4






 






	 	deposit with Trustee this Deed of Trust and the Note and such
receipts with evidence of expenditures made and secured hereby as
Trustee may require. Trustee shall then have the following duties and
powers:




		
	 	         (a)    Upon receipt of such notice from Beneficiary, Trustee shall
cause to be recorded, published and delivered to Trustor such notice of
default and election to sell as then required by law and by this Deed
of Trust and after lapse of such time as may then be required by law
and after recordation of such notice of default, Trustee without demand
on Trustor, shall, after notice of sale having been given as required
by law, sell the Property at the time and place of sale fixed by it in
said notice of sale, either as a whole or in separate parcels or items
and in such order as Trustee may determine, at public auction to the
highest bidder for cash in lawful money of the United States payable at
the time of sale. Trustee shall deliver to such purchaser its deed
conveying the Property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof. Any person,
including, without limitation, Trustor, Trustee or Beneficiary, may
purchase at such sale.
	 
	 	         (b)    After deducting all costs, fees and expenses of Trustee and of
this trust, including costs of evidence of title in connection with the
sale, Trustee shall apply the proceeds of sale to payment of: all sums
expended under the terms of this Deed of Trust, not then repaid, with
accrued interest at the rate then applicable under the Note; all
Indebtedness; all other sums of any kind whatsoever, secured hereby;
and the remainder, if any, to the person or persons legally entitled
thereto.
	 
	 	         (c)    Trustee
may postpone the sale of all or any portion of the Property
by public announcement at the time and place first fixed for sale, and
from time to time thereafter may postpone such sale by public announcement
at the time and place fixed by the preceding postponement, and without
further notice make such sale at the time fixed by the last postponement,
or may, in its discretion, give new notice of sale.
	 
	 	         (d)    To the extent there remains any outstanding Indebtedness
(“Outstanding Indebtedness”) under the PM Note after a partial
foreclosure by power of sale hereunder (for any reason), this PMTD shall
not be extinguished but shall remain in full force and effect with
respect to the Outstanding Indebtedness and Beneficiary may again elect
to foreclose by the exercise of the power of sale herein under the terms
and provisions of this PMTD with respect to such Outstanding Indebtedness.



5






 





VII. GENERAL PROVISIONS REGARDING THE PM NOTE.


     A.     Binding on Successors. The covenants and agreements contained in this
PM Note shall bind the successors and assigns of Maker and shall inure to the
benefit of Holder and its successors and assigns.


     B.     Waivers. Diligence, demand, notice, presentment, notice of dishonor,
grace, notice of protest and notice of intent to accelerate the maturity of
this PM Note are waived by Maker and all makers and endorsers of this PM Note.


     C.     Joint and Several Obligations. This PM Note shall be the joint and
several obligation of Maker and all makers and endorsers, if any, and shall be
binding upon them and their heirs, personal representatives, successors, and
assigns.


     D.     Consents
to Renewals and Extensions. Maker, all makers and endorsers
and all persons liable or who may become liable under this PM Note, consent to
any and all renewals, extensions, modifications, partial payments, releases or
substitutions of security, in whole or in part, with or without notice, before
or after the Maturity Date, by agreement between Holder and any owner of all or
any portion of the Property, without in any way affecting the liability of any
party to this PM Note or any person liable or to become liable as to any
Indebtedness evidenced by this PM Note.


     E.     Captions
and Headings. The captions and headings of the paragraphs of
this PM Note are for convenience only and are not to be used to interpret or
define the provisions of this PM Note.


     F.     California
Law Applies. This PM Note shall be governed by and construed
in accordance with the laws of the State of California.


     G.     Severability. If any provision or provisions of this PM Note are held
to be invalid, illegal or unenforceable in any respect, this PM Note shall be
construed in a manner that is fair and equitable to both Maker and Holder and
to the extent consistent therewith, as not containing such provision or
provisions, and all other provisions of this PM Note shall remain in full force
and effect, and to this end the provisions of this PM Note are declared to be
severable.


     H.     Compliance with Laws. It is Maker’s and Holder’s intention to comply
with any applicable usury law. In furtherance of this intention of Holder and
Maker, all agreements between Maker and Holder are expressly limited so that in
no contingency or event whatsoever shall the amount paid or agreed to be paid
to Holder for the use, forbearance, or detention of money under this PM Note
exceed the maximum permissible under applicable law.If, from any circumstance
whatsoever, fulfillment of any provision hereof shall be prohibited by law, the
obligation to be fulfilled shall be reduced to the maximum not so prohibited,
and if from any circumstances Holder should ever receive as interest an amount
as would exceed the highest lawful rate, such amount as would be excessive
interest shall at Holder’s option be applied to the reduction of the principal
of this


6






 



PM Note and not to the payment of interest or refund to Maker. This provision
shall control every other provision of all agreements between Maker and Holder.


     I.     Indebtedness. The Indebtedness shall mean the Principal Sum as
increased by accrued interest plus all other amounts to be paid Holder pursuant
to the terms and provisions hereof, from time to time, less all payments made
by Maker and credits in the reduction thereof.


     J.     Definitions. All definitions in the Agreement, including the definition
of Transfer in Section 1.1.54 thereof, and other Development Documents are
incorporated herein by this reference, to the extent used herein or applicable
to the matters herein contained.




	 	 	 	 	 	 	 	 	 
	 	 	 	 	“Maker”	 	 	 	 
	 
	 	 	TONNER
HILLS SSP, LLC, a Delaware limited
liability company
	 	 	 	 	 	 	 	 	 
	 	 	By: Standard Pacific of Tonner Hills, LLC, a
Delaware limited liability company, a member
	 	 	 	 	 	 	 	 	 
	 	 	 	By: Standard Pacific Corp., a Delaware
corporation, its sole member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 	 	 
	 	 	 	 	 
	 	

	 	 	 	 	Title:
	 	 	 	 
	 	 	 	 	 
	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 	 	 
	 	 	 	 	 
	 	

	 	 	 	 	Title:
	 	 	 	 
	 	 	 	 	 
	 	

	 	 	 	 	 	 	 	 	 
	 	 	By: Shea Tonner Hills, LLC, a Delaware limited
liability company, a member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: Shea Homes Limited Partnership, a
California limited partnership, its sole
member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	By: J.F. Shea LLC, a Delaware limited
liability company, its General
Partner
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Title:
	 	 
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 	 	 	 	

	 	 	 	 	 	 	Title:
	 	 
	 	 	 	 	 	 	 	 	




7







 




	 	 	 	 	 	 	 	 
	 	 	TONNER HILLS 680 LLC, a

Delaware limited liability company

	 
	 							
	 	 	
By:
	 	, a
	 	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	Title:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	Title:	 	 	 
	 	 	 	 	 	 	
	 
	 							
	 	 	
By:
	 	, a
	 	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	Title:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	Title:
	 	 	 
	 	 	 	 	 	 	
	 




8










 




Revised 11/22/03


EXHIBIT “E”



PM TD



 






 





RECORDING REQUESTED BY AND

WHEN RECORDED RETURN TO:



NUEVO ENERGY COMPANY

1021 Main, Suite 2100

Houston, TX 77002

Attn: David A. Leach



DEED OF TRUST, SECURITY AGREEMENT, AND FIXTURE FILING

WITH ASSIGNMENT OF RENTS



THIS DEED OF TRUST, SECURITY AGREEMENT, AND FIXTURE FILING WITH
ASSIGNMENT OF RENTS (“Deed of Trust” or “PM
TD”), dated           , 2003
is made by TONNER HILLS SSP, LLC, a Delaware limited company (“Shea”)
and TONNER HILLS 680 LLC, a Delaware limited liability company (“TH
680”) (collectively and individually, “Trustor”) whose address for purposes of
notices is 603 S. Valencia Avenue, Brea, California, 92823, Attention: Alan
Toffoli, to FIRST AMERICAN TITLE INSURANCE COMPANY (“Trustee”), whose address
for purposes of notices is 2 First American Way, Santa Ana, California, 92707,
in favor of NUEVO ENERGY COMPANY, a Delaware corporation and its successors and
assigns (“Beneficiary”), whose addresses for
purposes of notices are 1800 30th
Street, Bakersfield, California, 93301, and 1021 Main, Suite 2100, Houston,
Texas, 77002, and is entered into on the basis of the following facts,
intentions and understandings:


A.     Beneficiary is the owner of the surface, fee interest in the real property
(“Project” or “Land”) located in the County of Orange, California, which is
described on attached Exhibit A. Attached hereto as Exhibit B is a general
depiction of the Land.


B.     Concurrently with the recordation of this Deed of Trust, Trustor purchased
the Land from
Beneficiary under the terms of that certain purchase and sale agreement, dated
          , 2003
(the “Agreement” or “Purchase Agreement”), between Beneficiary, as seller, and
Trustor, as buyer. As partial consideration for such purchase, Trustor
delivered to Beneficiary that certain Purchase Money Promissory Note (“PM Note”
or “Note”) of even date herewith in the original principal
amount of            Million            Hundred Thousand Dollars ($           ), as increased or
reduced from time to time pursuant to the provisions thereof (“Indebtedness”),
which PM Note is intended to be secured by this Deed of Trust.


 






 


C.     The lien of this Deed of Trust is being granted to secure (i) the payment
when due and payable of all principal, interest and other payments pursuant to
the Note (including any interest which accrues after the commencement of any
case, proceeding or other action relating to bankruptcy, insolvency or
reorganization of the Trustor) (also “Indebtedness”), (ii) all other payments
and other obligations of the Trustor under this Deed of Trust, and (iii)
Trustor’s compliance with and performance of the terms and conditions of the
Secured Obligations (as described below).


ARTICLE 1. BASIC PROVISIONS.



     1.1 Grant of Security in Property. In consideration for Beneficiary’s selling
the Land and other property to Trustor in accordance with the Purchase
Agreement, and in order to secure the Note and Trustor’s performance of the
Secured Obligations, Trustor hereby irrevocably grants, conveys, transfers and
assigns to Trustee, its successors and assigns, with power of sale and right of
entry and possession, all of the present and future estate, right, title and
interest in and to the following described property, whether currently held or
hereafter acquired by Trustor (collectively, the
“Property”):


          1.1.1 Land. All estate, right, title and interest of the Trustor in, to, under
or derived from the Land as described in Exhibit A;



          1.1.2 Improvements. All right, title and interest of the Trustor in and to (i)
all buildings, structures, facilities and other improvements of every kind and
description now or hereafter located in or on the Land, (ii) all other items of
fixtures, equipment and personal property of every kind and description, in
each case now or hereafter located on the Land or affixed (actually or
constructively) to the improvements therein which by the nature of their
location hereon or affixation thereto are real property under applicable laws;
and (iii) all materials intended for the construction, reconstruction, repair,
replacement, alteration, addition or improvement of the Land, or to such
buildings, equipment, fixtures, structures and improvements, all of which
materials shall be deemed to be part of the Property immediately upon delivery
thereof in the Property and to be part of the improvements immediately upon
their incorporation therein (the foregoing being collectively called the
“Improvements”).



          1.1.3 Personal Property. All right, title and interest of the Trustor in, to,
under or derived from: all fixtures, chattels and articles of personal
property, together with all additions to, substitutions for, changes in or
replacements of the whole or any part of any or all of these articles of
property owned by the Trustor or in which the Trustor has or shall acquire an
interest, wherever situated, and now or hereafter located on or in, or affixed
(actually or constructively) to, the Property, whether or not affixed thereto
and which are not real property under applicable laws, including, to the extent
of the Trustor’s now or hereafter acquired interest therein, and all proceeds
received upon the sale, exchange, collection or other disposition of the
foregoing (the foregoing being collectively called the
“Personal Property”). If
the lien of this Deed of Trust is subject to a security interest covering any
portion of the Property described in




2






 




this Section 1.1.3, then all of the right, title and interest of the Trustor in
and to any and all such property is hereby assigned to the Beneficiary,
together with the benefits of all deposits and payments now or hereafter made
thereon by or on behalf of the Trustor.


          1.1.4
Appurtenant Rights. All estate, right, title and interest of the Trustor
in, to, under or derived from: all easements, tenements, hereditaments,
rights-of-way, entitlements, permits, licenses and appurtenances thereunto
belonging or in any way appertaining, and the reversion and reversions,
remainder and remainders, and all the estate, title and interest, homestead or
other claim or demand, as well in law as in equity, which Trustor now has or
hereafter may acquire, of, in or to the Land or the Improvements, or any part
thereof or appurtenances thereto.



          1.1.5
Agreements. All estate, right, title and interest of the Trustor in, to,
under or derived from all agreements now or hereafter relating to the Property,
and any other agreements, including: insurance policies (including all
unearned premiums and dividends thereunder), guarantees and warranties relating
to the Property and all supply and service contracts for water, sanitary and
storm sewer, drainage, electricity, gas, telephone, cable and other utilities
and the Agreements assigned or transferred to Trustor as part of the
Transaction contemplated in the Purchase Agreement.



          1.1.6
Leases. All estate, right, title and interest of the Trustor in, to,
under or derived from: all leases and subleases, whether or not of record,
for the use or occupancy of all or any part of the Property, including without
limitation all guarantees of the tenants’ of subtenants’ obligations
thereunder, and (i) all rent and other amounts now or hereafter payable to the
Trustor thereunder, (ii) all rights of the Trustor to exercise any election or
option or to make any decision or determination or to give any notice, consent,
waiver or approval or to take any other action under or in respect of any of
such leases or to accept any surrender or redelivery of the Property or any
part thereof, as well as all the rights, powers and remedies of the Trustor,
whether acting under any of the leases or by statute or at law or in equity, or
otherwise, arising out of any default or event of default under any of such
leases, and (iii) all estate, right, title and interest of the Trustor as a
secured part or lienholder thereunder to the extent a security interest or lien
may be deemed to be created by any such lease (the foregoing being collectively
referred to as the “Leases”).



          1.1.7
Rents, Issues and Profits. All estate, right, title and interest of the
Trustor in, to, under or derived from: all rents, royalties, issues, profits,
receipts, revenue, income and other benefits now or hereafter accruing with
respect to the Property, including all rents and other sums now or hereafter
payable with respect to the use, occupancy, management, operation or control of
the Property; and all other claims, rights and remedies now or hereafter
belonging or accruing with respect to the Property, including fixed, additional
and percentage rents, occupancy charges, security deposits, parking,
maintenance, common area, tax, insurance,



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utility and service charges and contributions (whether collected under the
Leases or otherwise), proceeds of sale of electricity, gas, heating,
air-conditioning and other utilities and services (whether collected under the
Leases or otherwise), and deficiency rents and liquidated damages following
default or cancellation (the foregoing rents and other sums described in this
Section 1.1.7 being collectively called the “Rents”), all of which the Trustor hereby
irrevocably directs be paid to the Beneficiary, to be held, applied or
disbursed as provided in this Deed of Trust.


     1.1.8 Entitlements/Permits. All estate, right, title and interest of the
Trustor in, to, under or derived from all entitlements, licenses,
authorizations, certificates, variances, consents, approvals and other permits,
and any and all applications, prepaid fees and deposits therefor, now or
hereafter appertaining to the Property including those applied for or received
pursuant to the Governmental Approval Documents and Governmental Approvals (the
foregoing being collectively called the “Permits”), excluding from the grant
under this Section 1.1.8 (but not the definition of the term “Permits” for the other purposes
hereof) any Permits which cannot be transferred or encumbered by the Trustor
without causing a default thereunder or a termination thereof and all of
Trustor’s rights and interest (but not obligations) in and to any surety bonds
provided for mitigation measures, construction of improvements, required
dedications or the payment of fees, impositions or taxes as a condition to the
issuance of any Permits related to or affecting the Property.


     1.1.9 Insurance Proceeds and Condemnation Awards. All estate, right, title
and interest of the Trustor in, to, under or derived from all proceeds of any
conveyance, financing, refinancing or conversion into cash or liquidated
claims, whether voluntary or involuntary, of any of the Property, including all
insurance proceeds, condemnation awards and title insurance proceeds under any
title insurance policy now or hereafter held by the Trustor, and all rights,
dividends and other claims of any kind whatsoever (including damage, secured,
unsecured, priority and bankruptcy claims) now or hereafter relating to any of
the Property, all of which the Trustor hereby irrevocably directs be paid to
the Beneficiary to the extent provided hereunder, to be held, applied and
disbursed as provided in this Deed of Trust.


     1.1.10 Additional Property. All greater, additional or other estate, right,
title and interest of the Trustor in, to, under or derived from the Property
now or hereafter acquired by the Trustor, including all right, title and
interest of the Trustor in, to, under or derived from all extensions,
improvements, betterments, renewals, substitutions and replacements of,
and additions and appurtenances to, any of the Property hereafter acquired by
or released to the Trustor or constructed or located on, or affixed to, the
Property, in each case, immediately upon such acquisition, release,
construction, location or affixation; all estate, right, title and interest of
the Trustor in, to, under or derived from any other property and rights which
are, by the provisions of this Deed of Trust, required to be subjected to the
lien hereof; all estate, right, title and interest of the Trustor in, to, under
or derived from any other property and rights which are necessary to maintain
the Property, to the fullest extent permitted by law, without any


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further conveyance, encumbrance, assignment or other act by the Trustor; and
all estate, right, title and interest of the Trustor in, to, under or derived
from all other property and rights which are by any instrument or otherwise
subjected to the lien hereof by the Trustor.


          1.2 Secured Obligations. This Deed of Trust secures the following obligations
(“Secured Obligations”):



               1.2.1 Note Payments. Payment and performance of all obligations of the Maker
under the PM Note, including all amendments, modifications, extensions and
renewals of the thereof.



               1.2.2 Payment of Future Advances. Payment of such further sums as Trustor (or
any successor in interest to Trustor as the owner of all or any part of the
Property covered by this Deed of Trust) may borrow from Beneficiary when
evidenced by another note or notes, reciting it is so secured, payable to
Beneficiary or order and made by Trustor or any successor in ownership.



               1.2.3 Payment of Advanced Sums. Payment of all sums advanced or paid out by the
Beneficiary under any provisions of this Deed of Trust or to protect the
security of this Deed of Trust.



               1.2.4 Performance of the Deed of Trust Obligations. Performance of all
obligations of Trustor under this Deed of Trust and the Development Documents
and performance of each covenant and agreement of Trustor contained or
incorporated by reference in this Deed of Trust or the Development Documents.



          1.3 Warranty of Title. Trustor represents and warrants that it is lawfully
seized of each and every part and parcel of the Property as described in the
granting clauses above and has good and indefeasible title to the same. This
Deed of Trust is a valid first and prior lien on the Property, subject only to
the matters set forth in Schedule B, Part I of the title insurance policy (the
“Title Policy”) issued by the title insurance company (the “Title Company”)
pursuant to the terms of the Purchase Agreement, which insures the priority of
this Deed of Trust, and there are no other liens or encumbrances on the
Property prior hereto. Trustor forever will warrant and defend the title in the
Property to the Trustee against the claims and demands of all persons. At any
time, upon the request of Beneficiary, Trustor will execute, acknowledge and
deliver all further necessary assurances of title and such additional papers
and instruments and do or cause to be done all such acts and things as may be
properly or reasonably necessary for effectually carrying out the intent of
this Section 1.3 or for better assuring or confirming unto Trustee all, or any
part of the Property, and in general will do or cause to be done everything
necessary so that the lien and priority of this Deed of Trust shall be fully
preserved, at the sole cost of Trustor, without expense to Trustee or
Beneficiary. If during the existence of this Deed of Trust any suit



5






 





or action affecting all, or any part of the Property, or the title to the
Property, is commenced or pending, or if any adverse claim for or against all,
or any part of the Property, is made or asserted, Trustee or Beneficiary (i)
may appear in the suit or action and retain counsel therein and defend the same
or otherwise take such action therein as Trustee or Beneficiary may deem
advisable, (ii) may settle or compromise in good faith the same or the adverse
claim, and (iii) may pay and expend such sums of money as Trustee or
Beneficiary may deem necessary in connection with such suit, action or claim.


ARTICLE 2. TRUSTOR’S COVENANTS. To protect the security of this Deed of Trust,
and as to the Property and the PM Note and other obligations secured by this
Deed of Trust, Trustor covenants and agrees to perform and be bound by the
following terms and provisions:


     2.1 Performance. Trustor shall duly and punctually pay, perform and observe the
Secured Obligations in accordance with the Note, this Deed of Trust, and any
other documents given now or later as security for the Note secured by this
Deed of Trust.


     2.2 Maintenance of Property. Trustor shall keep the Property in good condition
and repair (reasonable wear and tear excepted), and will commit or permit no
waste thereon, and except as may be provided or contemplated by the Agreement
or Development Documents, will use reasonable efforts to not allow the
Improvements now or later situated on the Land to remain vacant or unoccupied.
Should all, or any part of the Improvements require inspection, repair or
protection other than that given it by Trustor, then, and in that event,
provided Beneficiary gives Trustor notice before entering upon the Property
(except in case of emergency, in which case no notice is required), Beneficiary
(in its sole and absolute discretion and without any obligation to do so) may
enter or cause entry to be made upon the Property and into the Improvements for
inspection, repair or protection thereof. Such repair may be made by
Beneficiary and be made or done in such manner as to fully protect, in the
opinion of Beneficiary, Beneficiary’s interest under this Deed of Trust. Any
and all sums expended by Beneficiary in doing or causing to be done any of the
things above authorized shall be immediately reimbursed by Trustor upon written
demand from Trustee and the reimbursement of such sums shall be secured by this
Deed of Trust.


     2.3 Compliance with Applicable Laws. Trustor shall comply and, to the extent it
is able, shall require others to comply with all laws, ordinances, orders,
rules, regulations and requirements of all Governmental Agencies having
jurisdiction over the Property or the development, construction, operation,
marketing, leasing and sales of the Property (“Applicable Laws”) and shall
furnish Beneficiary with reports of any official notices or searches relating
to any actual, alleged or investigated violation of any such Applicable Laws.
Trustor shall comply, and, to the extent it is able, shall require others to
comply with, all restrictive covenants and all obligations created by private
contracts which affect ownership, construction, use, operation, marketing or
sales of the Property. The Property shall comply with all applicable
building,


6






 



zoning and land use laws, requirements, regulations and ordinances and shall
not violate any restrictions of record against the Property.


     2.4 Impounds. Upon and after the occurrence of an event which with the giving
of notice, the passing of time, or both, would constitute an Event of Default
(as defined in Section 5.1 below), on Beneficiary’s request, Trustor shall
deposit with and pay to Beneficiary, on each payment date specified in the
Note, an amount estimated by Beneficiary to be equal to the taxes and premiums
for fire and other insurance required under this Deed of Trust next to become
due, divided by, in each instance, the number of months to lapse preceding the
month in which the same, respectively, will become due. Upon the date when any
such tax or insurance premium is due, Trustor shall pay to Beneficiary an
additional amount which, taken together with tax and insurance deposits
previously made and not expended for taxes and insurance, shall be sufficient
to pay and discharge such tax and insurance premiums. Beneficiary shall not
be liable for interest on any such tax and insurance deposits and may mingle
the deposits with its general funds. These deposits shall create a
debtor-creditor relationship and not that of a trust. Trustor shall procure and
deliver to Beneficiary, in advance, statements for such charges. Payments from
the account for such purposes may be made by Beneficiary at Beneficiary’s
discretion, even though subsequent owners of the Property may benefit by such
payments. Beneficiary shall make such amounts available for payment of taxes or
insurance premiums, as the case may be, at least 10 days before the same,
respectively, will become due. Upon the occurrence of an Event of Default, any
part or all of the balance of the account may be applied to any part of the
Indebtedness. In refunding any part of the account, Beneficiary may deal with
whoever is represented to be the owner of the Property at that time. The
enforceability of the covenants relating to the taxes and insurance premiums
provided for this Section 2.4 shall not be affected hereby, except to the
extent that the obligations have been actually met by compliance with this
Section.


     2.5 Acceleration Upon Transfer. If Trustor shall Transfer (as defined in the
PM Note) the Property, or any part thereof, or any interest therein, or shall
be divested of its title or any interest therein in any manner or way, whether
voluntarily or involuntarily, Beneficiary shall have the right, at its option,
except as prohibited by law, to declare all of the Indebtedness and/or
obligations secured hereby, irrespective of the Maturity Date specified in any
document or instrument evidencing the same, immediately due and payable.


See also Article 5 hereof for a complete description of remedies on an Event of
Default.


     2.6 Restriction on Further Encumbrance. Subject to Section 2.8 below, Trustor
shall not (a) permit any lien, levy, attachment or restraint to be created or
recorded against all, or any part of or any interest in, the Property (whether
senior or junior to this PM TD) except to the extent such would not be a
Transfer, or (b) permit any receiver, trustee or assignee for the benefit


7






 


of creditors to be appointed to take possession of all, or any part of or any
interest in the Property.


     2.7 Taxes. Trustor shall pay, satisfy and discharge, before delinquency, all
taxes, assessments, charges, encumbrances, claims and liens (other than
mechanics’ liens) of every nature (referred to together as “taxes” or “tax”),
which now are or later shall be or appear to be a lien upon all, or any part of
the Property, or upon the Indebtedness. Upon Trustor’s default under this
Section 2.7, Beneficiary, without demand or notice, may pay, satisfy or
discharge the taxes, and pay and expend such sums of money as Beneficiary may
deem to be reasonably necessary therefor, and shall be the sole judge of the
legality of the validity of such taxes and the amount necessary to be paid in
the satisfaction or discharge of such taxes. Trustor will, upon the request of
Beneficiary, deliver to Beneficiary receipts evidencing the payment of all such
taxes.


     2.8 Discharge of Liens; Trustor’s Right to Contest.


          2.8.1 Trustor shall promptly, within 10 days after Trustor becomes aware of
such lien or claim of lien, discharge or cause to be discharged any mechanics’
or materialmen’s liens or claims of lien filed or otherwise asserted against
the Property, and any proceedings for the enforcement thereof; provided,
however, that Trustor shall have the right to contest in good faith and with
reasonable diligence the validity of any such liens or claims upon furnishing
to the Title Company (as defined above) such security or indemnity as the
latter may require to induce it to issue its Title Insurance Policy (as defined
above) or an interim endorsement thereto insuring against all such claims or
liens.



          2.8.2 If (a) Trustor fails either to promptly discharge or contest liens or
claims of lien, and provide the security or indemnity in the manner provided in
Section 2.8.1, or (b) after having complied with the provisions of Section
2.8.1 there is an adverse conclusion to any such contest and Trustor does not
cause any final judgment or decree to be immediately satisfied and the lien to
be discharged, then Beneficiary may, but shall not be required to, procure the
release and discharge of any such lien and any judgment or decree thereon, and
in furtherance thereof may, in its sole discretion, make any payment deemed
necessary or appropriate or otherwise effect any settlement or compromise or
furnish any security or indemnify as may be required by the Title Company. In
settling, compromising or arranging for the discharge of any lien under this
Section 2.8.2, Beneficiary shall not be required to establish or confirm the
validity or amount of the lien.



     2.9 Indemnity. Trustor shall indemnify, protect, defend (with counsel
acceptable to Beneficiary in its subjective, good faith discretion) and hold
harmless Beneficiary, its officers, directors, shareholders, employees,
partners, members, representatives, agents, successors (and any participants
in, or purchasers of, the Note) beginning on the date upon which this Deed of
Trust is recorded in the Official Records of Orange County, California against
and in respect of


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any and all losses, liabilities, damages, demands, claims, actions, judgments,
causes of action, assessments, penalties, fines, costs and expenses (including,
without limitation, actual attorneys’ fees and disbursements and the actual
charges or fees of all other consultants including, without limitation,
engineers, geologists, hydrogeologists, hydrologists and all other
environmental consultants), and all foreseeable and unforeseeable consequential
damages (hereinafter collectively referred to as
“Losses”), arising out of,
related to or incurred in connection with:


          (a) Trustor’s failing to perform its obligations under this Deed of Trust;



          (b) Any alleged obligation or undertaking on Beneficiary’s part to perform or
discharge any of the representations, warranties, conditions, covenants or
other obligations contained in the Development Documents or any other document
related to the Property (other than related to Beneficiary’s willful
misconduct).



This indemnity is in addition to, and shall not dilute or diminish in any way,
the indemnities of Trustor in Sections 3.7 and 3.9.7 and elsewhere in the
Agreement, and shall survive the release, reconveyance and cancellation of this
Deed of Trust and the obligations under this Deed of Trust.


     2.10 Insurance. Trustor shall procure and maintain or shall cause to be
procured and maintained continuously in effect until repayment in full of the
balance of the Note or such longer time as required by the Agreement, such
policies of insurance, in form and amount, issued by reputable, financially
sound insurers approved by Beneficiary, covering such casualties, risks,
perils, liabilities and other hazards, as are usually procured or maintained by
businesses operating properties of a similar nature in the same locale, all on
terms satisfactory to Beneficiary. All original policies, or certificates
thereof, and endorsements and renewals thereof shall be delivered to and
retained by Beneficiary unless Beneficiary waives this requirement in writing.
All policies shall expressly protect or recognize Beneficiary’s interest as
required by Beneficiary. Without limiting the generality of the foregoing,
Trustor shall provide or cause to be provided the following types of insurance
coverage until repayment in full of all amounts due to Beneficiary under the
Notes and this Deed of Trust: (i) Property insurance on an “all risks” cost
basis, including vandalism and malicious mischief endorsement naming
Beneficiary as mortgagee under a Lender’s Loss Payable Endorsement (Form
#430BFU or equivalent) and, at Beneficiary’s request, the policy shall contain
an assured value clause sufficient (as only determined by Beneficiary) to
eliminate any risk of no insurance, and (ii) such other types of insurance in
the amounts and meeting the requirements specified in Section 3.6 of the
Agreement.


     All insurance which covers damage to or loss of property and which is required
under the terms of this Deed of Trust shall cover all of the Property. The
insurance shall name Beneficiary as named insured. All policies of insurance
shall set forth the coverage, the limit of liability, the


9






 


name of the carrier, the policy number and the period of coverage. In addition,
all policies of insurance required under the terms of this Section 2.10 shall
contain an endorsement or agreement by the insurer that any loss shall be
payable in accordance with the terms of such policy notwithstanding any act or
negligence of Trustor or any party holding under Trustor which might otherwise
result in a forfeiture of the insurance and the further agreement of the
insurer waiving all rights of setoff, counterclaim or deductions against
Trustor. At least 30 days before the expiration of each required policy,
Trustor shall deliver to Beneficiary evidence reasonably satisfactory to
Beneficiary of the payment of premium and the renewal or replacement of such
policy, continuing insurance in the form as required by this Deed of Trust. All
such policies shall contain a provision that notwithstanding any contrary
agreement between Trustor and the applicable insurance company, such policies
will not be canceled, allowed to lapse without renewal, surrendered or
materially amended (which provision shall include any reduction in the scope or
limits of coverage) without at least 30 days’ prior written notice to
Beneficiary.


     Notwithstanding the foregoing, the insurance required to be purchased and
maintained by Trustor as Buyer under the Agreement shall be deemed sufficient
to satisfy this Section 2.10.


     2.11 Insurable Value. Until repayment in full of the balance of the Note, but
not prior to ninety (90) days from the date hereof, Trustor shall also provide,
from time to time at the written request of Beneficiary, satisfactory evidence
of the insurable value of the Land and Improvements. Such evidence may be in
the form of an insurance appraisal or valuation report prepared by an insurance
company, agent or broker, professional appraiser, architect, engineer or
contractor approved by Beneficiary.


     2.12 Insurance Proceeds.


Following and during the continuance of an Event of Default by Trustor:



          2.12.1 Should a loss occur related to damage to or destruction of property
under any policy of insurance required by Section 2.10 (“Insured Loss”),
Beneficiary shall be entitled to all insurance proceeds, compensation awards,
and other payments or relief thereof (all referred to as “Loss Proceeds”). At
its option, in its own name, Beneficiary shall be entitled to commence, appear
in and prosecute any action or proceedings or to make any good faith compromise
or settlement, in connection with an Insured Loss. All Loss Proceeds and rights
of action arising in connection with an Insured Loss are assigned to
Beneficiary. All Loss Proceeds as to any damage or destruction shall be payable
to Beneficiary and Trustor authorizes and directs any affected insurance
company to make payment of Loss Proceeds directly to Beneficiary and Trustor
shall promptly pay over to Beneficiary any Loss Proceeds received by Trustor.
All Loss Proceeds received by Beneficiary hereunder shall be applied to reduce
the



10






 





outstanding balance of the Secured Obligations in such priority as determined
by Beneficiary in its sole discretion.


          2.12.2 If there are no Loss Proceeds available after damage or destruction and
such unavailability results from the fact that the damage or destruction was
not insured against, and not required to be insured against under the terms of
this Deed of Trust or the Notes (“Uninsured Loss”), the outstanding balance of
the Notes together with applicable interest under the Note, shall become
immediately due and payable at Beneficiary’s option.



          2.12.3 If there are no Loss Proceeds available after damage or destruction due
to Trustor’s failure to carry insurance as required in this Deed of Trust,
Beneficiary may (notwithstanding any provisions of the Note or Section 2.12 of
this Deed of Trust) immediately, without further notice to Trustor, declare an
Event of Default under this Deed of Trust and/or the Note and by law.



     2.13 Condemnation Awards. Should all or any part of the Property be taken or
damaged by reason of any public improvement or condemnation proceeding,
Beneficiary shall be entitled to all proceeds, compensation, awards, and other
payments or relief thereof (all referred to as “Condemnation Proceeds”), and,
whether or not the security under this Deed of Trust has been impaired,
Beneficiary shall be entitled to apply the Condemnation Proceeds collected,
after first deducting therefrom all its expenses, including reasonable
attorneys’ fees, in collecting the Condemnation Proceeds, in accordance with
the provisions of the Note. At its option, in its own name, Beneficiary shall
be entitled to commence, appear in and prosecute any action or proceedings or
to make any good faith compromise or settlement, in connection with such taking
or damage. All such Condemnation Proceeds and rights of action are assigned to
Beneficiary as security. In the event that only a portion of the Property is
taken or damaged by reason of any public improvement or Condemnation
Proceeding, and restoration is necessary, Beneficiary, after deducting from the
Condemnation Proceeds received all its expenses, including reasonable
attorneys’ fees, and at its sole and absolute discretion and without limiting
the provisions of the preceding sentences hereof, may release to Trustor, as
restoration progresses, so much of the amount as equals the costs of
restoration effected by Trustor, subject to reasonable conditions, including
the right of Beneficiary to withhold up to ten percent (10%) of the amount
until completion and the expiration of the period within which mechanics’ or
materialmen’s liens may be filed and until receipt of satisfactory evidence
that no liens exist. Any amount required to complete such restoration in excess
of such Condemnation Proceeds shall be paid by Trustor before such Condemnation
Proceeds are used. Trustor shall execute such further assignments of any such
Condemnation Proceeds and rights of action as Beneficiary or Trustee may
require.


This Section 2.13 shall apply only following and during an Event of Default.


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     2.14 Processing of Entitlements. Trustor promises to use commercially
reasonable efforts to obtain the Entitlements and the other Governmental
Approvals (of the Governmental Approval Documents and otherwise) as soon as
commercially practical and so as to ensure repayment of the Beneficiary under
the PM Note within the time specified therein. To the extent within its
control, and subject to any Unavoidable Delay (see Development Declaration),
Trustor will ensure that the processing of the Governmental Approvals referred
to herein will be continuous and without interruption.


     2.15 Environmental Provisions.


          2.15.1 Trustor represents, covenants and warrants that it will operate the
Property in compliance with all environmental laws, regulations and ordinances,
and that it will not place or permit to be placed or to remain on the Property
any hazardous, toxic or polluting substances or wastes, including (A) any
ignitable, corrosive, reactive, carcinogenic, toxic, or reproductive toxic,
chemical, compound, mixture, substance, material or waste; and (B) asbestos,
asbestos containing materials, polychlorinated biphenyls, urea formaldehyde
foam insulation, oil, petroleum, including crude oil or fraction thereof,
natural gas, natural gas liquids, liquified natural gas, synthetic gas usable
for fuel (or mixtures of natural gas and such synthetic gas), radon gas, ash
produced by a resource recovery facility utilizing a municipal solid waste
stream, drilling fluids, produced waters, and other wastes association with the
exploration, development or production of crude oil, natural gas, or geothermal
resources defined in §2550 l(n) of the California Health and Safety Code
(“Hazardous Substances”). Provided, however, those substances used and/or
produced by the ongoing oil and gas production activities by BlackSand
Partners, L.P. and Aera Energy LLC shall not be deemed to be Hazardous
Substances. In the event of discovery of the presence of any Hazardous
Substances at the Property, Trustor shall notify the Beneficiary’s
Representatives immediately.



          2.15.2 Trustor shall defend and indemnify the Beneficiary, the Beneficiary’s
officers, directors, employees, agents, partners, members, attorneys and
representatives (“Beneficiary’s Representatives”) and the Trustee and hold the
Beneficiary, the Beneficiary’s Representatives and the Trustee harmless from
and against (a) all loss, liability, damage and expense, claims, costs, fines,
and penalties, including attorneys’ fees, suffered or incurred by the
Beneficiary, the Beneficiary’s Representatives or the Trustee, whether as
holder of this Deed of Trust, as a mortgagee in possession, or as
successor-in-interest to Trustor, by foreclosure deed or deed in lieu of
foreclosure, including any loss of value of the Property, arising out of any
breach of the representation or warranties of Trustor contained in this Section
2.15, (b) all fines or claims incurred by the Beneficiary, the Beneficiary’s
Representatives or the Trustee arising out of any breach of any environmental
statute, law, ordinance or order applicable to the Property, and (c) any
out-of-pocket costs (including attorney’s fees) incurred by Trustor (whether
before or after foreclosure) with respect to any investigation, remediation or
clean-up required under any environmental statute, law, ordinance or order
(unless such costs are attributable to any discharge



12






 





of Hazardous Substances resulting from actions of the Beneficiary or during the
period Beneficiary owned the Property). Trustor’s obligation under this Section
2.15 shall survive the termination or foreclosure of this Deed of Trust.


          2.15.3 As used herein, the term “release” has the meaning assigned to such term
in California Code of Civil Procedure Sections 726.5 and 736.



          2.15.4 Upon reasonable prior notice to Trustor, the Beneficiary’s
Representatives or their agents or representatives may, from time to time,
enter and inspect the Property for the purpose of determining the existence,
location, nature, and magnitude of any past or present release or threatened
release of any Hazardous Substances into, onto, beneath, or from the Property.
Trustor and the Beneficiary agree that each covenant, representation, and
warranty in this Section 2.15 (together with any indemnity applicable to a
breach of any such representation and warranty) is intended by the Beneficiary
and Trustor to be an “environmental provision” for purposes of California Code
of Civil Procedure Section 736.



          2.15.5 In accordance with California Code of Civil Procedure, Section 726.5
(“Section 726.5”), the Beneficiary may waive the security of this Deed of Trust
as to any parcel of Property which is real property that is “environmentally
impaired” or is an “affected parcel” (as such terms are defined in Section
726.5), and as to any Property which is personal property attached to such
parcel, and thereafter exercise against Trustor, to the extent permitted by
Section 726.5, the rights and remedies of an unsecured creditor, including
reduction of the Beneficiary’s claim against Trustor to judgment, and any other
rights and remedies permitted by law.



          2.15.6 Trustor and the Beneficiary acknowledge that, pursuant to Section 726.5,
the Beneficiary’s rights under Section 726.5 are limited to instances in which
Trustor either (a) knowingly or negligently caused, contributed to, or
knowingly or willfully permitted, or acquiesced in, the release or threatened
release of toxic or Hazardous Waste or waste products, or (b) had actual
knowledge or notice of such release or threatened release prior to the
execution and delivery of this Deed of Trust and failed to disclose such
release or threatened release to the Beneficiary in writing after the
Beneficiary’s written request for information concerning the environmental
condition of the Property, unless the Beneficiary otherwise obtained actual
knowledge of such release or threatened release prior to the execution and
delivery of this Deed of Trust.



          2.15.7 In accordance with California Code of Civil Procedure Section 736
(“Section 736”), the Beneficiary may bring an action for breach of contract
against Trustor for breach of any “environmental provisions” (as such term is
defined in Section 736) made by Trustor for the recovery of damages (including
attorneys’ fees and costs) and/or for the enforcement of the environmental
provision, including, without limitation, to recover all reasonable costs and
expenses incurred in good faith by the Beneficiary in connection with any



13






 





remedial work, without foreclosing this Deed of Trust judicially or
nonjudicially or accepting a deed or assignment in lieu of foreclosure.


          2.15.8 Before the reconveyance of the lien of this Deed of Trust, or the
extinguishment of the lien by foreclosure or action in lieu thereof, pursuant
to Section 736, the Beneficiary may enforce any “environmental provision” of
this Deed of Trust without foreclosing this Deed of Trust judicially or
nonjudicially or accepting a deed or assignment in lieu of foreclosure.



     2.16 No Improvements. Except as contemplated in, and in accordance with, the
Agreement and other Development Documents, Trustor shall not, without the prior
written consent of the Beneficiary (which may be withheld in Beneficiary’s sole
and absolute discretion), undertake or permit any Improvements (including,
without limitation, any grading or excavation) to any portion of the Land which
is then encumbered by this Deed of Trust or apply to any Governmental Agency
for a permit for the construction of such Improvements.


     2.17 No Modifications or Other Entitlement Approvals. Except as contemplated
in, and in accordance with, the Agreement and other Development Documents,
Trustor shall not apply for Governmental Approvals from the City, the County
and/or other Governmental Agencies to develop, improve and/or use any portion
of the Property remaining encumbered by this Deed of Trust, nor shall Trustor
apply for any modification to the general plan, zoning, planned community text,
area plan or any other land use entitlement affecting the Land as of the date
this Deed of Trust is recorded that would constitute a Material Change as
defined in the Agreement, without the prior written consent of the Beneficiary,
which consent may be held in Beneficiary’s sole and absolute discretion.


     2.18 No Disturbance or Modification of Protected Habitat or Species. Except as
contemplated in, and in accordance with, the Agreement, Trustor shall not
destroy, modify or disturb any protected habitat or species which may be
present on any of the Land which remains encumbered by this Deed of Trust or
perform or allow to be performed any new biological surveys or other
investigations or surveys of protected habitat or species on the Land, unless
Trustor is required to do so by a Governmental Agency.


ARTICLE 3. ASSIGNMENT OF RENTS AND PROFITS.



     3.1 Absolute Assignment of Rents. Trustor hereby irrevocably assigns and
transfers to Beneficiary all of Trustor’s right, title and interest in and
under: (a) the entire lessor’s interest in and to any and all Leases and rents
therein reserved and any and all guarantees thereof which may now or later
exist during the term of this Deed of Trust which Leases demise all, or any
portion of the Property; and (b) all Rents arising from the Leases and renewals
thereof and together with all rents, income and profits for the use and
occupation of the premises described in


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the Lease or in this Deed of Trust. This assignment is an absolute assignment,
and is not an assignment for security purposes only, and Beneficiary’s right to
the Leases and Rents is not contingent upon, and may be exercised without
possession of the Property.


     3.2
Grant of License.


          3.2.1 So long as there shall exist no Event of Default, Trustor is granted a
license (“License”) to collect at the time of, but not before the date provided
for the payment thereof, all Rents arising under the Leases or from the
premises described in the Leases and to retain, use and enjoy the same.



          3.2.2 Upon an Event of Default and without notice and without taking possession
of the Property, the License shall be automatically revoked and Beneficiary may
collect and apply the payments as otherwise provided under this Deed of Trust.
Trustor hereby irrevocably authorizes and directs each of the lessees under the
Leases to rely upon and comply with any notice or demand by Beneficiary for the
payment to Beneficiary of any Rent which may at any time become due under the
Leases, of for the performance of any of the lessees’ undertakings under the
Leases. Lessees have no right or duty to inquire as to whether any Event of
Default has actually occurred or is then existing hereunder. Trustor hereby
relieves the lessees from any liability to Trustor by reason of relying upon
and complying with any such notice or demand by Beneficiary.



     3.3
Covenants. Trustor covenants with the Beneficiary as follows: (a) to obtain
the approval of Beneficiary (which shall not be unreasonably withheld) to all
Leases for all or any part of the Property, (b) to observe and perform all the
obligations imposed upon the lessor under the Leases and require that lessees
under the Leases keep, perform and observe all of the obligations imposed upon
lessees under such Leases; (c) not to do or permit to be done anything to
impair the security thereof; (d) not to collect any of the Rent arising or
accruing under the Leases or from the Property more than one month in advance
of the time when the same shall become due; (e) not to execute any assignment
of lessor’s interest in the Leases or assignment of rents arising or accruing
from the Leases or from the Property; (f) after a Lease has been approved by
Beneficiary, not to alter, modify or change the terms of the Leases or give any
consent or exercise any option required or permitted by such terms without the
prior written consent of Beneficiary, or cancel or terminate the Leases or
accept a surrender thereof or convey or transfer or permit a conveyance or
transfer of the premises demised thereby or of any interest therein so as to
effect directly or indirectly, proximately or remotely a merger of the estates
and rights of, or a termination or diminution of the obligations of, lessee
thereunder; (g) after a Lease has been approved by Beneficiary, not to alter,
modify or change the terms of any guaranty of the Leases or cancel or terminate
such guaranty without the prior written consent of Beneficiary; (h) not to
consent to any assignment of or subletting under the Leases, whether or not in
accordance with its terms, without the prior written consent of Beneficiary if
such assignment or subletting


15






 


would release the original tenant under the Leases, change the permitted use of
the premises subject to the Lease, or violate the terms of any other lease or
any other agreement by which Trustor or the Property is subject or bound; (i)
at Beneficiary’s request, to specifically assign and transfer to Beneficiary
any and all subsequent leases upon all or any part of the premises described in
the Leases or this Deed of Trust and to execute and deliver at the request of
Beneficiary all such further assurances and assignments as Beneficiary shall
from time to time require; and, (j) Beneficiary’s approval of any Lease or form
of Lease shall not be construed as a modification of any requirement or
provision of this Deed of Trust, all of which shall remain in all events
binding upon Trustor and any other person whose interest in the Property is or
becomes subject to this Deed of Trust. Without limiting the generality of the
foregoing, nothing in this Deed of Trust shall be construed to permit Trustor
to, and Trustor hereby expressly agrees not to enter any Lease which grants any
option or right of first refusal to purchase any portion of the Property,
subordinate any Lease to any encumbrance not held by Beneficiary or otherwise
adversely affect the value or marketability or financeability of Trustor’s
interests in the Property or any tenant’s obligations to improve, use,
maintain, insure or operate the same.


     3.4 Effect of Assignment. Beneficiary shall not be liable for any loss
sustained by Trustor resulting from Beneficiary’s failure to let the premises
after default or from any other act or omission of Beneficiary in managing the
premises after default unless such loss is caused by the willful misconduct or
bad faith of Beneficiary. Nor shall Beneficiary be obligated to perform or
discharge nor does Beneficiary hereby undertake to perform or discharge any
obligation, duty or liability under said Lease or under or by reason of this
Deed of Trust. Should Beneficiary incur any such liability under said lease or
under or by reason of this Deed of Trust or in defense of any such claims or
demands, the amount thereof, including costs, expenses and/or demands, the
amount thereof, including costs, expenses and reasonable attorneys’ fees shall
be secured hereby and Trustor shall reimburse Beneficiary therefor immediately
upon demand and upon the failure of Trustor so to do, Beneficiary may, at its
option, declare all sums secured hereby immediately due and payable. It is
further understood that this Deed of Trust shall not operate to place
responsibility for the control, care, management or repair of the Property upon
Beneficiary, nor for the carrying out of any of the terms and conditions of
said Lease; nor shall it operate to make Beneficiary responsible or liable for
any waste committed on the property by tenants or any other parties, or for any
dangerous or defective condition of the Property, or for any negligence or
defective condition of the Property, or for any negligence in the management,
upkeep, repair or control of the Property resulting in loss or injury or death
to any tenant, licensee, employee or stranger.


     3.5 Trustor’s Cooperation. Trustor agrees that it will from time to time upon
demand therefor by Beneficiary, deliver to Beneficiary an executed counterpart
of each and every Lease then affecting all or any part of the Property covered
by this Deed of Trust. Further, Trustor agrees that it will from time to time
execute, acknowledge and record such documents, including additional
assignments and estoppel certificates as Beneficiary may request covering


16






 


any and all of the Leases. Such documents shall be on such forms as requested
and/or approved by Beneficiary, and Trustor agrees to pay all costs reasonably
incurred in connection with the preparation, execution and recording of such
assignments.


ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING.



     4.1 Security Interest in Fixtures and Other Personal Property. Without limiting
or affecting any rights Beneficiary may have under any separate security
agreement as to Personal Property owned by Trustor or in which Trustor has an
interest, this Deed of Trust grants to Beneficiary a security interest (a) in
all Personal Property currently owned or later acquired by Trustor which is or
becomes fixtures on or at the Property, and (b) in all other Personal Property
now owned or later acquired by Trustor (whether or not now fixtures or intended
to be fixtures) used in connection with the ownership, operation, maintenance
or repair of the Property.


     4.2 Certain Rights and Remedies. Beneficiary shall have all of the rights and
remedies of a secured party under the California Uniform Commercial Code
(“Commercial Code”) as well as all other rights and remedies available under
this Deed of Trust or any separate security agreement or at law or in equity
with respect to fixtures and other Personal Property. Trustor shall execute and
deliver on demand, and does irrevocably constitute and appoint Beneficiary the
attorney-in-fact of Trustor, to execute, deliver and, if appropriate, to file
with the appropriate filing officer or office such financing statements,
continuation statements or other similar instruments as Beneficiary may request
or require in order to impose, perfect and continue the perfection of the lien
or security interest created hereby. Trustor shall reimburse Beneficiary for
any costs incurred in filing such financing statement and any continuation
statements.


     4.3 Fixture Filing. Portions of the Property are goods which are or are to
become fixtures relating to the Land and the Improvements, and Trustor
covenants and agrees that the recording of this Deed of Trust in the real
estate records of the county where the Land is located shall also operate from
the time of recording as a Fixture Filing under Section 9313 (or any successor
section) of the Commercial Code. Trustor and Beneficiary agree that the filing
of a financing statement in the records normally having to do with Personal
Property shall never be construed as in any way derogating from or impairing
this declaration and the stated intention of the parties that everything is
used in connection with the operation or occupancy of the Property is and, at
all times and for all purposes and in all proceedings, both legal and
equitable, shall be regarded as real property, irrespective of whether (a) any
such item is physically attached to the Improvements, (b) serial numbers are
used for the better identification of certain equipment items capable of being
filed by the Beneficiary, or (c) any such item is referred to or reflected in
any such financing statement so filed at any time. Such mention in the
financing statement is declared to be for the protection of the Beneficiary in
the event any court or judge shall at any time hold that notice of
Beneficiary’s priority of interest must be filed in the Commercial Code


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records to be effective against a particular class of persons, including, but
not limited to, the federal government and any subdivision or entity of the
federal government.


     4.4 Sale of Collateral Consisting of Fixtures and Other Personal Property.
Without limiting the generality of Section 4.2, upon the occurrence of an Event
of Default, Beneficiary shall have the right to cause any of the Property which
constitutes fixtures, and other Personal Property subject to the security
interest of Beneficiary hereunder sold at any one or more foreclosure sales
along with the Property. Any such disposition may be conducted by an employee
or agent of Beneficiary or Trustee. Beneficiary shall give Trustor at least 10
business days prior written notice (which is agreed to be reasonable notice) of
the time and place of any public sale or other disposition of such fixtures and
other Personal Property, or of the time of or after which any private sale or
any other intended disposition is to be made; provided, however, that in the
absence of any separate notice for the sale or other disposition of fixtures
and other Personal Property (where the Beneficiary and Trustee give only those
notices that are required in a foreclosure of real property, including, without
limitation, the notice prescribed by California Civil Code Section 2924c), the
fixtures and other Personal Property shall be deemed to be offered for sale
together with the real property, without any requirement that the fixtures and
other Personal Property be separately described in such notices.


ARTICLE 5. DEFAULT AND REMEDIES.



     5.1 Event of Default. The occurrence of any of the following shall be a
default under this Deed of Trust (an “Event of Default”):


          5.1.1 Default shall be made in the performance or observance of any covenant or
agreement of the Trustor contained in the PM Note; or,



          5.1.2 Default shall be made in the performance or observance of any monetary
covenant or agreement of the Trustor contained in this PM TD; or,



          5.1.3 A monetary Default by Trustor shall occur under the Agreement, and/or any
Development Documents referred to therein.



          5.1.4 Except as hereinafter provided, default shall be made in the performance
or observance of any other covenant or agreement of the Trustor hereunder, or
under any Development Document, and such default shall not have been remedied
(a) within ten (10) days after notice of a failure to pay money or within
thirty (30) days after notice thereof shall have been given to the Trustor by
the Beneficiary with respect to all other obligations, or (b) if such
non-monetary default cannot be cured within said period of 30 days with the
exercise of all due diligence and the Trustor commences to cure the same with
all due diligence before the expiration of said 30 days, within such period of
time as may be necessary to cure the same with



18






 



the exercise of all due diligence; provided however, that in any event, such
cure shall be completed within ninety (90) days of receipt of such notice.


     5.2 Acceleration Upon Default; Additional Remedies In the event of any such
Event of Default, Beneficiary may declare, by notice given to Trustor, all
indebtedness secured hereby (including, without limitation, all indebtedness
evidenced by the Notes) to be due and payable without any further presentment,
demand, protest or notice of any kind. Thereafter, Beneficiary may:


               (a) Either in person or by agent, with or without bringing any action or
proceeding, or by a receiver appointed by a court and without regard to the
adequacy of any security for the Indebtedness and obligations hereby secured,
(a) enter upon and take possession of all, or any part of the Property, in its
own name or in the name of the Trustee, and do acts which it deems necessary or
desirable to preserve the rentability or increase the income of such Property
or protect the security hereof, and (b) with or without taking possession of
the Property sue for or otherwise collect the Rents, including those past due
and unpaid, and apply the Rents, less costs and expenses of operation and
collection including reasonable attorneys’ fees and accountants’ fees, upon any
Indebtedness, all in such order as Beneficiary may determine. The entering upon
and taking possession of said Property, the collection of such Rents, the
application of the Rents as provided above shall not cure or waive any default
or notice of default under this Deed of Trust or invalidate any act done under
such notice. Notwithstanding Beneficiary’s or Trustee’s continuance in
possession of the Property or the collection, receipt, and application of
rents, issues or profits, Trustee or Beneficiary shall be entitled to exercise
every right provided for in this Deed of Trust or by law upon the occurrence of
any default including the right to exercise the power of sale;



               (b) Commence an action to foreclose this Deed of Trust as a mortgage, appoint a
receiver, or specifically enforce any of the covenants hereof;



               (c) Deliver to Trustee a written declaration of default and demand for sale,
and a written notice of default and election to cause Trustor’s interest in the
Property to be sold, which notice Trustee or Beneficiary shall cause to be duly
filed for record in the Official Records of the county in which the Property is
located.



     5.3 Foreclosure By Power of Sale. Should Beneficiary elect to foreclose by
exercise of the power of sale herein, Beneficiary shall notify Trustee and
shall deposit with Trustee this Deed of Trust and the Notes and such receipts
with evidence of expenditures made and secured hereby as Trustee may require.
Trustee shall then have the following duties and powers:


               (a) Upon receipt of such notice from Beneficiary, Trustee shall cause to
be recorded, published and delivered to Trustor such Notice of Default and
Election to Sell as then



19






 





required by law and by this Deed of Trust and after lapse of such time as may
then be required by law and after recordation of such notice of default,
Trustee without demand on Trustor, shall, after notice of sale having been
given as required by law, sell the Property at the time and place of sale fixed
by it in said notice of sale, either as a whole or in separate parcels or items
and in such order as Trustee may determine, at public auction to the highest
bidder for cash in lawful money of the United States payable at the time of
sale. Trustee shall deliver to such purchaser its deed conveying the Property
so sold, but without any covenant or warranty, express or implied. The recitals
in such deed of any matters or facts shall be conclusive proof of the
truthfulness thereof. Any person, including, without limitation, Trustor,
Trustee or Beneficiary, may purchase at such sale.


               (b) After deducting all costs, fees and expenses of Trustee and of this trust,
including costs of evidence of title in connection with the sale, Trustee shall
apply the proceeds of sale to payment of: all sums expended under the terms of
this Deed of Trust, not then repaid, with accrued interest at the rate then
applicable under the Note; all Indebtedness; all other sums of any kind
whatsoever, secured hereby; and the remainder, if any, to the person or persons
legally entitled thereto.



               (c) Trustee may postpone the sale of all or any portion of the Property by
public announcement at the time and place first fixed for sale, and from time
to time thereafter may postpone such sale by public announcement at the time
and place fixed by the preceding postponement, and without further notice make
such sale at the time fixed by the last postponement, or may, in its
discretion, give new notice of sale.



     5.4
Appointment of Receiver. If any Event of Default shall have occurred and is
continuing, Beneficiary, as a matter of right but with notice to Trustor, but
without notice to anyone claiming under Trustor, and without regard to the then
value of the Property or the interest of Trustor therein, shall have the right
to apply to any court having jurisdiction to appoint a receiver or receivers of
the Property, and Trustor hereby irrevocably consents to such appointment and
waives notice of any application therefor. Any such receiver or receivers shall
have all the usual powers and duties of Beneficiary in case of entry as
provided in Section 5.2(a) and shall continue as such and exercise such powers
until the date of confirmation of sale of the Property unless such receivership
is sooner terminated.


     5.5
Remedies Not Exclusive. No remedy in this Deed of Trust conferred upon or
reserved to Trustee or Beneficiary is intended to be exclusive of any other
remedy in this Deed of Trust, or by law provided or permitted, but each shall
be distinct and cumulative and shall be in addition to every other remedy given
hereunder, or now or later existing at law or in equity or by statute. Every
power or remedy given by this Deed of Trust to Trustee or Beneficiary or to
which either of them may be otherwise entitled, may be exercised,
concurrently or


20






 



independently, from time to time and as often as may be deemed expedient by
Trustee or Beneficiary and either of them may pursue inconsistent remedies.


     5.6 Partial or Late Payment. The acceptance by Beneficiary of any sum after the
same is due shall not constitute a waiver of the right either to require prompt
payment, when due, of all sums secured by this Deed of Trust or to declare a
default as provided in this Deed of Trust and in either event to assess a late
charge or penalty. The acceptance by Beneficiary of any sum in an amount less
than the sum then due shall be deemed an acceptance on account only and upon
the condition that it shall not constitute a waiver of the obligation of
Trustor to pay the entire sum then due. Trustor’s failure to pay this entire
sum when due shall be and continue to be a default notwithstanding such
acceptance of such amount on account, as aforesaid. Beneficiary or Trustee
shall be at all times thereafter and until the entire sum then due shall have
been paid, and notwithstanding the acceptance by Beneficiary thereafter of
further sums on account, or otherwise, entitled to exercise all rights in this
Deed of Trust confirmed upon them or either of them upon the occurrence of an
Event of Default.


     5.7 Failure or Indulgence Not a Waiver. No failure or delay on the part of
Beneficiary in the exercise of any power, right or privilege under this Deed of
Trust shall operate as a waiver thereof, or shall any single or partial
exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other power, right or privilege.


     5.8 Right of Beneficiary to Perform Covenants, etc. If Trustor shall fail to
timely make any payment or to timely perform any act required to be made or
performed hereunder by it or to timely release any Lien affecting the Property
which it is required to release by the terms of this Deed of Trust,
Beneficiary, with ten (10) days’ notice to the Trustor (except in an emergency)
and without waiving or releasing any obligation or default, may (but without
any obligation to do so) at any time after the expiration of the Trustor’s time
for performance make such payment or perform such act for the account and at
the expense of the Trustor and may enter upon the Property, or any part thereof
for such purpose and take all such action with respect thereto as Beneficiary
may in its sole and absolute discretion, deem reasonably necessary or
appropriate therefor. No such entry shall be deemed an eviction. All sums
so paid by Beneficiary (or Trustee) and all reasonable costs and expenses
(including, without limitation, reasonable legal fees and expenses) so
incurred, together with interest thereon at the default rate of interest (as
provided in the Note), to the extent permitted by law, from the date of payment
or incurrence, shall constitute a Secured Obligation and shall be paid by
Trustor to Beneficiary (or Trustee) on demand. Neither Beneficiary nor Trustee
shall be liable for any damages resulting from any such payment or action
unless such damages shall be a consequence of willful misconduct or gross
negligence on the part of Beneficiary or Trustee.


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ARTICLE 6. GENERAL PROVISIONS



     6.1 Substitution of Trustee. Beneficiary, from time to time, may substitute
another trustee in place of the Trustee named in this Deed of Trust, to execute
the trusts hereby created; and upon such appointment, and without conveyance to
the successor trustee, the successor trustee shall be vested with all the
title, interest, powers, duties and trusts in the Property vested in or
conferred upon the Trustee. Each such appointment and substitution shall be
made by written instrument executed by the Beneficiary containing reference to
this Deed of Trust sufficient to identify it, which, when recorded in the
office of the County Recorder of the county or counties in which the Property
is situated, shall be conclusive proof of proper appointment of the successor
trustee. The recital or statements in any instrument executed by Trustee, in
pursuance of any of the trusts of the due authorization of any agent of Trustee
executing the same for all purposes be conclusive proof of such authorization.


     6.2 Trustee’s Suit. Trustee at any time, at Trustee’s option, may commence
and maintain suit in any court of competent jurisdiction and obtain the aid and
direction of the court in the execution by it of the trusts or any of them,
expressed or contained in this Deed of Trust, and, in such suit, may obtain the
orders or decrees, interlocutory or final, of the court directing the execution
of the trusts, and confirming and approving Trustee’s act, or any of them, or
any sales or conveyances made by Trustee, and adjudging the validity thereof,
and directing that the purchasers of the Property, or any part thereof, and
providing for order of court or other process requiring the Sheriff of the
county in which the Property is situated to place and maintain the purchasers
in quiet and peaceable possession of the Property, or any part thereof, so
purchased by them, and the whole thereof.


     6.3 No Waiver. Acceptance by Beneficiary of any sum in payment of an
indebtedness secured hereby, after the date when the same is due, or after the
filing of a notice of breach and election to sell, shall not constitute a
waiver of the right either to require prompt payment, when due, of all other
sums so secured, or to declare default as herein provided for failure to pay,
or to proceed with a sale under any such notice of breach and election to sell
for any unpaid balance of the Indebtedness. Any failure of Trustee or
Beneficiary to exercise any right or option by this Deed of Trust given or
preserved to Trustee or Beneficiary shall not estop Trustee or Beneficiary from
exercising any such right or option upon the occurrence of any subsequent Event
of Default. The granting of consent by Beneficiary to any transaction as
required by the terms hereunder shall not be deemed a waiver of the right to
require consent to future or successive transactions.


     6.4 Reconveyance. If Trustor fully pays or causes to be paid, at maturity, in
lawful money of the United States of America, all indebtedness under the Note
and this Deed of Trust, and also the reasonable expenses of this trust, as
herein specified, then Trustee, at the request and


22






 


expense of Trustor, shall reconvey to Trustor, Trustor’s successors or assigns,
all the estate in the Property granted to Trustee by this instrument.


     6.5 Partial Reconveyance. Trustee, at any time, upon request of Beneficiary,
may reconvey to Trustor or Trustor’s successors or assigns, any portion of the
Property without affecting the personal liability of any person for the payment
of any of the Indebtedness, or the lien of this Deed of Trust upon the
remainder of the Property not reconveyed.


     6.6 Trustee Liability. Trustee, by its acceptance hereof, covenants
faithfully to perform and fulfill the trusts herein created and hereby waives
any statutory fee and agrees to accept a reasonable compensation, in lieu
thereof, for any services rendered by it in accordance with the terms hereof.
Trustee shall not be liable or responsible with respect to its acts or
omissions hereunder, except for Trustee’s own gross negligence or willful
misconduct, or be liable or responsible for any acts or omissions of any agent,
attorneys or employee by it employed hereunder, if selected with reasonable
care.


     6.7 Beneficiary’s Statement. Trustor agrees to pay to Beneficiary, or to the
authorized loan servicing representative of Beneficiary, a reasonable charge as
requested by Beneficiary, but not more than the maximum permitted by law, for
any statement regarding the obligations secured by this Deed of Trust requested
by Trustor or in Trustor’s behalf.


     6.8 Construction. This Deed of Trust applies to, inures to the benefit of, and
binds all parties hereto, and subject to the provisions of this Deed of Trust,
their successors and assigns. This Deed of Trust shall be construed so that,
wherever applicable and with reference to any of the parties hereto, the use of
the singular number shall include the plural number, the use of the plural
number shall include the singular number, the use of one gender shall include
the neuter, masculine and feminine gender. In the event any one or more of the
provisions contained in this Deed of Trust or the Note shall for any reason be
held to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provisions of this
Deed of Trust, but this Deed of Trust shall be construed as if such invalid,
illegal or unenforceable provision had never been contained herein or therein.
If a dispute arises over the interpretation or construction of any provision,
term or word contained in this Agreement, this document shall be interpreted
and construed neutrally, and not against either party. Titles and captions are
for convenience only and shall not constitute a portion of this Deed of Trust.
References to Articles and Section numbers are to Articles and Sections in this
Deed of Trust, unless expressly stated otherwise. The word “including” shall be
construed as if followed by the words “without limitation.”


     6.9 Request for Notice. Pursuant to California Civil Code Section 2924b,
Trustor requests that a copy of any notice of default and of any notice of sale
hereunder shall be mailed to Trustor at Trustor’s address as stated in the
first paragraph of this Deed of Trust.


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     6.10 Modifications. If any change or changes occur in the title to all or any
part of the Property, Beneficiary, from time to time, may without notice to or
consent of Trustor and without prejudice to any rights which Beneficiary may
have against Trustor, (a) take, exchange, or release any security for any of
the obligations now or hereafter secured hereby; and (b) extend the time for
payment of the obligations.


     6.11 Usury Compliance. All agreements between Trustor and Beneficiary are
expressly limited so that in no contingency or event whatsoever, whether by
reason of advancement of the principal amount of the Note, acceleration of
maturity or the unpaid principal balance thereof, or otherwise, or advancement
of any sums under the provisions of this Deed of Trust, shall the amount paid
or agreed to be paid to the Holder of the Note for the use, forbearance or
detention of the money to be advanced thereunder or hereunder exceed the
highest lawful rate permissible. If, from any circumstances whatsoever,
fulfillment of any provision of this Deed of Trust or the Note or any other
agreement referred to herein, at the time performance of such provision shall
be due, shall involve transcending the limit of validity prescribed by law
which a court of competent jurisdiction may deemed applicable thereto or
hereto, then, ipso facto, the obligations to be fulfilled shall be reduced to
the limit of such validity, and if from any circumstances the Holder of the
Note or Beneficiary shall ever receive as interest an amount which would exceed
the highest lawful rate, such amount which would be excessive interest shall be
applied to the reduction of the unpaid principal balance due hereunder and not
to the payment of interest or, if such excessive interest exceeds the unpaid
principal balance due hereunder, the excess shall be refunded to Trustor or its
successors or assigns. This Section 6.12 shall control every other provision of
all agreements between Trustor and Beneficiary.


     6.12 Waiver of Jury Trial. BY INITIALING IN THE SPACE BELOW TRUSTOR HEREBY
AGREES TO WAIVE THE RIGHT TO ANY JURY TRIAL IN ANY ACTION, PROCEEDING,
COUNTERCLAIM OR CROSSCLAIM BROUGHT BY BENEFICIARY OR TRUSTOR.


Trustor’s Initials



     6.13 Definitions. Unless defined differently herein, or clearly not applicable
in the context used, Definitions in the Agreement shall apply herein as if
fully set forth.


24






 


IN WITNESS WHEREOF, Trustor has executed this Deed of Trust effective as of the
date set forth above.




	 	 	 	 	 	 	 	 	 
	 	 	 	 	TRUSTOR:	 	 	 	 
	 
	 	 	TONNER
HILLS SSP, LLC, a Delaware limited liability company
	 	 	 	 	 	 	 	 	 
	 	 	By:
Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: Standard Pacific Corp., a Delaware corporation, its sole member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	Title:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	Title:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	 	 	 	 	 
	 	 	By: Shea Tonner Hills, LLC, a Delaware limited liability company, a member 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: Shea Homes Limited Partnership,
a California limited partnership, its sole
member 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: J.F. Shea LLC,
a Delaware limited liability company, its General Partner 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	 	

	 	 	 	 	 	 	Title:
	 	 
	 	 	 	 	 
	 	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	 	

	 	 	 	 	 	 	Title:
	 	 
	 	 	 	 	 
	 	 	




25






 





	 	 	 	 	 	 	 	 
	 	 	TONNER HILLS 680 LLC, a

Delaware limited liability company

	 
	 							
	 	 	
By:
	 	 
	 	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	
By:
	 	 
	 	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 
	 
	 	 	 	 	By:
	 	 	 
	 	 	 	 	 	 	
	 





26






 





	 	 	 	 	 
	STATE OF CALIFORNIA	 	 	 	)
	 	 	 	 	
) ss.
	COUNTY OF	 	 	 	)



     On           , 2003, before me,          , a
Notary Public in and for said State, personally appeared           ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.


     WITNESS my hand and official seal.







               
          Notary Public



(SEAL)



	 	 	 	 	 
	STATE OF CALIFORNIA	 	 	 	)
	 	 	 	 	
)ss.
	COUNTY OF      	 	 	 	)



On          , 2003, before me,           , a
Notary Public in and for said State, personally appeared ,          ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.


     WITNESS my hand and official seal.







               
          Notary Public



(SEAL)


 






 







	 	 	 	 	 
	STATE OF CALIFORNIA	 	 	 	)
	 	 	 	 	
) ss.
	COUNTRY OF	 	 	 	)



     On          ,
2003, before me,
          , a
Notary Public in and for said State, personally appeared
          ,
personally known to me or proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.


     WITNESS my hand and official seal.







               
          Notary Public



(SEAL)



	 	 	 	 	 
	STATE OF CALIFORNIA	 	 	 	)
	 	 	 	 	
) ss.
	COUNTY OF	 	 	 	)



     On          ,
2003, before me,          , a
Notary Public in and for said State, personally appeared
          , Personally known to me or proved to me on the basis of satisfactory evidence to
be the person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument, the person(s) or the entity upon behalf of which the person(s)
acted, executed the instrument.


     WITNESS my hand and official seal.







               
          Notary Public



(SEAL)


 






 





Exhibit “A”

Legal Description of the Land



THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE,
AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, AND RECORD OF SURVEY
FILED IN BOOK 12 PAGE 40, RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133, PAGES
41 THROUGH 46 INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK 187,
PAGES 02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A DEED, BILL
OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:


PARCEL 1


BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE NORTHEAST
CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO THE SOUTHEAST
CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE PATENT BOUNDARY OF
SAID RANCHO RINCON DE LA BREA, NORTH 84° WEST 107.51 CHAINS TO A SAND STONE
MARKED R. B. IN MOUND WITH PITS; THENCE ALONG SAID PATENT BOUNDARY NORTH 57°
42' WEST 43.67 CHAINS TO A WHITE POST 4 INCHES SQUARE IN MOUND OF STONE MARKED
S. J. C. S. A. AT INTERSECTION OF THE PATENT LINES OF SAID RANCHOS SAN JUAN
CAJON DE SANTA ANA AND RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF SAID
RANCHO SAN JUAN CAJON DE SANTA ANA, NORTH 76° 25' WEST 62.67 CHAINS TO A 2" X
4" POST MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 58.96 CHAINS
TO A 2" × 4" POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 89° EAST 20.00
CHAINS TO A 4" × 4" POST IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 20.00
CHAINS TO A 2" × 4" POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 88° 39'
EAST 55.48 CHAINS TO A 2" × 4" POST MARKED 20 IN MOUND WITH
PITS.; THENCE SOUTH
0° 30' EAST 20.00 CHAINS TO A 2" × 4" POST IN MOUND WITH PITS; THENCE NORTH 89°
45" EAST 134.63 CHAINS TO A 2" × 4" POST MARKED 40.10 IN MOUND WITH PITS UPON
THE EASTERN BOUNDARY OF SAID RANCHO SAN JUAN CAJON DE SANTA ANA; THENCE ALONG
SAME NORTH 4° WEST 47.51 CHAINS TO THE PLACE OF BEGINNING.


EXCEPTING THEREFROM THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.


ALSO EXCEPTING THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED BOUNDARY
LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28° 30' EAST FROM THE WESTERN
TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN THE UNION OIL COMPANY
OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY, RECORDED JUNE 10, 1905 IN BOOK
120, PAGE 223 OF DEEDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO THE METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK


 Page 1 of 4






 


1051, PAGE 301 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER,
DESCRIBED AS FOLLOWS:



	 	 	BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY UNION OIL
COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE EASTERLY BOUNDARY OF
THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION OIL COMPANY OF CALIFORNIA TO
GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899, RECORDED JUNE 20, 1899 IN BOOK 44,
PAGE 79 OF DEEDS, WHICH POINT OF BEGINNING IS THE POINT OF INTERSECTION OF THE
AFORESAID WESTERLY BOUNDARY WITH THE EASTERLY PROLONGATION OF THE CENTER LINE
OF CENTRAL AVENUE AS THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET AND
BREA CANYON ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 73° 32' 24" WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF SAID CENTRAL AVENUE
AT SAID POINT OF INTERSECTION (ASSUMED AND TAKEN TO BEAR NORTH
15° 11' 16"
EAST), A DISTANCE OF 839.60 FEET TO THE TRUE POINT OF BEGINNING; THENCE NORTH
0° 10' 11" EAST A DISTANCE OF 1250 FEET; THENCE SOUTH 89° 49' 49" EAST A
DISTANCE OF 500 FEET; THENCE SOUTH 65° 23' 11" EAST A DISTANCE OF 604.15 FEET;
THENCE SOUTH 0° 10' 11" WEST A DISTANCE OF 1000 FEET; THENCE NORTH 89° 49' 49"
WEST A DISTANCE OF 1050 FEET TO THE TRUE POINT OF BEGINNING.



ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE
OFFICE OF SAID COUNTY RECORDER DESCRIBED AS FOLLOWS:



	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM
THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF CALIFORNIA,
A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2, 1899 IN BOOK 44,
PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10' 50" WEST ALONG SAID LINE 3131.98
FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID POINT OF BEGINNING BEING
MONUMENTED BY UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9° 48' 11" WEST
529.60 FEET TO A 2" × 2" STAKE AND THE TRUE POINT OF BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85° 48' 16" WEST, 380.00 FEET TO A 2" × 2" STAKE;
THENCE NORTH 4° 11' 44" EAST 1750.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 85°
48' 16" EAST 380.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 4° 11' 44" WEST
1750.00 FEET TO A 2" × 2" STAKE AND THE TRUE POINT OF BEGINNING.
	 
	 	 	ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.
	 
	 	 	ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 647 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.
	 
	 	 	ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



 Page 2 of 4






 




ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCEL 1 OF THE DEED TO THE
CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM PARCELS A6471-4, A6471-5, A6471-6 AND A6471-7 OF THAT
CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE NO. 156220, A
CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29, 1970 IN BOOK 9417, PAGE 364
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-243,
FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE
OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED ROAD, 80.00
FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID PARCELS 1 AND 2
ON THE EAST, AND BOUND NORTHEASTERLY BY THE NORTHEASTERLY LINE OF SAID PARCEL
MAP NO. 86-243, AND BOUND SOUTHERLY BY THE CENTERLINE OF LAMBERT ROAD AS SHOWN
ON SAID PARCEL MAP NO. 86-243.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF PARCEL MAP
NO. 83-1179, AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1 THROUGH 4 INCLUSIVE
OF PARCEL MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12562, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF MISCELLANEOUS MAPS,
IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12563, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE DEED TO THE CITY OF BREA
RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF A COUNTY OF
ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED AUGUST 13, 2001 AS
INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.


PARCEL 2


PARCEL 1 OF A COUNTY OF ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED
AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, IN THE
OFFICE OF SAID COUNTY RECORDER.


EXCEPTING THEREFROM THAT PORTION CONVEYED TO BREA-OLINDA UNIFIED SCHOOL
DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


 Page 3 of 4






 


ALSO EXCEPTING THEREFROM THAT PORTION CONVEYED TO THE COUNTY OF ORANGE BY GRANT
DEED RECORDED JUNE 4, 2003 AS INSTRUMENT NO. 2003000648901 OF OFFICIAL RECORDS,
IN THE OFFICE OF SAID COUNTY RECORDER.


PARCEL 3


THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED RECORDED JUNE 10, 1957 IN
BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER
DESCRIBED AS FOLLOWS:



	 	 	 
	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM
THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF CALIFORNIA,
A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2, 1899 IN BOOK 44,
PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10' 50" WEST ALONG SAID LINE 3131.98
FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID POINT OF BEGINNING BEING
MONUMENTED BY UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9° 48' 11" WEST
529.60 FEET TO A 2" × 2" STAKE AND THE TRUE POINT OF BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85° 48' 16" WEST, 380.00 FEET TO A 2" × 2" STAKE;
THENCE NORTH 4° 11' 44" EAST 1750.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 85°
48' 16" EAST 380.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 4° 11' 44" WEST
1750.00 FEET TO A 2" × 2" STAKE AND THE TRUE POINT OF BEGINNING.





THE ABOVE DESCRIPTION WAS COMPILED FROM INFORMATION SUPPLIED BY FIRST AMERICAN
TITLE COMPANY PRELIMINARY REPORT NO. 2033661, DATED JULY 16, 2003.


EXHIBIT “‘Al’ SITE
DEPICTION”, IS FOR INFORMATIONAL PURPOSES ONLY.


SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	 	 	
PREPARED BY: THE KEITH COMPANIES

UNDER THE DIRECTION OF:
	 	 	 
		 	

	 	 
	 	
KATHLEEN SUSAN TETREAULT P.L.S. 7297

MY LICENSE EXPIRES 12/31/2004
	 	 
	 	
August 20, 2003

JN: 13207.00



 Page 4 of 4






 















 














 













 














 




Revised 11/22/03


EXHIBIT F

NON-EXCLUSIVE ASSIGNMENT OF CONTRACTS AND BILL OF SALE



     THIS NON-EXCLUSIVE ASSIGNMENT OF CONTRACTS AND BILL OF SALE
(“Assignment”) is dated as of       , 2003, and is hereby entered into by and
between NUEVO ENERGY COMPANY, A DELAWARE CORPORATION (“Assignor”) and TONNER
HILLS SSP, LLC, a Delaware limited liability company (“Shea”) and TONNER HILLS
680 LLC, a Delaware limited liability company (“TH 608”) (jointly referred to
herein as “Assignee”) with respect to the following:


     1.     For valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Assignor hereby sells, assigns, transfers, grants, sets
over and delivers unto Assignee all of Assignor’s right, title, and interest in
and to all those certain (i) Long Lead Items (defined in Section 2.2.4 of the
PSA) and (ii) those certain well samples and cores located in the buildings
within Parcel 3 (“Personalty”) described on Exhibit A to that certain Purchase
and Sale Agreement by and between Assignor and Assignee dated      , 2003
(“PSA” or “Agreement”). The Personalty is conveyed in “AS IS,” “WHERE IS” CONDITION,
with all faults and defects, without warranty or representation, express or
implied, of any kind, including without limitation, warranty of fitness for a
particular purpose, habitability, merchantability, suitability or quality.


     2.     For valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Assignor, to the fullest extent legally permissible (and
only to the extent legally permissible), hereby assigns non-exclusively unto
Assignee all of Assignor’s rights, title and interest to those contracts and
agreements listed in Attachments 1, 2 and 3 insofar and only insofar as they
relate to the Land (collectively “Contracts” or “Contract Rights”), which to
the best of Assignor’s knowledge, include all of the remaining Contract Rights
pertaining to the Land, which were not otherwise exclusively assigned in the
Grant Deed. The non-exclusive Contract Rights assigned by this section and
this Assignment specifically pertain only to the surface rights in the Land, as
described more particularly in the Grant Deed, and are expressly assigned on a
non-exclusive basis to Assignee.


     3.     Assignee hereby expressly assumes and agrees to perform all of Assignor’s
obligations under the Contracts arising from and after the date hereof and Long
Lead Items, and, without in any way diluting the effect of the Indemnities of
Assignee/Buyer given in Sections 3.7 and 3.9 of the PSA, shall defend,
indemnify and hold harmless Assignor from any claim, cause of action,
liability, demand, expense or cost (including reasonable attorneys’ fees)
relating to the Contracts arising from and after the date hereof and Long Lead
Items. Except as provided to the contrary in the PSA, including the Indemnities
in Sections 3.7 and 3.9 thereof, Assignor shall defend, indemnify and hold
harmless Assignee from any claim, cause of action, liability, demand, expense
or cost (including reasonable attorneys’ fees) relating to the Contracts
arising prior to the date hereof.


Exhibit F



Page 1 of 4






 


Revised 11/22/03

     4.     This Assignment shall bind and inure to the benefit of the Parties hereto
and their respective successors, legal representatives and assigns.


     5.     This Assignment may be executed in counterparts with the same force and
effect as if the Parties hereto had executed one instrument and each such
counterpart shall constitute an original hereof.


     6.     All defined terms used herein have the meanings prescribed in the PSA,
including “to the best of Assignor’s knowledge” which is defined in Section
3.1C, thereof.


Executed this_________________________day of___________________________, 2003.




	 	 	 	 	 	 	 	 	 
	
“ASSIGNOR”
	 	 	 	NUEVO ENERGY COMPANY, a Delaware

corporation	 	 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	
	 	 
	 	 	 	 	Name:
	 	George B. Nilsen	 	 
	 	 	 	 	Title:
	 	Senior Vice President	 	 



Exhibit F



Page 2 of 4






 


Revised 11/22/03


	 	 	 	 	 	 	 	 	 
	 
	“ASSIGNEE”	 	TONNER HILLS SSP, LLC, a Delaware limited
liability company

	 	 	 	 	 	 	 	 	 
	 	 	By: 	 	Standard Pacific of Tonner Hills, LLC, a Delaware limited liability
company, a member 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	Standard Pacific Corp., a Delaware corporation, its sole member 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	Title:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	Title:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Shea Tonner Hills, LLC, a Delaware limited liability company, a
member

	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: 	Shea Homes Limited Partnership,
a California limited partnership, its sole
member 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	By: 	J.F. Shea LLC,
a Delaware limited liability company, its General Partner 
	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 	 	 
	 	

	 	 	 	 	 	 	Title:
	 	 
	 	 	 	 	 	 	 
	 	

	 	 	 	 	 	 	By:
	 	 
	 	 	 	 	 	 	 
	 	

	 	 	 	 	 	 	Title:
	 	 
	 	 	 	 	 	 	 
	 	

	 	 	TONNER HILLS 680 LLC, a

Delaware limited liability company
	 
	 	 	By:
	 	 	 	 	 	 
	 	 	 	 	

	 
	 	 	 	 	By:
	 	 	 	 
	 	 	 	 	 	 	




Exhibit F



Page 3 of 4






 


Revised 11/22/03


	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	

	 
	 	 	By:
	 	 	 	 
	 	 	 	 	

	 
	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	

	 	 	 	 	By:
	 	 
	 	 	 	 	 
	 	





Exhibit F



Page 4 of 4






 


Revised 11/22/03

ATTACHMENT 1



Certain Non-Exclusive Rights-of-Way, Contracts and License Agreements




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 	 	 	Schedule 1.1 (c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	Order #	 	#’s
	
	 	
	 	
	 	
	 	
	 	
	 	

	57534	 	
ASSIGN BILL OF SALE
	 	5/12/71
	 	5/13/75
11410/1929
OR
	 	Waste Water

Disposal Company
	 	 	119	 	 	 	504	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57862.2	 	
Easement Agree.
	 	 	 	8/7/89
60/368 OR
	 	Kraemer Imperial

Associates to

UNOCAL
	 	 	130	 	 	 	507	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	65186	 	
ROW
	 	10/14/96
	 	12/18/1996 Doc. No.

19960637286
	 	UNOCAL to NUEVO
	 	 	A	 	 	 	506	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	55701	 	
Deed
	 	 	 	6/10/1957 
3936/314
OR
	 	UNOCAL
	 	 	88	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
57534.1	 	
QC
	 	 	 	8/19/93 
93/0558983
DOC
	 	UNOCAL
	 	 	120	 	 	 	504.1	 



     (1)  That certain “Corridor Easement” described in Item C and that certain
“Street Easement” described in Item D in that certain Grant Deed dated October
3, 2001 by and between Nuevo and Brea Walden, LLC, recorded October 9, 2001 as
Instrument No. 20010710856 in the Official Records of Orange County,
California.


     (2)  Waste Water Line Agreements:



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Waste	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Water	 	 	 	Document	 	 	 	 
	Dated	 	Recorded	 	Co. File No.	 	Book/Page	 	Number	 	Doc. Type	 	Grantor
	
	 	
	 	
	 	
	 	
	 	
	 	

	5/1/1974	 	
11/5/1974
	 	 	 	11280/1845
	 	 	3078	 	 	Assign &
Bill of Sale
	 	Waste

Water

Disposal

Company
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	10/1/1995	 	
4/10/1996
	 	 	 	 	 	 	Recorder No.
19960175928	 	 	Deed & Bill
of Sale and
Assign.
	 	Unocal
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	11/2/1955	 	
3/8/1956
	 	U-11
	 	3430/504
	 	 	Unocal File No.
61987.3-
Recorder No.
35165	 	 	ROW
	 	Unocal



Attachment 1 to Non-Exclusive Assignment of

Contracts and Bill of Sale

Page 1 of 2



 






 


Revised 11/22/03




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Waste	 	 	 	 	 	 	 	 
	 	 	 	 	Water	 	 	 	Document	 	 	 	 
	Dated	 	Recorded	 	Co. File No.	 	Book/Page	 	Number	 	Doc. Type	 	Grantor
	
	 	
	 	
	 	
	 	
	 	
	 	

	4/25/1956	 	
5/1/1956
	 	 	 	3493/528
	 	Unocal File No.
61987.47
	 	Q.C. Deed
	 	Waste

Water

Disposal

Company
	 	 	 	 	 	 	 	 	 	 	 	 	 
	10/15/1996	 	 	 	 	 	 	 	Unocal File No.
65186
	 	ROW
	 	Unocal
	 	 	 	 	 	 	 	 	 	 	 	 	 
	4/2/1971	 	
No
	 	U-13
	 	 	 	Unocal File No.
68869.3
	 	ROW
	 	Unocal
	 	 	 	 	 	 	 	 	 	 	 	 	 
	5/10/1928	 	
No
	 	U-14
	 	 	 	 	 	ROW
	 	West Coast
Oil Co.
	 	 	 	 	 	 	 	 	 	 	 	 	 
	8/1/1978	 	 	 	 	 	 	 	Unocal File No.
57635 – ROW
Green Map No.
633
	 	ROW
	 	E.H.
Associates



Attachment 1 to Non-Exclusive Assignment of

Contracts and Bill of Sale

Page 2 of 2










 





ATTACHMENT 2



List of Unrecorded Contracts, Agreements, Easements and Licenses

(Exhibit Q to PSA)



Contracts



     (1)  The Commercial Lease and Agreement between Nuevo Energy Company, as Lessor,
and Brea Green Recycling, Inc., as Lessee,-dated February 1, 1997;


     (2)  The Letter Agreement between Haynes Apiaries and Union Oil Company of
California dated December 29, 1992, as amended;


     (3)  The Easement Agreement for Storm Drain Improvement between Nuevo Energy
Company and Brea Olinda Venture L. L. C. dated November 3, 2000,


     (4)  Asset Purchase Agreement dated February 16, 1996 by and among Union Oil
Company of California, Union California Pipeline Company and Nuevo Energy
Company, to the extent previously described in the Agreement, INSOFAR AND ONLY
INSOFAR AS SAID ASSET PURCHASE AGREEMENT PERTAINS TO THE LAND, AND NOT THE OIL
ASSETS UNDERLYING THE LAND;


     (5)  Acquisition and Settlement Agreement entered into as of July 23, 2002, by
and between Union Oil Company of California and Nuevo, together with all
subsequent agreements required thereunder, insofar as such Acquisition and
Settlement Agreement pertains to the Land; and


     (6)  Acquisition Agreement entered into July 29, 2002, by and between Union Oil
Company of California and Nuevo, together with all subsequent agreements
required thereunder, insofar as such Acquisition Agreement pertains to the
Land.


Additional Contracts, Licenses, Easements and Agreements




	1.	 	Memorandum of Understanding between Nuevo, County of Orange and City of
Brea dated December 10, 2002.
	 
	2.	 	Impact Mitigation Agreement between Brea Olinda Unified School District and
Nuevo dated as of October 28, 2002.
	 
	3.	 	Oil Accommodation and Surface Development Agreement between Nuevo and Aera
Energy LLC (“Aera”) dated September 9, 2003, to the extent described in the
Agreement at Section 5.36.
	 
	4.	 	Utility Easement between Nuevo and Aera dated September 9, 2003, which shall
be recorded by Aera in its sole discretion, subject to the provisions of
Section 5.36 in the Agreement.



Attachment 2




Page 1 of 3







 



	5.	 	Land Development License Agreement (Aera to Nuevo) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9, 2003.
(The Memorandum shall be recorded by Nuevo in its sole discretion.)
	 
	6.	 	Land Development License Agreement (Nuevo to Aera) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9, 2003.
(The Memorandum shall be recorded in Aera’s sole discretion.)
	 
	7.	 	Letter Agreement Concerning License Rights executed by Nuevo, Aera and
Blacksand Energy Partners, L.P. (“Blacksand”) dated September 9, 2003.
	 
	8.	 	Land Development License Agreement between Nuevo, Aera and Blacksand dated
September 9, 2003 and Memorandum to Land Development License Agreement between
Nuevo and Aera dated September 9, 2003, which Memorandum shall be recorded in
Aera’s sole discretion.
	 
	9.	 	License Agreement between Nuevo and Aera dated September 9, 2003.
	 
	10.	 	License Agreement between Nuevo and W B Scott Investment Company dated
April 7, 1925.
	 
	11.	 	Consent Agreement between Nuevo and Shell Oil Company dated July 10, 1951.
	 
	12.	 	Agreement between Nuevo and General Petroleum dated February 17, 1939.
	 
	13.	 	Permit between Nuevo and Orange County Flood Control District dated August
10, 1962.
	 
	14.	 	Amended Easement between Nuevo and Secretary of the Army dated July 20,
1994.
	 
	15.	 	Water Line Agreement between Union Oil Company of California and Thompson
Drilling Company dated March 29, 1988, as amended.
	 
	16.	 	Brea Canon Oil Company to General Petroleum Corporation dated May 1921.
	 
	17.	 	Master Services Agreement dated June 17, 2003 by and between Nuevo Energy
Company, as Client and Tetra Tech, Inc., as Contractor (Technical Support for
Remediation Services).



Contracts Relating to Entitlement Efforts at Tonner Hills




	1.	 	Letter Agreements dated March 19, 2001 and October 1, 2002, by and between
Deborah Linn Associates and Nuevo.
	 
	2.	 	Contract dated February 8, 2001, by and between Culbertson, Adams &
Associates and Nuevo, as amended by letter dated July 16, 2002.
	 
	3.	 	Proposal dated June 18, 2002, from Earth Consultants International to Nuevo.



Attachment 2




Page 2 of 3







 



	4.	 	Professional Service Agreement dated April 17, 2001, by and between The
Keith Companies, Inc. and Nuevo.
	 
	5.	 	Professional Services Agreement dated June 15, 1998, by and between QST
Environmental, Inc. and Nuevo, as amended February 27, 2002.



Contracts Relating to Revegetation Efforts at Tonner Hills




	1.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (82 Acre
Revegetation).
	 
	2.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (14 Acre
Revegetation).
	 
	3.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (20 Acre
Revegetation).



Attachment 2




Page 3 of 3







 



ATTACHMENT 3


List of Recorded Rights of Way and Contracts



     Easements, Licenses, Rights-of-Way, etc.



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 	 	 	Schedule 1.1(c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	Order #	 	#’s
	
	 	
	 	
	 	
	 	
	 	
	 	

	 	 	
ROW
	 	4/8/63
	 	4/19/63
6515/482
	 	Pacific Lighting

Gas Supply Co.
	 	 	7	 	 	N/A (31.7)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
ROW
	 	2/13/65
	 	2/23/65
7422/249
	 	Pacific Lighting

Gas Supply Co.
	 	 	8	 	 	317
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Easement
	 	1/15/51
	 	3/15/51
2158/495
	 	UNOCAL	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Easement
	 	8/23/88
	 	5/9/89
89-243784
	 	UNOCAL	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	502	 	
ROW
	 	2/22/08
	 	39795
	 	Industrial Oil CO
	 	 	5	 	 	601
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5254	 	
ROW
	 	 	 	5/17/2001
58/365

Deeds
	 	Brea Canon Oil CO.
	 	 	22	 	 	602
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5254A	 	
ROW
	 	 	 	4/28/1930
382/44 OR
	 	Brea Canon Oil CO.
	 	 	23	 	 	602
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	52980.1	 	
ROW
	 	 	 	4/28/1955
3047/183

OR
	 	W B Scott

Investment Company
	 	 	44	 	 	612
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755	 	
Easement
	 	 	 	9/27/43
1215/34 OR
	 	Anaheim Union Water

Company
	 	 	52	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.2	 	
Mod.
	 	 	 	6/7/49
1855/8 OR
	 	Anaheim Union Water

Company
	 	 	53	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.3	 	
Mod.
	 	 	 	9/23/66
8057/221 OR
	 	Anaheim Union Water

Company
	 	 	54	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.4	 	
Easement
	 	 	 	1/7/71
9512/924 OR
	 	State of California
	 	 	55	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.5	 	
Easement
	 	 	 	11/18/71
9892/217 OR
	 	State of California
	 	 	56	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.7	 	
ROW
	 	 	 	9/26/72
10343/735 OR
	 	Anaheim Union Water

Company
	 	 	58	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.8	 	
Assignment
	 	 	 	11/29/72
10465/69 OR
	 	Continental Mobile

Housing, Inc.
	 	 	59	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	54507	 	
ROW
	 	 	 	1/23/11
195/212

Deeds
	 	Pacific Electric

Land C
	 	 	76	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57241	 	
Easement
	 	 	 	9/30/70
451/102 OR
	 	State of California
	 	 	112	 	 	630
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57595	 	
ROW
	 	 	 	3/16/77
12106/802 OR
	 	Moreland Develop C
	 	 	123	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57595.1	 	
ROW
	 	 	 	6/8/77
12233/501 OR
	 	Moreland Develop C
	 	 	124	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 



Page 1 of 5






 




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 	 	 	Schedule 1.1(c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	Order #	 	#‘s
	
	 	
	 	
	 	
	 	
	 	
	 	

	57633.1	 	
ROW
	 	 	 	7/24/78
1269/1868 OR
	 	IPS, A General

Partnshp
	 	 	125	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57667	 	
ROW
	 	 	 	12/14/79
13437/789

OR
	 	Moreland Develop C
	 	 	126	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57848	 	
Grant of

Easement
	 	 	 	11/24/86
86/619178

OR
	 	Fairway Associates
	 	 	129	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57981	 	
ROW
	 	 	 	11/2/89
80-59276 DOC
	 	Sanitation, Inc.
	 	 	136	 	 	500
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	58049	 	
ROW
	 	 	 	1/25/93
93-054367

DOC
	 	Sanitation, Inc
	 	 	137	 	 	500
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	62528	 	 	 	 	 	6/23/54
2755/502 OR
	 	UNOCAL
	 	 	140	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7070.35	 	
Deed
	 	 	 	5/21/58
4291/396 OR
	 	UNOCAL
	 	 	159	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7070.44	 	
ROW
	 	 	 	1/17/64
6886/922 OR
	 	UNOCAL
	 	 	160	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7176.19	 	
Deed
	 	 	 	12/28/73
11044/678

OR
	 	UNOCAL
	 	 	168	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7176.2	 	
Deed
	 	 	 	11/15/47
1599/131 OR
	 	UNOCAL
	 	 	169	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
ROW
	 	 	 	5-15-97 Document

No. 19970226200
	 	UNOCAL
	 	 	A	 	 	666
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Deed
	 	8/9/98
	 	8-14-98 1998-

0533265
	 	UNOCAL
	 	 	A	 	 	736
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	19990774980	 	
Easement

& Agreement
	 	 	 	11/5/1999 Doc. No.

19990774980
	 	Unocal and Nuevo
	 	 	A	 	 	402



Contracts/Agreements



     (1)  The Indenture, as amended, by and between Union Oil Company of California
and Columbia Oil Producing Company dated February 26, 1901.


     (2)  Agreement Between Adjacent Landowners dated effective as of October 9, 2001
by and between Nuevo and Brea Walden, LLC, to the extent previously described
in the Agreement at Section 5.37, said Agreement Between Adjacent Landowners
being filed of record October 9, 2001, Instrument No. 20010710857 in the
official records of Orange County, California.


     (3)  Pipeline Easement Agreement dated September 13, 2002 by and between Union
Oil of California and Nuevo Energy Company, said Memorandum of Pipeline
Easement being filed of record December 6, 2002, Instrument No. 2002001104088
in the official records of Orange County, California.



Page 2 of 5








 




	(4)       Development Agreement dated December 4, 2002, between Nuevo and County of
Orange, said Development Agreement being filed of record February 14, 2003,
Instrument No. 2003000171873 in the official records of Orange County,
California.



Additional Easements




	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	12/14/1896	 	
The Stearns Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97
 30/11
	 	 	 	 	 	 	 
	2/21/1928	 	
Brea Canon Oil Company
	 	Waste Water Disposal Company
	 	2/24/28
 137/139
	 	 	 	 	 	 	 
	8/11/1986	 	
City of Brea (County
of Orange)
	 	Union Oil Company of California
	 	8/12/86
 86-357255
	 	 	 	 	 	 	 
	10/16/1958	 	
Collier Carbon and
Chemical Corporation
	 	Union Oil Company of California
	 	11/3/58
 4470/10
	 	 	 	 	 	 	 
	5/7/1996	 	
Nuevo Energy Company
	 	Union Oil Company of California,
dba UNOCAL
	 	5/26/1996
 Inst.
19960254739
	 	 	 	 	 	 	 
	5/12/1902	 	
The Steams Ranchos

Company
	 	Pacific Coast Oil Company
	 	6/25/02
 75/254
	 	 	 	 	 	 	 
	12/14/1896	 	
The Stearns Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97
 30/11
	 	 	 	 	 	 	 
	4/19/1913	 	
Union Oil Company of
California
	 	Pacific Light & Power Corporation
	 	12/15/13
 244/37
	 	 	 	 	 	 	 
	8/30/1928	 	
Union Oil Company of
California
	 	County of Orange
	 	11/8/28
 220/38
	 	 	 	 	 	 	 
	9/17/1940	 	
Union Oil Company of
California
	 	The Metropolitan Water District
of Southern California
	 	10/29/40
 1067/308
	 	 	 	 	 	 	 
	2/11/1954	 	
Union Oil Company of
California
	 	Amoniaco Corporation
	 	2/16/54
 2670/114
	 	 	 	 	 	 	 
	6/7/1957	 	
Union Oil Company of
California
	 	Brea Chemical, Inc.
	 	6/10/57
 3936/324
	 	 	 	 	 	 	 
	4/1/1958	 	
Union Oil Company of
California
	 	The Metropolitan Water District
of Southern California
	 	5/21/58
 4291/400
	 	 	 	 	 	 	 
	7/27/1962	 	
Union Oil Company of
California
	 	Boy Scouts of America, Los
Angeles Area Council
	 	8/1/62
 6245/654



Page 3 of 5






 




	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	10/2/1962	 	
Union Oil Company of
California
	 	Southern California Edison Company
	 	1/18/63

6399/705
	 
	Amended by unrecorded Amendment of Easement dated August 4, 2003 by Nuevo Energy Company, as Grantor
to Southern California Edison Company, as Grantee.
	 
	3/1/1977	 	
Union Oil Company
of California
	 	Southern California Edison Company
	 	3/29/77
 12123/814
	 	 	 	 	 	 	 
	9/18/1978	 	
Union Oil Company
of California
	 	Southern California Edison Company
	 	2/5/79
 13024/1157
	 	 	 	 	 	 	 
	1/26/1982	 	
Union Oil Company
of California
	 	Mobil Oil Corporation
	 	3/31/82
 Inst.
82-340271
 (Los
Angeles County)
	 	 	 	 	 	 	 
	9/13/1984	 	
Union Oil Company
of California
	 	City of Brea
	 	10/11/84 
84-421551
	 	 	 	 	 	 	 
	9/10/1985	 	
Union Oil Company
of California
	 	City of Brea
	 	10/7/85 
85-382994
	 	 	 	 	 	 	 
	7/3/1986	 	
Union Oil Company
of California
	 	City of Brea
	 	8/13/86 
86-359858
	 	 	 	 	 	 	 
	9/2/1986	 	
Union Oil Company
of California
	 	Brea H.O.P.E Inc.
	 	10/1/86 
86-459482
	 	 	 	 	 	 	 
	5/8/1987	 	
Union Oil Company
of California
	 	City of Brea
	 	5/11/87 
87-26083
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96
 Inst.
19960153323
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst.
19960153324
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst.
19960153322
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst.
1996013321
	 	 	 	 	 	 	 
	11/29/1988	 	
Union Oil Company
of California & Shell Oil Company
	 	City of Brea
	 	1/16/69
 884/518
	 	 	 	 	 	 	 
	9/25/1995	 	
Union Oil Company
of California dba
Unocal
	 	UNOCAL California Pipeline Company
	 	12/18/95 
19950565134



Page 4 of 5






 




	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	5/17/1988	 	
Union Oil Company
of California, dba
UNOCAL
	 	Southern California Edison Company
	 	6/7/88 
Inst.
88-268095
	 	 	 	 	 	 	 
	9/15/1995	 	
Union Oil Company
of California, dba
UNOCAL
	 	UNOCAL California Pipeline Company
	 	10/25/95 
Inst.
19950473641
	 	 	 	 	 	 	 
	12/11/1995	 	
Union Oil Company
of California, dba
UNOCAL
	 	Southern California Edison Company
	 	1/4/96 
Inst.
19960004773
	 	 	 	 	 	 	 
	1/14/1915	 	
Union Oil Company
of California,


Columbia Oil
Producing Company,


General Petroleum
Company
	 	County of Orange
	 	1/21/16 
280/244
	 	 	 	 	 	 	 
	4/17/1954	 	
Union Oil Company
of California
	 	The Metropolitan Water District
of Southern California
	 	7/8/54 
2766/268
	 	 	 	 	 	 	 
	8/23/1988	 	
Union Oil Company of
California
	 	Southern California Edison Company
	 	5/9/1989 

89-243784



Amended by unrecorded Amendment of Easement dated August 4, 2003 by Nuevo Energy Company, as Grantor
to Southern California Edison Company, as Grantee.


Page 5 of 5






 



Revised 12/1/03


EXHIBIT G



RECORDING REQUESTED BY AND WHEN

RECORDED MAIL TO:



Tonner Hills SSP, LLC

603 S. Valencia Avenue

Brea, CA 92823

Attention: Alan Toffoli





MAIL TAX STATEMENTS TO ADDRESS ABOVE



SHEA GRANT DEED



     FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
NUEVO ENERGY COMPANY, a Delaware corporation (“Nuevo” or “Grantor”), hereby
grants to TONNER HILLS SSP, LLC, a Delaware limited liability company
(“Grantee”), the following described real property (“Land” or “Property”) in
the County of Orange, State of California:



	 	 	 	 	 
	 	 	
PARCEL 1:
	 	The fee, surface interest in the real property described in
Attachment No. 1 which is incorporated herein by this reference.
	 	 	
PARCEL 2:
	 	The real property interests described in Attachment No. 2,
which is incorporated herein by this reference.



SUBJECT TO:



     1.     General and special real property taxes and assessments and
supplemental taxes and
assessments, if any, which are not delinquent, including those assessed as
a result of this conveyance.


     2.     All matters contained in the Mineral Grant Deed from Grantor to
BlackSand Partners,
L.P., dated February 28, 2003, recorded on February 28, 2003 as Instrument
No. 2003000226060, in
the Official Records of Orange County, California;


     3.     That certain Agreement between Adjacent Landowners, dated October 9,
2001,
between Grantor and Brea Walden, LLC, regarding, among other things, the
construction and
location of slopes and the disposition and use of export spoils, recorded
as Instrument No.
20010710857 on October 9, 2001 in the Official Records of Orange County,
California.


Exhibit “G”

Page 1 of 5



 






 



Revised 12/1/03




     4.     That certain Temporary Easement and Transfer Agreement between Grantor
and Brea Olinda Venture, LLC, dated June 6, 2001, whether a matter of record or
not.


     5.     That certain Storm Drain Easement between Grantor and Brea Olinda
Venture, LLC,
dated November 3, 2000, whether a matter of record or not.


     6.     That certain Declaration of Development Covenants, Conditions and
Restrictions,
Exhibit “I” to the PSA (“Declaration”), of even date herewith and recorded
on such date immediately
prior to this Grant Deed.


     7.     That certain Easement Agreement between Grantor and Grantee of even
date
herewith, Exhibit “M” to the PSA, recorded concurrently with this Grant
Deed, conveying certain
easements and rights from Grantee to Grantor with respect to the Land.


     8.     That certain, unrecorded Mineral Purchase and Sale Agreement (described
in Section
5.30 of the PSA) between Grantor and BlackSand Partners, L.P., dated
February 28, 2003, including
without limitation Exhibits A through L thereto.


     9.     That certain, unrecorded (a) Oil Accommodation and Surface Development
Agreement between Grantor and Aera Energy LLC, dated September 9, 2003,
Exhibit “O” to the
PSA, and (b) Hover Agreement (described in Section 1.1.28 of the PSA),
including without
limitation all Exhibits to each of them.


     10.     All other covenants, conditions, restrictions, reservations,
privileges, rights,
rights-of-way, dedications, offers of dedication, easements, obligations,
requirements and other
matters of record or apparent, including without limitation, those
contained in Attachment No. 3,
hereto.


     11.     All easements, licenses, rights and rights-of-way regarding the Land
and all contracts,
agreements and other documents/materials relating thereto (described in
Attachment “4” to the Declaration and appended hereto as Attachment No.
4), whether or not a
matter of record; and that certain (a) unrecorded Unocal Asset Purchase
Agreement described in
Section 5.32 of the PSA and (b) Corporate Guaranty attached to the PSA as
Exhibit “P.”


PROVIDED, HOWEVER, THAT THE SUBSEQUENT GRANT OF ANY PORTION OF THE LAND TO
THE OWNER OF A HOME AT THE LAND SHALL NOT BE SUBJECT TO ANY OF THE MATTERS IN
PARAGRAPHS 1 THROUGH 11, ABOVE, SOLELY BY VIRTUE OF THE INCLUSION OF SUCH
PARAGRAPHS IN THIS GRANT DEED; OTHERWISE THE EFFECT OF SUCH PARAGRAPHS 1
THROUGH 11 SHALL REMAIN UNCHANGED AND THE PARAGRAPHS IN FULL FORCE AND EFFECT
ACCORDING TO THEIR TERMS.


All defined terms in that certain Purchase and Sale Agreement for the Land
between Grantor and Grantee of even date herewith, to which this Grant Deed
is Exhibit G, are incorporated herein by this reference (“Agreement” or
“PSA”).


Exhibit “G”

Page 2 of 5



 






 



Revised 12/1/03




     IN WITNESS WHEREOF, Grantor has executed this Grant Deed on the day and
year hereafter written.



	 	 	 	 	 
	Dated:
	 	NUEVO ENERGY COMPANY, a Delaware

corporation
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	GRANTOR                               



Exhibit “G”

Page 3 of 5



 






 



Revised 12/1/03




ACCEPTANCE: Grantee hereby accepts this Grant Deed on the terms and conditions
herein stated.



	 	 	 	 	 	 	 	 	 
	 	 	Dated:
_______________
	 
	 	 	TONNER HILLS SSP, LLC, a Delaware limited

liability company
	 	 	 	 	 	 	 	 	 
	 	 	By: Standard Pacific of Tonner Hills, LLC, a
Delaware limited liability company, a member
	 	 	 	 	 	 	 	 	 
	 	 	 	By: Standard Pacific Corp., a Delaware
corporation, its sole member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	

	 	 	 	 	Title:
	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	

	 	 	 	 	Title:
	 	

	 	 	 	 	 	 	 	 	 
	 	 	By: Shea Tonner Hills, LLC, a Delaware limited

liability company, a member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: Shea Homes Limited Partnership, a
California limited partnership, its sole
member
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: J.F. Shea LLC, a Delaware limited
liability company, its General
Partner
	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	

	 	 	 	 	Title:
	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:
	 	

	 	 	 	 	Title:
	 	

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	GRANTEE



Exhibit “G”

Page 4 of 5




 






 



Revised 12/1/03





	 	 	 	 	 	 	 
	State of California	 	)	
 
	 	 	 
	 	 	)	
 
	 	 	 
	County of Orange	 	)	
 
	 	 	 



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


     WITNESS my hand and official seal.


Signature







	 	 	 	 	 	 	 
	State of California	 	
 
	)	 	 	 
	 	 	
 
	)	 	 	 
	County of Orange	 	
 
	)	 	 	 



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


     WITNESS my hand and official seal.


Signature





Exhibit “G”

Page 5 of 5




 






 





ATTACHMENT NO. 1



TO



GRANT DEED



PARCEL 1: LEGAL DESCRIPTION OF SHEA DEVELOPMENT AREAS



Attachment 1 to Exhibit “G”



 






 





LEGAL DESCRIPTION



THOSE PORTIONS OF TRACT NO. 16178, IN THE UNINCORPORATED TERRITORY OF THE COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK
        , PAGES
         THROUGH
         INCLUSIVE OF
MISCELLANEOUS MAP, IN THE OFFICE OF THE COUNTY RECORDER, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

 LOTS 1 THROUGH 8, 10 AND 20, TOGETHER WITH LETTERED LOTS A, B, C, AND D OF SAID
TRACT NO. 16178


CONTAINING: 210.149 ACRES, MORE OR LESS


ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART
HEREOF.


SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	 	 	
PREPARED BY OR

UNDER THE DIRECTION OF:
	 	 	 
		 	
-s- KATHLEEN SUSAN TETREAULT

KATHLEEN SUSAN TETREAULT, P.L.S. 7297

MY LICENSE EXPIRES 12/31/2004
	 	 	 
	 	 	
December 4, 2003

JN: 13207.00.000



Page 1 of 1



 






 









Attachment 2 to Exhibit “G”




 






 





ATTACHMENT NO. 2

TO

GRANT DEED


PARCEL 2: Non-Exclusive Corridor
Easement, Street Easement and Drainage Easement burdening the
Adjacent Property


Attachment 2 to Exhibit “G”






 





ATTACHMENT NO. 2 A



CORRIDOR EASEMENT



     A non-exclusive, subsurface easement and nonexclusive surface easement
(“Corridor Easement”) on, over and under the Adjacent Property (owned by Brea
Walden, LLC (“Walden”)) for ingress, egress and access to and from, and the
construction, installation, maintenance, replacement, repair, removal,
reconstruction and other uses (collectively, “uses”) of (a) electric, gas,
telephone, water, sewer, drainage, and all other wet and dry utilities, (b)
cable television and other telecommunications and/or data transmission lines
and facilities, and (c) other uses and facilities in connection with its
development of the Land as a master-planned community (the location of the
Corridor Easement is attached hereto); provided that the construction and
installation of such facilities shall not unreasonably interfere with Grantor’s
and BlackSand Partners, L.P.’s Oil Operations or Walden’s development of the
Adjacent Property, and after grading thereof has been completed, Grantee shall
repair any damage to the surface of the Adjacent Property caused by its
activity thereon; and provided further that Grantee shall construct and
maintain landscaping on and over the surface of the Corridor Easement
compatible with its development of the Land and Walden’s development of the
Adjacent Property.


Attachment 2A to Exhibit “G”



 






 









 






 





ATTACHMENT “2”

TENTATIVE TRACT NO. 16047

LOTS “A” & “F”



THOSE PORTIONS OF THE SOUTHEAST QUARTER OF SECTION 7. IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE CITY OF BREA. STATE OF CALIFORNIA AS SHOWN ON RECORD
OF SURVEY NO. 91-1007 FILED IN BOOK 133 PAGES 41 THROUGH 46 INCLUSIVE OF
RECORDS OF SURVEY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, ALSO
DESCRIBED AS A PORTION OF THE LAND DESCRIBED IN A. BILL OF SALE AND ASSIGNMENT,
RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928 OF OFFICIAL RECORDS. IN
THE OFFICE OF SAID COUNTY RECORDER. MORE PARTICULARLY DESCRIBED AS FOLLOWS:


PARCEL A (TENTATIVE TRACT NO. 16047 LOT “F”)


COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION
7 ;


THENCE ALONG THE EASTERLY LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 SOUTH
00°10'32'' WEST 543.66 FEET TO A POINT ON THE NORTHERLY LINE OF THE CITY OF BREA
ANNEXATION NO. 3-76. AS DESCRIBED IN RESOLUTION NO. 77-45 RECORDED
JUNE 28, 1977. IN BOOK 12265, PAGE 1781 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY
RECORDER;


THENCE ALONG SAID NORTHERLY LINE OF
SAID ANNEXATION NORTH 89°53'53''W 466.40
FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 6.05 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE
SOUTHERLY, AND HAVING A RADIUS OF 45.00 FEET. A RADIAL LINE THROUGH SAID POINT
BEARS NORTH 00050'30'' WEST, SAID POINT BEING ON THE RIGHT-OF-WAY OF PROPOSED
STREET “A”;


THENCE WESTERLY ALONG SAID CURVE AND RIGHT-OF-WAY 26.65 FEET THROUGH A CENTRAL
ANGLE OF 33°55'32'';


THENCE NORTH 14.12 FEET TO SAID NORTHERLY LINE;


THENCE ALONG SAID NORTHERLY LINE SOUTH 89°53'53'' EAST 25.00 FEET TO THE POINT
OF BEGINNING.


PARCEL B (TENTATIVE TRACT NO. 16047 LOT “A” )


COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION 7
;


THENCE ALONG THE EASTERLY LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 SOUTH
00° 10'32'' WEST 543.66 FEET TO A POINT ON THE NORTHERLY LINE OF THE CITY OF
BREA ANNEXATION NO. 3-76. AS DESCRIBED IN RESOLUTION NO. 77-45 RECORDED


Page 1 of 2



 






 





JUNE 28, 1977, IN BOOK 12265, PAGE 1781 OF OFFICIAL RECORDS IN THE OFFICE OF
SAID COUNTY RECORDER;


THENCE ALONG SAID NORTHERLY LINE OF SAID ANNEXATION NORTH 89°53'53''W 723.50
FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 07°50'05'' EAST 87.46 FEET TO A POINT ON THE RIGHT-OF-WAY OF
PROPOSED STREET “A”;


THENCE ALONG SAID RIGHT-OF-WAY SOUTH
81°51'01'' WEST 25.00 FEET;


THENCE NORTH 07°50'05'' WEST 91.09 FEET TO SAID NORTHERLY LINE;


THENCE ALONG SAID NORTHERLY LINE SOUTH
89°53'53'' EAST 25.24 FEET TO THE POINT
OF BEGINNING.


ALSO AS SHOWN ON EXHIBIT “B”, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART
HEREOF.


THIS DESCRIPTION HAS BEEN PREPARED FOR
“LAND OWNER AGREEMENT” PURPOSES AND MAY
NOT BE USED FOR THE CONVEYANCE, FINANCING OR LEASING OF LAND, EXCEPT AS
PROVIDED FOR IN LOCAL ORDINANCE AND THE SUBDIVISION MAP ACT, A DIVISION OF THE
GOVERNMENT CODE OF THE STATE OF CALIFORNIA


SUBJECT TO COVENANTS. CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD. IF ANY.


Page 2 of 2



 






 




ATTACHMENT NO. 2 B



STREET EASEMENT



     A non-exclusive easement (“Street Easement”) on, over and under the
streets on the Adjacent Property for ingress, egress and access to and from,
and the construction, installation, maintenance, replacement, repair, removal,
reconstruction and other uses of (a) electric, gas, telephone, water, sewer,
drainage, and all other wet and dry utilities, (b) cable television and other
telecommunications and/or data transmission lines and facilities, and (c) other
facilities in connection with its development of the Land as a master-planned
community (the location of the Street Easement is attached hereto); provided
that the use of such facilities shall not unreasonably interfere with Grantor’s
or BlackSand Partners, L.P.’s Oil Operations or Walden’s development of the
Adjacent Property, and after grading thereof has been completed, Grantee shall
repair any damage to the streets and surface of the Adjacent Property caused by
its activity thereon.


Attachment 2B to Exhibit “G”



 






 









 






 









 






 









 






 





ATTACHMENT NO. 2 C



DRAINAGE EASEMENT



     A non-exclusive easement on, over and under the Adjacent Property for
drainage purposes from the Land (as shown on the attachment hereto), as well as
the right to connect to and discharge and drain through, any water, sewer and
other facilities constructed by Walden on, over and under the Adjacent
Property.


Attachment 2C to Exhibit “G”



 






 





EXHIBIT “4A”

LOTS 56 STORM DRAIN EASEMENT



THAT PORTION OF THE SOUTHEAST QUARTER OF SECTION 7. IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE CITY OF BREA, STATE OF CALIFORNIA AS SHOWN ON RECORD
OF SURVEY NO. 91-1007 FILED IN BOOK 133 PAGES 41 THROUGH 46 INCLUSIVE OF
RECORDS OF SURVEY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, ALSO
DESCRIBED AS A PORTION OF THE LAND DESCRIBED IN A, BILL OF SALE AND
ASSIGNMENT,
RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER MORE PARTICULARLY DESCRIBED AS FOLLOWS:


A STRIP OF LAND BEING 20.00 FEET WIDE THE CENTERLINE BEING DESCRIBED AS
FOLLOWS:


COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION
7;


THENCE ALONG THE EASTERLY LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 SOUTH
00°10'32'' WEST 543.66 FEET TO A POINT ON THE NORTHERLY LINE OF THE CITY OF BREA
ANNEXATION NO. 3-76, AS DESCRIBED IN RESOLUTION NO. 77-45 RECORDED JUNE 28,
1977, IN BOOK 12265, PAGE 1781 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY
RECORDER;


THENCE ALONG SAID NORTHERLY LINE OF
SAID ANNEXATION NORTH 89°53'53'' W 237.23
FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 42°02'32'' WEST 27.29 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 87.50 FEET;


THENCE 85.90 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 56°14'57'';


THENCE SOUTH 14°12'24'' EAST 57.06 FEET TO THE NORTHERLY RIGHT-OF-WAY OF LAMBERT
ROAD, BEING 120.00 FEET WIDE, AS SHOWN ON SAID RECORD OF SURVEY.


CONTAINING 0.7 ACRES MORE OR LESS


THE SIDELINES OF SAID STRIP SHALL BE LENGTHENED OR SHORTENED TO TERMINATE
NORTHERLY ON THE NORTHERLY LINE OF SAID ANNEXATION, AND SOUTHERLY ON THE
NORTHERLY RIGHT-OF-WAY OF SAID LAMBERT ROAD.


ALSO AS SHOWN ON EXHIBIT “4A”, ATTACHED HERETO AND BY THIS REFERENCE MADE A
PART HEREOF.


THIS DESCRIPTION HAS BEEN PREPARED FOR “LAND OWNER AGREEMENT” PURPOSES AND MAY
NOT BE USED FOR THE CONVEYANCE, FINANCING OR LEASING OF LAND, EXCEPT AS
PROVIDED FOR IN LOCAL ORDINANCE AND THE SUBDIVISION MAP ACT, A DIVISION OF THE
GOVERNMENT CODE OF THE STATE OF CALIFORNIA


SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.


Page 1 of 1



 






 











 






 





ATTACHMENT NO. 3



TO



GRANT DEED



(List of Recorded Rights of Way and Contracts — Same as Attachment 3 to Non-Exclusive

Assignment and Bill of Sale)



Attachment 3 to Exhibit “G”



 






 





List of Recorded Rights of Way and
Contracts



 Easements, Licenses, Rights-of-Way, etc.




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 	 	 	Schedule 1.1 (c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	Order #	 	#’s
	
	 	
	 	
	 	
	 	
	 	
	 	

	 	 	
ROW
	 	4/8/63
	 	4/19/63
6515/482
	 	Pacific Lighting

Gas Supply Co.
	 	 	7	 	 	N/A 
(31.7)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
ROW
	 	2/13/65
	 	2/23/65 
7422/249
	 	Pacific Lighting

Gas Supply Co.
	 	 	8	 	 	317
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Easement
	 	1/15/51
	 	3/15/51
 2158/495
	 	UNOCAL	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Easement
	 	8/23/88
	 	5/9/89
 89-243784
	 	UNOCAL	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	502	 	
ROW
	 	2/22/08
	 	39795
	 	Industrial Oil CO
	 	 	5	 	 	601
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5254	 	
ROW
	 	 	 	5/17/2001 
58/365

Deeds
	 	Brea Canon Oil CO
	 	 	22	 	 	602
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5254A	 	
ROW
	 	 	 	4/28/1930 
382/44 OR
	 	Brea Canon Oil CO
	 	 	23	 	 	602
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	52980.1	 	
ROW
	 	 	 	4/28/1955 3047/183

OR
	 	W B Scott

Investment Company
	 	 	44	 	 	612
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755	 	
Easement
	 	 	 	9/27/43 
1215/34 OR
	 	Anaheim Union Water

Company
	 	 	52	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.2	 	
Mod
	 	 	 	6/7/49 
1855/8 OR
	 	Anaheim Union Water

Company
	 	 	53	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.3	 	
Mod
	 	 	 	9/23/66
 8057/221 OR
	 	Anaheim Union Water

Company
	 	 	54	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.4	 	
Easement
	 	 	 	1/7/71 
9512/924 OR
	 	State of California
	 	 	55	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.5	 	
Easement
	 	 	 	11/18/71
 9892/217 OR
	 	State of California
	 	 	56	 	 	 
	 
	53755.7	 	
ROW
	 	 	 	9/26/72 10343/735 OR
	 	Anaheim Union Water

Company
	 	 	58	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.8	 	
Assignment
	 	 	 	11/29/72 
10465/69 OR
	 	Continental Mobile

Housing, Inc.
	 	 	59	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	54507	 	
ROW
	 	 	 	1/23/11
 195/212

Deeds
	 	Pacific Electric

Land C
	 	 	76	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57241	 	
Easement
	 	 	 	9/30/70 
451/102 OR
	 	State of California
	 	 	112	 	 	630
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57595	 	

ROW
	 	 	 	3/16/77 
12106/802 OR
	 	Moreland Develop C
	 	 	123	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57595.1	 	
ROW
	 	 	 	6/8/77 
12233/501 OR
	 	Moreland Develop C
	 	 	124	 	 	 



Page 1 of 5



 






 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 	 	 	Schedule 1.1 (c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	Order #	 	#’s
	
	 	
	 	
	 	
	 	
	 	
	 	

	57633.1	 	
ROW
	 	 	 	7/24/78
1269/1868 OR
	 	IPS, A General

Partnshp
	 	 	125	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57667	 	
ROW
	 	 	 	12/14/79 
13437/789

OR
	 	Moreland Develop C
	 	 	126	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57848	 	
Grant of 
Easement
	 	 	 	11/24/86 
86/619178

OR
	 	Fairway Associates
	 	 	129	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57981	 	
ROW
	 	 	 	11/2/89 
80-59276 DOC
	 	Sanitation, Inc.
	 	 	136	 	 	500
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	58049	 	
ROW
	 	 	 	1/25/93 
93-054367

DOC
	 	Sanitation, Inc
	 	 	137	 	 	500
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	62528	 	 	 	 	 	6/23/54 
2755/502 OR
	 	UNOCAL
	 	 	140	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7070.35	 	
Deed
	 	 	 	5/21/58 
4291/396 OR
	 	UNOCAL
	 	 	159	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7070.44	 	
ROW
	 	 	 	1/17/64 
6886/922 OR
	 	UNOCAL
	 	 	160	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7176.19	 	
Deed
	 	 	 	12/28/73 
11044/678

OR
	 	UNOCAL
	 	 	168	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7176.2	 	
Deed
	 	 	 	11/15/47 
1599/131 OR
	 	UNOCAL
	 	 	169	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
ROW
	 	 	 	5-15-97
 Document

No. 
19970226200
	 	UNOCAL to NUEVO
	 	 	A	 	 	666
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Deed
	 	8/9/94
	 	8-14-98 
1998-0533265
	 	UNOCAL to NUEVO
	 	 	A	 	 	736
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	19990774980	 	
Easement & Agreement
	 	 	 	11/5/1999 Doc. 
No.

19990774980
	 	Unocal and Nuevo
	 	 	A	 	 	402



Contracts/Agreements



     (1)  The Indenture, as amended, by and between Union Oil Company
of California and Columbia Oil Producing Company dated February 26, 1901;


Additional Easements



     (1)  Nuevo to UNOCAL dated May 7, 1996, recorded May
21, 1996 as
Doc. #19960254739.


     (2)  UNOCAL to UNOCAL California Pipeline Co. dated September 25,
1995,
recorded December 19, 1995 as Doc. # 19950565134.


Page 2 of 5






 





	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	12/14/1896	 	
The Steams Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97
 30/11
	 	 	 	 	 	 	 
	2/21/1928	 	
Brea Canon Oil Company
	 	Waste Water Disposal Company
	 	2/24/28 
137/139
	 	 	 	 	 	 	 
	8/11/1986	 	
City of Brea (County
of Orange)
	 	Union Oil Company of California
	 	8/12/86 
86-357255
	 	 	 	 	 	 	 
	10/16/1958	 	
Collier Carbon and
Chemical Corporation
	 	Union Oil Company of California
	 	11/3/58 
4470/10
	 	 	 	 	 	 	 
	5/7/1996	 	
Nuevo Energy Company
	 	Union Oil Company of California,
dba UNOCAL
	 	5/26/1996 
Inst. 19960254739
	 	 	 	 	 	 	 
	5/12/1902	 	
The Stearns Ranchos

Company
	 	Pacific Coast Oil Company
	 	6/25/02

75/254
	 	 	 	 	 	 	 
	12/14/1896	 	
The Stearns Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97
30/11
	 	 	 	 	 	 	 
	4/19/1913	 	
Union Oil Company of
California
	 	Pacific Light & Power Corporation
	 	12/15/13

244/37
	 	 	 	 	 	 	 
	8/30/1928	 	
Union Oil Company of
California
	 	County of Orange
	 	11/8/28 
220/38
	 	 	 	 	 	 	 
	9/17/1940	 	
Union Oil Company of
California
	 	The Metropolitan Water District
of Southern California
	 	10/29/40 
1067/308
	 	 	 	 	 	 	 
	2/11/1954	 	
Union Oil Company of
California
	 	Amoniaco Corporation
	 	2/16/54
 2670/114
	 	 	 	 	 	 	 
	6/7/1957	 	
Union Oil Company of
California
	 	Brea Chemical, Inc.
	 	6/10/57 
3936/324
	 	 	 	 	 	 	 
	4/1/1958	 	
Union Oil Company of
California
	 	The Metropolitan Water District
of Southern California
	 	5/21/58
 4291/400
	 	 	 	 	 	 	 
	7/27/1962	 	
Union Oil Company of
California
	 	Boy Scouts of America, Los
Angeles Area Council
	 	8/1/62 
6245/654
	 	 	 	 	 	 	 
	10/2/1962	 	
Union Oil Company of
California
	 	Southern California Edison Company
	 	1/18/63 
6399/705
	 	 	 	 	 	 	 
	3/1/1977	 	
Union Oil Company of
California
	 	Southern California Edison Company
	 	3/29/77 
12123/814
	 	 	 	 	 	 	 
	9/18/1978	 	
Union Oil Company of
California
	 	Southern California Edison Company
	 	2/5/79
 13024/1157



Page 3 of 5



 






 






	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	1/26/1982	 	
Union Oil Company
of California
	 	Mobil Oil Corporation
	 	3/31/82 
Inst.
82-340271 
(Los
Angeles County)
	 	 	 	 	 	 	 
	9/13/1984	 	
Union Oil Company
of California
	 	City of Brea
	 	10/11/84 
84-421551
	 	 	 	 	 	 	 
	9/10/1985	 	
Union Oil Company
of California
	 	City of Brea
	 	10/7/85
 85-382994
	 	 	 	 	 	 	 
	7/3/1986	 	
Union Oil Company
of California
	 	City of Brea
	 	8/13/86 
36-359858
	 	 	 	 	 	 	 
	9/2/1986	 	
Union Oil Company
of California
	 	Brea H.O.P.E Inc.
	 	10/1/86 
86-459482
	 	 	 	 	 	 	 
	5/8/1987	 	
Union Oil Company
of California
	 	City of Brea
	 	5/11/87 
87-26083
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96

Inst.
19960153323
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst.
19960153324
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst.
19960153322
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst.
1996013321
	 	 	 	 	 	 	 
	11/29/1988	 	
Union Oil Company
of California &
Shell Oil Company
	 	City of Brea
	 	1/16/69
 884/518
	 	 	 	 	 	 	 
	9/25/1995	 	
Union Oil Company
of California
dba
Unocal
	 	UNOCAL California Pipeline Company
	 	12/18/95 
19950565134
	 	 	 	 	 	 	 
	5/17/1988	 	
Union Oil Company
of California, 

dba
UNOCAL
	 	Southern California Edison Company
	 	6/7/88 
Inst.
88-268095
	 	 	 	 	 	 	 
	9/15/1995	 	
Union Oil Company
of California, 

dba
UNOCAL
	 	UNOCAL California Pipeline Company
	 	10/25/95
 Inst.
19950473641
	 	 	 	 	 	 	 
	12/11/1995	 	
Union Oil Company
of California, 

dba
UNOCAL
	 	Southern California Edison Company
	 	1/4/96 
Inst.
19960004773



Page 4 of 5



 






 






	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	1/14/1915	 	
Union Oil Company
of California,
Columbia Oil
Producing Company,


General Petroleum
Company
	 	County of Orange
	 	1/21/16 
280/244
	 	 	 	 	 	 	 
	4/17/1954	 	
Union Oil Company
of California
	 	The Metropolitan
Water District of
Southern California
	 	7/8/54
 2766/268



Page 5 of 5





 






 





ATTACHMENT NO. 4



TO



GRANT DEED



Attachment 4 to Exhibit “G”



 






 





     List of Unrecorded Contracts, Agreements, Easements and Licenses


Contracts



     (1)  The Commercial Lease and Agreement between Nuevo Energy Company, as
Lessor, and Brea Green Recycling, Inc., as Lessee,-dated February 1, 1997;


     (2)  The Letter Agreement between Haynes Apiaries and Union Oil Company of
California dated December 29, 1992, as amended;


     (3)  The Easement Agreement for Storm Drain Improvement between Nuevo
Energy
Company and Brea Olinda Venture L. L. C. dated November 3, 2000,


     (4)  Asset Purchase Agreement dated February 16, 1996 by and among Union
Oil
Company of California, Union California Pipeline Company and Nuevo Energy
Company, to the
extent previously described in the Agreement, INSOFAR AND ONLY INSOFAR AS
SAID
ASSET PURCHASE AGREEMENT PERTAINS TO THE LAND, AND NOT THE OIL
ASSETS UNDERLYING THE LAND;


     (5)  Acquisition and Settlement Agreement entered into as of July 23, 2002,
by and
between Union Oil Company of California and Nuevo, together with all
subsequent agreements
required thereunder, insofar as such Acquisition and Settlement Agreement
pertains to the Land;
and


     (6)  Acquisition Agreement entered into July 29, 2002, by and between Union
Oil
Company of California and Nuevo, together with all subsequent agreements
required thereunder,
insofar as such Acquisition Agreement pertains to the Land.


Additional Contracts, Licenses, Easements and Agreements




	1.	 	Memorandum of Understanding between Nuevo, County of Orange and City of
Brea
dated December 10, 2002.
	 
	2.	 	Impact Mitigation Agreement between Brea Olinda Unified School District
and Nuevo dated as of October 28, 2002.
	 
	3.	 	Oil Accommodation and Surface Development Agreement between Nuevo and
Aera
Energy LLC (“Aera”) dated September 9, 2003, to the extent described in
the Agreement
at Section 5.36.
	 
	4.	 	Utility Easement between Nuevo and Aera dated September 9, 2003, which
shall be
recorded by Aera in its sole discretion, subject to the provisions of
Section 5.36 in the
Agreement.



Page 1 of 3






 







	5.	 	Land Development License Agreement (Aera to Nuevo) and Memorandum of
Land
Development License Agreement between Nuevo and Aera dated September 9,
2003.
(The Memorandum shall be recorded by Nuevo in its sole discretion.)
	 
	6.	 	Land Development License Agreement (Nuevo to Aera) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9,
2003.
(The Memorandum shall be recorded in Aera’s sole discretion.)
	 
	7.	 	Letter Agreement Concerning License Rights executed by Nuevo, Aera and
Blacksand
Energy Partners, L.P. (“Blacksand”) dated September 9, 2003.
	 
	8.	 	Land Development License Agreement between Nuevo, Aera and Blacksand
dated
September 9, 2003 and Memorandum to Land Development License Agreement
between
Nuevo and Aera dated September 9, 2003, which Memorandum shall be
recorded in
Aera’s sole discretion.
	 
	9.	 	License Agreement between Nuevo and Aera dated September 9, 2003.
	 
	10.	 	License Agreement between Nuevo and W B Scott Investment Company dated
April 7,
1925.
	 
	11.	 	Consent Agreement between Nuevo and Shell Oil Company dated July 10, 1951.
	 
	12.	 	Agreement between Nuevo and General Petroleum dated February 17, 1939.
	 
	13.	 	Permit between Nuevo and Orange County Flood Control District dated August
10, 1962.
	 
	14.	 	Amended Easement between Nuevo and Secretary of the Army dated July 20,
1994.
	 
	15.	 	Water Line Agreement between Union Oil Company of California and
Thompson
Drilling Company dated March 29, 1988, as amended.
	 
	16.	 	Brea Canon Oil Company to General Petroleum Corporation dated May 1921.
	 
	17.	 	Master Services Agreement dated June 17, 2003 by and between
Nuevo Energy
Company, as Client and Tetra Tech, Inc., as Contractor (Technical
Support for
Remediation Services).



Contracts Relating to Entitlement Efforts at Tonner Hills




	1.	 	Letter Agreements dated March 19, 2001 and October 1, 2002, by and
between Deborah
Linn Associates and Nuevo.
	 
	2.	 	Contract dated February 8, 2001, by and between Culbertson, Adams &
Associates and
Nuevo, as amended by letter dated July 16, 2002.
	 
