UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C., 20549
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required] for
the fiscal year ended December 31, 1996 or
Transition report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934 [No Fee Required]
for the transition period from
to .
Commission File No. 1-4385
DUNES HOTELS AND CASINOS INC.
(Exact name of registrant as specified in its charter)
NEW YORK 11-1687244
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4045 South Spencer, Suite 206, Las Vegas, Nevada 89119
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (702) 732-7474
Securities Registered Pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
NONE NONE
Securities Registered Pursuant to Section 12(g) of the Act:
Series B, $7.50 Cumulative
Common Stock, $.50 par value Preferred Stock, $.50 par value
(Title of class) (Title of class)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. (X)
The aggregate market value of the voting stock held by
non-affiliates of the Registrant (2,094,340 common shares) computed
by reference to the price at February 14, 1997 ($.1563 per share)
was approximately $327,345. No market value is assigned to the
Series B preferred stock. See "Item 5. Market for Registrant's
Common Equity and Related Matters".
The number of shares of common stock outstanding as of February
14, 1997 was 6,375,096.
Documents Incorporated by Reference Not Applicable
This document consists of pages with exhibits, pages
without exhibits.
ITEM 1. BUSINESS
Dunes Hotels and Casinos Inc. was incorporated in New York
in 1956. In this report the term "the Company" refers to Dunes
Hotels and Casinos Inc., individually, or with its wholly-owned
subsidiaries, Continental California Corporation (Continental), M
& R Corporation (MRC) and MRC's subsidiary M & R Investment
Company, Inc. (MRI) and MRI's subsidiaries SHF Acquisition
Corporation (SHF) and Southlake Acquisition Corporation
(Southlake).
On May 18, 1995, Continental filed a Petition for Relief
Under Chapter 11 of the United States Bankruptcy Code. The
Petition for Relief was filed in the United States District of
Nevada, Case No. 95-21992 LBR. The case was subsequently
transferred to the United States Bankruptcy Court for the
Southern District of California. The bankruptcy case was
dismissed on November 9, 1995.
The Company, through its subsidiaries, operates in two
principal business segments: real estate (development and sale
of residential lots and rental of agricultural land), and
agriculture (drying and storing rice). See Note 16 of Notes to
Consolidated Financial Statements for information relating to
industry segments and class of services.
The Company's real estate segment develops and sells
completed residential lots primarily to builders of custom homes
and to the general public located in and around the greater
Sacramento, California area.
The agricultural segment dries harvested rice over a two
month period (approximately September 15 to November 15) and
stores, for a fee, the dried rice (or other grains) until it is
removed by the owner. The Company drys and stores rice
principally for one customer, Farmers Rice Co-operative
(Farmers). Farmers accounts for approximately 98% of the rice
drying and storage revenue. If the Company were to lose Farmers
as a customer, it would have a material adverse effect on the
Company's agricultural segment. The Company is contemplating
building a new rice drying facility adjacent to its rice storage
facility. See "Item 1. Business - Agricultural Segment - Grain
Storage and Drying Facility."
RESOLUTION OF SASA DISPUTE
On October 24, 1995, the Company, along with Continental,
MRI and SHF, entered into a Settlement, Release and Loan
Modification Agreement (the Settlement Agreement) with the
Resolution Trust Corporation (the RTC) in connection with the
Company's obligation to San Antonio Savings Association (the
SASA Obligation) which the RTC alleged was $21,107,796 as of
October 10, 1995. The Settlement Agreement became effective on
December 6, 1995. As a result of the settlement, the Company
recorded a one-time extraordinary gain of $8,346,000. Pursuant
to the terms of the Settlement Agreement and as full payment of
the SASA Obligation, (i) Continental transferred four parcels of
non-contiguous real property located northwest of San Diego,
California, owned by Continental, to the RTC in consideration of
a $1,500,000 credit against the SASA Obligation, (ii) the Company
paid $290,000 to the RTC, and (iii) the Company delivered a
secured promissory note to the RTC (the RTC Settlement Note) in
the principal amount of $2,710,000. In addition, Continental
received an order dismissing its bankruptcy case, and the Company
received orders dismissing all of the litigation between the
Company, SASA and the RTC. The RTC Settlement Note bears
interest at an annual rate of 1% over the prime rate, adjustable
semi-annually; provided, however, that the interest rate shall
not be less than 8% or more than 12% per annum. The RTC
Settlement Note requires monthly payments of interest until
December 6, 2000, at which time the entire unpaid principal
amount and all accrued and unpaid interest is due. As of the date
hereof, the Company has made all required payments under the RTC
Settlement Note. The RTC Settlement Note is collateralized by
(i) a deed of trust (the Rancho Murieta Deed of Trust) on 69
unsold residential lots at The Fairways in Rancho Murieta,
California (56 lots as of December 31, 1996), (ii) a deed of
trust (the Nevada Deed of Trust) on 53 partially developed
residential lots located in North Las Vegas, Nevada, and (iii) a
collateral assignment (the Collateral Assignment) of purchase
money promissory notes (the SHF Notes) in the aggregate principal
amount of $725,520 secured by 7 residential lots previously sold
at The Fairways ($564,160 secured by 5 residential lots as of
December 31, 1996).
REAL ESTATE SEGMENT:
THE FAIRWAYS
The Company, through SHF, developed approximately 50 acres
of real property as a residential planned unit development known
as "The Fairways" in Rancho Murieta, California. Rancho Murieta
is a 3,500 acre master planned unit development located
approximately 25 miles from Sacramento, California. Rancho
Murieta consists primarily of single family homes, town houses,
commercial property and two 18-hole championship golf courses,
including country club facilities. The Fairways, located within
the boundaries of one of the golf courses at Rancho Murieta, was
subdivided into 110 single family estate lots. As of February
14, 1997, 55 lots remain unsold.
In connection with its development of The Fairways, SHF was
required to construct several water, sewer and drainage
facilities (the Improvements) that are oversized to serve lands
outside the boundaries of The Fairways (the Benefited
Properties). SHF and Rancho Murieta Community Services District
(the District) have entered into an agreement (the Reimbursement
Agreement) wherein SHF and the District have agreed that the
total cost of the Improvements was $1,597,425 and that of this
amount, $276,088 is allocable to The Fairways and $1,321,337 is
allocable to the Benefited Properties. SHF and the District also
agreed that future construction of certain other facilities will
benefit both The Fairways and the Benefited Properties. The
Reimbursement Agreement provides that the amount that will be
allocable to The Fairways will be approximately $176,500 and will
be deducted from the amount due SHF resulting in a net amount due
to SHF of approximately $1,140,900. The funds will be reimbursed
to SHF out of proceeds of any subsequent community facilities
district or by direct payment by subsequent developers of the
Benefited Properties. SHF's right to reimbursement under the
Reimbursement Agreement will expire in twenty years from
September 1995. The Company is unable to predict what amount, if
any, will be received under the Reimbursement Agreement. The
rights to reimbursement under the Reimbursement Agreement are
personal to SHF and do not run with The Fairway property unless
assigned by SHF.
As part of the development of The Fairways, SHF entered into
a Parks Development Agreement dated February 20, 1991 (the Parks
Agreement) with Rancho Murieta Association (RMA). The Parks
Agreement provided, among other things, that the developers of
properties in Rancho Murieta pay to RMA a park fee for each
developed lot. It was RMA's contention that the park fees were
due in full when the common areas within a subdivision are
annexed into RMA. SHF maintained that the park fees, applicable
to each lot, were due only when each lot was sold. In August
1994, SHF entered into a Settlement Agreement Regarding Payment
of Park Fees (the Park Fee Payment Agreement). The Park Fee
Payment Agreement acknowledged that the total park fees owing to
RMA were $173,238. The Park Fee Payment Agreement further
provided that SHF would pay $17,323 upon signing of the Park Fee
Payment Agreement and that the balance would be paid ratably as
the remaining lots were sold. In the event all of the lots are
not sold by December 31, 1997, then any remaining amount due must
be paid in full. In the event that SHF makes any sale or
transfer of multiple lots within the Fairways to any other
person, the allocable share of the SHF park fees attributable to
the lots so conveyed shall be immediately due and payable to RMA.
However, SHF is permitted to transfer multiple lots to an entity
in which SHF holds at least a 50% interest without accelerating
payment of the park fees allocable to the lots transferred.
As part of the Settlement Agreement described above with the
RTC, all of the unsold lots in The Fairways are encumbered by a
deed of trust in favor of the RTC. The deed of trust requires a
$40,000 payment for the release of each encumbered lot. See
"Resolution of SASA Dispute" above.
On October 7, 1996, the Company signed a letter agreeing to
modify the Purchase and Option Agreement (the New Agreement)
between the Company and Murieta Investors, LLC, (MI) formerly
West Coast Properties, LLC. The Purchase and Option Agreement is
described in detail in the Company's Form 10-K for the year ended
December 31, 1995. See Item 1. "Business - Real Estate and
Related Activities - The Fairways." The New Agreement provides
that MI will purchase from the Company 6 lots at The Fairways at
$40,000 per lot plus payment of the park fees applicable to the
lots purchased. In addition, the Company may receive contingent
consideration equal to 20% of the gross sales price of each
residential dwelling sold less $40,000 (the Success Payments).
Eight months after the purchase of the initial 6 lots, MI will be
entitled to purchase a second group of 6 lots. An additional
group of 6 lots may be purchased every 4 months thereafter until
40 lots have been purchased. The initial payment for the second
6 lots purchased will be $40,000, plus payment of the applicable
park fees and the Success Payments. Beginning with the purchase
of the third group of 6 lots, the initial payment will be
$45,000, plus payment of the park fees applicable to the lots
purchased. Therefore, the Success Payments will be 20% of the
gross sales price of each residential dwelling lot sold less
$45,000. If MI sells any lot without constructing a residential
dwelling thereon, the Company will receive 20% of the sale price
without offset of the initial payment. The sale of the first 6
lots closed on December 20, 1996.
WHITE RANCH
The Company, through Southlake, owns a 50% interest in the
White Ranch which consists of approximately 10,000 acres of
agricultural land, located in Kings and Tulare Counties,
California. The other 50% owner and Southlake share equally in
profits and losses on the operation and sale of the White Ranch.
All of the 10,000 acres have been leased for the 1997 crop year.
Tenants at the White Ranch generally pay a fixed cash rent plus a
share rent. The amount of the share rent is based on the
profitability of the crop grown. Tenants are required to pay all
water usage charges applicable to the leased land. In February
1997, the Company and the other 50% owner of the White Ranch
entered into a Purchase and Sales Agreement (the Agreement) to
sell the White Ranch for $6,000,000. The Agreement provides that
the purchaser will make a $10,000 non-refundable deposit for a
90-day inspection period. The inspection period may be extended
for an additional 90-day period upon the payment of an additional
$10,000 non-refundable deposit. Terms of the sale are all cash
at close of escrow. If the sale is consummated, net proceeds to
the Company will be approximately $3,000,000. The sale is
subject to, among other things, the buyer's ability to obtain
adequate financing. There can be no assurance that the buyer
will be able to obtain financing and that the sale will close.
SAM HAMBURG FARM
MRI owns approximately 150 acres of agricultural property
called Sam Hamburg Farm (Hamburg Farm) in Fresno and Merced
Counties, California. MRI's 150 acres are operated by SHF. Of
the 150 acres, 40 acres contain the airstrip and the shop areas
which are the focus of continuing attempts at chemical clean-up.
The remaining 110 acres are leased to various tenants at an
annual aggregate rental of approximately $20,000.
In connection with a potential 1991 sale of a portion of
Hamburg Farm, SHF was advised of possible contamination on the
site. The Company retained a specialist to inspect the sites,
take samples, analyze the samples and report to the Company. The
specialist indicated that there were two major sites of chemical
spillage, a storage facility for diesel fuels and an old airstrip
which had been used for the loading and fueling of aircraft
applying agricultural chemicals to the surrounding farm lands.
The Company has substantially completed the clean-up relating to
the diesel storage tanks at a cost of approximately $100,000.
The Company has disposed of a large amount of the contaminated
earth at an approved site for the storage of toxic wastes.
However, 5,000 cubic yards of contaminated earth (previously
thought to be 4,000 cubic yards) still remain to be disposed of.
The Company, through its chemical and toxic clean-up consultant,
has been working with the California State Environmental
Protection Agency, in seeking alternate means to the disposal in
toxic dump sites of chemical and toxics-laden soil. The State
has participated in the funding of several projects by a number
of chemical treatment firms in efforts to try other
detoxification methods on the soil.
Because of the ongoing testing the State has not imposed a
disposal date upon the Company. Cost of disposal is estimated at
$100 per cubic yard. However, if on-site remediation can be
achieved, it is estimated that the cost will be between $90,000
and $115,000. The Company is unable to predict when the ongoing
testing will be completed or what the outcome of these tests will
be. As of December 31, 1996, the Company has paid approximately
$500,000, including the $100,000 expended for the diesel storage
tanks and has accrued an estimated $174,000 relating to the
balance of the clean up. That estimate could change as the
remediation work takes place.
RESIDENTIAL LOTS, NORTH LAS VEGAS
The Company owns 57 partially developed residential lots in
North Las Vegas, Nevada. The 57 lots were formerly owned by Pine
Ridge Joint Venture (PRJV). As part of the settlement with the
RTC, 53 of the lots are encumbered by the Nevada Deed of Trust in
favor of the RTC. The Nevada Deed of Trust requires a $6,000
payment for the release of each of the encumbered lots. See
"Resolution of the SASA Dispute". On February 21, 1997, the
Company signed an Agreement for the Purchase and Sale of all 57
lots for a total consideration of $661,800 plus reimbursement of
water fees paid in the amount of $72,957. The sale is expected
to close in the second quarter of 1997.
AJD JOINT VENTURE
In June 1993, MRI entered into a joint venture known as PRJV
with AJD, a Nevada limited partnership, for the purpose of
developing approximately 92 single-family residences in North Las
Vegas, Nevada. The development was scheduled to be completed in
two phases consisting of 32 residences in the first phase and the
balance to be completed in the second phase. The holder of the
first lien on the land in the second phase, which consisted of 53
partially developed residential lots, filed a Notice of Default
and Election to Sell Under Deed of Trust. On May 3, 1995, SHF
acquired the lots at the foreclosure sale for approximately
$440,000. On October 1, 1996, PRJV deeded to the Company, in
lieu of foreclosure, 4 fully developed residential lots. See
"Residential Lots, North Las Vegas" above. On October 10, 1996,
the last remaining house in Phase I was sold, thereby effectively
terminating PRJV.
SOLANO COUNTY OPTION
The Company has an option (the Solano County Option) to
acquire approximately 1,690 acres of farm land located in Solano
County, California. The Company acquired the Solano County
Option as part of a settlement agreement between Baby Grand Corp.
(BGC), an Anderson Entity, a financial instution and MRI. The
purchase price of the Solano County Option was $1,043,902. The
Solano County Option provides that the Company can purchase the
1,690 acres at a price of $3,000,000. The Company will receive a
credit of $1,000,000 against the purchase price. The option
expires on May 1, 2003. Upon certain conditions and the consent
of the first lienholder on BGC's Maxim Hotel and Casino and the
Nevada Gaming Control Board, MRI can require BGC to repurchase
the Solano County Option (The Repurchase Agreement). The
Repurchase Agreement expires on the earlier of: (i) May 1, 2002
or (ii) 1 year prior to the date the Option Agreement expires.
The Company can only recover the value of the option (i) by
exercising the option and selling the property or (ii) selling
the option. However, if the fair value of the real property
should drop below the option purchase price, the Company would
not be able to recover all of its investment in the Solano County
Option. The owner of the property under option has informed the
Company that it may not be able to make the payment due on the
first mortgage lien which had a balance due of approximately
$1,356,000 as of December 31, 1996. The Company and the owner
are attempting to negotiate a solution, which could include the
Company exercising the Solano County Option at a price that is
less than the option price stated in the Solano County Option.
No assurance can be given that the Company will be able to
recover its investment in the Solano County Option, or to
negotiate a satisfactory solution with the owner of the property.
If the Company is unable to renegotiate the option price, the
Company may make the payment to the first mortgage lien holder
in order to protect its investment in the Solano County Option.
The Company is unable to predict what the outcome of this matter
will be.
AGRICULTURAL SEGMENT:
GRAIN STORAGE AND RICE DRYING FACILITIES
SHF owns a grain storage facility (The Storage Facility)
located in Yolo County, California. The Storage Facility
generally stores, for a fee, grains owned principally by Farmers
Rice Co-operative. The Storage Facility can store approximately
34,000 tons of grain.
On March 1, 1995, the Company entered into a two year lease,
at an annual rent of $54,000, of a rice drying facility (the
Drying Facility) located in West Sacramento, California.
In November 1996, the Company informed the lessor that it
was terminating the Drying Facility lease. In consideration of
the payment of $75,000, the lessor agreed to accept the return of
the Drying Facility, as is, and acknowledged that it had no
claims of any kind or nature against the Company and released the
Company from any and all obligations, except for rent payments
for the remainder of the lease term, and any subsequent damages.
On January 1, 1996, the Company entered into an agreement
with Cal-Dehy whereby the Company would pay to Cal-Dehy $60,000,
payable $5,000 per month, for the use of the Cal-Dehy name and a
Covenant Not To Compete. The agreement, including the Covenant
Not to Compete, was for one year. The agreement expired on
December 31, 1996. The Company does not intend to renew the
agreement or the Covenant Not To Compete.
In January 1996, the Company's Board of Directors authorized
management to pursue the possibility of constructing a new rice
drying facility adjacent to the rice storage facility in Yolo
County, California (The New Drying Facility). The cost of
constructing The New Drying Facility is estimated to be
approximately $1,800,000 including carrying costs. The Company
has made a $47,484 deposit on a rice dryer in anticipation of
constructing The New Drying Facility. Since the Company did not
begin construction as originally scheduled, 50% of the deposit
has been forfeited. However, the Company would receive credit
for the balance of the deposit if construction of The New Drying
Facility goes forward. In the event the Company does not proceed
with the construction of The New Drying Facility, the Company
will lose the balance of its deposit on the rice dryer.
Construction of The New Drying Facility is subject to various
governmental approvals and the ability of the Company to obtain
adequate financing. The Company has signed a financing
commitment which, if funded, would provide approximately 65% or
$1,150,000, whichever is less, of the construction funds needed
to build The New Drying Facility. The commitment is subject to
the final review and credit approval by the lender and execution
of mutually acceptable documentation. No assurance can be given
that the Company will receive the necessary approvals or adequate
financing. It is anticipated that construction of The New Drying
Facility would begin in the second or third quarter of 1997. The
Company is unable to predict whether The New Drying Facility will
be completed in time for the 1997 rice drying season
(approximately September 15 to November 15). If The New Drying
Facility is not completed in time for the 1997 rice drying
season, the Company may attempt to negotiate a new lease on the
West Sacramento, California drying facility. The Company is
unable to predict if a new lease can be obtained for the West
Sacramento drying facility or what the terms and conditions of
such a lease would be.
OTHER ACTIVITIES:
CERTAIN LOANS
From time to time the Company has made loans to various
Anderson Entities, Directors and Executive Officers of the
Company and other unrelated third parties. All loans to related
parties were approved by the Company's Audit Committee. The most
significant of these are as follows:
BABY GRAND CORP.
BGC d/b/a Maxim Hotel and Casino (the Maxim), Las Vegas,
Nevada, an Anderson Entity, owed the Company $2,129,400 plus
accrued interest in the amount of $167,000 at December 31,1996,
pursuant to a promissory note dated November 2, 1992, in the
original amount of $2,650,000 (the BGC Note). The BGC Note bears
interest at the rate of 9% per annum. Monthly payments under the
BGC Note are currently $50,000. The BGC Note is due in full on
December 1, 1997 at which time the first deed of trust
indebtedness on the Maxim is due. BGC is precluded from paying
the final installment due on the BGC Note until it pays the first
deed of trust indebtedness of approximately $34,200,000 as of
December 31,1996. If BGC is unable to pay or refinance the
first deed of trust indebtedness, it would have a material
adverse effect on the Company's ability to collect on the BGC
Note. If BGC is unable to make the final payment, the Company
would have a loss of approximately $1,899,000 for which
$1,899,000 has been provided. The BGC Note is collateralized by
approximately 1,280,000 shares of the Company's common stock.
BGC is current in payment of monetary obligations under the BGC
Note. The first trust deed holder has threatened to declare a
default primarily as a result of the litigation between Mr.
Anderson and the Anderson Parties and the FDIC (See Item 3.
"Legal Proceedings and Item 12, "Security Ownership Of Certain
Beneficial Owners And Management"). In the event the Maxim first
trust deed holder declares a default, the BGC Note will also be
in default.
GOLDEN STATE TRUST
In connection with a proposed settlement agreement (the
Agreement) dated June 12, 1996, between the FDIC and John B.
Anderson, Edith Anderson, Cedar Development Company, J.A. Inc.
and J.B.A. Investments, Inc.(collectively the Anderson Parties)
the Company loaned $250,000 to Golden State Trust, an Anderson
Party. The loan is evidenced by a note dated June 12, 1996,
which bears interest at the rate of 12% per annum, payable
monthly. A principal payment of $100,000 was paid on July 1,
1996. The balance of the principal and accrued and unpaid
interest was due on December 12, 1996. The Company believes that
the note is uncollectible and therefore has provided a reserve of
$150,000 against the balance of the amount due from Golden State
Trust. In addition, the Company ceased accruing interest on the
loan as of September 30, 1996.
OTHER TRANSACTIONS
In July 1995, the Company committed to invest up to $200,000
in a cattle feeding operation, with an unrelated third party,
known as Steadfast Cattle Co. (Steadfast). The feed lot is
located in Gonzales, California on land leased from the former
operator. The operation consisted of feeding both beef and dairy
cattle, owned by others, on a per diem basis. In addition to
its original commitment, the Company purchased approximately
$225,000 of equipment that it leases to the feed lot operation.
Because the cattle feeding operation was not successful, the
company stopped funding Steadfast. As of December 31, 1996, all
operations at Steadfast have ceased and the Company has written
off all advances made to Steadfast. The effect of the Steadfast
operations and its discontinuance on the Company's financial
statement have been immaterial. The Company is currently
attempting to sell the equipment that was purchased for the feed
lot operation. It is anticipated that the sale of the equipment
will result in a loss of approximately $10,000. However, it is
possible that the estimated amount of the loss could increase if
the Company is unable to sell the equipment within a reasonable
amount of time.
DIRECTORS
As reported in previous reports, the Company in 1993 made a
$500,000 loan to an entity wholly-owned by Director Andrew
Marincovich. See Annual Report on Form 10-K for the year ended
December 31, 1995, Item 1. "Business - Other Activities - Certain
Loans - Directors." The Company was informed that the
foreclosure sale of the El Dorado Vineyard property was completed
during the second quarter of 1996. The Company was further
informed that the foreclosure sale extinguished without payment
to Andrew Marincovich all of his interest in the property or the
proceeds thereof. The Company's non-recourse guarantee from Mr.
Marincovich was limited to excess proceeds from such foreclosure
sale. Therefore, the Company did not recover any of its funds
pursuant to the guarantee.
MADDOCKS/WILLOWS RANCH
In May 1990, the Company made a loan to William Maddocks, et
al, a central California real estate investment group (Maddocks),
in the principal amount of $1,000,000. The loan was
collateralized by real property in northern California. Maddocks
paid all but $315,000 of the loan. In 1992, the Company and
Maddocks formed a partnership called Willows Ranch. The
Company's contribution was the balance remaining on the original
$1,000,000 loan, and Maddocks contributed the net equity in the
real estate that served as collateral for the Company's loan.
In November 1995, Maddocks and the Company agreed to sell
the Willows Ranch for a price of $835,000. The sale closed on
February 5, 1996. Out of the sale proceeds, the Company received
cash of approximately $209,000 and a 91.90% interest in a note in
the amount of $243,430.
COMPETITION
REAL ESTATE SEGMENT:
The real estate investment and development business is
highly competitive. The Company competes for real estate
investments with investors of all types, including domestic and
foreign corporations, financial institutions, other real estate
investment companies and individuals, many of which have
substantially greater resources than the Company. In addition,
the Company's properties are subject to local competitors from
the surrounding areas. The Company does not consider its real
estate business to be seasonal in nature.
With respect to the residential real estate, the Company
competes with numerous other developers and residential
properties in the greater Sacramento area of California, ranging
from regional and national firms to local companies, many of
which have substantially greater resources than the Company. In
the greater Sacramento area, the Company's residential lots
compete on the basis of, among other things, location, price and
quality of amenities, such as the golf course and country club
facilities at Rancho Murieta.
With respect to the Company's agricultural real estate, the
Company competes for tenants with other regional or local
agricultural properties in their respective areas of California
where the Company's properties are located. Competition for
tenants is intense. Leasing property to prospective tenants is
generally determined on the basis of, among other things, lease
rates and quality of top soil. The Company's leases of
agricultural property are generally for a short-term period of
one year or less.
AGRICULTURAL SEGMENT:
With respect to the Company's rice drying and storage
operations, the Company competes with other rice drying and
storage companies in Northern California. The rice drying
operation is seasonal and runs from approximately September 15 to
November 15. The storage facility, depending on the types of
grain being stored, operates on a year around basis. The rice
drying and storage operations are impacted by the number of acres
of rice grown, the yield per acre, weather conditions and
government programs. Because the Company dries and stores rice
for principally one customer, the loss of that customer could
have a material adverse effect on the rice drying and storage
operation.
SALES AND MARKETING
The Company employs a sales consultant for the sale of its
residential lots at the Fairways, although sales by independent
real estate brokers are also encouraged. The residential lots
are marketed primarily by means of media advertising, customer
referrals and realtor contacts. Selling prices are set based on
the local market conditions and competitive factors. The
agricultural properties are marketed to farmers in the
surrounding area where the agricultural property is located. The
rice drying and storage operation is marketed to principally one
customer.
REGULATION
The Company must comply with various federal, state and
local zoning, building, pollution, environmental, health, and
advertising ordinances, rules and regulations, including
regulations relating to specific building materials to be used,
building design, minimum elevations of properties and emissions
from the rice drying and storage facilities.
EMPLOYEES
At February 14, 1997, the Company had 9 employees. None of
the Company's employees are covered by collective bargaining
agreements. The Company believes its employee relations to be
satisfactory.
ITEM 2. PROPERTIES
REAL ESTATE SEGMENT:
THE FAIRWAYS
The Fairways is comprised of approximately 50 acres of land
which has been developed into 110 single family estate lots. It
is located in Rancho Murieta, California, adjacent to Highway 16,
approximately 25 miles southeast of Sacramento. The land is
encumbered by bonds in the approximate amount of $600,000, which
is the pro rata share of a bonded indebtedness incurred that
enabled the Rancho Murieta Community Services District to acquire
the water and sewer facilities that serve the community of Rancho
Murieta, which includes the Fairways and by a deed of trust in
favor of RMA securing the payment of Park Fees due RMA. The
bonded indebtedness will be assumed, pro rata, by the individual
lot buyers. The amount due RMA will be paid as individual lot
sales are closed. If all of the lots are not sold by December
31, 1997, then the remaining balance owing to RMA will be due and
payable. As part of the settlement of the SASA Obligation, the
Company signed a note in favor of the RTC in the original
principal amount of $2,710,000. The note is collateralized by,
among other things, a deed of trust on the lots at The Fairways.
The deed of trust requires a $40,000 payment for the release of
each of the encumbered lots. See "Item 1. Business -- Real
Estate Segment -- The Fairways."
RESIDENTIAL LOTS -- NORTH LAS VEGAS
The residential lots in North Las Vegas consist of 53
partially developed lots and 4 completed lots. Of the 57 lots,
53 lots are encumbered by a deed of trust in favor of the RTC.
The deed of trust requires a $6,000 payment for the release of
each of the encumbered lots. See "Item 1. Business -- Real
Estate Segment -- Residential Lots, North Las Vegas."
WHITE RANCH
White Ranch, in which the Company holds a 50% interest, is
comprised of approximately 10,000 acres of agricultural land. It
is located on the western edge of Tulare County, California,
adjacent to State Highway 43 and the community of Angiola,
approximately 10 miles south of Corcoran and 30 miles southwest
of Tulare. See "Item 1. Business -- Real Estate Segment -- White
Ranch."
SAM HAMBURG FARM
Sam Hamburg Farm consists of approximately 150 acres
remaining from an original 4,600 acres of agricultural land. The
land is located in the most southwesterly corner of Merced
County, California and the most northwesterly corner of Fresno
County, California, approximately two miles east of Interstate
Highway 5. It is approximately ten miles south of the city of
Los Banos. The Company leases the remaining land to various
tenants, whose current crops include cotton, small grains, and
certain types of melons. The terms of the leases are usually one
crop year on a cash rent basis. See "Item 1. Business - Real
Estate Segment - Sam Hamburg Farm".
AGRICULTURAL SEGMENT:
GRAIN STORAGE FACILITY
The Storage Facility is located in Yolo County, California,
approximately 15 miles west of the city of Sacramento. The
Storage Facility can store approximately 34,000 tons of grain.
See "Item 1. Business -- Agricultural Segment -- Grain Storage
and Rice Drying Facilities."
EXECUTIVE OFFICES:
The Company's executive offices are located in an office
building in Las Vegas, Nevada. The executive offices are 1,744
square feet and are leased under terms of a lease agreement
expiring May 31, 1997. The Company also leases office space in
Davis, California on a month to month basis at a monthly rent of
$1,000. The Company believes that the executive offices and the
Davis office are suitable for its needs.
ITEM 3. LEGAL PROCEEDINGS
FEDERAL DEPOSIT INSURANCE CORPORATION, ET AL. V. JOHN B.
ANDERSON ET AL., United States District Court, District of
Nevada, Case No. CV-S-95-00679 (LRL), instituted on July 14,
1995. The FDIC, acting as a successor and assignee of
EurekaBank, formerly known as Eureka Federal Savings and Loan
Association (Eureka), filed a complaint against John B. Anderson,
Edith Anderson, Cedar Development Company, J.A., Inc. and J.B.A.
Investments, Inc. (collectively, the Anderson Parties). The
complaint arises out of a judgment in the original principal
amount of approximately $33,700,000 obtained by Eureka against
the Anderson Parties in the District Court for Clark County,
Nevada. In consideration of Eureka's forbearance from executing
on the judgment, the Anderson Parties executed a debtor-creditor
agreement and related pledge and security agreements. Among
other things, approximately 3,000,000 shares of the Company's
common stock is pledged as collateral to the FDIC. The FDIC
alleges, among other things, that the Anderson Parties have
breached the debtor-creditor agreement and seek relief including
(i) specific performance, (ii) appointment of a receiver, (iii)
injunctive relief, (iv) judicial foreclosure, and (v) enforcement
of the judgment, which together with interest, is alleged to be
in excess of $63,000,000. On September 15, 1995, the Anderson
Parties entered into a Stipulation and Order For: Entry of Order
Appointing Receiver and For Injunctive Relief, and For Entry of
Consent Judgment (the Stipulation). The District Court entered
its order (the Order) staying certain powers granted to the
receiver, but allowing the receiver to review the assets, observe
the operations, and inspect the books and records, including the
Company's, relating to the assets of the Anderson Parties.
In June 1996, the Company was informed that the Anderson
Parties had reached a tentative agreement (the Agreement)
regarding the Anderson Parties' obligation to the FDIC. The
Agreement was subject to final approval of the FDIC. The Company
made a $250,000 loan to Golden State Trust, an Anderson Party, in
connection with the Agreement of which $150,000 remains
outstanding. See" Item 1. Business - Other Activities - Certain
Loans - Golden State Trust" The Agreement provided that the
judgment, in the original principal amount of approximately
$33,700,000, held by the FDIC against the Anderson Parties, would
be sold to Golden State Trust. On August 27, 1996, the Company
was informed that the FDIC rejected the Agreement. The Company
was further informed that on August 28, 1996, the United States
District Court, District of Nevada, entered the Consent Judgment
appointing Ronald L. Durkin, C.P.A. (the Receiver) as the
permanent receiver over the assets of Mr. Anderson and the
Anderson Parties to the extent and with the powers set forth in
the Receivership Order.
Included in the assets over which the Receiver's powers
extend are Mr. Anderson's beneficial ownership of 3,000,000
shares, or approximately 47.1% of the common stock of the
Company. The balance of the shares owned beneficially by Mr.
Anderson are pledged to the Company as collateral for the BGC
Notes. On February 4, 1997, the United States District Court,
District of Nevada, terminated the receivership, discharged the
receiver, and appointed a special liquidating master. Based on
statements made by FDIC representatives in public proceedings
and court proceedings, the Company believes that it is the intent
of the special liquidating master to sell the assets of the
Anderson Parties that serve as collateral for the obligation to
the FDIC on terms and conditions ordered by the Court, including
the outstanding voting shares of the Company presently in the
possession of the FDIC. If the special liquidating master or the
FDIC obtains court approval and the common shares are in fact
sold to either persons or entities other than Mr. Anderson or
entities controlled by Mr. Anderson, a change of control of the
Company will occur. To the knowledge of the Company, the special
liquidating master has not taken any overt steps to assert
control, vote the shares, influence management of the Company, or
otherwise, although no assurance can be given that such steps are
not contemplated or imminent. In March 1997, the Anderson
Parties filed a notice of appeal with respect to the U. S.
District Court's February 4, 1997 ruling terminating and
discharging the Receiver and appointing a Special Liquidating
Master.
At the present time, the Company cannot predict the time or
likelihood that such sale of shares or such change of control
will occur, or whether other actions, proceedings or otherwise
will occur that may block, impede or otherwise prevent or
postpone such sale of shares or potential change of control.
The actions of the special liquidating master may jeopardize
the Anderson Parties ability to operate, including BGC which
remains liable to the Company under the BGC Note. The Company is
unable to predict what effect the outcome of the matters
described above will have on the Company, or the payment of the
BGC Note.
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
No matter was submitted during the fourth quarter of the
fiscal year covered by this report to a vote of security holders,
through the solicitation of proxies or otherwise. No matter has
been submitted to a vote of security holders since December 19,
1984. See "Item 10. - Directors and Executive Officers of the
Registrant."
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The principal United States market in which the Company's
common stock is traded is the over-the-counter market. There is
no established public trading market for the Company's Series B
preferred stock. Neither the Company's common stock nor the
Company's preferred stock is listed for trading on an exchange.
The following table sets forth for the periods indicated the
range of the high and low bid quotations for the Company's common
stock as reported by the National Quotation Bureau. The reported
bid quotations reflect inter-dealer prices, without retail
markup, markdown or commissions, and may not necessarily
represent actual transactions.
1997 HIGH LOW
1st Quarter
(through February 14, 1997) 3/16 5/32
1996 HIGH LOW
1st Quarter 3/16 3/16
2nd Quarter 11/32 3/32
3rd Quarter 1/4 1/8
4th Quarter 3/16 1/8
1995 HIGH LOW
1st Quarter 7/32 1/8
2nd Quarter 7/32 1/8
3rd Quarter 3/16 3/32
4th Quarter 3/16 1/32
At December 31, 1996, the Company's transfer agent reported
that there were approximately 1,838 holders of record of the
Company's common stock, and approximately 752 holders of record
of the Company's Series B Preferred Stock.
Dividends on the Company's common stock have not been paid
since the second quarter of 1979. Dividends on the Company's
Series B preferred stock have not been paid since the first
quarter of 1982. The Company is in arrears on such dividends in
the amount of approximately $1,101,000 as of December 31, 1996.
Because of the settlement of the SASA Obligation, the Company's
second tier subsidiary, MRI, is no longer prohibited from paying
dividends to MRC, which in turn is no longer prohibited from
paying dividends to the Company. The Company has no present
intention to pay dividends on either its common or preferred
shares. See "Item 7 - Management's Discussion and Analysis of
Financial Condition and Results of Operations".
ITEM 6. SELECTED FINANCIAL DATA
The following table summarizes certain selected financial
data for the periods indicated. The data for the years ended
December 31, 1994, 1995 and 1996 should be read in conjunction
with the more detailed audited Consolidated Financial Statements
and Notes thereto appearing elsewhere herein, including the
Independent Auditors' Report.
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(NOT COVERED BY INDEPENDENT AUDITORS' REPORTS)
<TABLE>
Year ended December 31,
1992 1993 1994 1995 1996
(Dollars in thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Continuing operations:
Net sales and miscellaneous
income $ 1,816 $ 1,387 $3,242 $3,130 $2,982
Income (loss) from
continuing
operations ($ 1,431) ($ 1,678) ($ 1,195) ($2,075) ($1,789)
Extraordinary
item, net of tax $8,346
Earnings (loss) per
common share before
extraordinary
item ($ .20) ($ .25) ($ .20) ($ .33) ($ .29)
Extraordinary item per common
share $ 1.30
Earnings (loss) per common
share ($ .20) ($ .25) ($ .20) $ .97 ($ .29)
As of the end of period:
Total assets $22,963 $21,262 $19,962 $19,527 $17,126
Long-term debt and
capital lease
obligations $ 25 $ 25 $ 146 $ 2,797 $ 1,955
Shareholders'
equity $ 9,298 $ 7,545 $ 6,275 $12,304 $10,443
Book value per
common share $ 1.43 $ 1.16 $ .97 $ 1.93 $ 1.64
</TABLE>
Certain items in the table of selected financial data have
been reclassified to conform to the current classification.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Consolidated Financial Statements and Notes thereto are
an integral part of this report, including this Item 7, and are
incorporated herein by this reference and should be read in
conjunction herewith.
Section 21 E of the Securities Exchange Act of 1934 provides
a "safe harbor" for forward-looking statements. Certain
information included herein contains statements that are
forward-looking, such as anticipated liquidity requirements for the
coming fiscal year, anticipated sources of liquidity for the
coming fiscal year, the impact of anticipated asset sales,
proposed facilities construction and potential changes in control
of the Company. Such forward-looking information involves
important risks and uncertainties that could significantly affect
the Company's financial condition and future results of
operations, and, accordingly, such future financial condition and
results of operations may differ from those expressed in any
forward-looking statements made herein. These risks and
uncertainties include, but are not limited to, those risks
relating to actual costs necessary to clean-up certain real
property chemical contamination, actual construction costs and
construction contingencies in connection with construction of new
facilities, real estate market conditions and general economic
conditions, the abilities of certain third parties to obtain
financing and otherwise perform under real estate purchase
agreements, and the outcome of certain litigation and other
risks. The Company cautions readers not to place undue reliance
on any such forward-looking statements, and, such statements
speak only as of the date made.
OVERVIEW
On October 24, 1995, the Company, along with its
subsidiaries Continental, MRI, and SHF, entered into a Settlement
Agreement with the RTC in connection with the SASA Obligation.
The Settlement Agreement became effective December 6, 1995. The
Settlement Agreement modifies and restructures and refinances and
extends further credit to the Company in accordance with the
terms and conditions set for in the Settlement Agreement, which
terms and conditions are intended to entirely supersede and
replace the terms of the SASA Obligation. The SASA Obligation is
more fully described in the Company's report on Form 10-K for the
year ended December 31, 1994, "Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operations,"
and in the Company's reports on Form 8-K dated February 2, 1995,
April 3, 1995, April 26, 1995 and May 18, 1995.
Pursuant to the terms of the Settlement Agreement and as
full payment of the SASA Obligation, (i) Continental transferred
the San Diego Property to the RTC in consideration of a
$1,500,000 credit against the SASA Obligation, (ii) the Company
paid $290,000 to the RTC, and (iii) the Company delivered a
secured promissory note to the RTC (the RTC Settlement Note) in
the principal amount of $2,710,000. The RTC Settlement Note
bears interest at an annual rare of 1% over the prime rate as
published in the Wall Street Journal. The interest rate is
adjusted semi-annually; provided, however, that the interest rate
shall not be less than 8% or more than 12% per annum. The
Company will make monthly payments of interest until December 6,
2000, at which time the entire principal amount and all accrued
interest is due.
The RTC Settlement Note is collateralized by (i) the Rancho
Murieta Deed of Trust on 69 unsold residential lots at The
Fairways in Rancho Murieta, California (56 lots as of December
31,1996), (ii) the Nevada Deed of Trust on 53 partially
developed residential lots located in North Las Vegas, Nevada,
and (iii) the Collateral Assignment of the SHF Notes in the
aggregate principal amount of $725,250 secured by 7 residential
lots previously sold at The Fairways ($564,160 secured by 5
residential lots at December 31, 1996). The Rancho Murieta Deed
of Trust requires a $40,000 payment for the release of each of
the encumbered lots. The Nevada Deed of Trust requires a $6,000
payment for the release of each of the encumbered lots. The RTC
will apply such payments to the outstanding principal due on the
RTC Settlement Note. Principal collections received by the
Company on the SHF Notes will be remitted to the RTC for
application to the outstanding principal due on the RTC
Settlement Note.
As a result of settling the SASA Obligation, the Company
recorded an extraordinary gain of $8,346,000 in the year ended
December 31, 1995. The gain consisted of a profit of
approximately $1,100,000 on the transfer of the San Diego
property to the RTC and a reduction of indebtedness of
approximately $7,246,000 net of related legal fees and other
costs.
On February 21, 1997, the Company signed an Agreement for
the Purchase and Sale of all of the 57 lots, located in North Las
Vegas, Nevada, for a total consideration of $661,800 plus
reimbursement of water fees paid in the amount of $72,597. The
sale is expected to close in the second quarter of 1997.
On October 7, 1996, the Company signed a letter agreeing to
modify the Purchase and Option Agreement (the New Agreement)
between the Company and Murieta Investors, LLC (MI), formerly
West Coast Properties, LLC. The Purchase and Option Agreement
between West Coast Properties, LLC and the Company is described
in detail in the Company's Form 10-K for the year ended December
31, 1995. See Item 1. "Business - Real Estate and Related
Activities - The Fairways". The New Agreement provides that MI
will purchase from the Company 6 lots at The Fairways at $40,000
per lot plus payment of the Park Fees applicable to the lots
purchased. In addition, the Company may receive contingent
consideration equal to 20% of the gross sales price of each
residential dwelling sold less $40,000 (the Success Payments).
Eight months after the purchase of the initial 6 lots, MI will be
entitled to purchase a second group of 6 lots. An additional
group of 6 lots may be purchased every 4 months thereafter until
a total of 40 lots have been purchased. The initial payment for
the second 6 lots purchased will be $40,000, plus payment of the
applicable Park Fees and the Success Payments. The initial
payment for all subsequent lots purchased will be $45,000, plus
payment of the applicable Park Fees and the Success Payments.
Beginning with the purchase of the third group of 6 lots, the
Success Payments will be 20% of the gross sales price of each
residential dwelling sold less $45,000. If MI sells any lots
without constructing a residential dwelling thereon, the Company
will receive 20% of the sales price without offset of the initial
price of $40,000. The sale of the first 6 lots closed on
December 20, 1996.
In January 1996, the Company's Board of Directors authorized
management to pursue the possibility of constructing a new rice
drying facility adjacent to the rice storage facility in Yolo
County, California (The New Drying Facility). The cost of
constructing The New Drying Facility is estimated to be
$1,800,000 including carrying costs. The Company has made a
$47,484 deposit on a rice dryer in anticipation of constructing
The New Drying Facility. Since the Company did not begin
construction as originally scheduled, 50% of the deposit has been
forfeited. However, the Company will receive credit for the
balance of the deposit if construction of The New Drying Facility
goes forward. In the event the Company does not proceed with the
construction of The New Rice Drying Facility, the Company will
lose the balance of its deposit on the rice dryer. Construction
of The New Drying Facility is subject to various governmental
approvals and the ability of the Company to obtain adequate
financing. The Company has signed a financing commitment, which
if funded, would provide approximately 65% or $1,150,000,
whichever is less, of the construction funds needed to build The
New Drying Facility. The commitment is subject to the final
review and credit approval of the lender and execution of
mutually acceptable documentation. No assurance can be given
that the Company will receive the necessary approvals or
adequate financing. It is anticipated that construction of The
New Drying Facility would begin in the second quarter of 1997.
The Company is unable to predict whether The New Drying Facility
will be completed in time for the 1997 rice drying season
(approximately September 15 to November 15). If The New Drying
Facility is not completed in time for the 1997 rice drying
season, the Company may attempt to negotiate a new lease on the
West Sacramento drying facility.
In February 1997, the Company and the other 50% owner of the
White Ranch entered into a Purchase Agreement (the Agreement) to
sell the White Ranch for $6,000,000. The Agreement provides that
the purchaser will make a $10,000 non-refundable deposit for a
90-day inspection period. The inspection period may be extended
for an additional 90 days upon payment of an additional $10,000
non-refundable deposit. Terms of the sale are all cash at close
of escrow. If the sale is consummated, net proceeds to the
Company will be approximately $3,000,000. However, no assurance
can be given that the sale will be completed.
A special liquidating master has been appointed by the
United States District Court, District of Nevada, to sell the
assets that serve as collateral for the obligation due the FDIC
by the Anderson Parties, including the outstanding voting shares
of the Company in the possession of the FDIC. If the common
shares are in fact sold to either persons or entities other than
Mr. Anderson or entities controlled by Mr. Anderson, a change in
control of the Company will occur. To the knowledge of the
Company, the special liquidating master has not taken any over
steps to assert control, vote the shares, influence management of
the Company, or otherwise, although no assurance can be given
that such steps are not contemplated or imminent. In March 1997,
the Anderson Parties filed a notice of appeal with respect to the
U.S. District Court's February 4, 1997 ruling terminating and
discharging the Receiver and appointing a special liquidating
master. At the present time the Company cannot predict the time
and likelihood that such sale of shares or such change in control
will occur, or whether other actions, proceedings or otherwise
will occur that may block, impede or otherwise prevent or
postpone such sale of shares or potential change in control. The
appointment of a special liquidating master may jeopardize the
Anderson Parties' ability to operate, including Baby Grand Corp.,
which remains liable to the Company under the Baby Grand Note.
The Company is unable to predict what the effect the outcome of
the matters described above will have on the Company. See Item
3. "Legal Proceedings".
The Company has no present intentions to pay dividends on
either its common or preferred stock.
OPERATING RESULTS
Results of operations for the year ended December 31, 1996,
were adversely impacted due to a number of factors including: (i)
a bad debt write off relating to entities owned or controlled by
or related to the President and Chairman of the Board of the
Company ($482,000); (ii) a write down of real estate held for
sale relating to The Fairways ($290,000); (iii) partnership
losses relating to Pine Ridge Joint Venture and Steadfast Cattle
Company ($135,000); (iv) a decline in profits from the operations
of the rice dryer and storage facility; and (v) a decline in the
profit from the sale of lots at The Fairways.
1996 vs. 1995
Real Estate
During 1996 the Company reduced the carrying value of The
Fairway lots by $290,000. The write down of the carrying value
was necessitated when the Company reduced the listed sales prices
of The Fairways lots in an attempt to increase the number of lot
sales. The sale of the 6 lots to MI were recorded at the initial
price of $40,000 per lot. In accordance with Statement of
Accounting Financial Standards (SFAS) No. 66 "Accounting for
Sales of Real Estate," no recognition was given to any Success
Payments the Company may receive in the future. The Company has
recorded all costs associated with the lots which resulted in a
loss on the sale of the 6 lots of approximately $240,000.
Net rental income from agricultural properties increased by
approximately $400,000 when compared with 1995. The increase was
due to increased acres being rented for the 1996 crop year.
Agricultural
Rice drying and storage gross profit decreased by
approximately $204,000 when compared with 1995. The decrease was
due primarily to increased costs associated with the operation of
the Drying Facility, and the payment of $75,000 relating to the
Drying Facility lease. The cost of operating the Drying Facility
increased because the Company had to rent generators to provide
the power necessary to run the Drying Facility. This was
necessitated by vandalism relating to the electrical wiring in
the drying facility. Because of the vandalism, the Company was
required, under the terms of the drying facility lease, to return
the premises to the lessor in the same condition it was in at the
inception of the lease. The Company paid the lessor $75,000 and
in return, the lessor agreed to accept the return of the premises
in an "as is" condition.
General
During 1996, the Company recorded bad debts of approximately
$482,000 relating to loans made to entities owned or related to
the Company's Chairman of the Board and President. Of the
$482,000, $150,000 related to a $250,000 loan made to Golden
State Trust in connection with a proposed settlement between John
B. Anderson and the Anderson Parties and the FDIC. (See Item 1.
"Business - Other Activities - Certain Loans - Golden State
Trust."). In addition, the Company reduced the carrying value of
the BGC Note by $338,000 to an amount the Company considers to be
collectible by the due date. (See Item 1. "Business - Other
Activities - Certain Loans - Baby Grand Corp.").
On October 10, 1996, the last remaining home constructed by
PRJV was sold, thereby effectively terminating PRJV. (See Item 1.
"Business - Real Estate Segment - AJD Joint Venture."). The
Company does not anticipate any future losses relating to PRJV.
As of December 31, 1996, all operations of Steadfast ceased.
(See Item 1. "Business - Other Activities - Other
Transactions."). The Company does not anticipate any future
losses relating to Steadfast and the cattle feeding operation.
When compared with 1995, corporate selling, general and
administrative expenses decreased due primarily to a reduction in
legal fees. When compared with 1995, real estate selling,
administrative and general expenses decreased due primarily to
the sale of lots at The Fairways which caused a reduction in
association dues, water and sewer fees, and property taxes. The
decrease in interest and dividend income, when compared with
1995, was due to a decrease in notes receivables. When compared
with 1995, interest expense increased because of the December
1995 settlement of the SASA Obligation and the commencement of
interest payments.
As a result of the foregoing, the net loss, before the
extraordinary item, for the year ended December 31, 1996,
decreased by $286,000 when compared with the net loss before the
extraordinary item for the year ended December 31, 1995.
1995 vs. 1994
Real Estate
Sales of real estate in 1995 increased by $343,000 when
compared with 1994. Cost of real estate sold in 1995 increased
by $477,000 when compared with 1994. The increase in sales and
cost of real estate sold was due to increased sales volume at The
Fairways. However, when compared with 1994, sales prices of
lots, on the average, was less than the average sale price in
1994, thereby causing a decrease in profit resulting from the
sale of real estate.
Rental income from agricultural properties in 1995 decreased
by $386,000 when compared with 1994. Rents received from the
White Ranch decreased by approximately $301,000 as a result of
fewer acres rented and reduced rental rates. Rent from Sam
Hamburg Farm decreased by approximately $85,000 when compared
with 1994. The decrease was due primarily to the sale of a
portion of the Sam Hamburg Farm land.
Agriculture
When comparing 1995 with 1994, there were no significant
increases or decreases in revenues and expenses associated with
the rice drying and storage operation.
General
When comparing 1995 with 1994, Corporate Selling,
Administrative and General expenses decreased by approximately
$78,000. The decrease was general in nature and did not relate to
any one given category of expenses. Real estate Selling,
Administrative and General expenses decreased by approximately
$168,000 in 1995. The decrease was due to a non-recurring charge
in 1994 relating to the Street of Dreams promotion at The
Fairways.
Total bad debts for the year 1995 were approximately
$761,000, which of $410,000 relating to a loan made to an entity
wholly-owned by a director of the Company and approximately
#351,000 relating to loans made to others, in the ordinary course
of business, which became uncollectible. These consisted of
unpaid rents at the White Ranch and a loan collateralized by a
first deed of trust on real property and an assignment of rents,
which real property was foreclosed on by the holder of the first
mortgage and deed of trust. Bad debt expense was reduced by
approximately $336,000 as a result of a settlement between Rancho
Murieta Properties, Inc. (RMPI), the Pension Trust Fund for
Operating Engineers and Rancho Murieta Country Club (RMCC)
relating to certain obligations owing to RMPI by RMCC in which
the Company had a security interest.
The increase in partnership loss was directly related to the
write-down of the Company's investments in PRJV and Steadfast.
LIQUIDITY AND CAPITAL RESOURCES
During the year ended December 31, 1996, cash, cash
equivalents and marketable securities increased by $804,000 from
$1,006,000 at December 31, 1995 to $1,810,000 at December 31,
1996. The most significant sources of cash in 1996 were cash
provided by operations ($935,000), the collection of loans made
to others, including related parties, ($975,000), proceeds from
short term debt ($123,000) and cash from the disposition of
investments ($183,000). The most significant uses of cash in
1996, consisted of payments on long-term debt ($842,000),
payments on short term debt ($129,000), loans made to others,
including related parties ($281,000) and cash paid for other
investments.
The Company believes that its primary requirements for
liquidity in the coming fiscal year will be to fund ongoing
expenses at The Fairways, which include, among other things,
association dues, water and sewer fees and property taxes; to
fund the required payments due on the note to the RTC; to fund a
portion of the construction and carrying costs of The New Drying
Facility; to fund costs that may be incurred relating to the
toxic clean-up at Sam Hamburg Farm; and to fund general and
administrative expenses. In addition, the Company may be
required to fund certain mortgage payments relating to the Solano
County Option if the current owner is unable to do so.
The Company believes that sources of required liquidity will
be cash generated from the rice drying and storage facilities,
anticipated lot sales at The Fairways, collection of notes
receivable resulting from sales at The Fairways, collection of
rents at the White Ranch and/or the sale of the White Ranch if
such sale is consummated, Success Payments related to the venture
with MI, the collection of the Maddocks investment which was
paid in February 1997, and the sale of the 57 lots in North Las
Vegas. Based on known commitments, the Company believes that the
sources of cash described will be adequate to fund known
liquidity requirements. However, if the sources of required
liquidity prove to be insufficient to cover the Company's primary
liquidity requirements, it will be necessary to sell some of the
Company's non-income producing assets.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Consolidated Financial Statements and supplementary data
of Dunes Hotels and Casinos Inc. are located at pages F-1 to F-32
and are listed and included under Item 14, Exhibits, Financial
Statement Schedules and Reports on Form 8-K of Part IV hereof and
are incorporated herein by reference.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The By-laws of the Company provide that the number of
directors constituting the entire board shall be twelve.
Directors are elected at each annual meeting of shareholders to
hold office until the next annual meeting and until a successor
has been elected and qualified. The Company has not held an
annual meeting of stockholders since December 19, 1984. Of the
nine directors elected at the December 19, 1984 annual meeting of
shareholders, three have resigned, and only two of such vacancies
thereby created have been filled. As a result, the number of
directors currently serving is eight.
Pursuant to a Securities and Exchange Commission consent
decree, the Company has been required to have an Audit Committee
of the Board of Directors (Audit Committee) since 1978, a
majority of which must be independent directors.
Identified herein are all directors and executive officers
of the Company. The information set forth as to each Director
and Executive Officer has been furnished by such person.
John B. Anderson, 54, is and has been since May 1984, a
director, chairman of the board, and president of the Company.
Anderson, through various subsidiaries, operates two
hotel/casinos in Nevada. On March 10, 1992, BGC (an Anderson
Entity) filed a voluntary petition for relief under Chapter 11 of
the Bankruptcy Code in the United States Bankruptcy Court for the
District of Nevada. On November 10, 1992, the United States
Bankruptcy Court confirmed and approved BGC's plan of
reorganization which became effective December 1, 1992. On
December 20, 1994, the Chapter 11 case was closed. On April 6,
1992, Maxim Development Co. (an Anderson Entity) filed a
voluntary petition for relief under Chapter 11 of the Bankruptcy
Code in the United States Bankruptcy Court for the Eastern
District of California, which bankruptcy was subsequently
dismissed on March 12, 1993.
Brent L. Bowen, 68, is and has been a director, officer and
member of the audit committee of the Company; and a director and
officer of certain of the Company's subsidiaries since December
1984. Mr. Bowen was employed by Anderson Farms (an Anderson
Entity) from 1981 to 1995 as a business and financial analyst.
Mr. Bowen became an employee of MRI in 1995. Mr. Bowen has
experience in the hotel/casino, farming, real estate,
home-building, rice mill, commodities and banking industries.
James H. Dale, 65, is and has been since January 1988, a
director of the Company. Mr. Dale was elected Treasurer of the
Company in 1990. From September 1986 to October 1991, Mr. Dale
was employed by Anderson Farms (an Anderson Entity) as Chief
Financial Officer. Prior to 1986, he was a partner in Grant
Thornton, Certified Public Accountants. Mr. Dale became an
employee of MRI in October 1991 when he was elected president of
MRI and its subsidiaries.
Andrew Marincovich, 75, is and has been since August 1978, a
director and member of the Audit Committee of the Company. He
is, and has been since July 1983, Chairman of the Audit
Committee. He is President and Executive Officer of Marincovich
& Company, a certified public accounting firm in Rancho Palos
Verdes, California. He is a Certified Public Accountant,
licensed to practice in California.
Donald J. O'Leary, 66, was elected to the Company's Board of
Directors and appointed to the Company's Audit Committee on May
19, 1994. Mr. O'Leary is an attorney and is a member of the
California, Virginia and District of Columbia Bars. He is
currently in private practice in California. Prior to entering
private practice, Mr. O'Leary was a trial attorney for the U.S.
Department of Justice and resident counsel for several large real
estate companies.
Edward Pasquale, 53, is and has been a director and officer
of the Company since December 1984; and was a director and
officer of certain of the Company's subsidiaries from December
1984 until September 1988. He is presently, and has been since
September 1983, self-employed as a financial consultant, with
emphasis in litigation support services, bankruptcy proceedings,
and corporate reorganization. He is a Certified Public
Accountant, licensed to practice in the States of California and
Nevada. Mr. Pasquale was elected to the Company's Audit
Committee on May 19, 1994.
Wayne O. Pearson, 66, is and has been since August 1978, a
director and member of the Audit Committee of the Company. From
March 1975 to May 1993, he was a marketing analyst for R&R
Advertising Agency, Las Vegas, Nevada; and since January 1970,
sole proprietor, Wayne Pearson Consulting, Las Vegas, Nevada, a
business and public opinion research company.
Erik J. Tallstrom, 49, is and has been a director of the
Company since December 1984. Prior to 1985, he was self-employed
as a certified public accountant, and was a financial consultant
to Anderson. Since November 1985, he has been a business partner
with Anderson in several real estate developments, including
Rancho Murieta in California. Currently, Mr. Tallstrom acts as a
consultant to various real estate companies.
There is no family relationship between any director or
executive officer of the Company. No director holds a
directorship in any company with a class of securities registered
pursuant to Section 12 of the Exchange Act or subject to the
requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company
Act of 1940, as amended.
Compliance with Section 16(a) of the Exchange Act. Based
solely upon a review of the Commission's Forms 3 and 4 received
by the Company during the last fiscal year and upon written
representations solicited by the Company, no Officer, Director,
beneficial owner of more than 10% of any class of the Company's
equity securities or any other person subject to Section 16 of
the Exchange Act failed to file on a timely basis as disclosed in
the above forms, reports required by Section 16(a) of the
Exchange Act during the year ended December 31, 1996.
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the annual compensation paid
to John B. Anderson, the Company's Chairman of the Board and
President, and to James H. Dale, the only executive officer of
the Company who received compensation in excess of $100,000 for
the year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
(a) (b) (c) (d) (e) (i)
Other annual All other
compen- compen-
Name and prin- sation sation
cipal position Year Salary($) Bonus($) ($) ($)
John B.
Anderson, 1996 --- --- --- $74,998 (1)
Chairman of 1995 --- --- --- $64,278 (1)
the Board and 1994 --- --- --- $73,134 (1)
President
James H. Dale, 1996 $110,000 $2,500 --- $15,000 (2)
Treasurer 1995 $102,400 $20,000 --- $15,000 (2)
1994 $100,000 $1,800 --- $15,000 (2)
(1) All other compensation to John B. Anderson, the
Company's Chairman of the Board and President consists
of the following for the years indicated:
1996 Annual Directors fees $ 15,000
Payments of certain expenses
on behalf of Mr. Anderson 59,998
$ 74,998
1995 Annual Directors fees $ 15,000
Payments of certain expenses
on behalf of Mr. Anderson 49,278
$ 64,278
1994 Annual Directors fees $ 15,000
Payments of certain expenses
on behalf of Mr. Anderson 58,134
$ 73,134
(2) All other compensation to James H. Dale, the Company's
Treasurer, consists of annual directors fees in the
amount of $15,000.
COMPENSATION OF DIRECTORS
The Company pays each director an annual fee of $15,000
which until December 31, 1996, was paid quarterly. At the
January 1997 Board of Directors meeting, the Directors voted to
pay directors fees monthly. Directors fees due Mr. Anderson are
retained by the Company and applied against amounts due the
Company from entities owned or controlled by Mr. Anderson. The
assignment of Mr. Anderson's directors fees will remain in effect
until changed by the Board of Directors. In 1996, Directors fees
due Mr. Tallstrom were retained by the Company and applied
against amounts due the Company from entities owned or controlled
by Mr. Tallstrom. In 1996, Directors fees due Mr. Marincovich
were retained by the Company and applied against amounts due the
Company from El Dorado Vineyards, Inc., a company wholly-owned by
Mr. Marincovich. In January 1997, the Board of Directors agreed
to pay Mr. Marincovich's and Mr. Tallstrom's director fees
directly to them effective January 1, 1997.
Messrs. Marincovich, Pearson, Bowen, Pasquale and O'Leary
are all members of the Company's Audit Committee. Audit
Committee members receive compensation of $1,000 per month plus a
travel allowance of $300 for each meeting attended. For services
rendered as Audit Committee members during the fiscal year 1996,
Messrs. Marincovich, Pearson, Pasquale, O'Leary and Bowen were
paid $16,550, $12,300, $16,460, $13,500, and $12,000,
respectively. Beginning January 1, 1997, the Company adopted the
policy of deferring $250 of each monthly directors fee and $200
of each monthly audit committee fee.
The Company does not have a plan, pursuant to which cash or
non-cash compensation is paid or distributed, or is proposed to
be paid or distributed in the future. The Company does not have
any pension or other benefit plans.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The table shown below (1) contains certain information with
respect to any person (including any "group" as that term is used
in Section 13(d)(3) of the Exchange Act), who are known to the
Company to be beneficial owners (as that term is defined in rules
and regulations of the Commission under the federal securities
laws) of more than 5% of the Company's common stock. No person
is known to the Company to be the beneficial owner of more than
5% of the Company's Series B preferred stock.
Percent of
Name and Address of Amount and Nature of Common Stock
Beneficial Owner Beneficial Ownership(1) Outstanding
John B. Anderson(2) 4,280,756 67.2%
P.O. Box 1410
Davis, CA 95617
Federal Deposit Insurance 4,280,756 67.2%
Corporation(2)
550-17th N.W.
Washington, D.C.
The table shown below (1) contains certain information with
respect to the Company's common stock beneficially owned (as that
term is defined in rules and regulations of the Commission under
the federal securities laws) by all directors, and directors and
executive officers of the Company as a group. No director or
executive officer of the Company is known to the Company to be
the beneficial owner of any of the Company's Series B preferred
stock.
NAME OF BENEFICIAL AMOUNT AND NATURE OF PERCENT OF COMMON
OWNER BENEFICIAL OWNERSHIP(1) STOCK OUTSTANDING
John B. Anderson(2) 4,280,756 67.2%
Brent L. Bowen(3) 2,000 *
Andrew P. Marincovich(3) 200 *
All Directors and Officers
as a Group (3 Persons) 4,282,956 67.2%
* Less than one percent
(1) In furnishing this information, the Company is relying
upon the contents of statements filed with the Commission
pursuant to Section 13(d) and Section 13(g) of the Exchange
Act.
(2) Anderson, through various entities owned or controlled
by him, claims beneficial ownership of, and shared voting
and shared investment power with respect to the reported
shares (the Anderson Shares).
Of the Anderson Shares, approximately 3,000,000 shares
are pledged in favor of the FDIC. On February 17, 1993,
the Company received a copy of Securities and Exchange
Commission Schedule 13D dated February 12, 1993 filed with
the Commission on behalf of EurekaBank (Eureka). The
Eureka Schedule 13D reports that Eureka possesses "sole
voting power" and "sole dispositive power" with respect to
3,000,000 shares of the Company's common stock. The Eureka
Schedule 13D also reports that Eureka may be deemed to have
acquired beneficial ownership of 4,367,643 shares of the
Company's common stock which amounts to 68.5% of the class
represented by said shares. In July 1993, Eureka
representatives advised the Nevada Gaming Control Board
that the FDIC had assumed management and supervision of
efforts to collect Mr. Anderson's obligation under a
debtor-creditor agreement dated November 30, 1988, by and
between John B. Anderson, Edith Anderson and Eureka Federal
Savings and Loan Association. On July 14, 1995, the FDIC
filed an action in the United District Court for the
District of Nevada against Anderson, Edith Anderson, CDC,
J.A. Inc. and J.B.A. Investments, Inc. The Company is not
a party to the action. See "Item.3 - Legal Proceedings" for
a detailed discussion of the Anderson Parties obligation to
the FDIC and the litigation relating thereto.
Of the Anderson Shares, approximately 1,280,000 shares
are pledged in favor of the Company to secure indebtedness
to the Company. The balance of the Anderson Shares are
pledged in favor of other creditors of Anderson.
The transfer agent's records maintained for the Company
show that Anderson or entities owned or controlled by him
own 4,510,912 shares. The difference between what the
transfer agent's records show and the information provided
to the Company by Anderson is 230,156 shares. The
difference consists of (i) 250,000 shares which were
purchased by the Company in January 1992, (ii) 106,731
shares purchased by BGC and (iii) 86,887 shares owned by
CBC given in payment of legal fees owed by Mr. Anderson.
None of these transactions have been changed on the
transfer agent's records.
(3) Messrs. Marincovich and Bowen claim beneficial
ownership of, and sole investment and sole voting powers
with respect to the reported shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Anderson and Anderson Entities own approximately 67.2% of
the Company's common stock. Refer to the Company's report on
Form 8-K dated February 12, 1993 regarding Securities and
Exchange Commission Schedule 13D filed on behalf of Eureka
wherein Eureka claims "sole voting" and "sole dispositive power"
with respect to 3,000,000 shares of the Company's common stock
and beneficial ownership of 4,367,643 shares of the Company's
common stock. In July 1993, the FDIC succeeded to the position
of Eureka with respect to the Debtor-Creditor Agreement.
As of December 31, 1996, BGC was indebted to MRI in the
principal amount of $2,129,400 plus accrued interest in the
amount of $167,000. Refer to "Item 1. -- Business -- Certain
Loans" for a more detailed discussion of the BGC loan.
On February 9, 1995, the Company purchased from BGC an
option, held by BGC, to purchase approximately 1,690 acres of
real property in Solano County, California. The purchase price
was $1,043,000. Refer to "Item 1.- Real Estate Segment - Solano
County Option."
On June 12, 1996, the Company loaned Golden State Trust, an
Anderson Entity, $250,000. The loan is presently in default.
Refer to "Item 1.-- Business - Certain Loans" for a more detailed
discussion of the Golden State Trust Loan.
In February 1993, the Company loaned $500,000 to an entity
wholly-owned by Director Andrew Marincovich. The Company did not
recover any of the loan amount, either directly or through the
non-recourse guarantee from Mr. Marincovich. Refer to "Item 1.-
- - Business - Certain Loans - Directors" for more detailed
discussion of the loan.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) The following documents are filed as part of this
report.
1. Financial Statements.
PAGE
Independent Auditors' Report F-1
Dunes Hotels and Casinos Inc. and Subsidiaries
Consolidated Financial Statements:
Balance sheets as of December 31, 1996 and 1995 F-2
Statements of income (loss), three years ended
December 31, 1996, 1995 and 1994 F-4
Statements of shareholders' equity, three years
ended December 31, 1996, 1995 and 1994 F-6
Statements of cash flows, three years ended
December 31, 1996, 1995 and 1994 F-7
Notes to Consolidated Financial Statements, three
years ended December 31, 1996, 1995 and 1994 F-9
2. Financial Statement Schedules:
Schedule II S-1
Schedule III S-4
Schedule IV S-5
3. Exhibits.
3.01 Restated Certificate of Incorporation of Dunes
Hotels and Casinos Inc. dated June 17, 1982, is
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December
31, 1994, Part IV, Item 14(a)(3), Exhibit 3.01.
3.02 Certificate of Amendment of Restated Certificate
of Incorporation of Dunes Hotels and Casinos
Inc. dated December 19, 1984, is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part
IV, Item 14(a)(3), Exhibit 3.02.
3.03 Revised By-laws of Dunes Hotels and Casinos Inc.
dated December 1984, is incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 3.03.
4.01 Specimen Certificate for the Common Stock of
Dunes Hotels and Casinos Inc., is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part
IV, Item 14(a)(3), Exhibit 4.01.
4.02 Specimen Certificate for the Preferred Stock of
Dunes Hotels and Casinos Inc., is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part
IV, Item 14(a)(3), Exhibit 4.02.
10.02 Agreement dated November 21, 1989 by and between
CCC Nevada Inc. (formerly Continental Connector
Corporation), and Continental Industries, Inc.;
Promissory Note dated November 20, 1984, in the
principal amount of $3,000,000 made by
Continental Industries, Inc. to Continental
Connector Corporation; Allonge to Promissory
Note, dated November 20, 1989, in the original
principal amount of $3,000,000 made by
Continental Industries, Inc. to Continental
Connector Corporation; Security Agreement dated
as of November 20, 1984 by and between
Continental Industries, Inc. and Continental
Connector Corporation; and Continuing Guaranty
dated April 2, 1985, by Morris Blinder and Meyer
Blinder in favor of Continental Connector
Corporation, are incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 10.02.
10.04 Settlement Agreement dated June 28, 1988, by and
between San Antonio Savings Association and
Dunes Hotels and Casinos Inc.; First Amendment
to Settlement Agreement dated December 5, 1989,
by and between San Antonio Savings Association,
F.A. (assignee of San Antonio Savings
Association) and Dunes Hotels and Casinos Inc.,
is incorporated herein by reference to Dunes
Hotels and Casinos Inc. Annual Report on Form
10-K (file no. 1-4385) for the year ended
December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.04. Settlement Release and Loan
Modification Agreement dated October 24, 1995,
by and among the Resolution Trust Corporation,
Dunes Hotels and Casinos Inc., Continental
California Corporation, M & R Investment
Company, Inc. and SHF Acquisition Corporation,
is incorporated herein by reference to Dunes
Hotels and Casinos Inc. Quarterly Report on Form
10-Q for the nine months ended September 30,
1995, Item 6, Exhibit 10.01. Order Granting
Joint Motion to Dismiss Bankruptcy Case and
Adversary Proceeding, dismissing bankruptcy case
of Continental California Corporation, is
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Current Report on Form 8-K
dated November 22, 1995, Item 7(c), Exhibit
99.01.
10.05 Stipulation and Order for Dismissal with
Prejudice filed in the United States Bankruptcy
Court, District of Nevada, Case No. BK-S-92-20989
(RCJ) executed by The Valley National Bank
of Arizona, EurekaBank, M&R Investment Company,
Inc. and Baby Grand Corp.; Compromise Agreement
dated November 9, 1992, by and among Maxim
Development, The Valley National Bank of Arizona
and Redwood Bank; Settlement Agreement and
Mutual Release dated November 2, 1992, by and
among EurekaBank, The Valley National Bank of
Arizona, M&R Investment Company, Inc. and Baby
Grand Corp.; Addendum to Settlement Agreement
and Mutual Release dated November 2, 1992, by
and among EurekaBank, The Valley National Bank
of Arizona, M&R Investment Company, Inc., and
Baby Grand Corp.; Stipulation for Dismissal of
Appeal with Prejudice filed in the United States
District Court, District of Nevada, Case No.
CV-S-92-675-LVG (RCH) dated November 2, 1992 and
executed by The Valley National Bank of Arizona,
Baby Grand Corp., M&R Investment Company, Inc.
and the official Unsecured Creditors' Committee;
Promissory Note dated November 2, 1992, in the
principal amount of $2,650,000 made by Baby
Grand Corp. to M&R Investment Company, Inc.;
Amended and Restated Pledge Agreement dated
November 2, 1992, by and between Baby Grand
Corp. and M&R Investment Company, Inc.; and
Release of Assignment of Leases, Rents and
Revenues dated November 2, 1992, by M&R
Investment Company, Inc., are incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1992,
Part IV, Item 14(a)(3), Exhibit 10.05. Second
Settlement and Forbearance Agreement dated
February 9, 1995, by and among Baby Grand Corp.,
M & R Investment Company, Inc. and Bank One,
Arizona, NA.; and Purchase Agreement (including
Option Agreement) dated February 9, 1995, by and
between Baby Grand Corp. and M & R Investment
Company, Inc., are incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Current Report on Form 8-K (file no. 1-4385)
dated February 9, 1995, Item 7, Exhibit Nos.
10.01 and 10.02.
10.06 Straight Note dated August 28, 1990, in the
principal amount of $486,000 made by Rancho
Murieta Properties, Inc. to SHF Acquisition
Corporation; and Deed of Trust with Assignment
of Rents (Short Form) dated August 28, 1990, by
and between Rancho Murieta Properties, Inc.,
First American Title Insurance Company and SHF
Acquisition Corporation, securing $486,000
Straight Note, are incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1990, Part IV, Item
14(a)(3), Exhibit 10.07. Second Extension
Agreement dated September 30, 1993, by and
between SHF Acquisition Corporation and Rancho
Murieta Properties, Inc.; Pre-workout Letter
Agreement dated November 9, 1993, by and between
SHF Acquisition Corporation and Rancho Murieta
Properties, Inc.; Assignment of Membership
Proceeds dated September 30, 1993, by and among
SHF Acquisition Corporation, Rancho Murieta
Properties, Inc. and M & R Investment Company,
Inc.; and UCC-1 Financing Statement dated
November 29, 1993, by Rancho Murieta Properties,
Inc. in favor of SHF Acquisition Corporation and
M & R Investment Company, Inc., are incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1993, Part
IV, Item 14(a)(3), Exhibit 10.10.
10.09 Promissory Note dated May 31, 1990, in the
principal amount of $1,100,000, made by Yolo Oil
and Gas, Inc. to SHF Acquisition Corporation;
Guaranty of Payment and Performance dated May
29, 1990, by 500 First Street, a California
general partnership, Kent N. Calfee, William
Maddocks and Kenneth Wallace in favor of SHF
Acquisition Corporation; Deed of Trust and
Security Agreement dated May 31, 1990, by and
among Yolo Oil and Gas, Inc., Chicago Title
Insurance Company and SHF Acquisition
Corporation; Deed of Trust and Security
Agreement dated May 29, 1990, by and among 500
First Street, Wildlife Artisan, Inc., Chicago
Title Insurance Company and SHF Acquisition
Corporation; Assignment of Rents and Leases
dated May 31, 1990, by and between Wildlife
Artisan, Inc. and 500 First Street, for the
benefit of SHF Acquisition Corporation;
Environmental Indemnity Agreement dated May 31,
1990, by Yolo Oil & Gas, Inc., 500 First Street,
Kent N. Calfee, William Maddocks and Kenneth
Wallace in favor of SHF Acquisition Corporation;
Loan Agreement dated May 25, 1990, by and among
Yolo Oil & Gas, Inc., SHF Acquisition
Corporation, 500 First Street, and William
Maddocks; Lender's Escrow Instructions dated May
31, 1990, by Yolo Oil & Gas, Inc., Chicago Title
Insurance Company and SHF Acquisition
Corporation; Deed of Trust and Security
Agreement dated May 29, 1990, by 500 First
Street, Wildlife Artisan, Inc., Chicago Title
Insurance Company and SHF Acquisition
Corporation; and Assignment of Rents and Leases
dated May 31, 1990, by Wildlife Artisan, Inc.,
500 First Street, and SHF Acquisition
Corporation, are incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1990, Part IV, Item
14(a)(3), Exhibit 10.11.
10.10 Letter Agreement dated July 21, 1991, by and
among Calfee & Young (on behalf of M & R
Investment Company, Inc.), Rancho Murieta
Properties, Inc. and CBC Builders, Inc.;
Promissory Note in the principal amount of
$955,500 made by Rancho Murieta Properties, Inc.
and CBC Builders, Inc. to M&R Investment
Company, Inc.; Deed of Trust with Assignment of
Rents dated July 22, 1991, by CBC Builders, Inc.
in favor of M&R Investment Company, Inc.; Deed
of Trust dated July 22, 1991 by CBC Builders,
Inc. in favor of M&R Investment Company, Inc.;
Collateral Assignment of Partnership Interest
dated July 22, 1991, by Erik J. Tallstrom in
favor of M&R Investment Company, Inc.;
Assignment of Director's Fees dated July 22,
1991, by and between CBC Builders, Inc. and M&R
Investment Company, Inc.; Memorandum of Option
to Purchase dated July 22, 1991, by and between
CBC Builders, Inc. and M&R Investment Company,
Inc.; and Personal Guaranty dated July 22, 1991,
by Erik J. Tallstrom, are incorporated by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no 1-4385) for
the year ended December 31, 1991, Part IV, Item
14(a)(3), Exhibit 10.12. Extension Agreement
dated September 30, 1993, by and among M & R
Investment Company, Inc., Rancho Murieta
Properties, Inc. and CBC Builders, Inc.;
Pre-workout Letter Agreement dated November 9, 1993,
by and among M & R Investment Company, Inc.,
Rancho Murieta Properties, Inc. and CBC
Builders, Inc.; Extension of Option Agreement
dated September 30, 1993, by and between M&R
Investment Company, Inc. and CBC Builders, Inc,
are incorporated herein by reference to Dunes
Hotels and Casinos Inc. Annual Report on Form
10-K (file no. 1-4385) for the year ended
December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.10.
10.14 Corporation Deed of Trust with Assignment of
Rents dated March 23, 1993, by and among Andrew
P. Marincovich and Matilda C. Marincovich, First
American Title Insurance Company and M&R
Investment Company, Inc.; Promissory Note dated
July 22, 1992, in the principal amount of
$500,000 made by El Dorado Vineyards, Inc. to
M&R Investment Company, Inc.; Business Loan
Agreement by and among M&R Investment Company,
Inc., El Dorado Vineyards, Inc. and Andrew P.
Marincovich; Security Agreement by El Dorado
Vineyards, Inc. in favor of M&R Investment
Company, Inc.; Personal Guaranty dated April 7,
1993, by Andrew P. Marincovich in favor of M&R
Investment Company, Inc., are incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1992, Part
IV, Item 14(a)(3), Exhibit 10.14. Promissory
Note in the principal amount of $500,000, made
by El Dorado Vineyards, Inc. to M&R Investment
Company, Inc.; Promissory Note in the principal
amount of $8,800 made by El Dorado Vineyards,
Inc. to M&R Investment Company, Inc.; Promissory
Note in the principal amount of $3,945.21 made
by El Dorado Vineyards, Inc. to M&R Investment
Company, Inc.; Promissory Note in the principal
amount of $39,591.29 made by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.;
Business Loan Agreement by and among M&R
Investment Company, Inc., El Dorado Vineyards,
Inc. and Andrew P. Marincovich; Personal
Guaranty by Andrew P. Marincovich in favor of
M&R Investment Company, Inc.; and Security
Agreement by El Dorado Vineyards, Inc. in favor
of M&R Investment Company, Inc., are
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December
31, 1993, Part IV, Item 14(a)(3), Exhibit 10.14.
Loan Modification Agreement dated July 15, 1994,
by and among El Dorado Vineyards, Inc., Andrew
P. Marincovich and M&R Investment Company, Inc.;
Durable Special Power of Attorney dated July 21,
1994 by Andrew P. Marincovich; Promissory Note
dated July 15, 1994, in the principal amount of
$500,000 made by El Dorado Vineyards, Inc. to
M&R Investment Company, Inc.; Promissory Note
dated July 15, 1994, in the principal amount of
$39,591.32 made by El Dorado Vineyards, Inc. to
M&R Investment Company, Inc.; Promissory Note
dated July 15, 1994, in the principal amount of
$3,945.21 made by El Dorado Vineyards, Inc. to
M&R Investment Company, Inc.; Promissory Note
dated July 15, 1994, in the principal amount of
$8,800.00 by El Dorado Vineyards, Inc. to M&R
Investment Company, Inc.; Promissory Note dated
July 15, 1994, in the principal amount of
$12,184.86 made by El Dorado Vineyards, Inc. to
M&R Investment Company, Inc.; and Promissory
Note dated July 19, 1994, in the principal
amount of $153,428.94 by El Dorado Vineyards,
Inc. to M&R Investment Company, Inc., are
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Quarterly Report on Form 10-Q
(file no. 1-4385) for the six months ended June
30, 1994, Item 6, Exhibit 10.01. Note
Modification Agreement (with Exhibits A through
F) dated January 5, 1995, by and among El Dorado
Vineyards, Inc., Andrew P. Marincovich and M&R
Investment Company, Inc., is incorporated herein
by reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 10.14.
10.16 Parks Development Agreement dated February 20,
1991, by and among the Rancho Murieta
Association, the Rancho Murieta Community
Services District, Rancho Murieta Properties,
Inc., CBC Builders, Inc. and SHF Acquisition
Corporation, is incorporated herein by reference
to Dunes Hotels and Casinos Inc. Annual Report
on Form 10-K (file no. 1-4385) for the year
ended December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.16. Settlement Agreement Regarding
Payment of Park Fees (not dated) by and among
Rancho Murieta Association, SHF Acquisition
Corporation, CBC Builders, Inc., Rancho Murieta
Properties, Inc. and Rancho Murieta Community
Services District of Sacramento County, is
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December
31, 1994, Part IV, Item 14(a)(3), Exhibit 10.16.
10.17 Inter-Creditor Agreement dated September 30,
1993, by and among SHF Acquisition Corporation,
M & R Investment Company, Inc. and Calfee &
Young, is incorporated herein by reference to
Dunes Hotels and Casinos Inc. Annual Report on
Form 10-K (file no. 1-4385) for the year ended
December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.17.
10.18 Commercial Premises Lease dated July 1, 1993, by
and between California Dehydrating Company and
SHF Acquisition Corporation, is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1993, Part
IV, Item 14(a)(3), Exhibit 10.18.
10.19 Renewal Promissory Note secured by Security
Agreement Modification Agreement dated June
1989, by and between Eureka Federal Savings and
Loan Association and Andco Development Group,
Inc.; Security Agreement-Pledge dated June 1989,
by and between Rancho Murieta Properties, Inc.
and Eureka Federal Savings and Loan Association;
Agreement to Modify Promissory Note dated June
1989, by and among Eureka Federal Savings and
Loan Association, Andco Development Group, Inc.,
Andco Land and Development Company, Inc. and
CBC Builders, Inc.; Extension Agreement dated
February 1, 1990, by and among Eureka Federal
Savings and Loan Association, Andco Development
Group, Inc., Andco Land and Development Company,
Inc., Rancho Murieta Properties, Inc., Erik J.
Tallstrom and John B. Anderson; Guaranty dated
October 1, 1987, by John B. Anderson in favor of
Eureka Federal Savings and Loan Association;
Guaranty dated October 1, 1987, by Erik J.
Tallstrom in favor of Eureka Federal Savings and
Loan Association; Guaranty dated October 1,
1987, by Rancho Murieta Properties, Inc. in
favor of Eureka Federal Savings and Loan
Association; Amendment No. 1 to Guaranty dated
June 1989, by and between John B. Anderson and
Eureka Federal Savings and Loan Association;
Amendment No. 1 to Guaranty dated June 1989, by
and between Erik J. Tallstrom and Eureka Federal
Savings and Loan Association; Amendment No. 1 to
Guaranty dated June 1989, by and between Rancho
Murieta Properties, Inc. and Eureka Federal
Savings and Loan Association; Corporation Deed
of Trust with Assignment of Rents dated June
1989, by and between Rancho Murieta Properties,
Inc. and Eureka Federal Savings and Loan
Association; Agreement for Purchase and Sale of
Promissory Note dated November 24, 1993, by and
between Realecon, Inc. and M&R Investment
Company, Inc.; Assignment of Promissory Note
dated November 24, 1993, by and between
Realecon, Inc. and M&R Investment Company, Inc.;
Assignment and Assumption Agreement of Security
Agreement and Guaranties dated November 24,
1993, between Realecon, Inc. and M&R Investment
Company, Inc.; Secured Promissory Note dated
November 24, 1993, in the principal amount of
$125,000 by M&R Investment Company, Inc. to
Realecon, Inc.; Assignment of Deed of Trust with
Request for Special Notice dated November 24,
1993, by Realecon, Inc. in favor of M&R
Investment Company, Inc.; and Corporation Deed
of Trust with Assignment of Rents dated November
24, 1993, by SHF Acquisition Corporation in
favor of Realecon, Inc, are incorporated herein
by reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1993, Part IV, Item
14(a)(3), Exhibit 10.19.
10.20 Pine Ridge Joint Venture Agreement dated June
1993, by and between AJD and M & R Investment
Company, Inc., is incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1993, Part IV, Item
14(a)(3), Exhibit 10.20. Pine Ridge Joint
Venture -- Joint Venture Meeting-- November 10,
1994, discussing additional capital requirements
for the continuing operations of Pine Ridge
Joint Venture and equity increases to M&R
Investment Company, Inc. related thereto, is
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December
31, 1994, Part IV, Item 14(a)(3), Exhibit 10.20.
10.21 Letter dated March 28, 1994 from M&R Investment
Company, Inc. to Michael Shipsey and Tri-Star
International Development regarding purchase of
a 25% interest of Tri-Star International
Development's 50% interest in Arroyo Grande
Joint Venture Agreement of distributable cash;
and Letter dated July 29, 1994 from Dennis L.
Kennedy of Lionel Sawyer & Collins to Tri-Star
International Development regarding termination
of Tri-Star International Development's interest
in the Arroyo Grande Joint Venture, are
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December
31, 1994, Part IV, Item 14(a)(3), Exhibit 10.21.
10.22 Agreement dated January 1, 1996, by and between
California Dehydrating Company, Inc. and SHF
Acquisition Corporation regarding use of the
California Dehydrating name and a Covenant Not
to Compete is incorporated herein by reference
to Dunes Hotels and Casinos Inc. Annual Report
on Form 10-K (file no. 1-4385) for the year
ended December 31, 1995, Part IV, Item 14(a)(3),
Exhibit 10.22.
10.23 Commercial Premises Lease dated March 1, 1995,
by and between Pheasant Investment Corporation
and SHF Acquisition Corporation regarding the
lease of the rice drying facility in West
Sacramento, California is incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1995, Part IV, Item
14(a)(3), Exhibit 10.23.
10.24 Reimbursement Agreement dated September 20,
1995, by and between Rancho Murieta Community
Services District and SHF Acquisition
Corporation regarding the amount of the
reimbursement due SHF for excess work done at
The Fairways at Rancho Murieta that will benefit
other properties within the boundaries of Rancho
Murieta is incorporated herein by reference to
Dunes Hotels and Casinos Inc. Annual Report on
Form 10-K (file no. 1-4385) for the year ended
December 31, 1995, Part IV, Item 14(a)(3),
Exhibit 10.24.
10.25 Assignment of promissory note in the original
principal amount of $57,000 made by James P.
Parks and Dale A. Parks in favor of SHF
Acquisition Corporation; Promissory Note dated
February 13, 1995, made by James P. Parks and
Dale A. Parks in favor of SHF Corporation; Deed
of Trust dated February 13, 1995, made by James
P. Parks and Dale A. Parks is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1995, Part
IV, Item 14(a)(3), Exhibit 10.25.
10.26 Assignment of promissory note in the original
principal amount of $70,000 made by Chandler T.
Martin and Debra L. Martin in favor of SHF
Acquisition Corporation; Promissory Note dated
March 2, 1992, made by Chandler T. Martin and
Debra L. Martin in favor of SHF Acquisition
Corporation; Letter dated April 6, 1994,
extending the due date of the note to March 10,
1998; Deed of Trust dated March 2, 1992, made by
Chandler T. Martin and Debra L. Martin is
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December
31, 1995, Part IV, Item 14(a)(3), Exhibit 10.26.
10.27 Assignment of promissory note in the original
principal amount of $164,160 made by
Consolidated Kapital, Inc. in favor of SHF
Acquisition Corporation; Promissory Note dated
January 24, 1992, made by Consolidated Kapital,
Inc in favor of SHF Acquisition Corporation;
Deed of Trust dated January 24, 1992, made by
Consolidated Kapital, Inc. is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1995, Part
IV, Item 14(a)(3), Exhibit 10.27.
10.28 Assignment of promissory note in the original
principal amount of $85,360 made by William A.
Brown in favor of SHF Acquisition Corporation;
Promissory Note dated April 6, 1995, made by
William A. Brown in favor of SHF Acquisition
Corporation; Deed of Trust dated April 6, 1995,
made by William A. Brown is incorporated herein
by reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1995, Part IV, Item
14(a)(3), Exhibit 10.28.
10.29 Assignment of promissory note in the original
principal amount of $76,000 made by John P.
Xepoleas and Monterey A. Xepoleas in favor of
SHF Acquisition Corporation; Promissory Note
dated March 10, 1995, made by John P. Xepoleas
and Monterey A. Xepoleas in favor of SHF
Acquisition Corporation; Deed of Trust dated
March 10, 1995, made by John P. Xepoleas and
Monterey A. Xepoleas is incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1995, Part IV, Item
14(a)(3), Exhibit 10.29.
10.30 Assignment of promissory note in the original
principal amount of $193,800 made by T. E. Duerr
and P. A. Duerr, Trustees of the Duerr Family
Revocable Trust dated October 14, 1987, in favor
of SHF Acquisition Corporation; Promissory Note
dated July 22, 1992, made by T.E. Duerr and P.
A. Duerr, Trustees of the Duerr Family Revocable
Trust in favor of SHF Acquisition Corporation;
Deed of Trust dated July 22, 1992, made by T.E.
Duerr and P. A. Duerr, Trustees of the Duerr
Family Revocable Trust is incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1995, Part IV, Item
14(a)(3), Exhibit 10.30.
10.31 Assignment of promissory note in the original
principal amount of $79,000 made by Raymond L.
James and Cheryle James in favor of SHF
Acquisition Corporation; Promissory Note dated
December 7, 1994, made by Raymond L. James and
Cheryle James in favor of SHF Acquisition
Corporation; Deed of Trust dated December 7,
1994, made by Raymond L. James and Cheryle James
is incorporated herein by reference to Dunes
Hotels and Casinos Inc. Annual Report on Form
10-K (file no. 1-4385) for the year ended
December 31, 1995, Part IV, Item 14(a)(3),
Exhibit 10.31.
10.32 Installment Note dated January 17, 1996, made by
Mukhtar Ahmad and Nazra P. Ahmad in favor of
Willows Ranch Group, consisting of SHF
Acquisition Corporation and 500 First Street
wherein SHF Acquisition Corporation has a 91.90%
interest is incorporated herein by reference to
Dunes Hotels and Casinos Inc. Annual Report on
Form 10-K (file no. 1-4385) for the year ended
December 31, 1995, Part IV, Item 14(a)(3),
Exhibit 10.32.
10.33 Purchase and Option Agreement by and between SHF
Acquisition Corporation and West Coast
Properties, LLC, undated, regarding the sale of
20 lots and an option to purchase an additional
20 lots at The Fairways is incorporated herein
by Dunes Hotels and Casinos Inc. Quarterly
Report on Form 10-Q for the quarter ended March
31, 1996, Part II, Item 6, Exhibit 10.01.
10.34 Letter dated July 12, 1996 from Murieta
Investors regarding Amended Purchase Agreement
is incorporated herein by reference to Dunes
Hotels and Casinos Inc. Quarterly Report on Form
10-Q for the quarter ended June 30, 1996, Part
II, Item 6, Exhibit 10.01
10.35 Promissory note dated June 12,1996, between
Golden State Trust and M & R Investment Company,
Inc.; Assignment of Rights to Payments, Consent
to Assignment between Baby Grand Corp. and M & R
Investment Company, Inc.; Loan Agreement and
Assignment between M & R Investment Company Inc.
and Golden State Trust is incorporated herein by
reference to Dunes Hotels and Casinos Inc.
Quarterly Report on Form 10-Q for the quarter
ended June 30,1996, Part II, Item 6, Exhibit
10.02.
10.36 Real Estate Option Agreement dated September 27,
1996, wherein M&R Investment Company, Inc.
granted an Option to MARCOR PARTNERSHIP, a
general partnership, an Option to acquire M&R
Investment Company, Inc's 66.667% interest in
2.16 acres of industrial property in Las Vegas,
Nevada; Memorandum Of Option for the purpose of
recordation.
10.37 Purchase Agreement dated February 27, 1997 by
and between Dana C. Hair ("Buyer") and Southlake
Acquisition Corporation, a Nevada Corporation,
and Jim Joseph, as Trustee of The Joseph
Revocable Trust, each as to an undivided 1/2
interest wherein Buyer agrees to buy the
property, more commonly known as The White Ranch
for $6,000,000; Exhibit "A" to purchase
agreement, Legal description of the property;
Exhibit "B", there are no items in Exhibit B;
Exhibit "C", there are no items in Exhibit "C";
Exhibit "D", (i) Copy of a Field Tenant Lease
dated January 5, 1997, between Southlake
Acquisition Corporation and Phoenix Farming
Company (ii) Copy of a Field Tenant Lease dated
January 5, 1997, between Southlake Acquisition
Corporation and Four B's Farms (iii) Copy of an
Agricultural Lease dated September 8, 1992, and
its amendment dated November 29, 1995 between
Southlake Acquisition Corporation and J.G.
Boswell Company (iv) Copy of a letter dated
February 14, 1997, from Brent Bowen, Vice
President, Southlake Acquisition Corporation to
J. W. Boswell, President, J.G. Boswell Company
(v) Copy of a Field Tenant Lease dated February
20, 1997, between Southlake Acquisition
Corporation and W.William Blanken dba HWB
Farms.; Exhibit "E", there are no items in
Exhibit "E"; Exhibit "F", (i) Copy of the
Angiola Water District Restated Water
Distribution Agreement (ii) Copy of a Fax
Transmittal dated February 12, 1997, from Kevin
Johansen, Angiola Water District, to Brent
Bowen, Southlake Acquisition Corporation,
describing portions of "the Property" lying
within the boundaries of the Tulare Lake Basin
Water Storage District and the Tulare Lake
Drainage District, (iii) Copy of the Short Term
State Water Contract between Tulare Lake Basin
Water Storage District and Southlake Acquisition
Corp. for the period January 1, 1997 through
December 31, 1998, (iv) Copy of the Ninth
Amended Rules and Regulations Governing the
Transmission of Water Under the Water Supply
Contract Between the State of California,
Department of Water Resources and the Tulare
Lake Basin Water Storage District; Exhibit "G",
there are no items in Exhibit "G".
10.38 Agreement For The Purchase and Sale of Real
Property dated February 21,1997, wherein SHF
Acquisition Corporation agrees to sell to
Celebrate, LLC, and/or assignee, a parcel of
vacant land consisting of approximately .82
acres described as a portion of the W2, SW4,
Se4NW4 of Section 33, Township 195 and Range
61E, M.D.M. The Property is further described
as Arroyo Grande Unit 3 consisting of 4 lots.
10.39 Agreement For The Purchase and Sale of Real
Property dated February 21,1997, wherein SHF
Acquisition Corporation agrees to sell to
Celebrate, LLC, and/or assignee, a parcel of
vacant land consisting of approximately 11 gross
acres described as a portion of the SW4, NW4 of
Section 33, Township 195 and Range 61E, M.D.M.
The property is further described as Arroyo
Grande Unit 2A and 2B consisting of 53 lots.
10.40 Purchase and Option Agreement by and between SHF
Acquisition Corporation and Murieta Investors,
LLC, dated October 7, 1996, wherein SHF
Acquisition Corporation sold 6 lots at The
Fairways to Murieta Investors, LLC, and granted
an option to Murieta Investors, LLC, to acquire
34 additional lots at The Fairways under terms
and conditions described in the Purchase and
Option Agreement.
21.01 Subsidiaries of Registrant.
27.01 Financial Data Schedule
(b) Reports on Form 8-K
8K.01 August 27, 1996. This report on Form 8-K, Item
5, reported the entry of the Consent Judgment
and the appointment of a receiver over the
assets of Mr. Anderson and the Anderson Parties.
8K.02 February 4, 1997. This report on Form 8-K, Item
5, reported the termination of the receivership,
the discharge of the receiver and the
appointment of a special liquidating master to
sell the assets of the Anderson Parties that
serve as collateral for the obligation due the
FDIC.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
DUNES HOTELS AND CASINOS INC. DUNES HOTELS AND CASINOS INC.
By /s/ John B. Anderson By /s/ James H. Dale
John B. Anderson James H. Dale
Chairman of the Board Treasurer (Principal
and President Accounting and Financial
(Principal Executive Officer) Officer)
Dated March 27, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the date indicated.