	3.	 	Proposal dated June 18, 2002, from Earth Consultants International to Nuevo.



Page 2 of 3








 








	4.	 	Professional Service Agreement dated April 17, 2001, by and
between The Keith
Companies, Inc. and Nuevo.
	 
	5.	 	Professional Services Agreement dated June 15, 1998, by and
between QST
Environmental, Inc. and Nuevo, as amended February 27, 2002.



Contracts Relating to Revegetation Efforts at Tonner Hills




	1.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company,
as Client and Nature’s Image, Inc., as Contractor (82 Acre Revegetation).
	 
	2.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company,
as Client and Nature’s Image, Inc., as Contractor (14 Acre Revegetation).
	 
	3.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company,
as Client and Nature’s Image, Inc., as Contractor (20 Acre Revegetation).



Page 3 of 3






 



Revised 12/1/03





EXHIBIT G



RECORDING REQUESTED BY AND WHEN

RECORDED MAIL TO:



Tonner Hills 680 LLC

603 S. Valencia

Avenue Brea, CA 92823

Attention: Joe Fleischaker




MAIL TAX STATEMENTS TO ADDRESS ABOVE



TH 680 GRANT DEED



     FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged,
NUEVO ENERGY COMPANY, a Delaware corporation (“Nuevo” or “Grantor”), hereby
grants to TONNER HILLS 680 LLC, a Delaware limited liability company
(“Grantee”), the following described real property (“Land” or “Property”) in
the County of Orange, State of California:



	 	 	 
	PARCEL 1:	 	
The fee, surface interest in the real property described in
Attachment No. 1 which is incorporated herein by this reference.
	 
	PARCEL 2:	 	
The real property interests described in Attachment No. 2,
which is incorporated herein by this reference.



SUBJECT TO:



     1.     General and special real property taxes and assessments and
supplemental taxes and
assessments, if any, which are not delinquent, including those assessed as
a result of this conveyance.


     2.     All matters contained in the Mineral Grant Deed from Grantor to
BlackSand Partners,
L.P., dated February 28, 2003, recorded on February 28, 2003 as Instrument
No. 2003000226060, in
the Official Records of Orange County, California;


     3.     That certain Agreement between Adjacent Landowners, dated October 9,
2001,
between Grantor and Brea Walden, LLC, regarding, among other things, the
construction and
location of slopes and the disposition and use of export spoils, recorded
as Instrument No.
20010710857 on October 9, 2001 in the Official Records of Orange County,
California.


Exhibit “G”

Page 1 of 5



 






 



Revised 12/1/03




     4.     That certain Declaration of Development Covenants, Conditions and
Restrictions, Exhibit “I” to the PSA (“Declaration”), of even date herewith
and recorded on such date immediately prior to this Grant Deed.


     5.     That certain Easement Agreement between Grantor and Grantee of even
date herewith, Exhibit “M” to the PSA, recorded concurrently with this Grant
Deed, conveying certain easements and rights from Grantee to Grantor with
respect to the Land.


     6.     That certain, unrecorded (a) Oil Accommodation and Surface
Development Agreement between Grantor and Aera Energy LLC, dated September 9,
2003, Exhibit “O” to the PSA, and (b) Hover Agreement (described in Section
1.1.28 of the PSA), including without limitation all Exhibits to each of them.


     7.     All other covenants, conditions, restrictions, reservations,
privileges, rights, rights-of-way, dedications, offers of dedication,
easements, obligations, requirements and other matters of record or apparent,
including without limitation, those contained in Attachment No. 3, hereto.


     8.     All easements, licenses, rights and rights-of-way regarding the Land
and all contracts, agreements and other documents/materials relating thereto
(described in Attachment “4” to the Declaration and appended hereto as
Attachment No. 4), whether or not a matter of record; and that certain (a)
unrecorded Unocal Asset Purchase Agreement described in Section 5.32 of the
PSA and (b) Corporate Guaranty attached to the PSA as Exhibit “P.”


PROVIDED, HOWEVER, THAT THE SUBSEQUENT GRANT OF ANY PORTION OF THE LAND TO THE
OWNER OF A HOME AT THE LAND SHALL NOT BE SUBJECT TO ANY OF THE MATTERS IN
PARAGRAPHS 1 THROUGH 11, ABOVE, SOLELY BY VIRTUE OF THE INCLUSION OF SUCH
PARAGRAPHS IN THIS GRANT DEED; OTHERWISE THE EFFECT OF SUCH PARAGRAPHS 1
THROUGH 11 SHALL REMAIN UNCHANGED AND THE PARAGRAPHS IN FULL FORCE AND EFFECT
ACCORDING TO THEIR TERMS.


All defined terms in that certain Purchase and Sale Agreement for the Land
between Grantor and Grantee of even date herewith, to which this Grant Deed is
Exhibit G, are incorporated herein by this reference (“Agreement” or “PSA”).


Exhibit “G”

Page 2 of 5



 






 



Revised 12/1/03


     IN WITNESS WHEREOF, Grantor has executed this Grant Deed on the day and
year hereafter written.



	 	 	 	 	 
	Dated:	 	NUEVO ENERGY COMPANY, a Delaware

corporation
	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	 
	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

	 	 	 	 	GRANTOR



Exhibit “G”

Page 3 of 5



 






 



Revised 12/1/03




ACCEPTANCE: Grantee hereby accepts this Grant Deed on the terms and conditions
herein stated.



	 	 	 	 	 	 	 
	Dated:	 	TONNER HILLS 680 LLC, a Delaware limited

liability company
	
	 	 

	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	 	

	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 
	 	 	 	 	 	 	

	 	 	 	 	By:	 	 
	 	 	 	 	 	 	

	 	 	
By:	 	 	 	 
	 	 	 	 	

	 	 	 	 	By:	 	 
	 	 	 	 	 	 	

	 	 	 	 	By:	 	 
	 	 	 	 	 	 	

	 	 	 	 	 	 	GRANTEE



Exhibit “G”

Page 4 of 5




 






 



Revised 12/1/03





	 	 	 	 	 
	State of California 	 	 	 	)
	 	 	 	 	)
	 County
of Orange	 	 	 	)



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


     WITNESS my hand and official seal.


Signature







	 	 	 	 	 
	State of California	 	 	 	)
		 	 	 	)
	County of Orange 	 	 	 	)



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


     WITNESS my hand and official seal.


Signature





Exhibit “G”

Page 5 of 5





 






 





ATTACHMENT NO. 1



TO



GRANT DEED



PARCEL 1: LEGAL DESCRIPTION



Attachment 1 to Exhibit “G”



 






 





LEGAL DESCRIPTION



THOSE PORTIONS OF SECTION 1, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND THAT PORTION
OF SECTION 7, TOWNSHIP 3 SOUTH, RANGE 9 WEST, SAN BERNARDINO MERIDIAN, AS PER
MAP FILED IN BOOK 51, PAGE 7 OF RECORDS OF SURVEY, PORTIONS OF TRACT NO.
16178, AS SHOWN ON A
MAP FILED IN BOOK
          ,
PAGES
          
THROUGH
          , INCLUSIVE OF MISCELLANEOUS MAPS, IN
CITY OF BREA AND THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE, STATE
OF CALIFORNIA, BOTH IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:


LOT 9 OF SAID TRACT NO. 16178,



TOGETHER WITH LOTS 11 THROUGH 19 INCLUSIVE OF SAID TRACT NO. 16178,


ALSO TOGETHER WITH LOT 21 OF SAID TRACT NO. 16178,


ALSO TOGETHER WITH PARCEL 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:



	 	 	THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY
DESCRIBED AS FOLLOWS:




	 	 	 	BEGINNING AT THE SOUTHWESTERLY
CORNER OF SAID LOT 11;
	 
	 	 	 	THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID LOT 11 NORTH 89°24’21”
EAST 495.67 FEET TO THE SOUTHWESTERLY BOUNDARY OF A GRANT DEED TO
METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK
8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER;
	 
	 	 	 	THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY BOUNDARY SOUTH
28°12’22” EAST 338.56 FEET TO THE NORTHERLY BOUNDARY OF TRACT NO.
12562 AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY
RECORDER;
	 
	 	 	 	THENCE WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24’21” WEST
659.12 FEET TO THE EASTERLY BOUNDARY OF TRACT NO. 9532 AS SHOWN ON
A MAP FILED IN BOOK 454, PAGES 25 THROUGH 28 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;
	 
	 	 	 	THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY NORTH 00°39’09” EAST
300.07 FEET TO THE POINT OF BEGINNING.




	 	 	CONTAINING: 3.977 ACRES, MORE OR LESS



ALSO TOGETHER WITH PARCEL 2 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




	 	 	THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




	 	 	 	BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 11, SAID CORNER ALSO
BEING ON THE WESTERLY BOUNDARY OF PARCEL A6471-4, AS CONVEYED BY A
FINAL ORDER OF CONDEMNATION RECORDED SEPTEMBER 29, 1970, IN BOOK
9417, PAGE 364 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY;
	 
	 	 	 	THENCE SOUTHERLY ALONG SAID WESTERLY BOUNDARY SOUTH 10°52’43” WEST
306.11 FEET NORTHERLY BOUNDARY OF TRACT NO. 12563 AS SHOWN ON A
MAP FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;
	 
	 	 	 	THENCE WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24’21” WEST
890.93 FEET TO THE EASTERLY BOUNDARY OF A GRANT DEED TO
METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK
8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER;



Page 1 of 2



 






 





	 	 	THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY THE FOLLOWING
COURSES:




	 	 	 	NORTH 23°43'24'' WEST 110.38 FEET TO THE BEGINNING OF A
TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 100.00
FEET;
	 
	 	 	 	NORTHERLY ALONG SAID CURVE 20.51 FEET THROUGH A CENTRAL ANGLE
OF 11°45'15'';
	 
	 	 	 	NORTH 11°58'09'' WEST 182.51 FEET TO THE SOUTHWEST CORNER OF
SAID LOT 12;




	 	 	THENCE LEAVING SAID EASTERLY BOUNDARY ALONG THE SOUTHERLY BOUNDARY
OF LOTS 12, “B” AND 11 OF SAID TRACT NO. 16178, NORTH 89°24'21''
EAST 1037.25 FEET TO THE POINT OF BEGINNING.



CONTAINING: 6.694 ACRES, MORE OR LESS


ALSO TOGETHER WITH PARCEL 3 MORE PARTICULARLY DESCRIBED AS
FOLLOWS:



	 	 	BEING THAT PORTION OF SAID SECTION 7 BOUND AS
FOLLOWS:




	 	 	 	NORTHERLY BY THE SOUTHERLY BOUNDARY OF SAID
LOT 13.
	 
	 	 	 	EASTERLY BY THE WESTERLY BOUNDARY OF
SAID LOT 13.
	 
	 	 	 	SOUTHERLY BY THAT CERTAIN COURSE ALONG THE NORTHERLY BOUNDARY LINE
OF TRACT NO. 9577 AS PER MAP FILED IN BOOK 7438 AT PAGES 4 THROUGH
12, INCLUSIVE OF MAPS, IN THE OFFICE OF SAID COUNTY RECORDER, SAID
COURSE SHOWN AS BEING (N89°47'11'' W 200.21') ON LAST SAID MAP.
	 
	 	 	 	WESTERLY BY THAT CERTAIN COURSE ALONG THE EASTERLY BOUNDARY LINE
OF LAST SAID TRACT 9577, SHOWN AS BEING (N
00°12'49'' E 250.00’) ON
LAST SAID MAP.



PARCEL 3 ALSO BEING DESCRIBED AS “EXCEPTION A” TO “PROPERTY PARCEL FOUR” IN A
CORPORATION GRANT DEED TO STRATHAVEN ESTATES RECORDED MARCH 15, 1966 IN BOOK
7868, PAGE 323 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER


CONTAINING: 1.148 ACRES, MORE OR LESS


ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE
A PART HEREOF.


SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
		 	
PREPARED BY OR UNDER THE DIRECTION OF:
	 	 	

	 	 	
KATHLEEN SUSAN TETREAULT, P.L.S. 7297
	 	 	
MY LICENSE EXPIRES 12/31/2004
	 	 	 
	 	 	
December 04, 2003
	 	 	
JN: 13207.00.000



Page 2 of 2



 






 









 






 










 






 









 






 





ATTACHMENT NO. 2



TO



GRANT DEED




	 	 	 
	PARCEL 2:	 	
Non-Exclusive Corridor Easement, Street Easement and Drainage
Easement burdening the Adjacent Property



Attachment 2 to Exhibit “G”



 






 





ATTACHMENT NO. 2 A


CORRIDOR EASEMENT



     A non-exclusive, subsurface easement and nonexclusive surface easement
(“Corridor Easement”) on, over and under the Adjacent Property (owned by Brea
Walden, LLC (“Walden”)) for ingress, egress and access to and from, and the
construction, installation, maintenance, replacement, repair, removal,
reconstruction and other uses (collectively, “uses”) of (a) electric, gas,
telephone, water, sewer, drainage, and all other wet and dry utilities, (b)
cable television and other telecommunications and/or data transmission lines
and facilities, and (c) other uses and facilities in connection with its
development of the Land as a master-planned community (the location of the
Corridor Easement is attached hereto); provided that the construction and
installation of such facilities shall not unreasonably interfere with Grantor’s
and BlackSand Partners, L.P.’s Oil Operations or Walden’s development of the
Adjacent Property, and after grading thereof has been completed, Grantee shall
repair any damage to the surface of the Adjacent Property caused by its
activity thereon; and provided further that Grantee shall construct and
maintain landscaping on and over the surface of the Corridor Easement
compatible with its development of the Land and Walden’s development of the
Adjacent Property.


Attachment 2A to Exhibit “G”



 






 












 






 





ATTACHMENT “2”

TENTATIVE TRACT NO. 16047

LOTS “A” & “F”



THOSE PORTIONS OF THE SOUTHEAST
QUARTER OF SECTION 7, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE CITY OF BREA, STATE OF CALIFORNIA AS SHOWN ON RECORD
OF SURVEY NO. 91-1007 FILED IN BOOK 133 PAGES 41 THROUGH 46 INCLUSIVE OF
RECORDS OF SURVEY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, ALSO
DESCRIBED AS A PORTION OF THE LAND DESCRIBED IN A, BILL OF SALE AND
ASSIGNMENT,
RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928 OF OFFICIAL
RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER, MORE PARTICULARLY DESCRIBED AS FOLLOWS:


PARCEL A (TENTATIVE TRACT NO. 16O47 LOT “F”)


COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION
7 ;


THENCE ALONG THE EASTERLY LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 SOUTH 00°10'32'' WEST 543.66 FEET TO A POINT ON THE NORTHERLY LINE OF THE CITY OF BREA
ANNEXATION NO. 3-76, AS DESCRIBED IN RESOLUTION NO. 77-45 RECORDED
JUNE 28, 1977, IN BOOK 12265, PAGE 1781 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY
RECORDER;


THENCE ALONG SAID NORTHERLY LINE OF
SAID ANNEXATION NORTH 89°53'53'' W 466.40
FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 6.05 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE
SOUTHERLY, AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE THROUGH SAID POINT
BEARS NORTH 00°50'30'' WEST, SAID POINT BEING ON THE RIGHT-OF-WAY OF PROPOSED
STREET “A”;


THENCE WESTERLY ALONG SAID CURVE AND RIGHT-OF-WAY 26.65 FEET THROUGH A CENTRAL
ANGLE OF 33°55'32'';


THENCE NORTH 14.12 FEET TO SAID NORTHERLY LINE;


THENCE ALONG SAID NORTHERLY LINE SOUTH
89°53'53'' EAST 25.00 FEET TO THE POINT
OF BEGINNING.


PARCEL B (TENTATIVE TRACT NO. 16047 LOT “A” )


COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION 7
;


THENCE ALONG THE EASTERLY LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 SOUTH
00°10'32'' WEST 543.66 FEET TO A POINT ON THE NORTHERLY LINE OF THE CITY OF
BREA ANNEXATION NO. 3-76, AS DESCRIBED IN RESOLUTION NO. 77-45 RECORDED


Page 1 of 2



 






 





JUNE 28, 1977, IN BOOK 12265, PAGE 1781 OF OFFICIAL RECORDS IN THE OFFICE OF
SAID COUNTY RECORDER;


THENCE ALONG SAID NORTHERLY LINE OF SAID ANNEXATION NORTH 89°53'53“W 723.50
FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 07°50'05'' EAST 87.46 FEET TO A POINT ON THE RIGHT-OF-WAY OF
PROPOSED STREET “A”;


THENCE ALONG SAID RIGHT-OF-WAY SOUTH 81°51'01'' WEST 25.00 FEET;


THENCE NORTH 07°50'05'' WEST 91.09 FEET TO SAID NORTHERLY LINE;


THENCE ALONG SAID NORTHERLY LINE SOUTH
89°53'53'' EAST 25.24 FEET TO THE POINT
OF BEGINNING.


ALSO AS SHOWN ON EXHIBIT “B”, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART
HEREOF.


THIS DESCRIPTION HAS BEEN PREPARED FOR “LAND OWNER AGREEMENT” PURPOSES AND MAY
NOT BE USED FOR THE CONVEYANCE, FINANCING OR LEASING OF LAND, EXCEPT AS
PROVIDED FOR IN LOCAL ORDINANCE AND THE SUBDIVISION MAP ACT, A DIVISION OF THE
GOVERNMENT CODE OF THE STATE OF CALIFORNIA


SUBJECT TO COVENANTS, CONDITIONS,
RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.


 


Page 2 of 2








 


ATTACHMENT NO. 2 B



STREET EASEMENT



     A non-exclusive easement (“Street Easement”) on, over and under the
streets on the Adjacent Property for ingress, egress and access to and from,
and the construction, installation, maintenance, replacement, repair, removal,
reconstruction and other uses of (a) electric, gas, telephone, water, sewer,
drainage, and all other wet and dry utilities, (b) cable television and other
telecommunications and/or data transmission lines and facilities, and (c) other
facilities in connection with its development of the Land as a master-planned
community (the location of the Street Easement is attached hereto); provided
that the use of such facilities shall not unreasonably interfere with Grantor’s
or BlackSand Partners, L.P.’s Oil Operations or Walden’s development of the
Adjacent Property, and after grading thereof has been completed, Grantee shall
repair any damage to the streets and surface of the Adjacent Property caused by
its activity thereon.


Attachment 2B to Exhibit “G”



 






 









 






 










 






 










 






 





ATTACHMENT NO. 2 C



DRAINAGE EASEMENT



     A non-exclusive easement on, over and under the Adjacent Property for
drainage purposes from the Land (as shown on the attachment hereto), as well as
the right to connect to and discharge and drain through, any water, sewer and
other facilities constructed by Walden on, over and under the Adjacent
Property.


Attachment 2C to Exhibit “G”






 




EXHIBIT “4A”

LOTS 56 STORM DRAIN EASEMENT



THAT PORTION OF THE SOUTHEAST QUARTER OF SECTION 7, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE CITY OF BREA, STATE OF CALIFORNIA AS SHOWN ON RECORD
OF SURVEY NO. 91-1007 FILED IN BOOK 133 PAGES 41 THROUGH 46 INCLUSIVE OF
RECORDS OF SURVEY IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, ALSO
DESCRIBED AS A PORTION OF THE LAND DESCRIBED IN A, BILL OF SALE AND ASSIGNMENT,
RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER MORE PARTICULARLY DESCRIBED AS FOLLOWS:


A STRIP OF LAND BEING 20.00 FEET WIDE THE CENTERLINE BEING DESCRIBED AS
FOLLOWS:


COMMENCING AT THE NORTHEAST CORNER OF SAID SOUTHEAST QUARTER OF SECTION
7;


THENCE ALONG THE EASTERLY LINE OF SAID SOUTHEAST QUARTER OF SECTION 7 SOUTH
00°10'32'' WEST 543.66 FEET TO A POINT ON THE NORTHERLY LINE OF THE CITY OF BREA
ANNEXATION NO. 3-76, AS DESCRIBED IN RESOLUTION NO. 77-45 RECORDED
JUNE 28, 1977, IN BOOK 12265, PAGE 1781 OF OFFICIAL RECORDS IN THE OFFICE OF SAID COUNTY
RECORDER;


THENCE ALONG SAID NORTHERLY LINE OF
SAID ANNEXATION NORTH 89°53'53'' W 237.23
FEET TO THE POINT OF BEGINNING;


THENCE SOUTH 42°02'32 WEST 27.29 FEET TO THE BEGINNING OF A TANGENT CURVE
CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 87.50 FEET;


THENCE 85.90 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 56°14'57'';


THENCE SOUTH 14°12'24'' EAST 57.06 FEET TO THE NORTHERLY RIGHT-OF-WAY OF
LAMBERT ROAD, BEING 120.00 FEET WIDE, AS SHOWN ON SAID RECORD OF SURVEY.


CONTAINING 0.7 ACRES MORE OR LESS


THE SIDELINES OF SAID STRIP SHALL BE LENGTHENED OR SHORTENED TO TERMINATE
NORTHERLY ON THE NORTHERLY LINE OF SAID ANNEXATION, AND SOUTHERLY ON THE
NORTHERLY RIGHT-OF-WAY OF SAID LAMBERT ROAD.


ALSO AS SHOWN ON EXHIBIT
“4A”, ATTACHED HERETO AND BY THIS REFERENCE MADE A
PART HEREOF.


THIS DESCRIPTION HAS BEEN PREPARED FOR
“LAND OWNER AGREEMENT” PURPOSES AND MAY
NOT BE USED FOR THE CONVEYANCE, FINANCING OR LEASING OF LAND, EXCEPT AS
PROVIDED FOR IN LOCAL ORDINANCE AND THE SUBDIVISION MAP ACT, A DIVISION OF THE
GOVERNMENT CODE OF THE STATE OF CALIFORNIA


SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.


Page 1 of 1




 






 











 






 





ATTACHMENT NO. 3



TO



GRANT DEED



(List of Recorded Rights of Way and Contracts — Same as Attachment 3 to Non-Exclusive

Assignment and Bill of Sale)




Attachment 3 to Exhibit “G”









 



List of Recorded Rights of Way and Contracts



Easements, Licenses, Rights-of-Way, etc




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date Recording	 	 	 	Schedule
1.1 (c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	Order#	 	#’s
	
	 	
	 	
	 	
	 	
	 	
	 	

	 	 	
ROW
	 	4/8/63
	 	4/19/63
	 	Pacific Lighting
	 	 	7	 	 	N/A
	 	 	 	 	 	 	6515/482
	 	Gas Supply Co.
	 	 	 	 	 	(31.7)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
ROW
	 	2/13/65
	 	2/23/65
	 	Pacific Lighting
	 	 	8	 	 	317
	 	 	 	 	 	 	7422/249
	 	Gas Supply Co.	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Easement
	 	1/15/51
	 	3/15/51
	 	UNOCAL	 	 	 	 	 	 
	 	 	 	 	 	 	2158/495	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Easement
	 	8/23/88
	 	5/9/89
	 	UNOCAL	 	 	 	 	 	 
	 	 	 	 	 	 	89-243784	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	502	 	
ROW
	 	2/22/08
	 	39795
	 	Industrial Oil CO
	 	 	5	 	 	601
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5254	 	
ROW
	 	 	 	5/17/2001
	 	Brea Canon Oil CO.
	 	 	22	 	 	602
	 	 	 	 	 	 	58/365 Deeds	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5254A	 	
ROW
	 	 	 	4/28/1930
	 	Brea Canon Oil CO.
	 	 	23	 	 	602
	 	 	 	 	 	 	382/44 OR	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	52980.1	 	
ROW
	 	 	 	4/28/1955
	 	W B Scott
	 	 	44	 	 	612
	 	 	 	 	 	 	3047/183 OR
	 	Investment
Company	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755	 	
Easement
	 	 	 	9/27/43
	 	Anaheim Union Water
	 	 	52	 	 	 
	 	 	 	 	 	 	1215/34 OR
	 	Company	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.2	 	
Mod.
	 	 	 	6/7/49
	 	Anaheim Union Water
	 	 	53	 	 	 
	 	 	 	 	 	 	1855/8 OR
	 	Company	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.3	 	
Mod.
	 	 	 	9/23/66
	 	Anaheim Union Water
	 	 	54	 	 	 
	 	 	 	 	 	 	8057/221 OR
	 	Company	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.4	 	
Easement
	 	 	 	1/7/71
	 	State of California
	 	 	55	 	 	 
	 	 	 	 	 	 	9512/924 OR	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.5	 	
Easement
	 	 	 	11/18/71
	 	State of California
	 	 	56	 	 	 
	 	 	 	 	 	 	9892/217 OR	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	53755.7	 	
ROW
	 	 	 	9/26/72
	 	Anaheim Union Water
	 	 	58	 	 	 
	 	 	 	 	 	 	10343/735 OR
	 	Company	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

	53755.8	 	
Assignment
	 	 	 	11/29/72
	 	Continental	 	 	59	 	 	 
	 	 	 	 	 	 	10465/69 OR	 	Mobile Housing,	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Inc.
	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	54507	 	
ROW
	 	 	 	1/23/11
	 	Pacific Electric
	 	 	76	 	 	 
	 	 	 	 	 	 	195/212 Deeds
	 	Land C	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57241	 	
Easement
	 	 	 	9/30/70
	 	State of California
	 	 	112	 	 	630
	 	 	 	 	 	 	451/102 OR	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57595	 	
ROW
	 	 	 	3/16/77
	 	Moreland Develop C
	 	 	123	 	 	 
	 	 	 	 	 	 	12106/802 OR	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57595.1	 	
ROW
	 	 	 	6/8/77
	 	Moreland Develop C
	 	 	124	 	 	 
	 	 	 	 	 	 	12233/501 OR	 	 	 	 	 	 	 	 



Page 1 of 5



 






 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date Recording	 	 	 	 	Schedule 1.1 (c)	 	Green Map
	File Number	 	Document Type	 	Dated	 	Information	 	Grantor	 	 	Order#	 	#’s
	
	 	
	 	
	 	
	 	
	 	 	
	 	

	57633.1	 	
ROW
	 	 	 	7/24/78
	 	IPS, A General	 	 	125	 	 
	 	 	 	 	 	 	1269/1868 OR	 	Partnshp	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	12/14/79	 	 	 	 	 	 	 
	57667	 	
ROW
	 	 	 	13437/789 OR
	 	Moreland Develop C
	 	 	126	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	11/24/86	 	 	 	 	 	 	 
	57848	 	
Grant of
	 	 	 	86/619178 OR
	 	Fairway Associates
	 	 	129	 	 
	 	 	
Easement	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	57981	 	
ROW
	 	 	 	11/2/89
	 	Sanitation, Inc.
	 	 	136
	 	500
	 	 	 	 	 	 	80-59276 DOC	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	58049	 	
ROW
	 	 	 	1/25/93	 	Sanitation, Inc
	 	 	137
	 	500
	 	 	 	 	 	 	93-054367 DOC	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	62528	 	 	 	 	 	6/23/54
	 	UNOCAL
	 	 	140	 	 
	 	 	 	 	 	 	2755/502 OR	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7070.35	 	
Deed
	 	 	 	5/21/58
	 	UNOCAL
	 	 	159	 	 
	 	 	 	 	 	 	4291/396 OR	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7070.44	 	
ROW
	 	 	 	1/17/64
	 	UNOCAL
	 	 	160	 	 
	 	 	 	 	 	 	6886/922 OR	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	7176.19	 	
Deed
	 	 	 	12/28/73	 	UNOCAL
	 	 	168	 	 
	 	 	 	 	 	 	11044/678 OR	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 
	7176.2	 	
Deed
	 	 	 	11/15/47
	 	UNOCAL
	 	 	169	 	 
	 	 	 	 	 	 	1599/131 OR	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
ROW
	 	 	 	5-15-97
	 	UNOCAL to NUEVO
	 	 	A
	 	666
	 	 	 	 	 	 	Document No.	 	 	 	 	 	 	 
	 	 	 	 	 	 	19970226200	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	
Deed
	 	8/9/94
	 	8-14-98
	 	UNOCAL to NUEVO
	 	 	A
	 	736
	 	 	 	 	 	 	1998-0533265	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	11/5/1999 Doc. No.	 	 	 	 	 	 	 
	19990774980	 	
Easement &
	 	 	 	19990774980
	 	Unocal and Nuevo
	 	 	A
	 	402
	 	 	
Agreement	 	 	 	 	 	 	 	 	 	 	 



Contracts/Agreements



     (1)  The Indenture, as amended, by and between Union Oil
Company of California and Columbia Oil Producing Company dated February
26, 1901;


Additional Easements



     (1)  Nuevo to UNOCAL dated May 7, 1996, recorded May
21, 1996 as Doc. #19960254739.


     (2)  UNOCAL to UNOCAL California Pipeline Co. dated September 25, 1995,
recorded December 19, 1995 as Doc. # 19950565134.


Page 2 of 5



 






 






	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec.Bk/Pg.
	
	 	
	 	
	 	

	12/14/1896	 	
The Stearns Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97
 30/11
	 	 	 	 	 	 	 
	2/21/1928	 	
Brea Canon Oil Company
	 	Waste Water Disposal Company
	 	2/24/28 
137/139
	 	 	 	 	 	 	 
	8/11/1986	 	
City of Brea (County
of Orange)
	 	Union Oil Company of California
	 	8/12/86 
86-357255
	 	 	 	 	 	 	 
	10/16/1958	 	
Collier Carbon and
Chemical Corporation
	 	Union Oil Company of California
	 	11/3/58
 4470/10
	 	 	 	 	 	 	 
	5/7/1996	 	
Nuevo Energy Company
	 	Union Oil Company of California,
dba UNOCAL
	 	5/26/1996 
Inst. 19960254739
	 	 	 	 	 	 	 
	5/12/1902	 	
The Stearns Ranchos

Company
	 	Pacific Coast Oil Company
	 	 6/25/02
 75/254
	 	 	 	 	 	 	 
	12/14/1896	 	
The Stearns Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97 
30/11
	 	 	 	 	 	 	 
	4/19/1913	 	
Union Oil Company of
California
	 	Pacific Light & Power Corporation
	 	12/15/13
 244/37
	 	 	 	 	 	 	 
	8/30/1928	 	
Union Oil Company of
California
	 	County of Orange
	 	11/8/28
 220/38
	 	 	 	 	 	 	 
	9/17/1940	 	
Union Oil Company of
California
	 	The Metropolitan Water District
of Southern California
	 	10/29/40
 1067/308
	 	 	 	 	 	 	 
	2/11/1954	 	
Union Oil Company of
California
	 	Amoniaco Corporation
	 	2/16/54
 2670/114
	 	 	 	 	 	 	 
	6/7/1957	 	
Union Oil Company of
California
	 	Brea Chemical, Inc.
	 	6/10/57
 3936/324
	 	 	 	 	 	 	 
	4/1/1958	 	
Union Oil Company of
California
	 	The Metropolitan Water District
of Southern California
	 	5/21/58
 4291/400
	 	 	 	 	 	 	 
	7/27/1962	 	
Union Oil Company of
California
	 	Boy Scouts of America, Los
Angeles Area Council
	 	8/1/62
 6245/654
	 	 	 	 	 	 	 
	10/2/1962	 	
Union Oil Company of
California
	 	Southern California Edison

Company
	 	1/18/63 
6399/705
	 	 	 	 	 	 	 
	3/1/1977	 	
Union Oil Company of
California
	 	Southern California Edison

Company
	 	3/29/77
 12123/814
	 	 	 	 	 	 	 
	9/18/1978	 	
Union Oil Company of
California
	 	Southern California Edison

Company
	 	2/5/79 
13024/1157



Page 3 of 5



 






 






	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec. Bk./Pg
	
	 	
	 	
	 	

	1/26/1982	 	
Union Oil Company
of California
	 	Mobil Oil Corporation
	 	 3/31/82
 Inst. 82-340271
 (Los
Angeles County)
	 	 	 	 	 	 	 
	9/13/1984	 	
Union Oil Company
of California
	 	City of Brea
	 	10/11/84
 84-421551
	 	 	 	 	 	 	 
	9/10/1985	 	
Union Oil Company
of California
	 	City of Brea
	 	10/7/85
 85-382994
	 	 	 	 	 	 	 
	7/3/1986	 	
Union Oil Company
of California
	 	City of Brea
	 	8/13/86
 86-359858
	 	 	 	 	 	 	 
	9/2/1986	 	
Union Oil Company
of California
	 	Brea H.O.P.E Inc.
	 	10/1/86
 86-459482
	 	 	 	 	 	 	 
	5/8/1987	 	
Union Oil Company
of California
	 	City of Brea
	 	5/11/87
 87-26083
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst. 19960153323
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96
 Inst. 19960153324
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96 
Inst. 19960153322
	 	 	 	 	 	 	 
	3/18/1996	 	
Union Oil Company
of California
	 	City of Brea
	 	3/29/96
 Inst. 1996013321
	 	 	 	 	 	 	 
	11/29/1988	 	
Union Oil Company
of California &
Shell Oil Company
	 	City of Brea
	 	1/16/69 
884/518
	 	 	 	 	 	 	 
	9/25/1995	 	
Union Oil Company
of California dba
Unocal
	 	UNOCAL California Pipeline Company
	 	12/18/95
 19950565134
	 	 	 	 	 	 	 
	5/17/1988	 	
Union Oil Company
of California, dba
UNOCAL
	 	Southern California Edison Company
	 	6/7/88 
Inst. 88-268095
	 	 	 	 	 	 	 
	9/15/1995	 	
Union Oil Company
of California, dba
UNOCAL
	 	UNOCAL California Pipeline Company
	 	10/25/95 
Inst. 19950473641
	 	 	 	 	 	 	 
	12/11/1995	 	
Union Oil Company
of California, dba
UNOCAL
	 	Southern California Edison Company
	 	1/4/96 
Inst. 19960004773



Page 4 of 5



 






 






	 	 	 	 	 	 	 
	Date	 	Grantor	 	Grantee	 	Rec.Bk./Pg
	
	 	
	 	
	 	

	1/14/1915	 	
Union Oil Company	 	County of
Orange	 	1/21/16
	 	 	
of California,	 	 	 	280/244
	 	 	
Columbia Oil	 	 	 	 
	 	 	
Producing Company,	 	 	 	 
	 	 	
General Petroleum	 	 	 	 
	 	 	
Company
	 	 	 	 
	 	 	 	 	 	 	 
	4/17/1954	 	Union Oil Company	 	The Metropolitan	 	 7/8/54
	 	 	 	 	Water District of	 	2766/268
	 	 	 	 	Southern California
	 	 



Page 5 of 5



 






 





ATTACHMENT NO. 4



TO



GRANT DEED



Attachment 4 to Exhibit “G”



 






 





     List of Unrecorded Contracts, Agreements, Easements and Licenses


Contracts



     (1)  The Commercial Lease and Agreement between Nuevo Energy Company, as
Lessor, and Brea Green Recycling, Inc., as Lessee,-dated February 1, 1997;



     (2)  The Letter Agreement between Haynes Apiaries and Union Oil Company of
California dated December 29, 1992, as amended;


     (3)  The Easement Agreement for Storm Drain Improvement between Nuevo
Energy Company and Brea Olinda Venture L. L. C. dated November 3, 2000,


     (4)  Asset Purchase Agreement dated February 16, 1996 by and among Union
Oil Company of California, Union California Pipeline Company and Nuevo Energy
Company, to the extent previously described in the Agreement, INSOFAR AND ONLY INSOFAR AS
SAID ASSET PURCHASE AGREEMENT PERTAINS TO THE LAND, AND NOT THE OIL ASSETS UNDERLYING THE LAND;


     (5)  Acquisition and Settlement Agreement entered into as of July 23, 2002,
by and between Union Oil Company of California and Nuevo, together with all
subsequent agreements required thereunder, insofar as such Acquisition and Settlement Agreement
pertains to the Land;
and


     (6)  Acquisition Agreement entered into July 29, 2002, by and between Union
Oil Company of California and Nuevo, together with all subsequent agreements
required thereunder, insofar as such Acquisition Agreement pertains to the Land.


Additional Contracts, Licenses, Easements and Agreements




	1.	 	Memorandum of Understanding between Nuevo, County of Orange and City of
Brea dated December 10, 2002.
	 
	2.	 	Impact Mitigation Agreement between Brea Olinda Unified School District
and Nuevo dated as of October 28, 2002.
	 
	3.	 	Oil Accommodation and Surface Development Agreement between Nuevo and
Aera Energy LLC (“Aera”) dated September 9, 2003, to the extent described in
the Agreement at Section 5.36.
	 
	4.	 	Utility Easement between Nuevo and Aera dated September 9, 2003, which
shall be recorded by Aera in its sole discretion, subject to the provisions of
Section 5.36 in the Agreement.



Page 1 of 3



 






 







	5.	 	Land Development License Agreement (Aera to Nuevo) and Memorandum of
Land Development License Agreement between Nuevo and Aera dated September 9,
2003. (The Memorandum shall be recorded by Nuevo in its sole discretion.)
	 
	6.	 	Land Development License Agreement (Nuevo to Aera) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9,
2003.
(The Memorandum shall be recorded in Aera’s sole discretion.)
	 
	7.	 	Letter Agreement Concerning License Rights executed by Nuevo, Aera and
Blacksand Energy Partners, L.P. (“Blacksand”) dated September 9, 2003.
	 
	8.	 	Land Development License Agreement between Nuevo, Aera and Blacksand
dated September 9, 2003 and Memorandum to Land Development License Agreement
between Nuevo and Aera dated September 9, 2003, which Memorandum shall be
recorded in Aera’s sole discretion.
	 
	9.	 	License Agreement between Nuevo and Aera dated September 9, 2003.
	 
	10.	 	License Agreement between Nuevo and W B Scott Investment Company dated
April 7, 1925.
	 
	11.	 	Consent Agreement between Nuevo and Shell Oil Company dated July 10, 1951.
	 
	12.	 	Agreement between Nuevo and General Petroleum dated February 17, 1939.
	 
	13.	 	Permit between Nuevo and Orange County Flood Control District dated August
10, 1962.
	 
	14.	 	Amended Easement between Nuevo and Secretary of the Army dated July 20,
1994.
	 
	15.	 	Water Line Agreement between Union Oil Company of California and
Thompson Drilling Company dated March 29, 1988, as amended.
	 
	16.	 	Brea Canon Oil Company to General Petroleum Corporation dated May 1921.
	 
	17.	 	Master Services Agreement dated June 17, 2003 by and between
Nuevo Energy Company, as Client and Tetra Tech, Inc., as Contractor (Technical
Support for Remediation Services).



Contracts Relating to Entitlement Efforts at Tonner Hills




	1.	 	Letter Agreements dated March 19, 2001 and October 1, 2002, by and
between Deborah Linn Associates and Nuevo.
	 
	2.	 	Contract dated February 8, 2001, by and between Culbertson, Adams &
Associates and Nuevo, as amended by letter dated July 16, 2002.
	 
	3.	 	Proposal dated June 18, 2002, from Earth Consultants International to Nuevo.



Page 2 of 3



 






 






	4.	 	Professional Service Agreement dated April 17, 2001, by and between
The Keith Companies, Inc. and Nuevo.
	 
	5.	 	Professional Services Agreement dated June 15, 1998, by and
between QST Environmental, Inc. and Nuevo, as amended February 27, 2002.



Contracts Relating to Revegetation Efforts at Tonner Hills




	1.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (82 Acre Revegetation).
	 
	2.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (14 Acre Revegetation).
	 
	3.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (20 Acre Revegetation).



Page 3 of 3



 






 









First American Title Company

2 FIRST AMERICAN WAY,

SANTA ANA, CA 92707 (714) 800-3000



FAX TRANSMITTAL




	 	 	 
	DATE:	
December 4, 2003
	 	 	 
	TO:	 	
J. ANDMARK LAW GROUP LLP
	ATTN:	 	
ESTHER CHEN
	FAX NO:	 	
310-300-2310
	YOUR REF NO:	 	
NUEVO
	 	 	 
	FROM:	
RONALD J. GOMEZ
	 	
FIRST AMERICAN TITLE / ORANGE COUNTY BRANCH
	 	 	 
	OUR ORDER NO:	
	922260
	 
	MESSAGE:	 	 
	 	 	 
	ESTHER,	 	 



AFTER REVIEWING YOUR REQUEST FOR AFFIRMATIVE COVERAGE AS TO THE BENEFICIAL
INTEREST CONTAINED IN THE MINERAL AGREEMENT I HAVE DETERMINED THAT IT SHOULD
BE IDENTIFIED IN THE “ESTATE OR “INTEREST” AREA OF THE POLICY.


ATTACHED IS A COPY OF PAGE 2 OF THE REPORT IDENTIFYING HOW WE WILL BE
SHOWING THIS IN THE POLICY.


PLEASE CALL IF YOU SHOULD HAVE ANY QUESTIONS.


RON


THIS TRANSMISSION CONTAINS 2 PAGES,
INCLUDING THIS COVER PAGE. IF
DIFFICULTIES ARISE, PLEASE CONTACT US AT 714-800-4822. RETURN
FAX NO. 714-800-4965.


 






 




	 	Order Number: 	O-SA-922260
	
 	Page Number:	
2



	All the beneficial rights
contained in that certain Mineral Agreement: Declaration of Development Covenants, Conditions and
Restrictions, Instrument No. 2003000226057, recorded February
28, 2003



Dated as of November 18, 2003 at 7:30 A.M.



The form of Policy of title insurance contemplated by this report is:


     ALTA
Standard Owners w/Reg Exc. 1992


     A specific request should be made if another form or
additional coverage is desired.


Title to said estate or interest at the date hereof is vested in:



     Nuevo Energy Company, a Delaware corporation.


The estate or interest in the land hereinafter described or referred
to covered by this Report is:


     A fee.
As to parcels 1, 2 and 3 AND


The Land referred to herein is described as follows;



(See attached Legal Description)


At the date hereof exceptions to coverage in addition to the printed
Exceptions and Exclusions in said policy form would be as fallows:



	1.	 	This item has been intentionally deleted.	 
	 	 	 	 
	2.	 	The lien of supplemental taxes, if any, assessed
pursuant to Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation Code.
	 
	 	 	 	 
	 	 	Although the above supplemental
taxes may be a lien, the
installments thereof are not yet due or payable.	 
	 	 	 	 
	3.	 	This item has been intentionally deleted.	 
	 	 	 	 
	4.	 	An easement for roads, railroads and ditches and incidental
purposes, recorded July 10, 1897 as in Book 30, page 11 of Deeds.	 
	 	 	 	 
	 	 	
In Favor of :

Affects:	
The Stearns Rancho Company.

Portions of the land.
	 	 	 	 
	 	 	Note: Affects Lot 3.	 
	 	 	 	 
	 	 	(A 103.1 endorsement will be issued at the time of dosing)





	5.	 	An oil and gas lease, covering the Easterly 100 acres of the
herein described land, dated February 26, 1901, executed by
Union Oil Company of California, as
lessor, and Columbia Oil Producing Company, as lessee, recorded
March 25, 1901 in Book 2, page 128 of Leases, and amended by
agreements recorded December 15, 1912 in Book 5, page 289 of
Leases and



First American Title




 






 




	 	Order Number: 	O-SA-922260
	
 	Page Number:	1



UPDATED






First American Title

2 First American Way

Santa Ana, CA 92707



Joe Fleischaker

Shea Homes

603 South Valencia Avenue

Brea, CA 92823-6346

Phone: (714) 985-1300

Fax:



Customer Reference:



	 	 	 
	Order Number:	 	
O-SA-922260
	 	 	 
	Title Officer:	 	
Ronald Gomez (09)
	Phone:	 	
(714) 800-4822
	Fax No.:	 	
(714)800-4965
	E-Mail:	 	
rogomez@firstam.com



Buyer:



Property:



	 	 	 
	 	 	
Brea, California



PRELIMINARY REPORT



In response to the above referenced application for a policy of title
insurance, this company hereby reports that it is prepared to issue, or cause
to be issued, as of the date hereof, a Policy or Policies of Title Insurance
describing the land and the estate or interest therein hereinafter set forth,
insuring against loss which may be sustained by reason of any defect, lien or
encumbrance not shown or referred to as an Exception below or not excluded from
coverage pursuant to the printed Schedules, Conditions and Stipulations of said
Policy forms.


The printed Exceptions and Exclusions from the coverage of said Policy or
Policies are set forth in Exhibit A attached. Copies of the Policy forms should
be read. They are available from the office which issued this report.


Please read the exceptions shown or referred to below and the exceptions
and exclusions set forth in Exhibit A of this report carefully. The
exceptions and exclusions are meant to provide you with notice of matters
which are not covered under the terms of the title insurance policy and
should be carefully considered.


It is important to note that this preliminary report is not a written
representation as to the condition of title and may not list all liens,
defects, and encumbrances affecting title to the land.


This report (and any supplements or amendments hereto) is issued solely for the
purpose of facilitating the issuance of a policy of title insurance and no
liability is assumed hereby. If it is desired that liability be assumed prior
to the issuance of a policy of title insurance, a Binder or Commitment should
be requested.


First American Title



 






 





	 	Order Number: 	O-SA-922260
	
 	Page Number:	
2



Dated as of November 18, 2003 at 7:30 A.M.


The form of Policy of title insurance contemplated by this report is:



     ALTA Standard Owners w/Reg Exc 1992


     A specific request should be made if another form or additional
coverage is desired.


Title to said estate or interest at the date hereof is vested in:



     Nuevo Energy Company, a Delaware corporation.


The estate or interest in the land hereinafter described or referred to covered by
this Report is:


     A fee.


The Land referred to herein is
described as follows:



(See attached Legal Description)


At the date hereof exceptions to coverage in addition to the printed Exceptions
and Exclusions in said policy form would be as follows:



	1.	 	This item has been intentionally deleted.
	 
	2.	 	The lien of supplemental taxes, if any, assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code.
	 
	 	 	Although the above supplemental taxes may be a lien, the installments
thereof are not yet due or payable.
	 
	3.	 	This item has been intentionally deleted.
	 
	4.	 	An easement for roads, railroads and ditches and incidental purposes,
recorded July 10, 1897 as in Book 30, page 11 of Deeds.




	 	 	 
	In Favor of:	 	
The Stearns Rancho Company.
	Affects:	 	
Portions of the land.
	 
	
Note: Affects Lot 3.
	 
	
(A 103.1 endorsement will be issued at the time of closing)








	5.	 	An oil and gas lease, covering the Easterly 100 acres of the herein
described land, dated February 26, 1901, executed by Union Oil Company of California, as
lessor, and Columbia Oil Producing Company, as lessee, recorded March 25, 1901 in Book 2, page 128
of Leases, and amended by agreements recorded December 15, 1912 in Book 5, page 289 of
Leases and



First American Title




 






 





	 	Order Number: 	O-SA-922260
	 	Page Number:	
3




	 	 	February 20, 1959 in Book 4594, page 488 of Official Records, to which
record reference is hereby made for full particulars.
	 
	 	 	Note 1: The lessee’s interest under said lease has been assigned to
Shell Oil Company, a Delaware corporation, by mesne assignments of
record.
	 
	 	 	Note 2: Recorded October 11, 1957 in Book 4067, page 328 of Official
Records is a deed dated August 2, 1957 wherein Shell Oil Company
quitclaims and surrenders said lease only insofar as it affects the
following described lands, reserving, however unto said Shell Oil Company
“all of those easements in, over and across the surrendered lands which
were conveyed to it under the provisions of said lease, as amended:”
	 
	 	 	Parcel 1: Beginning at the Northeast corner of the land described in
the deed to Union Oil Company of California recorded in Book 30, page 11
of Deeds in the office of the county recorder of said county; thence
South 4 deg. 22' 00'' East along the Easterly line of said land of union
815.03 feet; thence South 85 deg 38' 00'' West 41.21 feet; thence North 4
deg. 22' 00'' West 307.60 feet; thence South 85 deg. 38' 00'' West 855.56
feet; thence North 4 deg. 22' West 330.64 feet; thence South 85 deg. 38'
00'' West 462.95 feet; thence North 4 deg. 21' 13'' West 414.28 feet to the
Northerly line of the land described in said deed to union; thence South
84 deg. 27' 31'' East along said Northerly line 1380.20 feet to the point
of beginning.
	 
	 	 	Parcel 2: Beginning for reference at a point in the Easterly line of
the land above described in said deed to Union Oil Company of California
distant North 4 deg. 22' 00'' West along said Easterly line 438.07 feet
from the Southeast corner of said land; thence South 85 deg. 38' 00'' West
395.50 feet to the true point of beginning; thence continuing South 85
deg. 38' 00'' West 228.01 feet; thence North 4 deg. 22' 00'' West 394.17
feet; thence North 85 deg. 38' 00'' East 67.11 feet; thence North 4 deg.
22' 00'' West 410.00 feet; thence North 85 deg. 38' 00'' east 46.75 feet;
thence North 4 deg. 22' 00'' West 289.87 feet; thence North 85 deg. 38'
00'' East 58.37 feet; thence North 4 deg. 22' 00'' West 64.29 feet; thence
North 85 deg. 38' 00'' East 24.43 feet; thence South 4 deg. 22' 00'' East
221.53 feet; thence North 85 deg. 38' 00'' East 31.35 feet; thence South 4
deg. 22' 00'' East 936.80 feet to the true point of beginning.
	 
	 	 	Note 3: An instrument declaring a modification or amendment of said lease
was recorded March 29, 1960 in Book 5169, page 140 of Official Records.
	 
	 	 	Note 4: A portion of said lease was surrendered by an instrument
entitled “Partial Surrender of Oil and Gas Lease” recorded January 16,
1969 in Book 8846, page 968 of Official Records; reference being made to
the record thereof for full particulars.
	 
	6.	 	The right of way to lay, construct, maintain, operate, repair and remove
pipe lines for the transportation of oil, petroleum or gas, maintain and operate telegraph
or telephone lines, with the right of ingress and egress to and from the same, over, through,
under or along a portion of the land, as conveyed to the Pacific Coast Oil Company by deed recorded
June 25, 1902 in Book 75, page 254 of Deeds.
	 
	 	 	Note: Affects Lots 1 and 5.
	 
	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	7.	 	The effect of a map purporting to show the herein described and other
land recorded in Book 12, page 40 of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)



First American Title



 






 




	 	Order Number: 	O-SA-922260
	
 	Page Number:	
4




	8.	 	This item has been intentionally deleted.
	 
	9.	 	This item has been intentionally deleted.
	 
	10.	 	This item has been intentionally deleted.
	 
	11.	 	This item has been intentionally deleted.
	 
	12.	 	This item has been intentionally deleted.
	 
	13.	 	An easement for roadway and incidental purposes, recorded August 1, 1962
as in Book 6245, page 654 of Official Records.




	 	 	 
	In Favor of:	 	
Boy Scouts of America, Los Angeles area council.
	Affects:	 	
Lot A.




	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	14.	 	This item has been intentionally deleted.
	 
	15.	 	This item has been intentionally deleted.
	 
	16.	 	The effect of a map purporting to show the herein described and other
land in Book 91, page 12 of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	17.	 	The effect of a map purporting to show the herein described and other
land recorded in Book 99, pages 29 to 35 of Record of Surveys.
	 
	 	 	Note 1: An instrument entitled “Certificate of Correction” recorded
March 13, 1981 in Book 13981, page 691 of Official Records; reference
being made to the record thereof for full particulars.
	 
	 	 	Note 2: An instrument entitled “Certificate of Correction” recorded
August 11, 1981 in Book 14176, page 1928 of Official Records;
reference being made to the record thereof for full particulars.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	18.	 	The effect of a map purporting to show the herein described and other
land in Book 106, page 1 of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	19.	 	The effect of a map purporting to show the herein described and other
land recorded in Book 133, pages 41 to 46 of Record of Surveys.
	 
	 	 	Note 1: An instrument entitled “Record of Survey Certificate of
Correction” recorded July 30, 1991 as Instrument No. 91-401277 of
Official Records; reference being made to the record thereof for full
particulars.



First American Title



 






 






	 	Order Number: 	O-SA-922260
	 	Page Number:	
5




	 	 	Note 2: An instrument entitled “Record of Survey Certificate of
Correction” recorded October 18, 1994 as Instrument No. 94-0617580 of
Official Records; reference being made to the record thereof for full
particulars.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	20.	 	The effect of an instrument entitled “Notice of Intent to Preserve
Mineral Rights” recorded January 26, 1995 as Instrument No. 95-0034367 of Official Records;
reference being made to the record thereof for full particulars.
	 
	21.	 	This item has been intentionally deleted.
	 
	22.	 	An easement for road and incidental purposes, recorded March 29, 1996
as Instrument No. 19960153323 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lots 3 and 4.




	23.	 	An easement for water pipeline and incidental purposes, recorded March
29, 1996 as Instrument No. 19960153324 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lot 4 and Lot A.




	24.	 	Easements, covenants and conditions contained in the deed from Union Oil
Company of California, a California corporation, for itself and as successor by
merger to Collier Carbon and Chemical Corporation, a California corporation formerly known as R. T.
Collier Corporation which was successor by merger to Brea Chemicals, Inc. and Unocal California
Pipeline Company, a California corporation, as grantor, to Nuevo Energy Company, a Delaware
corporation, as grantee, recorded April 10, 1996 as Instrument No. 19960175928 of
Official Records. reference being made to said document for full particulars.
	 
	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	25.	 	The terms, provisions and conditions contained in a document entitled
“Agreement Between Adjacent Landowners”, executed by and between Nuevo Energy Company, a
Delaware corporation and Brea Walden, LLC, a California limited liability company,
recorded October 9, 2001 as Instrument No. 20010710857 of Official Records.
	 
	26.	 	The effect of a map purporting to show the herein described and other
land recorded in Book 187, pages 2 to 7 of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	27.	 	The terms, provisions and conditions contained in a document entitled
“Tonner Hills Development Agreement”, executed by and between the County of Orange and Nuevo Energy
Company, recorded February 14, 2003 as Instrument No. 2003000171873 of Official
Records.
	 
	28.	 	The terms, provisions and conditions and easements contained in a
document entitled “Easement Agreement”, executed by and between Nuevo Energy Company, a Delaware
corporation and



First American Title



 






 






	 	Order Number: 	O-SA-922260
	 	Page Number:	
6




	 	 	Blacksand Partners L.P., a Texas limited partnership, recorded
February 28, 2003 as Instrument No. 2003000226061 of Official Records.
	 
	29.	 	This item has been intentionally deleted.
	 
	30.	 	An easement for slope, drainage and incidental purposes, recorded June 4,
2003 as Instrument No. 2003000648902 of Official Records.




	 	 	 
	In Favor of:	 	
County of Orange
	Affects:	 	
Lot 10



First American Title



 






 






	 	Order Number: 	O-SA-922260
	 	Page Number:	
7



INFORMATIONAL NOTES



The map attached, if any, may or may not be a survey of the land depicted hereon. First American expressly disclaims and
liability for loss or damage which may result from reliance on this map except to the extent coverage for such loss or damage is expressly provided by the terms and provisions of
the title insurance policy, if any, to which this map is attached.


First American Title




 









 




	 	 	 	 	 
	 	 	
Order Number:
	 	01-SA-922260
	 	 	
Page Number:
	 	8



WIRE INSTRUCTIONS



First American Title Company, Demand/Draft Sub-Escrow Deposits

Orange County, California



First American Trust, FSB

Santa Ana Branch

421 North Main Street

Santa Ana, California 92701



ABA 122241255

Credit to First American Title Company

Account No. 15030

Reference Title Order Number O-SA-922260, and Title Officer Ronald Gomez



Please wire the day before recording. Also, notify the Title Officer of your intent to wire.


First American Title



 






 




	 	 	 	 	 
	 	 	
Order Number:
	 	O-SA-922260
	 	 	
Page Number:
	 	9



LEGAL DESCRIPTION



Real property in the City of Brea, County of Orange, State of California,
described as follows:


LOTS 1 THROUGH 8, INCLUSIVE, LOTS 10,
20, AND LETTERED LOTS A - D,
INCLUSIVE OF TENTATIVE TRACT 16178 BEING A SUBDIVISION OF:


THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE,
AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, AND RECORD OF SURVEY
FILED IN BOOK 12, PAGE 40, RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133,
PAGES 41 THROUGH 46 INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK
187, PAGES 02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY , IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A DEED,
BILL OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS INSTRUMENT NO.
19960175928 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:


PARCEL 1:


BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE NORTHEAST
CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO THE SOUTHEAST
CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE PATENT BOUNDARY OF
SAID RANCHO RINCON DE LA BREA, NORTH 84 DEG. WEST 107.51 CHAINS TO A SAND STONE
MARKED R. B. IN MOUND WITH PITS; THENCE ALONG SAID PATENT BOUNDARY NORTH 57
DEG. 42' WEST 43.67 CHAINS TO A WHITE POST 4 INCHES SQUARE IN MOUND OF STONE
MARKED S. J. C. S. A. AT INTERSECTION OF THE PATENT LINES OF SAID RANCHOS SAN
JUAN CAJON DE SANTA ANA AND RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF
SAID RANCHO SAN JUAN CAJON DE SANTA ANA, NORTH 76 DEG. 25' WEST 62.67 CHAINS TO
A 2'' × 4'' POST MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1 DEG. 45' WEST
58.96 CHAINS TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 89
DEG. EAST 20.00 CHAINS TO A 4'' × 4'' POST IN MOUND WITH PITS; THENCE SOUTH 1
DEG. 45' WEST 20.00 CHAINS TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS;
THENCE NORTH 88 DEG. 39' EAST 55.48 CHAINS TO A 2'' × 4'' POST MARKED 20 IN MOUND
WITH PITS; THENCE SOUTH 0 DEG. 30' EAST 20.00 CHAINS TO A 2'' × 4'' POST IN MOUND
WITH PITS; THENCE NORTH 89 DEG. 45'' EAST 134.63 CHAINS TO A 2'' × 4'' POST MARKED
40.10 IN MOUND WITH PITS UPON THE EASTERN BOUNDARY OF SAID RANCHO SAN JUAN
CAJON DE SANTA ANA; THENCE ALONG SAME NORTH 4 DEG. WEST 47.51 CHAINS TO THE
PLACE OF BEGINNING.


EXCEPTING THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.


ALSO EXCEPTING THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED BOUNDARY
LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28 DEG. 30' EAST FROM THE
WESTERN TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN THE UNION
OIL COMPANY OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY, RECORDED JUNE 10,
1905 IN BOOK 120, PAGE 223 OF DEEDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING FROM SAID TRACT OF LAND THE LAND CONVEYED TO THE METROPOLITAN


First American Title



 






 





	 	 	 	 	 
	 	 	
Order Number:
	 	O-SA-922260
	 	 	
Page Number:
	 	10



WATER DISTRICT OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK
1051, PAGE 301 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY, DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY UNION OIL
COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE EASTERLY BOUNDARY OF
THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION OIL COMPANY OF CALIFORNIA TO
GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899, RECORDED JUNE 20, 1899 IN BOOK 44,
PAGE 79 OF SAID DEEDS, WHICH POINT OF BEGINNING IS THE POINT OF INTERSECTION OF
THE AFORESAID WESTERLY BOUNDARY WITH THE EASTERLY PROLONGATION OF THE CENTER
LINE OF CENTRAL AVENUE AS THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET
AND BREA CANYON ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 73
DEG. 32' 24'' WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF SAID CENTRAL
AVENUE AT SAID POINT OF INTERSECTION (ASSUMED AND TAKEN TO BEAR NORTH 15 DEG.
11' 16'' EAST), A DISTANCE OF 839.60 FEET TO THE TRUE POINT OF BEGINNING; THENCE
NORTH 0 DEG. 10' 11'' EAST A DISTANCE OF 1250 FEET; THENCE SOUTH 89 DEG. 49' 49''
EAST A DISTANCE OF 500 FEET; THENCE SOUTH 65 DEG. 23' 11'' EAST A DISTANCE OF
604.15 FEET; THENCE SOUTH 0 DEG. 10' 11'' WEST A DISTANCE OF 1000 FEET; THENCE
NORTH 89 DEG. 49' 49'' WEST A DISTANCE OF 1050 FEET TO THE TRUE POINT OF
BEGINNING


ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF SAID OFFICIAL RECORDS,
DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM
THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF CALIFORNIA,
A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2, 1899 IN BOOK 44,
PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89 DEG. 10' 50'' WEST ALONG SAID LINE
3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID POINT OF BEGINNING
BEING MONUMENTED BY UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9 DEG. 48' 11''
WEST 529.60 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85 DEG. 48' 16'' WEST, 380.00 FEET TO A 2'' × 2'' STAKE;
THENCE NORTH 4 DEG. 11' 44'' EAST 1750.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH
85 DEG. 48' 16'' EAST 380.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 4 DEG. 11'
44'' WEST 1750.00 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 641 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 647 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCEL 1 OF THE DEED TO THE
CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF SAID OFFICIAL
RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCELS A6471-4, A6471-5,
A6471-6 AND A6471-7 OF THAT CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT
CASE NO. 156220, A CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29, 1970


First American Title



 






 






	 	 	 	 	 
	 	 	
Order Number:
	 	O-SA-922260
	 	 	
Page Number :
	 	11



IN BOOK 9417, PAGE 364 OF SAID OFFICIAL RECORDS.



ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-243,
FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE
OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED ROAD, 80.00
FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID PARCELS 1 AND 2
ON THE EAST, AND BOUND NORTHEASTERLY BY THE NORTHEASTERLY LINE OF SAID PARCEL
MAP NO. 86-243, AND BOUND SOUTHERLY BY THE CENTERLINE OF LAMBERT ROAD ON SAID
PARCEL MAP NO. 86-243


ALSO EXCEPTING THEREFROM THAT PORTION, IF ANY, INCLUDED WITHIN PARCEL 1 OF
PARCEL MAP NO. 83-1179, AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1 TO 4
INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE
COUNTY, CALIFORNIA.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12562, AS
SHOWN ON A MAP RECORDED IN BOOK 579, PAGES 4 TO 9 INCLUSIVE OF SAID
MISCELLANEOUS MAPS.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12563, AS
SHOWN ON A MAP RECORDED IN BOOK 579, PAGES 10 TO 15 INCLUSIVE OF SAID
MISCELLANEOUS MAPS.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE DEED TO THE CITY OF BREA
RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1, AS SHOWN ON
EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT LL 2000-054, RECORDED AUGUST 13,
2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS OF ORANGE COUNTY,
CALIFORNIA.


PARCEL 2:


PARCEL 1, AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT LL 2000-054,
RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS OF
ORANGE COUNTY, CALIFORNIA.


EXCEPTING THEREFROM THAT PORTION CONVEYED TO BREA-OLINDA UNIFIED SCHOOL
DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY.


EXCEPT THEREFROM THAT PORTION CONVEYED TO THE COUNTY OF ORANGE BY GRANT DEED
RECORDED JUNE 4, 2003 AS INSTRUMENT NO. 2003000648901 OF OFFICIAL RECORDS OF
SAID ORANGE COUNTY.


PARCEL 3:


THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED RECORDED JUNE 10, 1957 IN
BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER
DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM
THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF CALIFORNIA,
A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2, 1899 IN BOOK 44,
PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89 DEG. 10' 50'' WEST ALONG SAID LINE


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3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID POINT OF BEGINNING
BEING MONUMENTED BY UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9 DEG. 48' 11''
WEST 529.60 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85 DEG. 48' 16'' WEST, 380.00 FEET TO A 2'' × 2'' STAKE;
THENCE NORTH 4 DEG. 11' 44'' EAST 1750.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH
85 DEG. 48' 16'' EAST 380.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 4 DEG. 11'
44'' WEST 1750.00 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING.


EXCEPTING FROM PARCELS 1, 2 AND 3 ABOVE, ANY AND ALL OIL RIGHTS, MINERAL,
MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME
KNOWN, GEOTHERMAL STEAM AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING
(HEREINAFTER COLLECTIVELY REFERRED TO AS, THE “MINERALS”); TOGETHER WITH THE
PERPETUAL RIGHT, AS LIMITED THEREIN, OF DRILLING, EXPLORING AND OPERATING
THEREOF AND STORING IN AND REMOVING THE SAME; EXCEPTING THEREFROM THE MINERALS
LYING FROM THE SURFACE TO FIVE HUNDRED FEET (500') BELOW THE SURFACE OF THE
PROPERTY AND GRANTEE SHALL HAVE NO RIGHTS TO DRILL FOR, EXPLORE, OPERATE, STORE
OR REMOVE THE MINERALS FROM SAID RESERVED INTERVAL, PROVIDED, HOWEVER, GRANTEE
SHALL HAVE THE RIGHT OF SUBSURFACE ENTRY THROUGH SAID INTERVAL TO EXPLORE,
OPERATE, STORE OR REMOVE THE MINERALS LYING BELOW FIVE HUNDRED FEET (500') FROM
THE SURFACE OF THE PROPERTY; AS CONVEYED TO BLACKSAND PARTNERS, L.P., A TEXAS
LIMITED PARTNERSHIP, BY MINERAL GRANT DEED RECORDED FEBRUARY 28, 2003 AS
INSTRUMENT NO. 2003000226060 OF OFFICIAL RECORDS.


NOTE: THE ABOVE LEGAL DESCRIPTION IS FOR THE SOLE PURPOSE OF THIS REPORT AND
MAY NOT BE CONSIDERED FOR USE IN ANY POLICY OF TITLE INSURANCE TO BE ISSUED
BY THIS COMPANY, AND IS SUBJECT TO CHANGE AT ANY TIME.


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NOTICE



Section 12413.1 of the California Insurance Code, effective January 1, 1990,
requires that any title insurance company, underwritten title company, or
controlled escrow company handling funds in an escrow or sub-escrow capacity,
wait a specified number of days after depositing funds, before recording any
documents in connection with the transaction or disbursing funds. This statute
allows for funds deposited by wire transfer to be disbursed the same day as
deposit. In the case of cashier’s checks or certified checks, funds may be
disbursed the next day after deposit. In order to avoid unnecessary delays of
three to seven days, or more, please use wire transfer, cashier’s checks, or
certified checks whenever possible.


If you have any questions about the effect of this new law, please contact your
local First American Office for more details.


First American Title



 






 





	 	 	 	 	 
	 	 	
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EXHIBIT A

LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE)



1. CALIFORNIA LAND TITLE
ASSOCIATION STANDARD COVERAGE POLICY - 1990

SCHEDULE B



EXCEPTIONS FROM COVERAGE



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:



	1.	 	Taxes or assessments which are not shown as existing liens by the
records of any taxing authority that levies taxes or assessments on
real property or by the public records. Proceedings by a public agency
which may result in taxes or assessments, or notice of such
proceedings, whether or not shown by the records of such agency or by
the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of the land
or which may be asserted by persons in possession thereof.
	 
	3.	 	Easements, liens or encumbrances, or claims thereof, which are not shown by
the public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by the public records.
	 
	5.	 	(a) Unpatented mining claims; (b) reservations or exceptions in patents
or in Acts authorizing the issuance thereof; (c) water rights, claims
or title to water, whether or not the matters excepted under (a), (b), or
(c) are shown by the public records.



EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:



	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of
any improvement now or hereafter erected on the land; (iii) a separation
in ownership or a change in the dimensions or area of the land or
any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy.





	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims or other matters:




	 	 	(a) whether or not recorded in the public records at Date of Policy, but
created, suffered, assumed or agreed to by the insured claimant;
	 
	 	 	(b) not known to the Company, not recorded in the public records at Date
of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the insured claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy; or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the insured mortgage or for
the estate or interest insured by this policy.




	4.	 	Unenforceability of the lien of the insured mortgage because of the
inability or failure of the insured at Date of Policy, or the inability
or
failure of any subsequent owner of the indebtedness, to comply with
applicable “doing business” laws of the state in which the land is
situated.
	 
	5.	 	Invalidity or Unenforceability of the lien of the insured mortgage, or
claim thereof, which arises out of the transaction evidenced by the
insured mortgage and is based upon usury or any consumer credit
protection or truth in lending law.
	 
	6.	 	Any claim, which arises out of the transaction vesting in the insured the
estate or interest insured by their policy or the transaction creating
the interest of the insured lender, by reason of the operation of federal
bankruptcy, state insolvency or similar creditors’ rights laws.



2. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY FORM B - 1970

SCHEDULE OF EXCLUSIONS FROM COVERAGE




	1.	 	Any law, ordinance or governmental regulation (including but not limited
to building and zoning ordinances) restricting or regulating or
prohibiting the occupancy, use or enjoyment of the land, or regulating the
character, dimensions or location of any improvement now or
hereafter erected on the land, or prohibiting a separation in ownership or
a reduction in the dimensions of area of the land, or the effect of
any violation of any such law, ordinance or governmental regulation.
	 
	2.	 	Rights of eminent domain or governmental rights of police power unless
notice of the exercise of such rights appears in the public records at
Date of Policy.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters (a)
created, suffered, assumed or agreed to by the insured claimant; (b) not
known to the Company and not shown by the public records but known to the
insured claimant either at Date of Policy or at the date such
claimant acquired an estate or interest insured by this policy and not
disclosed in writing by the insured claimant to the Company prior to the
date such insured claimant became an insured hereunder; (c) resulting in
no loss or damage to the insured claimant; (d) attaching or



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	 	 	created subsequent to Date of Policy; or (e) resulting in loss or
damage which would not have been sustained if the insured claimant had
paid value for the estate or interest insured by this policy.



3. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY FORM B - 1970

WITH REGIONAL EXCEPTIONS



When the American Land Title Association policy is used as a Standard Coverage
Policy and not as an Extended Coverage Policy the exclusions set forth in
paragraph 2 above are used and the following exceptions to coverage appear in
the policy.


SCHEDULE B



This policy does not insure against loss or damage by reason of the matters
shown in parts one and two following:


Part One



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the
public
records.



4. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1970

WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE

SCHEDULE OF EXCLUSIONS FROM COVERAGE




	1.	 	Any law, ordinance or governmental regulation (including but not limited
to building and zoning ordinances) restricting or regulating or
prohibiting the occupancy, use or enjoyment of the land, or regulating the
character, dimensions or location of any improvement now or
hereafter erected on the land, or prohibiting a separation in ownership or
a reduction in the dimensions or area of the land, or the effect of
any violation of any such law ordinance or governmental regulation.
	 
	 
	2.	 	
Rights of eminent domain or governmental rights of police power unless
notice of the exercise of such rights appears in the public records at
Date of Policy.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters (a)
created, suffered, assumed or agreed to by the insured claimant, (b) not
known to the Company and not shown by the public records but known to the
insured claimant either at Date of Policy or at the date such
claimant acquired an estate or interest insured by this policy or acquired
the insured mortgage and not disclosed in writing by the insured
claimant to the Company prior to the date such insured claimant became an
insured hereunder, (c) resulting in no loss or damage to the
insured claimant; (d) attaching or created subsequent to Date of Policy
(except to the extent insurance is afforded herein as to any statutory
lien for labor or material or to the extent insurance is afforded herein
as to assessments for street improvements under construction or
completed at Date of Policy).
	 
	4.	 	Unenforceability of the lien of the insured mortgage because of failure
of the insured at Date of Policy or of any subsequent owner of the
indebtedness to comply with applicable “doing business” laws of the state
in which the land is situated.



5. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1970

WITH REGIONAL EXCEPTIONS



When the American Land Title Association Lenders Policy is used as a Standard
Coverage Policy and not as an Extended Coverage Policy, the exclusions set
forth in paragraph 4 above are used and the following exceptions to coverage
appear in the policy.


SCHEDULE B



This policy does not insure against toss or damage by reason
of the matters shown in parts one and two following:


Part One



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



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6. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1992

WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE

EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:



	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of
any improvement now or hereafter erected on the land; (iii) a separation
in ownership or a change in the dimensions or area of the land or
any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy;




	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters:




	 	 	(a) whether or not recorded in the public records at Date of Policy, but
created, suffered, assumed or agreed to by the insured claimant;
	 
	 	 	(b) not known to the Company, not recorded in the public records at Date
of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the insured claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy (except to the
extent that this policy insures the priority of the lien of the insured
mortgage over any statutory lien for services, labor or material or the
extent insurance is afforded herein as to assessments for street
improvements under construction or completed at date of policy); or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the insured mortgage.




	4.	 	Unenforceability of the lien of the insured mortgage because of the
inability or failure of the insured at Date of Policy, or the inability or
failure of any subsequent owner of the indebtedness, to comply with the
applicable “doing business” laws of the state in which the land is
situated.
	 
	5.	 	Invalidity or unenforceability of the lien of the insured mortgage, or
claim thereof, which arises out of the transaction evidenced by the
insured mortgage and is based upon usury or any consumer credit
protection or truth in lending law.
	 
	6.	 	Any statutory lien for services, labor or materials (or the claim of
priority of any statutory lien for services, labor or materials over the
lien of
the insured mortgage) arising from an improvement or work related to the
land which is contracted for and commenced subsequent to Date
of Policy and is not financed in whole or in part by proceeds of the
indebtedness secured by the insured mortgage which at Date of Policy
the insured has advanced or is obligated to advance.
	 
	7.	 	Any claim, which arises out of the transaction creating the interest of
the mortgagee insured by this policy, by reason of the operation of
federal bankruptcy, state insolvency, or similar creditors’ rights laws,
that is based on:
	 
	 	 	(i) the transaction creating the interest of the insured mortgagee being
deemed a fraudulent conveyance or fraudulent transfer; or 
	 
	 	 	(ii) the
subordination of the interest of the insured mortgagee as a result of the
application of the doctrine of equitable subordination; or
	 
	 	 	(iii) the
transaction creating the interest of the insured mortgagee being deemed a
preferential transfer except where the preferential transfer results from
the failure:




	 	 	(a) to timely record the instrument of transfer; or
	 
	 	 	(b) of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.



7. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1992

WITH REGIONAL EXCEPTIONS



When the American Land Title Association policy is used as a Standard Coverage
Policy and not as an Extended Coverage Policy the exclusions set forth in
paragraph 6 above are used and the following exceptions to coverage appear in
the policy.


SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said
land or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



8. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY - 1992



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EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:



	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of
any improvement now or hereafter erected on the land; (iii) a separation
in ownership or a change in the dimensions or area of the land or
any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy.




	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters:




	 	 	(a) created, suffered, assumed or agreed to by the insured claimant;
	 
	 	 	(b) not known to the Company, not recorded in the public records at Date
of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the insured claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy; or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the estate or interest insured
by this policy.




	4.	 	Any claim, which arises out of the transaction vesting in the insured the
estate or interest insured by this policy, by reason of the operation
of federal bankruptcy, state insolvency, or similar creditors’ rights
laws, that is based on:




	 	 	(i) the transaction creating the estate or interest insured by this policy
being deemed a fraudulent conveyance or fraudulent transfer; or
	 
	 	 	(ii) the
transaction creating the estate or interest insured by this policy being
deemed a preferential transfer except where the preferential transfer
results from the failure:
	 
	 	 	(a) to timely record the instrument of transfer; or
	 
	 	 	(b) of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.



9. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY - 1992

WITH REGIONAL EXCEPTIONS



When the American Land Title Association policy is used as a Standard Coverage
Policy and not as an Extended Coverage Policy the exclusions set forth in
paragraph 8 above are used and the following exceptions to coverage appear in
the policy.


SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:


Part One:



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL

TITLE INSURANCE POLICY - 1987

EXCLUSIONS



In addition to the Exceptions in Schedule B, you are not insured against loss,
costs, attorneys’ fees and expenses resulting from:



	1.	 	Governmental police power, and the existence or violation of any law or
government regulation. This includes building and zoning
ordinances and also laws and regulations concerning:




	 	 	 
	* land use

* improvements on the land	 	
* land division

* environmental protection




	 	 	This exclusion does not apply to violations or the enforcement of
these matters which appear in the public records at Policy Date.

This exclusion does not limit the zoning coverage described in items
12 and 13 of Covered Title Risks.



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	2.	 	The right to take the land by condemning it, unless:




	 	*	 	a notice of exercising the right appears in the public records on the
Policy Date
	 
	 	*	 	the taking happened prior to the Policy Date and is binding on you if
you bought the land without knowing of the taking.




	3.	 	Title Risks:




	 	*	 	that are created, allowed, or agreed to by you
	 
	 	*	 	that are known to you, but not to
us, on the Policy Date - unless they
appeared in the public records
	 
	 	*	 	that result in no loss to you
	 
	 	*	 	that first affect your title after
the Policy Date - this does not limit
the labor and material lien coverage in Item 8 of Covered Title Risks


	 
	4.	 	Failure to pay value for your title.
	 
	5.	 	Lack of a right:


	 
	 	*	 	to any land outside the area specifically described and referred to in
Item 3 of Schedule A, or
	 
	 	*	 	in streets, alleys, or waterways that touch your land

	 
	 	
This exclusion does not limit the access coverage in Item 5 of Covered
Title Risks.



11. EAGLE PROTECTION OWNER’S POLICY



CLTA HOMEOWNER’S POLICY OF
TITLE INSURANCE - 1998

ALTA HOMEOWNER’S POLICY OF TITLE INSURANCE - 1998



Covered Risks 14 (Subdivision Law Violation). 15 (Building Permit). 16 (Zoning)
and 18 (Encroachment of boundary walls or fences) are subject to
Deductible Amounts and Maximum Dollar Limits of Liability


EXCLUSIONS



In addition to the Exceptions in Schedule B, you are not insured against loss,
costs, attorneys’ fees, and expenses resulting from:



	1.	 	Governmental police power, and the existence or violation of any law
or government regulation. This includes ordinances, laws and
regulations concerning:




	 	 	 
	a. building	 	
b. zoning
	c. land use	 	
d. improvements on the land
	e. land division	 	
f. environmental protection




	 	 	This exclusion does not apply to violations or the enforcement of these
matters if notice of the violation or enforcement appears in the Public
Records at the Policy Date.

 This exclusion does not limit the coverage
described in Covered Risk 14, 15, 16, 17 or 24.
	 
	2.	 	The failure of Your existing structures, or any part of them, to be
constructed in accordance with applicable building codes. This Exclusion
does not apply to violations of building codes if notice of the violation
appears in the Public Records at the Policy Date.
	 
	3.	 	The right to take the Land by
condemning it, unless:


a. a notice of exercising the right appears in the Public Records at the
Policy Date; or


b. the taking happened before the Policy Date and is binding on You if You
bought the Land without Knowing of the taking.
	 
	4.	 	Risks:




	 	 	a. that are created, allowed, or agreed to by You, whether or not they
appear in the Public Records;
	 
	 	 	b. that are Known to You at the Policy Date, but not to Us, unless they
appear in the Public Records at the Policy Date;
	 
	 	 	c. that result in no loss to You; or
	 
	 	 	d. that first occur after the
Policy Date - this does not limit the
coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25.




	5.	 	Failure to pay value for Your Title.
	 
	6.	 	Lack of a right:




	 	 	a. to any Land outside the area specifically described and referred to in
paragraph 3 of Schedule A; and
	 
	 	 	b. in streets, alleys, or
waterways that touch the Land.


This exclusion does not limit the coverage described in Covered Risk 11 or
18.



12. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN
POLICY (10/13/01)



EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:


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Order Number:
	 	O-SA-922260
	 	 	
Page Number:
	 	19




	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the Land; (ii) the character, dimensions or location
of any improvement now or hereafter erected on the Land; (iii) a
separation in ownership or a change in the dimensions or area of the Land
or any parcel of which the Land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the Land has
been recorded in the Public Records at Date of Policy. This exclusion
does not limit the coverage provided under Covered Risks 12, 13, 14 and 16
of this policy.
	 
	(b)	 	Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the Public Records at Date of Policy. This
exclusion does not limit the coverage provided under Covered Risks 12, 13,
14 and 16 of this policy.
	 
	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the Public Records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
Knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims or other matters:




	 	 	(a) created, suffered, assumed or agreed to by the Insured Claimant;
	 
	 	 	(b) not Known to the Company, not recorded in the Public Records at Date
of Policy, but Known to the Insured Claimant and not disclosed in
writing to the Company by the Insured Claimant prior to the date the
Insured Claimant became an Insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the Insured Claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy (this paragraph does
not limit the coverage provided under Covered Risks 8, 16, 18,
19, 20, 21, 22, 23, 24, 25 and 26); or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
Insured Claimant had paid value for the Insured Mortgage.




	4.	 	Unenforceability of the lien of the Insured Mortgage because of the
inability or failure of the Insured at Date of Policy, or the inability
or
failure of any subsequent owner of the indebtedness, to comply with
applicable doing business laws of the state in which the Land is
situated.
	 
	5.	 	Invalidity or unenforceability of the lien of the Insured Mortgage, or
claim thereof, which arises out of the transaction evidenced by the
Insured Mortgage and is based upon usury, except as provided in Covered
Risk 27, or any consumer credit protection or truth in lending law.
	 
	6.	 	Real property taxes or assessments of any governmental authority which
become a lien on the Land subsequent to Date of Policy. This
exclusion does not limit the coverage provided under Covered Risks 7, 8
(e) and 26.
	 
	7.	 	Any claim of invalidity, unenforceability or lack of priority of the lien
of the Insured Mortgage as to advances or modifications made after the
Insured has Knowledge that the vestee shown in Schedule A is no longer the
owner of the estate or interest covered by this policy. This
exclusion does not limit the coverage provided in Covered Risk 8.
	 
	8.	 	Lack of priority of the lien of the Insured Mortgage as to each and
every advance made after Date of Policy, and all interest charged
thereon, over liens, encumbrances and other matters affecting title,
the existence of which are Known to the Insured at:




	 	 	(a) The time of the advance; or
	 
	 	 	(b) The time a modification is made to the terms of the Insured Mortgage
which changes the rate of interest charged, if the rate of interest
is greater as a result of the modification than it would have been before
the modification.


This exclusion does not limit the coverage provided in Covered Risk 8.




	9.	 	The failure of the residential structure, or any portion thereof to have
been constructed before, on or after Date of Policy in accordance with
applicable building codes. This exclusion does not apply to violations of
building codes if notice of the violation appears in the Public Records
at Date of Policy.



SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:



	1.	 	The following existing statutes, reference to which are made part of the
ALTA 8.1 Environmental Protection Lien Endorsement incorporated
into this Policy following item 28 of Covered Risks: NONE.



13. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN
POLICY (10/13/01)



WITH REGIONAL EXCEPTIONS



When the American Land Title Association loan policy with EAGLE Protection
Added is used as a Standard Coverage Policy and not as an Extended Coverage
Policy the exclusions set forth in paragraph 12 above are used and the
following exceptions to coverage appear in the policy.


SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:


Part One:



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.



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Order Number:
	 	O-SA-922260
	 	 	
Page Number:
	 	20




	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
acts authorizing the issuance thereof; water rights, claims or title to
water.

	 
	6.	 	
 Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



Part Two:



	1.	 	The following existing statutes, reference to which are made part of the
ALTA 8.1 Environmental Protection Lien Endorsement incorporated
into this Policy following item 28 of Covered Risks: None.



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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	1
	 
	 	 	 	 	UPDATED






First American Title

2 First American Way

Santa Ana, CA 92707



Joe Fleischaker

Shea Homes

603 South Valencia Avenue

Brea, CA 92823-6346

Phone: (714) 985-1300

Fax:



	 	 	 
	Customer Reference:	 	
Nuevo Energy - TT 16178
	 	 	 
	Order Number:	 	
O-SA-1028199
	 	 	 
	Title Officer:	 	
Ronald Gomez (09)
	Phone:	 	
(714) 800-4822
	Fax No.:	 	
(714) 800-4965
	E-Mail:	 	
rogomez@firstam.com
	 	 	 
	Buyer:	 	 
	 	 	 
	Property:	 	
Lots 11-19 & 21-22 of Tentative Tract No. 16178

Brea, California



PRELIMINARY REPORT



In response to the above referenced application for a policy of title
insurance, this company hereby reports that it is prepared to issue, or cause
to be issued, as of the date hereof, a Policy or Policies of Title Insurance
describing the land and the estate or interest therein hereinafter set forth,
insuring against loss which may be sustained by reason of any defect, lien or
encumbrance not shown or referred to as an Exception below or not excluded from
coverage pursuant to the printed Schedules, Conditions and Stipulations of said
Policy forms.


The printed Exceptions and Exclusions from the coverage of said Policy or
Policies are set forth in Exhibit A attached. Copies of the Policy forms should
be read. They are available from the office which issued this report.


Please read the exceptions shown or referred to below and the exceptions
and exclusions set forth in Exhibit A of this report carefully. The
exceptions and exclusions are meant to provide you with notice of matters
which are not covered under the terms of the title insurance policy and
should be carefully considered.


It is important to note that this preliminary report is not a written
representation as to the condition of title and may not list all liens,
defects, and encumbrances affecting title to the land.


This report (and any supplements or amendments hereto) is issued solely for the
purpose of facilitating the issuance of a policy of title insurance and no
liability is assumed hereby. If it is desired that liability be assumed prior
to the issuance of a policy of title insurance, a Binder or Commitment should
be requested.


First American Title



 






 





	 	 	 	 	 
	 	 	
Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	2



Dated as of November 18, 2003 at 7:30 A.M.


The form of Policy of title insurance contemplated by this report is:


          ALTA Standard Owners w/Reg Exc 1992



          A specific request should be made if another form or additional
coverage is desired.



Title to said estate or interest at the date
hereof is vested in:


          Nuevo Energy Company, a Delaware corporation.



The estate or
interest in the land hereinafter described or referred to covered by
this Report is:


          A fee.



The Land referred to herein is
described as follows:


(See attached
Legal Description)


At the date hereof exceptions to coverage in addition to the printed Exceptions
and Exclusions in said policy form would be as follows:



	1.	 	This item has been intentionally deleted.
	 
	2.	 	The lien of supplemental taxes, if any, assessed pursuant to Chapter
3.5 commencing with Section 75 of the California Revenue and Taxation Code.
	 
	 	 	Although the above supplemental taxes may be a lien, the installments
thereof are not yet due or payable.
	 
	3.	 	This item has been intentionally deleted.
	 
	4.	 	An easement for roads, railroads and ditches and incidental purposes,
recorded July 10, 1897 as
in Book 30, page 11 of Deeds.




	 	 	 
	In Favor of:	 	
The Stearns Rancho Company.
	Affects:	 	
Portions of Lots 13 and 19.




	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	5.	 	An oil and gas lease, covering the Easterly 100 acres of the herein
described land, dated
February 26, 1901, executed by Union Oil Company of California, as
lessor, and Columbia Oil
Producing Company, as lessee, recorded March 25, 1901 in Book 2, page 128
of Leases, and
amended by agreements recorded December 15, 1912 in Book 5, page 289 of
Leases and
February 20, 1959 in Book 4594, page 488 of Official Records, to which
record reference is
hereby made for full particulars.



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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	3




	 	 	Note 1: The lessee’s interest under said lease has been assigned to
Shell Oil Company, a Delaware corporation, by mesne assignments of
record.
	 
	 	 	Note 2: Recorded October 11, 1957 in Book 4067, page 328 of Official
Records is a deed dated August 2, 1957 wherein Shell Oil Company
quitclaims and surrenders said lease only insofar as it affects the
following described lands, reserving, however unto said Shell Oil Company
“all of those easements in, over and across the surrendered lands which
were conveyed to it under the provisions of said lease, as amended:”
	 
	 	 	Parcel 1: Beginning at the Northeast corner of the land described in
the deed to Union Oil Company of California recorded in Book 30, page 11
of Deeds in the office of the county recorder of said county; thence
South 4 deg. 22' 00'' East along the Easterly line of said land of union
815.03 feet; thence South 85 deg 38' 00'' West 41.21 feet; thence North 4
deg. 22' 00'' West 307.60 feet; thence South 85 deg. 38' 00'' West 855.56
feet; thence North 4 deg. 22' West 330.64 feet; thence South 85 deg. 38'
00'' West 462.95 feet; thence North 4 deg. 21' 13'' West 414.28 feet to the
Northerly line of the land described in said deed to union; thence South
84 deg. 27' 31'' East along said Northerly line 1380.20 feet to the point
of beginning.
	 
	 	 	Parcel 2: Beginning for reference at a point in the Easterly line of
the land above described in said deed to Union Oil Company of California
distant North 4 deg. 22' 00'' West along said Easterly line 438.07 feet
from the Southeast corner of said land; thence South 85 deg. 38' 00'' West
395.50 feet to the true point of beginning; thence continuing South 85
deg. 38' 00'' West 228.01 feet; thence North 4 deg. 22' 00'' West 394.17
feet; thence North 85 deg. 38' 00'' East 67.11 feet; thence North 4 deg.
22' 00'' West 410.00 feet; thence North 85 deg. 38' 00'' east 46.75 feet;
thence North 4 deg. 22' 00'' West 289.87 feet; thence North 85 deg. 38'
00'' East 58.37 feet; thence North 4 deg. 22' 00'' West 64.29 feet; thence
North 85 deg. 38' 00'' East 24.43 feet; thence South 4 deg. 22' 00'' East
221.53 feet; thence North 85 deg. 38' 00'' East 31.35 feet; thence South 4
deg. 22' 00'' East 936.80 feet to the true point of beginning.
	 
	 	 	Note 3: An instrument declaring a modification or amendment of said lease
was recorded March 29, 1960 in Book 5169, page 140 of Official Records.
	 
	 	 	Note 4: A portion of said lease was surrendered by an instrument
entitled “Partial Surrender of Oil and Gas Lease” recorded January 16,
1969 in Book 8846, page 968 of Official Records; reference being made to
the record thereof for full particulars.
	 
	6.	 	The right of way to lay, construct, maintain, operate, repair and remove
pipe lines for the transportation of oil, petroleum or gas, maintain and operate telegraph
or telephone lines, with
the right of ingress and egress to and from the same, over, through,
under or along a portion of
the land, as conveyed to the Pacific Coast Oil Company by deed recorded
June 25, 1902 in Book
75, page 254 of Deeds.
	 
	 	 	Note: Affects Lots 13 and 16.
	 
	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	7.	 	An easement over that portion of said land included within Brea Canyon
Road, as conveyed to
the County of Orange by deed recorded January 21, 1916 in Book 280, page
244 of Deeds and
by deed recorded November 8, 1928 in Book 220, page 38 of Official
Records.
	 
	 	 	Note: Affects Lot 18.



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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	4




	8.	 	The effect of a map purporting to show the herein described and other
land recorded in Book 12,
page 40 of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	9.	 	A permanent easement and right of way over a portion of said land to
construct and reconstruct
a line or lines of pipe for transportation of water and incidental
purposes, as conveyed to the
Metropolitan Water District of Southern California by a deed recorded
October 29, 1940 in Book
1067, page 308 of Official Records and as modified by an instrument dated
June 18, 1954,
executed by Union Oil Company of California in favor of the Metropolitan
Water District of
Southern California, recorded July 8, 1954 in Book 2766, page 268 of
Official Records, reference
being made to the record for full particulars.
	 
	 	 	Note: Affects Lot 11.
	 
	10.	 	This item has been intentionally deleted.
	 
	11.	 	This item has been intentionally deleted.
	 
	12.	 	This item has been intentionally deleted.
	 
	13.	 	This item has been intentionally deleted.
	 
	14.	 	An easement for roadway and incidental purposes, recorded August 1, 1962
as in Book 6245,
page 654 of Official Records.




	 	 	 
	In Favor of:	 	
Boy Scouts of America, Los Angeles area council.
	Affects:	 	
Lot 13.




	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	15.	 	An easement for public utilities and incidental purposes, recorded
January 18, 1963 as in Book
6399, page 705 of Official Records.




	 	 	 
	In Favor of:	 	
Southern California Edison Company.
	Affects:	 	
Lots 19 and 22




	16.	 	This item has been intentionally deleted.
	 
	17.	 	An easement for pipeline for the transportation of gas and
incidental purposes,
recorded February 23, 1965 as in Book 7422, page 249 of
Official Records.




	 	 	 
	In Favor of:	 	
Pacific Lighting Gas Supply Company, a California public
utility corporation.
	Affects:	 	
Lots 11, 13 and 22.




	18.	 	An easement for pipe line and incidental purposes, recorded January 16,
1969 as in Book 8847,
page 518 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lot 16.



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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	5



 



	19.	 	An easement for road and incidental purposes, recorded January 16, 1969
as in Book 8847, page
529 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lots 16 and 17.




	20.	 	The fact that the land has no right or easement of access to the freeway
adjacent, as condemned
to the people of the State of California in the final order of
condemnation recorded September
29, 1970 in Book 9417, page 364 of Official Records.
	 
	 	 	Note: Affects portions of the land.
	 
	21.	 	The effect of a map purporting to show the herein described and other
land in Book 91, page 12
of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	22.	 	The effect of a map purporting to show the herein described and other
land recorded in Book 99,
pages 29 to 35 of Record of Surveys.
	 
	 	 	Note 1: An instrument entitled “Certificate of Correction” recorded
March 13, 1981 in Book 13981, page 691 of Official Records; reference
being made to the record thereof for full particulars.
	 
	 	 	Note 2: An instrument entitled “Certificate of Correction” recorded
August 11, 1981 in Book 14176, page 1928 of Official Records;
reference being made to the record thereof for full particulars.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	23.	 	The effect of a map purporting to show the herein described and other
land in Book 106, page 1
of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	24.	 	An easement for highway slopes, appurtenant drainage structures and
incidental purposes,
recorded October 11, 1984 as Instrument No. 84-421551 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lot 13.




	25.	 	An easement for a public storm drain, appurtenances and incidental
purposes, recorded October
7, 1985 as Instrument No. 85-382994 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lot 13.




	26.	 	The effect of a map purporting to show the herein described and other
land recorded in Book
133, pages 41 to 46 of Record of Surveys.
	 
	 	 	Note 1: An instrument entitled “Record of Survey Certificate of
Correction” recorded July 30, 1991 as Instrument No. 91-401277 of
Official Records; reference being made to the record thereof for full
particulars.



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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	6




	 	 	Note 2: An instrument entitled “Record of Survey Certificate of
Correction” recorded October 18, 1994 as Instrument No. 94-0617580 of
Official Records; reference being made to the record thereof for full
particulars.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	27.	 	An instrument entitled “Certificate of Completion” recorded August 12,
1986 as Instrument No.
86-357255 of Official Records; reference being made to the record thereof
for full particulars.
	 
	28.	 	An easement for the passage of vehicular and pedestrian traffic,
utilities, storm drains, sewers
and incidental purposes, recorded October 1, 1986 as Instrument No. 86-459482 of Official
Records.




	 	 	 
	In Favor of:	 	
Brea H.O.P.E. Inc.
	Affects:	 	
Lot 13.




	29.	 	An easement for public utilities and incidental purposes, recorded May 9,
1989 as Instrument No.
89-243784 of Official Records.




	 	 	 
	In Favor of:	 	
Southern California Edison Company.
	Affects:	 	
Lot 22.




	 	 	 
	30.	 	
The effect of an instrument entitled “Notice of Intent to Preserve
Mineral Rights” recorded
January 26, 1995 as Instrument No. 95-0034367 of Official Records;
reference being made to the
record thereof for full particulars.
	 	 	 
	 	 	
(A 100.29 endorsement will be issued at the time of closing)
	 	 	 
	31.	 	
An easement for drainage and incidental purposes, recorded March 29, 1996
as Instrument No.
19960153322 of Official Records.




	 	 	 
	In Favor of:	 	
The City of Brea.
	Affects:	 	
Lot 13.




	32.	 	An easement for water pipeline and incidental purposes, recorded March
29, 1996 as Instrument
No. 19960153324 of Official Records.




	 	 	 
	In Favor of:

Affects:	 	
The City of Brea.

Lot 13.




	33.	 	Easements, covenants and conditions contained in the deed from Union Oil
Company of
California, a California corporation, for itself and as successor by
merger to Collier Carbon and
Chemical Corporation, a California corporation formerly known as R. T.
Collier Corporation which
was successor by merger to Brea Chemicals, Inc. and Unocal California
Pipeline Company, a
California corporation, as grantor, to Nuevo Energy Company, a Delaware
corporation, as
grantee, recorded April 10, 1996 as Instrument No. 19960175928 of
Official Records. reference
being made to said document for full particulars.
	 
	 	 	(A 103.1 endorsement will be issued at the time of closing)
	 
	34.	 	The terms, provisions and conditions contained in a document entitled
“Agreement Between Adjacent Landowners”, executed by and between Nuevo Energy Company, a
Delaware




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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	7




	 	 	corporation and Brea Walden, LLC, a California limited liability
company, recorded October 9, 2001 as Instrument No. 20010710857 of
Official Records.
	 
	35.	 	The effect of a map purporting to show the herein described and other
land recorded in Book
187, pages 2 to 7 of Record of Surveys.
	 
	 	 	(The above item will be eliminated upon tract recordation)
	 
	36.	 	The terms, provisions and conditions contained in a document entitled
“Tonner Hills Development
Agreement”, executed by and between the County of Orange and Nuevo Energy
Company,
recorded February 14, 2003 as Instrument No. 2003000171873 of Official
Records.
	 
	37.	 	The terms, provisions and conditions and easements contained in a
document entitled “Easement
Agreement”, executed by and between Nuevo Energy Company, a Delaware
corporation and
Blacksand Partners L.P., a Texas limited partnership, recorded February
28, 2003 as Instrument
No. 2003000226061 of Official Records.
	 
	38.	 	An easement shown or dedicated on the Map as referred to in the
legal description




	 	 	 
	For:	 	
emergency vehicle access and incidental purposes.




	 	 	Note: Affects Lots 13 and 16.
	 
	39.	 	An easement for slope, drainage and incidental purposes, recorded June 4,
2003 as Instrument
No. 2003000648902 of Official Records.




	 	 	 
	In Favor of:	 	
County of Orange
	Affects:	 	
a portion of Lot 16.



INFORMATIONAL NOTES



The map attached, if any, may or may not be a survey of the land depicted
hereon. First American expressly disclaims any liability for loss or damage
which may result from reliance on this map except to the extent coverage for
such loss or damage is expressly provided by the terms and provisions of the
title insurance policy, if any, to which this map is attached.


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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	8



WIRE INSTRUCTIONS



First American Title Company, Demand/Draft Sub-Escrow Deposits

Orange County, California



First American Trust, FSB

Santa Ana Branch

421 North Main Street

Santa Ana, California 92701



ABA 122241255

Credit to First American Title Company

Account No. 15030

Reference Title Order Number O-SA-1028199, and Title Officer Ronald Gomez



Please wire the day before recording. Also, notify the Title Officer of your intent to wire.



First American Title



 






 






	 	 	 	 	 
	 	 	
Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	9



LEGAL DESCRIPTION



Real property partly in the City of Brea, and partly in unincorporated
territory, County of Orange, State of California, described as follows:


LOTS 11 THROUGH 19 AND LOTS 21 AND 22 OF PROPOSED TRACT 16178 BEING A
SUBDIVISION OF:


THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE,
AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, AND RECORD OF SURVEY
FILED IN BOOK 12, PAGE 40, RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133,
PAGES 41 THROUGH 46 INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK
187, PAGES 02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY , IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A DEED,
BILL OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS INSTRUMENT NO.
19960175928 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:


PARCEL 1:


BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE NORTHEAST
CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO THE SOUTHEAST
CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE PATENT BOUNDARY OF
SAID RANCHO RINCON DE LA BREA, NORTH 84 DEG. WEST 107.51 CHAINS TO A SAND STONE
MARKED R. B. IN MOUND WITH PITS; THENCE ALONG SAID PATENT BOUNDARY NORTH 57
DEG. 42' WEST 43.67 CHAINS TO A WHITE POST 4 INCHES SQUARE IN MOUND OF STONE
MARKED S. J. C. S. A. AT INTERSECTION OF THE PATENT LINES OF SAID RANCHOS SAN
JUAN CAJON DE SANTA ANA AND RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF
SAID RANCHO SAN JUAN CAJON DE SANTA ANA, NORTH 76 DEG. 25' WEST 62.67 CHAINS TO
A 2'' × 4'' POST MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1 DEG. 45' WEST
58.96 CHAINS TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 89
DEG. EAST 20.00 CHAINS TO A 4'' × 4'' POST IN MOUND WITH PITS; THENCE SOUTH 1
DEG. 45' WEST 20.00 CHAINS TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS;
THENCE NORTH 88 DEG. 39' EAST 55.48 CHAINS TO A 2'' × 4'' POST MARKED 20 IN MOUND
WITH PITS; THENCE SOUTH 0 DEG. 30' EAST 20.00 CHAINS TO A 2'' × 4'' POST IN MOUND
WITH PITS; THENCE NORTH 89 DEG. 45'' EAST 134.63 CHAINS TO A 2'' × 4'' POST MARKED
40.10 IN MOUND WITH PITS UPON THE EASTERN BOUNDARY OF SAID RANCHO SAN JUAN
CAJON DE SANTA ANA; THENCE ALONG SAME NORTH 4 DEG. WEST 47.51 CHAINS TO THE
PLACE OF BEGINNING.


EXCEPTING THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.


ALSO EXCEPTING THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED BOUNDARY
LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28 DEG. 30' EAST FROM THE
WESTERN TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN THE UNION
OIL COMPANY OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY, RECORDED JUNE 10,
1905 IN BOOK 120, PAGE 223 OF DEEDS, IN THE OFFICE OF SAID COUNTY RECORDER.


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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	10



ALSO EXCEPTING FROM SAID TRACT OF LAND THE LAND CONVEYED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK
1051, PAGE 301 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY, DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY UNION OIL
COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE EASTERLY BOUNDARY OF
THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION OIL COMPANY OF CALIFORNIA TO
GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899, RECORDED JUNE 20, 1899 IN BOOK 44,
PAGE 79 OF SAID DEEDS, WHICH POINT OF BEGINNING IS THE POINT OF INTERSECTION OF
THE AFORESAID WESTERLY BOUNDARY WITH THE EASTERLY PROLONGATION OF THE CENTER
LINE OF CENTRAL AVENUE AS THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET
AND BREA CANYON ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 73
DEG. 32' 24'' WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF SAID CENTRAL
AVENUE AT SAID POINT OF INTERSECTION (ASSUMED AND TAKEN TO BEAR NORTH 15 DEG.
11' 16'' EAST), A DISTANCE OF 839.60 FEET TO THE TRUE POINT OF BEGINNING; THENCE
NORTH 0 DEG. 10' 11'' EAST A DISTANCE OF 1250 FEET; THENCE SOUTH 89 DEG. 49' 49''
EAST A DISTANCE OF 500 FEET; THENCE SOUTH 65 DEG. 23' 11'' EAST A DISTANCE OF
604.15 FEET; THENCE SOUTH 0 DEG. 10' 11'' WEST A DISTANCE OF 1000 FEET; THENCE
NORTH 89 DEG. 49' 49'' WEST A DISTANCE OF 1050 FEET TO THE TRUE POINT OF
BEGINNING


ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF SAID OFFICIAL RECORDS,
DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM
THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF CALIFORNIA,
A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2, 1899 IN BOOK 44,
PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89 DEG. 10' 50'' WEST ALONG SAID LINE
3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID POINT OF BEGINNING
BEING MONUMENTED BY UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9 DEG. 48' 11''
WEST 529.60 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85 DEG. 48' 16'' WEST, 380.00 FEET TO A 2'' × 2'' STAKE;
THENCE NORTH 4 DEG. 11' 44'' EAST 1750.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH
85 DEG. 48' 16'' EAST 380.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 4 DEG. 11'
44'' WEST 1750.00 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 641 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 647 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCEL 1 OF THE DEED TO THE
CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF SAID OFFICIAL
RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCELS A6471-4,
A6471-5, A6471-6 AND A6471-7 OF THAT CERTAIN FINAL ORDER OF CONDEMNATION,
SUPERIOR


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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	11



COURT CASE NO. 156220, A CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29,
1970 IN BOOK 9417, PAGE 364 OF SAID OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-243,
FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE
OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED ROAD, 80.00
FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID PARCELS 1 AND 2
ON THE EAST, AND BOUND NORTHEASTERLY BY THE NORTHEASTERLY LINE OF SAID PARCEL
MAP NO. 86-243, AND BOUND SOUTHERLY BY THE CENTERLINE OF LAMBERT ROAD ON SAID
PARCEL MAP NO. 86-243


ALSO EXCEPTING THEREFROM THAT PORTION, IF ANY, INCLUDED WITHIN PARCEL 1 OF
PARCEL MAP NO. 83-1179, AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1 TO 4
INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF ORANGE
COUNTY, CALIFORNIA.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12562, AS
SHOWN ON A MAP RECORDED IN BOOK 579, PAGES 4 TO 9 INCLUSIVE OF SAID
MISCELLANEOUS MAPS.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12563, AS
SHOWN ON A MAP RECORDED IN BOOK 579, PAGES 10 TO 15 INCLUSIVE OF SAID
MISCELLANEOUS MAPS.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE DEED TO THE CITY OF BREA
RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1, AS SHOWN ON
EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT LL 2000-054, RECORDED AUGUST 13,
2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS OF ORANGE COUNTY,
CALIFORNIA.


PARCEL 2:


PARCEL 1, AS SHOWN ON EXHIBIT “B” ATTACHED TO LOT LINE ADJUSTMENT LL 2000-054,
RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS OF
ORANGE COUNTY, CALIFORNIA.


EXCEPTING THEREFROM THAT PORTION CONVEYED TO BREA-OLINDA UNIFIED SCHOOL
DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS OF SAID ORANGE COUNTY.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCEL 115 OF THE DEED TO
THE COUNTY OF ORANGE RECORDED JUNE 4, 2003 AS INSTRUMENT NO. 2003000648901 OF
SAID OFFICIAL RECORDS.


PARCEL 3:


THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED RECORDED JUNE 10, 1957 IN
BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER
DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM
THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF CALIFORNIA,
A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2, 1899 IN


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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	12



BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89 DEG. 10' 50'' WEST ALONG SAID
LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID POINT OF
BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT 11B; THENCE NORTH 9
DEG. 48' 11'' WEST 529.60 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF
BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85 DEG. 48' 16'' WEST, 380.00 FEET
TO A 2'' × 2'' STAKE; THENCE NORTH 4 DEG. 11' 44'' EAST 1750.00 FEET TO A 2'' × 2''
STAKE; THENCE SOUTH 85 DEG. 48' 16'' EAST 380.00 FEET TO A 2'' × 2'' STAKE; THENCE
SOUTH 4 DEG. 11' 44'' WEST 1750.00 FEET TO A 2'' × 2'' STAKE AND THE TRUE POINT OF
BEGINNING.


EXCEPTING FROM PARCELS 1, 2 AND 3 ABOVE, ANY AND ALL OIL RIGHTS, MINERAL,
MINERAL RIGHTS, NATURAL GAS RIGHTS AND OTHER HYDROCARBONS BY WHATSOEVER NAME
KNOWN, GEOTHERMAL STEAM AND ALL PRODUCTS DERIVED FROM ANY OF THE FOREGOING
(HEREINAFTER COLLECTIVELY REFERRED TO AS, THE “MINERALS”); TOGETHER WITH THE
PERPETUAL RIGHT, AS LIMITED THEREIN, OF DRILLING, EXPLORING AND OPERATING
THEREOF AND STORING IN AND REMOVING THE SAME; EXCEPTING THEREFROM THE MINERALS
LYING FROM THE SURFACE TO FIVE HUNDRED FEET (500') BELOW THE SURFACE OF THE
PROPERTY AND GRANTEE SHALL HAVE NO RIGHTS TO DRILL FOR, EXPLORE, OPERATE, STORE
OR REMOVE THE MINERALS FROM SAID RESERVED INTERVAL, PROVIDED, HOWEVER, GRANTEE
SHALL HAVE THE RIGHT OF SUBSURFACE ENTRY THROUGH SAID INTERVAL TO EXPLORE,
OPERATE, STORE OR REMOVE THE MINERALS LYING BELOW FIVE HUNDRED FEET (500') FROM
THE SURFACE OF THE PROPERTY; AS CONVEYED TO BLACKSAND PARTNERS, L.P., A TEXAS
LIMITED PARTNERSHIP, BY MINERAL GRANT DEED RECORDED FEBRUARY 28, 2003 AS
INSTRUMENT NO. 2003000226060 OF OFFICIAL RECORDS.


NOTE: THE ABOVE LEGAL DESCRIPTION IS FOR THE SOLE PURPOSE OF THIS REPORT AND
MAY NOT BE CONSIDERED FOR USE IN ANY POLICY OF TITLE INSURANCE TO BE ISSUED
BY THIS COMPANY, AND IS SUBJECT TO CHANGE AT ANY TIME.


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Order Number:
	 	O-SA-1028199
	 	 	
Page Number:
	 	13



NOTICE



Section 12413.1 of the California Insurance Code, effective January 1, 1990,
requires that any title insurance company, underwritten title company, or
controlled escrow company handling funds in an escrow or sub-escrow capacity,
wait a specified number of days after depositing funds, before recording any
documents in connection with the transaction or disbursing funds. This statute
allows for funds deposited by wire transfer to be disbursed the same day as
deposit. In the case of cashier’s checks or certified checks, funds may be
disbursed the next day after deposit. In order to avoid unnecessary delays of
three to seven days, or more, please use wire transfer, cashier’s checks, or
certified checks whenever possible.


If you have any questions about the effect of this new law, please contact your
local First American Office for more details.


First American Title




 










 




	 	 	 	 
	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 14	 



EXHIBIT A

LIST OF PRINTED EXCEPTIONS AND EXCLUSIONS (BY POLICY TYPE)



1. CALIFORNIA LAND TITLE
ASSOCIATION STANDARD COVERAGE POLICY - 1990

SCHEDULE B



EXCEPTIONS FROM COVERAGE



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:



	1.	 	Taxes or assessments which are not shown as existing fens by the
records of any taxing authority that levies taxes or assessments on
real property or by the public records. Proceedings by a public agency
which may result in taxes or assessments, or notice of such
proceedings, whether or not shown by the records of such agency or by
the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of the land
or which may be asserted by persons in possession thereof.
	 
	3.	 	Easements, liens or encumbrances, or claims thereof, which are not shown by
the public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by the public records.
	 
	5.	 	(a) Unpatented mining claims; (b) reservations or exceptions in patents
or in Acts authorizing the issuance thereof; (c) water rights, claims
or title to water, whether or not the matters excepted under (a), (b), or
(c) are shown by the public records.



EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:



	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of
any improvement now or hereafter erected on the land; (iii) a separation
in ownership or a change in the dimensions or area of the land or
any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy.




	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims or other matters:




	 	 	(a) whether or not recorded in the public records at Date of Policy, but
created, suffered, assumed or agreed to by the insured claimant;
	 
	 	 	(b) not known to the Company, not recorded in the public records at Date
of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the insured claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy; or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the insured mortgage or for
the estate or interest insured by this policy.




	4.	 	Unenforceability of the lien of the insured mortgage because of the
inability or failure of the insured at Date of Policy, or the inability
or
failure of any subsequent owner of the indebtedness, to comply with
applicable “doing business” laws of the state in which the land is
situated.
	 
	5.	 	Invalidity or Unenforceability of the lien of the insured mortgage, or
claim thereof, which arises out of the transaction evidenced by the
insured mortgage and is based upon usury or any consumer credit
protection or truth in lending law.
	 
	6.	 	Any claim, which arises out of the transaction vesting in the insured the
estate or interest insured by their policy or the transaction creating
the interest of the insured lender, by reason of the operation of federal
bankruptcy, state insolvency or similar creditors’ rights laws.



2. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY FORM B - 1970

SCHEDULE OF EXCLUSIONS FROM COVERAGE




	1.	 	Any law, ordinance or governmental regulation (including but not limited
to building and zoning ordinances) restricting or regulating or
prohibiting the occupancy, use or enjoyment of the land, or regulating the
character, dimensions or location of any improvement now or
hereafter erected on the land, or prohibiting a separation in ownership or
a reduction in the dimensions of area of the land, or the effect of
any violation of any such law, ordinance or governmental regulation.
	 
	2.	 	Rights of eminent domain or governmental rights of police power unless
notice of the exercise of such rights appears in the public records at
Date of Policy.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters (a)
created, suffered, assumed or agreed to by the insured claimant; (b) not
known to the Company and not shown by the public records but known to the
insured claimant either at Date of Policy or at the date such
claimant acquired an estate or interest insured by this policy and not
disclosed in writing by the insured claimant to the Company prior to the
date such insured claimant became an insured hereunder; (c) resulting in
no loss or damage to the insured claimant; (d) attaching or



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	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 15	 




	 	 	created subsequent to Date of Policy; or (e) resulting in loss or
damage which would not have been sustained if the insured claimant had
paid value for the estate or interest insured by this policy.



3. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY FORM B - 1970

WITH REGIONAL EXCEPTIONS



When the American Land Title Association policy is used as a Standard Coverage
Policy and not as an Extended Coverage Policy the exclusions set forth in
paragraph 2 above are used and the following exceptions to coverage appear in
the policy.


SCHEDULE B



This policy does not insure against loss or damage by reason
of the matters shown in parts one and two following:

Part One



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to

water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material
heretofore or hereafter furnished, imposed by law and not shown by the
public
records.



4. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1970

WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE

SCHEDULE OF EXCLUSIONS FROM COVERAGE




	1.	 	Any law, ordinance or governmental regulation (including but not limited
to building and zoning ordinances) restricting or regulating or
prohibiting the occupancy, use or enjoyment of the land, or regulating the
character, dimensions or location of any improvement now or
hereafter erected on the land, or prohibiting a separation in ownership or
a reduction in the dimensions or area of the land, or the effect of
any violation of any such law ordinance or governmental regulation.
	 
	2.	 	Rights of eminent domain or governmental rights of police power unless
notice of the exercise of such rights appears in the public records at
Date of Policy.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters (a)
created, suffered, assumed or agreed to by the insured claimant, (b) not
known to the Company and not shown by the public records but known to the
insured claimant either at Date of Policy or at the date such
claimant acquired an estate or interest insured by this policy or acquired
the insured mortgage and not disclosed in writing by the insured
claimant to the Company prior to the date such insured claimant became an
insured hereunder, (c) resulting in no loss or damage to the
insured claimant; (d) attaching or created subsequent to Date of Policy
(except to the extent insurance is afforded herein as to any statutory
lien for labor or material or to the extent insurance is afforded herein
as to assessments for street improvements under construction or
completed at Date of Policy).
	 
	4.	 	Unenforceability of the lien of the insured mortgage because of failure
of the insured at Date of Policy or of any subsequent owner of the
indebtedness to comply with applicable “doing business” laws of the state
in which the land is situated.



5. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1970

WITH REGIONAL EXCEPTIONS



When the American Land Title Association Lenders Policy is used as a Standard
Coverage Policy and not as an Extended Coverage Policy, the exclusions set
forth in paragraph 4 above are used and the following exceptions to coverage
appear in the policy.


SCHEDULE B



This policy does not insure against toss or damage by reason
of the matters shown in parts one and two following:

Part One



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



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	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 16	 



6. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1992

WITH A.L.T.A. ENDORSEMENT FORM 1 COVERAGE

EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:



	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of
any improvement now or hereafter erected on the land; (iii) a separation
in ownership or a change in the dimensions or area of the land or
any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy;




	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters:




	 	 	(a) whether or not recorded in the public records at Date of Policy, but
created, suffered, assumed or agreed to by the insured claimant;
	 
	 	 	(b) not known to the Company, not recorded in the public records at Date
of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the insured claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy (except to the
extent that this policy insures the priority of the lien of the insured
mortgage over any statutory lien for services, labor or material or the
extent insurance is afforded herein as to assessments for street
improvements under construction or completed at date of policy); or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the insured mortgage.




	4.	 	Unenforceability of the lien of the insured mortgage because of the
inability or failure of the insured at Date of Policy, or the inability or
failure of any subsequent owner of the indebtedness, to comply with the
applicable “doing business” laws of the state in which the land is
situated.
	 
	5.	 	Invalidity or Unenforceability of the lien of the insured mortgage, or
claim thereof, which arises out of the transaction evidenced by the
insured mortgage and is based upon usury or any consumer credit
protection or truth in lending law.
	 
	6.	 	Any statutory lien for services, labor or materials (or the claim of
priority of any statutory lien for services, labor or materials over the
lien of
the insured mortgage) arising from an improvement or work related to the
land which is contracted for and commenced subsequent to Date
of Policy and is not financed in whole or in part by proceeds of the
indebtedness secured by the insured mortgage which at Date of Policy
the insured has advanced or is obligated to advance.
	 
	7.	 	Any claim, which arises out of the transaction creating the interest of
the mortgagee insured by this policy, by reason of the operation of
federal bankruptcy, state insolvency, or similar creditors’ rights laws,
that is based on:




	 	 	(i) the transaction creating the interest of the insured mortgagee being
deemed a fraudulent conveyance or fraudulent transfer; or
	 
	 	 	(ii) the subordination of the interest of the insured mortgagee as a result of the
application of the doctrine of equitable subordination; or
	 
	 	 	(iii) the transaction creating the interest of the insured mortgagee being deemed a
preferential transfer except where the preferential transfer results from
the failure:
	 
	 	 	(a) to timely record the instrument of transfer; or
	 
	 	 	(b) of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.



7. AMERICAN LAND TITLE
ASSOCIATION LOAN POLICY - 1992

WITH REGIONAL EXCEPTIONS



When the American Land Title Association policy is used as a Standard Coverage
Policy and not as an Extended Coverage Policy the exclusions set forth in
paragraph 6 above are used and the following exceptions to coverage appear in
the policy.


SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:



	1.	 	Taxes or assessments which are not
shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the
public records but which could be ascertained by an inspection of said
land or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



8. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY - 1992



First American Title



 






 




	 	 	 	 
	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 17	 



EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:



	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the land; (ii) the character, dimensions or location
of any improvement now or hereafter erected on the land; (iii) a separation in
ownership or a change in the dimensions or area of the land or
any parcel of which the land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the land has
been recorded in the public records at Date of Policy.




	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the public records at Date of Policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the public records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims, or other matters:




	 	 	(a) created, suffered, assumed or agreed to by the insured claimant;
	 
	 	 	(b) not known to the Company, not recorded in the public records at Date
of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the
insured claimant became an insured under this policy;
	 
	 	 	(c) resulting in no loss or damage to the insured claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy; or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
insured claimant had paid value for the estate or interest insured
by this policy.




	4.	 	Any claim, which arises out of the transaction vesting in the insured the
estate or interest insured by this policy, by reason of the operation
of federal bankruptcy, state insolvency, or similar creditors’ rights
laws, that is based on:




	 	 	(i) the transaction creating the estate or interest insured by this policy
being deemed a fraudulent conveyance or fraudulent transfer; or
	 
	 	 	(ii) the transaction creating the estate or interest insured by this policy being
deemed a preferential transfer except where the preferential transfer
results from the failure:
	 
	 	 	(a) to timely record the instrument of transfer; or
	 
	 	 	(b) of such recordation to impart notice to a purchaser for value or a
judgment or lien creditor.



9. AMERICAN LAND TITLE
ASSOCIATION OWNER’S POLICY - 1992

WITH REGIONAL EXCEPTIONS



When the American Land Title Association policy is used as a Standard Coverage
Policy and not as an Extended Coverage Policy the exclusions set forth in
paragraph 8 above are used and the following exceptions to coverage appear in
the policy.


SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of: Part One:



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.
	 
	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
Acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.



10. AMERICAN LAND TITLE ASSOCIATION RESIDENTIAL

TITLE INSURANCE POLICY - 1987

EXCLUSIONS



In addition to the Exceptions in Schedule B, you are not insured against loss,
costs, attorneys’ fees and expenses resulting from:



	1.	 	Governmental police power, and the existence or violation of any law or
government regulation. This includes building and zoning
	 
	 	 	ordinances and also laws and regulations concerning:




	 	 	 
	* land use	 	
* land division
	 	 	 
	* improvements on the land	 	
* environmental protection




	 	 	This exclusion does not apply to violations or the enforcement of
these matters which appear in the public records at Policy Date.
This exclusion does not limit the zoning coverage described in items
12 and 13 of Covered Title Risks.



First American Title



 






 




	 	 	 	 
	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 18	 





	2.	 	The right to take the land by condemning it, unless:


* a notice of exercising the right appears in the public records on the
Policy Date


* the taking happened prior to the Policy Date and is binding on you if
you bought the land without knowing of the taking.
	 
	3.	 	Title Risks:


* that are created, allowed, or agreed to by you


* that are known to you, but not to us, on the Policy Date - unless they
appeared in the public records


* that result in no loss to you


* that first affect your title after the Policy Date - this does not limit
the labor and material lien coverage in Item 8 of Covered Title Risks
	 
	4.	 	Failure to pay value for your title.
	 
	5.	 	Lack of a right:


* to any land outside the area specifically described and referred to in
Item 3 of Schedule A, or


* in streets, alleys, or waterways that touch your land


This exclusion does not limit the access coverage in Item 5 of Covered
Title Risks.



11. EAGLE PROTECTION OWNER’S POLICY



CLTA HOME OWNER’S POLICY OF
TITLE INSURANCE - 1998

ALTA HOME OWNER’S POLICY OF TITLE INSURANCE - 1998



Covered Risks 14 (Subdivision Law
Violation). 15 (Building Permit). 16 (Zoning) and 18 (Encroachment of boundary walls or fences) are subject to Deductible Amounts and Maximum Dollar Limits of Liability



EXCLUSIONS



In addition to the Exceptions in
Schedule B, you are not insured against loss,
costs, attorneys’ fees, and expenses resulting from:



	1.	 	Governmental police power, and the existence or violation of any law
or government regulation. This includes ordinances, laws and
regulations concerning:




	 	 	 
	a. building	 	
b. zoning
	 	 	 
	c. land use	 	
d. improvements on the land
	 	 	 
	e. land division	 	
f. environmental protection




	 	 	This exclusion does not apply to violations or the enforcement of these
matters if notice of the violation or enforcement appears in the Public
Records at the Policy Date.

This exclusion does not limit the coverage
described in Covered Risk 14, 15, 16, 17 or 24.




	2.	 	The failure of Your existing structures, or any part of them, to be
constructed in accordance with applicable building codes. This Exclusion
does not apply to violations of building codes if notice of the violation
appears in the Public Records at the Policy Date.
	 
	3.	 	The right to take the Land by condemning it, unless:




	 	 	a. a notice of exercising the right appears in the Public Records at the
Policy Date; or
	 
	 	 	b. the taking happened before the Policy Date and is binding on You if You
bought the Land without Knowing of the taking.




	4.	 	Risks:




	 	 	a. that are created, allowed, or agreed to by You, whether or not they
appear in the Public Records;
	 
	 	 	b. that are Known to You at the Policy Date, but not to Us, unless they
appear in the Public Records at the Policy Date;
	 
	 	 	c. that result in no loss to You; or
	 
	 	 	d. that first occur after the
Policy Date - this does not limit the
coverage described in Covered Risk 7, 8.d, 22, 23, 24 or 25.




	5.	 	Failure to pay value for Your Title.
	 
	6.	 	Lack of a right:




	 	 	a. to any Land outside the area specifically described and referred to in
paragraph 3 of Schedule A; and
	 
	 	 	b. in streets, alleys, or waterways that touch the Land.
	 
	 	 	This exclusion does not limit the coverage described in Covered Risk 11 or
18.



12. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN

POLICY (10/13/01)



EXCLUSIONS FROM COVERAGE



The following matters are expressly excluded from the coverage of this policy
and the Company will not pay loss or damage, costs, attorneys’ fees or expenses
which arise by reason of:


First American Title



 






 






	 	 	 	 
	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 19	 




	1.	 	(a) Any law, ordinance or governmental regulation (including but not
limited to building and zoning laws, ordinances, or regulations)
restricting, regulating, prohibiting or relating to (i) the occupancy,
use, or enjoyment of the Land; (ii) the character, dimensions or location
of any improvement now or hereafter erected on the Land; (iii) a
separation in ownership or a change in the dimensions or area of the Land
or any parcel of which the Land is or was a part; or (iv) environmental
protection, or the effect of any violation of these laws, ordinances or
governmental regulations, except to the extent that a notice of the
enforcement thereof or a notice of a defect, lien or encumbrance
resulting from a violation or alleged violation affecting the Land has
been recorded in the Public Records at Date of Policy.

This exclusion
does not limit the coverage provided under Covered Risks 12, 13, 14 and 16
of this policy.




	 	 	(b) Any governmental police power not excluded by (a) above, except to the
extent that a notice of the exercise thereof or a notice of a defect, lien
or encumbrance resulting from a violation or alleged violation affecting
the land has been recorded in the Public Records at Date of Policy. This
exclusion does not limit the coverage provided under Covered Risks 12, 13,
14 and 16 of this policy.




	2.	 	Rights of eminent domain unless notice of the exercise thereof has been
recorded in the Public Records at Date of Policy, but not excluding
from coverage any taking which has occurred prior to Date of Policy which
would be binding on the rights of a purchaser for value without
Knowledge.
	 
	3.	 	Defects, liens, encumbrances, adverse claims or other matters:




	 	 	(a) created, suffered, assumed or agreed to by the Insured Claimant;
	 
	 	 	(b) not Known to the Company, not recorded in the Public Records at Date
of Policy, but Known to the Insured Claimant and not disclosed in
writing to the Company by the Insured Claimant prior to the date the
Insured Claimant became an Insured under this policy;
	 
	 	 	(c) resulting in no toss or damage to the Insured Claimant;
	 
	 	 	(d) attaching or created subsequent to Date of Policy (this paragraph does
not limit the coverage provided under Covered Risks 8, 16, 18,
19, 20, 21, 22, 23, 24, 25 and 26); or
	 
	 	 	(e) resulting in loss or damage which would not have been sustained if the
Insured Claimant had paid value for the Insured Mortgage.




	4.	 	Unenforceability of the lien of the Insured Mortgage because of the
inability or failure of the Insured at Date of Policy, or the inability or
failure of any subsequent owner of the indebtedness, to comply with
applicable doing business laws of the state in which the Land is
situated.
	 
	5.	 	Invalidity or Unenforceability of the lien of the Insured Mortgage, or
claim thereof, which arises out of the transaction evidenced by the
Insured Mortgage and is based upon usury, except as provided in Covered
Risk 27, or any consumer credit protection or truth in lending law.
	 
	6.	 	Real property taxes or assessments of any governmental authority which
become a lien on the Land subsequent to Date of Policy. This
exclusion does not limit the coverage provided under Covered Risks 7, 8
(e) and 26.
	 
	7.	 	Any claim of invalidity, Unenforceability or lack of priority of the lien
of the Insured Mortgage as to advances or modifications made after the
Insured has Knowledge that the vestee shown in Schedule A is no longer the
owner of the estate or interest covered by this policy. This
exclusion does not limit the coverage provided in Covered Risk 8.
	 
	8.	 	Lack of priority of the lien of the Insured Mortgage as to each and
every advance made after Date of Policy, and all interest charged
thereon, over liens, encumbrances and other matters affecting title,
the existence of which are Known to the Insured at:




	 	 	(a) The time of the advance; or
	 
	 	 	(b) The time a modification is made to the terms of the Insured Mortgage
which changes the rate of interest charged, if the rate of interest
is greater as a result of the modification than it would have been before
the modification.


This exclusion does not limit the coverage provided in Covered Risk 8.




	9.	 	The failure of the residential structure, or any portion thereof to have
been constructed before, on or after Date of Policy in accordance with
applicable building codes. This exclusion does not apply to violations of
building codes if notice of the violation appears in the Public Records
at Date of Policy.



SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of:



	1.	 	The following existing statutes, reference to which are made part of the
ALTA 8.1 Environmental Protection Lien Endorsement incorporated
into this Policy following item 28 of Covered Risks: NONE.



13. SECOND GENERATION EAGLE LOAN POLICY AMERICAN LAND TITLE ASSOCIATION EXPANDED COVERAGE RESIDENTIAL LOAN

POLICY (10/13/01)

WITH REGIONAL EXCEPTIONS



When the American Land Title Association loan policy with EAGLE Protection
Added is used as a Standard Coverage Policy and not as an Extended Coverage
Policy the exclusions set forth in paragraph 12 above are used and the
following exceptions to coverage appear in the policy.


SCHEDULE B



This policy does not insure against loss or damage (and the Company will not
pay costs, attorneys’ fees or expenses) which arise by reason of: Part One:



	1.	 	Taxes or assessments which are not shown as existing liens by the records
of any taxing authority that levies taxes or assessments on real
property or by the public records.
	 
	2.	 	Any facts, rights, interests, or claims which are not shown by the public
records but which could be ascertained by an inspection of said land
or by making inquiry of persons in possession thereof.
	 
	3.	 	Easements, claims of easement or encumbrances which are not shown by the
public records.
	 
	4.	 	Discrepancies, conflicts in boundary lines, shortage in area,
encroachments, or any other facts which a correct survey would disclose,
and
which are not shown by public records.



First American Title



 






 







	 	 	 	 
	 	Order Number: 	O-SA-1028199	 
	 	Page Number:	 20	 




	5.	 	Unpatented mining claims; reservations or exceptions in patents or in
acts authorizing the issuance thereof; water rights, claims or title to
water.
	 
	6.	 	Any lien, or right to a lien, for services, labor or material theretofore
or hereafter furnished, imposed by law and not shown by the public
records.
	 
	Part Two:
	 
	1.	 	The following existing statutes, reference to which are made part of the
ALTA 8.1 Environmental Protection Lien Endorsement incorporated
into this Policy following item 28 of Covered Risks:
None.




First American Title









 



12/3/03



AGREEMENT



EXHIBIT I



DEVELOPMENT DECLARATION



 






 






EXHIBIT “I”



DECLARATION OF DEVELOPMENT COVENANTS,



CONDITIONS AND RESTRICTIONS



TONNER HILLS



 






 



TABLE OF CONTENTS FOR

DECLARATION OF DEVELOPMENT COVENANTS,

CONDITIONS AND RESTRICTIONS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	DESCRIPTION	 	PAGE
	
	 	

	Section 1.	 	Definitions
	 	 	3	 
	Section 2.	 	Programs
	 	 	5	 
	Section 3.	 	Program Implementation
	 	 	12	 
	Section 4.	 	Reimbursement
	 	 	14	 
	Section 5.	 	Liabilities and Responsibilities
	 	 	14	 
	Section 6.	 	PAPA Trust Deeds
	 	 	16	 
	Section 7.	 	Condition of the Property
	 	 	16	 
	Section 8.	 	Development Requirements, Conditions, Costs, Taxes and Assessments
	 	 	18	 
	Section 9.	 	Insurance
	 	 	19	 
	Section 10.	 	Indemnity
	 	 	22	 
	Section 11.	 	Survival of Covenants
	 	 	25	 
	Section 12.	 	No Hazardous Substances
	 	 	25	 
	Section 13.	 	Natural Hazard Zones
	 	 	29	 
	Section 14.	 	Release
	 	 	30	 
	Section 15.	 	Enforcement: Assignment By Declarant
	 	 	31	 
	Section 16.	 	Amendments
	 	 	33	 
	Section 17.	 	Captions
	 	 	33	 
	Section 18.	 	Governing Law
	 	 	33	 
	Section 19.	 	Arbitration/ Attorneys’ Fees
	 	 	33	 
	Section 20.	 	Severability
	 	 	34	 
	Section 21.	 	Gender and Number
	 	 	34	 
	Section 22.	 	Covenants to Run with the Land; Term
	 	 	35	 
	Section 23.	 	Notices
	 	 	35	 
	Section 24.	 	Effect of Declaration
	 	 	37	 
	Section 25.	 	Rights of Mortgagees
	 	 	37	 
	Section 26.	 	Waiver of Jury Trial
	 	 	37	 
	Section 27.	 	No Agency or Partnership
	 	 	37	 
	Section 28.	 	Governmental Approvals
	 	 	38	 
	Section 29.	 	Assignment of Agreement; Preauthorized Transfer
	 	 	39	 
	Section 30.	 	Stand Alone Insurance
	 	 	39	 
	Section 31.	 	Further Assurances and Cooperation
	 	 	40	 
	Section 32.	 	Assumption of Obligations
	 	 	41	 
	Section 33.	 	Unocal Asset Purchase Agreement
	 	 	42	 
	Section 34.	 	Assignment of Recorded and Unrecorded Contracts,
Agreements, Easement and Licenses
	 	 	43	 
	Section 35.	 	Payments; Interest
	 	 	43	 
	Section 36.	 	Survival of Certain Covenants in Agreement
	 	 	43	 
	Section 37.	 	Notice of Transfer
	 	 	43	 
	Section 38.	 	Assignment, Assumption and Substitution
	 	 	43	 
	Section 39.	 	Oil Assets/Oil Operations
	 	 	44	 
	Section 40.	 	Resolution of Indemnity Obligations
	 	 	45	 



i






 




	 	 	 
	ATTACHMENT “1” -	 	
BENEFITED AND BURDENED PROPERTY (COVERED
	 	 	
PROPERTY)
	ATTACHMENT “2” -	 	
DESCRIPTION OF DEVELOPMENT AREA
	ATTACHMENT “3” -	 	
DESCRIPTION OF REMAINDER PARCELS
	ATTACHMENT “4” -	 	
RECORDED AND UNRECORDED CONTRACTS, AGREEMENTS,
	 	 	
EASEMENTS AND LICENSES



ii






 



DECLARATION OF DEVELOPMENT COVENANTS,

CONDITIONS AND RESTRICTIONS



     THIS DECLARATION OF DEVELOPMENT COVENANTS, CONDITIONS AND
RESTRICTIONS (hereinafter “Declaration” or “Development Declaration”) is made
this     day of     , 2003, by NUEVO ENERGY COMPANY, a Delaware corporation
(“Declarant,” “Seller” or “Nuevo”). Declarant shall and hereby does include
any of its successors and assigns.


RECITALS



     A.     Declarant is the owner of that certain real property, consisting of the
fee, surface (“Surface”) interest in approximately 810 acres, located in the County of
Orange, State of California, more particularly described in Attachment “1” sometimes
referred to herein as the “Property,” “Land” or “Covered Property” which is being conveyed to TONNER
HILLS SSP, LLC, a Delaware limited liability company and TONNER HILLS 680 LLC, a
Delaware limited liability company (collectively, the “Buyer” or “Developer”), immediately
after the recordation hereof with the county recorder of the County. Buyer acknowledges that
Declarant has
previously sold the mineral estate, consisting of Oil Assets and Facilities from the Land to BlackSand
Partners, L.P. (“Operator”) for Operator’s continuing Oil Operations insofar as such Oil
Assets and Facilities and Oil Operations belong to Operator (collectively, “Mineral Estate”).


     B.     Buyer and Declarant have agreed that the completion of the Aera
Program, Permit Program and Hover Program (collectively, “Programs”) for the Covered
Property will be accomplished by Buyer, Operator and Declarant as provided in this
Declaration.


     C.     Declarant has already taken steps toward the preparation of the Covered
Property for development, including the submission of certain Governmental Approval
Documents and applications for Governmental Approvals. After the date hereof, all
further development activities for the Covered Property, including without
limitation, the submission of Governmental Approval Documents, are to be governed by the this
Declaration.


     D.     Buyer
is purchasing the Covered Property from Declarant on the
terms and conditions set forth in the agreement between Buyer and Declarant, of even date
herewith (“Agreement”).


DECLARATION



     PURPOSE OF RESTRICTIONS. Declarant is the owner of a large and unique
landholding which in the past has been used primarily as an operating oil
field. Declarant has completed the planning for, and has been engaged in the
process of obtaining land use entitlements from the County for a
master-planned residential, retail and recreational community


1






 



(“Community”) within the boundaries and on the Surface of the Development Areas
to coexist with Operator’s Oil Operations, which are also subject to a recorded
declaration of development covenants, conditions and restrictions (including
indemnities in favor of Declarant similar to those contained in this
Declaration) imposed upon the Mineral Estate to ensure compatibility with the
Community (“Mineral Declaration”) dated February 28, 2003, which is Instrument
No. 2003000226057 Recorded in the Official Records of Orange County on
February 28, 2003.


     The Community will provide much needed residential housing product for
all economic levels within the region (“Region”), County and City sphere of
influence pursuant to guideline requirements for housing from the Southern
California Association of Governments and extensive recommendations from the
City, and in accordance with and allocating great weight to environmental
preservation recommendations (and techniques, including significant land areas
remaining in open space and open space with oil operations) from various
public and private agencies. The Community, in the form endorsed by the City
and approved by the County on November 19, 2002, is a finely balanced,
coexisting, multiple-use development that should remain essentially as planned
and approved without the introduction of other significantly different uses
which might over-burden the Development Areas (and the Surface), cause harm to
the delicate environmental and economic balance within the Community, and/or
controversy within the City, County and/or Region.


     Of necessity in consummating the transactions under the purchase and sale
agreement with BlackSand and the Agreement Declarant assigned to Operator and
Buyer its rights, privileges, duties and obligations under numerous, complex
arrangements for the use, possession, improvement and remediation of the
Mineral Estate and Land/Project, respectively, including without limitation
third party licenses, permits, easements, rights-of-a way, contracts and the
like (collectively, “RE Contracts”). Declarant remains potentially responsible
to the third parties for the proper performance of the duties and obligations
under certain of the RE Contracts, and hence, retains a very significant
interest in the Land/Project, the development thereof, the creation of the
Community and the maintenance of harmony among the various ownership interests
therein, as well as the prevention and abatement of any situation that could
endanger the health, welfare and safety of persons or property there or
engender claims, demands, lawsuits or other adverse events/results for which
Declarant might ultimately be liable.


     THEREFORE, the terms and provisions of the Mineral Declaration and this
Declaration, including without limitation, the indemnity provisions in favor
of Declarant and the allocation of risks generally therein, respectively, were
conceived, negotiated and intended by the parties thereto to bind themselves
and all subsequent owners of all or any portion of the Mineral Estate and/or
Land, as a necessary and material part of Declarant’s “bargained for
exchange/consideration” in those transactions. But for the inclusion of such
provisions in the Mineral Declaration and this Declaration, Declarant would
not have consummated the transactions under the economic and other terms
thereof.


     It is for these reasons that the following Restrictions are imposed.


2






 


     NOW, THEREFORE, in consideration of the foregoing “PURPOSE OF
RESTRICTIONS,” Declarant hereby declares that all of the Covered Property and
Project are held and shall be held, conveyed, hypothecated, encumbered,
leased, used, occupied and improved subject to the following covenants,
conditions and restrictions, all of which are declared to be equitable
servitudes in furtherance of a plan for the subdivision, improvement and sale
of the Land and Project, and are established for the purpose of enhancing and
protecting the value, desirability and attractiveness of the Land and each and
every part thereof and of the Project.


     Subject to Section 14, hereof, all such covenants, conditions and
restrictions shall run with the Land and Project, and shall be binding upon
and for the benefit of, all persons having any right, title or interest in the
Land and/or Project or any part thereof, and all of their heirs, successors
and assigns; all of such covenants, conditions and restrictions are made for
the direct mutual and reciprocal benefit of every portion of the Land and/or
Project and any interest therein, and shall create reciprocal rights,
obligations and privity of contract and estate between the respective owners
of the Covered Property and/or the Project and their heirs, successors and
assigns.


     Section 1. Definitions. The following terms shall have the following
meaning whenever used in this Development Declaration (or in any other
Development Document, except where inconsistently defined therein):


     1.1 The term “Buyer” shall
mean and refer collectively to Tonner Hills SSP, LLC, a Delaware limited liability company, and Tonner Hills 680 LLC, a Delaware
limited, liability company. and all of their successors and assigns as to the
Covered Property and/or any part or portion thereof, and
all persons or entities who or which, after the date hereof, hold any right.
title or interest therein. If Buyer leases all or any of its interest in the
Covered Property, the
lessee (under any lease for ten (10) years or longer) thereunder shall also be
deemed to be Buyer
and both the lessor and the lessee under such lease shall be responsible as
principals (and not
sureties) for compliance with all of the terms and provisions of this
Development Declaration.


     1.2 The terms “Covered Property,” “Property” or “Land” shall mean and
refer to all of the real property described on Attachment “l,” that is from
time to time, subject to this Declaration and has not been released as provided
in Section 14.


     1.3 The term “Declarant” or “Seller” shall mean and refer to Nuevo, its
successors and any person or entity to whom Nuevo assigns its rights under
this Development Declaration.


     1.4 The term “Development Area” means the Property described on
Attachment “2”.


3






 

<
P align="left">     1.5    The term “Governmental Approvals” means any governmental approvals,
permits or entitlements requested or granted in connection with or relating to
the Project and/or the Land (including any work thereon required by the
Development Documents) from any Governmental Agency.


     1.6.    The term “Governmental Approval Costs” means costs incurred in
processing or participating in the processing of the governmental approvals.


     1.7    The term “Hover Agreement” means that certain agreement for the
purchase and sale of the Adjacent Parcel between Nuevo and Hover
Development Company, Inc., dated September 28, 2001, assigned to Brea Walden, LLC (“Brea
Walden”) and the Agreement Between Adjacent Landowners (Exhibit “I” thereto), between Nuevo
and Brea Walden, dated October 9, 2001 and recorded in the Official Records of
Orange County, California on October 9, 2001, as Instrument No. 20010710857.


     1.8    The term “Improvements” means means Homes and any other improvements
constructed on the Land pursuant to Governmental Approvals


     1.9    The term “Mineral Estate” shall mean the Mineral Estate as defined in
Recital A, hereof.


     1.10.   The term “Mineral PAPA” means that certain Mineral Payment and
Performance Agreement made February 28, 2003 by and between Nuevo Energy
Company and BlackSand Partners, L.P.


     1.11   The term “Party” and/or “party” means Buyer, Declarant or their
successors or assigns.


     1.12   The term “Programs” shall mean Programs as defined in Recital B, hereof.


     1.13   The term “PAPA TD’s” means (a) that certain Shea PAPA TD; of even date
herewith and (b) that certain TH 680 PAPA TD, of even date herewith, both
encumbering the Covered Property. “PAPA” means Exhibit “K” to the
Agreement.


     1.14.   The term “Remainder Parcels” mean the Property described on
Attachment “3.”


     1.15   The term “Unavoidable Delay” shall mean any prevention, delay or
stoppage in the completion of a Party’s Work, herein caused by fire, explosion,
terrorism, unavailability or breakdown of machinery or equipment or by acts of
God, war, riot, civil insurrection, labor disputes, inability to obtain labor
or materials or reasonable substitutes therefor, any order, regulation, request
or recommendation of a Governmental Agency, other similar matters or causes
beyond the reasonable control of the responsible party other than for the
payment of


4






 


money; provided however, that nothing in this Section shall excuse the
performance of any act rendered difficult solely because of the financial
condition of a party.


     Section 2. Programs.


     2.1 Aera Program. Nuevo has entered into an Oil Accommodation and Surface
Development Agreement with Aera Energy LLC (“Aera Agreement”), a copy of which
has been provided to Developer, under which (a) certain wells within the Park
shall be shut-in, plugged and abandoned in accordance with the requirements of
the California Department of Conservation, Division of Oil, Gas and Geothermal
Resources (“CDOGGR”), (b) certain other wells shall be temporarily shut-in and
accommodated to those standards established for well accommodation within the
Development Areas as more particularly described in the Mineral PAPA; (c)
certain pipeline and facilities shall be relocated by Aera within a relocation
corridor (“Relocation Corridor”) and other surface facilities shall be
removed, and (d) other activities shall be performed, all as more particularly
set out in the Aera Agreement. Such activities are collectively referred to as
the “Aera Program.”


     2.1.1 Responsibilities for Aera Program. Both Nuevo and Developer hereby
assume and agree to perform certain obligations and responsibilities
contained in the Aera Agreement or related to the Aera Program. A description
of such obligations, associated notices and time schedules are more
particularly set out in the Aera Agreement and herein. . The following table
designates the tasks which each party hereby assumes the responsibility for
performance:



	 	 	 	 	 	 	 	 	 
	Responsible Party	 	Task Found At	 	Task Number	 	Task
	
	 	
	 	
	 	

	Nuevo	 	
Aera Sec 1.1
	 	 	1	 	 	Notice to Aera to shut down
specified wells.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 1.2
	 	 	2	 	 	Notice to Aera to shut down
Columbia #17 Well.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 1.5 & 1.6
	 	 	3	 	 	Execution of instruments
accepting responsibility for
applicable wells and filing
Quitclaim and Report of Well
Transfer (“Transfer
Documents”).
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 1.7
	 	 	4	 	 	Acceptance of responsibility
and control from Aera of Task
No. 1 Wells and equipment
affected by the transfer,
future costs, indemnification
and release provisions, except
as to Columbia #17 Well, until
Final Acceptance hereunder.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 1.7
	 	 	5	 	 	Same as Task 4 insofar as same
applies to Columbia #17 Well.



5






 




	 	 	 	 	 	 	 	 	 
	Responsible Party	 	Task Found At	 	Task Number	 	Task
	
	 	
	 	
	 	

	Developer	 	
PAPA Sec 2.1.10
	 	 	6	 	 	With respect to Columbia #23,
59 and 69 Wells, Developer
shall execute Transfer
Documents accepting
responsibility for the wells
simultaneous with Nuevo’s
execution of Transfer
Documents. With respect to
wells under Task 1 and
Columbia #70 Well, Developer
shall execute Transfer
Documents upon Final
Acceptance.
	 	 	 	 	 	 	 	 	 
	Nuevo as to all
Wells except
Columbia #17 Well	 	
Aera Sec 1.8
	 	 	7	 	 	No right to produce applicable
transferred Wells. Plug and
abandon Wells.
	 	 	 	 	 	 	 	 	 
	Developer as to
Columbia #17 Well
and all Wells after	 	
PAPA Sec 2.1.10
	 	 	8	 	 	No right to produce transferred Wells. Plug and
abandon Wells.
	Final Acceptance	 	
Aera 1.8	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 2.1
	 	 	9	 	 	Preparation and submittal to
Aera of engineering plan and
design specifications for
Columbia #27 Well.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 2.2
	 	 	10	 	 	Payment to Aera for its
portion of estimated Columbia
#27 Well costs.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 2.3
	 	 	11	 	 	Except as provided under Task
12, perform accommodation work
for Colombia #27 Well not
performed by Aera.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 2.3
	 	 	12	 	 	Compaction of access road,
fencing, security and
aesthetic screening for
Columbia #27 Well.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 2.4
	 	 	13	 	 	Responsibility for (i)
Wellbore or conductor casing
damage caused by Nuevo, and
(ii) excess downtime of wells
to be returned to production
cause by Nuevo.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 2.4
	 	 	14	 	 	Task 13 (ii) Developer liable
for excess downtime caused by
Developer.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 2.5
	 	 	15	 	 	Additional operations costs
required as a result of the
Encumbrance Documents.



6






 




	 	 	 	 	 	 	 	 	 
	Responsible Party	 	Task Found At	 	Task Number	 	Task
	
	 	
	 	
	 	

	Nuevo	 	
Aera Sec 3.1
	 	 	16	 	 	$30,000 deposit payment to
Aera. Review and comment on
plans to relocate Major
Utilities and Minor Utilities
into Relocation Corridor.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 3.2
	 	 	17	 	 	Grade Relocation Corridor to
within two (2) feet of final
grade and preparation required
to receive Major Utilities.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 3.3
	 	 	18	 	 	Notice to Aera to remove steam
generators. Make payment of
$30,000 to Aera.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 4.1
	 	 	19	 	 	Remediate oil impacted soils under Task 7 & 11.
Name Aera as an additional Insured as to
any environmental policy as to
Affected Area.
	 	 	 	 	 	 	 	 
	 	 	
PAPA Sec 2.1.5
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 4.1
	 	 	20	 	 	All remediation
other than Task 19 within Affected Area.
	 	 	 	 	 	 	 	 
	 	 	
PAPA Sec 2.1.5
	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 4.1
	 	 	21	 	 	Remediation necessary to plug
Columbia #17 Well (if plugged
pursuant to Aera Program).
Name Aera as an Additionally
Insured on any environmental
policy Developer acquires as
to Affected Area.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 4.2
	 	 	22	 	 	Other than for Task 19
environmental remediation,
additional assessments and
work within Affected Area to
be performed at no cost to
Aera.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 4.4
	 	 	23	 	 	Duties to Aera if additional
grading is required outside of
the Affected Area.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 5.1 and 5.2
	 	 	24	 	 	Provide and pay for required
security fencing, aprons and
gates while plugging or
accommodating wells that are
Nuevo’s responsibility under
Tasks numbered 7 and 11.
Submit plans to Aera for
review and comment relating to
foregoing.
	 	 	 	 	 	 	 	 	 
	Developer	 	
Aera Sec 5.1
and 5.2
	 	 	25	 	 	Provide and pay for all
fencing, gates, aprons and
grades other than as required
by Task Number 24. Submit
plans to Aera for review and
comment relating to foregoing.
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 6
	 	 	26	 	 	Enter into Utility Easement



7






 




	 	 	 	 	 	 	 	 	 
	Responsible Party	 	Task Found At	 	Task Number	 	Task
	
	 	
	 	
	 	

	Nuevo	 	
Aera Sec 7
	 	 	27	 	 	Amend existing licenses
	 	 	 	 	 	 	 	 	 
	Nuevo	 	
Aera Sec 8
	 	 	28	 	 	Enter into reciprocal grading licenses



          2.1.2
Party Performance. Nuevo shall undertake the performance of those
tasks and activities specifically designated herein as Nuevo’s
responsibility. Developer shall undertake all tasks and activities under the Aera Agreement and in the
PAPA that are not expressly assumed by Nuevo.



          2.1.3 Commencement of Aera Program. With regard to the Tasks that are
Nuevo’s responsibility, upon thirty days prior written notice from
Developer, Nuevo shall (i) provide notice to Aera (accompanied by deposit or payment if so required)
to commence those tasks and activities which are Aera’s express responsibility under the
Aera Agreement and which are not conditioned upon the occurrence of a specified event, (ii) provide
notice to Aera (accompanied by deposit or payment if so required) to commence those tasks
and activities upon the occurrence of specified events if Aera’s performance is contingent
upon such occurrence, (iii) commence its performance of activities associated with those tasks
that are Nuevo’s responsibility.



          2.1.4 Removal of Surface Facilities and Subsurface Pipelines. After
transfer of the wells to Nuevo from Aera, as set forth in Section 2.1.1 above, and
prior to commencement of grading operations, each wellhead impacted by the grading will be surveyed
and marked by Nuevo one (1) time only and Developer will inspect and approve the
markings. After inspection and approval of the well markings, Developer will be responsible for
grading around the well casings without damaging them. Upon approval of the well markings,
Developer shall proceed with grading in a timely manner and be responsible to pay, and shall be
solely liable for any and all damage to any wells caused by Developer’s grading operations.



          2.1.5 Remediation Responsibilities. With respect to the Aera Program,
Nuevo shall be responsible for remediation and clean-up of any crude oil
impacted soil attributable to the wells to be abandoned within the Park. Developer shall be fully
responsible for all other remediation and clean-up activity of any kind or character, including but
not limited to funding, implementing and completing all environmental testing, assessment,
remediation, monitoring, reporting or other requirements with respect to all other environmental
(including any Hazardous Substance as defined in Section 12.8 of this Declaration crude oil or oil
well production impacts.



          2.1.6 On-Site Representative. Nuevo and Developer shall each have the
right to have representatives on-site at the time wells are abandoned or
accommodated, before the grading begins and during the grading operations on the Parcel to observe
such operations. Developer agrees to give Nuevo fifteen (15) days notice prior to
commencement of grading to allow each to arrange to have a representative on-site.



          2.1.7 Well Abandonment and Accommodation. As part of the Aera Program,
Nuevo will relocate below the surface of the grade the operating wellhead
for Columbia #27. Developer shall be responsible for and shall install screening devices and
other improvements as




8






 





if such well were accommodated in the Development Areas under the Mineral PAPA.
In addition, at Nuevo’s cost, Nuevo shall plug and abandon Wells 42, 58, 64,
66, 70, 73 and 75 lying within the Park and Well 28 located outside of the
Park, but within the area subject to the oil and gas lease under which Aera
Energy LLC is Lessee. Such wells shall be abandoned to the same standards as
those wells abandoned within the Development Areas.


          2.1.8 Developer Grading. Developer shall perform grading operations in
a manner consistent with its obligations in the Mineral PAPA including but
not limited to compliance with permits, preparing and designing plans consistent
therewith, providing appropriate notices, assuming responsibility for all remediation activity
not assumed by Nuevo, accommodation of unidentified wells and preparing and submitting all
required reports. In addition, Developer shall be responsible for all costs and expenses that
result from damages to wells or facilities or injury to persons or property caused by Developer’s
grading operations.



          2.1.9 Aera Scope of Work. Among other matters, Aera is responsible under
the Aera Agreement for the preparation and development of certain engineering
plans and the relocation and removal of certain facilities and equipment. To the
extent that Nuevo has not assigned the Aera Agreement in its entirety to Developer and Developer
incurs damages as a result of Aera’s failure to perform, Nuevo shall use good faith and
commercially reasonable efforts to secure Aera’s timely performance, but shall not be liable to
Developer for Aera’s failure to timely perform. At Developer’s request, Nuevo shall assign to
Developer any rights it has under the Aera Agreement necessary to assert a claim against Aera
resulting from an alleged breach or failure to perform by Aera. With regard to such claim by
Developer, Nuevo shall have no obligation or responsibility to participate in such lawsuit or action,
except to the extent that such participation is legally required in order for Developer to assert a
claim. Nuevo shall reasonably cooperate with Developer and such cooperation or participation,
as a party or otherwise, shall be at the cost and expense of Developer and Nuevo shall
be indemnified from Losses resulting therefrom as provided in herein. Nuevo makes no
warranty or representation and shall have no liability for the outcome thereof or damages awarded
therein.



          2.1.10 Aera Program Final Acceptance. Upon delivery of Transfer
Documents from Aera to Nuevo for Columbia #23, #59, and #69 wells, Final Acceptance
shall be deemed to occur by Developer. For other wells, on a well-by-well basis, Nuevo shall
notify Developer in writing that it has completed the abandonment or modification of each of
the wells specified in this Section 2.1.10. With respect to wells to be abandoned, Nuevo shall
not provide such notice to Developer until it has submitted to CDOGGR the required summary and
well report (“Report”). Within ten days of such notice, Developer shall conduct a
final inspection of such abandoned or accommodated well and shall advise Nuevo in writing within
ten days thereafter of acceptance of the work (“Final Acceptance”). Should Developer fail to
inspect the well within the time period specified, Final Acceptance for such well shall be deemed
to have occurred. Should Developer inspect the well and, in the exercise of its reasonable
commercial judgment, deem such work to be substantially incomplete, it shall notify Nuevo in
writing within such ten day period after the inspection specifying any unresolved items and the
actions that Developer believes are reasonably necessary to gain Final Acceptance. Should CDOGGR
reject the Report and request additional well abandonment work, Final Acceptance shall be
deemed rejected and Nuevo, at its cost and expense, shall undertake those additional actions
specified by CDOGGR. Upon completion of such additional work, Nuevo shall submit its notice to
Developer and the




9






 





parties shall follow the procedures set out herein for securing Final
Acceptance. If the parties cannot resolve any item for which acceptance is
requested, such unresolved item shall be submitted to arbitration in
accordance with this Declaration. Upon Final Acceptance, Nuevo shall transfer
such wells to Developer who shall execute Transfer Documents removing Nuevo as
the record operator. Upon Final Acceptance, Developer shall be deemed to have
accepted full and complete responsibility and control of the abandoned wells
and equipment, if any, affected by the transfer and Nuevo shall be expressly
relieved from further responsibility as set out in Section 3.5. In no event
will Developer, or its successors and assigns reenter or activate any
abandoned or idled well.


     2.2 Permit Program. Nuevo shall perform all activities required by the
Habitat Mitigation and Monitoring Plan (“Restoration Plan”) with respect to
the PA-7 Habitat Restoration Area, the approximate 20-acre PA-4 Habitat
Restoration Area and the remaining 87 acres of additional habitat restoration
(“Remainder Habitat Restoration Area”). Collectively, such activities are

referred to as the “Permit Program.”


          2.2.1 Permit Program Implementation. With respect to the Permit Program,
Nuevo shall continue to use commercially reasonable efforts to complete the
program in a timely manner consistent with the Restoration Plan. Upon
completion of the Permit Program with respect to the PA-4 Habitat Restoration
Area, Nuevo shall advise Developer by written notice when it has received
certification from the permitted biologist designated within the Restoration
Plan (“Certification”) that the PA-4 Habitat Restoration Area is occupiable as
required by the Restoration Plan. Nuevo shall further advise Developer by
written notice when it has received a Certification that PA-7 is occupied as
required by the Restoration Plan. Upon receipt of each Certification, Final
Acceptance by the Developer, as defined in Section 3.5, shall be deemed to have
occurred.



With respect to the Remainder Habitat Restoration Area, Final Acceptance shall
occur upon the first anniversary of completion of the restoration scope of work
for the area if the survivability standards for vegetation set out in the
Restoration Plan have been met, as evidenced by the joint written opinion of
the Chambers Group (representing Nuevo) and the Bon Terra Group (representing
Developer), who shall act jointly as biological monitor under the PAPA for the
Remainder Habitat Restoration Area. Either Party, in its sole discretion, may
appoint a different biological monitor to represent its interest, replacing the
named biologist, to represent that Party’s interests by providing the other
written notice. The biological monitors shall provide Developer and Nuevo with
written notice of their opinion that the survivability standards have been
attained, which certification shall be deemed Final Acceptance by the
Developer. In the event the biological monitors determine that any species
planted and maintained within the Remainder Habitat Restoration Area does not
meet the survivability standards set out in the Restoration Plan, the monitors
shall so advise Nuevo and Developer in writing, setting out (i) those
additional actions to be taken or the number of additional plants required
which, in the joint opinion of the biological monitors, are reasonably required
to bring the Remainder Habitat Restoration Area into compliance with the
Restoration Plan survivability standards and, (ii) the cost estimated by the
biological monitors to complete such additional work (“Additional Cost”).
Developer shall be entitled to withhold such “Additional Cost” from the
Additional Purchase Price up to $150,000.00, which Additional Cost shall be
placed into escrow pending Nuevo’s completion of the additional work. Nuevo, at
its own cost and expense, shall complete such


10






 



additional work. Upon completion of such additional plantings or actions, the
biological monitors shall then give an opinion certifying that such plantings
or actions required of Nuevo have been satisfactorily completed. Upon
certification by the biological monitors that the additional planting or
additional actions have been completed by Nuevo, the Remaining Habitat
Restoration Area shall be deemed Finally Accepted by Developer under Section
3.5 and the Additional Cost shall be released to Nuevo from escrow. It is not
the intention of the parties that the release of the Additional Cost is
conditioned upon meeting the survivability standards specified for subsequent
years. Rather, it is the intention of the parties that the Additional Cost will
be released upon completion of those actions taken after the first anniversary
that the biological monitors believe are reasonably necessary to attain future
survivability standards.


Nuevo shall be relieved of any and all liability related to each restoration
area upon Final Acceptance as further provided in Section 3.5. Notwithstanding
anything to the contrary contained herein, with respect to each area prior to
receipt of Certification, Developer shall not be liable or responsible for any
costs or increased costs which are related to the planting and revegetation of
each area, all of which costs shall be the responsibility of Nuevo.


     2.3 Hover Program. Pursuant to the Hover Agreement, Nuevo undertook
the following obligations:


     Under
Exhibit “G-2” to the Hover Agreement:



	 	I.	 	Well Abandonment Plan (“WAP”)
	 
	 	II.	 	Remedial Action Plan (“RAP”).
	 
	 	III.	 	Corridor Easement, Street Easement, Drainage Easement and other Non-Exclusive Easements (includes dismantling two (2)
water tanks and relocation on a temporary basis one (1) water tank at the East
Naranjal Tank Farm).



     Under the Agreement Between Adjacent Landowners:



	 	I.	 	Grant of Slope Easements
	 
	 	II.	 	Grant of Retention Basin Easements (includes possible
relocation of oil field pipelines in Section 2.7 at Hover’s expense up to $25,000).
	 
	 	III.	 	Spoils Export Easement (includes possible relocation of oil field pipelines in
Section 3.4 at Hover’s expense up to $50,000).



     The rights, privileges, duties and obligations under the Hover Agreements
retained by Nuevo and that collectively constitute the “Hover Program” are as
follows:



	 	(a)	 	Well Abandonment Plan: The Well Abandonment Plan as it
applies to E. Naranjal Wells No. 21, 22, 23 and 36 and is described
at Item I. and at Item V. in Exhibit “G 2” to the Hover Agreement.



11






 








	 	(b)	 	The Escrow Account: The escrow account, as referenced at
Section 2.2.2 of the
Hover Agreement, contains $600,000 which amount has
been previously
collected by Nuevo as a result of its “Soil Remediation” activities
referenced in
said Section 2.2.2. The balance of the escrow account is payable
to Nuevo upon
completion of the Well Abandonment Plan referenced above.
	 
	 	(c)	 	Stand-Alone Insurance: Nuevo is required to participate in
the acquisition of an insurance policy. This requirement is fully addressed at Section
5.27 of the Hover Agreement.
	 
	 	(d)	 	Remedial Action Plan: The Hover Agreement’s “Remedial
Action Plan” is described at Item II in Exhibit “G 2” to the Hover Agreement.
Nuevo has previously received a closure letter from the Orange County Health
Care Agency, subject only to removal of inaccessible soils which requires the
removal of two water tanks at the East Naranjal tank farm and soils associated
with East Naranjal Well 36, a well under the Well Abandonment Plan.



               2.3.1 Hover Final Acceptance. Upon completion of the Hover Program, Nuevo
shall provide Developer written notice, at which time Developer shall have ten
days to inspect the work completed. Within ten days thereafter, Developer shall
advise Nuevo that it concurs that the Hover Program has been substantially
completed in accordance with the Hover Agreements. Such communication shall be
deemed Final Acceptance and thereafter all duties, obligations and liabilities
for the Hover Program shall be the sole responsibility of Developer as further
provided in Section 3.5. Should Developer determine that the Hover Program has
not been substantially completed in accordance with the Hover Agreement, it
shall advise Nuevo of those items which it deems unsatisfactory and the actions
it requests that Nuevo take. Upon completion of such additional actions by
Nuevo, Developer shall again be notified and shall have ten days to inspect the
work performed by Nuevo. Within ten days thereafter, Developer shall provide
its Final Acceptance. Should Developer and Nuevo disagree on whether the Hover
Program has been substantially completed, such matter shall be submitted to
arbitration in accordance with the PAPA.



     Section 3. Program Implementation.


     3.1 Duty to Cooperate. Developer shall use good faith, commercially
reasonable efforts to timely and expeditiously perform its obligations and
rights under the PAPA in a manner that minimizes the interruption or
curtailment of production by Lessee or Operator. To the extent that Developer
fails to fully and timely cooperate with Nuevo, and Nuevo, as a result of
Developer’s acts or omissions, incurs penalties, damages or incremental costs
in performing any of the Programs, such penalty, damage or cost shall be the
responsibility of Developer and Developer hereby agrees to defend, indemnify
and hold Nuevo harmless therefrom. Developer shall also be liable to Nuevo for
any and all incremental reasonable cost or expense incurred by Lessee related
to Lessee’s performance of its obligations in the Aera Program or a delay in
returning temporarily shut-in wells to production which result from
Developer’s failure to comply with the provisions of this Section. Developer
expressly agrees to pay such incremental Lessee costs which shall not be
deemed to be Reimbursement Amounts and Developer hereby releases and shall
defend, indemnify and hold Nuevo harmless therefrom.


12






 


     3.2 Insurance. Each Party shall use commercially reasonable efforts to
name the other Parties as Additional Insured, on each Party’s standard blanket
insurance policy covering its activities in connection herewith, for the
duration of their construction or their activities on any portion of the
Property.


     3.3. Performance by Each Party. Each party shall be responsible for
bearing all costs and expenses associated with the performance of its
obligations under each Program. Each Party shall timely commence and complete
its respective responsibilities for each Program exercising commercially
reasonable effort and care. With respect to each Program, Nuevo shall not be
obligated to design, construct or install any improvements nor undertake work
or activities other than those specified in Section 2. Should Developer’s
failure to perform, including, without limitation its obligations under Section
2, other than for the payment of money, or should Nuevo’s failure to complete
any aspect of the work or any Program result from an Unavoidable Delay, such
required performance shall be excused for the period of time that the
Unavoidable Delay prevents performance. Provided, however, that nothing in this
Section shall excuse the performance of any act rendered difficult solely
because of the financial condition of a party. In the event that any delay due
to Unavoidable Delay is anticipated by a Party, such Party shall promptly
notify the other parties of such delay, its cause and the estimated duration of
the delay. Each Party shall exercise due diligence to shorten, mitigate and
avoid the effects of the delay and shall keep all Parties informed as to its
efforts.


     3.4 Independent Contractor. The acts or omissions of Lessee, Developer or
Nuevo in accordance with the terms this Declaration may not be imputed to the other
parties unless expressly stated herein or otherwise agreed to in writing. Unless
otherwise agreed by the Parties, Developer and Nuevo are each performing their obligations
hereunder as independent contractors and not as a subcontractor or agent of Lessee or the other.


     3.5 Final Acceptance. At all times, Developer shall be solely
responsible for and shall defend, indemnify and hold Nuevo harmless from all Losses and
Environmental Losses (as defined in this Declaration) related to activities in the Aera Program
that are designated as Developer’s responsibility. Prior to Final Acceptance, as set out in each
Program, Nuevo shall be responsible for and shall defend, indemnify and hold Developer harmless
from all Losses associated with performance of activities designated as Nuevo’s
responsibility in the Programs. At all times, after Final Acceptance of each Program segment performed by
Nuevo, Nuevo shall be released and Developer shall defend, indemnify and hold Nuevo harmless
from and be solely responsible for all Losses and Environmental Losses for that Program
segment. Developer’s indemnity herein shall be deemed for all purposes to be an indemnity under
Sections 10 and 12 of this Declaration. To the extent that any additional work is
required to be performed after Final Acceptance, such work, if any, and all costs and
expenses related thereto shall be borne by the Developer. After Final Acceptance by Developer of
each Program component, Developer shall be solely responsible for all maintenance,
revegetation, repair, replacement, removal, and reinstallation of any completed work including,
but not limited to, the cost of future relocation of such work requested by Developer and
performed by Lessee. After Final Acceptance by Developer of each task performed by Nuevo in the Aera
Program, Developer shall be bound by and responsible for the indemnity and release
provisions contained in Section 10 and 11 of the Aera Agreement. Prior to Final Acceptance of
each Task performed


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by Nuevo, the obligations under Section 10 and 11 of the Aera Agreement
shall be the responsibility of Nuevo.


     Section 4. INTENTIONALLY OMITTED.


     Section 5. Liabilities and Responsibilities.


     5.1 Liability Allocation. Either Nuevo or Developer may seek arbitration
as provided in Section 19 of this Declaration to obtain damages for losses suffered
as a result of the failure to either Party to perform hereunder or to resolve disputed issues in the
performance of the Programs. All disputes between the Parties herein shall be resolved
through arbitration. Any award in such arbitration shall be limited to the recovery of actual
direct damages. Neither Party shall be entitled to indirect, consequential, special, exemplary or
punitive damages. After Final Acceptance by Developer, Developer shall have no cause of action against
Nuevo, or its successors or assigns with respect to the Programs. Under no
circumstances shall Developer assert any claim or cause of action against Lessee except to the extent
such action is permitted by the Aera Agreement and Nuevo is indemnified and held harmless therefrom.
Developer may, in its reasonable discretion, maintain a lawsuit, arbitration or other action
against any construction entities hired by Nuevo (but not Nuevo itself) to perform work on the
Programs pursuant to a written contract (“Construction Entities”), to obtain damages for losses
suffered as a result of Nuevo’s failure to properly complete the Programs, to the extent caused by
such Construction Entities. In that regard, to the extent it possesses and may assign same,
Nuevo hereby conveys, transfers and assigns (and, if necessary, will convey, transfer and assign
at such time as such cause of action arises) to Developer a nonexclusive assignment of its
rights and interests in and to any relevant contracts or subcontracts, for the limited purposes stated
herein, without any obligation by Nuevo to participate in such lawsuit or action, as a party
or otherwise, and without any responsibility, warranty, representation or liability for any outcome
pursuant thereto or damages awarded therein. Construction Entities include
contractors, subcontractors, materialmen or other independent entities, but not Nuevo, their respective
constituent partners, officers, employees or any other related entities. Upon ten (10) days
written request, Nuevo will provide Lessee and Developer with a list of such Construction Entities
which have supplied Nuevo with the Preliminary Notice prescribed by the California Civil Code
for the maintenance of mechanic’s lien rights. Nuevo further agrees to not enter into any
contract with a Construction Entity that waives the liability for such entity’s
negligence.


     5.2 The Programs and Party Responsibilities. Except as otherwise
provided herein, each Party shall cooperate with the other in the completion of the
Programs and each Party shall
perform its obligations in a commercially reasonable manner, and in good
faith, as described
below and elsewhere herein. It is understood and agreed that Developer
shall have the primary
responsibility for and shall, at its sole cost and expense, complete all
work required to
accomplish the “Developer Improvements,” including but not limited to: (a)
soil remediation not
designated as the responsibility of Nuevo in the PAPA, (b) relocation of
third party easements
and licenses (“TPEL”), (c) all matters to the extent allocated to
Developer in the PAPA, and (d)
Mass Grading operations in a commercially reasonable manner to attain
completion of such


14






 


operations in the shortest time so as to minimize the disruption of Lessee’s
remaining oil operations. Developer shall fully cooperate with Nuevo and Lessee
in the implementation of each Program. Developer shall (i) timely process all
of its permit requests; (ii) comment on all applicable submittals of
specifications or plans within ten days; and (iii) make all facilities
available for accommodation under the Programs such that Nuevo may commence its
activities hereunder in a timely manner. In addition, Developer remains
responsible for those obligations set out as Developer’s responsibility in this
Declaration. The activities and tasks performed by Nuevo in each of the
Programs shall be undertaken in accordance with standards promulgated at the
time of such work by CDOGGR with respect to well abandonment or such other
Governmental Agency having jurisdiction over the activity, all subject to, and
as further described herein.


     5.3 Assumption of Obligations. As set out in the Agreement, Developer
has assumed all rights, duties, obligations and liabilities of both Nuevo
and of the Developer in the Mineral PAPA.


     5.4 Default/Cure. A “Default” (or “Event of Default”) shall be deemed to have
occurred if a Party has not effected a cure within ten (10) days after
failure to timely perform its
obligations to pay money hereunder, and within thirty (30) days after
written notice specifying
the breach in the case of other obligations hereunder; provided, however,
except as otherwise
specified herein, in the case of a breach of any obligations hereunder
other than for the payment
of money which is not capable of being cured within said thirty (30) day
period, no Default shall
be deemed to have occurred so long as the Party commences to cure such
default within ten (10)
days after such notice and thereafter diligently and continuously
prosecutes the same to
completion. Upon the occurrence of an Event of Default or Default
by Nuevo, in its
performance of its responsibilities under any of the Programs, as set out
herein (and Nuevo has
failed to cure or commence and continuously prosecute a cure within the
time periods specified
herein), Developer, at its option, may undertake and assume the Program
work which it alleges
Nuevo has failed to perform at Nuevo’s expense. Prior to assuming any
work of Nuevo under
the Programs, Developer will provide written notice to Nuevo after the
expiration of the time
periods set out herein stating the factual basis of its claim that Nuevo
has failed to cure the
Default and advising Nuevo of its intention to assume responsibility for
certain work under the
Programs, providing reasonable specificity as to the work that it intends
to assume responsibility
for and perform. Nuevo’s failure to perform additional actions requested
by Developer but not
specifically set out as Nuevo’s responsibility in the Programs shall not
be deemed a breach of its
obligations under the Programs.


Within 10 days of receipt of notice from Developer, should Nuevo dispute in
writing Developer’s assertion that Nuevo has committed a Default under the
PAPA, Developer shall not assume Nuevo’s Program responsibilities, but shall
submit such dispute to arbitration under Section 19 of this Declaration, which
arbitration shall be modified as provided herein. An arbitration under this
section shall be conducted by a single arbitrator who shall be directed to
provide an arbitration schedule that results in a decision within 45 days of
the arbitrator’s selection. Among other matters, upon establishing a Default,
such arbitrator shall have the power to assign Nuevo’s Program
responsibilities to Developer.


15






 


Should the Developer assume any work that is the responsibility of Nuevo under
the Programs, Nuevo shall be indemnified by Developer for all Losses and all
Environmental Losses associated with or arising out of Developer’s performance
thereof. Provided however, Developer shall be entitled to deduct from the
Additional Purchase Price attributable to the assumed work, the reasonable
costs and expenses incurred in performance of the work. Developer shall not
offset any amounts against Additional Purchase Price for Program activities
for which Nuevo is not in Default. Any dispute with respect to the
reasonableness of the costs incurred shall be resolved through arbitration and
any amount not in dispute shall be promptly paid to Nuevo upon Developer’s
completion of performance.


          5.4.1 Remedies Cumulative. All rights, options and remedies of
Nuevo
contained in the PAPA shall be construed and held to be cumulative, and
none of them shall be
exclusive of the other, and Nuevo shall have the right to pursue any
one or all of such remedies
or any other remedy or relief which may be provided by law or equity,
whether or not stated in
the PAPA. Further, Nuevo may exercise hereunder, any of the rights,
options and remedies, as
and to the extent, described in Sections 5 and 15 of this Development
Declaration.



          5.4.2 Arbitration. EXCEPT FOR THE RIGHT OF EITHER PARTY TO
APPLY TO A COURT OF COMPETENT JURISDICTION FOR TEMPORARY
RESTRAINING ORDERS, PRELIMINARY INJUNCTIONS, WRITS OF ATTACHMENT,
WRITS OF POSSESSION OR OTHER EQUITABLE OR PROVISIONAL RELIEF, ANY
CONTROVERSY, DISPUTE OR CLAIM OF ANY KIND OR NATURE ARISING OUT OF,
IN CONNECTION WITH, OR IN RELATION TO THE INTERPRETATION,
PERFORMANCE OR BREACH OF THIS DECLARATION SHALL BE SUBMITTED TO
ARBITRATION UNDER SECTION 19 OF THIS DECLARATION.



     Section 6. INTENTIONALLY OMITTED


     Section 7. Condition of the Property.


     7.1 Disclosures. Buyer expressly agrees to cause certain disclosures described
below (“Disclosures”) to be inserted in the Final Subdivision Public Reports
(“Public Report”) obtained by Buyer (and/or any builder/developer purchasing
from Buyer) from the Department of Real Estate relating to the Project or, in
the absence of a requirement for a Public Report, in a separate Disclosure
instrument; Buyer shall cause each purchaser of a Home constructed at the
Project to sign, prior to or contemporaneously with the execution of a purchase
agreement for such Home, a Disclosure notice and a specific “assumption of
risk” with respect thereto in such agreement. The Disclosure shall contain all
information required by California law, including the ordinances, rules and
regulations of any Governmental Agency and any other information that would be
disclosed by a prudent developer/builder of Homes in the same geographical
area, including those relating to nuisance (of any sort), noise, glare,
traffic, transmission lines, magnetism associated therewith or otherwise,
hazard zones, potential acts of God or nature, habitat restoration, protection
of species (wildlife and vegetation), the existence of landfills and other
man-made alterations to the Land, the existence of the Project; and, that the
Land (including the Development Areas) and the Adjacent Parcel have had a
number of historical uses including oil, gas and power production


16






 


and associated residential and commercial structures and habitation and may
contain contamination and buried trash and debris as a result of such use;
and, there will be abandoned oil wells at the Project, and continuing Oil
Operations (including, in Operator’s sole discretion, additional wells), as
well as the construction and development of a master-planned Community.


     7.2 Further Disclosures. Without in any way limiting the generality of the
foregoing provisions of this Section 7, Buyer expressly acknowledges it is
aware of and has satisfied itself with respect to the following:


          7.2.1 Unocal Gas Plant. That (a) the Project contains certain real
property that
was formerly used by Unocal as a gas plant for the commercial production
of natural gas, (b) the
Unocal gas plant has been shut down and its operations discontinued, (c)
Nuevo has caused the
areas surrounding the Unocal gas plant to be cleaned up and remediated
(“clean-up”) pursuant to
a remedial action plan established by the Orange County Health Care Agency
(“OCHCA”)
which has issued a Conditional Closure Letter indicating its inspection
and acceptance of such
remediation efforts, (d) Buyer has received and reviewed to its
satisfaction the Conditional
Closure Letter and other written materials concerning the Unocal gas
plant, its operation and the
clean-up as part of the Information and (e) Nuevo does not warrant,
represent or guarantee that
the Unocal gas plant or surrounding areas are free from contamination or
any other conditions
whatsoever, as a result of its operations or otherwise.



          7.2.2 Faults. Buyer acknowledges that Nuevo has made Buyer aware that
there
are earthquake and other faults which exist on or near the Project.
Further, Buyer acknowledges
that there may be faults, unknown to Nuevo, which exist on or near the
Project.



          7.2.3 Lessees on the Property. Buyer acknowledges that there (a) are
surface
leases on a portion of the Land and the Project, between Nuevo, as
successor to Unocal, and Brea
Green Recycling, Inc., dated February 1, 1997, and with Haynes Apiaries,
dated December 29,
1992, as amended, for the keeping of bees, and (b) is an oil and gas lease
between Seller and
Aera Energy LLC, commonly referred to as the Indenture, as amended, by and
between Unocal
and Columbia Oil Producing Company dated February 26, 1901, affecting a
portion of the Land.
Buyer has been provided copies of such leases as part of the Information.



          7.2.4 Water Storage Tanks. The Property surrounds two (2) large, domestic
water storage tanks currently in operation. The tanks are owned and
operated by the City.



          7.2.5 Oil Wells and Change House. As part of the AS IS purchase of the
Property (including the Development Areas) and the Project, Buyer
understands and agrees that
the wells and Change House (shown as “Changing House”) shown on Exhibit
“N” to the
Agreement have been identified “to the best of Nuevo’s knowledge” (as
defined in Section 3.1C
thereof).



FOR PURPOSES OF THIS SECTION 7, ALL REFERENCES TO “LAND” AND/OR “PROPERTY”
SHALL MEAN AND INCLUDE OIL OPERATIONS.


NUEVO SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR ASSURANCE THAT THE PROJECT
OR ANY HOMES CONSTRUCTED THEREIN WILL ENJOY ANY VIEW.


17






 


     Section 8. Development Requirements, Conditions. Costs, Taxes and
Assessments. Until the full reconveyance of the PAPA TDs, (a) Buyer shall use
commercially reasonable efforts to satisfy all conditions and requirements of
Governmental Agencies and/or with respect to Governmental Approval Documents
and (b) Buyer shall pay and be responsible therefor and for all other costs and
expenses, of every nature whatsoever, incurred in developing the Project. Such
costs and expenses shall include, without limitation, the following:


     8.1 Buyer shall be responsible for all Governmental Approval Costs (as
defined in
herein), including those bond costs described in Section 1.3 thereof. If
any such Governmental
Approval Costs, pursuant to the terms of any agreement between Nuevo and
any Governmental
Agency with jurisdiction over the Project or any ordinance, administrative
procedure or other
regulation adopted by such Governmental Agency or otherwise, are charged
to and paid by
Nuevo, then Buyer shall reimburse Nuevo for the portion of such fees
allocable to the Project
and/or the Improvements to be constructed in connection therewith.


     8.2 Buyer shall be responsible for the cost of construction
of all Buyer’s
Improvements and for all other charges and costs for the Project and
development pursuant to the
Governmental Approval Documents and Governmental Approvals, including the
costs of any
bonds required in connection therewith.


     8.3 Buyer shall be responsible for all taxes and assessments for the Land after the
Close.;


     8.4 Buyer shall pay and be solely responsible to the Governmental Agency
as may be
applicable, all fees, including street, transportation, connection or
similar types of fees due for
the Project and for the discharge of all conditions to the Governmental
Approvals, including all
maps. To the extent such fees continue to be required by any
Governmental Agency or
authority, Buyer agrees that all such fees shall be payable by Buyer
whether or not the applicable
enabling ordinance or other legislation is repealed, invalidated,
terminated or revoked or if the
Governmental Agency’s participation in funding or constructing such
facilities is prohibited. In
no event shall Buyer be entitled to a refund from Seller of any portion of
any such fees or any
portion of the Purchase Price due to a failure by the Governmental Agency
to construct the
facilities relating thereto or for any other reason.


     8.5 Should Buyer fail to satisfy, pay and/or discharge, or cause to be
satisfied, paid
and/or discharged prior to delinquency, any tax, assessment or other
condition, requirement,
charge, cost or expense upon or in connection with the Land and/or
Project, or its or their
development, as otherwise required herein, and if Buyer after ten (10)
days’ written notice from
Nuevo shall fail to pay and discharge the same, then Nuevo may, at its
option, satisfy and/or pay
any such conditions or amounts, respectively, or settle or discharge any
action therefor or satisfy
any judgment thereon, and all reasonable costs, expenses and other sums
incurred or paid by
Nuevo in connection therewith, including, without limitation, attorneys’
fees and court costs,
shall be paid to Nuevo by Buyer within ten (10) days of a request therefor
by Nuevo, which
request shall be accompanied by an invoice for such fee or charge and
reasonable supporting
documentation. Any such reimbursement shall not relieve Buyer of its
obligation to reimburse
Nuevo for any subsequent billing.


18






 


     Notwithstanding the above, Buyer may contest such matters in good faith
and postpone such satisfaction and/or payment until resolution of the
contested matter, or as required by law, whichever is sooner. If Buyer
contests such matters in good faith and Nuevo exercises its rights hereunder,
Nuevo may pay such amounts under protest and reimburse Buyer for any amounts
paid from Buyer to Nuevo to the extent of any reduction resulting from such
contest, to the extent Nuevo receives a refund thereof.


     8.6 Constructive Meaning of Certain Provision. Notwithstanding anything
to the contrary elsewhere in this Declaration, where any obligation, covenant,
restriction or duty of
Buyer is limited herein to the period of time prior to the full reconveyance of
the PAPA TDs
(“Time period”), that Time Period shall automatically be extended to include
any periods of time during which (a) the PM TD, or any portion thereof, is
extant and not fully reconveyed and/or any amounts secured thereby have not been
fully paid to Nuevo as required and (b) the Corporate
Guaranty and/or SPC Guaranty, or any portion thereof, is/are extant and not
fully reconveyed/discharged and/or any amounts secured thereby have not been
fully paid to Nuevo as required.


     Section 9. Insurance.


     9.1 Insurance Types. From and after the date recordation of Declaration.
Buyer shall, at its sole cost and expense, as required by the Agreement,
maintain in full force and effect with companies satisfying the requirements
specified below, the following insurance:


          9.1.1 Comprehensive General Liability Insurance. Buyer shall maintain
Comprehensive or Commercial General Liability Insurance on an “occurrence”
basis, with reasonably acceptable deductibles, and excess umbrella coverage,
with a combined single limit for bodily injury and property damage of
Twenty-Five Million Dollars ($25,000,000.00), reduced automatically to Three
Million Dollars ($3,000,000) (a) with respect to the portion Transferred, upon
the Transfer or Transfers in the aggregate (in a single or multiple
transactions) to the same or a related Transferee of the fee interest in any
portion of the Remainder Parcels constituting less than thirty (30) acres or
(b) with respect to the rest of the Remainder Parcels, after the sale of the
last Home at the Project to the Homebuying public (or an amount equal to the
limit from time to time carried by Buyer, if greater), covering the following:



               9.1.1.1 Operations, Independent Contractors and Products and Completed
Operations (which Buyer shall maintain in effect on at least an annual
renewal basis for at least
ten (10) years following the completion of the last Home at the Project;



               9.1.1.2 Owners’ and Contractors’ Protective Liability;



               9.1.1.3 Severability of Interest and Cross Liability clauses;



               9.1.1.4 Contractual Liability, including without limitation coverage for
Buyer’s contractual indemnities in this Agreement;



               9.1.1.5 Personal Injury and Explosions, Collapse and
Underground Hazards (X, C, U);




19






 





               9.1.1.6 Broad Form Property Damage Liability, including completed
operations.



               The limits of liability of the insurance coverage specified in this
subsection may be provided by any combination of primary and excess liability
insurance policies.



          9.1.2 Automobile Liability Insurance. Buyer shall maintain owned, hired
and non-owed automobile liability insurance covering all use of all
automobiles, trucks and other motor vehicles utilized by Buyer in connection
with the requirements or obligations specified in any Development Document
with a combined single limit for bodily injury and property damage of Five
Million Dollars ($5,000,000.00) as to the Development Areas and One Million
Dollars ($1,000,000.00) as to the Remainder Parcels (or in an amount equal to
the limit from time to time carried by Buyer if greater).



     9.2 Waiver of Subrogation. Buyer hereby waives all rights against Nuevo
and the
Indemnitees (as that term is defined in Section 10 hereof)
for damages caused by fire and other perils and any other risk.


     9.3 Named and Additional Insured. Each of the entities constituting
Buyer shall be
named insureds on the policy required by this Section 9. Nuevo shall be
included as an
additional insured under the coverage specified in subsections 9.1 above
with the following
provisions included within each applicable policy: “It is understood and
agreed that coverage
afforded by this Policy shall also apply to Nuevo Energy Company and Torch
Energy Advisors
Inc. and Torch Operating Company (collectively, “Torch”), and their
members, partners and their
constituent members, their parent companies, subsidiaries, and all of
their respective officers,
directors, shareholders, agents, representatives, employees and
professional consultants, and all
of their respective successors and assigns, as additional insureds, but
only with respect to legal
liability or claims caused by, arising out of or resulting from the acts
or omissions of the named
insured or others performing acts on behalf of the named insured in
connection with their
ownership, use and development of the Property (including the Development
Areas) and the
Project. This insurance is primary and any other insurance by such
additional insureds is non-
contributing with this insurance as respects claims or liability arising
out of or resulting from the
acts or omissions of the named insured, or of others performing on behalf
of the named insured.”


     9.4 Insurance Policies. Each insurance policy required under this Section
shall:


          9.4.1 Be issued by insurance carriers licensed and approved to do business
in
California, having a general rating of not less than an “A-” and financial
rating of not less than
“VIII” in the most current Best’s Insurance Report. Should Buyer wish to
maintain insurance
issued by an Affiliate of Buyer, Buyer shall provide Seller with
sufficient financial information
to demonstrate that the financial ability of such is comparable to other
insurance companies
having the forgoing Best’s Insurance Report ratings. Such information
shall include but not be
limited to such Affiliate’s balance sheet and income statement, loss
reserves and contingencies, and reinsurance arrangements.



          9.4.2 Contain a provision that the policy shall not be subject to material





20






 





alteration to the detriment of Nuevo or Buyer or cancellation without at least
thirty (30) days prior written notice given to Nuevo by registered mail;


          9.4.3 Provide that such policy or policies and the coverage evidenced
thereby
are primary and Nuevo’s insurance is noncontributing with such primary
coverage; and,



          9.4.4 Contain severability of interest and cross liability clauses.



          Buyer may provide the insurance described in this Section 9 in whole or in
part through a policy or policies covering other liabilities and projects of
Buyer; provided, however, that any such policy or policies shall (a)
specifically allocate to the Agreement the full amount of insurance required
hereunder and (b) be subject to, without limitation, and contain, permit or
otherwise unconditionally authorize the waiver contained in subsection 9.2
above; and provided further that any such policy or policies shall not
otherwise dilute or impair the rights of Nuevo or in any way negate the
requirements of this Declaration.



     9.5 Evidence of Insurance. As confirmation and evidence of each type of
insurance
coverage required by Section 9.1 and Section 30 hereof, Buyer shall
satisfy the following
requirements:


          9.5.1 Buyer shall comply with all payment obligations of each type of
insurance, as specified in the subject policy quote or binder, whichever
is relevant to the specific
type of insurance coverage;



          9.5.2 Buyer shall comply with all terms and conditions of each subject
quote or
binder that require additional information be provided to the insurer
prior to binding;



          9.5.3 Upon request of Buyer, Nuevo shall be provided with certificates
issued
by Buyer’s insurance carrier acceptable to Nuevo showing such policies in
force for the specified
period. Nuevo has the right to review certified policies as it may deem
necessary. Evidence of
any renewal insurance including specifically without limitation, the
Products and Completed
Operations insurance, shall be delivered to Nuevo not less than thirty
(30) days prior to the
expiration date on the term of the policy. Each policy and certificate
shall be subject to
reasonable approval by Nuevo. Should any policy expire or be cancelled
before the expiration of
the Agreement, or such later period as Buyer is required to carry such
insurance as set forth
herein, and Buyer fails immediately to procure other insurance as
specified, Nuevo, upon ten
(10) days written notice to Buyer, shall have the right, but shall have no
obligation, to procure
such insurance and to charge Buyer with one hundred ten percent (110%) of
the cost to Nuevo of
procuring such insurance. Buyer shall pay Nuevo any such amount within
ten (10) days of
written demand therefor.



     9.6 Damages. Nothing contained in these insurance requirements is to be
construed
as limiting the type, quality or quantity of insurance Buyer should
maintain or the extent of
Buyer’s responsibility for payment of damages resulting from its
operations.


     9.7 Nuevo’s Election to Insure. Should Buyer fail to do so, Nuevo
reserves the right
(but shall have no obligation), upon ten (10) days notice to Buyer to
effect a cure and procure
such insurance, to procure the insurance itself, or any portion thereof.
As provided above,


21






 


Nuevo shall notify Buyer if Nuevo exercises its right, whereupon Buyer’s
responsibility to carry such duplicative insurance shall cease. Nuevo further
reserves the right at any time, upon thirty (30) days notice to Buyer, to
require that Buyer resume the maintenance of any insurance for which Nuevo has
elected to become responsible pursuant to this subsection 9.7.


     9.8 Contractors. Buyer shall not permit any architect, engineer or
contractor to commence work on or relating to the Property (including
Development Areas) or the Project until such parties have complied with
Buyer’s customary insurance requirements. Buyer shall use commercially
reasonable efforts to cause each such party to name Nuevo and Torch as
additional insureds to such party’s general liability insurance policies.
Buyer shall also include Nuevo and Torch in any indemnity provisions with such
parties for defense and indemnification to the same extent Buyer is defended
and indemnified. Failure by Buyer to discharge its obligations under this
Section 9.8 shall not give rise to a right in Seller to exercise a remedy at
law or equity, except to the extent Seller suffers Losses or Environmental
Losses as a result thereof.


     Section 10. Indemnity. To the maximum extent permitted by law, and except
to the limited extent provided to the contrary in the Agreement or in Exhibit
“K” thereto, Nuevo, Torch and their members, partners and their constituent
members, their parent companies and subsidiaries and their employees, officers,
directors, shareholders, agents and representatives and all of their respective
successors and assigns (collectively, the “Indemnitees”) shall not be liable
for any Losses (as defined below) of any kind or character to any person or
property arising from, caused by or relating to, with or without fault or
negligence of an Indemnitee (a) the Property, the development or use of the
Property, the performance of the Work or work at, relating to or in connection
with the Property, and/or the construction, use or sale or other conveyance of
Improvements or other improvements at, relating to or in connection with the
Property, including, without limitation, any loss, damage, injury or claim
arising from or caused by or alleged to have arisen from or have been caused by
(i) the use of the Property during grading or other activities by Buyer or any
of Buyer’s Representatives (as that term is defined in Section 12 below) in a
manner that impacts operations relating to oil and gas or any other mineral or
hydrocarbon or substance, or any related and/or any other operations, (ii) a
defect in the design or construction of, or material in, any structure or other
improvement at, relating to or in connection with the Property, or in any Work
performed by Buyer or any of Buyer’s Representatives, or by Seller; (iii) the
condition of the Property including any earthquake or other faults, or other
natural hazards, disclosed or undisclosed, a defect in soils or in the
preparation of soils (including any grading performed at, relating to or in
connection with the Property prior to the date hereof by Nuevo or any other
party), (iv) the presence or existence of any Hazardous (or toxic) Substances
(including any methane gas and/or tar seeps), materials or waste (including any
landfill) in, on or near the soil or groundwater at, relating to or in
connection with the Property, whether known or unknown and whether resulting
from occurrences prior to, on the date of or after the acquisition of the
Property, including without limitation any liability under the Comprehensive
Environmental Response, Compensation and Liability Act, the California
Environmental Quality Act or any other law, (v) claims made by third parties
for matters at, relating to or in connection with the Property and/or the
Adjacent Property (in equity, tort or strict liability and/or rising out of,
relating to or in connection with all agreements and contracts assumed by Buyer
pursuant to the Agreement, including the Aera Agreement, Hover Agreement and
the Agreement between Adjacent Landowners between Seller


22






 



and Brea Walden, LLC, dated October 9, 2001, and recorded on October 9, 2001,
as Instrument No. 20010710857 in the Official Records of Orange County,California), including any matter disclosed in Section 7, above, (vi) any act
or omission of Buyer or any of Buyer’s Representatives, (vii) any accident or
casualty at, relating to or in connection with the Property after the date this
Declaration is recorded, (viii) a material misrepresentation by Buyer or any of
Buyer’s Representatives, (ix) a violation or alleged violation by Buyer or any
of Buyer’s Representatives of any law now or hereinafter enacted, (x) a slope
erosion, sluffing or failure or subsurface geologic or groundwater condition
at, relating to or in connection with the Property, as well as the effect on
such slopes and subsurface areas of Buyer’s development at, relating to or in
connection with the Property and use of the improvements at, relating to or in
connection with the Property (including watering), (xi) the application of the
principles of equity or strict liability with respect to any act or omission of
Buyer or an Indemnitee or their respective licensees, invitees or contractors
at, relating to or in connection with the Property, including without
limitation the grading thereof and/or the existence of any contaminants or
Hazardous Substances or materials in or on the soil or groundwater, or (xii)
any other cause whatsoever at, relating to or in connection with the Property,
Buyer’s use of the Property or Buyer’s performance under the this Declaration
(including its covenants, representations and warranties made pursuant thereto
and specifically including those of it and its Transferees made in Paragraphs 1
through 4, and otherwise in, the Assumption of Obligations shown at Section
32.3 below); (b) the negligence or willful misconduct of Buyer or any of
Buyer’s Representatives in the development, construction, grading or other work
performed off the Land or Project by Buyer, or otherwise in connection with the
development of the Property, or any defect in any such Work; or (c) the Default
by Buyer of any of its obligations under this Declaration.


          As a material part of the consideration of this Declaration, except as
prohibited by law and/or as provided to the contrary below or in Exhibit “K”
to the Agreement, Buyer hereby releases the Indemnitees from and waives on its
behalf, and on behalf of its successors and assigns, all claims, demands and
causes of action against the Indemnitees for any such loss, liability, damage,
cost, expense, injury or claim, including court costs and attorneys’ fees
arising out of, relating to or in connection with the matters in (a), (b) and
(c) of the preceding paragraph (collectively, “Losses”) and agrees to
indemnify, defend and hold harmless Nuevo and all of the Indemnitees and their
property from all such Losses whether incurred or made by Buyer, Nuevo, any
Indemnitee or any third parties/person(s). The foregoing release, waiver,
indemnity and obligation to defend and hold harmless shall apply to any claim
or action brought by a private party or by a Governmental Agency or entity
under any statute or common law now or hereinafter in effect and is intended
to apply with respect to Losses before or after the conveyance of all of the
Homes and/or other improvements at, relating to or in connection with the
Property. The foregoing release, waiver, indemnity and obligation to defend
and hold harmless, and any similar covenants by Buyer elsewhere in this
Declaration, are intended to apply to Losses incurred directly by Nuevo or any
Indemnitee, or their property, as well as by Buyer or any third party or their
property. With respect to design, construction methods, materials, locations
and other matters for which Nuevo has given or will give its approval,
recommendation or other direction, the foregoing release, waiver, indemnity
and obligation to defend and hold harmless shall apply irrespective of Nuevo’s
approval, recommendation or other direction.




23






 



          Notwithstanding anything to the contrary above, nothing contained in this
Section shall operate to relieve any Indemnitee to the extent of any Losses
found by a court of competent jurisdiction to have been caused (a) solely by
the reckless behavior, willful behavior or gross negligence or (b) by the
intentional misconduct of such Indemnitee.



          BUYER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY ITS LEGAL COUNSEL AND IS
FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH
PROVIDES AS FOLLOWS:




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



          BUYER BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHT
IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTE OR COMMON LAW
PRINCIPLE OF SIMILAR EFFECT.




	 	 	 	 	 	 	 
	BUYER’S INITIALS
_________	 	
 
	 	 
	 	NUEVO’S
INITIALS _________



This indemnity and release shall not apply to the extent (a) of any material
breach by Nuevo of (i) its representations set forth in Section 3.1 C of the
Agreement, (ii) its covenants set forth in 3.2 of the Agreement and/or (iii)
its other obligations under this Declaration (taking into account, all
provisions therein expanding, limiting or otherwise altering or modifying the
legal and equitable rights and duties of the Parties); (b) attributable to
civil or criminal penalties imposed upon Nuevo before the Close, but not paid
or Nuevo taxes delinquent before the Close, but not paid; (c) of any claims,
demands, causes of action, loss, liability, damage, cost, expense or injury
including court costs and attorneys fees (collectively, “employment losses”),
of Seller resulting from or relating to the employment relationship between
Seller and any of Seller’s present or former employees or the termination of
any such employment relationship, including without limitation OSHA claims,
matters relating to employee health, severance pay and other similar benefits,
if any, and any employment losses on behalf of any such present or former
employee relating to the employment or termination of employment of any such
employee by Seller prior to the Closing, including without limitation any claim
for wrongful discharge, breach of contract, unfair labor practice, employment
discrimination, unemployment compensation, or workers’ compensation or any
employment losses of Seller in respect of any agreement, trust, plan, fund, or
other arrangement under which benefits or employment is provided for any of
Seller’s present or former employees; (d) of any Losses, whether incurred or
made by Nuevo, Buyer, or Indemnitee or any third party, in connection with or
arising out of any off-site activities (i.e., Seller’s actions performed off of
the Property), including but not limited to, storage, handling, transportation,
disposal or discharge, by Seller, of any materials, substances, and wastes from
the Property (including without limitation produced water, drilling fluids,
NORM, and other wastes); or (e) of any Losses to the extent they have been
acknowledged and accepted by Operator as its responsibility or there is a final
judgment or other non-appealable resolution of the issues allocating such
responsibility solely to Operator.


24






 


Except as provided above, this Indemnity and release shall apply to the extent
of all Losses at, relating to or in connection with the Property, regardless
of when they occur.


For purposes of this Section 10, the term Property shall include the Project.


     Notwithstanding the above, Buyer may, in its reasonable discretion,
maintain a lawsuit or other action against Construction Entities, to obtain
damages for losses suffered as a result of its indemnification and release
given herein, to the extent caused by such Construction Entities. In that
regard, to the extent it possesses and may assign same, Nuevo hereby conveys to
Buyer a non-exclusive assignment of its rights and interests in and to any
relevant contracts or subcontracts, for the limited purposes stated herein,
without any obligation by Nuevo to participate in such lawsuit or action, as a
party or otherwise, and without any responsibility, warranty, representation or
direct or indirect liability for any outcome pursuant thereto or damages
awarded therein. Construction Entities include contractors, subcontractors,
materialmen or other independent entities, but not Nuevo, or Torch, their
constituent partners, their officers, employees or any other related entities.
Upon ten (10) days written request, Nuevo will provide Buyer with a list of
such Construction Entities which (a) have supplied Nuevo with the Preliminary
Notice prescribed by the California Civil Code for the maintenance of
mechanic’s lien rights or (b) have an Independent (direct) Contract with Nuevo
with respect to such Work, and a copy of any such contract.


     Section 11. Survival of Covenants. All of Buyer’s indemnification,
defense and hold harmless covenants in this Declaration, including without
limitation the covenants in the Sections hereof entitled “Indemnity” and “No
Hazardous Substances,” and Buyer’s obligation to maintain completed operations
insurance pursuant to the Section hereof entitled “Insurance,” shall survive
the conveyance of all or any of the improvements built by Buyer at, relating
to or in connection with the Property and shall be binding on Buyer until the
last to occur of (a) such date as any action against the Indemnitees is
absolutely barred by the applicable statute of limitations or (b) such date as
any claim or action for which indemnification may be claimed under said
Section is fully and finally resolved and, if applicable, any compromise
thereof or judgment or award thereon is paid in full by Buyer and the
Indemnitees are reimbursed by Buyer for any amounts paid by the Indemnitees in
compromise thereof or upon a judgment or award thereon and in defense of such
action or claim, including attorneys’ fees. Neither payment nor a finding of
liability or of an obligation to defend shall be a condition precedent to the
enforcement of any indemnity or duty to defend provision herein or elsewhere
in any Development Document, and if any action or proceeding shall be brought
against any Indemnitee alleging any fact or circumstances for which Buyer is
to provide indemnification, Buyer upon notice from such Indemnitee shall
defend the same at Buyer’s expense by counsel approved in writing by such
Indemnitee. Buyer waives as defenses to its obligations in the this
Declaration the pleading or defense of any statute of limitations.


     Section 12. No Hazardous Substances. Except as specifically allocated to
Nuevo elsewhere in this Declaration, the responsibility for Hazardous
Substances shall accrue solely to Buyer. Buyer shall use commercially
reasonable efforts to comply with the following:


25






 


     12.1 Buyer shall not engage in any “Hazardous Substance Activity” (as
hereinafter
defined) or allow Buyer, Buyer’s contractors, its or their respective
subcontractors, agents,
employees, licensees, invitees or representatives, or any other parties
directly or indirectly
employed by any one of the foregoing or reasonably under the control of
any of the foregoing or
for whose acts any of the foregoing may be liable (collectively, “Buyer’s
Representatives”), to do
so in violation of any “Environmental Law” (as hereinafter defined at 12.8).


     12.2 Buyer shall keep and maintain, and cause Buyer’s Representatives to keep and
maintain, the Property in compliance with, and Buyer shall not cause or
permit the Property to be
in violation of, any Environmental Law. Buyer shall keep and maintain
and cause Buyer’s
Representatives to keep and maintain its Work in compliance with, and
Buyer shall not cause
any such Work or the Property to be in violation of, any Environmental
Law.


     12.3 Buyer shall immediately advise Nuevo in writing of (a) any and all
“Hazardous
Substance Claims” (as hereinafter defined) against Buyer or the Property;
(b) any remedial action
taken by Buyer in response to any (i) “Hazardous Substance” (as
hereinafter defined) in, on,
under or about the Property or (ii) Hazardous Substance Claims; (c)
Buyer’s discovery of any
occurrence or condition at, relating to or in connection with the Property
that could cause the
Property to be subject to any restrictions on the ownership, occupancy,
transferability or use of
the Property under any Environmental Law; and (d) Buyer’s discovery of any
occurrence or
condition on the Adjacent Property or on any real property adjoining or in
the vicinity of the
Property that could cause the Property or any part thereof to be
classified as “border-zone
property” under the provisions of California Health and Safety Code
Sections 25220 et seq., or
any regulation adopted in accordance therewith, or to be otherwise subject
to any restrictions on
the ownership, occupancy, transferability or use of the Property under any
Environmental Law.
Buyer will provide Nuevo with copies of all communications with federal,
state and local
governments or Governmental Agencies relating to Hazardous Substance
Claims.


     12.4 In the event any investigation, site monitoring, containment, cleanup,
removal,
restoration or other remedial work of any kind or nature (the “Remedial Work”)
is required under
any Environmental Law or any judicial order or notice by any Governmental
Agency or in
response to any Hazardous Substance Claims because of, or in connection with,
the breach by
Buyer of any of its obligations under this Declaration or the current or future
presence,
suspected presence, threatened or existing Release (defined
therein) or suspected Release of a Hazardous Substance in or into the air,
soil,
groundwater, surface water or soil vapor at, on, under or about the Property,
or transportation of
a Hazardous Substance to or from the Property, Buyer shall, within such period
of time as may
be required under applicable law, regulation or order, commence to perform, or
cause to be
commenced, and thereafter diligently prosecute to completion all such Remedial
Work on any
portion of the Property.


     12.5 Should Buyer at any time default in or fail to perform or observe any of its
obligations under this Section entitled “No Hazardous Substances,” Nuevo
shall have the right
but not the obligation, without limitation to any of Nuevo’s other rights
hereunder, upon twenty
(20) days’ written notice to Buyer, to perform the same, and Buyer shall
pay to Nuevo,
immediately upon demand, One Hundred Ten Percent (110%) of all costs and
expenses incurred
by Nuevo in connection therewith, including without limitation actual
attorneys’ fees.


26






 


     12.6 Without limiting the generality of any Section of any of this
Declaration dealing with Buyer’s indemnities, as of the date of execution of
the Agreement, Buyer agrees to indemnify, defend and hold harmless Nuevo and
all of the Indemnitees and their property, from and against any claim, action,
suit, proceeding, loss, cost (including court costs and any clean-up costs),
damage (including, without limitation, any consequential damage), liability,
deficiency, fine, penalty, punitive damage or expense (including, without
limitation technical consulting fees and attorneys’ fees) (collectively, the
“Environmental Losses”), directly or indirectly, resulting from, arising out
of, or based upon, with or without fault (a) the presence, release, use,
generation, discharge, storage, disposal or clean-up of any Hazardous
Substance to, on, in or from the Property, or any residual contamination
therefrom affecting any natural resource or the environment, (b) the
violation, or alleged violation by Buyer or Buyer’s Representatives of any
statute, ordinance, notice, order, rule, regulation, permit, judgment or
license relating to the use, generation, Release, discharge, storage, disposal
or transportation of any Hazardous Substance in, on, under or about, to or
from the Property or (c) any breach of the agreements and obligations of Buyer
under this Section entitled “No Hazardous Substances”; provided, however that
no Indemnitee shall be entitled to indemnification under this paragraph for
any Environmental Loss as and to the extent established by a court of
competent jurisdiction to have been caused (d) solely by its reckless
behavior, willful behavior and/or gross negligence or (e) by the intentional
misconduct of such Indemnitee. This waiver, indemnity and obligation to defend
and hold harmless shall include, without limitation, any damage, liability,
fine, penalty, punitive damage, cost or expense arising from or out of any
claim, action, suit or proceeding for personal injury (including sickness,
disease or death), tangible or intangible property damage, compensation for
lost wages, business income, profits or other economic loss, damage to the
natural resources or the environment, nuisance, pollution, contamination,
leak, spill, release or other adverse effect upon the environment. Except as
prohibited by law or as provided to the contrary below or in Exhibit “K” to
the Agreement, the above indemnification applies to all matters involving the
Property or a portion thereof.


This indemnity and release shall not apply to the extent (a) of any material
breach by Nuevo of (i) its representations set forth in Section 3.1 C of the
Agreement, (ii) its covenants set forth in 3.2 of the Agreement and/or (iii)
its other obligations under this Declaration (taking into account, all
provisions therein expanding, limiting or otherwise altering or modifying the
legal and equitable rights and duties of the Parties); (b) attributable to
civil or criminal penalties imposed upon Nuevo before the Close, but not paid;
(c) of any Environmental Losses, whether incurred or made by Nuevo, Buyer, or
Indemnitee or any third party, in connection with or arising out of any
off-site activities (i.e., Seller’s actions performed off of the Property),
including but not limited to, storage, handling or transportation by Seller, of
any materials, substances, and wastes produced from the Property (including
without limitation produced water, drilling fluids and NORM); or (d) of any
Environmental Losses to the extent they have been acknowledged and accepted by
Operator as its responsibility or there is a final judgment or other
non-appealable resolution of the issues allocating such responsibility solely
to Operator.


Except as provided above, this Indemnity and release shall apply to the extent
of all Environmental Losses at, relating to or in connection with the
Property, regardless of when they occur.


27






 


For purposes of this Section 12, the term Property (which includes the
Development Areas) shall include the Project.


Notwithstanding the above, Buyer may, in its reasonable discretion, maintain a
lawsuit or other action against Construction Entities, to obtain damages for
losses suffered as a result of its indemnification and release given herein, to
the extent caused by such Construction Entities. In that regard, to the extent
it possesses and may assign same, Nuevo hereby conveys to Buyer a non-exclusive
assignment of its rights and interests in and to any relevant contracts or
subcontracts, for the limited purposes stated herein, without any obligation by
Nuevo to participate in such lawsuit or action, as a party or otherwise, and
without any responsibility, warranty, representation or direct or indirect
liability for any outcome pursuant thereto or damages awarded therein.
Construction Entities include contractors, subcontractors, materialmen or other
independent entities, but not Nuevo, or Torch, their constituent partners,
their officers, employees or any other related entities. Upon ten (10) days
written request, Nuevo will provide Buyer with a list of such Construction
Entities which (a) have supplied Nuevo with the Preliminary Notice prescribed
by the California Civil Code for the maintenance of mechanic’s lien rights or
(b) have an independent (direct) contract with Nuevo with respect to such Work,
and a copy of any such contract.


     12.7
Without limiting the generality of any Section  in this Declaration
dealing with Buyer’s Indemnities, and without limiting the generality of
Section 12.6 above,
Buyer agrees to indemnity, defend and hold harmless Seller and all of the
Indemnitees who are
“secured lenders” as that term is used in Section 736 of the California
Code of Civil Procedure
and their property, from and against any and all claims, costs and damages
that a secured lender
is authorized and allowed to bring and recover pursuant to said Section
736 of the California
Code of Civil Procedure. Buyer shall not indemnify the Indemnitees under
this Section 12.7 and
the Indemnitees shall not proceed against Buyer under this Section 12.7
with respect to any
claims or costs Indemnitees are not authorized or allowed to recover from
Buyer under Section
736 of the California Code of Civil Procedure. All rights of Indemnitees
under this Section 12.7
shall survive following the foreclosure of any deed of trust, including,
without limitation, the PM
TD, the PAPA Trust Deeds, the repayment of any sums payable pursuant to
the PAPA, any other
Development Document or the PM Note or any promissory note (or which are
secured by any
deed of trust), the reconveyance or termination of the Development
Declaration or the PM TD,
the PAPA Trust Deeds, or any other deed of trust as an encumbrance upon
the Property, and
Buyer’s transfer of the Property to and until the last to occur of the
dates specified in Section 11
entitled “Survival of Covenants.”


     12.8 As used in this Declaration the following terms shall have the following
meanings:


          “Environmental Laws” means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601, et seq., the
Resource Conservation and Recovery Act of 1976, 42 U.S.C. Sections 6901, et
seq., the Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq., the
Hazardous Materials Transportation Act, 49 U.S.C. 1801 et seq., the Clean
Water Act, 33 U.S.C. Section 1251 et seq., the Safe Drinking Water and Toxic
Enforcement Act of 1986 (Cal. H&S Code Sections 25249.5-25249.13), the
Carpenter-Presley-Tanner Hazardous Substance Account Act (Cal. H&S Code
Sections 25300 et




28






 



seq.), and the Porter-Cologne Water Quality Control Act, California Water Code
Sections 13000, et seq., the California Health and Safety Code generally and
any and all other present and future federal, state or local laws (whether
under common law, statute, ordinance, rule, regulation or otherwise), permits,
orders, determinations, notices and any other requirements of Governmental
Agencies relating to the environment or to any Release, Hazardous Substance or
Hazardous Substance Activity, as heretofore or hereafter amended from time to
time.


          “Hazardous Substance” means (a) any chemical, compound, material, mixture
or substance that is now or hereafter defined or listed in, or otherwise
classified pursuant to, any Environmental Law as a “hazardous substance,”
“hazardous material,” “hazardous waste,” “extremely hazardous waste,”
“infectious waste,” “toxic substance,” “toxic pollutant” or any other
formulation intended to define, list, or classify substances by reason of
deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, toxicity, reproductive toxicity, or “EP toxicity” and (b) ash
produced by a resource recovery facility utilizing a municipal solid waste
stream. Oil and natural gas are expressly excluded from the definition of
Hazardous Substances.



          “Hazardous Substance Activity” means any actual, proposed or threatened
storage, use, holdings, existence, release, emission, discharge, generation,
processing, abatement, removal, disposition, handling or transportation of any
Hazardous Substance from, under, into or on the Land or surrounding property;
provided, however, that the use, installation, storage and maintenance by
Buyer in compliance with all applicable laws, ordinances, notices, orders and
regulations, of materials reasonably necessary and normally used in the
development of the Land as contemplated in this Declaration, shall not be
considered a Hazardous Substance Activity.



          “Hazardous Substance Claims” shall mean any and all enforcement,
investigation, clean-up, removal or other Governmental Agency notices,
actions, proceedings of any kind or nature, or orders threatened, instituted
or completed pursuant to any Environmental Law, together with all claims made
or threatened by any third party against Buyer, Nuevo, the other Indemnitees
or the Property, relating to damage, construction, cost recovery compensation,
loss or injury resulting from any Hazardous Substance.



          “Release”
shall mean and include any accidental or intentional spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, migrating, dumping or disposing into the air, land, surface water,
ground water or the environment of any Hazardous Substance (including, without
limitation, the abandonment or discarding of receptacles containing any
Hazardous Substance).



     Section 13. Natural Hazard Zones. Seller has submitted to Buyer and Buyer
acknowledges that it has received, read and approved the natural hazard zones
(“Natural Hazard Zones”) disclosure materials attached as Exhibit “J” to the
Agreement which have been provided by the Title Company. Buyer agrees that
Seller has thereby fully discharged all of its obligations to Buyer, if any,
under California law with respect to Natural Hazards Zones disclosures.


29






 


     Section 14. Release.


     14.1 Declarant may release any portion of the Covered
Property from this
Development Declaration at any time and for any reason without the
approval of Buyer.


     14.2 Upon the sale of a Home or other Improvement by Buyer to a member of
the Home-buying public or other ultimate user, but not upon the sale of one or
more Homes or any Improvement to any person or entity for resale to the public, Declarant
shall, upon written request from Buyer, release such Home or Improvement from the encumbrance
of this Development Declaration if Buyer shall not then be in Default of any of
the terms and provisions of this Development Declaration. Such release shall be evidenced by a
writing in recordable form, and upon the recordation thereof a Home or Improvement shall no
longer be deemed a part of the Covered Property and shall be free of all of the terms and
provisions of this Development Declaration. Declarant shall also, upon written request from Buyer, so
release any portion of the Covered Property (i) dedicated or otherwise conveyed to and accepted by a
Governmental Agency and/or (ii) consisting of any community facilities, concurrently
with conveyance thereof to an Association comprised solely of owners of Homes.


     14.3 Notwithstanding anything to the contrary above, subject to paragraph (f) of this
Section 14.3., from time to time, so long as there shall be no unrescinded
notice of Default hereunder given by Declarant to Buyer, a partial reconveyance may be had
and, upon the written request of Buyer (“Reconveyance Request”), will be given from the lien or
charge of this Declaration subject to the following terms and conditions:


          (a) Release Price. Declarant shall have been paid all amounts then due
under the Agreement, including the PAPA, Shea PAPA TD and this Declaration.



          (b) Advances. Buyer shall have repaid with interest all of the amounts
expended by Declarant to protect the security of this Declaration, including without limitation
any amounts expended for keeping senior encumbrances current, payment
of taxes or attorneys’ fees.



          (c) Default. Buyer shall not be in Default of any of its other
obligations hereunder (or under the Agreement) for which a notice of
Default may be given hereunder, and is given by Declarant as provided herein, within five (5)
days after receipt of a Buyer’s Reconveyance Request; provided however, subject to all the other
requirements of this Section 14.3, that in such event, if Buyer satisfies Declarant, in
Declarant’s reasonable discretion (e.g., by irrevocable instruction to escrowholder), that all proceeds from
the sale of Homes to be so reconveyed will be held, as security for the cure of such Default and
discharge of the underlying obligation, in a neutral escrow account pending a final
determination of any controversy regarding such Default or alleged Default pursuant to Section
19 hereof, or in the alternative, by providing other adequate security, in Declarant’s
reasonable discretion, for the cure of such Default and discharge of the underlying obligation (e.g., by
the posting of an adequate bond or letter of credit in favor of Declarant), then Declarant
shall reconvey the lien of this Declaration pursuant to such Reconveyance Request.




30






 





          (d) Costs. Buyer shall pay all costs of preparing, executing and
recording all
documents necessary to accomplish the partial reconveyances contemplated
herein. Such
payments shall be in addition to any required release payments specified
above. All such
payments to Declarant shall be in cash or other immediately available
funds.



          (e) Exempt Property. Without limiting the generality of the foregoing,
Declarant shall not be required to release any portion of the Covered
Property from the lien or
charge of this Declaration which has not been legally mapped in accordance
with the California
Subdivision Map Act (or is not exempt therefrom) and, except as provided
elsewhere in the this
Declaration regarding Community Facilities, improved with a Home.



          (f) Reconveyance Request. The Reconveyance Request shall:



               (i) specify the Homes to be reconveyed;



               (ii) specify no more than ten (10) Homes per
Reconveyance Request;



               (iii) subject to (ii), above, conform, to the extent possible, with phases
of development approved by the California Department of Real Estate; and,



               (iv) for subsequent Reconveyance Requests after the first Reconveyance
Request, be submitted only for the number of Homes previously sold under the
immediately preceding Reconveyance Request.



Provided however, that in no event shall Buyer be entitled to have more than
ten (10) Homes in its inventory reconveyed from the lien of this Declaration at
any given point in time.


          (g) Reconveyance at Close of Home Escrow. Where all the conditions of (f),
above, are not satisfied, and subject to the remaining provisions of this
Section 14.3, Declarant
shall provide a partial reconveyance of the lien of this Declaration on a
Home-by-Home basis
(pursuant to Reconveyance Requests) through escrows established for the
sale of Homes to the
Homebuying public, at the closing of such sale escrows.



          (h) Nuevo Designee. David Leach (or any other person(s) appointed by
Declarant as his successor upon ten (10) days written notice to Buyer), shall
be Declarant’s designee (“Designee”) for receipt of the partial reconveyances
described in this Section 14.3. Subject to satisfaction by Buyer of all the
requirements of Section 14.3, such Designee shall properly execute (or cause
same to be executed) and acknowledge any such partial reconveyance and cause
same to be received by Buyer within ten (10) business days of receipt of the
Reconveyance Request therefor.



     Section 15. Enforcement: Assignment By Declarant.


     15.1 Declarant shall have all rights and remedies herein including the
right to enforce by proceedings at law or in equity, all restrictions,
conditions, covenants and reservations, now or hereafter imposed by the
provisions of this Development Declaration or any amendment


31






 



hereto, specifically including the right to prevent the violation of any such
restrictions, conditions, covenants, or reservations and the right to recover
damages or other compensation for such violation. Failure by Declarant to
enforce any covenant, condition, or restriction herein contained in any certain
instance or on any particular occasion shall not be deemed a waiver of such
right on any future breach of the same or any other covenant, condition or
restriction by Buyer. All rights, options and remedies of Declarant specified
in this Development Declaration are cumulative, and no one of them shall be
exclusive of any other, and Declarant shall have the right to pursue any one or
all of such rights, options and remedies or any other remedy or relief which
may be provided by law, whether or not stated in this Development Declaration.


     15.2 In addition to and without limiting the foregoing, Declarant may
assign any of its rights and powers under this Development Declaration to any
Successor (as that term is defined below) so long as such person or entity in
writing agrees to assume the duties of Declarant pertaining to the particular
rights and powers assigned. Upon the recordation of such writing accepting such
assignment and assuming such duties, such assignee (“Successor”), to the extent
of such assignment, shall have the same rights and powers and be subject to the
same obligations and duties as are given to and assumed by Declarant herein.
Without limiting the generality of the foregoing, Declarant may make such
assignments as to the entire Covered Property or to any portion thereof.


     15.3 A Default under the Agreement shall be a Default hereunder.


     15.4 Subject to the provisions regarding Defaults set forth in this
Declaration and those imposed by law, the violation or breach of any covenant,
condition, restriction or provision contained herein shall give Declarant the
right to enter upon such portion of the Land and/or Project upon or as to
which said violation or breach exists and to summarily abate and remove, at
the expense of Buyer, any structure, thing or condition that may be or exist
therein contrary to the intent and meaning of this instrument.


     Declarant and any aggrieved owner of any portion of the Land and/or
Project shall have the right to prosecute a proceeding at law or in equity
against Buyer or any other person or persons who have violated or are
attempting to violate any of the provisions, covenants, conditions, and
restrictions set forth herein, to enjoin or prevent them from doing so, to
cause said violation or breach to be remedied or to recover damages for said
violation; provided, however, that nothing herein contained shall be deemed to
impose upon Declarant any liability for the failure to correct or prosecute a
violation or breach hereof or Default hereunder.


     Buyer shall be jointly and severally liable with each other person owning
every portion of the Land and/or Project for the violation or breach of any
covenant, condition, restriction or provision contained herein (i) existing
upon the portion of the Land and/or Project owned by Buyer and/or such person
or (ii) caused or committed by Buyer and/or such person.


     15.5 Notwithstanding anything to the contrary in this Section 15, for the
reasons specified in the PURPOSE OF RESTRICTIONS hereto, except to the extent
it would be a violation of the law or “public policy” of the State of
California, Declarant may enforce the


32






 


provisions of this Declaration for thirty (30) years after the recordation
hereof with the County Recorder of Orange County California, even after
Declarant has no ownership interest in the Covered Property or Project.


     Section 16. Amendments.


     Except as provided in this Development Declaration concerning (a) release
of property from the Covered Property, (b) assignment by Declarant of its
rights under this Development Declaration, and (c) reacquisition of the
Covered Property by Declarant, this Development Declaration may only be
amended by a writing executed by Declarant, Buyer and all entities having a
fee ownership interest in the Land/Project, which amendment shall be recorded
against the Covered Property.


     Section 17. Captions.


     The captions used herein are for convenience only and are not a part of
this Development Declaration and do not in any way limit or amplify the terms
and provisions hereof.


     Section 18. Governing Law.


     This Development Declaration shall be governed by and construed under the
laws of the State of California.


     Section 19. ARBITRATION/ATTORNEYS’ FEES. EXCEPT FOR THE RIGHT OF EITHER
PARTY TO APPLY TO A COURT OF COMPETENT JURISDICTION FOR TEMPORARY RESTRAINING
ORDERS, PRELIMINARY INJUNCTIONS, WRITS OF ATTACHMENT, WRITS OF POSSESSION OR
OTHER EQUITABLE OR PROVISIONAL RELIEF, ANY CONTROVERSY, DISPUTE OR CLAIM OF ANY
KIND OR NATURE ARISING OUT OF, IN CONNECTION WITH, OR IN RELATION TO THE
INTERPRETATION, PERFORMANCE OR BREACH OF THE AGREEMENT (INCLUDING THIS
DECLARATION), ANY DEVELOPMENT DOCUMENT AND/OR THE USE OR DEVELOPMENT OF THE
PROPERTY OR PROJECT, INCLUDING, WITHOUT LIMITATION, ANY CLAIM BASED ON
CONTRACT, TORT OR STATUTE, SHALL BE SETTLED BY FINAL AND BINDING
ARBITRATION BY THREE (3) ARBITRATORS IN ACCORDANCE WITH THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION THEN IN EFFECT (THE “RULES”). EACH PARTY SHALL, IN ACCORDANCE WITH
THE RULES, NOMINATE ONE (1) ARBITRATOR TO THE ARBITRATIONAL TRIBUNAL AND THE
TWO (2) ARBITRATORS SO APPOINTED SHALL APPOINT THE THIRD ARBITRATOR IN
ACCORDANCE WITH THE RULES, THE THREE (3) ARBITRATORS CONSTITUTING THE
ARBITRATION TRIBUNAL; PROVIDED HOWEVER, IF THE AMOUNT IN CONTROVERSY IS LESS
THAN ONE MILLION DOLLARS ($1,000,000), THE PARTIES WILL APPOINT ONE (1)
ARBITRATOR UNDER THE RULES WHO WILL CONSTITUTE THE ARBITRATION TRIBUNAL. THE
ARBITRATION SHALL BE HELD IN ORANGE COUNTY, CALIFORNIA. REASONABLE DISCOVERY
SHALL BE ALLOWED IN CONNECTION WITH SUCH ARBITRATION. AT THE REQUEST OF A
PARTY, THE ARBITRATION TRIBUNAL MAY ISSUE ORDERS FOR INTERIM RELIEF AS DEEMED
NECESSARY TO SAFEGUARD PROPERTY THAT IS THE SUBJECT OF


33






 


THE ARBITRATION OR IN ORDER TO ACCOMPLISH THE OBJECTIVES OF THIS DECLARATION.
SUCH INTERIM MEASURES MAY ALSO BE SOUGHT FROM JUDICIAL AUTHORITY HAVING
JURISDICTION. THE DECISION OF THE MAJORITY OF THE ARBITRATORS SHALL BE REDUCED
TO WRITING, SHALL BE THE SOLE AND EXCLUSIVE REMEDY BETWEEN THE PARTIES
REGARDING ANY AND ALL SUCH DISPUTES OR DIFFERENCES, AND SHALL BE FINAL AND
BINDING ON ALL PARTIES TO THE ARBITRATION; AND, APPLICATION MAY BE MADE TO ANY
COURT OF COMPETENT JURISDICTION FOR AN ORDER OF ENFORCEMENT AND SHALL BE
ENFORCEABLE IN ANY COURT OF COMPETENT JURISDICTION. THE PARTIES AGREE TO
EXCLUDE ANY RIGHT OF APPLICATION OR APPEAL TO THE COURTS OF ANY JURISDICTION IN
CONNECTION WITH ANY QUESTIONS OF LAW ARISING IN THE COURSE OF ARBITRATION OR
WITH RESPECT TO ANY AWARD MADE, EXCEPT FOR ENFORCEMENT PURPOSES. CONSEQUENTIAL,
PUNITIVE, OR INCIDENTAL OR OTHER SIMILAR DAMAGES SHALL NOT BE ALLOWED.


     IN THE EVENT ANY SUCH ARBITRATION (OR OTHER PROCEEDING) IS BROUGHT TO
ENFORCE OR INTERPRET ANY OF THE COVENANTS, TERMS OR PROVISIONS OF THE AGREEMENT
(INCLUDING THIS DECLARATION), ANY DEVELOPMENT DOCUMENT AND/OR USE OR
DEVELOPMENT OF THE PROPERTY OR PROJECT, THE PREVAILING PARTY IN ANY AND ALL
SUCH ARBITRATION(S) OR OTHER PROCEEDING(S), INCLUDING ANY BANKRUPTCY
PROCEEDINGS, SHALL BE ENTITLED TO RECOVER FROM THE NON-PREVAILING PARTY ALL OF
THE ATTORNEYS’ FEES AND COSTS INCURRED BY SUCH PARTY IN EACH AND EVERY SUCH
ARBITRATION OR OTHER PROCEEDING, INCLUDING ANY AND ALL APPEALS OR PETITIONS
THEREFROM. AS USED IN THE AGREEMENT (INCLUDING THIS DECLARATION), ATTORNEYS’
FEES SHALL BE DEEMED, TO THE EXTENT ALLOWED BY LAW, TO MEAN THE FULL AND ACTUAL
COSTS OF ANY LEGAL SERVICES ACTUALLY PERFORMED IN CONNECTION WITH THE MATTERS
INVOLVED, CALCULATED ON THE BASIS OF THE USUAL FEE CHARGED BY THE ATTORNEYS
PERFORMING SUCH SERVICES, AND SHALL NOT BE LIMITED TO “REASONABLE ATTORNEYS’
FEES” AS DEFINED IN ANY STATUTE OR RULE OF COURT. THE ABOVE APPLIES TO ALL
MATTERS WHICH ARE THE SUBJECT OF THE ARBITRATION PROVIDED FOR HEREIN.


     Section 20. Severability. If any portion of this Declaration is or becomes
illegal, null or void or against the public policy of the State of California,
for any reason, or shall be held by any court of competent jurisdiction to be
illegal, null or void or against the public policy of the State of California,
the remaining portions of this Declaration shall remain in force and effect to
the fullest extent permissible by law and the Declaration, as a whole, shall
then be interpreted in the manner fairest to both Parties taking into
consideration the “bargained for exchange” contemplated by each of them in
executing the Declaration.


     Section 21. Gender and Number. In this Development Declaration (unless the
context requires otherwise), the masculine, feminine and neuter genders and the
singular and the plural include one another.


34






 


     Section 22. Covenants to Run with the Land; Term.


     22.1 The Covered Property shall be held, developed, conveyed,
hypothecated,
encumbered, leased, rented, used and occupied subject to the covenants,
conditions, restrictions,
indemnities, and other limitations set forth in this Development
Declaration (collectively, the
“Restrictions”). The Restrictions are intended and shall be construed
as covenants and
conditions running with, benefitting and binding the Covered Property and
equitable servitudes
upon the Covered Property and every part thereof, and all and each of the
Restrictions shall
benefit, be binding upon, burden and be enforceable by all persons having
or acquiring any right,
title or interest in the Covered Property (during their ownership of such
interest), or any part
thereof, and their successors and assigns.


     22.2 This Development Declaration shall continue in full force and effect
for a term of
sixty (60) years from the date it is recorded in the Office of the County
Recorder, Orange
County, California.


     22.3 Notwithstanding the foregoing, this Development Declaration
shall, upon
recordation in the Office of the County Recorder of Orange County,
California of a notice of
termination executed by Declarant, automatically terminate and be of no
further force or effect as
to any portion of the Covered Property reacquired by Declarant (as to
which Declarant has not
assigned its rights and obligations hereunder to a Successor Declarant),
whether by grant deed,
lot line adjustment or otherwise, but the Restrictions shall continue to
apply as to the remainder
of the Covered Property.


     22.4 Declarant may assign its enforcement rights and/or obligations
hereunder only to
an entity which (a) is a successor-in-interest to the indemnities and
other rights and benefits
provided herein in Declarant’s favor and (b) specifically assumes in
writing such rights and
obligations (“Successor”).


     Section 23. Notices.


     Any notice to be given or other document to be delivered by any Party to
the other or others hereunder, and any payments from Buyer to Nuevo, may be
delivered in person to an officer of any party, or may be delivered by Federal
Express, private commercial delivery or courier service for next business day
delivery, or may be deposited in the United States mail, duly certified or
registered, return receipt requested, with postage prepaid, and addressed to
the party for whom intended, as follows:



	 	 	 	 	 
	 	 	
If to Nuevo:	 	 
	 	 	 	 	Nuevo Energy Company
	 	 	 	 	1021 Main, Suite 2100
	 	 	 	 	Houston, Texas 77002
	 	 	 	 	Attn: David A. Leach
	 	 	 	 	Fax: (713)374-4899
	 	 	 	 	Phone: (713)374-4802
	 	 	 	 	Email: leachd@nuevoenergy.com
	 	 	 	 	 
	 	 	 	 	and



35






 




	 	 	 	 	 
	 	 	 	 	Attn: General Counsel
	 	 	 	 	Fax: (713) 374-4897
	 	 	 	 	Phone: (713) 374-4880
	 	 	 	 	Email: murchib@nuevoenergy.com
	 	 	 	 	 
	 	 	
Copy to:	 	 
	 	 	 	 	 
	 	 	 	 	Nossaman, Guthner, Knox & Elliott, LLP
	 	 	 	 	18101 Von Karman Avenue, Suite 1800
	 	 	 	 	Irvine, California 92612-1047
	 	 	 	 	Attn: William P. Tanner, III
	 	 	 	 	Fax: (949) 833-7878
	 	 	 	 	Phone: (949) 833-7800
	 	 	 	 	Email: wtanner@nossaman.com
	 	 	 	 	 
	 	 	
To Buyer:	 	 
	 	 	 	 	 
	 	 	 	 	Tonner Hills SSP, LLC
	 	 	 	 	603 S. Valencia Avenue
	 	 	 	 	Brea, CA 92823
	 	 	 	 	Attention: Alan Toffoli
	 	 	 	 	Fax: (714) 985-3605
	 	 	 	 	Phone: (714) 792-2504
	 	 	 	 	Attn: Alan Toffoli
	 	 	 	 	Email: alan.toffoli@sheahomes.com
	 	 	 	 	 
	 	 	 	 	and
	 	 	 	 	 
	 	 	 	 	Tonner Hills 680 LLC
	 	 	 	 	603 S. Valencia Avenue
	 	 	 	 	Brea, CA 92823
	 	 	 	 	Attn: Joe Fleischaker
	 	 	 	 	Fax: (714) 223-3526
	 	 	 	 	Phone: (714) 792-2592
	 	 	 	 	Email: joe.fleischaker@sheahomes.com
	 	 	 	 	 
	 	 	
Copy to:	 	 
	 	 	 	 	 
	 	 	 	 	Landmark Law Group, L.L.P.
	 	 	 	 	10350 Santa Monica Boulevard, Suite 295
	 	 	 	 	Los Angeles, CA 90025-5074
	 	 	 	 	Attn: Gulwinder S. Singh
	 	 	 	 	Fax: (310) 300-2310
	 	 	 	 	Phone: (310) 300-2300 Ext. 101
	 	 	 	 	Email: gss@llgllp.com



Notice may also be given by facsimile transmission (“Fax”) to any party at
the respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party


36






 


hereto may from time to time, by written notice to the other, designate a
different address which shall be substituted for the one above specified. If
any notice or other document is sent by mail as aforesaid, the same shall be
deemed served or delivered seventy-two (72) hours after the mailing thereof as
above provided. Notice by any other method shall be deemed served or
delivered upon actual receipt at the address or Fax number listed above.


     Section 24. Effect of Declaration.


     This Development Declaration is made solely for the purposes set forth
herein. Declarant makes no warranties or representations, express or implied,
as to the binding effect or enforceability of all or any portion of this
Development Declaration, or as to the compliance of any of these provisions
with public laws, ordinances and regulations applicable thereto.


     Section 25. Rights of Mortgagees.


     The breach of any Restrictions herein contained shall not defeat,
invalidate nor impair the obligation or priority of any mortgage or deed of
trust now or hereafter executed and constituting a lien upon the Covered
Property or any portion thereof, which is made in good faith and for value;
provided, however, that any party, including the holder or beneficiary of the
mortgage or deed of trust (except for Declarant), which acquires title through
private or judicial foreclosure, trustee’s sale or deed in lieu of foreclosure
(a “Foreclosure-Purchaser”) and all successors and assigns of such
Foreclosure-Purchaser shall take title subject to all of the Restrictions
contained in this Development Declaration. Such Foreclosure-Purchaser shall
not be liable for damages arising from the breach of any Restrictions
performed or which were to have been performed prior to the time such
Foreclosure-Purchaser acquires title to all or any portion of the Covered
Property, and the Foreclosure-Purchaser shall have until six (6) months after
acquisition of title to all or a portion of the Covered Property to correct
any Default hereunder.


     Section 26. Waiver of Jury Trial.


     As set forth in the Agreement, Declarant and Buyer have each acknowledged
that it has had the advice of counsel of its choice with respect to rights to
trial by jury under the constitutions of the United States and the State of
California. Both Declarant and Buyer expressly and knowingly waive and release
all such rights to trial by jury in any action, proceeding or cross or
counterclaim brought by either party against the other on any matters arising
out of or in any way connected with this Development Declaration, Buyer’s use
or development of the Covered Property and/or any claim for injury or damage.


     Section 27. No Agency or Partnership.


     27.1 Buyer and Nuevo expressly acknowledge and agree that they are not joint
venturers, partners, or agents of each other and do not have fiduciary duties
with respect to one another, in any manner whatsoever, in the acquisition,
development or conveyance of the Property and/or Project. Nothing in this
Declaration, nor any communication or other action between the Parties relating
to the Property and/or Project, is intended or shall be construed to create a
joint venture, partnership, agency or fiduciary relationship between Buyer and
Nuevo or their respective owners, regardless of any common identity of
ownership in Nuevo and Buyer.


37






 


     27.2 Except as provided to the contrary elsewhere in the this Declaration,
without limiting the generality of the foregoing subsection 27.1, Nuevo shall
not be liable to any contractor, subcontractor, supplier, laborer, architect,
engineer, consultants, purchaser, or any other entity for services performed or
materials supplied or for any causes of action arising out of or in connection
with the construction, sale or other conveyance of improvements on any of the
Property and/or Project by Buyer; Nuevo shall not be liable for any debts or
claims accruing in favor of any such entities against Buyer or others or
against the Property and/or Project. Buyer is not and shall not be an agent of
Nuevo for any purposes. Nuevo shall not be deemed to be in privity of contract
with any contractor or provider of services at, relating to or in connection
with the Property and/or Project or any purchaser or transferee thereof or any
portion thereof, nor shall any payment of funds directly to a contractor,
subcontractor or provider of services be deemed to create any third party
beneficiary status or recognition of same by Nuevo under any of the this
Declaration. Approvals or consents granted by a Party for any matters covered
under this Declaration shall be construed to be solely for the benefit of the
other Party.


     Section 28. Governmental Approvals.


     28.1 Buyer shall be responsible for the processing of Governmental
Approvals (and
until the full reconveyance of the PAPA TDs, with Seller’s involvement,
assistance and prior
approval of Material Changes, to be given in Seller’s reasonable
discretion; thereafter, Buyer
shall promptly give Seller written notice of any such Material Change).
All such processing with
respect to the Development Areas, shall be continuous so as to effect the
Governmental
Approvals at the earliest possible time. Notwithstanding the above,
Buyer acknowledges and
agrees that (a) Seller’s relationships and “standing” with the City are
very significant elements in
the viability of the Project and the opportunity to procure the
Governmental Approvals therefor,
and that its reasonable decisions regarding the processing of such
Governmental Approvals and
the Governmental Approval Documents will be made taking this into
consideration, and (b) the
method of payment of the Additional Purchase Price involves Seller in
considerable risk, and, by
necessity, therefore, in the timing and substance of such processing.


     28.2 In accordance with Section 28.1 above, the Buyer shall submit all
applications for
Governmental Approvals which involve Material Changes to and coordinate
with Declarant;
such applications must be approved in writing by Declarant, in its
reasonable discretion, prior to
filing with the appropriate Governmental Agency. Declarant shall have a
period of seven (7)
business days from receipt to disapprove, in its reasonable discretion,
any applications provided
by the Buyer. In the event of such disapproval, Declarant shall specify
the reasons therefor and
Buyer shall then revise and resubmit such applications and Declarant shall
again have seven (7)
business days for the approval/disapproval process. Failure to so
disapprove within any time
period described herein shall be deemed approval thereof. Buyer shall
provide Declarant with
copies of all written (and material) communications with the Governmental
Agency processing
such applications.


     28.3 “Material Change” or “material change” shall mean a change to a
Governmental
Approval Document after the date of execution of this
Declaration, which
significantly (a) reduces the chance of obtaining a material Governmental
Approval or (b)
diminishes or dilutes the potential rights or entitlements of the owner of
the Project, and shall


38






 


include, without limitation, a diminution in the number of residential Lots in
the Area Plan, increased costs of, or increased restrictions on, the timing of
development of the Project, and increased requirements for on or off site
Improvements, if such diminution, increases or restrictions will have a
substantial, adverse effect upon the economic viability of the Project.


     Section 29. INTENTIONALLY OMITTED.


     Section 30. Stand Alone Insurance. As a separate and distinct matter, not
covered by the insurance requirements assumed by Buyer and contained elsewhere
in this Declaration, Buyer shall obtain and keep in effect a single premium,
ten-year term, “stand-alone” environmental insurance policy covering the
entirety of the Covered Property (“SA Insurance”) to cover a portion of the
risks described in Sections 10(a)(iv) and 12 hereof having a combined total
limit of Twenty Million Dollars ($20,000,000), with a self-insurance retention
of no greater than Two Hundred Fifty Thousand Dollars ($250,000); and, at
least the following:


          (a) The insurance company is rated at least A- VIII in the latest
Best’s Report;



          (b) Buyer (and its members, lenders, successors in interest to all or a
portion
of the Land and permitted assigns) and Seller (and all the Indemnitees)
are Named Insureds;



          (c) First party clean-up and third party claims, both on-site and
off-site, are
covered on a “claims made” basis, to the extent “occurrence” based
insurance is not available in
the marketplace;



          (d) Personal and bodily injury, property damage, health, nuisance (e.g.,
from
odor) and diminished property value on and off the Land and/or Project are
covered;



          (e) Unknown, pre-existing conditions are covered, including underground
storage tanks;



          (f) No third party claim is necessary to trigger coverage for occurrences
arising from unknown, pre-existing conditions; and, defense and indemnity
is available therefor,
including coverage for the assertions of Governmental Agencies and any
Home Owners’
Association (including internal costs, bonds to release liens and
attachments, appeal bonds, pre
and post judgment interest);



          (g) There is no “retroactive” time limitation on coverage; and



          (h) Cancellation may be effected only to the limited extent of
specific Named Insured non-compliance.



Buyer shall pay the premium and all other amounts necessary for the
procurement and maintenance in effect of such policy. Each of its entities
constituting Buyer and Nuevo shall be named insureds on the SA Insurance.



39









 



Upon discovering any potential claim which
may be covered by the SA Insurance, Buyer shall promptly notify Insurer and
Seller in writing, with a description of the potential claim and circumstances
surrounding its assertion, and shall take all actions required by the SA
Insurance, in accordance with all terms and provisions thereof, to assure full
and complete coverage for such potential claims thereunder.


To the extent any insurance payment under such policy of SA Insurance is
applied to reduce any liability imposed as a result of such a risk (or Buyer’s
indemnity in Section 10), Buyer’s payment obligations pursuant to Sections
10(a)(iv) and/or 12 shall be reduced proportionately; provided however, that
such SA Insurance and/or payment shall not otherwise dilute Buyer’s
obligations under such Sections 10(a)(iv) or 12, or the Indemnities specified
therein.


TO THE EXTENT THE SA INSURANCE HAS ALREADY BEEN PROCURED BY SELLER AND SELLER
HAS DESIGNATED BUYER AS DEVELOPER UNDER THE POLICY PRIOR TO THE IMPOSITION OF
THIS DECLARATION, BUYER SHALL BE RELIEVED OF ITS OBLIGATIONS UNDER THIS
SECTION 30 TO PROCURE THE ORIGINAL POLICY. EXCEPT TO THE EXTENT MODIFIED BY
THIS PARAGRAPH, BUYER’S OBLIGATIONS UNDER THIS SECTION 30 SHALL REMAIN
UNCHANGED AND IN FULL FORCE AND EFFECT.


     Section 31. Further Assurances and Cooperation. Each of the Parties shall
execute and deliver all additional papers, documents and other reasonable
assurances, and shall do all acts and things reasonably necessary in connection
with the performance of its obligations hereunder to carry out the intent of
this Declaration, and shall cooperate with the other Party to ensure a smooth
transition from Seller to Buyer regarding the ownership, possession and use of
the Property and/or Project, including Operator’s use of the Land for Oil
Operations, Seller’s conduct of the Permit Program and completion of the
Restoration Plan, Aera Program and Hover Program (and Buyer’s observation and
monitoring thereof), and Buyer’s use of the Property as property under
development and needing the Governmental Approvals therefor, including the
following (but limited, however, to matters arising out of, relating to or in
connection with the rights and obligations of the Parties under this
Declaration): (a) Buyer shall provide access and make available to Seller and
Operator, during normal business hours, upon reasonable notice, copies of the
Knowledge including all financial and accounting documents and information
relating to Seller’s prior ownership, use and possession of the Property and/or
Project, among other things, in order for Seller and Operator to (i) submit any
reports to or filings with any Governmental Agency (including taxing
authorities), (ii) wind up certain business activities with respect to the
Property and/or Project and (iii) continue their general, corporate operations
in the ordinary course of their business, as well as Seller’s conduct of the
Permit, Aera and Hover Programs and (b) Seller shall provide reasonable
assistance to Buyer in (i) assuming the role of Developer of the Development
Areas and the Project and (ii) enforcing its rights and discharging its
obligations under the Unocal Asset Purchase Agreement, without however, being
required to spend money, participate in any formal controversy including
litigation or arbitration or spend excessive employee or consultant time and
effort in so doing. Additionally, Seller, in the conduct of the Permit Program,
will keep Buyer informed periodically as to milestone/important events, solicit
and consider from time-to-time comments and advice regarding its conduct of the


40






 


Permit Program and provide Buyer the opportunity from time-to-time during
normal business hours to observe its activities with respect to the Permit,
Aera and Hover Programs.


     Section 32. Assumption of Obligations. As security for the proper discharge of
Buyer’s duties and obligations under this Declaration, including without
limitation, those described in Sections, , 9, 10, 11 and 12 of this Declaration Buyer hereby
agrees as follows:


     32.1 Assumption of Obligations/Guaranties. Buyer will obtain for Seller’s
benefit from any transferee entity to which/whom Buyer makes a Transfer hereunder,
respectively (collectively and individually, “Transferee” or “Transferee Entities”), and
deposit into Escrow, if applicable, a written assumption (“Assumption”) of all the duties and
obligations of Buyer under this Declaration including without limitation those written Indemnities and related covenants of
Buyer contained in Sections, 9, 10, 11 and 12 of this Declaration,
in the form specified in Section 32.3, below, and limited only to the extent of the
respective Property interests (or interest in this Declaration) transferred to each entity.


     32.2 Memorandum and/or Restrictions. Seller has recorded this Declaration against
the Property (Development Areas and the Remainder Parcels), covering the
matters in this Section 32, to secure the proper performance hereof and may, in its sole
discretion, make the grant of conveyance to Buyer subject to restrictions and/or CC&Rs in the
Grant Deeds ensuring that all successor owners of all or a portion of the Property, will be
bound by the matters in this Section 32; provided however that any such matters in the Grant Deeds
shall automatically be rendered void insofar, but only insofar, as to that portion of the
Property sold to a member of the Home buying public, community association, property owner association or
Governmental Agency.


     32.3 Further Covenants. Subject only to the matters in the Assumption of Obligations
agreement incorporated below, to ensure the performance by Buyer (and its
successors and assigns to all or a portion of the Property), of its obligations under
this Declaration, any hypothecation or recording of claims against the Property, shall be made
expressly subject to the rights of Seller hereunder. This provision shall be included in the
Grant Deeds and any subsequent deed or conveyancing instrument for any of the Property. The
Assumption of Obligations language to which every Transferee must be, and is hereby
declared to be, bound appears below:


     The undersigned acknowledge and agree that they have received valuable
consideration for executing this Assumption of Obligations and assuming all
the obligations of Buyer under the Declaration (including specifically without
limitation those obligations in Sections 9, 10, 11 and 12 of the Declaration)
as the beneficiary of (a) the further transfer of the Property and (c)
otherwise in connection with the recitals, covenants and promises between
Seller and Buyer in the Declaration, and in exchange therefor, hereby assume,
in addition to and not in lieu of the assumption by Buyer of all its duties
and obligations under this Declaration, all of Buyer’s duties and obligations
under the Declaration; provided, however, that each of


41






 


the undersigned’s potential liability to Seller pursuant to this Assumption of
Obligations shall be limited, to the fair market value of the Property held by
such undersigned entity, except to the extent of any insurance, surety or
other third party proceeds, contributions and/or liability from which they may
benefit relating thereto and which they hereby agree to pursue in each
instance with best efforts on behalf of Seller and for Seller’s benefit.


     Without in any way limiting the effect of the Indemnity Sections in the
Declaration or of any other obligation, liability, responsibility or indemnity
of Buyer under the Declaration, the following shall apply with respect to
this Assumption of Obligations by the undersigned (jointly and severally,
“Undersigned”) regarding the Indemnities of Buyer in favor of Seller against
Losses and Environmental Losses, respectively, contained in Sections 10 and 12
of the Declaration (“Indemnity Sections”):


     (1)  In the event of any mediation, arbitration, reference proceeding,
litigation or any other dispute resolution method, procedure and/or endeavor (“Indemnity
Controversy”) for which defense and indemnity may be claimed by Seller against Buyer, Seller
may demand defense and indemnity against Buyer and/or any or all of the Undersigned,
at Seller’s sole discretion. Upon such demand, Buyer and/or the Undersigned to whom such
demand is made shall immediately tender to Seller defense and indemnity pursuant to the
terms of the Declaration.


     (2)  In any Indemnity Controversy, Buyer and/or any or all of the
Undersigned may make a written request of any trier of fact (“Trier”) therein for a
specific, special finding (“Finding”) that any liability of Seller for which defense and indemnity
applies under the Declaration shall be identified and allocated in whole or in part by
such Trier, in its sole discretion, to the various Property interests (“Allocation”). For
purposes of this Assumption of Obligations, a “Finding” does not occur and is not effective until there
is a final judgment or other final, non-appealable resolution of the dispute concerning the
Allocation.


     (3)  In the event a Finding is made pursuant to this Assumption of
Obligations, the Undersigned owning the various Property interests, to the extent specified
in the Finding, shall have the sole responsibility to Seller, from the date of the Finding
forward, for their portion of the Allocation. In the absence of a Finding or prior to the effectiveness
of a Finding, Buyer and the Undersigned shall be jointly and severally responsible for the full
amount of liability of Seller for which defense and indemnity applies under the Declaration. In
no event shall Buyer or the Undersigned have the right to recover from Seller any defense and/or
indemnity payments made to Seller under this Assumption of Obligations or the Declaration.


     (4)  To the extent any disputes arise between or among Buyer, the
Undersigned, or any of them, regarding the matters described in this Assumption of
Obligations, Buyer and the Undersigned shall resolve such disputes among themselves. Any such
disputes shall not be a matter for which Seller shall be concerned or in which Seller shall be a
party or participant, or have any liability whatsoever.


     Section 33. Unocal Asset Purchase Agreement. Except as described in
Section 3.1.16 thereof, all the rights and privileges, as well as all the
duties and obligations, of every nature and type whatsoever, under, in or
relating to the Unocal Asset Purchase Agreement to the extent they


42






 




relate to the interests acquired hereunder by Buyer, are hereby assigned by
Nuevo to, and assumed by, Buyer.



     Section 34. Assignment of Recorded and Unrecorded Contracts, Agreements,
Easements and Licenses. As of the Close, the matters described in Attachment
4 hereto have been assigned to Buyer and the grant deed to Buyer is subject
thereto.


     Section 35. Payments; Interest. Any amounts which are due and owing to
Nuevo or Buyer pursuant to the various terms of the this Declaration shall be
paid in cash, bank cashier’s check or wire transfer.


     If any amounts are not paid when due, all such amounts shall bear
interest as specified in the particular Section requiring such payment or, if
not so specified, then at the rate of the lesser of ten percent (10%) per annum
or the maximum allowable rate under then existing California law, from the due
date until fully paid.


     Section 36. INTENTIONALLY OMITTED.



     Section 37. Intent of Definitions. The limitations, prohibitions,
restrictions, requirements and obligations of Buyer in this Declaration, when expressed in
respect of, in connection with or in relation to a defined term, shall mean,
include and apply to all or any part or portion of such defined term. The use
of the word “including” shall mean “including without limitation.”


     Section 38.
Assignment. Assumption and Substitution. Effective upon the Close of
Escrow, Buyer hereby assumes the following (collectively, the “Obligations”): (a) all of
Nuevo’s liabilities, duties and obligations, both in its individual
capacity and as original Developer, with respect to the Program as
defined in the Mineral Payment and Performance Agreement made February 28, 2003
by and between Nuevo Energy Company and BlackSand Partners, L.P.
(“Mineral PAPA”) and (b) those certain Nuevo liabilities, duties and
obligations specified below (the “Assumed BlackSand PSA
Obligations”)
pursuant to that certain Purchase and Sale Agreement dated February 28,
2003 between Nuevo and BlackSand Ltd. (“BlackSand PSA”).
Effective upon the Close of Escow, Nuevo hereby (c) assigns to Buyer, to the full extent
assignable without Operator’s consent, all of its rights and benefits,
both in its individual capacity and as original Developer, under the
Mineral PAPA and (d) conveys to Buyer pursuant to the BlackSand PSA, to
the full extent assignable without Operator’s consent, (i) an exclusive
assignment of its right and benefits to the limited extent necessary
for Buyer to properly complete, in a commercially reasonable manner, the
discharge of the Obligations pursuant to the Mineral PAPA and (ii) reserving
to itself the enjoyment of all the benefits, rights and privileges therein, a non-exclusive assignment
of its other rights and benefits to the limited extent of affording Buyer contractual protection by
BalckSand (but only to the extent of the contractual protection enjoyed by
Nuevo) from any Losses (as defined therein) as a result of
Buyer’s performance
in the discharge of such Obligations, and the rights and benefits under Section
3.4, 3.5, 3.7, 5.24, 5.25 and 5.29 therein. To the extent that the
cooperation or participation of


43






 



Declarant is legally required to enable Buyer
to assert rights to seek remedies under the Mineral PAPA, Declarant
shall cooperate with Buyer and reasonably participate, as a party to legal
proceedings or otherwise, at the cost and expense of Buyer who shall
defend, indemnify and hold Declarant harmless form
Losses resulting therefrom. If Operator challenges Buyer’s right to perform the
Program as an assignee of Nuevo, the Parties agree to cooperate in good faith to
resolve this issue. If such efforts do not result in resolution of the
challenge within 90 days, and should either Party in good faith
determine that performance of the Program by Buyer as an independent contractor
resolves such challenge, the Parties agree, at either Party’s request, to execute an agreement
that provides that Buyer shall perform the Program as an independent
contractor. Such agreement shall in all other respects result in the
performance of the duties, obligations, responsibilities of the
Program by Buyer in the manner contemplated
by this Agreement. In such event, the rights duties, liabilities and obligations of Seller and Buyer
under this Agreement shall remain unchanged.


     The
Assumed BlackSand PSA Obligations are contained in: (a) Section 3.6;
(b) Section 3.1.4; (c) Section 3.7. 3; (d) Section 5.4 to the extent that such
actions are required by the Mineral PAPA; (e) Section 5.13; (f) Section 5.17
other than the performance of the Well Abandonment Plan and the dismantling of
two (2) water tanks and the relocation on a temporary basis one (1) water tank
at the East Naranjal Tank Farm; (g) Section 5.24.2; and (h) Section 5.25
other than Seller’s obligation to make a Contingent Payment.


     Buyer expressly assumes and obligates itself to exercise all rights and
benefits and to undertake, discharge and perform on a timely basis all
Obligations in accordance with the terms and conditions set out in the Mineral
PAPA and BlackSand PSA. For all purposes, Buyer agrees to stand in full
substitution of Nuevo, both as Nuevo individually and as the original
Developer in the Mineral PAPA, in performance of the Obligations whether such
right, benefit, duty, obligation or liability arose before or after the
Effective Date.


     In connection herewith, and without in any way limiting the effect of the
Indemnities in Sections 3.7 and 3.9 of the Agreement and Sections 10 and 12
herein, or of any other obligation, liability or responsibility of Buyer under
the Agreement or hereunder, Buyer shall provide Nuevo with a guaranty of
performance and indemnity by Shea Homes Limited Partnership and Standard
Pacific Corp., affiliates of Buyer. Such guaranty shall be in the form of
Exhibit “P” to the Agreement.


     Section 39. Oil Assets/Oil Operations. Buyer acknowledges that Seller has
informed Buyer that Seller has divested itself of the Mineral Estate to
BlackSand Partners, L.P., the Operator, and that Buyer must conduct its
activities subject to (a) the Operator Development Declaration and other
Operator Development Documents executed pursuant to the BlackSand PSA and the
Operator transaction described therein, as well as to (b) Seller’s agreements
with Aera, pursuant to the Aera Agreement and (c) Seller’s agreements with
Hover in the Hover Agreement.


44






 


     Section 40. Resolution of Indemnity Obligations. The following shall
apply to Buyer and all its successors and assigns to any portion of the
Covered Property, with respect to the Indemnity obligations from Buyer in
favor of Seller regarding Losses and Environmental Losses, respectively, more
fully described in Sections 10 and 12 hereof (“Indemnity Sections”).


          (a) In the event of any mediation, arbitration, reference proceeding,
litigation or any other dispute resolution method, procedure and/or endeavor
(“Indemnity Controversy”) for which defense and indemnity may be claimed by Seller against Buyer,
Seller may demand defense and indemnity against Buyer, Shea and/or TH 680 jointly and
severally, at Seller’s sole discretion. Upon such demand, the entity to whom such demand is made
shall immediately tender to Seller defense and indemnity pursuant to the terms of this
Declaration.



          (b) In any Indemnity Controversy, Buyer, Shea and/or TH 680 may make a
written request of any trier of fact (“Trier”) therein for a specific,
special finding (“Finding”) that any liability of Seller for which defense and indemnity applies under this
Declaration shall be identified and allocated in whole or in part by such Trier, in its sole
discretion, to the various Property interests owned by Buyer, Shea and/or TH 680 (“Allocation”). For
purposes hereof, a “Finding” does not occur and is not effective until there is a final
judgment or other final, non- appealable resolution of the dispute concerning the Allocation.



          (c) In the event a Finding is made pursuant to this Section 40, the
entities owning the various Property interests, to the extent specified in the
Finding, shall have the sole responsibility to Seller, from the date of the Finding forward, for their
portion of the Allocation. In the absence of a Finding or prior to the effectiveness of a Finding,
Buyer, Shea and/or TH 680 shall be jointly and severally responsible for the full amount of
liability of Seller for which defense and indemnity applies hereunder. In no event shall Buyer, Shea
and/or TH 680 have the right to recover from Seller any defense and/or indemnity payments made to
Seller under this Section 40.



          (d) To the extent any disputes arise between or among Buyer, Shea and/or
TH 680 regarding the matters described in this Section 40, Buyer, Shea
and/or TH 680 shall resolve such disputes among themselves. Any such disputes shall not be a
matter for which Seller shall be concerned or in which Seller shall be a party or
participant, or have any liability whatsoever.



     Section 41. Completion of Program Obligations. Upon completion of any of
the Programs by Nuevo and Developer, and Final Acceptance thereof, the
relevant sections pertaining to that Program shall be of no further force and
effect in this Declaration. Within ten (10) business days of Developer’s
written request, Declearant shall execute and deliver to Developer a
recordable Amendment to this Declaration confirming that such Program is
completed and deleting those sections pertaining to that Program from this
Declaration.


     Section 42. Estoppel Certificate. Within ten (10) business days of a
commercially reasonable, written request by Developer, Declarant shall issue
an estoppel certificate confirming: (a) if true, that there are no Defaults
under this Declaration or if not true specifying in reasonable detail the
nature of such Defaults, (b) the extent to which any of the Programs have been
completed, (c) such other items as Developer may reasonably request.


45






 



     Section
43. No Limitation. Nothing in this Declaration is intended to limit or
otherwise modify or amend the rights, privileges, duties and/or obligations of the Parties to and
from each other or to and from third parties that arise pursuant to
other documents or instruments between them.


     IN WITNESS WHEREOF, Declarant has executed this instrument the day and
year first hereinabove written.



	 	 	 
	 	
NUEVO ENERGY COMPANY, a Delaware

corporation
	 	 	 
	 	
By:	 
	 	 	


	 	
Title:	 
	 	 	


	 	
By:	 
	 	 	


	 	
Title:	 
	 	 	







	 	 	 
	State of California	 	)
	 	 	)
	County of Orange	 	)



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


     WITNESS my hand and official seal.


     Signature
____________________


46






 


DEVELOPMENT DECLARATION



ATTACHMENT “1”



LEGAL DESCRIPTION OF COVERED PROPERTY



(All 810 Acres)



 






 



LEGAL DESCRIPTION OF COVERED PROPERTY



THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE,
AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, AND RECORD OF SURVEY
FILED IN BOOK 12 PAGE 40, RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133, PAGES
41 THROUGH 46 INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK 187,
PAGES 02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A DEED, BILL
OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:


PARCEL 1



BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE NORTHEAST
CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO THE SOUTHEAST
CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE PATENT BOUNDARY OF
SAID RANCHO RINCON DE LA BREA, NORTH 84° WEST 107.51 CHAINS TO A SAND STONE
MARKED R. B. IN MOUND WITH PITS; THENCE ALONG SAID PATENT BOUNDARY NORTH 57°
42' WEST 43.67 CHAINS TO A WHITE POST 4 INCHES SQUARE IN MOUND OF STONE MARKED
S. J. C. S. A. AT INTERSECTION OF THE PATENT LINES OF SAID RANCHOS SAN JUAN
CAJON DE SANTA ANA AND RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF SAID
RANCHO SAN JUAN CAJON DE SANTA ANA, NORTH 76° 25' WEST 62.67 CHAINS TO A 2'' ×
4'' POST MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 58.96 CHAINS
TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 89° EAST 20.00
CHAINS TO A 4'' × 4'' POST IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 20.00
CHAINS TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 88° 39'
EAST 55.48 CHAINS TO A 2'' × 4'' POST MARKED 20 IN MOUND WITH PITS’; THENCE SOUTH
0° 30' EAST 20.00 CHAINS TO A 2'' × 4'' POST IN MOUND WITH PITS; THENCE NORTH 89°
45'' EAST 134.63 CHAINS TO A 2'' × 4'' POST MARKED 40.10 IN MOUND WITH PITS UPON
THE EASTERN BOUNDARY OF SAID RANCHO SAN JUAN CAJON DE SANTA ANA; THENCE ALONG
SAME NORTH 4° WEST 47.51 CHAINS TO THE PLACE OF BEGINNING.


EXCEPTING THEREFROM THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.


ALSO EXCEPTING THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED BOUNDARY
LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28° 30' EAST FROM THE WESTERN
TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN THE UNION OIL COMPANY
OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY, RECORDED JUNE 10, 1905 IN BOOK
120, PAGE 223 OF DEEDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO THE METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK


Page 1 of 4



 






 





1051, PAGE 301 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER, DESCRIBED AS FOLLOWS:



	 	 	BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY
UNION OIL COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE
EASTERLY BOUNDARY OF THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION
OIL COMPANY OF CALIFORNIA TO GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899,
RECORDED JUNE 20, 1899 IN BOOK 44, PAGE 79 OF DEEDS, WHICH POINT OF
BEGINNING IS THE POINT OF INTERSECTION OF THE AFORESAID WESTERLY BOUNDARY
WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF CENTRAL AVENUE AS
THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET AND BREA CANYON
ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 73° 32' 24''
WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF SAID CENTRAL AVENUE
AT SAID POINT OF INTERSECTION (ASSUMED AND TAKEN TO BEAR NORTH 15° 11'
16'' EAST), A DISTANCE OF 839.60 FEET TO THE TRUE POINT OF BEGINNING;
THENCE NORTH 0° 10' 11'' EAST A DISTANCE OF 1250 FEET; THENCE SOUTH 89°
49' 49'' EAST A DISTANCE OF 500 FEET; THENCE SOUTH 65° 23' 11'' EAST A
DISTANCE OF 604.15 FEET; THENCE SOUTH 0° 10' 11'' WEST A DISTANCE OF 1000
FEET; THENCE NORTH 89° 49' 49'' WEST A DISTANCE OF
1050 FEET TO THE TRUE POINT OF BEGINNING.



ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE
OFFICE OF SAID COUNTY RECORDER DESCRIBED AS FOLLOWS:



	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED
FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2,
1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10' 50'' WEST
ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND,
SAID POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT
11B; THENCE NORTH 9° 48' 11'' WEST 529.60 FEET TO A 2'' × 2'' STAKE AND THE
TRUE POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85° 48' 16''
WEST, 380.00 FEET TO A 2'' × 2'' STAKE; THENCE NORTH 4° 11' 44'' EAST
1750.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 85° 48' 16'' EAST 380.00
FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 4° 11' 44'' WEST 1750.00 FEET TO A
2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING.



ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 647 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


Page 2 of 4



 






 




ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCEL 1 OF THE DEED TO THE
CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM PARCELS A6471-4, A6471-5, A6471-6 AND A6471-7 OF THAT
CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE NO. 156220, A
CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29, 1970 IN BOOK 9417, PAGE 364
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-243,
FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE
OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED ROAD, 80.00
FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID PARCELS 1 AND 2
ON THE EAST, AND BOUND NORTHEASTERLY BY THE NORTHEASTERLY LINE OF SAID PARCEL
MAP NO. 86-243, AND BOUND SOUTHERLY BY THE CENTERLINE OF LAMBERT ROAD AS SHOWN
ON SAID PARCEL MAP NO. 86-243.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF PARCEL
MAP NO. 83-1179, AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1 THROUGH 4
INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12562, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF MISCELLANEOUS MAPS,
IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12563, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE DEED TO THE CITY OF BREA
RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF A COUNTY OF
ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED AUGUST 13, 2001 AS
INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.


PARCEL 2



PARCEL 1 OF A COUNTY OF ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054,
RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS,
IN THE OFFICE OF SAID COUNTY RECORDER.


EXCEPTING THEREFROM THAT PORTION CONVEYED TO BREA-OLINDA UNIFIED SCHOOL
DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.


Page 3 of 4




 









 






ALSO EXCEPTING THEREFROM THAT PORTION
CONVEYED TO THE COUNTY OF ORANGE BY GRANT DEED RECORDED JUNE 4, 2003 AS
INSTRUMENT NO. 2003000648901 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID
COUNTY RECORDER.




PARCEL 3




THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED RECORDED JUNE 10, 1957 IN
BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER
DESCRIBED AS FOLLOWS:





BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED
FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2,
1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89°
10' 50" WEST
ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND,
SAID POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT
11B; THENCE NORTH 9° 48' 11" WEST 529.60 FEET TO A
2" × 2" STAKE AND THE
TRUE POINT OP BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85°
48' 16"
WEST, 380.00 FEET TO A 2" × 2" STAKE; THENCE NORTH 4° 11' 44" EAST
1750.00 FEET TO A 2" × 2" STAKE; THENCE SOUTH 85° 48' 16" EAST 380.00
FEET TO A 2" × 2" STAKE; THENCE SOUTH 4° 11' 44" WEST 1750.00 FEET TO A
2" × 2" STAKE AND THE TRUE POINT OF BEGINNING.



THE ABOVE DESCRIPTION WAS COMPILED FROM INFORMATION SUPPLIED BY FIRST
AMERICAN TITLE COMPANY PRELIMINARY REPORT NO. 2033661, DATED JULY 16, 2003.




EXHIBIT “ ‘Al’
SITE DEPICTION”, IS FOR INFORMATIONAL PURPOSES ONLY.




SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.




	 	 	 
	

	 	PREPARED BY: THE KEITH COMPANIES

UNDER THE DIRECTION OF:



KATHLEEN SUSAN TETREAULT P.L.S. 7297

MY LICENSE EXPIRES 12/31/2004


August 20, 2003

JN: 13207.00







Page 4 of 4









 











 









 








DEVELOPMENT DECLARATION




ATTACHMENT “2”




(Development Area)




 









 








LEGAL DESCRIPTION




THOSE PORTIONS OF TRACT NO. 16178, IN THE UNINCORPORATED TERRITORY OF THE COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK _____, PAGES ___
THROUGH ___ INCLUSIVE OF MISCELLANEOUS MAP, IN THE OFFICE OF THE COUNTY RECORDER,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:




LOTS 1 THROUGH 8, 10 AND 20, TOGETHER WITH LETTERED LOTS A, B, C, AND D OF SAID
TRACT NO. 16178




CONTAINING: 210.149 ACRES, MORE OR LESS




ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART
HEREOF.




SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.




	 	 	 
	

	 	PREPARED BY OR

UNDER THE DIRECTION OF:



KATHLEEN SUSAN TETREAULT, P.L.S. 7297

MY LICENSE EXPIRES 12/31/2004


December 4, 2003

JN: 13207.00.000







Page 1 of 1









 











 









 








DEVELOPMENT DECLARATION




ATTACHMENT “3”




(Remainder Parcels)




 









 








LEGAL DESCRIPTION




THOSE PORTIONS OF SECTION 1, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND THAT PORTION
OF SECTION 7, TOWNSHIP 3 SOUTH, RANGE 9 WEST, SAN BERNARDINO MERIDIAN, AS PER
MAP FILED IN BOOK 51, PAGE 7 OF RECORDS OF SURVEY, PORTIONS OF TRACT NO.
16178, AS SHOWN ON A
MAP FILED IN BOOK ____, PAGES ___ THROUGH ____, INCLUSIVE OF MISCELLANEOUS MAPS, IN
CITY OF BREA AND THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE, STATE
OF CALIFORNIA, BOTH IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:




LOT 9 OF SAID TRACT NO. 16178,




TOGETHER WITH LOTS 11 THROUGH 19 INCLUSIVE OF SAID TRACT NO. 16178,




ALSO TOGETHER WITH LOT 21 OF SAID TRACT NO. 16178,




ALSO TOGETHER WITH PARCEL 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:





THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY
DESCRIBED AS FOLLOWS:




BEGINNING AT THE SOUTHWESTERLY
CORNER OF SAID LOT 11;




THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID LOT 11 NORTH 89°24'21"
EAST 495.67 FEET TO THE SOUTHWESTERLY BOUNDARY OF A GRANT DEED TO
METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK
8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER;




THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY BOUNDARY SOUTH
28°12'22" EAST 338.56 FEET TO THE NORTHERLY BOUNDARY OF TRACT NO.
12562 AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY
RECORDER;




THENCE WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24'21" WEST
659.12 FEET TO THE EASTERLY BOUNDARY OF TRACT NO. 9532 AS SHOWN ON
A MAP FILED IN BOOK 454, PAGES 25 THROUGH 28 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;




THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY NORTH 00°39'09" EAST
300.07 FEET TO THE POINT OF BEGINNING.




CONTAINING: 3.977 ACRES, MORE OR LESS



ALSO TOGETHER WITH PARCEL 2 MORE PARTICULARLY DESCRIBED AS FOLLOWS:





THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 11, SAID CORNER ALSO
BEING ON THE WESTERLY BOUNDARY OF PARCEL A6471-4, AS CONVEYED BY A
FINAL ORDER OF CONDEMNATION RECORDED SEPTEMBER 29, 1970, IN BOOK
9417, PAGE 364 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY;




THENCE SOUTHERLY ALONG SAID WESTERLY BOUNDARY SOUTH 10°52'43" WEST
306.11 FEET NORTHERLY BOUNDARY OF TRACT NO. 12563 AS SHOWN ON A MAP
FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;




THENCE WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24'21" WEST
890.93 FEET TO THE EASTERLY BOUNDARY OF A GRANT DEED TO
METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK
8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER;



Page 1 of 2




 









 









THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY THE FOLLOWING
COURSES:




NORTH 23°43'24" WEST 110.38 FEET TO THE BEGINNING OF A
TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 100.00
FEET;




NORTHERLY ALONG SAID CURVE 20.51 FEET THROUGH A CENTRAL ANGLE
OF 11°45'15";




NORTH 11°58'09" WEST 182.51 FEET TO THE SOUTHWEST CORNER OF
SAID LOT 12;




THENCE LEAVING SAID EASTERLY BOUNDARY ALONG THE SOUTHERLY BOUNDARY
OF LOTS 12, “B” AND 11 OF SAID TRACT NO. 16178, NORTH 89°24'21"
EAST 1037.25 FEET TO THE POINT OF BEGINNING.