Signature Title Date
/s/ John B. Anderson
John B. Anderson Chairman of the Board
and President March 27, 1997
/s/ Brent L. Bowen
Brent L. Bowen Director March 27, 1997
/s/ James H. Dale
James H. Dale Director March 27, 1997
/s/ Andrew P. Marincovich
Andrew P. Marincovich Director March 27, 1997
/s/ Donald J. O'Leary
Donald J. O'Leary Director March 27, 1997
/s/ Edward Pasquale
Edward Pasquale Director March 27, 1997
/s/ Wayne O. Pearson
Wayne O. Pearson Director March 27, 1997
Erik J. Tallstrom Director March 27, 1997
INDEPENDENT AUDITORS' REPORT
Board of Directors and Shareholders
Dunes Hotels and Casinos Inc.
Las Vegas, Nevada
We have audited the accompanying consolidated balance sheets
of Dunes Hotels and Casinos Inc. and Subsidiaries as of December
31, 1996 and 1995, and the related consolidated statements of
income (loss), shareholders' equity and cash flows for each of
the three years in the period ended December 31, 1996. These
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally
accepted auditing standards. Those standards require that we
plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the
financial position of Dunes Hotels and Casinos Inc. and
Subsidiaries as of December 31, 1996 and 1995, and the results of
their operations and their cash flows for each of the three years
in the period ended December 31, 1996, in conformity with
generally accepted accounting principles.
As discussed in Note 4a(1), the appointment in February 1997
of a special liquidating master in connection with the matter
involving John B. Anderson and the Anderson Parties and the
Federal Deposit Insurance Corporation could result in change of
control; the effects of this and related developments on the
Company or its future financial statements cannot be determined.
As also discussed in Note 4, the Company has engaged in
significant business activity and transactions with related
parties, including real estate investment and lending, which have
resulted in losses.
In connection with our audits of the financial statements
referred to above, we audited the financial statement schedules
listed under Item 14(a)2. In our opinion, these financial
statement schedules present fairly, in all material respects, the
information stated therein, when considered in relation to the
financial statements taken as a whole.
/s/ Piercy, Bowler, Taylor & Kern
Las Vegas, Nevada
February 14, 1997 (except as to the matters discussed in Notes
4a(1), 5(b) and 5(c) as to which the dates are March 6, 1997,
February 27, 1997 and February 21, 1997, respectively)
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
ASSETS
1996 1995
(Dollars in thousands)
Cash and cash equivalents $ 1,283 $ 495
Marketable securities 527 511
Receivables
Trade, less allowance, 1996, $141; 1995, $23 133 256
Related party, less allowance, 1996, $2,049;
1995, $1,566 397 1,127
Real estate sales 928 813
Other 47 410
Inventory of real estate held for sale 10,919 12,312
Inventory, other 38 89
Prepaid expenses 116 142
Property and equipment, less accumulated depreciation
and amortization, 1996, $424; 1995, $325 1,678 1,754
Investments 1,049 1,566
Deferred costs and other 11 52
$ 17,126 $ 19,527
(continued)
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
DECEMBER 31, 1996 AND 1995
LIABILITIES AND SHAREHOLDERS' EQUITY
1996 1995
(Dollars in thousands)
Accounts payable $ 98 $ 100
Accrued expenses 246 73
Deferred income 70 23
Income taxes 247 327
Short-term debt 69 75
Long-term debt and capitalized lease obligations 1,955 2,797
Accrued preferred stock dividends 1,101 1,028
Total liabilities 3,786 4,423
Minority interest 2,897 2,800
Shareholders' equity
Preferred stock - authorized 10,750,000 shares
($.50 par); issued 10,512 shares Series B $7.50
cumulative preferred stock, outstanding 9,250
shares in 1996 and 1995, aggregate liquidation
value $2,301 including dividends in arrears 5 5
Common stock - authorized 25,000,000 shares
($.50 par); issued 7,799,780 shares,
outstanding 6,375,096 shares in 1996 and 1995 3,900 3,900
Capital in excess of par 25,881 25,881
Deficit (17,343) (15,482)
12,443 14,304
Treasury stock at cost; Preferred - Series B,
902 shares Common 1,424,684 shares in 1996
and 1995 2,000 2,000
Total shareholders' equity 10,443 12,304
$ 17,126 $ 19,527
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
(Dollars in thousands,
except per share)
Operating revenues:
Sales of real estate $ 1,128 $ 1,901 $ 1,558
Cost of real estate sold 1,226 1,824 1,347
(98) 77 211
Rental income - agricultural properties 948 485 871
Cost and expense of rental income 449 386 594
499 99 277
Rice drying and storage revenues 787 752 774
Cost of rice drying and storage 768 529 561
19 223 213
Miscellaneous income - net 119 (8) 39
539 391 740
Operating expenses:
Selling, administrative and general
Corporate 1,022 1,090 1,168
Real estate operations 245 388 220
Bad debts, net of recoveries 556 425 624
Depreciation 99 69 63
Losses on real estate investments 290 284 500
2,212 2,256 2,575
Loss before other credits (charges),
income taxes, minority interest and
extraordinary item (1,673) (1,865) (1,835)
Other credits (charges):
Interest and dividend income 360 595 578
Interest expense (230) (37) (10)
Partnership income (loss) (135) (781) 23
Securities gains (losses), net (14) 26 57
(19) (197) 648
(continued)
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1996 1995 1994
(Dollars in thousands,
except per share)
Loss before income taxes, minority interest
and extraordinary item (1,692) (2,062) (1,187)
Income taxes (13) (8)
Loss before minority interest and
and extraordinary item (1,692) (2,075) (1,195)
Minority interest in income of the
White Ranch (97)
Loss before extraordinary item (1,789) (2,075) (1,195)
Extraordinary item, net of taxes of $80 8,346
Net income (loss) $ (1,789) $ 6,271 $ (1,195)
Income (loss) per common share:
Loss before extraordinary item $ (0.29) $ (0.33) $ (0.20)
Extraordinary item 1.30
Net income (loss) $ (0.29) $ 0.97 $ (0.20)
See notes to consolidated financial statements.
<TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Dollars in thousands)
Preferred Stock Common stock Capital Preferred Common Total
issued (1) issued in treasury stock treasury stock share-
excess holders'
Shares Amount Shares Amount of par Deficit Shares Amount Shares Amount equity
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1994 10,152 $5 7,799,780 $3,900 $25,881 ($20,411) (902) ($70) (1,339,684) ($1,760) 7,545
Accrued dividends, Preferred (75) (75)
Net loss (1,195) (1,195)
Balance, December 31, 1994 10,152 5 7,799,780 3,900 25,881 (21,681) (902) (70) (1,339,684) (1,760) 6,275
Accrued dividends, Preferred (72) (72)
Purchase of treasury stock (85,000) (170) (170)
Net income 6,271 6,271
Balance, December 31, 1995 10,152 5 7,799,780 3,900 25,881 (15,482) (902) (70) (1,424,684) (1,930) 12,304
Accrued dividends, Preferred (72) (72)
Net loss (1,789) (1,789)
Balance, December 31, 1996 10,152 $5 7,799,780 $3,900 $25,881 ($17,343) (902) ($70) (1,424,684) ($1,930) $10,443
(1) Series B, $7.50 dividend, voting and non-convertible
(liquidation value $125 per share)
See notes to consolidated financial statements.
</TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1995 and 1994
1996 1995 1994
(Dollars in Thousands)
Cash flows from operating activities:
Net income (loss) $ (1,789) $ 6,271 $ (1,195)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Provision for losses on accounts and notes
receivable, related parties and others 600 331 717
Non-cash gain from settlement of liability (8,619)
Depreciation 99 69 63
Cost of real estate sold 1,191 1,732 1,172
Gain on disposition of assets (2)
Non-cash portion of real estate sales (323) (777)
Write-down of real estate held for sale 290 284
Provision for losses on investments 171 346 428
Partnership loss - net 435 50
Allocation of minority interest 97
(Gain) loss on marketable securities 14 (26) (57)
Changes in certain assets and liabilities:
Decrease (increase) in trade receivables 6 235 (123)
Decrease (increase) in inventory 51 (89)
Decrease (increase) in prepaid expenses 26 107 2
Decrease (increase) in deferred costs
and other 41 (44) (2)
Increase (decrease) in accounts payable (2) (74) (175)
Increase (decrease) in accrued expenses 173 15 (20)
Increase (decrease) in deferred income 47 4
Increase (decrease) in income taxes (80) 80
Net cash provided by operating activities 935 728 87
Cash flows from investing activities:
Payments made for real estate held for
sale (50) (445) (6)
Capital expenditures (146)
Cash paid for property and equipment (23)
Cash paid for investments (125) (1,367) (568)
Proceeds from investments 64 12
Investment in marketable securities (30) (65) (835)
Proceeds from sale of marketable securities 435 1,286
Payments received on receivables 975 1,873 1,282
Loans made to related parties (250) (594) (718)
Loans made to others (43) (193) (645)
Cash from funds held in escrow 459
Cash from disposition of investments 183
Proceeds from disposition of property 10 87
Net cash provided by (used in) investing
activities 701 (492) 354
(continued)
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1995 and 1994
1996 1995 1994
(Dollars in Thousands)
Cash flows from financing activities:
Proceeds from short-term debt $ 123 $ 133 $ 137
Payments on short-term debt (129) (134) (186)
Payments on long-term debt (842) (444) (38)
Payments for treasury stock (170)
Net cash (used in) financing activities (848) (615) (87)
Increase (decrease) in cash and cash
equivalents 788 (379) 354
Cash and cash equivalents, beginning of
year 495 874 520
Cash and cash equivalents, end of year $ 1,283 $ 495 $ 874
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest $ 283 $ 10 $ 10
Supplemental schedules of non-cash
investing and financing activities:
Total liability settled $ $ 8,985 $
Less assets transferred (366)
Non-cash gain from extraordinary
items -- settlement of liabilities $ $ 8,619 $
Real estate acquired through
foreclosure $ 38 $ $
Note receivable from sale of
investments $ 224 $ $
Property and equipment acquired
through a capitalized lease $ $ 73 $
Dividends accrued but unpaid $ 72 $ 72 $ 75
See notes to consolidated financial statements.
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
CONSOLIDATION:
The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned
subsidiaries Continental California Corporation
(Continental), M & R Corporation (MRC) and MRC's
subsidiary, M & R Investment Company, Inc. (MRI) and
MRI's subsidiaries SHF Acquisition Corporation (SHF) and
Southlake Acquisition Corporation (Southlake), after
elimination of all material intercompany balances and
transactions.
The Company did not consolidate Pine Ridge Joint Venture
(PRJV), a joint venture in which the Company has a 51%
interest, or Steadfast Cattle Company, a limited
liability company in which the Company has a 50%
interest. Both PRJV and Steadfast disposed of all of
their assets during 1996 and are no longer operational.
PROPERTY AND EQUIPMENT AND DEPRECIATION AND AMORTIZATION:
Property and equipment are stated at cost. Depreciation and
amortization are provided by the straight-line method
over the estimated useful lives of the assets. The book
value of obsolete assets is charged to depreciation
expense when they are disposed of. Profits and losses
from the sale of assets are included in other income.
Repairs and maintenance are charged to expense as
incurred.
Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards (SFAS) No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of," without any material
effect.
INCOME (LOSS) PER SHARE:
Income (loss) per common share has been computed using the
weighted average number of shares outstanding during the
year: 6,375,096, 6,429,822 and 6,460,096 for the years
ended December 31, 1996, 1995 and 1994, respectively.
Dividends on nonconvertible preferred stock - Series B
have been deducted from income or added to the loss
applicable to common shares. See Note 17 of Notes to
Consolidated Financial Statements.
CASH AND CASH EQUIVALENTS:
Cash equivalents are short-term (original maturity of 90
days or less), highly liquid investments that are both
readily convertible to known amounts of cash and so near
their maturity that they present insignificant risk of
changes in value because of changes in interest rates.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
MARKETABLE SECURITIES:
Effective December 31, 1995, the Company adopted Statement
of Financial Accounting Standards (SFAS) No. 115
"Accounting for Certain Investments in Debt and Equity
Securities". The Company's investments in marketable
securities are generally in preferred stocks of publicly
held companies, are held for an indefinite period and are
accounted for as trading securities. There have been no
material gains or losses related to the Company's
investments in marketable securities.
RECLASSIFICATIONS:
Effective January 1, 1996, the Company changed the format of
its balance sheet from a classified balance sheet to a
non-classified balance sheet. The format of the December
31, 1995 balance sheet has been changed to conform to the
new presentation. The Company believes that a non-classified
balance sheet, one that does not present
current assets and current liabilities, better reflects
the status of the Company's assets, liabilities and
shareholders' equity.
Certain amounts in the Company's consolidated statements of
income (loss) for the years ended December 31, 1995 and
1994 have been reclassified to conform to the 1996
presentation. Such reclassification has no effect on the
results of operations. The Company's Consolidated Balance
Sheet for the year ended December 31, 1995 has been
restated to reflect the 50% minority interest in the
White Ranch.
ENVIRONMENTAL EXPENDITURES:
Expenditures that relate to current operations are expensed
or capitalized as appropriate. Expenditures that relate
to an existing condition caused by past operations and
which do not contribute to future revenues are expensed.
Liabilities are recorded when remedial efforts are
probable and the costs can be reasonably estimated.
REAL ESTATE HELD FOR DEVELOPMENT AND SALE:
Real estate held for development and sale is stated at the
lower of cost or net realizable value. Costs include
primarily acquisition costs and improvements costs.
Costs are allocated to individual properties using the
method appropriate in the circumstances.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED):
USE OF ESTIMATES:
The timely preparation of financial statements in conformity
with generally accepted accounting principles requires
management to make estimates and assumptions that affect
certain reported amounts and disclosures. Actual results
could differ from those estimates.
2. BANKRUPTCY PROCEEDING:
On May 18, 1995, Continental filed a Petition for Relief
Under Chapter 11 of the United States Bankruptcy Code.
The Petition for Relief was filed in the United States
District of Nevada, Case No. 95-21992 LBR. The case was
subsequently transferred to The United States Bankruptcy
Court for the Southern District of California. The
bankruptcy case was dismissed on November 9, 1995.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS:
Estimated fair value of the Company's financial instruments
(all of which are held for nontrading purposes, except
for marketable securities) are as follows:
Carrying Fair
Amount Value
(Dollars in thousands)
Cash and cash equivalents $1,283 $1,283 (a)
Marketable securities 527 527 (a)
Notes receivable, real estate
sales 928 928 (b)
Note receivable, related party
(the BGC Note) 397 (c)
Solano County Option 1,043 1,043 (d)
Long-term debt (1,955) (e)
(a) The carrying amount approximates fair value of cash,
cash equivalents and marketable securities. For
marketable securities, fair values are estimated based
on quoted market prices.
(b) The fair value of the notes receivable are based on
their outstanding balances and their respective
interest rates. Notes receivable are collateralized by
first deeds of trust on the real estate sold. In the
event any purchaser were to default on the real estate
notes, the Company could institute foreclosure
proceedings and reacquire the property which serves as
the collateral for the note. The Company believes that
the fair value of the collateral is in excess of the
principal amount of the related note.
3. FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED):
(c) It is not possible to determine the fair value of the
Baby Grand Corp. note ( the BGC Note) because the
Company is unable to predict whether Baby Grand Corp.
(BGC) will be able to pay its first lien note on its
due date, which is the same date that the BGC Note
payable to the Company comes due. See Note 4a(1) of
Notes to Consolidated Financial Statements.
(d) The fair value of the Solano County Option is estimated
based on an appraisal of the real property, and
subsequent discussions with local realtors, to which
the option relates and the length of the option period
which enables the Company to have some flexibility as
to when and if the option should be exercisable. The
Company can only recover the fair value of the option
(i) by exercising the option and selling the property
or (ii) selling the option. However, if the fair value
of the real property should drop below the option
purchase price, the Company would not be able to
recover all of its investment in the Solano County
Option. See Note 8(a) of Notes to Consolidated
Financial Statements.
(e) The fair value of long-term debt is not subject to
reasonable estimation because the debt arose
principally as a result of the settlement of a dispute.
See Notes 9 and 10 of Notes to Consolidated Financial
Statements.
4. RELATED PARTY TRANSACTIONS:
a. John B. Anderson (Anderson), the Company's controlling
stockholder and Chairman of the Board of Directors of the
Company, and entities owned or controlled by him
(Anderson Entities) own approximately 67.2% of the
Company's common stock as of February 14, 1997. Each
entity controlled by John B. Anderson will hereinafter be
identified as an Anderson Entity.
(1) Baby Grand Corp. d/b/a Maxim Hotel and Casino (the
Maxim), Las Vegas, Nevada, an Anderson Entity, owed
the Company $2,129,400 plus accrued interest in the
amount of $167,000 at December 31, 1996, pursuant to
a promissory note dated November 2, 1992, in the
original amount of $2,650,000 (the BGC Note). The
BGC Note bears interest at the rate of 9% per annum.
Monthly payments under the BGC Note are currently
$50,000. The BGC Note is due in full on December 1,
1997 at which time the first deed of trust
indebtedness on the Maxim is due. BGC is precluded
from paying the final installment due on the BGC
Note until it pays the amount due the first deed of
trust indebtedness of approximately $34,200,000 as
of December 31, 1996. If BGC is unable to pay the
first deed of trust indebtedness, it would have a
material adverse effect on the Company's ability to
collect on the BGC Note. If BGC is unable to make
the final payment, the Company would have a
loss of approximately $1,899,000 for which
4. RELATED PARTY TRANSACTIONS (CONTINUED):
a. (1) continued
$1,899,000 has been provided. The BGC Note is
collateralized by approximately 1,280,000 shares of
the Company's common stock.
BGC is current in payment of monetary obligations
under the note. The first trust deed holder has
threatened to declare a default primarily as a
result of the litigation between Mr. Anderson and
the Anderson Parties and the Federal Deposit
Insurance Corporation (the FDIC). In the event the
first trust deed lender declares a default, the BGC
Note will also be in default.
The FDIC, acting as a successor and assignee of
EurekaBank formerly known as Eureka Federal Savings
and Loan Association (Eureka), filed a complaint
against Anderson, Edith Anderson, Cedar Development
Company, J. A. Inc. and J.B.A. Investments, Inc.
(collectively, the Anderson Parties). The complaint
arises out of a judgment in the original principal
amount of approximately $33,700,000 obtained by
Eureka against the Anderson Parties in the District
Court for Clark County, Nevada. In consideration of
Eureka's forbearance from executing on the judgment,
the Anderson Parties executed a debtor-creditor
agreement and related pledge and security
agreements. Among other things, approximately
3,000,000 shares of the Company's common stock is
pledged to the FDIC. The FDIC alleges, among other
things, that the Anderson Parties have breached the
debtor-creditor agreement and seek relief including
(i) specific performance, (ii) appointment of a
receiver, (iii) injunctive relief, (iv) judicial
foreclosure, and (v) enforcement of the judgment,
which together with interest, is alleged to be in
excess of $63,000,000. On September 15, 1995, the
Anderson Parties entered into a Stipulation and
Order For: Entry of Order Appointing Receiver and
For Injunctive Relief, and For Entry of Consent
Judgment (the Stipulation). The District Court
entered its order (the Order) staying certain powers
granted to the receiver, but allowing the receiver
to review the assets, observe the operations, and
inspect the books and records, including the
Company's, relating to the assets of the Anderson
Parties.
4. RELATED PARTY TRANSACTIONS (CONTINUED):
a. (1) continued
In June 1996, the Company was informed that the
Anderson Parties had reached a tentative agreement
(the Agreement) regarding the Anderson Parties
obligations to the FDIC. The Agreement was subject
to final approval of the FDIC. As described below,
the Company made a $250,000 loan to Golden State
Trust, an Anderson Party, in connection with the
Agreement of which $150,000 remains outstanding.
See Notes 4a(3) and 7 of Notes to Consolidated
Financial Statements. The Agreement provided that
the judgment, in the original principal amount of
approximately $33,700,000, held by the FDIC against
the Anderson Parties would be sold to Golden State
Trust. On August 27,1996, the Company was informed
that the FDIC rejected the Agreement. The Company
was further informed that on August 28, 1996, the
United Stated District Court, District of Nevada,
entered the Consent Judgment appointing Ronald L.
Durkin, C.P.A. (the Receiver) as the permanent
receiver over the assets of Mr. Anderson and the
Anderson Parties to the extent and with the powers
set forth in the Receivership Order.
Included in the assets over which the receiver's
powers extend are Mr. Anderson's beneficial
ownership of 3,000,000 shares, or approximately
47.1% of the common stock of the Company. The
balance of the shares owned beneficially by Mr.
Anderson are pledged to the Company as collateral
for the BGC Note. On February 4, 1997, the United
States District Court, District of Nevada,
terminated the receivership, discharged the
receiver, and appointed a special liquidating
master. Based on statements made by the FDIC
representatives in public proceedings and court
proceedings, the Company believes that it is the
intent of the special liquidating master to sell the
assets of the Anderson Parties that serve as
collateral for the obligation to the FDIC on terms
and conditions ordered by the Court, including the
outstanding voting shares of the Company presently
in possession of the FDIC. If the special
liquidating master or the FDIC obtains court
approval and the common shares are in fact sold to
either persons or entities other than Mr. Anderson
or entities controlled by Mr. Anderson, a change of
control of the Company will occur. To the knowledge
of the Company, the special liquidating master has
not taken any overt steps to assert control, vote
the shares, influence management of the Company, or
otherwise, although no assurance can be given that
such steps are not contemplated or imminent. In
March 1997 the Anderson Parties filed a notice of
appeal with respect to the U.S. District Court's
February 4, 1997 ruling terminating and discharging
the receiver and appointing a special liquidating
master.
4. RELATED PARTY TRANSACTIONS (CONTINUED):
a. (1) continued
At the present time, the Company cannot predict the
time or likelihood that such sale of shares or such
change of control will occur, or whether other
actions, proceedings or otherwise will occur that
may block, impede or otherwise prevent or postpone
such sale of shares or potential change of control.
The actions of the special liquidating master may
jeopardize the Anderson Parties ability to operate,
including BGC which remains liable to the Company
under the BGC Note. The Company is unable to
predict what effect the outcome of the matters
described above will have on the Company, or the
payment of the BGC Note.
The appointment of a special liquidating master may
jeopardize the Anderson Parties' ability to operate,
including BGC which remains liable to the Company
under the BGC Note. The Company is unable to
predict what effect the outcome of the matters
described above will have on the Company.
(2) For the years ended December 31, 1996, 1995 and
1994, $59,998, $49,278 and $58,134, respectively,
was paid on behalf of Anderson for certain of
Anderson's expenses, which payments were considered
compensation to Anderson and were approved by the
Company's Audit Committee. The Audit Committee
approved payments on behalf of Mr. Anderson of up to
$48,000 for the year 1997. The payments are subject
to continuing review by the Audit Committee.
(3) In connection with a proposed settlement agreement
in June 1996, between the FDIC and the Anderson
Parties, the Company loaned $250,000 to the Golden
State Trust, an Anderson Party. The loan is
evidenced by a note dated June 12, 1996, which bears
interest at the rate of 12% per annum, payable
monthly. A principal payment of $100,000 was paid
on July 1, 1996. The balance of the principal and
accrued interest was due on December 12, 1996. Due
to the matters discussed in Note 4a(1), and the
Company's belief that the note is uncollectible, the
Company has provided a reserve of $150,000 against
the balance of the note as of December 31, 1996. In
addition, the Company ceased accruing interest on
the loan in September 1996.
4. RELATED PARTY TRANSACTIONS (CONTINUED):
a. (4) In July 1993, SHF entered into a three-year lease
agreement with California Dehydrating Co. (Cal-Dehy,
an Anderson Entity) whereby SHF leased a rice drying
facility (the Drying Facility) located in West
Sacramento, California, at an annual rental of
$60,000. In February 1995, the Drying Facility was
the subject of a foreclosure action which terminated
the SHF lease. On March 1, 1995, the Company
entered into a two-year lease with the new owner of
the Drying Facility at an annual rental of $54,000.
In November 1996, the Company informed the lessor
that it was terminating the Drying Facility lease.
In consideration for the payment of $75,000, the
lessor agreed to accept the return of the Drying
Facility, as is, and acknowledged that it had no
claims of any kind or nature against SHF and
released SHF from any and all obligations, except
for payment of rent for the remainder of the lease
term and any subsequent damage prior to the
termination of the lease of the Drying Facility.
On January 1, 1996, the Company entered into an
agreement with Cal-Dehy whereby the Company would
pay to Cal-Dehy $60,000 per year for the use of the
Cal-Dehy name and a Covenant Not To Compete. The
agreement, including the Covenant Not To Compete, is
for a one-year period. The agreement expired on
December 31, 1996. The Company does not intend to
renew the agreement or the Covenant Not To Compete.
(5) As reported in previous reports, the Company in 1993
made a $500,000 loan to an entity wholly-owned by
Director Andrew Marincovich. See Annual Report on
Form 10-K for the year ended December 31, 1995, Item
1. "Business - Other Activities - Certain Loans -
Directors." The Company was informed that the
foreclosure sale of the El Dorado Vineyard property
was completed during the second quarter of 1996.
The Company was further informed that the
foreclosure sale extinguished without payment to
Andrew Marincovich all of his interest in the
property or the proceeds thereof. The Company's
non-recourse guarantee from Mr. Marincovich was
limited to excess proceeds from such foreclosure
sale. Therefore, the Company did not recover any of
its funds pursuant to the guarantee.
5. INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE:
1996 1995
The Fairways (a) $ 4,664 $ 6,099
White Ranch (b) 5,600 5,600
Residential lots, North
Las Vegas (c) 469 427
Sam Hamburg Farm (d) 146 146
Other 40 40
$ 10,919 $ 12,312
5. INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE
(CONTINUED):
(a) The Company, through SHF, developed the 50 acres of
residential land located at Rancho Murieta, California
as a residential planned unit development known as "The
Fairways". Rancho Murieta is a 3,500 acre master
planned unit development located approximately 25 miles
from Sacramento, California. Rancho Murieta consists
primarily of single family homes, town houses,
commercial property and two 18-hole championship golf
courses, including country club facilities. The
Fairways, located within the boundaries of one of the
golf courses located at Rancho Murieta, was subdivided
into 110 single-family estate lots. As of February 14,
1997, 55 lots remain unsold.
In connection with its development of The Fairways, SHF
was required to construct certain improvements that
benefitted not only The Fairways, but other properties
that lay outside of the boundaries of The Fairways (the
Benefited Properties). The total cost of the
improvements was $1,597,425, of which $276,088 is
allocable to The Fairways and $1,321,337 is allocable
to the Benefited Properties. SHF entered into an
agreement (the Reimbursement Agreement) with the Rancho
Murieta Community Services District which provides that
SHF will be reimbursed the amount of the costs
allocable to the Benefitted Properties, less
approximately $176,500 of future costs that will be of
benefit to The Fairways. The funds will be reimbursed
to SHF out of proceeds of any subsequent community
facilities district or by direct payment by subsequent
developers of the Benefited Properties. SHF's right to
reimbursement will expire in twenty years from
September 1995. The Company is unable to predict what
amount, if any, will be received under the
Reimbursement Agreement.
As part of the development of The Fairways, SHF entered
into a Settlement Agreement Regarding Payment of Park
Fees (the Park Fee Payment Agreement) regarding park
fees that are payable to Rancho Murieta Association
(RMA) on each developed lot. The Park Fee Agreement
acknowledged that the total park fees owing to RMA were
$173,238. SHF agreed to pay $17,323 upon signing the
Park Fee Agreement with the balance payable ratably as
the remaining lots were sold. In the event all of the
lots are not sold by December 31, 1997, then any
remaining amount due must be paid in full.
As part of the Settlement Agreement with the Resolution
Trust Corporation (the RTC) as Receiver for San Antonio
Savings Association, all of the unsold lots in The
Fairways are encumbered by a deed of trust in favor of
the RTC. The deed of trust requires a $40,000 payment
for the release of each of the encumbered lots. See
Note 10 of Notes to Consolidated Financial Statements.
5. INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE
(CONTINUED):
(a) continued
On October 7, 1996, the Company signed a Purchase and
Option Agreement with West Coast Properties, LLC (WCP)
whereby WCP offered to purchase from the Company, 20
lots at The Fairways and obtain an option to purchase
an additional 20 lots, with the intent of constructing
single family residences on the lots purchased. On
July 12, 1996, the Company signed a letter agreeing to
modify the Purchase and Option Agreement (the New
Agreement) between the Company and Murieta Investors,
LLC (MI), formerly WCP. The New Agreement provides
that MI will purchase from the Company 6 lots at The
Fairways at $40,000 per lot plus payment of Park Fees
applicable to the lots purchased. In addition, the
Company may receive contingent consideration equal to
20% of the gross sales price of each residential
dwelling sold less $40,000 (the Success Payments).
Eight months after the purchase of the initial 6 lots,
MI will be entitled to purchase a second group of 6
lots. An additional group of 6 lots may be purchased
every 4 months thereafter until a total of 40 lots have
been purchased. The initial payment for the second 6
lots purchased will be $40,000, plus payment of the
applicable Park Fees and the Success Payments. The
initial payment for all subsequent lots purchased will
be $45,000, plus payment of the applicable Park Fees
and the Success Payments. Therefore, beginning with
the purchase of the third group of 6 lots, the Success
Payments will be 20% of the gross sales price of each
residential lot sold less $45,000. If MI sells any lot
without constructing a residential dwelling thereon,
the Company will receive 20% of the sale price without
offset of the initial payment. The sale of the first 6
lots which closed on December 20, 1996, were recorded
at the initial price of $40,000 per lot. In accordance
with Statement of Accounting Financial Standards (SFAS)
No. 66 "Accounting for Sales of Real Estate," no
recognition was given to any Success Payments the
Company may receive in the future, but the Company has
recorded all costs associated with the lots, resulting
in a recorded loss on the sale of the six lots.
(b) The White Ranch consists of approximately 10,000 acres
of agricultural land in which the Company has a 50%
interest. The other 50% owner and the Company share
equally in profits and losses on the operation and sale
of the White Ranch. All of the 10,000 acres have been
leased for the 1997 crop year. Tenants at the White
Ranch generally pay a fixed cash rent plus a share
rent. The amount of the share rent is based on the
profitability of the crop grown. Tenants are required
to pay all water usage charges applicable to the leased
land.
5. INVENTORY OF REAL ESTATE HELD FOR DEVELOPMENT AND SALE
(CONTINUED):
(b) continued
In February 1997, the Company entered into a Purchase
Agreement (the Agreement) to sell the White Ranch for
$6,000,000. The Agreement provides that the purchaser
will make a $10,000 non-refundable deposit for a 90-day
inspection period. The inspection period may be
extended for an additional 90-day period upon the
payment of an additional $10,000 non-refundable
deposit. Terms of the sale are all cash at close of
escrow. If the sale is consummated, net proceeds to
the Company will be approximately $3,000,000. The sale
is subject to, among other things, the buyer's ability
to obtain financing. There can be no assurance that
the buyer will be able to obtain financing or that the
sale will close.
(c) The Company owns 57 partially developed residential
lots located in the City of North Las Vegas, Nevada.
As part of the settlement with the RTC, 53 of the lots
are encumbered by a deed of trust in favor of the RTC.
The deed of trust requires a $6,000 payment for the
release of each of the encumbered lots. See Note 10 of
Notes to Consolidated Financial Statements. On
February 21, 1997, the Company signed an agreement for
the purchase and sale of all 57 lots for a total
consideration of $661,800 plus reimbursement of water
fees paid in the amount of $72,957. The sale is
expected to close in the second quarter of 1997.
(d) Sam Hamburg Farm consists of approximately 150 acres of
agricultural property. Of the 150 acres, 40 acres
contain the air strip and shop areas which are the
focus of continuing attempts at chemical clean-up. See
Note 13 for a detailed discussion concerning the
removal of the toxic waste. The remaining 110 acres are
leased to various tenants at an annual aggregate rental
of approximately $20,000.
6. PROPERTY AND EQUIPMENT AND ACCUMULATED DEPRECIATION AND
AMORTIZATION:
1996 1995
(Dollars in thousands)
Land and land improvements $ 159 $ 159
Building and improvements 1,679 1,679
Machinery and equipment 265 241
2,103 2,079
Less accumulated depreciation
and amortization ( 425) (325)
$ 1,678 $ 1,754
In January 1996, the Company's Board of Directors authorized
management to pursue the possibility of constructing a
new drying facility adjacent to the rice storage facility
in Yolo, County, California (the New Drying Facility).
The cost of constructing the New Drying Facility is
estimated to be approximately $1,800,000 including
carrying costs. The Company has made a $47,484 deposit
on a rice dryer in anticipation of constructing the New
Drying Facility. Since the Company did not begin
construction as originally scheduled, 50% of the deposit
has been forfeited. However, the Company would receive
credit for the balance of the deposit if construction of
the New Drying Facility goes forward. Construction of
the New Drying Facility is subject to various
governmental approvals and the ability of the Company to
obtain adequate financing. The Company has signed a
financing commitment which, if funded, would provide
approximately 65% or $1,150,000, whichever is less, of
the construction funds to build the New Drying Facility.
The commitment is subject to final review and credit
approval by the lender and execution of mutually
acceptable documentation. No assurance can be given that
the Company will receive the necessary approvals or
adequate financing. It is anticipated that construction
of the New Drying Facility would begin in the second or
third quarter of 1997. The Company is unable to predict
whether the New Drying Facility will be completed in time
for the 1997 rice drying season. If the New Drying
Facility is not completed in time for the 1997 rice
drying season, and the Company wants to continue drying
rice in 1997, it will be necessary to attempt to
negotiate a new lease for the West Sacramento drying
facility. The Company is unable to predict if a new
lease can be obtained for the West Sacramento drying
facility or what the terms and conditions of such a lease
would be. In the event the Company does not proceed with
the construction of the New Drying Facility, the Company
will lose the balance of its deposit.
7. LONG-TERM NOTES RECEIVABLE:
1996 1995
(Dollars in thousands)
Related parties
BGC, including interest $ 2,296 $ 2,693
Less allowance (1,899) (1,566)
Golden State Trust 150
Less allowance (150)
397 1,127
Real estate
Various real estate notes,
collateralized by deeds
of trust with interest
ranging from 8% to 10% (a) 928 1,223
$ 1,325 $ 2,350
(a) Included in the "various real estate notes" is
approximately $564,160 resulting from the sale of lots at
The Fairways which notes are subject to a collateral
assignment in favor of the RTC. See Note 10 of Notes to
Consolidated Financial Statements. "Various real estate
notes" also includes a note in the approximate amount of
$224,000 which resulted from the sale of the Willows
Ranch investment as discussed in Note 8c of Notes to
Consolidated Financial Statements.
8. INVESTMENTS:
1996 1995
(Dollars in thousands)
Investments at cost, net of
valuation allowances, consist of:
Solano County Option (a) $ 1,045 $ 1,045
Pine Ridge Joint Venture (b) 572 576
Less reserve (572) (531)
Partnership, Willows Ranch (c) 406
Steadfast Cattle Company (d) 84 64
Less reserve (84)
Other 4 6
$ 1,049 $ 1,566
8. INVESTMENTS (CONTINUED):
(a) The Company has an option (the Solano County Option) to
acquire approximately 1,690 acres of farm land located
in Solano County, California. The Company acquired the
Solano County Option as part of a settlement agreement
between BGC, an Anderson Entity, a financial
institution and MRI. The purchase price of the Solano
County Option was $1,043,902. The Solano County Option
provides that the Company can purchase the 1,690 acres
at a price of $3,000,000. The Company will receive a
credit of $1,000,000 against the purchase price. The
option expires on May 1, 2003. Upon certain conditions
and the consent of the first lien holder on the Maxim
and the Nevada Gaming Control Board, MRI can require
BGC to repurchase the Solano County Option (the
Repurchase Agreement). The Repurchase Agreement
expires on the earlier of: (i) May 1, 2002 or (ii) 1
year prior to the date the option agreement expires.
The owner of the property under option has informed the
Company that it may not be able to make the payment due
on the first mortgage lien which had a balance due of
approximately $1,356,000 as of December 31, 1996. The
Company and the owner are attempting to negotiate a
solution, which could include the Company exercising
its option at a price that is less than the option
price stated in the Option Agreement. If the Company
is unable to renegotiate the option price, the Company
may make the payment to the mortgage lien holder in
order to protect its investment in the Solano County
Option. The Company is unable to predict what the
outcome of this matter will be.
(b) In June 1993, MRI entered into a joint venture known as
Pine Ridge Joint Venture (PRJV) with AJD, a Nevada
limited partnership, for the purpose of developing
approximately 92 single-family residences in Clark
County, Nevada. The development was scheduled to be
completed in two phases consisting of 32 residences
which were to be completed in the first phase and the
balance to be completed in the second phase. See Note
5 of Notes to Consolidated Financial Statements
regarding the disposition of 57 of the PRJV lots. On
October 10, 1996, the last remaining house in Phase I
was sold, thereby effectively terminating PRJV.
(c) In May 1990, the Company made a loan to William
Maddocks, et al, a Central California real estate
investment group, (Maddocks) in the principal amount of
$1,000,000. The loan was collateralized by real
property in northern California. Maddocks paid all but
$315,000 of the loan. In 1992, the Company and
Maddocks formed a partnership called Willows Ranch.
The Company's contribution was the balance remaining on
the original $1,000,000 loan and Maddocks contributed
the net equity in the real estate that served as
collateral for the Company's loan.
8. INVESTMENTS (CONTINUED):
(c) continued
In November 1995, Maddocks and the Company agreed to
sell the Willows Ranch property for a price of
$835,000. The sale closed on February 5, 1996. Out of
the sale proceeds, the Company received cash of
approximately $209,000 and a 91.90% interest in a note
in the amount of $243,430.
(d) In July 1995, the Company's Board of Directors
authorized the Company to invest up to $200,000 for a
50% interest in a cattle feeding operation with an
unrelated third party. The parties formed a Limited
Liability Company named Steadfast Cattle Company
(Steadfast). Steadfast's primary operation was feeding
cattle, owned by others, on leased land located in
Gonzales, California.
The cattle feeding operation was not successful and,
therefore, the Company discontinued funding the
operations of Steadfast. Without funding from the
Company, Steadfast was unable to continue its
operations. As of December 31, 1996, all operations at
the feed lot have ceased. The effect of the Steadfast
operations, and its discontinuance, on the Company's
financial statements have been immaterial. In
connection with its investment in Steadfast, the
Company purchased equipment costing approximately
$200,000 for use in the Steadfast operation. As of
December 31, 1996, the equipment had a carrying value
of approximately $160,000. The Company is currently
attempting to sell the equipment it purchased for the
feed lot operation. The Company estimates that the
sale of the equipment will result in a loss of
approximately $10,000 which has been accrued. However,
it is possible that the estimated amount of the loss
could increase if the Company is unable to sell the
equipment within a reasonable amount of time.
9. RESOLUTION OF SASA DISPUTE:
On October 24, 1995, the Company, along with Continental,
MRI and SHF, entered into a Settlement, Release and Loan
Modification Agreement (the Settlement Agreement) with
the RTC in connection with the SASA Obligation. The
Settlement Agreement became effective December 6, 1995.
Pursuant to the Settlement Agreement and as full payment
of the SASA Obligation, (i) Continental transferred the
San Diego Property to the RTC in consideration of
$1,500,000 credit against the SASA Obligation, (ii) the
Company paid $290,000 to the RTC, and (iii) the Company
delivered a secured promissory note to the RTC (the RTC
Settlement Note) in the amount of $2,710,000. See Note
10 of Notes to Consolidated Financial Statements for a
detailed discussion of the terms of the RTC Settlement
Note.
10. LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS:
Long-term debt and capitalized lease obligations consists of
the following at December 31:
1996 1995
(Dollars in thousands)
RTC Settlement Note $ 1,784 $ 2,590
RMA 93 114
Capitalized lease obligation 57 72
Other 21 21
$ 1,955 $ 2,797
Five year maturities of long-term debt are as follows:
(Dollars in thousands)
Long term Capitalized
debt Lease Obligation Total
1997 $ 95 $ 15 $ 110
1998 2 18 20
1999 3 24 27
2000 1,787 1,787
2001 3 3
Thereafter 8 8
$ 1,898 $ 57 $ 1,955
The amount due RMA is for payment of park fees, is non-interest
bearing and is collateralized by a first deed of
trust on The Fairway lots. Principal payments, in the
approximate amount of $1,700 per lot, are paid upon the
close of escrow of each sale of a lot in The Fairways. If
on December 31, 1997, any lots remain unsold, then the
balance of the amount due becomes payable in full.
The capitalized lease obligation is payable in monthly
installments of approximately $1,890 including interest at
an effective rate of approximately 16%. The lease is
collateralized by a security interest in equipment formerly
used in the Steadfast cattle feeding operation.
Other long-term debt consists of an unsecured note payable
in annual installments of $5,000 including interest.
10. LONG-TERM DEBT AND CAPITALIZED LEASE OBLIGATIONS
(CONTINUED):
The RTC Settlement Note is dated December 6, 1995, and is
due December 6, 2000. The note bears interest at the rate of
1% per annum in excess of the prime rate as published in the
Wall Street Journal. The rate is adjusted semi-annually
(the Interest Adjustment Date), provided, however, that
under no circumstances shall the rate be less than 8% or
more than 12% per annum. Payment terms are interest only,
payable monthly. Monthly payments are adjusted semi-annually
on the Interest Adjustment Date. The entire
remaining principal amount and all accrued and unpaid
interest is due and payable in full on the maturity date.
The note is collateralized by the following:
a. A deed of trust with an assignment of rents (Nevada
Deed of Trust) with SHF. The Nevada Deed of Trust
encumbers 53 partially improved residential lots
located in North Las Vegas, Nevada. SHF is entitled to
the release of a lot upon the payment of $6,000 to the
RTC for each lot released. The RTC will apply such
payments to the outstanding principal due on the note.
b. A deed of trust with an assignment of rents (Rancho
Murieta Deed of Trust) with SHF. The Rancho Murieta
Deed of Trust encumbers approximately 56 finished
residential lots at December 31, 1996 located at The
Fairways. SHF is entitled to the release of a lot upon
the payment of $40,000 to the RTC for each lot
released. The RTC will apply such payments to the
outstanding principal due on the note.
c. A collateral assignment of purchase money promissory
notes (The Promissory Notes) secured by deeds of trust
(Collateral Assignment) with SHF as pledgor and the RTC
as pledgee. The Collateral Assignment provides for SHF
to assign to the RTC the promissory notes and deeds of
trust in the approximate principal amount of $725,000
($564,000 as of December 31, 1996). Principal
collections on the Promissory Notes will be remitted to
the RTC for application to the outstanding principal
due on the note.
11. SHAREHOLDERS' EQUITY:
The Company is authorized to issue 10,750,000 shares of
$0.50 par value Preferred shares. The Company gave
authority to its Board of Directors to issue such
Preferred shares in one or more series, and to fix the
number of shares in each series, and all designations,
relative rights preferences and limitations of the shares
issued in each series. As of December 31, 1996, the
Board of Directors has not exercised the authority
granted, and no such Preferred shares have been issued
except for the 10,512 shares of Series B, $7.50
cumulative Preferred of which 902 shares are held as
Treasury stock.
11. SHAREHOLDERS' EQUITY (CONTINUED):
Dividends on the Company's Series B Preferred stock have not
been paid since the first quarter of 1982. The Company
is in arrears on such dividends in the amount of
approximately $1,100,000 as of December 31, 1996.
12. MINORITY INTEREST:
The minority interest consists of the investment of
$2,800,000 made by the other 50% owner of the White
Ranch. The minority interest is increased or decreased
by the other 50% owner's share of profits or losses
attributable to the operations of the White Ranch. These
amounts were previously included in accounts receivable
or accounts payable.
13. CONTINGENCIES:
a. As of December 31, 1996, there were no material legal
proceedings pending against the Company.
b. SHF was advised of possible contamination on two sites
at Sam Hamburg Farm, a storage facility for diesel
fuels and an old airstrip which had been used for the
loading and fueling of aircraft applying agricultural
chemicals to the surrounding farm lands. The Company
has completed the cleanup relating to the diesel
storage tanks at a cost of approximately $100,000.
The Company has disposed of a large amount of the
contaminated earth at an approved site for the storage
of toxic wastes. However, 5,000 cubic yards of
contaminated earth (previously thought to be 4,000
cubic yards) still remain to be disposed of. The
Company, through its chemical and toxic clean-up
consultant, has been working with the California State
Environmental Protection Agency, in seeking alternate
means to the disposal in toxic dump sites of chemical
and toxics-laden soil. The State has participated in
the funding of several projects by a number of chemical
treatment firms in efforts to try other detoxification
methods on the soil.
Because of the ongoing testing, the State has not
imposed a disposal date upon the Company. Cost of
disposal is estimated at $100 per cubic yard. However,
if on-site remediation can be achieved, it is estimated
that the cost will be between $90,000 and $115,000.
The Company is unable to predict when the ongoing
testing will be complete or what the outcome of these
tests will be. As of December 31, 1996, the Company
has paid approximately $500,000, including the $100,000
expended for the diesel storage tank, and accrued an
estimated $174,000 relating to the balance of the
clean-up of the contaminated earth. That estimate could
change as the remediation work takes place.
13. CONTINGENCIES (CONTINUED):
c. The Company has received a notice from the State of
California Franchise Tax Board (FTB) wherein the FTB
alleges that one of the Company's subsidiaries owes
California franchise tax, penalties and interest of
approximately $316,000. The FTB claims that the
Company is not permitted to file a unitary tax return
in California. The Company has retained legal counsel
to resolve the matter with the FTB. The matter is
currently being appealed to the California State Board
of Equalization.
d. As more fully described in Note 4a(1), Mr. Anderson and
the Anderson Parties are involved in litigation with
the FDIC, the result of which could cause a sale of the
pledged assets of the Anderson Parties. Such a sale of
the Anderson Parties assets would have an adverse
effect on the Company's ability to collect the BGC
Note, and in addition, would result in a change in
control of the Company.
14. TAXES:
The Company and its subsidiaries file a consolidated federal
income tax return.
Deferred tax assets (liabilities) are comprised of the
following at December 31, 1996 and 1995:
1996 1995
(Dollars in thousands)
Loan reserves $ 697 $ 536
Accounts receivable reserves 48 8
Investment reserves 195
Real estate reserves 480 382
Loss carryforwards 15,337 14,702
Other 2 4
Gross deferred tax assets 16,564 15,827
Deferred tax assets
valuation allowance 16,553 (15,810)
11 17
Marketable securities
valuation allowance (11) (17)
Gross deferred tax
liabilities (11) (17)
Net deferred tax assets $ 0 $ 0
14. TAXES (CONTINUED):
A reconciliation of the changes in deferred tax assets
valuation allowance for 1996 and 1995 is as follows:
1996 1995
(Dollars in thousands)
Write-off of installment
notes receivable $ $ 73
Tax recognition of real estate
basis difference 117
Tax recognition of passive loss (7)
Book marketable securities
unrealized (gain) loss 6 (10)
Current year loss carryforwards 635 130
(Decrease) increase in loan reserves 161 (1,018)
(Decrease) increase in accounts
receivable reserves 40 (53)
Book reserve of investments loss (197) 54
Book reserve of real estate loss 98 97
Change in deferred tax asset
valuation allowance 743 (617)
Deferred tax assets valuation
allowance, beginning of year 15,810 16,427
Deferred tax assets valuation
allowance, end of year $ 16,553 $ 15,810
A reconciliation of the federal statutory tax rate to the
effective tax rate for 1996, 1995 and 1994, is as
follows:
Percentage of pre-tax income
1996 1995 1994
Federal statutory rate (34.00%) 34.00% (34.00%)
Net operating loss applied (18.38%)
Debt discharges and other (15.52%) (21.55%)
Non-deductible items:
Loss reserves 45.41% 0.03% 21.91%
Valuation adjustments 8.75% 0.03% 12.22%
Other (4.64%) 5.88% (0.13%)
0.00% 0.01% 0.00%
14. TAXES (CONTINUED):
The Company has the following net operating loss carryovers
available for income tax reporting purposes:
Year of expiration (Dollars in thousands)
2001 $10,337
2003 22,034
2004 1,908
2005 1,896
2006 3,550
2007 825
2008 2,425
2009 604
2011 1,529
As more fully described in Note 4a(1), a change in control
of the Company could take place. If such a change in
control were to take place, it would have an effect as to
when and as to the amount of net operating losses that
the Company could use to offset future taxable income in
any given year. This annual limitation, to the extent
not used in any given taxable year, may be carried
forward and added to the limitation of subsequent years.
A subsidiary has not paid State of New Jersey income taxes
since 1980 due to a dispute with the taxing authorities
over the method of determining the tax liability. In
1983, judgments were entered in favor of the State
amounting to $247,000 exclusive of interest and penalties
for which the Company believes adequate provision has
been made in the consolidated financial statements.
15. EXTRAORDINARY ITEM:
At December 31, 1995, the Company recorded as an
extraordinary item, a gain in the amount of $8,346,000,
net of tax of $80,000, resulting from the settlement of
the SASA Obligation with the RTC. The settlement
resulted in the Company and the RTC entering into a
Settlement, Release and Loan Modification Agreement (The
Agreement). The Agreement provided, among other things,
that upon execution of The Agreement, the Company would
pay to the RTC the sum of $290,000, transfer to the RTC
the San Diego property at an agreed upon price of
$1,500,000 and sign a promissory note in favor of the RTC
in the principal amount of $2,710,000. The effect of the
foregoing was to reduce the amount of the SASA Obligation
by $8,616,000. In connection with the settlement, the
Company incurred legal fees and other costs in the
approximate amount of $190,000.
15. EXTRAORDINARY ITEM (CONTINUED):
A reconciliation of the extraordinary item as shown in the
Consolidated Statements of Income (Loss) with the
supplemental schedules of non-cash investing and
financing activities as shown in the Consolidated
Statements of Cash Flow for the year ended December 31,
1995 is as follows:
Non-cash gain from extraordinary items--
Settlement of liabilities $8,619,000
Less: Cash paid for legal fees (190,000)
Tax effects (80,000)
Cash paid for miscellaneous
expenses (3,000)
Extraordinary item -- net
of tax effect $8,346,000
16. SEGMENT INFORMATION:
The Company operates in two principal business segments:
Real estate investments (development and sale of
residential lots and rental of agricultural land), and
agricultural (drying and storing rice).
The Company's real estate segment sells completed
residential lots primarily to builders of custom homes
and to the general public located in and around the
greater Sacramento, California area. The agricultural
properties are leased to farmers in the area where the
agricultural properties are located.
The agricultural segment dries harvested rice over a two
month period (approximately September 15 to November 15)
and stores, for a fee, the dried rice (or other grains)
until it is removed by the owner. The Company dries and
stores rice for principally one customer, Farmers Rice
Co-operative (Farmers). Farmers accounts for
approximately 98% of the rice drying and storage
revenues. If the Company were to lose Farmers as a
customer, it would have a material adverse effect on the
drying and storage operation.
16. SEGMENT INFORMATION (CONTINUED):
Following is a summary of segmented information for 1996,
1995, and 1994:
1996 1995 1994
Net revenues from
unaffiliated customers:
Real estate:
Sale of residential
lots $ 1,128 $ 1,901 $ 1,558
Land rent 948 485 871
Rice drying and
storage revenue 787 752 774
$ 2,683 $ 3,138 $ 3,203
Income (loss) from
operations:
Real estate $ (254) $ (482) $ 195
Rice drying and
storage (42) 162 152
(296) (320) 347
Corporate operating
expense (1,496) (1,537) (2,221)
Other income (expense) 100 (205) 687
Income taxes (13) (8)
Minority interest (97)
Loss before extraordinary
item as reported in the
accompanying consolidated
statement of
income (loss) ($ 1,789) ($ 2,075) ($ 1,195)
1996 1995
Identifiable assets
Real estate $ 10,919 $ 12,312
Rice drying and storage 1,836 1,894
General corporate assets 4,371 5,321
Total assets as reported
in the accompanying
consolidated balance sheets $ 17,126 $ 19,527
17. COMPUTATION OF PER SHARE EARNINGS (LOSS):
Earnings (loss) per share for the years ended December 31,
1996, 1995 and 1994 were computed as follows:
1996 1995 1994
Weighted average
number of shares
outstanding 6,375,096 6,429,822 6,460,096
Net loss for the year
before extraordinary
item $ $ (2,075) $
Extraordinary item 8,346
Net income (loss)
for the year (1,789) 6,271 (1,195)
Dividends applicable
to preferred shares 72 (72) (75)
Net income (loss)
used for computing
net earnings (loss)
per common share $ (1,861) $ 6,199 $ (1,270)
Net earnings (loss)
per common share $ (.29) $ .97 $ (.20)
<TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
December 31, 1996
SCHEDULE II
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
(1) (2)
Balance at Charges to Charges to Other changes Balance
beginning Costs and other accounts- add (deduct) at end of
Classification of period expenses describe describe period
(Dollars in thousands)
Allowance for doubtful
accounts:
<S> <C> <C> <C>
Long-term notes receivable -
related party $1,566 $483 $2,049
Accounts receivables 23 118 141
$1,589 $601 $2,190
(1) Bad debt recovery
S-1
</TABLE>
<TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
December 31, 1995
SCHEDULE II
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
(1) (2)
Balance at Charges to Charges to Other changes Balance
beginning Costs and other accounts- add (deduct) at end of
Classification of period expenses describe describe period
(Dollars in thousands)
Allowance for doubtful
accounts:
<S> <C> <C> <C> <C> <C>
Notes Receivable -
Director $427 $382 $72(2) ($881)(1) $0
Long-term notes receivable -
related party 2,967 41(2) (1,442)(1) 1,566
Accounts receivables 23 23
Long-term notes
receivable 1,174 61(2) (1,235)(1) 0
$4,568 $405 $174 ($3,558) $1,589
(1) Credit to related notes receivable
(2) Interest income
S-2
</TABLE>
<TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
December 31, 1994
SCHEDULE II
COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E
Additions
(1) (2)
Balance at Charges to Charges to Other changes Balance
beginning Costs and other accounts- add (deduct) at end of
Classification of period expenses describe describe period
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts:
Accounts Receivable $131 $72 ($203)(1) $0
Long-term notes receivable 1,092 $82(2) 1,174
Notes Receivable - Director 427 427
Long-term notes receivable -
related party 2,759 125 111(2) (28)(3) 2,967
$3,982 $624 $193 ($231) $4,568
(1) Write off against allowance
(2) Interest income
(3) Bad debt recovery
</TABLE>
S-3
<TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
SCHEDULE III - REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 1996
SCHEDULE III
COLUMN A COLUMN B COLUMN C
Initial cost to Company
Buildings
and
Description Encumbrances Land Improvements
<S> <C> <C> <C> <C>
REAL ESTATE HELD FOR SALE (D o l l a r s i n T h o u s a n d s)
Approximately 110 residential lots Deed of Trust in
located in Rancho Murieta, California favor of Resolution
(The Fairways) Trust Corporation (2) $1,784
Deed of Trust in
favor of Rancho
Murieta Association 93 $3,880
Approximately 80 acres of unimproved
land located in Auburn, California 40
7 partially improved residential lots Deed of Trust in
located in North Las Vegas, Nevada favor of Resolution
Trust Corporation (2) 469
Approximately 10,000 acres located in Kings
and Tulare County, California (4) 5,600
Approximately 4,600 acres located in Fresno
and Merced County, California 1,866
1,877 11,855
REAL ESTATE INCLUDED IN PROPERTY,
PLANT AND EQUIPMENT
Rice storage facility located in Yolo County,
California 159 1,678
$1,877 $12,014 $1,678
</TABLE>
<TABLE>
COLUMN A COLUMN D COLUMN E
Costs capitalized subsequent Gross amount at which carried
to acquisition at close of period (Note 1)
Buildings
Carrying and
Description Improvements costs Land Improvements Total
<S> <C> <C> <C> <C> <C>
REAL ESTATE HELD FOR SALE
Approximately 110 residential lots
located in Rancho Murieta, California
(The Fairways)
$6,837 $4,664 $4,664
Approximately 80 acres of unimproved
land located in Auburn, California 40 40
7 partially improved residential lots
located in North Las Vegas, Nevada
469 469
Approximately 10,000 acres located in Kings
and Tulare County, California 5,600 5,600
Approximately 4,600 acres located in Fresno
and Merced County, California 276 146 146
6,837 276 10,919 10,919
REAL ESTATE INCLUDED IN PROPERTY,
PLANT AND EQUIPMENT
Rice storage facility located in Yolo County,
California 159 1,678 1,837
$6,837 $276 $11,078 $1,678 $12,756
</TABLE>
<TABLE>
COLUMN A COLUMN F COLUMN G COLUMN H COLUMN I
Life on which
depreciation in
latest income
Accumulated Date of Date statement is
Description depreciation construction acquired computed
<S> <C> <C> <C> <C>
REAL ESTATE HELD FOR SALE
Approximately 110 residential lots
located in Rancho Murieta, California
(The Fairways)
01/31/90
Approximately 80 acres of unimproved
land located in Auburn, California 03/08/94
7 partially improved residential lots
located in North Las Vegas, Nevada
1995-1996
Approximately 10,000 acres located in Kings
and Tulare County, California 1989
Approximately 4,600 acres located in Fresno
and Merced County, California 03/23/88
REAL ESTATE INCLUDED IN PROPERTY,
PLANT AND EQUIPMENT
Rice storage facility located in Yolo County,
California 359 1985 11/14/90 10-31 years
$359
</TABLE>
<TABLE>
December 31,
1996 1995 1994
<S> <C> <C> <C>
Accumulated Depreciation
Reconciliation:
Balance-beginning of period $301 $243 $185
Additions during period:
Provision for depreciation 58 58 58
Balance - end of period $359 $301 $243
December 31,
1996 1995 1994
Reconciliation:
Balance-beginning of period $11,348 $12,920 $13,872
Additions during period:
Improvements 17 239
Other acquisitions 2,841 427 40
14,189 13,364 14,151
Deductions during period:
Cost of sales 1,143 1,732 1,231
Valuation allowance (3) 290 284
Balance - close of period $12,756 $11,348 $12,920
Note 1 The cost basis for Federal Income Tax purposes is the same as for financial
reporting purposes.
Note 2 The Deed of Trust in favor of the Resolution Trust Corporation encumbers
both properties in the total amount of $1,784.
Note 3 Valuation allowances have been provided against the lots in Rancho
Murieta. The purpose of the valuation allowance was to reduce the
carrying value to estimated market value.
Note 4 50% owned by an unrelated third party.
</TABLE>
<TABLE>
DUNES HOTELS AND CASINOS INC. AND SUBSIDIARIES
SCHEDULE IV - MORTGAGE LOANS ON REAL ESTATE
DECEMBER 31, 1996
SCHEDULE IV
COLUMN A COLUMN B COLUMN C COLUMN D
Final Periodic
Interest Maturity Payment
Description Rates Date Term
<S> <C> <C> <C>
Collateralized by Sam Hamburg Farm Property:
Delgado 9.00% 02/22/00 Note 1
ATB Packing 8.50% 02/08/00 Note 2
Collateralized by Real Estate:
Ahmad
Collateralized by the Fairways Property:
Consolidated Kapital, Inc. 8.00% 01/25/97 Note 3 & 4
Martin, Chandler T. & Debra L. 8.00% 03/05/98 Note 3 & 4
Duerr Family Revocable Trust 8.00% 08/10/96 Note 3 & 4
James, Raymond L. & Cheryle 10.00% 12/14/97 Note 3 & 4
Parks, James P. & Dale A. 9.00% 02/22/98 Note 3 & 4
</TABLE>
<TABLE>
COLUMN A COLUMN E COLUMN F COLUMN G COLUMN H
Principal
Amount of
Loans
Carrying Subject to
Face Amount of Delinquent
Prior Amount of Mortgages Principal
Description Liens Mortgages (Note 3) or Interest
<S> <C> <C> <C> <C>
Collateralized by Sam Hamburg Farm Property:
Delgado None $50,099 $40,079 $0
ATB Packing None 126,737 82,380 0
Subtotal 176,836 122,459 0
Collateralized by Real Estate:
Ahmad 432,630 224,000
Collateralized by the Fairways Property:
Consolidated Kapital, Inc. None 164,160 164,160 0
Martin, Chandler T. & Debra L. None 70,000 70,000 70,000
Duerr Family Revocable Trust None 193,800 193,800 0
James, Raymond L. & Cheryle None 79,200 79,200 0
Parks, James P. & Dale A. None 57,000 57,000 0
Subtotal 564,160 564,160 70,000
TOTAL $1,173,626 $910,619 $70,000
</TABLE>
<TABLE>
<S> <C>
12/31/96
Balance at Beginning of Period $1,086,920
Additions During Period:
New Mortgage Loans 432,630
1,519,550
Deduction During Period:
Reclassified to investments 119,958
Collections of Principal 488,973
Balance at End of Period $ 910,619
Note 1 - Interest Payable Quarterly - Principal payable in 5 equal annual installments.
Note 2 - Principal and interest payable quarterly until maturity.
Note 3 - Interest payable monthly until maturity.
Note 4 - Subject to a collateral assignment in favor of the Resolution Trust Corporation
as Receiver for San Antonio Savings Association, F.A.
Note 5 - Mortgage loans collateralized by the Fairways Property do not include
accrued interest.
</TABLE>
EXHIBIT INDEX
Exhibit
No. Description Page No.
3.01 Restated Certificate of Incorporation of Dunes
Hotels and Casinos Inc. dated June 17, 1982, is
incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K (file
no. 1-4385) for the year ended December 31, 1994,
Part IV, Item 14(a)(3), Exhibit 3.01.
3.02 Certificate of Amendment of Restated Certificate
of Incorporation of Dunes Hotels and Casinos Inc.
dated December 19, 1984, is incorporated herein
by reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for
the year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 3.02.
3.03 Revised By-laws of Dunes Hotels and Casinos Inc.
dated December 1984, is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the
year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 3.03.
4.01 Specimen Certificate for the Common Stock of
Dunes Hotels and Casinos Inc., is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 4.01.
4.02 Specimen Certificate for the Preferred Stock of
Dunes Hotels and Casinos Inc., is incorporated
herein by reference to Dunes Hotels and Casinos
Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 4.02.
10.02 Agreement dated November 21, 1989 by and between CCC
Nevada Inc. (formerly Continental Connector
Corporation), and Continental Industries, Inc.;
Promissory Note dated November 20, 1984, in the
principal amount of $3,000,000 made by Continental
Industries, Inc. to Continental Connector
Corporation; Allonge to Promissory Note, dated
November 20, 1989, in the original principal amount
of $3,000,000 made by Continental Industries, Inc.
to Continental Connector Corporation; Security
Agreement dated as of November 20, 1984 by and
between Continental Industries, Inc. and Continental
Connector Corporation; and Continuing Guaranty dated
April 2, 1985, by Morris Blinder and Meyer Blinder
in favor of Continental Connector Corporation, are
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.02.
10.04 Settlement Agreement dated June 28, 1988, by and
between San Antonio Savings Association and Dunes
Hotels and Casinos Inc.; First Amendment to
Settlement Agreement dated December 5, 1989, by and
between San Antonio Savings Association, F.A.
(assignee of San Antonio Savings Association) and
Dunes Hotels and Casinos Inc., is incorporated
herein by reference to Dunes Hotels and Casinos Inc.
Annual Report on Form 10-K (file no. 1-4385) for the
year ended December 31, 1994, Part IV, Item
14(a)(3), Exhibit 10.04. Settlement Release and
Loan Modification Agreement dated October 24, 1995,
by and among the Resolution Trust Corporation, Dunes
Hotels and Casinos Inc., Continental California
Corporation, M & R Investment Company, Inc. and SHF
Acquisition Corporation, is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Quarterly
Report on Form 10-Q for the nine months ended
September 30, 1995, Item 6, Exhibit 10.01. Order
Granting Joint Motion to Dismiss Bankruptcy Case and
Adversary Proceeding, dismissing bankruptcy case of
Continental California Corporation, is incorporated
herein by reference to Dunes Hotels and Casinos Inc.
Current Report on Form 8-K dated November 22, 1995,
Item 7(c), Exhibit 99.01.
10.05 Stipulation and Order for Dismissal with Prejudice
filed in the United States Bankruptcy Court,
District of Nevada, Case No. BK-S-92-20989 (RCJ)
executed by The Valley National Bank of Arizona,
EurekaBank, M&R Investment Company, Inc. and Baby
Grand Corp.; Compromise Agreement dated November 9,
1992, by and among Maxim Development, The Valley
National Bank of Arizona and Redwood Bank;
Settlement Agreement and Mutual Release dated
November 2, 1992, by and among EurekaBank, The
Valley National Bank of Arizona, M&R Investment
Company, Inc. and Baby Grand Corp.; Addendum to
Settlement Agreement and Mutual Release dated
November 2, 1992, by and among EurekaBank, The
Valley National Bank of Arizona, M&R Investment
Company, Inc., and Baby Grand Corp.; Stipulation for
Dismissal of Appeal with Prejudice filed in the
United States District Court, District of Nevada,
Case No. CV-S-92-675-LVG (RCH) dated November 2,
1992 and executed by The Valley National Bank of
Arizona, Baby Grand Corp., M&R Investment Company,
Inc. and the official Unsecured Creditors'
Committee; Promissory Note dated November 2, 1992,
in the principal amount of $2,650,000 made by Baby
Grand Corp. to M&R Investment Company, Inc.; Amended
and Restated Pledge Agreement dated November 2,
1992, by and between Baby Grand Corp. and M&R
Investment Company, Inc.; and Release of Assignment
of Leases, Rents and Revenues dated November 2,
1992, by M&R Investment Company, Inc., are
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1992, Part
IV, Item 14(a)(3), Exhibit 10.05. Second Settlement
and Forbearance Agreement dated February 9, 1995, by
and among Baby Grand Corp., M & R Investment
Company, Inc. and Bank One, Arizona, NA.; and
Purchase Agreement (including Option Agreement)
dated February 9, 1995, by and between Baby Grand
Corp. and M & R Investment Company, Inc., are
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Current Report on Form 8-K (file no. 1-4385)
dated February 9, 1995, Item 7, Exhibit Nos.
10.01 and 10.02.
10.06 Straight Note dated August 28, 1990, in the
principal amount of $486,000 made by Rancho Murieta
Properties, Inc. to SHF Acquisition Corporation; and
Deed of Trust with Assignment of Rents (Short Form)
dated August 28, 1990, by and between Rancho Murieta
Properties, Inc., First American Title Insurance
Company and SHF Acquisition Corporation, securing
$486,000 Straight Note, are incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1990, Part IV, Item 14(a)(3),
Exhibit 10.07. Second Extension Agreement dated
September 30, 1993, by and between SHF Acquisition
Corporation and Rancho Murieta Properties, Inc.;
Pre-workout Letter Agreement dated November 9, 1993,
by and between SHF Acquisition Corporation and
Rancho Murieta Properties, Inc.; Assignment of
Membership Proceeds dated September 30, 1993, by and
among SHF Acquisition Corporation, Rancho Murieta
Properties, Inc. and M & R Investment Company, Inc.;
and UCC-1 Financing Statement dated November 29,
1993, by Rancho Murieta Properties, Inc. in favor of
SHF Acquisition Corporation and M & R Investment
Company, Inc., are incorporated herein by reference
to Dunes Hotels and Casinos Inc. Annual Report on
Form 10-K (file no. 1-4385) for the year ended
December 31, 1993, Part IV, Item 14(a)(3), Exhibit
10.10.
10.09 Promissory Note dated May 31, 1990, in the principal
amount of $1,100,000, made by Yolo Oil and Gas, Inc.
to SHF Acquisition Corporation; Guaranty of Payment
and Performance dated May 29, 1990, by 500 First
Street, a California general partnership, Kent N.
Calfee, William Maddocks and Kenneth Wallace in
favor of SHF Acquisition Corporation; Deed of Trust
and Security Agreement dated May 31, 1990, by and
among Yolo Oil and Gas, Inc., Chicago Title
Insurance Company and SHF Acquisition Corporation;
Deed of Trust and Security Agreement dated May 29,
1990, by and among 500 First Street, Wildlife
Artisan, Inc., Chicago Title Insurance Company and
SHF Acquisition Corporation; Assignment of Rents and
Leases dated May 31, 1990, by and between Wildlife
Artisan, Inc. and 500 First Street, for the benefit
of SHF Acquisition Corporation; Environmental
Indemnity Agreement dated May 31, 1990, by Yolo Oil
& Gas, Inc., 500 First Street, Kent N. Calfee,
William Maddocks and Kenneth Wallace in favor of SHF
Acquisition Corporation; Loan Agreement dated May
25, 1990, by and among Yolo Oil & Gas, Inc., SHF
Acquisition Corporation, 500 First Street, and
William Maddocks; Lender's Escrow Instructions dated
May 31, 1990, by Yolo Oil & Gas, Inc., Chicago Title
Insurance Company and SHF Acquisition Corporation;
Deed of Trust and Security Agreement dated May 29,
1990, by 500 First Street, Wildlife Artisan, Inc.,
Chicago Title Insurance Company and SHF Acquisition
Corporation; and Assignment of Rents and Leases
dated May 31, 1990, by Wildlife Artisan, Inc., 500
First Street, and SHF Acquisition Corporation, are
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1990, Part IV,
Item 14(a)(3), Exhibit 10.11.
10.10 Letter Agreement dated July 21, 1991, by and among
Calfee & Young (on behalf of M & R Investment
Company, Inc.), Rancho Murieta Properties, Inc. and
CBC Builders, Inc.; Promissory Note in the principal
amount of $955,500 made by Rancho Murieta
Properties, Inc. and CBC Builders, Inc. to M&R
Investment Company, Inc.; Deed of Trust with
Assignment of Rents dated July 22, 1991, by CBC
Builders, Inc. in favor of M&R Investment Company,
Inc.; Deed of Trust dated July 22, 1991 by CBC
Builders, Inc. in favor of M&R Investment Company,
Inc.; Collateral Assignment of Partnership Interest
dated July 22, 1991, by Erik J. Tallstrom in favor
of M&R Investment Company, Inc.; Assignment of
Director's Fees dated July 22, 1991, by and between
CBC Builders, Inc. and M&R Investment Company, Inc.;
Memorandum of Option to Purchase dated July 22,
1991, by and between CBC Builders, Inc. and M&R
Investment Company, Inc.; and Personal Guaranty
dated July 22, 1991, by Erik J. Tallstrom, are
incorporated by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no 1-4385)
for the year ended December 31, 1991, Part IV,
Item 14(a)(3), Exhibit 10.12. Extension Agreement
dated September 30, 1993, by and among M & R
Investment Company, Inc., Rancho Murieta Properties,
Inc. and CBC Builders, Inc.; Pre-workout Letter
Agreement dated November 9, 1993, by and among M &
R Investment Company, Inc., Rancho Murieta
Properties, Inc. and CBC Builders, Inc.; Extension
of Option Agreement dated September 30, 1993, by and
between M&R Investment Company, Inc. and CBC
Builders, Inc, are incorporated herein by reference
to Dunes Hotels and Casinos Inc. Annual Report on
Form 10-K (file no. 1-4385) for the year ended
December 31, 1993, Part IV, Item 14(a)(3), Exhibit
10.10.
10.14 Corporation Deed of Trust with Assignment of Rents
dated March 23, 1993, by and among Andrew P.
Marincovich and Matilda C. Marincovich, First
American Title Insurance Company and M&R Investment
Company, Inc.; Promissory Note dated July 22, 1992,
in the principal amount of $500,000 made by El
Dorado Vineyards, Inc. to M&R Investment Company,
Inc.; Business Loan Agreement by and among M&R
Investment Company, Inc., El Dorado Vineyards, Inc.
and Andrew P. Marincovich; Security Agreement by El
Dorado Vineyards, Inc. in favor of M&R Investment
Company, Inc.; Personal Guaranty dated April 7,
1993, by Andrew P. Marincovich in favor of M&R
Investment Company, Inc., are incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1992, Part IV, Item 14(a)(3),
Exhibit 10.14. Promissory Note in the principal
amount of $500,000, made by El Dorado Vineyards,
Inc. to M&R Investment Company, Inc.; Promissory
Note in the principal amount of $8,800 made by El
Dorado Vineyards, Inc. to M&R Investment Company,
Inc.; Promissory Note in the principal amount of
$3,945.21 made by El Dorado Vineyards, Inc. to M&R
Investment Company, Inc.; Promissory Note in the
principal amount of $39,591.29 made by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.;
Business Loan Agreement by and among M&R Investment
Company, Inc., El Dorado Vineyards, Inc. and Andrew
P. Marincovich; Personal Guaranty by Andrew P.
Marincovich in favor of M&R Investment Company,
Inc.; and Security Agreement by El Dorado Vineyards,
Inc. in favor of M&R Investment Company, Inc., are
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1993, Part IV,
Item 14(a)(3), Exhibit 10.14. Loan Modification
Agreement dated July 15, 1994, by and among El
Dorado Vineyards, Inc., Andrew P. Marincovich and
M&R Investment Company, Inc.; Durable Special Power
of Attorney dated July 21, 1994 by Andrew P.
Marincovich; Promissory Note dated July 15, 1994, in
the principal amount of $500,000 made by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.;
Promissory Note dated July 15, 1994, in the
principal amount of $39,591.32 made by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.;
Promissory Note dated July 15, 1994, in the
principal amount of $3,945.21 made by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.;
Promissory Note dated July 15, 1994, in the
principal amount of $8,800.00 by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.;
Promissory Note dated July 15, 1994, in the
principal amount of $12,184.86 made by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc.; and
Promissory Note dated July 19, 1994, in the
principal amount of $153,428.94 by El Dorado
Vineyards, Inc. to M&R Investment Company, Inc., are
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Quarterly Report on Form 10-Q (file no.
1-4385) for the six months ended June 30, 1994, Item
6, Exhibit 10.01. Note Modification Agreement (with
Exhibits A through F) dated January 5, 1995, by and
among El Dorado Vineyards, Inc., Andrew P.
Marincovich and M&R Investment Company, Inc., is
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.14.
10.16 Parks Development Agreement dated February 20, 1991,
by and among the Rancho Murieta Association, the
Rancho Murieta Community Services District, Rancho
Murieta Properties, Inc., CBC Builders, Inc. and SHF
Acquisition Corporation, is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.16. Settlement Agreement Regarding
Payment of Park Fees (not dated) by and among Rancho
Murieta Association, SHF Acquisition Corporation,
CBC Builders, Inc., Rancho Murieta Properties, Inc.
and Rancho Murieta Community Services District of
Sacramento County, is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.16.
10.17 Inter-Creditor Agreement dated September 30, 1993,
by and among SHF Acquisition Corporation, M & R
Investment Company, Inc. and Calfee & Young, is
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1993, Part IV,
Item 14(a)(3), Exhibit 10.17.
10.18 Commercial Premises Lease dated July 1, 1993, by and
between California Dehydrating Company and SHF
Acquisition Corporation, is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1993, Part IV, Item 14(a)(3),
Exhibit 10.18.
10.19 Renewal Promissory Note secured by Security
Agreement Modification Agreement dated June 1989, by
and between Eureka Federal Savings and Loan
Association and Andco Development Group, Inc.;
Security Agreement-Pledge dated June 1989, by and
between Rancho Murieta Properties, Inc. and Eureka
Federal Savings and Loan Association; Agreement to
Modify Promissory Note dated June 1989, by and among
Eureka Federal Savings and Loan Association, Andco
Development Group, Inc., Andco Land and Development
Company, Inc. and CBC Builders, Inc.; Extension
Agreement dated February 1, 1990, by and among
Eureka Federal Savings and Loan Association, Andco
Development Group, Inc., Andco Land and Development
Company, Inc., Rancho Murieta Properties, Inc., Erik
J. Tallstrom and John B. Anderson; Guaranty dated
October 1, 1987, by John B. Anderson in favor of
Eureka Federal Savings and Loan Association;
Guaranty dated October 1, 1987, by Erik J. Tallstrom
in favor of Eureka Federal Savings and Loan
Association; Guaranty dated October 1, 1987, by
Rancho Murieta Properties, Inc. in favor of Eureka
Federal Savings and Loan Association; Amendment No.
1 to Guaranty dated June 1989, by and between John
B. Anderson and Eureka Federal Savings and Loan
Association; Amendment No. 1 to Guaranty dated June
1989, by and between Erik J. Tallstrom and Eureka
Federal Savings and Loan Association; Amendment No.
1 to Guaranty dated June 1989, by and between Rancho
Murieta Properties, Inc. and Eureka Federal Savings
and Loan Association; Corporation Deed of Trust with
Assignment of Rents dated June 1989, by and between
Rancho Murieta Properties, Inc. and Eureka Federal
Savings and Loan Association; Agreement for Purchase
and Sale of Promissory Note dated November 24, 1993,
by and between Realecon, Inc. and M&R Investment
Company, Inc.; Assignment of Promissory Note dated
November 24, 1993, by and between Realecon, Inc.
and M&R Investment Company, Inc.; Assignment and
Assumption Agreement of Security Agreement and
Guaranties dated November 24, 1993, between
Realecon, Inc. and M&R Investment Company, Inc.;
Secured Promissory Note dated November 24, 1993, in
the principal amount of $125,000 by M&R Investment
Company, Inc. to Realecon, Inc.; Assignment of Deed
of Trust with Request for Special Notice dated
November 24, 1993, by Realecon, Inc. in favor of M&R
Investment Company, Inc.; and Corporation Deed of
Trust with Assignment of Rents dated November 24,
1993, by SHF Acquisition Corporation in favor of
Realecon, Inc, are incorporated herein by reference
to Dunes Hotels and Casinos Inc. Annual Report on
Form 10-K (file no. 1-4385) for the year ended
December 31, 1993, Part IV, Item 14(a)(3), Exhibit
10.19.
10.20 Pine Ridge Joint Venture Agreement dated June 1993,
by and between AJD and M & R Investment Company,
Inc., is incorporated herein by reference to Dunes
Hotels and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December 31,
1993, Part IV, Item 14(a)(3), Exhibit 10.20. Pine
Ridge Joint Venture -- Joint Venture Meeting--
November 10, 1994, discussing additional capital
requirements for the continuing operations of Pine
Ridge Joint Venture and equity increases to M&R
Investment Company, Inc. related thereto, is
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1994, Part IV,
Item 14(a)(3), Exhibit 10.20.
10.21 Letter dated March 28, 1994 from M&R Investment
Company, Inc. to Michael Shipsey and Tri-Star
International Development regarding purchase of a
25% interest of Tri-Star International Development's
50% interest in Arroyo Grande Joint Venture
Agreement of distributable cash; and Letter dated
July 29, 1994 from Dennis L. Kennedy of Lionel
Sawyer & Collins to Tri-Star International
Development regarding termination of Tri-Star
International Development's interest in the Arroyo
Grande Joint Venture, are incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1994, Part IV, Item 14(a)(3),
Exhibit 10.21.
10.22 Agreement dated January 1, 1996, by and between
California Dehydrating Company, Inc. and SHF
Acquisition Corporation regarding use of the
California Dehydrating name and a Covenant Not to
Compete is incorporated herein by reference to Dunes
Hotels and Casinos Inc. Annual Report on Form 10-K
(file no. 1-4385) for the year ended December 31,
1995, Part IV, Item 14(a)(3), Exhibit 10.22.
10.23 Commercial Premises Lease dated March 1, 1995, by
and between Pheasant Investment Corporation and SHF
Acquisition Corporation regarding the lease of the
rice drying facility in West Sacramento, California
is incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K (file
no. 1-4385) for the year ended December 31, 1995,
Part IV, Item 14(a)(3), Exhibit 10.23.
10.24 Reimbursement Agreement dated September 20, 1995, by
and between Rancho Murieta Community Services
District and SHF Acquisition Corporation regarding
the amount of the reimbursement due SHF for excess
work done at The Fairways at Rancho Murieta that
will benefit other properties within the boundaries
of Rancho Murieta is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1995, Part IV, Item 14(a)(3),
Exhibit 10.24.
10.25 Assignment of promissory note in the original
principal amount of $57,000 made by James P. Parks
and Dale A. Parks in favor of SHF Acquisition
Corporation; Promissory Note dated February 13,
1995, made by James P. Parks and Dale A. Parks in
favor of SHF Corporation; Deed of Trust dated
February 13, 1995, made by James P. Parks and Dale
A. Parks is incorporated herein by reference to
Dunes Hotels and Casinos Inc. Annual Report on Form
10-K (file no. 1-4385) for the year ended December
31, 1995, Part IV, Item 14(a)(3), Exhibit 10.25.
10.26 Assignment of promissory note in the original
principal amount of $70,000 made by Chandler T.
Martin and Debra L. Martin in favor of SHF
Acquisition Corporation; Promissory Note dated March
2, 1992, made by Chandler T. Martin and Debra L.
Martin in favor of SHF Acquisition Corporation;
Letter dated April 6, 1994, extending the due date
of the note to March 10, 1998; Deed of Trust dated
March 2, 1992, made by Chandler T. Martin and Debra
L. Martin is incorporated herein by reference to
Dunes Hotels and Casinos Inc. Annual Report on Form
10-K (file no. 1-4385) for the year ended December
31, 1995, Part IV, Item 14(a)(3), Exhibit 10.26.
10.27 Assignment of promissory note in the original
principal amount of $164,160 made by Consolidated
Kapital, Inc. in favor of SHF Acquisition
Corporation; Promissory Note dated January 24, 1992,
made by Consolidated Kapital, Inc in favor of SHF
Acquisition Corporation; Deed of Trust dated January
24, 1992, made by Consolidated Kapital, Inc. is
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1995, Part IV,
Item 14(a)(3), Exhibit 10.27.
10.28 Assignment of promissory note in the original
principal amount of $85,360 made by William A. Brown
in favor of SHF Acquisition Corporation; Promissory
Note dated April 6, 1995, made by William A. Brown
in favor of SHF Acquisition Corporation; Deed of
Trust dated April 6, 1995, made by William A. Brown
is incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K (file
no. 1-4385) for the year ended December 31, 1995,
Part IV, Item 14(a)(3), Exhibit 10.28.
10.29 Assignment of promissory note in the original
principal amount of $76,000 made by John P. Xepoleas
and Monterey A. Xepoleas in favor of SHF Acquisition
Corporation; Promissory Note dated March 10, 1995,
made by John P. Xepoleas and Monterey A. Xepoleas in
favor of SHF Acquisition Corporation; Deed of Trust
dated March 10, 1995, made by John P. Xepoleas and
Monterey A. Xepoleas is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Annual
Report on Form 10-K (file no. 1-4385) for the year
ended December 31, 1995, Part IV, Item 14(a)(3),
Exhibit 10.29.
10.30 Assignment of promissory note in the original
principal amount of $193,800 made by T. E. Duerr and
P. A. Duerr, Trustees of the Duerr Family Revocable
Trust dated October 14, 1987, in favor of SHF
Acquisition Corporation; Promissory Note dated July
22, 1992, made by T.E. Duerr and P. A. Duerr,
Trustees of the Duerr Family Revocable Trust in
favor of SHF Acquisition Corporation; Deed of Trust
dated July 22, 1992, made by T.E. Duerr and P. A.
Duerr, Trustees of the Duerr Family Revocable Trust
is incorporated herein by reference to Dunes Hotels
and Casinos Inc. Annual Report on Form 10-K (file
no. 1-4385) for the year ended December 31, 1995,
Part IV, Item 14(a)(3), Exhibit 10.30.
10.31 Assignment of promissory note in the original
principal amount of $79,000 made by Raymond L. James
and Cheryle James in favor of SHF Acquisition
Corporation; Promissory Note dated December 7, 1994,
made by Raymond L. James and Cheryle James in favor
of SHF Acquisition Corporation; Deed of Trust dated
December 7, 1994, made by Raymond L. James and
Cheryle James is incorporated herein by reference to
Dunes Hotels and Casinos Inc. Annual Report on Form
10-K (file no. 1-4385) for the year ended December
31, 1995, Part IV, Item 14(a)(3), Exhibit 10.31.
10.32 Installment Note dated January 17, 1996, made by
Mukhtar Ahmad and Nazra P. Ahmad in favor of Willows
Ranch Group, consisting of SHF Acquisition
Corporation and 500 First Street wherein SHF
Acquisition Corporation has a 91.90% interest is
incorporated herein by reference to Dunes Hotels and
Casinos Inc. Annual Report on Form 10-K (file no. 1-4385)
for the year ended December 31, 1995, Part IV,
Item 14(a)(3), Exhibit 10.32.
10.33 Purchase and Option Agreement by and between SHF
Acquisition Corporation and West Coast Properties,
LLC, undated, regarding the sale of 20 lots and an
option to purchase an additional 20 lots at The
Fairways is incorporated herein by Dunes Hotels and
Casinos Inc. Quarterly Report on Form 10-Q for the
quarter ended March 31, 1996, Part II, Item 6,
Exhibit 10.01.
10.34 Letter dated July 12, 1996 from Murieta Investors
regarding Amended Purchase Agreement is incorporated
herein by reference to Dunes Hotels and Casinos Inc.
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, Part II, Item 6, Exhibit 10.01
10.35 Promissory note dated June 12,1996, between Golden
State Trust and M & R Investment Company, Inc.;
Assignment of Rights to Payments, Consent to
Assignment between Baby Grand Corp. and M & R
Investment Company, Inc.; Loan Agreement and
Assignment between M & R Investment Company Inc. and
Golden State Trust is incorporated herein by
reference to Dunes Hotels and Casinos Inc. Quarterly
Report on Form 10-Q for the quarter ended June
30,1996, Part II, Item 6, Exhibit 10.02.
10.36 Real Estate Option Agreement dated September 27,
1996, wherein M&R Investment Company, Inc. granted
an Option to MARCOR PARTNERSHIP, a general
partnership, an Option to acquire M&R Investment
Company, Inc's 66.667% interest in 2.16 acres of
industrial property in Las Vegas, Nevada;
Memorandum Of Option for the purpose of recordation.
10.37 Purchase Agreement dated February 27, 1997 by and
between Dana C. Hair ("Buyer") and Southlake
Acquisition Corporation, a Nevada Corporation, and
Jim Joseph, as Trustee of The Joseph Revocable
Trust, each as to an undivided 1/2 interest wherein
Buyer agrees to buy the property, more commonly
known as The White Ranch for $6,000,000; Exhibit
"A" to purchase agreement, Legal description of the
property; Exhibit "B", there are no items in
Exhibit B; Exhibit "C", there are no items in
Exhibit "C"; Exhibit "D", (i) Copy of a Field
Tenant Lease dated January 5, 1997, between
Southlake Acquisition Corporation and Phoenix
Farming Company (ii) Copy of a Field Tenant Lease
dated January 5, 1997, between Southlake Acquisition
Corporation and Four B's Farms (iii) Copy of an
Agricultural Lease dated September 8, 1992, and its
amendment dated November 29, 1995 between Southlake
Acquisition Corporation and J.G. Boswell Company
(iv) Copy of a letter dated February 14, 1997, from
Brent Bowen, Vice President, Southlake Acquisition
Corporation to J. W. Boswell, President, J.G.
Boswell Company (v) Copy of a Field Tenant Lease
dated February 20, 1997, between Southlake
Acquisition Corporation and W. William Blanken dba
HWB Farms.; Exhibit "E", there are no items in
Exhibit "E"; Exhibit "F", (i) Copy of the Angiola
Water District Restated Water Distribution Agreement
(ii) Copy of a Fax Transmittal dated February 12,
1997, from Kevin Johansen, Angiola Water District,
to Brent Bowen, Southlake Acquisition Corporation,
describing portions of "the Property" lying within
the boundaries of the Tulare Lake Basin Water
Storage District and the Tulare Lake Drainage
District, (iii) Copy of the Short Term State Water
Contract between Tulare Lake Basin Water Storage
District and Southlake Acquisition Corp. for the
period January 1, 1997 through December 31, 1998,
(iv) Copy of the Ninth Amended Rules and
Regulations Governing the Transmission of Water
Under the Water Supply Contract Between the State of
California, Department of Water Resources and the
Tulare Lake Basin Water Storage District; Exhibit
"G", there are no items in Exhibit "G".
10.38 Agreement For The Purchase and Sale of Real Property
dated February 21,1997, wherein SHF Acquisition
Corporation agrees to sell to Celebrate, LLC, and/or
assignee, a parcel of vacant land consisting of
approximately .82 acres described as a portion of
the W2, SW4, Se4 NW4 of Section 33, Township 195 and
Range 61E, M.D.M. The Property is further described
as Arroyo Grande Unit 3 consisting of 4 lots.
10.39 Agreement For The Purchase and Sale of Real Property
dated February 21,1997, wherein SHF Acquisition
Corporation agrees to sell to Celebrate, LLC, and/or
assignee, a parcel of vacant land consisting of
approximately 11 gross acres described as a portion
of the SW4, NW4 of Section 33, Township 195 and
Range 61E, M.D.M. The property is further described
as Arroyo Grande Unit 2A and 2B consisting of 53
lots.
10.40 Purchase and Option Agreement by and between SHF
Acquisition Corporation and Murieta Investors, LLC,
dated October 7, 1996, wherein SHF Acquisition
Corporation sold 6 lots at The Fairways to Murieta
Investors, LLC, and granted an option to Murieta
Investors, LLC, to acquire 34 additional lots at The
Fairways under terms and conditions described in the
Purchase and Option Agreement.
21.01 Subsidiaries of Registrant.
27.01 Financial Data Schedule
REAL ESTATE OPTION AGREEMENT
THIS REAL ESTATE OPTION AGREEMENT ("Agreement") is made and
entered into as of this 27th day of September, 1996, by and
between MARCOR PARTNERSHIP, a general partnership, ("Optionee")
and M & R INVESTMENT COMPANY, INC., a Nevada corporation
("Optionor").
RECITALS:
WHEREAS Optionor is the owner of an undivided two thirds
(66.667%) interest (the "Subject Interest") as tenant in common
in that certain real property located in Clark County, Nevada,
containing approximately 2.16 acres, as more particularly
described on Exhibit "A" hereto (the "Property"); and
WHEREAS Optionee desires an option to acquire the Subject
Interest; and
WHEREAS Optionor is willing to grant Optionee said option on
the terms and conditions provided hereinbelow;
NOW, THEREFORE, in consideration of the foregoing, and for
other good and valuable consideration, receipt and sufficiency of
which are hereby acknowledged, Optionee and Optionor agree as
follows:
WITNESSETH:
1. PROPERTY. Subject to the terms hereof, Optionor hereby
grants Optionee an exclusive option (the "Option") to purchase
the entire Subject Interest, including all rights and
hereditiments appurtenant thereto.
2. TERM OF OPTION. If not sooner exercised pursuant to
the terms of this Agreement, the Option shall expire and be of no
further force or effect at 5:00 p.m. Las Vegas time on October
11, 1999 (the "Option Deadline").
3. FEASIBILITY PERIOD. Optionee shall have until thirty
(30) days after mutual execution hereof (the "Feasibility
Period") in which to evaluate the Property and conduct such
studies and investigations as Optionee sees fit. At any time
prior to expiration of the Contingency Period Optionee may
terminate this Agreement by written notice to Optionor, in which
event neither party shall have any further rights or obligations
hereunder.
4. OPTION FEE. In consideration of the Option granted
herein, Optionee shall pay Optionor an annual payment (the
"Option Fee") in the amount of Forty Five Thousand One Hundred
Eighty Five Dollars ($45,185.00), so long as the Option remains
in effect. the first such payment shall be due and payable on or
before the expiration of the Feasibility Period, with a like
payment due and payable on each of the next two (2) anniversaries
thereof, provided that the Option has not sooner been terminated
as provided for elsewhere herein.
5. EXERCISE OF OPTION. At any time during the term of the
Option, Optionee shall have the right to exercise the Option by
giving Optionor not less than thirty (30) days prior written
notice thereof (the "Exercise Notice").
6. CLOSING. Within two (2) business days after Optionor's
receipt of Optionee's Exercise Notice as provided for under
Section 5 above, Optionee and Optionor shall open an escrow with
Angie Galindo of United Title Agency ("Escrow Agent"), 2300 W.
Sahara Avenue, Suite 140, Las Vegas, Nevada 89102, by depositing
an executed copy of this Agreement. The parties shall promptly
execute and deliver such escrow instructions and additional
documents, not inconsistent with this Agreement, as may be
required to effectuate the intent hereof. Escrow shall close not
later than thirty (30) days after Optionor's receipt of
Optionee's Exercise Notice. Optionor shall convey the Subject
Interest to Optionee or Optionee's nominee by grant, bargain and
sale deed as customary in Nevada. At close of escrow, Optionor
shall cause Escrow Agent to issue the Optionee Escrow Agent's
standard CLTA owner's policy of title insurance, with coverage in
the amount of the Purchase Price, insuring good and marketable
title to the Subject Interest subject only to Items 1, 2, 4, 5,
6, 7, 8 and 12 as shown on Schedule B of United Title Company's
preliminary title report dated April 19, 1996 and attached hereto
as Exhibit "B"; provided, however, that as to Item 1, all taxes
shall be paid current by Optionor as of close of escrow, and as
to Item 2, Optionor shall remain obligated as to supplemental
taxes assessed against any improvements constructed by Optionor
or on Optionor's behalf. Closing costs shall be apportioned as
follows: Optionor shall pay transfer tax, the premium for
Optionee's CLTA title policy, and one-half of the escrow fee.
Optionee shall pay recording costs and one-half of the escrow
fee, and the incremental cost of any ALTA title insurance
coverage desired by Optionee over and above the cost of a
standard CLTA policy. Real property taxes shall be prorated as
of closing.
7. PURCHASE PRICE. The purchase price for the Subject
Interest (the "Purchase Price") shall be an amount equal to Nine
Dollars ($9.00) multiplied by the total square footage of the
Property. The square footage of the Property shall be deemed to
be Ninety Four Thousand Ninety (94,090) square feet unless
Optionee obtains a survey, at Optionee's expense, prepared by a
licensed Nevada surveyor during the Feasibility Period, which
reflects a different square footage. In such event, the square
footage of the Property shall be determined by reference to said
survey. The Purchase Price shall be payable in cash at close of
escrow. No portion of the Option Fee paid by Optionee shall be
applicable to the Purchase Price.
8. RIGHT OF ENTRY. Optionee and its agents shall have the
right to enter onto the Property during the term of the Option,
to inspect same and conduct studies thereon and/or a survey
thereof. Optionee shall indemnify Optionor from any claims,
liens, damages and expenses (including attorneys fees) arising
from or in connection with such entry. Optionor agrees to
provide to Optionee, promptly after execution hereof, all
information and materials concerning the Property in the present
possession of Optionor or its agent.
9. BROKERS. Optionee and Optionor hereby represent and
warrant to each other that they have not retained or dealt with
any broker or agent with respect to this transaction. Optionee
and Optionor each hereby agree to indemnify and hold the other
harmless from and against the claims of any broker, agent or
finder claiming by or through the indemnifying party. Optionee
discloses that Optionee and/or principals of Optionee are
licensed Nevada real estate brokers.
10. OPTIONOR'S REPRESENTATIONS. Optionor hereby represents
and warrants to Optionee as follows:
(a) The execution, delivery and performance by Optionor of
this Agreement and such other instruments and documents to
be executed and delivered in connection herewith by Optionor
does not, and will not, result in any violation of, or
conflict with, or constitute a default under, any provision
of any agreement or any mortgage, deed of trust, indenture,
lease, security agreement, or other instrument or agreement
to which Optionor is a party.
(b) To the best of the Optionor's knowledge, Optionor is
not prohibited from consummating the transactions
contemplated by this Agreement by any law, rule, regulation,
instrument, agreement, order or judgment.
(c) Optionor has not received any notice of, and, to the
best of Optionor's knowledge, there do not exist any current
violations of any laws, statutes, ordinances, regulations or
other requirements of any governmental agency in connection
with or related to the Property. Without limiting the
generality of the foregoing, to the best of Optionor's
knowledge, no hazardous substances or wastes or petroleum
products are presently located on the Property. Optionor
has not received any notice of any proceeding or any pending
inquiry by any governmental agency with respect to hazardous
wastes or toxic substances in connection with the Property.
Optionor has received no notice of any violations of any
local, state or federal statutes or laws governing the
generation, treatment, storage, disposal or clean-up of
hazardous substances, including, without limitation, NRS
Chapter 459, the Toxic Substance Control Act of 1976, or the
Resource Conservation and Recovery Act of 1976, as they have
been amended from time to time.