CONTAINING: 6.694 ACRES, MORE OR LESS




ALSO TOGETHER WITH PARCEL 3 MORE PARTICULARLY DESCRIBED AS
FOLLOWS:





BEING THAT PORTION OF SAID SECTION 7 BOUND AS
FOLLOWS:




NORTHERLY BY THE SOUTHERLY BOUNDARY OF SAID
LOT 13.




EASTERLY BY THE WESTERLY BOUNDARY OF
SAID LOT 13.




SOUTHERLY BY THAT CERTAIN COURSE ALONG THE NORTHERLY BOUNDARY LINE
OF TRACT NO. 9577 AS PER MAP FILED IN BOOK 7438 AT PAGES 4 THROUGH
12, INCLUSIVE OF MAPS, IN THE OFFICE OF SAID COUNTY RECORDER, SAID
COURSE SHOWN AS BEING (N 89°47'11"W 200.21') ON LAST SAID MAP.




WESTERLY BY THAT CERTAIN COURSE ALONG THE EASTERLY BOUNDARY LINE
OF LAST SAID TRACT 9577, SHOWN AS BEING (N 00°12'49"E 250.00') ON
LAST SAID MAP.



PARCEL 3 ALSO BEING DESCRIBED AS “EXCEPTION A” TO “PROPERTY PARCEL FOUR” IN A
CORPORATION GRANT DEED TO STRATHAVEN ESTATES RECORDED MARCH 15, 1966 IN BOOK
7868, PAGE 323 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER




CONTAINING: 1.148 ACRES, MORE OR LESS




ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE
A PART HEREOF.




SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.




	 	 	 
	

	 	PREPARED BY OR UNDER THE DIRECTION OF:



KATHLEEN SUSAN TETREAULT, P.L.S. 7297 

MY LICENSE EXPIRES 12/31/2004


December 04, 2003

JN: 13207.00.000







Page 2 of 2




 









 













 









 













 









 















 









 








DEVELOPMENT DECLARATION




ATTACHMENT “4”




(Recorded and Unrecorded Contracts)





 









 








     List of Unrecorded Contracts, Agreements, Easements and Licenses



Contracts




     (1) The Commercial Lease and Agreement between Nuevo Energy Company, as
Lessor, and Brea Green Recycling, Inc., as Lessee,-dated February 1, 1997;



     (2) The Letter Agreement between Haynes Apiaries and Union Oil Company of
California dated December 29, 1992, as amended;



     (3) The Easement Agreement for Storm Drain Improvement between Nuevo
Energy
Company and Brea Olinda Venture L. L. C. dated November 3, 2000,



     (4) Asset Purchase Agreement dated February 16, 1996 by and among Union
Oil
Company of California, Union California Pipeline Company and Nuevo Energy
Company, to the
extent previously described in the Agreement, INSOFAR AND ONLY INSOFAR AS
SAID
ASSET PURCHASE AGREEMENT PERTAINS TO THE LAND, AND NOT THE OIL
ASSETS UNDERLYING THE LAND;



     (5) Acquisition and Settlement Agreement entered into as of July 23, 2002,
by and
between Union Oil Company of California and Nuevo, together with all
subsequent agreements
required thereunder, insofar as such Acquisition and Settlement Agreement
pertains to the Land;
and



     (6) Acquisition Agreement entered into July 29, 2002, by and between Union
Oil
Company of California and Nuevo, together with all subsequent agreements
required thereunder,
insofar as such Acquisition Agreement pertains to the Land.



Additional Contracts, Licenses, Easements and Agreements





	1.	 	Memorandum of Understanding between Nuevo, County of Orange and City of
Brea
dated December 10, 2002.
	 
	2.	 	Impact Mitigation Agreement between Brea Olinda Unified School District
and Nuevo
dated as of October 28, 2002.
	 
	3.	 	Oil Accommodation and Surface Development Agreement between Nuevo and
Aera
Energy LLC (“Aera”) dated September 9, 2003, to the extent described in
the Agreement
at Section 5.36.
	 
	4.	 	Utility Easement between Nuevo and Aera dated September 9, 2003, which
shall be
recorded by Aera in its sole discretion, subject to the provisions of
Section 5.36 in the
Agreement.




Page 1 of 3









 












	5.	 	Land Development License Agreement (Aera to Nuevo) and Memorandum of
Land
Development License Agreement between Nuevo and Aera dated September 9,
2003.
(The Memorandum shall be recorded by Nuevo in its sole discretion.)
	 
	6.	 	Land Development License Agreement (Nuevo to Aera) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9,
2003.
(The Memorandum shall be recorded in Aera’s sole discretion.)
	 
	7.	 	Letter Agreement Concerning License Rights executed by Nuevo, Aera and
Blacksand
Energy Partners, L.P. (“Blacksand”) dated September 9, 2003.
	 
	8.	 	Land Development License Agreement between Nuevo, Aera and Blacksand
dated
September 9, 2003 and Memorandum to Land Development License Agreement
between
Nuevo and Aera dated September 9, 2003, which Memorandum shall be
recorded in
Aera’s sole discretion.
	 
	9.	 	License Agreement between Nuevo and Aera dated September 9, 2003.
	 
	10.	 	License Agreement between Nuevo and W B Scott Investment Company dated
April 7,
1925.
	 
	11.	 	Consent Agreement between Nuevo and Shell Oil Company dated July 10, 1951.
	 
	12.	 	Agreement between Nuevo and General Petroleum dated February 17, 1939.
	 
	13.	 	Permit between Nuevo and Orange County Flood Control District dated August
10, 1962.
	 
	14.	 	Amended Easement between Nuevo and Secretary of the Army dated July 20,
1994.
	 
	15.	 	Water Line Agreement between Union Oil Company of California and
Thompson
Drilling Company dated March 29, 1988, as amended.
	 
	16.	 	Brea Canon Oil Company to General Petroleum Corporation dated May 1921.
	 
	17.	 	Master Services Agreement dated June 17, 2003 by and between
Nuevo Energy
Company, as Client and Tetra Tech, Inc., as Contractor (Technical
Support for
Remediation Services).





Contracts Relating to Entitlement Efforts at Tonner Hills





	1.	 	Letter Agreements dated March 19, 2001 and October 1, 2002, by and
between Deborah
Linn Associates and Nuevo.
	 
	2.	 	Contract dated February 8, 2001, by and between Culbertson, Adams &
Associates and
Nuevo, as amended by letter dated July 16, 2002.
	 
	3.	 	Proposal dated June 18, 2002, from Earth Consultants International to Nuevo.




Page 2 of 3









 












	4.	 	Professional Service Agreement dated April 17, 2001, by and
between The Keith
Companies, Inc. and Nuevo.
	 
	5.	 	Professional Services Agreement dated June 15, 1998, by and
between QST
Environmental, Inc. and Nuevo, as amended February 27, 2002.





Contracts Relating to Revegetation Efforts at Tonner Hills





	1.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company,
as Client and Nature’s Image, Inc., as Contractor (82 Acre Revegetation).
	 
	2.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company,
as Client and Nature’s Image, Inc., as Contractor (14 Acre Revegetation).
	 
	3.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company,
as Client and Nature’s Image, Inc., as Contractor (20 Acre Revegetation).






Page 3 of 3









 










Revised 11/22/03




     Certain Non-Exclusive Rights-of-Way, Contracts and License
Agreements



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Date	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Recording	 	 	 	Schedule 1.1 (c)	 	Green Map
	File Number
	 	Document Type
	 	Dated
	 	Information
	 	Grantor
	 	Order #
	 	#’s

	 	57534	 	 	ASSIGN BILL	 	 	  5/12/71	 	 	 	5/13/75	 	 	Waste Water
	 	 	119	 	 	 	504	 
	 	 	 	 	OF SALE	 	 	 	 	 	11410/1929 OR	 	Disposal Company
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	57862.2	 	 	Easement Agree	 	 	 	 	 	 	8/7/89	 	 	Kraemer Imperial
	 	 	130	 	 	 	507	 
	 	 	 	 	 	 	 	 	 	 	 	 	60/368 OR	 	Associates to
UNOCAL
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	65186	 	 	ROW	 	 	10/14/96	 	 	12/18/1996 Doc.	 	UNOCAL to
	 	 	A	 	 	 	506	 
	 	 	 	 	 	 	 	 	 	 	 	 	No. 19960637286	 	NUEVO
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	55701	 	 	Deed	 	 	 	 	 	 	6/10/1957 3936/314 OR	 	 	UNOCAL
	 	 	88	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	57534.1	 	 	QC	 	 	 	 	 	 	8/19/93	 	 	UNOCAL
	 	 	120	 	 	 	504.1	 
	 	 	 	 	 	 	 	 	 	 	 	 	93/0558983 DOC








     (1) That certain “Corridor Easement” described in Item C and that
certain “Street
Easement” described in Item D in that certain Grant Deed dated October
3, 2001 by and between
Nuevo and Brea Walden, LLC, recorded October 9, 2001 as Instrument No.
20010710856 in the
Official Records of Orange County, California.



     (2) Waste Water Line Agreements:



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Waste	 	 	 	 	 	 	 	 
	 	 	 	 	Water	 	 	 	 	 	 	 	 
	 	 	 	 	Co.	 	 	 	 	 	 	 	 
	 	 	 	 	File	 	 	 	Document	 	 	 	 
	Dated
	 	Recorded
	 	No.
	 	Book/Page
	 	Number
	 	Doc. Type
	 	Grantor

	  5/1/1974

	 	11/5/1974
	 	 	 	11280/1845
	 	3078
	 	Assign &
Bill of Sale
	 	Waste

Water

Disposal

Company
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	10/1/1995

	 	 4/10/1996
	 	 	 	 	 	Recorder No.
19960175928
	 	Deed & Bill
of Sale and
Assign
	 	Unocal
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	11/2/1955

	 	  3/8/1956
	 	U-11
	 	 3430/504
	 	Unocal File No.
61987.3-
Recorder No.
35165
	 	ROW
	 	Unocal







Attachment 1 to Non-Exclusive Assignment of

Contracts and Bill of Sale

Page 1 of 2




 









 






Revised 11/22/03




	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Waste	 	 	 	 	 	 	 	 
	 	 	 	 	Water	 	 	 	 	 	 	 	 
	 	 	 	 	Co.	 	 	 	 	 	 	 	 
	 	 	 	 	File	 	 	 	Document	 	 	 	 
	Dated
	 	Recorded
	 	No.
	 	Book/Page
	 	Number
	 	Doc. Type
	 	Grantor

	4/25/1956

	 	5/1/1956
	 	 	 	3493/528
	 	Unocal File No.
61987.47
	 	Q.C. Deed
	 	Waste

Water

Disposal

Company
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	10/15/1996

	 	 	 	 	 	 	 	Unocal File No.
65186
	 	ROW
	 	Unocal
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	4/2/1971

	 	No
	 	U-13
	 	 	 	Unocal File No.
68869.3
	 	ROW
	 	Unocal
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	5/10/1928

	 	No
	 	U-14
	 	 	 	 	 	ROW
	 	West Coast
Oil Co.
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	8/1/1978

	 	 	 	 	 	 	 	Unocal File No.

57635 – ROW
Green

Map No.
633
	 	ROW
	 	E.H.
Associates







Attachment 1 to Non-Exclusive Assignment of

Contracts and Bill of Sale

Page 2 of 2




 









 








List of Recorded Rights of Way and Contracts




     Easements, Licenses, Rights-of-Way, etc.



	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 		 	Schedule 1.1(c)	 	Green Map
	File Number
	 	Document Type
	 	Dated
	 	Information
	 	Grantor
	 	Order #
	 	#’s

	 	 	ROW
	 	4/8/63
	 	4/19/63

6515/482
	 	Pacific Lighting

Gas Supply Co.
	 	7
	 	N/A

(31.7)
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ROW
	 	2/13/65
	 	2/23/65

7422/249
	 	Pacific Lighting

Gas Supply Co.
	 	8
	 	317
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Easement
	 	1/15/51
	 	3/15/51

2158/495
	 	UNOCAL	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Easement
	 	8/23/88
	 	5/9/89

89-243784
	 	UNOCAL	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	502
	 	ROW
	 	2/22/08
	 	39795
	 	Industrial Oil CO.
	 	5
	 	601
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	5254
	 	ROW
	 	 	 	5/17/2001

58/365 Deeds
	 	Brea Canon Oil CO.
	 	22
	 	602
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	5254A
	 	ROW
	 	 	 	4/28/1930

382/44 OR
	 	Brea Canon Oil CO.
	 	23
	 	602
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	52980.1
	 	ROW
	 	 	 	4/28/1955

3047/183 OR
	 	W B Scott

Investment

Company
	 	44
	 	612
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755
	 	Easement
	 	 	 	9/27/43

1215/34 OR
	 	Anaheim Union

Water Company
	 	52	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755.2
	 	Mod.
	 	 	 	6/7/49

1855/8 OR
	 	Anaheim Union

Water Company
	 	53	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755.3
	 	Mod.
	 	 	 	9/23/66

8057/221 OR
	 	Anaheim Union

Water Company
	 	54	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755.4
	 	Easement
	 	 	 	1/7/71

9512/924 OR
	 	State of California
	 	55	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755.5
	 	Easement
	 	 	 	11/18/71

9892/217 OR
	 	State of California
	 	56	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755.7
	 	ROW
	 	 	 	9/26/72

10343/735 OR
	 	Anaheim Union

Water Company
	 	58	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	53755.8
	 	Assignment
	 	 	 	11/29/72

10465/69 OR
	 	Continental

Mobile Housing,

Inc.
	 	59	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	54507
	 	ROW
	 	 	 	1/23/11

195/212 Deeds
	 	Pacific Electric

Land C
	 	76	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	57241
	 	Easement
	 	 	 	9/30/70

451/102 OR
	 	State of California
	 	112
	 	630
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	57595
	 	ROW
	 	 	 	3/16/77

12106/802 OR
	 	Moreland Develop

C
	 	123	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	57595.1
	 	ROW
	 	 	 	6/8/77

12233/501 OR
	 	Moreland Develop

C
	 	124	 	 







Page 1 of 5









 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Date	 	 	 	 	 	 
	 	 	 	 	 	 	Recording	 		 	Schedule 1.1(c)	 	Green Map
	File Number
	 	Document Type
	 	Dated
	 	Information
	 	Grantor
	 	Order #
	 	#’s

	57633.1
	 	ROW
	 	 	 	7/24/78

1269/1868 OR
	 	IPS, A General

Partnshp
	 	125	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	57667
	 	ROW
	 	 	 	12/14/79

13437/789 OR
	 	Moreland Develop

C
	 	126	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	57848
	 	Grant of

Easement
	 	 	 	11/24/86

86/619178 OR
	 	Fairway

Associates
	 	129	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	57981
	 	ROW
	 	 	 	11/2/89

80-59276 DOC
	 	Sanitation, Inc.
	 	136
	 	500
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	58049
	 	ROW
	 	 	 	1/25/93

93-054367 DOC
	 	Sanitation, Inc
	 	137
	 	500
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	62528
	 	 	 	 	 	6/23/54

2755/502 OR
	 	UNOCAL
	 	140	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7070.35
	 	Deed
	 	 	 	5/21/58

4291/396 OR
	 	UNOCAL
	 	159	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7070.44
	 	ROW
	 	 	 	1/17/64

6886/922 OR
	 	UNOCAL
	 	160	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7176.19
	 	Deed
	 	 	 	12/28/73

11044/678 OR
	 	UNOCAL
	 	168	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	7176.2
	 	Deed
	 	 	 	11/15/47

1599/131 OR
	 	UNOCAL
	 	169	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	ROW
	 	 	 	5-15-97

Document No.

19970226200
	 	UNOCAL
	 	A
	 	666
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Deed
	 	8/9/98
	 	8-14-98 1998-

0533265
	 	UNOCAL
	 	A
	 	736
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	19990774980
	 	Easement &

Agreement
	 	 	 	11/5/1999 Doc.

No. 19990774980
	 	Unocal and Nuevo
	 	A
	 	402







Contracts/Agreements




     (1) The Indenture, as amended, by and between Union Oil Company of
California
and Columbia Oil Producing Company dated February 26, 1901.



     (2) Agreement Between Adjacent Landowners dated effective as of October
9, 2001
by and between Nuevo and Brea Walden, LLC, to the extent previously
described in the
Agreement at Section 5.37, said Agreement Between Adjacent Landowners
being filed of record
October 9, 2001, Instrument No. 20010710857 in the official records of
Orange County,
California.



     (3) Pipeline Easement Agreement dated September 13, 2002 by and between
Union
Oil of California and Nuevo Energy Company, said Memorandum of Pipeline
Easement being
filed of record December 6, 2002, Instrument No. 2002001104088 in the
official records of
Orange County, California.



Page 2 of 5









 





     (4) Development Agreement dated December 4, 2002, between Nuevo and
County of Orange, said Development Agreement being filed of record February
14, 2003, Instrument No. 2003000171873 in the official records of Orange
County, California.



Additional Easements




	 	 	 	 	 	 	 
	Date
	 	Grantor
	 	Grantee
	 	Rec. Bk./Pg.

	12/14/1896

	 	The Stearns Ranchos

Company
	 	Union Oil Company of California
	 	7/10/97

30/11
	 
	 	 	 	 	 	 
	2/21/1928

	 	Brea Canon Oil Company
	 	Waste Water Disposal Company
	 	2/24/28

137/139
	 
	 	 	 	 	 	 
	8/11/1986

	 	City of Brea (County of
Orange)
	 	Union Oil Company of California
	 	8/12/86

86-357255
	 
	 	 	 	 	 	 
	10/16/1958

	 	Collier Carbon and
Chemical Corporation
	 	Union Oil Company of California
	 	11/3/58

4470/10
	 
	 	 	 	 	 	 
	5/7/1996

	 	Nuevo Energy Company
	 	Union Oil Company of California, dba
UNOCAL
	 	5/26/1996
Inst. 19960254739
	 
	 	 	 	 	 	 
	5/12/1902

	 	The Stearns Ranches

Company
	 	Pacific Coast Oil Company
	 	6/25/02

75/254
	 
	 	 	 	 	 	 
	12/14/1896

	 	The Stearns Ranches

Company
	 	Union Oil Company of California
	 	7/10/97

30/11
	 
	 	 	 	 	 	 
	4/19/1913

	 	Union Oil Company of
California
	 	Pacific Light & Power Corporation
	 	12/15/13

244/37
	 
	 	 	 	 	 	 
	8/30/1928

	 	Union Oil Company of
California
	 	County of Orange
	 	11/8/28

220/38
	 
	 	 	 	 	 	 
	9/17/1940

	 	Union Oil Company of
California
	 	The Metropolitan Water District of
Southern California
	 	10/29/40

1067/308
	 
	 	 	 	 	 	 
	2/11/1954

	 	Union Oil Company of
California
	 	Amoniaco Corporation
	 	2/16/54

2670/114
	 
	 	 	 	 	 	 
	6/7/1957

	 	Union Oil Company of
California
	 	Brea Chemical, Inc.
	 	6/10/57

3936/324
	 
	 	 	 	 	 	 
	4/1/1958

	 	Union Oil Company of
California
	 	The Metropolitan Water District of
Southern California
	 	5/21/58

4291/400
	 
	 	 	 	 	 	 
	7/27/1962

	 	Union Oil Company of
California
	 	Boy Scouts of America, Los Angeles
Area Council
	 	8/1/62

6245/654







Page 3 of 5









 






	 	 	 	 	 	 	 	 	 
	Date
	 	Grantor
	 	Grantee
	 	Rec. Bk./Pg
	 	 
	10/2/1962

	 	Union Oil Company of
California
	 	Southern California Edison Company
	 	1/18/63

6399/705	 	 
	 
	 	 	 	 	 	 	 	 
	Amended by unrecorded Amendment of
Easement dated August 4, 2003 by
Nuevo Energy Company, as Grantor to
Southern California Edison Company,
as Grantee.
	 
	 	 	 	 	 	 	 	 
	3/1/1977

	 	Union Oil Company of
California
	 	Southern California Edison Company
	 	3/29/77

12123/814	 	 
	 
	 	 	 	 	 	 	 	 
	9/18/1978

	 	Union Oil Company of
California
	 	Southern California Edison Company
	 	2/5/79

13024/1157	 	 
	 
	 	 	 	 	 	 	 	 
	1/26/1982

	 	Union Oil Company of
California
	 	Mobil Oil Corporation
	 	 3/31/82
Inst. 82-340271
(Los Angeles County)	 	 
	 
	 	 	 	 	 	 	 	 
	9/13/1984

	 	Union Oil Company of
California
	 	City of Brea
	 	10/11/84

84-421551	 	 
	 
	 	 	 	 	 	 	 	 
	9/10/1985

	 	Union Oil Company of
California
	 	City of Brea
	 	10/7/85

85-382994	 	 
	 
	 	 	 	 	 	 	 	 
	7/3/1986

	 	Union Oil Company of
California
	 	City of Brea
	 	 8/13/86

86-359858	 	 
	 
	 	 	 	 	 	 	 	 
	9/2/1986

	 	Union Oil Company of
California
	 	Brea H.O.P.E Inc.
	 	 10/1/86

86-459482	 	 
	 
	 	 	 	 	 	 	 	 
	5/8/1987

	 	Union Oil Company of
California
	 	City of Brea
	 	 5/11/87

87-26083	 	 
	 
	 	 	 	 	 	 	 	 
	3/18/1996

	 	Union Oil Company of
California
	 	City of Brea
	 	 3/29/96
Inst. 19960153323	 	 
	 
	 	 	 	 	 	 	 	 
	3/18/1996

	 	Union Oil Company of
California
	 	City of Brea
	 	3/29/96
Inst. 19960153324	 	 
	 
	 	 	 	 	 	 	 	 
	3/18/1996

	 	Union Oil Company of
California
	 	City of Brea
	 	3/29/96
Inst. 19960153322	 	 
	 
	 	 	 	 	 	 	 	 
	3/18/1996

	 	Union Oil Company of
California
	 	City of Brea
	 	3/29/96
Inst. 1996013321	 	 
	 
	 	 	 	 	 	 	 	 
	11/29/1988

	 	Union Oil Company of
California & Shell Oil
Company
	 	City of Brea
	 	1/16/69

884/518	 	 
	 
	 	 	 	 	 	 	 	 
	9/25/1995

	 	Union Oil Company of
California
dba Unocal
	 	UNOCAL California Pipeline

Company
	 	12/18/95

19950565134	 	 







Page 4 of 5









 






	 	 	 	 	 	 	 	 	 
	Date
	 	Grantor
	 	Grantee
	 	Rec. Bk./Pg
	 	 
	5/17/1988

	 	Union Oil Company of
California, dba UNOCAL
	 	Southern California Edison Company
	 	 6/7/88
Inst. 88-268095	 	 
	 
	 	 	 	 	 	 	 	 
	9/15/1995

	 	Union Oil Company of
California, dba UNOCAL
	 	UNOCAL California Pipeline

Company
	 	10/25/95
Inst. 19950473641	 	 
	 
	 	 	 	 	 	 	 	 
	12/11/1995

	 	Union Oil Company of
California, dba UNOCAL
	 	Southern California Edison Company
	 	1/4/96
Inst. 19960004773	 	 
	 
	 	 	 	 	 	 	 	 
	1/14/1915

	 	Union Oil Company of
California,
Columbia Oil Producing
Company,
General Petroleum
Company
	 	County of Orange
	 	1/21/16

280/244	 	 
	 
	 	 	 	 	 	 	 	 
	4/17/1954

	 	Union Oil Company of
California
	 	The Metropolitan Water District of
Southern California
	 	7/8/54

2766/268	 	 
	 
	 	 	 	 	 	 	 	 
	8/23/1988

	 	Union Oil Company of
California
	 	Southern California Edison Company
	 	5/9/1989
89-243784
	 	 







Amended by unrecorded Amendment of Easement dated August 4, 2003 by Nuevo Energy Company, as Grantor to
Southern California Edison Company, as Grantee.




Page 5 of 5









 








EXHIBIT “J”

Natural Hazard Zones




     Natural Hazard Zones For more information regarding a particular Airport
or the specified Public Record, please contact your local office of the U.S.
Department of Transportation, Federal Aviation Administration.



B-4. Megan’s Law (California Civil Code §2079.10a)




	 	 	 	 	 
	 

	 	The following notice is provided as an accommodation.
California Civil Code Section 2079.l0a (commonly
referred to as “Megan’s Law”) requires the following
notice be provided as part of the purchase agreement
to a buyer or lessee of residential property:
	 	 







Notice: The California Department of Justice, sheriffs departments, police
EXHIBIT G




PDR® INFORMATION PAGE

PDR is a registered trademark




THE COMPANY




PROPERTY DATA SERVICES, INC.

A Subsidiary of The First American Corporation

(the “Company”)

5601 E. La Palma Avenue, Anaheim, CA 92807




PROPERTY IDENTIFICATION & PDR DATE




PLEASE VERIFY THAT THE PROPERTY INFORMATION BELOW IS CORRECT.




Property Address: SEE ADDENDUM, BREA, CA 92821




Property Assessor’s Parcel Number: SEE ADDENDUM




PDR Date: Monday, July 29, 2002




ADDRESSEE




FIRST AMERICAN TITLE

ATTENTION: RON GOMEZ

2 FIRST AMERICAN WAY
SANTA ANA, CA 92707


 









 








Property Address: SEE ADDENDUM BREA CA 92821




NOTICE




The Company is pleased to provide Recipient with this Property Disclosure
Report (“PDR”) for the Property identified above. Please note that this PDR is
a contract subject to the Terms, Conditions, and Limitations on Liability set
forth herein which should be reviewed carefully.




The information contained in this PDR is derived as of the PDR Date from
certain specified Public Records within the control of the governmental
entities described in Schedule A (“Natural Hazard Disclosure Summary”) and
Schedule B (“Summary of Additional Disclosures”). The information set forth in
Schedule A (a) relates to the natural hazard zones specified in California
Civil Code § 1 103.2, and (b) is provided by the Company in accordance with the
requirements of Civil Code § I103.4(c). The information set forth in Schedule
B is provided by the Company to facilitate compliance with those disclosures
specified in Schedule B. Please note that this PDR is NOT based upon a
physical inspection of the Property.




THE “NATURAL HAZARD DISCLOSURE STATEMENT” FORM REQUIRED BY CALIFORNIA CIVIL
CODE §1 103.2(a) (“THE LAW”) HAS BEEN COMPLETED AS OF THE PDR DATE IN
ACCORDANCE WITH THE TERMS OF THIS PDR AND IS PROVIDED WITH THIS PDR AS AN
ACCOMMODATION ONLY AND IS NOT PART OF THE PDR. PLEASE NOTE THAT THE LAW
REQUIRES THAT THE STATUTORY FORM BE COMPLETED, EXECUTED, AND DELIVERED BY THE
SELLER AND RESPECTIVE REAL ESTATE AGENTS TO THE BUYER. IN ADDITION TO THESE
STATUTORY NATURAL HAZARD DISCLOSURES, CERTAIN OTHER INFORMATION IS ALSO
PROVIDED IN THIS PDR FOR THE BENEFIT OF THE RECIPIENTS.




If you have any questions or comments regarding this PDR,

please contact the Company’s Customer Service Department at (800) 200-2561.




THIS PDR IS A CONTRACT.
PLEASE READ IT CAREFULLY.

THIS PDR IS A REPORT PRODUCT AND IS NOT AN INSURANCE POLICY.




©2002 Property Data Services, Inc.




Exhibit J




Page 2 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




Addendum to

PDR No. 02PDS1669 (Control/File No. 318379)

Property Identification - Assessor Parcel Numbers




     This Addendum pertains solely to PDR No. 02PDS 1669 (Control/File #
318379) dated 29 July 2002 for disclosure information about twenty-three (23)
parcels located in County of Orange, State of California as provided to
Property Data Services, Inc. These parcels constitute the Property for the
purpose of this PDR. The accompanying PDR is hereby issued for disclosures
pursuant to a Transaction involving Property as provided by Customer as
identified by the following assessor parcel numbers:



	 	 	 	 	 
	304-171-02

	 	306-031-05
	 	319-142-08
	306-011-02

	 	306-031-06
	 	319-142-10
	306-012-22

	 	306-031-07
	 	320-281-02
	306-012-32

	 	306-031-08
	 	320-281-05
	306-012-33

	 	306-031-09
	 	320-281-09
	306-012-34

	 	306-031-11
	 	320-073-02
	306-031-02

	 	306-031-12
	 	320-073-06
	306-031-03

	 	306-031-17	 	 







     This PDR applies only to the Property as identified by those parcel
numbers specified above and to no others pursuant to the Transaction.
Responses contained in this PDR apply only to the Property identified by those
parcels described above and to no others pursuant to the Transaction. This
Addendum is attached hereto and made a part of PDR No. 02PDS1669 (Control/File
# 318379) as of this reference and is subject to the Terms, Conditions, and
Limitations on Liability contained herein.



Exhibit J




Page 3 of 26









 








Property Address: SEE
ADDENDUM BREA CA 92821




SCHEDULE A

NATURAL HAZARD DISCLOSURE SUMMARY




SPECIAL FLOOD HAZARD AREA




Is any portion of the Property located within a Special Flood Hazard Area
(“SFHA”) according to the Public Record specified below as of the PDR Date?




Yes
       No   X   Do not know / information not available from local jurisdiction
           




Public Record: Official Flood Insurance Rate Maps (“FIRM”) compiled and issued
by FEMA pursuant to 42 United States Code §4001, et seq.




Note: If the Property is subject to either a Letter of Map Amendment (“LOMA”)
or Letter of Map Revision (“LOMR”) issued by the Federal Emergency Management
Agency (“FEMA”), a copy of the LOMA or the LOMR must be attached to the
Natural Hazard Disclosure Statement (“NHDS”) or appropriate disclosure
statement. The Company is not always able to determine if the Property is
subject to a LOMA or a LOMR. Even if such information is available to the
Company, the Company is unable to attach a copy of the LOMA or LOMR to the
NHDS. If Seller is aware that the Property is subject to a LOMR or a LOMA, the
Seller shall attach a copy to the NHDS and notify the Company.




AREA OF POTENTIAL FLOODING




Is any portion of the Property located within an Area of Potential Flooding
according to the Public Record specified below as of the PDR Date?




Yes
  X   No        Do not know / information not available from local
jurisdiction          




Public Record: Official dam inundation maps issued by the California Office of
Emergency Services (“OES”) pursuant to California Government Code §8589.5.




VERY HIGH FIRE HAZARD SEVERITY ZONE




Is any portion of the Property located within a Very High Fire Hazard Severity
Zone according to the Public Record specified below as of the PDR Date?




Yes 
       No   X  




Public Record: Official maps issued by the California Department of Forestry
and Fire Protection (“CDF”) pursuant to California Government Code §51178.
NOTE: Publicly available data provided by local agencies responsible for fire
prevention and suppression in this county pursuant to Government Code §§51179
and 65302(g) may be used to supplement CDF data. For more information, please
contact the Company’s Customer Service Department.




Exhibit J




Page 4 of 26









 








Property Address: SEE
ADDENDUM BREA CA 92821




WILDLAND - STATE RESPONSIBILITY AREA




Is
any portion of the Property located within a Wildland - State Responsibility
Area according to the Public Record specified below as of the PDR Date?



Yes   X   No       




Public Record: Official maps issued by the California Department of Forestry
and Fire Protection (“CDF”) pursuant to California Public Resources Code §4125.




EARTHQUAKE FAULT ZONE




Is any portion of the Property located within an Earthquake Fault Zone
according to the Public Record specified below as of the PDR Date?




Yes   X   No       




Public Record: Official earthquake fault zone or special study zone maps
approved by the State Geologist and issued by the California Department of
Conservation, California Geological Survey pursuant to California Public
Resources Code §2622.




SEISMIC HAZARD ZONE




Is any portion of the Property located within a Seismic Hazard Zone (Area of
Potential Liquefaction) according to the Public Record specified below as of
the PDR Date?




Yes   X   No        Maps not yet released by state
         




Is any portion of the Property located within a Seismic Hazard Zone (Area of
Potential Landslide) according to the Public Record specified below as of the
PDR Date?




Yes   X   No        Maps not yet released by state
            




Public Record: Official seismic hazard zone maps approved by the State
Geologist and issued by the California Department of Conservation, California
Geological Survey pursuant to California Public Resources Code §2696.




Exhibit J




Page 5 of 26









 








Property Address: SEE
ADDENDUM BREA CA 92821




SCHEDULE B

SUMMARY OR ADDITIONAL DISCLOSURES




B-1. Mello-Roos C.F.D. Act of 1982 & Improvement Bond Act of 1915
Assessments




Is the Property (1) located within one or more Mello-Roos Community Facilities
District(s) as defined in California Government Code §53311 et seq. according
to the Public Record specified below as of the PDR Date and/or (2) subject to
one or more fixed lien assessment(s) collected in installments to secure bonds
issued pursuant to the Improvement Bond Act of 1915 as set forth in California
Streets and Highways Code §8500 et seq. according to the Public Record
specified below as of the PDR Date?




	 	 	 
	      

	 	YES, the Property IS subject to one or more of the specified special assessments.
	 
	 	 
	  X  

	 	NO, the Property IS NOT subject to the specified special assessments.







Public Record: Latest equalized assessment roll for real property taxes for
the Property (“Assessment Roll”).




IMPORTANT NOTE ON CURRENT AND FUTURE ASSESSMENTS




     The following information is provided to facilitate a good faith effort to
obtain
information for the required disclosures. Company has made a good faith
effort to obtain
information from available Public Records; however, some local agencies
have not made
such Public Records available to Company. Company recommends that each
party review
the statutory guidelines and Public Records and obtain advice from an
attorney if
concerned about meeting the statutory requirements.



     The information above is derived from the Assessment Roll as of the PDR
Date. Such information will NOT appear on the Assessment Roll if a district or
assessment (a) is in the process of being formed as of the PDR Date, (b) has
been stripped from the Assessment Roll as of the PDR Date due to delinquency,
or (c) has been stripped from or zeroed out from the Assessment Roll as of the
PDR Date as a result of judicial foreclosure1, or an exemption granted to the
current property owner. For more information, please review a current
preliminary title report or title commitment for the Property for possible
additional assessment information that has been recorded in the official
records of the county where the Property is located. Buyer should ask the
Seller if he/she has received any notices of intent or has any information
regarding the formation of assessment districts or other assessments which may
affect the property.






1 As used herein, the term “foreclosure” refers to foreclosure due to
delinquent assessment liens or delinquent ad valorem property
taxes.




Exhibit J




Page 6 of 26









 









Property Address: SEE ADDENDUM BREA CA 92821




STATUTORY DISCLOSURE OBLIGATIONS





     California
Civil Code §I 102.6(b) requires that a seller make a good
faith effort to obtain a disclosure notice (“Notice of Special Tax”)
concerning any special tax from the applicable local agency and to deliver
such Notice to the buyer. To promote compliance, California Government Code
§53340.2 and §53754 set forth a statutory form for this Notice and provide
that the legislative body levying the special tax shall designate an office,
department, or bureau of the local agency which shall set procedures to
promptly respond to inquiries regarding current and future estimated tax
liability. This Notice shall be furnished to an individual or an owner of
property subject to a special tax levied by the local agency within five (5)
working days of receiving a request for such Notice. The local agency may
charge a reasonable fee for this service not to exceed ten dollars ($10.00).
After a seller receives said Notice from the agency, said Notice must be
provided to the buyer. THE COMPANY DOES NOT OBTAIN SUCH NOTICE AS A PART OF
THIS PDR.



MELLO-ROOS C.F.D. ACT OF 1982 & THE IMPROVEMENT BOND ACT OF 1915




     California Civil Code § 1102.6(b) requires a Seller of real property to
make a good faith effort to obtain and to deliver to the Buyer a “Notice of
Special Tax” from each local agency which levies a special tax pursuant to:



     The Mello-Roos Community Facilities Act of 1982 authorizes the
establishment of Mello-Roos Community Facilities District(s) (“CFD”), a special
taxing authority allowing certain local governmental entities to finance
certain designated public services and capital facilities including, but not
limited to, police and fire protection services, ambulance and paramedic
services, elementary and secondary schools, libraries, cultural facilities, and
museums. This special tax is a lien on the property. For more details, please
consult California Government Code §53311 et seq.



     The Improvement Bond Act of 1915 authorizes the legislative body of any
city to issue special bonds to pay the cost of any work or improvement in any
of the streets, avenues, lanes, alleys, courts, places, or public ways of the
city, or in, over, or through any property or rights-of-way owned by the city
authorized by the Improvement Act of 1911 (Division 7 (commencing with
§5000)), or by the Municipal Improvement Act of 1913 (Division 12 (commencing
with §10000)), or to pay the cost of any other work or improvement charged and
assessed upon real property pursuant to any other law. For more details,
please consult California Streets and Highways Code §8500 et seq.



B-2. Former Ordnance Locations (California Civil Code §1102.15)




As of the PDR Date, are there any Former Ordnance Locations within one (1) mile
Radius of the Property according to the Public Record specified below?




	 	 	 
	  X  

	 	NO, the Property IS NOT
located within a one (1) mile Radius of a Former Ordnance
Location according to the Public Record.







Exhibit J




Page 7 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




	 	 	 
	      

	 	YES, the Property IS
located within a one (1) mile Radius of Former Ordnance
Location according to the Public Record as follows:







Public Record: “DERP-FUDS Projects in California” Reports, Project Information
Retrieval System, United States Army Corps of Engineers (“USACE”)
(http://pirs.mvr.usace.army.mil/) supplemented by “OE Project Fact Sheets -
California,” USACE Engineering and Support Center, Huntsville, AL
(www.hnd.usace.army.mil/oew/factsbts/states/cafact)




SCHEDULE B-2 DEFINITIONS AND REPORTING STANDARDS




     This Schedule uses the following definitions in addition to those
specified in Section 1 of
the “Terms, Conditions and Limitations on Liability”:



	 	 	 
	TERM
	 	DEFINITION

	Boundary - Approximate

	 	The boundary of the specified Former Ordnance Location is an approximation
only. Location map(s) and legal description(s) in the Public Record is not of
adequate scale or clarity to define a distinct geographic boundary.
	 
	 	 
	Boundary - Defined

	 	The boundary of the specified Former Ordnance Location set forth in the
location map(s) or legal description(s) in the Public Record is of adequate
scale or clarity to define a distinct geographic boundary.
	 
	 	 
	Former Ordnance Locations

	 	Former state or federal ordnance locations which have been identified by an
agency or instrumentality of the federal or state government as an area once
used for military training purposes which may contain potentially explosive
munitions.
	 
	 	 
	Radius

	 	A distance of one (1) mile in any direction using the Property as the origin.
NOTE: The Property is mapped as a geocoded point based on information
provided to the Company. Former Ordnance Locations are mapped as
polygons as represented in size, shape, and position in the Public Record. The
Boundary of a Former Ordnance Locations is factored into the calculation of
the Radius; however, the physical boundary of the Property is not.







     This Schedule uses the following Reporting Standards in addition to those
specified in Section 6 of the “Terms, Conditions and Limitations on Liability”:




	 	•	 	The following information is NOT disclosed in this Schedule:






	 	o	 	Former Ordnance Locations listed in inventories of other states or
located in other
states.
	 
	 	o	 	Properties currently operated or managed by the
Department of Defense
(including Base Realignment and Closure projects, unless specifically identified
as eligible for investigation within the Public Record).






	 	•	 	If the Public Record has identified potential or confirmed ordnance presence on any
portion of a Former Ordnance Location, the entire site is so designated
for purpose of
disclosure in this Schedule.





Exhibit J




Page 8 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821





	 	•	 	Former Ordnance Locations consisting of multiple geographic
locations are treated as a
single site in this Schedule.






	 	•	 	Former Ordnance Locations only include locations which were previously utilized for
military training purposes; however, the Public Record includes sites used for other
purposes.






	 	•	 	Privately operated sites such as gun ranges are not included in this Schedule.





STATUTORY DISCLOSURE OBLIGATIONS AND DATA SOURCE




     California Civil Code §1102.15 requires the seller of residential real
property who has actual knowledge of any Former Ordnance Locations within the
“neighborhood area” (which is defined as being within one (1) mile of the
residential real property) to give written notice of that knowledge to buyer
as soon as practicable before transfer of title.



     The Formerly Utilized Defense Sites program was established to
coordinate environmental cleanup of properties formerly controlled by the
Department of Defense. In 1985, USACE assumed program management
responsibilities. One of the goals of risk assessment is to detect the
potential or confirmed presence of unexploded ordnance. At least a portion of
project sites identified in the Public Record have been determined to have
potential and/or confirmed ordnance presence subject to this risk assessment.
Some of these project sites may be subject to further investigative and
clean-up action. For more information about a particular project, please
contact the Los Angeles or Sacramento office of the United States Army Corps
of Engineers.



B-3. Airport Locations (California Civil Code §1102.17)




As of the PDR Date, are there any Airports identified in the specified Public
Record located within a five (5) mile Radius of the Property?




	 	 	 
	  X  

	 	NO, an Airport IS NOT located within a five (5) mile Radius of the Property.
	 
	 	 
	      

	 	YES, the following Airport(s) IS located within a five (5) mile Radius of the
Property:







Public Record: “Sectional Aeronautical Charts” published by the United
States Department of Transportation, Federal Aviation Administration, National
Aeronautical Charting Office.




SCHEDULE B-3 DEFINITIONS AND REPORTING STANDARDS




     This Schedule uses the following definitions in addition to those
specified in Section 1 of the “Perms, Conditions and Limitations on
Liability”:



	 	 	 
	TERM
	 	DEFINITION

	Airport

	 	Defined in the specified Public Record as (1) “Hard-surfaced runways 1500
ft.
to 8069 ft. in length”; (2) “Hard surfaced runways greater than 8069 ft. in
length or some multiple runways less than 8069 ft. in length”; or (3)
“Open







Exhibit J




Page 9 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




	 	 	 
	TERM
	 	DEFINITION

	

	 	dot within hard-surfaced runway configuration indicates approximate VOR,
VOR-DME, or VORTAC location.” The location of an Airport is based on a polygon,
the position of which is based on the approximate location of that Airport’s
runway(s), not upon the physical property boundary of that Airport.
	 
	 	 
	Radius

	 	A distance of five (5) miles in any direction using the Property as the origin.
NOTE: The Property is mapped as a geocoded point based on information provided
to the Company. Airports are mapped as polygons as represented in size, shape,
and position in the Public Record. The physical property boundary of neither
any Airport nor the Property is factored into the calculation of the Radius.







     This Schedule uses the following Reporting Standards in addition to those
specified in Section 6 of the “Terms, Conditions and Limitations on
Liability”:




	 	•	 	The following information is NOT disclosed in this Schedule: 






	 	o	 	Airports located outside California.
	 
	 	o	 	Airports defined in the Public Record as “Other than
hard-surfaced runways”
(which may include dirt landing strips or roads).
	 
	 	o	 	Airports
identified in the Public Record as “Abandoned - paved having landmark
value, 3000 ft. or greater.”
	 
	 	o	 	Standard instrument departure routes, standard
terminal arrival routes, or airways which may be located within
the Radius.





STATUTORY DISCLOSURE REQUIREMENTS




     California Civil Code § 1102.17 requires the seller of residential real
property who has “actual knowledge” that the property “is affected by or zoned
to allow an industrial use described in §73la of the Code of Civil Procedure”
to give written notice of that knowledge as soon as practicable before
transfer of title. California Code of Civil Procedure §731(a) states:



“Whenever any city, city and county, or county shall have established zones or
districts under authority of law wherein certain manufacturing or commercial or
airport uses are expressly permitted, except in an action to abate a public
nuisance brought in the name of the people of the State of California, no
person or persons, firm or corporation shall be enjoined or restrained by the
injunctive process from the reasonable and necessary operation in any such
industrial or commercial zone or airport of any use expressly permitted
therein, nor shall such use be deemed a nuisance without evidence of the
employment of unnecessary and injurious methods of operation. Nothing in this
act shall be deemed to apply to the regulation and working hours of canneries,
fertilizing plants, refineries and other similar establishments whose operation
produce offensive odors. “departments serving jurisdictions of 200,000 or more
and many other local law enforcement authorities maintain for public access a
data base of the locations of persons required to register pursuant to
paragraph (1) of subdivision (a) of Section 290.4 of the Penal Code. The data
base is updated on a quarterly basis and a source of information



Exhibit J



Page 10 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




about the presence of these individuals in any neighborhood. The Department of
Justice also maintains a Sex Offender Identification Line through which
inquiries about individuals may be made. This is a “900” telephone service.
Callers must have specific information about individuals they are checking.
Information regarding neighborhoods is not available through the “900”
telephone service.




Additional Information: Megan’s Law does not require that the seller or
seller’s agent to investigate or review the data base. However, this Notice
does not exempt a seller or seller’s agent from complying with California
Civil Code Sections 1102 and 2079 which require disclosure of any fact
materially affecting the value and desirability of the Property.




     For more information regarding Megan’s Law, please visit the California
Office of the Attorney General, Department of Justice website at:
http://caag.state.ca.us/megan/index.htm.



INFORMATION ON NATURAL HAZARD DISCLOSURE




The following information is a summary of the most basic aspects of natural
hazard disclosure requirements as set forth by the Residential Natural Hazard
Disclosure Law. Please note that a property owner and his/her agent may still
be subject to additional disclosures required by other State laws or county,
city, or local ordinances.




Residential Natural Hazard Disclosure Law




     The Residential Natural Hazard Disclosure Law (California Civil Code
§1103 et seq.) requires the location of residential real property (defined as
property containing 1-4 family dwelling units) in relation to six (6) natural
hazard zones/areas be disclosed to a “transferee” of such property. A
“transferee” is anyone acquiring an interest in residential real property
whether by sale, exchange, installment land contract, lease with option to
purchase, option to purchase, or ground lease coupled with the improvements.
Certain specific types of transactions set forth in Civil Code § 1103.1 are
exempt, such as transfers ordered by a probate court, etc. Other than the
excluded transactions, the specified disclosures are mandatory and can not be
waived. Any such waiver is void as against public policy. The disclosures are
to be made on the statutory form which is to be executed by the parties and
agents.



     The Residential Natural Hazard Disclosure Law states that the required
disclosures under this particular statute do not limit or abridge any
obligation for disclosure created by any other provision of law or that may
exist in order to avoid fraud, misrepresentation, or deceit in the transfer
transaction and shall not change the duty of a real estate broker or
salesperson pursuant to Civil Code §2079.



     Neither the transferor nor his/her agent is responsible for any error,
inaccuracy, or omission of any information delivered pursuant to the law
provided that such error, inaccuracy, or omission was not within their personal
knowledge and was based on a report prepared by a licensed engineer, land
surveyor, geologist, or expert in natural hazard discovery dealing with matters
within the scope of the professional’s license or expertise. In the event that
the information provided becomes inaccurate due to changes caused by
governmental action, map



Exhibit J




Page 11 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




revisions, changed information, or other act of occurrence, the inaccuracy is
not a violation of the Residential Natural Hazard Disclosure Law unless the
transferor or agent has actual knowledge that the information has become
inaccurate.




     Any person who fails to perform any duty prescribed by any provision of
the Residential Natural Hazard Disclosure Law shall be liable in the amount
of actual damages suffered by the transferee.



The Six Natural Hazard Zones/Areas




     California’s Residential Natural Hazard Disclosure Law requires the
transferor (if acting alone) or the transferor’s agent to disclose to a
prospective transferee if any portion of residential real property is located
within any one of six designated natural hazard zones according to maps
issued by the appropriate governmental agency:



	 	 	 
	Natural Hazard

	 	Code Section (§) Defining the Zone/ Area
	 
	 	 
	1. SPECIAL FLOOD HAZARD AREA

	 	California Government
Code §8589.3
	 
	 	 
	2. AREA OF POTENTIAL FLOODING

	 	California Government Code §8589.4/.5
	 
	 	 
	3. VERY HIGH FIRE HAZARD SEVERITY ZONE

	 	California Government Code §51178
	 
	 	 
	4. WILDLAND -STATE RESPONSIBILITY AREA

	 	California Public Resources Code §4125
	 
	 	 
	5. EARTHQUAKE FAULT ZONE

	 	California Public Resources Code §2622
	 
	 	 
	6. SEISMIC HAZARD ZONE

	 	California Public Resources Code §2696







     For more detailed information regarding these zones/areas, please see the
section below entitled “The Six Natural Hazard Areas/Zones.”



Statutory Disclosure Form(s)




The Residential Natural Hazard Disclosure Law specifies the required
disclosures are to be made pursuant to a specific form set forth in Civil
Code §1103.2(a). This form is commonly referred to the “Natural Hazard
Disclosure Statement.” This form is to be completed and executed by the
property transferor, the transferee, and their respective agents. Another
statutory form, “Local Option Real Estate Transfer Disclosure
Statement,”
should be completed and executed by the same parties with respect to certain
disclosures if and when mandated by local ordinance.




For more information, copies of applicable statutes may be obtained at your local law library

or on the Internet at http://www.leginfo.ca.gov/calaw.html.




THE SIX NATURAL HAZARD AREAS/ZONES




Special Flood Hazard Area (California Government Code §8589.3; 42 U.S.C. §4001 etseq.)




Exhibit J




Page 12 of 26









 








Property Address: SEE
ADDENDUM BREA CA 92821




     Federal law requires the Federal Emergency Management Agency (“FEMA”) to
compile Flood Insurance Rate Maps (“FIRM”) identifying areas of potential
flooding from natural sources. Property located with a special flood hazard
area (“SFHA”), designated as any Zone “A” or “V” on such maps, is subject to a
one percent (1%) or greater chance of complete or partial flooding in any
given year. FEMA defines this type of flood as the “base flood” which is more
commonly known as a “100 year flood.” A 100 year flood has a 26% chance of
occurring during any 30 year period.




	•	 	Civil Code § 1103.2(c) states that a transferor or transferor’s agent MAY
mark “No” on the
SFHA component of the NHDS if FEMA has issued a Letter of Map Amendment
(“LOMA”)
confirming that the property is no longer within a SFHA, even if the FIRM
has not yet been
updated. Seller must attach a copy of the LOMA to the NHDS.
	 
	•	 	Civil Code § 1 103.2(d) states that a transferor or transferor’s agent
MUST mark “Yes” on the
SFHA component of the NHDS if FEMA has issued a Letter of Map Revision
(“LOMR”)
confirming that the property is within a SFHA and the location of the LOMR
has been posted
by appropriate local agencies, even if the FIRM has not yet been updated.
Seller must attach
a copy of the LOMR to the NHDS.
	 
	•	 	Federal law (42 United States Code 4001 et seq.) requires lienholders of structures
determined to be within a SFHA have adequate flood insurance coverage in
place from either
(1) the National Flood Insurance Program (“NFIP”) which is administered by
the Federal
Insurance Administration (“FLA”), or (2) any licensed property/casualty
insurance agent or
any private insurance company that are writing flood insurance agreements
with the FLA. In
communities that participate in the NFIP, federally insured or regulated
lenders require flood
insurance for mortgages and other loans secured by structures located in a
SFHA.
	 
	•	 	A parcel of property located outside a SFHA may still be subject to
severe flooding. FEMA
reports that 20% to 25% of all flood insurance claims come from owners of
property located
outside of a SFHA.
	 
	•	 	In both NFIP and non-participating communities, a lender has the
discretion to require the
purchase of flood insurance even if a property is not located within a SFHA.
	 
	•	 	For ways to protect a house from flooding, refer to FEMA Publication 312,
“Homeowner’s
Guide to Retrofitting.”





For more information, please contact FFMA or visit their official website at www.fema.Qov




Exhibit J




Page 13 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




Area of Potential
Flooding (California Government Code §8589.4/.5)




     Local governmental agencies, utilities, and owners of a designated dam
are required to prepare and submit inundation maps for review and approval by
the California Office of Emergency Services (“OES”). These maps show areas of
potential flooding in the event of sudden or total failure of any dam, failure
of which would result in death or personal injury; however, these maps do not
identify areas of potential flooding resulting from storms and other causes.
The OES is required to review and approve maps that have been prepared and
submitted to ensure that the maps meet all requirements before providing
approved copies to appropriate public safety agencies of any local
jurisdiction likely to be affected so that emergency procedures can be adopted
for the evacuation and control of populated areas.




	•	 	OES has yet to review and submit approved maps for numerous dams to local
authorities.






	•	 	Dam inundation maps depict a best estimate of water flow in the event of
dam failure.
Projected water flow is based on a scenario in which a full reservoir
completely empties itself
and does not account for run-off from other sources. These maps, most of which were
created in the 1970’s, do not employ newer assumptions and map-making methods.






	•	 	A property located outside an area of potential flooding may still be subject to severe
flooding from other causes.





For more information, please contact the OES in Sacramento or visit their official website at

www.oes.ca.gov




Very High Fire Hazard Severity Zone (California Government Code §51178)




     Designated by the Director of the California Department of Forestry and
Fire Protection (“CDFFP”), a Very High Fire Hazard Severity Zone (“VHFHS
Zone”) is defined as real property not deemed to be a state responsibility
pursuant to Public Resources Code §4125 et seq. Based on consistent statewide
criteria and the severity of the fire hazard expected to prevail, VHFHS Zones
are designated by fuel loading, slope, fire weather, and other factors.
Designation allows identification and implementation of measures to retard the
rate of spread and reduce the potential intensity of uncontrolled fires.




	•	 	Government Code §51179 allows a “local agency” (defined as a city,
county, city and county,
or district responsible for fire protection within a VHFHS Zone), at its discretion, to make
changes to the VHFHS Zone boundaries that may not be reflected on maps released by the
CDFFP. For more information on this provision, please contact your local agency.






	•	 	Any person who owns, leases, controls, operates, or maintains any occupied dwelling or
occupied structure in, upon, or adjoining any land that is covered with
flammable material
and located within a VHFHS Zone has certain statutory duties of property
maintenance.
Please refer to Government Code §51182 et seq. for more information.





For more information, contact your local fire protection agency, the CDFFP, or visit the

official CDFFP website at www.fire.ca.gov




Exhibit J




Page 14 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




Wildland - State Responsibility Area (California Public Resources Code §4125 et seq.)




     The State Board of Forestry classifies all lands within the State of
California based on factors such as cover, beneficial use of water from
watersheds, probable damage from erosion, and fire risks and hazards to
determine those areas for which the financial responsibility of fire
prevention and suppression is primarily the responsibility of the State. Fire
prevention and suppression in all areas which are not within a Wildland -
State Responsibility Area (“WSRA”) is primarily the responsibility of the
local or federal agencies, as applicable.



For property located within a WSRA, a transferor must also disclose that:





	1.	 	there may be substantial forest fire risks and hazards;
	 
	2.	 	except for property located within a county which has assumed
responsibility for prevention
and suppression of all fires (California Public Resources Code §4129), it is
NOT the state’s
responsibility to provide fire protection services to any building or
structure located within
wildlands unless the Department has entered into a cooperative agreement
with a local
agency (California Public Resources Code §4142); and
	 
	3.	 	the property owner is subject to the imposition of fire mitigation
measures which may
substantially impact and limit construction and remodeling of improvements
and landscaping
(California Public Resources Code §4291).





WSRAs include lands which are:






	•	 	covered wholly or in part by forests or by trees producing or capable of producing forest
products.






	•	 	covered wholly or in part by timber, brush, undergrowth, or grass,
whether of commercial
value or not, which protect the soil from excessive erosion, retard runoff of water or
accelerate water percolation, if such lands are sources of water which is available for
irrigation or for domestic or industrial use.






	•	 	in areas principally used or useful for range or forage purposes and are contiguous to the
lands described above.





WSRAs do not include lands which are:





	•	 	owned or controlled by the federal government or any agency of the federal
government.






	•	 	within the exterior boundaries of any city, except a city and county with
a population of less
than 25,000 if, at the time the city and county government is established,
the county contains
no municipal corporations.






	•	 	located within the State but do not come within any of the classes
specifically described as
being included.





For more information, contact your local fire protection agency, contact the CDFFP, or visit the

official CDFFP website at www.dre.ca.gov




Earthquake Fault Zone (California Public Resources Code §2622)




     The Alquist-Priolo Special Studies Zones Act of 1972, renamed the
“Alquist-Priolo Earthquake Fault Zoning Act” in 1994 (“A-P Act”), regulates
development and construction of buildings intended for human occupancy so as to
mitigate hazards associated with surface fault



Exhibit J




Page 15 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




rupture and/or fault creep. State law requires the disclosure of only active
faults known to date and delineated on Earthquake Fault Zone (“EF Zone”) (also
know as “Special Study Zone”) maps approved by the State Geologist. “Active”
faults are classified by the State Mining and Geology Board as those having
surface displacement within about the last 11,000 years. EF Zones vary in
size, but average one-quarter mile in width (i.e., the “typical” zone
boundaries are set back approximately 660 feet on either side of the fault
trace)





	•	 	California Public Resources Code §2624 allows cities and counties to
establish policies and
criteria stricter than those set by the State respecting, but not limited to, permitting,
development, and mapping of EF Zones.






	•	 	A property that lies partially or entirely within a designated EF Zone may be subject to
requirements for site-specific geologic studies and mitigation before any
new or additional
construction may take place. If an active fault is found on a property,
structures generally
will not be allowed to be constructed within 50 feet of the fault trace.






	•	 	Information on EF Zone maps is not a sufficient substitute for geologic
and geotechnical site
investigations.






	•	 	The A-P Act applies to new or renewed construction and development
projects, including all
divisions of land as well as most structures intended for human occupancy.
Certain types of
structures and developments are excluded, and exemptions may be granted, but
such an
exclusion or exemption does not excuse or limit disclosure obligations.





For more information, contact the California Department of Conservation, California

Geological Survey in Sacramento, San Francisco, or Los Angeles, or visit their official

website at www.consrv.ca.gov




Seismic Hazard Zone (California Public Resources Code §2696)




     The Seismic Hazards Mapping Act (SHM Act”) requires the State Geologist to
map areas subject to seismic hazards such as strong ground shaking,
liquefaction, landslides, or other ground failure or other seismic hazards
caused by earthquakes. The location and severity of seismic hazards resulting
from earthquakes are based on technical evidence subject to debate among
specialists. An earthquake capable of causing liquefaction or triggering a
landslide may not uniformly affect all areas within a Seismic Hazard Zone (“SH
Zone”).




	•	 	California Public Resources Code §2698 allows cities and counties to
establish policies and
criteria stricter than those set by the State respecting, but not limited to, permitting,
development, and mapping of SH Zones.






	•	 	A property that lies partially or entirely within a designated SH Zone may be subject to
requirements for site-specific geologic studies and mitigation before any
new or additional
construction may take place.






	•	 	Information on SH Zone maps is not a sufficient substitute for geologic
and geotechnical site
investigations.






	•	 	Although property within a SH Zone should not be
automatically excluded from
development, a SH Zone is an area where the potential for damage from seismic hazards is
great enough to make it prudent to conduct geologic investigations to identify and mitigate
hazards prior to development.





Exhibit J




Page 16 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




For more information, contact the California Department of Conservation, California
Geological Survey in Sacramento, San Francisco, or Los Angeles, or visit their official website
at www.consrv.ca.gov



Exhibit J




Page 17 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




TERMS, CONDITIONS, AND LIMITATIONS ON LIABILITY




SECTION 1. Definition of Terms




	 	 	 
	TERM
	 	DEFINITION

	Buyer

	 	The party acquiring the interest in the Property directly from the Seller
as
a result of the Transaction (“Original Buyer”). The term “Buyer” shall
also be deemed to include, as applicable, (a) anyone who receives the
Property as a result of the death of the Original Buyer by operation of
law,
and (b) the trustee or successor trustee of a trust in which the Original
Buyer is the trustor/settlor to whom the Property is transferred by the
Original Buyer after the Effective Date.
	 
	 	 
	Company

	 	The Company as specified (with its address) on the Information Page of
this PDR.
	 
	 	 
	Damages Limit

	 	The limitation on liability under this PDR as defined in Section 7
(“Limitation on Damages”) below.
	 
	 	 
	Effective Date

	 	The date on which the Transaction is consummated.
	 
	 	 
	Information Page

	 	The first page of this PDR which (a) identifies the Company; the PDR
Date; and the Property; and (b) contains the name and address of who
received this PDR.
	 
	 	 
	PDR

	 	This Property Disclosure Report (“PDR”) which consists of
(a)
Information Page, (b) Schedule A (“Natural Hazard Disclosure
Summary”), (c) Schedule B (“Summary of Additional Disclosures”), (d)
“Information on Natural Hazard Disclosures,” and (e) these “Terms,
Conditions, and Limitations “on Liability.
	 
	 	 
	PDR Date

	 	The date specified on the Information Page as of which the information in
the PDR Summaries was obtained from the Public Records.
	 
	 	 
	PDR Summaries

	 	Schedule A (“Natural Hazard Disclosure Summary”) and Schedule B
(“Summary of Additional Disclosures”), both of which contain
information about the specified Risk Elements for the Property as
disclosed by the Public Records as of the PDR Date in compliance with
the Reporting Standards.
	 
	 	 
	Property

	 	The real property identified on the Information Page provided either (i) a
residential structure consisting of not more than four dwelling units is
located on such real property, or (ii) the real property is zoned as of
the
PDR Date for residential use for not more than four dwelling units. The
term “Property” does not include any interests beyond the lines described
or referred to on the Information Page, nor any right, title, interest,
estate
or easement in abutting streets, alleys, or other rights of way, or water,
watercourses, or waterways. The term “Property” may consist of more
than one legal parcel if (1) each individual parcel is assigned an
assessor’s
parcel number that is identified on the Information Page or on an
addendum to this PDR; (2) parcels are contiguous; and (3) parcels are
transferred between the same Buyer and same Seller in the same
Transaction.







Exhibit J




Page 18 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




	 	 	 
	TERM
	 	DEFINITION

	Public Record(s)

	 	The records, data, or maps specified by the applicable governmental
agency and which are publicly available as of the PDR Date and specified
in the PDR Summaries.
	 
	 	 
	Recipient

	 	The Seller, Buyer, and each of their respective licensed real estate
agents
and brokers involved in the Transaction. This term does not include any
third party.
	 
	 	 
	Reporting Standards

	 	The standards set forth in Section 6 below which are used for the
reporting of the Risk Elements for the Property.
	 
	 	 
	Residential Natural

Hazard Disclosure

Law

	 	California Civil Code § 1 103 et seq.
	 
	 	 
	Risk Element

	 	Each specified risk element disclosed by the Public Records identified in
the PDR Summaries which was reported in accordance with the Reporting
Standards.
	 
	 	 
	Seller

	 	The owner of the Property interest involved in the Transaction on the
PDR Date.
	 
	 	 
	Transaction

	 	The transaction between the Seller and the Buyer whereby on the
Effective Date the Buyer acquires an interest in the Property as a
result of
the sale, exchange, installment land contract, lease with option to
purchase, option to purchase, or ground lease coupled
with the
improvements.







SECTION 2. PDR Assurances and When the PDR is Effective.




     As of the PDR Date, this PDR accurately discloses the Risk Elements in
the PDR Summaries for the Property in compliance with the Reporting
Standards. This PDR shall be effective as of the Effective Date provided
that (1) the fee for this PDR has been paid to the Company, and (2) the
Transaction was consummated within three (3) months of the PDR Date.



SECTION 3. This PDR is NOT an Insurance Policy.




     This PDR is NOT AN INSURANCE POLICY. THIS PDR IS NOT A SUBSTITUTE FOR
THE BUYER OBTAINING PROPERTY & CASUALTY INSURANCE POLICIES which will
provide coverage against losses incurred as a result of earthquakes, fires,
flooding, environmental hazards, or any other kind of risks associated with
the Property. If Recipient wishes to obtain insurance for physical risks to
the Property, various forms of coverage are available from private and
public sources, such as fire or environmental insurance through private
insurance carriers, flood insurance through the National Flood Insurance
Program, and earthquake insurance through the California Earthquake
Authority.



SECTION 4. No Third-Party Reliance.




Exhibit J




Page 19 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




     This PDR may be relied upon only by the Recipient within the limitations
specified herein. This PDR may not be relied upon by any person or entity
other than Recipient without the express written consent of the Company.
Recipient shall not take any action that may induce a third party to rely on
the information in this PDR.



SECTION 5. Other Information Within the Knowledge of the Company.




     The recipient recognizes that while it is possible the Company may have
knowledge of other facts concerning the Property, the Company is under no duty
or responsibility to disclose such information to the Recipient.



SECTION 6. PDR REPORTING STANDARDS.





	6.1	 	This PDR is a Public Records Disclosure Report ONLY.





     This PDR is a Public Records disclosure report designed to assist the
Seller of the Property and the Sellers’ agent to comply with those disclosure
requirements as specified in the Residential Natural Hazard Disclosure Law and
other specified laws. This PDR (a) may not satisfy disclosure obligations
under other laws applicable to the transfer of the Property, and (b) does not
disclose the specific or actual condition or character of the Property.




	6.2	 	This PDR is NOT Based Upon an Inspection of the Property.





     This PDR is NOT based upon an inspection of the Property and should not be
used as a substitute for (1) appropriate inspection(s) conducted by a qualified
professional, (2) geologic, geotechnical, or other reports required by
governmental agencies, or (3) any other inspections or reports required by
applicable laws in connection with the transfer of residential real property.




	6.3	 	Maps Are NOT a Part of this PDR.





     Maps that may be attached to this PDR are provided as an accommodation
only and are NOT a part of this PDR. The locations of zones, areas, districts,
the Property, and other information depicted on any maps, are APPROXIMATIONS
ONLY. Recipient should rely only upon the reporting of the Risk Elements for
the Property as set forth in the PDR Summaries.




	6.4	 	Public Records Used as the Basis for this PDR-and Disclosure as to the
Property.





     This PDR was prepared based upon a review of ONLY those Public Records
specifically cited in the PDR Summaries. The Company makes no representation or
warranty regarding the accuracy, completeness, validity, reliability,
integrity, or accessibility of any Public Records used to prepare this PDR, nor
does the Company assume any responsibility for any other information provided
or not provided by the Seller, third parties or the Public Records.



Exhibit J




Page 20 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821





	6.5	 	The Public Records MAY Change After the PDR Date.





     From time to time the Public Records released and made publicly available
by appropriate authorities are modified and, therefore, information regarding
the location of the Property with respect to the Risk Element may change. The
Company has no obligation to advise Recipient(s) of a change in the Public
Records or to update the information in this PDR after the PDR Date. The
Residential Natural Hazard Disclosure Law states that a transferor or
transferor’s agent acting in compliance with California Civil Code § 1103.2 is
not required to notify to a transferee if the information provided
subsequently becomes inaccurate as a result of governmental action, map
revision, changed information, or other act of occurrence, unless the
transferor or agent has actual knowledge of the inaccuracy.




	6.6	 	NATURAL HAZARD DISCLOSURES.






	A.	 	“Property-Specific” versus “Structure-Specific” Reporting Standard.





     California’s Residential Natural Hazard Disclosure Law is
“property-specific.” Therefore, if any portion of the Property is located
within a specified natural hazard zone/area, then the entire Property is
regarded as being located in that zone/area. This is different from the
“structure-specific” standard for flood zone determinations under the National
Flood Insurance Program which only identifies if the structure or mobile home
on the Property is located within a special flood hazard area.




	B.	 	Reporting of Risk Elements for Condominium Projects,
Planned Unit
Developments, and Other Properties with Common or Undivided Interests.





     Because California’s Residential Natural Hazard Disclosure Law requires
disclosure if any portion of the Property is located within a specified
natural hazard area/zone, “Yes” must be marked on the natural hazard
disclosure statement if any portion of such a condominium project, planned
unit development, or common area is located within a specified hazard
area/zone, even if the primary lot comprising the Property is not directly
affected by or located within the same hazard area/zone.




	C.	 	Reporting of Risk Elements for Multiple, Parcel Transactions.





     A PDR may be issued for a Property with multiple legal parcels so long as
all parcels (1) are assigned a valid assessor’s parcel number that is
identified on the Information Page or on an addendum to this PDR; (2) are
contiguous; and (3) are transferred between the same Buyer and same Seller in
the same Transaction. Therefore, if one or more of said parcels constituting
the Property is located within a specified Risk Element, then all parcels
identified shall be considered to be affected by this Risk Element.




	D.	 	Location of a Property Relative to a Specified Natural-Hazard Zone.





     The fact that the Property is located outside of a natural hazard
area/zone according to the Public Records does not necessarily mean that the
Property may not be subject to the effects of



Exhibit J




Page 21 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




that natural hazard. Regardless of the Property’s location with respect to a
given natural hazard area/zone, the potential risk associated with such a
natural hazard should be assessed and appropriate measures should be
considered to minimize the impact of that natural hazard on the Property.





	E.	 	Specific Reporting Practices regarding the Risk Element Information.






	 	 	A. Special Flood Hazard Area (California Government Code §8589.3)

Federal law established the Federal Emergency Management Agency (“FEMA”) to
compile Flood Insurance Rate Maps (“FIRM”) identifying areas of potential
flooding from natural sources. FTRMs specify certain “zones” and are
commonly used to determine requirements for flood insurance. Any type of
zone “A” or “V” is classified by FEMA as a special flood hazard area
(“SFHA”). Federal law mandates flood insurance if any part of the structure
is located within a SFHA. However, the Residential Natural Hazard
Disclosure Law mandates disclosure if any portion of the residential
property is located within a SFHA. Therefore, even though a property may
not be deemed to be located within a SFHA for federal flood insurance
purposes, it may be within a SFHA for disclosure purposes under the
Residential Natural Hazard Disclosure Law.




If the Property has been (a) excluded from the applicable FIRM due to a
Letter of Map Revision (“LOMR”); or (b) included in the applicable FIRM due
to a Letter of Map Amendment (“LOMA”), and the LOMR or LOMA has been
provided to the Company, then this PDR will indicate the appropriate answer
on Schedule A (“Natural Hazard Disclosure Summary”). Please note: The
Company does not attach the LOMR or the LOMA to the statutory form. A copy
of the LOMR or LOMA must be attached to the statutory disclosure form by
the Seller or the Buyer must request that it be provided by the Seller.






	 	 	
B. Area of Potential Flooding (California Government Code §8589.5)

The California Office of Emergency Services (“OES”) provides the official
maps with respect to areas of potential flooding under California
Government Code §8589.4 but has yet to review and submit approved maps for
numerous dams. Please note: (1) although dams may exist, if maps regarding
a specific dam are not a part of the OES information, then this PDR may not
reference all dams within an area of potential inundation for the Property;
(2) if a map in the OES records shows areas of potential flooding, whether
or not the map has been formally marked “approved” by the OES, the area is
reported in this PDR as being within a potential flood area; and (3)
although federal dams are not subject to state laws, the federal
authorities have voluntarily provided maps or information for some dams and
to the extent such information is part of the OES official records, the
information on those dams is reported in this PDR.






	 	 	
C. Earthquake Fault Zone (California Public Resources Code §2622)

California’s Residential Natural Hazard Disclosure Law requires the
disclosure of only those faults known to date that are classified as
“active” by the State Geologist and delineated on Earthquake Fault Zone or
Special Study Zone maps issued by the California Department of Conservation,
California Geological Survey (“CGS,” formerly known as “Division of Mines
and Geology”). However, such maps have only been created and approved for a
portion of California. Therefore, if there is no official map for the area
of the Property, the Earthquake





Exhibit J




Page 22 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821





	 	 	
Fault Zone element of the Schedule A (“Natural Hazard Disclosure Summary”)
will be
marked “No.”






	 	 	
D. Seismic Hazard Zone (California Public Resources Code §2696)

California’s Residential Natural Hazard Disclosure Law also requires the
disclosure of seismic hazard zones identified on official seismic hazard
zone maps issued by the CGS as compiled by the State Geologist in
compliance with California Public Resources Code §2696. These maps identify
areas of potential liquefaction and areas of potential earthquake-induced
landslides. Please note: (1) because official seismic hazard zone maps are
currently available only for selected portions of the Bay Area and Southern
California, the Seismic Hazard Zone element of the Schedule A (“Natural
Hazard Disclosure Summary”) will be marked “Maps Not Available” for the
Property if it is located in an area for which there is no official map;
and (2) currently available official maps that include coastal communities
do not identify potential areas of tsunami or seiche.






	6.7	 	Additional Disclosures.





     Any additional disclosures contained in the Schedule B are subject to the
Reporting Standards set forth in Schedule B with that specific disclosure.



SECTION 7. Limitation on
Damages - PLEASE READ CAREFULLY.




     Recipient recognizes that the fee charged for this PDR is not of a
magnitude or in the nature of an insurance premium and does not cover the
potential liability associated with any such risks. Therefore, as part of the
consideration for this PDR, each Recipient understands and agrees to the
following damage limitations (“Damages Limit”):




	 	 	
(a) the Company’s liability to the Recipient shall only be for losses and
damages
suffered by that Recipient which are a direct result of any material
error or omission
contained in this PDR and shall be limited to the LESSER OF: (1) actual
provable
damages measured by diminution in the fair market value or fair rental
value of the
Property as of the Effective Date suffered by the Recipient as a result
of such error, or (2)
the fair market value or fair rental value of the Property as of
Effective Date as
established by the Transaction; and






	 	 	
(b) the Company shall not be liable for indirect, special, consequential,
multiple,
exemplary, or punitive damages (including but not limited to, personal
injury, property
damage, etc.) or other type of damage not listed and described in
subparagraph (a) of this
provision.





The Damages Limit shall apply to any and all claims, actions, or proceedings by
Recipient(s) regardless of whether (i) this PDR contains multiple errors or
omissions, (ii) the Property identified in this PDR consists of more than one
parcel, and/or (iii) there is more than one Recipient. In no event shall the
Company be liable for more than the Damages Limit on a cumulative basis for any
and all claims made by any or all Recipients under this PDR. Each Recipient
acknowledges that the Company shall have no responsibility or liability to the
Recipient for any matters known to the Recipient (including errors in this PDR)
and not disclosed to all other Recipients and the Company in writing prior to
the Effective Date.




Exhibit J




Page 23 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




The Company’s obligations under this PDR shall not be affected or reduced as
to the Recipient who has no knowledge of any such information which is not
disclosed by another Recipient. The Company shall also not be liable for loss
or damages (a) incurred by reason of the delay Recipient to file a claim to
the extent that such delay prejudices the right of the Company or increases
the amount of damages; and (b) voluntarily assumed by the Recipient in
settling any claim or suit without the prior written consent of the Company.
The Company shall be subrogated to any and all rights that the Recipient may
have against any other person or entity (including any other Recipient) and
such Recipient shall be obligated to cooperate with the Company in pursuing
such rights.




SECTION 8. No Duty to Defend Recipient.




     In the event of any omission or inaccuracy in this PDR, the Company shall
have NO DUTY TO DEFEND RECIPIENT or pay any costs or expenses incurred by a
Recipient in defense of a claim by reason of any omission or inaccuracy in
this PDR. Each Recipient acknowledges that Company has no obligation to defend
Recipient based upon California Civil Code §2778 or any other law. The Company
shall not be responsible or otherwise liable for any attorneys’ fees,
expenses, and costs incurred in connection with any lawsuit, action, or
proceeding based upon this PDR or a Recipient’s failure to comply with any
state or federal disclosure requirements.



SECTION 9. Claims and Notices to the Company.




     All claims and notices shall be sent by Recipient as soon as practicable
to the Company, Attn.: Legal Department. All claims must be initiated in a
timely and efficient manner but, in no event, more than six (6) months after
the discovery by the Recipient of the alleged error, claim, breach, or
omission. Failure to make such claim within this period constitutes an
absolute bar to the institution of any proceeding, claim, or action against
the Company.



SECTION 10. Arbitration.




     Unless prohibited by applicable law, either the Company or the Recipient
may require the other party to submit to binding arbitration pursuant to the
commercial arbitration rules of the American Arbitration Association.
Arbitrable matters may include, but are not limited to, any controversy or
claim between the Company and the Recipient arising out of or relating to this
PDR or arising from any service of the Company performed in connection with its
issuance of this PDR. Arbitration shall be governed by the commercial
arbitration rules in effect on the date the demand for arbitration is made and
the parties shall be entitled to discovery as permitted by applicable law.
Arbitration shall be binding. In no event shall the arbitration award (a)
exceed the Damages Limit (defined in Section 7 above), or (b) include
attorneys’ fees. Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having jurisdiction. California law shall apply to an
arbitration under this PDR. Under no circumstances shall the parties’
arbitration rights constitute a waiver of, or diminish in any way, the Damages
Limit



END OF “TERMS, CONDITIONS, AND LIMITATIONS ON LIABILITY.”

END OF PDR.




Exhibit J




Page 24 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




NATURAL HAZARD DISCLOSURE STATEMENT




This statement applies to the following property:




	 	 	 
	Property Address:

	 	SEE ADDENDUM, BREA CA 92821
	APN Number:

	 	SEE ADDENDUM







The transferor and his or her agent(s) disclose the following information with
the knowledge that even though this is not a warranty, prospective transferees
may rely on this information in deciding whether and on what terms to purchase
the subject property. Transferor hereby authorizes any agent(s) representing
any principal(s) in this action to provide a copy of this statement to any
person or entity in connection with any actual or anticipated sale of the
property. The following are representations made by the transferor and his or
her agent(s) based on their knowledge and maps drawn by the state and federal
governments. This information is a disclosure and is not intended to be part
of any contract between the transferee and the transferor. THIS REAL PROPERTY
LIES WITHIN THE FOLLOWING HAZARDOUS AREA(S):




A SPECIAL FLOOD HAZARD AREA (Any type Zone “A” or “V”) designated by the
Federal Emergency Management Agency.




Yes____ No   X   Do not know and information not available from local jurisdiction




AN AREA OF POTENTIAL FLOODING shown on a dam failure inundation map pursuant to
Section 8589.5 of the Government Code.




Yes____ No   X   Do not know and information not available from local
jurisdiction




A VERY HIGH FIRE HAZARD SEVERITY ZONE pursuant to Section 51178 or 51179 of the
Government Code. The owner of this property is subject to the maintenance
requirements of Section 51182 of the Government Code.




Yes____ No   X  




A WILDLAND AREA THAT MAY CONTAIN SUBSTANTIAL FOREST FIRE RISKS AND HAZARDS
pursuant to Section 4125 of the Public Resources Code. The owner of this
property is subject to the maintenance requirements of Section 4291 of the
Public Resources Code. Additionally, it is not the state’s responsibility to
provide fire protection services to any building or structure located within
the wildlands unless the Department of Forestry and Fire Protection has
entered into a cooperative agreement with a local agency for those purposes
pursuant to Section 4142 of the Public Resources Code.




Yes____ No   X  




AN EARTHQUAKE FAULT ZONE pursuant to Section 2622 of the Public Resources Code.




Yes____ No   X  




Exhibit J





Page 25 of 26









 








Property Address: SEE ADDENDUM BREA CA 92821




A SEISMIC HAZARD
ZONE pursuant to Section 2696 of the Public Resources Code.




Yes   X  
(Landslide Zone) Yes   X   (Liquefaction
Zone)



No____ Maps not yet released by state ______________




THESE HAZARDS MAY LIMIT YOUR ABILITY TO DEVELOP THE REAL PROPERTY, TO OBTAIN
INSURANCE, OR TO RECEIVE ASSISTANCE AFTER A DISASTER. THE MAPS ON WHICH THESE
DISCLOSURES ARE BASED ESTIMATE WHERE NATURAL HAZARDS EXIST. THEY ARE NOT
DEFINITIVE INDICATORS OF WHETHER OR NOT A PROPERTY WILL BE AFFECTED BY A
NATURAL DISASTER. TRANSFEREE(S) AND TRANSFERORS(S) MAY WISH TO OBTAIN
PROFESSIONAL ADVICE REGARDING THOSE HAZARDS AND OTHER HAZARDS THAT MAY AFFECT
THE PROPERTY.




“The representations made in this Natural Hazard Disclosure Statement and the
report are based upon information provided by a third party report as a
substituted disclosure pursuant to California’s Civil Code Section 1103.4.
Neither the transferor nor the transferor’s agent has (1) independently
verified the information contained in this form and report, or (2) is
personally aware of any inaccuracies in the information contained on the form.”




Transferor represents that the information herein is true and correct to the
best of the transferor’s knowledge as of the date signed by the transferor.




	 	 	 	 	 	 	 	 	 
	Signature
of Transferor

	 	 	 	 
	 	Date	 	 
	

	

	 	 	 	 	








Agent represents that the information herein is true and correct to the best
of the agent’s knowledge as of the date signed by the agent. Agent hereby
represents that he or she has received a copy of the Property Disclosure
Report (PDR No. 02PDS 1669/Control No. 318379) issued by the Company.




	 	 	 	 	 	 	 	 	 
	Signature
of Agent

	 	 	 	 
	 	Date	 	 
	

	

	 	 	 	 	

	 
	 	 	 	 	 	 	 	 
	Signature of Agent

	 	 	 	 
	 	Date	 	 
	

	

	 	 	 	 	








Transferee represents that he or she has read and understands this document and
has received a copy of the Property Disclosure Report (PDR No. 02PDS
1669/Control No. 318379) issued by the Company.




	 	 	 	 	 	 	 	 	 
	Signature
of Transferee

	 	 	 	 
	 	Date	 	 
	

	

	 	 	 	 	








	 	 	 
	Based on Public Record data as of the PDR Date:

	 	Monday, July 29, 2002
	Escrow No:

	 	2252674







Exhibit J





Page 26 of 26









 





Revised 11/26/03




AGREEMENT




EXHIBIT “K”




PAYMENT AND PERFORMANCE AGREEMENT




(OPTION A)




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	DESCRIPTION
	 	PAGE NO.

	ATTACHMENT “1”

	 	LEGAL DESCRIPTION OF LAND	 	 
	ATTACHMENT “2”

	 	SHEA PAPA TRUST DEED	 	 
	ATTACHMENT “3”

	 	TH680 PAPA TRUST DEED	 	 
	ATTACHMENT “4”

	 	MINERAL PAPA	 	 







 i




 









 





PAYMENT AND PERFORMANCE AGREEMENT


          This Payment and Performance Agreement (“PAPA”) is made this        day of
           , 2003, by and between NUEVO ENERGY COMPANY, a Delaware corporation
(“Nuevo”) and TONNER HILLS SSP, LLC, a Delaware limited liability company, and
TONNER HILLS 680 LLC, A Delaware limited liability company (collectively,
“Developer”). Nuevo and Developer are hereinafter individually or collectively
referred to as a “Party” or the “Parties.”



PREAMBLE:




     A. Concurrently herewith, Developer has acquired from Nuevo that certain
real property located in Orange County, California, more particularly described
on Attachment “1” which is appended hereto and incorporated herein by this reference
(“Property,” “Parcel” or “Land”).



     B. In accordance with the Purchase and Sale Agreement, of even date
herewith,
pursuant to which Developer acquired the Land (“Agreement” or “PSA”), the
Parties are setting
forth herein certain (i) obligations of Nuevo and Developer regarding the
Programs (defined
below in Section 2) and (ii) provisions for payments Developer is
obligated to make to Nuevo.



     C. As described herein, Nuevo assumes certain specified obligations with
respect to
each of the Programs, and Developer expressly assumes other specific
obligations as well as all
obligations with respect to the Programs not specified as Nuevo’s
responsibility.



1









 





          NOW, THEREFORE, in consideration of the PREAMBLE, covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, including without
limitation the conveyance of the Land to Developer by Nuevo, the Parties
hereby covenant and agree as follows:



          1. Definitions. Unless otherwise expressly provided herein, the following
words and phrases when used in this PAPA shall have the following meanings;
all terms not specifically defined herein shall have the meaning prescribed
for them in the Agreement or elsewhere in the Development Documents.



               1.1 Agreement. “Agreement” or “PSA” shall mean that certain
agreement described in Paragraph “B” of the Preamble to this PAPA.



               1.2 BlackSand PSA. “BlackSand PSA” shall mean that certain
Purchase and Sale Agreement between Nuevo and BlackSand dated February
28, 2003
(“BlackSand PSA”). Developer acknowledges that it has a copy of the
BlackSand PSA together
with all exhibits thereto. The terms “Property Minerals” and “Property
Interests” as used in this
PAPA are defined in the BlackSand PSA.



               1.3 Development Areas. “Development Areas” shall have the
meaning prescribed in Section 1.1.10 of the Agreement.



               1.4 Development Documents. “Development Documents” shall have
the meaning prescribed in Section 1.1.11 of the Agreement.



2









 





               1.5 Development Reimbursement Monies. “Development
Reimbursement Monies” shall have the meaning prescribed in Section 1.1.12
of the PSA.



               1.6 CDOGGR. CDOGGR shall mean the California Department of
Conservation, Division of Oil, Gas and Geothermal Resources.



               1.7 Lessee. “Lessee” shall mean Aera Energy LLC as the Lessee of
the Minerals described in that certain Oil and Gas Lease, as amended,
dated February 26, 1901,
and recorded in Book 2, Page 128 of the Official Records of Orange County,
California.



               1.8 PAPA Trust Deed. “PAPA Trust Deed” or “PAPA TD” shall
mean collectively that certain deed of trust securing this PAPA and other
obligations specified
therein in the form of Attachment “2” (individually, the “Shea PAPA Trust
Deed”) and
Attachment “3” (individually, the “TH680 Trust Deed”) which are appended
hereto and
incorporated herein by this reference. The PAPA Trust Deed shall be
recorded as described in
the Escrow Instructions.



               1.9 Parcel. “Parcel,” “Property” or “Land” shall have that meaning set
out in Section 1.1.32 of the Agreement.



               1.10 Park. “Park” shall mean that portion of the Development Areas
designated as Wildcatter Park insofar as Wildcatter Park overlays that
certain Oil and Gas Lease



3









 





described in Section 1.6, as more specifically depicted on the Level A Final
Map for the Tonner Hills Project.



               1.11 Programs. “Programs” shall refer collectively to the
Aera
Program, the Permit Program and the Hover Program, each of which shall
have the meaning set
forth in Section 2 of this PAPA.



               1.12 Unavoidable Delay. “Unavoidable Delay” shall mean any
prevention, delay or stoppage in the completion of a Party’s work as
defined herein caused by
fire, explosion, unavailability or breakdown of machinery or equipment or
by acts of God, war,
riot, civil insurrection, terrorism, labor disputes, inability to obtain
labor or materials or
reasonable substitutes therefore, any order, regulation, request or
recommendation of a
Governmental Agency, other similar matters or causes beyond the reasonable
control of the
responsible party other than for the payment of money; provided however,
that nothing in this
Section shall excuse the performance of any act rendered difficult solely
because of the financial
condition of a Party.



          2. Programs.



                    2.1
Aera Program. Nuevo has entered into an Oil
Accommodation and Surface Development Agreement with Aera Energy LLC (“Aera
Agreement”), a copy of which has been provided to Developer, under which (a)
certain wells within the Park shall be shut-in, plugged and abandoned in
accordance with the requirements of CDOGGR, (b) certain other wells shall be
temporarily shut-in and accommodated to those



4









 





standards established for well accommodation within the Development Areas as
more particularly described in the Mineral PAPA that is Exhibit I to the
Mineral Agreement; (c) certain pipeline and facilities shall be relocated by
Aera within a relocation corridor (“Relocation Corridor”) and other surface
facilities shall be removed, and (d) other activities shall be performed, all
as more particularly set out in the Aera Agreement. Such activities are
collectively referred to as the “Aera Program.”



                    2.1.1 Responsibilities for Aera Program. Both
Nuevo and
Developer hereby assume and agree to perform certain obligations and
responsibilities contained in the Aera Agreement or related to the Aera
Program. A description of such obligations, associated notices and time
schedules are more particularly set out in the Aera Agreement and herein. The
following table designates the tasks which each party hereby assumes the
responsibility for performance:



	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Nuevo

	 	Aera Sec 1.1
	 	 	1	 	 	Notice to Aera to shut down
specified wells.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 1.2
	 	 	2	 	 	Notice to Aera to shut down
Columbia #17 Well.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 1.5 &
1.6
	 	 	3	 	 	Execution of instruments accepting
responsibility for applicable
wells and
filing Quitclaim and Report of Well
Transfer (“Transfer Documents”).







5









 






	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Nuevo

	 	Aera Sec 1.7
	 	 	4	 	 	Acceptance of responsibility and
control from Aera of Task No. 1
Wells and equipment affected by the
transfer, future costs,
indemnification
and release provisions, except as to
Columbia #17 Well, until Final
Acceptance hereunder.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 1.7
	 	 	5	 	 	Same as Task 4 insofar as same
applies to Columbia #17 Well.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	PAPA Sec
2.1.10
	 	 	6	 	 	With respect to Columbia #23, 59 and
69 Wells, Developer shall execute
Transfer Documents accepting
responsibility for the wells
simultaneous with Nuevo’s execution
of Transfer Documents. With respect
to wells under Task 1 and Columbia
#70 Well, Developer shall execute
Transfer Documents upon Final
Acceptance.
	 
	 	 	 	 	 	 	 	 
	Nuevo as to all
Wells except
Columbia #17 Well

	 	Aera Sec 1.8
	 	 	7	 	 	No right to produce applicable
transferred Wells.
Plug and abandon Wells.
	 
	 	 	 	 	 	 	 	 
	Developer as to
Columbia #17 Well
and all Wells after
Final Acceptance

	 	PAPA Sec
2.1.10


Aera 1.8
	 	 	8	 	 	No right to produce transferred
Wells. Plug and abandon Wells.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.1
	 	 	9	 	 	Preparation and submittal to Aera of
engineering plan and design
specifications for Columbia #27
Well.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.2
	 	 	10	 	 	Payment to Aera for its portion of
estimated Columbia #27 Well costs.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.3
	 	 	11	 	 	Except as provided under Task 12,
perform accommodation work for
Colombia #27 Well not performed by
Aera.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 2.3
	 	 	12	 	 	Compaction of access road, fencing,
security and aesthetic screening for
Columbia #27 Well.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.4
	 	 	13	 	 	Responsibility for (i) Wellbore or
conductor casing damage caused by
Nuevo, and (ii) excess downtime of
wells to be returned to production
cause by Nuevo.







6









 






	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Developer

	 	Aera Sec 2.4
	 	 	14	 	 	Task 13 (ii)Developer liable for
excess downtime caused by
Developer.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 2.5
	 	 	15	 	 	Additional operations costs required
as a result of the Encumbrance
Documents.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 3.1
	 	 	16	 	 	$30,000 deposit payment to Aera.
Review and comment on plans to
relocate Major Utilities and Minor
Utilities into Relocation Corridor.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 3.2
	 	 	17	 	 	Grade Relocation Corridor to within
two (2) feet of final grade and
preparation required to receive
Major Utilities.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 3.3
	 	 	18	 	 	Notice to Aera to remove steam
generators. Make payment of $30,000
to Aera.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 4.1


PAPA Sec 2.1.5
	 	 	19	 	 	Remediate oil impacted soils under
Task 7 & 11. Name Aera as an
additional Insured as to any
environmental policy as to Affected
Area.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.1
PAPA Sec 2.1.5
	 	 	20	 	 	All remediation other than Task 19
within Affected Area.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.1
	 	 	21	 	 	Remediation necessary to plug
Columbia #17 Well (if plugged
pursuant to Aera Program). Name
Aera as an Additionally Insured on
any environmental policy Developer
acquires as to Affected Area.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.2
	 	 	22	 	 	Other than for Task 19 environmental
remediation, additional assessments
and work within Affected Area to be
performed at no cost to Aera.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.4
	 	 	23	 	 	Duties to Aera if additional
grading is
required outside of the Affected
Area.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 5.1
and 5.2
	 	 	24	 	 	Provide and pay for required
security
fencing, aprons and gates while
plugging or accommodating wells that
are Nuevo’s responsibility under
Tasks numbered 7 and 11. Submit
plans to Aera for review and comment
relating to foregoing.







7









 






	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Developer

	 	Aera Sec 5.1
and 5.2
	 	 	25	 	 	Provide and pay for all
fencing, gates,
aprons and grades other than as
required by Task Number 24.
Submit
plans to Aera for review and
comment
relating to foregoing.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 6
	 	 	26	 	 	Enter into Utility Easement
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 7
	 	 	27	 	 	Amend existing licenses
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 8
	 	 	28	 	 	Enter into reciprocal grading

licenses







               2.1.2 Party Performance. Nuevo shall undertake the performance of those
tasks and activities specifically designated herein as Nuevo’s
responsibility. Developer shall undertake all tasks and activities under the
Aera Agreement and in this PAPA that are not expressly assumed by Nuevo.



                    2.1.3 Commencement of Aera Program. With regard to
the
Tasks that are Nuevo’s responsibility, upon thirty days prior written notice
from Developer, Nuevo shall (i) provide notice to Aera (accompanied by deposit
or payment if so required) to commence those tasks and activities which are
Aera’s express responsibility under the Aera Agreement and which are not
conditioned upon the occurrence of a specified event, (ii) provide notice to
Aera (accompanied by deposit or payment if so required) to commence those
tasks and activities upon the occurrence of specified events if Aera’s
performance is contingent upon such occurrence, (iii) commence its performance
of activities associated with those tasks that are Nuevo’s responsibility.



                    2.1.4 Removal of Surface Facilities and Subsurface
Pipelines.
After transfer of the wells to Nuevo from Aera, as set forth in Section 2.1.1
above, and prior to commencement of grading operations, each wellhead impacted
by the grading will be surveyed



8









 





and marked by Nuevo one (1) time only and Developer will inspect and approve
the markings. After inspection and approval of the well markings, Developer
will be responsible for grading around the well casings without damaging them.
Upon approval of the well markings, Developer shall proceed with grading in a
timely manner and be responsible to pay, and shall be solely liable for any
and all damage to any wells caused by Developer’s grading operations.



                    2.1.5 Remediation Responsibilities. With respect to
the Aera
Program, Nuevo shall be responsible for remediation and clean-up of any crude
oil impacted soil attributable to the wells to be abandoned within the Park.
Developer shall be fully responsible for all other remediation and clean-up
activity of any kind or character, including but not limited to funding,
implementing and completing all environmental testing, assessment, remediation,
monitoring, reporting or other requirements with respect to all other
environmental (including Hazardous Materials as defined in the Agreement),
crude oil or oil well production impacts.



                    2.1.6 On-Site Representative. Nuevo and Developer
shall each
have the right to have representatives on-site at the time wells are abandoned
or accommodated, before the grading begins and during the grading operations on
the Parcel to observe such operations. Developer agrees to give Nuevo fifteen
(15) days notice prior to commencement of grading to allow each to arrange to
have a representative on-site.



                    2.1.7 Well Abandonment and Accommodation. As part of
the
Aera Program, Nuevo will relocate below the surface of the grade the operating
wellhead for Columbia #27 Well. Developer shall be responsible for and shall
install screening devices and other improvements as if such well were
accommodated in the Development Areas under the



9









 





Mineral PAPA. In addition, at Nuevo’s cost, Nuevo shall plug and abandon Wells
42, 58, 64, 66, 70, 73 and 75 lying within the Park and Well 28 located
outside of the Park, but within the area subject to the oil and gas lease
under which Aera Energy LLC is Lessee. Such wells shall be abandoned to the
same standards as those wells abandoned within the Development Areas.



                    2.1.8 Developer Grading. Developer shall perform
grading
operations in a manner consistent with its obligations in the Mineral PAPA
including but not limited to compliance with permits and the Development
Documents, preparing and designing plans consistent therewith, providing
appropriate notices, assuming responsibility for all remediation activity
not assumed by Nuevo, accommodation of unidentified wells and preparing and
submitting all required reports. In addition, Developer shall be responsible
for all costs and expenses that result from damages to wells or facilities or
injury to persons or property caused by Developer’s grading operations.



                    2.1.9 Aera Scope of Work. Among other matters, Aera
is
responsible under the Aera Agreement for the preparation and development
of certain engineering plans and the relocation and removal of certain
facilities and equipment. To the extent that Nuevo has not assigned the Aera
Agreement in its entirety to Developer and Developer incurs damages as a result
of Aera’s failure to perform, Nuevo shall use good faith and commercially
reasonable efforts to secure Aera’s timely performance, but shall not be liable
to Developer for Aera’s failure to timely perform. At Developer’s request,
Nuevo shall assign to Developer any rights it has under the Aera Agreement
necessary to assert a claim against Aera resulting from an alleged breach or
failure to perform by Aera. With regard to such claim by Developer, Nuevo
shall have no obligation or responsibility to participate in such lawsuit or



10









 





action, except to the extent that such participation is legally required in
order for Developer to assert a claim. Nuevo shall reasonably cooperate with
Developer and such cooperation or participation, as a party or otherwise,
shall be at the cost and expense of Developer and Nuevo shall be indemnified
from Losses resulting therefrom as provided in the Agreement. Nuevo makes no
warranty or representation and shall have no liability for the outcome thereof
or damages awarded therein.



                    2.1.10 Aera Program Final Acceptance. Upon delivery of
Transfer Documents from Aera to Nuevo for Columbia #23, #59, and #69 wells,
Final Acceptance shall be deemed to occur by Developer. For other wells, on a
well-by-well basis, Nuevo shall notify Developer in writing that it has
completed the abandonment or modification of each of the wells specified in
Section 2.1.1. With respect to wells to be abandoned, Nuevo shall not provide
such notice to Developer until it has submitted to CDOGGR the required summary
and well report (“Report”). Within ten days of such notice, Developer shall
conduct a final inspection of such abandoned or accommodated well and shall
advise Nuevo in writing within ten days thereafter of acceptance of the work
(“Final Acceptance”). Should Developer fail to inspect the well within the time
period specified, Final Acceptance for such well shall be deemed to have
occurred. Should Developer inspect the well and, in the exercise of its
reasonable commercial judgment, deem such work to be substantially incomplete,
it shall notify Nuevo in writing within such ten day period after the
inspection specifying any unresolved items and the actions that Developer
believes are reasonably necessary to gain Final Acceptance. Should CDOGGR
reject the Report and request additional well abandonment work, Final
Acceptance shall be deemed rejected and Nuevo, at its cost and expense, shall
undertake those additional actions specified by CDOGGR. Upon completion of such
additional work, Nuevo



11









 





shall submit its notice to Developer and the parties shall follow the
procedures set out herein for securing Final Acceptance. If the parties cannot
resolve any item for which acceptance is requested, such unresolved item shall
be submitted to arbitration in accordance with the Agreement. Upon Final
Acceptance, Nuevo shall transfer such wells to Developer who shall execute
Transfer Documents removing Nuevo as the record operator. Upon Final
Acceptance, Developer shall be deemed to have accepted full and complete
responsibility and control of the abandoned wells and equipment, if any,
affected by the transfer and Nuevo shall be expressly relieved from further
responsibility as set out in Section 3.5. In no event will Developer, or its
successors and assigns reenter or activate any abandoned or idled well.



               2.2 Permit Program. Nuevo shall perform all activities required by the
Habitat Mitigation and Monitoring Plan (“Restoration Plan”) with respect to
the PA-7 Habitat Restoration Area, the approximate 20-acre PA-4 Habitat
Restoration Area and the remaining 87 acres of additional habitat restoration
(“Remainder Habitat Restoration Area”). Collectively, such activities are
referred to as the “Permit Program.”



                    2.2.1 Permit Program Implementation. With respect to the
Permit Program, Nuevo shall continue to use commercially reasonable efforts to
complete the program in a timely manner consistent with the Restoration Plan.
Upon completion of the Permit Program with respect to the PA-4 Habitat
Restoration Area, Nuevo shall advise Developer by written notice when it has
received certification from the permitted biologist designated within the
Restoration Plan (“Certification”) that the PA-4 Habitat Restoration Area is
occupiable as required by the Restoration Plan. Nuevo shall further advise
Developer by written notice when it has received a Certification that PA-7 is
occupied as required by the Restoration Plan. Upon



12









 





receipt of each Certification, Final Acceptance by the Developer, as defined
in Section 3.5, shall be deemed to have occurred.



With respect to the Remainder Habitat Restoration Area, Final Acceptance shall
occur upon the first anniversary of completion of the restoration scope of work
for the area if the survivability standards for vegetation set out in the
Restoration Plan have been met, as evidenced by the joint written opinion of
the Chambers Group (representing Nuevo) and the Bon Terra Group (representing
Developer), who shall act jointly as biological monitor under this PAPA for the
Remainder Habitat Restoration Area. Either party, in its sole discretion, may
appoint a different biological monitor to represent its interest, replacing the
named biologist, to represent that Party’s interests by providing the other
written notice. The biological monitors shall provide Developer and Nuevo with
written notice of their opinion that the survivability standards have been
attained, which certification shall be deemed Final Acceptance by the
Developer. In the event the biological monitors determine that any species
planted and maintained within the Remainder Habitat Restoration Area does not
meet the survivability standards set out in the Restoration Plan, the monitors
shall so advise Nuevo and Developer in writing, setting out (i) those
additional actions to be taken or the number of additional plants required
which, in the joint opinion of the biological monitors, are reasonably required
to bring the Remainder Habitat Restoration Area into compliance with the
Restoration Plan survivability standards and, (ii) the cost estimated by the
biological monitors to complete such additional work (“Additional Cost”)
Developer shall be entitled to withhold such “Additional Cost” from the
Additional Purchase Price up to $150,000.00, which Additional Cost shall be
placed into escrow pending Nuevo’s completion of the additional work.
Irrespective of the estimated cost, Nuevo, at its own cost and expense, shall
complete such additional work. Upon completion of such additional plantings or



13









 








actions, the biological monitors shall then give an opinion certifying that
such plantings or actions required of Nuevo have been satisfactorily
completed. Upon certification by the biological monitors that the additional
planting or additional actions have been completed by Nuevo, the Remaining
Habitat Restoration Area shall be deemed Finally Accepted by Developer under
Section 3.5 and the Additional Cost shall be released to Nuevo from escrow. It
is not the intention of the parties that the release of the Additional Cost is
conditioned upon meeting the survivability standards specified for subsequent
years. Rather, it is the intention of the parties that the Additional Cost
will be released upon completion of those actions taken after the first
anniversary that the biological monitors believe are reasonably necessary to
attain future survivability standards.



Nuevo shall be relieved of any and all liability related to each restoration
area upon Final Acceptance as further provided in Section 3.5. Notwithstanding
anything to the contrary contained herein, with respect to each area prior to
receipt of Certification, Developer shall not be liable or responsible for any
costs or increased costs which are related to the planting and revegetation of
each area, all of which costs shall be the responsibility of Nuevo.



               2.3 Hover Program. Pursuant to the Hover Agreement, as defined in Section
1.1.28 of the Agreement, and Exhibit “G-2” more particularly entitled “First
Amendment to Option Agreement” dated September 28, 2001 and the Agreement
Between Adjacent Land Owners dated October 9, 2001 (collectively “Hover
Agreements”), Nuevo undertook the following obligations:



14









 





     Under Exhibit “G-2” to the Hover Agreement:




	I.	 	Well Abandonment Plan (“WAP”)
	 
	II.	 	Remedial Action Plan (“RAP”).
	 
	III.	 	Corridor Easement, Street Easement, Drainage Easement and
other
Non-Exclusive Easements (includes dismantling two (2) water
tanks and
relocation on a temporary basis one (1) water tank at the East
Naranjal Tank Farm).





     Under the Agreement Between Adjacent Landowners:




	I.	 	Grant of Slope Easements
	 
	II.	 	Grant of Retention Basin Easements (includes possible
relocation of oil field
pipelines in Section 2.7 at Hover’s expense up to $25,000).
	 
	III.	 	Spoils Export Easement (includes possible relocation of
oil field pipelines in
Section 3.4 at Hover’s expense up to $50,000).





The rights, privileges, duties and obligations under the Hover Agreements
retained by Nuevo and that collectively constitute the “Hover Program” are as
follows:



15









 









	(a)	 	Well Abandonment Plan: The Well Abandonment Plan as
it applies to
E. Naranjal Wells No. 21, 22, 23 and 36 and is described at Item I.
and at Item V.
in Exhibit “G 2” to the Hover Agreement.
	 
	(b)	 	The Escrow Account: The escrow account, as referenced at
Section 2.2.2 of the
Hover Agreement, contains $600,000 which amount has been
previously
collected by Nuevo as a result of its “Soil Remediation” activities
referenced in
said Section 2.2.2. The balance of the escrow account is payable
to Nuevo upon
completion of the Well Abandonment Plan referenced above.
	 
	(c)	 	Stand-Alone Insurance: Nuevo is required to participate in the
acquisition of an
insurance policy. This requirement is fully addressed at Section
5.27 of the Hover
Agreement.
	 
	(d)	 	Remedial Action Plan: The Hover Agreement’s “Remedial Action
Plan” is
described at Item II in Exhibit “G 2” to the Hover Agreement.
Nuevo has
previously received a closure letter from the Orange County Health
Care Agency,
subject only to removal of inaccessible soils which requires the
removal of two
water tanks at the East Naranjal tank farm and soils associated
with East Naranjal
Well 36, a well under the Well Abandonment Plan. Nuevo anticipates
this will be
finalized prior to the Close of the Agreement between Nuevo and
Developer.





                    2.3.1 Hover Final Acceptance. Upon completion of the Hover Program,
Nuevo shall provide Developer written notice, at which time Developer shall
have ten



16









 





days to inspect the work completed. Within ten days thereafter, Developer
shall advise Nuevo that it concurs that the Hover Program has been
substantially completed in accordance with the Hover Agreements. Such
communication shall be deemed Final Acceptance and thereafter all duties,
obligations and liabilities for the Hover Program shall be the sole
responsibility of Developer as further provided in Section 3.5. Should
Developer determine that the Hover Program has not been substantially
completed in accordance with the Hover Agreement, it shall advise Nuevo of
those items which it deems unsatisfactory and the actions it requests that
Nuevo take. Upon completion of such additional actions by Nuevo, Developer
shall again be notified and shall have ten days to inspect the work performed
by Nuevo. Within ten days thereafter, Developer shall provide its Final
Acceptance. Should Developer and Nuevo disagree on whether the Hover Program
has been substantially completed, such matter shall be submitted to
arbitration in accordance with this PAPA.



          3. Program Implementation.



               3.1 Duty to Cooperate. Developer shall use good faith, commercially
reasonable efforts to timely and expeditiously perform its obligations and
rights under this PAPA in a manner that minimizes the interruption or
curtailment of production by Lessee or Operator. To the extent that Developer
fails to fully and timely cooperate with Nuevo, and Nuevo, as a result of
Developer’s acts or omissions, incurs penalties, damages or incremental costs
in performing any of the Programs, such penalty, damage or cost shall be the
responsibility of Developer and Developer hereby agrees to defend, indemnify
and hold Nuevo harmless therefrom. Developer shall also be liable to Nuevo for
any and all incremental reasonable cost or expense incurred by Lessee related
to Lessee’s performance of its obligations in the Aera



17









 





Program or a delay in returning temporarily shut-in wells to production which
result from Developer’s failure to comply with the provisions of this Section.
Developer expressly agrees to pay such incremental Lessee costs which shall not
be deemed to be either Additional Purchase Price or Reimbursement Amounts and
Developer hereby releases and shall defend, indemnify and hold Nuevo harmless
therefrom. Nuevo shall use good faith, commercially reasonable efforts to
timely and expeditiously perform its obligations and rights under this PAPA in
a manner that minimizes the interruption of development of the Project by
Developer. To the extent that Nuevo has not assigned in its entirety necessary
to Developer any agreement with a third party to perform all or part of the
Hover Program or the Permit Program, and Developer incurs damages as a result
of any such third party’s failure to timely perform under such agreement, Nuevo
shall use good faith and commercially reasonable efforts to secure such party’s
performance, but shall not be liable to Developer for such party’s failure to
timely perform. At Developer’s request, to the full extent assignable without
consent, Nuevo shall assign to Developer any rights it has under such agreement
necessary to assert a claim against such third party resulting from an alleged
breach or failure to perform by such party. With regard to such claim by
Developer, Nuevo shall have no obligation or responsibility to participate in
such lawsuit or action, except to the extent that such participation is legally
required in order for Developer to assert a claim. Nuevo shall reasonably
cooperate with Developer and such cooperation or participation, as a party or
otherwise, shall be at the cost and expense of Developer and Nuevo shall be
indemnified from Losses resulting therefrom as provided in the Agreement. Nuevo
makes no warranty or representation and shall have no liability for the outcome
thereof or damages awarded therein.



               3.2 Insurance. Each Party shall use commercially reasonable efforts
to name the other Parties as Additional Insured, on each Party’s standard
blanket insurance policy



18









 





covering its activities in connection herewith, for the duration of their
construction or their activities on any portion of the Property.



               3.3. Performance by Each Party. Each party shall be responsible for
bearing all costs and expenses associated with the performance of its
obligations under each Program. Such costs shall not be considered Development
Reimbursement Monies as defined in the Agreement. Each party shall timely
commence and complete its respective responsibilities under each Program
exercising commercially reasonable effort and care. With respect to each
Program, Nuevo shall not be obligated to design, construct or install any
improvements nor undertake work or activities other than those specified in
Section 2. Should Developer’s failure to perform, including, without limitation
its obligations under Section 2, other than for the payment of money, or should
Nuevo’s failure to complete any aspect of the work or any Program result from
an Unavoidable Delay, such required performance shall be excused for the period
of time that the Unavoidable Delay prevents performance. Provided, however,
that nothing in this Section shall excuse the performance of any act rendered
difficult solely because of the financial condition of a party. In the event
that any delay due to Unavoidable Delay is anticipated by a Party, such Party
shall promptly notify the other parties of such delay, its cause and the
estimated duration of the delay. Each Party shall exercise due diligence to
shorten, mitigate and avoid the effects of the delay and shall keep all Parties
informed as to its efforts.



               3.4 Independent Contractor. The acts or omissions of Lessee, Developer or
Nuevo in accordance with the terms of this PAPA may not be imputed to the
other parties unless expressly stated herein or otherwise agreed to in
writing. Developer and Nuevo



19









 





are each performing their obligations hereunder as independent contractors and
not as a subcontractor or agent of Lessee or the other.



               3.5 Final Acceptance. At all times, Developer shall be solely responsible
for and shall indemnify and hold Nuevo harmless from all Losses and
Environmental Losses (as defined in the Agreement) related to activities in the
Aera Program that are designated as Developer’s responsibility herein. Prior to
Final Acceptance, as set out in each Program, Nuevo shall be responsible for
and shall hold Developer harmless from all Losses associated with performance
of activities designated as Nuevo’s responsibility in the Programs. At all
times, after Final Acceptance of each Program segment performed by Nuevo, shall
be released and Developer shall indemnify and hold Nuevo harmless from and be
solely responsible for all Losses and Environmental Losses for that Program
segment. Developer’s indemnities herein shall be deemed for all purposes to be
an indemnity under Sections 3.7 and 3.9 of the Agreement. To the extent that
any additional work is required to be performed after Final Acceptance, such
work, if any, and all costs and expenses related thereto shall be borne by the
Developer. After Final Acceptance by Developer of each Program component,
Developer shall be solely responsible for all maintenance, revegetation,
repair, replacement, removal, and reinstallation of any completed work
including, but not limited to, the cost of future relocation of such work
requested by Developer and performed by Lessee. After Final Acceptance by
Developer of each task performed by Nuevo in the Aera Program, Developer shall
be bound by and responsible for the indemnity and release provisions contained
in Section 10 and 11 of the Aera Agreement. Prior to Final Acceptance of each
Task performed by Nuevo, the obligations under Section 10 and 11 of the Aera
Agreement shall be the responsibility of Nuevo.



20









 





          4. Permit Program Reimbursement.



               4.1 Reimbursement Plan. Developer and Nuevo agree that Nuevo shall be
paid an Additional Purchase Price for the performance of the Permit Program.
The following payments shall be made, all of which are more specifically set
out in the Agreement:



     (i) $2 million paid directly to Nuevo upon approval of U. S. Fish and
Wildlife of the Restoration Plan. Provided, however, should such approval
occur before Closing of the transaction as set out in the Agreement, such
amount shall be paid as part of the Purchase Price at Closing.



     (ii) $3 million paid directly to Nuevo upon receipt of a Certification
that the PA-7 habitat restoration area is being utilized by California
gnatcatchers according to the United States Fish and Wildlife Service
Biological Opinion performance standard.



     (iii) $1.5 million paid directly to Nuevo upon receipt of a Certification
that the PA-4 habitat restoration area is occupiable by California
gnatcatchers in accordance with United States Fish and Wildlife Service
Biological Opinion performance standard.



     (iv) $2 million paid directly to Nuevo upon the one year anniversary of
the completion of the planting of the revegetation set out in the initial Scope
of Work required by the Restoration Plan for the Remaining Habitat Restoration
Area.



21









 





     Should the biologists fail to agree on either the satisfaction of the
survivability standards or the additional actions to be taken to meet such
standards, upon receipt of an arbitrator’s opinion that the standards have
been met or upon completion of further actions set out by the arbitrator.
Should the project be modified as a result of new or additional Government
Agency requirements prior to Final Acceptance, all such costs shall be borne
by Nuevo. However, should such Government Agency requirements result from the
modifications requested by Developer or as a result of the mutual agreement of
the Parties, such costs shall be borne by Developer.



          5. Liabilities and Responsibilities.



               5.1 Liability Allocation. Either Nuevo or Developer may seek arbitration
as provided in Section 7.2.2 to obtain damages for losses suffered as a result
of the failure to either Party to perform hereunder or to resolve disputed
issues in the performance of the Programs. All disputes between the Parties
herein shall be resolved through arbitration. Any award in such arbitration
shall be limited to the recovery of actual direct damages. Neither Party shall
be entitled to indirect, consequential, special, exemplary or punitive damages.
After Final Acceptance by Developer, Developer shall have no cause of action
against Nuevo, or its successors or assigns with respect to the Programs. Under
no circumstances shall Developer assert any claim or cause of action against
Lessee except to the extent such action is permitted by the Aera Agreement and
Nuevo is indemnified and held harmless therefrom. Developer may, in its
reasonable discretion, maintain a lawsuit, arbitration or other action against
any construction entities hired by Nuevo (but not Nuevo itself) to perform work
on the Programs pursuant to a written contract (“Construction Entities”), to
obtain damages for losses suffered as a result of



22









 





Nuevo’s failure to properly complete the Programs, to the extent caused by
such Construction Entities. In that regard, to the extent it possesses and may
assign same, Nuevo hereby conveys, transfers and assigns (and, if necessary,
will convey, transfer and assign at such time as such cause of action arises)
to Developer a nonexclusive assignment of its rights and interests in and to
any relevant contracts or subcontracts, for the limited purposes stated
herein, without any obligation by Nuevo to participate in such lawsuit or
action, as a party or otherwise, and without any responsibility, warranty,
representation or liability for any outcome pursuant thereto or damages
awarded therein. Construction Entities include contractors, subcontractors,
materialmen or other independent entities, but not Nuevo, their respective
constituent partners, officers, employees or any other related entities. Upon
ten (10) days written request, Nuevo will provide Lessee and Developer with a
list of such Construction Entities which have supplied Nuevo with the
Preliminary Notice prescribed by the California Civil Code for the maintenance
of mechanic’s lien rights (see Exhibit “F” to the PSA). Nuevo further agrees
to not enter into any contract with a Construction Entity that waives the
liability for such entity’s negligence.



               5.2 The Programs and Party Responsibilities. Except as otherwise provided
herein, each party shall cooperate with the other in the completion of the
Programs and each Party shall perform its obligations in a commercially
reasonable manner, and in good faith, as described below and elsewhere herein.
It is understood and agreed that Developer shall have the primary
responsibility for and shall, at its sole cost and expense, complete all work
required to accomplish the “Developer Improvements,” including but not limited
to: (a) soil remediation not designated as the responsibility of Nuevo in this
PAPA, (b) relocation of third party easements and licenses (“TPEL”), (c) all
matters to the extent allocated to Developer herein, and (d) Mass Grading
operations in a commercially reasonable manner to attain completion of such



23









 





operations in the shortest time so as to minimize the disruption of Lessee’s
remaining oil operations. Developer shall fully cooperate with Nuevo and
Lessee in the implementation of each Program. Developer shall (i) timely
process all of its permit requests; (ii) comment on all applicable submittals
of specifications or plans within ten days; and (iii) make all facilities
available for accommodation under the Programs such that Nuevo may commence
its activities hereunder in a timely manner. In addition, Developer remains
responsible for those obligations set out as Developer’s responsibility in the
Agreement this PAPA and other Development Documents whether or not a part of
the Programs. The activities and tasks performed by Nuevo in each of the
Programs shall be undertaken in accordance with standards promulgated at the
time of such work by CDOGGR with respect to well abandonment or such other
Governmental Agency having jurisdiction over the activity, all subject to, and
as further described herein.



          6. PAPA Trust Deed.



               6.1 Obligations Secured by PAPA Trust Deeds. Certain obligations under
the PAPA, including the obligations which are set out in the PAPA Trust Deeds
hereunder, are secured by the PAPA Trust Deeds recorded against the Land in
the form of Attachment “2” and Attachment “3” which are appended hereto and
incorporated herein by this reference. The obligations secured by the PAPA
Trust Deeds are described as follows:



                    6.1.1 Indemnities. The obligation to perform the indemnities and to pay
any and all amounts, costs and fees for which the Developer is responsible as a
result of



24









 





the indemnity obligations contained herein and in Section 3.7, Section 3.9 and
elsewhere in the Agreement.



                    6.1.2 Development Reimbursement Monies. The obligation to
pay any and all amounts described in Section 2.2.3 and 2.2.4, if
applicable,
of the Agreement as Development Reimbursement Monies.



                    6.1.3 Agreement Payment Obligations. All other payment
obligations under the Agreement, including without limitation, interest as
described in Section 5.2 thereof.



               6.2 Partial Release of Homes. Except as provided in Section 14 of the
Development Declaration, and Section C(5) of the PAPA Trust Deed attached
hereto as
Attachment “2,” and as further provided in the PAPA Trust Deeds, upon
Nuevo’s receipt and
approval of the amounts specified in, and upon compliance with the
applicable provisions of, the
PAPA Trust Deeds, Nuevo shall release portions of the Property from the
lien or charge of the
PAPA Trust Deeds, as provided for in the PAPA TDs.



               6.3 Release of Community Facilities. As further provided in the
PAPA Trust Deed, concurrently with the conveyance to a Master Association
or any Association
or Governmental Agency of any Community Facilities, and upon written
request accompanied
by evidence of such Close of Escrow and conveyance satisfactory to Nuevo,
Nuevo shall,
without the payment of any consideration (other than reimbursement of
Nuevo’s reasonable
costs), release such Community Facilities from the lien or charge of the
PAPA Trust Deeds.



25









 





               6.4 Cross Default.
The PAPA Trust Deeds shall provide that a default
under the Shea PAPA Trust Deed (Attachment “2” hereof) shall be deemed a
default under the TH680 PAPA Trust Deed (Attachment “3” hereof).



          7. Miscellaneous.



               7.1 Assumption of
Obligations: As set out in the Agreement, Developer has
assumed certain rights and all duties, obligations and liabilities of both
Nuevo and of the Developer in the Mineral PAPA.



               7.2 Default/Cure.
Upon the occurrence of an Event of Default or Default (as
defined in Section 5.8.1 of the Agreement) by Nuevoin its performance of its
responsibilities under any of the Programs, as set out herein, and Nuevo, has
failed to cure or commence and continuously prosecute a cure within the time
periods specified in Section 5.8.1 of the Agreement, Developer, at its option,
may undertake and assume the Program work which it alleges Nuevo has failed to
perform at Nuevo’s expense. Prior to assuming any work of Nuevo under the
Programs, Developer will provide written notice to Nuevo after the expiration
of the time periods set out in said Section 5.8.1 stating the factual basis of
its claim that Nuevo has failed to cure the Default, advising Nuevo of its
intention to assume responsibility for certain work under the Programs and
providing reasonable specificity as to the work that it intends to assume
responsibility for and perform. Nuevo’s failure to perform additional actions
requested by Developer but not specifically set out as Nuevo’s responsibility
in the Programs shall not be deemed a breach of its obligations under the
Programs.



Within 10 days of
receipt of notice from Developer, should Nuevo dispute in
writing Developer’s assertion that Nuevo has committed a Default hereunder,
Developer shall not



26









 








assume Nuevo’s Program responsibilities, but shall submit such dispute to
arbitration under Section 5.9 of the Agreement, which arbitration shall be
modified as provided herein. An arbitration under this Section shall be
conducted by a single arbitrator who shall be directed to provide an
arbitration schedule that results in a decision within 45 days of the
arbitrator’s selection. Among other matters, upon establishing a Default, such
arbitrator shall have the power to assign Nuevo’s Program responsibilities to
Developer.



Should the Developer assume any work that is the responsibility of Nuevo under
the Programs, Nuevo shall be indemnified by Developer for all Losses and all
Environmental Losses associated with or arising out of Developer’s performance
thereof. Provided however, Developer shall be entitled to deduct from the
Additional Purchase Price attributable to the assumed work, the reasonable
costs and expenses incurred in performance of the work. Developer shall not
offset any amounts against Additional Purchase Price for Program activities
for which Nuevo is not in Default. Any dispute with respect to the
reasonableness of the costs incurred shall be resolved through arbitration and
any amount not in dispute shall be promptly paid to Nuevo upon Developer’s
completion of performance.



                    7.2.1 Remedies Cumulative. All rights, options and remedies of
Nuevo contained in this PAPA shall be construed and held to be cumulative, and
none of them shall be exclusive of the other, and Nuevo shall have the right
to pursue any one or all of such remedies or any other remedy or relief which
may be provided by law or equity, whether or not stated in this PAPA. Further,
Nuevo may exercise hereunder, any of the rights, options and remedies, as and
to the extent, described in Sections 5 and 15 of the Development Declaration.



27









 





                    7.2.2 Arbitration. EXCEPT FOR THE RIGHT OF EITHER
PARTY TO APPLY TO A COURT OF COMPETENT JURISDICTION FOR TEMPORARY RESTRAINING
ORDERS, PRELIMINARY INJUNCTIONS, WRITS OF ATTACHMENT, WRITS OF POSSESSION OR
OTHER EQUITABLE OR PROVISIONAL RELIEF, ANY CONTROVERSY, DISPUTE OR CLAIM OF
ANY KIND OR NATURE ARISING OUT OF, IN CONNECTION WITH, OR IN RELATION TO THE
INTERPRETATION, PERFORMANCE OR BREACH OF THIS PAPA SHALL BE SUBMITTED TO
ARBITRATION UNDER SECTION 5.9 OF THE AGREEMENT.



                    7.2.4 Acceleration; Default Amount. In the event of an uncured
Event of Default, all of the amounts payable by Developer pursuant to this PAPA
shall, at the option of Nuevo, following ten (10) days’ written notice, be
immediately due and payable. The PAPA Trust Deed contains the following
language:




	 	 	“B. Additional Covenants. It is mutually agreed:






               (6) Acceleration. That upon default by Trustor in payment of
any indebtedness secured hereby or in performance of any agreement
hereunder (or under the PAPA) or the Development Documents,
Beneficiary may declare all sums secured hereby immediately due and
payable by delivery to Trustee of written declaration of default
and demand for sale and of written notice of default and of
election to cause the Property to be sold, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit
with Trustee this PAPA Trust Deed and all documents evidencing
expenditures secured hereby.




After the lapse of such time as may then be required by law following
the recordation of said notice of default, and notice of sale having
been given as then



28









 






required by law, Trustee, without demand on Trustor, shall sell the Property
at the time and place fixed by it in said notice of sale, either as a whole or
in separate parcels, and in such order as it may determine, at public auction
to the highest bidder for cash in lawful money of the United States, payable
at time of sale. Trustee may postpone the sale of all or any portion of the
Property by public announcement at such time and place of sale, and from time
to time thereafter may postpone such sale by public announcement at the time
fixed by the preceding postponement. Trustee shall deliver to such purchaser
its deed conveying the Property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any person, including Trustor,
Trustee, or Beneficiary may purchase at such sale.




After deducting all costs, fees and expenses of Trustee and of this Trust,
including cost of evidence of title in connection with the sale, Trustee shall
apply the proceeds of sale to payment, FIRST, of the expenses of such sale,
together with the reasonable expenses of this Trust, including Trustee’s fees,
cost of evidence of title in connection with the sale and revenue stamps for
documentary transfer tax on Trustee’s deed; SECOND, payment of all monies
advanced, paid or expended by Beneficiary under the terms hereof and the PAPA
not then repaid, together with the interest thereon as provided in the
Agreement; THIRD, payment of the amount of all delinquent sums then due under
the PAPA and all other sums secured hereby then remaining unpaid including
those due under the Development Documents; and LAST the balance or surplus, if
any, of such proceeds of sale to



29









 






the person or persons legally entitled thereto, upon satisfactory
proof of such right.




               E. Acceleration Upon Sale. Subject to contrary provisions of
the Agreement, including 5.19, and Paragraphs “C” and “D” herein
concerning partial reconveyances of Homes and Community
Facilities, if Trustor shall Transfer (as defined in the
Agreement) the Property, or any part thereof, or any interest
therein, or shall be divested of its title or any interest therein
in any manner or way, whether voluntarily or involuntarily,
Beneficiary shall have the right, at its option, except as
prohibited by law, to declare all of the indebtedness or
obligations secured hereby, irrespective of the maturity date
specified in any document or instrument evidencing the same,
immediately due and payable.”



                    7.2.5 Waiver. No waiver by Nuevo of a default under any of the
terms of this PAPA by Developer, and no delay or failure to enforce any of the
terms of this PAPA shall be a waiver of or shall affect a default other than
as specified in such waiver. The consent or approval by Nuevo to any act by
Developer requiring Nuevo’s consent or approval shall not be deemed to waive
or render unnecessary Nuevo’s consent or approval to or of any subsequent
similar acts by Developer.



               7.3 Continuous Operation. Nuevo and Developer covenant to proceed
continuously and diligently in accordance with the terms and conditions of this
PAPA and as may be required under the Development Documents, and except where
mutual agreement is expressly required, if either party does not proceed
continuously and diligently the same shall, at the option of Nuevo, be
considered as an event of default herein, except as such failure to so proceed
is excused by reason of any Unavoidable Delay.



30









 





               7.4 Assignment. The assignment by Developer of any interest in the
property shall be done in a manner that is consistent with the Agreement
and shall not relieve the
Developer of its duties and obligations under the Agreement or this PAPA.



               7.5 Subdivision Maps and Applications. Subject to the provisions of
the Development Documents, and provided there exists no material default
thereunder, Nuevo as
the beneficiary under the PAPA Trust Deed agrees, without cost to Nuevo,
to execute any and all
Nuevo approved Level B Final Maps, applications and petitions pertaining
to the development of
the Land.



               7.6 Captions. The captions used herein are for convenience only, are
not part of this PAPA and do not in any way limit or amplify the scope or
intent of the terms and
provisions hereof.



               7.7 Invalidity of a Provision. If any provision of this PAPA shall be
adjudged by a court of competent jurisdiction to be void, invalid, illegal
or unenforceable for any
reason, the same shall in no way affect (to the maximum extent permissible
by law) any other
provision of this PAPA, the application of any such provision under
circumstances different from
those adjudicated by the court, or the validity or enforceability of this
PAPA as a whole, but only
to the extent that performance of such remaining provisions would not be
inconsistent with the
intent and purposes of this PAPA.



               7.8 Notices. Any notice to be given or other document to be delivered
by any Party to the other or others hereunder, and any payments from
Developer to Nuevo, may
be delivered in person to an officer of any party, or may be delivered by
Federal Express, private
commercial delivery or courier service for next business day delivery, or
may be deposited in the



31









 





United States mail, duly certified or registered, return receipt requested,
with postage prepaid, and addressed to the party for whom intended, as follows:



	 	 	 	 	 
	 	 	If to Nuevo:
	 
	 	 	 	 
	

	 	 	 	Nuevo Energy Company
	

	 	 	 	1021 Main, Suite 2100
	

	 	 	 	Houston, Texas 77002
	

	 	 	 	Attn: Phillip A. Gobe
	

	 	 	 	Fax: (713)374-4817
	

	 	 	 	Phone: (713)374-4832
	

	 	 	 	Email: gobep@nuevoenergy.com
	 
	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Attn: Phillip E. Sorbet
	

	 	 	 	1200 Discovery Drive, Suite 500
	

	 	 	 	Bakersfield, CA 93309
	

	 	 	 	Fax: (661)395-5294
	

	 	 	 	Phone: (661)395-5431
	

	 	 	 	Email: sorbetp@nuevoenergy.com
	 
	 	 	 	 
	 	 	Copy to:
	 
	 	 	 	 
	

	 	 	 	Ullom Associates
	

	 	 	 	16149 Redmond Way, Ste, 401
	

	 	 	 	Redmond, Washington 98052
	

	 	 	 	Fax: (425) 836-2870
	

	 	 	 	Phone: (425) 836-2728
	

	 	 	 	Email: ullomjw@aol.com
	 
	 	 	 	 
	

	 	 	 	Nossaman, Guthner, Knox & Elliott, LLP
	

	 	 	 	18101 Von Karman Avenue, Suite 1800
	

	 	 	 	Irvine, California 92612-1047
	

	 	 	 	Attn: William P. Tanner, III
	

	 	 	 	Fax: (949) 833-7878
	

	 	 	 	Phone: (949) 833-7800
	

	 	 	 	Email: wtanner@nossaman.com







32









 






	 	 	 	 	 
	 	 	If to Developer:
	 
	 	 	 	 
	

	 	 	 	Tonner Hills SSP, LLC
	

	 	 	 	603 South Valencia Avenue
	

	 	 	 	Brea, CA 92823
	

	 	 	 	Attn: Joe Fleischaker
	

	 	 	 	Fax: (714) 223-3526
	

	 	 	 	Phone: (714) 792-2592
	

	 	 	 	Email: joe.fleischaker@sheahomes.com
	 
	 	 	 	 
	

	 	 	 	Tonner Hills 680 LLC
	

	 	 	 	603 South Valencia Avenue
	

	 	 	 	Brea, CA 92823
	

	 	 	 	Attn: Joe Fleischaker
	

	 	 	 	Fax: (714) 223-3526
	

	 	 	 	Phone: (714) 792-2592
	

	 	 	 	Email: joe.fleischaker@sheahomes.com
	 
	 	 	 	 
	 	 	Copy to:
	 
	 	 	 	 
	

	 	 	 	Landmark Law Group LLP
	

	 	 	 	10350 Santa Monica Boulevard, Suite 295
	

	 	 	 	Los Angeles, CA 90025
	

	 	 	 	Attn: Gulwinder S. Singh
	

	 	 	 	Fax: (310) 300-2310
	

	 	 	 	Phone: (310) 300-2300 Ext. 101
	

	 	 	 	Email: gss@llgllp.com







          Notice may also be given by facsimile transmission (“Fax”) to any party at
the respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which shall
be substituted for the one above specified. If any notice or other document is
sent by mail as aforesaid, the same shall be deemed served or delivered
seventy-two (72) hours after the mailing thereof as above provided. Notice by
any other method shall be deemed served or delivered upon actual receipt at the
address or Fax number listed above.



33









 





               7.9 Binding Effect. Subject to Section 7.2.3 concerning assignments,
it is the intent of the Parties that the covenants, conditions, and
agreements imposed by this
PAPA shall be binding upon and inure to the benefit of the Parties and
their respective
successors, heirs and assigns to all or any portion of the Land. In this
regard, subject to Sections
6.2 through 6.3 concerning partial releases, all of the obligations of
Developer as stated herein
shall be binding upon and enforceable against any person other than Nuevo
(or any successor to
the rights of Nuevo hereunder) to whom Developer may transfer all or any
portion of the Land.



               7.10 Further Assurances. Each of the Parties shall execute and deliver
all additional papers, documents and other assurances, and shall do all
acts and things reasonably
necessary in connection with the performance of its obligations hereunder
and to carry out the
intent of the Parties.



               7.11 Time of Essence. Time is of the essence of each provision of this
PAPA of which time is an element. Any reference in this PAPA to time for
performance of
obligations or to elapsed time shall mean consecutive calendar days,
months or years, as
applicable, unless otherwise explicitly indicated herein.



               7.12 Attorneys’ Fees. If any action or proceeding is instituted to enforce
or interpret any provision of this PAPA the prevailing party shall by
entitled to recover such
amounts as the court may judge to be reasonable as costs incurred in such
action, including,
without limitation, court costs and attorneys’ fees.



               7.13 Payments. Any amounts which are due and owing to Nuevo or
Developer pursuant to the various terms of the Development Documents shall
be paid as
specified. If any of these amounts are not paid when due, such amounts
shall bear interest as
specified in the particular Section of the Development Document requiring
such payment or, if



34









 





not so specified, then at the maximum nonusurious rate which may be charged by
a nonexempt lender.



               7.14 Term. This PAPA shall remain in effect from the date first shown
above until the first to occur of Final Acceptance, the sale of the last
Home to be developed or
the Expiration of the Development Agreement between Nuevo and Orange
County dated
December 19, 2002. Expiration of this PAPA shall not terminate any
payment obligation,
indemnity obligation or assumption of liability all of which shall survive
this PAPA and remain
in full force and effect.



               7.15 Applicable Law. This PAPA and the documents in the forms
attached as exhibits hereto shall be governed by and construed under the
laws of the State of
California.



               7.16 Lessee’s Rights, Obligations and Responsibilities. The parties
recognize that the Lessee is not a signatory to this PAPA. All
references to Lessee’s rights,
obligations and responsibilities are for convenience. The parties
executing this PAPA
acknowledge that the Lessee’s responsibilities are more completely and
fully set out in the Aera
Agreement.



          The Parties have executed this PAPA on the date first set forth
above.



35









 





	 	 	 	 	 	 	 	 	 	 	 
	TONNER HILLS SSP, LLC, a Delaware

limited liability company	 	NUEVO ENERGY COMPANY, a Delaware

corporation
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By: 	 	Standard Pacific of Tonner Hills, LLC,	 	By:	 	 
	 	 	 	 	a Delaware limited liability company, a member	 	 	 	

	

	 	 	 	 	 	 	 	Its:	 	 
	

	 	 	 	 	 	 	 	 	 	

	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: 	Standard Pacific Corp., a Delaware	 	By:	 	 
	

	 	 	 	 	corporation, its sole member	 	 	 	

	

	 	 	 	 	 	 	 	Its:	 	 
	 

	 	 	 	 	 	 	 	 	 	

	

	 	 	 	 	By:	 	 	 	 	 
	 

	 	 	 	 	 	
	 	 	 	“Nuevo”
	

	 	 	 	 	Title:	 	 	 	 	 
	 

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	 	By:	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	 	Title:	 	 	 	 	 
	 

	 	 	 	 	 	
	 	 	 	 
	By:	 	Shea Tonner Hills, LLC, a

Delaware limited liability company,

a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Shea Homes Limited Partnership,
 a California
limited partnership,
 its
sole member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	By:
	J.F. Shea LLC, a Delaware limited
liability company, its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	TONNER HILLS SSP, LLC, a Delaware

limited liability company	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:           , a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:           , its sole member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	By:	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	 	Title:	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 







36









 






	 	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	Title:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:           , a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:           , its sole member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:           , its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	Title:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	Title:	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	“Trustor”	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	“Developer”	 	 	 	 







37









 






ATTACHMENT 1 TO PAYMENT AND PERFORMANCE AGREEMENT




Legal Description of the Land




THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE,
AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A HAP FILED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, AND RECORD OF SURVEY
FILED IN BOOK 12 PAGE 40, RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133, PAGES
41 THROUGH 46 INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK 187,
PAGES 02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A DEED, BILL
OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:



PARCEL 1


BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE NORTHEAST
CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO THE SOUTHEAST
CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE PATENT BOUNDARY OF
SAID RANCHO RINCON DE LA BREA, NORTH 84° WEST 107.51 CHAINS TO A SAND STONE
MARKED R. B. IN MOUND WITH PITS; THENCE ALONG SAID PATENT BOUNDARY NORTH 57°
42' WEST 43.67 CHAINS TO A WHITE POST 4 INCHES SQUARE IN MOUND OF STONE MARKED
S. J. C. S. A. AT INTERSECTION OF THE PATENT LINES OF SAID RANCHOS SAN JUAN
CAJON DE SANTA ANA AND RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF SAID
RANCHO SAN JUAN CAJON DE SANTA ANA, NORTH 76° 25' WEST 62.67 CHAINS TO A 2'' ×
4'' POST MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 58.96 CHAINS
TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 89° EAST 20.00
CHAINS TO A 4'' × 4'' POST IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 20.00
CHAINS TO A 2'' × 4'' POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 88° 39'
EAST 55.48 CHAINS TO A 2'' × 4'' POST MARKED 20 IN MOUND WITH PITS”; THENCE SOUTH
0° 30' EAST 20.00 CHAINS TO A 2'' × 4'' POST IN MOUND WITH PITS; THENCE NORTH 89°
45'' EAST 134.63 CHAINS TO A 2'' × 4'' POST MARKED 40.10 IN MOUND WITH PITS UPON
THE EASTERN BOUNDARY OF SAID RANCHO SAN JUAN CAJON DE SANTA ANA; THENCE ALONG
SAME NORTH 4° WEST 47.51 CHAINS TO THE PLACE OF BEGINNING.



EXCEPTING THEREFROM THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.



ALSO EXCEPTING THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED BOUNDARY
LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28° 30' EAST FROM THE WESTERN
TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN THE UNION OIL COMPANY
OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY, RECORDED JUNE 10, 1905 IN BOOK
120, PAGE 223 OF DEEDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO
EXCEPTING THEREFROM THE LAND CONVEYED TO THE METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK



Page 1 of 4









 





1051, PAGE 301 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER, DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY
UNION OIL COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE
EASTERLY BOUNDARY OF THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION
OIL COMPANY OF CALIFORNIA TO GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899,
RECORDED JUNE 20, 1899 IK BOOK 44, PAGE 79 OF DEEDS, WHICH POINT OF
BEGINNING IS THE POINT OF INTERSECTION OF THE AFORESAID WESTERLY BOUNDARY
WITH THE EASTERLY PROLONGATION OF THE.CENTER LINE OF CENTRAL AVENUE AS
THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET AND BREA CANYON
ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 73° 32' 24''
WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF SAID CENTRAL AVENUE
AT SAID POINT OF INTERSECTION (ASSUMED AND TAKEN TO BEAR NORTH 15° 11'
16' EAST). A DISTANCE OF 839.60 FEET TO THE TRUE POINT OF BEGINNING;
THENCE NORTH 0° 10' 11'' EAST A DISTANCE OF 1250 FEET; THENCE SOUTH 89°
49' 49'' EAST A DISTANCE OF 500 FEET; THENCE SOUTH 65° 23' 11'' EAST A
DISTANCE OF 604.15 FEET; THENCE SOUTH 0° 10' 11'' WEST A DISTANCE OF 1000
FEET; THENCE NORTH 89° 49' 49'' WEST A DISTANCE OF
1050 FEET TO THE TRUE POINT OF BEGINNING.



ALSO
EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE
OFFICE OF SAID COUNTY RECORDER DESCRIBED AS FOLLOWS:


BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED
FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2,
1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10' 50'' WEST
ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND,
SAID POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT
11B; THENCE NORTH 9° 48' 11'' WEST 529.60 FEET TO A 2'' × 2'' STAKE AND THE
TRUE POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85° 48' 16''
WEST, 380.00 FEET TO A 2'' × 2'' STAKE; THENCE NORTH 4° 11' 44'' EAST
1750.00 FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 85° 48' 16'' EAST 380.00
FEET TO A 2'' × 2'' STAKE; THENCE SOUTH 4° 11' 44'' WEST 1750.00 FEET TO A
2'' × 2'' STAKE AND THE TRUE POINT OF BEGINNING.



AISO
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 647 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALS0
EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.




Page 2 of 4










 





ALSO
EXCEPTING THEREFROM THAT PORTION DESCRIBED IN
PARCEL 1 OF THE DEED
TO THE CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF
OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM PARCELS A6471-4, A6471-5,
A6471-6 AND A6471-7 OF THAT
CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE NO. 156220, A
CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29, 1970 IN BOOK 9417, PAGE 364
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN
ON PARCEL MAP NO. 86-243,
FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE
OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED ROAD, 80.00
FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID PARCELS 1 AND 2
ON THE EAST, AND BOUND NORTHEASTERLY BY THE NORTHEASTERLY LINE OF SAID PARCEL,
MAP NO. 86-243, AND BOUND SOUTHERLY BY THE CENTERLINE OF LAMBERT ROAD AS SHOWN
ON SAID PARCEL MAP NO. 86-243.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED
WITHIN PARCEL 1 OF PARCEL MAP
NO. 83-1179, AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1 THROUGH 4 INCLUSIVE
OF PARCEL MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED
WITHIN TRACT NO. 12562, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF MISCELLANEOUS MAPS,
IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED
WITHIN TRACT NO. 12563, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE
DEED TO THE CITY OF BREA
RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED
WITHIN PARCEL 1 OF A COUNTY OF
ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED AUGUST 13, 2001 AS
INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.



PARCEL 2



PARCEL 1 OF A COUNTY OF ORANGE LOT LINE ADJUSTMENT
NO. LL 2000-054,
RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



EXCEPTING THEREFROM THAT PORTION CONVEYED TO
BREA-OLINDA UNIFIED SCHOOL
DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



Page 3 of 4









 








ALSO EXCEPTING THEREFROM THAT PORTION CONVEYED TO
THE COUNTY OF ORANGE BY
GRANT DEED RECORDED JUNE 4, 2003 AS INSTRUMENT NO. 2003000648901 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



PARCEL 3



THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN
BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER
DESCRIBED AS FOLLOWS:




	 	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED
FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2,
1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10' 50" WEST
ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND,
SAID POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT
11B; THENCE NORTH 9° 48' 11" WEST 529.60 FEET TO A 2" X 2" STAKE AND THE
TRUE POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85° 48' 16"
WEST, 380.00 FEET TO A 2" X 2" STAKE; THENCE NORTH 4° 11' 44" EAST
1750.00 FEET TO A 2" X 2" STAKE; THENCE SOUTH 85° 48' 16" EAST 380.00
FEET TO A 2" X 2" STAKE; THENCE SOUTH 4° 11' 44" WEST 1750.00 FEET TO A
2" X 2" STAKE AND THE TRUE POINT OF BEGINNING.





THE ABOVE DESCRIPTION WAS COMPILED FROM INFORMATION
SUPPLIED BY FIRST
AMERICAN TITLE COMPANY PRELIMINARY REPORT NO. 2033661, DATED JULY 16, 2003.



EXHIBIT
“ ‘Al’ SITE DEPICTION
”, IS FOR INFORMATIONAL PURPOSES ONLY.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS,
RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	

	 	PREPARED BY: THE KEITH COMPANIES
	 	UNDER THE DIRECTION OF:
	 	
	 	KATHLEEN SUSAN TETREAULT P.L.S.7297
	 	MY LICENSE EXPIRES 12/31/2004
	 
	 	August 20, 2003
	 	JN: 13207.00







Page 4 of 4









 








SHEA PAPA DEED OF TRUST




          This PAPA Trust Deed (“PAPA Trust
Deed” or “PAPA TD”) is made this         
day of          , 2003, by and among TONNER HILLS SSP, LLC, a Delaware limited
liability company (“Shea” or “Trustor”), NUEVO ENERGY COMPANY, a Delaware
corporation (“Trustee”) and NUEVO ENERGY COMPANY, a Delaware corporation
(“Beneficiary”).



          Trustor hereby grants, assigns and
transfers to Trustee in Trust, with
Power of Sale:



PARCEL NO. 1: The real property (“Land”)
in Orange County, described as
follows, and all improvements thereon or added thereto from time to time: (See
Attachment 1)



TOGETHER WITH the rents, issues and profits thereof
and easements appurtenant
thereto, subject to the right, power and authority hereinafter given to and
conferred upon Beneficiary to collect and apply such rents, issues and
profits; and, together with insurance proceeds, settlement proceeds,
condemnation awards and payments in settlement or in lieu thereof, if any.



PARCEL NO. 2: All that certain personal property
used solely in the operation
of the Land, whether now owned or hereafter acquired by Trustor, including but
not limited to all furniture, fixtures and equipment, including maintenance
equipment and model complex furnishings and other decorations, and all
renewals, replacements or substitutions thereof or additions thereto, and all
materials and equipment acquired for use in or to be incorporated in the
improvements constructed or to be constructed on the Land, and all renewals
and replacements therefor, and all warranties in which Trustor may now or
hereafter have an interest relating to work, labor, skill or





1









 








materials furnished in connection with the
construction of any improvements on
the Land and all plans and specifications which have been or will be prepared
by or for Trustor related to improvements on the Land or to the adjacent lands
of Beneficiary, whether constructed or not, and together with insurance
proceeds, settlement proceeds, condemnation awards and payments in settlement
or in lieu thereof.



          All of the Land and personal property
granted, assigned and transferred
by Trustor to Trustee together with all other property hereafter granted,
assigned and transferred to Trustee under this Deed of Trust is referred to
herein as the “Property.”



          FOR THE PURPOSE OF SECURING, in such order
of priority as Beneficiary may
determine:



          ONE: The following obligations of Trustor
under that certain Payment and
Performance Agreement (“PAPA”) of even date herewith between Beneficiary and
Trustor as “Nuevo” and “Developer,” respectively (and any amendments or
modifications thereto): The obligations pursuant to Section 6.1 of the PAPA
entitled “Obligations secured by PAPA Trust Deed.”



          TWO: The performance of each agreement of
Trustor contained in the PAPA
and herein;



          THREE: The performance of any and all
obligations of Trustor to
Beneficiary which may hereafter be evidenced by an agreement or other writing
reciting that such obligation is secured by this PAPA Trust Deed.



     A. Trustor’s Covenants. To protect the security of this PAPA
Trust Deed,
Trustor agrees, except as contemplated by the Transaction described in, or
otherwise expressly provided to the contrary in, the Development Documents, or
specifically authorized by Beneficiary in writing to the contrary:



          (1) Repairs. To keep the Property in
good condition and repair; to pay
when due all claims for labor performed and materials furnished therefor; to
comply with all laws affecting the Property or requiring any alterations or
improvements to be made thereon; not to commit or permit waste thereof; not to commit, suffer or permit any act
upon the Property in violation of law; to do all acts which from the character or use of the
Property may be reasonably necessary for the proper care and maintenance thereof.



          (2) Insurance. To provide, maintain
and deliver to Beneficiary insurance
as required by the Development Documents. Following and during the
continuance of an Event of Default by Trustor, the amount collected under any casualty insurance
policy shall be applied by Beneficiary to the restoration of the Property, or if Beneficiary
reasonably determines that its security is impaired or that restoration is not feasible, such amounts
shall be applied against any indebtedness secured hereby and in such order as Beneficiary may
determine, and any remainder shall be released to Trustor or the persons entitled thereto. Such
application or release shall not cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to such notice.



2









 





          (3) Claims. Following and during the
continuance of an Event of Default
by Trustor, to appear in and defend any action or proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or Trustee.



          (4) Encumbrances. To pay (and to
provide Beneficiary with evidence of) at
least ten days before delinquency all taxes and assessments affecting the
Property, including assessments on appurtenant water stock and any Master
Association and Association assessments, if any, when due; all encumbrances, charges and liens, with
interest, on said Property or any part thereof, which appear to be prior or superior hereto;
and all allowable expenses of this Trust, in connection with the payment of such items.



          (5) Failure to Pay. Upon an Event of
Default by Trustor under this PAPA
Trust Deed, then Beneficiary or Trustee, but without obligation to do so
and without additional notice to or additional demand upon Trustor and without releasing Trustor
from any obligation hereof, may: (a) make or do the same in such manner and to such extent as
either may deem necessary to protect the security hereof, Beneficiary or Trustee being
authorized to enter upon the Property for such purposes; (b) appear in and defend any action or
proceeding purporting to affect the security hereof or the rights or powers of Beneficiary or
Trustee; (c) pay, purchase, contest or compromise any encumbrance, charge or lien which in the
judgment of either appears to be prior or superior hereto; and (d) in exercising any such powers, pay
allowable expenses.



          (6) Expenditures. To pay immediately
and without demand all sums so
expended by Beneficiary or Trustee to protect the security of this PAPA
TD, with interest from date of expenditure at the maximum amount then allowed by law.



     B. Additional Covenants. It is mutually agreed:



          (1) Condemnation. Following and during
the continuance of an Event of
Default by Trustor, that any award of damages in connection with any
condemnation for public use of or injury to the Property or any part thereof is hereby assigned
and shall be paid to Beneficiary which may apply or release, or retain, such moneys received by
it in the same manner and with the same effect as above provided for disposition of
proceeds of casualty insurance.



          (2) Waiver. That by accepting payment
of any sum secured hereby after its
due date, Beneficiary does not waive its right either to require prompt
payment when due of all other sums so secured or to declare default for failure so to pay.



          (3) Maps, etc. That at any time or
from time to time, without liability
therefor and without notice, but only upon written request of Beneficiary and
presentation of this PAPA Trust Deed for endorsement, and without affecting the personal liability
of any person for payment of the indebtedness secured hereby, Trustee shall: (a) reconvey
any part of said Property; (b) consent to the making of any map or plat thereof; (c) join
in granting any easement thereon; or (d) join in any extension agreement or any agreement
subordinating the lien or charge hereof.



          (4) Full Reconveyance. That upon
written request of Beneficiary stating
that all sums secured hereby have been paid and other obligations secured
hereby have been properly



3









 





discharged or waived by Beneficiary, and upon
surrender of this PAPA Trust
Deed to Trustee for cancellation and retention or other disposition as Trustee
in its sole discretion may choose and upon payment of its fees, Trustee shall
reconvey, without warranty, the Property then held hereunder. The recitals in
such reconveyance of any matters or facts shall be conclusive proof of the
truthfulness thereof. The grantee in such reconveyance may be described as
“the person or persons legally entitled thereto.”



          (5) Rents, Issues & Profits. That
Trustor hereby assigns, gives to and
confers upon Beneficiary the right, power and authority, during the continuance of
these Trusts, to collect the rents, issues and profits of the Property, reserving unto
Trustor the right, prior to any default by Trustor in payment of any indebtedness or discharge of any
other obligation secured hereby or in performance of any agreement hereunder, to collect and retain
such rents, issues and profits as they become due and payable. Upon any such default,
Beneficiary may at any time without notice, either in person, by agent, or by receiver to be appointed
by a court, and without regard to the adequacy of any security for the indebtedness hereby
secured, enter upon and take possession of the Property or any part thereof, in its own name sue for or
otherwise collect such rents, issues and profits, including those past due and unpaid, and apply
the same, less allowable expenses of operation, upon any indebtedness or other obligation secured
hereby, and in such order as Beneficiary may determine. The entering upon and taking
possession of the Property, the collection of such rents, issues and profits and the application
thereof as aforesaid, shall not cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to such notice.



          (6) Acceleration. That upon Default by
Trustor in payment of any
indebtedness or discharge of any obligation secured hereby or in
performance of any agreement
hereunder (or under the PAPA), Beneficiary may declare all sums secured
hereby immediately
due and payable by delivery to Trustee of written declaration of Default
and demand for sale and
of written notice of Default and of election to cause the Property to be
sold, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit with
Trustee this PAPA Trust
Deed and all documents evidencing expenditures secured hereby.



          After the lapse of such time as may then be
required by law following the
recordation of said notice of Default, and notice of sale having been given as
then required by law, Trustee, without demand on Trustor, shall sell the
Property at the time and place fixed by it in said notice of sale, either as a
whole or in separate parcels, and in such order as it may determine, at public
auction to the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone the sale of all or any portion of
the Property by public announcement at such time and place of sale, and from
time to time thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying the Property so sold, but without any covenant or
warranty, express or implied. The recitals in such deed of any matters or facts
shall be conclusive proof of the truthfulness thereof. Any person, including
Trustor, Trustee, or Beneficiary may purchase at such sale.



          After deducting all costs, fees and
expenses of Trustee and of this Trust,
including cost of evidence of title in connection with the sale, Trustee shall
apply the proceeds of sale to payment, FIRST, of the expenses of such sale,
together with the reasonable expenses of this



4









 





Trust, including Trustee’s fees, cost of
evidence of title in connection with
the sale and revenue stamps for documentary transfer tax on Trustee’s deed;
SECOND, payment of all monies advanced, paid or expended by Beneficiary under
the terms hereof and the PAPA not then repaid, together with the interest
thereon as provided in the Agreement; THIRD, payment of the amount of all
delinquent sums then due under the PAPA and all other sums (or costs to
discharge obligations) secured hereby then remaining unpaid under the
Agreement; and LAST the balance or surplus, if any, of such proceeds of sale
to the person or persons legally entitled thereto, upon satisfactory proof of
such right.



          (7) Substitution of Trustee.
Beneficiary, or any successor in interest
of Beneficiary under this PAPA Trust Deed, may, from time to time, by
instrument in writing, substitute a successor or successors to any Trustee named herein or acting
hereunder, which instrument, executed by the Beneficiary and duly acknowledged and recorded
in the office of the
recorder of the county or counties where the Property is situated, shall
be conclusive proof of
proper substitution of such successor Trustee or Trustees, who shall,
without conveyance from
the predecessor Trustee, succeed to all its title, estate, rights, powers
and duties. Said instrument
must contain the name of the original Trustor, Trustee and Beneficiary
hereunder, the book and
page where this PAPA Trust Deed is recorded and the name and address of

the new Trustee.
Beneficiary shall also have all of its other rights and remedies at law
and equity in the event of a
default by Trustor hereunder (or under the PAPA).



          (8) Binding Effect. This PAPA Trust
Deed applies to and inures to the
benefit
of, and binds all parties hereto, their heirs, legatees, devisees,
administrators, executors,
successors and assigns. The term Beneficiary shall include Beneficiary’s
successor in interest
under the PAPA. In this PAPA Trust Deed, whenever the context so
requires, the masculine
gender includes the feminine and/or neuter, and the singular number
includes the plural.



          (9) Trustee’s Acceptance. That
Trustee accepts this trust when this PAPA
Trust Deed, duly executed and acknowledged, is made a public record as
provided by law.
Trustee is not obligated to notify any party hereto of any pending sale
under any other deed of
trust or of any action or proceeding in which Trustor, Beneficiary or
Trustee shall be a party
unless brought by Trustee.



          (10) Trustor’s Request for Notice
of Default. The undersigned Trustor
requests
that a copy of any notice of Default and of any notice of sale hereunder
be mailed to Trustor at
the address specified herein for giving notices.



     C. Partial Reconveyances of Homes. Subject to the
final
paragraph of this Section C., from time to time, so long as there shall be no
unrescinded notice of Default hereunder given by Trustee to Trustor, a partial
reconveyance may be had and, upon the written request of Trustor
(“Reconveyance Request”), will be given from the lien or charge of this PAPA
Trust Deed subject to the following terms and conditions.



          (1) Release Price. Beneficiary shall
have been paid all amounts
then due under the Agreement, the PAPA and, this PAPA TD.



5









 





Revised 11/22/03




          (2) Advances. Trustor shall have
repaid with interest all of the amounts
expended by Beneficiary to protect the security of this PAPA Trust Deed,
including without
limitation any amounts expended for keeping senior encumbrances current,
payment of taxes or
attorneys’ fees.



          (3) Default. Trustor shall not be in
Default of any of its other obligations
hereunder (or under the PAPA or the Agreement) for which a notice of Default
may be given
hereunder, and is given by Trustee as provided in B.(6) above, within five (5)
days after receipt
of a Trustor’s Reconveyance Request; provided however, subject to all the other
requirements of
this Section C, that in such event, if Trustor satisfies Trustee, in Trustee’s
reasonable discretion
(e.g., by irrevocable instruction to escrowholder), that all proceeds from the
sale of Homes to be
so reconveyed will be held, as security for the cure of such Default and
discharge of the
underlying obligation, in a neutral escrow account pending a final
determination of any
controversy regarding such Default or alleged Default pursuant to Section 5.9
of the Agreement, or in the alternative, by providing other
adequate security, in Trustee’s reasonable discretion, for the cure of such
Default and discharge
of the underlying obligation (e.g., by the posting of an adequate bond or
letter of credit in favor
of Trustee), then Trustee shall reconvey the lien of this PAPA TD
pursuant to such Reconveyance Request.



          (4) Costs. Trustor shall pay all costs
of preparing, executing and
recording all documents necessary to accomplish the partial reconveyances contemplated
herein. Such payments shall be in addition to any required release payments specified
above. All such payments to Beneficiary shall be in cash or other immediately available
funds.



          (5) Exempt Property. Without limiting
the generality of the foregoing,
Beneficiary shall not be required to release any portion of the Property
from the lien or charge of
this PAPA Trust Deed which has not been legally mapped in accordance with
the California
Subdivision Map Act (or is not exempt therefrom) and, except as provided
in Paragraph (D)
below, improved with a Home.



          (6) Reconveyance Request. The
Reconveyance Request shall:



               (a) specify the Homes to be reconveyed;



               (b) specify no more than ten
(10) Homes per Reconveyance
Request;



               (c) subject to (b), above, conform, to the
extent possible, with phases
of development approved by the California Department of Real Estate; and,



               (d) for
subsequent Reconveyance Requests after the first
Reconveyance Request, be submitted only for the number of Homes previously
sold under the immediately preceding Reconveyance Request.



Provided however, that in no event shall Trustor be
entitled to have more than
ten (10) Homes in its inventory reconveyed from the lien of this PAPA TD at any
given point in time.



6









 








          (7) Reconveyance at Close of Home
Escrow. Where all the conditions of (6),
above, are not satisfied, and subject to the remaining provisions of this
Section C, Trustee shall
provide a partial reconveyance of the lien of this PAPA TD on a
Home-by-Home basis (pursuant
to Reconveyance Requests) through escrows established for the sale
of Homes to the
Homebuying public, at the closing of such sale escrows.



          (8) Nuevo Designee. David Leach (or
any other person(s) appointed by
Trustee as his successor upon ten (10) days written notice to Trustor),
shall be Trustee’s designee
(“ Designee”) for receipt of the partial reconveyances described in this
Section C. Subject to
satisfaction by Trustor of all the requirements of Section C, such
Designee shall properly execute
(or cause same to be executed) and acknowledge any such partial
reconveyance and cause same
to be received by Trustor within ten (10) business days of receipt of the
Reconveyance Request
therefor.



     D. Partial Reconveyance of Community Facilities. Concurrently
with the
conveyance to a Master Association or any Association or Governmental
Agency, of any
Community Facilities, and upon written request of Trustor accompanied by
evidence of such
close of escrow and conveyance satisfactory to Beneficiary, and provided
that Trustor has
satisfied all other requirements of paragraph “C” above, Beneficiary
shall release such
Community Facilities from the lien or charge of this PAPA Trust Deed
without the payment of
any release price attributable solely to such Community Facilities.



     E. Acceleration Upon Sale. Subject to contrary provisions of the
Agreement,
including 5.19, and Paragraphs “C” and “D” herein concerning partial
reconveyances of Homes
and Community Facilities, if Trustor shall Transfer (as defined in the
Agreement) the Property,
or any part thereof, or any interest therein, or shall be divested of its
title or any interest therein
in any manner or way, whether voluntarily or involuntarily, Beneficiary
shall have the right, at
its option, except as prohibited by law, to declare all of the
indebtedness or obligations secured
hereby, irrespective of the maturity date specified in any document or
instrument evidencing the
same, immediately due and payable.



     F. Notices. Any notice to be given or other document to be delivered
by
any Party
to the other or others hereunder, and any payments from Trustor to Nuevo,
may be delivered in
person to an officer of any party, or may be delivered by Federal Express,
private commercial
delivery or courier service for next business day delivery, or may be
deposited in the United
States mail, duly certified or registered, return receipt requested, with
postage prepaid, and
addressed to the party for whom intended, as follows:




7









 





	 	 	 
	If to Nuevo:
	 	 
	

	 	Nuevo Energy Company
	

	 	1021 Main, Suite 2100
	

	 	Houston, Texas 77002
	

	 	Attn: David A. Leach
	

	 	Fax: (713) 374-4899
	

	 	Phone: (713) 374-4802
	

	 	Email: leachd@nuevoenergy.com
	 
	 	 
	 

	 	and
	 
	 	 
	

	 	Attn: George B. Nilsen
	

	 	Fax: (713) 374-4981
	

	 	Phone: (713) 374-4973
	

	 	Email: nilseng@nuevoenergy.com
	 
	 	 
	Copy to:
	 	 
	

	 	Ullom Associates
	

	 	16149 Redmond Way, Ste. 401
	

	 	Redmond, Washington 98052
	

	 	Fax: (425) 836-2870
	

	 	Phone: (425) 836-2728
	

	 	Email: ullomjw@aol.com
	 
	 	 
	

	 	and
	 
	 	 
	

	 	Nossaman, Guthner, Knox & Elliott, LLP
	

	 	18101 Von Karman Avenue, Suite 1800
	

	 	Irvine, California 92612-1047
	

	 	Attn: William P. Tanner, III
	

	 	Fax: (949) 833-7878
	

	 	Phone: (949) 833-7800
	

	 	Email: wtanner@nossaman.com
	 
	 	 
	To Trustor:
	 	 
	 
	 	 
	

	 	Tonner Hills SSP, LLC
	

	 	603 S. Valencia Avenue
	

	 	Brea, CA 92823
	

	 	Attention: Alan Toffoli
	

	 	Fax: (714) 985-3605
	

	 	Phone: (714) 792-2504
	

	 	Attn: Alan Toffoli
	

	 	Email: alan.toffoli@sheahomes.com
	 
	 	 
	

	 	and







8









 






	 	 	 
	

	 	Tonner Hills 680 LLC
	

	 	603 S. Valencia Avenue
	

	 	Brea, CA 92823
	

	 	Attn: Joe Fleischaker
	

	 	Fax: (714) 985-3605
	

	 	Phone: (714) 792-2592
	

	 	Email: joe.fleischaker@shehomes.com
	 
	 	 
	Copy to:
	 	 
	 
	 	 
	

	 	Landmark Law Group, L.L.P.
	

	 	10350 Santa Monica Boulevard, Suite 295
	

	 	Los Angeles, CA 90025-5074
	

	 	Attn: Gulwinder S. Singh
	

	 	Fax: (310) 300-2310
	

	 	Phone: (310) 300-2300 Ext. 101
	

	 	Email: gss@llgllp.com







Notice may also be given by facsimile transmission
(“Fax”) to any party at the
respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which
shall be substituted for the one above specified. If any notice or other
document is sent by mail as aforesaid, the same shall be deemed served or
delivered seventy-two (72) hours after the mailing thereof as above provided.
Notice by any other method shall be deemed served or delivered upon actual
receipt at the address or Fax number listed above.



     G. Definitions. Except as specifically defined to the contrary
herein,
defined terms used in this PAPA Trust Deed shall have the same meanings
prescribed in the Agreement or other Development Documents. When used herein,
the word Land shall include the Project, and the word “including” shall mean
“including without limitation.” “Default” (also referred to herein as “Event of
Default”) is defined in Section 5.8.1 of the Purchase and Sale Agreement
(“Agreement”) between Trustor and Beneficiary, of even date herewith, to which
the PAPA and this PAPA TD are attached as Exhibit “K. ”



9









 





     H. Subordination. The lien of this PAPA TD shall be subordinated one
time
to a lender’s first deed of trust securing a loan used solely to purchase the
Property and/or construct Project improvements thereon, only as described in
and limited by the Subordination Agreement appended hereto as
Attachment “2. ”



     I. Cross-Default. Any Default by Trustor under the Agreement, the
PAPA
and/or this PAPA TD shall conclusively and automatically be a Default by TH
680 under the Agreement, the PAPA and that certain Payment and Performance
Agreement Trust Deed, of even date herewith, by and among TH 680 as Trustor,
Nuevo as Trustee and Nuevo as Beneficiary, for which all of Trustee’s and
Beneficiary’s rights, privileges, benefits and remedies thereunder may be
exercised.



10









 





          Trustor, Trustee and Beneficiary have
executed this PAPA Trust Deed as of
the date first written above.



	 	 	 	 	 	 	 	 	 	 	 
	TONNER HILLS SSP, LLC, a Delaware
limited liability company	 	
NUEVO ENERGY COMPANY, a Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By: Standard Pacific of Tonner Hills, LLC,
a Delaware limited liability company, a member	 	By:	 	 
	

	 	 	 	 	 	 	 	 	

	

	 	By: Standard Pacific Corp., a Delaware
corporation, its sole member	 	Its:	 	 
	

	 	 	 	 	 	 	 	 	

	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	By:	 	 
	

	 	 	 	 	
	 	 	

	 	 	 	 	Title:	 	Its:	 	 
	

	 	 	 	 	
	 	 	

	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	
	 	 	 	 
	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	
	 	 	 	 
	 
	By: Shea Tonner Hills, LLC, a
Delaware limited liability company, a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By: Shea Homes Limited
Partnership, a California limited
partnership, its sole member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By: J.F. Shea LLC, a
Delaware limited liability
company, its General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	
	 	 
	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	
	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	
	 	 
	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	
	 	 







	 	 	 
	“Trustor”
	 	“Trustee”
	 	 	 
	
	 	and
	 	 	 
	
	 	“Beneficiary”







11









 






	 	 	 	 	 
	State of California

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	County of Orange

	 	 	)	 







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



     WITNESS my hand and official seal.



Signature ______________




	 	 	 	 	 
	State of California

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	County
of  ___________

	 	 	)	 







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



     WITNESS my hand and official seal.



Signature ________________




12









 








LEGAL DESCRIPTION




THOSE PORTIONS OF TRACT NO. 16178, IN THE
UNINCORPORATED TERRITORY OF THE
COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK       , PAGES       
THROUGH          INCLUSIVE OF MISCELLANEOUS MAP, IN THE OFFICE OF THE COUNTY RECORDER,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:



LOTS 1 THROUGH 8, 10 AND 20, TOGETHER WITH LETTERED
LOTS A, B, C, AND D OF SAID
TRACT NO. 16178



CONTAINING: 210.149 ACRES, MORE OR LESS



ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND
BY THIS REFERENCE MADE A PART
HEREOF.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS,
RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	

	 	PREPARED BY OR
	 	UNDER THE DIRECTION OF:
	 	
	 	KATHLEEN SUSAN TETREAULT, P.L.S. 7297
	 	MY LICENSE EXPIRES 12/31/2004
	 	 
	 	December 4, 2003
	 	JN: 13207.00.000







Page 1 of 1









 






 









 









 









SHEA

SUBORDINATION AGREEMENT




NOTICE: THIS SUBORDINATION AGREEMENT RESULTS IN
YOUR RIGHTS AND INTERESTS AND
YOUR SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF LOWER
PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.




          THIS SUBORDINATION AGREEMENT is made this
         day of          , 2003,
by and among TONNER HILLS SSP, LLC, a Delaware limited liability
company, the owner (“Owner”) of the property described in Exhibit “A”
(“Property”), NUEVO ENERGY COMPANY, a Delaware corporation (“Company”),
beneficiary of the Trust Deed described herein, and          , a          
(“Lender”).



RECITALS




          A. Owner has executed and acknowledged
the following deed of trust
which is Attachment “2” to the Payment and
Performance
Agreement between Owner and Company, dated          , 2003 (“PAPA”) and which



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was recorded with the County Recorder of Orange
County, California in favor of
Company, encumbering the Property.



	 	 	 	 	 	 	 	 	 
	 	 	Date	 	 
	Description
	 	Recorded
	 	Instrument No.

	Shea PAPA Trust Deed
	 	 	 	 	 	 	 	 







The Shea PAPA Trust Deed is referred to herein as
the “Trust Deed,” “TD” or
“Company Encumbrance.”



          B. Owner has executed, or is about to
execute, a deed of trust
(“Lender’s Encumbrance” or “Lender’s deed of trust”), note and certain
loan documents (“Loan Documents”) which include Lender’s Encumbrance,
in favor of          or a wholly owned financial institution subsidiary thereof
(collectively, “Lender”) payable with interest and upon the terms and
conditions described therein, which deed of trust is dated          and
is recorded/recording concurrently herewith.



          C. It is a condition precedent to
obtaining said loan (“Loan”) that
Lender’s Encumbrance shall be a lien or charge upon the Property, prior
and superior to the Company Encumbrance.



          D. Lender is willing to make the Loan
provided the deed of trust
securing the same is a lien or charge upon the Property prior and superior
to the Company
Encumbrance, and provided that Company will specifically subordinate the
Company Encumbrances to the lien or charge of the deed of trust in favor
of Lender. Company is willing that the deed of trust securing the Loan
shall, when recorded, constitute a lien or charge upon the Property which is prior and superior
to the Company
Encumbrance, to the extent and as described herein.



          NOW, THEREFORE, for a valuable
consideration, the receipt and sufficiency
of which consideration is hereby acknowledged, it is hereby declared,
understood and agreed as follows:



          (1) Lender’s Encumbrance, and any
renewals, modifications or extensions
thereof, shall be a lien or charge on the Property, prior and superior to the
lien or charge of the Company Encumbrance.



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          (2) The parties acknowledge it to be
their intent, and hereby agree that,
from and after the date of Lender’s recordation of a deed in lieu of
foreclosure or Lender’s
acquisition of the Property at a judicial or trustee’s sale held to
foreclose Lender’s
Encumbrance (collectively and individually “Acquisition”), the Company
Encumbrance shall continue to encumber the Property; but, shall not be
enforceable by the
Company



               (a) Unless



                    (i) the
purchaser at a judicial or trustee sale of the Property is
not Lender, or (ii) Lender transfers the Property to a subsequent purchaser or
transferee (collectively or individually, “Subsequent
Transferee”);



OR




               (b) Until the Earlier of:



                    (i) Lender
commences construction of Homes on the Property;



                    (ii) Lender
offers for sale, or sells, a Home to the Homebuying public; or



                    (iii) the
expiration of twelve (12) months after the Acquisition.,



The occurrence of any event in (a) or
(b) shall be deemed an “Enforceability
Event.”



               Upon the
occurrence of an Enforceability Event, the Company Encumbrance
shall no longer be junior to Lender’s Encumbrance and
shall again be fully enforceable by the Company against Lender or a Subsequent
Transferee, as the case may be; such Lender or Subsequent Transferee shall
then be required to cure, within thirty (30) days of the Enforceability Event,
any uncured Default under the Company Encumbrance, whether such Default
occurred prior to or after the Acquisition.



               The act of
transferring the Property to a Subsequent Transferee shall not
trigger enforceability against Lender, but only against the Subsequent
Transferee in accordance with the provisions of the Company Encumbrance.
“Commencement of construction” shall mean the trenching of foundations and/or
any or all later construction activities. “Offering for Sale” shall mean
advertising sales to the public. “Sale” shall mean the close of escrow and/or
the recordation of the deed conveying a Home, or buyer’s right to possession of
the Home pursuant to a sales contract. “Property” shall include portions
thereof. Other defined terms used herein shall have the meaning prescribed for
them in the PAPA.



          (3) Lender would not make its Loan
described above without this
Subordination Agreement.



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          (4) This Subordination Agreement shall
be the whole and only agreement
with regard to the subordination of the Company Encumbrance to the Lender’s
Encumbrance. Company declares, agrees and acknowledges that:



          (a) Except as provided below, Company,
in its reasonable discretion, has
approved (i) the form of the note and deed of trust in favor of Lender,
which documents
provide for notice to, and a right to cure any default of Owner thereunder
by, Company and
(ii) all agreements, including but not limited to any Loan or escrow
agreements, between
Owner and Lender for the disbursement of the proceeds of Lender’s Loan;
provided that the
Company’s approval of same shall be deemed an approval solely in
connection with the
Company’s requirement to execute this subordination and shall not be
deemed a consent to
the terms and provisions of, nor for the Company to be bound by, the Loan
Documents, nor
approval for any other purpose;



          (b) Notwithstanding that the person or
persons to whom Lender disburses
the Loan proceeds uses such proceeds in contravention of the Loan
Documents for purposes
other than those provided for in the Loan Documents, the subordination
herein made shall
remain valid according to the terms hereof; and,



          (c) Company intentionally subordinates
the Company Encumbrance in favor
of the lien or charge upon the Property of the Lender’s Encumbrance
and understands that in reliance upon, and in consideration of such
subordination, specific
loans and advances are being and will be made and, as part and parcel
thereof, specific
monetary and other obligations are being and will be entered into which
would not be made
or entered into but for said subordination.



          The
Company Encumbrance shall not be subordinate to any
amounts payable as interest which
are based upon any participation of Lender in appreciation, profits or any
basis other than a percentage of the outstanding principal balance of the
Loan. The foregoing sentence shall not be applicable to, nor in any way limit
the subordination of the Company Encumbrance to Lender’s Encumbrance for (i)
late payment charges assessed for failure to timely pay any amounts owed to
Lender, (ii) any advances made by Lender to protect the security of Lender’s
deed of trust, (iii) any expenses incurred to enforce Lender’s rights under
Lender’s deed of trust, and (iv) interest which is based upon a percentage of
the outstanding principal balance of the Loan. Company and Owner acknowledge
that the Company  Encumbrance is hereby being subordinated to
those matters listed in subparagraphs (i), (ii), (iii) and (iv) above. This
paragraph in no way implies that Lender’s Encumbrance or other related loan
documents being executed concurrently with Lender’s Encumbrance presently
provide for interest based upon any participation of Lender in appreciation,
profits or any basis other than a percentage of the outstanding principal of
the Loan.



          (5) All language in this Subordination
Agreement, including without
limitation, the language in paragraphs 2 and 4(a) and (c), above, limiting the
rights of Lender shall prevail over any contrary language in the Loan Documents
including the Lender’s Encumbrance; and,



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          (6) A Default or Event of Default by
Owner shall be deemed to have
occurred under the Company Encumbrance as described therein.
Notwithstanding its rights described therein, upon the occurrence of a
Default, Company
will give Lender at least fifteen (15) days prior written notice before
recording a notice of
Default or otherwise commencing any foreclosure proceedings under
the Company
Encumbrance, during which period Lender shall have the right, but not the
obligation, to cure any such Default. In the event of a default by Owner
under any of the
Loan Documents, Lender shall
give the

Company at least fifteen (15) days prior written notice before recording a
notice of default
or otherwise commencing any foreclosure proceedings during which period
the Company shall have the right, but not the obligation, to cure such
default.



          (7) Neither Owner, nor any entity
constituting Owner, nor any division,
affiliate, subsidiary, parent or related entity may become a Lender as
that term is defined
herein, nor enjoy the rights and benefits conferred upon Lender herein,
whether as
successor-in-interest to, or transferee of, all or a portion of Lender’s
rights and benefits
under the Loan Documents and/or this Subordination Agreement, or
otherwise.



	 	 	 	 	 	 	 	 	 	 	 
	 	 	“OWNER”	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	TONNER HILLS SSP, LLC, a Delaware limited

liability company	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:  Standard Pacific of Tonner Hills,
LLC, a Delaware limited liability company,
a member	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:  Standard Pacific Corp., a
Delaware corporation, its sole
member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	
	 	 	 	 
	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	By:	 	 	 	 
	

	 	 	 	 	
	 	 	 	 
	 	 	 	 	Title:	 	 	 	 
	

	 	 	 	 	
	 	 	 	 







5









 






	 	 	 	 	 	 	 	 	 	 	 
	 	 	By: Shea Tonner Hills, LLC, a Delaware limited liability company, a member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: Shea Homes Limited Partnership, a California limited partnership, its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By: J.F. Shea LLC, a Delaware limited liability company,
its General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 	 	“COMPANY”	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	NUEVO ENERGY COMPANY, a Delaware corporation	 
	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	“LENDER”	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
	,
	 	 	a ___________________ corporation	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 







6









 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	COUNTY OF ORANGE

	 	 	)	 







          On this ______________day of ____________,
2000, before me, _______________________
   , a Notary Public, personally appeared ________________,
personally known to me or proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument
 WITNESS my hand and
official seal.



	 	 	 
	

	 	

	

	 	Signature of Notary
	 
	 	 
	

	 	Commission Expires:__________________
	

	 	 
	

	 	Subordination Agreement







 









 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	COUNTY OF ORANGE

	 	 	)	 







          On
this
               
day of                , 2000, before me,
                      , a Notary Public in and for said state, personally
appeared
                   , personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity(ies), and that by his/her signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s), acted,
executed the instrument.
WITNESS my hand and official seal.



	 	 	 
	

	 	

	

	 	Notary Public
	

	 	State of California
	 
	 	 
	

	 	Commission Expires:_____________







 









 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	COUNTY OF ORANGE

	 	 	)	 







          On
this                 day of
                  ,
2000, before me,
                  , a Notary Public in and for said state, personally
appeared                  , personally known to me (or proved to me on the basis of satisfactory
evidence) to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she executed the same in his/her
authorized capacity(ies), and that by his/her signature(s) on the instrument
the person(s), or the entity upon behalf of which the person(s), acted,
executed the instrument.

WITNESS my hand and official seal.



	 	 	 
	

	 	

	

	 	Notary Public
	

	 	State of California
	 
	 	 
	

	 	    Commission Expires:________________







 









 






LEGAL DESCRIPTION




THOSE PORTIONS OF TRACT NO. 16178, IN THE
UNINCORPORATED TERRITORY OF THE COUNTY
OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK    , PAGES    
THROUGH    INCLUSIVE OF MISCELLANEOUS MAP, IN THE OFFICE OF THE COUNTY RECORDER,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:



LOTS 1 THROUGH 8, 10 AND 20, TOGETHER WITH LETTERED
LOTS A, B, C, AND D OF SAID
TRACT NO. 16178



CONTAINING: 210.149 ACRES, MORE OR LESS



ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND
BY THIS REFERENCE MADE A PART
HEREOF.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS,
RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	

	 	PREPARED BY OR
	 	UNDER THE DIRECTION OF:
	 	
	 	KATHLEEN SUSAN TETREAULT, P.L.S. 7297
	 	MY LICENSE EXPIRES 12/31/2004
	 	 
	 	December 4, 2003

JN: 13207.00.000







 









 












 









 








Revised 11/24/03




ATTACHMENT 3 TO PAYMENT AND PERFORMANCE AGREEMENT




RECORDING REQUESTED BY:



Nuevo Energy Company

1021 Main, Suite
2100
Houston, Texas
77002
Attn: David
A. Leach



WHEN RECORDED MAIL TO:



Nuevo Energy Company

1021 Main, Suite 2100

Houston, Texas 77002

Attn: David A. Leach



(Space above for Recorder’s Use)



TH 680 PAPA DEED OF TRUST




          This PAPA Trust Deed (“PAPA Trust
Deed” or “PAPA TD”) is made this
     day of    , 2003, by and among TONNER
HILLS 680 LLC, a Delaware limited liability company
(“TH 680” or “Trustor”), NUEVO ENERGY COMPANY, a Delaware corporation
(“Trustee”) and NUEVO ENERGY COMPANY, a Delaware corporation (“Beneficiary”).



          Trustor hereby grants, assigns and
transfers to Trustee in Trust, with
Power of Sale:



PARCEL NO. 1: The real property (“Land”)
in Orange County, described as
follows, and all improvements thereon or added thereto from time to time: (See
Attachment 1)



TOGETHER WITH the rents, issues and profits thereof
and easements appurtenant
thereto, subject to the right, power and authority hereinafter given to and
conferred upon Beneficiary to collect and apply such rents, issues and
profits; and, together with insurance proceeds, settlement proceeds,
condemnation awards and payments in settlement or in lieu thereof, if any.



PARCEL NO. 2: All that certain personal property
used solely in the operation
of the Land, whether now owned or hereafter acquired by Trustor, including but
not limited to all furniture, fixtures and equipment, including maintenance
equipment and model complex furnishings and other decorations, and all
renewals, replacements or substitutions thereof or additions thereto, and all
materials and equipment acquired for use in or to be incorporated in the
improvements constructed or to be constructed on the Land, and all renewals
and replacements therefor, and all warranties in which Trustor may now or
hereafter have an interest relating to work, labor, skill or




1









 








Revised 11/24/03




materials furnished in connection with the
construction of any improvements on
the Land and all plans and specifications which have been or will be prepared
by or for Trustor related to improvements on the Land or to the adjacent lands
of Beneficiary, whether constructed or not, and together with insurance
proceeds, settlement proceeds, condemnation awards and payments in settlement
or in lieu thereof.



          All of the Land and personal property
granted, assigned and transferred
by Trustor to Trustee together with all other property hereafter granted,
assigned and transferred to Trustee under this Deed of Trust is referred to
herein as the “Property.”



          FOR THE PURPOSE OF SECURING, in such order
of priority as Beneficiary may
determine:



          ONE: The following obligations of Trustor
under that certain Payment and
Performance Agreement (“PAPA”) of even date herewith between Beneficiary and
Trustor as “Nuevo” and “Developer,” respectively (and any amendments or
modifications thereto): The obligations pursuant to Section 6.1 of the PAPA
entitled “Obligations secured by PAPA Trust Deed.”



          TWO: The performance of each agreement of
Trustor contained in the PAPA
and herein;



          THREE: The performance of any and all
obligations of Trustor to
Beneficiary under the Development Documents, or which may hereafter be
evidenced by an agreement or other writing reciting that such obligation is
secured by this PAPA Trust Deed.



     A. Trustor’s Covenants. To protect the security of this PAPA
Trust Deed,
Trustor agrees, except as contemplated by the Transaction described in, or
otherwise expressly provided to the contrary in, the Development Documents, or
specifically authorized by Beneficiary in writing to the contrary:



          (1) Repairs. To keep the Property in
good condition and repair; not to
remove
or demolish any building thereon; to complete or restore promptly and in
good and workmanlike
manner any building, or other improvement which may be constructed,
damaged or destroyed
thereon and to pay when due all claims for labor performed and materials
furnished therefor; to
comply with all laws affecting the Property or requiring any alterations
or improvements to be
made thereon; not to commit or permit waste thereof; not to commit, suffer
or permit any act
upon the Property in violation of law; to do all acts which from the
character or use of the
Property may be reasonably necessary for the proper care and maintenance
thereof.



          (2) Insurance. To provide, maintain
and deliver to Beneficiary insurance
as required by the Development Documents. In addition, during the period
of time that any
construction is to take place on the Property, Trustor shall maintain
course of construction
insurance with a loss payable clause in favor of Beneficiary which
insurance shall not be
modified or canceled except upon at least thirty (30) days written notice
to Beneficiary.
Following and during the continuance of an Event of Default by Trustor,
the amount collected
under any casualty insurance policy shall be applied by Beneficiary to the
restoration of the
Property, or if Beneficiary reasonably determines that its security is
impaired or that restoration



2









 





Revised 11/24/03




is not feasible, such amounts shall be applied
against any indebtedness
secured hereby and in such order as Beneficiary may determine, and any
remainder shall be released to Trustor or the persons entitled thereto. Such
application or release shall not cure or waive any default or notice of
default hereunder or invalidate any act done pursuant to such notice.



          (3) Claims. Following and during the
continuance of an Event of Default by
Trustor, to appear in and defend any action or proceeding purporting to
affect the security hereof
or the rights or powers of Beneficiary or Trustee.



          (4) Encumbrances. To pay (and to
provide Beneficiary with evidence of) at
least ten days before delinquency all taxes and assessments affecting the
Property, including
assessments on appurtenant water stock and any Master
Association and Association
assessments, if any, when due; all encumbrances, charges and liens, with
interest, on said
Property or any part thereof, which appear to be prior or superior hereto;
and all allowable
expenses of this Trust, in connection with the payment of such items.



          (5) Failure to Pay. Upon an Event of
Default by Trustor under this PAPA
Trust Deed, then Beneficiary or Trustee, but without obligation to do so
and without additional
notice to or additional demand upon Trustor and without releasing Trustor
from any obligation
hereof, may: (a) make or do the same in such manner and to such extent
as either may deem
necessary to protect the security hereof, Beneficiary or Trustee being
authorized to enter upon
the Property for such purposes; (b) appear in and defend any action or
proceeding purporting to
affect the security hereof or the rights or powers of Beneficiary or
Trustee; (c) pay, purchase,
contest or compromise any encumbrance, charge or lien which in the
judgment of either appears
to be prior or superior hereto; and (d) in exercising any such powers, pay
allowable expenses.



          (6) Expenditures. To pay immediately
and without demand all sums so
expended by Beneficiary or Trustee to protect the security of this PAPA
TD, with interest from
date of expenditure at the maximum amount then allowed by law.



     B. Additional Covenants. It is mutually agreed:



          (1) Condemnation. Following and during
the continuance of an Event of
Default by Trustor, that any award of damages in connection with any
condemnation for public
use of or injury to the Property or any part thereof is hereby assigned
and shall be paid to
Beneficiary which may apply or release, or retain, such moneys received by
it in the same
manner and with the same effect as above provided for disposition of
proceeds of casualty
insurance.



          (2) Waiver. That by accepting payment
of any sum secured hereby after
its
due date, Beneficiary does not waive its right either to require prompt
payment when due of all
other sums so secured or to declare default for failure so to pay.



          (3) Maps, etc. That at any time or
from time to time, without liability
therefor
and without notice, but only upon written request of Beneficiary and
presentation of this PAPA
Trust Deed for endorsement, and without affecting the personal liability
of any person for
payment of the indebtedness secured hereby, Trustee shall: (a) reconvey
any part of said
Property; (b) consent to the making of any map or plat thereof; (c) join
in granting any easement



3









 





Revised 11/24/03




thereon; or (d) join in any extension
agreement or any agreement subordinating
the lien or charge hereof.



          (4) Full Reconveyance. That upon
written request of Beneficiary stating
that
all sums secured hereby have been paid and other obligations secured
hereby have been properly
discharged or waived by Beneficiary, and upon surrender of this PAPA Trust
Deed to Trustee for
cancellation and retention or other disposition as Trustee in its sole
discretion may choose and
upon payment of its fees, Trustee shall reconvey, without warranty, the
Property then held
hereunder. The recitals in such reconveyance of any matters or facts shall
be conclusive proof of
the truthfulness thereof. The grantee in such reconveyance may be
described as “the person or
persons legally entitled thereto.”



          (5) Rents. Issues & Profits. That
Trustor hereby assigns, gives to and
confers
upon Beneficiary the right, power and authority, during the continuance of
these Trusts, to
collect the rents, issues and profits of the Property, reserving unto
Trustor the right, prior to any
default by Trustor in payment of any indebtedness or discharge of any
other obligation secured
hereby or in performance of any agreement hereunder, to collect and retain
such rents, issues and
profits as they become due and payable. Upon any such default,
Beneficiary may at any time
without notice, either in person, by agent, or by receiver to be appointed
by a court, and without
regard to the adequacy of any security for the indebtedness hereby
secured, enter upon and take
possession of the Property or any part thereof, in its own name sue for or
otherwise collect such
rents, issues and profits, including those past due and unpaid, and apply
the same, less allowable
expenses of operation, upon any indebtedness or other obligation secured
hereby, and in such
order as Beneficiary may determine. The entering upon and taking
possession of the Property,
the collection of such rents, issues and profits and the application
thereof as aforesaid, shall not
cure or waive any default or notice of default hereunder or invalidate any
act done pursuant to
such notice.



          (6) Acceleration. That upon Default by
Trustor in payment of any
indebtedness or discharge of any obligation secured hereby or in
performance of any agreement
hereunder (or under the PAPA), Beneficiary may declare all sums secured
hereby immediately
due and payable by delivery to Trustee of written declaration of default
and demand for sale and
of written notice of Default and of election to cause the Property to be
sold, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit with
Trustee this PAPA Trust
Deed and all documents evidencing expenditures secured hereby.



          After the lapse of such time as may then be
required by law following the
recordation of said notice of Default, and notice of sale having been given as
then required by law, Trustee, without demand on Trustor, shall sell the
Property at the time and place fixed by it in said notice of sale, either as a
whole or in separate parcels, and in such order as it may determine, at public
auction to the highest bidder for cash in lawful money of the United States,
payable at time of sale. Trustee may postpone the sale of all or any portion of
the Property by public announcement at such time and place of sale, and from
time to time thereafter may postpone such sale by public announcement at the
time fixed by the preceding postponement. Trustee shall deliver to such
purchaser its deed conveying the Property so sold, but without any covenant or
warranty, express or implied. The recitals in such deed of any matters or facts
shall



4









 





Revised 11/24/03




be conclusive proof of the truthfulness thereof.
Any person, including
Trustor, Trustee, or Beneficiary may purchase at such sale.



          After deducting all costs, fees and
expenses of Trustee and of this
Trust, including cost of evidence of title in connection with the sale,
Trustee shall apply the proceeds of sale to payment, FIRST, of the expenses of
such sale, together with the reasonable expenses of this Trust, including
Trustee’s fees, cost of evidence of title in connection with the sale and
revenue stamps for documentary transfer tax on Trustee’s deed; SECOND, payment
of all monies advanced, paid or expended by Beneficiary under the terms hereof
and the PAPA not then repaid, together with the interest thereon as provided
in the Agreement; THIRD, payment of the amount of all delinquent sums then due
under the PAPA and all other sums (or costs to discharge obligations) secured
hereby then remaining unpaid including those due under the Agreement; and LAST
the balance or surplus, if any, of such proceeds of sale to the person or
persons legally entitled thereto, upon satisfactory proof of such right.



          (7) Substitution of Trustee.
Beneficiary, or any successor in interest
of
Beneficiary under this PAPA Trust Deed, may, from time to time, by
instrument in writing,
substitute a successor or successors to any Trustee named herein or acting
hereunder, which
instrument, executed by the Beneficiary and duly acknowledged and recorded
in the office of the
recorder of the county or counties where the Property is situated, shall
be conclusive proof of
proper substitution of such successor Trustee or Trustees, who shall,
without conveyance from
the predecessor Trustee, succeed to all its title, estate, rights, powers
and duties. Said instrument
must contain the name of the original Trustor, Trustee and Beneficiary
hereunder, the book and
page where this PAPA Trust Deed is recorded and the name and address of
the new Trustee.
Beneficiary shall also have all of its other rights and remedies at law
and equity in the event of a Default by Trustor hereunder (or under the PAPA).



          (8) Binding Effect. This PAPA Trust
Deed applies to and inures to the
benefit
of, and binds all parties hereto, their heirs, legatees, devisees,
administrators, executors,
successors and assigns. The term Beneficiary shall include Beneficiary’s
successor in interest
under the PAPA. In this PAPA Trust Deed, whenever the context so
requires, the masculine
gender includes the feminine and/or neuter, and the singular number
includes the plural.



          (9) Trustee’s Acceptance. That
Trustee accepts this trust when this PAPA
Trust Deed, duly executed and acknowledged, is made a public record as
provided by law.
Trustee is not obligated to notify any party hereto of any pending sale
under any other deed of
trust or of any action or proceeding in which Trustor, Beneficiary or
Trustee shall be a party
unless brought by Trustee.



          (10) Trustor’s Request for Notice
of Default. The undersigned Trustor
requests that a copy of any notice of Default and of any notice of sale hereunder
be mailed to Trustor at the address specified herein for giving Notices.




     C. Reconveyance. Subject to the final paragraph of this Section C., so long as there shall be no unrescinded
notice of Default hereunder given by Trustee to Trustor and no event shall
then be existing which would entitle Beneficiary to execute and deliver a
notice of Default as provided herein, upon and



5









 





Revised 11/24/03




contemporaneously with the close of escrow for the
sale of the last Home at
the Project to a member of the Homebuying public, a full reconveyance may be
had and, upon the request of Trustor, will be given from the lien or charge of
this PAPA Trust Deed subject to the following terms and conditions:



          (1) Release Price. Beneficiary shall
have been paid all amounts then due
under the Agreement, the PAPA and this PAPA TD.



          (2) Advances. Trustor shall have
repaid with interest all of the
amounts
expended by Beneficiary to protect the security of this PAPA Trust Deed,
including without
limitation any amounts expended for keeping senior encumbrances current,
payment of taxes or
attorneys’ fees.



          (3) Default. Trustor shall not be in
Default of any of its
other
obligations hereunder (or under the PAPA) or under the Agreement.



          (4) Costs. Trustor shall pay all costs
of preparing, executing and
recording all
documents necessary to accomplish the partial reconveyances contemplated
herein. Such payments shall be in addition to any required release payments specified
above. All such
payments to Beneficiary shall be in cash or other immediately available
funds.



          (5) Exempt Property. Without limiting
the generality of the foregoing,
Beneficiary shall not be required to release any portion of the Property
from the lien or charge of
this PAPA Trust Deed which has not been legally mapped in accordance with
the California
Subdivision Map Act (or is not exempt therefrom).



     D. Acceleration Upon Sale. Subject to contrary provisions of the
Agreement,
including 5.19, if Trustor shall Transfer (as defined in the Agreement)
the Property, or any part
thereof, or any interest therein, or shall be divested of its title or any
interest therein in any
manner or way, whether voluntarily or involuntarily, Beneficiary shall
have the right, at its
option, except as prohibited by law, to declare all of the indebtedness or
obligations secured
hereby, irrespective of the maturity date specified in any document or
instrument evidencing the
same, immediately due and payable.



     E. Notices. Any notice to be given or other document to be delivered
by
any Party
to the other or others hereunder, and any payments from Buyer to Nuevo,
may be delivered in
person to an officer of any party, or may be delivered by Federal Express,
private commercial
delivery or courier service for next business day delivery, or may be
deposited in the United
States mail, duly certified or registered, return receipt requested, with
postage prepaid, and
addressed to the party for whom intended, as follows:



6









 





Revised 11/24/03




	 	 	 
	If to Nuevo:
	 	 
	

	 	Nuevo Energy Company
	

	 	1021 Main, Suite 2100
	

	 	Houston, Texas 77002
	

	 	Attn: David A. Leach
	

	 	Fax: (713)374-4899
	

	 	Phone: (713)374-4802
	

	 	Email: leachd@nuevoenergy.com
	 
	 	 
		 	and

	 
	 	 
	

	 	Attn: George B. Nilsen
	

	 	Fax: (713) 374-4981
	

	 	Phone: (713) 374-4973
	

	 	Email: nilseng@nuevoenergy.com
	 
	 	 
	Copy to:
	 	 
	

	 	Ullom Associates
	

	 	16149 Redmond Way, Ste. 401
	

	 	Redmond, Washington 98052
	

	 	Fax: (425) 836-2870
	

	 	Phone: (425) 836-2728
	

	 	Email: ullomiw@aol.com
	 
	 	 
	

	 	and
	 
	 	 
	

	 	Nossaman, Guthner, Knox & Elliott, LLP
	

	 	18101 Von Karman Avenue, Suite 1800
	

	 	Irvine, California 92612-1047
	

	 	Attn: William P. Tanner, III
	

	 	Fax: (949) 833-7878
	

	 	Phone: (949) 833-7800
	

	 	Email: wtanner@nossaman.com
	 
	 	 
	To Buyer:
	 	 
	 
	 	 
	

	 	Shea Homes Limited Partnership (“Shea”)
	

	 	603 S. Valencia Avenue
	

	 	Brea, CA 92823
	

	 	Attention: Alan Toffoli
	

	 	Fax: (714) 985-3605
	

	 	Phone:(714) 792-2504
	

	 	Attn: Alan Toffoli
	

	 	Email:alan.toffoli@sheahomes.com
	 
	 	 
	

	 	and







7









 







Revised 11/24/03




	 	 	 
	

	 	Tonner Hills 680 LLC

603 S. Valencia Avenue

Brea, CA 92823

Attn: Joe Fleischaker

Fax: (714)985-3605

Phone: (714)792-2592

Email: joe.fleischaker@sheahomes.com
	 
	 	 
	Copy to:
	 	 
	 
	 	 
	

	 	Landmark Law Group, L.L.P.
	

	 	10350 Santa Monica Boulevard, Suite 295
	

	 	Los Angeles, CA 90025-5074
	

	 	Attn: Gulwinder S. Singh
	

	 	Fax: (310)300-2310
	

	 	Phone: (310) 300-2300 Ext. 101
	

	 	Email: gss@llgllp.com







Notice may also be given by facsimile transmission
(“Fax”) to any party at the
respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which
shall be substituted for the one above specified. If any notice or other
document is sent by mail as aforesaid, the same shall be deemed served or
delivered seventy-two (72) hours after the mailing thereof as above provided.
Notice by any other method shall be deemed served or delivered upon actual
receipt at the address or Fax number listed above.



     F. Definitions. Except as specifically defined to the contrary
herein,
defined terms used in this PAPA Trust Deed shall have the same meanings
prescribed in the Agreement or other Development Documents. When used herein,
the word Land shall include the Project, and the word “including” shall mean
“including without limitation. “ “Default” (also referred to herein as “Event
of Default”) is defined in Section 5.8.1 of the Purchase and Sale Agreement
(“Agreement”) between Trustor and Beneficiary, of even date herewith, to which
the PAPA and this PAPA TD are attached as Exhibit “K.”



8









 





Revised 11/24/03




     G. CROSS-DEFAULT. NOTWITHSTANDING ANYTHING TO THE
CONTRARY IN THE AGREEMENT, PAPA, OTHER DEVELOPMENT DOCUMENTS OR HEREIN,
TRUSTOR AGREES AND HEREBY STIPULATES THAT (1) TRUSTOR HAS RECEIVED, REVIEWED
AND UNDERSTANDS THE MEANING OF EACH AND EVERY PROVISION OF THAT CERTAIN
PAYMENT AND PERFORMANCE AGREEMENT TRUST DEED, OF EVEN DATE HEREWITH, BETWEEN
SHEA, AS TRUSTOR AND NUEVO, AS TRUSTEE AND BENEFICIARY (“SHEA PAPA TD”),
INCLUDING SECTION I (CROSS-DEFAULT) THEREIN, AND (2) ANY DEFAULT BY SHEA UNDER
THE SHEA PAPA TD, PAPA AND/OR AGREEMENT, SHALL CONCLUSIVELY AND AUTOMATICALLY
BE A DEFAULT BY TRUSTOR HEREUNDER FOR WHICH ALL OF TRUSTEE’S AND BENEFICIARY’S
RIGHTS, PRIVILEGES, BENEFITS AND REMEDIES HEREUNDER MAY BE EXERCISED.



	 	 	 
	

	 	

	Trustor’s Initials
	 	Trustee’s and
	
	 	Beneficiary’s Initials







     H. Shea Easement. This PAPA TD shall be subject and subordinate to
that
certain
easement from TH 608 in favor of Shea for the completion of certain
revegetation and other
work to be completed by Shea on the TH 680 Land in connection with the
Project, all as
more fully
agreed between Shea and TH 680, and approved by Beneficiary in its
reasonable discretion.



9









 





Revised 11/24/03




          Trustor and Beneficiary have executed this
PAPA Trust Deed as of the date first written above.



	 	 	 	 	 	 	 	 	 
	TONNER HILL 680 LLC, a Delaware limited
liability company	 	NUEVO ENERGY COMPANY, a Delaware
corporation
	 
	 	 	 	 	 	 	 	 
	By:	 	By:	 	 
	 	
	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	Its:	 	 
	
	 	 	
	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	By:	 	 
	
	 	 	
	 	 	

	 
	 	 	 	 	 	 	 	 
	By:	 	Its:	 	 
	 	
	 	 	

	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 	 
	
	 	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:	 	 	 	 
	

	 	 	
	 	 	 	 







	 	 	 
	“Trustor”
	 	“Trustee”
	 	 	 
	
	 	and
	 	 	 
	
	 	“Beneficiary”







10









 






Revised 11/24/03




	 	 	 	 	 
	State of California

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	County of Orange

	 	 	)	 







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



     WITNESS my hand and official seal.



Signature ____________________




	 	 	 	 	 
	State of California

	 	 	)	 
	 
	 	 	 	 
	

	 	 	)	 
	 
	 	 	 	 
	County of

	___________	 	)	 







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



     WITNESS my hand and official seal.



Signature_________________





11









 





ATTACHMENT 1




TO PAPA DEED OF TRUST




(Legal Description of the TH 680 Land)




 









 








LEGAL DESCRIPTION




THOSE PORTIONS OF SECTION 1, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND THAT PORTION
OF SECTION 7, TOWNSHIP 3 SOUTH, RANGE 9 WEST, SAN BERNARDINO MERIDIAN, AS PER
MAP FILED IN BOOK 51, PAGE 7 OF RECORDS OF SURVEY, PORTIONS OF TRACT NO.
16178, AS SHOWN ON A
MAP FILED IN BOOK        , PAGES         THROUGH        , INCLUSIVE OF MISCELLANEOUS MAPS, IN
CITY OF BREA AND THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE, STATE
OF CALIFORNIA, BOTH IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE
PARTICULARLY DESCRIBED AS FOLLOWS:



LOT 9 OF SAID TRACT NO. 16178,




TOGETHER WITH LOTS 11 THROUGH 19 INCLUSIVE OF SAID TRACT NO. 16178,



ALSO TOGETHER WITH LOT 21 OF SAID TRACT NO. 16178,



ALSO TOGETHER WITH PARCEL 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:



     THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 11;




THENCE ALONG
THE SOUTHERLY BOUNDARY OF SAID LOT 11 NORTH 89°24'21''
EAST 495-67 FEET TO THE SOUTHWESTERLY BOUNDARY OF A GRANT DEED TO
METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK
8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER;




THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY BOUNDARY SOUTH
28°12'22'' EAST 338.56 FEET TO THE NORTHERLY BOUNDARY OF TRACT NO.
12562 AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9
INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY
RECORDER;




THENCE
WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24'21'' WEST
659.12 FEET TO THE EASTERLY BOUNDARY OF TRACT NO. 9532 AS SHOWN ON
A MAP FILED IN BOOK 454, PAGES 25 THROUGH 28 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;




THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY NORTH 00°39’09” EAST
300.07 FEET TO THE POINT OF BEGINNING.



     CONTAINING: 3.977 ACRES, MORE OR LESS



ALSO TOGETHER WITH PARCEL 2 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




     THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 11, SAID CORNER ALSO
BEING ON THE WESTERLY BOUNDARY OF PARCEL A6471-4, AS CONVEYED BY A
FINAL ORDER OF CONDEMNATION RECORDED SEPTEMBER 29, 1970, IN BOOK
9417, PAGE 364 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY
RECORDER OF SAID COUNTY;




THENCE
SOUTHERLY ALONG SAID WESTERLY BOUNDARY SOUTH 10°52'43'' WEST
306.11 FEET NORTHERLY BOUNDARY OF TRACT NO. 12563 AS SHOWN ON A MAP
FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;




THENCE
WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24'21" WEST
890.93 FEET TO THE EASTERLY BOUNDARY OF A GRANT DEED TO
METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK
8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER;



Page 1 of 2









 







THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY THE FOLLOWING
COURSES:




NORTH 23°43'24'' WEST 110.38 FEET TO THE BEGINNING OF A
TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 100.00
FEET;




NORTHERLY ALONG SAID CURVE 20.51 FEET THROUGH A CENTRAL ANGLE
OF 11°45'15'';




NORTH
11°58'09'' WEST 182.51 FEET TO THE SOUTHWEST CORNER OF
SAID LOT 12;




THENCE LEAVING SAID EASTERLY BOUNDARY ALONG THE SOUTHERLY BOUNDARY
OF LOTS 12, “B” AND 11 OF SAID TRACT NO. 16178, NORTH
89°24'21''
EAST 1037.25 FEET TO THE POINT OF BEGINNING.



CONTAINING: 6.694 ACRES, MORE OR LESS




ALSO TOGETHER WITH PARCEL 3 MORE PARTICULARLY DESCRIBED AS FOLLOWS:




     BEING THAT PORTION OF SAID SECTION 7 BOUND AS FOLLOWS:




NORTHERLY BY THE SOUTHERLY BOUNDARY OF SAID
LOT 13.

EASTERLY BY THE WESTERLY BOUNDARY OF
SAID LOT 13 .




SOUTHERLY BY THAT CERTAIN COURSE ALONG THE NORTHERLY BOUNDARY LINE
OF TRACT NO. 9577 AS PER MAP FILED IN BOOK 7438 AT PAGES 4 THROUGH
12, INCLUSIVE OF MAPS, IN THE OFFICE OF SAID COUNTY RECORDER, SAID
COURSE SHOWN AS BEING (N89°47'11"W 200.21') ON LAST SAID MAP.




WESTERLY BY THAT CERTAIN COURSE ALONG THE EASTERLY BOUNDARY LINE OF
LAST SAID TRACT 9577, SHOWN AS BEING (N 00°12'49"E 250.00') ON LAST
SAID MAP.



PARCEL 3 ALSO BEING DESCRIBED AS “EXCEPTION A” TO “PROPERTY PARCEL FOUR” IN A
CORPORATION GRANT DEED TO STRATHAVEN ESTATES RECORDED MARCH 15, 1966 IN BOOK
7868, PAGE 323 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER



CONTAINING: 1.148 ACRES, MORE OR LESS




ALSO AS SHOWN ON A DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE
A PART HEREOF.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	

	 	PREPARED BY OR UNDER THE DIRECTION OF:
	

	 	
	


	 	KATHLEEN SUSAN TETREAULT, P.L.S. 7297

MY LICENSE EXPIRES 12/31/2004


December 04, 2003

JN: 13207.00.000







Page 2 of 2









 













 









 














 









 















 









 








REVISED 2/27/03

2:20 PM




ATTACHMENT 4 MINERAL PAPA




EXHIBIT I TO

PURCHASE AND SALE AGREEMENT

BETWEEN NUEVO AND BLACKSAND PARTNERS, L.P.




MINERAL




PAYMENT AND PERFORMANCE AGREEMENT




WELL ABANDONMENT AND OIL FIELD

ACCOMMODATION PROGRAM AND

OPERATOR/NUEVO IMPROVEMENTS




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	PAGE NO.

	1. DEFINITIONS 
	 	 	1	 
	1.1 PSA 
	 	 	1	 
	1.2 DEVELOPER 
	 	 	1	 
	1.3 DEVELOPMENT DECLARATION 
	 	 	2	 
	1.4 DEVELOPMENT DOCUMENTS 
	 	 	2	 
	1.4 DEVELOPMENT DOCUMENTS 
	 	 	2	 
	1.5 REIMBURSEMENT AMOUNTS 
	 	 	2	 
	1.6 DRE 
	 	 	2	 
	1.7 PARCEL 
	 	 	2	 
	1.8 PROGRAM 
	 	 	2	 
	1.9 UNAVOIDABLE DELAY 
	 	 	2	 
	2. WELL ABANDONMENT AND OIL FIELD ACCOMMODATION PROGRAM AND IMPROVEMENTS
	 	 	2	 
	2.1 PROGRAM 
	 	 	2	 
	2.1.1 Operator’s Surface Facilities 
	 	 	3	 
	2.1.1.1 Removal of Surface Facilities 
	 	 	3	 
	2.1.1.2 Remediation Responsibilities 
	 	 	3	 
	2.1.2. Third Party Easements and Licenses 
	 	 	4	 
	2.1.3. On-Site Representative 
	 	 	5	 
	2.1.4. Reimbursement 
	 	 	5	 
	2.1.4.1. Reimbursement Plan 
	 	 	5	 
	2.1.4.2. Program Segments and Notices to Proceed 
	 	 	5	 
	2.1.5. Anchor Points and Pulling Pads 
	 	 	8	 
	2.1.6. Well Vaulting
	 	 	8	 
	2.1.7. Insurance 
	 	 	8	 
	2.1.8. Completion of the Program 
	 	 	8	 
	2.1.8.1. Performance by Each Party 
	 	 	8	 
	2.1.8.2. Final Acceptance 
	 	 	9	 
	2.1.8.3. Liability Allocation 
	 	 	9	 
	2.1.8.4. Construction Easement 
	 	 	10	 
	2.1.9. Developer Option to Purchase Wells 
	 	 	10	 
	2.2. THE PROGRAM AND PARTY RESPONSIBILITIES
	 	 	11	 
	I. Post closure-Pre Grading Events 
	 	 	11	 
	II. Site Clearing and Site Grading Events Within the Development Areas 
	 	 	14	 
	III. Post-Grading Events 
	 	 	18	 
	2.3 DEVELOPER IMPROVEMENTS AND ADDITIONAL PAYMENTS 
	 	 	20	 
	2.3.1 Processing Costs — Employee Costs 
	 	 	20	 
	2.3.2 Operator Improvements 
	 	 	21	 
	2.3.3.Governmental Modifications 
	 	 	21	 
	2.4 MISCELLANEOUS 
	 	 	21	 
	2.4.1 Remedies 
	 	 	21	 







i









 






	 	 	 	 	 
	2.4.1.1 Default/Cure 
	 	 	21	 
	2.4.1.2 Remedies Cumulative 
	 	 	21	 
	2.4.1.3 Waiver 
	 	 	22	 
	2.4.2. Continuous Operation 
	 	 	22	 
	2.4.3. Assignment 
	 	 	23	 
	2.4.4 Subdivision Maps and Applications 
	 	 	23	 
	2.4.5. Captions 
	 	 	23	 
	2.4.6. Invalidity of a Provision 
	 	 	23	 
	2.4.7. Notices 
	 	 	23	 
	2.4.8. Binding Effect: 
	 	 	25	 
	2.4.9. Further Assurances 
	 	 	25	 
	2.4.10. Time of Essence 
	 	 	25	 
	 2.4.12. Attorneys’ Fees 
	 	 	26	 
	2.4.13 Payments 
	 	 	26	 
	2.4.14 Applicable Law 
	 	 	26	 







ii









 






ATTACHMENTS




	 	 	 
	Attachment 1

	 	LEGAL DESCRIPTION OF LAND
	Attachment 2

	 	LIST OF ENGINEERING FIRMS PER SECTION 2.1.9
	Attachment 3

	 	OIL FIELD RELATED THIRD PARTY
EASEMENTS AND LICENSE–TPEL
	Attachment 4

	 	BREA FIELD DEVELOPMENT ACCOMMODATION PROGRAM







i









 






MINERAL




PAYMENT AND PERFORMANCE AGREEMENT




     This Payment and Performance Agreement (“Agreement” or “PAPA”) is made this
______ day of ______, 2003, by and between NUEVO ENERGY COMPANY, a Delaware
corporation (“Nuevo”) and BLACKSAND PARTNERS, L.P., a Texas Limited
Partnership (“Operator”). Such entities are hereinafter individually or
collectively referred to as a “Party” or the “Parties.”



P R E A M B L E:




     A. Concurrently herewith, Operator has acquired from Nuevo that certain
real property consisting of mineral interests located in Orange County,
California, more particularly described on Attachment “1” which is appended hereto and incorporated
herein by this reference (“Minerals”).



     B. In accordance with the Purchase and Sale Agreement of even date
herewith, pursuant to which Operator is acquiring the Minerals, the Parties wish to
set forth herein certain
obligations of Operator, Nuevo and Developer (defined below in Section
1.2) regarding the
Program (defined below in Section 2.1) and the construction of other
improvements.



     C. As described herein and in the Development Declaration (defined in
Section 1.3), Operator has assumed certain obligations with respect to the Program,
which, pursuant to this Agreement, Nuevo is required to perform.



     NOW, THEREFORE, in consideration of the PREAMBLE and the covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, including without
limitation the conveyance of the Minerals to Operator by Nuevo, the Parties
hereby covenant and agree as follows:



     1. Definitions. Unless otherwise expressly provided herein, the following
words and phrases when used in this Agreement shall have the following
meanings; all terms not specifically defined herein shall have the meaning
prescribed for them in the PSA or elsewhere in the Development Documents.



          1.1 PSA. “PSA” or “Purchase and Sale Agreement” shall mean that certain
agreement described in Paragraph “B” of the Preamble to this Agreement.



          1.2 Developer. “Developer” shall mean Nuevo as the initial applicant to
Governmental Agencies for development of the Project or any entity (or
entities collectively or
individually) which subsequently acquires all or any portion of the
surface fee interest in the
Parcel for the purpose of developing all or a portion of the Project, from
and after the effective date of such acquisition.




1










 





          1.3 Development Declaration.“Development Declaration” shall mean that
certain Declaration of Development Covenants, Conditions and Restrictions
encumbering the Parcel between Nuevo and Operator and recorded as described in
the Repository Instructions.



          1.4 Development Documents. “Development Documents” shall have the meaning
prescribed in the PSA.



          1.5 Final Acceptance.“Final Acceptance” means the date on which Developer
or Operator has delivered an Acceptance Confirmation for those activities in
each Program Segment set forth in Section 2.1.4.2, after it has conducted a
final inspection of all work performed by the other or Nuevo in connection with
the activity.



          1.6 Reimbursement Amounts. “Reimbursement Amounts” shall have the meaning
given in Section 2.1.4. 1. of this Agreement.



          1.7
DRE. “DRE” shall mean the California Department of Real Estate or such
other governmental agency of the State of California which administers the sale
of subdivided lands pursuant to Sections 11000 et seq. of the California
Business and Professions Code, or any similar California statute hereinafter
enacted.



          1.8 Parcel.“Parcel” shall mean all that certain real property described on
Attachment “1” which is appended hereto and incorporated herein by this
reference, less and except the Minerals acquired by Operator.



          1.9
Program.“Program” has the meaning set forth in Section 2.1.



          1.10 Unavoidable Delay. “Unavoidable Delay” shall mean any prevention,
delay or stoppage in the completion of a Party’s Work as defined herein caused
by fire, explosion, unavailability or breakdown of machinery or equipment or by
acts of God, war, riot, civil insurrection, labor disputes, inability to obtain
labor or materials or reasonable substitutes therefor, any order, regulation,
request or recommendation of a Governmental Agency, or other similar matters or
causes beyond the reasonable control of the responsible party other than for
the payment of money; provided, however, that nothing in this Section shall
excuse the performance of any act rendered difficult solely because of the
financial condition of a party.



     2. Well
Abandonment and Oil Field Accommodation Program and
Improvements.



          2.1
Program. Nuevo, at no cost and expense to Operator except as may be
expressly provided in this Agreement, shall conduct a well abandonment and
oil field accommodation program for the Parcel composed of those tasks and
activities which are described in this Section 2 and are specifically set out
in Attachment 4 hereto, which, together with those tasks and activities of
Developer described in this Section 2 and specifically set out in Attachment 4
are hereinafter referred to as the “Program.” In connection with the
performance of the Program, Nuevo shall, in the event of conveyance of the
Parcel, enter into an agreement with any successor Developer which will provide
for the performance by Developer of those tasks and activities described in
this Section 2 as Developer’s responsibility. The Program shall



2









 





be undertaken with Operator’s cooperation, and in accordance with standards
promulgated at the time of such work by the California Department of
Conservation, Division of Oil, Gas and Geothermal Resources (“CDOGGR) or such
other governmental agency having jurisdiction over the activity, other legal
and regulatory requirements, as amended from time to time (but such amendment
applicable only to those activities for which Final Acceptance has not been
received), and good oil field practices, all subject to the terms of this
Agreement. Generally, the Program will be accomplished as follows:



            2.1.1 Operator’s Surface Facilities.



                   2.1.1.1 Removal of Surface Facilities and Subsurface Pipelines. Nuevo
shall remove certain of Operator’s surface equipment as specified in Attachment
4, to the extent and when necessary in accordance with the applicable Developer
Notice to Proceed within the Development Areas and lands adjacent thereto,
including those areas designated for continued oil and gas operations, to
accommodate Developer’s Grading Plan. This will include, but not be limited to,
pumping units, concrete cellars and concrete pads immediately contiguous to the
wellheads, power poles, transformers, manifolds, test bubbles, compressors,
tanks, vessels and above ground pipelines. In addition, Nuevo shall drain,
flush and cap subsurface pipelines, to the extent and when necessary in
accordance with the applicable Developer Notice to Proceed within the
Development Areas and lands adjacent thereto to accommodate Developer’s Grading
Plan. Removal of subsurface pipelines to the extent deemed necessary or
desirable shall be the responsibility of Developer. Prior to Nuevo’s
commencement of work, Operator shall isolate and cease operation of all
equipment and facilities to be removed and shall take such other steps as are
reasonably necessary to allow such removal to be conducted in accordance with
all applicable regulatory requirements and consistent with good oil field
practices. The surface equipment will be removed from such wells, not just
those to be abandoned, to facilitate the grading. Each wellhead will be
surveyed and marked by Operator one (1) time only and Nuevo and Developer will
inspect and approve the markings. After inspection and approval of the well
markings, Developer will be responsible for grading around the well casings
without damaging them. Upon approval of the well markings, Developer shall
proceed in a timely manner and be responsible to pay, and shall be solely
liable for, any and all damage to any wells caused by Developer’s grading
operations.



     The acts or omissions of Developer or Nuevo in accordance with the terms
of this Agreement may not be imputed to Operator unless expressly stated
herein. Developer and Nuevo are each performing their obligations hereunder as
independent contractors and not as a subcontractor or agent of Operator.
Furthermore, the actions or omissions of Operator must be based upon a specific
duty imposed by this Agreement or law upon Operator, and not delegated to
Nuevo.



                   2.1.1.2 Remediation Responsibilities. Should Developer encounter soil that
appears to be crude oil or oil well production impacted (evidenced by staining
or odor), Developer shall immediately notify Operator’s field operations person
and Nuevo’s on-site representative. Developer shall be fully responsible for
funding, implementing and completing all environmental testing, assessment,
remediation, monitoring, reporting or other requirements (with the assistance
of Operator or Nuevo if the absence of such assistance would prevent Developer
from properly performing such responsibilities) with respect to such crude oil
or oil



3









 





well production impacts. To the extent that such crude oil impact or oil well
production impact is associated with active and producing wells or operational
pipelines or facilities, Operator shall be responsible for completion of any
required well, pipeline or facility repairs. Notwithstanding the foregoing,
Nuevo at its sole cost and expense shall be and remain responsible for (i)
those remediation activities described in the approved Remedial Action Plan
submitted December 16, 1999, as amended October 3, 2001,
December 27, 2001 and
January 13, 2003 (“EIR Remediation”) and (ii) crude oil or other oil well
production releases that result from work and activities undertaken by Nuevo in
furtherance of this Agreement. Upon discovery of crude oil or oil well
production contamination in the vicinity of a well identified in Schedule B of
Attachment 4 or temporary or permanent pipeline or facility, Operator’s field
operations person, Nuevo’s onsite representative and Developer’s on site
representative shall determine as soon as reasonably practical if the soil is
crude oil impacted as a result of a leak caused by (i) Operator’s ongoing
production activity in which event costs associated with cleanup and
remediation to oil field standards shall be the responsibility of Operator,
(ii) the activities of Nuevo in performance of the Program including EIR
Remediation in which event costs associated with cleanup and remediation shall
be the responsibility of Nuevo or (iii) from any other causes in which event
the costs associated with cleanup and remediation, including costs to bring
cleanup associated with ongoing production activities from oil field standards
to residential standards, together with clean up and remediation of all
contamination other than the EIR Remediation, shall be Developer’s
responsibility. The Parties agree that if Operator’s field operations person
and Developer’s and Nuevo’s on site representatives cannot make such a
determination or cannot agree on the source of the apparent soil contamination
within seven (7) business days, Nuevo, Developer and Operator will designate a
representative from a reputable, soils engineering firm that routinely does
soils work (“Soil Firm”) who is familiar with soil contamination issues to
designate the source of the apparent soil contamination. If the parties are
unable to select a Soils Firm, any party to this Agreement may make application
to the Superior Court of Orange County for the timely appointment of a Soil
Firm. The Soil Firm’s representative shall take a sufficient number of samples
to permit initial and follow-up testing and such representative’s determination
as to all matters, including the allocation of costs, including its fees, shall
be final and binding on the parties hereto. The parties shall use their
commercially reasonable efforts to secure the determination by the Soil Firm’s
representative of the source of the apparent soil contamination shall be made
as soon as practicable after notification to the Soil Firm. If the Soil Firm’s
representative cannot make a conclusive determination as to the source of the
apparent soil contamination, the soil contamination shall be presumed to have
been from other than ongoing production activity. The party whose actions are
found to have created the contamination shall in addition to the clean up and
remediation cost, pay for the Soil Firm’s work; and if more than one party is
found to have created such contamination, the costs of the Soil Firm’s work
will be prorated by such firm among the parties creating the contamination in
proportion to that Parties’ contribution to such contamination.



            2.1.2. Third Party Easements and Licenses. Nuevo and Operator will
cooperate with Developer in attempting to remove and/or relocate from the
Development Areas oil field related easements and licenses for pipelines
(“TPEL”) belonging to other entities, including those of Southern California
Edison. Nuevo is not aware, to the best of its knowledge, of any other TPEL on
or affecting
the Parcel except as described in Attachment “3,” hereto. Nuevo and
Operator shall not be required to incur any costs, in their efforts to
cooperate in the removal and/or relocation of the TPEL. Temporary pipelines may
be required in some areas



4









 





while the grading is in progress. Operator and Nuevo will use commercially
reasonable efforts, at no cost to Operator and Nuevo, to assist Developer at
Developer’s expense in causing these pipelines to be reinstalled by the
respective companies in permanent easements after the grading is complete.
Operator agrees that upon Developer’s written notice, Operator will assist
Developer in giving notice to the third party companies in an attempt to have
the pipelines removed and replaced. Operator and Developer acknowledge receipt
of copies of the easement documents, both recorded and unrecorded, listed on
Attachment “3” hereto and incorporated herein by this reference.



            2.1.3. On-Site Representative. Nuevo, Operator and Developer shall each
have the right to have representatives on-site both before the grading begins
and during the grading operations on the Parcel to observe such grading
operations. Developer agrees to give Operator sufficient notice prior to
commencement of grading to allow Operator to arrange to have a representative
on-site at Operator’s cost, if Operator so elects.



            2.1.4. Reimbursement.



                   2.1.4.1. Reimbursement Plan. Operator and Nuevo agree that the costs to
implement the Program (“Reimbursement Amounts”) shall not be borne by Operator,
unless otherwise provided herein. Notwithstanding any term in the Agreement to
the contrary, Operator shall only be responsible for the cost of incremental
work, if any, requested by Operator under Section 2.3.2. The parties recognize
that the Project may be modified as a result of new or additional governmental
requirements or as a result of the mutual agreement of the Developer and
Operator or among Developer, Operator and Nuevo as specified herein. In no
event shall any modification requested by Developer or any additional or new
governmental requirements prior to Final Acceptance result in costs,
expenditures or commitments by Operator.



                   2.1.4.2. Program Segments and Notices to Proceed. The Program shall be
implemented into segments as shown below, and each Program Segment shall
commence upon proper receipt of a written notice issued by Developer and
delivered to Nuevo and Operator specifying the Program Segment to be performed
(“NTP”), as follows:



	 	 	 	 	 	 	 
	Program Segment
	 	Notice to Proceed (“NTP”)
	 	Acceptance Confirmation

	Pre-Phase I Initial Activity	 	NTP will be issued as mutually agreed
between Nuevo and Developer.	 	 
	 
	 	 	 	 	 	 
	•

	 	Preliminary and detailed engineering
	 	 	 	Not Applicable
	

	 	and design	 	 	 	 
	 
	 	 	 	 	 	 
	•

	 	Permitting
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	•

	 	Remediation required by EIR
	 	 	 	Developer







5









 






	 	 	 	 	 	 	 
	Program Segment
	 	Notice to Proceed (“NTP”)
	 	Acceptance Confirmation

	•

	 	Initial abandonment of 25 idle and
reabandoned wells
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	Pre-Phase I Intermediate Activity	 	NTP will not issue prior to receipt of
all required Operator permits or, to the
extent certain activity can be
commenced without permits, as	 	 
	•

	 	Begin procurement of all required
materials and equipment
	 	mutually agreed between Nuevo and
Developer.
	 	Not Applicable
	 
	 	 	 	 	 	 
	•

	 	Remove infrastructure and initial
abandonment of active wells
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	•

	 	Begin construction of tank farm and
field infrastructure
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	Pre-Phase I Final Activity	 	NTP will not issue prior to receipt of
all required Operator permits or, to the
extent certain activity can be	 	 
	•

	 	Complete construction of tank farm and
field infrastructure
	 	commenced without permits, as
mutually agreed between Nuevo and
Developer.
	 	Operator
	 
	 	 	 	 	 	 
	•

	 	Construct power system
	 	 	 	Operator
	 
	 	 	 	 	 	 
	•

	 	Temporary removal of equipment
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	Phase I	 	NTP will not issue prior to receipt of
all required Operator permits or, to the
extent certain activity can be
commenced without permits, as	 	 
	•

	 	Raise/lower Phase I well heads
	 	mutually agreed between Nuevo and
Developer.
	 	Operator
	 
	 	 	 	 	 	 
	•

	 	Final abandonment of Phase I wells
	 	 	 	Developer
	 
	 	 	 	 	 	 
	•

	 	Accommodation of retained wells
	 	 	 	Operator (and Developer for limited
purpose of design compliance)
	 
	 	 	 	 	 	 
	•

	 	Remove infrastructure and initial
abandonment of Phase II wells
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	•

	 	Temporarily remove Phase II retained

well equipment
	 	 	 	Not Applicable







6









 






	 	 	 	 	 	 	 
	Phase II	 	NTP will not issue prior to receipt of
all required Operator permits or to, the
extent certain activity can be
commenced without permits, as	 	 
	•

	 	Raise/lower Phase II well heads
	 	mutually agreed between Nuevo and
Developer.	 	Operator
	 
	 	 	 	 	 	 
	•

	 	Final abandonment of Phase II wells
	 	 	 	Developer
	 
	 	 	 	 	 	 
	•

	 	Accommodation of retained wells (21
wells)
	 	 	 	Operator (and Developer for limited
purpose of design compliance)
	 
	 	 	 	 	 	 
	•

	 	Remove infrastructure and initial
abandonment of Phase III wells (8
wells)
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	•

	 	Temporarily remove Phase II retained

well equipment
	 	 	 	Not Applicable
	 
	 	 	 	 	 	 
	Phase III	 	NTP will not issue prior to receipt of
all required Operator permits or, to the
extent certain activity can be
commenced without permits, as	 	 
	•

	 	Raise/lower Phase III well heads
	 	mutually agreed between Nuevo and
Developer.
	 	Operator
	 
	 	 	 	 	 	 
	•

	 	Final abandonment of Phase III wells
	 	 	 	Developer
	 
	 	 	 	 	 	 
	•

	 	Seismic Sensor installation
	 	 	 	Developer







     Upon receipt of the NTP for any Program Segment specified above, Nuevo
shall be obligated to commence the required work within forty-five (45) days
and complete the work within the time duration specified in Attachment 4.
Operator shall cooperate in good faith with Nuevo and Developer in the
implementation of the Program. Operator shall (i) promptly process all permit
requests; (ii) at its cost comment on all submittals of specifications or plans
within ten (10) business days of receipt thereof; and (iii) at its cost make
all facilities available for accommodation under the Program such that Nuevo
may commence the Program Segment within 45 days of receipt of a NTP. To the
extent that Operator fails to fully and timely cooperate with Nuevo, and Nuevo,
as a result of Operator’s acts or omissions, incurs penalties, damages or
incremental costs in performing the Program, such penalty, damage or cost shall
be the responsibility of Operator and Operator hereby agrees to defend,
indemnify and hold Nuevo harmless therefrom. Operator shall also be liable to
Developer for any and all incremental reasonable cost or expense incurred by
Developer in the development of the Development Areas as a result of Operator’s
failure to comply with the provisions of this Section. Operator expressly
agrees to pay such incremental Developer costs and defend, indemnify and hold
Nuevo harmless therefrom. In addition to the foregoing, should Operator fail
to temporarily or permanently shut in any well in accordance with the Program,
Nuevo shall have the right, but not the obligation to shut-in such well at
Operator’s sole risk and expense. In the event Developer abandons or



7









 





suspends the Program other than as a result of Unavoidable Delay, and does not
resume Program activity within the time period specified in Section 2.4.1.1
after receiving written notice from Operator, Nuevo shall restore such wells to
production at Developer’s risk and sole expense provided that Nuevo has been
prepaid by Developer an amount adequate to restore such wells. To the extent
Nuevo acts as the Developer hereunder and fails properly to carry out the
responsibilities and obligations allocated to Developer in this Section 2,
Operator, after ten (10) days written notice to Nuevo, may take over and
discharge such responsibilities and obligations at the sole cost and expense of
Nuevo, to be reimbursed in cash to Operator within thirty (30) days of proper
completion of such Work by Operator, fully in compliance with this PAPA and all
plans and specifications for such Work.



            2.1.5.
Anchor Points and Pulling Pads. As part of the Program, Nuevo shall
be responsible for construction of the anchor points and pulling pads necessary
for Operator’s continuing Oil Operations within the Exclusive Use Areas and
Joint Use Areas within the Development Areas and graded areas adjacent thereto.



            2.1.6.
Well Accommodation. As part of the Program, Nuevo will relocate below
the surface of the Parcel, all operating wellheads in the Development Areas,
and those required wells within the adjacent grading areas and Public Park
areas, and as required by appropriate Governmental Agency rules as more
particularly set out in Attachment 4, Schedule
B.



            2.1.7.
Insurance. Each Party shall use commercially reasonable efforts to
name the other parties as Additional Insured, on each Party’s standard blanket
insurance policy covering its activities related to the Minerals or in
connection with the Program Improvements, for the duration of their
construction or their activities on the Minerals and any portion of the Parcel.



            2.1.8.
Completion of the Program.



                      2.1.8.1. Performance by Each Party. Nuevo shall timely commence and
complete each Program Segment within the time duration specified in Attachment
4 after receipt of all required permits for such Segment. Phase I, II
and III
Segments will not commence until after completion of Developer’s grading for
that Segment. In no event shall Nuevo or Operator be obligated to design,
construct or install any improvements nor undertake work or activities other
than those specified in Attachment 4. Should Developer or Operator’s failure to
perform, including, without limitation, pursuant to Section 2.1.4, other than
for the payment of money, or should Nuevo’s failure to complete any aspect of
the work or any Program Segment result from an Unavoidable Delay, such required
performance shall be excused for the period of time that the Unavoidable Delay
prevents performance and the time duration for the Program Segment shall be
extended by the length of time performance is delayed. Provided, however, that
nothing in this Section shall excuse the performance of any act rendered
difficult solely because of the financial condition of a party. In the event
that any delay due to Unavoidable Delay is anticipated by a Party, such Party
shall promptly notify the other parties of such delay, its cause and the
estimated duration of the delay. Each Party shall exercise due diligence to
shorten, mitigate and avoid the effects of the delay and shall keep all Parties
informed as to its efforts.



8









 





               2.1.8.2.
Final Acceptance. Developer and Operator shall respectively
conduct a final inspection of those activities in each Program Segment as set
forth in Section 2.1.4.2 as to the items by their name in the “Acceptance
Confirmation” in such section within fifteen (15) days of written notice of
completion. In addition Operator shall have the right, but not the obligation,
to perform a final inspection of the Developer’s work and comment on the same.
Developer and Operator shall deliver to Nuevo (with a copy to the other) (i)
its written confirmation of “Final Acceptance of all matters” (each an
“Acceptance Confirmation”) for each activity in a Program Segment designated
for its Acceptance or (ii) an Acceptance Confirmation of all matters it
considers as completed and a detailed description of any items in the Program
Segment designated for its Acceptance which it in good faith cannot give “Final
Acceptance” together with its requirements therefore. The issuance of an
Acceptance Confirmation of each completed activity within the Program
Segment and of all matters shall be contingent upon acceptance of the work by
the appropriate governmental authority to the extent required. If the parties
cannot resolve any item for which an Acceptance Confirmation has not been given
within 30 days, such unresolved item shall be submitted to arbitration in
accordance with this Agreement. Upon completion of any outstanding items,
Operator or Developer shall deliver an Acceptance Confirmation thereof to Nuevo
and the other within 10 days of such completion. After Final Acceptance,
Developer shall be responsible for and shall release, hold harmless and
indemnify Operator and Nuevo from all claims, demands, losses or damages, of
any sort whatsoever, relating to the design, engineering, permitting,
maintenance, repair, replacement, relocation, removal and reinstallation of any
abandoned wells, pipelines or facilities located within or adjacent to the
Development Areas and all other matters for which it has given an Acceptance
Confirmation and, together with all other work performed hereunder shall be
referred to as “Developer Liability”. After Final Acceptance, Operator shall be
responsible for and shall release, hold harmless and indemnify Developer and
Nuevo from all claims, demands, losses or damages of any sort whatsoever,
relating to the design, engineering, permitting, installation, repair,
relocation, removal and reinstallation of all active wells, pipelines or
facilities and all other matters for which it has given Final Acceptance
(“Operator Liability”). It is the intention of the Parties that upon Final
Acceptance, Nuevo shall have no further liability or obligation with respect to
the Program and the wells, equipment and facilities accommodated under the
Program. Upon Final Acceptance, Nuevo and Operator shall be relieved of any and
all liability directly or indirectly related to Developer Liability; provided
that notwithstanding the foregoing, so long as Nuevo is Developer, Nuevo shall
not be relieved of Developer Liability. Upon Final Acceptance, as between Nuevo
and Operator, Nuevo shall be relieved of further liability or obligation and
Operator shall indemnify, release and hold Nuevo harmless from any and all
claims, including third party claims, related to Operator Liability.
Notwithstanding anything to the contrary contained herein, Operator, prior to
Final Acceptance, shall not be liable or responsible for any increased costs
which result from governmental requirements to obtain additional permits or
remediate or restore the Parcel to a higher standard resulting from the real
estate development and all such incremental or increased costs shall be the
responsibility of Developer.



               2.1.8.3. Liability Allocation. Notwithstanding the above or the
Indemnities Developer gives in its agreement to purchase the Parcel, at
any time prior to Final Acceptance, Developer may, in its reasonable
discretion, seek arbitration as provided in



9









 





Section 2.1.4.3 against Nuevo to obtain damages for losses suffered as a result
of the failure of Nuevo to timely or properly complete the Program Segment or
work hereunder. All disputes between any of the Parties herein shall be
resolved through arbitration. Any award in such arbitration shall be limited
to the recovery of actual direct damages incurred by Developer. Developer shall
not be entitled to indirect, consequential, special, exemplary or punitive
damages. After Final Acceptance by Developer, Developer shall have no cause of
action with respect to Developer’s Liability against Operator or Nuevo, or
their successors or assigns. After Final Acceptance by Operator, Operator shall
have no cause of action against Developer or Nuevo or their successors or
assigns for Operator’s Liability but Operator or Developer may, in its
reasonable discretion, maintain a lawsuit, arbitration or other action against
any construction entities hired by Nuevo (but not Nuevo itself) to perform work
on the Parcel pursuant to a written contract (“Construction Entities”), to
obtain damages for losses suffered as a result of Nuevo’s failure to timely or
properly construct the completed work, to the extent caused by such
Construction Entities. In that regard, to the extent it possesses and may
assign same, Nuevo hereby conveys, transfers and assigns (and, if necessary,
will convey, transfer and assign at such time as such cause of action arises)
to Operator and Developer a non-exclusive assignment of its rights and
interests in and to any relevant contracts or subcontracts, for the limited
purposes stated herein, without any obligation by Nuevo to participate in such
lawsuit or action, as a party or otherwise, and without any responsibility,
warranty, representation or liability for any outcome pursuant thereto or
damages awarded therein. Construction Entities include contractors,
subcontractors, materialmen or other independent entities, but not Operator or
Nuevo, their respective constituent partners, officers, employees or any other
related entities. Upon ten (10) days written request, Nuevo will provide
Operator and Developer with a list of such Construction Entities which have
supplied Operator and/or Nuevo with the Preliminary Notice prescribed by the
California Civil Code for the maintenance of mechanic’s lien rights (See
Exhibit “F” to the PSA). Nuevo further agrees to not enter into any contract
with a Construction Entity that waives the liability for such entity’s
negligence.



            2.1.8.4. Construction Easement. Operator and Developer, their respective
successors and assigns, hereby grant to Nuevo together with the right to
partition, grant and transfer the same, a nonexclusive easement in gross over
the Parcel to the extent necessary to complete all work required by the
Program.



      2.1.9. Developer Option to Purchase Wells. Developer may at any time prior
to commencement of grading, elect to purchase any or all of Operator’s active
wells lying within the Development Areas solely for the purpose of well
abandonment by giving notice by certified mail of such well designation. The
value of a producing oil well or an injection well shall be determined by
mutual agreement of the parties taking into consideration the current condition
of the well, the reserves assigned to the well, the well’s production,
operating cost, plugging and abandonment cost, for an injector well, the
replacement cost, and any other matter deemed relevant. For purposes of this
Section 2.1.9, the value of a well shall be equal to the average of the values
determined by the reserve engineers, one to be selected by each party from the
list attached as Attachment 2. Each party shall select one company from such
list by providing written notice thereof within ten days of the certification
date of Operator’s notice. The value, once determined, shall be final. Prior to
grading, the
determined value shall be paid by Developer to Operator, and such costs to
Developer shall not be considered as costs to



10









 





implement the Program. Developer shall notify Operator within ten (10) days of
receipt of the determination of values which wells it elects to purchase.
Developer shall pay the amount to Operator within twenty (20) days of such
notice. Upon receipt of such payment, Operator shall promptly (i) shut in any
applicable wells, if active, and (ii) deliver to Developer a Bill of Sale for
any such well and transfer operatorship to Developer. Developer shall (iii)
assume operatorship and obtain all necessary permits and governmental
approvals to act as Operator, (iv) not return any well it purchases to
production, and (iv) cause such wells to be plugged and abandoned and all
gathering lines and facilities abandoned and, if above ground, removed all in
accordance with all Governmental Agency regulatory requirements at Developer’s
sole cost and expense in the same time and manner required of Operator under
the Program. Any ancillary costs associated with the purchase and plugging and
abandonment of any such wells and removal of facilities therefor shall not be
considered as Reimbursement Amounts.



          2.2. The Program and Party Responsibilities. Except as otherwise provided
herein, Operator, Nuevo and Developer shall cooperate in the completion of the
Program and each Party shall perform its obligations in a commercially
reasonable manner, and in good faith, as described below and elsewhere herein:



     I. Post closure-Pre Grading Events



        A. Operator and Nuevo have mutually agreed or, if so indicated, shall
mutually agree, in a manner consistent with Attachment 4 hereto, to the
following matters as more specifically set out in Attachment 4 and schedules
thereto:




	 	i.	 	the location and size of the area for the expansion of
the existing Tonner Canyon Tank Farm (“Tank Farm”), which
will be required prior to the decommissioning of the
existing East Naranjal Tank Farm (“EN Tank Farm”).
	 
	 	ii.	 	the general alignment and grade for service lines to
the Tank Farm and plan facilities to accommodate the
operating wells previously served by the East Naranjal Tank
Farm. (References to grade within this Agreement refer only
to those lines for which burial is required.) The final
alignment and grade will be mutually agreed to so as to
avoid conflict with future development to the extent
possible and to avoid future interruption of service.
	 
	 	iii.	 	the general alignment and grade for the surface and
subsurface installation of the 12KV service line from the
existing electrical substation to the new site and to the
existing Steams gas plant location (“Gas Plant”). The final
alignment and grade have been selected as to minimize
conflict with future development and avoid future
interruption of service.
	 
	 	iv.	 	INTENTIONALLY OMITTED




11









 






	 	v.	 	shall mutually agree upon the location, alignment and
grade of the “sales point” for the ConocoPhillips (formerly
Tosco) pipeline to serve the Tank Farm.
	 
	 	vi.	 	shall mutually agree upon the location, alignment and
grade of the gas gathering system and associated facilities,
and service lines between the Gas Plant and the Tank Farm.
	 
	 	vii.	 	shall mutually agree upon the final grade elevations
for each existing well remaining in the Development Areas,
or impacted by grading for the Development Areas.
	 
	 	viii.	 	shall mutually agree upon access plans to provide
for interim and final access to accommodate the Program work
and all future oilfield-related activities.





          B. Developer, at Developer’s cost and expense, shall:




	 	i.	 	Prepare the Grading Plan and process it through the
appropriate Governmental Agency. The Grading Plan shall be
designed to be completed in three phases to correspond to
the work set out in Attachment 2, all as approved by the
appropriate Governmental Agency.
	 
	 	ii.	 	Prepare a soils and geological review of the Grading
Plan.
	 
	 	iii.	 	Satisfy, or cause to be satisfied, all mitigation
measures precedent to grading found in the Final Tonner
Hills EIR.
	 
	 	iv.	 	Prepare a preliminary utility master plan (“Street and
Utility Improvement Plans”) to serve as a basis for the
Facilities Plan (see C.v., below) and to be submitted to,
and approved by, the appropriate Governmental Agency.
	 
	 	v.	 	Provide grade elevations for all wells to be retained or
abandoned within the Development Areas or impacted by
grading required for the Development Areas.
	 
	 	vii.	 	Obtain coverage under the National Pollutant Discharge
Eliminating System (NPDES) statewide General Construction
Activity Stormwater Permit from the State Water Quality
Control Board.
	 
	 	viii.	 	Cause a Remedial Action Plan to be completed and
processed through the County of Orange Health Care Agency,
Division of Environmental Health, or such agency as may have
current jurisdiction of any identified contaminants.




12









 











          C. Nuevo at Developer’s cost and expense shall:




	 	i.	 	Complete construction drawings for
the expanded Tank Farm and facilities related thereto
and process them through the appropriate Governmental
Agencies (including, if necessary, the South Coast Air
Quality Management District).
	 
	 	ii.	 	Complete improvement and relocation plans and process
them through the appropriate Governmental Agencies (as
necessary) for the relocation of the Tank Farm service
lines, the East Naranjal Tank Farm service lines, the Gas
Plant service lines, natural gas gathering lines and 12KV
power lines.
	 
	 	iii.	 	Prepare and submit the well abandonment program, as
set out in Attachment 4, for permitting through CDOGGR.
	 
	 	iv.	 	Prepare schematic facilities plans for pipelines and
facilities (“Facilities Plan”) to service the wells to be
accommodated within and adjacent to the Development Areas.
	 
	 	v.	 	Construct the Tank Farm improvements.
	 
	 	vi.	 	Remediate the identified contaminated soils associated
with the EN Tank Farm. Exhumed soils will be isolated and
stock piled for placement by Developer with the grading of
the first phase of development in accordance with the
approved Remedial Action Plan. Exhumed soils not meeting the
criteria for placement on site will be removed from the site
for appropriate disposal.
	 
	 	vii.	 	Decommission the EN Tank Farm once the service lines
are connected to the improved Tank Farm.
	 
	 	viii.	 	Construct the new service lines as required to the
Tank Farm, rerouting lines currently serving the East
Naranjal Tank Farm, and prepare as-built plans for those
service lines which are permanent.
	 
	 	ix.	 	Drain, flush and mark for grading any identified
abandoned EN Tank Farm and Tank Farm pipelines.
	 
	 	x.	 	Construct the temporary or permanent (as applicable) gas
gathering lines and facilities to the Gas Plant.
	 
	 	xi.	 	Flush and mark any identified abandoned below ground
pipelines and facilities for grading.
	 
	 	xii.	 	Relocate the 12KV line from the existing electrical
substation to the existing Gas Plant and Tank Farm as
necessary.




13









 






	 	xiii.	 	Locate and mark all identified pipelines and
facilities within the area to be graded.
	 
	 	xiv.	 	Relocate the point of sale for the ConocoPhillips
(formerly Tosco) pipeline to the relocated ConocoPhillips
(formerly Tosco) pipeline to connect to such new point of
sale.
	 
	 	xv.	 	Complete the design drawing for all service-related
facilities not otherwise contemplated herein.
	 
	 	xvi.	 	Prepare and submit fire and seismic protection plans
for accommodated facilities.





     II. Site Clearing and Site Grading Events Within the Development Areas.



          A. Upon notice from Developer of the issuance of a grading permit, and
prior to site clearing, Nuevo, with the cooperation of Operator, shall, after
the receipt of the NTP on a Segment-by-Segment basis, in accordance with the
work associated with the Program Segment as further set out in
Attachment 4:




	 	i.	 	“Shut in” the appropriate wells as necessary; and all
appurtenant service lines and pipelines for such wells will
be drained, flushed and marked in place.
	 
	 	ii.	 	Disassemble and remove the surface facilities for such
wells (test bubbles, manifolds, valves, etc.).
	 
	 	iii.	 	Remove all well site equipment associated with such
wells.
	 
	 	iv.	 	Remove all of Operator’s surface and subsurface power
lines and transformers.
	 
	 	v.	 	Relocate, as necessary, power lines, pipelines and
facilities to service wells located outside of the
Development Areas.
	 
	 	vi.	 	Cause all identified wells impacted by grading to be
clearly marked.
	 
	 	vii.	 	Commence well abandonment operations for those wells
that are to be permanently abandoned. Identify and isolate
any contaminated soils associated with the wells for
remediation as called for in the approved Remedial Action
Plan. Soils not meeting the criteria for placement in deep
fills, if any, will be removed from the site for
appropriate disposal.




14









 






	 	viii.	 	Remove and crush all well cellars associated with the
wells to be abandoned and accommodated; the concrete will be
crushed, and stockpiled for later placement by Developer.
	 
	 	ix.	 	Maintain full authority over the cleanup and
remediation operations for any crude oil released as a
result of Developer’s performance. All such costs shall be
for the account of Developer.
	 
	 	x.	 	Provide Developer with copies of all inspection records
and reports and test results for any contaminated soils
associated with the well work.





          B. Upon the issuance of a grading permit, Developer at Developer’s cost
shall, on a Segment-by-Segment basis, in accordance with the work associated
with the applicable Program Segment as further set out in Attachment 4:




	 	i.	 	Provide construction staking to define the limits of
the area to be cleared and developed.
	 
	 	ii.	 	If not previously commenced, notify the appropriate
Governmental Agencies and all interested parties of the
commencement of the soils remediation program as required
under the approved Remedial Action Plan. (This assumes that
the majority of the soils remediation efforts will occur
during the grading operations, and will utilize a modified
direct burial approach.)
	 
	 	iii.	 	Coordinate grading with Nuevo, such that the scheduled
sequence of wells to be shut-in or abandoned, as
appropriate, is consistent with Developer’s grading
program.
	 
	 	iv.	 	Provide notice to the grading contractor as to the well
locations and the necessity of avoiding wells during the
clearing and grading operation(s).
	 
	 	v.	 	Cause a comprehensive health and safety plan to be
prepared and submitted to Nuevo and Operator and all the
appropriate Governmental Agencies prior to commencement.
The plan shall cover both grading and remediation
activities.
	 
	 	vi.	 	If not previously remediated by Nuevo during the soils
remediation process of those sites that are set out in
Attachment 4 as Developer’s responsibility, remediate (at
Developer’s cost) those specific sites requiring
remediation identified in the approved Remedial Action Plan
that lie within Development Areas or within the grading
area adjacent to the Development Areas including




15









 






	 	 	 	exhuming and remediating the contaminated soils which
it shall also isolate and stockpile for placement by
the Developer in deep fills during the phased grading
operation in accordance with the approved Remedial
Action Plan. Soils not meeting the criteria for
placement in deep fills, if any, will be removed by
Developer (at Developer’s cost) from the site for
appropriate disposal.
	 
	 	vii.	 	At all times comply with the mitigation measures of the
Final Tonner Hills EIR, and the requirements, as applicable,
of the USF&WS Resource Management Plan.





          C. During grading, Nuevo shall, on a Segment-by-Segment basis, in
accordance with the Work associated with the applicable Program Segment as
further set out in Attachment 4:




	 	i.	 	Identify and isolate any contaminated soils associated
with the wells for remediation as called for in the approved
Remedial Action Plan. Isolated soils meeting the criteria of
the approved Remedial Action Plan will be stockpiled for
placement in deep fills by Nuevo. Soils not meeting the
criteria will be removed from the site for appropriate
disposal.
	 
	 	ii.	 	Provide Developer with copies of well abandonment
reports for all well abandonment activities completed as
provided to and from CDOGGR.
	 
	 	iii.	 	Design the final Facilities Plan in accordance with the
Street and Utility Improvement Plans provided by Developer.
	 
	 	iv.	 	Relocate temporary service lines serving the oil
operations as may be necessary.





          D. During grading, on a Segment-by-Segment basis, in accordance with the
phasing plan, Developer shall:




	 	i.	 	Prepare and process the Precise Area Plans and Level B
Tentative Maps through the appropriate Governmental
Agencies, showing the final lot layout and the Joint Use
and Exclusive Use Areas to be retained around the wells
remaining in operation. The Precise Area Plans will clearly
identify all wells to be abandoned, and identify all
abandoned wells that will require methane venting in
accordance with the requirements of the Orange County Fire
Authority and other appropriate Governmental Agencies.




16









 






	 	ii.	 	Grade the Development Areas in accordance with the
approved Grading Plan.
	 
	 	iii.	 	Immediately notify Nuevo and Operator in the event
Developer excavates any unidentified previously abandoned
wells. Developer shall promptly reabandon such wells in
accordance with the requirements of all appropriate
Governmental Agencies.
	 
	 	iv.	 	Place soils stockpiled as a result of Developer’s
remediation activities within deep fills in accordance with
the criteria established within the approved Remedial Action
Plan. The location and constituency components of these
soils will be detailed and reported in the final grading
report prepared by the Developer.
	 
	 	v.	 	Install all required erosion control devices in
accordance with the approved Grading Plan, ensuring that
storm runoff will be diverted from the area(s) affected by
the Program.
	 
	 	vi.	 	At all times comply with the General Construction
Activity
Stormwater Permit.
	 
	 	vii.	 	Based upon the approved Precise Area Plans, provide
Nuevo and Operator with grade elevations and staking for
all wells.
	 
	 	viii.	 	Prepare the grading plans (“Grading Plans”) and
process them for approval by the appropriate Governmental
Agencies.
	 
	 	ix.	 	Prepare the final Street and Utility Improvement Plans
and process them for approval by the appropriate
Governmental Agencies. The Street and Utility Improvement
Plans will identify the oil production service facilities
as provided by Operator’s Facilities Plan.
	 
	 	x.	 	Prepare the Level B Final Maps and process them for
approval by the appropriate Governmental Agencies, and
record such maps at the County Recorder’s office. The Level
B Final Maps will identify all Exclusive and Joint Use
Areas.
	 
	 	xi.	 	Identify and dispose of any previously unidentified oil
production facilities or third party facilities uncovered
during the course of the grading operation.
	 
	 	xii.	 	Cleanup and remediate any crude oil released during
the course of the grading operations according to standards
approved by the appropriate Governmental Agency.




17









 






	 	xiii.	 	Prepare a final soils and geological report on the
Development Areas and obtain from the appropriate
Governmental Agency, a final compaction certificate relating
thereto, within sixty (60) days of completion of grading for
each phase.
	 
	 	xiv.	 	Reabandon or otherwise accommodate, if necessary, any
unidentified wells or facilities within the Development Area
in accordance with CDOGGR specifications and requirements.





          E. During grading, Developer and Nuevo shall cooperate with each other in
the implementation of the Program, as follows:




	 	i.	 	Design of the Precise Area Plans, Level B Tentative and
Final Maps and final Street and Utility Improvement Plans to
avoid conflicts between the oil production service
facilities and the utilities required to service the
Development Areas; Nuevo shall have the reasonable right of
approval in event of design conflicts.
	 
	 	ii.	 	Design the Precise Area Plans to ensure that all Joint
and Exclusive Use Areas necessary for the wells and
facilities are shown to the Parties and meet all Parties’
joint satisfaction.
	 
	 	iii.	 	Identification and differentiation of
naturally-occurring tar seep or oil-bearing sands from
crude oil released as a result of oil operations; provided
that unless Developer and Nuevo can conclusively determine
that such contamination resulted from ongoing production
activity, such contamination shall be presumed to be from
naturally-occurring tar seep or oil-bearing sands.





     III.
Post-Grading Events:



          A. Upon completion of Grading within the Development Areas, on a
Segment-by-Segment basis in accordance with the approved phasing plan, Nuevo
shall:




	 	i.	 	Cause all abandoned wells within the Development Areas
to be capped below those grades provided by Developer in
accordance with CDOGGR and the requirements of the EIR,
Planned Community Text and Area Plan. Final inspections of
such wells shall be conducted by CDOGGR.
	 
	 	ii.	 	Cause all appropriate pumping equipment to be installed
within the Exclusive Use Areas.




18









 






	 	iii.	 	Complete all oil production service facilities to be
installed to service the producing and injection wells.
Service lines will be connected to the new site and Tank
Farm.
	 
	 	iv.	 	Install permanent pipelines and facilities as
determined by Nuevo in its discretion as required for
Operator’s continued operations in accordance with grading
operations.
	 
	 	v.	 	Provide as-built drawings to Developer and Operator
showing the line and grade for all installed facilities.
	 
	 	vi.	 	Install seismic monitoring devices as required by the
mitigation measures in the Final Tonner Hills Environmental
Impact Report.





          B. Upon completion of the GRADING within the Development Areas, on a
phase-by-phase basis in accordance with the approved phasing plan, Developer
shall:




	 	i.	 	Install the utility systems in accordance with the
approved Street and Utility Improvement Plans.
	 
	 	ii.	 	Install the street improvements in accordance with the
approved Street and Utility Improvement Plans. Such Plans
shall make provision for oil field related facilities to
the extent deemed necessary by Nuevo to operate wells in
the Development Areas.
The utility and street improvements are
anticipated to take four months beyond the completion
of grading.
	 
	 	iii.	 	Install oil facility screening devices in accordance
with the requirements of, and plans approved by, the
appropriate Governmental Agencies.
	 
	 	iv.	 	Provide construction staking for the installation of
Operator’s wells, pipelines and facilities within the
Development Areas.
	 
	 	v.	 	Construct methane gas vents over abandoned oil wells as
may be necessary to accommodate the housing development.
	 
	 	vi.	 	Construct all required active and passive methane
mitigations as required by the Final Tonner Hills
Environmental Impact Report, the Orange County Fire
Authority or other Governmental Agency.





          C. Upon completion of grading within the Development Areas, Developer and
Nuevo shall cooperate with each other to:




	 	i.	 	Develop Homebuyer notification language to be supplied
by Developer to future surface purchasers with respect to
the past and




19









 






	 	 	 	continuing oil operations. State Proposition 65 language will be included in any Homebuyer
notification.
	 	ii.	 	Develop Homebuyer notification language for inclusion
within the Division of Real Estate Public Report, Grant Deed
or Covenants, Conditions and Restrictions, as may be
appropriate or required as to the placement of remedial
soils within the deep fills.
	 
	 	iii.	 	Satisfy any EIR mitigation measures regarding the
past and continuing oil operations.
	 
	 	iv.	 	Obtain a conditional case closure letter from the County
of Orange Health Care Agency, Division of Environmental
Health for the approved Remedial Action Plan.





          2.3 Developer Improvements and Additional Payments. It is understood and
agreed that Developer shall have the primary responsibility for and shall, at
its sole cost and expense, complete all work required to accomplish the
“Developer Improvements” including: (a) soil remediation, (b) relocation of
third party easements and licenses (TPEL), (c) all matters to the extent
allocated to Developer in Sections 2.1 and 2.2, hereof, (d) Mass/Grading
operations in the best commercial manner and completion of such operations in
the shortest time but, in all cases, within the time duration set out for the
activity in Attachment 4, so as to minimize the disruption of Operator’s
remaining Oil Operations, (e) after Final Acceptance by Developer of the
completed work, Developer shall be solely responsible for all maintenance,
repair, replacement, removal, and reinstallation of such completed work for
which Developer assumes Developer’s Liability and for any liability as a result
thereof or pertaining there to. Developer shall bear the cost of future
relocation of such work requested by Developer and performed by Operator.
Developer shall fully cooperate with Nuevo and Operator in the implementation
of the Program. Developer shall (i) timely process all of its permit requests;
(ii) comment on all applicable submittals of specifications or plans within
five business days; and (iii) make all facilities available for accommodation
under the Program such that Nuevo may commence the Project Segment. To the
extent that Developer fails to fully and timely cooperate with Nuevo and Nuevo
incurs penalties, damages or incremental costs in performing the Program, such
penalty, damage or cost shall be the responsibility of Developer and Developer
hereby agrees to indemnify and hold Nuevo harmless there from. Developer shall
also be liable to Operator for any and all incremental cost or expense incurred
by Operator in the performance of its work in the Program as a result of
Developer’s (or Nuevo’s, if acting on behalf of Developer) failure to fully and
timely perform and complete Developer’s Improvements. Developer shall use good
faith, commercially reasonable efforts to timely and expeditiously perform its
obligations and rights under this Agreement in a manner that minimizes the
interruption or curtailment of production and shall be liable to and indemnify
Operator for all losses resulting from the failure to do so.



                 2.3.1
Processing Costs – Employee Costs. Operator and Nuevo agree not to
charge Developer for their employees or overhead costs allocable to such
employees in the processing of the Governmental Approvals.



20









 





                 2.3.2 Operator Improvements. Nuevo shall submit to Operator the
preliminary and final detailed design and engineering of all facilities,
pipelines and well accommodation plans (“Operator Improvements”) when
completed. Operator shall have ten (10) business days to review and comment on
the plans. All final decisions with respect to the plans including pipeline and
facility locations, use of new, refurbished or salvaged equipment and materials
and the staging of the work to be performed shall be made by Nuevo in the
exercise of its reasonable discretion and in a manner consistent with customary
oil field practices. Should Operator request changes or modifications to the
design and engineering of Operator Improvements other than changes or
modifications required by applicable law or governmental regulations and should
Nuevo determine that such modifications can be incorporated into the Program
within the time duration specified in Attachment 4, Nuevo shall make such
modification provided that Operator prepays all incremental costs associated
with such modification. Operator shall not request a modification to the wells
or well classifications set out in Schedule B to Attachment 4 without first
obtaining the written approval of Developer. Incremental costs associated with
such well changes, if any, shall be pre-paid by Operator.



                 2.3.3. Governmental Modifications. Should the Program be modified to
reflect changes that result from decisions of Governmental Entities, court
orders or settlement of litigation or by agreement such that fewer wells are
accommodated, abandoned, or less infrastructure is removed or altered, then
Nuevo shall have no obligation or duty of any kind or character with respect to
such wells or facilities that are removed from the Program.



          2.4 Miscellaneous.



                 2.4.1 Remedies,



                         2.4.1.1
Default/Cure. Each of the terms, conditions, covenants and
provisions of the Development Documents is a material consideration for this
Agreement, the breach of which shall be deemed a default hereunder. Said
default shall be deemed to have occurred if a Party has not effected a cure
within ten (10) days for payment of money hereunder and thirty (30) days for
all other defaults of receipt of notice specifying the breach in the case of
any of the obligations hereunder; provided, however, except as otherwise
specified herein, in the case of a breach of any of Nuevo’s obligations
hereunder, other than for the payment of money, which is not capable of being
cured within said thirty (30) day period, no default shall be deemed to have
occurred so long as Nuevo commences to cure such default within ten (10) days
of Notice and thereafter diligently and continuously prosecutes the same to
completion; provided however, that any such cure shall be accomplished within
ninety (90) days of the event giving rise to the Notice.



                         2.4.1.2 Remedies Cumulative. All rights, options and remedies of either
Party contained in this Agreement shall be construed and held to be cumulative,
and none of them shall be exclusive of the other, and either Party shall have
the right to pursue any one or all of such remedies or any other remedy or
relief which may be provided by law or equity, whether or not stated in this
Agreement. Further, either Party may exercise



21









 





hereunder, any of the rights, options and remedies, as and to the extent,
described in Sections 5 and 13 of the Development Declaration.



                    2.4.1.3 Arbitration. Except for the right of either party to apply to a
court of competent jurisdiction for temporary restraining orders, preliminary
injunctions, writs of attachment, writs of possession or other equitable or
provisional relief, any controversy, dispute or claim of any kind or nature
arising out of, in connection with, or in relation to the interpretation,
performance or breach of this Agreement, without limitation, any claim based on
contract, tort or statute, shall be settled by final and binding arbitration by
three (3) arbitrators in accordance with the Rules of the American Arbitration
Association then in effect (the “Rules”). Each party to the arbitration shall,
in accordance with the Rules, nominate one (1) arbitrator to the arbitrational
tribunal and the two (2) arbitrators so appointed shall appoint the third
arbitrator in accordance with the Rules, the three (3) arbitrators constituting
the arbitration tribunal. The arbitration shall be held in Orange County,
California. Reasonable discovery shall be allowed in connection with such
arbitration. At the request of a party, the arbitration tribunal may issue
orders for interim relief as deemed necessary to safeguard property that is the
subject of the arbitration or in order to accomplish the objectives of this
Agreement. Such interim measures may also be sought from judicial authority
having jurisdiction. The decision of the majority of the arbitrators shall be
reduced to writing, shall be the sole and exclusive remedy between the parties
regarding any and all such disputes or differences, and shall be final and
binding on all parties to the arbitration; and, application may be made to any
court of competent jurisdiction for an order of enforcement and shall be
enforceable in any court of competent jurisdiction. The parties agree to
exclude any right of application or appeal to the courts of any jurisdiction in
connection with any questions of law arising in the course of arbitration or
with respect to any award made, except for enforcement purposes. Consequential,
punitive, or incidental or other similar damages shall not be allowed.



     In the event any such arbitration (or other proceeding) is brought to
enforce or interpret any of the covenants, terms or provisions of this
Agreement, the prevailing party in any and all such arbitration(s) or other
proceeding(s), including any bankruptcy proceedings, shall be entitled to
recover from the non-prevailing party all of the attorneys’ fees and costs
incurred by such party in each and every such arbitration or other proceeding,
including any and all appeals or petitions there from. As used in this
Agreement, attorneys’ fees shall be deemed, to the extent allowed by law, to
mean the full and actual costs of any legal services actually performed in
connection with the matters involved, calculated on the basis of the usual fee
charged by the attorneys performing such services, and shall not be limited to
“reasonable attorneys’ fees” as defined in any statute or rule of court.



                    2.4.1.4 Waiver. No waiver by either party of a default under any of the
terms of this Agreement by the other, and no delay or failure to enforce any of
the terms of this Agreement shall be a waiver of or shall affect a default
other than as specified in such waiver. The consent or approval of either party
to any act by the other requiring consent or approval shall not be deemed to
waive or render unnecessary consent or approval to or of any subsequent similar
acts.



            2.4.2.
Continuous Operation. Operator agrees to use good faith, commercially
reasonable efforts to cooperate with Nuevo so that
Nuevo can proceed



22









 





continuously, diligently and in a timely manner in accordance with the terms
and conditions of this Agreement and in accordance with and as required under
the Development Documents, and except where mutual agreement is expressly
required, if Nuevo cannot proceed continuously and diligently due to Operator’s
unexcused failure to cooperate the same shall, at the option of Nuevo, be
considered as an event of default herein, except as such failure to so proceed
is excused by reason of any Unavoidable Delay.



            2.4.3. Assignment. Nuevo may assign its rights hereunder at any time
without the consent of Developer.



            2.4.4. Subdivision Maps and Applications. Subject to the provisions of
the Development Documents, if required to do so, and provided there exists no
default thereunder, Operator agrees, without cost to Operator and Nuevo, to
execute any and all Developer approved Level B Final Maps, applications and
petitions pertaining to the development of any portion of the Parcel.



            2.4.5. Captions. The captions used herein are for convenience only, are
not part of this Agreement and do not in any way limit or amplify the scope or
intent of the terms and provisions hereof.



            2.4.6. Invalidity of a Provision. If any provision of this Agreement shall
be adjudged by a court in a final and non-appealable judgment to be void,
invalid, illegal or unenforceable for any reason, the same shall in no way
affect (to the maximum extent permissible by law) any other provision of this
Agreement, the application of any such provision under circumstances different
from those adjudicated by the court, or the validity or enforceability of this
Agreement as a whole, but only to the extent that performance of such remaining
provisions would not be inconsistent with the intent and purposes of this
Agreement.



            2.4.7. Notices. Any notice to be given or other document to be delivered
by any Party to the other or others hereunder, and any payments between
parties, may be delivered in person to an officer of any party, or may be
delivered by Federal Express, private commercial delivery or courier service
for next business day delivery, or may be deposited in the United States mail,
duly certified or registered, return receipt requested, with postage prepaid,
and addressed to the party for whom intended, as follows:



23









 





	 	 	 	 	 
	 	 	If to Nuevo (“Nuevo”):
	 
	 	 	 	 
	

	 	 	 	Nuevo Energy Company
	

	 	 	 	1021 Main, Suite 2100
	

	 	 	 	Houston, Texas 77002
	

	 	 	 	Attn:
    Phillip A. Gobe
	

	 	 	 	Phone: 713-374-4832
	

	 	 	 	Fax:     713-374-4817
	

	 	 	 	Email:  gobep@nuevoenergy.com
	 
	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Attn: Phillip E. Sorbet
	

	 	 	 	Phone: 661-395-5431
	

	 	 	 	Fax:     661-395-5294
	

	 	 	 	Email: sorbetpp@nuevoenergy.com
	 
	 	 	 	 
	 	 	Copy to:
	 
	 	 	 	 
	

	 	 	 	Ullom Associates
	

	 	 	 	16149 Redmond Way, Ste. 401
	

	 	 	 	Redmond, Washington 98052
	

	 	 	 	Fax:     (425) 836-2870
	

	 	 	 	Phone: (425) 836-2728
	

	 	 	 	Email: ullomjw@aol.com
	 
	 	 	 	 
	

	 	 	 	Nossaman, Guthner, Knox & Elliott, LLP
	

	 	 	 	18101 Von Karman Avenue, Suite 1800
	

	 	 	 	Irvine, California 92612-1047
	

	 	 	 	Attn:   William P. Tanner, III
	

	 	 	 	Fax:     (949) 833-7878
	

	 	 	 	Phone: (949)833-7800
	

	 	 	 	Email: wtanner@nossaman.com
	 
	 	 	 	 
	 	 	To Operator: BlackSand Partners, L.P.
	 
	 	 	 	 
	

	 	 	 	Attn: Tim Collins
	

	 	 	 	1801 Broadway, Suite 600
	

	 	 	 	Denver, Colorado 80202
	

	 	 	 	Fax:
    (303) 296-0329
	

	 	 	 	Phone: (303) 296-1908
	

	 	 	 	Email: timdenver@aol.com







24









 






	 	 	 
	Copy to:
	 	 	 
	 	 	Arthur Wright, Esq.
	 	 	Thompson & Knight LLP
	 	 	1700 Pacific Avenue, Suite 3300
	 	 	Dallas, Texas 75201
	 	 	Fax:     (214) 999-1695
	 	 	Phone: (214)969-1409
	 	 	Email:  arthur.wright@tklaw.com
	 	 	 
	To Developer:
	 	 	 
	 	 	To be added upon execution of this Agreement by any Developer.







          Notice may also be given by facsimile transmission (“Fax”) to any party at
the respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which
shall be substituted for the one above specified. If any notice or other
document is sent by mail as aforesaid, the same shall be deemed served or
delivered seventy-two (72) hours after the mailing thereof as above provided.
Notice by any other method shall be deemed served or delivered upon actual
receipt at the address or Fax number listed above.



            2.4.8.
Binding Effect. Subject to Section 2.3.3 concerning assignments, it
is the intent of the Parties that the covenants, conditions, and agreements
imposed by this Agreement (i) shall be binding upon and inure to the benefit of
the Parties and their respective successors, heirs and assigns to all or any
portion of the Minerals or to a Developer and (ii) all of the obligations of
Nuevo as stated herein shall be binding upon and enforceable against Nuevo by
any successor to Buyer.



            2.4.9. Further Assurances. Each of the Parties shall execute and deliver
all additional papers, documents and other assurances, and shall do all acts
and things reasonably necessary in connection with the performance of its
obligations hereunder and to carry out the intent of the Parties.



            2.4.10. Time of Essence. Time is of the essence of each provision of this
Agreement of which time is an element. Any reference in this Agreement to time
for performance of obligations or to elapsed time shall mean consecutive
calendar days, months or years, as applicable, unless otherwise explicitly
indicated herein.



            2.4.11. Term. This Agreement shall remain in effect from the date first
shown above until Final Acceptance or the Expiration of the Development
Agreement between Nuevo and Orange County dated December 19, 2002. Expiration
of this Agreement shall not terminate any payment obligation, indemnity
obligation or assumption of liability all of which shall survive this Agreement
and remain in full force and effect.



25









 





            2.4.12. Attorneys’ Fees. If any action or proceeding is instituted to
enforce or interpret any provision of this Agreement the prevailing party shall
by entitled to recover such amounts as the court may judge to be reasonable as
costs incurred in such action, including, without limitation, court costs and
attorneys’ fees.



            2.4.13 Payments. Any amounts which are due and owing to Nuevo or Operator
pursuant to the various terms of the Development Documents shall be paid as
specified. If any of these amounts are not paid when due, such amounts shall
bear interest as specified in the particular Section of the Development
Document requiring such payment or, if not so specified, then at the
maximum non
usurious rate which may be charged by a nonexempt lender.



            2.4.14 Applicable Law This Agreement and the documents in the forms
attached as exhibits hereto shall be governed by and construed under the laws
of the State of California.



     The Parties have executed this Agreement on the date first set forth
above.



	 	 	 	 	 	 	 
	BLACKSAND PARTNERS, L.P.,	 	NUEVO ENERGY COMPANY,
	a Texas Limited Partnership	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	BlackSand Energy, Inc.,	 	 	 	 
	

	 	a Delaware corporation
	 	By:
	 	-s- George B. Nilsen
	

	 	 	 	 	 	

	

	 	 	 	 	 	George B. Nilsen
	Its:

	 	General Partner
	 	Its:
	 	Senior Vice President
	 
	 	 	 	 	 	 
	By:

	 	-s- Tim Collins
	 	By:	 	 
	

	 	

	 	 	 	

	

	 	Tim Collins
	 	 	 	Phillip A. Gobe
	Its:

	 	President
	Its:
	 	 	Chief Operating Officer







26









 






performance of obligations or to elapsed time shall mean consecutive calendar
days, months or years, as applicable, unless otherwise explicitly indicated
herein.