(d) To the best of Optionor's knowledge, there are not any
existing, pending or anticipated litigation, condemnation or
similar proceedings against or involving the Property or, to
the best of Optionor's knowledge, or any other claim,
action, suit or other proceeding threatened or pending which
would materially and/or adversely affect Optionee's right,
title and/or interest in and to, or enjoyment or use of, the
Property.
(e) The Property is a legal parcel or parcels in accordance
with Nevada's Subdivision Map Act, Chapter 278 of Nevada
Revised Statutes.
(f) Optionor shall not transfer, encumber or otherwise
hypothecate the Property or any portion thereof or interest
therein, so long as this Agreement remains in effect.
The foregoing representations and warranties shall be true
and correct as of the date hereof and as of close of escrow, and
shall survive closing and delivery of the deed. In the event of
any failure of any of the foregoing representations and
warranties prior to the close of escrow. Optionee shall have the
right, at its option and without limitation of remedy, to
terminate this Agreement and obtain a refund of all Option Fees
paid to Optionor.
11. NOTICES. Any notices hereunder shall be hand delivered
or sent by certified mail, postage prepaid, return receipt
requested, addressed as follows:
OPTIONEE: OPTIONOR:
4495 South Polaris Avenue 4045 S. Spencer St. #206
Las Vegas, Nevada 89103 Las Vegas, Nevada 89119
Attn: Robert H. O'Neil Attn: James H. Dale
Notices mailed as aforesaid shall be deemed delivered on the
earlier of (a) actual receipt, or (b) two (2) business days after
deposited in the U.S. mail.
12. DEFAULT. In the event of default hereunder by
Optionor, which default is not cured within five (5) days after
written notice thereof from Optionee to Optionor, Optionee shall
have all rights and remedies available at law or in equity,
including (without limitation) the right to compel specific
performance of this Agreement. In the event of default hereunder
by Optionee, which default is not cured within five (5) days
after written notice thereof from Optionor to Optionee,
Optionor's sole remedy shall be to terminate this Agreement by
written notice to Optionee and Escrow Agent, in which event
Optionor shall retain all portions of the Option Fee paid by
Optionee, and neither party shall have any further rights or
obligations hereunder.
13. GENERAL. Time is of the essence hereof. This
Agreement represents the entire agreement of the parties,
expressly superseding all prior agreements and understandings
(including, without limitation, the matters set forth in
correspondence between the parties dated August 22, 1996, August
26, 1996, and August 27, 1996, respectively). This Agreement may
only be amended in writing. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their
respective heirs, successors and assigns. The waiver of any
default by Optionor or Optionee shall not be construed as a
continuing waiver, or a waiver of any subsequent default of the
same or any other provision of this Agreement. The terms of this
Agreement shall be governed under Nevada law. In the event of
any action to enforce the terms of this Agreement, the prevailing
party shall be entitled to costs and attorneys fees from the
other party. This Agreement may be executed in counter parts.
14. ACCEPTANCE. Unless this Agreement is executed by
Optionor and delivered to Optionee by 5:00 p.m., Las Vegas time,
on September 24, 1996, any offer represented hereby shall be
deemed revoked and of no further force or effect.
15. MEMORANDUM OF OPTION. Concurrently with the expiration
of the Feasibility Period, Optionee and Optionor shall execute
and record against the Property a memorandum giving notice of the
existing, but not the terms, of this Agreement.
IN WITNESS WHEREOF Optionee and Optionor have executed this
Agreement as of the date first set forth above.
OPTIONEE: OPTIONOR:
MARCOR PARTNERSHIP, M & R INVESTMENT COMPANY, INC.
a general partnership, a Nevada corporation,
/s/ /s/ James H. Dale
By: By: James H. Dale
Its: Managing General Partner Its: President
EXHIBIT A
A parcel of land located in the Northeast One Quarter (NE 1/4) of
the Northwest One Quarter (NW 1/4) of Section 20, Township 21
South, Range 61 East, Mount Diablo Meridian, Clark County,
Nevada, more particularly described as follows:
Beginning at a point South 75(45'32" West 815.64 feet from the
North Quarter (N 1/4) corner of Section 20, Township 21 South,
Range 61 East, MDM, said point being on the West right of way
line of Industrial Road; thence North 66(10'34" West 282.96 feet,
thence North 27(39'44" East, 62.48 feet to a point on the South
right of way of Flamingo Wash; thence South 72(50'01" East 31.47
feet along the South right of way line of Flamingo Wash; thence
South 84(38'32" East 52.93 feet along the South right of way line
of Flamingo Wash; thence South 86(11'41" East 53.52 feet along
the South right of way line of Flamingo Wash; thence North
83(04'56" East 50.98 feet along the South right of way line of
Flamingo Wash; thence North 68(22'39" East 72.74 feet along the
South right of way line of Flamingo Wash to the West right of way
line of Industrial Road; thence Southerly along the arc of a
curve concave to the East 167.18 feet along the West right of way
line of Industrial Road, said curve has a radius of 565 feet and
has a central angle of 16(57'11" and radial lines bearing North
73(02'49" West and due West; thence due South 20.05 feet along
the West right of way line of Industrial Road to the point of
beginning.
Escrow Number: 96-10-4555-AG
MEMORANDUM OF OPTION
This MEMORANDUM OF OPTION is made this 21st day of November, 1996
by and between M & R INVESTMENT COMPANY, INC., hereinafter
referred to as "Optionor" and CINDERLANE, INC., A NEVADA
CORPORATION, hereinafter referred to as "Optionee".
The parties have entered into a REAL ESTATE OPTION AGREEMENT
dated September 27, 1996, for the option to purchase the property
as set forth on Exhibit "A" attached hereto and by reference made
a part hereof.
The Real Estate Option Agreement terminates at 5:00 PM, October
11, 1999.
THIS MEMORANDUM OF OPTION IS PREPARED FOR THE PURPOSE OF
RECORDATION AND IN NO WAY MODIFIES THE TERMS AND CONDITIONS OF
THE AGREEMENT.
Witness our hands this 3rd day of December, 1996
OPTIONOR:
M & R INVESTMENT COMPANY, INC.,
A NEVADA CORPORATION
/s/ James H. Dale
By: JAMES H. DALE, PRESIDENT
OPTIONEE:
CINDERLANE, INC., A NEVADA CORPORATION
By:
STATE OF NEVADA ) Escrow No. 96-10-4555-AG
COUNTY OF CLARK ) When recorded, mail to:
On this 3rd of December, 1996 UNITED TITLE OF NEVADA
appeared before me, a Notary 2300 West Sahara Ave/Box 3
Public, James H. Dale personally Las Vegas, Nevada 89103
known or proven to me to be the
person(s) whose name(s) is/are This document is executed in
subscribed to the above counterpart to facilitate this
instrument, who acknowledged transaction each of which so
that he/she/they executed executed shall, irrespective
the instrument for the purposes of the date of its execution
therein contained. and delivery, be deemed an
original, and these
counterparts together
/s/ constitute one and the same
Notary Public instrument.
My commission expires: March 13, 1999
This area for Notary Seal
THIS IS CERTIFIED TO BE A TRUE
& CORRECT COPY OF THE SIGNED
ORIGINAL BY /S/ UNITED TITLE
OF NEVADA
Escrow Number: 96-10-4555-AG
MEMORANDUM OF OPTION
This MEMORANDUM OF OPTION is made this 21st day of November, 1996
by and between M & R INVESTMENT COMPANY, INC., hereinafter
referred to as "Optionor" and CINDERLANE, INC., A NEVADA
CORPORATION, hereinafter referred to as "Optionee".
The parties have entered into a REAL ESTATE OPTION AGREEMENT
dated September 27, 1996, for the option to purchase the property
as set forth on Exhibit "A" attached hereto and by reference made
a part hereof.
The Real Estate Option Agreement terminates at 5:00 PM, October
11, 1999.
THIS MEMORANDUM OF OPTION IS PREPARED FOR THE PURPOSE OF
RECORDATION AND IN NO WAY MODIFIES THE TERMS AND CONDITIONS OF
THE AGREEMENT.
Witness our hands this 3rd day of December, 1996
OPTIONOR:
M & R INVESTMENT COMPANY, INC.,
A NEVADA CORPORATION
By: JAMES H. DALE, PRESIDENT
OPTIONEE:
CINDERLANE, INC., A NEVADA CORPORATION
/s/
By: James A. Barrett, Jr.,
President
STATE OF NEVADA ) Escrow No. 96-10-4555-AG
COUNTY OF CLARK ) When recorded, mail to:
On this 3rd of December, 1996 UNITED TITLE OF NEVADA
appeared before me, a Notary 2300 West Sahara Ave/Box 3
Public, James A. Barrett, Jr. Las Vegas, Nevada 89103
personally known or proven to
me to be the person(s)
whose name(s) is/are This document is executed in
subscribed to the above counterpart to facilitate this
instrument, who acknowledged transaction each of which so
that he/she/they executed executed shall, irrespective
the instrument for the purposes of the date of its execution
therein contained. and delivery, be deemed an
original, and these
counterparts together
/s/ constitute one and the same
Notary Public instrument.
My commission expires: 7/27/99
This area for Notary Seal
THIS IS CERTIFIED TO BE A TRUE
& CORRECT COPY OF THE SIGNED
ORIGINAL BY /S/ UNITED TITLE
OF NEVADA
EXHIBIT "A"
A parcel of land located in the Northeast One Quarter (N/E 1/4)
of the Northwest One Quarter (NW 1/4) of Section 20, Township 21
South, Range 61 East, Mount Diablo Meridian, Clark County,
Nevada, more particularly described as follows:
Beginning at a point on the North line of Section 20, Township 21
South, Range 61 East, M.D.M. and the North right of way line of
Flamingo Road and the West right of way line of I-15 said point
being North 89(53'29" West, 199.49 feet from the North Quarter (N
1/4) corner of Section 20; Thence South Westerly along the arc of
a curve concave to the North West 421.46 feet. This arc is the
North right of way line of Flamingo Road and has a radius of 415
feet and a central angle of 58(11'18" and radial lines bearing
South 69(43'06" East and South 11(31'48" East; thence Westerly
along the arc of a curve concave to the North 164.57 feet. This
arc is the North right of way line of Flamingo Road and has a
radius of 1340 feet and a central angle of 07(02'28" and radial
lines bearing South 00(31'08" East; and South 06(31'20" West.
This point being the intersection of the North right of way line
of Flamingo Road and the East right of way line of Industrial
Road; Thence North 04(14'05" West, 73.43 feet along the East
right of way line of Industrial Road; Thence Northerly along the
arc of a curve concave to the East 44.26 feet said arc being the
East right of way line of Industrial Road. this curve has a
radius of 450 feet and a central angle of 05(38'08" and radial
lines bearing North 84(21'54" East and due East; Thence North
84(21'54" East 20.00 feet; Thence Northerly along the arc of a
curve concave to the East 127.79 feet. Said Arc being the East
right of way line of Industrial Road. This curve has radius of
430 feet and a central angle of 17(01'38" and a radials bearing
North 67(20'08" West and North 84(21'54" West; Thence North
22(39'44" East 17.38 feet along the East right of way line of
Industrial Road to a point on the North line of Section 20;
Thence South 89(53'29" East 416.18 feet along the North line of
Section 20 to the Point of Beginning.
CLARK COUNTY, NEVADA
JUDITH A. VANDEVER, RECORDER
RECORDED AT REQUEST OF:
UNITED TITLE OF NEVADA
12-05-96 08:01 CPD 3
BOOK: 961205 INST: 00291
Fee: 9.00 RPTT: .00
OPTION
CONFORMED COPY-HAS NOT BEEN COMPARED
TO THE ORIGINAL
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT is made and entered into as of the
27th day of February, 1997 by and between Dana C. Hair ("Buyer")
and Southlake Acquisition Corporation, a Nevada Corporation, and
Jim Joseph, as Trustee of the Joseph Revocable Trust, each as to an
undivided 1/2 interest ("Owner").
1. General Description of Transaction: Buyer is agreeing to
purchase (subject to the terms and conditions set forth is
this Agreement) the Property from Owner. The purchase price
is Six Million and no/100 Dollars ($6,000,000.00) to be paid
all in cash at the close of escrow. Escrow will be opened at
First American Title Insurance Company and will close one
hundred twenty (120) days from the opening of escrow, unless
extended. Buyer will make a Ten Thousand and no/100 Dollars
($10,000.00) non-refundable deposit at the opening of escrow.
Owner will provide Buyer with certain information about the
Property after the opening of escrow. Buyer is to have ninety
(90) days from the opening of escrow to conduct such
investigations, inspections and tests as Buyer deems prudent,
as well as to review condition of title. In addition,
concurrent with the ninety (90) day Inspection/Contingency
Period, Buyer will be attempting to arrange financing for the
purchase of the Property. Buyer may extend this ninety (90)
day Inspection/Contingency Period for an additional ninety
(90) days by making an additional Ten Thousand and no/100
Dollar ($10,000.00) non-refundable payment to Owner. Assuming
Buyer is satisfied with the results of the title, inspections,
etc., and is able to arrange financing, Buyer will notify
escrow in writing that all conditions have been satisfied and
thereafter, be legally bound to purchase the Property, and
thereafter, escrow will close. In the event Buyer is not
satisfied with the results of the title, inspections, etc., or
has been unable to arrange financing, then Buyer may terminate
this Agreement, cancel escrow, and have no further obligation
to Owner, however, Buyer's deposit (or deposits) will not be
refunded.
The foregoing is intended as a generalized overview of the
transaction. The specific terms and conditions of the
Parties' agreements are set forth in the balance of this
Agreement. In the event any statement in the Generalized
Overview is inconsistent with a specific provision in the
remainder of this Agreement, the specific provision is
intended to be controlling.
2. Definitions: The following terms, whenever used in this
Agreement, shall have only the meanings set forth below,
unless such meanings are expressly modified elsewhere herein.
2.1. Broker: Neither Owner, nor Buyer is represented
by a broker in this transaction.
2.2. Broker's Commission: There is no Broker's
Commission.
2.3. Closing: The date the deed to the Property is
recorded in the Official Records of the county where
the Property is located.
2.4. Deposit: Buyer will deposit with Escrow Holder
Ten Thousand and no/100 Dollars ($10,000.00) as a
non-refundable deposit which escrow will be instructed to
disburse to Seller immediately following the opening of
escrow. This deposit is intended to compensate Seller
for Seller's agreement to remove the Property from the
market during the Inspection/Contingency Period, and to
serve as Liquidated Damages under Paragraph 7.
2.5. Escrow Holder: First American Title Insurance Company
4540 California Avenue, Suite 100
Bakersfield, CA 93309
(805) 327-5311
(805) 327-8533 - fax
2.6. Inspection/Contingency Period: The period
commencing at the Opening of Escrow and ending ninety
(90) days thereafter. However, at any time prior to
the expiration of the initial ninety (90) day
Inspection/Contingency Period, Buyer may extend the
Inspection/Contingency Period one time for up to ninety
(90) days, for a total of a one hundred eighty (180)
day Inspection/Contingency Period, by paying Owner Ten
Thousand and no/100 Dollars ($10,000.00) outside of
escrow. This Ten Thousand and no/100 Dollars
($10,000.00) extension fee shall be non-refundable, and
shall be in addition to the deposit made on the opening
of escrow.
2.7. Opening of Escrow: Opening of Escrow shall be the
time when escrow instructions signed by both Buyer and
Owner are received by First American Title Insurance
Company.
2.8. Outside Closing Date: Escrow will close and the
deed will be recorded no later than thirty (30) days
after the close of the Inspection/Contingency Period
(ninety (90) or one hundred eighty (180) days, if
extended by tender of additional non-refundable deposit
as described in 2.6).
2.9. Property: The property that is the subject of
this Purchase Agreement is commonly known as The White
Ranch. The legal description of the Property is set
forth in Exhibit "A" ("the Property").
2.10. Purchase Period: The period commencing on the
timely execution of this Agreement and ending on the
earlier to occur of (a) the Closing or the cancellation
of the Escrow, or (b) 5:00 p.m. on the Outside Closing
Date.
2.11. Purchase Price: Six Million and no/100 Dollars
($6,000,000.00).
2.12. Title Company: First American Title Insurance Company
4540 California Avenue, Suite 100
Bakersfield, CA 93309
(805) 327-5311
(805) 327-8533 - fax
* ALL PAYMENTS TO BE MADE BY BUYER TO OWNER OR ESCROW
HOLDER SHALL BE IN THE FORM OF CASH OR CASHIER'S CHECK OR BY
WIRE TRANSFER OF FEDERAL FUNDS ONLY.
3. Conditions to Buyer's Obligation to Purchase.
3.1. Buyer's Inspection Rights: At any time during the
Inspection Period, Buyer and Buyer's experts shall have
the right to enter upon the Property at reasonable
times after reasonable notice to the Owner to make
reasonably necessary inspections including the sampling
of any surface waters, wells, and groundwater on or
under the Property, and conducting such tests and
examinations upon the Property as they deem
appropriate, but without unreasonably interfering with
the Property.
These inspections will include, but not be
limited to, examination of soils and environmental
factors, a review and investigation of the effect of
any zoning, maps, permits, reports, engineering data,
regulations, ordinances and laws affecting the
Property, and the review of the items, if any, required
to be delivered as provided in this Agreement. Buyer
and Buyer's experts shall exercise care in entering
upon and inspecting the Property, and Buyer hereby
agrees to defend, indemnify and hold harmless Owner,
its officers, employees and agents from all damages,
losses, costs, expenses and liabilities (including all
attorneys' fees incurred by Owner), arising out of or
resulting from Buyer's or Buyer's experts' entry upon
or inspection of the Property.
At any time during the Inspection Period,
Buyer has the right to cancel this Agreement if it is
dissatisfied with the results of any inspection,
evaluation, report, etc., and decides that the Property
is not suitable for Buyer's purposes. Buyer's failure
to disapprove the physical condition of the Property on
or before the end of the Inspection Period shall be
deemed approval of the condition of the Property by
Buyer. Buyer agrees to keep the Property free and
clear of all liens, and further agrees to indemnify and
hold Owner harmless from all liabilities and to repair
all damages to the Property arising from the
inspections.
3.2. Financing: Buyer does not know if Buyer can
obtain suitable permanent financing. Buyer shall seek
financing during the Inspection Period. In the event
Buyer is unable to obtain financing acceptable to Buyer
during that time, Buyer may terminate this Agreement in
writing delivered to Owner during the Inspection Period
and have no further obligation to Owner under this
Agreement, except Buyer's indemnity obligation as set
forth in Paragraph 3.
3.3. Title.
a) Matters of Record: Owner will provide
Buyer a copy of a preliminary title report on the
Property along with copies of all documents
reflected as exceptions in the Preliminary Title
Report. Buyer shall, within thirty (30) days of
his receipt of the Preliminary Title Report,
provide written notice to Owner of any items
unacceptable to Buyer. Owner shall then have ten
(10) days to agree to remove such items and in the
event Owner is unwilling or unable to do so, this
Agreement shall terminate. Buyer's failure to
object to exceptions in the Preliminary Title
Report within 30 days set forth above shall be
deemed an approval of the Preliminary Title Report.
b) Matters not of Record: Any matters not
of record but known to Owner are disclosed in
Exhibits C, D, E, and F. Buyer shall, within
thirty (30) days, provide written notice to Owner
of any items unacceptable to Buyer. Owner shall
then have ten (10) days to agree to remove such
items and in the event Owner is unwilling or unable
to do so, this Agreement shall terminate. Buyer's
failure to object to exceptions in Exhibits C, D,
E, and F in a timely manner shall be deemed an
approval of the matter set forth in those Exhibits
C, D, E, and F.
c) Title at Close: At the close of escrow:
(a) Title shall be transferred by grant deed;
(b) title shall be free of liens, except the lien
for current property taxes; (c) title shall be free
of other encumbrances, easements, restrictions,
rights, and conditions of record or know to Owner,
except for all matters shown in the Preliminary
Title Report which are not disapproved in writing
by Buyer, as set forth in a) and b), above. Owner
shall provide Buyer with a CLTA Standard Policy of
Title Insurance in favor of Buyer in the amount of
Six Million and no/100 Dollars ($6,000,000.00).
4. Operation of Property: During the Purchase Period, and if
escrow closes, until the close of escrow, the Owner shall have
the right to possess the property. If escrow closes, Owner
shall deliver possession to Buyer at the close of escrow
subject to any Farm Leases approved by Buyer. Notwithstanding
the foregoing, Owner will not materially alter the Property in
any manner during the Purchase Period.
5. Property Condition/Owner's Representations and Warranties:
Owner has made no representations, except as set forth in this
Paragraph 5. Owner warrants and represents to Buyer that as
of the date of this Agreement and as of the Closing Date, the
following warranties and representations are accurate:
5.1. Owner possesses fee simple absolute title to the
Property and Owner has the legal right to enter into
this Agreement. This Agreement and all documents,
certificates and instruments executed or to be executed
by Owner in connection with the transfer of the
Property to Buyer have been or will be duly authorized,
executed, and delivered, and each constitutes or shall
constitute a legal, valid and binding agreement
enforceable against Owner in accordance with its terms;
and no consents, orders or approvals are required in
connection therewith.
5.2. Owner and Buyer are aware of the existence in the
NW 1/4 of Section 3, T23S R23E of the Property of a
dilapidated residence. Owner makes no warranty or
representation as to the physical, structural, or
mechanical condition of the residence or any systems or
fixtures which may or may not be a part of the
residence.
5.3. To the best of Owner's knowledge, there are no
violations of any laws or regulations applicable to the
Property.
5.4. There is no Section 5.4.
5.5. There is no Section 5.5.
5.6. Owner is not aware of any fact or circumstance
which would prevent Buyer from operating the Property
after Closing as a farm.
5.7. Except as listed on Exhibit "C", or in the
Preliminary Title Report, at the Closing there shall be
no outstanding contracts made by Owner affecting the
Property, for any improvements to the Property or for
services to be rendered to the Property and all such
contracts that existed prior to closing will have been
fully performed and paid for by Owner. Owner shall
cause to be discharged all mechanic's liens and
materialmen's liens arising from any labor or materials
furnished prior to Closing which pertain to the
Property.
5.8. Except as listed on Exhibit "D", there are no
rental agreements, leases or other agreements creating
any possessory right in any third party in the
Property.
5.9. Except as disclosed in Exhibits "C" or "D", or as
set forth in Exhibit "E", to the best of Owner's
knowledge, there are no matters, not of record, that
would have a material adverse impact on the Buyer's use
and enjoyment of the Property.
5.10. The Property lies within, or is entitled to water
service from the water districts disclosed on Exhibit
"F". Any other source of water for the Property is
also disclosed on Exhibit "F". Seller has made no
representations or warranties as to the quality or
quantity of water available to the Property. Buyer
will make Buyer's own independent evaluation of the
water supply.
5.11. Owner has not filed or been the subject of any
filing of a petition under the Federal Bankruptcy Law
or any insolvency laws, or any laws for composition of
indebtedness or for the reorganization of debtors.
5.12. To the best of Owner's knowledge, there are not
now pending any lawsuits or causes of action regarding
the Property, or any part thereof, and that Owner shall
protect, indemnify, and hold Buyer harmless from any
causes of action arising out of or relating to the
Property, where the incidents or events which are the
basis of any such lawsuit or cause of action are
alleged to have occurred prior to the Closing Date.
The agreement to protect, indemnify and hold Buyer
harmless in the preceding sentence shall not include
any matters arising out of or caused by Buyer's
negligent acts or omissions.
5.13. Owner has received no written notice from any
governmental authority that eminent domain proceedings
for the condemnation of all or any portion of the Land
or Improvements are pending or proposed.
5.14. Owner is not a "foreign person" within the meaning
of section 1445(f)(3) of the Internal Revenue Code of
1954, as amended, and that Owner shall furnish to
Buyer, prior to the Closing, an affidavit in form
satisfactory to Buyer confirming the same.
5.15. No Hazardous Substances.
(i) To the best of Owner's knowledge, there
have been no violations of any Environmental Laws
(as defined below).
(ii) To the best of Owner's knowledge, there
are no buried or partially buried storage tanks on
the Property.
(iii) To the best of Owner's knowledge, Owner
has received no notice, warning, notice of
violation, administrative complaint, judicial
complaint, or other formal or informal notice
alleging that conditions on the Property are or
have been in violation of any Environmental Law,
or informing Owner that the Property is subject to
investigation or inquiry regarding Hazardous
Substances on the Property or the potential
violation of any Environmental Law.
(iv) To the best of Owner's knowledge, there
is no monitoring program required by the
Environmental Protection Agency ("EPA") or any
similar state agency concerning the Property.
(v) Except as noted below, to the best of
Owner's knowledge, no toxic or hazardous
chemicals, waste, or substances of any kind have
ever been spilled, disposed or, or stored on,
under or at the Property, whether by accident,
burying, drainage, or storage in containers,
tanks, holding areas, or by any other means.
Note: As of February 19, 1997, a
number of metal drums of unknown origin and
unknown contents were located on the property
in the shop yard. The drums have been
examined by Buyer, and he has determined that
the drums were empty except for accumulations
of rain water, and that the drums had been
stored on the property by a former tenant.
On February 20, 1997, the drums were removed
to the former tenant's property.
(vi) To the best of Owner's knowledge, the
Property has never been used as a dump or
landfill.
(vii) Owner has disclosed to Buyer all
information, records, and studies maintained by
Owner in connection with the Property concerning
Hazardous Substances.
(viii) The warranties in this section apply to
all Hazardous Substances other than residues of
chemicals applied to the Property or to crops
growing in the property in the ordinary course of
farming.
As used in this Agreement, "Environmental Laws"
means all federal, state, local or municipal laws, rules,
orders, regulations, statutes, ordinances, codes,
decrees, or requirements of any government authority
regulating, relating to, or imposing liability or
standards of conduct concerning any Hazardous Substance
(as later defined), or pertaining to occupational health
or industrial hygiene (and only to the extent that the
occupation or industrial hygiene laws, ordinances, or
regulations relate to Hazardous Substances on, under, or
about the Property), occupational or environmental
conditions on, under, or about the Property, as now or
may at any later time be in effect, including without
limitation, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 ("CERCLA") [42
USCS Sections 9601 et seq.]; the Resource Conservation
and Recovery Act of 1976 ("RCRA") [42 USCS Sections 6901
et seq.]; the Clean Water Act also known as the Federal
Water Pollution Control Act ("FWPCA") [33 USCS Sections
1251 et seq.]; the Toxic Substances Control Act ("TSCA")
[15 USCS Sections 2601 et seq.]; the Hazardous Materials
Transportation Act ("HMTA") [49 USCS Sections 1801 et
seq.]; the Insecticide, Fungicide and Rodenticide Act [7
USCS Sections 136 et seq.]; the Superfund Amendments and
Reauthorization Act [42 USCS Sections 6901 et seq.]; the
Clean Air Act [42 USCS Sections 7401 et seq.]; the Safe
Drinking Water Act [42 USCS Sections 300f et seq.]; the
Solid Waste Disposal Act [42 USCS Sections 6901 et seq.];
the Surface Mining Control and Reclamation Act [30 USCS
Sections 1201 et seq.]; the Emergency Planning and
Community Right to Know Act [42 USCS Sections 11001 et
seq.]; the Occupational Safety and Health Act [29 USCS
Sections 655, 657]; the California Underground Storage of
Hazardous Substances Act [H & SC Sections 25280 et seq.];
The California Hazardous Substances Account Act [H & SC
Sections 25300 et seq.]; the California Hazardous Waste
Control Act [H & SC Sections 25100 et seq.]; the
California Safe Drinking Water and Toxic Enforcement Act
[H & SC Sections 24249.5 et seq.]; the Porter-Cologne
Water Quality Act [Wat C Sections 13000 et seq.],
together with any amendments of or regulations
promulgated under the statutes cited above and any other
federal, state, or local law, statute, ordinance, or
regulation now in effect or later enacted that pertains
to occupational health or industrial hygiene (and only to
the extent that the occupational health or industrial
hygiene laws, ordinances, or regulations relate to
Hazardous Substances on, under, or about the Property),
or the regulation or protection of the environment,
including ambient air, soil, soil vapor, groundwater,
surface water, or land use.
As used in this Agreement, "Hazardous
Substances" includes, without limitation:
(a) Those substances included
within the definitions of "hazardous
substance", "hazardous material", "toxic
substance", "solid waste", or "pollutant or
contaminant" in CERCLA, RCRA, TSCA, HMTA, or
under any other Environmental Law;
(b) Those substances listed in the
United States Department of Transportation
(DOT) Table [49 CFR 172.101], or by the
Environmental Protection Agency (EPA), or any
successor agency, as hazardous substances [40
CFR Part 302];
(c) Other substances, materials,
and wastes that are or become regulated or
classified as hazardous or toxic under
federal, state, or local laws or regulations;
and,
(d) Any material, waste, or substance that is:
(i) a petroleum or refined petroleum product;
(ii) asbestos;
(iii) polychlorinated biphenyl;
(iv) designated as a hazardous substance
pursuant to 33 USCS Section 1321 or listed
pursuant to 33 USCS Section 1317;
(v) a flammable explosive; or,
(vi) a radioactive
material.
5.16. To the Best of Owner's Knowledge: In making the
representations and warranties set forth in this
Purchase Agreement, where Owner has stated "To the best
of Owner's knowledge," Owner means that Owner has no
conscious awareness of any information that would cause
Owner to reach a different conclusion, and has
undertaken no investigation or verification to
determine the existence of any information that might
cause Owner to reach a different conclusion. The
Property is occupied by tenants of Owner, and Owners'
knowledge is limited to infrequent observations of the
Property. Buyer is directly and/or indirectly involved
in farming on the Property as a result of Buyer's
affiliation with two of the tenants on the Property.
5.17. The continued accuracy in all respects of Owner's
representations and warranties shall be a condition
precedent to Buyer's obligation to close. All
representations and warranties contained in the
Agreement shall be deemed remade as of the date of
Closing and shall survive the Closing. If any of the
representations and warranties are not correct at the
time made or as of the Closing, Buyer may terminate
this Agreement, and there shall be no further liability
on the part of Buyer to Owner. The fact that Buyer has
the right to inspect the Property as provided in
Paragraph 3 of this Agreement, and further the fact
that Buyer conducts such inspections, shall not in any
manner relieve Owner of its Representations and
Warranties under this Paragraph and shall not
constitute a waiver by Buyer of these Representations
and Warranties.
6. Purchase and Closing: Owner shall be legally bound to sell
and Buyer legally bound to buy the Property under the
following terms and conditions.
6.1. Purchase Price and Terms: The purchase price is
Six Million and no/100 Dollars ($6,000,000.00) and will
be paid at the close of escrow in one lump sum.
6.2. Escrow: The escrow shall be with First American
Title Insurance Company. Buyer and Owner agree to
deliver signed escrow instructions to escrow within a
reasonable time after the execution of this Agreement
by Owner and Buyer. The Escrow Instructions shall be
in the usual form used by the Escrow Company, but shall
specifically provide that they do not supersede this
Agreement. Owner will pay one-half (1/2) of the Escrow
Agent's fees, the cost of the Preliminary Title Report,
the cost of the policy of title insurance and the
documentary transfer tax. Buyer shall pay one-half
(1/2) of the Escrow Agent's fees and all recording
costs.
6.3. Possession: Buyer shall be given possession of
the Property upon the close of escrow. Possession
shall mean actual physical possession. Owner covenants
that the Property will not be subject to any possessory
interests (leases, rental agreements, licenses, etc.)
of any kind at the close of escrow, except as approved
by Buyer pursuant to Paragraph 3.3.
6.4. Title: Title shall be as provided in Paragraph 3.3.
6.5. Prorations/Fees/Closing Costs. For purposes of
prorations, the Property shall be deemed to have been
transferred on the close of escrow, and the following
items shall be prorated based on that closing date:
(a) County consolidated property tax bill
charges, and public utility charges (water, sewer,
electricity, gas, garbage) shall be paid current by
Owner and prorated between Owner and Buyer as of
the date of recordation of the Deed.
(b) Bonds or assessments of Special
Assessment Districts which are now a lien and are
reflected in the county consolidated tax bill
referred to in Paragraph (a) or are disclosed on
the preliminary title report and approved by Buyer,
shall be paid current by Owner as of the date shown
in Paragraph (a); payments that are not yet due
shall be assumed by Buyer.
(c) County transfer tax or tax transfer fee
shall be paid by Owner. City transfer tax or
transfer fee shall be paid by Owner.
(d) Rents due under the leases shown in
Exhibit "D" to 4 B's Farms, Phoenix Farming
Company, and the J.G. Boswell Company will be
prorated at the close of escrow on a calendar year
basis. Rents due prior to the close of escrow
under the lease to HWB Farms as shown in Exhibit
"D" will be for the account of the Owner.
6.6. Personal Property: There are no items of personal
property included as part of the Property. However,
the Property does include those items set forth on
Exhibit "G", which may be classified as personal
property or fixtures.
6.7. Fixtures: All permanently installed fixtures and
fittings that are attached to the Property or for which
special openings have been made are included, free of
liens, in the purchase price, including, but not
limited to, fences, fuel tanks, and fixtures in or on
the shop, except that Owner believes, but does not
warrant, that is has the right to transfer an above-ground
fuel tank located in the shop yard.
6.8. Assignment: Buyer may assign all or any part of
its interests in the Agreement.
6.9. Risk of Loss: Except as otherwise provided in
this Paragraph, all risk of loss to the Property which
occurs after the offer is accepted and before either
title has been transferred or possession has been given
to Buyer, whichever occurs first, shall be borne by
Owner. Any damage to the land and improvements
totaling one percent (1%) of the purchase price shall:
(a) be repaired by Owner until Buyer takes possession
of the Property, or (b) be the responsibility of Buyer
once Buyer takes possession of the Property. If the
land or improvements to the Property are destroyed or
materially damaged prior to transfer of title in an
amount exceeding one percent (1%) of the purchase
price, then whether or not Buyer has possession, buyer
shall have the right only to either: (a) terminate
this Agreement and recover the full deposit, or
(b) purchase the Property in its then present
condition. If this Agreement is terminated pursuant to
this Paragraph, any expenses paid by Buyer or Owner for
credit reports, appraisals, title examination, or
inspections of any kind shall remain that party's
responsibility. Whether the loss exceeds, equals, or
is less than one percent (1%) of the purchase price, if
Buyer purchases the Property, Owner shall assign to
Buyer all rights to any insurance claims or insurance
proceeds covering, or recovered for, the loss. If
transfer of title and possession do not occur at the
same time, Buyer and Owner are advised to seek advice
of their insurance advisors as to the insurance
consequence thereof.
6.10. Permits: If in Owner's possession, Owner shall
within ten (10) days of the Opening of Escrow, deliver
to Buyer copies of all permits and approvals concerning
the Property obtained from any governmental entity,
including but not limited to, Certificates of
Occupancy, Conditional Use Permits, Development Plans,
and licenses and permits pertaining to the operation of
the Property.
6.11. Structural Modifications: Owner, within ten (10)
days of the Opening of Escrow, shall disclose to Buyer
in writing any known structural additions or
alterations, or the installation, alteration, repair,
or replacement of significant components of the
structure upon the Property. Buyer may notify Owner in
writing of disapproval at any time during the
Inspection Period. Notice by Buyer to Owner of its
disapproval shall terminate this Agreement.
6.12. Governmental Compliance: (a) Within ten (10) days
of the Opening of Escrow, Owner shall disclose to Buyer
any improvements, additions, alterations, or repairs
("Improvements") made by Owner or known to Owner to
have been made without required governmental permits,
final inspections, and approvals. (b) In addition,
Owner represents that Owner has no knowledge of any
notice of violations of City, County, State, or Federal
building, zoning, fire, or health laws, codes,
statutes, ordinances, regulations, or rules filed or
issued against the Property. If Owner receives notice
or is made aware of any of the above violations prior
to the Closing Date, Owner shall immediately notify
Buyer in writing. (c) Prior to the end of the
Inspection Period, Buyer shall provide Owner written
notice of any items disclosed in (a) or (b) which Buyer
disapproves. Notice by Buyer to Owner of its
disapproval shall terminate this Agreement.
6.13. Survey, Land, and Engineering Documents: Owner,
within ten (10) days of opening of escrow, shall
deliver to Buyer copies of surveys, plans,
specifications, and engineering documents, if any,
prepared on Owner's behalf or in Owner's possession.
Prior to the end of the Inspection Period, Buyer shall
notify Owner in writing of disapproval. Notice by
Buyer to Owner of its disapproval shall terminate this
Agreement.
6.14. Rental/Service Agreements: Owner, within ten (10)
days of the Opening of Escrow, shall make available to
Buyer for inspection and review: (1) all current
leases, rental agreements, service contracts and other
agreements pertaining to the operation of the Property;
(2) a rental statement including names of tenants,
rental rates, period of rental, date of last rent
increase, security deposits, rental concessions,
rebates or other benefits, if any, and a list of
delinquent rents and their duration. Owner represents
that no tenant is entitled to any rebate, concession,
or other benefit except as set forth in the documents.
Owner represents that the documents to be furnished are
those maintained in the ordinary and normal course of
business. Prior to the end of the Inspection Period,
Buyer shall notify Owner in writing of disapproval.
Buyer's failure to timely disapprove shall be deemed
approval. Notice by Buyer to Owner of its disapproval
shall terminate this Agreement.
6.15. Income/Expense Statements: Not applicable.
6.16. There is no Section 6.16
6.17. Delay Caused by Owner: If Owner fails to provide
the documents required in this Section 6 within the ten
(10) day period, the Inspection Period shall be
extended by the period of the delay or Buyer, at
Buyer's option, may terminate this Agreement.
6.18 Exchange Option: Owner reserves the right to
effect a tax free exchange prior to the close of this
escrow, and Buyer agrees to cooperate with Owner in
such exchange, provided Buyer is not at any additional
expense as a result thereof, and provided that such
exchange escrow does not involve Buyer taking title to
any other property and does not interfere with the
timely closing of the sale to Buyer. Owner shall
assume responsibility for all aspects of the "tax free"
exchange and Buyer's only obligation is reasonable
cooperation.
7. Liquidated Damages:
BUYER AND OWNER AGREE THAT IT WOULD BE IMPRACTICAL OR
EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGES TO OWNER IN THE
EVENT BUYER ELECTS NOT TO CLOSE OR DEFAULTS UNDER THIS
AGREEMENT. THE PARTIES HEREBY AGREE THAT A REASONABLE
ESTIMATE OF SUCH DAMAGE IS TEN THOUSAND DOLLARS ($10,000.00).
OWNER ACKNOWLEDGES THAT IT HAS NO RIGHT TO RECOVER ANY OTHER
CONSIDERATION OR DAMAGES OR TO EXERCISE ANY OTHER REMEDIES OR
MAKE ANY OTHER CLAIMS IN THE EVENT THAT BUYER DOES NOT CLOSE
AND TO THE EXTEND THAT OWNER HAS ANY RIGHTS, REMEDIES OR
CLAIMS, GROWING OUT OF BUYER'S FAILURE TO PURCHASE THE
PROPERTY, DOES HEREBY WAIVE THEM.
/s/ /s/
Owner's Initials Buyer's Initials
8. Notices: All notices or other communications required or
permitted hereunder shall be in writing, and shall be
personally delivered (delivery by overnight courier shall be
deemed personal delivery) to the following addresses or sent
by telecopy to the following fax numbers:
To Owner: Brent Bowen
Vice-President
Southlake Acquisition Corp.
P.O. Box 1410
Davis, CA 95617
(916) 753-5695 ext. 17; (916) 756-8252-fax
with a copy to: Christopher J. Konwinski, Esq.
CALFEE & YOUNG
611 North Street
Woodland, CA 95695-3237
(916) 666-2185; (916) 666-3123 - fax
The Joseph Irrevocable Trust
Jim Joseph, Trustee
1480 Drew Avenue, Suite 100
Davis, CA 95616
(___)____________; (___)___________-fax
with a copy to: _______________________________
_______________________________
_______________________________
(___)___________; (___)____________-fax
To Buyer: Dana C. Hair
629 Oleander
Bakersfield, CA 93301
(805) 328-9232; (___)____________-fax
with a copy to: Thomas C. Fallgatter, Esq.
THOMAS C. FALLGATTER, LAWYER
1605 "G" Street
Bakersfield, CA 93301
(805)328-9091; (805) 328-9314-fax
Personally delivered or telecopied notice shall be deemed
given upon receipt. Notice of change of address shall be
given by written notice in the manner detailed in this
Paragraph. If escrow has been opened, copies of all notices
shall also be sent to the Escrow Holder at the address or fax
number set forth in Paragraph 2.5.
9. General Provisions:
9.1. Successors and Assigns: This Agreement shall be
binding upon and inure to the benefit of Owner and
Buyer and their respective successors and assigns,
except as otherwise provided herein.
9.2. Entire Agreement: This Agreement contains the
entire agreement between the parties concerning the
Property, and no addition to or modification of any
term or provision shall be effective unless in writing,
signed by both Owner and Buyer.
9.3. Time of Essence: Owner and Buyer hereby
acknowledge and agree that time is strictly of the
essence with respect to each term and condition of this
Agreement and that the failure to timely perform any of
the terms and conditions by either party shall
constitute a breach and default under this Agreement by
the party failing to perform.
9.4. Partial Invalidity: If any portion of this
Agreement shall be declared by any court of competent
jurisdiction to be invalid, illegal or unenforceable,
that portion shall be deemed severed from this
Agreement and the remaining parts shall remain in full
force as fully as though the invalid, illegal or
unenforceable portion had never been part of this
Agreement.
9.5. Attorneys' Fees: If any action, lawsuit or other
proceeding is commenced which arises out of, or in any
way relates to this Agreement or its enforcement, the
prevailing party shall be entitled to recover from each
other party such amounts as the court may adjudge to be
reasonable attorneys' fees in the action, lawsuit or
proceeding (including, but not limited to, the
allocated costs for services of in-house counsel), in
addition to such court costs, expert witness fees and
such other fees, costs or sums as are allowed by law.
9.6. Governing Law: The parties intend and agree that
this Agreement shall be governed by and construed in
accordance with the laws of the State of California.
9.7 Waivers: No waiver by either party of any
provision shall be deemed a waiver of any other
provision or of any subsequent breach by either party
of the same or any other provision.
9.8 Captions: The captions, paragraph and
subparagraph numbers of the Agreement are for
convenience only and in no way define or limit the
scope of intent of the paragraphs of this Agreement.
9.9. Counterparts: This Agreement may be executed in
counterparts, each of which shall be deemed an
original, but all of which, together, shall constitute
one Agreement.
9.10. Exhibits: Exhibits A, B, C, D, E, F, and G,
attached to this Agreement are hereby incorporated by
this reference.
IN WITNESS WHEREOF, Buyer has executed this Agreement on the day
and year set forth below.
DATED: 2/27 , 1997 OWNER:
Southlake Acquisition Corporation,
a Nevada Corporation
By: /s/ BRENT BOWEN
Print: BRENT BOWEN
Its: VICE PRESIDENT
The Joseph Revocable Trust
By: /s/ JIM JOSEPH BY DONALD C. LEWIS
Jim Joseph, Trustee
By: /s/ DONALD C. LEWIS
ATTORNEY IN FACT
DATED: 2/27 , 1997 BUYER:
By: /s/ DANA C. HAIR
DANA C. HAIR
EXHIBIT "A"
to PURCHASE AGREEMENT dated ______________ between Southlake
Acquisition Corporation and Jim Joseph Revocable Trust, "Owner";
and Dana C. Hair "Buyer".
Legal description of "the Property".
RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO
NAME CALFEE & YOUNG
ADDRESS: P.O. Box 2143
CITY & Woodland, CA 95695
STATE
ZIP
Title Order No. _______ Escrow No. _______
Space above this line for recorder's use.
_____________________________________________________________
MAIL TAX STATEMENTS TO
NAME SOUTHLAKE ACQUISITION Documentary Transfer Tax $0
CORPORATION ___ computed on full value of
STREET 4045 S. Spencer Street property conveyed,
ADDRESS: Suite 206 X or computed on full value
CITY & Las Vegas, NV 89119 less liens and encum-
STATE brances remaining at
ZIP time of sale.
/s/
Signature of Declarant or
Agent determining tax. Firm
Name.
No tax-Deed is from an
Agent to a principal, not
pursuant to a sale.
CORPORATION GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged,
ADDIS CORPORATION
a Texas Corporation hereby GRANT(S) to
SOUTHLAKE ACQUISITION CORPORATION, a Nevada corporation the
following described real property in the UNINCORPORATED AREA OF
county of KINGS, state of California
SEE EXHIBIT "A" ATTACHED HERETO AND INCORPORATED HEREIN BY THIS
REFERENCE
ADDIS CORPORATION
Dated February 15, 1989 By: /s/ D. Doyle Mize
D. Doyle Mize, President
STATE OF CALIFORNIA )
) ss __________________________________
COUNTY OF _________ )
__________________________________
On _______ before me, the
undersigned, a Notary /s/
Public in and for said WITNESS
County and State, personally
appeared ___________ known to
me to be the ______ President,
and _________ known to me to
be ________ Secretary of the
corporation that executed the
within Instrument, and
acknowledged to me that such
corporation executed the
within instrument pursuant
to its bylaws or a resolution
of its board of directors.
Signature ___________________
_____________________________
Name (Typed or Printed)
Notary Public in and for said County and State
(This area for official notarial seal)
Order No. 70436
EXHIBIT "A"
DESCRIPTION
PARCEL 1:
The Northeast Quarter of Section 11 in Township 23 South, Range
22 East, Mount Diablo Base and Meridian, according to United
States Government Township Plat, in the County of Kings, State of
California.
EXCEPTING FROM the North one-eighth of the Northeast Quarter of
said Section, any part thereof included in ditches and public
roads.
ALSO EXCEPTING THEREFROM an undivided one-half interest in and to
all minerals, mineral deposits, oil, gas and other hydrocarbon
substances of every kind and character contained in or upon said
premises, as saved and executed by California Western States Life
Insurance Company, a corporation, in its Deed to South Lake
Farms, Inc., a corporation, dated December 17, 1946 and recorded
January 20, 1947 in Book 367 at Page 394 of Official Records, as
Document No. 568.
PARCEL 2:
All of Section 12, Township 23 South, Range 22 East, Mount Diablo
Base and Meridian, according to United States Government Township
Plat.
EXCEPTING THEREFROM an undivided one-half interest in and to all
minerals, mineral deposits, oil, gas and other hydrocarbon
substances of every kind and character contained in or upon said
premises, as saved and executed by California Western States Life
Insurance Company, a corporation, in its Deed to South Lake
Farms, Inc., a corporation, dated December 17, 1946 and recorded
January 20, 1947 in Book 367 at Page 394 of Official Records, as
Document No. 568.
STATE OF CALIFORNIA )
) ss.
COUNTY OF YOLO )
On 2/15, 1989, before me, the undersigned, a Notary Public
in and for said State, personally appeared Kent N. Calfee,
personally known to me (or proved to me on the basis of the oath
of ___________, a credible witness who is personally known to me)
to be the person whose name is subscribed to the within
instrument as witness thereto, who being by duly sworn, deposed
and said: That he/she resides in Yolo County, that he/she was
present and saw D. Doyle Mize, personally known to him/her to be
the same person described in and who executed the within
instrument as ___________ President and ___________ Secretary, on
behalf of Addis Corporation, the corporation therein named and
acknowledged to him/her that the corporation executed the same as
a party thereto pursuant to its bylaws or a resolution of its
Board of Directors, signed, sealed and delivered the same and
that said party duly acknowledged in the presence of said
affiant, that he/she/they executed the same, and that said
affiant, thereupon at the parties request subscribed his/her name
as a witness thereto.
Witness my hand and official seal
(Seal)
/s/
Notary Public
END OF DOCUMENT
Order No.
Escrow No.
Loan No.
RECORDING REQUESTED BY:
WHEN RECORDED MAIL TO:
NAME CALFEE & YOUNG
ADDRESS: P.O. Box 2143
CITY & Woodland, CA 95695
STATE
ZIP
Space above this line for recorder's use.
_____________________________________________________________
MAIL TAX STATEMENTS TO
NAME SOUTHLAKE ACQUISITION Documentary Transfer Tax $0
CORPORATION ___ Computed on the considera-
STREET 4045 S. Spencer Street tion or value of property
ADDRESS: Suite 206 conveyed; OR
CITY & Las Vegas, NV 89119 X Computed on the considera-
STATE tion or value less liens
ZIP or encumbrances remaining
at time of sale.
/s/
Signature of Declarant or
Agent determining tax. Firm
Name.
No tax-Deed is from an
agent to a principal not
pursuant to a sale.
CORPORATION GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby
acknowledged,
ADDIS CORPORATION, a Texas corporation
a Corporation organized under the laws of the State of Texas,
does hereby GRANT to SOUTHLAKE ACQUISITION CORPORATION, a Nevada
corporation
the real property in the City of Unincorporated area County of
Tulare, State of California, described as
See Exhibit "A" attached hereto and incorporated herein by this
reference.
THIS DEED IS RE-RECORDED TO CORRECT LEGAL DESCRIPTION.
Dated January 31, 1989 ADDIS CORPORATION
STATE OF TEXAS )
) ss. By: /s/
COUNTY OF HARRIS ) D. Doyle Mize President
On November 6, 1989 before By: ______________________________
me, the undersigned, a Secretary
Notary Public in and for said
State, personally appeared
D. Doyle Mize known to me
to be the _____________ /s/
President, and _________ Witness
known to me to be the ______
Secretary of the corporation
that executed the within
Instrument, and known to me
to be the person who executed
the within instrument on
behalf of the corporation
therein named, and
acknowledged to me that such
corporation executed the
within instrument pursuant
to its bylaws or a resolution
of its board of directors.
WITNESS my hand and official seal
Signature /s/
Name (Typed or Printed)
Notary Public in and for said County and State
MAIL TAX STATEMENTS AS DIRECTED ABOVE
STATE OF CALIFORNIA )
) ss.
COUNTY OF YOLO )
On January 31, 1989 before me, the undersigned, a Notary
Public in and for said State, personally appeared Kent N. Calfee,
personally known to me a credible witness who is personally known
to me to be the person whose name is subscribed to the within
instrument as witness thereto, who being by duly sworn, deposed
and said: That he/she resides in Yolo County, that he/she was
present and saw D. Doyle Mize, personally known to him/her to be
the same person described in and who executed the within
instrument as _____________ President and _____________
Secretary, on behalf of Addis Corporation, the corporation
therein named and acknowledged to him/her that the corporation
executed the same as a party thereto pursuant to its bylaws or a
resolution of its Board of Directors, signed, sealed and
delivered the same and that said party duly acknowledged in the
presence of said affiant, that he/she/they executed the same, and
that said affiant, thereupon at the parties request subscribed
his/her name as a witness thereto.
Witness my hand and official seal
(Seal)
/s/
Notary Public
EXHIBIT "A"
Description
Parcel 1:
The follwoing parcels located in Township 22 South, Range 23
East Mount Diablo Base and Meridian, County of Tulare, State
of California, according to the official plot thereof.
APN 291-140-05 (portion)
(A) The Southerly 20 acres of Swamp and Overflow, Lot 2 of the
East half of Section 20, the North line of said 20 acres being
parallel with the North line of said Section 20.
APN 291-070-01
(B) The Southwest quarter of Section 21; the West half of the
Southeast quarter of Section 21.
APN 291-100-03
(C) That portion of the South half of Section 27, lying West of
the Westerly line of the land described in the Deed to the State of
California, recorded September 14, 1973, in Book 3130, page 744,
Official Records.
APN 291-100-01 and 02
(D) All of Section 28.
APN 291-110-03 (portion)
(E) Swamp and Overflow Lot 1 in the Southwest quarter of Section 34,
the Southeast quarter of the Southwest quarter of Section 34; the North
half of the Southwest quarter of Section 34; the North half of Section
34, the Southeast quarter of Section 34.
EXCEPTING therefrom that portion lying East of the Westerly line
of the land described in a Deed to the State of California
recorded September 14, 1973 in Book 3130, page 744, Official
Records.
ALSO EXCEPTING an undivided one-half interest in and to all
minerals, oil, gas and other hydrocarbon substances as reversed
by Myrtle Frances Bryson, a widow, in the Deed to F. L. Purinton
and Gertrude E. Purinton, his wife, dated October 8, 1947, and
recorded October 22, 1984 in Book 1268, page 413, File No. 27542,
Official Records.
ALSO EXCEPTING from said Parcel 1 an undivided one-fourth
interest in and to all minerals, oil, gas and other hydrocarbon
substances, as reserved in the Deed from F.L. Purinton and
Gertrude E. Purinton, his wife, to Goldring Packing Co., a
California Corporation, dated January 21, 1948, recorded February
17, 1948 in Book 1283, page 244, File No. 4398, Official Records.
ALSO EXCEPTING an undivided one-eighth interest in all oil, gas
and other hydrocarbons and minerals as reserved by Angiola Ranch
in Deed recorded in Book 2403, page 422, Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and to her
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damages or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonable value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, at al, recorded April 16, 1981 in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 2: APN 291-140-05
Swamp and Overflow Lot 3 in the Southeast quarter and the Swamp
and Overflow Lots 4 and 5 in the Northeast quarter; the Northwest
quarter of the Southeast quarter;
the Southeast quarter of the Southeast quarter; the Southwest
quarter of the Southeast quarter, and the West half of Section 20,
Township 22 South, Range 23 East, Mount Diablo Base and Meridian,
County of Tulare, State of California, according to the official
plat thereof.
EXCEPTING therefrom one-half of all the oil, gas and other hydrocarbons
and minerals in, on or that may be produced therefrom reserved by James
A. Booth and Francis N. Booth, his wife, in Deed dated May 27, 1943,
recorded June 2, 1943 in Book 1832, page 272, Official Records.
ALSO EXCEPTING one-fourth of all oil, gas and other hydrocarbons
and minerals in, on or under, or that may be produced from said land,
as reserved by Harold A. Witham and Frances A. Witham, his wife, in Deed
dated January 2, 1947, recorded February 21, 1947 in Book 1234,
page 71, Official Records.
ALSO EXCEPTING therefrom one-eighth of all the oil, gas and other
hydrocarbons and minerals in, on or under, or that may be
produced therefrom as reserved by John Ruether and Margaret F.
Ruether, in the Deed recorded February 5, 1962, in Book 2317,
page 250, File No. 4664, Official Records.
ALSO EXCEPTING therefrom a strip of land 30 feet wide along the
entire East side of the property described hereinabove and a
strip of land 55 feet wide along the Northerly boundary of the
property described hereinabove, measured from the center of the
County road South, said 30 foot strip to leave the East line and
pass to the West of the pumping plant in the Northeast corner of
the property hereinabove described, a distance therefrom of not
less than 25 feet, so that the East line of said 30 foot strip is
not less than 25 feet West of the pumping plant.
ALSO EXCEPTING all oil, gas, petroleum and the hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of passage over, upon and across, and egress and ingress
to and from said land for any or all of the above purposes at
locations approved in advance in writing by grantee or his
successor in interest; which approval shall not be unreasonably
withheld; provided, however, that the grantor, his heirs,
administrators, executors, and assigns, whomsoever shall own the
mineral rights at the time, shall make complete payment to the
grantee, his heirs, administrators, executors and assigns, for
any and all damages occasioned by the operations of the grantor,
his heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, to crops, wells, pumps, pipe
lines, fences, canals, buildings and other improvements of the
grantee, his heirs, administrators, executors and assigns, a
reasonable price, based on its fair market value for all land
used or damaged or occupied by the grantor, his heirs,
administrators, executors, assigns and lessees, under leases made
after December 12, 1980, for any of said purposes. If the
parties or their successors and assigns cannot agree as to the
damages or as to the reasonable value of the land so occupied and
used, the same shall be determined by arbitration, each party,
their successors or assigns selecting one arbitrator, and the two
so selected choosing a third arbitrator, and the decision of any
two of such arbitrators shall be conclusive and binding upon the
parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al, recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 3: APN 291-140-05 (portion)
The right of ingress and egress at not more than two points
across the strip of land 55 feet wide, excepted from Parcel No. 2
above, and across the ditch maintained thereon and the right to
maintain a bridge not over 16 feet wide at not more than two
points on the North crossing said ditch.
Also an easement and right of way for a pipe line over and across
the strips of land excepted from Parcel No. 2 above, for the
purpose of conveying water from the pumping plant across said
strip of land to the above described land.
Also the further easement and right of way through and across the
strips of land excepted from Parcel No. 2 above, at a point where
the lateral of the Bayou Vista Ditch now feeds and conveys water
to said Section 20, for conveyance of water purchased or to be
purchased from Bayou Vista Ditch Company, to said Section 20,
should the strip of land above described by used for other than
ditch purposes.
PARCEL 4: APN 291-070-10
That portion of Section 22, Township 22 South, Range 23 East,
Mount Diablo Base and Meridian, County of Tulare, State of
California, according to the official plat thereof, lying West of
the Atchison, Topeka and Santa Fe Railroad, more particularly
described as follows:
Beginning at a point 26.70 feet East and 30 feet North of the
Southwest corner of said Section 22; thence East 758.50 feet to a
point on the Westerly right of way line of the Atchison, Topeka
and Santa Fe Railroad said point being 30 feet North of the South
line of said Section 22; thence North 30 degrees 17' 45" West
1375.63 feet along the Westerly right of way line of the Atchison,
Topeka and Santa Fe Railroad; thence South 66 degrees 09' 45" West
56.46 feet; thence South 0 degrees 38' 15" West 1165.00 feet
to the point of beginning.
EXCEPTING therefrom that portion described as follows:
Beginning at the Southwest corner of said Section 22; thence
North 89 degrees 46' 06" East, along the South line of said
Section 22, 803.02 feet to the Westerly right of way line of
the Atchison, Topeka and Santa Fe Railroad Company; thence
North 30 degrees 23' 39" West, along said Westerly right of
way line, 34.70 feet to the true point of beginning, thence
continuing North 30 degrees 23' 39" West, along said Westerly
right of way line, 11.56 feet; thence South 59 degrees 26' 21"
West, 19.89 feet; thence North 89 degrees 46' 06" East,
parallel to and 30 feet distant from said South line of Section
22, 23.01 to the true point of beginning.
ALSO EXCEPTING therefrom an undivided three-fourths interest in
all oil, gas and other minerals beneath the surface of said land,
together with rights incidental to the development of the same,
as reserved by the Union Central Life Insurance Company, a
corporation, in Deed dated February 14, 1940, recorded October 2,
1940 in Book 911, page 477, Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns. A reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonable value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so-selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al, recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 5: APN 291-080-01, 02 and 291-090-01
That portion of the Northwest quarter of Section 27, Township 22
South, Range 23 East, Mount Diablo Base and Meridian, County of
Tulare, State of California, according to the official plat
thereof, lying West of a line 150 feet Southwesterly at right
angles from the center line of the Atchison, Topeka and Santa Fe
Railway Company right of way.
EXCEPTING therefrom those portions thereof described as follows:
(A) Beginning at a point 230 feet at right angles in a
Southwesterly direction from a point in the center line of the
Atchison, Topeka and Santa Fe Railway which point is a distance
of 1439.3 feet, measured along said line Southeasterly from the
point where said line intersects the North boundary of said
Section 27; thence Southeasterly parallel with said centerline,
75 feet; thence at right angles Southwesterly 150 feet; thence at
right angles Northwesterly 75 feet; thence at right angles
Northeasterly 150 feet to the point of beginning.
(B) Beginning at a point in the Northwest quarter of said
Section 27 which point is determined by commencing at the point
where the Atchison, Topeka and Santa Fe Railway Company right of
way crosses the North line of said Section 27; thence
Southeasterly along the center of said right of way 939.3 feet;
thence at right angles to said right of way in a Southwesterly
direction, 230 feet to a post at the Northeasterly corner of a
Blacksmith Shop; thence in a Southeasterly direction and parallel
with said right of way, 175 feet to the true point of beginning;
thence in a Southwesterly direction at right angles to said right
of way 150 feet; thence Southeasterly parallel with said right of
way 50 feet; thence Northeasterly and at right angles to said
right of way, 150 feet; thence Northwesterly and parallel with
said right of way, 50 feet to the true point of beginning.
EXCEPTING therefrom an undivided one-half interest in and to all
minerals, mineral deposits, oil, gas, and other hydrocarbon
substance of every kind and character contained in or upon said
premises, together with rights incidental to the development of
the same, as reserved by California-Western States Life Insurance
Company, a corporation, in Deed dated July 1, 1944, recorded
September 1, 1944, in Book 1099, page 64, Official Records.
ALSO EXCEPT from a portion of said Northwest quarter, an
undivided three-fourths interest in and to all oil, gas, minerals
and mineral rights in and under said land, as reserved by John F.
Butcher and Verna V. Butcher, his wife, in Deed recorded
September 15, 1977 in Book 3454, page 932, Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of development and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and to her
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonable value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al, recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 6: APN 291-120-07 (portion)
The Northeast quarter of Section 31, Township 22 South, Range 23
East, Mount Diablo Base and Meridian, County of Tulare, State of
California, according to the official plat thereof.
EXCEPTING therefrom all oil, gas, petroleum, and other
hydrocarbon substances within or underlying said land or that may
be saved or produced therefrom, with rights of ingress and egress
to recover the same, as excepted by Ethel B. Cooper, a married
woman, in the Deed to O. L. Foy, et al., dated June 13, 1952,
recorded July 9, 1952 in Book 1608, page 105, Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonable value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al, recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 7: APN 291-120-06, 05 and 291-110-05, 06 and 311-020-10 &
11
All of Section 32; all of Section 33 in Township 22 South, Range
23 East, Mount Diablo Base and Meridian, and all of Section 4,
Township 23 South, Range 23 East, Mount Diablo Base and Meridian,
County of Tulare, State of California, according to the official
plat thereof.
EXCEPTING therefrom an undivided one-half interest in and to all
oil, gas, and minerals in and under said land, together with all
easements and rights necessary or convenient for the production,
storage and transportation thereof, and the exploration and
testing of said real property, as reserved by R. V. Taylor and
Marie Hutton Taylor, his wife, in Deed dated December 30, 1946,
recorded December 9, 1952 in Book 1636, page 71, Official
Records.
ALSO EXCEPTING all oil, gas petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonable value of the land so occupied
and use, the same shall be determined by arbitration, each party,
their successors or assigns selecting one arbitrator, and the two
so selected choosing a third arbitrator, and the decision of any
two of such arbitrators shall be conclusive and binding upon the
parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al, recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantees, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 260, page 238 of Deeds, Tulare
County Records."
PARCEL 8: APN 291-120-07 (portion)
The Southeast quarter of Section 31, Township 22 South, Range 23
East, Mount Diablo Base and Meridian, in the County of Tulare,
State of California, according to the official plat thereof.
EXCEPTING therefrom an undivided one-half interest in and to all
minerals, mineral deposits, oil, gas, and other hydrocarbon
substance of every kind and character contained in or upon said
land, together with rights incidental to the development of the
same, as reserved by California-Western States Life Insurance
Company, a corporation, in Deed dated December 17, 1946, recorded
January 20, 1947 in Book 1228, page 373, Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonable value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties thereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al, recorded April 16, 1981, in book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 9: APN 291-110-03 (PORTION)
That portion of the Southwest quarter of Section 34, Township 22
South, Range 23 East, Mount Diablo Base and Meridian, County of
Tulare, State of California, according to the official plat
thereof, described as follows:
Beginning at the Southwest corner of said Section 34, thence East
6 chains; thence Northwesterly along the Swamp and Overflow line,
North 17 degrees West 20.8 chains to the West line of said
Section 34, thence South along said West line to the point of
beginning.
EXCEPT one-half interest in all oil, gas, minerals, and other
hydrocarbon substances located in or under Parcel No. 9, as
reserved by Angiola Ranch in Deed recorded March 8, 1963, in Book
2403, page 422, Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under and upon said property,
together with the right to go upon said property at any time
hereafter for the purposes of developing and extracting oil, gas,
minerals and other hydrocarbon substances from said land, and to
erect and construct upon said land at locations approved in
advance in writing by Grantee or his successor in interest which
approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators,
executors, and assigns, a reasonable price, based on its fair
market value for all land used or damaged or occupied by the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, for any of
said purposes. If the parties or their successors and assigns
cannot agree as to the damages or as to the reasonable value of
the land so occupied and used, the same shall be determined by
arbitration, each party, their successors or assigns selecting
one arbitrator, and the two so selected choosing a third
arbitrator, and the decision of any two of such arbitrators shall
be conclusive and binding upon the parties hereto, their heirs,
successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981 in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 10: APN 311-030-08 (portion)
The Northwest quarter of Section 3 and the West half of the
Southwest quarter of Section 3, Township 23 South, Range 23 East,
Mount Diablo Base and Meridian, County of Tulare, State of
California, according to the official plat thereof.
EXCEPTING from said Parcel 10 an undivided one-half interest in
and to all minerals, oil, gas, and other hydrocarbon substances
as reserved in the Deed from F.L. Purinton and Gertrude E.
Purinton, his wife, dated January 21, 1948 and recorded February
17, 1948 in Book 1283, page 244, File No. 4398, Official Records.
ALSO EXCEPTING one-fourth interest in all oil, gas, minerals, and
other hydrocarbons and substances as reserved by Angiola Ranch in
Deed recorded in Book 2403, page 422, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
or failure to act of such mineral rights owner in violation of
any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 11: APN 311-030-80 (portion)
The Northeast quarter of Section 3 and the East half of Southwest
quarter of Section 3, Township 23 South, Range 23 East, Mount
Diablo Base and Meridian, County of Tulare, State of California,
according to the official plat thereof.
EXCEPTING therefrom one-half of all oil, gas, and other
hydrocarbon substances and minerals in, under and that may be
produced from said land as reserved by Charles F. Harper Company,
a corporation, in Deed dated January 22, 1947, recorded March 3,
1947, in Book 1237, page 15, Official Records.
ALSO EXCEPT from said Parcel 11 one-fourth of all oil, gas, and
other hydrocarbon substances, as reserved in the Deed from F.L.
Purinton and Gertrude E. Purington, husband and wife, dated
January 21, 1948 and recorded February 17, 1948 in Book 1283,
page 244, File No. 4398, Official Records.
ALSO EXCEPTING one-eighth interest in all oil, gas, minerals, and
other hydrocarbon substances in or under Parcel No. 11, as
reserved by Angiola Ranch in Deed recorded March 8, 1963 in Book
2403, page 422, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantor,
his heirs, administrators, executors, and assigns, whomsoever
shall own the mineral rights at the time, shall make complete
payment to the grantee, his heirs, administrators, executors and
assigns, for any and all damages occasioned by the operations of
the grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "in addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 12: APN 311-030-07
The Southeast quarter of Section 3, Township 23 South, Range 23
East, Mount Diablo Base and Meridian, in the County of Tulare,
State of California, according to the official plat thereof.
EXCEPTING therefrom the East 66 feet thereof.
ALSO EXCEPTING therefrom an undivided one-half interest in all
oil, gas, and minerals in and under said lands as reserved in the
Deed from California Lands, Inc., to R.Y. Williams, dated
December 26, 1934, filed for record January 3, 1935, in Book 602,
page 370, Official Records of Tulare County, California.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
as reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, leasees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation of
any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 13: APN 311-020-05, 06, 18, and portion 17
The West half of Section 5, Township 23 South, Range 23 East,
Mount Diablo Base and Meridian, in the County of Tulare, State of
California, according to the official plat thereof.
EXCEPTING the Northeast quarter of the Northwest quarter of the
Northwest quarter of the Northwest quarter thereof.
ALSO EXCEPTING the Northwest quarter of the Northwest quarter of
the Northwest quarter of the Northwest quarter thereof.
ALSO EXCEPTING therefrom an undivided one-half interest in and to
all minerals, mineral deposits, oil, gas, and other hydrocarbon
substances of every kind and character contained in or upon said
land, together with the rights incidental to the development of
the same, as reserved by California-Western States Life Insurance
Company, a corporation, in Deed dated December 17, 1946, recorded
January 20, 1947 in Book 1228, page 373, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 14: APN 311-020-19, 20, 21, 22 and portion 17
The East half of Section 5; all of Section 8, Township 23 South,
Range 23 East, Mount Diablo Base and Meridian, County of Tulare,
State of California, according to the official plat thereof.
EXCEPTING from Section 5 the Northeast quarter of the Northeast
quarter of the Northeast quarter of the Northeast quarter and the
Southwest quarter of the Northeast quarter of the Northeast
quarter of the Northeast quarter.
EXCEPTING from said Section 8, the interest in a strip of land on
the Southerly end thereof, being a strip 123 links wide at the
West end and 98 links wide at the East end of said Section 8,
which was conveyed to Kings County Canal Company, a corporation,
for use as an irrigation ditch with 25 links in width adjoining
said ditch, by Deed dated April 20, 1906, recorded April 8, 1924
in Book 61, page 285, Official Records.
ALSO EXCEPTING therefrom the minerals within or underlying the
Northeast quarter of said Section 5, and the South half of the
Southwest quarter of said Section 8, as excepted in the Deed from
Annie L. Johnson and C. Walter Johnson, dated December 1, 1943,
recorded January 17, 1944 in Book 1058, page 144, Official
Records.
ALSO EXCEPT from the above portion of Section 5 and Section 8
except the South half of the Southwest quarter, an overriding one
percent net royalty of all the oil, gas, and other hydrocarbon
substances produced and saved as conveyed to Richard N. Oster and
wife in a Deed recorded October 16, 1943 in Book 1046, page 342,
Official Records.
ALSO EXCEPTING all oil, gas, petroleum and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrator shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 15: APN 311-020-08
The Southwest quarter of the Northeast quarter of the Northeast
quarter of the Northeast quarter of Section 5, Township 23 South,
Range 23 East, Mount Diablo Base and Meridian, in the County of
Tulare, State of California, according to the official plat
thereof.
EXCEPT the minerals within or underlying said land as excepted in
a Deed from Annie L. Johnson, et con. recorded January 17, 1944,
in Book 1058, page 144, Official Records.
PARCEL 16: APN 311-020-09
The Northeast quarter of the Northeast quarter of the Northeast
quarter of the Northeast quarter of Section 5, Township 23 South,
Range 23 East, Mount Diablo Base and Meridian, in the County of
Tulare, State of California, according to the official plat
thereof.
EXCEPT the minerals within or underlying said land as excepted in
a Deed from Annie L. Johnson, et con., recorded January 17, 1944
in Book 1058, page 144, Official Records.
PARCEL 17: APN 311-020-02
Swamp and Overflow Lots 1, 2, 3, 4, 7, 8, and 11 of Section 6;
the South half of the Northeast quarter of Section 6; the
Southeast quarter of the Northwest quarter of Section 6; the East
half of the Southwest quarter of Section 6, and the Southeast
quarter of Section 6, all in Township 23 South, Range 23 East,
Mount Diablo Base and Meridian, in the County of Tulare, State of
California, according to the official plat thereof.
EXCEPTING therefrom an undivided one-half interest in and to all
minerals, mineral deposits, oil, gas, and other hydrocarbon
substances of every kind and character contained in or upon said
land, together with rights incidental to the development of the
same, as reserved by California-Western States Life Insurance
Company, a corporation, in Deed dated December 17, 1946, recorded
January 20, 1947, in Book 1228, page 373, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances form said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 18: APN 311-020-15 and 16
Swamp and Overflow Lots 1, 2, 3, 4, 5, 6, 7, and 8 of Section 7;
the East half of the Northwest quarter of Section 7; the East
half of the Southwest quarter of Section 7; and the East half of
Section 7, Township 23 South, Range 23 East, Mount Diablo Base
and Meridian, in the County of Tulare, State of California,
according to the official plat thereof.
EXCEPTING therefrom an undivided one-half interest in and to all
minerals, mineral deposits, oil, gas, and other hydrocarbon
substances of every kind and character contained in or upon said
land, together with rights incidental to the development of the
same, as reserved by California-Western States Life Insurance
Company, a corporation, in Deed dated December 17, 1946, recorded
January 20, 1947, in Book 1228, page 373, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnity and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 19: APN 311-020-12
Section 9, Township 23 South, Range 23 East, Mount Diablo Base
and Meridian, in the County of Tulare, State of California,
according to the official plat thereof.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for al land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
damages or as to the reasonably value of the land so occupied and
used, the same shall be determined by arbitration, each party,
their successors or assigns selecting one arbitrator, and the two
so selected choosing a third arbitrator, and the decision of any
two of such arbitrators shall be conclusive and binding upon the
parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 20: APN 311-030-03, 05, 16, and 311-060-02
The North half of the Northeast quarter of Section 10, Lots 5, 6,
7, and 8 of Section 10 and Lot 3 of Section 15, all in Township
23 South, Range 23 East, Mount Diablo Base and Meridian, in the
County of Tulare, State of California, according to the official
plat thereof.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe lines, fences, canals, buildings and other
improvements of the grantee, his heirs, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns not agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 21: APN 311-030-02 and 17
The South half of the Northeast quarter, the Southeast quarter,
and Lots 2, 3, and 4, all in Section 10, Township 23 South, Range
23 East, Mount Diablo Base and Meridian, in the County of Tulare,
State of California, according to the official plat thereof.
EXCEPTING therefrom that portion of said land conveyed to Curtney
McCracken, a single man, in Deed recorded march 3, 1952, File No.
6344, Official Records, described as follows:
That portion lying Easterly of the Easterly line of the existing
100 foot right of way for the canal which runs Northeasterly and
Southwesterly through the East half of said Section 10.
ALSO EXCEPTING therefrom an undivided one-half interest in and to
all oil, gas, and minerals in and under said land, as reserved by
Ada R. Boyd, a widow, in Deed recorded October 22, 1975, File No.
42420, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe liens, fences, canals, buildings and other
improvements of the grantee, his heir, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
PARCEL 22: APN 311-030-04
Lot 1 in Section 10, Township 23 South, Range 23 East, Mount
Diablo Base and Meridian, in the County of Tulare, State of
California, according to the official plat thereof.
EXCEPTING therefrom an undivided one-half of all oil, gas, and
minerals in and under said land, as reserved by P.T. Burns and
Sarah Burns, in Deed recorded May 18, 1946, File No. 18354,
Official Records.
ALSO EXCEPTING therefrom an undivided one-half interest in and to
all oil, gas, and minerals in and under said land, as reserved by
Ada R. Boyd, a widow, in Deed recorded October 22, 1975, File No.
42420, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe liens, fences, canals, buildings and other
improvements of the grantee, his heir, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
NOTE: Said property is situated within the Tulare Lake Resource
Conservation District.
PARCEL 23: APN 311-010-02
Swamp and Overflow Lots 1, 4, 5, and 8 of Section 18; the East
half of the Northwest quarter of Section 18 and the East half of
the Southwest quarter of Section 18, and the East half of Section
18, Township 23 South, Range 23 East, Mount Diablo Base and
Meridian, County of Tulare, State of California, according to the
official plat thereof.
EXCEPTING therefrom an undivided one-half interest in and to all
minerals, mineral deposits, oil, gas and other hydrocarbon
substances of every kind and character contained in or upon said
land, together with rights incidental to the development of the
same, as reserved by California-Western States Life Insurance
Company, a corporation, in Deed dated December 17, 1946, recorded
January 20, 1947 in Book 1228, page 373, Official Records.
ALSO EXCEPTING all oil, gas, petroleum, and other hydrocarbon
substances and minerals located in, under, and upon said
property, together with the right to go upon said property at any
time hereafter for the purposes of developing and extracting oil,
gas, minerals and other hydrocarbon substances from said land,
and to erect and construct upon said land at locations approved
in advance in writing by Grantee or his successor in interest
which approval shall not be unreasonably withheld, any and all
equipment, derricks, telephone and telegraph lines, storage
tanks, pipelines, and any and all things necessary or incidental
to the exploration and development of said land for oil, gas, and
other hydrocarbon substances and minerals, together with the
rights of way of passage over, upon and across, and egress and
ingress to and from said land for any or all of the above
purposes at locations approved in advance in writing by grantee
or his successor in interest; which approval shall not be
unreasonably withheld; provided, however, that the grantor, his
heirs, administrators, executors, and assigns, whomsoever shall
own the mineral rights at the time, shall make complete payment
to the grantee, his heirs, administrators, executors and assigns,
for any and all damages occasioned by the operations of the
grantor, his heirs, administrators, executors, assigns and
lessees, under leases made after December 12, 1980, to crops,
wells, pumps, pipe liens, fences, canals, buildings and other
improvements of the grantee, his heir, administrators, executors
and assigns, a reasonable price, based on its fair market value
for all land used or damaged or occupied by the grantor, his
heirs, administrators, executors, assigns and lessees, under
leases made after December 12, 1980, for any of said purposes.
If the parties or their successors and assigns cannot agree as to
the damages or as to the reasonably value of the land so occupied
and used, the same shall be determined by arbitration, each
party, their successors or assigns selecting one arbitrator, and
the two so selected choosing a third arbitrator, and the decision
of any two of such arbitrators shall be conclusive and binding
upon the parties hereto, their heirs, successors and assigns.
As reserved by South Lake Farms, a corporation, in a Deed to
Floyd C. Williams, et al., recorded April 16, 1981, in Book 3856,
page 843, Official Records.
NOTE: Said Deed recites: "In addition, the grantor, its heirs,
successors, lessees and assigns, whomsoever shall own the mineral
rights at the time, shall indemnify and hold grantee, its heirs,
successors and assigns harmless from any loss, costs, expense or
damage caused by any complete or partial defeasance suffered by
the grantee, its heirs, successors or assigns resulting from any
act or failure to act of such mineral rights owner in violation
of any covenant or condition contained in that certain Deed dated
July 30, 1919, recorded in Book 280, page 238 of Deeds, Tulare
County Records."
EXHIBIT "B"
to PURCHASE AGREEMENT dated _______________ between
Southlake Acquisition Corporation and Jim Joseph Revocable Trust,
"Owner"; and Dana C. Hair "Buyer."
There is no Exhibit "B."
EXHIBIT "C"
to PURCHASE AGREEMENT dated _______________ between
Southlake Acquisition Corporation and Jim Joseph Revocable Trust,
"Owner"; and Dana C. Hair "Buyer."
There are no items in Exhibit "C."
EXHIBIT "D"
to PURCHASE AGREEMENT dated _______________ between
Southlake Acquisition Corporation and Jim Joseph Revocable Trust,
"Owner"; and Dana C. Hair "Buyer."
- - A copy of a Field Tenant Lease dated January 5, 1997,
between Southlake Acquisition Corporation ("Landlord") and
Phoenix Farming Company ("Tenant").
- - A copy of a Field Tenant Lease dated January 5, 1997,
between Southlake Acquisition Corporation ("Landlord") and Four
B's Farms ("Tenant").
- - A copy of an Agricultural Lease dated September 8, 1992 and
its amendment dated November 29, 1995 between Southlake
Acquisition Corporation ("Owner") and J.G. Boswell Company
("Tenant").
- - A copy of a letter dated February 14, 1997, from Brent
Bowen, Vice President, Southlake Acquisition Corporation to J.W.
Boswell, President, J.G. Boswell Company.
- - A copy of a Field Tenant Lease dated February 20, 1997,
between Southlake Acquisition Corporation ("Landlord") and
W. William Blanken dba HWB Farms ("Tenant").
FIELD TENANT LEASE
DATE: January 5, 1997
PARTIES: SOUTHLAKE ACQUISITION CORPORATION, a Nevada corporation,
(hereinafter referred to as "Landlord"); and PHOENIX FARMING COMPANY, a
general partnership (hereinafter referred to as "Tenant").
RECITALS:
A. The Landlord is the owner of approximately 3,533 acres,
more or less (hereinafter referred to as the "Real Property"),
located in the County of Tulare, State of California, and more
particularly described in Exhibit "A".
B. Landlord desires to lease to Tenant and Tenant desires to
lease from Landlord the Real Property, together with
appurtenances, subject to the terms and conditions contained
herein.
AGREEMENTS:
In consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Lease: The Landlord leases to Tenant and the Tenant leases
from Landlord, on the terms and conditions set forth in this
Lease, the Real Property, together with all appurtenances.
2. Term: The term of this Lease starts on the date hereof and
terminates upon the completion of the harvest of the crop planted
on the Real Property during the 1997 cropping season or December
31, 1997, whichever event occurs first.
3. Rent - Cotton: Tenant shall pay to the landlord an amount
per acre of cotton grown on the premises determined as
follows:
$55.00 per acre plus "Additional Rent" per acre
computed as follows:
Gross Income minus "Cost of Production",
minus "Marketing Costs", plus gin credits
(minus gin debits), minus $100, divided by
three.
Rent shall be paid as follows:
$55,602.25 on or before February 1, 1997
$55,602.25 on or before December 1, 1997
"Additional Rent" due (if any) on or before
February 1, 1998
"Cost of Production" is hereby stipulated at $825 per acre for
upland cotton and $835 per acre of pima cotton.
"Cost of Production" includes (among other costs) $55 per acre
for rent and $170 per acre for the cost and application of
herbicides, the cost and application of insecticides, and the
cost of hand weeding. If the actual costs for insecticides,
herbicides and hand weeding exceed or are less than $170 per
acre, the "Cost of Production" will be adjusted accordingly.
"Marketing Costs" will include costs such as freight, insurance,
and f.o.b. charges which Tenant incurs for his account in the
marketing of the crop from the premises.
Computations for additional rent due will be made separately for
upland and Pima cotton grown on the premises.
The yield for each type of cotton will be the average yield per
acre from each type of cotton grown on the premises.
The costs for insecticides, herbicides and hand weeding will be
the average per acre of such costs for all cotton grown on the
premises and shall not be segregated between pima and upland
cotton.
Tenant shall supply to Landlord figures for cotton yields, "Gross
Income", "Cost of Production", "Marketing Costs", and gin credits
or debits. Tenant shall also supply Landlord, upon its reasonable
request, with documents and records to substantiate those
figures.
Rent-Wheat: Tenant shall pay to Landlord an amount per acre of
wheat grown on the premises determined as follows:
"Wheat Revenue" shall be the gross amount received by
the tenant for wheat grown on the premises.
"Wheat Cost of Production" is hereby stipulated to be
$265 per acre.
"Wheat Profit" per acre is equal to the "Wheat Revenue"
per acre minus the "Wheat Cost of Production" per acre.
Tenant shall pay to Landlord and amount equal to
one-half the "Wheat Profit" per acre for "Wheat Profit"
per acre up to $50 per acre. "Wheat Profit" per acre
exceeding $50.00 per acre is for the account of the
Tenant.
No rental shall be due unless the "Wheat Revenue" per
acre exceeds the "Wheat Cost of Production" per acre.
Wheat rental due, if any, shall be paid by the Tenant to the
Landlord on or before September l, 1997.
Tenant shall supply Landlord with figures for wheat yields per
acre and "Wheat Revenue" per acre. Tenant shall also supply
Landlord, upon its reasonable request, with documents and records
to substantiate those figures.
Tenant shall supply to Landlord acreage planted to pima cotton,
upland cotton and wheat.
4. Government Programs. Upon written request of Tenant,
Landlord agrees to join in and cooperate with all governmental
agricultural plans and programs, both state and federal, which
may during the term hereof be applicable to the Real Property or
the farming operations upon the Real Property contemplated
hereby, and Landlord agrees to execute any and all writings which
may be required by governmental authorities in that regard.
Tenant shall be entitled to all crop allotments and/or histories
arising out of the farming operations on the Real Property during
the term hereof to the extent allowed by any such governmental
plan or program. Provided, however, under no circumstances shall
any crop allotment, crop history, or other program benefit be
severed from the Real Property.
5. Relationship of the Parties: The relationship of the
parties hereto is that Landlord and Tenant, and Landlord shall
not be deemed a partner or a joint venturer with Tenant by
reasons of the provisions of this Lease.
6. Use: The Real Property is leased to Tenant for the
planting, growing, and harvesting of wheat, barley, cotton and
any other crops customarily grown in the area. Tenant shall not
use, or permit to be used, any part of the Real Property for any
purpose other than other than those specified herein. All
operations incident to this use of the Real Property shall be
carried on according to the best courses of husbandry practised
in the vicinity, and Tenant shall use all reasonable means to
control the growth of noxious weeds and grasses at its sole
expense. Tenant shall also perform post-harvest discing and
ground preparation as is required by law and/or is consistent
with the highest standards of farming practices in the area.
7. Entry by Owner: Tenant shall permit Landlord, and
Landlord's agents and assigns, at all reasonable times, to enter
the Real Property, and to use the roads established on the Real
Property now or in the future, for the purposes of inspection,
compliance with the terms of this Lease, posting notices, and all
other lawful purposes. Tenant shall supply Landlord and its
agents and assigns with keys and other instruments necessary to
effect entry on the Real Property.
Tenant shall make and keep pertinent records of all
operations and conduct under this Lease and shall make them
available to Landlord and Landlord's agents and assigns at all
reasonable times for inspection.
8. Expenses: Tenant shall pay all costs and expenses in
connection with the planting, cultivating, irrigating, dusting,
spraying, harvesting, hauling, and all other costs incurred in
connection with the crops to be grown on the Real Property during
the term of this Lease.
9. Utilities: Tenant shall pay for all water, gas, heat,
light, power, telephone service, and for all other services to
the Real Property except as otherwise provided in this Lease.
10. Irrigation and Water Districts: During the term of this
Lease Tenant shall be entitled to receive whatever water is
available to Tenant from the facilities of the Angiola Water
District. Tenant shall pay, during the term of this Lease, to
the Angiola Water District Fifty Dollars ($50.00) per acre foot
for all water delivered to the Real Property by the Angiola Water
District and applied to land planted to cotton and shall pay
Twenty Five Dollars ($25.00) for all water delivered to the Real
Property by the Angiola Water District and applied to land
planted to wheat or other crops. Tenant shall pay for such water
within 10 days of the date of the invoice from the Angiola Water
District. Failure on the part of Tenant to pay for water within
that ten-day period may result in the discontinuance of water
deliveries. Tenant agrees that such discontinuance of water
delivery shall constitute no cause of action by Tenant against
Landlord or the Angiola Water District. Tenant agrees to pay the
penalties and interest assessed by the Angiola Water District on
late payments to the District.
11. Waste: Tenant shall not commit, or permit others to
commit, waste on the Real Property, or maintain a nuisance upon
the Real Property. Tenant accepts the Real Property in its
present condition and agrees on the last day of the term or upon
sooner termination of the Lease, to surrender the Real Property
in the same condition as when received.
12. Repairs: Tenant has inspected the premises and all
improvements thereon and acknowledges that the premises and
improvements are now in good and tenantable condition and thereby
waives any obligations on the Landlord's part to repair such
improvements and any and all rights to make improvements at
Landlord's expense under the provisions of Section 1942 of the
California Civil Code. All improvements now and hereafter placed
on the premises will be maintained by Tenant during the term
hereof at its own expense. At the expiration or sooner
termination of the term, Tenant will surrender the premises and
improvements in as good order and condition as when received by
Tenant, reasonable use and wear excepted.
13. Alterations: Tenant shall not make or permit to be made
any alterations on the Reap Property without first obtaining
Landlord's written consent. All alterations and additions shall
be made at the sole expense of the Tenant. Additions to or
alterations of the Reap Property shall become at once a part of
the Real Property and belong to the Landlord. Tenant shall keep
the Real Property free from any liens arising out of work
performed, material furnished, or any other obligations incurred
by Tenant.
14. Liability and Insurance: Tenant agrees to keep Landlord
free from all liability and claims for damages arising from any
injury from any cause to any person, including Tenant, or to
property of any kind belonging to anyone, including Tenant,
arising from Tenant's operations while in, upon, or in any way
connected with the Real Property, including the flooding of
public roads or neighboring lands because of improper drainage or
escaping irrigation waters, during the term of any occupancy
under this Lease. Tenant waives any and all claims against
Landlord for damage to person or property arising from any
reason. Tenant further agrees to take out and to keep in full
force and effect during the term of this Lease, at Tenant's
expense, a policy of public liability insurance for protection
against liability to the public arising as an incident to the use
of, or resulting from any action occurring in or about the Real
Property. Landlord shall be an additional named insured on the
policy, and the policy shall contain cross-liability
endorsements. The policy shall provide for combined single limit
coverage in an amount not less than One Million Dollars
($1,000,000.00). Upon demand by the Landlord, Tenant shall
deliver to Landlord a certificate of such insurance coverage.
Tenant further agrees to take out and keep in force during the
term of this Lease at its own expense, proper and adequate
workman's compensation insurance.
15. Remedies of Landlord on Default: Landlord shall have the
following remedies if Tenant commits a default. These remedies
are not exclusive; they are cumulative in addition to any
remedies now or later allowed by law.
A. Landlord can continue this Lease in full force and
effect, and the Lease will continue in effect as long as Landlord
does not terminate Tenant's right to possession, and Landlord
shall have the right to collect rent when due. During the period
Tenant is in default, Landlord can enter the premises and relet
them or any part of them, to third parties for the Tenant's
account. Tenant shall be liable immediately to Landlord for all
costs Landlord incurs in reletting the Real Property, including,
without limitation, broker's commissions, expenses of remodeling
the Real Property required by the reletting, and like costs.
Reletting can be for a period shorter or longer than the
remaining term of this Lease. Tenant shall pay to Landlord the
rent due under this Lease on the dates the rent is due, less the
rent the Landlord receives from any reletting. No act by Landlord
allowed by this paragraph shall terminate this Lease unless
Landlord notifies Tenant that the Landlord elects to terminate
this Lease. After Tenant's default and for as long as Landlord
does not terminate Tenant's right of possession of the Real
Property, if Tenant obtains Landlord's consent Tenant shall have
the right to assign or sublet its interest in this Lease, but
Tenant shall not be released from liability. Landlord's consent
toa propose assignment or subletting shall not be unreasonably
withheld.
B. Landlord can terminate Tenant's right to possession
of the Real Property at any time. No act by the Landlord other
than giving notice to Tenant shall terminate this Lease. Acts of
maintenance, efforts to relet the Real Property, or the
appointment of a receiver on the Landlord's initiative to protect
Landlord's interest under this Lease shall not constitute a
termination of Tenant's right to possession. On Termination,
Landlord has the right to recover from Tenant:
(i) The worth, at the time of the award, of the unpaid
rent that had been earned at the time of termination of this
Lease;
(ii) The worth, at the time of the award, of the amount
by which the unpaid rent that would have been earned after the
date of termination of this Lease until the time of the award
exceeds the amount of the loss of rent that Tenant proves could
have been reasonably avoided;
(iii)The worth, at the time of the award, of the amount
by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided; and
(iv) any other amount, and court costs, necessary to
compensate Landlord for all detriment proximately caused by
Tenant's default.
"The worth at the time of the award", as used in (i)
and (ii) of this paragraph, is to be computed by allowing
interest at the maximum rate an individual is allowed by law
charge. "The worth, at the time of the award", as referred to in
(iii) of this paragraph, is to be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%).
Landlord shall have the right to re-enter the premises
to take whatever acts, in the landlord's sole and absolute
discretion, are necessary to protect the crops and/or Real
Property and may take possession and/or ownership of all crops
and may apply any proceeds to amounts due from Tenant.
No re-entry or taking possession of the Real Property
by Landlord shall be construed as an election by him to terminate
this Lease unless a written notice of such an intention is given
to the Tenant or the Lease is declared to be terminated by a
court of competent jurisdiction.
All these rights shall be concurrent and cumulative and
are in addition to, and not in derogation of, all other rights
and remedies available to Landlord.
Nothing contained in this Lease, and no security or
guaranty of the Tenant that landlord holds now or in the future
under this Lease, shall in any way constitute a bar or defense to
an action by Landlord in unlawful detainer or for recovery of the
Real Property.
16. Landlord's Right to Cure Tenant's Defaults. If Tenant
should fail to pay any charges, tax, or other amounts herein
required to be paid by it when due, or in the event that Tenant
fails to pay any sums required to be paid hereunder to protect
Landlord's interest herein, the same may be paid by the Landlord
and all sums so expended by Landlord shall immediately become due
and payable from Tenant to Landlord and shall bear interest at
the rate specified in Paragraph 3. Landlord shall also have the
right, should Landlord deem it necessary for the protection of
Landlord's interest in any crop or produce being grown upon the
premises, to take immediate possession of the premises and to
mature, harvest and/or market the crops and produce growing
thereon for the benefit of both Landlord and Tenant, and any and
all costs or expenses incurred by the Landlord in so doing shall
be deemed to be amounts paid to cure a default of Tenant and
shall become immediately due and payable from Tenant to Landlord
pursuant to the terms of this Paragraph.
17. Security Agreement. Tenant hereby grants Landlord a
security interest in all crops growing or to be grown on the Real
Property during the term of this Lease including proceeds of said
crops to secure Tenants to secure Tenant's obligations under this
Lease, said obligations include but are not limited to the
payment of rent. Tenant agrees to execute any and all documents
reasonably necessary to memorialize and perfect said security
interest including, but not limited to two copies of UCC-1
Financing Statement in the form of Exhibit "B". Should
enforcement of the above described security interest be
necessary, Landlord shall have any and all remedies available
under California law.
18. Assignment and Subletting. Tenant shall not assign this
Lease, or any rights under it, and shall not sublet the entire or
any part of the Real Property, or any right or privilege
appurtenant to the Real Property, or permit any other person (the
agents and employees of Tenant excepted) to occupy or use the
entire or any portion of the Real Property, without first
obtaining Landlord's written consent. A consent to one
assignment, subletting, occupation, or use by another person is
not a consent to future assignment, subletting, occupation, or
use by the same or another person. An assignment or subletting
without Landlord's consent shall be void, and shall, at
Landlord's option, terminate this Lease. No interest of Tenant in
this Lease shall be assignable by operation of law without
Landlord's written consent.
19. Rights of Others. This Lease is subject to all existing
easements, servitudes, licenses, and rights-of-way for canals,
ditches, levees,, roads, highways, telephone, telegraph,
electric, power lines, railroads, pipelines, and other purposes
whether recorded or not.
20. Subordination. This Lease shall be subordinate to any
mortgages, or deeds of trust that may subsequently be placed on
the premises, to all advances made under them, to the interest on
all obligations secured by them, and to all renewals,
replacements, and extensions of them. PROVIDED, HOWEVER, the
mortgagee or beneficiary in those mortgages or deeds of trust
shall recognize the Lease of Tenant in the event of foreclosure
if Tenant is not in default under the terms of the Lease.
Subordination of the Tenant's interest is effective without
any further act of Tenant. Tenant shall from time to tome upon
Landlord's request execute and deliver any documents or
instruments that may be required by a lender or other third party
to effectuate any subordination. If Tenant fails to execute and
deliver any such documents or instruments, Tenant irrevocably
appoints Landlord as Tenant's special attorney in fact to deliver
any such document or instrument.
21. Disclaimer. Landlord makes no warranty of the soil
suitability for growing crops Tenant is authorized to grow under
this Lease.
22. Oil, Gas, and Mineral Rights. All rights in minerals,
oil, gases, and other hydrocarbons located on or under the Real
Property, and all hunting rights are particularly reserved to the
landlord and are particularly excepted from the property covered
by the terms of this Lease. Landlord agrees to reimburse Tenant
for any reasonable damages that Tenant sustains as a result of
and interference with the agricultural operations conducted on
the Real Property under the terms of this Lease arising from the
exploration, drilling, or mining operations or from hunting.
23. Condemnation. If a part of the Real Property is condemned
for a public or quasi-public use, and the remaining part is
capable of supporting an economical farming operation by Tenant,
this Lease shall terminate, as to the part taken, on the date
title vests in the condemnor.
The cash rent payable under this Lease shall be adjusted so
that Tenant shall be required to pay for the remainder of the
term only the portion of the rent that the value of the part
remaining after the condemnation bears to the value of the entire
Real Property at the date of valuation for condemnation purposes.
If the entire or a part of the Real Property is taken or
condemned, all compensation awarded on condemnation shall go to
the Landlord, with Tenant having no claim to compensation except
that Tenant shall be entitled to compensation for Tenant's share
of growing crops only.
All expenses necessary to restore fences and ditches and to
replace access roads lost by condemnation shall be borne by
Landlord.
If, after condemnation, the Real Property is not capable of
supporting a economical farming operation by Tenant, this Lease
shall terminate on the date title vests in the condemnor.
24. Compliance with Law. Tenant shall comply with all
requirements of all governmental authorities, enforced either now
or in the future, affecting Tenant's use of the Real Property.