            2.4.1 1. Term. This Agreement shall remain in effect from the date first
shown above until Final Acceptance or the Expiration of the Development
Agreement between Nuevo and Orange County dated________. Expiration of this Agreement
shall not terminate any payment obligation, indemnity obligation or assumption
of liability all of which shall survive this Agreement and remain in full force
and effect.



            2.4.12. Attorneys’ Fees. If any action or proceeding is instituted to
enforce or interpret any provision of this Agreement the prevailing party shall
by entitled to recover such amounts as the court may judge to be reasonable
as costs incurred in such action, including, without limitation, court costs and
attorneys’ fees.



            2.4.13 Payments. Any amounts which are due and owing to Nuevo or Operator
pursuant to the various terms of the Development Documents shall be paid as
specified. If any of these amounts are not paid when due, such amounts shall
bear interest as specified in the particular Section of the Development
Document requiring such payment or, if not so specified, then at the
maximum non
usurious rate which may be charged by a nonexempt lender.



            2.4.14
Applicable Law. This Agreement and the documents in the forms
attached as exhibits hereto shall be governed by and construed under the laws
of the State of California.



     The Parties have executed this Agreement on the date first set forth
above.



	 	 	 	 	 	 	 
	BLACKSAND PARTNERS, L.P.,	 	NUEVO ENERGY COMPANY,
	a Texas Limited Partnership	 	a Delaware corporation
	 
	 	 	 	 	 	 
	By:

	 	BlackSand Energy, Inc.,	 	 	 	 
	

	 	a Delaware corporation
	 	By:
	 	-s- [ILLEGIBLE]
	Its:

	 	General Partner
	 	Its:
	 	Chief Operating Officer
	 
	 	 	 	 	 	 
	By:

	 	

	 	By:
	 	

	

	 	 	 	Its:	 	

	 
	 	 	 	 	 	 
	TIM COLLINS	 	“Developer”
	 
	 	 	 	 	 	 
	Its:

	 	Chairman	 	 	 	 
	

	 	 	 	By:
	 	

	

	 	 	 	Its:
	 	








26









 






ATTACHMENT “1”




THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, I N THE
RANCHO SAN JUAN CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE
COUNTY OF ORANGE, AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE
OF CALIFORNIA, AS SHOWN ON A MAP FILED IN BOOK 51, PAGE 7 OF
MISCELLANEOUS MAPS, AND RECORD OF SURVEY FILED IN BOOK 12 PAGE 40, RECORD
OF SURVEY NO. 91-1007 FILED IN BOOK 133, PAGES 41 THROUGH 46 INCLUSIVE
AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK 187, PAGES
02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A
DEED, BILL OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS
INSTRUMENT NO. 19960175928 OF OFFICIAL RECORDS, I N
THE OFFICE OF SAID COUNTY RECORDER, MORE PARTICULARLY DESCRIBED AS
FOLLOWS:



PARCEL 1




BEGINNING AT A WHITE POST 4
INCHES SQUARE IN MOUND WITH PITS AT THE
NORTH EAST CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO
THE SOUTH EAST CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE
PATENT BOUNDARY OF SAID RANCHO RINCON DE LA BREA, NORTH 84° WEST 107.51
CHAINS TO A SAND STONE MARKED R.B. IN MOUND WITH PITS; THENCE ALONG SAID
PATEN" BOUNDARY NORTH 57° 42' WEST 43.67 CHAINS TO A
WHITE POST 4
INCHES SQUARE IN MOUND OF STONE MARKED S. J. C. S. A. AT INTERSECTION
OF THE PATENT LINES OF SAID RANCHOS SAN JUAN CAJON DE SANTA ANA AND
RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF SAID RANCHO SAN JUAN
CAJON DE SANTA ANA, NORTH 76° 25’ WEST 62.67 CHAINS TO A
2" X 4" POST
MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1° 45' WEST 58.96 CHAINS TO A
2" X 4" POST MARKED 20.60 I N MOUND WITH PITS; THENCE NORTH 89° EAST 20.00
CHAINS TO A 4' X 4' POST IN MOUND WITH PITS; THENCE SOUTH LO
45' WEST
20.00 CHAINS TO A 2" X 4" POST MARKED 20.60 I N MOUND WITH
PITS; THENCE NORTH 88O 39' EAST 55.48 CHAINS TO A 2' X
4' POST MARKED
20 IN MOUND WITH PITS; THENCE SOUTH 0° 30' EAST 20.00
CHAINS TO A
2' X
4' POST IN MOUND WITH PITS; THENCE NORTH 89° 45' EAST 134.63 CHAINS TO
A 2" X 4" POST MARKED 40.10 IN MOUND WITH PITS UPON THE EASTERN
BOUNDARY OF SAID RANCHO SAN JUAN CAJON DE SANTA ANA; THENCE ALONG SAME
NORTH 4° WEST 47.51 CHAINS TO THE PLACE OF BEGINNING.



EXCEPTING THERE FROM
THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.



ALSO EXCEPTING
THEREFROM ANY PORTIONLYING NORTHERLY OF THE AGREED
BOUNDARY LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28° 30’ EAST
FROM THE WESTERN TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN
THE UNION OIL COMPANY OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY,
RECORDED JUNE 10, 1905 IN BOOK 120, PAGE 223 OF DEEDS, IN THE OFFICE OF
SAID COUNTY RECORDER.



ALSO EXCEPTING
THEREFROM THE LAND CONVEYED TO THE METROPOLITAN WATER
DISTRICT OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK



Page 1 of 5









 





1051, PAGE 301 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID
COUNTY RECORDER, DESCRIBED AS FOLLOWS:




BEGINNING AT
A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY UNION OIL
COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE EASTERLY
BOUNDARY OF THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION OIL
COMPANY OF CALIFORNIA TO GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899,
RECORDED JUNE 20, 1899 IN BOOK 44, PAGE 79 OF DEEDS, WHICH POINT OF
BEGINNING IS THE POINT OF INTERSECTION OF THE AFORESAID WESTERLY
BOUNDARY WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF CENTRAL
AVENUE AS THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET AND
BREA CANYON ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE
OF 73° 32' 24" WITH THE EASTERLY PROLONGATION OF THE CENTER LINE
OF SAID CENTRAL AVENUE AT SAID POINT OF INTERSECTION (ASSUMED AND
TAKEN TO BEAR NORTH 15° 11' 16" EAST), A DISTANCE OF 839.60 FEET
TO THE TRUE POINT OF BEGINNING; THENCE NORTH 0° 10' 11" EAST A
DISTANCE OF 1250 FEET; THENCE SOUTH 89° 49' 49" EAST A DISTANCE
OF 500 FEET; THENCE SOUTH 65° 23' 11" EAST A DISTANCE
OF 604.15 FEET; THENCE SOUTH 0° 10' 11" WEST A
DISTANCE OF 1000 FEET; THENCE NORTH 89° 49' 49" WEST
A DISTANCE OF 1050 FEET TO THE TRUE POINT OF BEGINNING.



ALSO EXCEPTING THEREFROM THE
LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED RECORDED JUNE 10, 1957
IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID
COUNTY RECORDER DESCRIBED AS FOLLOWS:




BEGINNING AT A
POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED FROM THE
STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER
2, 1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89°
10' 50" WEST ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER
OF SAID LAND, SAID POINT OF BEGINNING BEING MONUMENTED BY UNION OIL
COMPANY MONUMENT 11B; THENCE NORTH 9° 48' 11" WEST 529.60 FEET
TO A 2" X 2" STAKE AND THE TRUE POINT OF BEGINNING FOR THIS
DESCRIPTION; THENCE NORTH 85° 48' 16" WEST, 380.00 FEET
TO A 2" X 2" STAKE; THENCE NORTH 4° 11' 44" EAST 1750.00 FEET TO A 2" X
2" STAKE; THENCE SOUTH 85° 48' 16" EAST 380.00 FEET
TO A 2" X 2"
STAKE; THENCE SOUTH 4° 11' 44" WEST 1750.00 FEET TO A
2" X 2"
STAKE AND THE TRUE POINT OF BEGINNING.



ALSO EXCEPTING THEREFROM THAT
PORTION DESCRIBED IN DEED TO THE METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173, PAGE 641
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT
PORTION DESCRIBED IN DEED TO THE METROPOLITAN WATER DISTRICT OF
SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173, PAGE 647
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THE
LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED SCHOOL DISTRICT OF
ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN BOOK 8716,
PAGE 437 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



Page 2 of 5









 





ALSO EXCEPTING THEREFROM THAT
PORTION DESCRIBED IN PARCEL 1 OF THE DEED TO THE CITY OF BERA
RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THERE FORM
PARCELS A6471-4, A6471-5, A6471-6 AND A6471-7 OF THAT CERTAIN FINAL ORDER OF
CONDEMNATION, SUPERIOR COURT CASE NO. 156220, A CERTIFIED COPY OF
WHICH WAS RECORDED SEPTEMBER 29, 1970 IN BOOK 9417, PAGE 364 OF
OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM
PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-243, FILED IN BOOK 214,
PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE OF SAID
COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED ROAD,
80.00 FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID
PARCELS 1 AND 2 ON THE EAST, AND BOUND NORTHEASTERLY BY THE
NORTHEASTERLY LINE OF SAID PARCEL MAP NO. 86-243, AND BOUND SOUTHERLY
BY THE CENTERLINE OF LAMBERT ROAD AS SHOWN ON SAID PARCEL MAP NO.
86-243.



ALSO EXCEPTING THEREFROM THAT
PORTION INCLUDED WITHIN PARCEL 1 OF PARCEL MAP NO. 83-1179, AS SHOWN
ON A MAP FILED IN BOOK 218, PAGES 1 THROUGH 4 INCLUSIVE OF PARCEL
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THAT
PORTION INCLUDED WITHIN TRACT NO. 12562, AS SHOWN ON A MAP FILED IN
BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE
OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT
PORTION INCLUDED WITHIN TRACT NO. 12563, AS SHOWN ON A MAP FILED IN
BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS MAPS IN THE
OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THE
LAND DESCRIBED IN THE DEED TO THE CITY OF BERA RECORDED MARCH 29,
1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS IN THE OFFICE
OF SAID COUNTY RECORDER.


ALSO EXCEPTING
THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF A COUNTY OF ORANGE
LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED AUGUST 13, 2001 AS
INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID
COUNTY RECORDER.


ALSO EXCEPTING THEREFROM THE
FOLLOWING DESCRIBED PARCEL OF LAND:



BEGINNING AT
A POINT ON THE EASTERLY BOUNDARY OF PARCEL 1 OF PARCEL MAP NO.
86-243, FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING THE
SOUTHERLY TERMINUS OF A COURSE SHOWN AS “N 10°33' 18"E
381.48' ” ON
SAID RECORD OF SURVEY NO. 2001-1007; THENCE SOUTHEASTERLY ALONG THE
EASTERLY BOUNDARY OF SAID PARCEL 1 OF PARCEL MAP NO. 86-243, SOUTH
60°42' 49" EAST 43.00 FEET TO THE TRUE POINT OF BEGINNING;


THENCE NORTH
10°42'00" EAST 141.00 FEET

THENCE NORTH 15°02'00" EAST 103.00 FEET

THENCE NORTH 26°29'00" EAST 105.00 FEET



Page 3 of 5









 






THENCE NORTH
46°26'07'' WEST 92.94 FEET TO A POINT ON SAID
EASTERLY BOUNDARY OF PARCEL 1 OF PARCEL MAP NO. 86-243, SAID POINT
ALSO BEING THE NORTHERLY TERMINUS OF SAID COURSE SHOWN AS
“ N10°33'18'' E 381.48”;




THENCE
SOUTHERLY ALONG SAID COURSE SOUTH 10°33’18” WEST 381.48 FEET TO
THE TRUE POINT OF BEGINNING.



PARCEL 2




PARCEL 1 OF A COUNTY OF
ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED AUGUST 13, 2001
AS INSTRUMENT NO.20010557229 OF OFFICIAL RECORDS, IN THE OFFICE OF
SAID COUNTY RECORDER.



EXCEPTING THEREFROM THE FOLLOWING DESCRIBED PARCEL OF LAND:




BEGINNING AT
A POINT ON THE EASTERLY BOUNDARY OF PARCEL 1 OF PARCEL MAP NO.
86-243, FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL
MAPS, IN THE OFFICE OF SAID COUNTY RECORDER, SAID POINT BEING THE
SOUTHERLY TERMINUS OF A COURSE SHOWN AS “ N
10°33'18"E 381.48'”
ON SAID RECORD OF SURVEY NO. 2001-1007; THENCE SOUTHEASTERLY ALONG
THE EASTERLY BOUNDARY OF SAID PARCEL 1 OF PARCEL MAP NO. 86-243,
SOUTH 60°42'49" EAST 43.00 FEET TO THE TRUE POINT OF BEGINNING;




THENCE NORTH
10°42'00" EAST 141.00 FEET

THENCE NORTH 15°02'00" EAST 103.00 FEET

THENCE NORTH 26°29'00" EAST 105.00 FEET

THENCE NORTH 46°26'07" WEST 92.94 FEET TO A POINT ON SAID EASTERLY
BOUNDARY OF PARCEL 1 OF PARCEL MAP NO. 86-243, SAID POINT ALSO BEING THE NORTHERLY
TERMINUS OF SAID COURSE SHOWN AS “ Nl0°33'18"E
381.48' ”;




THENCE
SOUTHERLY ALONG SAID COURSE SOUTH 10°33'18" WEST 381.48
FEET TO THE TRUE POINT OF BEGINNING.



PARCEL 3




THE LAND CONVEYED TO BREA
CHEMICALS, INC., BY DEED RECORDED JUNE 10,
1957 IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID
COUNTY RECORDER DESCRIBED AS FOLLOWS:




BEGINNING AT
A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN
DEED FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL
COMPANY OF CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899,
RECORDED SEPTEMBER 2, 1899 IN BOOK 44, PAGE 250 OF SAID DEEDS,
DISTANT SOUTH 89° 10' 50" WEST ALONG SAID LINE 3131.98 FEET
FROM




Page 4 of 5










 




	 	 	 	THE SOUTHEAST CORNER OF SAID LAND,
SAID POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY
MONUMENT 11B; THENCE NORTH 9° 48' 11" WEST 529.60 FEET
TO A 2" × 2" STAKE AND THE TRUE POINT OF BEGINNING FOR
THIS DESCRIPTION; THENCE NORTH 85° 48' 16" WEST,
380.00 FEET TO A 2" × 2" STAKE; THENCE NORTH 4°
11' 44" EAST 1750.00 FEET TO A 2" × 2"
STAKE; THENCE SOUTH 85° 48' 16" EAST 380.00 FEET TO A
2" × 2" STAKE; THENCE SOUTH 4° 11' 44"
WEST 1750.00 FEET TO A 2" × 2" STAKE AND THE TRUE POINT OF
BEGINNING.




THE ABOVE DESCRIPTION WAS COMPILED FROM INFORMATION SUPPLIED BY FIRST
AMERICAN TITLE COMPANY PRELIMINARY REPORT NO. 2033601, DATED JUNE 15,
2000 AND PRELIMINARY REPORT NO. 2033661, DATED JUNE 21, 2002. 

EXHIBIT “ ‘A1’ SITE
DEPICTION  ”, IS FOR INFORMATIONAL PURPOSES ONLY.


SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS
AND RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	 	 	
PREPARED BY: THE KEITH COMPANIES
	 	 	
UNDER THE DIRECTION OF:
		 	

	 	 	
KATHLEEN SUSAN TETREAULT P.L.S.7297
	 	 	
MY LICENSE EXPIRES 12/31/2004
	 	 	 
	 	 	
January 31, 2003
	 	 	
JN: 13207.00



Page 5 of 5



 






 





ATTACHMENT “2”



LIST OF ENGINEERING FIRMS PER SECTION 2.1.9



Cawley, Gillespie & Associates, Inc.



DeGolyer & McNaughton, Inc.



Netherland, Sewell & Associates, Inc.



Ryder Scott Company



 






 





ATTACHMENT 3 TO EXHIBIT “I”

RELATED THIRD-PARTY EASEMENTS,

CONTRACTS AND LICENSE AGREEMENTS



(Oil Field Related Third Party
Easements and License – TPEL)




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Recording
	Document Type	 	Date	 	Grantor	 	Grantee	 	Information
	
	 	
	 	
	 	
	 	

	Right-of-way	 	
1/26/82
	 	Union Oil Company of
	 	Mobil Oil
	 	82-340271
	 	 	 	 	California
	 	Corporation
	 	Los Angeles Country
	License	 	
8/21/67
	 	Union Oil Company of
	 	Shell Oil
	 	Unrecorded
	 	 	 	 	California
	 	Company	 	 
	License PSA	 	
11/10/88
	 	Union Oil Company
of

California
	 	Shell Western

E&P Inc.
	 	Unrecorded
	Easement	 	
7/27/62
	 	Union Oil Company of
	 	Boy Scouts of
	 	8/1/62
	 	 	 	 	California
	 	America,Los
	 	6245/654
	 	 	 	 	 	 	Angeles Area	 	 
	 	 	 	 	 	 	Council	 	 
	Easement	 	
9/13/84
	 	Union Oil Company of
	 	City of Brea
	 	10/11/84
	 	 	 	 	California
	 	 	 	84-421551
	Easement	 	
9/10/85
	 	Union Oil Company of
	 	City of Brea
	 	10/7/85
	 	 	 	 	California
	 	 	 	85-382994
	Easement	 	
9/2/86
	 	Union Oil Company of
	 	Brea H.O.P.E.
	 	10/1/86
	 	 	 	 	California
	 	Inc
	 	86-459482
	Easement	 	
3/18/96
	 	Union Oil Company of
	 	City of Brea
	 	3/29/96
	 	 	 	 	California
	 	 	 	Inst.
19960153323
	Easement	 	
3/18/96
	 	Union Oil Company of
	 	City of Brea	 	3/29/96
	 	 	 	 	California
	 	 	 	Inst.
19960153324
	Easement	 	
1/26/82
	 	Union Oil Company
of
California
	 	Mobil Oil
Corporation
	 	3/31/82
Inst.
82-340271
[Los Angeles
County]
	Easement	 	
8/12/67
	 	Union Oil Company of
	 	Shell Oil Company	 	N/A
	 	 	 	 	California
	 	 	 	 
	Easement	 	
11/10/88
	 	Union Oil Company of
	 	Shell Western
	 	N/A
	 	 	 	 	California	 	E&P Inc.	 	 
	Easement	 	
4/1/58
	 	Union Oil Company of
	 	The Metropolitan
	 	5/21/58
	 	 	 	 	California
	 	Water District of
Southern
California
	 	4291/400
	Easement for oil	 	
10/16/58
	 	Collier Carbon and
	 	Union Oil
	 	11/3/58



Page 1 of 3



 






 






	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Recording	 	 	 	 
	Document Type	 	Date	 	Grantor	 	Grantee	 	Information	 	 	 	 
	
	 	
	 	
	 	
	 	
	 	 	 	 
	Wells	 	 	 	Chemical Corporation
	 	Company of
California
	 	4470/10
	Non-Exclusive
Easement and
Right-of-way	 	
7/27/62
	 	Union Oil Company of
California
	 	Boy Scouts of
America, Los
Angeles Area
Council.
	 	8/1/62

6245/654
	Right-of-way	 	
10/2/62
	 	Union Oil Company of
California
	 	Southern

California

Edison Company
	 	1/18/63

6399/705
	Grant     of

Easement	 	
9/18/78
	 	Union Oil Company of
California
	 	Southern

California

Edison company
	 	2/5/79

13024/1157
	Grant    of

Easement	 	
5/17/88
	 	Union oil Company of
California, dba
UNOCAl
	 	Southern

California

Edison Company
	 	6/7/88


Inst. 88-268095
	Easement	 	
9/15/95
	 	Union Oil Company of
California,dba
UNOCAI
	 	UNOCAL

California

Pipeline

Company
	 	10/25/95

 Inst. 1995047364


	Grant of	 	
12/11/95
	 	Union Oil Company of
	 	Southern
	 	1/4/96
	Easement	 	 	 	California, dba

UNOCAl
	 	California

Edison Company
	 	Inst.
19960004773
	Easement PSA	 	
3/18/96
	 	Union Oil Company of
	 	City of Brea
	 	3/29/96
	 	 	 	 	California
	 	 	 	Inst.
19960153322
	Easement PSA	 	
3/18/96
	 	Union Oil Company of
	 	City of Brea
	 	3/29/96
	 	 	 	 	California
	 	 	 	Inst.
19960153323
	Easement PSA	 	
3/18/96
	 	Union Oil Company of
	 	City of Brea
	 	3/29/96
	 	 	 	 	California
	 	 	 	Inst.
19960153324
	Easement	 	
5/7/96
	 	Nuevo Energy
	 	Union Oil
	 	5/26/96
	 	 	 	 	Company
	 	Company of
California dba
UNOCAl
	 	Inst.
19960254739
	Pipeline Right-	 	
5/12/02
	 	The Sterns Ranchos
	 	Pacific Coast Oil
	 	6/25/02
	Of-Way	 	 	 	Company
	 	Company
	 	Do not have
recording info.
	License	 	
5/1/59
	 	Union Oil Company of

California
	 	Shell oil

Company
	 	DO not have

recording info.




Any other Third Party Easement or License disclosed in Preliminary Title Report
#OR-2252674, dated September 13,2002, First American Title Company.


Page 2 of 3




 






 





ADDITIONAL CONTRACTS AND GIFT DEED




	1.	 	Memorandum of Understanding between Nuevo, County of Orange and City of
Brea dated December 10,2002 regarding pre-annexation.
	 
	2.	 	Development Agreement dated December 4, 2002, between Nuevo and County of
Orange.
	 
	3.	 	Impact Mitigation Agreement between Brea Olinda Unified School District
and Nuevo dated as of October 28, 2002.
	 
	4.	 	Gift Deed dated January 30,2003 from Nuevo to the Brea-Olinda Unified
School District Conveying 0.425 acres, recorded on February
     , 2003 as
Instrument No.     .



Page 3 of 3



 






 





Attachment 4

Brea Field Development Accommodat[ILLEGIBLE]




	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	Agency
	 	 	 	 	Category	 	Responsible	 	 	 	Approval
	Cost ($)	 	Duration	 	Activity	 	Party	 	Action	 	Required
	
	 	
	 	
	 	
	 	
	 	

	PRE-PHASE I
Initial Activity	 	 	 	 	 	 	 
	170,000	 	
7 weeks
	 	G,T
	 	Nuevo
	 	Preliminary Engineering Design: Pipelines, Tank Farms, Utilities, Power System	 	 
	300,000	 	
7 weeks
	 	T
	 	Nuevo
	 	SCAQMD Permitting: Tank Farm(s), Compressors, Pumps, Vessel, etc.
	 	SCAQMD
	 	 	
3 months
	 	R
	 	Developer
	 	Re-vegetation of Open Space (Reference Schedule E)
	 	USA COE
	3,061,500	 	
36 weeks
	 	A,B,C,D,E
	 	Nuevo
	 	Begin Procurement: Tanks, Vessels, Pipe, Transformers, Pumps	 	 
	1,830,000	 	
20 weeks
	 	G
	 	Nuevo
	 	Detailed Engineering Design	 	 
	2,080,000	 	
20 weeks
	 	M,O
	 	Nuevo
	 	Initial Abandonment
of Idle Wells & Re-Abandonments (25 Total) Covering All
 Phases of Project (Reference Well Work Listing - Schedule B)
	 	CALDOGGR
	PRE-PHASE I
Intermediate Activity	 	 	 	 	 	 	 
	3,061,500	 	
36 weeks
	 	A,B,C,D,E
	 	Nuevo
	 	Continue Procurement: Tanks, Vessels, Pipe, Transformers, Pumps	 	 
	1,908,200	 	
4 months
	 	R
	 	Nuevo
	 	Remediation Required by EIR (Reference Schedule D)
	 	OCHCA
	 	 	
4 weeks
	 	G
	 	Nuevo
	 	Building Permits: Tanks, Power System, Vessels
	 	BLDGDEPT
	1,150,000	 	
13 weeks
	 	I,M
	 	Nuevo
	 	Removal of lnfrastructure within Development Area (Reference Drawings BO-200-2003, 2004, 2005) and
 Initial Abandonment of Active Wells (17 wells) for Phase 1 (Reference Well Work Listing — Schedule B)
	 	OCHCA
	 	 	 	 	 	 	 	 	 	 	 
	1,000,000	 	
30 weeks
	 	A,C,F
	 	Nuevo
	 	Begin Construction of Field Infrastructure	 	 
	1,000,000	 	
30 weeks
	 	D
	 	Nuevo
	 	Begin Construction of Power System	 	 
	456,000	 	
19 weeks
	 	B
	 	Nuevo
	 	Construct Expanded Tonner Canyon Tank Facility
	 	SCAQMD
	 	 	 	 	 	 	Developer
	 	Tentative Map (needed prior to grading)	 	 
	PRE-PHASE I Final
Activity	 	 	 	 	 	 	 
	1,661,000	 	
30 weeks
	 	A,C,F
	 	Nuevo
	 	Construct Field Infrastructure	 	 
	 	 	 	 	 	 	Developer
	 	Corehouse Demolition	 	 
	1,840,000	 	
30 weeks
	 	D
	 	Nuevo
	 	Construct Power System	 	 
	500,000	 	
4 weeks
	 	L
	 	Nuevo
	 	Temporary Removal of
Equipment for Accommodated Wells (46 wells) for Phase I in Development and Grading Areas (Reference Well Work Listing — Schedule B)	 	 
	3,417,936	 	
9 months
	 	I,R
	 	Nuevo
	 	last Naranjal Tank Farm Demolition & Remediation
	 	OCHCA
	PHASE I	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Developer
	 	Grading to include line and grade for wells and associated permanent infrastructure	 	 
	2,135,000	 	
17 weeks
	 	P
	 	Nuevo
	 	Raise/Lower Wellheads of All Phase I Accommodated Wells (46 Wells) (Reference Well Work	 	 
	 	 	 	 	 	 	 	 	Listing-Schedule B)	 	 
	165,000	 	
4 weeks
	 	M,O
	 	Nuevo
	 	Final Abandonment of Phase
I Wells (35 Idle, Re-Abandonments & Active Wells) (Reference Well Work
 Listing -Schedule B)	 	CALDOGGR
	 	 	 	 	 	 	 	 		 	 
	1,941,000	 	
17wwks
	 	L
	 	Nuevo
	 	Accommodation for Phase I Accommodated Wells (46 Wells) ( Reference Well Work Listing • Schedule B)	 	 
	225,000	 	
13 weeks
	 	I,R
	 	Nuevo
	 	Removal of
Infrastructure (Reference Drawings BO-200-2003, 2004, 2005) within Development Area and Initial Abandonments of Active Wells (8 wells) for Phase II (Reference Well Work Listing — Schedule B)
	 	CALDOGGR
	200,000	 	
4 weeks
	 	I,L
	 	Nuevo
	 	Temporary Removal of
Equipment for Accommodated Wells (21 wells) for Phase II (Reference Well Work Listing Schedule B)	 	 
	PHASE II	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Developer
	 	Grading to include line and grade for wells and associated permanent infrastructure	 	 
	900,000	 	
17 weeks
	 	P
	 	Nuevo
	 	Raise/Lower Wellheads of All Phase H Accommodated Wells (21 Wells) (Reference Well Work Listing -Schedule B)	 	 
	85,000	 	
4 weeks
	 	M,O
	 	Nuevo
	 	Final Abandonment of
Phase II Wells (14 Idle, Re-Abandonments & Active Wells) (Reference Well Work Listing Schedule B)
	 	CALDOGGR
	1,018,000	 	
17 weeks
	 	L,H
	 	Nuevo
	 	Accommodation for Phase II Accommodated Wells (21 wells) ( Reference Well Work Listing — Schedule B)	 	 
	100,000	 	
4 weeks
	 	I,R
	 	Nuevo
	 	Removal of Infrastructure and Initial Abandonment of Active Wells (3 wells) for Phase III Reference
	 	CALDOGGR
	 	 	 	 	 	 	 	 	Well Work Listing Schedule B)	 	 
	PHASE III	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Developer
	 	Grading to include line and grade for wells and associated permanent infrastructure	 	 
	92,000	 	
1 week
	 	M,O
	 	Nuevo
	 	Final Abandonment of
Phase III Wells (4 idle and active wells) (Reference Well Work Listing — Schedule B)
	 	CALDOGGR
	84,000	 	
4 weeks
	 	S
	 	Nuevo
	 	Seismic Sensor Installation
	 	BLDGDEPT



 






 



Schedule A



Accommodation Categories




	 	 	 	 	 	 	 	 	 
	Activity	 	Brea	 	 	 	 
	Code	 	Accommodation Costs	 	($M)
	
	 	
	 	

	 	 	 	 	Infrastructure
	 	 	 	 
	 	A	 	 	Water flood
	 	 	695	 
	 	B	 	 	Production Gathering
	 	 	2,822	 
	 	C	 	 	Gas Collection
	 	 	2,296	 
	 	D	 	 	Electrical
	 	 	5,247	 
	 	E	 	 	Taxes / Freight
	 	 	1,060	 
	 	F	 	 	Misc.(NDE & Cathodic Protection)
	 	 	300	 
	 	G	 	 	Engineering
	 	 	2,000	 
	 	 	 	 	 
	 	 	
	 
	 	 	 	 	Total Infrastructure
	 	 	14,420	 
	 	 	 	 	 
	 	 	
	 
	 	 	 	 	Other
	 	 	 	 
	 	H	 	 	Noise Control, Fencing, & Screens
	 	 	600	 
	 	I	 	 	Demolition
	 	 	1,000	 
	 	J	 	 	New Warehouse
	 	 	76	 
	 	L	 	 	PCP or SPS Units (46)
	 	 	2,875	 
	 	M	 	 	Well Abandonments (46)
	 	 	2,760	 
	 	O	 	 	Well Reabandonments (10)
	 	 	1,000	 
	 	P	 	 	Raise / Lower Wellheads (74)
	 	 	3,039	 
	 	R	 	 	Soil Remediation
	 	 	3,850	 
	 	S	 	 	Seismic
	 	 	80	 
	 	T	 	 	Permits
	 	 	300	 
	 	 	 	 	 
	 	 	
	 
	 	 	 	 	Total - Other
	 	 	15,580	 
	 	 	 	 	 
	 	 	
	 
	 	 	 	 	Grand Total
	 	 	30,000	 
	 	 	 	 	 
	 	 	
	 



 






 



Schedule B



Well Work Listing




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Abandonments	 	 	 	 	 	 	 	 
	Development	 	
	 	Vaulted	 	Peripheral
	Phase	 	Idle Wells	 	Active Wells	 	Reabandonments *	 	Wells	 	Wells
	
	 	
	 	
	 	
	 	
	 	

	1
	 	EN 17	 	EN 16	 	EN 1	 	EN 26	 	 	36	RD
	1
	 	EN 18	 	 	32	RD	 	EN 2	 	 	46	 	 	 	52	 
	1
	 	 	33	 	 	 	34	 	 	 	35	 	 	 	79	 	 	 	52	A
	1
	 	 	40	 	 	 	51	A	 	 	39	 	 	 	89	 	 	 	55	 
	1
	 	 	50	 	 	 	75	RD	 	 	92	 	 	 	90	 	 	 	55	A
	1
	 	 	51	 	 	 	91	 	 	 	 	 	 	 	147	 	 	 	73	 
	1
	 	 	152	 	 	 	144	 	 	 	 	 	 	 	148	 	 	 	160	 
	1
	 	 	199	 	 	 	165	 	 	 	 	 	 	 	150	 	 	 	163	 
	1
	 	 	215	 	 	 	207	 	 	 	 	 	 	 	151	 	 	 	173	 
	1
	 	 	216	 	 	 	208	 	 	 	 	 	 	 	153	 	 	 	174	 
	1
	 	 	257	 	 	 	218	 	 	 	 	 	 	 	171	 	 	 	196	 
	1
	 	 	268	 	 	 	244	 	 	 	 	 	 	 	198	 	 	 	206	 
	1
	 	 	284	 	 	 	258	 	 	 	 	 	 	 	221	 	 	 	209	 
	1
	 	 	 	 	 	 	283	 	 	 	 	 	 	 	232	 	 	 	210	 
	1
	 	 	 	 	 	 	301	 	 	 	 	 	 	 	256	 	 	 	213	 
	1
	 	 	 	 	 	 	304	 	 	 	 	 	 	 	269	 	 	 	222	 
	1
	 	 	 	 	 	 	309	 	 	 	 	 	 	 	285	 	 	 	223	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	287	 	 	 	224	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	288	 	 	 	225	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	292	 	 	 	249	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	294	 	 	 	282	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	159	 	 	 	302	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	217 RD2	 	 	 	 
	1
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	247	 	 	 	 	 
	2
	 	 	145	 	 	 	80	 	 	 	17	 	 	 	87	 	 	 	37	 
	2
	 	 	146	 	 	81 RD	 	 	41	 	 	 	134	 	 	 	74	 
	2
	 	 	 	 	 	 	88	 	 	 	42	 	 	 	180	 	 	 	133	 
	2
	 	 	 	 	 	 	100	 	 	 	44	 	 	 	211	 	 	 	141	 
	2
	 	 	 	 	 	 	164	 	 	 	 	 	 	 	230	 	 	 	168	 
	2
	 	 	 	 	 	 	178	 	 	 	 	 	 	 	259	 	 	 	176	 
	2
	 	 	 	 	 	 	203	 	 	 	 	 	 	 	276	 	 	 	177	 
	2
	 	 	 	 	 	 	251	 	 	 	 	 	 	 	281	 	 	 	181	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	293	 	 	 	190	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	219	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	220	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	241	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3
	 	 	197	 	 	 	130	 	 	 	 	 	 	 	 	 	 	 	 	 
	3
	 	 	 	 	 	 	192	 	 	 	 	 	 	 	 	 	 	 	 	 
	3
	 	 	 	 	 	 	194	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Wells
	 	 	16	 	 	 	28	 	 	 	9	 	 	 	33	 	 	 	34	 



* Reabandonments subject to verification of need



 






 



Schedule C



Drawing List




	 	 	 
	Drawing Number	 	Drawing Title
	
	 	

	BO-200-2001	 	
Conceptual Pipeline/Electrical Corridor
	BO-200-2003	 	
Existing Oil Gathering System for Real Estate Development
	BO-200-2004	 	
Existing Gas Gathering System for Real Estate Development
	BO-200-2005	 	
Existing Water Injection System for Real Estate Development



 






 









 






 











 






 










 






 










 






 





Schedule D



Remediation Required By EIR (Nuevo)



As set out in the approved Remedial Action Plan



submitted December 16, 1999, as amended




October  3, 2001, December 27, 2001 and January 13, 2003



 






 





Schedule E



Re-Vegetation Of Open Space



As set out in the Biological
Assessment included within the




Biological Opinion dated
December 30, 2002 as used by




the US Army Corps of Engineers in its Section 404 Permit






 






 





12/3/03


EXHIBIT “L”



DD SUBORDINATION AGREEMENT



(For Use Only With SPC Guaranty
– Exhibit “S”)



	
Nuevo  Shea - DD Subordination Agreement (Ex. L) 	 	Subordination Agreement 






 











 



EXHIBIT “L”



RECORDING REQUESTED BY:

Tonner Hills SSP, LLC 
603 S.
Valencia Avenue
 Brea, CA
92823
 Attn: Joe Fleischaker



WHEN RECORDED MAIL TO:


LENDER ADDRESS


[Space Above Line For Recorder’s Use Only]


DEVELOPMENT DECLARATION

SUBORDINATION AGREEMENT



NOTICE: THIS SUBORDINATION
AGREEMENT RESULTS IN YOUR RIGHTS AND INTERESTSAND YOUR
SECURITY INTEREST IN THE PROPERTY BECOMING SUBJECT TO AND OF
LOWER PRIORITY THAN THE LIEN OF SOME OTHER OR LATER SECURITY INSTRUMENT.


     THIS
SUBORDINATION AGREEMENT (“DD Subordination Agreement”) is
made this        day
of,____________ 200_, by and among TONNER HILLS SSP, LLC, a Delaware limited liability
company, the owner (“Owner”) of the property described in Exhibit “A”
(“Property”), NUEVO ENERGY COMPANY, a Delaware corporation
(“Company”),
Declarant under the Development Declaration described herein,
and___________, a___________
(“Lender”).


R E C I T A L S



     A.     Owner has executed and acknowledged the following Development
Declaration imposed by Company against the Property, and encumbering the record
title thereof. The Development Declaration is Exhibit “I” to that certain
Purchase and Sale Agreement between Owner and Company,
dated____________, 2003 (“IPSA”)
and which was



	
Nuevo  Shea - DD Subordination Agreement (Ex. L) 	 	Subordination Agreement 






1






 





recorded with the County Recorder of Orange County, California in favor of
Company, encumbering the Property, as follows:



	 	 	 	 	 	 	 	 	 
	 	 	Date	 	 	 	 
	Description	 	Recorded	 	Instrument No.
	
	 	
	 	

	Development Declaration




The
Development Declaration is referred to herein as the “Company
Encumbrance.”


     B.     Owner has executed, or is about to execute, a deed of trust (“Lender’s
Encumbrance” or “Lender’s deed of trust”), note and certain loan documents
(“Loan Documents”) which include Lender’s Encumbrance, in favor of____________ or a wholly
owned financial institution subsidiary thereof (collectively, “Lender”) payable
with interest and upon the terms and conditions described therein, which deed
of trust is dated____________and is recorded/recording concurrently herewith.


     C.     It’s a condition precedent to obtaining said loan (“Loan”) that
Lender’s Encumbrance shall be a lien or charge upon the Property, prior and
superior to the Company Encumbrance.


     D.     Lender is willing to make the Loan provided the deed of trust securing
the same is a lien or charge upon the Property prior and superior to the
Company Encumbrance, and provided that Company will specifically subordinate
the Company Encumbrance to the lien or charge of the deed of trust in favor of
Lender. Company is willing that the deed of trust securing the Loan shall, when
recorded, constitute a lien or charge upon the Property which is prior and
superior to the Company Encumbrance, to the extent and as described herein,
because Owner has executed and delivered to Company that certain SPC Guaranty
in the form of Exhibit “S” to the PSA.


     NOW, THEREFORE, in consideration of the Recitals and for other valuable
consideration, the receipt and sufficiency of which consideration is hereby
acknowledged, it is hereby declared, understood and agreed as follows:


     (1)  Lender’s Encumbrance, and any renewals, modifications or extensions
thereof, shall be a lien or charge on the Property, prior and superior to the
lien or charge of the Company Encumbrance.


     (2)  The parties acknowledge it to be their intent, and hereby agree that,
from and after the date of Lender’s recordation of a deed in lieu of
foreclosure or Lender’s acquisition of the Property at a judicial or trustee’s
sale held to foreclose Lender’s Encumbrance (collectively and individually
“Acquisition”), the Company Encumbrance shall continue to encumber the
Property, but, shall not be enforceable by the Company


2






 


          (a) Unless



               (i) the
purchaser at a judicial or trustee sale of the Property is not
Lender, or (ii) Lender transfers the Property to a subsequent purchaser or
transferee (collectively or individually, “Subsequent Transferee”);



OR



          (b) Until the Earlier of:




               (i) Lender commences construction of Homes on the
Property;



               (ii) Lender offers for sale, or sells, a Home to the Homebuying public;
or



               (iii) the expiration of twelve (12) months after the
Acquisition.



The occurrence of any event in (a) or (b) shall be deemed an “Enforceability
Event.”


          Upon the occurrence of an Enforceability Event, the
Company Encumbrance shall no longer be junior to Lender’s
Encumbrance and shall again be fully enforceable by the Company
against Lender or a Subsequent Transferee, as the case may be;
any Subsequent Transferee, but not Lender unless an
Enforceability Event in (b)(i) or (ii) has occurred, shall then
be required to cure, within thirty (30) days of the
Enforceability Event, any uncured Default under the Company
Encumbrance, whether such Default occurred prior to or after
the Acquisition, or. if given the nature of the Default. more
than  thirty (30)days would be reasonably required for such
cure, then the Subsequent Transferee shall have a reasonable
time to effectuate such cure so long as such cure is commenced within such thirty (30) day period and
diligently pursued to completion.



          The act of transferring the Property to a Subsequent Transferee shall not
trigger enforceability against Lender, but only against the Subsequent
Transferee in accordance with the provisions of the Company Encumbrance.
“Commencement of construction” shall mean the trenching of foundations and/or
any or all later construction activities. “Offering for Sale” shall mean
advertising sales to the public. “Sale” shall mean the close of escrow and/or
the recordation of the deed conveying a Home, or buyer’s right to possession of
the Home pursuant to a sales contract. “Property” shall include portions
thereof. Other defined terms used herein shall have the meaning prescribed for
them in the PSA.



     (3)  Lender would not make its Loan described above without this
Subordination Agreement.


     (4) 
This Subordination Agreement shall be the whole and only agreement with
regard to the
subordination of the Company Encumbrance to the Lender’s Encumbrance.
Company declares, agrees and acknowledges that:


     (a)  Except as provided below, Company, in its reasonable discretion, has
approved (i) the form of the note and deed of trust in favor of Lender, which
documents





3






 






provide for notice to, and a right to cure any default of Owner there under by,
Company and (ii) all agreements, including but not limited to any Loan or
escrow agreements, between Owner and Lender for the disbursement of the
proceeds of Lender’s Loan; provided that the Company’s approval of same shall
be deemed an approval solely in connection with the Company’s requirement to
execute this subordination and shall not be deemed a consent to the terms and
provisions of, nor for the Company to be bound by, the Loan Documents, nor
approval for any other purpose;


     (b)  Notwithstanding that the person or persons to whom Lender disburses
the Loan proceeds uses such proceeds in contravention of the Loan Documents for
purposes other than those provided for in the Loan Documents, the subordination
herein made shall remain valid according to the terms hereof; and,


     (c)  Company intentionally subordinates the Company Encumbrance in favor of
the lien or charge upon the Property of the Lender’s Encumbrance and
understands that in reliance upon, and in consideration of such subordination,
specific loans and advances are being and will be made and, as part and parcel
thereof, specific monetary and other obligations are being and will be entered
into which would not be made or entered into but for said subordination.


     The Company Encumbrance shall not be subordinate to any amounts payable as
interest which are based upon any participation of Lender in appreciation,
profits or any basis other than a percentage of the outstanding principal
balance of the Loan. The foregoing sentence shall not be applicable to, nor in
any way limit the subordination of the Company Encumbrance to Lender’s
Encumbrance for (i) late payment charges assessed for failure to timely pay any
amounts owed to Lender, (ii) any advances made by Lender to protect the
security of Lender’s deed of trust, (iii) any expenses incurred to enforce
Lender’s rights under Lender’s deed of trust, and (iv) interest which is based
upon a percentage of the outstanding principal balance of the Loan. Company and
Owner acknowledge that the Company Encumbrance is hereby being subordinated to
those matters listed in subparagraphs (i), (ii), (iii) and (iv) above. This
paragraph in no way implies that Lender’s Encumbrance or other related loan
documents being executed concurrently with Lender’s Encumbrance presently
provide for interest based upon any participation of Lender in appreciation,
profits or any basis other than a percentage of the outstanding principal of
the Loan.


     (5) 
All language in this Subordination Agreement, including without
limitation, the language in paragraphs 2 and 4(a) and (c), above, limiting the
rights of Lender shall prevail over any contrary language in the Loan Documents
including the Lender’s Encumbrance; and,


     (6)  A Default or Event of Default by Owner shall be deemed to have
occurred under the Company Encumbrance as described therein. Notwithstanding
its rights described therein, upon the occurrence of a Default, Company will
give Lender at least fifteen (15) days prior written notice before recording a
notice of Default or otherwise commencing any foreclosure or other proceedings
under the Company Encumbrance, during which period Lender shall have the right,
but not the obligation, to
cure any such Default. In the event of a default by Owner under any of the
Loan Documents, Lender shall give the



4










 





Company at least fifteen (15) days prior written notice before recording a
notice of default
or otherwise commencing any foreclosure proceedings, during which period the
Company
shall have the right, but not the obligation, to cure such default.



     (7) Neither Owner, nor any entity constituting Owner, nor any division,
affiliate, subsidiary, parent or related entity may become a Lender as that
term is defined
herein, nor enjoy the rights and benefits conferred upon Lender herein, whether
as
successor-in-interest to, or transferee of, all or a portion of Lender’s rights
and benefits
Under the Loan Documents and/or this Subordination Agreement, or otherwise.



     (8) Notwithstanding anything to the contrary in this DD Subordination
Agreement, this DD Subordination Agreement shall remain viable only for so long
as the
SPC Guaranty remains in full force and effect according to its terms in favor
of Company;
upon the lapse or termination of the SPC Guaranty, this DD Subordination
Agreement shall
automatically become void and of no effect, the Development Declaration shall
be
enforceable to the fullest extent legally permissible
with“respect to the
Covered Property (as
defined therein) and the Development Declaration shall again be superior in
priority, in all
respects, to the Lender’s Encumbrance.



	 	 	 	 	 	 	 
	 	 	“OWNER”
	 
	 	 	 	 	 	 
	 	 	TONNER HILLS SSP, LLC, a Delaware limited
	 	 	liability company
	 
	 	 	 	 	 	 
	 	 	By: Standard Pacific of Tonner Hills, LLC, a
	 	 	Delaware limited liability company, a member
	 
	 	 	 	 	 	 
	 	 	 	 	By: Standard Pacific Corp., a Delaware
	 	 	 	 	corporation, its sole member
	 
	 	 	 	 	 	 
	 	 	 	 	By:
	

	 	 	 	 	 	
 
	 	 	 	 	Title:
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	 	 	 	 	By:
	

	 	 	 	 	 	
 
	 	 	 	 	Title:
	

	 	 	 	 	 	
 







5









 







	 	 	 	 	 	 	 	 	 	 	 
	 	 	By: Shea Tonner Hills, LLC, a Delaware limited liability company, a member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: Shea Homes Limited Partnership, a California limited partnership, its sole member
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By: J.F. Shea LLC, a Delaware limited liability company,
its General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	Title:	 	 
	 	 	 	 	 	 	 	 	 	
	 
	 	 	“COMPANY”	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	NUEVO ENERGY COMPANY, a Delaware corporation	 
	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	“LENDER”	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	
	,
	 	 	a ___________________ corporation	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	 
	 	 	 	
	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 
	 	 	 	 	 	
	 







6









 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	

	 	 	)	 
	COUNTY OF ORANGE

	 	 	)	 







     On this     day of     , 2000,
before me,      ,a Notary Public, personally
appeared      , Personally known to me or proved to me on the basis of satisfactory
evidence to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument. 
WITNESS my hand and
official seal.



	 	 	 	 	 
	 	 	
 
	 	 	Signature of Notary

	 
	 	 	 	 
	 	 	Commission Expires:
	

	 	 	 	
 







 









 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	

	 	 	)	 
	COUNTY OF ORANGE

	 	 	)	 







     On this     day of     , 2000, before me,      ,
a Notary Public, in and for said state,
personally appeared      , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s)whose name(s) is are subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity(ies), and that by his/her signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s),
acted, executed the instrument. 
WITNESS my hand and official seal.



	 	 	 	 	 
	 	 	
 
	 	 	Notary Public
	 	 	State of California
	 
	 	 	 	 
	 	 	Commission Expires:
	

	 	 	 	
 







 








 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	 	)	 
	

	 	 	)	 
	COUNTY OF ORANGE

	 	 	)	 







     On this     day of     , 2000, before me,     ,
a Notary Public in and for said state,
personally appeared     , personally known to me (or proved to me on the basis of
satisfactory evidence) to be the person(s) whose name(s) idare subscribed to
the within instrument and acknowledged to me that he/she executed the same in
his/her authorized capacity(ies), and. that by his/her signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s),
acted, executed the instrument. WITNESS my hand and official seal.



	 	 	 	 	 
	 	 	
 
	 	 	Notary Public
	 	 	State of California
	 
	 	 	 	 
	 	 	   Commission Expires:
	

	 	 	 	
 
















 






EXHIBIT “A”




Legal Description of Property




 









 







LEGAL DESCRIPTION




THOSE PORTIONS OF TRACT NO.16178, IN THE UNINCORPORATED TERRITORY OF THE
COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN ON A MAP FILED IN
BOOK         , PAGES         
THROUGH         INCLUSIVE OF MISCELLANEOUS MAP, IN THE
OFFICE OF THE COUNTY RECORDER,
MORE PARTICULARLY DESCRIBED AS FOLLOWS:



LOTS 1
THROUGH 8, 10 AND 20, TOGETHER WITH LETTERED LOTS A, B, C, AND D OF SAID
TRACT NO. 16178



CONTAINING: 210.149 ACRES, MORE OR LESS



ALSO
AS SHOWN ON A DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART
HEREOF.



SUBJECT
 TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	

	 	PREPARED BY OR
	

	 	UNDER THE DIRECTION OF:
	 
	 	 
	

	 	
	


	 	KATHLEEN SUSAN TETREAULT, P.L.S.7297
MY LICENSE EXPIRES 12/31/2004
	

	 	 
	

	 	December 4, 2003
	

	 	JN: 13207.00.000







Page 1 of 1









 











 









 






Revised 11/22/03




AGREEMENT




EXHIBIT “M”




EASEMENT AGREEMENT

GRANTING EASEMENTS FROM TONNER HILLS SSP, LLC AND

TONNER HILLS 680 LLC TO NUEVO




 









 







EASEMENT AGREEMENT




THIS EASEMENT AGREEMENT (“Agreement” or “Easement Agreement”), is made
effective the    day of      ,      2003, by and between TONNER HILLS SSP, LLC, a Delaware
limited liability company (“Shea”) and TONNER HILLS 680, a Delaware limited
liability company (“TH 680”) and their successors in interest and assigns
(collectively, “Grantor”) and NUEVO ENERGY COMPANY, a Delaware corporation, and
its successors in interest and assigns (“Nuevo” or “Grantee”).



RECITALS




     A. Grantor is the owner of the surface, fee interest in that certain real
property consisting of approximately 810 acres, located in the sphere of
influence of the City of Brea, County of Orange, State of California, more
fully described on Attachment 1 (“Property” or “Land”). The Property includes
the Development Areas on which the Project will be developed by Shea, and
certain non-developable portions of the Property (“Remainder Parcels”), which
include areas of the Property used exclusively (i) by  TH 680 as open space
and (ii) by Operator for Oil Operations (“Retained Properties” or “Retained
Land”).



     B. Grantees old Grantor the Property pursuant to that certain Purchase and
Sale Agreement dated
          , 2003 (“Purchase and Sale Agreement” or “PSA”), to which
this Easement Agreement is Exhibit “M.”



     C. Nuevo has previously (i) sold the Oil Assets and Facilities to the
Operator for its continuing Oil Operations in the Land (including the
Development Areas, Remainder Parcels and Retained Properties) and (ii) has
consummated the Aera Agreement, Exhibit “O’ to the PSA, with Aera Energy LLC.



     D. The parties now desire to enter into this Easement Agreement upon such
terms and conditions as are hereinafter set forth, with the understanding that
all rights granted herein by Grantor to Grantee are in addition to and not in
limitation of, the rights enjoyed by Grantee under the PSA and Grant Deeds,
Exhibit “G” thereto.



1









 





     F. Initially capitalized terms not otherwise defined herein shall have
the meanings given in the Purchase and Sale Agreement, unless specifically
defined otherwise herein.



     NOW THEREFORE, in consideration of the Recitals, mutual covenants
contained herein, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Grantee and Grantor hereby
agree as follows:



I. GRANT OF EASEMENTS TO NUEVO




     GRANTOR HEREBY GRANTS TO NUEVO/GRANTEE AND, ITS SUCCESSORS AND ASSIGNS,
WITH THE RIGHT AND POWER TO GRANT AND TRANSFER ALL OR A PORTION OF SAME, THE
FOLLOWING EASEMENTS:



     A. A blanket, non-exclusive surface and subsurface easement and
right-of-way over, under, in and through the Property described on Attachment 1
for access, ingress and egress to complete all work, construct all improvements
and otherwise discharge all its obligations pursuant to the PSA, including
without limitation (1) the Hover Program described in Section 5.37 thereof, (2)
the Permit Program described in Section 5.35 thereof, (3) the Aera Program
described in Section 5.36 thereof, and (4) the PAPA at Exhibit “K,” thereto.



     B. A blanket, non-exclusive surface and subsurface easement and
right-of-way over, under, in and through the Property for access, ingress and
egress for the purposes described below:



          (1) To complete all work, construct all improvements and otherwise
discharge all its obligations affecting the Property pursuant to (a) the
Development Documents to which Grantor or Grantee is a party which are recorded
(“recorded”) in the Official Records of Orange County, California, to the
extent Grantor or any successor-in-interest does not properly complete all
such work, construct all such improvements and/or discharge such obligations,
(b) the Development Documents to which Grantor or Grantee is a party which are
not so recorded, to the extent Grantor or any successor-in-interest does not
properly complete all such work, construct all such improvements and or
discharge such obligations, and (c) the requirements of any Governmental Agency,
as defined in the PSA and at Attachment 2;



          (2) To complete all work, construct all improvements and otherwise
discharge all its obligations affecting the Property not described in Section
I.B.(l) above, but which are, in Nuevo’s reasonable discretion, necessary as a
result of, arising out of or relating to such matters described in Section
I.B.( 1);



          (3)Without in any way diluting or diminishing the indemnities of Grantor
more fully described in Sections 3.7 and 3.9 of the PSA, to complete all work,
construct all improvements and/or otherwise discharge all obligations or
alleged obligations which are, in Nuevo’s sole discretion, necessary in order to
prevent, limit, discharge and/or compromise or settle any Losses and/or
Environmental Losses, defined in Section Sections 3.7 and 3.9 of the PSA,
respectively, including without limitation, Losses and/or Environmental Losses
which are the result of action, inaction or omission of She a, TH 680 and/or
any guarantor under the Corporate Guaranty, Exhibit “P” to the PSA and/or
guarantor under the SPC Guaranty, .“Exhibit “S” to the PSA.



2









 





II. NO SUBORDINATION




     GRANTOR
AGREES THAT NEITHER THIS EASEMENT AGREEMENT, NOR ANY
PROVISION HERE OF, SHALL BE SUBORDINATED TO ANY DEBT INSTRUMENT,OR
INSTRUMENT OF ANY
KIND FOR ANY PURPOSE.



III. FURTHER COVENANTS AND RESTRICTIONS




     GRANTOR AND GRANTEE AGREE AS FOLLOWS:



     1. Limitation
on Exercise of Rights Granted Herein. Notwithstanding any thing to the
contrary in Section I, above, Grantee may only exercise (“Exercise”) the rights
granted in this Easement Agreement subject to the following:



         
 1.1 With regard to Section IB., the Exercise may only be
commenced (a) after
a determination in the reasonable judgment of Grantee that such Exercise is
necessary to prevent, mitigate, terminate, halt or clean up (individually and
collectively, “remedial action”) Losses or Environmental Losses, or the situation
causing same (which shall be deemed to include any Losses described in the
BlackSand PSA), or to preserve the value of the Property (b) written notice
(“notice”) to Grantor by Grantee to take action specified in the notice to
accomplish the remedial action and (c) failure by Grantor to commence such
remedial action (and continuously process it to completion) within ninety (90)
days of receipt of such notice, except in the case of an emergency, in which
case commencement must occur within a reasonable period based upon the extant
circumstances.



          1.2 The Exercise may only be conducted by Grantee so as to (a) accomplish
Grantee’s purpose in a commercially reasonable manner, minimizing interference
with the activities of Grantor, (b) avoid, to the extent possible, any entry
onto a Lot, or any building pad on a Lot and (c) return the Land to its
original condition, reasonable wear and tear excepted, after completion of the
Exercise.



IV. MISCELLANEOUS PROVISIONS




     1. Incorporation of
Recitals sand Attachments.Nuevo and Grantor hereby
incorporate into the terms of this Agreement each and every one of the Recitals
contained in paragraphs A through F, and Attachments 1 and 2 (with their
attachments and exhibits, if any), as though fully set forth herein.



     2. Attorneys’
Fees. Subject to Section 5.9 of the PSA, in the event of any
dispute between the parties hereto or the institution of any action or
proceeding to interpret or enforce this Easement Agreement, or arising out of
the subject matter of this Easement Agreement or the transactions contemplated
hereby, the prevailing party shall be entitled to recover its actual expenses,
attorneys’ fees and costs, including professional or expert consultation or
testimony and paralegal fees, both at trial and on any appeal and in any
administrative proceeding, including any bankruptcy proceeding.



     3. Notices.
Any notice to be given or other document to be delivered by
any party to the other or others hereunder, and any payments from Grantor to
Grantee, may be delivered in



3









 





person to an officer of any party, or may be delivered by Federal Express,
private commercial delivery or courier service for next business day delivery,
or may be deposited in the United States mail, duly certified or registered,
return receipt requested, with postage prepaid, and addressed to the party for
whom intended, as follows:



	 	 	 	 	 
	

	 	If to Nuevo:	 	 
	

	 	 	 	Nuevo Energy Company
	

	 	 	 	1021 Main, Suite 2100
	

	 	 	 	Houston, Texas 77002
	

	 	 	 	Attn: David A. Leach
	

	 	 	 	Fax: (713) 374-4899
	

	 	 	 	Phone: (713) 374-4802
	

	 	 	 	Email: leachd@nuevoenergy.com
	 
	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Attn: Hemant Patel
	

	 	 	 	Fax: (713) 374-4981
	

	 	 	 	Phone: (713) 374-4809
	

	 	 	 	Email: hemant.patel@nuevoenergy.com
	 
	 	 	 	 
	

	 	Copy to:	 	 
	

	 	 	 	Ullom Associates
	

	 	 	 	16149 Redmond Way, Ste. 401
	

	 	 	 	Redmond, Washington 98052
	

	 	 	 	Fax: (425) 836-2870
	

	 	 	 	Phone: (425) 836-2728
	

	 	 	 	Email: ullomjw@aol.com
	 
	 	 	 	 
	

	 	 	 	Nossaman, Guthner, Knox & Elliott, LLP
	

	 	 	 	18101 Von Karman Avenue, Suite 1800
	

	 	 	 	Irvine, California 92612-1047
	

	 	 	 	Attn: William P. Tanner, III
	

	 	 	 	Fax: (949) 833-7878
	

	 	 	 	Phone: (949) 833-7800
	

	 	 	 	Email: wtanner@nossaman.com
	 
	 	 	 	 
	

	 	To Buyer:	 	 
	

	 	 	 	Tonner Hills SSP, LLC
	

	 	 	 	603 S. Valencia Avenue
	

	 	 	 	Brea, CA 92823
	

	 	 	 	Attention: Alan Toffoli
	

	 	 	 	Fax: (714) 985-3605
	

	 	 	 	Phone:(714) 792-2504
	

	 	 	 	Attn: Alan Toffoli
	

	 	 	 	Email: alan.toffoli@sheahomes.com







4









 






	 	 	 	 	 
	

	 	 	 	and
	 
	 	 	 	 
	

	 	 	 	Tonner Hills 680 LLC
	

	 	 	 	603 S. Valencia Avenue
	

	 	 	 	Brea, CA 92823
	

	 	 	 	Attn: joe Fleischaker
	

	 	 	 	Fax: (714) 985-3605
	

	 	 	 	Phone: (714) 792-2592
	

	 	 	 	Email: joe.fleischaker@sheahomes.com
	

	 	Copy to:	 	 
	

	 	 	 	Landmark Law Group, L.L.P.
	

	 	 	 	10350 Santa Monica Boulevard, Suite 295
	

	 	 	 	Los Angeles, CA 90025-5074
	

	 	 	 	Attn: Gulwinder S. Singh
	

	 	 	 	Fax: (310) 300-2310
	

	 	 	 	Phone: (310) 300-2300 Ext. 101
	

	 	 	 	Email: gss@llgllp.com







Notice may also be given by facsimile transmission (“Fax”) to any party at the
respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which shall
be substituted for the one above specified. If any notice or other document is
sent by mail as aforesaid, the same shall be deemed served or delivered
seventy-two (72) hours after the mailing thereof as above provided. Notice by
any other method shall be deemed served or delivered upon actual receipt at the
address or Fax number listed above.



     4. Interpretation: Governing Law. This Easement Agreement shall be
construed according to its fair meaning and as if prepared by both parties
hereto. This Easement Agreement shall be construed in accordance with the laws
of the State of California. Any action shall be brought in a court of competent
jurisdiction located in Orange County, California.



5









 





     5. No Waiver. No delay or omission by either party hereto in exercising
any right or power accruing upon the compliance or failure of performance by
the other party hereto under the provisions of this Easement Agreement shall
impair any such right or power or to be construed to be a waiver thereof. A
waiver by either party hereto of a breach of any of the covenants, conditions
or agreements hereto to be performed by the other party shall not be construed
as a waiver of any succeeding breach of the same or other covenants,
agreements, restrictions or conditions hereof.



     6. Modifications. Any alteration, change or modification of or to this
Easement Agreement, in order to become effective, shall be made by written
instrument, and in each such instance executed on behalf of each party hereto,
and duly recorded by the Orange County recorder.



     7. Severability. If any term, provision, condition or covenant of this
Easement Agreement or the application thereof to any party or circumstance
shall, to any extent, be held invalid or unenforceable, the remainder of this
instrument, or the application of such term, provision, condition or covenant
to persons or circumstances other than those as to whom or which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Easement Agreement shall be valid and enforceable to the
fullest extent permitted by law.



     8. Time is of the Essence. Time is hereby expressly made of the essence
in this Easement Agreement and each term and provision hereof, and the parties
specifically agree to strictly comply and perform their obligations herein in
the time and manner specified and waive any and all rights to claim such
compliance by mere substantial compliance with the terms of this Easement
Agreement.



     9. Authority and Capacity. Each of the persons signing this Easement
Agreement represents and warrants that he or she is authorized to execute and
deliver this Easement Agreement and that this Easement Agreement will be
binding upon the party for whom such person has signed, and that the signature
of no other party or person is required in order to bind such party. Each
person executing this Easement Agreement on behalf of a corporation or other
entity represents and warrants that he or she is duly authorized to execute and
deliver this Easement Agreement on behalf of such corporation or other entity
in accordance with authority granted under the formation documents of such
entity, that all conditions to the exercise of such authority have been
satisfied, and that this Easement Agreement will be binding upon such entity in
accordance with its terms.



     10. Titles and Captions. Titles and captions are for convenience only and
shall not constitute a portion of this Easement Agreement.



     11. Gender. As used in this Easement Agreement, masculine, feminine or
neuter gender and the singular or plural number shall each be deemed to include
the others wherever and whenever the context so dictates.




6










 





     12. Execution in Counterparts. This Easement Agreement may be executed in
several counterparts, and all so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties are not
signatories to the original or the same counterpart.



     13. Partition. The easements granted herein to Grantee may be
partitioned and/or assigned in its sole discretion, including without
limitation, to any contractors, subcontractors, licensees and invitees.



     14. Binding
Effect; Runs with the Land. This Easement Agreement and each
and all of its provisions shall bind and inure to the benefit of the respective
heirs, personal representatives, successors and assigns of the parties hereto
and/or to the Property and/or any portion thereof. Every person or entity who
(or which) now or hereafter owns or acquires any right, title or interest in or
to any portion of the Property, shall be deemed to have consented and agreed to
each and all of the provisions hereof, whether or not any reference to this
Easement Agreement is contained in the instrument by which such person or
entity acquired an interest therein.



     15. Termination. The provisions of this Easement Agreement shall be
automatically void and of no effect, without the requirement of any further
action by Grantee or Grantor, to the extent of any transfer of the Property to
the purchaser of a Home, a Governmental Agency or a Homeowners Association or
other Association comprised entirely of Homeowners.



     IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.



	 	 	 	 	 
	 	 	“Grantee”
	 
	 	 	 	 
	 	 	NUEVO ENERGY COMPANY, a Delaware

corporation
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Title:	 	 
	

	 	 	 	
 
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	
 
	

	 	Title:	 	 
	

	 	 	 	
 







7









 






	 	 	 	 	 	 	 	 	 
	 	 	“Grantor”
	 
	 	 	 	 	 	 	 	 
	 	 	Tonner Hills SSP, LLC, a Delaware

limited liability company
	 
	 	 	 	 	 	 	 	 
	 	 	By: Standard Pacific of Tonner Hills, LLC,
a Delaware limited liability company,
a member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: Standard Pacific Corp. a Delaware
corporation, its sole member
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By	 	 	 	 
	 	 	 	 	 	 	

	 	 	 	 	Title	 	 
	 	 	 	 	 	 	

	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By	 	 	 	 
	 	 	 	 	 	 	
 
	 	 	 	 	Title	 	 
	 	 	 	 	 	 	
 
	 
	 	 	 	 	 	 	 	 
	 	 	By: Shea Tonner Hills, LLC, a

Delaware limited liability company, a

member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: Shea Homes Limited Partnership, a

California limited partnership, its sole

member
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	By: J.F. Shea LLC, a Delaware
limited

liability company, its General
Partner
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By	 	 
	

	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	Title	 	 
	

	 	 	 	 	 	 	 	
 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	By	 	 
	

	 	 	 	 	 	 	 	
 
	

	 	 	 	 	 	Title	 	 
	

	 	 	 	 	 	 	 	
 







8









 






	 	 	 	 	 	 	 
	 	 	TONNER HILLS 680 LLC, a Delaware
limited liability company
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 
	

	 	 	 	By:	 	 
	

	 	 	 	 	 	
 







9









 






	 	 	 	 	 
	State of California

	 	 	)	 
	

	 	 	)	 
	County of Orange

	 	 	)	 







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



     WITNESS my hand and official seal.



	 	 	 
	Signature
	 	 
	

	 	
 







	 	 	 	 	 
	State of California

	 	 	)	 
	

	 	 	)	 
	County of Orange

	 	 	)	 







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



     WITNESS my hand and official seal.



	 	 	 
	Signature
	 	 
	

	 	
 







 









 







	 	 	 	 	 
	State of California

	 	 	)	 
	

	 	 	)	 
	County of Orange

	 	 	)	 







     On ____________________before me, ___________________________,

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



     WITNESS my hand and official seal.



	 	 	 
	Signature
	 	 
	

	 	
 







	 	 	 	 	 
	State of California

	 	 	)	 
	

	 	 	)	 
	County of Orange

	 	 	)	 







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



     WITNESS
my hand and official seal.



	 	 	 
	Signature
	 	 
	

	 	
 







 









 






ATTACHMENT 1 TO EASEMENT AGREEMENT




(LEGAL DESCRIPTION AND MAP OF THE PROPERTY/LAND

INCLUDING DEVELOPMENT AREAS, REMAINDER PARCELS

AND RETAINED PROPERTIES)




Attachment 1


Page 1 0f 1




 









 








Legal Description of the Land



THOSE PORTIONS OF SECTIONS 1 AND 12, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND
SECTIONS 5, 6, 7 AND 8, TOWNSHIP 3 SOUTH, RANGE 9 WEST, IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, IN THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE,
AND IN THE CITY OF BREA, IN THE COUNTY OF ORANGE, STATE OF CALIFORNIA, AS SHOWN
ON A MAP FILED IN BOOK 51, PAGE 7 OF MISCELLANEOUS MAPS, AND RECORD OF SURVEY
FILED IN BOOK 12 PAGE 40, RECORD OF SURVEY NO. 91-1007 FILED IN BOOK 133, PAGES
41 THROUGH 46 INCLUSIVE AND RECORD OF SURVEY NO. 2001-1007, FILED IN BOOK 187,
PAGES 02 THROUGH 07 INCLUSIVE, ALL OF RECORDS OF SURVEY, IN THE OFFICE OF THE
COUNTY RECORDER OF SAID COUNTY RECORDER, ALSO BEING DESCRIBED IN A DEED, BILL
OF SALE AND ASSIGNMENT, RECORDED APRIL 10, 1996 AS INSTRUMENT NO. 19960175928
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER, MORE PARTICULARLY
DESCRIBED AS FOLLOWS:




PARCEL 1



BEGINNING AT A WHITE POST 4 INCHES SQUARE IN MOUND WITH PITS AT THE NORTHEAST
CORNER OF THE RANCHO SAN JUAN CAJON DE SANTA ANA, BEING ALSO THE SOUTHEAST
CORNER OF THE RANCHO RINCON DE LA BREA; THENCE ALONG THE PATENT BOUNDARY OF
SAID RANCHO RINCON DE LA BREA, NORTH 84° WEST 107.51 CHAINS TO A SAND STONE
MARKED R. B. IN MOUND WITH PITS; THENCE ALONG SAID PATENT BOUNDARY NORTH 57°
42’ WEST 43.67 CHAINS TO A WHITE POST 4 INCHES SQUARE IN MOUND OF STONE MARKED
S. J. C. S. A. AT INTERSECTION OF THE PATENT LINES OF SAID RANCHOS SAN JUAN
CAJON DE SANTA ANA AND RINCON DE LA BREA; THENCE ALONG THE PATENT LINE OF SAID
RANCHO SAN JUAN CAJON DE SANTA ANA, NORTH 76° 25’ WEST 62.67 CHAINS TO A 2” X
4’ POST MARKED 62.67 IN MOUND WITH PITS; THENCE SOUTH 1° 45’ WEST 58.96 CHAINS
TO A 2” X 4” POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 89° EAST 20.00
CHAINS TO A 4” X 4” POST IN MOUND WITH PITS; THENCE SOUTH 1° 45’ WEST 20.00
CHAINS TO A 2” X 4” POST MARKED 20.60 IN MOUND WITH PITS; THENCE NORTH 88°39’
EAST 55.48 CHAINS TO A 2” X 4” POST MARKED 20 IN MOUND WITH PITS; THENCE SOUTH
0° 30’ EAST 20.00 CHAINS TO A 2” X 4” POST IN MOUND WITH PITS; THENCE NORTH 89°
45” EAST 134.63 CHAINS TO A 2” X 4” POST MARKED 40.10 IN MOUND WITH PITS UPON
THE EASTERN BOUNDARY OF SAID RANCHO SAN JUAN CAJON DE SANTA ANA; THENCE ALONG
SAME NORTH 4° WEST 47.51 CHAINS TO THE PLACE OF BEGINNING.



EXCEPTING THEREFROM THE WESTERLY 200 ACRES OF THE ABOVE DESCRIBED TRACT.



ALSO EXCEPTING THEREFROM ANY PORTION LYING NORTHERLY OF THE AGREED BOUNDARY
LINE AND BOUNDED WESTERLY BY LINE, RUNNING NORTH 28° 30’ EAST FROM THE WESTERN
TERMINUS OF SAID LINE AS ESTABLISHED BY AGREEMENT BETWEEN THE UNION OIL COMPANY
OF CALIFORNIA AND THE GRAHAM-LOFTUS OIL COMPANY, RECORDED JUNE 10, 1905 IN BOOK
120, PAGE 223 OF DEEDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THE LAND CONVEYED TO THE METROPOLITAN WATER DISTRICT
OF SOUTHERN CALIFORNIA BY DEED RECORDED JUNE 28, 1940 IN BOOK




Page 1 of 4









 







1051, PAGE 301 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER, DESCRIBED AS FOLLOWS:





	 	 	BEGINNING AT A POINT ON THE WESTERLY BOUNDARY OF SAID LANDS OWNED BY
UNION OIL COMPANY OF CALIFORNIA, WHICH WESTERLY BOUNDARY IS ALSO THE
EASTERLY BOUNDARY OF THAT CERTAIN 200-ACRE TRACT CONVEYED BY SAID UNION
OIL COMPANY OF CALIFORNIA TO GEORGE CHAFFEY BY DEED DATED APRIL 25, 1899,
RECORDED JUNE 20, 1899 IN BOOK 44, PAGE 79 OF DEEDS, WHICH POINT OF
BEGINNING IS THE POINT OF INTERSECTION OF THE AFORESAID WESTERLY BOUNDARY
WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF CENTRAL AVENUE AS
THE SAME EXISTED ON MAY 23, 1940 BETWEEN BERRY STREET AND BREA CANYON
ROAD; THENCE NORTHEASTERLY ALONG A LINE FORMING AN ANGLE OF 73” 32’ 24”
WITH THE EASTERLY PROLONGATION OF THE CENTER LINE OF SAID CENTRAL AVENUE
AT SAID POINT OF INTERSECTION (ASSUMED AND TAKEN TO BEAR NORTH 15° 11’
16” EAST), A DISTANCE OF 839.60 FEET TO THE TRUE POINT OF BEGINNING;
THENCE NORTH 0° 10’ 11” EAST A DISTANCE OF 1250 FEET; THENCE SOUTH 89°
49’ 49” EAST A DISTANCE OF 500 FEET; THENCE SOUTH 65° 23’ 11” EAST A
DISTANCE OF 604.15 FEET; THENCE SOUTH 0° 10’ 11” WEST A DISTANCE OF 1000
FEET; THENCE NORTH 89° 49’ 49” WEST A DISTANCE OF 1050 FEET TO THE TRUE
POINT OF BEGINNING.




A1SO EXCEPTING THEREFROM THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED
RECORDED JUNE 10, 1957 IN BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE
OFFICE OF SAID COUNTY RECORDER DESCRIBED AS FOLLOWS:





	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED
FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2,
1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10’ 50” WEST
ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID
POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT 11B;
THENCE NORTH 9° 48’ 11” WEST 529.60 FEET TO A 2” X 2” STAKE AND THE TRUE
POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85° 48’ 16” WEST,
380.00 FEET TO A 2” X 2” STAKE; THENCE NORTH 4° 11’ 44” EAST 1750.00 FEET
TO A 2” X 2” STAKE; THENCE SOUTH 85° 48’ 16” EAST 380.00 FEET TO A 2” X
2” STAKE; THENCE SOUTH 4° 11’ 44” WEST 1750.00 FEET TO A 2” X 2” STAKE
AND THE TRUE POINT OF BEGINNING.




ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN DEED TO THE METROPOLITAN
WATER DISTRICT OF SOUTHERN CALIFORNIA RECORDED FEBRUARY 10, 1967 IN BOOK 8173,
PAGE 647 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN DEED TO THE BREA-OLINDA UNIFIED
SCHOOL DISTRICT OF ORANGE COUNTY, CALIFORNIA, RECORDED SEPTEMBER 11, 1968 IN
BOOK 8716, PAGE 437 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.




Page 2 of 4









 







ALSO EXCEPTING THEREFROM THAT PORTION DESCRIBED IN PARCEL 1 OF THE DEED TO THE
CITY OF BREA RECORDED JANUARY 16, 1969 IN BOOK 8846, PAGE 971 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM PARCELS A6471-4, A6471-5, A6471-6 AND A6471-7 OF THAT
CERTAIN FINAL ORDER OF CONDEMNATION, SUPERIOR COURT CASE NO. 156220, A
CERTIFIED COPY OF WHICH WAS RECORDED SEPTEMBER 29, 1970 IN BOOK 9417, PAGE 364
OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM PARCELS 1 AND 2 AS SHOWN ON PARCEL MAP NO. 86-243,
FILED IN BOOK 214, PAGES 28 THROUGH 31 INCLUSIVE OF PARCEL MAPS, IN THE OFFICE
OF SAID COUNTY RECORDER, TOGETHER WITH THE WEST HALF OF ASSOCIATED
ROAD, 80.00
FEET WIDE, AS SHOWN SAID PARCEL MAP NO. 86-243, ADJOINING SAID PARCELS 1 AND 2
ON THE EAST, AND BOUND NORTHEASTERLY BY THE NORTHEASTERLY LINE OF SAID PARCEL
MAP NO. 86-243, AND BOUND SOUTHERLY BY THE CENTERLINE OF LAMBERT ROAD AS SHOWN
ON SAID PARCEL MAP NO. 86-243.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF PARCEL MAP
NO. 83-1179. AS SHOWN ON A MAP FILED IN BOOK 218, PAGES 1 THROUGH 4 INCLUSIVE
OF PARCEL MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12562, AS SHOWN
ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF MISCELLANEOUS MAPS,
IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN TRACT NO. 12563, AS
SHOWN ON A MAP FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF
MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THE LAND DESCRIBED IN THE DEED TO THE CITY OF BREA
RECORDED MARCH 29, 1996 AS INSTRUMENT NO. 19960153320 OF OFFICIAL RECORDS, IN
THE OFFICE OF SAID COUNTY RECORDER.



ALSO EXCEPTING THEREFROM THAT PORTION INCLUDED WITHIN PARCEL 1 OF A COUNTY OF
ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054, RECORDED AUGUST 13, 2001 AS
INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY
RECORDER.




PARCEL 2



PARCEL 1 OF A COUNTY OF ORANGE LOT LINE ADJUSTMENT NO. LL 2000-054,
RECORDED AUGUST 13, 2001 AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS,
IN THE OFFICE OF SAID COUNTY RECORDER.



EXCEPTING THEREFROM THAT PORTION CONVEYED TO BREA-OLINDA UNIFIED SCHOOL
DISTRICT BY GIFT DEED RECORDED FEBRUARY 25, 2003 AS INSTRUMENT NO.
2003000207265 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.




Page 3 of 4









 







ALSO EXCEPTING THEREFROM THAT PORTION CONVEYED TO THE COUNTY OF ORANGE BY
GRANT DEED RECORDED JUNE 4, 2003 AS INSTRUMENT NO. 2003000648901 OF OFFICIAL
RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER.



PARCEL 3



THE LAND CONVEYED TO BREA CHEMICALS, INC., BY DEED RECORDED JUNE 10, 1957 IN
BOOK 3936, PAGE 314 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER
DESCRIBED AS FOLLOWS:





	 	 	BEGINNING AT A POINT IN THE SOUTHERLY LINE OF THE LAND DESCRIBED IN DEED
FROM THE STEARNS RANCHOS COMPANY, A CORPORATION, TO UNION OIL COMPANY OF
CALIFORNIA, A CORPORATION, DATED AUGUST 31, 1899, RECORDED SEPTEMBER 2,
1899 IN BOOK 44, PAGE 250 OF SAID DEEDS, DISTANT SOUTH 89° 10’ 50” WEST
ALONG SAID LINE 3131.98 FEET FROM THE SOUTHEAST CORNER OF SAID LAND, SAID
POINT OF BEGINNING BEING MONUMENTED BY UNION OIL COMPANY MONUMENT 11B;
THENCE NORTH 9° 48’ 11” WEST 529.60 FEET TO A 2”
X 2” STAKE AND THE TRUE
POINT OF BEGINNING FOR THIS DESCRIPTION; THENCE NORTH 85° 48’ 16” WEST,
380.00 FEET TO A 2” X 2” STAKE; THENCE NORTH 4° 11’ 44” EAST 1750.00 FEET
TO A 2” X 2” STAKE; THENCE SOUTH 85° 48’ 16” EAST 380.00 FEET TO A 2” X
2” STAKE; THENCE SOUTH 4° 11’ 44” WEST 1750.00 FEET TO A 2” X 2” STAKE
AND THE TRUE POINT OF BEGINNING.




THE ABOVE DESCRIPTION WAS COMPILED FROM INFORMATION SUPPLIED BY FIRST
AMERICAN TITLE COMPANY PRELIMINARY REPORT NO. 2033661, DATED JULY 16, 2003.



EXHIBIT “ ‘Al’
SITE DEPICTION ”, IS FOR INFORMATIONAL PURPOSES ONLY.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.




	 	 	 	 	 
		 	PREPARED BY: THE KEITH COMPANIES UNDER
THE DIRECTION OF:

	 	 	 	 
	 	

	 	KATHLEEN SUSAN
TETREAULT P.L.S. 7297 MY
LICENSE EXPIRES 12/31/2004

	 	 	 	 
	 	August 20,
2003

	 	JN: 13207.00







Page 4 of 4









 












 









 














 









 














 









 














 









 









ATTACHMENT 2 TO EASEMENT AGREEMENT




DEFINITION OF GOVERNMENTAL AGENCY)




     “Governmental Agency” shall mean the State of California (“State”) and any
governmental body of the State, and shall also include all “public” and
“quasi-governmental” entities within the State; and, any federal agency or body
with jurisdiction over the Land, or any portion thereof, for any reason or
purpose.



Attachment 2


Page 1 of 1





 









 






EXHIBIT N




Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	APl No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 9
	 	 	059-06952	 	 	 	7/24/00	 	 	 	7/9/01	 	 	SI
	Stearns 12
	 	 	059-06955	 	 	 	6/4/00	 	 	 	8/10/01	 	 	Prod
	Stearns 13
	 	 	059-06956	 	 	 	1/26/01	 	 	 	7/17/01	 	 	Prod
	Stearns 14
	 	 	059-06957	 	 	 	11/8/00	 	 	 	1/1/01	 	 	SI
	Stearns 15
	 	 	059-06958	 	 	 	1/3/01	 	 	 	3/8/01	 	 	SI
	Stearns 18
	 	 	059-06961	 	 	 	8/1/01	 	 	 	10/18/01	 	 	SI
	Stearns 21
	 	 	059-06964	 	 	 	5/22/01	 	 	 	7/15/01	 	 	SI
	Stearns 26
	 	 	059-06969	 	 	 	9/25/02	 	 	 	8/9/03	 	 	SI
	Stearns 27
	 	 	059-06970	 	 	 	4/23/03	 	 	 	7/10/03	 	 	SI
	Stearns 28
	 	 	059-06971	 	 	 	7/18/03	 	 	 	8/21/03	 	 	SI
	Stearns 29
	 	 	059-06972	 	 	 	8/16/03	 	 	 	10/22/03	 	 	SI
	Stearns 32RD
	 	 	Same	 	 	5/2/57	 	 	 	5/19/57	 	 	Prod
	Stearns 33
	 	 	059-07121	 	 	 	8/15/06	 	 	 	9/2/07	 	 	SI
	Stearns 34
	 	 	059-07122	 	 	 	9/4/06	 	 	 	3/2/08	 	 	Prod
	Stearns 36
	 	 	059-07124	 	 	 	7/27/14	 	 	 	8/22/14	 	 	SI
	Stearns 37
	 	 	059-07125	 	 	 	7/23/07	 	 	 	8/20/08	 	 	Prod
	Stearns 38
	 	 	059-07682	 	 	 	9/23/08	 	 	 	7/27/09	 	 	SI
	Stearns 39
	 	 	059-07683	 	 	 	11/5/07	 	 	 	5/19/09	 	 	SI
	Stearns 40
	 	 	059-07684	 	 	 	4/23/08	 	 	 	4/26/09	 	 	SI
	Stearns 45
	 	 	059-07689	 	 	 	1/16/09	 	 	 	11/1/56	 	 	SI
	Stearns 46
	 	 	059-07690	 	 	 	2/22/09	 	 	 	12/5/09	 	 	Prod
	Stearns 50
	 	 	059-07695	 	 	 	8/20/09	 	 	 	4/10/10	 	 	SI
	Stearns 51
	 	 	059-07696	 	 	 	2/9/10	 	 	 	4/23/12	 	 	SI
	Stearns 51 A
	 	 	059-00931	 	 	 	9/4/64	 	 	 	9/17/64	 	 	Prod
	Stearns 52
	 	 	059-07697	 	 	 	2/25/10	 	 	 	2/15/13	 	 	Prod
	Stearns 52A
	 	 	059-00932	 	 	 	7/13/64	 	 	 	7/29/64	 	 	SI
	Stearns 53
	 	 	059-07698	 	 	 	8/15/12	 	 	 	1/28/14	 	 	Prod
	Stearns 54
	 	 	059-07699	 	 	 	6/17/14	 	 	 	12/17/15	 	 	SI
	Stearns 55
	 	 	059-07700	 	 	 	3/30/18	 	 	 	11/2/19	 	 	SI
	Stearns 55A
	 	 	059-00933	 	 	 	6/1/63	 	 	 	6/13/63	 	 	SI
	Stearns 57
	 	 	059-07702	 	 	 	11/14/21	 	 	 	5/11/21	 	 	SI
	Stearns 58
	 	 	059-07703	 	 	 	10/14/20	 	 	 	1/31/21	 	 	Prod







Exhibit N


Page 1 of 14





 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 59
	 	 	059-07704	 	 	 	6/9/20	 	 	 	10/3/20	 	 	Prod
	Stearns 60
	 	 	059-07705	 	 	 	5/29/20	 	 	 	11/25/20	 	 	Prod
	Stearns 61
	 	 	059-07706	 	 	 	6/16/20	 	 	 	2/17/21	 	 	RD
	Stearns 61RD
	 	 	Same	 	 	9/7/20	 	 	 	9/18/20	 	 	SI
	Stearns 62
	 	 	059-07707	 	 	 	7/1/20	 	 	 	9/30/20	 	 	RD
	Stearns 62RD
	 	 	Same	 	 	6/2/48	 	 	 	6/26/48	 	 	SI
	Stearns 63A
	 	 	059-07709	 	 	 	3/21/49	 	 	 	4/16/49	 	 	Prod
	Stearns 64
	 	 	059-07710	 	 	 	12/20/20	 	 	 	3/9/21	 	 	Prod
	Stearns 65A
	 	 	059-07713	 	 	 	9/11/26	 	 	 	12/30/26	 	 	Prod
	Stearns 66
	 	 	059-07712	 	 	 	1/15/26	 	 	 	8/31/26	 	 	SI
	Stearns 68
	 	 	059-07715	 	 	 	4/22/26	 	 	 	8/29/26	 	 	SI
	Stearns 69
	 	 	059-07716	 	 	 	1/25/27	 	 	 	9/27/27	 	 	Prod
	Stearns 71
	 	 	059-07718	 	 	 	12/20/27	 	 	 	7/8/28	 	 	Prod
	Stearns 72
	 	 	059-06831	 	 	 	6/22/42	 	 	 	7/16/42	 	 	SI
	Stearns 73
	 	 	059-06832	 	 	 	8/8/42	 	 	 	8/27/42	 	 	SI
	Stearns 74
	 	 	059-07719	 	 	 	9/13/42	 	 	 	10/9/42	 	 	Prod
	Stearns 75
	 	 	059-06833	 	 	 	12/30/42	 	 	 	3/12/43	 	 	RD
	Stearns 75RD
	 	 	Same	 	 	10/11/93	 	 	 	10/23/93	 	 	Prod
	Stearns 76
	 	 	059-06834	 	 	 	1/28/43	 	 	 	4/24/43	 	 	SI
	Stearns 77
	 	 	059-06835	 	 	 	3/28/43	 	 	 	5/3/43	 	 	SI
	Stearns 78
	 	 	059-06836	 	 	 	5/30/43	 	 	 	6/16/43	 	 	Inject
	Stearns 79
	 	 	059-06837	 	 	 	4/4/57	 	 	 	4/12/57	 	 	Prod
	Stearns 80
	 	 	059-06838	 	 	 	11/25/46	 	 	 	12/27/46	 	 	Prod
	Stearns 81
	 	 	059-06839	 	 	 	5/31/44	 	 	 	6/13/46	 	 	RD
	Stearns 81RD
	 	 	Same	 	 	12/10/63	 	 	 	12/19/63	 	 	Prod
	Stearns 83
	 	 	059-06841	 	 	 	8/21/43	 	 	 	9/25/43	 	 	Prod
	Stearns 84
	 	 	059-06842	 	 	 	12/23/43	 	 	NC	 	RD
	Stearns 84RD
	 	 	Same	 	 	N/A	 	 	 	3/18/44	 	 	SI
	Stearns 85
	 	 	059-06843	 	 	 	2/8/45	 	 	 	7/14/45	 	 	SI
	Stearns 86
	 	 	059-06844	 	 	 	5/26/44	 	 	 	7/7/44	 	 	Prod
	Stearns 87
	 	 	059-06845	 	 	 	6/23/44	 	 	 	9/4/46	 	 	Prod
	Stearns 88
	 	 	059-06846	 	 	 	6/11/44	 	 	 	9/30/46	 	 	Prod
	Stearns 89
	 	 	059-00044	 	 	 	10/4/46	 	 	 	10/24/46	 	 	Prod
	Stearns 90
	 	 	059-06847	 	 	 	12/5/60	 	 	 	12/17/60	 	 	Prod
	Stearns 91
	 	 	059-06848	 	 	 	10/28/46	 	 	 	11/21/46	 	 	Prod
	Stearns 93
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 







Exhibit N


Page 2 of 14




 








 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 94
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 95
	 	 	059-06849	 	 	 	1/2/47	 	 	 	1/12/47	 	 	SI
	Stearns 96
	 	 	059-06850	 	 	 	12/18/46	 	 	 	12/30/46	 	 	SI
	Stearns 97
	 	 	059-06855	 	 	 	1/15/47	 	 	 	1/23/47	 	 	SI
	Stearns 98
	 	 	059-06856	 	 	 	11/8/46	 	 	 	11/22/46	 	 	SI
	Stearns 99
	 	 	059-06857	 	 	 	7/30/47	 	 	 	8/17/47	 	 	Inject
	Stearns 100
	 	 	059-06858	 	 	 	10/27/47	 	 	 	11/23/47	 	 	Prod
	Stearns 101
	 	 	059-06859	 	 	 	3/12/48	 	 	 	4/9/48	 	 	Prod
	Stearns 102
	 	 	059-06860	 	 	 	7/29/48	 	 	 	8/27/48	 	 	SI
	Stearns 103
	 	 	059-07672	 	 	 	9/21/47	 	 	 	11/11/47	 	 	SI
	Stearns 104
	 	 	059-06861	 	 	 	3/23/48	 	 	 	4/16/48	 	 	SI
	Stearns 105
	 	 	059-06862	 	 	 	12/10/47	 	 	 	1/18/48	 	 	SI
	Stearns 106
	 	 	059-06863	 	 	 	2/11/48	 	 	 	4/3/48	 	 	Prod
	Stearns 107
	 	 	059-06864	 	 	 	4/17/48	 	 	 	5/21/48	 	 	SI
	Stearns 108
	 	 	059-06865	 	 	 	5/27/48	 	 	 	6/16/48	 	 	Prod
	Stearns 109
	 	 	059-06866	 	 	 	3/29/49	 	 	 	6/7/49	 	 	SI
	Stearns 110
	 	 	059-06867	 	 	 	9/10/48	 	 	 	10/12/48	 	 	SI
	Stearns 111
	 	 	059-06868	 	 	 	10/30/48	 	 	 	11/29/48	 	 	Prod
	Stearns 112
	 	 	059-06869	 	 	 	10/24/48	 	 	 	11/17/48	 	 	Prod
	Stearns 113
	 	 	059-07673	 	 	 	12/12/48	 	 	 	2/4/49	 	 	Prod
	Stearns 114
	 	 	059-06870	 	 	 	12/12/48	 	 	 	1/8/49	 	 	Prod
	Stearns 116
	 	 	059-06872	 	 	 	6/4/49	 	 	 	6/24/49	 	 	Prod
	Stearns 117
	 	 	059-06873	 	 	 	7/4/49	 	 	 	8/11/49	 	 	SI
	Stearns 118
	 	 	059-06874	 	 	 	4/22/51	 	 	 	5/19/51	 	 	Prod
	Stearns 119
	 	 	059-06875	 	 	 	2/16/52	 	 	 	3/20/52	 	 	Prod
	Stearns 120
	 	 	059-06901	 	 	 	7/9/51	 	 	 	8/5/51	 	 	Prod
	Stearns 121
	 	 	059-06902	 	 	 	9/25/51	 	 	 	10/19/51	 	 	Prod
	Stearns 122
	 	 	059-06903	 	 	 	10/26/51	 	 	 	11/10/51	 	 	Prod
	Stearns 123
	 	 	059-06904	 	 	 	11/29/51	 	 	 	1/10/52	 	 	Prod
	Stearns 124
	 	 	059-06905	 	 	 	3/29/52	 	 	 	4/27/52	 	 	SI
	Stearns 125
	 	 	059-06906	 	 	 	4/29/52	 	 	 	5/18/52	 	 	SI
	Stearns 127
	 	 	059-06908	 	 	 	2/15/53	 	 	 	3/10/53	 	 	Prod
	Stearns 128
	 	 	059-06909	 	 	 	11/14/51	 	 	 	11/24/51	 	 	Prod
	Stearns 129
	 	 	059-06876	 	 	 	5/2/53	 	 	 	5/25/53	 	 	Prod
	Stearns 130
	 	 	059-06877	 	 	 	8/9/53	 	 	 	9/5/53	 	 	Prod
	Stearns 131
	 	 	059-06878	 	 	 	9/9/53	 	 	 	9/14/53	 	 	Prod







Exhibit N


Page 3 of 14




 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 132
	 	 	059-06879	 	 	 	8/26/53	 	 	 	9/9/53	 	 	Prod
	Stearns 133
	 	 	059-06880	 	 	 	2/12/54	 	 	 	2/20/54	 	 	Prod
	Stearns 134
	 	 	059-06881	 	 	 	1/24/54	 	 	 	2/11/54	 	 	Prod
	Stearns 135
	 	 	059-06882	 	 	 	9/16/53	 	 	 	9/26/53	 	 	Prod
	Stearns 136
	 	 	059-06883	 	 	 	3/16/54	 	 	 	3/25/54	 	 	Prod
	Stearns 137
	 	 	059-06884	 	 	 	2/23/54	 	 	 	3/11/54	 	 	Prod
	Stearns 138
	 	 	059-06885	 	 	 	3/30/54	 	 	 	4/28/54	 	 	SI
	Stearns 139
	 	 	059-06886	 	 	 	11/6/56	 	 	 	11/19/56	 	 	Prod
	Stearns 140 OH
	 	 	059-06887	 	 	 	11/26/56	 	 	NC	 	RD
	Stearns 140RD1
	 	 	Same	 	 	N/A	 	 	NC	 	RD
	Stearns 140RD2
	 	 	Same	 	 	1/10/57	 	 	 	1/14/57	 	 	SI
	Stearns 141
	 	 	059-06888	 	 	 	12/7/54	 	 	 	12/24/54	 	 	Inject
	Stearns 142
	 	 	059-06889	 	 	 	12/28/54	 	 	 	1/14/55	 	 	Prod
	Stearns 143
	 	 	059-06890	 	 	 	1/16/55	 	 	 	1/23/55	 	 	SI
	Stearns 144
	 	 	059-06891	 	 	 	10/18/56	 	 	 	10/31/56	 	 	Prod
	Stearns 145
	 	 	059-06892	 	 	 	2/14/57	 	 	 	2/23/57	 	 	SI
	Stearns 146
	 	 	059-06893	 	 	 	3/7/57	 	 	 	3/17/57	 	 	SI
	Stearns 147
	 	 	059-06894	 	 	 	3/23/57	 	 	 	3/30/57	 	 	Prod
	Stearns 148
	 	 	059-06895	 	 	 	10/6/57	 	 	 	10/11/57	 	 	SI
	Stearns 149
	 	 	059-06896	 	 	 	1/16/57	 	 	 	2/9/57	 	 	Prod
	Stearns 150
	 	 	059-06897	 	 	 	4/18/57	 	 	 	4/30/57	 	 	Prod
	Stearns 151
	 	 	059-06898	 	 	 	10/29/57	 	 	 	11/9/57	 	 	Prod
	Stearns 152
	 	 	059-06899	 	 	 	5/19/57	 	 	 	5/27/57	 	 	SI
	Stearns 153
	 	 	059-06900	 	 	 	6/23/57	 	 	 	6/30/57	 	 	Prod
	Stearns 154
	 	 	059-06910	 	 	 	6/13/57	 	 	 	6/20/57	 	 	Prod
	Stearns 155
	 	 	059-06911	 	 	 	5/31/57	 	 	 	6/12/57	 	 	Prod
	Stearns 156
	 	 	059-06912	 	 	 	7/22/57	 	 	 	8/1/57	 	 	Prod
	Stearns 157
	 	 	059-06913	 	 	 	7/5/57	 	 	 	7/17/57	 	 	SI
	Stearns 158
	 	 	059-06914	 	 	 	8/24/57	 	 	 	9/3/57	 	 	SI
	Stearns 159
	 	 	059-06915	 	 	 	9/8/57	 	 	 	9/18/57	 	 	Prod
	Stearns 160
	 	 	059-06916	 	 	 	9/20/57	 	 	 	10/8/57	 	 	Prod
	Stearns 161
	 	 	059-06917	 	 	 	8/6/57	 	 	 	8/22/57	 	 	Prod
	Stearns 162 OH
	 	 	059-00934	 	 	 	11/10/57	 	 	 	11/19/57	 	 	RD
	Stearns 162RD
	 	 	Same	 	 	9/17/64	 	 	 	10/1/64	 	 	SI
	Stearns 163
	 	 	059-06918	 	 	 	10/16/57	 	 	 	10/24/57	 	 	Prod
	Stearns 164
	 	 	059-06919	 	 	 	3/8/60	 	 	 	3/16/60	 	 	Prod







Exhibit N


Page 4 of 14




 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 165
	 	 	059-06920	 	 	 	3/21/60	 	 	 	4/2/60	 	 	Prod
	Stearns 166
	 	 	059-06921	 	 	 	5/16/60	 	 	 	5/24/60	 	 	Prod
	Stearns 167
	 	 	059-06922	 	 	 	11/21/57	 	 	 	11/29/57	 	 	Prod
	Stearns 168
	 	 	059-06923	 	 	 	2/20/60	 	 	 	3/2/60	 	 	Inject
	Stearns 169
	 	 	059-06924	 	 	 	12/12/57	 	 	 	1/12/58	 	 	Prod
	Stearns 170
	 	 	059-06925	 	 	 	6/13/60	 	 	 	6/28/60	 	 	Prod
	Stearns 171
	 	 	059-06926	 	 	 	12/19/60	 	 	 	12/29/60	 	 	Prod
	Stearns 172
	 	 	059-06927	 	 	 	5/2/60	 	 	 	5/12/60	 	 	Prod
	Stearns 173
	 	 	059-06928	 	 	 	5/28/60	 	 	 	6/12/60	 	 	Prod
	Stearns 174
	 	 	059-06929	 	 	 	4/6/60	 	 	 	4/26/60	 	 	Prod
	Stearns 175
	 	 	059-06930	 	 	 	2/26/60	 	 	 	4/24/60	 	 	Prod
	Stearns 176
	 	 	059-06931	 	 	 	7/5/60	 	 	 	7/27/60	 	 	Prod
	Stearns 177
	 	 	059-06932	 	 	 	8/1/60	 	 	 	8/23/60	 	 	Prod
	Stearns 178
	 	 	059-06933	 	 	 	8/24/60	 	 	 	9/5/60	 	 	Prod
	Stearns 179
	 	 	059-06934	 	 	 	1/10/61	 	 	 	1/23/61	 	 	Prod
	Stearns 180
	 	 	059-06935	 	 	 	9/6/60	 	 	 	9/20/60	 	 	Prod
	Stearns 181
	 	 	059-06936	 	 	 	11/1/60	 	 	 	11/13/60	 	 	Prod
	Stearns 182
	 	 	059-06937	 	 	 	10/18/60	 	 	 	10/31/60	 	 	Prod
	Stearns 183
	 	 	059-06938	 	 	 	10/6/60	 	 	 	10/17/60	 	 	Prod
	Stearns 184
	 	 	059-06939	 	 	 	9/23/60	 	 	 	10/5/60	 	 	Prod
	Stearns 185
	 	 	059-06940	 	 	 	8/6/60	 	 	 	9/1/60	 	 	Prod
	Stearns 186
	 	 	059-06941	 	 	 	2/21/61	 	 	 	3/7/61	 	 	Prod
	Stearns 187 OH
	 	 	059-06942	 	 	 	3/13/61	 	 	 	3/24/61	 	 	 	N/A	 
	Stearns 187RD
	 	 	Same	 	 	3/25/61	 	 	 	4/5/61	 	 	SI
	Stearns 188
	 	 	059-06943	 	 	 	12/30/60	 	 	 	1/9/61	 	 	Prod
	Stearns 189
	 	 	059-06944	 	 	 	12/25/63	 	 	 	1/9/64	 	 	Prod
	Stearns 190
	 	 	059-06945	 	 	 	11/19/63	 	 	 	12/2/63	 	 	Prod
	Stearns 191
	 	 	059-06946	 	 	 	1/30/61	 	 	 	2/20/61	 	 	Prod
	Stearns 192
	 	 	059-06947	 	 	 	10/14/61	 	 	 	11/3/61	 	 	Prod
	Stearns 193 OH
	 	 	059-06948	 	 	 	11/14/60	 	 	 	12/4/60	 	 	RD
	Stearns 193RD
	 	 	Same	 	 	7/28/73	 	 	 	8/7/73	 	 	SI
	Stearns 194
	 	 	059-06949	 	 	 	4/13/61	 	 	 	5/6/61	 	 	Prod
	Stearns 195
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 196
	 	 	059-06950	 	 	 	1/2/62	 	 	 	1/15/62	 	 	Prod
	Stearns 197
	 	 	059-07674	 	 	 	3/7/64	 	 	 	3/15/64	 	 	SI
	Stearns 198
	 	 	059-07675	 	 	 	7/1/63	 	 	 	7/21/63	 	 	Prod







Exhibit N


Page 5 of 14




 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 199
	 	 	059-07853	 	 	 	10/12/63	 	 	 	10/27/63	 	 	SI
	Stearns 200
	 	 	059-00926	 	 	 	12/6/63	 	 	 	12/17/63	 	 	SI
	Stearns 201
	 	 	059-07676	 	 	 	10/28/63	 	 	 	11/11/63	 	 	SI
	Stearns 202
	 	 	059-07852	 	 	 	11/14/64	 	 	 	1/5/65	 	 	SI
	Stearns 203
	 	 	059-07677	 	 	 	1/10/64	 	 	 	2/2/64	 	 	Prod
	Stearns 204
	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.
	Stearns 205
	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.
	Stearns 206
	 	 	059-07678	 	 	 	6/13/64	 	 	 	7/1/64	 	 	Prod
	Stearns 207
	 	 	059-00935	 	 	 	3/16/64	 	 	 	4/3/64	 	 	Prod
	Stearns 208
	 	 	059-07114	 	 	 	8/8/64	 	 	 	9/2/64	 	 	Prod
	Stearns 209
	 	 	059-07115	 	 	 	10/2/64	 	 	 	10/22/64	 	 	Prod
	Stearns 210
	 	 	059-00936	 	 	 	11/11/64	 	 	 	11/26/64	 	 	Prod
	Stearns 211
	 	 	059-07116	 	 	 	12/24/63	 	 	 	1/27/64	 	 	Prod
	Stearns 212
	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.
	Stearns 213
	 	 	059-07117	 	 	 	7/30/64	 	 	 	9/12/64	 	 	Prod
	Stearns 214
	 	 	059-07118	 	 	 	11/28/64	 	 	 	12/19/64	 	 	SI
	Stearns 215
	 	 	059-07119	 	 	 	12/21/64	 	 	 	1/15/65	 	 	Prod
	Stearns 216
	 	 	059-00045	 	 	 	5/13/65	 	 	 	5/23/65	 	 	SI
	Stearns 217 OH
	 	 	059-00937	 	 	 	5/1/65	 	 	 	5/13/65	 	 	RD
	Stearns 2 17RD1
	 	 	Same	 	 	1/17/73	 	 	 	1/25/73	 	 	RD
	Stearns 217RD2
	 	 	Same	 	 	11/21/88	 	 	 	12/10/88	 	 	Prod
	Stearns 218
	 	 	059-07120	 	 	 	4/6/65	 	 	 	5/1/65	 	 	Prod
	Stearns 219
	 	 	059-00046	 	 	 	12/13/66	 	 	 	1/6/67	 	 	SI
	Stearns 220
	 	 	059-20072	 	 	 	10/7/67	 	 	 	10/21/67	 	 	Prod
	Stearns 221
	 	 	059-20073	 	 	 	7/25/67	 	 	 	8/8/67	 	 	Prod
	Stearns 222
	 	 	059-20080	 	 	 	8/8/67	 	 	 	8/18/67	 	 	Prod
	Stearns 223
	 	 	059-20081	 	 	 	8/19/67	 	 	 	8/30/67	 	 	Prod
	Stearns 224
	 	 	059-20088	 	 	 	9/1/67	 	 	 	9/12/67	 	 	Prod
	Stearns 225
	 	 	059-20107	 	 	 	10/24/67	 	 	 	11/4/67	 	 	Prod
	Stearns 226
	 	 	059-20133	 	 	 	2/21/68	 	 	 	3/5/68	 	 	Prod
	Stearns 227
	 	 	059-20134	 	 	 	12/21/68	 	 	 	1/7/69	 	 	Prod
	Stearns 228
	 	 	059-20135	 	 	 	3/6/68	 	 	 	3/21/68	 	 	Prod
	Stearns 229
	 	 	059-20136	 	 	 	4/8/68	 	 	 	4/23/68	 	 	Prod
	Stearns 230
	 	 	059-20275	 	 	 	9/16/69	 	 	 	10/14/69	 	 	Prod
	Stearns 231
	 	 	059-20276	 	 	 	1/31/69	 	 	 	2/16/69	 	 	Prod
	Stearns 232
	 	 	059-20277	 	 	 	11/3/69	 	 	 	12/9/69	 	 	Prod







Exhibit N


Page 6 of 14




 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 233
	 	 	059-20274	 	 	 	1/7/69	 	 	 	1/28/69	 	 	Prod
	Stearns 234
	 	 	059-20160	 	 	 	3/22/68	 	 	 	4/7/68	 	 	Prod
	Stearns 235
	 	 	059-20235	 	 	 	10/25/68	 	 	 	11/1/68	 	 	Prod
	Stearns 236 OH
	 	 	059-20310	 	 	 	3/21/69	 	 	 	3/28/69	 	 	RD
	Stearns 236RD
	 	 	Same	 	 	3/21/69	 	 	 	4/12/69	 	 	Prod
	Stearns 237
	 	 	059-20278	 	 	 	5/28/69	 	 	 	6/12/69	 	 	Prod
	Stearns 238
	 	 	059-20314	 	 	 	4/15/69	 	 	 	5/5/69	 	 	Prod
	Stearns 239
	 	 	059-20315	 	 	 	5/7/69	 	 	 	5/27/69	 	 	Prod
	Stearns 240
	 	 	059-20303	 	 	 	3/4/69	 	 	 	3/19/69	 	 	Prod
	Stearns 241
	 	 	059-20321	 	 	 	6/13/69	 	 	 	6/25/69	 	 	Prod
	Stearns 242
	 	 	059-20322	 	 	 	6/26/69	 	 	 	7/13/69	 	 	Prod
	Stearns 243
	 	 	059-20323	 	 	 	7/14/69	 	 	 	7/29/69	 	 	Prod
	Stearns 244
	 	 	059-20370	 	 	 	10/28/69	 	 	 	11/1/69	 	 	Prod
	Stearns 245
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 246
	 	 	059-20360	 	 	 	8/11/69	 	 	 	8/29/69	 	 	SI
	Stearns 247
	 	 	059-20361	 	 	 	9/2/69	 	 	 	9/14/69	 	 	Prod
	Stearns 248
	 	 	059-20362	 	 	 	7/31/69	 	 	 	8/8/69	 	 	Prod
	Stearns 249
	 	 	059-20371	 	 	 	10/15/69	 	 	 	10/24/69	 	 	Prod
	Stearns 250
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 251
	 	 	059-20455	 	 	 	7/11/70	 	 	 	7/27/70	 	 	Prod
	Stearns 252
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 253
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 254 OH
	 	 	059-20457	 	 	 	7/28/70	 	 	 	9/4/70	 	 	RD
	Stearns 254RD
	 	 	Same	 	 	9/5/70	 	 	 	9/12/70	 	 	Prod
	Stearns 255
	 	 	059-20436	 	 	 	4/21/70	 	 	 	4/24/70	 	 	Prod
	Stearns 256
	 	 	059-20437	 	 	 	4/15/70	 	 	 	4/20/70	 	 	Prod
	Stearns 257
	 	 	059-20438	 	 	 	5/1/70	 	 	 	5/5/70	 	 	SI
	Stearns 258
	 	 	059-20439	 	 	 	4/28/70	 	 	 	5/1/70	 	 	Prod
	Stearns 259
	 	 	059-20450	 	 	 	5/27/70	 	 	 	6/9/70	 	 	Prod
	Stearns 260
	 	 	059-20451	 	 	 	5/6/70	 	 	 	5/26/70	 	 	Prod
	Stearns 261
	 	 	059-20454	 	 	 	6/11/70	 	 	 	6/30/70	 	 	Prod
	Stearns 262
	 	 	059-20521	 	 	 	9/11/71	 	 	 	9/15/71	 	 	Prod
	Stearns 263
	 	 	059-20522	 	 	 	8/31/71	 	 	 	9/3/71	 	 	Prod
	Stearns 264
	 	 	059-20523	 	 	 	8/28/71	 	 	 	8/31/71	 	 	SI
	Stearns 265
	 	 	059-20524	 	 	 	9/3/71	 	 	 	9/7/71	 	 	SI
	Stearns 266
	 	 	059-20525	 	 	 	9/7/71	 	 	 	9/11/71	 	 	SI







Exhibit N


Page 7 of 14




 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 267
	 	 	059-20537	 	 	 	9/7/71	 	 	 	9/16/71	 	 	SI
	Stearns 268
	 	 	059-20643	 	 	 	8/12/73	 	 	 	8/21/73	 	 	Prod
	Stearns 269
	 	 	059-20843	 	 	 	8/13/76	 	 	 	8/26/76	 	 	SI
	Stearns 270
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 271
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 273
	 	 	059-21402	 	 	 	12/12/88	 	 	 	1/15/89	 	 	Prod
	Stearns 274
	 	 	059-21406	 	 	 	8/15/89	 	 	 	10/12/89	 	 	Prod
	Stearns 275
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 276
	 	 	059-21407	 	 	 	7/22/89	 	 	 	8/21/89	 	 	Prod
	Stearns 277
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 278
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	N.D.	 
	Stearns 279 OH
	 	 	059-21497	 	 	 	3/31/93	 	 	 	4/13/93	 	 	RD
	Stearns 279RD
	 	 	Same	 	 	4/16/93	 	 	 	4/23/93	 	 	SI
	Stearns 280
	 	 	059-21529	 	 	 	10/25/96	 	 	 	12/7/96	 	 	Prod
	Stearns 281
	 	 	059-21530	 	 	 	10/4/96	 	 	 	10/23/96	 	 	Prod
	Stearns 282
	 	 	059-21534	 	 	 	2/11/97	 	 	 	2/26/97	 	 	Prod
	Stearns 283
	 	 	059-21531	 	 	 	12/28/96	 	 	 	1/7/97	 	 	Inject
	Stearns 284
	 	 	059-21532	 	 	 	1/9/97	 	 	 	1/21/97	 	 	Inject
	Stearns 285
	 	 	059-21533	 	 	 	12/14/96	 	 	 	12/25/96	 	 	Prod
	Stearns 286
	 	 	059-21535	 	 	 	1/25/97	 	 	 	2/8/97	 	 	Prod
	Stearns 287
	 	 	059-21536	 	 	 	3/22/97	 	 	 	4/3/97	 	 	Inject
	Stearns 288
	 	 	059-21537	 	 	 	4/7/97	 	 	 	4/17/97	 	 	Prod
	Stearns 289
	 	 	059-21538	 	 	 	3/1/97	 	 	 	3/12/97	 	 	Prod
	Stearns 290
	 	 	059-21540	 	 	 	5/24/97	 	 	 	6/11/97	 	 	Inject
	Stearns 291
	 	 	059-21539	 	 	 	3/15/97	 	 	 	3/25/97	 	 	Inject
	Stearns 292
	 	 	059-21541	 	 	 	4/23/97	 	 	 	5/2/97	 	 	Inject
	Stearns 293
	 	 	059-21542	 	 	 	3/27/97	 	 	 	4/15/97	 	 	Inject
	Stearns 294
	 	 	059-21543	 	 	 	5/7/97	 	 	 	5/21/97	 	 	Inject
	Stearns 295
	 	 	059-21544	 	 	 	6/15/97	 	 	 	8/30/97	 	 	Prod
	Stearns 296
	 	 	059-21545	 	 	 	7/2/97	 	 	 	7/17/97	 	 	Prod
	Stearns 297
	 	 	059-21550	 	 	 	1/24/98	 	 	 	3/11/98	 	 	Prod
	Stearns 298
	 	 	059-21551	 	 	 	1/5/98	 	 	 	2/13/98	 	 	Prod
	Stearns 299
	 	 	059-21549	 	 	 	12/15/97	 	 	 	1/17/98	 	 	Prod
	Stearns 301
	 	 	059-21627	 	 	 	11/30/01	 	 	 	1/5/02	 	 	Inject
	Stearns 302
	 	 	059-21629	 	 	 	11/19/01	 	 	 	1/5/02	 	 	Inject
	Stearns 304
	 	 	059-21628	 	 	 	10/29/01	 	 	 	12/3/01	 	 	Prod







Exhibit N


Page 8 of 14




 









 








Brea - Olinda Field: Well Information




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 309
	 	 	059-21630	 	 	 	11/8/01	 	 	 	12/3/01	 	 	Inject







Exhibit N


Page 9 of 14




 









 








P & A LIST




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	WelI
	 	APl No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 1
	 	 	059-07018	 	 	 	2/8/00	 	 	 	2/10/01	 	 	Abd
	Stearns 2
	 	 	059-07019	 	 	 	3/20/00	 	 	 	8/10/00	 	 	Abd
	Stearns 3
	 	 	059-07020	 	 	 	3/16/00	 	 	 	6/10/00	 	 	Abd
	Stearns 4
	 	 	059-07021	 	 	 	5/30/02	 	 	 	9/4/02	 	 	Abd
	Stearns 5
	 	 	059-07022	 	 	 	6/26/00	 	 	 	5/18/01	 	 	Abd
	Stearns 6
	 	 	059-07023	 	 	 	5/25/00	 	 	 	4/24/01	 	 	Abd
	Stearns 7
	 	 	059-07024	 	 	 	5/25/00	 	 	 	11/5/00	 	 	Abd
	Stearns 8
	 	 	059-07025	 	 	 	10/22/00	 	 	 	6/28/01	 	 	Abd
	Stearns 10
	 	 	059-06953	 	 	 	1/14/00	 	 	 	8/4/00	 	 	Abd
	Stearns 11
	 	 	059-06954	 	 	 	9/19/00	 	 	 	2/3/01	 	 	Abd
	Stearns 16
	 	 	059-06959	 	 	 	3/19/01	 	 	 	4/30/01	 	 	Abd
	Stearns 17
	 	 	059-06960	 	 	 	3/7/01	 	 	 	10/17/01	 	 	Abd
	Stearns 19
	 	 	059-06962	 	 	 	3/15/01	 	 	 	8/22/01	 	 	Abd
	Stearns 20
	 	 	059-06963	 	 	 	10/3/01	 	 	 	5/16/02	 	 	Abd
	Stearns 22
	 	 	059-06965	 	 	 	4/27/01	 	 	 	9/15/01	 	 	Abd
	Stearns 23
	 	 	059-06966	 	 	 	7/1/01	 	 	 	10/1/01	 	 	Abd
	Stearns 24
	 	 	059-06967	 	 	 	 	 	 	 	7/25/01	 	 	Abd
	Stearns 25
	 	 	059-06968	 	 	 	 	 	 	 	2/15/02	 	 	Abd
	Stearns 30
	 	 	059-06973	 	 	 	11/20/03	 	 	 	4/3/04	 	 	Abd
	Stearns 31
	 	 	059-06974	 	 	 	11/13/03	 	 	 	7/23/04	 	 	Abd
	Stearns 32
	 	 	059-06975	 	 	 	8/28/05	 	 	 	12/14/07	 	 	Abd
	Stearns 35
	 	 	059-07123	 	 	 	12/1/06	 	 	 	6/13/07	 	 	Abd
	Stearns 41
	 	 	059-07685	 	 	 	3/30/08	 	 	 	6/7/10	 	 	Abd
	Stearns 42
	 	 	059-07686	 	 	 	6/12/08	 	 	 	9/14/12	 	 	Abd
	Stearns 43
	 	 	059-07687	 	 	 	1/4/09	 	 	 	5/9/11	 	 	Abd
	Stearns 44
	 	 	059-07688	 	 	 	8/27/08	 	 	 	8/19/09	 	 	Abd
	Stearns 47A
	 	 	059-07691	 	 	 	5/3/09	 	 	 	10/11/09	 	 	Abd
	Stearns 47B
	 	 	059-07692	 	 	 	10/20/09	 	 	 	12/31/14	 	 	Abd
	Stearns 48
	 	 	059-07693	 	 	 	5/24/09	 	 	 	7/18/10	 	 	Abd
	Stearns 49
	 	 	059-07694	 	 	 	3/17/10	 	 	 	12/31/14	 	 	Abd
	Stearns 56
	 	 	059-07701	 	 	 	5/14/21	 	 	 	11/18/26	 	 	Abd
	Stearns 63
	 	 	059-07708	 	 	 	11/1/20	 	 	 	12/31/20	 	 	Abd
	Stearns 65
	 	 	059-07711	 	 	 	2/21/21	 	 	 	5/18/21	 	 	Abd
	Stearns 67
	 	 	059-07714	 	 	 	1/27/26	 	 	 	11/24/26	 	 	Abd
	Stearns 70
	 	 	059-07717	 	 	 	2/3/27	 	 	 	6/19/27	 	 	Abd







Page 9 of 14





 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	Date
	 	Date
	 	As of 8/8/02

	Stearns 82
	 	 	059-06840	 	 	 	3/22/21	 	 	Abdn	 	Abd
	Stearns 92
	 	 	059-01918	 	 	 	1/2/47	 	 	 	1/23/47	 	 	Abd
	Stearns 115
	 	 	059-06871	 	 	 	5/1/49	 	 	 	5/26/49	 	 	Abd
	Stearns 126 OH
	 	 	059-06907	 	 	 	3/16/53	 	 	NC	 	Abd
	Stearns 126RD
	 	 	Same	 	 	N/A	 	 	 	5/1/53	 	 	Abd
	Stearns 272
	 	 	059-20893	 	 	 	12/8/77	 	 	 	12/17/77	 	 	Abd
	Naranjal 1
	 	 	059-07083	 	 	 	7/25/10	 	 	 	2/29/11	 	 	Abd
	Naranjal 2
	 	 	059-07084	 	 	 	11/21/10	 	 	 	11/4/11	 	 	Abd
	Naranjal 4
	 	 	059-07086	 	 	 	4/9/14	 	 	 	8/26/14	 	 	Abd
	Naranjal 8
	 	 	059-07090	 	 	 	2/7/17	 	 	 	10/12/18	 	 	Abd
	Naranjal 10
	 	 	 	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 10A
	 	 	059-07092	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 11
	 	 	059-07093	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 12
	 	 	 	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 12A
	 	 	059-07094	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 42
	 	 	059-07101	 	 	 	8/13/48	 	 	 	8/20/48	 	 	Abd
	Naranjal 42A
	 	 	059-00005	 	 	 	9/23/48	 	 	 	9/30/48	 	 	Abd
	Naranjal 44
	 	 	059-07103	 	 	 	8/13/51	 	 	 	9/18/51	 	 	Abd
	Naranjal 50
	 	 	059-07108	 	 	 	11/4/54	 	 	 	11/30/54	 	 	Abd
	Naranjal 56
	 	 	059-20292	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 57
	 	 	 	 	 	 	9/16/71	 	 	 	9/26/71	 	 	Abd
	Naranjal 3
	 	 	059-07085	 	 	 	10/2/12	 	 	 	6/18/15	 	 	Abd
	Naranjal 13
	 	 	059-07096	 	 	 	4/13/28	 	 	 	 	 	 	Abd
	Naranjal 31-2
	 	 	059-05593	 	 	 	10/15/47	 	 	 	11/15/47	 	 	Abd
	Naranjal 33-3
	 	 	059-05595	 	 	 	2/2/48	 	 	 	3/2/48	 	 	Abd
	Naranjal 38-3
	 	 	059-05599	 	 	 	6/20/48	 	 	 	7/14/48	 	 	Abd
	Naranjal 40-34
	 	 	037-16460	 	 	 	 	 	 	 	 	 	 	Abd
	Naranjal 40-34RD
	 	 	Same	 	 	10/22/54	 	 	 	11/9/54	 	 	Abd
	Naranjal 43-2
	 	 	059-07102	 	 	 	1/12/49	 	 	 	3/7/49	 	 	Abd
	Naranjal 45-2
	 	 	059-07104	 	 	 	9/21/51	 	 	 	10/7/51	 	 	Abd
	Naranjal 52-3
	 	 	059-07110	 	 	 	7/19/60	 	 	 	7/31/60	 	 	Abd
	Naranjal 54-3
	 	 	059-07112	 	 	 	7/12/61	 	 	 	9/4/61	 	 	Abd







Page 10 of 14




 









 








	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Spud
	 	Compl.
	 	Status

	Well
	 	API No.
	 	date
	 	Date
	 	As of 8/8/02

	Naranjal 67-2
	 	 	059-20924	 	 	 	9/27/78	 	 	 	10/3/78	 	 	Abd







Page 11 of 14





 









 








OBO WELLS




Wells operated by AERA      **Data As of August 1, 2002




This list does not contain well status as we do not operate these wells and we
do not have access to
them.



Royalty
Interest Only - Subject to Oil & Gas Lease



Columbia



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Well No.	 	API Number	 	Spud Date	 	Comp Date	 	 	 	Sec.	 	Twnship	 	Range
	1
	 	 	059-07585	 	 	 	4/1/01	 	 	 	2/11/02	 	 	 	647.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	2
	 	 	059-07586	 	 	 	6/4/01	 	 	 	5/27/02	 	 	 	652.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	3
	 	 	059-07587	 	 	 	10/29/01	 	 	 	2/7/02	 	 	 	638.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	4
	 	 	059-07588	 	 	 	12/24/01	 	 	 	2/8/02	 	 	 	589.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	5
	 	 	059-07589	 	 	 	12/31/02	 	 	 	2/7/03	 	 	 	650.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	6
	 	 	059-07590	 	 	 	1/28/03	 	 	 	5/2/03	 	 	 	697.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	7
	 	 	059-07591	 	 	 	2/8/03	 	 	 	7/24/03	 	 	 	624.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	8
	 	 	059-07592	 	 	 	9/14/03	 	 	 	1903	 	 	 	670.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	9
	 	 	059-07593	 	 	 	10/10/03	 	 	 	7/30/04	 	 	 	 	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	10
	 	 	059-07594	 	 	 	10/3/03	 	 	 	1/8/04	 	 	 	674.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	11
	 	 	059-07595	 	 	 	1/8/04	 	 	 	6/8/04	 	 	 	701.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	12
	 	 	059-07596	 	 	 	9/8/04	 	 	 	1/31/05	 	 	 	656.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	13
	 	 	059-07597	 	 	 	10/20/05	 	 	 	12/1/06	 	 	 	536.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	14
	 	 	059-07598	 	 	 	12/20/06	 	 	 	5/12/08	 	 	 	598.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	15
	 	 	059-07599	 	 	 	11/30/06	 	 	 	2/10/08	 	 	 	551.5	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	16
	 	 	059-07600	 	 	 	1/1/08	 	 	 	6/1/09	 	 	 	535.7	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	17
	 	 	059-07626	 	 	 	4/24/08	 	 	 	6/22/12	 	 	 	521.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	18
	 	 	059-07627	 	 	 	1/1/08	 	 	 	12/7/09	 	 	 	521.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	19
	 	 	059-07628	 	 	 	1/1/09	 	 	 	3/29/11	 	 	 	523.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	20
	 	 	059-07629	 	 	 	8/12/09	 	 	 	1/11/11	 	 	 	523.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	21
	 	 	059-07630	 	 	 	12/28/08	 	 	 	3/23/12	 	 	 	533.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	21 RD
	 	 	059-07630	 	 	 	4/1/13	 	 	 	2/3/14	 	 	 	533.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	22
	 	 	059-07631	 	 	 	1/19/10	 	 	 	9/1/12	 	 	 	588.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	23
	 	 	059-07632	 	 	 	6/29/12	 	 	 	11/4/12	 	 	 	547.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	23 RD
	 	 	059-07632	 	 	 	11/18/12	 	 	 	2/23/14	 	 	 	547.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	24
	 	 	059-07633	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	25
	 	 	059-17634	 	 	 	5/8/14	 	 	 	9/3/15	 	 	 	592.3	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	26
	 	 	059-07635	 	 	 	10/1/15	 	 	 	7/31/17	 	 	 	644.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	27
	 	 	059-07636	 	 	 	2/29/16	 	 	 	2/7/17	 	 	 	588.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	28
	 	 	059-07637	 	 	 	8/16/16	 	 	 	9/14/19	 	 	 	586.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	29
	 	 	059-07638	 	 	 	2/22/17	 	 	 	4/6/18	 	 	 	537.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	30
	 	 	059-07639	 	 	 	9/29/17	 	 	 	12/30/18	 	 	 	574.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	31
	 	 	059-07640	 	 	 	10/8/18	 	 	 	4/20/20	 	 	 	652.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 







 









 






Wells
operated by AERA     **Data As of August 1, 2002



This list does not contain well status as we do not operate these wells and we
do not have access to
them.



Royalty
Interest Only - Subject to Oil & Gas Lease



Columbia



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Well No.	 	API Number	 	Spud Date	 	Comp Date	 	 	 	 	 	Sec.	 	Twnship	 	Range
	32
	 	 	059-07641	 	 	 	4/4/19	 	 	 	12/16/19	 	 	 	660.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	33
	 	 	059-07642	 	 	 	1/12/20	 	 	 	5/8/21	 	 	 	666.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	34
	 	 	059-07643	 	 	 	4/23/20	 	 	 	11/20/20	 	 	 	693.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	35
	 	 	059-07644	 	 	 	7/31/20	 	 	 	4/7/21	 	 	 	709.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	36
	 	 	059-07645	 	 	 	9/20/20	 	 	 	5/7/21	 	 	 	717.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	37
	 	 	059-07646	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	38
	 	 	059-07647	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	39
	 	 	059-07648	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	40
	 	 	059-07649	 	 	 	 	 	 	 	 	 	 	 	652.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	41
	 	 	059-07775	 	 	 	3/19/59	 	 	 	4/1/59	 	 	 	533.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	42
	 	 	059-07776	 	 	 	4/2/59	 	 	 	4/16/59	 	 	 	553.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	43
	 	 	059-07777	 	 	 	4/16/59	 	 	 	4/29/59	 	 	 	701.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	44
	 	 	059-07778	 	 	 	8/26/59	 	 	 	10/11/59	 	 	 	656.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	45
	 	 	059-07779	 	 	 	10/14/59	 	 	 	10/28/59	 	 	 	535.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	46
	 	 	059-07780	 	 	 	5/24/60	 	 	 	6/20/60	 	 	 	567.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	46RD
	 	 	059-07780	 	 	 	N/A	 	 	 	6/24/60	 	 	 	567.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	47
	 	 	059-07781	 	 	 	4/20/60	 	 	 	5/22/60	 	 	 	632.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	48
	 	 	059-07782	 	 	 	10/4/60	 	 	 	10/25/60	 	 	 	565.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	49
	 	 	059-07783	 	 	 	6/22/60	 	 	 	7/4/60	 	 	 	542.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	50
	 	 	059-07784	 	 	 	10/22/60	 	 	 	11/17/60	 	 	 	565.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	51
	 	 	059-07785	 	 	 	11/9/60	 	 	 	11/17/60	 	 	 	584.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	52
	 	 	059-07786	 	 	 	6/27/61	 	 	 	7/17/61	 	 	 	524.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	53
	 	 	059-07787	 	 	 	6/14/61	 	 	 	7/5/61	 	 	 	527.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	54
	 	 	059-07788	 	 	 	6/30/66	 	 	 	7/10/66	 	 	 	528.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	55
	 	 	059-07789	 	 	 	6/25/66	 	 	 	7/10/66	 	 	 	537.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	56
	 	 	059-07790	 	 	 	7/26/66	 	 	 	8/9/66	 	 	 	533.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	57
	 	 	059-00419	 	 	 	12/30/66	 	 	 	1/11/67	 	 	 	539.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	58
	 	 	059-07791	 	 	 	6/9/66	 	 	 	6/30/66	 	 	 	553.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	59
	 	 	059-00420	 	 	 	8/2/66	 	 	 	8/6/66	 	 	 	568.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	60
	 	 	059-07792	 	 	 	8/7/66	 	 	 	8/23/66	 	 	 	629.4	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	61
	 	 	059-00015	 	 	 	1/18/67	 	 	 	1/28/67	 	 	 	629.5	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	62
	 	 	059-07793	 	 	 	6/19/66	 	 	 	7/1/66	 	 	 	590.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	63
	 	 	059-07794	 	 	 	8/16/66	 	 	 	9/3/66	 	 	 	566.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	64
	 	 	059-00203	 	 	 	1/5/67	 	 	 	1/16/67	 	 	 	574.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 







 









 






Wells
operated by AERA     **Data As of August 1, 2002



This list does not contain well status as we do not operate these wells and we
do not have access to
them.



Royalty
Interest Only - Subject to Oil & Gas Lease



Columbia



	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Well No.	 	API Number	 	Spud Date	 	Comp Date	 	 	 	 	 	Sec.	 	Twnship	 	Range
	65
	 	 	059-07656	 	 	 	7/20/66	 	 	 	8/2/66	 	 	 	561.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	66
	 	 	059-00016	 	 	 	1/11/67	 	 	 	1/24/67	 	 	 	564.1	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	68
	 	 	059-20461	 	 	 	9/14/70	 	 	 	10/6/70	 	 	 	525.3	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	69
	 	 	059-20492	 	 	 	1/28/71	 	 	 	2/9/71	 	 	 	570.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	70
	 	 	059-20518	 	 	 	6/7/71	 	 	 	6/24/71	 	 	 	570.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	72
	 	 	059-21280	 	 	 	3/19/85	 	 	 	4/1/85	 	 	 	545.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	73
	 	 	059-21319	 	 	 	11/23/85	 	 	 	1/9/86	 	 	 	579.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	74
	 	 	059-21320	 	 	 	12/8/85	 	 	 	1/18/86	 	 	 	594.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 
	75
	 	 	059-21321	 	 	 	12/18/85	 	 	 	1/23/86	 	 	 	588.0	 	 	 	8	 	 	 	3S	 	 	 	9W	 







 









 






CHANGING HOUSE




LEGAL DESCRIPTION




THAT PORTION OF PARCEL 1 OF LOT LINE ADJUSTMENT NO. LL 2000-054, IN THE
UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE, STATE OF CALIFORNIA, RECORDED
AUGUST 13, 2001, AS INSTRUMENT NO. 20010557229 OF OFFICIAL RECORDS, ALSO AS
SHOWN ON RECORD OF SURVEY NO. 2001-1007 FILED IN BOOK 187, PAGES 02 THROUGH 07
INCLUSIVE OF RECORDS OF SURVEY, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY MORE PARTICULARLY DESCRIBED AS FOLLOWS:



BEGINNING AT THE NORTHEASTERLY CORNER OF SOUTHEAST QUARTER OF SECTION 7,
TOWNSHIP 3 SOUTH, RANGE 9 WEST, SAN BERNARDINO MERIDIAN IN THE RANCHO SAN JUAN
CAJON DE SANTA ANA, SAID POINT ALSO BEING THE EASTERLY TERMINUS OF A COURSE
SHOWN AS “ N 89°47’12” W 2289.20’ ”, AS SHOWN ON SAID RECORD OF SURVEY, SAID
COURSE BEARS NORTH 89°47’21” WEST FOR THIS DESCRIPTION;



THENCE
NORTH 30°25’00” WEST 2984.00 FEET TO THE TRUE POINT OF BEGINNING; 



THENCE NORTH 56°12’00” WEST 261.00 FEET;


THENCE SOUTH 88°04’00” WEST 125.00 FEET;


THENCE NORTH 40°43’32” EAST 288.63 FEET;


THENCE SOUTH 69°16’00” EAST 117.00 FEET;


THENCE SOUTH 59°29’00” EAST 190.00 FEET;

THENCE
SOUTH 28°20’00” WEST 252.00 FEET; TO THE TRUE POINT OF
BEGINNING.




CONTAINING 1.872 ACRES, MORE OR LESS.



ALSO AS SHOWN ON DEPICTION, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART
HEREOF.



SUBJECT TO COVENANTS, CONDITIONS, RESTRICTIONS, RESERVATIONS, EASEMENTS AND
RIGHTS-OF-WAY OF RECORD, IF ANY.



	 	 	 
	
	 	PREPARED BY: THE KEITH COMPANIES

UNDER THE DIRECTION OF:
	

	 
	
	
	

	KATHLEEN SUSAN TETREAULT P.L.S. 7297

MY LICENSE EXPIRES 12/31/2004
	 
	 
	

	August 20, 2003 

JN: 13209.00.042







Page 1 of 1




 









 













 









 








EXHIBIT O




OIL ACCOMMODATION AND SURFACE DEVELOPMENT AGREEMENT




THIS OIL ACCOMMODATION AND SURFACE DEVELOPMENT AGREEMENT (“Agreement”) is made
and entered into this 9th day of September, 2003, by and between the Nuevo
Energy Company, a Delaware Corporation (“Nuevo”) and Aera Energy LLC, a
California limited liability company (“Aera”).



WHEREAS, Nuevo owns fee title (except the minerals) to certain real property
located in Orange County, California, and more particularly described on
Exhibit “A” (the “Property”); and,



WHEREAS, BlackSands Limited Partnership owns the mineral interest in the
Property; and



WHEREAS, Aera owns the oil and gas leasehold interests for the Property
pursuant to a written lease dated February 26, 1901, a copy of which is
attached as Exhibit “B” (such lease, together with all amendments thereto, is
referred to herein as the “Lease”); and



WHEREAS, Aera is currently conducting oil and gas operations on and adjacent
to the Property which include among other things the production and conveyance
of crude oil and related substances; and,



WHEREAS, the Property, in its entirety, lies within the so-called Tonner Hills
project and Nuevo has prepared a subdivision map for Tract 16178 specifying a
certain area of the Property as depicted on Exhibit “C” (the “Affected Area”)
to be developed as residential property, park and road within said project;
and,



WHEREAS, Nuevo wants Aera to (i) conduct future operations under the Lease
subject to the governmental agency approvals and permits for the Tonner Hills
project as provided in Section 2.5 and (ii) give up it’s right to occupy the
Affected Area and, except for the limited re-entry rights reserved in the
Quitclaim attached as Exhibit “F”, quitclaim Aera’s future rights of surface
entry to the Affected Area; and,



WHEREAS, Nuevo is willing to assume the obligations set forth herein to plug
and abandon wells, remove oil-related facilities, and restore the surface of
the Affected Aera as required by the Lease and applicable laws and regulations;



NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter made and exchanged, and for good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties agree as
follows:



1. WELL TRANSFERS




1.1. Within 30 days after Nuevo’s written notice, Aera will shut down
the following seven (7) active wells on the Property.