25. Insolvency: Receiver. Any of the following shall
constitute a breach of this Lease by Tenant: (a) the appointment
of a receiver to take possession of all or substantially all of
Tenant's assets; or (b) a general assignment by Tenant for the
benefit of creditors; or ( c) an action taken or suffered by
Tenant under any insolvency or bankruptcy act.
26. Attorney's Fees. In any action or proceeding by either
party to enforce this Lease or any portion hereof, the prevailing
party shall be entitled to all costs incurred and to reasonable
attorneys' fees.
27. Surrender of Lease - Effect on Subleases. The voluntary
or other surrender by Tenant, or a mutual cancellation of this
Lease shall not work a merger, and shall, at Landlord's option,
terminate all existing subleases or sub-tenancies, or may, at
Landlord's option, operate as an assignment to him of any or all
subleases or subtenancies.
28. Crop Mortgages. All crop mortgages, encumbrances, or
liens given or suffered by Tenant on the crops grown on the Real
Property shall be for terms or periods not extending beyond the
term of this Lease and shall not encumber Landlord's share of the
crops. Landlord agrees to execute any crop waiver as to Tenant's
share of the crops which may be submitted by Tenant. All Liens
created by Tenant must be satisfied of record before the end of
the Lease term. If a mortgage or lien creates a cloud on the
Landlord's title, Tenant must pay all reasonable costs and
expenses, including attorneys' fees, for removal of the cloud.
29. Notice. Any notice to be given to either party by the
other shall be in writing and shall be served either personally
or by certified or registered mail addressed as follows:
If to Landlord: Southlake Acquisition Corporation
P.O. Box 1410
Davis, CA 95617
Attn: Brent Bowen
If to Tenant: Phoenix Farming Co.
1601 Skyway Drive, Ste. 225
Bakersfield, CA 93308
30. Waiver. The waiver by the Landlord of a breach of any
term, covenant, or condition contained in this Lease shall not be
treated as a waiver of any other term, covenant, or condition, or
breach thereof. The acceptance of rent by the Landlord shall not
be treated as a waiver of a previous breach by Tenant of any
term, covenant, or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted,
regardless of the Landlord's knowledge of a previous breach at
the time of acceptance of rent.
31. Legal Effect. All covenants of Tenant contained in this
Lease are expressly made conditions. The provisions of this Lease
shall, subject to the provisions on assignment, apply to and bind
the heirs, successors, executors, administrators, and assigns of
all parties to this Lease; and all parties to this Lease shall be
jointly and severally liable under it.
The titles or headings to the paragraphs of this Lease are not a
part of this Lease and shall have no effect on the construction
or interpretation of any part of this Lease.
32. Further Assurances. Each party agrees that it will
execute and acknowledge such documents reasonably requested by
the other to carry out the terms, purposes, and intent of this
Lease, including, without limitation: (1) a memorandum in
recordable form to give constructive notice of this Lease or any
of its terms; (2) contracts and commitments to sell crops grown
upon the Real Property; and (3) waivers of any interest to the
interest of the other party in such crops.
33. Time. Time is of the essence of this agreement.
The parties have executed this Lease effective as of the date and
year first above written.
Landlord: SOUTHLAKE ACQUISITION CORPORATION
a Nevada Corporation
By: /s/ Brent Bower
Its Vice President
Tenant: Phoenix Farming Co. by
By: Phoenix Farms, Inc.
/s/ President
1/8/97 EXHIBIT "A"
PHOENIX FARMING COMPANY - 1997
618.7 acres Part of Section 9 T23S R23E
645.5 acres Part of Section 18 T23S R23E
338.4 acres Part of W1/2 Section 20 T22S R23E
188.8 acres Part of E1/2 Section 20 T22S R23E
180.1 acres Part of SW1/4 Section 21 and
part of W1/2 Section 20 T22S R23E
77.5 acres Part of W1/2 SE1/4 Section 21 T22S R23E
75.0 acres Part of NW1/4 Section 27 T22S R23E
616.5 acres Part of Section 28 T22S R23E
162.2 acres Part of NE1/4 Section 31 T22S R23E
634.7 acres Part of Section 32 T22S R23E
EXHIBIT "B"
(California Uniform Commercial Code)
Blank UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC
FIELD TENANT LEASE
DATE: January 5, 1997
PARTIES: SOUTHLAKE ACQUISITION CORPORATION, a Nevada corporation,
(hereinafter referred to as "Landlord"); and FOUR BPS FARMS, a
general partnership (hereinafter referred to as "Tenant").
RECITALS:
A. The Landlord is the owner of approximately 3,538 acres,
more or less (hereinafter referred to as the "Real Property"),
located in the County of Tulare, State of California, and more
particularly described in Exhibit "A".
B. Landlord desires to lease to Tenant and Tenant desires
to lease from Landlord the Real Property, together with
appurtenances, subject to the terms and conditions contained
herein.
AGREEMENTS:
In consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Lease: The Landlord leases to Tenant and the Tenant
leases from Landlord, on the terms and conditions set forth in
this Lease, the Real Property, together with all appurtenances.
2. Term: The term of this Lease starts on the date hereof
and terminates upon the completion of the harvest of the crop
planted on the Real Property during the 1997 cropping season or
December 31, 1997, whichever event occurs first.
3. Rent - Cotton: Tenant shall pay to the landlord an
amount per acre of cotton grown on the premises
determined as follows:
$55.00 per acre plus "Additional Rent" per acre computed as
follows:
Gross Income minus "Cost of Production",
minus "Marketing Costs", plus gin credits
(minus gin debits), minus $ 100, divided by
three.
Rent shall be paid as follows:
$55,673.75 on or before February 1, 1997
$55,673.75 on or before December 1, 1997
"Additional Rent" due (if any) on or before
February 1, 1998
"Cost of Production" is hereby stipulated at $825 per acre for
upland cotton and $835 per acre of pima cotton.
"Cost of Production" includes (among other costs) $55 per acre
for rent and $170 per acre for the cost and application of
herbicides, the cost and application of insecticides, and the
cost of hand weeding. If the actual costs for insecticides,
herbicides and hand weeding exceed or are less than $170 per
acre, the "Cost of Production" will be adjusted accordingly.
"Marketing Costs" will include costs such as freight, insurance,
and f.o.b. charges which Tenant incurs for his account in the
marketing of the crop from the premises.
Computations for additional rent due will be made separately for
upland and Pima cotton grown on the premises.
The yield for each type of cotton will be the average yield per
acre from each type of cotton grown on the premises.
The costs for insecticides, herbicides and hand weeding will be
the average per acre of such costs for all cotton grown on the
premises and shall not be segregated between pima and upland
cotton.
Tenant shall supply to Landlord figures for cotton yields, "Gross
Income", "Cost of Production" "Marketing Costs", and gin credits
or debits. Tenant shall also supply Landlord, upon its reasonable
request, with documents and records to substantiate those
figures.
Rent-Wheat: Tenant shall pay to Landlord an amount per acre of
wheat grown on the premises determined as follows:
"Wheat Revenue" shall be the gross amount received by
the tenant for wheat grown on the premises.
"Wheat Cost of Production" is hereby stipulated to be
$265 per acre.
"Wheat Profit" per acre is equal to the "Wheat Revenue"
per acre minus the "Wheat Cost of Production" per acre.
Tenant shall pay to Landlord and amount equal to
one-half the "Wheat Profit" per acre for "Wheat Profit"
per acre up to $50 per acre. "Wheat Profit" per acre
exceeding S50.00 per acre is for the account of the
Tenant.
No rental shall be due unless the "Wheat Revenue" per
acre exceeds the "Wheat Cost of Production" per acre.
Wheat rental due, if any, shall be paid by the Tenant to the
Landlord on or before September 1, 1997.
Tenant shall supply Landlord with figures for wheat yields per
acre and "Wheat Revenue, per acre. Tenant shall also supply
Landlord, upon its reasonable request, with documents and records
to substantiate those figures.
Tenant shall supply to Landlord acreage planted to pima cotton,
upland cotton and wheat.
4. Government Programs. Upon written request of Tenant,
Landlord agrees to join in and cooperate with all governmental
agricultural plans and programs, both state and federal, which
may during the term hereof be applicable to the Real Property or
the farming operations upon the Real Property contemplated
hereby, and Landlord agrees to execute any and all writings which
may be required by governmental authorities in that regard.
Tenant shall be entitled to all crop allotments and/or histories
arising out of the farming operations on the Real Property during
the term hereof to the extent allowed by any such governmental
plan or program. Provided, however, under no circumstances shall
any crop allotment, crop history, or other program benefit be
severed from the Real Property.
5. Relationship of the Parties: The relationship of the
parties hereto is that Landlord and Tenant, and Landlord shall
not be deemed a partner or a joint venturer with Tenant by
reasons of the provisions of this Lease.
6. Use: The Real Property is leased to Tenant for the
planting, growing, and harvesting of wheat, barley, cotton and
any other crops customarily grown in the area. Tenant shall not
use, or permit to be used, any part of the Real Property for any
purpose other than other than those specified herein. All
operations incident to this use of the Real Property shall be
carried on according to the best courses of husbandry practised
in the vicinity, and Tenant shall use all reasonable means to
control the growth of noxious weeds and grasses at its sole
expense. Tenant shall also perform post-harvest discing and
ground preparation as is required by law and /or is consistent
with the highest standards of farming practices in the area.
7. Entry by Owner: Tenant shall permit Landlord, and
Landlord's agents and assigns, at all reasonable times, to enter
the Real Property, and to use the roads established on the Real
Property now or in the future, for the purposes of inspection,
compliance with the terms of this Lease, posting notices, and all
other lawful purposes. Tenant shall supply Landlord and its
agents and assigns with keys and other instruments necessary to
effect entry on the Real Property.
Tenant shall make and keep pertinent records of all
operations and conduct under this Lease and shall make them
available to Landlord and Landlord's agents and assigns at all
reasonable times for inspection.
8. Expenses: Tenant shall pay all costs and expenses in
connection with the planting, cultivating, irrigating, dusting,
spraying, harvesting, hauling, and all other costs incurred in
connection with the crops to be grown on the Real Property during
the term of this Lease.
9. Utilities: Tenant shall pay for all water, gas, heat,
light, power, telephone service, and for all other services to
the Real Property except as otherwise provided in this Lease.
10. Irrigation and Water Districts: During the term of this
Lease Tenant shall be entitled to receive whatever water is
available to Tenant from the facilities of the Angiola Water
District. Tenant shall pay, during the term of this Lease, to the
Angiola Water District Fifty Dollars ($50.00) per acre foot for
all water delivered to the Real Property by the Angiola Water
District and applied to land planted to cotton and shall pay
Twenty Five Dollars ($25.00) for all water delivered to the Real
Property by the Angiola Water District and applied to land
planted to wheat or other crops . Tenant shall pay for such water
within 10 days of the date of the invoice from the Angiola Water
District. Failure on the part of Tenant to pay for water within
that ten-day period may result in the discontinuance of water
deliveries. Tenant agrees that such discontinuance of water
delivery shall constitute no cause of action by Tenant against
Landlord or the Angiola Water District. Tenant agrees to pay the
penalties and interest assessed by the Angiola Water District on
late payments to the District.
11. Waste: Tenant shall not commit, or permit others to
commit, waste on the Real Property, or maintain a nuisance upon
the Real Property. Tenant accepts the Real Property in its
present condition and agrees on the last day of the term or upon
sooner termination of the Lease, to surrender the Real Property
in the same condition as when received.
12. Repairs: Tenant has inspected the premises and all
improvements thereon and acknowledges that the premises and
improvements are now in good and tenantable condition and thereby
waives any obligations on the Landlord's part to repair such
improvements and any and all rights to make improvements at
Landlord's expense under the provisions of Section 1942 of the
California Civil Code. All improvements now and hereafter placed
on the premises will be maintained by Tenant during the term
hereof at its own expense. At the expiration or sooner
termination of the term, Tenant will surrender the premises and
improvements in as good order and condition as when received by
Tenant, reasonable use and wear excepted.
13. Alterations: Tenant shall not make or permit to be made
any alterations on the Reap Property without first obtaining
Landlord's written consent. All alterations and additions shall
be made at the sole expense of the Tenant. Additions to or
alterations of the Reap Property shall become at once a part of
the Real Property and belong to the Landlord. Tenant shall keep
the Real Property free from any liens arising out of work
performed, material furnished, or any other obligations incurred
by Tenant.
14. Liability and Insurance: Tenant agrees to keep Landlord free
from all liability and claims for damages arising from any injury
from any cause to any person, including Tenant, or to property of
any kind belonging to anyone, including Tenant, arising from
Tenant's operations while in, upon, or in any way connected with
the Real Property, including the flooding of public roads or
neighboring lands because of improper drainage or escaping
irrigation waters, during the term of any occupancy under this
Lease. Tenant waives any and all claims against Landlord for
damage to person or property arising from any reason. Tenant
further agrees to take out and to keep in full force and effect
during the term of this Lease, at Tenant's expense, a policy of
public liability insurance for protection against liability to
the public arising as an incident to the use of, or resulting
from any action occurring in or about the Real Property. Landlord
shall be an additional named insured on the policy, and the
policy shall contain cross-liability endorsements. The policy
shall provide for combined single limit coverage in an amount not
less than One Million Dollars ($1,000,000.00). Upon demand by the
Landlord, Tenant shall deliver to Landlord a certificate of such
insurance coverage. Tenant further agrees to take out and keep in
force during the term of this Lease at its own expense, proper
and adequate workman's compensation insurance.
15. Remedies of Landlord on Default: Landlord shall have
the following remedies if Tenant commits a default. These
remedies are not exclusive; they are cumulative in addition to
any remedies now or later allowed by law.
A. Landlord can continue this Lease in full force and
effect, and the Lease will continue in effect as long as Landlord
does not terminate Tenant's right to possession, and Landlord
shall have the right to collect rent when due. During the period
Tenant is in default, Landlord can enter the premises and relet
them or any part of them, to third parties for the Tenant's
account. Tenant shall be liable immediately to Landlord for all
costs Landlord incurs in reletting the Real Property, including,
without limitation, broker's commissions, expenses of remodeling
the Real Property required by the reletting, and like costs.
Reletting can be for a period shorter or longer than the
remaining term of this Lease. Tenant shall pay to Landlord the
rent due under this Lease on the dates the rent is due, less the
rent the Landlord receives from any reletting. No act by Landlord
allowed by this paragraph shall terminate this Lease unless
Landlord notifies Tenant that the Landlord elects to terminate
this Lease. After Tenant's default and for as long as Landlord
does not terminate Tenant's right of possession of the Real
Property, if Tenant obtains Landlord's consent Tenant shall have
the right to assign or sublet its interest in this Lease, but
Tenant shall not be released from liability. Landlord's consent
toa propose assignment or subletting shall not be unreasonably
withheld.
B. Landlord can terminate Tenant's right to
possession of the Real Property at any time. No act by the
Landlord other than giving notice to Tenant shall terminate this
Lease. Acts of maintenance, efforts to relet the Real Property,
or the appointment of a receiver on the Landlord's initiative to
protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession. On Termination,
Landlord has the right to recover from Tenant:
(i) The worth, at the time of the award, of the unpaid
rent that had been earned at the time of termination of this
Lease;
(ii) The worth, at the time of the award, of the amount
by which the unpaid rent that would have been earned after the
date of termination of this Lease until the time of the award
exceeds the amount of the loss of rent that Tenant proves could
have been reasonably avoided;
(iii)The worth, at the time of the award, of the amount
by which the unpaid rent for the balance of the term after the
time of award exceeds the amount of the loss of rent that Tenant
proves could have been reasonably avoided; and
(iv) any other amount, and court costs, necessary to
compensate Landlord for all detriment proximately caused by
Tenant's default.
"The worth at the time of the award", as used in (i)
and (ii) of this paragraph, is to be computed by allowing
interest at the maximum rate an individual is allowed by law
charge. "The worth, at the time of the award", as referred to in
(iii) of this paragraph, is to be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%).
Landlord shall have the right to re-enter the premises
to take whatever acts, in the landlord's sole and absolute
discretion, are necessary to protect the crops and/or Real
Property and may take possession and/or ownership of all crops
and may apply any proceeds to amounts due from Tenant.
No re-entry or taking possession of the Real Property
by Landlord shall be construed as an election by him to terminate
this Lease unless a written notice of such an intention is given
to the Tenant or the Lease is declared to be terminated by a
court of competent jurisdiction.
All these rights shall be concurrent and cumulative and
are in addition to, and not in derogation of, all other rights
and remedies available to Landlord.
Nothing contained in this Lease, and no security or
guaranty of the Tenant that landlord holds now or in the future
under this Lease, shall in any way constitute a bar or defense to
an action by Landlord in unlawful detainer or for recovery of the
Real Property.
16. Landlord's Right to Cure Tenant's Defaults. If Tenant
should fail to pay any charges, tax, or other amounts herein
required to be paid by it when due, or in the event that Tenant
fails to pay any sums required to be paid hereunder to protect
Landlord's interest herein, the same may be paid by the Landlord
and all sums so expended by Landlord shall immediately become due
and payable from Tenant to Landlord and shall bear interest at
the rate specified in Paragraph 3. Landlord shall also have the
right, should Landlord deem it necessary for the protection of
Landlord's interest in any crop or produce being grown upon the
premises, to take immediate possession of the premises and to
mature, harvest and/or market the crops and produce growing
thereon for the benefit of both Landlord and Tenant, and any and
all costs or expenses incurred by the Landlord in so doing shall
be deemed to be amounts paid to cure a default of Tenant and
shall become immediately due and payable from Tenant to Landlord
pursuant to the terms of this Paragraph.
17. Security Agreement. Tenant hereby grants Landlord a
security interest in all crops growing or to be grown on the Real
Property during the term of this Lease including proceeds of said
crops to secure Tenants to secure Tenant's obligations under this
Lease, said obligations include but are not limited to the
payment of rent. Tenant agrees to execute any and all documents
reasonably necessary to memorialize and perfect said security
interest including, but not limited to two copies of UCC-1
Financing Statement in the form of Exhibit "B". Should
enforcement of the above described security interest be
necessary, Landlord shall have any and all remedies available
under California law.
18. Assignment and Subletting. Tenant shall not assign this
Lease, or any rights under it, and shall not sublet the entire or
any part of the Real Property, or any right or privilege
appurtenant to the Real Property, or permit any other person (the
agents and employees of Tenant excepted) to occupy or use the
entire or any portion of the Real Property, without first
obtaining Landlord's written consent. A consent to one
assignment, subletting, occupation, or use by another person is
not a consent to future assignment, subletting, occupation, or
use by the same or another person. An assignment or subletting
without Landlord's consent shall be void, and shall, at
Landlord's option, terminate this Lease. No interest of Tenant in
this Lease shall be assignable by operation of law without
Landlord's written consent.
19. Rights of Others. This Lease is subject to all existing
easements, servitudes, licenses, and rights-of-way for canals,
ditches, levees,, roads, highways, telephone, telegraph,
electric, power lines, railroads, pipelines, and other purposes
whether recorded or not.
20. Subordination. This Lease shall be subordinate to any
mortgages, or deeds of trust that may subsequently be placed on
the premises, to all advances made under them, to the interest on
all obligations secured by them, and to all renewals,
replacements, and extensions of them. PROVIDED, HOWEVER, the
mortgagee or beneficiary in those mortgages or deeds of trust
shall recognize the Lease of Tenant in the event of foreclosure
if Tenant is not in default under the terms of the Lease.
Subordination of the Tenant's interest is effective without
any further act of Tenant. Tenant shall from time to tome upon
Landlord's request execute and deliver any documents or
instruments that may be required by a lender or other third party
to effectuate any subordination. If Tenant fails to execute and
deliver any such documents or instruments, Tenant irrevocably
appoints Landlord as Tenant's special attorney in fact to deliver
any such document or instrument.
21. Disclaimer. Landlord makes no warranty of the soil
suitability for growing crops Tenant is authorized to grow under
this Lease.
22. Oil, Gas, and Mineral Rights. All rights in minerals,
oil, gases, and other hydrocarbons located on or under the Real
Property, and all hunting rights are particularly reserved to the
landlord and are particularly excepted from the property covered
by the terms of this Lease. Landlord agrees to reimburse Tenant
for any reasonable damages that Tenant sustains as a result of
and interference with the agricultural operations conducted on
the Real Property under the terms of this Lease arising from the
exploration, drilling, or mining operations or from hunting.
23. Condemnation. If a part of the Real Property is
condemned for a public or quasi-public use, and the remaining
part is capable of supporting an economical farming operation by
Tenant, this Lease shall terminate, as to the part taken, on the
date title vests in the condemnor.
The cash rent payable under this Lease shall be adjusted so
that Tenant shall be required to pay for the remainder of the
term only the portion of the rent that the value of the part
remaining after the condemnation bears to the value of the entire
Real Property at the date of valuation for condemnation purposes.
If the entire or a part of the Real Property is taken or
condemned, all compensation awarded on condemnation shall go to
the Landlord, with Tenant having no claim to compensation except
that Tenant shall be entitled to compensation for Tenant's share
of growing crops only.
All expenses necessary to restore fences and ditches and to
replace access roads lost by condemnation shall be borne by
Landlord.
If, after condemnation, the Real Property is not capable of
supporting a economical farming operation by Tenant, this Lease
shall terminate on the date title vests in the condemnor.
24. Compliance with Law. Tenant shall comply with all
requirements of all governmental authorities, enforced either now
or in the future, affecting Tenant's use of the Real Property.
25. Insolvency: Receiver. Any of the following shall
constitute a breach of this Lease by Tenant: (a) the appointment
of a receiver to take possession of all or substantially all of
Tenant's assets; or (b) a general assignment by Tenant for the
benefit of creditors; or ( c) an action taken or suffered by
Tenant under any insolvency or bankruptcy act.
26. Attorney's Fees. In any action or proceeding by either
party to enforce this Lease or any portion hereof, the prevailing
party shall be entitled to all costs incurred and to reasonable
attorneys' fees.
27. Surrender of Lease - Effect on Subleases. The voluntary
or other surrender by Tenant, or a mutual cancellation of this
Lease shall not work a merger, and shall, at Landlord's option,
terminate all existing subleases or sub-tenancies, or may, at
Landlord's option, operate as an assignment to him of any or all
subleases or subtenancies.
28. Crop Mortgages. All crop mortgages, encumbrances, or
liens given or suffered by Tenant on the crops grown on the Real
Property shall be for terms or periods not extending beyond the
term of this Lease and shall not encumber Landlord's share of the
crops. Landlord agrees to execute any crop waiver as to Tenant's
share of the crops which may be submitted by Tenant. All Liens
created by Tenant must be satisfied of record before the end of
the Lease term. If a mortgage or lien creates a cloud on the
Landlord's title, Tenant must pay all reasonable costs and
expenses, including attorneys' fees, for removal of the cloud.
29. Notice. Any notice to be given to either party by the
other shall be in writing and shall be served either personally
or by certified or registered mail addressed as follows:
If to Landlord: Southlake Acquisition Corporation
P.O. Box 1410
Davis, CA 95617
Attn: Brent Bowen
If to Tenant: Four B's Farms
1601 Skyway Drive, Ste. 225
Bakersfield, CA 93308
30. Waiver. The waiver by the Landlord of a breach of any
term, covenant, or condition contained in this Lease shall not be
treated as a waiver of any other term, covenant, or condition, or
breach thereof. The acceptance of rent by the Landlord shall not
be treated as a waiver of a previous breach by Tenant of any
term, covenant, or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted,
regardless of the Landlord's knowledge of a previous breach at
the time of acceptance of rent.
31. Legal Effect. All covenants of Tenant contained in this
Lease are expressly made conditions. The provisions of this Lease
shall, subject to the provisions on assignment, apply to and bind
the heirs, successors, executors, administrators, and assigns of
all parties to this Lease; and all parties to this Lease shall be
jointly and severally liable under it.
The titles or headings to the paragraphs of this Lease are not a
part of this Lease and shall have no effect on the construction
or interpretation of any part of this Lease.
32. Further Assurances. Each party agrees that it will
execute and acknowledge such documents reasonably requested by
the other to carry out the terms, purposes, and intent of this
Lease, including, without limitation: (1) a memorandum in
recordable form to give constructive notice of this Lease or any
of its terms; (2) contracts and commitments to sell crops grown
upon the Real Property; and (3) waivers of any interest to the
interest of the other party in such crops.
33. Time. Time is of the essence of this agreement.
The parties have executed this Lease effective as of the date and
year first above written.
Landlord: SOUTHLAKE ACQUISITION CORPORATION
a Nevada Corporation
By: /s/ Brent Bowen
Its Vice President
Tenant: Farm B's Farm
By: /s/
1/8/97 EXHIBIT "A"
FOUR B's FARMS-1997
613.4 acres Part of Section 4 T23S R23E
155.3 acres Part of SE1/4 Section 5 T23S R23E
312.7 acres Part of N1/2 Section 5 T23S R23E
293.9 acres Part of S1/2 Section 6 T23S R23E
579.9 acres Part of Section 7 T23S R23E
589.1 acres Part of Section 8 T23S R23E
148.0 acres Part of SW1/4 Section 27 T22S R23E
566.0 acres Part of Section 33 T22S R23E
279.8 acres Part of W1/2 Section 34 T22S R23E
EXHIBIT "B"
(California Uniform Commercial Code)
Blank UNIFORM COMMERCIAL CODE - FINANCING STATEMENT - FORM UCC-1
AGRICULTURAL LEASE
THIS LEASE, made and entered into this 8th day of September,
1992, by and between SOUTHLAKE ACQUISITION CO., hereinafter
called OWNER, and J.G. BOSWELL COMPANY, a California Corporation,
hereinafter called TENANT.
WITNESSETH
That the Owner hereby leases to the Tenant and the Tenant
hereby leases from the Owner that certain real property
("Premises") situated and located in the County of Kings, State
of California, and more particularly described as follows, to
wit:
The Northeast Quarter (NE1/4) of Sec. 11,
Township Twenty-Three South (23S), Range
Twenty-Two East (22E), M.D.B.&M.
All of of Sec. 12, Township Twenty-Three
South (23S), Range Twenty-Two East (22E),
M.D.B.&M.
1. The term of this lease shall be from August 15, 1992, to
December 20, 1995, with the understanding that the NE
quarter of Sec. 11 will be available upon conclusion of
harvest or December 30, 1992, whichever comes first.
2. The Premises are leased to Tenant for agricultural purposes
only, and for the purpose of growing cotton, barley, wheat
or such other annual crops as tenant in its sole discretion
shall determine.
3. Tenant will pay to Owner for the use and occupation of the
Premises, as follows:
a. $75 per-farmed-acre when cotton is grown
b. $40 per-farmed-acre when seed alfalfa is grown
c. $20 per-farmed-acre when grain or safflower are grown
Said rental payment shall be made on or about March 15 each
year. Tenant shall each year review all factors affecting
the profitability of this Lease, including but not limited
to, yield, the price received for the crop grown, water
supply and cost thereof, all farming expenses attributable
to such crop and any other factors bearing upon such
profitability. Based upon such review Tenant may, in its
sole discretion, pay Owner a profitability bonus of up to
100% of the cash rent due Owner under this Lease.
4. Should the rented premises be flooded so that Tenant is
prevented from planting any crop or a planted crop is
destroyed by flood or other act of God, Owner shall not be
entitled to any rental payment for said rented premise.
5. Owner will supply up to 2.75 acre feet per acre for the
gross farmable acres. At least 2.0 acre feet per acre will
be available during the crop irrigation season which is
normally from June 1 to September 10. Tenant will pay Owner
$50 per acre foot delivered to the field.
6. If less than 2.75 acre feet per acre is available, Tenant
has the option to reduce the acreage farmed until 2.75 acre
feet per acre is available.
7. Tenant agrees to pay for all costs and expenses of the
farming, planting, seed, irrigation and harvesting of any
and all crops planted and/or harvested and any other costs
or charges incident to raising and harvesting said crops on
the Premises hereby leased, all at his own cost and expense.
Owner will be responsible for all taxes and/or assessments
levied against the Premises.
8. Tenant agrees to farm any crops planted on said land in a
good, farmer-like manner and in accordance with the usual
farming practices in the neighborhood and will not permit
any damages to said premises or suffer the same to be done
by another, all at his own cost and expense.
9. That, in the event Owner brings an action at law against
Tenant to enforce the payment of any amount due or to
enforce any of the terms hereof or in the event of the
commencement of a summary action under the unlawful detainer
laws of the State of California for the forfeiture of this
lease and possessions of the demised premises, then the
Tenant agrees to pay Owner reasonable attorney's fees to be
fixed by the Court.
10. Owner and any of its agents or representatives shall, at
reasonable times, have the right to freely go on the
premises.
11. Owner agrees to cooperate with Tenant in executing any
document required by any agricultural program that may be
promulgated by the United States Government or any other
governmental agency.
12. The failure on the part of the Owner to take any action
against Tenant by reason of any particular breach of any of
the terms, covenants and conditions of this lease on the
part of the Tenant shall not be deemed in any way a waiver
of any other or subsequent breach on the part of any or all
of the covenants and conditions of this lease.
13. Tenant agrees that the Owner may lease said premises or any
part thereof, without having first obtained the written
consent of Tenant, for the purpose of drilling for oil, gas
or other mineral products. Tenant hereby waives and
terminates any rights he may have acquired by this lease and
in and to any revenues from such above mentioned mineral
lease or leases. In case such lease is entered into and
drilling is started on the premises, any damage done to the
crops growing thereon shall be adjusted with the Tenant so
that Tenant may be compensated for any damage so suffered.
Should any portion of the Premises be devoted to an oil or
gas well site or used for any other mineral production
purpose so that the portion so devoted may not be used for
agricultural purposes, then the rental specified, in
Paragraph 2 hereof, shall be adjusted by subtracting from
the total rent specified the sum of the per-acre rental for
the crop grown, times the acres devoted to mineral
production.
14. Owner will not claim rights to or in any water, water system
or service therefrom which may be used or provided by
Tenant.
15. Any notice or demand required or permitted under this lease
shall be deemed duly given if deposited in the United States
mail, with postage prepaid, addressed as follows:
OWNER: SOUTHLAKE ACQUISITION CO.
P.O. BOX 1410
DAVIS, CA 95617
TENANT: J.G. BOSWELL COMPANY
POST OFFICE BOX 457
CORCORAN, CALIFORNIA 93212
16. This Lease shall inure to the benefit of and be binding upon
the heirs, executors, administrators, successors and assigns
of the respective parties hereto.
IN WITNESS WHEREOF, the Owner has caused this Lease to be
executed in triplicate and Tenant has hereunto set his hand.
OWNER: SOUTHLAKE ACQUISITION CO.
By: /s/ Brent Bowen
Vice President
By: ____________________
TENANT: J.G. BOSWELL COMPANY
By: /s/ Gary Gamble
Vice President
By: /s/
Secretary
AMENDMENT TO LEASE
This Amendment to Lease is entered into by and between J.G.
BOSWELL COMPANY ("Lessee") and SOUTHLAKE ACQUISITION CORPORATION
("Lessor") as of the day and date last written hereon.
RECITALS
WHEREAS, Lessor and Lessee heretofore entered into that
certain Lease dated September 8, 1992, and
WHEREAS, Lessor and Lessee desire to amend said lease in the
following particulars,
NOW THEREFORE, It is Hereby Agreed by and between the
parties hereto as follows:
1. The term of said aforementioned Lease is hereby
extended for four (4) years beginning on January 1,
1996 through and including December 31, 1999.
2. Except as specifically amended hereby, all other terms
and conditions of said Lease shall remain the same.
IN WITNESS WHEREOF, the parties hereto have executed this
Amendment to Lease as of 11/29/95.
LESSEE:
J.G. BOSWELL COMPANY
By: /s/ Gary Gamble
Vice President and
Chief Operating Officer
By: /s/ John P. Rodrigues
Manager, California Ranching
LESSOR:
SOUTHLAKE ACQUISITION CORPORATION
By: /s/ Brent Bowen, V.P.
SOUTHLAKE ACQUISITION CORPORATION
P.O. Box 1410
Davis, California 95617
(916) 753-5695
February 14, 1997
Mr. J. W. Boswell, President
J.G. Boswell Company
101 West Walnut Street
Pasadena, California 91103
Dear Mr. Boswell:
This is further to our telephone conversation of February 11,
1997 concerning property leased by Southlake Acquisition
Corporation to the J.G. Boswell Company. A copy of the lease and
its amendment, dated September 8, 1992 and November 29, 1995,
respectively, are enclosed.
In that conversation I reported that Southlake and Dana Hair are
presently negotiating the sale to Mr. Hair of the property which
Southlake currently owns known as the White Ranch, and which
contains the leased property. It is my understanding of our
conversation that, in the event of a sale of the White Ranch to
Mr. Hair (or his assigns) during the calendar year 1997, the
Boswell Company will cancel and terminate the subject lease as of
December 31, 1997.
If this is also your understanding of that conversation, I'll
appreciate your signing the enclosed copy of this letter and
returning it to me.
Very truly,
/s/ Brent Bowen
Brent Bowen, Vice President,
Southlake Acquisition Corporation
/s/ J.W. Boswell 2-26-97
J.W. Boswell date
Encl.
FIELD TENANT LEASE
DATE: February 20, 1997
PARTIES: SOUTHLAKE ACQUISITION CORPORATION, a Nevada
corporation, (hereinafter referred to as "Landlord"); and, H.
WILLIAM BLANKEN, dba HWB FARMS (hereinafter referred to as
"Tenant").
RECITALS:
A. The Landlord is the owner of approximately 1,620 acres,
more or less (hereinafter referred to as the "Real Property"),
located in the County of Tulare, State of California, and more
particularly described in Exhibit "A".
B. Landlord desires to lease to Tenant and Tenant desires
to lease from Landlord the Real Property, together with
appurtenances, subject to the terms and conditions contained
herein.
AGREEMENTS:
In consideration of the mutual covenants contained herein,
the parties agree as follows:
1. Lease: The Landlord leases to Tenant and the Tenant
leases from Landlord, on the terms and conditions set forth in
this Lease, the Real Property, together with all appurtenances.
2. Term: The term of this Lease starts on the date hereof
and terminates upon December 31, 1997, or the close of escrow in
the event of sale of the Real Property whichever is the earlier.
3. Rent: Tenant shall pay to the Landlord, as rental for
the Real Property, without deduction or set-off, at such places
as may be designated from time to time by Landlord, 33 l/3%
(thirty three and one-third per cent) of the gross proceeds of
alfalfa and cotton, and 12 1/2% (twelve and one-half per cent) of
the gross proceeds of all wheat and barley produced on the Real
Property during the term hereof. Such rental shall be paid to the
Landlord and mailed to the Landlord at P.O. Box 1410, Davis,
California 95617 within 10 days of the receipt by the Tenant of
any such proceeds.
4. Government Programs. Upon written request of Tenant,
Landlord agrees to join in and cooperate with all governmental
agricultural plans and programs, both state and federal, which
may, during the term hereof, be applicable to the Real Property
or the farming operations upon the Real Property contemplated
hereby, and Landlord agrees to execute any and all writings which
may be required by governmental authorities in that regard.
Tenant shall be entitled to all crop allotments and/or histories
arising out of the farming operations on the Real Property during
the term hereof to the extent allowed by any such governmental
plan or program. Provided, however, that Tenant shall not be
entitled to receive any payments made subsequent to the
termination of this Lease under any governmental plan or program:
and provided further that under no circumstances shall any crop
allotment, crop history, or other program benefit be severed from
the Real Property.
5. Relationship of the Parties: The relationship of the
parties hereto is that Landlord and Tenant, and Landlord shall
not be deemed a partner or a joint venturer with Tenant by
reasons of the provisions of this Lease.
6. Use: The Real Property is leased to Tenant for the
planting, growing, and harvesting of wheat, barley, cotton and
any other crops customarily grown in the area. Tenant shall not
use, or permit to be used, any part of the Real Property for any
purpose other than other than those specified herein. All
operations incident to this use of the Real Property shall be
carried on according to the best courses of husbandry practiced
in the vicinity, and Tenant shall use all reasonable means to
control the growth of noxious weeds and grasses at its sole
expense. Tenant shall also perform post-harvest discing and
ground preparation as is required by law and /or is consistent
with the highest standards of farming practices in the area.
7. Entry by Owner: Tenant shall permit Landlord, and
Landlord's agents and assigns, at all reasonable times, to enter
the Real Property, and to use the roads established on the Real
Property now or in the future, for the purposes of inspection,
compliance with the terms of this Lease, posting notices, and all
other lawful purposes. Tenant shall supply Landlord and its
agents and assigns with keys and other instruments necessary to
effect entry on the Real Property.
Tenant shall make and keep pertinent records of all
operations and conducted under this Lease and shall make them
available to Landlord and Landlord's agents and assigns at all
reasonable times for inspection.
8. Expenses: Tenant shall pay all costs and expenses in
connection with the planting, cultivating, irrigating, dusting,
spraying, harvesting, hauling, and all other costs incurred in
correction with the crops to be grown on the Real Property during
the term of this Lease.
9. Utilities: Tenant shall pay for all water, gas, heat,
light, power, telephone service, and for all other services to
the Real Property except as otherwise provided in this Lease.
10. Irrigation and Water Districts: During the term of this
Lease Tenant shall be entitled to receive whatever water is
available to Tenant from the facilities of the Angiola Water
District. Tenant shall pay, during the term of this Lease, to the
Angiola Water District, Twenty Five Dollars ($25.00) per acre
foot for all water delivered to the Real Property by the Angiola
Water District during the term of this Lease. Tenant shall pay
for such water within 10 days of the date of the invoice from the
Angiola Water District.
Water from the source mentioned above shall be used only on the
Real Property and in the performance of the Tenant's obligations
under the Lease. Landlord assumes no responsibility to Tenant for
any water shortage from the facilities mentioned above and
assumes no responsibility for, and does not warrant, the quality
or quantity of the water supplied to the Real Property.
11. Waste: Tenant shall not commit, or permit others to
commit, waste on the Real Property, or maintain a nuisance upon
the Real Property. Tenant accepts the Real Property in its
present condition and agrees on the last day of the term or upon
sooner termination of the Lease, to surrender the Real Property
in the same condition as when received.
12. Repairs: Tenant shall be responsible for the day-to-day
repair and maintenance of the Real Property during the term of
this Lease, including, but not limited to, all fences, wells,
pumps, pipelines ditches, and roadways, and Tenant agrees to
maintain them in the same order and consition in which received,
ordinary wear and tear excepted. All minor repairs and
maintenance shall be at Tenant's cost and expense.
13. Alterations: Tenant shall not make or permit to be made
any alterations on the Real Property without first obtaining
Landlord's written consent. All alterations and additions shall
be made at the sole expense of the Tenant. Additions to or
alterations of the Real Property shall become at once a part of
the Real Property and belong to the Landlord. Tenant shall keep
the Real Property free from any liens arising out of work
performed, material furnished, or any other obligations incurred
by Tenant.
14. Liability and Insurance: Tenant agrees to keep Landlord
free from all liability and claims for damages arising from any
injury from any cause to any person, including Tenant, or to
property of any kind belonging to anyone, including Tenant,
arising from Tenant's operations while in, upon, or in any way
connected with the Real Property, including the flooding of
public roads or neighboring lands because of improper drainage or
escaping irrigation waters, during the term of any occupancy
under this Lease. Tenant waives any and all claims against
Landlord for damage to person or property arising from any
reason. Tenant further agrees to take out and to keep in full
force and effect during the term of this Lease, at Tenant's
expense, a policy of public liability insurance for protection
against liability to the public arising as an incident to the use
of, or resulting from any action occurring in or about the Real
Property. Landlord shall be an additional named insured on the
policy, and the policy shall contain cross-liability
endorsements. The policy shall provide for combined single limit
coverage in an amount not less than One Million Dollars
($1,000,000.00). Upon demand by the Landlord, Tenant shall
deliver to Landlord a certificate of such insurance coverage.
Tenant further agrees to take out and keep in force during the
term of this Lease at its own expense, proper and adequate
workman's compensation insurance.
15. Remedies of Landlord on Default: Landlord shall have
the following remedies if Tenant commits a default. These
remedies are not exclusive; they are cumulative in addition to
any remedies now or later allowed by law.
A. Landlord can continue this Lease in full force and
effect, and the Lease will continue in effect as long as Landlord
does not terminate Tenant's right to possession, and Landlord
shall have the right to collect rent when due. During the period
Tenant is in default, Landlord can enter the premises and relet
them or any part of them, to third parties for the Tenant's
account. Tenant shall be liable immediately to Landlord for all
costs Landlord incurs in reletting the Real Property, including,
without limitation, broker's commissions, expenses of remodeling
the Real Property required by the reletting, and like costs.
Reletting can be for a period shorter or longer than the
remaining term of this Lease. Tenant shall pay to Landlord the
rent due under this Lease on the dates the rent is due, less the
rent the Landlord receives from any reletting. No act by Landlord
allowed by this paragraph shall terminate this Lease unless
Landlord notifies Tenant that the Landlord elects to terminate
this Lease. After Tenant's default and for as long as Landlord
does not terminate Tenant's right of possession of the Real
Property, if Tenant obtains Landlord's consent Tenant shall have
the right to assign or sublet its interest in this Lease, but
Tenant shall not be released from liability. Landlord's consent
to a propose assignment or subletting shall not be unreasonably
withheld.
B. Landlord can terminate Tenant's right to
possession of the Real Property at any time. No act by the
Landlord other than giving notice to Tenant shall terminate this
Lease. Acts of maintenance, efforts to relet the Real Property,
or the appointment of a receiver on the Landlord's initiative to
protect Landlord's interest under this Lease shall not constitute
a termination of Tenant's right to possession. On Termination,
Landlord has the right to recover from Tenant:
(i) The worth, at the time of the award, of the unpaid
rent that had been earned at the time of termination of this
Lease;
(ii) The worth, at the time of the award, of the amount
by which the unpaid rent that would have been earned after the
date of termination of this Lease until the time of the award
exceeds the amount of the loss of rent that Tenant proves could
have been reasonably avoided;
(iii) The worth, at the time of the award, of the
amount by which the unpaid rent for the balance of the term after
the time of award exceeds the amount of the loss of rent that
Tenant proves could have been reasonably avoided; and
(iv) any other amount, and court costs, necessary to
compensate Landlord for all detriment proximately caused by
Tenant's default.
"The worth at the time of the award", as used in (i)
and (ii) of this paragraph, is to be computed by allowing
interest at the maximum rate an individual is allowed by law
charge. "The worth, at the time of the award", as referred to in
(iii) of this paragraph, is to be computed by discounting the
amount at the discount rate of the Federal Reserve Bank of San
Francisco at the time of the award, plus one percent (1%).
No re-entry or taking possession of the Real Property
by Landlord shall be construed as an election by him to terminate
this Lease unless a written notice of such an intention is given
to the Tenant or the Lease is declared to be terminated by a
court of competent jurisdiction.
All these rights shall be concurrent and cumulative and
are in addition to, and not in derogation of, all other rights
and remedies available to Landlord.
Nothing contained in this Lease, and no security or
guaranty of the Tenant that landlord holds now or in the future
under this Lease, shall in any way constitute a bar or defense to
an action by Landlord in unlawful detainer or for recovery of the
Real Property.
16. Landlord's Right to Cure Tenant's Defaults. If Tenant
should fail to pay any charges, tax, or other amounts herein
required to be paid by it when due, or in the event that Tenant
fails to pay any sums required to be paid hereunder to protect
Landlord's interest herein, the same may be paid by the Landlord
and all sums so expended by Landlord shall immediately become due
and payable from Tenant to Landlord and shall bear interest at
the rate specified in Paragraph 3. Landlord shall also have the
right, should Landlord deem it necessary for the protection of
Landlord's interest in any crop or produce being grown upon the
premises, to take immediate possession of the premises and to
mature, harvest and/or market the crops and produce growing
thereon for the benefit of both Landlord and Tenant, and any and
all costs or expenses incurred by the Landlord in so doing shall
be deemed to be amounts paid to cure a default of Tenant and
shall become immediately due and payable from Tenant to Landlord
pursuant to the terms of this Paragraph.
17. Security Agreement. Tenant hereby grants Landlord a
security interest in all crops growing or to be grown on the Real
Property during the term of this Lease including proceeds of said
crops to secure Tenants to secure Tenant's obligations under this
Lease, said obligations include but are not limited to the
payment of rent. Tenant agrees to execute any and all documents
reasonably necessary to memorialize and perfect said security
interest including, but not limited to two copies of UCC-1
Financing Statement in the form of Exhibit "B". Should
enforcement of the above described security interest be
necessary, Landlord shall have any and all remedies available
under California law.
18. Assignment and Subletting. Tenant shall not assign this
Lease, or any rights under it, and shall not sublet the entire or
any part of the Real Property, or any right or privilege
appurtenant to the Real Property, or permit any other person (the
agents and employees of Tenant excepted) to occupy or use the
entire or any portion of the Real Property, without first
obtaining Landlord's written consent. A consent to one
assignment, subletting, occupation, or use by another person is
not a consent to future assignment, subletting, occupation, or
use by the same or another person. An assignment or subletting
without Landlord's consent shall be void, and shall, at
Landlord's option, terminate this Lease. No interest of Tenant in
this Lease shall be assignable by operation of law without
Landlord's written consent.
19. Rights of Others. This Lease is subject to all existing
easements, servitudes, licenses, and rights-of-way for canals,
ditches, levees, roads, highways, telephone, telegraph, electric,
power lines, railroads, pipelines, and other purposes whether
recorded or not.
20. Subordination. This Lease shall be subordinate to any
mortgages, or deeds of trust that may subsequently be placed on
the premises, to all advances made under them, to the interest on
all obligations secured by them, and to all renewals,
replacements, and extensions of them. PROVIDED, HOWEVER, the
mortgagee or beneficiary in those mortgages or deeds of trust
shall recognize the Lease of Tenant in the event of foreclosure
if Tenant is not in default under the terms of the Lease.
Subordination of the Tenant's interest is effective without any
further act of Tenant. Tenant shall from time to time upon
Landlord's request execute and deliver any documents or
instruments that may be required by a lender or other third party
to effectuate any subordination. If Tenant fails to execute and
deliver any such documents or instruments, Tenant irrevocably
appoints Landlord as Tenant's special attorney in fact to deliver
any such document or instrument.
21. Disclaimer. Landlord makes no warranty of the soil
suitability for growing crops Tenant is authorized to grow under
this Lease.
22. Oil, Gas, and Mineral Rights. All rights in minerals,
oil, gases, and other hydrocarbons located on or under the Real
Property, and all hunting rights are particularly reserved to the
landlord and are particularly excepted from the property covered
by the terms of this Lease. Landlord agrees to reimburse Tenant
for any reasonable damages that Tenant sustains as a result of
and interference with the agricultural operations conducted on
the Real Property under the terms of this Lease arising from the
exploration, drilling, or mining operations or from hunting.
23. Condemnation. If a part of the Real Property is
condemned for a public or quasi-public use, and the remaining
part is capable of supporting an economical farming operation by
Tenant, this Lease shall terminate, as to the part taken, on the
date title vests in the condemnor.
The cash rent payable under this Lease shall be adjusted so
that Tenant shall be required to pay for the remainder of the
term only the portion of the rent that the value of the part
remaining after the condemnation bears to the value of the entire
Real Property at the date of valuation for condemnation purposes.
If the entire or a part of the Real Property is taken or
condemned, all compensation awarded on condemnation shall go to
the Landlord, with Tenant having no claim to compensation except
that Tenant shall be entitled to compensation for Tenant's share
of growing crops only.
All expenses necessary to restore fences and ditches and to
replace access roads lost by condemnation shall be borne by
Landlord.
If, after condemnation, the Real Property is not capable of
supporting a economical farming operation by Tenant, this Lease
shall terminate on the date title vests in the condemnor
24. Compliance with Law. Tenant shall comply with all
requirements of all governmental authorities, enforced either now
or in the future, affecting Tenant's use of the Real Property.
25. Insolvency; Receiver. Any of the following shall
constitute a breach of this Lease by Tenant: (a) the appointment
of a receiver to take possession of all or substantially all of
Tenant's assets; or (b) a general assignment by Tenant for the
benefit of creditors; or (c) an action taken or suffered by
Tenant under any insolvency or bankruptcy act.
26. Attorney's Fees. In any action or proceeding by either
party to enforce this Lease or any portion hereof, the prevailing
party shall be entitled to all costs incurred and to reasonable
attorneys' fees.