	 	 	 
	Columbia # 28

	 	Columbia # 66
	Columbia # 42

	 	Columbia # 73
	Columbia # 58

	 	Columbia # 75
	Columbia # 64
	 	 







1









 







1.2 Within 30 days after Nuevo’s written notice, which notice may
be made
simultaneous with or at a different time than the notice in 1.1. above, Aera
will shut down
the following active well on the Property:




Columbia # 17




1.3 Nuevo will not deliver notice for Aera to shut down any active well unless and
until Nuevo has submitted a rough grading plan for final approval from the
applicable
governmental agencies with the intent to commence actual grading operations on
the
Affected Area within 150 days.




1.4 With respect to all active wells to be shut down by Aera, Aera will leave
each well
and wellsite in the condition as follows:




i) The flow line from each well will be flushed back to Aera’s header.




ii) The well cellar will be free of all fluids




iii) The wellhead will be left intact with the casing valves and master
and/or wing valves shut




iv) If not removed altogether, the electrical panel will be locked in
the “off position.




   Aera will have the option but not the obligation to remove and retain all
facilities and equipment associated with all wells being transferred to Nuevo,
including by way of example only and without limitation all pumping units,
motors, rods, tubing, flowlines, meters, electrical panels, compressors, and
treating facilities. Notwithstanding the foregoing, Aera will not remove the
casing or wellhead from any of the wells. Aera will notify Nuevo of its
intention for these facilities at the time that Aera submits the Bill of Sale
and Report of Well Transfer to Nuevo as described below in Section 1.5. If
Aera elects not to retain the facilities and equipment, it shall become the
property of Nuevo. Should Aera elect to remove rods and/or tubing from the
well it shall install a valve or other means to secure the well in a shut-in
state and that shall allow access to pump fluids into the well.




1.5 Aera will use commercially reasonable efforts to complete the work
specified in
Section 1.4 for the wells specified in Sections 1.1 and 1.2 above within
forty-five (45) days following the receipt of each notice from Nuevo. Upon completion of such
work for each well to be transferred, Aera will execute the following documents
(collectively the “Transfer Documents”) to Nuevo




i) A Report of Well Transfer in substantially the form of Exhibit “D”,
for each well
shut down at Nuevo’s request.




ii) A Bill of Sale substantially the form of Exhibit “E”, for the
facilities associated
with each well shut down at Nuevo’s request




iii) With respect to the wells specified in Section 1.1, a Quitclaim of
Surface Entry,
substantially the form of Exhibit “F”, as to that portion of the
Affected Area
identified on Exhibit “C” as the “Phase I Vacated Property”.




iv) With respect to the Columbia #17 well, a Quitclaim of Surface
Entry,
substantially the form of Exhibit “F”, as to that portion of the
Affected Area
identified on Exhibit “C” as the “Phase II Vacated Property”.




Within ten (10) days after receipt of the Transfer Documents, Nuevo will
execute all instruments as evidence that it has accepted responsibility for the
wells and will file the



2









 






Quitclaim of record in Orange County, California and the Report of Well
Transfer with the California Division of Oil Gas & Geothermal Resources.




1.6 Concurrently with the delivery of the Transfer Documents for the wells
specified
in Section 1.1. above, Aera will also deliver Transfer
Documents transferring responsibility to Nuevo for the following idle well and previously abandoned wells within
the Affected Area:



	 	 	 
	Columbia # 23

	 	Columbia # 69
	Columbia # 59

	 	Columbia # 70








The Columbia #70 well shall be left in the condition as described in
paragraph 1.4 above.




1.7 Upon Aera’s execution and delivery of the Transfer Documents to Nuevo,
Nuevo
will be deemed to have accepted full and complete responsibility and
control of all further operations on the wells and equipment (not removed by Aera) affected by the transfer.
At all times thereafter, Nuevo will be solely responsible to perform all work and bear all
costs associated with plugging and abandoning the transferred wells and will be bound
by the indemnity and release provisions of Sections 10 and 11 of this Agreement.




1.8 Nuevo will have no right to produce hydrocarbon products from the transferred
wells or the Affected Area. Pursuant to the Lease terms, Aera will
reserve and retain
the exclusive right to develop, redevelop, and produce all remaining
hydrocarbon
reserves at depths greater than 500 feet beneath the surface of the
Affected Area.
Nuevo shall plug and abandon the wells specified in Section 1.1 and the
Columbia #70
well as desired or required to proceed with development of the Tonner
Hills project.




2. WELL ACCOMMODATION The Columbia # 27 well will be accommodated and
retained by Aera as a producing oil well under the Lease. As used herein,
the term “accommodate” shall mean all of the activities desired by or
required of Nuevo, as generally described in this Section, to make the
Columbia #27 well operational, secure, and aesthetically pleasing.




2.1 Nuevo will prepare an engineering plan and design specifications
for the
Columbia #27 well, its pad, gathering and utility lines and submit it to
Aera for review and
comment prior to finalization. The final design specifications will
include cost estimates
and time schedules for both (i) Aera’s portion, and (ii) Nuevo’s portion
for completing the
accommodation work, will be generally consistent with the design for
wells within and
adjacent to housing development elsewhere in the Tonner Hills project,
and will be
acceptable to Aera in its reasonable discretion.




2.2 All costs associated with accommodating the Columbia # 27 well will
be borne by
Nuevo. Aera will perform all downhole work within the wellbore and all
work on surface
pumping unit. The accommodation work will begin within 30 days after
finalization of
the plans and specifications and Aera’s receipt of payment for 100% of
Nuevo’s portion
of the estimated costs of the operation. Aera shall use commercially
reasonable efforts
to complete its portion of the accommodation work within the time period
specified in the
final design specifications.



3









 






2.3 Nuevo will perform all other work necessary to accommodate the
Columbia # 27 at its sole cost. The Nuevo work will include by way of example and without limitation all
grading, excavation, and compaction of the pad and access road, fencing, security, and
aesthetic screening or landscaping, and the relocation and replacement of the power
and flow lines serving the well.




2.4 In the event that Nuevo damages the wellbore or conductor casing during its
operations, Aera will perform all necessary repairs at Nuevo’s expense. Nuevo will not
be liable for damages arising from downhole work performed by Aera at the request of
Nuevo, or for the repair of any existing damage discovered during downhole operations
not attributable to Nuevo. Any well down time attributable to Nuevo in excess of the
period set forth in the schedule described in Section 2.1 above will be reimbursed by
Nuevo according to the average of the previous six months’ production using the daily
posted price for each day for which the reimbursement is due.




2.5 Aera’s use of the Property shall henceforth be subject to the terms, conditions,
and limitations specified in the documents listed in Exhibit “I” (the
“Encumbrance
Documents”), provided however that any and all costs to comply with any
term,
provision, or restriction of the Encumbrance Documents shall be borne
solely by Nuevo.
Nuevo represents and warrants that Nuevo has not granted and to its
Knowledge is not
aware of any restrictions or limitations to the use of the Property other
than those that
are contained in Encumbrance Documents. In the event that Aera is
requested to bring
its present or future oil operations into compliance with
any provision of the
Encumbrance Documents, Aera shall not be required to perform any work or
expend any
money until and unless Aera receives an advance deposit from Nuevo for
100% of the
estimated cost of such work. The provisions of Section 9 will govern the
accounting for
such work.



3. FACILITIES AND EQUIPMENT





3.1 Upon receipt of a deposit of $30,000 from Nuevo, Aera will
commence
preparation of engineering plans to relocate five “Major Utilities”, identified as one 12kV
power line, two gas lines, a wastewater line, and an oil and water dispersion line, to
locations outside the Affected Area. Nuevo has identified a “Relocation Corridor”
acceptable to Aera as depicted on Exhibit “C” located on the east side of the Affected
Area and west of Valencia Avenue. Aera’s design and engineering plans will also
include plans to relocate the “Minor Utilities”, identified as the power distribution and
gathering lines serving individual wells to be retained by Aera that may be affected by
the Tonner Hills development. Nuevo will be provided a draft of the relocation plans for
review and comment prior to finalization. Final plans will include a commercially
reasonable cost estimate and work schedule for performing relocation of the Major
Utilities and the Minor Utilities. Aera will use commercially reasonable efforts to provide
final plans and commercially reasonable cost estimates to Nuevo within 90 days
following receipt of the Nuevo deposit.




3.2 At any time after the completion of the final relocation plans, Nuevo may give
Aera written notice to relocate the Major Utilities or the Minor
Utilities or both. Nuevo
agrees that the Relocation Corridor will, at no cost to Aera, be graded
to within 2 feet of
final grade and will otherwise be fully prepared to receive the Major
Utilities at the time
such notice respecting the Major Utilities is delivered. Such notice
will be accompanied



4









 






by payment of 100% of the estimated cost of the requested operation. Aera
will use commercially reasonable efforts to complete the requested
relocation within 180 days after the above conditions have been met and
all required permits have been received. Notwithstanding the foregoing,
the parties agree that Aera will not be required to disturb or shut down
its existing utilities until the relocation is complete and the
replacement utilities have been put into service.




3.3 At any time after the execution of this Agreement, Nuevo may deliver
notice to Aera to remove three (3) steam generators from the Property.
Nuevo’s notice will be accompanied by a payment of thirty thousand
dollars ($30,000.00) to cover the estimated costs of removal. Aera may
relocate or demolish the steam generators at Aera’s sole option provided
they are removed from the Property. Nuevo will not be liable for any
costs exceeding $30,000.00, but will be entitled to a refund if the
operation costs are less than $30,000.00 in the manner specified in
Section 9. Aera will use commercially reasonable efforts to complete the
operation within ninety (90) days after receipt of payment, however Aera
will have no responsibility to demolish, remove or remediate any pad or
concrete foundation associated with the steam generators.



4. ENVIRONMENTAL MATTERS






4.1 As a material part of the consideration for this Agreement, Nuevo
agrees to be
solely responsible for and to perform all work and bear all costs of
environmental
remediation within the Affected Area or associated with any well
transferred to or
accommodated by Nuevo pursuant to this Agreement in accordance with any
and all
obligations under the Lease or other contract and any and all applicable
laws and
regulations. In addition, Nuevo agrees that the Affected Area will be
included on any
policy of insurance obtained to cover losses associated with
environmental claims for the
Tonner Hills project, and that Aera Energy LLC will be named as
Additionally Insured on
any such policy.




4.2 Nuevo represents and warrants that, prior to entering into this
Agreement, Nuevo
has inspected the Affected Area, observed the physical characteristics
and conditions
thereof, performed a comprehensive investigation, and in all material
respects satisfied
itself as to the physical and environmental condition of the Affected
Area. In its
evaluation of the Affected Area, Nuevo directed QST Environmental, an
independent
environmental engineering firm, to prepare a Phase I Environmental Site
Assessment
dated January 9, 1998, and the Phase II Environmental Site Assessment
dated
December 15 1998. Other than the Environmental Site Assessments recited
herein,
Aera represents and warrants that to its actual knowledge (meaning to the
actual current
knowledge of George L. Basye), without any duty to investigate any
private or public
records, including those of Aera, it is not aware of any other
environmental matters that
materially affect the Affected Area. Nuevo agrees and covenants that it
will perform all
of its obligations for environmental remediation associated with the
Affected Area
hereunder at its sole cost, risk and expense, in accordance with an
approved Remedial
Action Plan, and to a standard that is suitable for Nuevo’s intended
future use of the
Affected Area. The parties recognize that additional Environmental
Assessments and/or
remediation work may be necessary in the event that the Affected Area is
proposed to
be used in the future for purposes other than those that Nuevo presently
intends
pursuant to the Tonner Hills Project. Any such additional assessments
and work shall
be performed at no cost or liability to Aera.



5









 






4.3 Nuevo represents and warrants that it is a sophisticated company with
extensive
experience in oil and gas producing operations. Nuevo acknowledges that the Property
has previously been used to produce, treat, and store crude oil, natural gas and gas
liquids, and other petroleum and chemical products, and that environmental conditions
requiring remediation are known to exist on properties that have been in such use and
may remain on the Property. Nuevo has sought and received, to its best knowledge,
competent advice regarding all material conditions relevant to the Property and to the
obligations Nuevo is undertaking pursuant to this Agreement.




4.4 If field conditions require Nuevo to perform additional grading on the Property
outside of the Affected Area, Nuevo will submit the plans to Aera for
review and
comment at least 10 business days prior to commencing operations. All
additional
facility relocations and well accommodations requested by Nuevo will be
performed in
materially the same manner as provided in Section 3.1 and Section 2,
respectively, and
Nuevo will be responsible for all environmental matters as provided in
this Section 4.
The indemnity and release provisions of Sections 10 and 11 shall govern
such additional
grading in the same manner as they apply to the Affected Area and the
Vacated
Property. Any such additional grading, remediation, and accommodation
work i) will be
immediately adjacent to the Affected Area, ii) will be incidental to and
reasonably
necessary for the development of the Tonner Hills Project as presently
planned, iii) will
not be commenced without the prior written approval of Aera pursuant to
this Section
4.4, and iv) will be performed at no cost or risk to Aera. With respect
to the Incidental
Grading Area identified on Exhibit “C”, the approval specified in 4.4.iii)
will be waived
provided that such area has been addressed in the planning process
specified in Section
3 above. In no event will Aera be required to permanently abandon any
producing wells
or permanently relinquish any surface occupancy rights in addition to
those specified
elsewhere in this Agreement. Additionally, any slopes or other
improvements made
under this Section 4.4 will be maintained at no cost to Aera.



5.    ROAD ACCESS AND SECURITY FOR ONGOING OIL OPERATIONS





5.1 Nuevo will provide security fencing required by governmental agencies
and
uninterrupted road access to serve all of Aera’s operations on the Property during all
grading and development activities. Nuevo will prepare an engineering plan showing the
proposed final fencing, gates, aprons, and grades for entry and access to Aera’s oil
operations after grading and development are complete. Nuevo will submit the plans to
Aera for review and comment prior to finalization, and the final design will meet all
requirements of the California Division of Oil Gas & Geothermal Resources and will be
acceptable to Aera in Aera’s reasonable discretion.




5.2 Nuevo will be responsible to perform all work and pay all costs associated with
planning and implementing the operations contemplated in this Section 5.



6.    UTILITY EASEMENT





Concurrent with the execution of this Agreement, the parties will enter into
a Utility Easement in the form attached hereto as Exhibit “G”. Aera will make
a payment in the amount of Fifteen Thousand Dollars ($15,000.00) as
consideration for Nuevo’s execution of the Utility Easement. Aera will have
the irrevocable right in its sole discretion to record the Utility Easement
in the official records of Orange County California at any time after either
a)



6









 






the recordation of the Level A final map for Tract 16178, or b) December 31,
2003, whichever occurs earlier. The area affected by Easement will be
reflected on the Tonner Hills “A” map filed by Nuevo and on all subsequent
subdivision or conveyance maps filed by Nuevo, its successors and
assigns.
Aera and Nuevo will each bear 50% of the cost of preparing the Utility
Easement, including the cost of the legal description and map exhibits.



7. EXISTING LICENSE AGREEMENTS





Nuevo and Aera each hold existing license rights on one another’s property
for pipelines and power lines serving their respective local oilfield
operations. Concurrently with the execution of this Agreement, the parties
will enter into amendments to the license agreements providing that
existing production facilities covered thereunder will continue to be
operated so long as such facilities are utilized in their present
locations, subject to a one-time relocation provision, and giving Nuevo the
right to transfer the licenses to BlackSand Partners as successor to
Nuevo’s local oil operations. The facilities relocations performed under
Section 3 of this Agreement shall constitute the one-time relocation with
respect to Aera’s licenses for the Major Facilities.



8. GRADING LICENSE





Concurrently with the execution of this Agreement, the parties will enter
into reciprocal Grading Licenses in the form attached hereto as Exhibit “H”
granting each party the right to enter on the other party’s property and
conduct grading operations to support each party’s land development
projects. Aera will have the irrevocable right in its sole discretion to
record a memorandum of the Grading Licenses granted to Aera in the official
records of Orange County California at any time after either a) the
recordation of the Level A final map for Tract 16178, or b) December 31,
2003, whichever occurs earlier. Nuevo will have the irrevocable right in its
sole discretion to record a memorandum of the Grading License granted to
Nuevo in the official records of Orange County California at any time of its
choosing.



9. COSTS AND ACCOUNTING





   Any deposit made by Nuevo pursuant to this Agreement represents an
advance payment for the commercially reasonable estimated costs of the
project for which the deposit is made and, except as may be expressly
provided to the contrary herein, does not represent the limit of Nuevo’s
obligation to reimburse 100% of Aera’s actual costs for each operation
performed. Aera will have the right to commingle any such deposit with
Aera’s other cash assets. A final reconciliation will be performed within
sixty (60) days after the completion of the each project to be performed by
Aera under this Agreement based on actual invoices paid for such project.
Aera will furnish Nuevo with a cost summary detail report based upon actual
charges for each such project and agrees to return any unspent portions of
the deposit or, in the event of shortfall, Nuevo agrees to pay any amount
expended in excess of the deposit. In the event that either party does not
pay the amount owed within thirty (30) days following receipt of written
demand, the unpaid amount will bear interest at ten percent (10%) per annum,
but in any event not in excess of the highest rate allowable by California
law to be charged by non-exempt lenders in business related transactions,
from the demand date until paid in full. At any time within 180 days after
payment, Nuevo shall have the right to audit Aera and its vendors’ records
as to all costs paid by Nuevo to Aera hereunder. Aera shall use good faith
and commercially reasonable



7









 






efforts to promptly respond to inquiries resulting from such audit. Both
Aera and Nuevo shall diligently and in good faith work to resolve any of
such inquiries.



10. INDEMNIFICATION





As a material part of the consideration for this Agreement, Nuevo hereby
agrees to indemnify, defend (with counsel reasonably satisfactory to Aera)
and hold Aera and its agents, employees, officers, directors, members,
affiliated companies, contractors, consultants, successors, assigns
(collectively “Indemnitees”) entirely harmless from and against any loss,
damage, injury, casualty, suit, penalty, fine, lien, liability, claim, cost,
or expense (including, but not limited to, attorneys’ fees, litigation costs
including expert witness fees and costs, other costs of investigation and
costs, and fees for appeal) of any kind or character arising from or caused
by (i) any use of the Affected Area by Nuevo, (ii) any act or omission of
Nuevo occurring on or in connection with the Affected Area, (iii) any bodily
injury (including death), property damage and destruction, accident, fire,
or other casualty on or about the Affected Area arising out of any act or
omission of Nuevo occurring on or in connection with the Affected Area, (iv)
any violation or alleged violation by Nuevo of any applicable law,
ordinance, code, regulation or approval occurring on or in connection with
the Affected Area, (v) any failure by Nuevo to maintain the Affected Area in
a safe, clean, and sanitary condition, (vi) any breach by Nuevo of any
provision of this Agreement, (vii) any damage or alleged damage to natural
resources or any environmental medium arising out of any act or omission of
Nuevo occurring on or in connection with the Affected Area, (viii) any claim
made by a mineral owner arising out of actions contemplated in this
Agreement occurring on or in connection with the Affected Area, (ix) any
claim made by any of Nuevo’s successors or assigns pertaining to the
suitability of the Affected Area for a particular use, (x) the cost of
compliance with any provision of the Encumbrance Documents in excess of what
is required or allowed by the Lease, and (xi) the cost of compliance with
any judicial or governmental authority order or decision arising out of any
of the foregoing matters for which Nuevo has agreed to indemnify the
Indemnitees as provided in this Section.




The foregoing indemnification obligation will survive the expiration and
termination of this Agreement and will apply even though the indemnified
event or occurrence arises from or is caused by the concurrent or
contributory negligence (whether active or passive of any kind or nature)
or fault of an Indemnitee; provided, however, such indemnification
obligation will not apply if the indemnified event or occurrence is caused
by the gross negligence or willful misconduct of an Indemnitee.



11. ASSUMPTION OF RESPONSIBILITY AND RELEASE





11.1 Upon Aera’s delivery of the Transfer Documents as provided in
Section 1 of this Agreement, Nuevo will assume control and responsibility
for all subsequent operations and activities conducted on and with
respect to the that portion of the Property recited in the Transfer
Documents (the “Vacated Property”). From that date forward, with respect
to the Vacated Property, Aera will be deemed to have fully complied with
all of its obligations under this Agreement, and will also be deemed to
have fully satisfied all of its obligations under the Lease such that
Aera will be fully released from any and all obligations performed or to
be performed by Aera under the Lease. Nuevo acknowledges that said
release by Nuevo of said obligations of Aera is a material inducement to
the execution and delivery of this Agreement by Aera, and that said
release constitutes a material consideration to Aera under this
Agreement.



8









 






11.2 As of the date of delivery of the Transfer Documents, Nuevo will
automatically and
immediately become fully responsible and liable for any condition of the Vacated
Property caused by or attributable to operations conducted by Aera or its predecessors
in interest, regardless of whether the same was disclosed in the Environmental Site
Assessments detailed in Section 4.2, or was caused by or attributable to operations
conducted under the Lease, even though Aera would otherwise have the responsibility
and liability for correcting or remedying such condition in its capacity as the lessee or
former lessee under the Lease. Nuevo will be deemed to have accepted the Vacated
Property in its “AS IS” and “WITH ALL FAULTS” physical, environmental and entitled
condition. Upon the occurrence described in the immediately preceding sentence,
NUEVO WAIVES ANY AND ALL WARRANTIES AND CLAIMS OF ANY TYPE OR KIND
WHATSOEVER AGAINST AERA WITH RESPECT TO THE PROPERTY, WHETHER
EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THOSE OF FITNESS
FOR A PARTICULAR PURPOSE AND USE.




11.3 Aera expressly disclaims any representation or warranty, express or implied, by
Aera regarding the adequacy, accuracy or completeness of any reports, plans or studies
or other documents previously delivered to Nuevo or made available for review by
Nuevo, and Nuevo acknowledges, agrees to and accepts such disclaimer. Nuevo
further represents and warrants that, in entering into this Agreement, Nuevo has not
relied on any representation, warranty, promise or statement, express or implied, of Aera
or anyone acting for or on behalf of Aera, except as may expressly be set forth in this
Agreement. Nuevo has independently verified all matters material to the Property prior
to the date of this Agreement, and Nuevo is assuming all obligations set forth herein
based on Nuevo’s own prior investigation and examination of the Property.




11.4 Nuevo waives its right to recover from Aera and Aera’s affiliated companies, and
their respective officers, directors, shareholders, employees, agents and
representatives
any and all damages, losses, liabilities, costs or expenses whatsoever
(including without
limitation reasonable attorneys’ fees and costs) and claims therefor, whether
direct or
indirect, known or unknown, foreseen or unforeseen, which may arise from any
aspect of
the Affected Area, including without limitation the physical condition of the
Affected Area,
the Affected Area’s compliance or lack of compliance with any law or regulation
applicable thereto (including without limitation federal, state or local
environmental laws),
and the presence of any “Hazardous Substance” located in, on or under the
Affected
Area. For purposes of this Agreement, the term “Hazardous Substance” will mean
any
hazardous or toxic substance, material or waste that is now or in the future
becomes
regulated by any local, state or federal governmental authority, including
without
limitation radon, methane gas, asbestos or asbestos-containing-materials,
petroleum or
petroleum by-products, and lead-based paint. Nuevo expressly waives the
benefits of
Section 1542 of the California Civil Code, which provides as follows:




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




In this connection and to the extent permitted by law, Nuevo hereby agrees,
represents and warrants that factual matters now unknown to it may have given
or may hereafter give rise to causes of action, claims, demands, debts,
controversies, damages, costs,



9









 






losses and expenses which are presently unknown, unanticipated and
unsuspected, and Nuevo further agrees, represents and warrants that the
waivers and releases herein have been negotiated and agreed on in light
of that realization, and Nuevo nevertheless hereby intends to release,
discharge and acquit Aera and Aera’s affiliated companies, and their
respective, officers, directors, shareholders, employees, agents and
representatives from any such unknown causes of action, claims, demands,
debts, controversies, damages, costs, losses and expenses which might in
any way be included in the waivers and matters released as set forth in
this Section 11. The provisions of this Section are material and included
as a material portion of the consideration given to Aera by Nuevo in
exchange for Aera’s performance hereunder. Aera and Nuevo have each
initialed this Section to further indicate their awareness and acceptance
of each and every provision hereof.



	 	 	 
	-s- Nuevo’s Initials

	 	-s- Area’s Initials

	Nuevo’s Initials

	 	Aera’s Initials







12. ARBITRATION OF DISPUTES





ANY CONTROVERSY BETWEEN THE PARTIES HERETO WILL BE SUBMITTED TO ARBITRATION
IN ORANGE COUNTY, CALIFORNIA, ON THE REQUEST OF EITHER PARTY. ANY
CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES WILL BE DETERMINED BY
ARBITRATION IN ACCORDANCE WITH TITLE 9 OF PART 3 OF THE CALIFORNIA CODE OF
CIVIL PROCEDURE (I.E., CCP §§ 1280 THROUGH 1294.2), INCLUDING ITS PROVISIONS
FOR THE ENFORCEMENT OF AGREEMENTS TO ARBITRATE AND ENFORCEMENT AND VACATION
OF ARBITRATION AWARDS. ALL STATUTES OF LIMITATIONS WHICH WOULD OTHERWISE BE
APPLICABLE WILL APPLY TO ANY ARBITRATION PROCEEDING UNDER THIS PARAGRAPH.
JUDGMENT UPON THE AWARD RENDERED MAY BE ENTERED IN ANY COURT HAVING
JURISDICTION AND WILL BE FINAL AND BINDING.




NO PROVISION OF, NOR THE EXERCISE OF ANY RIGHTS UNDER THIS SECTION WILL
LIMIT THE RIGHT OF ANY PARTY TO OBTAIN PROVISIONAL OR ANCILLARY REMEDIES
SUCH AS INJUNCTIVE RELIEF, ATTACHMENT, OR THE APPOINTMENT OF A RECEIVER
FROM A COURT HAVING JURISDICTION BEFORE, DURING, OR AFTER THE PENDENCY OF
ANY ARBITRATION. THE INSTITUTION AND MAINTENANCE OF AN ACTION FOR JUDICIAL
RELIEF OR PURSUIT OF PROVISIONAL OR ANCILLARY REMEDIES WILL NOT CONSTITUTE
A WAIVER OF THE RIGHT OF ANY PARTY, INCLUDING THE PLAINTIFF. TO SUBMIT THE
DISPUTE TO ARBITRATION.




WHENEVER AN ARBITRATION IS REQUIRED, THE ARBITRATOR OR REFEREE WILL BE
SELECTED IN ACCORDANCE WITH THIS SECTION. WITHIN FIVE (5) DAYS AFTER WRITTEN
NOTICE OF ANY DISPUTE IS GIVEN TO THE OTHER PARTY, THE PARTIES WILL ATTEMPT
TO AGREE ON A MUTUALLY ACCEPTABLE ARBITRATOR. IN THE EVENT THE PARTIES ARE
UNABLE TO SO AGREE WITHIN SUCH FIVE (5) DAY PERIOD, THEN EITHER PARTY MAY
PETITION THE ORANGE COUNTY SUPERIOR COURT FOR THE APPOINTMENT OF THE
ARBITRATOR FOLLOWING THE PROCEDURES SET FORTH IN CODE OF CIVIL PROCEDURE
SECTION 1281.6. THE DISPUTED MATTER WILL ONLY BE HEARD BY THE ARBITRATOR OR
REFEREE WHO IS A RETIRED STATE OR FEDERAL COURT JUDGE WITH CIVIL TRIAL
EXPERIENCE OF THE GENERAL TYPE OF THE MATTER IN DISPUTE. THE ARBITRATOR OR



10









 






REFERREE WILL APPLY CALIFORNIA LAW AND BE BOUND BY PRECEDENT AND STATUTORY
RULES AS THOUGH THEY WERE JUDGES SITTING IN A CALIFORNIA COURT. STATEMENTS
OF ARBITRATION AWARDS WILL BE IN WRITING. THE PARTIES WILL BE ENTITLED IN
ANY ARBITRATION HEREUNDER, TO SUCH RIGHTS OF DISCOVERY AS DETERMINED BY THE
ARBITRATOR. IN THE EVENT OF ANY DISPUTE GOVERNED BY THIS SECTION, EACH OF
THE PARTIES WILL PAY ALL OF ITS OWN EXPENSES, AND, SUBJECT TO THE AWARD OF
THE ARBITRATOR, WILL PAY AN EQUAL SHARE OF THE ARBITRATORS’ OR REFEREES’
FEES. THE ARBITRATOR WILL HAVE THE POWER TO AWARD RECOVERY OF ALL COSTS AND
FEES (INCLUDING ATTORNEYS’ FEES, ADMINISTRATIVE FEES,
ARBITRATORS’ FEES, AND
COURT COSTS) TO THE PREVAILING PARTY. THE ARBITRATOR WILL NOT HAVE THE POWER
TO AWARD PUNITIVE DAMAGES OR TREBLE DAMAGES OF ANY TYPE.




NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY
DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF
DISPUTES” PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY
CALIFORNIA LAW AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE
THE DISPUTE LITIGATED IN A COURT OR JURY TRIAL. BY INITIALING IN THE
SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND
APPEAL, UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION
OF DISPUTES” PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER
AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO
THIS ARBITRATION PROVISION IS VOLUNTARILY.




WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES
ARISING OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES”
PROVISION TO NEUTRAL ARBITRATION.



	 	 	 
	-s- Nuevo’s Initials

	 	-s- Area’s Initials

	Nuevo’s Initials

	 	Aera’s Initials







13. FORCE MAJEURE





If the performance of any obligations of either party under this Agreement is
interrupted or delayed in whole or in part by any occurrence or condition
beyond that party’s control including, without limitation, acts of God, war,
riot, strike, storm, earthquake, fire, other natural forces, inability to
obtain necessary labor, equipment, material, or permits, or any act, order,
or requirement of governmental, regulatory, or judicial authorities or
agencies, then the party so affected will be excused from any further
performance for whatever period of time such occurrence or condition exists
and for such additional time as is reasonably necessary to remedy the effects
of that occurrence or condition. Financial inability will be excluded as a
condition of force majeure.



14. COMPLIANCE





All work undertaken by either party under this Agreement will be in
compliance with all applicable laws, regulations, and permits, and in a
manner consistent with good oil and gas field practices and procedures.
Except as may be otherwise specified herein, the party performing the work
will be solely responsible for obtaining all permits, waivers, and regulatory
approvals that may be required to perform the work required of that party.
Nuevo will furnish Aera copies of all final closure documents and reports
received from the



11









 






approving agencies, including at a minimum a “No Further Action” letter from
the Orange County Healthcare Agency and the Report of Well Abandonment from
the Division of Oil, Gas & Geothermal Resources, for all Work performed on
the Affected Area promptly upon receipt of such documents and reports.



15. USE OF INDEPENDENT CONTRACTOR(S)





Either party, in its sole discretion, may utilize an independent contractor
or contractors to undertake and complete the work required of that party.



16. LIMITATION ON ASSIGNMENT





Any assignment, transfer or conveyance of this Agreement, or any part
hereof, or any right or duty created herein, will not be effective until and
unless the assigning party has delivered notice of the transfer to the
non-assigning party together with a document executed by the assignee
expressly assuming all obligations of the assigning party under this
Agreement. If requested by the non-assigning party, assignor and assignee
will provide reasonable financial assurances to ensure that assignee is
financially able to perform all the obligations of this Agreement.
Notwithstanding the foregoing, prior approval is hereby granted by Aera of
an assignment hereunder by Nuevo of all or any part of its rights, title and
interests under this Agreement to Shea Homes Limited Partnership or to a
limited liability company or other affiliated entity in which Shea Homes
Limited Partnership owns no less than a fifty one percent (51%) interest.
Such approval shall not constitute a novation of this Agreement, and Nuevo
shall remain secondarily liable in the event that the assignee does not
perform as herein provided.



17. RECORDING AND FILING





This Agreement will not be recorded or filed in or with any public or
government office, agency, or records repository, by either party, or their
successors or assigns, without the prior written consent of the other
party.



18. NOTICES





Any notices to be given under this Agreement will be given in writing. Such
notices will be delivered either by private commercial delivery, courier
service, personal delivery, facsimile, or first-class regular U.S. mail,
postage prepaid. Any such notice will be considered given when actually
received. For purposes hereof, the addresses of the parties are:



	 	 	 	 	 
	

	 	Aera:
	 	Aera Energy LLC

Attn.: Jeff Maisch

3030 Saturn Street, #101

Brea, CA 92821

Phone: (714) 577-8258

Facsimile: (714) 577-9149







12









 






	 	 	 
	With a copy to:
	 	Aera Energy LLC

Attn: Coastal Asset/Land

P.O. Box 11164

Bakersfield, CA 93389-1164

Phone: (661) 665-5791

Facsimile: (661) 665-5973
	 	 	 
	Nuevo:
	 	Nuevo Energy Company

Attn: David Leach

1021 Main Street, Suite 2100

Houston TX 77002

Phone: (713) 374-4802

Facsimile: (713) 374-4899







19. ENTIRE AGREEMENT





This Agreement constitutes the entire agreement between the parties with
respect to this matter and supersedes all prior negotiations, statements,
representations, discussions, correspondence, offers, agreements, and
understandings relating to this matter whether oral or written. This
Agreement may be modified, amended, or supplemented only by written
agreement executed by the parties. In the event of a conflict between this
Agreement and the Lease, the provisions of this Agreement will have
superceding effect and will govern.



20. APPLICABLE LAW





This Agreement and disputes regarding the interpretations of any of its
provisions, any disputes involving claims of breach, any other documents
executed and delivered pursuant hereto, and the legal relations between the
parties with respect to this Agreement, will be governed and construed in
accordance with the laws of the State of California without regard to rules
concerning conflicts of laws.



21. HEADINGS





The headings used in this Agreement are inserted for convenience only, and
will be disregarded in construing it.



22. AUTHORITY





The persons and parties making and executing this Agreement represent and
warrant that each has the requisite power and authority, financial and
otherwise, to execute and deliver this Agreement and when so executed and
delivered it will constitute the legal and binding obligation of such party
enforceable in accordance with its terms and conditions.



23. BINDING EFFECT





All covenants, rights and obligations under this Agreement will be
appurtenant to and run with the Property and will be binding upon and inure
to the benefit of the parties respective successors, assigns and
transferees whether they be individuals, or duly organized business
organizations, and whether they be private or public and whether the
transfer be voluntary or involuntary.



13









 





24. COOPERATION





The parties will execute and deliver such additional documents and will use
all reasonable efforts to take or cause to be taken all actions as may be
necessary or advisable to make effective the intent and purposes of this
Agreement.



25. COST AND EXPENSES





Except as otherwise expressly provided herein, each party will bear and pay
its own costs and expenses, including, but not limited to, attorney fees
and environmental fees incurred in connection with this Agreement.



26. NO JOINT VENTURE,
PARTNERSHIP, OR AGENCY




Nothing contained in this Agreement will be deemed to create a joint
venture, partnership, tax partnership, or agency relationship between the
parties.



27. COUNTERPARTS





This Agreement may be executed in any number of counterparts, each of which
will be deemed an original and all of which will be construed together and
constitute one agreement. The signature of any party on any counterpart
will be deemed a signature on and may be appended to any other counterpart.
This Agreement will not be binding on any party unless signed by all
parties.



28. AGREEMENT AND TERMS CONFIDENTIAL





Aera and Nuevo agree that this Agreement and each of its terms is
confidential in nature, and each party agrees not to disclose this Agreement
or any of its terms to any third party without the express written consent
of the other, which consent will not be unreasonably delayed or withheld;
provided, however, that if either party has entered into negotiations or
subsequently a written agreement for the sale of the Property to a
purchaser, that party may show this Agreement to the purchaser in order for
the purchaser to adequately conduct a due diligence investigation that may
enable the sale to close, all without obtaining prior written consent.
Nothing in this Section will prevent either party from complying with a
court order compelling disclosure of this Agreement or an administrative
process directing or compelling disclosure of this Agreement.



IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day, month, and year first above written.



	 	 	 	 	 	 	 
	“Nuevo”

	 	“Aera”
	 
	 	 	 	 	 	 
	Nuevo Energy Company

	 	Aera Energy LLC
	a Delaware Corporation

	 	A California Limited Liability Company
	 
	 	 	 	 	 	 
	By:

	 	/s/ David A. Leach
	 	By:
	 	/s/ Van N. Schultz
	

	 	
 
	 	 	 	
 
	

	 	David A. Leach
	 	 	 	Van N. Schultz
	Its: Attorney-in-Fact

	 	Its: Vice President
– SD & J







14









 






Exhibit “A”




Description of the Steams-Columbia property.




Exhibit “B”




Copy of the 1901 “Columbia Lease”.




Exhibit “C”




Map of the Affected Area, identifying “Phase I Phase II Vacated Property” and the “Relocation Corridor”.




Exhibit “D”




DOGGR Report of Well Transfer form.




Exhibit “E”




Bill of Sale.




Exhibit “F”




Quitclaim of Surface Entry.




Exhibit “G”




Utility Easement.




Exhibit “H”




Land Development License Agreement




Exhibit “I”




Encumbrance Documents (a/k/a “Compendium of Approved Documents”).




15









 








EXHIBIT “A”




“PROPERTY”




Orange County, California




All that portion of Sections 5 and 8, Township 3 South, Range 9 West comprising
100 acres described as being situated within the limits of the Rancho San Juan
Cajon de Santa Ana, and is the easterly one hundred (100) acres of that certain
tract of land containing 1,214.89 acres described in and conveyed by that
certain deed made and executed by the Stearns Ranchos Company, a corporation,
to the Union Oil Company of California, a corporation, bearing date
the 4th day
of December, 1896, and recorded in the office of the County Recorder of said
County of Orange in Book 30 of Deeds at page 11; the northerly line of the said
100 acre tract being the northerly line of said Rancho San Juan Cajon de Santa
Ana and of said 1,214.89 acre tract, its easterly line being the easterly line
of said Rancho and said 1,214.89 acre tract, its southerly line being the
southerly line of said last mentioned tract, and its westerly line being a line
drawn parallel with its said easterly line and at such a uniform distance
westerly therefrom as will include within the limits of the said tract 100
acres of land, no more and no less.




 








 





Exhibit “B”


Columbia Lease


as retyped from poor copy found in


Lease File CA 7015



          THIS INDENTURE, Made and entered into in duplicate this 26th day of
February, 1901, by and between Union Oil Company of California, a corporation
organized and existing under the laws of the State of California, and having
its principal place of business at Los Angeles, California, party of the first
part, and Columbia Oil Producing Company, a corporation organized and existing
under the laws of the State of California and having its principal place of
business at Los Angeles, California, party of the second part,



          WITNESSETH:



          That for an in consideration of the rents and royalties to be paid by
party of the second part to party of the first part, hereinafter specified, and
of the covenants, agreements and stipulations by said party of the second part
hereinafter undertaken to be done and performed, the said party of the first
part doth hereby grant, lease, and demise and let unto the party of the second
part, its successors and assigns, for the term and time for the purposes, and
under and in accordance with the stipulations, agreements and conditions herein
set forth, the 100 acre tract of land hereinafter described, together with the
exclusive right to operate, mine, tunnel and drill for, and to otherwise
develop, collect and obtain crude petroleum oil, asphaltum, maltha, tar, gas,
and any and all other hydrocarbon substances in, upon and under the 100 acre
tract of land hereinafter described; together also with the right to
take,


- 1 -









 





remove, held, own, market and otherwise to use, enjoy and dispose of (subject
to the payment of the rents and royalties herein provided) all of said
petroleum oil and any and all of said other substances out of, from and away
from said 100 acre tract of land (which may be produced and saved by party of
the second part) which said tract of land is situated within the limits of the
Rancho San Juan Cajon de Santa Ana, in the County of Orange, State of
California, and is the easterly one hundred (100) acres of that certain larger
tract of land containing 1214.89 acres described in and conveyed by that
certain deed made and executed by the Sterns Ranchos Company, a corporation, to
the party of the first part herein, bearing date the 4th day of December, 1896,
and recorded in the office of the County Recorder of said County of Orange in
Book 30 of Deeds at page 11; (the northerly line of the said 100 acre tract
being the northerly line of said Rancho San Juan Cajon de Santa Ana and of said
1214.89 acre tract, its easterly line being the easterly line of said
Rancho and of said 1214.89 acre tract, the southerly line being the southerly
line of said last mentioned tract, and its westerly line being a line drawn
parallel with its said easterly line and at such a uniform distance westerly
therefrom as will include within the limits of the said tract 100 acres of
land, no more and no less.)



          TOGETHER with the right and privilege at any and all times, during the
continuance of this contract, to enter and travel in, upon and over any and
all portions of said demised premises, and thereon to build, erect, hold,
operate, maintain and enjoy any and all necessary or convenient roads,
derricks, rigs, boilers, engines, machinery, pumping stations and plants,
jacks, boarding houses, bunk houses, stables, pipelines, tanks, telephone
lines, and any and all other means, appliances, machinery and structures,
proper or convenient for use in connection



- 2 -









 





with the development, collection, storage (and
(or transportation of any and all of said hydrocarbon
substances.



          TOGETHER also with the right, at any and all times, during the continuance
of this contract, to take, develop and use any and all water on said demised
premises that may be necessary or convenient for operating machinery and for
domestic and stock purposes and uses in connection with the operations of party
of the second part under this contract, and for use in sinking and drilling
wells and driving tunnels and making excavations on and in said tract, and
otherwise in connection with operating for and developing, removing and
marketing said oil and said other substances on, in and from said demised
premises.



          AND ALSO the right to lay, construct, operate and maintain on, over, upon
and across and to remove from the lands belonging to the party of the first
part adjacent to the said 100 acre tract on the west thereof, any pipe line or
pipe lines necessary or convenient for the transportation of oil or other
liquids which may be produced upon said 100 acre tract (such pipe line or pipe
lines to be buried if so requested by party of the first part to a depth of at
least twelve inches); and also like rights of way of and for roads on and over
said lands for the purposes of ingress to and egress from said 100 acre tract;
and also the right to use for this purpose all roads already constructed and
which may hereafter be constructed on said lands adjacent to said demised
premises.



          TO HAVE AND TO HOLD the said one hundred acre tract of land and all and
singular said rights, privileges, interests and easements herein granted, unto
the said party of the second part, its successors and assigns, for and during
the times and periods and subject to all the terms, conditions, stipulations
and agreements herein specially set forth.



- 3 -









 





          It is covenanted and agreed by and between the parties hereto as
follows:



          FIRST: That as soon as practicable after the execution and delivery of
this instrument the exact location of the westerly line of the said 100 acre
tract shall be fixed and determined by a competent surveyor or competent
surveyors to be selected by the parties hereto, and shall be by them marked and
designated upon the ground by permanent monuments placed at the northern and
southern termini thereof.



          SECOND: The party of the second part agrees that it will within the
period of sixty (60) days from the date hereof commence operations on said
tract, and that it shall and will sink or drill wells in said tract at the rate
of four (4) wells per year for the period of twenty (20) years from and after
the date hereof, provided that the party of the second part shall be able to
sink as many as four wells per year on said tract by the diligent and
continuous operation of two strings of drilling tools thereon; it being
understood that if four wells cannot be sunk on said tract in any year by the
diligent and continuous operation of two strings of drilling tools, the
obligation of the party of the second part in this behalf shall nevertheless be
considered to have been, and shall be, fully performed for such year if two
strings of drilling tools shall have been diligently and continuously operated
on said tract during such year.



          IT IS FURTHER UNDERSTOOD AND AGREED, however, that the foregoing
agreement fixes only the minimum number of wells to be sunk or the minimum
number of strings of tools to be operated, and that party of the second part
may sink in any year in said term of twenty years and in the aggregate during
said term as many wells hereunder as it sees fit, there being no maximum limit
fixed to the number of wells to be sunk hereunder during said term of twenty
years; and that in case party of the second part in any of



- 4 -









 





said years shall sink a well or wells on said tract in excess of said number of
four wells required to be sunk in each year, then the well or wells so sunk in
excess of said required yearly number shall be applied on the wells required to
be sunk thereafter, in such manner and for such year or years as the said party
of the second part shall elect.



          IT IS FURTHER UNDERSTOOD AND AGREED that if the party of the second part
shall fail for any one year to sink the said required number of wells for that
year, or to operate continuously and diligently during the same with two
strings of tools as herein expressed and stated, the party of the second part
shall forfeit all rights under this grant to drill or sink upon said tract
other wells than those already completed as herein defined, or on which work is
being done in good faith at the time of such forfeiture, and shall also forfeit
the right to begin any new tunnels, excavations or other works thereon.



          It is being particularly understood and agreed, however, that said party
of the second part shall not be bound to carry on said work of drilling wells
on Sundays, or on legal holidays, or at nights when by reason of excessive gas
or otherwise it is unsafe to drill at nights, or when prevented by the weather,
strikes, unavoidable shortage of water, accidents or other unavoidable causes,
and that the failure of party of the second part, at any time, to diligently
and continuously operate two strings of tools shall be deemed to be excused,
and shall be excused if such failure occurs by reason of any of the causes or
reasons above named, and by such failure to operate party of the second part
shall neither forfeit nor loose any of its rights hereunder.



          IT IS FURTHER UNDERSTOOD AND AGREED that the right and privilege hereby
granted to drill or construct new wells, tunnels, or excavations for the
development of said



- 5 -









 





hydro-carbon substances upon said tract shall in any event cease and determine
at and from the expiration of said term of twenty (20) years from the date of
this instrument. It being understood and agreed, however, that the party of
the second part shall have the right to complete such wells or other works as
may have been commenced at the time of the expiration of said term, and work
whereon is in active progress.



          THIRD: The party of the second part agrees that during the year ending
February 26th, 1902 it will operate only upon the easterly one-half of said 100
acre tract; it being understood that subsequent to said date party of the
second part shall and may operate where and as it deems best; provided only
that the party of the second part shall and may operate where and as it deems
best; provided only that the part of the second part shall not, nor shall its
successors or assigns, at any time drill, bore or otherwise operate for oil or
other substances aforesaid at any point or points distant less than one hundred
(100) feet from the westerly line of said 100 acre tract. And in consideration
of the premises, and for the protection of the said party of the second part,
and for the benefit of said demised premises and as an incident and supplement
of and to said grant of rights therein, the said party of the first part for
itself and its successors in interest in and to the strip of land hereafter
described, doth hereby covenant and agree that so long as the rights and
privileges herein granted to the said party of the second part to prospect,
drill for and otherwise operate for the discovery of oil, and other such like
substances upon said 100 acre tract shall continue to exist and be and remain
in force and effect as herein provided, it, the said party of the first part
shall not, and they, its said successors in interest shall not drill or
otherwise operate for or secure or take any oil of other of said hydro-carbon
substances in or from a strip of land of the



- 6 -









 





uniform width of one hundred (100) feet adjoining the said 100 acre tract on
the west thereof and running north and south along the westerly boundary of the
same, and that after the termination of the said right and privilege herein
granted to the party of the second part to commence new wells or other works of
said party of the second part shall continue to produce oil, or other such
substances, in commercial quantities, the party of the first part shall not and
it agrees for itself, its successors and assigns, that it and they shall not,
and will not, put down any well or wells, or otherwise operate for or secure
oil or any other of said hydro-carbon substances within a distance of two
hundred (200) feet of or from any such producing well, tunnel or excavation, or
of or from any such work in process of construction in accordance with the
agreements and stipulations hereinbefore contained; it being understood that
the foregoing stipulation and agreement shall apply, not only to said 100 acre
tract, but also to the said strip of land.



          FOURTH: Whenever the party of the second shall have found oil in any
well in quantities sufficient to pay to pump, such well shall be deemed to be
and shall be, and shall be counted as, a completed well, for all and singular
the purposes of this agreement; and whenever party of the second part shall
have sunk any well to a depth of five hundred feet, although oil be not not
discovered in paying quantities, the same shall be deemed to be and shall be,
and shall be counted as, a completed well for all and singular the purposes of
this agreement.



          FIFTH: The party of the first part shall receive and have, and party of
the second part shall pay and deliver to party of the first part, as and for
rent and royalty, a one-fourth (1/4) part of the net production of all oil, or
other hydro-carbon substances, taken or obtained by said party of the second
part in commercial quantities from any



- 7 -









 





tunnels, wells, or excavations sunk or made on said 100 acre tract, or any
portion thereof, hereunder, and said rent and royalty shall be so paid by said
party of the second part to said party of the first part as long as said party
of the second part shall operate or pump any wells upon said 100 acre tract, or
take from said premises any of.said substances.



          By the term “net production” is meant the entire amount of oil, or other
hydro-carbon substances, produced and saved from any tunnel excavations or
wells on said premises, after deduction shall have been made for and of any and
all fuel used by said party of the second part in connection with its
operations on said premises. Said rents and royalties shall be delivered to
party of the first part in kind, and, if they be liquids, at and from the
storage tanks of party of the second part, on said premises, deliveries of all
rents and royalties produced during each calendar month shall be made not later
than the 15th day of the month next succeeding. The parties hereto shall, on
the 15th day of each month, make an accounting and settlement of and for the
royalty oil or other hydro-carbon substances produced and saved under this
contract from said premises during the preceding calendar month.



          In the event that party of the first part shall fail or neglect to
provide suitable means of transportation and storage for the receipt and
transportation of its royalties, at the times and places when and where the
same are to be delivered, as aforesaid, then the party of the second part may
store, transport and market the same; and in such case party of the second
part shall be entitled to a credit for, and shall receive, the usual and
reasonable rates for such storage and transportation, and for its service in
marketing such royalties, and shall account for and pay to party of the first
part the excess after deduction of such charges.



- 8 -









 





          SIXTH: Party of the second part shall keep a full, correct and accurate
account of all oil, or said other substances produced and saved by it on and
from said premises under this agreement, which said account may at all times,
during office hours, be inspected by the duly authorized officers of party of
the first part, who shall also have free access to said premises at all
reasonable times and to the wells sunk thereon, and to the storage tanks, for
the purpose of measuring and gauging the oil and other substances produced and
saved from said premises.



          SEVENTH: That party of the second part shall and will diligently and in a
business like manner pump or otherwise operate and care for the wells and other
works sunk or made on the said 100 acre tract at all times, so long as it shall
remain in possession and control of the same; it being understood and agreed,
however, that said party of the second part shall not be, and it is not, bound
to operate its works at night, on Sundays, or on legal holidays, nor when
prevented by the weather, strikes, unavoidable shortage of water, accidents, or
other unavoidable causes, nor during such times as for any reason it is unable
to secure tank cars for the transportation of said oil, in all cases in which
the party of the second part is at liberty under this contract to transport its
oil otherwise than by or through pipe-lines of party of the first part.



               It is also particularly understood and agreed that if, at any time, the
price which can be obtained at the wells for oil produced on and from said
premises shall drop to, or be fifty cents, or less, per barrel of 42 gallons,
then during such period or periods in which the market price of said oil shall
be fifty cents, or less, per barrel at the wells, party of the second part
shall not be obligated to pump, drill or otherwise work or operate on said
premises



- 9 -









 





for oil, and it shall neither forfeit nor lose any of its rights hereunder for
failure to operate during said period or periods of low price of oil.



          EIGHTH: At the expiration of the time hereinabove designated within which
party of the second part is given the right to sink new wells, drive new
tunnels or make new excavations hereunder; to-wit, twenty years from and after
February 26, 1901, or after the sooner termination of such rights, party of the
second part shall cease all further prosecution of such work on said premises,
excepting on and in any wells which have been completed, as hereinbefore
defined, or on or in any wells or other works which at the time are in process
of completion it being particularly understood and agreed that party of the
second part shall have the right to complete any well or wells, tunnels or
excavations which may have been started before such expiration of the time
within which it have the right to do such work hereunder and on which work is
in active progress, which wells, tunnels and excavations shall be deemed to be,
shall be, and shall be treated in all respect as though sunk, drilled or
prosecuted to completion prior to the expiration of such time within which the
party of the second part has the right to drill or sink additional wells or
commence said other works hereunder. It is further understood and agreed that
the party of the second part shall, at all times, either before or after the
termination of its right to commence additional wells, funnels and excavations
hereunder, have the right to repair, clean, deepen, extend, or otherwise
operate on and in any and all wells, tunnels or excavations which may have been
completed, as defined hereunder, or which are in process of completion at the
termination of such right.



          NINTH: The party of the second part hereby covenants and agrees that in
case of abandonment of any well, it shall and will use its best endeavors to
shut off



- 10 -









 





from the oil bearing rock any and all water it may have encountered in
drilling.



          TENTH: It is further particularly understood and agreed that after
termination of the right of the party of the second part to sink additional
wells or commence other new work on said premises hereunder, whether said right
shall terminate prior to or upon the expiration of said term of twenty years,
said party of the second part shall have the right to retain, deepen, extend,
clean out, repair, pump and otherwise work and operate all and singular the
well, tunnels and excavations completed, as herein defined, or commenced to be
sunk made by said party of the second part prior to the expiration of its right
to commence new work hereunder and on which work is in progress, and to secure,
remove, have, enjoy and market all and singular the oil and said other
substances therefrom/ so long as said works, or
any thereof, shall produce oil, or any of said other
any thereof, shall produce oil, any of said other
substances, in quantities sufficient to pay to pump, or secure and save;
and party of the first part hereby grants, confirms, and extends to party of
the second part, for such purposes, all and singular the rights, privileges,
easements and interests heretofore described and granted to construct, erect,
keep, maintain, and operate all water and sources of water supply, all roads,
pipe-lines, telephone lines, appliances, machinery, buildings and structures of
whatever nature necessary or convenient for use in connection with the pumping
or otherwise operating said wells, and other works, and the developing,
securing, removing and marketing such oil or other products, so long as said
wells, tunnels, or excavations, or any thereof, shall produce oil, or any of
said other substances, in quantities sufficient to pay to pump, or otherwise
secure and save.



          ELEVENTH: At the termination of the rights of the party of the
second part hereunder, either in whole or in part, or on the final
abandonment of said wells, or any thereof,



- 11 -









 





drilled, or sunk hereunder, party of the second part shall have the right to
remove from said premises any and all tubings, casings, rigs, pipes, machinery,
telephone lines, and any and all other appliances and structures of whatever
nature owned by it, or placed by it upon said premises.



          TWELFTH: And as a further consideration for the making of the said lease
and grants, the party of the second part for itself, its successors and
assigns, hereby covenants and agrees with the party of the first part, its
successors and assigns, that in all cases of shipments by it of oils produced
upon said 100 acre tract under this agreement, to points of delivery at which
delivery can be conveniently made through the pipe lines owned or controlled by
party of the first part, or by combination of said pipe lines with other
transportation lines or facilities, the party of the second part shall make
such deliveries through and by means of said pipe-lines of party of the first
part, and party of the first part agrees that is shall and will receive, and
with diligence and reasonable promptness deliver all such oils to any and all
such points as party of the second part may desire oil delivered and which it
can conveniently reach by its pipe-lines, or by combination thereof with other
transportation facilities. And party of the first part further agrees that it
shall and will charge for such transportation of said oil, whether it be
transported entirely through its own pipe lines, or by combination thereof with
other transportation lines or facilities, rates and charges in no case higher
than the usual rates and charges for such service, and that in case said oil
could be delivered, or procured to be delivered by party of the second part at
such points by means of transportation lines or facilities not owned or
controlled in whole or in part by party of the first part, the charges of the
party of the first part for transporting said oil to such point or points shall
not, and will not be greater than the cost would be to



- 12 -









 





party of the second part of delivering said oil by such other transportation
lines or methods. And it is agreed that in no event shall the party of the
first part charge, or the party of the second part be obligated to pay, for the
transporting of said oil from said demised premises to either San Pedro or Los
Angeles, a greater charge than fifteen (15C) cents per barrel of 42 gallons.
It is further agreed in case of delivery by party of the second part, on sales
to any railroad or to any refinery within one-half mile of Olinda, it may make
such arrangements for the transportation and delivery of its oil at such point
as it sees fit, and the foregoing provision and requirement shall not apply to
such point or points.



          It is further particularly understood and agreed that all and singular the
foregoing provisions concerning the transportation of oil by and through pipe
lines of party of the first part apply exclusively and only to oil of a gravity
higher, that is to say, lighter, than 16° Baume.



          THIRTEENTH: The following covenants herein contained by and on behalf of
party of the second part are of the essence of this contract, to-wit



          1st To make delivery of oil produced from said demised premises by and
through the pipe lines of party of the first part in cases when so required by
the provisions of this contract made in that behalf.



          2nd To pay and deliver the rent and royalty in and by this contract
stipulated and required to be paid party of the first part by party of the
second part of and from the crude petroleum oil and other hydro-carbon
substances produced or secured and saved from said demised premises.



          3rd To pump or otherwise operate wells and other works of party of the
second part on and in said demised



- 13 -









 





premises diligently and in a businesslike manner in accordance with
the provision of this contract in that behalf.



          And it is agreed that upon the material failure of party of the second
part to keep and perform all or anyone of said essential covenants, and upon
the continuance of such material failure or default for a period of thirty (30)
days after service of written notice given by party of the first part to the
party of the second part, particularly designating the matter or thing
constituting such material failure or default, this lease and contract and all
the rights, privileges, interests, easements, servitudes and hereditaments by
it created and granted (excepting the rights and privileges hereinbefore
contained for removal of property on the termination of this contract) may
forthwith re-enter upon each and every portion of said demised premises
affected hereby in possession of the party of the second part, and the same and
every portion thereof have, hold and enjoy as if this instrument had never been
executed.



          FOURTEENTH: It is hereby expressly understood, covenanted and agreed
that the lease of the above described peremises is made, and the right of
possession of said premises under said lease is given, solely and exclusively
for all and singular the purposes hereinabove set forth, that is to say, to
fully assure to the party of the second part the full and complete exercise
and enjoyment of all and singular the rights, interests, privileges,
easements, servitudes and hereditaments herein granted to said party of the
second part, and in all respects to protect it therein; and that the party of
the first part, its successors and assigns, shall have the right to use, enjoy
and occupy the said demised premises, subject only to the possession, rights,
interests, privileges, easements, servitudes and hereditaments herein given
and granted to the party of the second part, and for such purpose and
purposes, and in such



- 14 -









 





manner as shall not in any way interfere with the full, free and complete
exercise and enjoyment by the said party of the second part of the said
possession, rights, interests, privileges, easements, servitudes, and
hereditaments, and that said party of the second part at the expiration and
termination of its right to occupy and possess the said demised premises in
whole or in part as hereinbefore expressed, will quit and surrender the said
premises in whole or in part as the case may be, subject nevertheless to the
right already reserved to the party of the second part in the foregoing
ELEVENTH article hereof to remove from said premises, and from any portion
thereof, within a reasonable time, any and all tubings, casings, rigs, pipes,
machinery, telephone lines, and any and all other appliances and structures or
whatever nature owned by it or placed by it upon said premises, or any part
thereof.



          All and singular the grants, covenants and agreements herein contained and
made by and on behalf of party of the first part shall be and are covenants
running with the land in favor of the party of the second part, and binding
upon and against the party of the first part, and its successors in interest,
in, of, to and respecting said demised premises.



          All of the provisions, covenants, agreements and stipulations herein
contained, by which either one of the parties hereto is bound, shall in like
manner be binding upon the successors and assigns of the party so bound; and
those which are for the benefit of either of the parties shall in like manner
inure to the benefit of the successors and assigns of the party so benefitted.



          IN WITNESS WHEREOF each one of the corporations, parties hereto, has on
the day and year first above written, caused to be hereunto set its corporate
name and its corporate seal to be affixed by its President and its Secretary
thereunto duly authorized by a resolution of its



- 15 -









 





Board of Directors, copies of which resolutions, respectively designated
Exhibit A and Exhibit B, are hereto annexed and hereby referred to and by
reference made a part hereof.



	 	 	 	 	 
	

	 	UNION OIL COMPANY OF CALIFORNIA
	 
	 	 	 	 
	

	 	BY_(Signed) Lyman Stewart _________
	

	 	 	 	Its President.
	 
	 	 	 	 
	(SEAL)
	 	 	 	 
	 
	 	 	 	 
	

	 	BY ____” ____ W. A. Carney _________
	

	 	 	 	Its Secretary.








- 16 -









 













 









 









Exhibit “D”




REPORT OF PROPERTY/WELL TRANSFER OR ACQUISITION

(To be completed by old and new operators)




	 	 	 
	Please complete and return this form to:

	 	


	

	 	(date)
	Division of Oil, Gas, and Geothermal Resources
	 	 
	 
	 	 
	


	 	 
	


	 	 
	


	 	 







	 	 	 	 	 	 	 
	Effective date of transfer / acquisition

	 	 	 	, date of possession	,
	

	 	
 
	 	 	 	
 
	

	 	(date)
	 	 	 	(if different)







	 	 	 
	

	 	, transferred
	
 
	 	 
	(old operator)
	 	 







	 	 	 
	the following wells to
	 	 
	

	 	
 
	

	 	(new operator)







NOTE: Pursuant to Section 3202 of the Public Resources Code, before wells will
be transferred, the new operator must provide proper bond coverage and well
information for all transferred active, idle, and/or plugged and abandoned
wells.



	 	 	 	 	 	 	 
	Well Designation
	 	Field or County
	 	Sec.    T.    R.
	 	API Number

	 
	 	 	 	 	 	 
	
 

	 	
 
	 	
 
	 	
 
	 
	 	 	 	 	 	 
	
 

	 	
 
	 	
 
	 	
 
	 
	 	 	 	 	 	 
	
 

	 	
 
	 	
 
	 	
 
	 
	 	 	 	 	 	 
	
 

	 	
 
	 	
 
	 	
 
	 
	 	 	 	 	 	 
	
 

	 	
 
	 	
 
	 	
 







(if additional space is needed, use separate sheets.)



Legal description
of the land where the well(s) is (are) located:



 

 



	 	 	 	 	 	 	 
	OLD OPERATOR

	 	 	 	NEW OPERATOR	 	 
	
 

	 	 	 	
 	 	 
	 
	
 

	 	 	 	
 	 	 
	(operator name)

	 	 	 	(operator name)	 	 
	 
	
 

	 	 	 	
 	 	 
	(address)

	 	 	 	(address)	 	 
	 
	
 

	 	 	 	
 	 	 
	Phone (            )

	 	 	 	Phone (            )
	 	 
	
	 	 	 	
	 	 
	By

	 	 	 	By	 	 
	


	 	 	 	
	 	 
	(signature)    
            
     (date)

	 	 	 	(signature)        
            (date)	 	 
	 
	
	 	 	 	
 	 	 
	(printed name)   
                  (title)

	 	 	 	(printed name)          
          (title)	 	 







Note: By signing this form, both the old operator and the new operator certify
that the new operator owns the mineral interest or holds a valid and effective
lease giving the new operator the right to operate the well or wells being
transferred.





 









 








EXHIBIT “E”

BILL OF SALE




          For valuable consideration, the receipt and adequacy of which is hereby
acknowledged, AERA ENERGY LLC, A CALIFORNIA LIMITED LIABILITY COMPANY
(“Transferor”), to the fullest extent legally permissible (and only to the
extent legally permissible), hereby sells, assigns, transfers, grants, sets
over and delivers unto NUEVO ENERGY COMPANY, A DELAWARE CORPORATION
(“Transferee”), all of Transferor’s right, title, interest, estate, power and
privilege in and to the title, interest, estate, power and privilege in and to
(i) the wells listed on Attachment 1 (the “Wells”) and (ii) all of
Transferor’s fixtures, equipment and personal property associated with the
Wells and not retained by Transferor (the “Personalty”). THE WELLS AND THE
PERSONALTY ARE CONVEYED IN “AS IS,” “WHERE IS” CONDITION, WITH ALL FAULTS AND
DEFECTS, WITHOUT WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OF ANY KIND,
INCLUDING WITHOUT LIMITATION, WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE,
HABITABILITY, MERCHANTABILITY, SUITABILITY OR QUALITY.



          1.     Transferee warrants, represents and acknowledges it is hereby acquiring
the Wells and Personalty based solely upon Transferee’s own independent
investigations and inspections of the Wells and Personalty, and not in reliance
on any information provided by Transferor or Transferor’s agents or
contractors.



          2.     Transferee warrants, represents and acknowledges it is hereby acquiring
the Wells and Personalty subject to and in satisfaction of the terms and
conditions of that certain
Oil Accommodation and Surface Development. Agreement dated September      , 2003
between
the Transferor and Transferee.



          3.     This Bill of Sale shall bind and inure to the benefit of the parties
and their respective successors, legal representatives and assigns.



          4.     This Bill of Sale may be executed in counterparts with the same force
and effect as if the parties hereto had executed one instrument and each such
counterpart shall constitute an original hereof.



          Executed
and effective this
      
day of
                     ,
20    .



	 	 	 	 	 	 	 
	“TRANSFEROR”

AERA ENERGY LLC

	 	“TRANSFEREE”

NUEVO ENERGY COMPANY
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	

	 	
 
	 	 	 	
 
	

	 	 	 	 	 	George B. Nilsen
	Its:

	 	 	 	Its: Vice President
	

	 	
 	 	 	 	 







 









 






ATTACHMENT 1




WELLS




     The following wells located in Section 8, Township 3 South, Range 9 West in
Orange County, California, to-wit:



 









 





EXHIBIT “F”




Form for
Relinquishment of Surface Rights to the Vacated Property




	 	 	 	 	 	 	 
	RECORDED AT THE REQUEST OF

	 	 	)	 	 	 
	AND WHEN RECORDED RETURN TO:

	 	 	)	 	 	 
	

	 	 	)	 	 	 
	Aera Energy LLC

	 	 	)	 	 	 
	3030 Saturn Street, Suite 101

	 	 	)	 	 	 
	Brea, CA 92821

	 	 	)	 	 	 
	

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	No Documentary Tax Due

	 	 	 	 	 	Space above this line for
	No Consideration Paid

	 	 	 	 	 	Recorder’s use only







PARTIAL QUITCLAIM OF OIL & GAS LEASE




WHEREAS, By oil and gas lease dated February 26, 1901 and recorded at Book 2,
Page 128 of the Lease Records of Orange County CA,, Union Oil Company, as
Lessor, granted certain rights to Columbia Oil Producing Company, as Lessee
(such lease and any memorandums or amendments thereto being hereafter
collectively referred to as “Said Lease”); and



WHEREAS, Aera Energy LLC, a California limited liability company (hereinafter
called “Aera”) is the owner and holder of Said Lease as successor in interest
to Columbia Oil Producing Company; and



WHEREAS, Aera desires to quitclaim and relinquish certain rights to occupy a
portion of the surface of Said Lease, subject to the terms, conditions and
reservations set forth below.



NOW THEREFORE, for a valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Aera does hereby remise, release, and forever
quitclaim unto the persons legally entitled thereto, as their interests may
appear, the following interests in Said Lease,




The right to enter on or occupy that portion of Said Lease identified in the
attached Exhibit “A” as the “Phase I Vacated Property”, from the surface of
the earth down to an including a depth of Five Hundred Feet (500’), for any
purpose other than those purposes explicitly reserved in this instrument.
The area and depth described in this paragraph are referred to herein as the
“Vacated Property”.



RESERVING unto Aera, its successors and assigns the following rights and
privileges:




     (a)     other than the right to occupy the Vacated Property, the right to
operate for, extract and sell any and all oil, gas, minerals, and other
hydrocarbons by whatsoever name known, and all products derived from any of
the foregoing that may be produced from beneath the Vacated Property
pursuant to the terms of Said Lease below a depth of 500 feet below the
finished grade of each portion of the Property (the “Oil, Gas & Minerals”),




     (b)     together with the right and easement (including the right to grant
the same to others) to whipstock or directionally drill and mine from lands
other than the Vacated Property, oil or gas wells, and for such whipstocked
or directionally-drilled wells, tunnels, and shafts to pass through the
Vacated Property at depths greater than 100 feet below finished grade, and
to bottom such wells under and beneath or beyond the exterior limits
thereof, and to redrill, retunnel, equip, maintain, repair, deepen, and
operate any such wells,



 









 






     (c)     except for the rights herein relinquished, all right, title and
interest in and to privileges and benefits, express and implied, to explore
for and produce the Oil Gas & Minerals under the terms of Said Lease,




     (d)     the right, but not the duty, to re-enter onto the Vacated Property
and perform an investigation and remediation in accordance with applicable
environmental laws in response to any assertion or claim that there exists
on the Vacated Property any condition of the soil, surface waters,
groundwaters that (i) requires investigatory, corrective or remedial
measures, and/or (ii) comprises a basis for claims of and/or liabilities in
respect of the ownership or operation of the Vacated Property. The agreed
upon standard for any remediation shall be no more stringent that
that which is required by applicable environmental laws and any
government agency with jurisdiction to enforce such laws.



This Partial Quitclaim is granted pursuant to that certain “Oil Accommodation
and Surface
Development Agreement” dated September         , 2003 by and between Aera and Nuevo
Energy Company.



This
instrument is executed on this
         day of
           ,
200   .



	 	 	 	 	 
	 

	 	AERA ENERGY LLC
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	

	 
	 	 	 	 
	

	 	Its:	 	 
	

	 	 	 	








	 	 	 	 	 
	STATE OF CALIFORNIA

	 	:
	 	 
	

	 	:	 	 
	COUNTY OF

	 	:	 	 







          On
        , before me,
             ,
personally appeared                         of the Aera Energy LLC, personally
known to me to be the person whose name is subscribed to the within instrument
and acknowledged to me that he executed the same in his authorized capacity,
and that by his signature on the instrument the person, or the entity upon
behalf of which the person acted, executed the instrument.



          WITNESS my hand and official seal.



	 	 
	 
	

	 
	Notary Public







 









 






Exhibit “G” Form of Easement




	 	 	 	 	 	 	 
	RECORDED AT THE REQUEST OF

	 	 	)	 	 	 
	AND WHEN RECORDED RETURN TO:

	 	 	)	 	 	 
	

	 	 	)	 	 	 
	AERA ENERGY LLC

	 	 	)	 	 	 
	3030 SATURN STREET, SUITE 101

	 	 	)	 	 	 
	BREA, CA 92821

	 	 	)	 	 	 
	

	 	 	)	 	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	 	 	Space above this line for
	

	 	 	 	 	 	Recorder’s use only







UTILITY EASEMENT




FOR A GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency of which is
hereby acknowledged, NUEVO ENERGY COMPANY (“Owner”) does hereby grant and
convey to AERA ENERGY LLC (“Grantee”) and to its successors and assigns the
following rights over a portion of that certain real property (the “Property”)
legally described on Exhibit “A” attached hereto which is owned by Owner and
located in Orange County California:



1.     Scope of Easement. A non-exclusive perpetual easement and right of way in,
on, over, under, across and along the following described portions of the
Property for the following described purposes (collectively referred to herein
as the “Easement Rights”): Those certain four (4) strips of land legally
described on Exhibit “B” attached hereto and graphically depicted on Exhibit
“C” attached hereto (the “Easement Area”), for the purposes, from time to time,
of constructing, using, operating, inspecting, maintaining, altering,
repairing, replacing, reconstructing, inspecting, changing the size of and
removing or abandoning in place facilities, including but not limited to: (i)
up to four (4) underground pipelines for transmission of oil, natural gas,
water, waste water, and sanitary sewer; (ii) pump stations; (iii) overhead
electric power transmission lines and communication lines to the extent
necessary to serve the pipelines and pump stations; (iv) an all-weather access
and service road, and (v) all surface and subsurface equipment appurtenant,
necessary or convenient to any of these purposes (collectively referred to
herein as “Facilities”) on, in, over, under and through the Easement Area. The
Facilities referred to herein do not include any existing facilities that may
be present on the Property as of the date of this instrument. Grantee shall
also have the right to clear and keep clear the Easement Area from all
vegetation and debris, and to use such temporary working space within fifteen
feet (15’) adjacent to the Easement Area as is reasonably required for the
installation, removal or relocation of any of the Facilities. Provided however
should Grantee not construct the Facilities for which this Easement is granted
within the earlier of ten (10) years from the receipt of all final governmental
approvals for that project currently designated Puente Hills, or twenty-five
(25) years from the date hereof, or should Grantee fail to pay the
consideration specified in Section 2 , this Easement shall be extinguished and
Grantee shall promptly deliver a Quitclaim of all Easement Rights granted
hereunder to Owner in recordable form.



2.     Consideration. In consideration of Owner granting to Grantee the rights
contained herein, Grantee shall pay to Grantor the following consideration: (i)
Fifteen Thousand Dollars ($15,000.00) upon execution of this easement; and,
(ii) One Hundred Thousand Dollars ($100,000.00) at such time as Grantee submits
the Construction Notice, as defined in Section 4 below.



 









 








3.     Rights of Ingress and Egress. The rights of ingress, egress, and access to,
from in, over, across and through the Easement Area in order to enjoy the
Easement shall be along the route designated by Owner and acceptable to Grantee
in Grantee’s reasonable discretion.



4.     Construction Notice. Not less than 90 days prior to commencing
construction of any Facilities, Grantee shall notify Owner in writing of the
proposed alignment of the Facilities (the “Construction Notice”), which shall
be located along a single continuous route anywhere within the strips of land
described in Exhibit B. The Construction Notice shall include drawings showing
the detailed proposed design for the facilities and will allow Owner a thirty
(30) day period in which to comment on the proposed design. Grantee shall use
commercially reasonable efforts to accommodate Owner’s reasonable requests for
design modifications to reduce impacts to ongoing oil operations, housing
development or grading operations. Within 30 days after construction is
actually commenced, as evidenced by trenching for pipelines, Grantee shall
execute and deliver to Owner a recordable quitclaim of the Easement Rights
pertaining to that portion of the Easement Area which is not included in the
Construction Notice. Within a reasonable time after completion of construction,
Grantee shall provide Owner with a set of “as built” drawings for the facility.



5.     Governmental Approvals and Regulations. The design, construction,
installation, maintenance and repair of all facilities shall be in compliance
with the Encumbrance Documents (as defined below) and with all applicable
governmental requirements, rules and regulations.



6.     Relocation of Facilities. In the event that Owner wishes to relocate any
Facilities installed within the Easement Area subsequent to the execution date
of this Easement, Grantee shall, following not less than ninety (90) days
written notice from Owner, relocate the Facilities to an alternate location on
the Property, which alternate location shall be represented by the recorded
“Replacement Easement” (as defined below). Such alternate location shall be
provided by Owner at no cost to Grantee and shall be acceptable to Grantee in
Grantee’s reasonable discretion. Owner shall be solely responsible for the
payment to Grantee of all reasonable “Relocation Costs” including without
limitation the cost of abandoning the existing Facilities and designing,
engineering, permitting, bonds, labor and material for the relocated
Facilities. Upon the completion of the relocation of the Facilities and the
receipt of payment of all Relocation Costs, Grantee shall execute, in
recordable form, a quitclaim deed for that portion of the Easement Area so
vacated. Concurrently with Owner’s delivery to Grantee of a request for Grantee
to relocate all or any of the Facilities, Owner shall present to Grantee an
easement document covering the relocation area (the “Replacement Easement”)
which shall be identical in all material respects to this Utility Easement.



7.     Limitations on Use of Surface Area. Grantee’s use of the Easement Area is
expressly subject to the terms, conditions, and limitations specified in the
documents listed in Exhibit “D” (the “Encumbrance Documents”). Owner represents
and warrants that Owner has not granted and, to its knowledge, is not aware of
any restrictions or limitations to the use of the Easement Area other than
those that are contained in Encumbrance Documents or otherwise disclosed on
Exhibit “D”. Owner agrees not to erect, place, construct or maintain, or
permit the erection, placement, construction or maintenance of any permanent
building or similar above-ground structure within the Easement Area. Owner
further agrees not to plant or allow the planting of any landscaping within the
Easement Area without the prior written consent of the Grantee. Grantee shall
at all times have the right to clear and keep clear the Easement Area of all
growth and vegetation that may limit, endanger or interfere with any of the
rights and privileges herein



 









 








granted.



8.     Runs With the Land. The easement granted herein shall run with the land and
the benefits and burdens herein created shall be binding upon the heirs,
executors, administrators, successors, and assigns of the parties hereto. The
rights and easements herein granted shall be assignable together or separately,
in whole or in part to any successor in interest to Grantee’s Brea area real
estate or oil & gas operations, or to any public or private utility having
jurisdiction over any of the Facilities. Owner shall disclose the existence of
this easement in writing to Owner’s successors and assigns, and shall
explicitly recite this easement in writing in any future transfer, assignment,
or encumbrance documents



9.     Grantee shall exercise the rights herein granted in such manner as to
interfere as little as may be practicable with Owner’s use and enjoyment of the
Easement Area. All work performed by Grantee shall be in a workmanlike manner
consistent with the approved design, exercising all due caution and safety in
enjoyment of the rights granted hereunder.



10.     Grantee shall coordinate and fully cooperate with Owner’s contractors and
shall make all reasonable efforts to accommodate Owner’s construction schedule
in connection with Owner’s construction and any reconstruction of all or any
part of improvements to be made or made by Owner on or about the Easement Area.
In performing any work in the Easement Area, Grantee, its employees, agents and
contractors shall observe the following:



          10.1 Grantee shall provide Owner with not less than seventy-two (72)
hours’ advance written notice (which may be given by facsimile transmission or
otherwise) of the intention of Grantee, its employees, agents or contractors to
perform work in the Easement Area, specifying the purpose, location and
anticipated period of time required for the work. Grantee shall comply with
such reasonable requests regarding Grantee’s work as Owner may timely make in
response to Grantee’s notice.



          10.2 Grantee, its employees, agents and contractors will perform all
work in the Easement Area between the hours of 6:00 a.m. and 700 p.m. unless
Owner has granted its consent to the performance of work at another time.



          10.3 Unless the work to be performed in the Easement Area requires
construction or demolition, including the cutting of asphalt and/or excavation
of soil, the foregoing restrictions shall not apply to work which may be
performed by Grantee’s employees, agents and contractors in a period of thirty
(30) minutes or less in any twenty-four (24) hour period.



          10.4 None of the foregoing restrictions shall apply in the event of an
emergency.



          10.5 Grantee shall at all times secure Grantee’s work so that the Easement
Area and surrounding areas are safe from pedestrian and vehicular traffic and
shall maintain and require the contractors to maintain customary insurance
contracts naming Owner as an additional insured.



          10.6 Grantee shall maintain the surface of the Easement Area in a manner
consistent with the Encumbrance Documents and all applicable laws and
regulations.



11. Operations and Maintenance All improvements hereafter installed in the
Easement Area



 









 








shall be buried not less than three (3) feet from the finished surface of the
Easement Area except for roads and manholes, which shall be flush with the
ground surface, power lines and pump stations. All such improvements shall be
installed, operated, maintained and repaired in accordance with all applicable
laws, rules and regulations. Grantee shall have the right to install a maximum
of two (2) pump stations above the surface of the Easement Area. The Easement
Area shall be expanded to include an additional pad area of up to twenty five
feet by forty feet (25’x 40’) to accommodate each pump station required, which
additional pad area shall be provided by Owner at no additional charge.
Proposals for any pump station shall be subject to the Construction Notice
provisions of Section 4. If required by Owner, all pump stations shall at be
aesthetically screened at Grantee’s expense.



12. Repairs. Grantee shall, at Grantee’s sole cost and expense, timely restore
to their prior condition or better, any and all improvements in, on and under
the Easement Area, which are damaged or destroyed by Grantee, or its employees
or agents. In the event that all such damaged or destroyed improvements are not
fully restored within (i) Sixty (60) business days following written notice
from Owner or (ii) the substantial completion of Grantee’s work, whichever is
later, Owner shall have the right to make all such repairs and reconstruction
at Grantee’s sole cost and expense and should Grantee not fully reimburse Owner
for all of Owner’s necessary and reasonable costs and expenses so incurred
within thirty (30) days following Owner’s delivery of an invoice and reasonably
supporting back-up data, the amount demanded shall bear interest at the Bank of
America National Association’s prime (reference) rate of interest but in any
event not in excess of the maximum rate of interest which can be charged by
non-exempt lenders in business related transactions in the State of California.



13. Prior Rights, Taxes. Owner grants this easement subject only to any and
all covenants, conditions, restrictions, reservations, easements, rights,
rights-of-way, encumbrances and other matters which are of record or are
disclosed on Exhibit “D”. Grantee shall be responsible for and pay any and all
taxes, assessments, fees and levies which arise out of or are attributable to
Grantee’s ownership interest or rights in the easement and any Facility
constructed by or on behalf of Grantee under the Easement Area. The foregoing
is not intended to cause Grantee to pay Owner’s real property taxes which are
not related to the value or existence of the Facilities.



15. Indemnity. The rights granted herein shall be reasonably exercised by
Grantee, and Grantee shall indemnify, defend and hold harmless Owner from all
risks, claims demands or causes of action for any damage, injury, death,
disease, loss, cost, expense, claim, action, penalty, fine and damage or
destruction to property, both real and personal, incurred or made by Grantee
and/or Owner, their respective employees, agents, representatives, contractors,
or any third party, including governmental agencies, which results from
Grantee’s and its employees’, agents’ and contractors’ use or enjoyment of the
Easement Area and/or from the Facilities placed in the ground, except to the
extent arising from the gross negligence or willful misconduct of Owner or its
employees, agents, contractors or representatives.



16. Notices. Any notice required to be given or delivered to any party shall
be deemed to have been received when personally delivered or seventy-two
(72) hours following deposit of the same in any United States Post Office,
registered or certified, postage prepaid, or upon confirmation of delivery
by facsimile transmission, provided that delivery is made Monday through
Friday, and prior to 1:00 p.m. on Friday, addressed as follows:



 









 








	 	 	 
	Owner:

	 	Nuevo Energy Company

1021 Main Street, Suite
2100
 Houston, TX 77002

Attention: David Leach

Telephone: (713) 374-4802

Facsimile: (713) 374-4899
	 
	 	 
	Grantee:

	 	Aera Energy LLC

3030 Saturn Street, Suite 101

Brea, CA 92821

Attention: George L. Basye

Telephone: (714) 577-9146

Facsimile: (714)577-9149
	 
	 	 
	With a copy to:

	 	Aera Energy LLC

P.O. Box 11164

Bakersfield, CA 93389-1164

Attention: Coastal Asset/Land







       Each party may change its address or facsimile number for delivery of
notice by delivering written notice of such change to the other party.



       IN WITNESS WHEREOF, this instrument is duly executed this    day of
September, 2003.



	 	 	 	 	 	 	 
	OWNER:

	 	GRANTEE:
	 
	 	 	 	 	 	 
	NUEVO ENERGY COMPANY

	 	AERA ENERGY LLC
	 
	 	 	 	 	 	 
	By:

	 	 	 	By:	 	 
	

	 	

	 	 	 	

	

	 	David A. Leach
	 	 	 	T.E. Enders
	Its:
Attorney-in-Fact

	 	Its: Attorney-in-Fact







 









 






	 	 	 	 	 
	STATE OF CALIFORNIA

	 	:
	 	 
	

	 	:	 	 
	COUNTY OF ORANGE

	 	:	 	 







          On             , before me,             , personally appeared
David A. Leach, Attorney-in-Fact of the Nuevo Energy Company, personally known
to me to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf
of which the person acted, executed the instrument.



          WITNESS my hand and official seal.



	 	 	 
	 

	 	

	

	 	Notary Public







	 	 	 	 	 
	STATE OF CALIFORNIA

	 	:
	 	 
	

	 	:	 	 
	COUNTY OF KERN

	 	:	 	 







          On             , before me,             , personally appeared
T.E. Enders, Attorney-in-Fact of Aera Energy LLC, personally known to me to be
the person whose name is subscribed to the within instrument and acknowledged
to me that he executed the same in his authorized capacity, and that by his
signature on the instrument the person, or the entity upon behalf of which the
person acted, executed the instrument.



          WITNESS my hand and official seal.



	 	 	 
	 

	 	

	

	 	Notary Public








 










 





Exhibit “H”




LAND DEVELOPMENT LICENSE AGREEMENT




     THIS LAND DEVELOPMENT LICENSE AGREEMENT (“Agreement”) is made as of
September     , 2003, by and between Aera Energy LLC (“Aera”), and Nuevo Energy Company
(“Licensee”).



RECITALS




     A. Aera is the owner of certain real property located in Orange County,
California, more particularly described in Exhibit “A” to this Agreement
(“Property”).



     B. Licensee is the owner of certain real property located in Orange
County, California, which real property is adjacent to the Property and is more
particularly described in Exhibit “B” to this Agreement (“Nuevo Property”).



     C. In connection with certain construction Licensee is performing or
intends to perform on the Nuevo Property, Licensee desires to enter on the
Property for the purposes hereinafter set forth.



     D. Aera is willing to permit Licensee to enter on the Property subject to
the terms and conditions of this Agreement.



     NOW, THEREFORE, FOR VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged, Licensee and Aera agree as follows:



     1. LICENSE



        1.01. Purposes. In connection with Licensee’s proposed grading and
installation of land improvements on the Nuevo Property, Licensee intends to
enter upon the Property pursuant to this Agreement for the following purposes
only:



               (i) staking and prestaking activities in connection with grading,
slope stabilization and mass excavation and related activities on the Nuevo
Property;



               (ii) ingress to and egress from the Nuevo Property in connection
with grading, slope stabilization and Licensee’s excavation activities on the
Nuevo Property;



               (iii) ingress to and egress from the Nuevo Property for
planting,
maintenance and fuel modification of plants and vegetation on the Property and
the Nuevo Property and related activities as approved by Aera and required by
Governmental Authorities (as defined below) in connection with Licensee’s Work
on the Nuevo Property;



               (iv) the possible construction of shear keys and toe key trenches on
the Property in connection with grading activities on the Nuevo Property. The
shear keys and toe key trenches may, to the extent permitted by and pursuant to
the Work Plan (as defined below), be located partially on the Property; and



               (v) ingress and egress from the Nuevo Property for construction
and maintenance of drainage and erosion control structures on the Nuevo
Property



MP915501 – 1




 









 








               (vi) such other access and construction of such other improvements as
may be necessary and advisable by Licensee and approved by Aera.



               (vii) Any remedial grading required in connection with grading
activities on the Nuevo Property and set forth in the Work Plan



        The activities and work permitted to be performed by Licensee on the
Property are referred to herein as the “Work.”



        1.02. Permit to Enter Premises. Aera hereby grants to Licensee a
nonexclusive revocable license and permission to enter upon the Property for
performance of the Work and for no other purpose, subject to Licensee’s strict
compliance with all the terms of this Agreement and provided that the following
conditions precedent have been met i) Licensee has delivered to Aera the
deposits specified in Section 1.03, and ii) Licensee has received from Aera
written notice (“Start Notice”) that the “Oil Accommodation Work” (defined in
Section 1.03 below) has been completed or has otherwise been granted written
permission to enter upon the Property as part of the Work Plan. The license
shall continue for the period of time described in Section 6 below. Licensee
shall use commercially reasonable efforts not to interfere with the use or
enjoyment thereof by Aera or its representatives, employees, agents,
independent contractors, or joint venture partners. Licensee shall not permit
any other party, except Licensee’s duly authorized representatives, employees,
agents, independent contractors, and any subcontractors of such independent
contractors (collectively “Licensee’s Representatives”), to enter or use the
Property during the term of this Agreement unless such entry or use is pursuant
to the Work Plan (as defined below).



        1.03. Deposit and Payment for Oil Accommodation Work. Licensee will deliver
to Aera notice of its intent to commence at least 150 days prior to actual
grading operations on the Property together with its grading plan. Licensee
shall remit to Aera a deposit of $20,000 at the same time as notice is given.
The deposit shall be utilized by Aera to prepare engineering plans for the
evaluation of any necessary relocation and demolition of certain oil field
facilities and pipelines (“Oil Accommodation Work”) together with a
commercially reasonable cost estimate and work schedule for performing such Oil
Accommodation Work. The engineering evaluation shall reflect both pre-grading
and post-grading Oil Accommodation Work. Aera will use commercially reasonable
efforts to provide the cost estimate for the Oil Accommodation Work within 45
days of receipt of the aforementioned notice from Licensee. Licensee shall then
remit to Aera the amount of such cost estimate, less any unspent funds from the
initial deposit. Aera shall then use commercially reasonable efforts to perform
its work such that all pre-grading Oil Accommodation Work is performed and
completed prior to the commencement of grading operations. Once Licensee has
completed its grading operations, Aera shall promptly commence and perform any
post-grading Oil Accommodation Work, if any, in a diligent and commercially
reasonable manner.



        1.04. Reconciliation of Oil Accommodation Work. The deposit made by
Licensee for the Oil Accommodation Work represents an advance payment for the
commercially reasonable estimated costs of such work and, except as may be
expressly provided to the contrary herein, does not represent the limit of
Licensee’s obligation to reimburse 100% of Aera’s actual costs for each
operation performed. Aera will have the right to commingle any such deposit
with Aera’s other cash assets. A final reconciliation will be performed within
sixty (60) days after the completion of the Oil Accommodation Work based on
actual invoices paid for such project. Aera will furnish Licensee with a cost
summary detail report based upon actual charges for each such project and
agrees to return any unspent portions of the deposit or, in the



MP915501 – 2




 









 







event of shortfall, Licensee agrees to pay any amount expended in excess of the
deposit. In the event that either party does not pay the amount owed within
thirty (30) days following receipt of written demand, the unpaid amount will
bear interest at ten percent (10%) per annum, but in any event not in excess of
the highest rate allowable by California law to be charged by non-exempt
lenders in business related transactions, from the demand date until paid in
full. At any time within 120 days after payment, Licensee shall have the right
to audit Aera and its vendors’ records as to all costs paid by Licensee to Aera
hereunder. Aera shall use good faith and commercially reasonable efforts to
promptly respond to inquiries resulting from such audit. Both Aera and Licensee
shall diligently and in good faith work to resolve any of such inquiries.




     2. SUPERVISION BY AERA REPRESENTATIVE.



        2.01. Aera Representative. Licensee acknowledges that all aspects of the
Work must be carried out in accordance with the Work Plan and the Work Plan
shall be subject to written approval of an Aera-appointed representative (“Aera
Representative”). The Aera Representative shall at all times represent Aera and
Aera’s interests with regard to the Work at the Property and may, in Aera’s
discretion, represent Aera before any governmental or quasi-governmental
agency, entity, department or regulatory authority (“Governmental
Authority(ies)”) having or asserting jurisdiction over the Property or Work.
Licensee acknowledges that Aera and/or the Aera Representative may perform
certain tests on the Property or, with Licensee’s prior written approval, the
Nuevo Property (including, without limitation, geologic and soil exploration,
soils tests, compaction tests, and drainage tests) prior to or during the
course of the Work to ensure that the Work is in accordance with the Work Plan.
Aera shall use commercially reasonable efforts to minimize the delay,
suspension or termination of the Work. Licensee and the Licensee
Representatives shall reasonably cooperate with Aera and/or the Aera
Representative in connection with such testing. If the Aera or the Aera
Representative provides Licensee with notice that the Work materially deviates
from the Work Plan or is not being performed in accordance with applicable code
requirements or otherwise poses a potential danger to the human health or
safety, oil operations, structures or improvements, including any future
improvements, on or adjacent to the Property, and Licensee does not cure such
deficiency within one (1) business day (or if more than one (1) business day is
reasonably required to effectuate such cure, a reasonable time, provided
Licensee has commenced to cure within such one (1) business day period an
diligently pursues the cure thereafter) then Aera and/or Aera Representative
shall have the right to order Licensee to immediately cease work . Such notice
may be given orally provided that it is followed up in writing within one (1)
business day. Upon any such suspension, Licensee and Aera shall use good faith
efforts to agree upon a modification to the Work Plan so as to eliminate the
hazardous condition, deviation from the Work Plan, or lack of compliance so
that the Work can be recommenced in accordance with the modified Work Plan.
Initially, the Aera Representative shall be Pacific Soils Engineering, Inc.,
3002 Dow Avenue, Suite 514, Tustin, California 92780, Attention: Jim Castles
(Phone: 714/730-2122, FAX: 714/730-5191). Aera may change the Aera
Representative at any time upon five (5) days written notice to Licensee.



        2.02. Work Plan. No later than fifteen (15) business days prior to
commencement of any portion of the Work at the Property, Licensee shall prepare
and deliver to Aera and the Aera Representative, in writing, complete plans for
the Work and time schedules for completion of the Work. Plans for the Work
shall include, but not be limited to, the following:



               (i) Engineering plans and specifications;



               (ii) Grading plans;



MP915501 – 3




 









 








               (iii) Drainage plans;



               (iv) Geology and soils reports; and



               (v) Environmental mitigation and remediation plans, if required by
law, regulation or any Governmental Authority (provided, however, any necessary
mitigation and remediation for environmental matters shall be incorporated at
the Nuevo Property without impact or liability to the Property).



          The time schedules of the Work shall include, but not be limited
to, the following:



               (a) The anticipated date for obtaining all required Governmental Authority
permits, consents, authorizations or approvals (including, without limitation,
grading permits) required for the commencement and completion of the Work
(“Approvals”);



               (b) The anticipated dates for completion and approval, respectively, of
any environmental impact report, assessment or declaration required by law,
regulation or any Governmental Authority related to the Property;



               (c) The anticipated date for completion of each major item of construction
in connection with the Work, including but not limited to, remediation
(including re-seeding and re-vegetation) of the Property.



          The Aera Representative shall respond to the proposed Work Plan within 10
business days and Licensee and Aera shall use good faith efforts to resolve any
concerns any so the work can be commenced without delay.



          As used herein, the term “Work Plan” shall mean the plans for the Work and
the Work time schedules, as approved in writing by the Aera Representative, and
a detailed description of the activities to be conducted by the Aera
Representative as agreed upon under Section 4.01 below.



        2.03. Work Product and Other Documentation. Licensee shall, at
Licensee’s cost, deliver to the Aera Representative promptly upon preparation
by Licensee or any Licensee Representative or upon receipt by Licensee or any
Licensee Representative copies of documents, maps, plans or other written work
product relating to the Work including, by way of example only, the following:



               (i) any and all applications, correspondence or other written
communications to or from any Governmental Authority regarding any Approval
with respect to the Work or any activities to be conducted at the Property
pursuant to this Agreement;



               (ii) any and all site plans and surveys of the Nuevo Property which
reflects any proposed or final edge conditions that relate to the Property or
any portion thereof;



               (iii) any and all construction plans, geotechnical reports (including
maps), soils reports, environmental audits, grading plan reviews, interim and
final grading compaction reports, engineering data, studies, or other documents
or written material pertaining to the Property (or any portion thereof) or the
Work (or any portion thereof).



MP915501 – 4




 









 








        2.04. Submissions to Governmental Authority. Licensee shall not submit any
correspondence, applications or written materials (including, without
limitation, any interim or final geotechnical reports or compaction reports) to
any Governmental Authority regarding the Work, the Property or any portion of
either of the foregoing without the prior written consent of the Aera
Representative. Licensee shall provide the Aera Representative (i) with at
least ten (10) days’ prior notice of all public hearings before or public
meetings with any Governmental Authority or with a representative of a
Governmental Authority involving the Work, and (ii) with reasonable prior
notice for all non-public meetings with any Governmental Authority or with a
representative of a Governmental Authority involving the Work. In its capacity
in representing the interests of Aera, the Aera Representative may, at Aera’s
discretion, appear at any such public or non-public hearings or meetings and
participate therein, but shall not oppose any action by Licensee so long such
action is consistent with the Work Plan.



        2.05. Review of Work Plan. In order to permit the Aera Representative to
have adequate current knowledge regarding the Work, Licensee shall, at a
frequency to be agreed to as part of the Work Plan, deliver a written report to
the Aera Representative of the current state of the Work and/or processing of
applications or Approvals with Governmental Authorities as compared with the
Work Plan. In addition, Licensee’s Representatives and the Aera Representative
shall periodically review the Work Plan and, subject to the consent of the Aera
Representative, Licensee may revise the Work Plan in light of current
circumstances.



        2.06. Conditions to Entry Upon the Property. Licensee and/or the Licensee
Representatives shall not enter onto the Property for any purpose other than in
accordance with the time schedules in the Work Plan approved by the Aera
Representative unless at least three (3) business day advance written or oral
notice of such entry has been given to the Aera Representative, and neither
Aera nor Aera’s Representative objects.



        2.07. Relationship of Aera and Licensee. Nothing contained in this
Agreement, including without limitation the right of the Aera Representative to
consent to the Work Plan, shall be deemed or construed to create a partnership,
tenancy in common, joint tenancy, joint employer liability, joint venture or
co-ownership by or between Aera and Licensee. Neither Aera now the Aera
Representative shall in any way be responsible or liable for any of the
obligations or duties of Licensee with respect to the Property or otherwise or
Licensee’s performance of the Work or Work Plan. At all times consistent with
the terms and provisions of this Agreement, Licensee shall be free to determine
its own policies and practices in the conduct of its business and activities
concerning the performance of the Work and the Work Plan.



     3. LICENSEE’S PERFORMANCE.



        3.01. Performing the Work. Licensee shall devote and shall cause each
Licensee Representative to devote such time, effort and skill as may be
necessary for the timely, safe, efficient and successful conduct in completion
of the Work pursuant to the Work Plan. All Work performed at the Property by
Licensee and/or any Licensee Representative shall be performed strictly in
accordance with the Work Plan approved by the Aera Representative. Licensee
shall not permit the use of the Property, or any part thereof, except in strict
compliance with the provisions of this Agreement.



        3.02. Equipment at the Property. Licensee and Licensee’s Representatives
shall not install or otherwise bring onto the Property any equipment or
materials except during such time as such equipment is being actively used in
connection with the performance of the Work or such materials are being
incorporated into the Property pursuant to the terms of the Work



MP915501 – 5




 









 







Plan. Specifically, Licensee and/or the Licensee Representatives shall not
store overnight or at any time equipment or materials at the Property.




        3.03. Maintenance and Condition of the Property. Licensee shall take such
commercially reasonable actions as necessary to protect the Property from any
potential danger to the human health or safety, oil operations, structures or
improvements, including any future improvements, in connection with the Work.
Licensee’s obligation in this regard shall extend to any other property
[including, without limitation, any real property owned by Aera in the vicinity
of the Property and any Aera oil field operations (including production
capacity of such operations)] that may be affected by the Work. Licensee shall
not create any drainage conditions that will adversely affect Aera’s property.
Upon commencement of any portion of the Work at the Property, Licensee shall be
responsible for maintaining the Property in a safe and non-hazardous condition,
at its sole expense. Upon the earlier of (i) completion of the Work, (ii)
termination or expiration of this Agreement, or (iii) Licensee’s departure from
the Property other than upon completion of the Work, termination or expiration
of this Agreement, or other shut-down or termination of the Work prior to
completion thereof, Licensee shall perform or cause to be performed at its sole
expense (a) the removal of any installations made to the Property by Licensee
and/or the Licensee Representatives [except for those installations (such as
erosion control or drainage systems) that pursuant to the Work Plan are
intended to be permanent], and (b) all other repairing and restoration of the
Property and adjoining property and any portion thereof (including but not
limited to the removal of debris including excess soil) required to restore the
Property and such adjoining property to at least as good a condition as existed
prior to Licensee’s entry onto the Property subject to the portions of the Work
which are intended by the Work Plan to be permanent.



        3.04. No Construction Without Permission. No structures or other
improvement of any kind shall be constructed and no grading or moving of earth
(including customary soils or subsoils, drainage or other engineering tests)
shall be undertaken on the Property by Licensee or the Licensee Representatives
except pursuant to the Work Plan. Approval or consent by the Aera
Representative to the Work Plan shall not be deemed to constitute an approval
of any architectural or engineering design or to be a representation or
warranty by Aera or the Aera Representative as to the adequacy or sufficiency
of the Work Plan or the improvements contemplated thereby for any use or
purpose; but such approval or consent shall be nothing more than an approval of
Aera and the Aera Representative as required hereunder in connection with
Licensee’s performance of the Work. Aera, by the approval of the Aera
Representative of the Work Plan, assumes no responsibility or liability for any
defect in any improvements constructed, grading done or other activities
undertaken on the basis of the Work Plan. All improvements made by Licensee or
a Licensee Representative at the Property shall either become the sole property
of Aera upon expiration or termination of this Agreement, subject to Licensee’s
perpetual obligation to repair and maintain without the payment of any
consideration to Licensee, or shall be removed by Licensee pursuant to the Work
Plan.



        3.05. Government Regulations. Licensee shall comply and shall cause all
Licensee’s Representatives to comply with all governmental laws, regulations,
ordinances, codes and Approvals applicable to the Property and the Work.
Licensee and all Licensee Representatives who enter upon the property pursuant
to this Agreement do so at their own risk, and shall comply with any and all
requirements contained in the Work Plan.



        3.06. Prohibited Activities. Licensee shall cause all Licensee
Representatives to observe strict fire and smoking precautions. Such
precautions shall include, by way of example only, the absolute prohibition of
open fires, smoking in designated areas only and provision for



MP915501 – 6




 










 







safe disposal of smoking materials in such designated areas. Licensee shall
prevent the bringing onto the Property of any explosives or explosive devices,
hazardous waste, hazardous materials, hazardous substances, alcoholic
beverages, drugs, contraband, controlled substances, firearms or other
dangerous weapons and the procedures necessary to implement such prohibition
shall be a component of the Work Plan.




        3.07. As-Built Plans. At the time agreed to as part of the Work Plan
Licensee shall provide to the Aera Representative any “as-built” plans of the
Work completed that may be obtained by Licensee, in its discretion. In
addition, Licensee shall provide to the Aera Representative the Final
Geotechnical Reports and Final Compaction Reports for the Work as submitted to
the applicable Governmental Authorities together with all Governmental
Authority approval forms and correspondence to or from such Governmental
Authorities related to such Reports.



     4. WORK AND RELATED COSTS.



        4.01. Cost. The cost and expense of the Work and any and all related costs
including, without limitation, the cost of obtaining and complying with the
Approvals required for performance of the Work, shall be the sole
responsibility of Licensee. Licensee shall reimburse to Aera, from time to
time, for the actual out of pocket costs incurred by Aera for services rendered
by the Aera Representative in connection with the Work and consistent with the
Work Plan. Such reimbursement shall be remitted within fifteen (15) days after
receipt by Licensee of a copy of the statement for such services from the Aera
Representative. By way of example and not limitation, the Aera Representative
activities at the Property may include periodic on-site monitoring and testing
of the progress of the Work during the construction of the shear keys, toe key
trenches, drainage and erosion control structures, and removal and recompaction
of unsuitable materials in order to confirm that the progress and performance
of the Work are in accordance with the Work Plan.



     4.02. Liens.



               (i) Licensee shall not suffer or permit to be enforced against the
Property, or any part thereof, any mechanics’, materialmen’s, contractors’ or
subcontractors’ liens or any claim for damage arising from the work or any
construction, excavation, survey, tests, grading, restoration, replacement or
improvement, performed by Licensee or a Licensee Representative. Licensee shall
pay or cause to be paid all such liens or claims before any action is brought
to enforce the same against the Property. Licensee expressly agrees to
indemnify, defend (with counsel reasonably satisfactory to Aera) and hold Aera
and the “Indemnitees” (defined in Section 4.05) and the Property free and
harmless from all liability for any and all such liens and claims, together
with reasonable attorneys’ fees and all costs and expenses in connection
therewith.



               (ii) At Licensee’s option, Licensee shall: (i) provide to Aera
a Standby
Irrevocable Letter of Credit in form and content satisfactory to Aera issued by
a U.S. Bank with a branch in Orange County, California, in an amount determined
pursuant to the Work Plan; or (ii) or Licensee shall record its construction
contracts, and shall obtain and record payment bonds, pursuant to Section 3235
of the California Civil Code and obtain performance bonds covering the Work in
amounts, form and substance reasonably acceptable to Aera. Aera shall be named
as co-obligee on all such bonds.



MP915501 – 7




 









 








               (iii) The requirements of Section 4.02 (ii) shall be waived for Licensee
and for the Assignees expressly approved by Aera in Section 9.01.



        4.03. Lien Contest. Notwithstanding anything to the contrary set forth
above, if Licensee shall in good faith contest the validity of any such lien or
claim, then Licensee shall, at its expense, defend itself and Aera against the
same and shall pay and satisfy any adverse judgment that may be rendered
thereon before any enforcement thereof against Aera or the Property. In such
event and if Aera shall so require, Licensee shall procure and record or
furnish to Aera a surety bond in accordance with California Civil Code Section
3143, a standby irrevocable letter of credit in a form reasonably satisfactory
to Area or other acceptable security satisfactory to Aera in an amount at least
equal to 150% of such contested lien or claim indemnifying Aera against
liability for the same, and holding the Property free from the effect of any
such lien or claim. Aera reserves the right at any time and from time to time
to post and maintain on the Property, or any portion thereof or improvement
thereon, such notices of nonresponsibility or otherwise as may be necessary to
protect Aera against liability for all liens and claims.



        4.04. Aera Payment of Claims. Except for Licensee’s right to contest
mechanics lien claims in the manner set forth in Section 4.03 above, whenever
under any provision of this Agreement, Licensee shall be obligated to make any
payment or expenditure, or to do any act or thing or to incur any liability
whatsoever, if Licensee fails, or refuses or neglects to perform as herein
required within ten (10) days of written request from Aera, then Aera shall be
entitled but shall not be obligated to make any such payment or expenditure, or
to do any such act or thing, or to incur any such liability, all on behalf of
and at the cost under the account of Licensee. In such event the amount thereof
shall be due and payable from Licensee to Aera upon demand. Any payments to be
so made by Licensee to Aera, if not paid when due, shall bear interest from the
respective dates of payment at ten percent (10%) per annum, but in any event,
not in excess of the highest rate allowable by California law to be charged by
non-exempt lenders in business related transactions, from the due date until
paid in full by Licensee.



        4.05. Licensee’s Indemnification.



               (i) As a material part of the consideration for this Agreement, Licensee
hereby agrees to indemnify, defend (with counsel reasonably satisfactory to
Aera) and hold Aera and its agents, employees, officers, directors, members,
affiliated companies, contractors, consultants, successors, assigns, and the
Aera Representative (collectively “Indemnitees”) entirely harmless from and
against any loss, damage, injury, casualty, suit, penalty, fine, lien,
liability, claim, cost, or expense (including, but not limited to, attorneys’
fees, litigation costs including expert witness fees and costs, other costs of
investigation and costs, and fees for appeal) of any kind or character arising
from or caused by (i) any use of the Property or areas adjacent thereto by
Licensee or a Licensee Representative, (ii) any act or omission of Licensee or
a Licensee Representative, (iii) any bodily injury (including death), property
damage and destruction, accident, fire, or other casualty on or about the
Property or areas adjacent thereto arising out of any act or omission of
Licensee or a Licensee Representative, (iv) any violation or alleged violation
by Licensee or a Licensee Representative of any applicable law, ordinance,
code, regulation or Approval, (v) any failure by Licensee or a Licensee
Representative during the course of the Work to maintain the Property or areas
adjacent thereto in a safe, clean, and sanitary condition, (vi) any loss or
theft whatsoever of any property or anything placed or stored by Licensee or a
Licensee Representative on or about the Property, (vii) any breach by Licensee
of any provision of this Agreement, (viii) any damage or alleged damage to
natural resources or any environmental medium arising out of any act or
omission of Licensee or a



MP915501 – 8




 









 







Licensee Representative, (ix) any costs in removing Licensee or a Licensee
Representative from the Property or restoring the same, and (x) the cost of
compliance with any judicial or Governmental Authority order or decision
arising out of any of the foregoing matters for which Licensee has agreed to
indemnify the Indemnitees as provided in this Section 4.05.




               The foregoing indemnification obligation shall survive the expiration and
termination of this Agreement and shall apply even though the indemnified event
or occurrence arises from or is caused by the concurrent or contributory
negligence (whether active or passive of any kind or nature) or fault of an
Indemnitee; provided, however, such indemnification obligation shall not apply
if the indemnified event or occurrence is caused by the gross negligence or
willful misconduct of an Indemnitee.



               (ii) In addition to and not in limitation of Aera’s other rights and
remedies under this Agreement, should Licensee fail within thirty (30) days of
a written request from Aera to fulfill Licensee’s obligations under Section
4.05(i) above, then in any such case, the Indemnitees may, at their respective
options, pay any Claim, or settle or discharge any Claim, or satisfy any
judgment thereon. All costs, expenses and other sums incurred by the
Indemnitees in connection therewith (including, but not limited to, reasonable
attorneys’ fees and costs of litigation, investigation, expert witness fees and
costs, and costs of appeal) shall be paid to the Indemnitees by Licensee within
thirty (30) days following written demand and delivery of invoices, together
with interest thereon at the rate established in Section 4.04 above from the
date incurred or paid until repaid. Any default either in such initial failure
to pay or subsequent repayment to the Indemnitees shall, at Aera’s option,
constitute a breach under this Agreement.



     5. INSURANCE. During the term of this Agreement, Licensee shall maintain
and cause all contractors entering on the Property to maintain the following
kinds and amounts of insurance coverage:



        5.01. General Liability. A minimum of Three Million Dollars
($3,000,000) combined single limit per occurrence. Three Million Dollars
($3,000,000) combined single limit in the annual aggregate for bodily injury,
property damage, personal injury and advertising injury. The coverage shall
include contractual liability (including assumed liability for personal injury
and advertising injury) broad form property damage liability, XCU (explosion,
collapse and underground) coverages, products and completed operations
coverage. Medical expense (medical payments) coverage shall be to the limits of
the policy if Licensee is found legally liable for the incident. Defense costs
shall apply in addition to the limit of liability. Coverage shall be provided
on an occurrence form. Limits may be provided in a layered program (e.g. by
means of primary and umbrella or excess liability policies.



        5.02. Automobile Liability. A minimum of One Million Dollars ($1,000,000)
combined single limit per accident (without annual aggregate) for bodily injury
and property damage. Defense costs shall apply in addition to the limit of
liability. Coverage shall include contractual liability and shall apply to
owned, hired and non-owned autos. Limits may be provided in a layered program
(e.g. by means of primary and umbrella or excess liability policies).



        5.03. Workers’ Compensation and Employers’ Liability. Statutory workers’
compensation coverage as required by the State of California and employers’
liability limits of not less than One Million Dollars ($1,000,000) bodily
injury by accident, One Million Dollars ($1,000,000) bodily injury by disease,
and One Million Dollars ($1,000,000) bodily injury by disease each employee.



MP915501 – 9




 









 








        5.04. Builders’ Risk. During the term of the license from the date of the
commencement of Licensee’s Work to the date upon which completion of the Work
occurs, Licensee shall procure and maintain or cause to be procured and
maintained builders’ risk insurance on the Work. The policies shall be written
on an “all risk” or “special form” basis and shall include coverage for
replacement cost, collapse, demolition, soft costs and increased costs of
construction resulting from operations of building codes, laws or ordinance.
Coverage shall apply to any construction scaffolding, temporary barricades and
other construction equipment, supplies and materials, on site, off site and
while in transit.



        5.05. Mandatory Insurance Provisions. Licensee’s insurance policies shall
contain or be endorsed to contain.



               (i) With regard to general liability, automobile liability, umbrella and
excess liability and pollution liability, if applicable, the following:



                    (a) A provision naming Aera Energy LLC as additional
insured with
respect to liability arising out of Licensee’s operations in and about the
Property. The coverage shall contain no special limitations on the scope of
protection afforded to Aera. For general liability coverages, the additional
insured clause shall be no more restrictive than the coverage afforded by ISO
Form No. CG 20 26 11 85 entitled “Additional Insured
– Designated Person or
Organization. For automobile liability coverages the additional insured clause
shall be no more restrictive than ISO endorsement number CA 20 48 07 97
entitled “Designated Insured Endorsement”. Excess and umbrella liability
policies may include following form additional insured provisions in lieu of
specific endorsement language.



                    (b) A provision stating that the policy shall be primary and non-
contributing with respect to claims covered thereby and any self-insurance
program or separate insurance carried by Aera shall be excess and
noncontributing with respect to such claims.



                    (c) A provision similar to the ISO “separation of insureds” provision or
other commonly used “severability of interests” provisions. This provision
shall apply the coverage separately to each insured (except with respect to the
limits of liability).



                    (d) Language stating that any failure to comply with the reporting
provisions of the policies shall not affect the coverage provided Aera.



                    (e) No cross suits exclusions.



               (ii) With regard to all coverages (i.e. general liability, automobile
liability, umbrella and excess liability, workers’ compensation/employers
liability, and any other required or voluntary insurance), the following:



                    (a) Licensee shall request that its insurance policies be
properly
endorsed, if necessary, to prevent the invalidation of said insurance by reason
of the waiver. Licensee shall request that the documents evidencing insurance
compliance acknowledge the waiver of subrogation or the insurer’s waiving of
its right of recovery. In the case of workers’ compensation and employers’
liability insurance, Licensee shall specifically provide an endorsement from
the insurer waiving its right of recovery against Aera.



                    (b) Each policy shall be endorsed to state the coverage shall not be
cancelled, suspended, voided, allowed to expire or be reduced in coverage or
limits (except by



MP915501 – 10




 









 







payment of losses thereunder) by any party, except after thirty (30) days’
prior written notice by certified mail, return receipt requested, has been
given to Aera. Any notice of cancellation due to nonpayment of premium shall at
a minimum comply with the requirement set forth by California law but in no
event be less than ten (10) business days.




                    (c) The mailing address for all notices pertinent to these policies shall
be sent to Aera at the addresses set forth herein for notices.



        5.06. Acceptability of Licensee’s Insurers. Insurance shall be placed with
insurers licensed to do business and admitted in the state of California and
having an A.M. Best Company (Best’s Key Rating Guide) rating of no less than A
VII.



        5.07. Verification of Coverage.



               (i) At least ten (10) days prior to the commencement of or any Work for
any purpose, Licensee shall furnish Aera with original certificates of
insurance and original endorsements evidencing insurance coverage required
herein. The certificates and endorsements for each insurance policy shall, by
typed name, identify the person authorized by that insurer to bind the coverage
on its behalf.



               (ii) Failure of Aera to request or receive complete or partial documents
will not in any way waive Aera’s rights under this Agreement. Aera reserves the
right to require complete, certified copies of all required insurance policies
at any time. Failure to request such policies will not waive any rights or
constitute an admission of any kind. Receipt of such certificates, endorsements
or policies by Aera does not constitute approval as to their form or content.



        5.08. Waiver of Subrogation. Licensee hereby waives: (i) any rights of
recovery against Aera for injury or loss to persons and to real and personal
property, including loss or use thereof, covered by insurance, to the extent of
the injury or loss covered thereby; and (ii) on behalf of its insurance
companies, any right of subrogation that it may have against Aera. Any policies
of insurance which Licensee obtains hereunder shall include a clause or
endorsement denying the insurer any right or subrogation against Aera.



        5.09. Contractors’ Insurance Requirements. Licensee shall require its
contractors to provide evidence of insurance. All coverages for each such
contractor or other party shall be subject to all of the requirements stated in
Section 5.01, 5.02, 5.03, 5.04, 5.05, 5.06, 5.07, 5.08, except as follows:



               (i) General Liability. Limits for general liability for any general
contractors engaged in construction shall be for a minimum limit of not less
than Two Million Dollars ($2,000,000) combined single limit per occurrence per
project, and Two Million Dollars ($2,000,000) combined single limit in the
annual aggregate for bodily injury, property damage, personal injury and
disability injury.



               (ii) Automobile Liability. Limits for automobile liability for any general
contractors engaged in construction shall be for a minimum limit of not less
than One Million Dollars ($1,000,000) per accident without annual aggregate.



MP915501 – 11




 









 








        5.010. Blanket Policy. Any policy required by the provisions of this
Section     may be made a part of a blanket policy of insurance so long as such
blanket policy contains all of the provisions required herein and does not
reduce the coverage or impair Aera’s rights.



        5.011. Professional Liability. Engineers shall provide professional
liability coverage for performance of professional services at limits not less
than One Million Dollars ($1,000,000) per claim and Three Million Dollars
($3,000,000) in the annual aggregate. Such coverage shall be on an “occurrence”
basis; or, if on a “claims made” basis shall be retroactive to the earliest of
the date they commence work or services with respect to the Property or the
date of their contract with Licensee. Such coverage shall be maintained for a
minimum of ten years following final acceptance of the work.



     6. WORK COMMENCEMENT, TERMINATION AND REMEDIES



        6.01. Commencement. Licensee shall not commence or cause to be commenced
the actual performance of the Work at the Property unless and until: (i) Aera
has received the insurance certificates; (ii) the Work Plan has been approved
by Aera and all Approvals have been obtained; and (iii) copies of approvals
have been delivered to Aera Representative.



        6.02. Termination. The right of entry and other rights granted to Licensee
by this Agreement shall, at Aera’s option, terminate immediately upon the
occurrence of any one of the following events:



               (i) The failure of Licensee to obtain or maintain by Licensee, all
necessary Approvals from all Governmental authorities to commence and complete
the Work, or



               (ii) Failure by Licensee to commence the Work by June 1,
2006, or



               (iii) The lapse of any insurance required under
Article 5, or



               (iv) Completion of the Work and the filing of the geotechnical and
engineering certificates with the appropriate Governmental Authority.



        6.03. Breach by Licensee. Except as provided in Section 6.02, if Licensee
shall be in breach of any of its obligations under this Agreement and should
Licensee fail to cure such breach within thirty (30) days of a written notice
from Aera or the Aera Representative specifying the nature of such breach (or
if a longer period of time would reasonably be required to effectuate such
cure, a reasonable period of time so long as Licensee shall have commenced cure
within the 30 day period and diligently pursues such cure thereafter), Aera
shall have the right to terminate the rights of entry and other rights granted
to Licensee under this Agreement by written notice to Licensee.



        6.04. Remedies. Licensee acknowledges that this Agreement is solely an
agreement in the nature of a license and that Licensee has no rights as an
owner, purchaser or tenant by virtue thereof. In the event of termination
hereof due to a breach or threatened breach by Licensee of any provision
hereunder, Aera may re-enter and take exclusive possession of the Property and
remove all persons or things therefrom, without legal process to the maximum
extent permitted by law, or by such legal process as Aera may deem appropriate.
Aera may also seek any other remedy available at law or in equity, including
but not limited to a suit for damages for any breach or noncompliance herewith,
including failure to complete any work commenced and costs to repair and/or
replace any defective work and/or work not performed in



MP915501 - 12




 









 







strict conformance with the Work Plan, or an action for specific performance or
injunction. All remedies provided herein or by law or equity shall be
cumulative and not exclusive.




        6.05. Quitclaim. Upon termination of this Agreement pursuant to
Section 6.02, Licensee shall promptly issue a recordable quitclaim of all
of its rights hereunder to Aera.



     7. AERA INSPECTION



        Aera and the Aera Representative and their respective representatives,
employees, agents or independent contractors, shall (a) on reasonable prior
notice, be entitled to enter and inspect the Property, the Work or any portion
thereof at any time and from time to time and (b) shall use commercially
reasonable efforts to not disturb or interfere with the progress of the Work



     8. NOTICES



        8.01. Except as otherwise provided herein, all notices or other
communications required or permitted hereunder shall be in writing, and shall
be personally delivered, or sent by registered or certified mail, postage
prepaid, return receipt requested, or overnight courier, or telecopy and shall
be deemed received upon the earlier of (a) if personally delivered, the date of
delivery to the address of the person to receive such notice, (b) if mailed,
four (4) business days after the date of posting by the United States Post
Office, (c) if given by overnight courier, upon receipt by the person to
receive such notice, or (d) if sent by telecopy, when sent. Any notice or
communication sent by telecopy must also be sent within two (2) business days
after transmission of the telecopy by United States Mail in accordance with the
foregoing.



	 	 	 	 	 
	

	 	If to Aera:
	 	Aera Energy LLC
	

	 	 	 	3030 Saturn Street, Suite 101
	

	 	 	 	Brea, CA 92821
	

	 	 	 	Attn: Vice President - Fee Lands
	

	 	 	 	Telecopy: (714) 577-9149
	 
	 	 	 	 
	

	 	With a copy to:
	 	Donfeld, Kelley & Rollman
	

	 	 	 	11845 West Olympic Blvd., Suite 1245
	

	 	 	 	Los Angeles, CA 90064
	

	 	 	 	Attn: Jeffrey Donfeld, Esq.
	

	 	 	 	Telecopy: (310)312-8014
	 
	 	 	 	 
	

	 	If to the Aera
	 	Pacific Soils Engineering, Inc.
	

	 	Representative:
	 	10653 Progress Way
	

	 	 	 	Cypress, CA 90630
	

	 	 	 	Attn: Jim Castles
	

	 	 	 	Telecopy: 714/220-9589
	 
	 	 	 	 
	

	 	With a copy to:
	 	Aera Energy LLC
	

	 	 	 	3030 Saturn St, Suite 101
	

	 	 	 	Brea, CA 92821
	

	 	 	 	Attn: Vice President - Fee Lands
	

	 	 	 	Telecopy: 714/577-9149
	 
	 	 	 	 
	

	 	If to Licensee:
	 	Nuevo Energy Company







MP915501 - 13




 









 








	 	 	 	 	 
	 	 	 	 	Attn: David Leach 

	 	 	 	 	1021 Main Street, Suite 2100

	 	 	 	 	Houston TX 77002

	 	 	 	 	Telecopy: (713)374-4899







Notice of change of address shall be given by written notice in the manner
detailed in this Section. Rejection or other refusal to accept shall be deemed
to constitute receipt of the notice or communication sent.




     9. MISCELLANEOUS



        9.01. Assignment and Modification. This Agreement may not be modified
except by a written instrument executed by the parties hereto. Any assignment,
transfer or conveyance of this Agreement, or any part hereof, or any right or
duty created herein, will not be effective until and unless the assigning party
has delivered notice of the transfer to the non-assigning party together with a
document executed by the assignee expressly assuming all obligations of the
assigning party under this Agreement. If requested by the non-assigning party,
assignor and assignee will provide reasonable financial assurances to ensure
that assignee is financially able to perform all the obligations of this
Agreement. Notwithstanding the foregoing, prior approval is hereby granted by
Aera of an assignment hereunder by Licensee of all or any part of its rights,
title and interests under this Agreement to Shea Homes Limited Partnership or
to a limited liability company or other affiliated entity in which Shea Homes
Limited Partnership owns no less than a fifty one percent (51%) interest. Such
approval shall not constitute a novation of this Agreement, and Licensee shall
remain secondarily liable in the event that the assignee does not perform as
herein provided.



        9.02. Further Assistance. From time to time, each party will execute and
deliver such further instruments and will take such other action as any other
party reasonably may request in order to discharge and perform their
obligations and agreements hereunder.



        9.03. Form of Documents. All instruments, certificates and other documents
to be executed and delivered under this Agreement by any party to the other
party shall be in a form reasonably satisfactory to the other party.



        9.04. Successors. This Agreement shall be binding upon, and shall inure to
the benefit of, the successors and, to the extent permitted hereunder, assigns
of the parties.



        9.05. Entire Agreement. Except as provided herein, this Agreement is the
entire agreement between the parties with respect to the subject matter hereof,
and all prior negotiations, representations or agreements between the parties
are merged into this Agreement. Recitals set forth at the beginning of this
Agreement and the Exhibits attached hereto are incorporated herein by this
reference.



        9.06. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.



        9.07. Recording. This Agreement shall not be recorded, however a memorandum
of this Agreement shall be recorded in the Official Records of Orange County.
Failure to record this Agreement or a memorandum shall not affect the validity
of the terms and conditions herein specified.



MP915501 - 14




 









 








        9.08. Section Headings. The various section headings are inserted for
convenience of reference only, and shall not affect the meaning or
interpretation of this Agreement or any section thereof.



        9.09. Calendar Days; Close of Business. Unless the context otherwise
requires, all periods terminating on a given day, period of days, or date shall
terminate at 5:00 p.m. Pacific Time on that day or date and references to
“days” shall refer to calendar days. All periods of time referred to in this
Agreement shall include Saturdays, Sundays and California State and national
holidays; provided that if the last date to perform any act or give a notice
with respect to this Agreement shall fall on a Saturday, Sunday or California
State or national holiday, such act or notice shall be timely performed or
given on or before the next succeeding day which is not a Saturday, Sunday or
California State or national holiday. Notwithstanding the foregoing, all
periods of time in this Agreement referring to “business days” shall not
include Saturdays, Sundays, California State or national holidays.



        9.010. Severability. In the event that any of the provisions, or portions
thereof, of this Agreement are held to be unenforceable or invalid by any court
of competent jurisdiction, the validity and enforceability of the remaining
provisions or portions thereof, shall not be affected thereby.



        9.011. Consent. Except as expressly provided elsewhere in this Agreement,
i) whenever the consent of either party is sought under this Agreement, such
consent shall not be unreasonably withheld, conditioned or delayed, and ii) if
no response is given within the longer of ten (10) business days after receipt
of written request, then consent shall be deemed to have been granted.



        IN WITNESS WHEREOF, the parties hereto have executed this instrument as of
the date first above written.



	 	 	 
	“Licensee”

	 	“Aera”
	 
	 	 
	Nuevo Energy Company

	 	Aera Energy LLC
	a Delaware Corporation

	 	A California Limited Liability Company
	 
	 	 
	By:

	 	By:
	


	 	

	        David A. Leach

	 	Van N. Schultz
	 
	 	 
	Its: Attorney-in-Fact

	 	Its: Vice President – SD&I







MP915501 - 15




 









 








Exhibit “I”

Encumbrance Documents



The Encumbrance Documents are contained in a separate binder furnished by Nuevo
entitled “Compendium of Approved Documents. November 19. 2002”. The Encumbrance
Documents are enumerated as follows




     1. Program Text for the Tonner Hills Planned Community dated November 19,
2002, adopted by Ordinance No. 02-010 of the Orange County Board of
Supervisors.



     2. Tonner Hills Area Plan dated October 16, 2002, adopted by Resolution
No. 02- 10 of the Orange County Planning Commission.



     3. Tonner Hills Development Agreement dated November 19, 2002 and recorded
as document #2003000171873 of the Official Records of Orange County,
California.



     4. Tonner Hills Environmental Impact Report No. 581 and Mitigation
Monitoring and Reporting Plan, certified November 19, 2002, by Resolution No.
02-366 of the Orange County Board of Supervisors.



     5. US Army Corps of Engineers “Provisional Permit” No. 199916501-DPS,
dated March 18, 2003.



     6. Formal Section 7 Consultation and Biological Opinion (FWS-OR-2347.5)
dated December 31, 2002 from the US Fish & Wildlife Service, Carlsbad office.



     7. Streambed Alteration Agreement No. R5-2002-0114 issued by the
State of California Department of Fish & Game on August 26, 2003.



 









 





12/4/03




EXHIBIT “P”




CORPORATE PAYMENT AND PERFORMANCE GUARANTY




     This CORPORATE PAYMENT AND PERFORMANCE GUARANTY (“Guarantee” or
Guaranty”) is made as of                   , 2003, by SHEA HOMES LIMITED
PARTNERSHIP, a California limited partnership (“Shea”) and STANDARD PACIFIC
CORP. (“Standard”), a Delaware corporation (collectively referred to herein as
“Guarantor”), in favor of NUEVO ENERGY COMPANY, a Delaware corporation
(“Nuevo”), and its successors and assigns, and all their affiliates, members
and partners (and their members and partners), directors, officers, employees,
shareholders, agents and representatives (collectively and individually in
each case, “Beneficiary” or “Beneficiaries”). Capitalized terms used but not
defined herein shall have the respective meanings attributed to them in the
Agreement to which this Guaranty is attached as Exhibit “P.”



Recitals




     WHEREAS, Nuevo, as Seller, and Tonner Hills SSP, LLC, a Delaware limited
liability company and Tonner Hills 680 LLC, a Delaware limited liability
company, as Buyer (collectively “Developer”) have entered into a Purchase and
Sale Agreement for the sale of the surface fee interest in approximately 810
acres located in the sphere of influence of the City of Brea, County of Orange,
California (“Shea PSA”);



1









 





     WHEREAS, Developer has agreed in the Shea PSA, among other matters, to
pay the Additional Purchase Price and to assume, undertake and discharge the
Obligations (defined in Section 5.30 of the Shea PSA).



     WHEREAS, Guarantor, who will obtain substantial direct and indirect
benefit from the transactions contemplated by the Shea PSA, now wishes, among
other things, unconditionally and irrevocably to guarantee (a) the proper
performance of all the Obligations of Developer, (including all defense and
indemnity obligations that are part of the Obligations) granted by Developer
in favor of Nuevo, and (b) the timely payment of the Additional Purchase Price
as provided for in the Shea PSA, in such a manner as to ensure that
Guarantor’s responsibilities, duties and obligations under this Guaranty are
independent of the responsibilities, duties and obligations of Developer being
guaranteed (“Original Matters”) and that this Guaranty will survive, on its
own terms, in the event the Original Matters are rendered void by operation of
law, in spite of non-payment or non-performance. Such matters set
forth as (a)
and (b) in the preceding sentence are hereinafter referred to as “Guaranteed
Obligations.”



     NOW, THEREFORE, (a) in consideration of the Recitals set forth above, (b)
to satisfy certain provisions in the Shea PSA, (c) as a material inducement to
Nuevo to enter into the Shea PSA, including the Subordination Agreement
described therein at Exhibit “K,” and (d) as further assurance to Nuevo of the
performance by Developer of the Guaranteed Obligations, Guarantor agrees as
follows:



2









 





Agreements




     1. Guarantee. Guarantor hereby absolutely, unconditionally and
irrevocably guarantees Beneficiaries the payment and performance by Developer
of all of the Guaranteed Obligations whether absolute or contingent or now or
hereafter existing or due or to become due (including in all cases all such
amounts which would become due but for the operation of the automatic stay
under Section 362(a) of the United States Bankruptcy Code, 11 U.S.C. §362(a),
or the operation of Section 502(b) and 506(b) of the United States Bankruptcy
Code, 11 U.S.C. §502(b) and §506(b)), and agrees to indemnify and hold harmless
each Beneficiary from any and all costs and expenses (including but not limited
to reasonable counsel fees, court costs and expenses) incurred by such
Beneficiary as a result of Developer failure to perform the Guaranteed
Obligations, after the expiration of all notice and cure periods available to
Developer under the Mineral PAPA.



     2. Waivers. Guarantor hereby expressly waives, to the maximum extent
permitted by law, (i) promptness, diligence, presentment, notice of acceptance,
demand for payment or performance, and any other notice with respect to any of
the Guaranteed Obligations, (ii) any right to require that any Beneficiary
enforce its rights or remedies against Developer, other than the notice
requirements in the Mineral PAPA, (iii) each and every right to which it may be
entitled by virtue of any applicable suretyship and (iv) the filing of claims
with a court in the event of the insolvency or bankruptcy. Guarantor
acknowledges and agrees that its obligations to the Beneficiaries under this
Guaranty are separate and distinct from Developer’s obligations to the
Beneficiaries under Shea PSA, as hereinafter defined.



3









 





     3. Representations and Warranties. Guarantor hereby represents
and warrants to the Beneficiaries, as of the date hereof, as follows:




        (a) Developer is an affiliate of Guarantor.




        (b) Shea is a limited partnership duly organized, validly existing
and in good standing under the laws of the State of California. Shea
has all necessary power and authority (i) to conduct its business and own
its properties and (ii) to execute and deliver this Guaranty and to
perform all of its obligations hereunder. The execution, delivery and
performance of this Guaranty by Shea has been duly and validly authorized
by all requisite action on the part of Shea.




        (c) Standard is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. Standard has
all necessary power and authority (i) to conduct its business and own its
properties and (ii) to execute and deliver this Guaranty and to perform
all of its obligations hereunder. The execution, delivery and performance
of this Guaranty by Standard has been duly and validly authorized by all
requisite action on the part of Standard.




        (d) This Guaranty has been duly executed and delivered on behalf
of Guarantor, and this Guaranty constitutes the legal, valid and binding
obligation of Guarantor, enforceable against it in accordance with its
terms, subject, however, to



4









 






bankruptcy, insolvency, reorganization and other laws affecting
creditors’ rights generally and, with regard to any equitable remedies,
to the discretion of the court before which proceedings to obtain such
remedies may be pending.




        (e) The making and performance by Guarantor of this Guaranty does not
(i) violate any provision of law or any rule, regulation, order, writ,
judgment, decree or determination currently in effect having applicability
to Guarantor or Guarantor’s articles of incorporation, bylaws or other
governing documents, or (ii) result in a breach of or constitute a default
under any agreement to which Guarantor is a party or by which Guarantor is
currently bound or affected; and all consents or approvals under such
agreements and instruments necessary to permit the valid execution,
delivery and performance by Guarantor of this Guaranty have been obtained.




        (f) Guarantor has received copies of the Shea PSA, has read the Shea
PSA, has reviewed the Shea PSA with its counsel and understands the terms
of the Shea PSA.



     4. Nature of Guaranty. This Guaranty constitutes a guaranty of performance
obligations and is the joint and several liability of each party constituting
Guarantor. Guarantor specifically agrees that it shall not be necessary or
required that any Beneficiary exercise any right, assert any claim or demand or
enforce any remedy whatsoever against Developer, either before or as a
condition to the obligations of Guarantor hereunder; provided that Guarantor
shall have the benefit of and the right to assert any defenses against the
claims of any Beneficiary which are available to Developer and which would have
also been available to Guarantor if



5









 




Guarantor had been in the same contractual position as Developer under the
relevant Shea PSA, other than (i) defenses arising from the insolvency,
reorganization or bankruptcy of Developer, (ii) defenses expressly waived in
this Guaranty and (iii) defenses previously asserted by Developer against
such claims to the extent such defenses have been finally resolved in a
Beneficiary’s favor by a court of last resort.




     5. Unconditional Obligations. The obligations of Guarantor under
this Guaranty shall be continuing, absolute, unconditional and irrevocable, and
shall not be affected by (i) any lack of validity, legality or enforceability
of the Shea PSA or any other agreement or instrument relating thereto, (ii) the
modification, amendment or termination of the Shea PSA, (iii) any change in the
beneficial ownership of or interests in Guarantor or Developer, (iv) any
regulatory change or other governmental action, (v) the dissolution or
termination of Developer, (vi) any indulgence, compromise, settlement or
release which may be given to Developer by any of the Beneficiaries, and (vii)
any failure, omission or delay to enforce, assert or exercise any right, power,
or remedy conferred by this Guaranty. Specifically, Beneficiary may perform any
of the following acts at any time without notice to or consent of Guarantor and
without in any way releasing, affecting or impairing any of Guarantor’s
obligations or liabilities under this Guaranty: (a) alter, modify or amend the
Shea PSA by agreement or course of conduct or performance or dealings; (b)
assign or otherwise transfer its interests in the Shea PSA, any property which
is the subject of the Shea PSA or this Guaranty, in each case, however, subject
to any restrictions on assignment or transfer set forth in the Shea PSA; and
(c) consent to any transfer or assignment of Guarantor’s interest under the
Shea PSA.



6









 





     6. Rescinded Payments. This Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any of the
Guaranteed Obligations (in whole or in part) is rescinded or must otherwise be
returned by the Beneficiary for any reason, including the insolvency,
bankruptcy or reorganization of Developer or otherwise, all as though such
payment had not been made, and, in such event, Guarantor will pay to the
Beneficiary an amount equal to any such payment that has been rescinded or
returned. The provisions of this Section 6 will survive any release or
termination of this Guaranty. If and to the extent that Guarantor makes any
payment to the Beneficiary or to any other Person pursuant to or in respect of
this Guaranty, any claim which Guarantor may have against Developer by reason
thereof shall be subject and subordinate to the prior indefeasible payment in
full in cash of the Guaranteed Obligations that require the payment of money.



     7. Affirmative Covenants. Guarantor covenants and agrees that, so long as
any part of the Guaranteed Obligations shall remain unpaid, unperformed or
otherwise outstanding, Guarantor shall, unless Beneficiary otherwise consents
in writing:




        (a) not merge or consolidate with any partnership, limited liability
company, corporation or other entity or sell or otherwise dispose of all
or substantially all of its assets to any individual, partnership,
limited liability company, corporation or other entity (a
“Person”)
unless the succeeding entity assumes all obligations of Guarantor;




        (b) preserve and maintain, and cause Developer to preserve and
maintain, its existence, rights (charter and statutory) and franchises in
the jurisdiction of its formation,



7









 






and qualify and remain qualified, in good standing as a foreign
partnership in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises and qualification would
materially adversely affect the interests of any of the Beneficiaries
under this Guaranty, or the ability of Guarantor to perform its
obligations under this Guaranty, or of Developer to perform its
obligations under the Shea PSA; and




        (c) not, directly or indirectly, institute or commence against
Developer, join any other Person in, directly or indirectly, instituting
or commencing against Developer, or authorize any trustee or other Person
acting on its behalf or on behalf of others to, directly or indirectly,
institute or commence against Developer, any bankruptcy, reorganization,
debt arrangement, insolvency, dissolution, winding up or liquidation
proceeding or other case or proceeding, under any bankruptcy, insolvency,
reorganization, receivership or similar law or any creditors’ rights, law
or pursuant to any creditors’ rights claim or otherwise pursuant to any
law of any applicable jurisdiction (including any suit on a sworn
account, suit on a debt, or suit or payment of any kind), in each case,
at any time during the period from the date of this Guaranty to the date
which is one year and one day after the date the Guaranteed Obligations
are satisfied in full. Guarantor’s obligations under this Section shall
survive the termination of this Guaranty.



     8. Amendments. No release or waiver of any provision of this Guaranty nor
consent to any departure by Guarantor therefrom shall in any event be effective
unless the same shall be in writing and signed by the party against whom such
waiver, release or consent is to be



8









 




enforced. This Guaranty may not be amended except by written agreement signed
by Guarantor and Beneficiary.




     9. Notices. All notices, consents, requests, demands, instructions, approvals
and other communications permitted or required to be given hereunder shall be
validly given or made only if in writing and (a) personally delivered, (b)
delivered and confirmed by telecopier or like facsimile transmission service,
(c) delivered by United Parcel Service, Federal Express or other reputable
overnight courier delivery service or (d) deposited in the United States mail,
first class, postage prepaid, certified or registered, return receipt
requested, addressed as follows:



	 	 	 
	

	 	If to the Guarantor, to:
	 
	

	 	Shea Homes Limited Partnership
	

	 	603 S. Valencia Avenue
	

	 	Brea, California 92822-1509
	

	 	Attn: Alan Toffoli
	

	 	Facsimile: (714) 792-3505
	

	 	Phone: (714) 792 2504
	 
	 	 
	

	 	With a copy to:
	 
	 	 
	

	 	Standard Pacific Corp.
	

	 	15326 Alton Parkway
	

	 	Irvine, California 92618
	

	 	Attn: Orange County Division President
	

	 	Facsimile: (949) 789-1708
	

	 	Phone: (949) 789-1600







9









 






	 	 	 
	

	 	With a copy to:
	 
	 	 
	

	 	Landmark Law Group LLP
	

	 	10350 Santa Monica Boulevard
	

	 	Suite 295
	

	 	Los Angeles, California 90025
	

	 	Attn: Gulwinder S. Singh, Esq.
	

	 	Facsimile: (310) 300-2310
	

	 	Phone:
     (310) 300-2300
	 
	 	 
	

	 	If to Nuevo, to:
	 
	 	 
	

	 	1021 Main Street, Suite 1200
	

	 	Houston, TX 77002
	

	 	Attention: Bruce K. Murchison
	

	 	Facsimile: (713) 374-4897
	

	 	Phone:
     (713) 374-4880






or to such other place within the United States of America as any party may
designate as to itself by written notice to the other party. All notices given
by personal delivery or mail shall be effective on the date of actual receipt
at the appropriate address. Notice given by telecopy shall be effective upon
actual receipt if received during recipient’s normal business hours or at the
beginning of the next business day after receipt if received after the
recipient’s normal business hours.




     10. No Waiver; Cumulative Rights and Remedies. No failure on the part of
any Beneficiary to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof, or the
exercise of any other right. Each of the rights and remedies herein provided
are cumulative and not exclusive of any rights and remedies provided by law or
in any other agreements.



10









 





     11. Governing Law. THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF CALIFORNIA WITHOUT REGARD
TO THE CONFLICTS OF LAWS PROVISION THEREOF.



     12. Continuing Guaranty. The obligations of Guarantor under this Guaranty
shall be continuing and (i), subject to Section 15 below, remain in full force
and effect until indefeasible payment and performance in full of the Guaranteed
Obligations, (ii) be binding upon Guarantor and its corporate successors, and
(iii) inure to the benefit of and be enforceable by the Beneficiaries and their
respective heirs, legal representatives, successors and assigns which are
permitted successors and assigns pursuant to the terms of the Shea PSA.



     13. Jurisdiction. THE PARTIES AGREE TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN ORANGE COUNTY,
CALIFORNIA, IN CONNECTION WITH ANY ACTION OR OTHER PROCEEDING
RELATING TO THIS GUARANTY. EACH PARTY IRREVOCABLY WAIVES AND AGREES NOT TO
MAKE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE JURISDICTION OF ANY SUCH COURT OR TO THE LAYING OF VENUE
OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.



11









 





     14. Third Party Beneficiaries. Guarantor hereby acknowledges and agrees
that each Beneficiary is an express third party beneficiary of this Guaranty
and shall have the same rights to enforce this Guaranty against Guarantor as if
it were a party hereto.



     15.
Release from Guaranty. At such time that all Final Acceptances by
Operator under the Mineral PAPA have been given and received as required
therein, and no claims have been tendered under this Guaranty that remain
unsatisfied, the Guarantor shall be released from this Guaranty and all the
Guaranteed Obligations. Upon written request by Guarantor, Beneficiary shall
provide a release within fifteen business days thereof.



          Notwithstanding the foregoing, this Guaranty shall not be released but
shall remain in full force and effect and Guarantor shall be obligated
hereunder for so long as a claim has been tendered under this Guaranty which
has not been satisfied, or a claim has been made against Developer which, if
not properly discharged, would also constitute a Guaranteed Obligation.



12









 





     IN WITNESS WHEREOF, the parties hereto have executed this Guaranty
effective as of the day and year first above written.



	 	 	 
	

	 	                Guarantor
	 
	 	 
	

	 	Brea Tonner Ltd., by its General Partner
	 
	 	 
	

	 	SHEA HOMES LIMITED PARTNERSHIP, a
	

	 	California limited partnership
	 
	 	 
	

	 	By: J. F. Shea LLC, a Delaware limited
	

	 	 liability company, its General Partner
	 
	 	 
	

	 	By:
	

	 	

	

	 	Name:
	

	 	

	

	 	Title:
	

	 	

	 
	 	 
	 
	 	 
	

	 	By:
	

	 	

	

	 	Name:
	

	 	

	

	 	Title:
	

	 	

	 
	 	 
	

	 	STANDARD PACIFIC CORP., a
	

	 	Delaware corporation
	 
	 	 
	

	 	By:
	

	 	

	

	 	Name:
	

	 	

	

	 	Title:
	

	 	

	 
	 	 
	 
	 	 
	

	 	By:
	

	 	

	

	 	Name:
	

	 	

	

	 	Title:
	

	 	

	 
	 	 







13









 





State of                           



County of                           




     This instrument was acknowledged before me on                           , 2003 by
                           as                            of                           .



	 	 
	 	


	 	Notary Public’s Signature







State of                           



County of                           



This instrument was acknowledged before me on                           , 2003 by                            as
                           of                           .




	 	 
	 	


	 	Notary Public’s Signature








14









 






EXHIBIT Q




     List of Unrecorded Contracts, Agreements, Easements and Licenses



Contracts




     (1) The Commercial Lease and Agreement between Nuevo Energy Company, as
Lessor, and Brea Green Recycling, Inc., as Lessee, dated February 1, 1997;



     (2) The Letter Agreement between Haynes Apiaries and Union Oil Company of
California dated December 29, 1992, as amended;



     (3) The Easement Agreement for Storm Drain Improvement between Nuevo
Energy Company and Brea Olinda Venture L. L. C. dated November 3, 2000,



     (4) Asset Purchase Agreement dated February 16, 1996 by and among Union
Oil Company of California, Union California Pipeline Company and Nuevo Energy
Company, to the extent previously described in the Agreement, INSOFAR AND ONLY
INSOFAR AS SAID ASSET PURCHASE AGREEMENT PERTAINS TO THE LAND, AND NOT THE OIL
ASSETS UNDERLYING THE LAND;



     (5) Acquisition and Settlement Agreement entered into as of July 23, 2002,
by and between Union Oil Company of California and Nuevo, together with all
subsequent agreements required thereunder, insofar as such Acquisition and
Settlement Agreement pertains to the Land; and



     (6) Acquisition Agreement entered into July 29, 2002, by and between Union
Oil Company of California and Nuevo, together with all subsequent agreements
required thereunder, insofar as such Acquisition Agreement pertains to the
Land.



Additional Contracts, Licenses, Easements and Agreements





	1.	 	Memorandum of Understanding between Nuevo, County of Orange and City of
Brea dated December 10, 2002.
	 
	2.	 	Impact Mitigation Agreement between Brea Olinda Unified School District
and Nuevo dated as of October 28, 2002.
	 
	3.	 	Oil Accommodation and Surface Development Agreement between Nuevo and
Aera Energy LLC (“Aera”) dated September 9, 2003, to the extent described
in the Agreement at Section 5.36.
	 
	4.	 	Utility Easement between Nuevo and Aera dated September 9, 2003, which
shall be recorded by Aera in its sole discretion, subject to the
provisions of Section 5.36 in the Agreement.





Exhibit “Q”

Page 1 of 3




 









 









	5.	 	Land Development License Agreement (Aera to Nuevo) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9,
2003. (The Memorandum shall be recorded by Nuevo in its sole discretion.)
	 
	6.	 	Land Development License Agreement (Nuevo to Aera) and Memorandum of Land
Development License Agreement between Nuevo and Aera dated September 9,
2003. (The Memorandum shall be recorded in Aera’s sole discretion.)
	 
	7.	 	Letter Agreement Concerning License Rights executed by Nuevo, Aera and
Blacksand Energy Partners, L.P. (“Blacksand”) dated September 9, 2003.
	 
	8.	 	Land Development License Agreement between Nuevo, Aera and Blacksand
dated September 9, 2003 and Memorandum to Land Development License
Agreement between Nuevo and Aera dated September 9, 2003, which Memorandum
shall be recorded in Aera’s sole discretion.
	 
	9.	 	License Agreement between Nuevo and Aera dated September 9, 2003.
	 
	10.	 	License Agreement between Nuevo and W B Scott Investment Company dated
April 7, 1925.
	 
	11.	 	Consent Agreement between Nuevo and Shell Oil Company dated July 10, 1951.
	 
	12.	 	Agreement between Nuevo and General Petroleum dated February 17, 1939.
	 
	13.	 	Permit between Nuevo and Orange County Flood Control District dated August 10, 1962.
	 
	14.	 	Amended Easement between Nuevo and Secretary of the Army dated July 20, 1994.
	 
	15.	 	Water Line Agreement between Union Oil Company of California and
Thompson Drilling Company dated March 29, 1988, as amended.
	 
	16.	 	Brea Canon Oil Company to General Petroleum Corporation dated May 1921.
	 
	17.	 	Master Services Agreement dated June 17, 2003 by and between
Nuevo Energy Company, as Client and Tetra Tech, Inc., as
Contractor (Technical Support for Remediation Services).





Contracts Relating to Entitlement Efforts at Tonner Hills





	1.	 	Letter Agreements dated March 19, 2001 and October 1, 2002, by and
between Deborah Linn Associates and Nuevo.
	 
	2.	 	Contract dated February 8, 2001, by and between Culbertson, Adams &
Associates and Nuevo, as amended by letter dated July 16, 2002.
	 
	3.	 	Proposal dated June 18, 2002, from Earth Consultants International to Nuevo.





Exhibit “Q”

Page 2 of 3




 









 









	4.	 	Professional Service Agreement dated April 17, 2001, by and between
The Keith Companies, Inc. and Nuevo.
	 
	5.	 	Professional Services Agreement dated June 15, 1998, by and
between QST Environmental, Inc. and Nuevo, as amended February 27,
2002.





Contracts Relating to Revegetation Efforts at Tonner Hills





	1.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (82 Acre
Revegetation).
	 
	2.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (14 Acre
Revegetation).
	 
	3.	 	Contract Agreement dated September 10, 2003 by and between Nuevo Energy
Company, as Client and Nature’s Image, Inc., as Contractor (20 Acre
Revegetation).





Exhibit “Q”

Page 3 of 3




 









 








REDLINE REVISION: 11-24-03




AGREEMENT




EXHIBIT “R”




PAYMENT AND PERFORMANCE AGREEMENT




(OPTION B)




 









 








TABLE OF CONTENTS




	 	 	 	 	 
	DESCRIPTION
	 	 	 	PAGE NO.
	ATTACHMENT “1”

	 	LEGAL DESCRIPTION OF LAND	 	 
	ATTACHMENT “2”

	 	SHEA PAPA TRUST DEED	 	 
	ATTACHMENT “3”

	 	TH680 PAPA TRUST DEED	 	 
	ATTACHMENT “4”

	 	MINERAL PAPA	 	 
	ATTACHMENT “5”

	 	LIST OF ENGINEERING FIRMS	 	 
	ATTACHMENT “6”

	 	BREA FIELD DEVELOPMENT ACCOMMODATION AGREEMENT	 	 







i









 






PAYMENT AND PERFORMANCE AGREEMENT




               This Payment and Performance Agreement (“PAPA”) is made this              day of
                        , 2003, by and between NUEVO ENERGY COMPANY, a Delaware corporation
(“Nuevo”) and SHEA HOMES LIMITED PARTNERSHIP, a California limited partnership,
and TONNER HILLS 680 LLC, a Delaware limited liability company
(collectively, “Developer”). Nuevo and Developer are hereinafter individually
or collectively referred to as a “Party” or the “Parties.”



PREAMBLE:




     A. Concurrently herewith, Developer has acquired from Nuevo that certain
real property located in Orange County, California, more particularly described
on Attachment “1” which is appended hereto and incorporated herein by this
reference (“Property,” “Parcel” or “Land”).



     B. In accordance with the Purchase and Sale Agreement, of even date
herewith, pursuant to which Developer acquired the Land (“Agreement” or “PSA”),
the Parties are setting forth herein certain (i) obligations of Nuevo and
Developer regarding the Programs (defined below in Section 2) and (ii)
provisions for payments Developer is obligated to make to Nuevo.



     C. As described herein, Nuevo assumes certain specified obligations with
respect to each of the Programs, and Developer expressly assumes other specific
obligations as well as all obligations with respect to the Programs not
specified as Nuevo’s responsibility.



               NOW, THEREFORE, in consideration of the PREAMBLE, covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, including without
limitation the conveyance of the Land to Developer by Nuevo, the Parties
hereby covenant and agree as follows:



               1. Definitions. Unless otherwise expressly provided herein, the following
words and phrases when used in this PAPA shall have the following meanings;
all terms not specifically defined herein shall have the meaning prescribed
for them in the Agreement or elsewhere in the Development Documents.



                    1.1 Agreement. “Agreement” or “PSA” shall mean that certain agreement
described in Paragraph “B” of the Preamble to this PAPA.



                    1.2 BlackSand Development Declaration. “Development Declaration” shall
mean that certain Declaration of Development Covenants, Conditions and
Restrictions encumbering the Land dated and filed of record February 28, 2003
as Instrument No. 2003000226057 in the Official Records of Orange County,
California.



                    1.3 BlackSand Program. “BlackSand Program” has the meaning set forth in
Section 2.4.



1









 





                    1.4 BlackSand PSA. “BlackSand PSA” shall mean that certain Purchase
and Sale Agreement between Nuevo and BlackSand dated February 28, 2003
(“BlackSand PSA”). Developer acknowledges that it has a copy of the BlackSand
PSA together with all exhibits thereto. The terms “Property Minerals” and
“Property Interests” as used in this PAPA are defined in the BlackSand PSA.



                    1.5 Bulk Sale. “Bulk Sale” has the meaning given in Section 6.5 hereof.



                    1.6 CDOGGR. CDOGGR shall mean the California Department of Conservation,
Division of Oil, Gas and Geothermal Resources.



                    1.7 Community Facilities. “Community Facilities” shall mean all real
property and the improvements constructed thereon to be owned in fee or
easement by a Master Association or any Association, membership in which is
appurtenant to the ownership of Homes, for the common use and enjoyment of the
members of such associations.



                    1.8 Development Areas. “Development Areas” shall have the
meaning prescribed in Section 1.1.10 of the Agreement.



                    1.9 Development Declaration. “Development Declaration” shall mean that
certain Declaration of Development Covenants, Conditions and Restrictions
attached to the Agreement as Exhibit I.



                    1.10 Development Documents. “Development Documents” shall have the
meaning prescribed in Section 1.1.11 of the Agreement.



                    1.11 Development Reimbursement Monies. “Development Reimbursement Monies” shall have the meaning prescribed in Section 1.1.12 of the PSA.



                    1.12 Exempt Sale. “Exempt Sale” shall mean the sale of a Home (at the
close of escrow thereof and recordation of the deed of conveyance) in the
ordinary course of business to a member of the home purchasing public pursuant
to a Final Subdivision Public Report (“Report”) issued by the California
Department of Real Estate or otherwise, if no such Report is required.



                    1.13 Home. “Home” shall mean that portion of the Land which is a
residential unit (including a condominium unit) or an unimproved or improved
lot (“paper lot,” “blue top,” “finished” or other) which Developer (including
its Affiliates) sells in the ordinary course of its business to a member of
the public pursuant to a report for the Property issued by the California
Department of Real Estate, or otherwise if no report is required.



                    1.14 Lessee. “Lessee” shall mean Aera Energy LLC as the Lessee of the
Minerals described in that certain Oil and Gas Lease, as amended, dated
February 26, 1901, and recorded in Book 2, Page 128 of the Official Records of
Orange County, California.



2









 





                    1.15 Mineral PAPA. “Mineral PAPA” shall mean that Mineral Payment
and Performance Agreement between Nuevo and BlackSand Partners, L.P. dated
February 28, 2003. The Mineral PAPA is attached hereto as Attachment “5.”



                    1.16 Operator. Operator shall mean BlackSand Partners, L.P. as the owner
of the Minerals and party to the Mineral PAPA or BlackSand Partners, L.P.’s.
successor in ownership and obligation under the Mineral PAPA.



                    1.17 PAPA Trust Deed. “PAPA Trust Deed” or “PAPA TD” shall mean
collectively that certain deed of trust securing this PAPA and other
obligations specified therein in the form of Attachment “2” (individually, the
“Shea PAPA Trust Deed”) and Attachment “3”
(individually, the “TH680 Trust
Deed”) which are appended hereto and incorporated herein by this reference. The
PAPA Trust Deed shall be recorded as described in the Escrow Instructions.



                    1.18 Parcel. “Parcel,” “Property” or “Land” shall have that meaning set
out in Section 1.1.32 of the Agreement.



                    1.19 Park. “Park” shall mean that portion of the Development Areas
designated as Wildcatter Park insofar as Wildcatter Park overlays that certain
Oil and Gas Lease described in Section 1.6, as more specifically depicted on
the Level A Final Map for the Tonner Hills Project.



                    1.20 Programs. “Programs” shall refer collectively to the Aera
Program, the Permit Program, the Hover Program and, to the extent not expressly
excluded, the BlackSand Program, each of which shall have the meaning set forth
in Section 2 of this PAPA.



                    1.21 Transfer. “Transfer” shall have the meaning given
in Section 1.1.54 of the Agreement.



                    1.22 Unavoidable Delay. “Unavoidable Delay” shall mean any
prevention, delay or stoppage in the completion of a Party’s work as defined
herein caused by fire, explosion, unavailability or breakdown of machinery or
equipment or by acts of God, war, riot, civil insurrection, terrorism, labor
disputes, inability to obtain labor or materials or reasonable substitutes
therefore, any order, regulation, request or recommendation of a Governmental
Agency, other similar matters or causes beyond the reasonable control of the
responsible party other than for the payment of money; provided however, that
nothing in this Section shall excuse the performance of any act rendered
difficult solely because of the financial condition of a Party.



               2. Programs.



                    2.1 Aera Program. Nuevo has entered into an Oil
Accommodation and Surface Development Agreement with Aera Energy LLC (“Aera
Agreement”), a copy of which has been provided to Developer, under which (a)
certain wells within the Park shall be shut-in, plugged and abandoned in
accordance with the requirements of CDOGGR, (b) certain other wells shall be
temporarily shut-in and accommodated to those



3









 




standards established for well accommodation within the Development Areas as
more particularly described in the Mineral PAPA that is Exhibit I to the
Mineral Agreement; (c) certain pipeline and facilities shall be relocated by
Aera within a relocation corridor
(“Relocation Corridor”) and other surface facilities shall be removed, and (d)
other activities shall be performed, all as more particularly set out in the
Aera Agreement. Such activities are collectively referred to as the “Aera
Program.”




                         2.1.1 Responsibilities for Aera Program. Both
Nuevo and
Developer hereby assume and agree to perform certain obligations and
responsibilities contained in the Aera Agreement or related to the Aera
Program. A description of such obligations, associated notices and time
schedules are more particularly set out in the Aera Agreement and herein. The
following table designates the tasks which each party hereby assumes the
responsibility for performance:



	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Nuevo

	 	Aera Sec 1.1
	 	 	1	 	 	Notice to Aera to shut down
specified wells.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 1 .2
	 	 	2	 	 	Notice to Aera to shut down
Columbia #17 Well.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 1.5 & 1.6
	 	 	3	 	 	Execution of instruments
accepting responsibility for
applicable wells and filing
Quitclaim and Report of Well
Transfer (“Transfer
Documents”).
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 1.7
	 	 	4	 	 	Acceptance of responsibility
and control from Aera of Task
No. 1 Wells and equipment
affected by the transfer,
future costs, indemnification
and release provisions, except
as to Columbia #17 Well, until
Final Acceptance hereunder.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 1 .7
	 	 	5	 	 	Same as Task 4 insofar as same
applies to Columbia #17 Well.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	PAPA Sec 2.1.10
	 	 	6	 	 	With respect to Columbia #23,
59 and 69 Wells, Developer
shall execute Transfer
Documents accepting
responsibility for the wells
simultaneous with Nuevo’ s
execution of Transfer
Documents. With respect to
wells under Task 1 and
Columbia #70 Well, Developer
shall execute Transfer
Documents upon Final
Acceptance.
	 
	 	 	 	 	 	 	 	 
	Nuevo as to all
Wells except
Columbia #17 Well

	 	Aera Sec 1 .8
	 	 	7	 	 	No right to produce applicable
transferred Wells. Plug and
abandon Wells.







4









 






	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Developer as to
Columbia #17 Well
and all Wells after
Final Acceptance

	 	PAPA Sec. 2.1.10

Aera l.8
	 	 	8	 	 	No right to produce
transferred Wells. Plug and
abandon Wells.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.1
	 	 	9	 	 	Preparation and submittal to
Aera of engineering plan and
design specifications for
Columbia #27 Well.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.2
	 	 	10	 	 	Payment to Aera for its
portion of estimated Columbia
#27 Well costs.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.3
	 	 	11	 	 	Except as provided under Task
12, perform accommodation work
for Colombia #27 Well not
performed by Aera.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 2.3
	 	 	12	 	 	Compaction of access road,
fencing, security and
aesthetic screening for
Columbia #27 Well.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 2.4
	 	 	13	 	 	Responsibility of (i) Wellbore
or conductor casing damage
caused by Nuevo, and (ii)
excess downtime of wells to be
returned to production cause
by Nuevo.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 2.4
	 	 	14	 	 	Task 13 (ii)Developer liable
for excess downtime caused by
Developer.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 2.5
	 	 	15	 	 	Additional operations costs
required as a result of the
Encumbrance Documents.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 3.1
	 	 	16	 	 	$30,000 deposit payment to
Aera. Review and comment on
plans to relocate Major
Utilities and Minor Utilities
into Relocation Corridor.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 3.2
	 	 	17	 	 	Grade Relocation Corridor to
within two (2) feet of final
grade and preparation required
to receive Major Utilities.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 3.3
	 	 	18	 	 	Notice to Aera to remove steam
generators. Make payment of
$30,000 to Aera.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 4.1 PAPA

Sec 2.1. 5
	 	 	19	 	 	Remediate oil impacted soils
under Task 7 & 11 . Name Aera
as an additional Insured as
any environmental policy as to
Affected Area.







5









 






	 	 	 	 	 	 	 	 	 
	Responsible Party
	 	Task Found At
	 	Task Number
	 	Task

	Developer

	 	Aera Sec 4.1

PAPA Sec 2.1.5
	 	 	20	 	 	All remediation other than
Task 19 within Affected Area.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.1
	 	 	21	 	 	Remediation necessary to plug
Columbia #17 Well (if plugged
pursuant to Aera Program).
Name Aera as an Additionally
Insured on any environmental
policy Developer acquires as
to Affected Area.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.2
	 	 	22	 	 	Other than for Task 19
environmental remediation,
additional assessments and
work within Affected Area to
be performed at no cost to
Aera.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 4.4
	 	 	23	 	 	Duties to Aera if additional
grading is required outside of
the Affected Area.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 5.1 and 5.2
	 	 	24	 	 	Provide and pay for required
security fencing, aprons and
gates while plugging or
accommodating wells that are
Nuevo’s responsibility under
Tasks numbered 7 and 11.
Submit plans to Aera for
review and comment relating to
foregoing.
	 
	 	 	 	 	 	 	 	 
	Developer

	 	Aera Sec 5.1 and 5.2
	 	 	25	 	 	Provide and pay for all
fencing, gates, aprons and
grades other than as required
by Task Number 24. Submit
plans to Aera for review and
comment relating to foregoing.
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 6
	 	 	26	 	 	Enter into Utility Easement
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 7
	 	 	27	 	 	Amend existing licenses
	 
	 	 	 	 	 	 	 	 
	Nuevo

	 	Aera Sec 8
	 	 	28	 	 	Enter into reciprocal grading licenses







                         2.1.2 Party Performance. Nuevo shall undertake the performance of those
tasks and activities specifically designated herein as Nuevo’s
responsibility. Developer shall undertake all tasks and activities under the
Aera Agreement and in this PAPA that are not expressly assumed by Nuevo.



                         2.1.3 Commencement of Aera Program. With regard
to the
Tasks that are Nuevo’s responsibility, upon thirty days prior written notice
from Developer, Nuevo shall (i) provide notice to Aera (accompanied by
deposit or payment if so required) to commence those tasks and activities
which are Aera’s express responsibility under the Aera Agreement and which
are not conditioned upon the occurrence of a specified event, (ii) provide
notice to Aera (accompanied by deposit or payment if so required) to commence
those tasks and activities upon the occurrence of specified events if Aera’s
performance is contingent upon such occurrence, (iii) commence its
performance of activities associated with those tasks that are Nuevo’s
responsibility.



6









 





                         2.1.4 Removal of Surface Facilities and Subsurface
Pipelines.
After transfer of the wells to Nuevo from Aera, as set forth in Section 2.1.1
above, and prior to commencement of grading operations, each wellhead impacted
by the grading will be surveyed and marked by Nuevo one (1) time only and
Developer will inspect and approve the markings. After inspection and approval
of the well markings, Developer will be responsible for grading around the well
casings without damaging them. Upon approval of the well markings, Developer
shall proceed with grading in a timely manner and be responsible to pay, and
shall be solely liable for any and all damage to any wells caused by
Developer’s grading operations.



                         2.1.5 Remediation Responsibilities. With respect to
the Aera
Program, Nuevo shall be responsible for remediation and clean-up of any crude
oil impacted soil attributable to the wells to be abandoned within the Park.
Developer shall be fully responsible for all other remediation and clean-up
activity of any kind or character, including but not limited to funding,
implementing and completing all environmental testing, assessment, remediation,
monitoring, reporting or other requirements with respect to all other
environmental (including Hazardous Materials as defined in the Agreement),
crude oil or oil well production impacts.



                         2.1.6 On-Site Representative. Nuevo and Developer
shall each
have the right to have representatives on-site at the time wells are abandoned
or accommodated, before the grading begins and during the grading operations on
the Parcel to observe such operations. Developer agrees to give Nuevo fifteen
(15) days notice prior to commencement of grading to allow each to arrange to
have a representative on-site.



                         2.1.7 Well Abandonment and Accommodation. As part of
the
Aera Program, Nuevo will relocate below the surface of the grade the operating
wellhead for Columbia #27 Well. Developer shall be responsible for and shall
install screening devices and other improvements as if such well were
accommodated in the Development Areas under the Mineral PAPA. In addition, at
Nuevo’s cost, Nuevo shall plug and abandon Wells 42, 58, 64, 66, 70, 73 and 75
lying within the Park and Well 28 located outside of the Park, but within the
area subject to the oil and gas lease under which Aera Energy LLC is Lessee.
Such wells shall be abandoned to the same standards as those wells abandoned
within the Development Areas.



                         2.1.8 Developer Grading. Developer shall perform
grading
operations in a manner consistent with its obligations in the Mineral PAPA
including but not limited to compliance with permits and the Development
Documents, preparing and designing plans consistent therewith, providing
appropriate notices, assuming responsibility for all remediation activity not
assumed by Nuevo, accommodation of unidentified wells and preparing and
submitting all required reports. In addition, Developer shall -be responsible
for all costs and expenses that result from damages to wells or facilities or
injury to persons or property caused by Developer’s grading operations.



                         2.1.9 Aera Scope of Work. Among other matters, Aera
is
responsible under the Aera Agreement for the preparation and development of
certain engineering plans and the relocation and removal of certain facilities
and equipment. To the extent that Nuevo has not assigned the Aera Agreement
in its entirety to Developer and Developer incurs damages as a result of Aera’s
failure to perform, Nuevo shall use good faith and commercially reasonable
efforts to secure Aera’s timely performance, but shall not be liable to
Developer for Aera’s failure to timely perform. At Developer’s request, Nuevo
shall assign to



7









 




Developer any rights it has under the Aera Agreement necessary to assert a
claim against Aera resulting from an alleged breach or failure to perform by
Aera. With regard to such claim by Developer, Nuevo shall have no obligation
or responsibility to participate in such lawsuit or action, except to the
extent that such participation is legally required in order for Developer to
assert a claim. Nuevo shall reasonably cooperate with Developer and such
cooperation or participation, as a party or otherwise, shall be at the cost
and expense of Developer and Nuevo shall be indemnified from Losses resulting
therefrom as provided in the Agreement. Nuevo makes no warranty or
representation and shall have no liability for the outcome thereof or damages
awarded therein.




                         2.1.10 Aera Program Final Acceptance. Upon delivery of
Transfer Documents from Aera to Nuevo for Columbia #23, #59, and #69 wells,
Final Acceptance shall be deemed to occur by Developer. For other wells, on a
well-by-well basis, Nuevo shall notify Developer in writing that it has
completed the abandonment or modification of each of the wells specified in
Section 2.1.1. With respect to wells to be abandoned, Nuevo shall not provide
such notice to Developer until it has submitted to CDOGGR the required summary
and well report (“Report”). Within ten days of such notice, Developer shall
conduct a final inspection of such abandoned or accommodated well and shall
advise Nuevo in writing within ten days thereafter of acceptance of the work
(“Final Acceptance”). Should Developer fail to inspect the well within the
time period specified, such well shall be deemed accepted. Should Developer
inspect the well and, in the exercise of its reasonable commercial judgment,
deem such work to be substantially incomplete, it shall notify Nuevo in
writing within such ten day period after the inspection specifying any
unresolved items and the actions that Developer believes are reasonably
necessary to gain Final Acceptance. Should CDOGGR reject the Report and
request additional well abandonment work, Final Acceptance shall be deemed
rejected and Nuevo, at its cost and expense, shall undertake those additional
actions specified by CDOGGR. Upon completion of such additional work, Nuevo
shall submit its notice to Developer and the parties shall follow the
procedures set out herein for securing Final Acceptance. If the parties cannot
resolve any item for which acceptance is requested, such unresolved item shall
be submitted to arbitration in accordance with the Agreement. Upon Final
Acceptance, Nuevo shall transfer such wells to Developer who shall execute
Transfer Documents removing Nuevo as the record operator. Upon Final
Acceptance, Developer shall be deemed to have accepted full and complete
responsibility and control of the abandoned wells and equipment, if any,
affected by the transfer and Nuevo shall be expressly relieved from further
responsibility as set out in Section 3.5. In no event will Developer, or its
successors and assigns reenter or activate any abandoned or idled well.



                    2.2 Permit Program. Nuevo shall perform all activities required by the
Habitat Mitigation and Monitoring Plan (“Restoration Plan”) with respect to
the PA-7 Habitat Restoration Area, the approximate 20-acre PA-4 Habitat
Restoration Area and the remaining 87 acres of additional habitat restoration
(“Remainder Habitat Restoration Area”). Collectively, such activities are
referred to as the “Permit Program.”



                         2.2.1 Permit Program Implementation. With respect to the
Permit Program, Nuevo shall continue to use commercially reasonable efforts to
complete the program in a timely manner consistent with the Restoration Plan.
Upon completion of the Permit Program with respect to the PA-4 Habitat
Restoration Area, Nuevo shall advise Developer by written notice when it has
received -certification from the permitted biologist designated within



8









 




the Restoration Plan (“Certification”) that the PA-4 Habitat Restoration Area
is occupiable as required by the Restoration Plan. Nuevo shall further advise
Developer by written notice when it has received a Certification that PA-7 is
occupied as required by the Restoration Plan. Upon receipt of each
Certification, Final Acceptance by the Developer shall be deemed to have
occurred.



With respect to the Remainder Habitat Restoration Area, Final Acceptance shall
occur upon the first anniversary of completion of the restoration scope of
work for the area if the survivability standards for vegetation set out in the
Restoration Plan have been met, as evidenced by the joint written opinion of
the Chambers Group representing Nuevo and the Bon Terra Group representing
Developer, who shall act jointly as biological monitor under this PAPA for the
Remainder Habitat Restoration Area. Either Party, in its sole discretion, may
appoint a different biological monitor to represent its interest, replacing
the named biologist, to represent that Party’s interests by providing the
other written notice. The biological monitors shall provide Developer and
Nuevo with written notice of their opinion that the survivability standards
have been attained, which certification shall be deemed Final Acceptance by
the Developer. In the event the biological monitors determine that any species
planted and maintained within the Remainder Habitat Restoration Area does not
meet the survivability standards set out in the Restoration Plan, the monitors
shall so advise Nuevo and Developer in writing, setting out (i) those
additional actions to be taken or the number of additional plants required
which, in the joint opinion of the biological monitors, are reasonably
required to bring the Remainder Habitat Restoration Area into compliance with
the Restoration Plan survivability standards and, (ii) the cost estimated by
the biological monitors to complete such additional work (“Additional Cost”)
Developer shall be entitled to withhold such “Additional Cost” from the
Additional Purchase Price up to $150,000.00, which Additional Cost shall be
placed into escrow pending Nuevo’s completion of the additional work. Nuevo,
at its own cost and expense, shall complete such additional work. Upon
completion of such additional plantings or actions, the biological monitors
shall then give an opinion certifying that such plantings or actions required
of Nuevo have been satisfactorily completed. Upon certification by the
biological monitors that the additional planting or additional actions have
been completed by Nuevo, the Remaining Habitat Restoration Area shall be
deemed Finally Accepted by Developer under Section 3.5 and the Additional Cost
shall be released to Nuevo from escrow. It is not the intention of the parties
that the release of the Additional Cost is conditioned upon meeting the
survivability standards specified for subsequent years. Rather, it is the
intention of the parties that the Additional Cost will be released upon

completion of those actions taken after the first anniversary that the
biological monitors believe are reasonably necessary to attain future
survivability standards.



Nuevo shall be relieved of any and all liability related to each restoration
area upon Final Acceptance as further provided in Section 3.5. Notwithstanding
anything to the contrary contained herein, with respect to each area prior to
receipt of Certification, Developer shall not be liable or responsible for any
costs or increased costs which are related to the planting and revegetation of
each area, all of which costs shall be the responsibility of Nuevo.




                    2.3 Hover Program. Pursuant to the Hover Agreement, as defined in Section
1.1.28 of the Agreement, and Exhibit “G-2” more particularly entitled “First
Amendment to Option Agreement” dated September 28, 2001 and the Agreement
between Adjacent Land Owners dated October 9, 2001 (collectively “Hover
Agreements”), Nuevo undertook the following obligations:



9









 





     Under Exhibit “G-2” to the Hover Agreement:




	 	I.	 	Well Abandonment Plan (“WAP”)
	 
	 	II.	 	Remedial Action Plan (“RAP”).
	 
	 	III.	 	Corridor Easement, Street Easement, Drainage Easement and
other
Non-Exclusive Easements (includes dismantling two (2) water
tanks and
relocation on a temporary basis one (1) water tank at the East
Naranjal Tank
Farm).





      Under the Agreement Between Adjacent Landowners:




	 	I.	 	Grant of Slope Easements
	 
	 	II.	 	Grant of Retention Basin Easements (includes possible
relocation of oil field
pipelines in Section 2.7 at Hover’s expense up to $25,000).
	 
	 	III.	 	Spoils Export Easement (includes possible relocation of
oil field pipelines in
Section 3.4 at Hover’s expense up to $50,000).




The rights, privileges, duties and obligations under the Hover Agreements
retained by Nuevo and that collectively constitute the “Hover Program” are as
follows:





	 	(a)	 	Well Abandonment Plan: The Well Abandonment Plan as it
applies to
E. Naranjal Wells No. 21, 22, 23 and 36 and is described at Item I.
and at Item V.
in Exhibit “G 2” to the Hover Agreement.
	 
	 	(b)	 	The Escrow Account: The escrow account, as referenced at
Section 2.2.2 of the
Hover Agreement, contains $600,000 which amount has been
previously
collected by Nuevo as a result of its “Soil Remediation” activities
referenced said
Section 2.2.2. The balance of the escrow account is payable to
Nuevo upon
completion of the Well Abandonment Plan referenced above.
	 
	 	(c)	 	Stand-Alone Insurance: Nuevo is required to participate in
the acquisition of an
insurance policy. This requirement is fully addressed at Section
5.27 of the Hover
Agreement.
	 
	 	(d)	 	Remedial Action Plan: The Hover Agreement’s “Remedial
Action Plan” is
described at Item II in Exhibit “G 2” to the Hover Agreement.
Nuevo has
previously received a closure letter from the Orange County Health
Care Agency,
subject only to removal of inaccessible soils which requires the
removal of two water tanks at the East Naranjal tank farm and soils associated
with East Naranjal
Well 36, a well under the Well Abandonment Plan. Nuevo anticipates
this will be
finalized prior to the Close of the Agreement between Nuevo and
Developer.




10









 











                         2.3.1 Hover Final Acceptance. Upon completion of the Hover
Program, Nuevo shall provide Developer written notice, at which time Developer
shall have ten days to inspect the work completed. Within ten days thereafter,
Developer shall advise Nuevo that it concurs that the Hover Program has been
substantially completed in accordance with the Hover Agreements. Such
communication shall be deemed Final Acceptance and thereafter all duties,
obligations and liabilities for the Hover Program shall be the sole
responsibility of Developer as further provided in Section 3.5. Should
Developer determine that the Hover Program has not been substantially
completed in accordance with the Hover Agreement, it shall advise Nuevo of
those items which it deems unsatisfactory and the actions it requests that
Nuevo take. Upon completion of such additional actions by Nuevo, Developer
shall again be notified and shall have ten days to inspect the work performed
by Nuevo. Within ten days thereafter, Developer shall provide its Final
Acceptance. Should Developer and Nuevo disagree on whether the Hover Program
has been substantially completed, such matter shall be submitted to
arbitration in accordance with this PAPA.



                    2.4 Well Abandonment and Oil Field Accommodation
Program.



                         2.4.1 BlackSand Program. Nuevo will conduct a well
abandonment and oil field accommodation program for the Property; composed of
those tasks and activities which are described in this Section 2.4 and are
specifically set out in Attachment 6 hereto, hereinafter referred to as the
“BlackSand Program.” In connection with Nuevo’s performance of the BlackSand
Program, Developer shall undertake those tasks and activities which are
described in this Section 2.4 as Developer’s obligations and are specifically
set out in Attachment 6 (as part of the BlackSand Program), in addition to
Developer’s obligations mandated in the Agreement and other Development
Documents which may not be part of the BlackSand Program. The BlackSand
Program shall be undertaken with Developer’s full cooperation and assistance,
and in accordance with standards promulgated at the time of such work by
CDOGGR or such other Governmental Agency having jurisdiction over the
activity, all subject to, and as further described herein. Generally, the
BlackSand Program will be accomplished as follows:



                              2.4.1.1 Nuevo’s Surface Facilities.



                                   2.4.1.1.1 Removal of Surface Facilities and
Subsurface Pipelines. Nuevo shall remove certain of Operator’s surface
equipment as specified in Attachment 6, to the extent and when necessary in
accordance with the applicable Developer Notice to Proceed within the
Development Areas and lands adjacent thereto, including those areas designated
for continued oil and gas operations, to accommodate Developer’s Grading Plan.
This will include, but not be limited to, pumping units, concrete cellars and
concrete pads associated with the wellheads, power poles, transformers,
manifolds, test bubbles, compressors, tanks, vessels and above ground
pipelines. In addition, Nuevo shall drain, flush and cap active subsurface
pipelines to the extent and when necessary in accordance with the applicable
Developer Notice to Proceed within the Development Areas and lands adjacent
thereto to accommodate Developer’s Grading Plan. Removal of subsurface
pipelines to the extent deemed necessary or desirable by Developer, shall be
the responsibility of Developer. Prior to Nuevo’s commencement of work,
Operator is obligated under the Mineral PAPA to isolate and cease operation of
all equipment and facilities to be removed and shall take such other steps as
are reasonably necessary to allow such removal to be conducted in accordance
with all applicable



11









 




regulatory requirements and consistent with good oil field practices. The
surface equipment will be removed from such wells, not just those to be
abandoned, to facilitate the grading. Each wellhead will be surveyed and
marked by Operator one (1) time only and Nuevo and Developer will inspect and
approve the markings. After inspection and approval of the well markings,
Developer will be responsible for grading around the well casings without
damaging them. Upon approval of the well markings, Developer shall proceed in
a timely manner and be responsible to pay, and shall be solely liable for any
and all damage to any wells caused by Developer’s grading operations.



The acts or omissions of Operator, Developer or Nuevo in accordance with the
terms of this Agreement may not be imputed to the other parties unless
expressly stated herein or otherwise agreed to in writing. Developer and Nuevo
are each performing their obligations hereunder as independent contractors and
not as a subcontractor or agent of Operator. Furthermore, the actions or
omissions of Operator must be based upon (i) a specific duty imposed by the
Mineral PAPA or law upon Operator and not delegated to Nuevo under the Mineral
PAPA; or (ii) duties specified in this PAPA and assumed in writing by Operator
under the Mineral PAPA or otherwise.




                                   2.4.1.1.2 Remediation Responsibilities. If prior to
BlackSand Final Acceptance as defined in Section 3.5.2, Developer encounters
soil that appears to be crude oil impacted or oil well production impacted
(evidenced by oil staining or odor), Developer shall immediately notify
Operator’s field operations person and Nuevo’s on-site representative. Subject
to the provisions of this Subsection that follow, Developer shall be fully
responsible for funding, implementing and completing all environmental testing,
assessment, remediation, monitoring, reporting or other requirements (with the
assistance of Operator or Nuevo if the absence of such assistance would prevent
Developer from promptly performing such responsibilities) with respect to such
crude oil or oil well production impacts. To the extent that such impacts are
associated with active and producing wells or operational pipelines or
facilities, under the Mineral PAPA Operator shall be responsible for completion
of any required well, pipeline or facility repairs. Notwithstanding the
foregoing, Nuevo at its sole cost and expense shall be and remain responsible
for (i) those remediation activities described in the approved Remedial Action
Plan submitted December 16, 1999, as amended October 3, 2001, December 27,2001
and January 13, 2003 (“EIR Remediation”) and (ii) crude oil or other oil well
production releases that result from work and activities undertaken by Nuevo in
furtherance of this Agreement. Upon discovery of crude oil or oil well
production contamination in the vicinity of a well identified in Schedule B of
Attachment 6 or temporary or permanent pipeline or facility, Operator’s field
operations person, Nuevo’s onsite representative and Developer’s onsite
representative shall determine as soon as reasonably practical if the soil is
crude oil impacted as a result of a leak caused by (i) Operator’s ongoing
production activity in which event costs associated with cleanup and
remediation to oil field standards shall be the responsibility of Operator
under the Mineral PAPA, (ii) the activities of Nuevo in performance of the
BlackSand Program including EIR Remediation in which event costs associated
with cleanup and remediation shall be the responsibility of Nuevo (and not
considered a cost under the BlackSand Program) or (iii) from any other causes
in which event the costs associated with cleanup and remediation, shall be
Developer’s responsibility. The Parties agree that if Operator’s field
operations person and Developer’s and Nuevo’s on site representatives cannot
make such a determination or cannot agree on the source of the apparent soil
contamination within seven (7) business days, Nuevo, Developer and Operator
will designate a representative from a reputable,



12









 




soils engineering firm that routinely does soils work (“Soil Firm”) who is
familiar with soil contamination issues to designate the source of the
apparent soil contamination. If the parties are unable to select a Soils Firm,
any party to this Agreement may make application to the Superior Court of
Orange County for the timely appointment of a Soil Firm. The Soil Firm’s
representative shall take a sufficient number of samples to permit initial and
follow-up testing and such representative’s determination as to all matters,
including the allocation of costs, including its fees, shall be final and
binding on the parties hereto. The parties shall use their commercially
reasonable efforts to secure the determination by the Soil Firm’s
representative of the source of the apparent soil contamination shall be made
as soon as practicable after notification to the Soil Firm. If the Soil Firm’s
representative cannot make a conclusive determination as to the source of the
soil contamination, the soil contamination shall be presumed to have been from
other than ongoing production activity. The party whose actions are found to
have created the contamination shall in addition to the clean up and
remediation cost, pay for the Soil Firm’s work; and if more than one party is
found to have created such contamination, the costs of the Soil Firm’s work
will be prorated by such firm among the parties creating the contamination in
proportion to that Parties’ contribution to such contamination.




                              2.4.1.2 Third Party Easements and Licenses.
Nuevo and
Operator, as required by the Mineral PAPA, will cooperate with Developer in
attempting to remove and/or relocate from the Development Areas oil field
related easements and licenses for pipelines (“TPEL”) belonging to other
entities, including those of Southern California Edison. Nuevo and Operator
shall not be required to incur any costs, in their efforts to cooperate in the
removal and/or relocation of the TPEL. Temporary pipelines may be required in
some areas while the grading is in progress. Operator, as required by the
Mineral PAPA, and Nuevo will use commercially reasonable efforts, at no cost to
Operator and Nuevo, to assist Developer at Developer’s expense in causing these
pipelines to be reinstalled by the respective companies in permanent easements
after the grading is complete. Operator has agreed in the Mineral PAPA that
upon Developer’s written notice, Operator will assist Developer in giving
notice to the third party companies in an attempt to have the pipelines removed
and replaced. Developer acknowledges receipt of copies of the easement
documents, both recorded and unrecorded.



                              2.4.1.3 On-Site Representative. Nuevo,
Operator and
Developer shall each have the right to have representatives on-site both before
the grading begins and during the grading operations on the Parcel to observe
such grading operations. Developer agrees to give Operator sufficient notice
prior to commencement of grading to allow Operator to arrange to have a
representative on-site, at Operator’s cost, if Operator so elects.



                              2.4.1.4 BlackSand Reimbursement.



                                   2.4.1.4.1 BlackSand Reimbursement Plan.
Developer and Nuevo agree that Nuevo shall be reimbursed by Developer for the
cost of the BlackSand Program, which the parties have estimated to cost
approximately Thirty Million Dollars ($30,000,000.00). Developer agrees to
reimburse Nuevo the first $30 Million expended or committed to be expended in
accordance with this PAPA (the “Reimbursement Amount”). All costs of Nuevo’s
Program in excess of $30 Million shall be borne by Nuevo except as otherwise
provided herein. Should the final cost of the BlackSand Program be less than
$30 Million, Nuevo shall be entitled to retain the difference between the final
cost and $30 Million. The parties recognize that the final project may be
modified as a result of new or



13









 




additional Governmental Agency requirements or as a result of the mutual
agreement of the parties as specified herein. Should the estimated cost of
the BlackSand Program be reduced by more than $5 Million as a result of such
modification, the parties shall mutually agree upon a new estimated BlackSand
Program cost based upon adjustments using the costs set out in Attachment 6,
adjusted to reflect then existing market conditions. In no event shall any
modification reduce the Reimbursement Amount or result in costs, expenditures
or commitments by Nuevo greater than those set out herein.





                                   2.4.1.4.2 Payment of Reimbursement
Amounts.
The Reimbursement Amounts shall be paid in full by Developer to Nuevo in
accordance herewith, as follows:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	Segment	 	 	 	Acceptance
	BlackSand Program Segment
	 	Payment
	 	Notice to Proceed (NTP)
	 	Confirmation

	Pre-Phase I Initial Activity	 	$7,400,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	NTP will be issued as
mutually agreed between
Nuevo and Developer.	 	 
	 
	 	 	 	 	 	 	 	 
	•

	 	Preliminary and detailed
engineering and design
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	•

	 	Permitting
	 	 	 	 	 	Not Applicable 
	 
	 	 	 	 	 	 	 	 
	•

	 	Remediation required by EIR
	 	 	 	 	 	Developer
	 
	 	 	 	 	 	 	 	 
	•

	 	Initial abandonment of 25 idle and
reabandoned wells
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	Pre-Phase I Intermediate Activity	 	$8,400,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	NTP will not issue prior
to receipt of all required
Operator permits or, to
the extent certain
activity
can be commenced
without permits, as
mutually agreed between
Nuevo and Developer.	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	•

	 	Begin procurement of all required
materials and equipment
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	•

	 	Remove infrastructure and initial
abandonment of active wells
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	•

	 	Begin construction of tank farm and
field infrastructure
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	Pre-Phase I Final Activity	 	$7,200,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	NTP will not issue prior
to receipt of all required
Operator permits or, to
the extent certain
activity
can be commenced
without permits, as
mutually agreed between
Nuevo and Developer.	 	 
	 
	 	 	 	 	 	 	 	 
	•

	 	Complete construction of tank farm
and field infrastructure
	 	 	 	 	 	Operator
	 
	 	 	 	 	 	 	 	 
	•

	 	Construct power system
	 	 	 	 	 	Operator
	 
	 	 	 	 	 	 	 	 
	•

	 	Temporary removal of equipment
	 	 	 	 	 	Not Applicable







14









 






	 	 	 	 	 	 	 	 	 
	 	 	 	 	Segment	 	 	 	Acceptance
	BlackSand Program Segment
	 	Payment
	 	Notice to Proceed (NTP)
	 	Confirmation

	Phase I	 	$4,500,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	NTP will not issue prior
to receipt of all required
Operator permits or, to
the extent certain
activity
can be commenced
without permits, as
mutually agreed between
Nuevo and Developer.	 	 
	•

	 	Raise/lower Phase I well heads
	 	 	 	 	 	Operator
	 
	 	 	 	 	 	 	 	 
	•

	 	Final abandonment of Phase I wells
	 	 	 	 	 	Developer
	 
	 	 	 	 	 	 	 	 
	•

	 	Accommodation of retained
wells
	 	 	 	 	 	Operator (and Developer
for limited purpose of
design compliance)
	 
	 	 	 	 	 	 	 	 
	•

	 	Remove infrastructure and initial
abandonment of Phase II wells
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	•

	 	Temporarily remove Phase II
retained well equipment
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	Phase II	 	$2,000,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	NTP will not issue prior
to receipt of all required
Operator permits or, to
the extent certain
activity can be commenced
without permits, as
mutually agreed between
Nuevo and Developer.	 	 
	•

	 	Raise/lower Phase II well heads
	 	 	 	 	 	Operator
	 
	 	 	 	 	 	 	 	 
	•

	 	Final abandonment of Phase II
wells
	 	 	 	 	 	Developer
	 
	 	 	 	 	 	 	 	 
	•

	 	Accommodation of retained wells
(12 wells)
	 	 	 	 	 	Operator (and Developer
for limited purpose of
design compliance)
	 
	 	 	 	 	 	 	 	 
	•

	 	Remove infrastructure and initial
abandonment of Phase III wells
(4 wells)
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	•

	 	Temporarily remove Phase II
retained well equipment
	 	 	 	 	 	Not Applicable
	 
	 	 	 	 	 	 	 	 
	Phase III	 	$175,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	NTP will not issue prior
to receipt of all required
Operator permits or, to
the extent certain
can be commenced activity
without permits, as
mutually agreed between
Nuevo and Developer.	 	 
	 
	 	 	 	 	 	 	 	 
	•

	 	Raise/lower Phase III well heads
	 	 	 	 	 	Operator
	 
	 	 	 	 	 	 	 	 
	•

	 	Final abandonment of Phase III
wells (4 wells)
	 	 	 	 	 	Developer
	 
	 	 	 	 	 	 	 	 
	•

	 	Seismic Sensor installation
	 	 	 	 	 	Developer
	 
	 	 	 	 	 	 	 	 
	Final Payment upon Final Acceptance
and release (actual or by posting of
bonds) of construction liens	 	$325,000.00
paid in
accordance with
this Section
2.4.1.4.2	 	 	 	Due within 30 days of
Final Acceptance and
release of or bond
indemnification for liens








15










 






Each NTP issued by Developer shall be accompanied by a wire transfer payment to
an account designated by Nuevo of an amount equal to five percent (5%) of the
Segment Payment designated above. Thereafter, Nuevo shall invoice Developer
monthly for the BlackSand Program Segment costs incurred by Nuevo up to the
total Segment Payment. Should Nuevo complete any BlackSand Program Segment for
an amount less than the Segment Payment, the remaining amount shall be paid to
Nuevo within seven days of Final Acceptance of such BlackSand Program Segment.
In addition, Nuevo may invoice Developer for the amount of any monetary
commitment made by Nuevo in pursuit of the BlackSand Program Segment. For the
purchase of equipment and materials, Nuevo shall be entitled to invoice for an
amount equal to any prepayment, periodic payment, as such payment comes due,
and any restocking fees or termination charges that are contractual obligations
of Nuevo in connection with the BlackSand Program Segment. For all service
contracts, Nuevo shall be entitled to bill for any cancellation fees that are
contractual obligations of Nuevo in connection with the BlackSand Program
Segment. Upon receipt of evidence of such BlackSand Program costs incurred by
Nuevo, Developer shall remit the entire amount of such costs to Nuevo within
twenty (20) days thereof. Upon receipt of the NTP for any BlackSand Program
Segment specified above, Nuevo shall be obligated to commence the required work
within forty-five (45) days and complete the work within the time duration
specified in Attachment 4. Developer shall cooperate in good faith with Nuevo
and Operator in the implementation of the BlackSand Program. Operator under the
Mineral PAPA is obligated to (i) promptly process all permit requests; (ii) at
its cost, comment on all submittals of specifications or plans within ten (10)
business days of receipt thereof; and (iii) at its cost make all facilities
available for accommodation under the BlackSand Program such that Nuevo may
commence the BlackSand Program Segment within 45 days of receipt of a NTP. To
the extent that Developer fails to fully and timely cooperate with Nuevo, and
Nuevo, as a result of Developer’s acts or omissions, incurs penalties, damages
or incremental costs in performing the BlackSand Program, such penalty, damage
or cost shall be the responsibility of Developer and Developer hereby agrees to
defend, indemnify and hold Nuevo harmless therefrom. Developer shall also be
liable to Operator for any and all incremental reasonably cost or expense
incurred by Operator related to a delay in returning temporarily shut in wells
to production as a result of Developer’s failure to comply with the provisions
of this Section. Developer expressly agrees to pay such incremental Operator
costs which shall not be deemed to be Reimbursement Amounts and Developer
hereby releases and shall defend, indemnify and hold Nuevo harmless therefrom.
Under the Mineral PAPA, should Operator fail to temporarily or permanently shut
in any well in accordance with the BlackSand Program, Nuevo has retained the
right, but not the obligation to shut in such well at Operator’s sole risk and
expense. At the request of Developer, Nuevo shall shut-in such wells provided
that (i) Developer reimburses the actual costs incurred by Nuevo; (ii)
Developer indemnifies Nuevo from any and all claims related thereto; and (iii)
Nuevo assigns to Developer its rights to reimbursement from Operator under the
Mineral PAPA. In the event Developer abandons or suspends the BlackSand Program
other than as a result of Unavoidable Delay, and does not resume BlackSand
Program activity within the time period specified in Section 2.4.1.1 of the
Mineral PAPA, Nuevo shall have the right, but not the obligation to restore
wells to production at Developer’s risk and sole expense.




                              2.4.1.5 Anchor Points and Pulling Pads. As part of the
BlackSand Program, Nuevo shall be responsible for construction of the anchor
points and pulling pads necessary for Operator’s continuing Oil Operations
within the Exclusive Use Areas and Joint Use Areas within the Development
Areas and graded areas adjacent thereto.



16









 





                              2.4.1.6 Well Accommodation. As part of the
BlackSand
Program, Nuevo will relocate below the surface of the Parcel, all applicable
operating wellheads in the Development Areas, and those required wells within
the adjacent grading areas, and as required by appropriate Governmental Agency
rules as more particularly set out in Attachment 6, Schedule B.



                              2.4.1.7 Left Blank Intentionally.



                              2.4.1.8 Completion of the BlackSand Program.



                                   2.4.1.8.1 Developer Completion of BlackSand
Program. After receipt of a Notice to Proceed for any BlackSand Program
Segment, should Nuevo fail to commence or fail to use commercially reasonable
efforts to prosecute the work associated with the BlackSand Program in a
timely manner, Developer may provide Nuevo with a written notice of default
describing the alleged default in reasonable detail and the actions Developer
desires Nuevo to undertake to cure the default. Within 10 days of receipt of
notice from Developer, should Nuevo dispute in writing Developer’s assertion
that Nuevo has either failed to perform or continuously pursue a cure,
Developer shall not assume BlackSand’s Program responsibilities, but shall
submit such dispute to arbitration under Section 5.9 of the Agreement, which
arbitration shall be modified as provided herein. An arbitration under this
section shall be conducted by a single arbitrator who shall be directed to
provide an arbitration schedule that results in a decision within 45 days of
the arbitrator’s selection. Among other matters, upon establishing a Default,
such arbitrator shall have the power to assign BlackSand’s Program
responsibilities to Developer. Should Nuevo fail to cure or commence and
continuously prosecute actions to cure such Default within thirty days of the
receipt of such notice, Developer may take over and complete the BlackSand
Program and may retain all outstanding Reimbursement Amounts. In the event
Developer takes over the BlackSand Program as provided herein, to the extent
that the cost of completion of the BlackSand Program exceeds the outstanding
Reimbursement Amount, Nuevo shall be responsible for the next $4 Million of
expenditures reasonably incurred by Developer. The next $10 Million of cost in
excess of the $4 Million required to complete the BlackSand Program shall be
borne equally by Nuevo and Developer. Thereafter, Nuevo shall be responsible
for all other additional reasonable costs to complete the BlackSand Program.
Other than with respect to the allocation of cost, Developer shall assume all
responsibilities of Nuevo herein and shall be responsible to complete the work
in a reasonable and prudent manner and shall indemnify and hold Nuevo harmless
from any and all claims resulting therefrom. Nothing herein shall limit (i)
the Developer’s rights to seek direct damages under Section 7.2.2, other than
Developer’s obligation to share excess cost hereunder which are the sole
liability of Developer and (ii) Nuevo’s right to seek direct damages based on
allegation that Developer wrongfully asserted a default.



                              2.4.1.9 Developer Option to Purchase Wells.
Developer,
pursuant to the Mineral PAPA, may at any time prior to commencement of grading,
elect to purchase any or all of Operator’s active wells lying within the
Development Areas solely for the purpose of well abandonment by giving notice
by certified mail of such well designation. The value of a producing oil well
or an injection well shall be determined by mutual agreement of the Developer
and Operator taking into consideration the current condition of the well, the
reserves assigned to the well, the well’s production, operating cost, plugging
and abandonment cost, for an injector well, the replacement cost, and any other
matter deemed relevant. For purposes of this



17









 




Section 2.4.1.9, the value of a well shall be equal to the average of the
values determined by the reserve engineers, one to be selected by each party
from the list attached as Attachment 5. The Developer and Operator shall each
select one company from such list by providing written notice thereof within
ten days of the certification date of Operator’s notice. The value, once
determined, shall be final. Prior to grading, the determined value shall be
paid by Developer to Operator, and such costs to Developer shall not be
considered as Reimbursement Amounts. Developer shall notify Operator within
ten (10) days of receipt of the determination of values which wells it elects
to purchase. Developer shall pay the amount to Operator within twenty (20)
days of such notice. Upon receipt of such payment, Operator shall promptly (i)
shut in any applicable wells, if active, and (ii) deliver to Developer a Bill
of Sale for any such well and transfer operatorship to Developer. Developer
shall (i) assume operatorship and obtain all necessary permits and
governmental approvals to act as an Operator, (ii) not return any well it
purchases to production, and (iii) shall cause such wells to be plugged and
abandoned and all gathering lines and facilities abandoned and, if above
ground, removed all in accordance with all Governmental Agency regulatory
requirements at Developer’s sole cost and expense in the same time and manner
required of Operator under the BlackSand Program. Any ancillary costs
associated with the purchase and plugging and abandonment of any such wells
and removal of facilities therefor shall not be considered as Reimbursement
Amounts.




                         2.4.2. The BlackSand Program and Party Responsibilities Except
as otherwise provided herein, Operator, pursuant to the Mineral PAPA, Nuevo
and Developer shall cooperate in the completion of the BlackSand Program and
each shall perform its obligations in a commercially reasonable manner, and in
good faith, as described below and elsewhere herein:



          I. Post closure-Pre Grading Events



               A. Pursuant to the Mineral PAPA, Operator and Nuevo have mutually agreed
or, if so indicated, shall mutually agree to the following matters as more
specifically set out in Attachment 6 and schedules thereto:




	 	i.	 	the location and size of the area
for the expansion of the existing Tonner Canyon Tank
Farm (“Tank Farm”), which will be required prior to the
decommissioning of the existing East Naranjal Tank Farm
(“EN Tank Farm”).
	 
	 	ii.	 	the general alignment and grade for
service lines to the Tank Farm and plan facilities to
accommodate the operating wells previously served by the
East Naranjal Tank Farm. (References to grade within
this Agreement refer only to those lines for which
burial is required.) The final alignment and grade will
be mutually agreed to so as to avoid conflict with
future development to the extent possible and avoid
future interruption of service.
	 
	 	iii.	 	the general alignment and grade for
the surface and subsurface installation of the 12KV
service line from the existing electrical substation to
the new site and to the existing Stearns gas plant
location (“Gas Plant”). The final alignment and grade
have been




18









 






	 	 	 	selected as to minimize conflict with future
development and avoid future interruption of service.
	 
	 	iv.	 	the currently approved Remedial
Action Plan for the Land and to amend it if necessary
to reflect work already completed. If amended, process
the amendment through the County of Orange Health Care
Agency, Division of Environmental Health, or such
agency as may have current jurisdiction of any
identified contaminants.
	 
	 	v.	 	shall mutually agree upon the
location, alignment and grade of the “sales point” for
the ConocoPhillips (formerly Tosco) pipeline to serve
the Tank Farm.
	 
	 	vi.	 	shall mutually agree upon the
location, alignment and grade of the gas gathering
system and associated facilities, and service lines
between the Gas Plant and the Tank Farm.
	 
	 	vii.	 	shall mutually agree upon the final
grade elevations for each existing well remaining in
the Development Areas, or impacted by grading for the
Development Areas, which grade shall be consistent with
Developer’s Grading Plan.
	 
	 	viii.	 	shall mutually agree upon access
plans to provide for interim and final access to
accommodate the BlackSand Program work and all future
oilfield-related activities.





               B. Developer, at Developer’s cost and expense, shall:




	 	i.	 	Prepare the Grading Plan and process
it through the appropriate Governmental Agency. The
Grading Plan shall be designed to be completed in three
phases to correspond to the work set out in Attachment
2, all as approved by the appropriate Governmental
Agency.
	 
	 	ii.	 	Prepare a soils and geological review of the
Grading Plan.
	 
	 	iii.	 	Satisfy, or cause to be satisfied,
all mitigation measures precedent to grading found in
the Final Tonner Hills EIR.
	 
	 	iv.	 	Prepare a preliminary utility master
plan (“Street and Utility Improvement Plans”) to serve
as a basis for the Facilities Plan (see C.v., below)
and to be submitted to, and approved by, the
appropriate Governmental Agency.
	 
	 	v.	 	Provide grade elevations for all
wells to be retained or abandoned within the Development
Areas or impacted by grading required for the
Development Areas.




19









 






	 	vii.	 	Obtain coverage under the National
Pollutant Discharge Eliminating System (NPDES)
statewide General Construction Activity Stormwater
Permit from the State Water Quality Control Board.





               C. Nuevo, subject to reimbursement from the Reimbursement
Amount described in Section 2.4.1.4 shall:




	 	i.	 	Complete construction drawings for
the expanded Tank Farm and facilities related thereto
and process them through the appropriate Governmental
Agencies (including, if necessary, the South Coast Air
Quality Management District).
	 
	 	ii.	 	Complete improvement and relocation
plans and process them through the appropriate
Governmental Agencies (as necessary) for the relocation
of the Tank Farm service lines, the East Naranjal Tank
Farm service lines, the Gas Plant service lines,
natural gas gathering lines and 12KV power lines.
	 
	 	iii.	 	Prepare and submit the well
abandonment program, as set out in Attachment 6, for
permitting through CDOGGR.
	 
	 	iv.	 	Prepare schematic facilities plans
for pipelines and facilities (“Facilities Plan”) to
service the wells to be accommodated within and
adjacent to the Development Areas.
	 
	 	v.	 	Construct the Tank Farm improvements.
	 
	 	vi.	 	Remediate the identified contaminated
soils associated with the EN Tank Farm. Exhumed soils
will be isolated and stockpiled for placement by
Developer with the grading of the first phase of
development in accordance with and as permitted by the
approved Remedial Action Plan. Exhumed soils not meeting
the criteria for placement on site will be removed from
the site for appropriate disposal by Nuevo.
	 
	 	vii.	 	Decommission the EN Tank Farm once
the service lines are connected to the improved Tank
Farm.
	 
	 	viii.	 	Construct the new service lines as
required to the Tank Farm, rerouting lines currently
serving the East Naranjal Tank Farm, and prepare
as-built plans for those service lines which are
permanent.
	 
	 	ix.	 	Drain, flush and mark for grading
any identified abandoned EN Tank Farm and Tank Farm
pipelines.
	 
	 	x.	 	Construct the temporary or permanent
(as applicable) gas gathering lines and facilities to
the Gas Plant.




20









 





	 	xi	 	Flush and mark any identified
abandoned below ground pipelines and facilities for
grading.
	 
	 	xii.	 	Relocate the 12KV line from the
existing electrical substation to the existing Gas
Plant and Tank Farm as necessary.
	 
	 	xiii.	 	Locate and mark all identified
pipelines and facilities within the area to be graded.
	 
	 	xiv.	 	Relocate the point of sale for the
ConocoPhillips (formerly Tosco) pipeline to the
relocated ConocoPhillips (formerly Tosco) pipeline to
connect to such new point of sale.
	 
	 	xv.	 	Complete the design drawing for all
service-related facilities not otherwise contemplated
herein.
	 
	 	xvi.	 	Prepare and submit fire and seismic
protection plans for accommodated facilities.





          II. Site Clearing and Site Grading Events Within the Development
Areas.



               A. Upon notice from Developer of the issuance of a grading permit, and
prior to site clearing, Nuevo, with the cooperation of Operator pursuant to
the Mineral PAPA, shall, after the receipt of the NTP on a Segment-by-Segment
basis, in accordance with the work associated with the Program Segment as
further set out in Attachment 6:




	 	i.	 	“Shut in” the appropriate wells as necessary; and all appurtenant
service lines and pipelines for such wells will be
drained, flushed and marked in place.
	 
	 	ii.	 	Disassemble and remove the surface facilities for such wells (test
bubbles, manifolds, valves, etc.).
	 
	 	iii.	 	Remove all well site equipment associated with such
wells.
	 
	 	iv.	 	Remove all of Operator’s surface and subsurface power lines and
transformers.
	 
	 	v.	 	Relocate, as necessary, power lines, pipelines and facilities to
service wells located outside of the Development Areas.
	 
	 	vi.	 	Cause all identified wells impacted by grading to be clearly
marked.
	 
	 	vii.	 	Commence well abandonment operations
for those wells that are to be permanently abandoned.
Identify and isolate any contaminated soils associated
with the wells for remediation as called for in the
approved Remedial Action Plan. Soils not meeting the
criteria for placement in deep fills, if any, will be




21









 






	 	 	 	removed from the site for appropriate disposal and
costs associated with such a disposal shall be
considered part of the Reimbursement Amount.
	 
	 	viii.	 	Remove and crush all well cellars
associated with the wells to be abandoned and
accommodated; the concrete will be crushed, and
stockpiled for later placement by Developer.
	 
	 	ix.	 	Maintain full authority over the cleanup and remediation
operations for any crude oil released as a result of
Developer’s performance. All such costs shall be for
the account of Developer.
	 
	 	x.	 	Provide Developer with copies of all inspection records and
reports and test results for any contaminated soils
associated with the well work.





               B. Upon the issuance of a grading permit, Developer at Developer’s cost
shall, on a Segment-by-Segment basis, in accordance with the work associated
with the applicable Program Segment as further set out in Attachment 6:




	 	i.	 	Provide construction staking to
define the limits of the area to be cleared and
developed.
	 
	 	ii.	 	If not previously commenced, notify
the appropriate Governmental Agencies and all
interested parties of the commencement of the soils
remediation program as required under the approved
Remedial Action Plan. (This assumes that the majority
of the soils remediation efforts will occur during the
grading operations, and will utilize a modified direct
burial approach.)
	 
	 	iii.	 	Coordinate grading with Nuevo, such
that the scheduled sequence of wells to be shut-in or
abandoned, as appropriate, is consistent with
Developer’s grading program.
	 
	 	iv.	 	Provide notice to the grading
contractor as to the well locations and the necessity
of avoiding wells during the clearing and grading
operation(s).
	 
	 	v.	 	Cause a comprehensive health and
safety plan to be prepared and submitted to Nuevo and
Operator and all the appropriate Governmental Agencies
prior to commencement. The plan shall cover both
grading and remediation activities.
	 
	 	vi.	 	At all times comply with the
mitigation measures of the Final Tonner Hills EIR, and
the requirements, as applicable, of the USF&WS Resource
Management Plan.




22









 











               C. During grading, Nuevo shall, on a Segment-by-Segment basis, in
accordance with the work associated with the applicable BlackSand Program
Segment as
further set out in Attachment 6:




	 	i.	 	Identify and isolate any
contaminated soils associated with the wells for
remediation as called for in the approved Remedial
Action Plan. Isolated soils meeting the criteria of the
approved Remedial Action Plan will be stockpiled
adjacent to the remediation site for placement in deep
fills by Nuevo. Soils not meeting the criteria will be
removed from the site for appropriate disposal and the
costs associated with such a disposal shall be part of
the Reimbursement Amount.
	 
	 	ii.	 	Provide Developer with copies of
well abandonment reports for all well abandonment
activities completed as provided to and from CDOGGR.
	 
	 	iii.	 	Design the final Facilities Plan in
accordance with the Street and Utility Improvement
Plans provided by Developer.
	 
	 	iv.	 	Relocate temporary service lines
serving the oil operations as may be necessary.





               D. During grading, on a Segment-by-segment basis, in accordance with the
phasing plan, Developer shall:




	 	i.	 	Prepare and process the Precise Area
Plans and Level B Tentative Maps through the
appropriate Governmental Agencies, showing the final
lot layout and the Joint Use and Exclusive Use Areas to
be retained around the wells remaining in operation.
The Precise Area Plans will clearly identify all wells
to be abandoned, and identify all abandoned wells that
will require methane venting in accordance with the
requirements of the Orange County Fire Authority and
other appropriate Governmental Agencies.
	 
	 	ii.	 	Grade the Development Areas in
accordance with the approved Grading Plan.
	 
	 	iii.	 	Immediately notify Nuevo and Operator
in the event Developer excavates any unidentified
previously abandoned wells. Developer shall promptly
reabandon such wells in accordance with the requirements
of all appropriate Governmental Agencies.
	 
	 	iv.	 	Place soils stockpiled as a result of
Developer’s remediation activities within deep fills in
accordance with the criteria established within the
approved Remedial Action Plan. The location and
constituency components of these soils will be




23









 




	 	 	 	detailed and reported in the final grading report
prepared by the Developer.
	 
	 	v.	 	Install all required erosion control
devices in accordance with the approved Grading Plan,
ensuring that storm runoff will be diverted from the
area(s) affected by the Program.
	 
	 	vi.	 	At all times comply with the General
Construction Activity Stormwater Permit.
	 
	 	vii.	 	Based upon the approved Precise Area
Plans, provide Nuevo and Operator with grade elevations
and staking for all wells.
	 
	 	viii.	 	Prepare the Grading Plan and
process them for approval by the appropriate
Governmental Agencies.
	 
	 	ix.	 	Prepare the final Street and Utility
Improvement Plans and process them for approval by the
appropriate Governmental Agencies. The Street and
Utility Improvement Plans will identify the oil
production service facilities as provided by Operator’s
Facilities Plan.
	 
	 	x.	 	Prepare the Level B Final Maps and
process them for approval by the appropriate
Governmental Agencies, and record such maps at the
County Recorder’s office. The Level B Final Maps will
identify all Exclusive and Joint Use Areas.
	 
	 	xi.	 	Identify and dispose of any
previously unidentified oil production facilities or
third party facilities uncovered during the course of
the grading operation.
	 
	 	xii.	 	Clean up and remediate any crude oil
released during the course of the grading operations
according to standards approved by the appropriate
Governmental Agency, unless such release is the
responsibility of Nuevo or Operator as provided for
herein.
	 
	 	xiii.	 	Prepare a final soils and
geological report on the Development Areas and obtain
from the appropriate Governmental Agency, a final
compaction certificate relating thereto, within sixty
(60) days of completion of grading for each phase.
	 
	 	xiv.	 	Reabandon or otherwise accommodate,
if necessary, any unidentified wells or facilities
within the Development Area in accordance with CDOGGR
specifications and requirements.





               E. During grading, Developer and Nuevo shall cooperate with each
other in the implementation of the BlackSand Program, as follows:



24









 






	 	i.	 	Design of the Precise Area Plans,
Level B Tentative and Final Maps and final Street and
Utility Improvement Plans to avoid conflicts between
the oil production service facilities and the utilities
required to service the Development Areas; Nuevo shall
have the reasonable right of approval in event of
design conflicts.
	 
	 	ii.	 	Design the Precise Area Plans to
ensure that all Joint and Exclusive Use Areas necessary
for the wells and facilities are shown to the Parties
and meet all Parties’ joint satisfaction.
	 
	 	iii.	 	Identification and differentiation
of naturally-occurring tar seep or oil-bearing sands
from crude oil released as a result of oil operations;
provided that unless Developer and Nuevo can
conclusively determine that such contamination resulted
from prior or ongoing production activity, such
contamination shall be presumed to be from
naturally-occurring tar seep or oil-bearing sands.





          III. Post-Grading Events



               A. Upon completion of Grading within the Development Areas, on a
Segment-by-Segment basis in accordance with the phasing plan as approved
in the Development
Agreement, Nuevo shall:




	 	i.	 	Cause all abandoned wells within the
Development Areas to be capped below those grades
provided by Developer in accordance with CDOGGR and the
requirements of the EIR, Planned Community Text and
Area Plan. Final inspections of such wells shall be
conducted by CDOGGR.
	 
	 	ii.	 	Install permanent pipelines and
facilities as determined by Nuevo in its discretion as
required for Operator’s continued operations in
accordance with grading operations.
	 
	 	iii.	 	Provide as-built drawings to
Developer and Operator showing the line and grade for
all installed facilities.
	 
	 	iv.	 	Install seismic monitoring devices
as required by the mitigation measures in the Final
Tonner Hills Environmental Impact Report.





               B. Upon completion of the Grading within the Development Areas, on a
phase-by-phase basis in accordance with the approved phasing plan as
approved in the
Development Agreement, Developer shall:




	 	i.	 	Install the “Backbone” utility

systems in accordance with the approved Street and
Utility Improvement Plans.






25









 






	ii.	 	Install the street improvements in accordance
with the approved Street and Utility Improvement Plans.
Such Plans shall make provision for oil field related
facilities to the extent deemed necessary by Nuevo to
operate wells in the Development Areas. The “Backbone”
utility and street improvements are anticipated to take
four months beyond the completion of grading.
	 
	iii.	 	Install oil facility screening
devices in accordance with the requirements of, and
plans approved by, the appropriate Governmental
Agencies.
	 
	iv.	 	Provide construction staking for the
installation of Operator’s wells, pipelines and
facilities within the Development Areas.
	 
	v.	 	Construct methane gas vents over
abandoned oil wells as may be necessary to accommodate
the housing development
	 
	vi.	 	Construct all required active and
passive methane mitigations as required by the Final
Tonner Hills Environmental Impact Report, the Orange
County Fire Authority or other Governmental Agency for
residential development.





          C. Upon completion of grading within the Development Areas,
Developer and Nuevo shall cooperate with each other to:




	i.	 	Develop Homebuyer notification
language to be supplied by Developer to future surface
purchasers with respect to the past and continuing oil
operations. State Proposition 65 language will be
included in any Homebuyer notification.
	 
	ii.	 	Develop Homebuyer notification
language for inclusion within the Division of Real
Estate Public Report, Grant Deed or Covenants,
Conditions and Restrictions, as may be appropriate or
required as to the placement of remedial soils within
the deep fills.
	 
	iii.	 	Satisfy those EIR mitigation
measures regarding the past and continuing oil
operations that are designated as Nuevo’s
responsibility under the Mineral PAPA.
	 
	iv.	 	Obtain a conditional case closure
letter from the County of Orange Health Care Agency,
Division of Environmental Health for the approved
Remedial Action Plan.





                              2.4.3 Duty to Cooperate with BlackSand Program. Developer
shall fully cooperate with Nuevo and Operator in the implementation of the
BlackSand Program. Developer shall (i) timely process all of its permit
requests; (ii) comment on all applicable submittals of specifications or plans
within five business days; and (iii) make all facilities available for
accommodation under the BlackSand Program such that Nuevo may commence the



26









 




BlackSand Program Segment. To the extent that Developer fails to fully and
timely cooperate with Nuevo and Nuevo incurs penalties, damages or incremental
costs in performing the BlackSand Program, such penalty, damage or cost shall
be the responsibility of Developer and Developer hereby agrees to indemnify
and hold Nuevo harmless therefrom. Developer shall also be liable to Operator
for any and all incremental cost or expense incurred by Operator in the
performance of its work in the BlackSand Program as a result of Developer’s
failure to fully and timely perform and complete Developer’s Improvements.
Developer shall use good faith, commercially reasonable efforts to timely and
expeditiously perform its obligations and rights under this Agreement in a
manner that minimizes the interruption or curtailment of production and shall
be liable to and indemnify Operator for all losses resulting from the failure
to do so.




                                        2.4.3.1
Processing Costs – Employee Costs. Under the
Mineral PAPA, Operator and Nuevo agree not to charge Developer for their
employees or overhead costs allocable to such employees in the processing of
the Governmental Approvals.



          3. Program Implementation.



               3.1 General Duty to Cooperate. Developer shall use good faith, commercially
reasonable efforts to timely and expeditiously perform its obligations and
rights under this PAPA in a manner that minimizes the interruption or
curtailment of production by Lessee. To the extent that Developer fails to
fully and timely cooperate with Nuevo, and Nuevo, as a result of Developer’s
acts or omissions, incurs penalties, damages or incremental costs in performing
any of the Programs, such penalty, damage or cost shall be the responsibility
of Developer and Developer hereby agrees to defend, indemnify and hold Nuevo
harmless therefrom. Developer shall also be liable to Nuevo for any and all
incremental reasonable cost or expense incurred by Lessee related to Lessee’s
performance of its obligations in the Aera Program or a delay in returning
temporarily shut-in wells to production which result from Developer’s failure
to comply with the provisions of this Section. Developer expressly agrees to
pay such incremental Lessee costs which shall not be deemed to be either
Additional Purchase Price or Reimbursement Amounts and Developer hereby
releases and shall defend, indemnify and hold Nuevo harmless therefrom. Nuevo
shall use good faith, commercially reasonable efforts to timely and
expeditiously perform its obligations and rights under this PAPA in a manner
that minimizes the interruption of development of the Project by Developer. To
the



27









 




extent that Nuevo has not assigned to Developer any agreement in its
entirety necessary to Developer any agreement with a third party to perform
all or part of the Hover Program or the Permit Program, and Developer incurs
damages as a result of any such third party’s failure to timely perform under
such agreement, Nuevo shall use good faith and commercially reasonable efforts
to secure such party’s performance, but shall not be liable to Developer for
such party’s failure to timely perform. At Developer’s request, to the full
extent assignable without consent, Nuevo shall assign to Developer any rights
it has under such agreement necessary to assert a claim against such third
party resulting from an alleged breach or failure to perform by such
party. With regard to such claim by Developer, Nuevo shall have no obligation
or responsibility to participate in such lawsuit or action, except to the
extent that such participation is legally required in order for Developer to
assert a claim. Nuevo shall reasonably cooperate with Developer and such
cooperation or participation, as a party or otherwise, shall be at the cost
and expense of Developer and Nuevo shall be indemnified from Losses resulting
therefrom as provided in the Agreement. Nuevo makes no warranty or
representation and shall have no liability for the outcome thereof or damages
awarded therein.




               3.2 Insurance. Each Party shall use commercially reasonable efforts to
name the other Parties as Additional Insured, on each Party’s standard blanket
insurance policy covering its activities in connection herewith, for the
duration of their construction or their activities on any portion of the
Parcel.



               3.3. Performance by Each Party. Each party shall be responsible for
bearing all costs and expenses associated with the performance of its
obligations under each Program. Such costs shall not be considered Development
Reimbursement Monies as defined in the Agreement. Nuevo shall timely commence
and complete its respective responsibilities under each Program exercising
commercially reasonable effort and care. With respect to each Program, Nuevo
shall not be obligated to design, construct or install any improvements nor
undertake work or activities other than those specified in Section 2. Should
Developer’s failure to perform, including, without limitation its obligations
under Section 2, other than for the payment of money, or should Nuevo’s failure
to complete any aspect of the work or any Program result from an Unavoidable
Delay, such required performance shall be excused for the period of time that
the Unavoidable Delay prevents performance. With respect to the BlackSand
Program,



28









 




such required performance shall be excused for the period of time that the
Unavoidable Delay prevents performance and the time duration for the BlackSand
Program Segment shall be extended by the length of time performance is
delayed. Provided, however, that nothing in this Section shall excuse the
performance of any act rendered difficult solely because of the financial
condition of a party. In the event that any delay due to Unavoidable Delay is
anticipated by a Party, such Party shall promptly notify the other parties of
such delay, its cause and the estimated duration of the delay. Each Party
shall exercise due diligence to shorten, mitigate and avoid the effects of the
delay and shall keep all Parties informed as to its efforts.




               3.4 Independent Contractor. The acts or omissions of Lessee,
Developer or Nuevo in accordance with the terms of this PAPA may not be
imputed to the other
parties unless expressly stated herein or otherwise agreed to in writing.
Developer and Nuevo
are each performing their obligations hereunder as independent contractors
and not as a
subcontractor or agent of Lessee or the other.



               3.5 Final Acceptance.



                    3.5.1 Final Acceptance for Programs Other Than BlackSand
Program. At all times, Developer shall be solely responsible for and shall
indemnify and hold Nuevo harmless from all Losses and Environmental Losses (as
defined in the PSA) related to activities in the Aera Program that are
designated as Developer’s responsibility herein. Prior to Final Acceptance, as
set out in each Program, Nuevo shall be responsible for and shall indemnify and
hold Developer harmless from all Losses associated with performance of
activities designated as Nuevo’s responsibility in the Programs. At all times,
after Final Acceptance of each Program segment performed by Nuevo, Nuevo shall
be released and Developer shall indemnify and hold Nuevo harmless from and be
solely responsible for all Losses and Environmental Losses for that Program
segment. Developer’s indemnity herein shall be deemed for all purposes to be an
indemnity under Section 3.7 and 3.9. To the extent that any additional work is
required to be performed after Final Acceptance, such work, if any, and all
costs and expenses related thereto shall be borne by the Developer. After Final
Acceptance by Developer of each Program component, Developer shall be solely
responsible for all maintenance, revegetation, repair, replacement, removal,
and reinstallation of any completed work including, but not limited to, the
cost of future relocation of such work requested by Developer and performed by
Lessee. After Final Acceptance by Developer of each task performed by Nuevo in
the Aera Program, Developer shall be bound by and responsible for the indemnity
and release provisions contained in Section 10 and 11 of the Aera Agreement.
Prior to Final Acceptance of each Task performed by Nuevo, the obligations
under Section 10 and 11 of the Aera Agreement shall be the responsibility of
Nuevo.



                    3.5.2 BlackSand Program Final Acceptance.



                              3.5.2.1 Acceptance Process. Developer and Operator shall
respectively conduct a final inspection of those activities in each Program
Segment as set forth in Section 2.4.1.4.2 as to the items by their names in
the “Acceptance Confirmation” in such section within fifteen (15) days of
written notice of completion. In addition, Operator shall have the right, but
not the obligation, to perform a final inspection of the Developer’s work and
comment on the same. Developer and Operator shall deliver to Nuevo (with a
copy to the other) of (i) its written confirmation of “Final Acceptance of all
matters” (each an “Acceptance



29









 




Confirmation”) for each activity in a BlackSand Program Segment designated for
its Acceptance or (ii) an Acceptance Confirmation of all matters it considers
as completed and a detailed description of any items in the BlackSand Program
Segment designated for its Acceptance which it in good faith cannot give
“Final Acceptance” together with its requirements therefor. The issuance of an
Acceptance Confirmation of each completed activity within the BlackSand
Program Segment and of all matters shall be contingent upon acceptance of the
Work by the appropriate governmental authority to the extent required. If the
parties cannot resolve any item for which an Acceptance Confirmation has not
been given within 30 days, such unresolved item shall be submitted to
arbitration in accordance with this Agreement. Upon completion of any
outstanding items in a manner deemed reasonably acceptable by Operator and
Developer, Operator or Developer shall deliver an Acceptance Confirmation
thereof to Nuevo and the other within 10 days of such completion. Such notice
shall be deemed a “BlackSand Final Acceptance.” For the purpose of
clarification, BlackSand Final Acceptance, as used herein, has the identical
meaning as “Final Acceptance” as used in the Mineral PAPA.




                              3.5.2.2 Liability after Final Acceptance. After Final
Acceptance by Developer of the completed work, Developer shall be solely
responsible for all maintenance, repair, replacement, removal, and
reinstallation of such completed work for which Developer assumes Developer’s
Liability (as defined in Section 3.5.2) and for any liability as a result
thereof or pertaining thereto. Developer shall bear the cost of future
relocation of such work requested by Developer and performed by Operator. After
Final Acceptance, Developer shall be responsible for and shall release, hold
harmless and indemnify Operator and Nuevo from all claims, demands, losses or
damages, of any sort whatsoever, relating to the design, engineering,
permitting, maintenance, repair, replacement, relocation, removal and
reinstallation of any abandoned wells, or pipelines or facilities located
within or adjacent to the Development Areas and all other matters for which it
has given an Acceptance Confirmation and, together with all other work
performed hereunder, shall be referred to as “Developer Liability.” After Final
Acceptance, Operator shall be responsible for and shall release, hold harmless
and indemnify Developer and Nuevo from all claims, demands, losses or damages
of any sort whatsoever, relating to the design, engineering, permitting,
installation, repair, relocation, removal and reinstallation of all active
wells, pipelines or facilities and all other matters for which it has given
Final Acceptance, (“Operator Liability”). It is the intention of the Parties
that upon Final Acceptance, Nuevo shall have no further liability or obligation
with respect to the BlackSand Program and the wells, equipment and facilities
accommodated under the BlackSand Program. Upon Final Acceptance, Nuevo and
Operator shall be relieved of any and all liability directly or indirectly
related to Developer Liability. Upon Final Acceptance, as between Nuevo and
Operator, Nuevo shall be relieved of further liability or obligation and
Operator shall indemnify, release and hold Nuevo harmless from any and all
claims, including third party claims, related to Operator Liability.
Notwithstanding anything to the contrary contained herein, Operator, prior to
Final Acceptance, shall not be liable or responsible for any increased costs
which result from governmental requirements to obtain additional permits or
remediate or restore the Parcel to a higher standard resulting from the real
estate development and all such incremental or increased costs shall be the
responsibility of Developer.



               3.6 Construction Easement. Developer, their respective successors and
assigns, hereby grant to Nuevo together with the right to partition, grant and
transfer the same, a temporary, nonexclusive easement in gross over the Parcel
to the extent necessary to complete all work required by the Programs.



30









 





          4. Permit Program Reimbursement.



               4.1 Reimbursement Plan. Developer and Nuevo agree that Nuevo shall be
paid an Additional Purchase Price for the performance of the Permit Program.
The following payments shall be made, all of which are more specifically set
out in the Agreement:



     (i) $2 million paid directly to Nuevo upon approval of U. S. Fish and
Wildlife of the Restoration Plan. Provided, however, should such approval
occur before Closing of the transaction as set out in the Agreement, such
amount shall be paid as part of the Purchase Price at Closing.



     (ii) $3 million paid directly to Nuevo upon receipt of a Certification
that the PA-7 habitat restoration area is being utilized by California
gnatcatchers according to the United States Fish and Wildlife Service
Biological Opinion performance standard.



     (iii) $1.5 million paid directly to Nuevo upon receipt of a Certification
that the PA-4 habitat restoration area is occupiable by California
gnatcatchers in accordance with United States Fish and Wildlife Service
Biological Opinion performance standard.



     (iv) $2 million paid directly to Nuevo upon the one year anniversary of
the completion of the planting of the revegetation set out in the initial
Scope of Work required by the Restoration Plan for the Remaining Habitat
Restoration Area.



     Should the biologists fail to agree on either the satisfaction of the
survivability standards or the additional actions to be taken to meet such
standards, upon receipt of an arbitrator’s opinion that the standards have
been met or upon completion of further actions set out by the arbitrator.
Should the project be modified as a result of new or additional Government
Agency requirements prior to Final Acceptance, all such costs shall be borne
by Nuevo. However, should such Government Agency requirements result from the
modifications requested by Developer or as a result of the mutual agreement of
the Parties, such costs shall be borne by Developer.



          5. Liabilities and Responsibilities.



               5.1 Liability Allocation. Either Nuevo or Developer may seek arbitration
as provided in Section 7.2.2 to obtain damages for losses suffered as a result
of the failure to either Party to perform hereunder or to resolve disputed
issues in the performance of the Programs. All disputes between the Parties
herein or any claim either may have against Operator shall be resolved through
arbitration. Any award in such arbitration shall be limited to the recovery of
actual direct damages. Neither Party nor Operator shall be entitled to
indirect, consequential, special, exemplary or punitive damages. After Final
Acceptance by Developer, Developer shall have no cause of action against Nuevo,
or its successors or assigns with respect to the Programs. Under no
circumstances shall Developer assert any claim or cause of action against
Lessee except to the extent such action is permitted by the Aera Agreement and
Nuevo is indemnified and held harmless therefrom. Developer may, in its
reasonable discretion, maintain a lawsuit, arbitration or other action against
any construction entities hired by Nuevo (but not Nuevo itself) to perform work
on the Programs pursuant to a written contract (“Construction



31









 




Entities”), to obtain damages for losses suffered as a result of Nuevo’s
failure to properly complete the Programs, to the extent caused by such
Construction Entities. In that regard, to the extent it possesses and may
assign same, Nuevo hereby conveys, transfers and assigns (and, if necessary,
will convey, transfer and assign at such time as such cause of action arises)
to Developer a nonexclusive assignment of its rights and interests in and to
any relevant contracts or subcontracts, for the limited purposes stated
herein, without any obligation by Nuevo to participate in such lawsuit or
action, as a party or otherwise, and without any responsibility, warranty,
representation or liability for any outcome pursuant thereto or damages
awarded therein. Construction Entities include contractors, subcontractors,
materialmen or other independent entities, but not Nuevo, their respective
constituent partners, officers, employees or any other related entities. Upon
ten (10) days written request, Nuevo will provide Lessee and Developer with a
list of such Construction Entities which have supplied Nuevo with the
Preliminary Notice prescribed by the California Civil Code for the maintenance
of mechanic’s lien rights (see Exhibit “F” to the PSA). Nuevo further agrees
to not enter into any contract with a Construction Entity that waives the
liability for such entity’s negligence.




               5.2 The Programs and Party Responsibilities. Except as otherwise provided
herein, each Party shall cooperate with the other in the completion of the
Programs and each Party shall perform its obligations in a commercially
reasonable manner, and in good faith, as described below and elsewhere herein.
It is understood and agreed that Developer shall have the primary
responsibility for and shall, at its sole cost and expense, complete all work
required to accomplish the “Developer Improvements.” including but not limited
to: (a) soil remediation not designated as the responsibility of Nuevo in this
PAPA, (b) relocation of third party easements and licenses (TPEL), (c) all
matters to the extent allocated to Developer in Sections 2.4.1 and 2.4.2,
hereof, (d) all matters to the extent allocated to Developer herein, and (e)
Mass Grading operations in the best commercial manner to attain completion of
such operations in the shortest time but, in all cases, with respect to the
BlackSand Program within the tune duration set out for the activity in
Attachment 6, so as to minimize the disruption of Operator’s and Lessee’s
remaining oil operations. Developer shall fully cooperate with Nuevo and
Lessee in the implementation of each Program. Developer shall (i) timely
process all of its permit requests; (ii) comment on all applicable submittals
of specifications or plans within ten days; and (iii) make all facilities
available for accommodation under the Programs such that Nuevo may commence
its activities hereunder in a timely manner. In addition, Developer remains
responsible for those obligations set out as Developer’s responsibility in the
Agreement, this Agreement and Developer and other Development Documents
whether or not a part of the Programs. The activities and tasks performed by
Nuevo in each of the Programs shall be undertaken in accordance with standards
promulgated at the time of such work by CDOGGR with respect to well
abandonment or such other Governmental Agency having jurisdiction over the
activity, all subject to, and as further described herein.



          6. PAPA Trust Deed.



               6.1 Obligations Secured by PAPA Trust Deeds. Certain obligations,
including the obligations which are set out in the PAPA Trust Deeds hereunder,
are secured by the PAPA Trust Deed recorded against the Land in the form of
Attachment “2” and Attachment “3” which are appended hereto and incorporated
herein by this reference. The obligations secured by the PAPA Trust Deed are
described as follows:



32









 





                    6.1.1 Additional Purchase Price. The obligation to pay the
Additional Purchase Price specified in Section 2.2.2(b) of the Agreement.



                    6.1.2 Indemnities. The obligation to perform the
indemnities and
to pay any and all amounts, costs and fees for which the Developer is
responsible as a result of the indemnity obligations contained herein and in
Section 3.7, Section 3.9 and elsewhere in the Agreement.



                    6.1.3 Development Reimbursement Monies. The obligation to
pay any and all amounts described in Section 1.4 as Development
Reimbursement Monies.



                    6.1.4 BlackSand Program. The obligation to pay the
Reimbursement Amount set forth under the BlackSand Program.



                    6.1.5 Agreement Payment Obligations. All other payment
obligations under the Agreement, including without limitation, interest as
described in Section 5.2 thereof.



               6.2 Partial Release of Homes. Except as provided in Sections 13(b) of
the Development Declaration, and D of the PAPA Trust Deed, and as further
provided in the
PAPA Trust Deed, upon Nuevo’s receipt and approval of the amounts
specified in, and upon
compliance with the applicable provisions of, the PAPA Trust Deed, Nuevo
shall release Homes
from the lien or charge of the PAPA Trust Deed, as provided for in the
PAPA TD, as long as
Developer is not in default of any of its obligations under the Agreement,
PAPA or the PAPA
Trust Deed.



               6.3 Release of Community Facilities. As further provided in the
PAPA Trust Deed, concurrently with the conveyance to a Master Association
or any Association
or Governmental Agency of any Community Facilities, and upon written
request accompanied
by evidence of such Close of Escrow and conveyance satisfactory to Nuevo,
Nuevo shall,
without the payment of any consideration (other than reimbursement of
Nuevo’s reasonable
costs), release such Community Facilities from the lien or charge of the
PAPA Trust Deed.



               6.4 Cross Default. The PAPA Trust Deed shall provide that a default
under the Shea PAPA Trust Deed (Attachment “2” hereof) shall be deemed a
default
under the TH680 PAPA Trust Deed (Attachment “3” hereof).



               6.5 Bulk Sales.



                    6.5.1 Approval of Bulk Sales. If Developer proposes to sell,
exchange or otherwise transfer any portion of the Parcel (except pursuant to
Exempt Sales made in the ordinary course of business) (“Bulk Sales”), to a Bulk
Sale purchaser (“Bulk Sale Purchaser”), such transfer shall be done in
compliance with Section 5.1.8 of the Agreement and Developer shall, among other
things, provide Nuevo with the Assumption of Obligations described therein.
Developer may sell or assign up to either 33% of its interest in the
Development Area or 33% of the acreage comprising the Development Area.
Thereafter, should Developer make a further disposition, Developer shall be
required to place 50% of the value received from such assignment or sale into
escrow up to an amount equal to the unpaid reimbursement amounts to be paid by
Developer to Nuevo under Section 2. All sums in such



33









 




escrow shall be used for the sole purpose of satisfying Developer’s payment
obligations under this PAPA.




          7. Miscellaneous.



               7.1 Assumption of Obligations: As set out in the Agreement,
Developer has assumed all rights, duties, obligations and liabilities of
both Nuevo and of the
Developer in the Mineral PAPA. To the extent that the Mineral PAPA is
inconsistent with this
PAPA, the Mineral PAPA shall take precedence.



               7.2 Default/Cure. Upon the occurrence of an Event of Default (as
defined in Section 5.8.1 of the Agreement) by Nuevo in its performance of
its responsibilities
under any of the Programs, as set out herein other than the BlackSand
Program, and Nuevo has
failed to cure or commence and continuously prosecute actions to cure such
Default within the
time periods specified in Section 5.8.1 of the Agreement, Developer, at
its option, may undertake
and assume the Program work which it alleges Nuevo has failed to perform
at Nuevo’s expense.
Prior to assuming any work of Nuevo under the Programs, Developer will
provide written notice
to Nuevo after the expiration of the time periods set out in Section 5.8.1
stating the factual basis
of its claim that Nuevo has failed to cure the Default, advising Nuevo of
its intention to assume
responsibility for certain work under the Programs and providing
reasonable specificity as to the
work that it intends to assume responsibility for and perform. Nuevo’s
failure to perform
additional actions requested by Developer but not specifically set out as
Nuevo’s responsibility
in the Programs shall not be deemed a Default.


Within 10 days of receipt of notice from Developer, should Nuevo dispute in
writing Developer’s assertion that Nuevo has either failed to perform or
continuously pursue a cure, Developer shall not assume Nuevo’s Program
responsibilities, but shall submit such dispute to arbitration under Section
5.9 of the Agreement, which arbitration shall be modified as provided herein.
An arbitration under this section shall be conducted by a single arbitrator
who shall be directed to provide an arbitration schedule that results in a
decision within 45 days of the arbitrator’s selection. Among other matters,
upon establishing a Default, such arbitrator shall have the power to assign
Nuevo’s Program responsibilities to Developer.



Should the Developer assume any work that is the responsibility of Nuevo under
the Programs, Nuevo shall be indemnified by Developer for all Losses and all
Environmental Losses associated with or arising out of Developer’s performance
thereof. Provided however, Developer shall be entitled to deduct from the
Additional Purchase Price attributable to the assumed work, the reasonable
costs and expenses incurred in performance of the work. Developer shall not
offset any amounts against Additional Purchase Price for Program activities
for which Nuevo is not in Default. Any dispute with respect to the
reasonableness of the costs incurred shall be resolved through arbitration and
any amount not in dispute shall be promptly paid to Nuevo upon Developer’s
completion of performance.



                    7.2.1 Remedies Cumulative. All rights, options and remedies of
Nuevo contained in this PAPA shall be construed and held to be cumulative, and
none of them shall be exclusive of the other, and Nuevo shall have the right
to pursue any one or all of such remedies or any other remedy or relief which
may be provided by law or equity, whether or not stated in this PAPA. Further,
Nuevo may exercise hereunder, any of the rights, options and remedies, as and
to the extent, described in Sections 5 and 13 of the Development Declaration.


34









 








                    7.2.2 Arbitration. EXCEPT FOR THE RIGHT OF EITHER
PARTY TO APPLY TO A COURT OF COMPETENT JURISDICTION FOR TEMPORARY RESTRAINING
ORDERS, PRELIMINARY INJUNCTIONS, WRITS OF ATTACHMENT, WRITS OF POSSESSION OR
OTHER EQUITABLE OR PROVISIONAL RELIEF, ANY CONTROVERSY, DISPUTE OR CLAIM OF
ANY KIND OR NATURE ARISING OUT OF, IN CONNECTION WITH, OR IN RELATION TO THE
INTERPRETATION, PERFORMANCE OR BREACH OF THIS PAPA SHALL BE SUBMITTED TO
ARBITRATION UNDER SECTION 5.9 OF THE AGREEMENT.



                    7.2.4 Acceleration: Default Amount. In the event of an uncured
Event of Default, all of the amounts payable by Developer pursuant to this PAPA
shall, at the option of Nuevo, following ten (10) days’ written notice, be
immediately due and payable. The PAPA Trust Deed contains the following
language:



     “B. Additional Covenants. It is mutually agreed:




          (6) Acceleration. That upon default by Trustor in payment of
any indebtedness secured hereby or in performance of any agreement
hereunder (or under the PAPA) or the Development Documents,
Beneficiary may declare all sums secured hereby immediately due and
payable by delivery to Trustee of written declaration of default
and demand for sale and of written notice of default and of
election to cause the Property to be sold, which notice Trustee
shall cause to be filed for record. Beneficiary also shall deposit
with Trustee this PAPA Trust Deed and all documents evidencing
expenditures secured hereby.




After the lapse of such time as may then be required by law
following the recordation of said notice of default, and notice of
sale having been given as then required by law, Trustee, without
demand on Trustor, shall sell the Property at the time and place
fixed by it in said notice of sale, either as a whole or in
separate parcels, and in such order as it may determine, at public
auction to the highest bidder for cash in lawful money of the
United States, payable at time of sale. Trustee may postpone the
sale of all or any portion of the Property by public announcement
at such time and place of sale, and from time to time thereafter
may postpone such sale by public announcement at the time fixed by
the preceding postponement. Trustee shall deliver to such purchaser
its deed conveying the Property so sold, but without any covenant
or warranty, express or implied. The recitals in such deed of any
matters or facts shall be conclusive proof of the truthfulness
thereof. Any person, including Trustor, Trustee, or Beneficiary may
purchase at such sale.




After deducting all costs, fees and expenses of Trustee and of this
Trust, including cost of evidence of title in connection with the
sale, Trustee shall apply the proceeds of sale to payment, FIRST,
of the expenses of such sale, together with the reasonable expenses
of this Trust, including Trustee’s fees, cost of evidence of title
in connection with the sale and revenue stamps for documentary
transfer tax on Trustee’s deed; SECOND, payment of all monies
advanced, paid or expended by Beneficiary under the terms hereof
and the PAPA not then repaid, together with the interest thereon as
provided in the Agreement; THIRD, payment of the amount of all
delinquent sums then due under the PAPA and all other sums



35









 






secured hereby then remaining unpaid including those due under the
Development Documents; and LAST the balance or surplus, if any, of
such proceeds of sale to the person or persons legally entitled
thereto, upon satisfactory proof of such right.




     E. Acceleration Upon Sale. Subject to contrary provisions of
the Agreement, including 5.19, and Paragraphs “C” and “D” herein
concerning partial reconveyances of Homes and Community Facilities,
if Trustor shall Transfer (as defined in the Agreement) the
Property, or any part thereof, or any interest therein, or shall be
divested of its title or any interest therein in any manner or way,
whether voluntarily or involuntarily, Beneficiary shall have the
right, at its option, except as prohibited by law, to declare all
of the indebtedness or obligations secured hereby, irrespective of
the maturity date specified in any document or instrument
evidencing the same, immediately due and payable.”



                    7.2.5 Waiver. No waiver by Nuevo of a default under any of the
terms of this PAPA by Developer, and no delay or failure to enforce any of the
terms of this PAPA shall be a waiver of or shall affect a default other than
as specified in such waiver. The consent or approval by Nuevo to any act by
Developer requiring Nuevo’s consent or approval shall not be deemed to waive
or render unnecessary Nuevo’s consent or approval to or of any subsequent
similar acts by Developer.



               7.3 Continuous Operation. Nuevo and Developer covenant to proceed
continuously and diligently in accordance with the terms and conditions of
this PAPA and as
may be required under the Development Documents, and except where mutual
agreement is
expressly required, if either party does not proceed continuously and
diligently the same shall, at
the option of Nuevo, be considered as an event of default herein, except
as such failure to so
proceed is excused by reason of any Unavoidable Delay.



               7.4 Assignment. The assignment by Developer of any interest in the
property shall be done in a manner that is consistent with the Agreement
and shall not relieve the
Developer of its duties and obligations under the Agreement or this PAPA.



               7.5 Subdivision Maps and Applications. Subject to the provisions of
the Development Documents, and provided there exists no material default
thereunder, Nuevo as
the beneficiary under the PAPA Trust Deed agrees, without cost to Nuevo,
to execute any and all
Nuevo approved Level B Final Maps, applications and petitions pertaining
to the development of
the Land.



               7.6 Captions. The captions used herein are for convenience only, are
not part of this PAPA and do not in any way limit or amplify the scope or
intent of the terms and
provisions hereof.



               7.7 Invalidity of a Provision. If any provision of this PAPA shall be
adjudged by a court of competent jurisdiction to be void, invalid, illegal
or unenforceable for any
reason, the same shall in no way affect (to the maximum extent permissible
by law) any other
provision of this PAPA, the application of any such provision under
circumstances different from
those adjudicated by the court, or the validity or enforceability of this
PAPA as a whole, but only



36









 




to the extent that performance of such remaining provisions would not be
inconsistent with the intent and purposes of this PAPA.




               7.8 Notices. Any notice to be given or other document to be delivered by
any Party to the other or others hereunder, and any payments from Developer to
Nuevo, may be delivered in person to an officer of any party, or may be
delivered by Federal Express, private commercial delivery or courier service
for next business day delivery, or may be deposited in the United States mail,
duly certified or registered, return receipt requested, with postage prepaid,
and addressed to the party for whom intended, as follows:



               If to Nuevo:



	 	 	 	 	 	 	 	 	 
	Nuevo Energy Company
	1021 Main, Suite 2100
	Houston, Texas 77002
	Attn:

	 	Phillip A. Gobe	 	 	 	 	 	 
	Fax:

	 	(713) 374-4817	 	 	 	 	 	 
	Phone:

	 	(713) 374-4832	 	 	 	 	 	 
	Email:

	 	gobep@nuevoenergv.com	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	and
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Attn:

	 	Phillip E. Sorbet	 	 	 	 	 	 
	

	 	1200 Discovery Drive,
Suite 500
Bakersfield, CA 93309	 	 	 	 	 	 
	Fax:

	 	(661) 395-5294	 	 	 	 	 	 
	Phone:

	 	(661)395-5431	 	 	 	 	 	 
	Email:

	 	sorbetp@nuevoenergy.com	 	 	 	 	 	 







               Copy to:



	 	 	 	 	 	 	 	 	 
	Ullom Associates
	16149 Redmond Way, Ste. 401
	Redmond, Washington 98052
	Fax:

	 	(425) 836-2870	 	 	 	 	 	 
	Phone:

	 	(425) 836-2728	 	 	 	 	 	 
	Email:

	 	ullomjw@aol.com	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Nossaman, Guthner, Knox & Elliott, LLP
	18101 Von Karman Avenue, Suite 1800
	Irvine, California 92612-1047
	Attn:

	 	William P. Tanner, III	 	 	 	 	 	 
	Fax:

	 	(949) 833-7878	 	 	 	 	 	 
	Phone:

	 	(949) 833-7800	 	 	 	 	 	 
	Email:

	 	wtanner@nossaman.com	 	 	 	 	 	 







37









 





               If to Developer:


38









 











	 	 	 	 	 	 	 	 	 
	Tonner Hills 680 LLC
	603 South Valencia Avenue
	Brea, CA 92823
	Attn:

	 	Joe Fleischaker	 	 	 	 	 	 
	Fax:

	 	(714) 223-3526	 	 	 	 	 	 
	Phone:

	 	(714) 792-2592	 	 	 	 	 	 
	Email:

	 	joe.fleischaker@sheahomes.com	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Tonner Hills SSP, LLC
	603 South Valencia Avenue
	Brea, CA 92823
	Attn:

	 	Joe Fleischaker	 	 	 	 	 	 
	Fax:

	 	(714) 223-3526	 	 	 	 	 	 
	Phone:

	 	(714) 792-2592	 	 	 	 	 	 
	Email:

	 	joe.fleischaker@sheahomes.com	 	 	 	 	 	 







               Copy to:



	 	 	 	 	 	 	 	 	 
	Landmark Law Group
LLP


	10350 Santa Monica
Boulevard, Suite 295
	Los Angeles, CA 90025
	Attn:

	 	Gulwinder S. Singh	 	 	 	 	 	 
	Fax:

	 	(310) 300-2310	 	 	 	 	 	 
	Phone:

	 	(310) 300-2300 Ext. 101	 	 	 	 	 	 
	Email:

	 	gss@llgllp.com	 	 	 	 	 	 







               Notice may also be given by facsimile transmission (“Fax”) to any party at
the respective Fax number given above or by email, provided receipt of such
transmission shall be confirmed by follow-up notice within seventy-two (72)
hours by another method authorized above. Any party hereto may from time to
time, by written notice to the other, designate a different address which shall
be substituted for the one above specified. If any notice or other



39









 




document is sent by mail as aforesaid, the same shall be deemed served or
delivered seventy-two (72) hours after the mailing thereof as above provided.
Notice by any other method shall be deemed served or delivered upon actual
receipt at the address or Fax number listed above.




               7.9 Binding Effect. Subject to Section 7.2.3 concerning assignments,
it is the intent of the Parties that the covenants, conditions, and
agreements imposed by this
PAPA shall be binding upon and inure to the benefit of the Parties and
their respective
successors, heirs and assigns to all or any portion of the Land. In this
regard, subject to Sections
6.2 through 6.3 concerning partial releases, all of the obligations of
Developer as stated herein
shall be binding upon and enforceable against any person other than Nuevo
(or any successor to
the rights of Nuevo hereunder) to whom Developer may transfer all or any
portion of the Land.



               7.10 Further Assurances. Each of the Parties shall execute and deliver
all additional papers, documents and other assurances, and shall do all
acts and things reasonably
necessary in connection with the performance of its obligations hereunder
and to carry out the
intent of the Parties.



               7.11 Time of Essence. Time is of the essence of each provision of this
PAPA of which time is an element. Any reference in this PAPA to time for
performance of
obligations or to elapsed time shall mean consecutive calendar days,
months or years, as
applicable, unless otherwise explicitly indicated herein.



               7.12 Attorneys’ Fees. If any action or proceeding is instituted to enforce
or interpret any provision of this PAPA the prevailing party shall by
entitled to recover such
amounts as the court may judge to be reasonable as costs incurred in such
action, including,
without limitation, court costs and attorneys’ fees.



               7.13 Payments. Any amounts which are due and owing to Nuevo or
Developer pursuant to the various terms of the Development Documents shall
be paid as
specified. If any of these amounts are not paid when due, such amounts
shall bear interest as
specified in the particular Section of the Development Document requiring
such payment or, if
not so specified, then at the maximum nonusurious rate which may be
charged by a nonexempt
lender.



               7.14 Term. This PAPA shall remain in effect from the date first shown
above until the first to occur of Final Acceptance, the sale of the last
Home to be developed or
the Expiration of the Development Agreement between Nuevo and Orange
County dated
December 19, 2002. Expiration of this PAPA shall not terminate any
payment obligation,
indemnity obligation or assumption of liability all of which shall survive
this PAPA and remain
in full force and effect.



               7.15 Applicable Law. This PAPA and the documents in the forms
attached as exhibits hereto shall be governed by and construed under the
laws of the State of
California.



               7.16 Operator’s and Lessee’s Rights, Obligations and Responsibilities.
The parties recognize that the Operator and the Lessee are not signatories
to this PAPA. All
references to Operator’s and/or Lessee’s rights, obligations and
responsibilities are for
convenience. The parties executing this PAPA acknowledge that the
Operator’s and Lessee’s



40









 




respective rights, obligations and responsibilities are more completely and fully set out in the
Aera Agreement (as to Lessee) and the Mineral PAPA (as to
Operator).


The Parties have executed this PAPA on the date first set forth above.




	 	 	 	 	 	 	 	 	 	 	 
	TONNER HILLS SSP, LLC, a Delaware	 	NUEVO ENERGY COMPANY, a Delaware
	limited liability company	 	corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	Standard Pacific of Tonner Hills, LLC,	 	By:	 	


	 	 	a Delaware limited liability company, a	 	 	 	
	 	 	member	 	Its:	 	


	

	 	 	 	 	 	 	 	 	 	
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By: Standard Pacific Corp., a Delaware	 	By:	 	


	 	 	corporation, its sole member	 	 	 	
	

	 	 	 	 	 	 	 	Its:	 	


	

	 	 	 	 	 	 	 	 	 	
	

	 	 	 	By:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	

	 	 	 	Title:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	

	 	 	 	Title:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:	 	Shea Tonner Hills, LLC, a Delaware	 	 	 	 
	 	 	limited liability company, a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	Shea Homes Limited Partnership,	 	 	 	 
	 	 	 	 	a California limited partnership, its	 	 	 	 
	 	 	 	 	sole member	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:
	 	J.F. Shea LLC, a Delaware	 	 	 	 
	

	 	 	 	 	 	limited liability company, its	 	 	 	 
	

	 	 	 	 	 	General Partner	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	

	 	 	 	Title:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 
	

	 	 	 	Title:	 	

	 	 	 	 
	

	 	 	 	 	 		 	 	 	 







41









 






	 	 	 	 	 	 	 	 	 
	TONNER HILLS SSP, LLC, a Delaware	 	 
	limited liability company
	 
	 	 	 	 	 	 	 	 
	By:          , a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:     , its sole member	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	

	 	 
	

	 	 	 	Title:	 	

	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	

	 	 
	

	 	 	 	Title:	 	

	 	 
	 

	 	 	 	 	 		 	 
	By:          , a member	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By:     , its sole member	 	 
	

	 	 	 	 	 		 	 
	

	 	 	 	By:    ,
its General Partner
	

	 	 	 	 	 		 	 
	

	 	 	 	By:	 	

	 	 
	

	 	 	 	Title:	 	

	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	By:	 	

	 	 
	

	 	 	 	Title:	 	

	 	 
	

	 	 	 	 	 		 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	  “Trustor”	 	 
	 
	 	 	 	 	 	 	 	 
	

	 	 	 	 	 	  “Developer”
	 	“Nuevo”







42









 






12/1/03




EXHIBIT
“S”

CORPORATE GUARANTY




     This
CORPORATE GUARANTY (“SPC Guarantee” or “SPC Guaranty”) is made as
of      , 2003, by SHEA HOMES LIMITED PARTNERSHIP, a California
limited partnership (“Shea”) and STANDARD PACIFIC
CORP. (“Standard”), a
Delaware corporation (collectively referred to herein as
“Guarantor”), in
favor of NUEVO ENERGY COMPANY, a Delaware corporation
(“Nuevo”), and its
successors and assigns, and all their affiliates, members and partners (and
their members and partners), directors, officers, employees, shareholders,
agents and representatives (collectively and individually in each case,
“Beneficiary” or “Beneficiaries”). Capitalized terms used but not defined
herein shall have the respective meanings attributed to them in the Agreement
to which this SPC Guaranty is attached as Exhibit “S.”



Recitals




     WHEREAS, Nuevo, as Seller, and Tonner Hills SSP, LLC, a Delaware limited
liability company and Tonner Hills 680 LLC, a Delaware limited liability
company, as Buyer (individually and collectively,
“Buyer”) have entered into a
Purchase and Sale Agreement for the sale of the surface fee interest in
approximately 810 acres located in the sphere of influence of the City of Brea,
County of Orange, California (“Shea PSA”);



 









 





     WHEREAS, among other things, Buyer has agreed in the Shea PSA to pay,
assume, undertake and discharge the following duties and obligations: (a) the
Aera Program, (b) the Hover Program, (c) the indemnities contained in the
Shea PSA for Losses and Environmental Losses and, (d) the maintenance of
insurance of the type and in the amount set out in the Shea PSA
(collectively, “Guaranteed Obligations”), such Guaranteed Obligations being
secured by the PAPA TD, appended as Attachment 2 to Exhibit “K.”



     WHEREAS, Guarantor, pursuant to Section 5.42 of the PSA, at its option,
may deliver this fully executed and enforceable SPC Guaranty to the
Beneficiaries and secure the release and reconveyance of the PAPA TD, as more
particularly provided in Section 5.42.



     WHEREAS, Guarantor, who will obtain substantial direct and indirect
benefit from the transactions contemplated by the Shea PSA, now wishes, among
other things, unconditionally and irrevocably to guarantee, subject to the
Monetary Limit defined below, the proper performance of all the Guaranteed
Obligations, including the defense and indemnities granted by Buyer in favor
of Nuevo, in such a manner as to ensure that Guarantor’s responsibilities,
duties and obligations under this Guaranty are independent of the
responsibilities, duties and obligations of Buyer being guaranteed (“Original
Matters”) and that this Guaranty will survive, on its own terms, in the event
the Original Matters are rendered void by operation of law, in spite of
nonpayment or non-performance.



     NOW, THEREFORE, (a) in consideration of the Recitals set forth above, (b)
to satisfy certain provisions in the Shea PSA, (c) as a material inducement to
Nuevo to enter into the Shea



2









 




PSA, and (d) as further assurance to Nuevo of the performance by Buyer of the
Guaranteed Obligations, Guarantor agrees as follows:




Agreements




     1. Guarantee.
Guarantor hereby absolutely, unconditionally and
irrevocably
guarantees Beneficiaries the payment and performance by Buyer of all of
the Guaranteed
Obligations whether absolute or contingent or now or hereafter existing or
due or to become due
(including in all cases all such amounts which would become due but for
the operation of the
automatic stay under Section 362(a) of the United States Bankruptcy Code,
11 U.S.C. §362(a), or
the operation of Section 502(b) and 506(b) of the United States Bankruptcy
Code, 11 U.S.C.
§502(b) and §506(b)), and agrees to indemnify and hold harmless each
Beneficiary from any and
all costs and expenses (including but not limited to reasonable counsel
fees, court costs and
expenses) incurred by such Beneficiary as a result of Buyer’s failure to
perform the Guaranteed
Obligations, after the expiration of all notice and cure periods available
to Developer under the
Mineral PAPA.



     2. Monetary
Limit. The Guaranteed Obligations of Guarantor set out in
Section 1
above are limited only by the Monetary Limit as defined herein. The
Monetary Limit is
$15,000,000, which amount shall be reduced proportionately upon the sale
of each Home to a
member of the Homebuying public. By way of illustration, if 795 Homes
are to be sold to
members of the Homebuying public based on the number of Homes approved in
the Level B
final maps, for each Home sold to a member of the Homebuying public the
Monetary Limit shall



3









 




be reduced by 1/795th. At the time Nuevo asserts a claim or claims under this
Guaranty: (a) if the Monetary Limit is greater than the aggregate of the
monetary value of the claims being asserted, the Monetary Limit shall continue
to be reduced proportionately until the outstanding balance is reduced to
zero; or (b) if the Monetary Limit is less than the aggregate of the value of
the claims for indemnity, the then outstanding Monetary Limit shall continue
to be available to satisfy the claims asserted up to an including the amount
outstanding. Other than for the proportionate reduction described above, no
reductions in the outstanding balance of the Monetary Limit shall be deemed
made until actually paid in cash from Guarantor to Beneficiary in satisfaction
of a claim or claims under this SPC Guaranty.




     3. Waivers. Guarantor hereby expressly waives, to the maximum extent
permitted
by law, (i) promptness, diligence, presentment, notice of acceptance,
demand for payment or
performance, and any other notice with respect to any of the Guaranteed
Obligations, (ii), any
right to require that any Beneficiary enforce its rights or remedies
against Buyer, (iii) each and
every right to which it may be entitled by virtue of any applicable
suretyship and (iv) the filing of
claims with a court in the event of the insolvency or bankruptcy.
Guarantor acknowledges and
agrees that its Guaranteed Obligations to the Beneficiaries under this SPC
Guaranty are separate
and distinct from Buyer’s obligations to the Beneficiaries under the Shea
PSA, as more fully
described in the Recitals and elsewhere herein.



     4. Representations and Warranties. Guarantor hereby represents and
warrants to
the Beneficiaries, as of the date hereof, as follows:



4









 






     (a) Buyer is an affiliate of Guarantor.




     (b) Shea is a limited partnership duly organized, validly existing and in
good
standing under the laws of the State of California. Shea has all
necessary power and
authority (i) to conduct its business and own its properties and (ii) to
execute and deliver
this SPC Guaranty and to perform all of its Guaranteed Obligations
hereunder. The
execution, delivery and performance of this SPC Guaranty by Shea has been
duly and
validly authorized by all requisite action on the part of Shea.




     (c) Standard is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Standard has all
necessary power and
authority (i) to conduct its business and own its properties and (ii) to
execute and deliver
this SPC Guaranty and to perform all of its Guaranteed Obligations
hereunder. The
execution, delivery and performance of this SPC Guaranty by Standard has
been duly and
validly authorized by all requisite action on the part of Standard.




     (d) This SPC Guaranty has been duly executed and delivered on behalf of
Guarantor, and this SPC Guaranty constitutes the legal, valid and binding
obligation of
Guarantor, enforceable against it in accordance with its terms, subject,
however, to
bankruptcy, insolvency, reorganization and other laws affecting creditors’
rights generally
and, with regard to any equitable remedies, to the discretion of the court
before which
proceedings to obtain such remedies may be pending.



5









 






     (e) The making and performance by Guarantor of this SPC Guaranty does
not
(i) violate any provision of law or any rule, regulation, order,
writ, judgment, decree or
determination currently in effect having applicability to Guarantor
or Guarantor’s articles
of incorporation, bylaws or other governing documents, or (ii) result
in a breach of or
constitute a default under any agreement to which Guarantor is a
party or by which
Guarantor is currently bound or affected; and all consents or
approvals under such
agreements and instruments necessary to permit the valid execution,
delivery and
performance by Guarantor of this SPC Guaranty have been obtained.




     (f) Guarantor has received copies of the Shea PSA, has read the Shea
PSA,
has reviewed the Shea PSA with its counsel and understands the terms
of the Shea PSA.



     5. Nature of SPC Guaranty. This SPC Guaranty constitutes a guaranty of the
performance of the Guaranteed Obligations and is the joint and several
liability of each party constituting Guarantor. Guarantor specifically agrees
that it shall not be necessary or required that any Beneficiary exercise any
right, assert any claim or demand or enforce any remedy whatsoever against
Buyer, either before or as a condition to the Guaranteed Obligations of
Guarantor hereunder; provided that Guarantor shall have the benefit of and the
right to assert any defenses against the claims of any Beneficiary which are
available to Buyer and which would have also been available to Guarantor if
Guarantor had been in the same contractual position as Buyer under the relevant
Shea PSA, other than (i) defenses arising from the insolvency, reorganization
or bankruptcy of Buyer, (ii) defenses expressly waived in this SPC Guaranty and



6









 




(iii) defenses previously asserted by Buyer against such claims to the extent
such defenses have been finally resolved in a Beneficiary’s favor by a court of
last resort.




     6. Unconditional Guaranteed Obligations. The Guaranteed
Obligations of Guarantor under this SPC Guaranty shall be continuing,
absolute, unconditional and irrevocable, and shall not be affected by (i) any
lack of validity, legality or enforceability of the Shea PSA or any other
agreement or instrument relating thereto, (ii) the modification, amendment or
termination of the Shea PSA, (iii) any change in the beneficial ownership of or
interests in Guarantor or Buyer, (iv) any regulatory change or other
governmental action, (v) the dissolution or termination of Buyer, (vi) any
indulgence, compromise, settlement or release which may be given to Buyer by
any of the Beneficiaries, and (vii) any failure, omission or delay to enforce,
assert or exercise any right, power, or remedy conferred by this SPC Guaranty.
Specifically, Beneficiary may perform any of the following acts at any time
without notice to or consent of Guarantor and without in any way releasing,
affecting or impairing any of Guarantor’s Guaranteed Obligations or liabilities
under this SPC Guaranty: (a) alter, modify or amend the Shea PSA by agreement
or course of conduct or performance or dealings; (b) assign or otherwise
transfer its interests in the Shea PSA, any property which is the subject of
the Shea PSA or this SPC Guaranty, in each case, however, subject to any
restrictions on assignment or transfer set forth in the Shea PSA; and (c)
consent to any transfer or assignment of Guarantor’s interest under the Shea
PSA.



     7. Rescinded Payments. This SPC Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Guaranteed Obligations



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(in whole or in part) is rescinded or must otherwise be returned by the
Beneficiary for any reason, including the insolvency, bankruptcy or
reorganization of Buyer or otherwise, all as though such payment had not been
made, and, in such event, Guarantor will pay to the Beneficiary an amount
equal to any such payment that has been rescinded or returned. The provisions
of this Section 7 will survive any release or termination of this SPC
Guaranty. If and to the extent that Guarantor makes any payment to the
Beneficiary or to any other Person pursuant to or in respect of this SPC
Guaranty, any claim which Guarantor may have against Buyer by reason thereof
shall be subject and subordinate to the prior indefeasible payment in full in
cash of the Guaranteed Obligations that require the payment of money.




     8. Affirmative Covenants. Guarantor covenants and agrees that, so long as
any part of the Guaranteed Obligations shall remain unpaid, unperformed or
otherwise outstanding, Guarantor shall, unless Beneficiary otherwise consents
in writing:




     (a) not merge or consolidate with any partnership, limited liability
company,
corporation or other entity or sell or otherwise dispose of all or
substantially all of its
assets to any individual, partnership, limited liability company,
corporation or other entity
(a “Person”) unless the succeeding entity assumes all Guaranteed
Obligations of
Guarantor;




     (b) preserve and maintain, and cause Buyer to preserve and maintain,
its
existence, rights (charter and statutory) and franchises in the
jurisdiction of its formation,
and qualify and remain qualified, in good standing as a foreign
partnership in each



8









 






	 	 	
jurisdiction where the failure to preserve and maintain such existence,
rights, franchises and qualification would materially adversely affect
the interests of any of the Beneficiaries under this SPC Guaranty, or the
ability of Guarantor to perform its Guaranteed Obligations under this SPC
Guaranty, or of Buyer to perform its obligations under the Shea PSA; and






     (c) not, directly or indirectly, institute or commence against
Buyer, join any other Person in, directly or indirectly, instituting or
commencing against Buyer, or authorize any trustee or other Person acting
on its behalf or on behalf of others to, directly or indirectly,
institute or commence against Buyer, any bankruptcy, reorganization, debt
arrangement, insolvency, dissolution, winding up or liquidation
proceeding or other case or proceeding, under any bankruptcy, insolvency,
reorganization, receivership or similar law or any creditors’ rights, law
or pursuant to any creditors’ rights claim or otherwise pursuant to any
law of any applicable jurisdiction (including any suit on a sworn
account, suit on a debt, or suit or payment of any kind), in each case,
at any time during the period from the date of this SPC Guaranty to the
date which is one year and one day after the date the Guaranteed
Obligations are satisfied in full. Guarantor’s Guaranteed Obligations
under this Section shall survive the termination of this SPC Guaranty.



     9. Amendments. No release or waiver of any provision of this SPC Guaranty
nor consent to any departure by Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by the Party against
whom such waiver, release or consent is to be



9









 




enforced. This SPC Guaranty may not be amended except by written agreement
signed by Guarantor and Beneficiary.




     10. Notices. All notices, consents, requests, demands, instructions, approvals
and other communications permitted or required to be given hereunder shall be
validly given or made only if in writing and (a) personally delivered, (b)
delivered and confirmed by telecopier or like facsimile transmission service,
(c) delivered by United Parcel Service, Federal Express or other reputable
overnight courier delivery service or (d) deposited in the United States mail,
first class, postage prepaid, certified or registered, return receipt
requested, addressed as follows:



	 	 	 
	

	 	If to the Guarantor, to:
	 
	 	 
	

	 	Shea Homes Limited Partnership
	

	 	603 S. Valencia Avenue
	

	 	Brea, California 92822-1509
	

	 	Attn: Alan Toffoli
	

	 	Facsimile: (714) 792-3505
	

	 	Phone:      (714) 792 2504
	 
	 	 
	

	 	With a copy to:
	 
	 	 
	

	 	Standard Pacific Corp.
	

	 	15326 Alton Parkway
	

	 	Irvine, California 92618
	

	 	Attn: Orange County Division President
	

	 	Facsimile: (949) 789-1708
	

	 	Phone:      (949) 789-1600







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	 	With a copy to:
	 
	 	 
	

	 	Landmark Law Group LLP
	

	 	10350 Santa Monica Boulevard
	

	 	Suite 295
	

	 	Los Angeles, California 90025
	

	 	Attn: Gulwinder S. Singh, Esq.
	

	 	Facsimile: (310) 300-2310
	

	 	Phone:
     (310) 300-2300
	 
	 	 
	

	 	If to Nuevo, to:
	 
	 	 
	

	 	1021 Main Street, Suite 1200
	

	 	Houston, TX 77002
	

	 	Attention: Bruce K. Murchison
	

	 	Facsimile: (713) 374-4897
	

	 	Phone:      (713) 374-4880






or to such other place within the United States of America as any party may
designate as to itself by written notice to the other party. All notices given
by personal delivery or mail shall be effective on the date of actual receipt
at the appropriate address. Notice given by telecopy shall be effective upon
actual receipt if received during recipient’s normal business hours or at the
beginning of the next business day after receipt if received after the
recipient’s normal business hours.




     11. No
Waiver; Cumulative Rights and Remedies. No failure on the part of
any Beneficiary to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right hereunder preclude any other or further exercise thereof, or the
exercise of any other right. Each of the rights and remedies herein provided
are cumulative and not exclusive of any rights and remedies provided by law or
in any other agreements.



11









 





     12. Governing Law. THIS SPC GUARANTY SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA WITHOUT REGARD TO THE CONFLICTS OF LAWS PROVISION
THEREOF.



     13. Continuing SPC Guaranty. The obligations of Guarantor under this
SPC
Guaranty shall be continuing and (a) subject to the Monetary Limit and
Section 16 below, remain
in full force and effect until indefeasible payment and performance in
full of the Guaranteed
Obligations, (b) be binding upon Guarantor and its corporate successors,
and (c) inure to the
benefit of and be enforceable by the Beneficiaries and their respective
heirs, legal representatives,
successors and assigns which are permitted successors and assigns pursuant
to the terms of the
Shea PSA.



     14. Jurisdiction. THE PARTIES AGREE TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN ORANGE
COUNTY, CALIFORNIA, IN CONNECTION WITH ANY ACTION OR OTHER
PROCEEDING RELATING TO THIS SPC GUARANTY. EACH PARTY IRREVOCABLY
WAIVES AND AGREES NOT TO MAKE, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
JURISDICTION OF ANY SUCH COURT OR TO THE LAYING OF VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT
ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.



12









 





     15. Third Party Beneficiaries. Guarantor hereby acknowledges and agrees
that each
Beneficiary is an express third party beneficiary of this SPC Guaranty and
shall have the same
rights to enforce this SPC Guaranty against Guarantor as if it were a
party hereto.



     16. Release from SPC Guaranty. At the time that all Homes have been sold
to
members of the Homebuying public and no claims have been tendered under
this Guaranty that
remain unsatisfied, the Guarantor shall be released from this SPC Guaranty
and all the
Guaranteed Obligations. Upon written request by Guarantor, Beneficiary
shall provide a written
release within fifteen business days thereof.



          Notwithstanding the foregoing, this Guaranty shall not be released but
shall remain in full force and effect and Guarantor shall be obligated
hereunder for so long as a claim has been tendered under this Guaranty which
has not been satisfied, or a claim has been made against Buyer which, if not
properly discharged, would also constitute a Guaranteed Obligation.



13









 






     IN WITNESS WHEREOF, the parties hereto have executed this SPC Guaranty
effective as of the day and year first above written.



	 	 	 
	 

	 	Guarantor







	 	 	 	 	 	 	 	 	 	 	 
	SHEA HOMES LIMITED PARTNERSHIP, a
	California limited partnership
	 
	 	 	 	 	 	 	 	 	 	 
	By: J. F. Shea LLC, a Delaware limited
	liability company, its General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	STANDARD PACIFIC CORP., a
	Delaware corporation
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 	 	 
	

	 	
	 	 	 	 







14









 






State of







County
of






     This
instrument was acknowledged before me on
           ,
2003 by
            
as
            
of           .



	 	 	 
	 

	 	

	

	 	Notary Public’s Signature







State
of






County
of





This instrument was
acknowledged before me on
           ,
2003 by
            
as
            
of           .




	 	 	 
	 

	 	

	

	 	Notary Public’s Signature








15