27. Surrender of Lease - Effect on Subleases. The voluntary
or other surrender by Tenant, or a mutual cancellation of this
Lease shall not work a merger, and shall, at Landlord's option,
terminate all existing subleases or sub-tenancies, or may, at
Landlord's option, operate as an assignment to him of any or all
subleases or subtenancies.
28. Crop Mortgages. All crop mortgages, encumbrances, or
liens given or suffered by Tenant on the crops grown on the Real
Property shall be for terms or periods not extending beyond the
term of this Lease and shall not encumber Landlord's share of the
crops. Landlord agrees to execute any crop waiver as to Tenant's
share of the crops which may be submitted by Tenant. All Liens
created by Tenant must be satisfied of record before the end of
the Lease term. If a mortgage or lien creates a cloud on the
Landlord's title, Tenant must pay all reasonable costs and
expenses, including attorneys' fees, for removal of the cloud.
29. Notice. Any notice to be given to either party by the
other shall be in writing and shall be served either personally
or by certified or registered mail addressed as follows:
If to Landlord: Southlake Acquisition Corporation
P.O. Box 1410
Davis, CA 95617
Attn: Brent Bowen
If to Tenant: H. William Blanken
HWB Farms
335 Richardson Way
Hanford, CA 93230
30. Waiver. The waiver by the Landlord of a breach of any
term, covenant, or condition contained in this Lease shall not be
treated as a waiver of any other term, covenant, or condition, or
breach thereof. The acceptance of rent by the Landlord shall not
be treated as a waiver of a previous breach by Tenant of any
term, covenant, or condition of this Lease, other than the
failure of Tenant to pay the particular rental so accepted,
regardless of the Landlord's knowledge of a previous breach at
the time of acceptance of rent.
31. Legal Effect. All covenants of Tenant contained in this
Lease are expressly made conditions. The provisions of this Lease
shall, subject to the provisions on assignment, apply to and bind
the heirs, successors, executors, administrators, and assigns of
all parties to this Lease; and all parties to this Lease shall be
jointly and severally liable under it. The titles or headings to
the paragraphs of this Lease are not a part of this Lease and
shall have no effect on the construction or interpretation of any
part of this Lease.
32. Further Assurances. Each party agrees that it will
execute and acknowledge such documents reasonably requested by
the other to carry out the terms, purposes, and intent of this
Lease, including, without limitation: (1) a memorandum in
recordable form to give constructive notice of this Lease or any
of its terms; (2) contracts and commitments to sell crops grown
upon the Real Property; and (3) waivers of any interest to the
interest of the other party in such crops.
33. Time. Time is of the essence of this agreement.
The parties have executed this Lease effective as of the date and
year first above written.
Landlord: SOUTHLAKE ACQUISITION CORPORATION,
a Nevada Corporation
By: /s/ Brent Bowen
Its Vice President
Tenant: By: /s/ H. William Blanken
EXHIBIT "A"
HWB Lease- 1997
All property described herein is located in the County of Tulare,
State of California:
35 acres Part of SE1/4 Section 27 T22S R23E
221 acres Part of E1/2 Section 34 T22S R23E
612 acres Part of Section 3 T23S R23E
299 acres Part of N1/2 Section 6 T23S R23E
310 acres Part of Wl/2 Section 10 T23S R23E
143 acres Part of E1/2 Section 10 T23S R23E
EXHIBIT "E"
to PURCHASE AGREEMENT dated ___________________ between
Southlake Acquisition Corporation and Jim Joseph Revocable Trust,
"Owner"; and Dana C. Hair "Buyer".
There are no items in Exhibit "E".
EXHIBIT "F"
to PURCHASE AGREEMENT dated _____________ between Southlake
Acquisition Corporation and Jim Joseph Revocable Trust, "Owner";
and Dana C. Hair "Buyer".
- - A copy of the Angiola Water District Restated Water
Distribution Agreement
- - A copy of a Fax Transmittal dated February 12, 1997 From Kevin
Johansen, Angiola Water District, to Brent Bowen, Southlake
Acquisition Corporation, describing portions of " the Property"
lying within the boundaries of the Tulare Lake Basin Water
Storage District and the Tulare Lake Drainage District.
- - A copy of the Short Term State Water Contract between Tulare
Lake Basin Water Storage District and Southlake Acquisition Corp.
for the period January 1, 1997 through December 31, 1998.
- - A copy of the Ninth Amended Rules and Regulations Governing the
Transmission of Water Under the Water Supply Contract Between the
State of California, Department of Water Resources and the Tulare
Lake Basin Water Storage District.
ANGIOLA WATER DISTRICT
RESTATED
WATER DISTRIBUTION AGREEMENT
DATE: _________________, 1987
PARTIES: First Party: FEDERAL LAND BANK OF
SACRAMENTO, a corporation,
(hereinafter "Land Owner").
Second Party: ANGIOLA WATER DISTRICT, organ-
ized and existing under and by
virtue of the California Water
District Law, Division 13 of
the California Water Code,
(hereinafter "Angiola").
RECITALS:
A. Pursuant to a foreclosure of certain security
interests held by it, Land Owner acquired title to all of the real
property, located in Kings and Tulare Counties in the State of
California, included within the boundaries of Angiola. All of said
real property is sometimes hereafter referred to as the "South Lake
Property," and is more particularly described in EXHIBIT A and
EXHIBIT B attached hereto and by this reference incorporated
herein. The real property described in EXHIBIT A is sometimes
hereafter referred to as the "White Ranch," and the real property
described in EXHIBIT B is sometimes hereafter referred to as
"Liberty Farms."
B. On May 27, 1983, the predecessors in interest of
Land Owner as the owners of the South Lake Property, together with
Angiola, entered into the ANGIOLA WATER DISTRICT WATER DISTRIBUTION
AGREEMENT (hereafter referred to as the "Prior Agreement"). Said
document was recorded in the official records of Tulare County on
June 10, 1983, as Document No. 26996, in Vol. 4077, at Page 794,
and was recorded in the official records of Kings County on June
10, 1983, as Document No. 7373, in Book 1265, at Page 404.
C. The purposes of the Prior Agreement were to provide
that all water, regardless of its source, then available to or
historically used on the South Lake Property would be used to meet
the water needs of the South Lake Property as if such property had
remained a single unified farming entity, as was the case when it
was operated by South Lake Farms, a California corporation, prior
to the sale of the South Lake Property to the predecessors of the
Land Owner, to insure that the present or future owners of the
South Lake Property, or any part thereof, would have a voice in the
establishment of policy decisions within Angiola in proportion to
the amounts of land owned by them within the South Lake Property,
and to provide that in the event sufficient water is not available
to meet the water needs of the South Lake Property, the water and
the capacity for its transportation should be shared on a pro rata
acreage basis throughout the South Lake Property.
D. Section 9 of the Prior Agreement provides a
mechanism for the amendment thereof, upon the mutual written
consent of certain parties, all of whom are parties to this
Restated Water Distribution Agreement (hereinafter, "this
Agreement").
E. The parties hereto are basically satisfied with the
mechanisms set up by the Prior Agreement for providing water to the
South Lake Property, but believe that by amending the Prior
Agreement as set forth below, the mechanisms will be able to
function even more advantageously than in the past. The parties
further believe that a complete restatement of all of the terms of
the Prior Agreement, as amended, in one document would minimize the
possibilities of confusion in the future.
AGREEMENT:
NOW THEREFORE, it is mutually agreed by all of the
parties hereto that the Prior Agreement is hereby amended in its
entirety to read as follows:
Section 1. COVENANTS RUNNING WITH THE LAND. All of the
agreements contained herein are expressly made for the benefit of
the South Lake Property and the owners thereof, and the benefits
and burdens created herein shall run with the South Lake Property
and with each and every lot or parcel into which the South Lake
Property may from time to time be divided, and shall be binding
upon the parties, and the heirs, successors and assigns of the
parties hereto and the present and future owners of the South Lake
Property for the benefit of the South Lake Property, or such
portion thereof as may be owned by such owners.
Section 2. WATER SUBJECT TO AGREEMENT. The parties
agree that the "water subject to this Agreement" shall mean all
water or water rights, regardless of the source thereof, presently
available to, historically used on, or acquired in the future by
Angiola for use on, the South Lake Property, including, without
limitation:
(a) All water and water rights attributable to
ownership of stock in Tulare Lake Water Company, Tulare Lake
Canal Company, Liberty Farms Mutual Water Company, Southeast
Lake Water Company, the Bayou Vista Ditch Company, and the
Gates-Jones Mutual Water Company, whether such stock is owned
by Land Owner, any of its successors or assigns as owners of
all or any part of the South Lake Property, or Angiola, and
(b) All water and water rights attributable to
membership in the Downstream Kaweah and Tule Rivers
Association and the Kings River Water Association, and
(c) All water and water rights attributable to
portions of the South Lake Property being located within the
Tulare Lake Basin Water Storage District, and
(d) All non-riparian water and water rights, of
whatever nature, in and to the Kings River, Tule River, Kaweah
River, Deer Creek, White River, Poso Creek, Kern River, and in
any and all other streams, surface and/or underground,
intermittent and/or continuous which adjoin or traverse any
part of the South Lake Property or with respect to which the
South Lake Property or any portion thereof shall have water
rights of any kind however acquired, and
(e) All rights whatsoever to extract water from
Tulare Lake, and
(f) All rights whatsoever to extract ground water
from the South Lake Property for agronomic purposes,
Section 3. TRANSFER OF WATER RIGHTS AND STOCK. Land Owner
hereby transfers to Angiola all of its right, title and interest in
the water subject to this Agreement; provided that:
(a) With respect to Land owner's overlying rights
to extract ground water for agronomic purposes from below its
property for use on its property, the rights so transferred
shall be exclusive,
(b) With respect to Land Owner's overlying rights
to extract ground water for any other purposes from below its
property for use on its property, the rights so transferred
shall be non-exclusive, as more fully set forth in Section 10
below,
(c) If at any time a court or other forum of
competent jurisdiction shall determine that Angiola's
extraction of ground water for agronomic purposes for use on
overlying land pursuant to this Agreement is not an overlying
use, then, at the time such order or judgment becomes final,
the overlying ground water rights transferred herein shall
revert to the then fee owners of the lands from which such
rights are derived, but such water rights shall remain water
subject to this Agreement, and
(d) Notwithstanding any other provision of this
Agreement, the parties hereto do not intend to transfer, and
do not transfer, any water right to Angiola which right would
be lost by severance as a result of such transfer.
The parties further declare that similar water rights were
transferred by Land Owner's predecessors in interest as owners of
the South Lake Property pursuant to the terms of the Prior
Agreement, and that the transfer of water rights set forth in this
Agreement is not meant to imply that the previous transfers were
not effective. The transfer of water rights set forth in this
Agreement is meant only to reconfirm the previous transfers, to the
extent that such previous transfers conveyed water rights also
conveyed by the terms of this Agreement. To the extent that it
might be asserted that the water rights transferred pursuant to the
terms of the Prior Agreement conveyed to Angiola water rights which
are not also included within the terms of this Agreement, Angiola
quitclaims such water rights to the parties originally conveying
such rights to Angiola, or to their respective successors in
interest.
Land Owner also hereby transfers to Angiola all of its
right, title and interest in any non-appurtenant stock in Tulare
Lake Water Company, Tulare lake Canal Company, Liberty Farms Mutual
Water Company, Southeast Lake Water Company, the Bayou Vista Ditch
Company, and the Gates-Jones Mutual Water Company.
All of the parties agree to execute whatever documents and
take whatever further steps may be necessary to formalize any of
the transfers accomplished pursuant to this Section, including
obtaining approval of such transfer, when required, by other water
distribution organizations.
Section 4. TRANSFER OF WATER DISTRIBUTION FACILITIES.
Land Owner hereby grants and transfers to Angiola all those
existing water works, water distribution facilities and equipment
presently available to or historically used in connection with the
South Lake Property, including, without limitation, all existing
ditches, canals, pipes, pumps, motors, tanks, gates, weirs and
other devices, and excluding only wells and related facilities.
Land Owner also hereby grants and transfers to Angiola permanent
easements for and rights of access to such existing water works and
water distribution facilities. It is the intention of the parties
that such existing water works, water distribution facilities and
easements shall become the property of Angiola. Such existing
water works, water distribution facilities and easements are more
particularly described in EXHIBIT C attached hereto and by this
reference incorporated herein.
Land Owner hereby grants to Angiola a permanent non-
exclusive easement and right of use and access in and to all
existing wells and related facilities located on the South Lake
Property. It is not the intention of the parties that any of the
foregoing shall become the property of Angiola. Such items shall
remain the property of the respective owners of the South Lake
Property. Nevertheless, Angiola shall, at all times it is not in
material default of its obligations under this Agreement, be
entitled to the exclusive use of such items.
For the purposes specified in this Agreement, the parties
agree to use their best efforts to grant to Angiola a right of use
in and to that portion of the Wellfield Systems Ditch extending
across Section 22, Township 22 South, Range 23 East, M.D.B. & M.,
and in and to the Wilbur Ditch, running northerly from the
northwest corner of Liberty Farms along the boundary between Range
20 East and Range 21 East, M.D.B. & M., title to both of which is
in W.H. Wilbur Reclamation District No. 825.
In addition to the foregoing provisions of this Section 4,
Angiola shall retain its full rights under law to purchase,
construct, condemn or otherwise acquire such facilities in the
future. Angiola shall also have the right, and hereby agrees, to
make such repairs and replacements of such existing water works and
water distribution facilities and any water wells located on the
South Lake Property, and to undertake such construction, including
the drilling of new water wells, as is reasonably necessary to
maintain the historic capacity of said existing water works,
facilities and wells, and to provide such increased capacity as the
Board of Directors of Angiola may determine to be necessary in the
future. Angiola shall also have the right, at reasonable times and
places, to enter upon any portion of the South Lake Property as may
be necessary to carry out such activities, without unreasonably
interfering with the surface use of the portion of the South Lake
Property entered upon. However, it is not the intention of the
parties that Angiola shall have the right to construct, maintain,
operate or use any existing or future sub-surface drainage works
upon the South Lake Property. All such matters shall remain in the
sole discretion of the applicable respective owners of the South
Lake Property.
The parties further acknowledge that the South Lake Property
is presently affected by the following agreements and grants of
easement:
(a) License Agreement dated July 7, 1971, by and
between South Lake Farms and Salyer Land Company, concerning
the Wilbur Ditch.
(b) License Agreement dated August 1, 1971, by and
between South Lake Farms and J.G. Boswell Company ("Boswell"),
concerning Wilbur Ditch.
(c) Canal Use Exchange Agreement dated December 10,
1974, by and between South Lake Farms and Boswell.
(d) Agreement For Canal Right of Way and For
Construction and Maintenance of Canal, dated March 1976, by
and between South Lake Farms and Salyer Land Company.
(e) Agreement For Construction of Interceptor Ditch
dated September 8, 1976, between and among South Lake Farms,
Salyer Land Company, and Boswell.
(f) Agreement For Exchange of Easements and Other
Rights and Relating to Storage Use of South Wilbur Area, dated
December 10, 1980, by and between South Lake Farm and Boswell.
(g) Letter Agreement amending the agreement
referred to in item (f) above, dated March 19, 1981, between
South Lake Farms and Boswell.
(h) Grant of Easement relating to "North Wilbur,"
dated March 20, 1981, between Boswell and Wilbur Reclamation
District No. 825, a California Reclamation District
("Wilbur").
(i) Agreement For Enlargement and Use of the Wilbur
Ditch and South Wilbur Levee, dated March 20, 1981, between
South Lake Farms, Wilbur, and Boswell.
(j) Grant of Easement relating to "West Homeland,"
dated March 20, 1981, between South Lake Farms and Boswell.
(k) Grant of Easement relating to "Lateral A
(Sections 7 and 8-23-22)," dated March 20, 1981, between South
Lake Farms and Kings County Canal Company ("KCCC").
(l) Grant of Easement relating to "Lateral A
(Sections 9 and 10-23-22)," dated March 20, 1981, between
South Lake Farms and KCCC.
(m) Grant of Easement relating to "Lateral A and
System Ditch (Section 11-23-22)," dated March 20, 1981,
between South Lake Farms, Boswell, and KCCC.
(n) Grant of Easement relating to "Homeland Canal,"
dated March 20, 1981, between South Lake Farms and Boswell.
(o) Grand of Easement relating to "Homeland Canal,"
dated March 20, 1981, between South Lake Farms and KCCC.
(p) Grand of Easement relating to "Lateral A and
System Ditch (Sections 7 and 8-23-22)," dated March 20, 1981,
between South Lake Farms and KCCC.
(q) Grant of Easement relating to "Lateral A
(Sections 9 and 10-23-23)," dated March 20, 1981, between
South Lake Farms and KCCC.
(r) Grand of Easement relating to "Lateral A and
System Ditch (Section 12-23-33)," dated March 20, 1981,
between South Lake Farms, Boswell and KCCC.
The parties agree that all costs, expenses, indemnities,
prorations and payments called for in such agreements and
grants of easement to be made by South Lake Farms or Wilbur
shall be deemed an expense of Angiola, and shall be subject to
the provisions of this Agreement.
Section 5. AVAILABILITY AND DISTRIBUTION OF WATER. The
parties agree that all water subject to this Agreement, other than
surplus water sold for use outside the boundaries of Angiola
pursuant to the provisions of California Water Code Section 35425,
and the capacity for its production, transportation and
distribution shall be made available equally on a pro rata acreage
basis to all lands within the South Lake Property, with no
distinctions made between the White Ranch, Liberty Farms, or any
portion of either of them, to the fullest extend possible.
Notwithstanding anything to the contrary set forth elsewhere
in this Agreement, for purposes of determining the availability of
water pursuant to the terms of this Section 5, and for purposes of
determining the allocation of standby charges pursuant to the terms
of Section 8 below, the following areas shall not be considered to
be a part of the South Lake Property:
(a) Any property lying within Township 24 South,
Range 20 East, M.D.B. & M,
(b) That portion of Liberty Farms located within
Township 22 South, Range 23 East, M.D.B. & M, and
(c) Those drainage ponds, consisting of
approximately 640 acres, located within Sections 23 and
26, Township 23 South, Range 21 East, M.D.B. & M. Such
ponds may once again be included within the scope of the
term "South Lake Property", for purposes of Sections 5
and 8 herein, at such time as they are returned to
agricultural production, upon the request of the owner
thereof.
The acreage of the lands within the South Lake Property may
be determined by Angiola, for any purpose under this Agreement, by
reference to the assessor's parcel records of the county in which
the land in question is located, as such records exist from time-to-time.
All the parties hereto understand, agree and acknowledge
that in order for each acre within the South Lake Property to
receive, or have the right to receive, the same amount of water,
different water, water rights, water capacity, and sources of water
will have to be utilized, regardless of relative cost of water from
different sources. This pro rata acreage availability standard
shall apply regardless of crop requirements, hardship from drought,
or other public or private emergency, but shall not be construed to
include a requirement that water from any specific source or under
any particular right must itself be distributed on a pro rata
acreage basis throughout the South Lake Property.
Having made water available to the lands within the South
Lake Property on a pro rata acreage basis as set forth in the
preceding paragraph, Angiola may distribute water on other than a
pro rata acreage basis if any owners of land within the South Lake
Property chose to take less than the amount of water to which they
would otherwise be entitled. Any water made available as a result
of such a choice by an owner shall be made available on a pro rata
acreage basis to the other owners of land within the South Lake
Property.
Nothing in this Agreement shall be meant to imply that
Angiola will have any obligation to deliver water to any lands not
directly served by the water distribution facilities transferred
pursuant to the terms of Section 4 above. Its obligation to make
water available on a pro rata acreage basis, set forth in this
Section, shall be satisfied by making the water available to a
point in such water distribution facilities selected by the land
owner to whom the water is being made available. The exact time
and amount of each delivery shall be at the discretion of Angiola,
taking into account available supplies, overall demand for
deliveries, and such other factors as Angiola may determine to be
appropriate.
Nothing in this Agreement shall require any party or owner
of a portion of the South Lake Property to apply its allocation of
water on a particular portion of such party's or owner's lands, and
each party or owner may determine where, within the South Lake
Property, such allocation may be applied, subject to any
limitations imposed by law, or by agreement to which any party or
owner may be bound upon acquisition of a portion of the South Lake
Property.
Notwithstanding the foregoing, if, by reason of the
assertion, directly or indirectly, by an owner of any interest in
any portion of the South Lake Property of any legal or contractual
limitation, Angiola is unable to furnish a pro rata share of water
subject to this Agreement to all or any portion of the South Lake
Property, then the share of the water subject to this Agreement
that would be available for beneficial use on said lands if such
limitation did not exist may not be put to beneficial use on any
portion of the South Lake Property in which the owner asserting
such limitations owns any interest, except with the written consent
of the owner of record of said unserved lands. Said right of
consent is in addition to all other rights and remedies available
hereunder to the owner of the unserved lands. The owner asserting
such limitations shall become liable for all delivery charges in
connection with such pro rata share of the water subject to this
Agreement. If, by reason of the assertion of such legal or
contractual limitations by any person or entity not owning, either
directly or indirectly, any interest in any portion of the South
Lake Property, Angiola is unable to furnish a pro rata share of
water subject to this Agreement to all or any portion of the South
Lake Property, Angiola shall be entitled to furnish such water for
use or to transfer such water to the fullest extent permitted by
law, and to obtain by purchase, exchange, or otherwise sufficient
water from other sources to furnish to the portion of the South
Lake Property to which a pro rata share of the water subject to
this Agreement could not be furnished an amount of water equal to
that to which it would have been entitled had such legal or
contractual limitations not existed. Any additional cost of
obtaining such replacement water need not be borne solely by the
land to which it is furnished, but may, in the discretion of the
Board of Directors of Angiola, be spread among all of the owners of
the South Lake Property.
Also notwithstanding the foregoing, to the extent that any
owner of a portion of the South Lake Property holds any riparian
rights to water which either is commingled with or may conveniently
be commingled with water distributed pursuant to this agreement in
any water works or water distribution facilities operated by
Angiola, such riparian water may be delivered by Angiola to the
land entitled thereto as if it were water subject to this
Agreement.
The transfer to Angiola of the water subject to this
Agreement, pursuant to the provisions of Section 3 above, and the
transfer to Angiola of water distribution facilities pursuant to
Section 4 above, are specifically made subject to the provisions of
this Section.
Section 6. USE OF WATER RIGHTS. Angiola shall exercise all
water rights currently owned by it, transferred pursuant to Section
3 hereinabove to it, or at any time in the future acquired by it,
in such a fashion as to maximize its ability to distribute water
pursuant to the provisions of Section 5 hereinabove.
Section 7. DEVELOPMENT OF WATER RESOURCES. In order to
perfect Angiola's ability to deliver water consistent with the
provisions of this Agreement at the lowest possible cost to all of
the present or future owners of the South Lake Property, Angiola
shall have, in addition to the powers set forth in Section 5 above,
the power to establish surface or underground reservoirs, to enter
into agreements for the exchange of water, to exercise its right of
condemnation, to store water delivered to it in current years for
use in future years, to conduct engineering and technical studies,
to commingle water from various sources (both inside and outside
the District) and to acquire water by purchase, by exchange or by
acceptance of overflow and surplus water, maintaining records of
the sources thereof so that the rights of the District therein
shall be maintained. Land Owner agrees not to drill any new wells,
or otherwise develop any ground water resources in its individual
capacities, other than as set forth in Section 10 below, so long as
no party to this Agreement is in material breach of any of the
obligations set forth herein; provided, that in this regard a
party's own material breach shall not justify that party drilling
any new well or developing any water resources in its individual
capacity. In the event that any owner of a portion of the South
Lake Property shall nevertheless drill any new wells, or otherwise
develop any ground water resources in violation of the provisions
of this Section, then such wells and ground water resources shall
be subject to all of the terms of this Agreement, including without
limitation, the grant of a permanent easement in such items
contained in Section 4 above, the same as if they had existed at
the time of the execution hereof.
Section 8. CHARGES FOR WATER. Angiola shall raise its
revenues to meet expenses and to finance its activities undertaken
by reason of this Agreement primarily by means of charges,
including standby charges, pursuant to Article 4 of Chapter 2 of
Part V of the California Water District Law. Standby charges,
reflecting the fixed costs of making water available to the South
Lake Property, shall be fixed and applied on a pro rata acreage
basis to the South Lake Property, as that term is modified pursuant
to the terms of Section 5 above, without regard to the amount of
water used, without distinction to the type of use, and without
differentiation based upon differing costs of water from different
sources. All other costs of making water available to the South
Lake Property shall be met by delivery charges, to be fixed and
applied as determined from time-to-time by the Board of Directors
of Angiola, taking into account the actual deliveries of water
made. It is the intention of the parties that, under circumstances
were the owners of the South Lake Property are each making use of
approximately the pro rata share of water made available to them,
and all the water from various sources delivered by Angiola is of
substantially equal quality for irrigation purposes, the Board of
Directors of Angiola will ordinarily fix such delivery charges at
an equal amount of each unit of water delivered anywhere in the
South Lake Property, without regard to the particular source or
marginal cost of producing or delivering any such unit of water.
All charges shall be due and payable at such times as may be
determined by the Board of Directors of Angiola. Nothing in this
Agreement shall limit the right of Angiola to collect any such
charges in any manner authorized by law. Angiola may also raise
revenues by means of assessment.
Section 9. AGREEMENTS AMONG OWNERS OF LAND. The parties
recognize that, although the distribution of water subject to this
Agreement and allocation of costs therefor are governed by the
provisions of Sections 5 and 8 above, the owners of the South Lake
Property may, from time-to-time, make agreements between themselves
to sell or exchange certain of the water to which each of them is
entitled pursuant to the terms of this Agreement. So long as the
water affected by such agreements is not transported for use
outside the boundaries of Angiola, Angiola may, upon receipt of
written notice of the terms thereof, recognize such agreement, and
deliver water in accordance therewith. Any such agreements shall
not be effective for periods of more than one year, and shall not
affect the obligation of any party to pay any charges allocated to
him pursuant to Section 8 above. In addition, Angiola may be
requested by the parties to any such agreements to make appropriate
adjustments in its records of payments of charges for such parties
to reflect any consideration paid for water transferred pursuant to
such agreements. Such adjustments shall only be made annually,
upon written request of the parties involved, and may be
discontinued at any time by Angiola.
Section 10. WATER FOR DOMESTIC PURPOSES. Angiola shall not
provide water for human consumption, for any other domestic use, or
for animal husbandry purposes. Notwithstanding any other
provisions in this Agreement, the owners of the South Lake Property
shall continue to have the right, to the extent that there is no
adverse impact on the ability of Angiola to produce groundwater for
agronomic purposes, to develop groundwater resources for domestic
or animal husbandry purposes, including without limitation the
right to drill wells and related facilities for such purposes, and
any water so produced for such purposes shall not be water subject
to this Agreement. Any owner of land in the South Lake Property
desiring to develop groundwater resources for such purposes shall,
however, give Angiola ninety (90) days prior written notice of any
such development.
Section 11. COVENANT TO PAY CHARGES; TERMINATION OF WATER
DELIVERIES. Land Owner agrees to pay in a timely fashion all
charges, including standby charges, levied upon the South Lake
Property. In the event that Land Owner, or any future owner of any
portion of the South Lake Property, shall not pay when due any
charge or assessment imposed by Angiola, then the Board of
Directors of Angiola shall, on such terms and conditions as it may
deem by resolution to be appropriate, cease deliveries of water to
any land owned by such defaulting owner until such charge, together
with any applicable penalties, late charges and interest, shall
have been paid. Any cessation of water deliveries occurring
pursuant to the terms of this Section shall not be deemed a failure
of Angiola to comply with the provisions of Section 5 above
regarding the distribution of water.
Section 12. DETACHMENT OF LAND FROM DISTRICT. In the event
that any part of the South Lake Property is detached from Angiola,
so that it is no longer included within the boundaries thereof,
such detached land shall no longer be entitled to receive any of
the water subject to this Agreement from Angiola, nor shall it be
subject to any charges or assessments imposed by Angiola.
Notwithstanding the foregoing, however, all transfers to Angiola of
water subject to this Agreement, or of any other personal or real
property, other than any transfers of rights to extract groundwater
and right to the use of wells, by any then current or prior owner
of such detached land, shall remain effective. In the event of
such detachment, any rights to extract groundwater and to the use
of wells attributable to the ownership of the land being detached
shall revert to the owner of such land. All covenants contained in
this Agreement which are stated to be covenants running with the
land pursuant to the provisions of Section 1 above, shall continue
to bind such detached land and the owners thereof as if it were
still included within the South Lake Property. From and after the
effective date of the detachment of any land from Angiola, it shall
no longer be considered as a part of the South Lake Property for
purposes of this Agreement, except as otherwise set forth in this
Section. Angiola shall, upon written request, execute and record
any documents necessary to make the effects of this Section matters
of public record.
Section 13. PROTECTION OF GROUND WATER RIGHTS. Angiola
shall use its best efforts to protect the ground water rights
attributable to the South Lake Property. To fulfill this
obligation, Angiola may, without limitation, file with the State
Water Resources Control Board statements pursuant to Water Code
Sections 1005.1 through 1005.4, develop and implement a ground
water pumping program designed to insure and protect the ground
water rights attributable to the South Lake Property against loss
or limitation by any cause whatsoever, and/or do all such other
acts as are necessary from time-to-time to protect said ground
water rights. Further, the other parties agree to fully cooperate
with Angiola in carrying out the provisions of this Section.
Section 14. WATER CONSERVATION. Angiola shall at all times
in performing its obligations under this Agreement promote the
effective use and conservation of the water available to it, and
shall avoid unnecessary depletion of ground water resources, by
utilizing surface water in place of pumping such ground water
whenever possible, consistent with the efficient use of water and
the need to minimize expenses.
Section 15. FOREIGN WATER. The parties acknowledge that
from time-to-time any of the owners of the South Lake Property may
have the opportunity to acquire water from sources outside the
boundaries of Angiola, which is not water subject to this Agreement
(such water hereinafter being referred to as "foreign water"), but
which such owner intends for use within the boundaries of Angiola.
Such owner shall have the right to import such foreign water and to
use it on any portion of the South Lake Property which he owns,
provided that his right to use any portion of the water
distribution system owned or operated by Angiola shall be subject
to the following conditions:
(a) The use of any portion of the water
distribution system owned and operated by Angiola shall
at all times be subordinate and subservient to the
paramount obligation of Angiola to deliver water subject
to this Agreement in accordance with the terms set forth
in this Agreement.
(b) The land owner acquiring the foreign water
shall make such water available to all of the other
owners of land within the South Lake Property on a pro
rata acreage basis, at a price equal to that paid by such
land owner for such foreign water. Any foreign water
made available to an owner of land who chooses not to
purchase it, shall be made available on a pro rata
acreage basis to the other owners of land within the
South Lake Property. Such foreign water shall be
delivered on a pro rata acreage basis to those owners of
land within the South Lake Property who have agreed to
purchase all or any portion of such foreign water made
available to them. Such foreign water must be paid for
in cash, in advance of any deliveries.
(c) Any land owner to whom such foreign water is to
be delivered shall pay whatever delivery charge as the
Board of Directors shall determine is appropriate, in
cash, prior to being entitled to the delivery of any such
foreign water by means of any portion of the water
distribution system owned or operated by Angiola.
Section 16. NOTICE TO GRANTEES. Each party hereto agrees
that upon any transfer by them of ownership of any portion of the
South Lake Property, the grant deed or other document accomplishing
such transfer shall make specific reference to the existence of
this Agreement. The failure to include such reference shall not,
however, effect the binding nature of this Agreement on any
transferee.
Section 17. NOTICES. Any notice of demand required or
permitted under this Agreement shall be deemed made when personally
delivered or three (3) days following deposit in the United States
mail, first class, postage prepared, and addressed:
(a) In the case of Land Owner to:
General Counsel
Federal Land Bank of Sacramento
P.O. Box 13106-C
3636 American River Drive
Sacramento, CA. 95813
(b) In the case of Angiola to:
Angiola Water District
P.O. Box 1236
Corcoran, California 93212
Attn: Mike Steele
With copies to:
William A. Dahl
Thomas, Snell, Jamison, Russell,
& Asperger, P.C.
P.O. Box 1461
Fresno, California 93716
Any party may change its address by giving notice in accordance
with this Section to the other parties. Any new owner of record of
any portion of the South Lake Property shall give notice to all
other parties of its address, and Angiola shall send to such new
owner the address of all other land owners of which it has been
given notice.
Section 18. POWERS OF ANGIOLA. Notwithstanding anything
in this Agreement, Angiola shall possess all powers and enjoy all
privileges vested in it by California Water District Law, provided
that Angiola shall exercise those powers and privileges, and adopt
bylaws in furtherance thereof, in a manner consistent with this
Agreement, including but not limited to, distributing water on a
pro rata acreage basis, as set forth in Section 5; and further
provided that as a condition precedent to the signing of any
contract or the making or the failure to make any election with the
United States of America, the State of California, or any agency of
either, or with any public agency, the effect of which contract,
election or failure to make an election would be subject landowners
of any portion of the South Lake Property to acreage limitations or
to a requirement of divestment of acreage as a condition to
receiving water, Angiola shall first obtain the written consent of
any landowner so affected.
Section 19. RECORDING. After execution of this Agreement,
the parties agree to promptly execute, acknowledge and record
complete copies hereof, in the official Records of Kings and Tulare
Counties.
Section 20. LIMITATIONS. No party shall use, permit or
suffer the actual or possible use of the water subject to this
Agreement outside the South Lake Property except as a result of
sales of surplus water pursuant to California Water Code Section
35425, or except as may be an unavoidable result of Angiola's
operations as herein authorized. The rights and obligations of
this Agreement are subject to any limitations imposed by law, or by
agreement to which any party is or will be bound upon acquisition
of the South Lake Property.
Section 21. REMEDIES.
(a) In the event that any party fails to perform
its obligations hereunder, the parties acknowledge that
the rights created by this Agreement constitute a
valuable property right, that such property right is
unique in nature, that damages are incapable of being
ascertained and will be inadequate to compensate the
parties for the irreparable detriment that will be
suffered by failure of that party to perform its said
obligations. The parties therefore agree that a non-
defaulting party shall have all remedies now or hereafter
available at law or in equity, including, without
limitation, the right to obtain an injunction or specific
performance of this Agreement, and said remedies shall be
deemed cumulative and not exclusive.
(b) The rights affected hereby are property rights
constituting fundamental rights of the parties hereto.
Section 22. SEVERABILITY. If any word, phrase, clause,
sentence or paragraph of this agreement is, or shall be, invalid
for any reason, the same shall be deemed severable from the
remainder and shall in no way affect or impair the validity of this
Agreement or any portion thereof.
Section 23. ATTORNEYS' FEES. In the event any party hereto
commences an action against any other party hereto to enforce any
obligation hereunder, the prevailing party shall be entitled to
recover reasonable attorneys' fees and costs as fixed by the court
in that action or in a separate action brought for that purpose;
provided, however, that in the event that Angiola is a non-
prevailing party in any such action, and is obligated to pay such
attorneys' fees and costs to a prevailing party who also owns land
within the South Lake Property, then no part of any charges imposed
by Angiola to cover the expense of payment of such fees and costs
shall be imposed upon such prevailing party.
Section 24. BOARD OF DIRECTORS. The holders of title to
the lands within the South Lake Property shall cast their votes for
directors, or join in nomination of directors, in such manner that
two of the seven directors of Angiola shall be chosen by the owners
of record of White Ranch, that four of the directors of Angiola
shall be chosen by the owners of Liberty Farms, and that the
seventh director of Angiola shall be chosen by all of the owners of
record of land within Angiola, with each such owner in each such
case being entitled to the same proportionate voting strength as
would have been the case if each acre of land within the South
lake property was entitled to one vote and cumulative voting was
permitted. The seventh director shall, when possible, be an
independent director, not related to any of the other owners of
record within Angiola, but with experience in matters of water
distribution and water district administration if possible. The
parties agree to use their best efforts to fill vacancies on the
Board of Directors of Angiola in a manner consistent with the
purposes of this Section.
Section 25. APPOINTMENT OF AGENT. With respect to any
water subject to this Agreement which is not currently transferred
to Angiola, or with respect to any such water which any of the
parties hereto is legally prevented from transferring to Angiola,
each party owning any such water hereby designates and appoints
Angiola as its sole and exclusive agent to exercise all rights and
privileges associated with the ownership of such water, in a manner
consistent with the terms of this Agreement, as if the ownership of
such water had been transferred to Angiola pursuant to the terms of
this Agreement but also in a manner consistent with the rights and
incidents of actual ownership of such water. The parties further
agree and affirm that any agency created by the terms of this
Section is a power coupled with an interest in a portion of the
South Lake Property, shall not be affected by the subsequent
incapacity or death of any party or any of their successors, and
shall continue in effect for so long as this Agreement continues in
effect.
Section 26. EFFECT ON PRIOR AGREEMENTS. All of the parties
hereby mutually agree that the Agency Agreement referred to in
Recital F of the Prior Agreement is rescinded and of no further
force or effect. All of the parties further agree that this
Agreement is intended to be a complete restatement of the Prior
Agreement, superseding all of the terms and conditions thereof, but
without affecting the validity of any transfers of water rights or
other interests in property from any of the parties to the Prior
Agreement to Angiola.
Section 27. TRANSFER AND REVERSION OF WELL FIELD. The
parties acknowledge that, simultaneously with the recording of this
agreement, Land Owner is granting to Angiola certain real property
located within the South Lake Property, more particularly described
in EXHIBIT D attached hereto (the "Well Field"). It is intended
that Angiola shall continue to own the Well Field for as long as
this Agreement shall continue in effect. In the event that any
time this Agreement shall cease to be binding on the parties, then
the Well Field shall be conveyed to the owners of record at that
time of whatever portion of Liberty Farms is then within the
boundaries of Angiola, as tenants in common, in undivided interests
corresponding to the acreage in such portion of Liberty Farms owned
by each such owner of record.
Section 28. NOTICES OF INTENT TO PRESERVE. In the event
that the transfer of the Well Field referred to in Section 27
above, or any other transfer of property accomplished by this
Agreement, is deemed to be the transfer of a fee simple subject to
a restriction in the form of a condition subsequent pursuant to the
terms of Section 885.020 of the California Civil Code, or any
successor statute, then the parties agree to cooperate in the
execution and recording of appropriate notices of intent to
preserve any power of termination associated therewith pursuant to
the provisions of Section 885.030 (a)(2) or (3), or any successor
statute, prior to the date which is thirty (30) years from and
after the date of the execution of this Agreement.
Section 29. BINDING EFFECT. The parties agree that this
Agreement is intended to be and shall be binding on each of them
and their heirs, successors and assigns. Specifically, but not by
way of limitation, any reference herein to Land Owner, or to the
parties, shall be interpreted to include any future owner of record
of any portion of the South Lake Property, the same as if such
future owner has owned such portion at the time of the execution of
this Agreement, and such owner had been one of the original parties
hereto.
Section 30. FURTHER ASSURANCES. The parties agree to do
such further acts and execute such further documents as may be
necessary to implement the terms of this Agreement.
Section 31. MUTUAL WRITTEN CONSENT. This Agreement sets
forth the entire agreement of the parties, and incorporates all
discussions between the parties. This Agreement may not be
revoked, terminated or amended without the mutual written consent
of the owners of record of the entire South Lake Property and of
Angiola.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date and year first hereinabove written.
LAND OWNER:
FEDERAL LAND BANK OF
SACRAMENTO, a corporation
By: ______________________
President
By: ______________________
Secretary
ANGIOLA:
ANGIOLA WATER DISTRICT
By: _____________________
By: _____________________
STATE OF CALIFORNIA )
) ss.
COUNTY OF _________ )
On this ____ day of ____________, 19__, before me, the
undersigned, a Notary Public in and for the State of California,
personally appeared __________________ and _________________,
personally known to me (or proved to me on the basis of
satisfactory evidence) to be the persons who executed the within
instrument as President and Secretary, respectively, of FEDERAL
LAND BANK OF SACRAMENTO, the corporation therein named, and
acknowledged to me that such corporation executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and
affixed my official seal the day and year in this Certificate first
above written.
___________________________________
Notary Public in and for said State
STATE OF CALIFORNIA )
) ss.
COUNTY OF _________ )
On this ____ day of
____________, 19__, before me, the undersigned, a Notary Public in
and for the State of California, personally appeared
__________________ and _________________, personally known to me
(or proved to me on the basis of satisfactory evidence) to be the
persons who executed the within instrument as _____________ and
______________, respectively, of ANGIOLA WATER DISTRICT, a
California Water District, and acknowledged to me that said
district executed the same.
IN WITNESS WHEREOF, I have
hereunto set my hand and affixed my official seal the day and year
in this Certificate first above written.
___________________________________
Notary Public in and for said State
ANGIOLA WATER DISTRICT
c/o Provost & Pritchard, Inc. Phone (209) 449-2700
286 W. Cromwell Avenue FAX (209) 449-2715
Fresno, California 93711-6162
FAX TRANSMITTAL
DATE: February 12, 1997
TO: Brent Bowen FAX Number: 916-878-8946
Southlake Acquisition Corp.
FROM: Kevin Johansen Job Number: 9730100
SUBJECT: TLBWSD and TLDD Boundaries
Number of Pages: 2 (including this page)
Original to follow by mail? No
Attached is a map showing the boundaries of Tulare Lake Basin
Water Storage District (TLBWSD) and Tulare Lake Drainage District
(TLDD) in relation to the White Ranch. It appears that the
following land is in these districts:
In both TLBWSD & TLDD
NE/4 Section 11
Section 12
Section 18
SW/4 Section 8
In TLBWSD (but outside TLDD)
SE/4 Section 8
22 + or - acres in Section 15
In TLDD (but outside TLBWSD)
E/2 Section 31
Section 6
SW/4 Section 5
Section 7
NW/4 Section 8
If you have any questions, give me a call.
If you do not receive all of the pages indicated, please give us
a call at (209) 449-2700.
[Map showing the boundaries of Tulare Lake Basin
Water Storage District and Tulare Lake Drainage
District in relation to the White Ranch]
TULARE LAKE BASIN WATER STORAGE DISTRICT
Established 1926
1109 Whitley Avenue, Corcoran, California 93212
Phone (209) 992-4127 . FAX (209) 992-3891
December 20, 1996
Landowners of
the Tulare Lake Basin
Water Storage District
Re: 1997 & 1998 Short Term
State Water Service Contract
Dear Landowner:
With respect to the 1997 & 1998 Water Service Contract, please find
enclosed the following:
1. One copy of the 1997 & 1998 Short Term State Water Service
Contract;
2. Two Signature Pages; and
3. One copy of Landowner Requested Participation Sheet.
Should you desire to participate in State Project Water for the
1997 & 1998 period, either for yourself or on behalf of your
tenant, please sign the two (2) enclosed signature pages [Page 22
of the Contract] as Landowner.
With reference to the Landowner Requested Participation Sheet,
please check the appropriate line. Near the bottom of this sheet,
please indicate the name of your authorized Agent, if applicable.
All correspondence and billings will be forwarded to your Agent,
unless otherwise directed. Sign and date the Participation Sheet.
Please return the two (2) copies of the signed signature pages and
the Landowner Requested Participation Sheet. The District will
return one fully signed copy of the signature page to attach to
your copy of the 1997 & 1998 Contract. We ask that the signature
pages and the Landowner Requested Participation sheet be returned
not later than January 31, 1997. This will enable the District to
expedite finalizing the 1997 & 1998 allocation of Table A Water to
all the participating Landowners.
Based upon the final allocation of Table A water for State Project
Water in 1997 & 1998, a revised Exhibit A, indicating each Water
User's Table A Water will also be forwarded for attachment to your
copy of the Contract.
If you do not desire to participate in the 1997 & 1998 Contract,
return only the Participation Sheet signed with the appropriate
line checked.
Should you have questions, please call our office.
Yours truly,
/s/ Brent L. Graham
Brent L. Graham
Manager
blg/em
Enclosures (4)
COMPRISING TULARE LAKE BASIN IN KINGS AND TULARE COUNTIES, CALIFORNIA
SHORT TERM STATE WATER SERVICE CONTRACT
BETWEEN
TULARE LAKE BASIN WATER STORAGE DISTRICT
AND
SOUTHLAKE AQUISITION CORP.
FOR AGRICULTURAL WATER SERVICE
FOR THE PERIOD
JANUARY 1, 1997 THROUGH DECEMBER 31, 1998
1997& 1998 SHORT TERM
STATE WATER SERVICE CONTRACT
This contract, hereinafter referred to as "Water Service
Contract," made and entered into on the effective date hereof, in
pursuance of powers granted by Division 14 of the Water Code of
the State of California, by and between TULARE LAKE BASIN WATER
STORAGE DISTRICT, hereinafter referred to as "District," a
California Water Storage District organized and existing under
provisions of said Division 14 of the California Water Code and
the undersigned landowner(s), hereinafter sometimes referred to
as "Water User(s),"
WITNESSETH, that:
EXPLANATORY RECITALS
WHEREAS, District has duly, regularly, and according to law,
entered into a contract with the State of California, Department
of Water Resources, for a water supply, which contract is dated
December 20, 1963; and,
WHEREAS, said contract has been amended from time to time
and may be so amended in the future from time to time; and,
WHEREAS, said contract as now amended and as may be amended
is referred to herein as the "State Contract"; and,
WHEREAS, District duly, regularly, and according to law,
adopted General District Project No. 4, which Project provided
among other things for the construction of Laterals A and B as
conduits for the transmission of water acquired under the terms
of State Contract from the California Aqueduct; and,
WHEREAS, the District transmission facilities have been
completed; and,
WHEREAS, by the terms of the State Contract, District is
obligated to pay for Project Water whether or not District fails
or refuses to accept delivery or State is unable to provide
delivery of any or all thereof; and,
WHEREAS, the Hacienda Water District State Water Supply
Contract has been consolidated with District's State Contract as
per Amendment No. 16 to the State Contract dated February 11,
1981; and,
WHEREAS, the benefits of the State Water Supply Contract
Assessment, General District Project No. 1, General District
Project No. 3, General District Project No. 4 (now retired), and
General District Project No. 5, accrue to only those lands within
the District; and,
WHEREAS, in accordance with General District Project No. 5,
District tract numbers 1353, 1354, and 1385 through 1391,
inclusively, have been detached and the liabilities of the
forenamed tracts have been assumed by the Water Users; and,
WHEREAS, the short term contracts with Water Users presently
executed terminate on December 31, 1996; and,
WHEREAS, the Board of Directors of District is of the
opinion that the best interest of District will be served by
offering two-year Short Term State Water Service Contracts to
Water Users due to a number of modifications that have recently
been made to the State Contract under Amendment Number 25 thereto
and recent implementations thereof; and,
WHEREAS, the State Water Supply Contract Assessment roll has
been filed with the County Treasurers of Kings and Tulare
Counties and assessments may be levied to pay periodic service
charges under the State Contract to the extent that funds are not
otherwise available for the payment of such charges, all as
provided for in Section 44030 of the California Water Code
(California Water Storage District Law);
NOW, THEREFORE, IT IS MUTUALLY AGREED BY AND BETWEEN THE
PARTIES TO THIS SHORT TERM STATE WATER SERVICE CONTACT AS FOLLOWS:
1. DEFINITIONS
(a) Agricultural Use means any use of water primarily in the
production of plant crops or livestock for market, including any
use incidental thereto for domestic or stock watering purposes.
(b) Annual Entitlement means the amount of entitlement water to be
made available to District during the respective Year at the
California Aqueduct delivery structures provided for District,
und er the terms of the State Contract, as shown in Table A
thereof or as amended.
(c) Board means the body of members duly constituted as the Board
of Directors of the Tulare Lake Basin Water Storage District.
(d) Carryover Water means water carried from one year to the next
under the provisions of the State Contract Article 12(e) and/or
Article 56(c).
(e) Contract Amount of Water means the amount of water equal to
the sum of Water User's Table A Water, Interruptible Water,
Turnback Water and/or other Project Water which District agrees
to deliver, or make available for delivery, to Water User(s) in
each Year based in proportion to Water User's respective Table A
Wat er as shown in Exhibit A attached hereto and made a part
hereof, subject to the provisions of this Water Service Contract
and the State Contract.
(f) Contract Water Service means the delivery, or the availability
for delivery, of the Contract Amount of Water through District
Turnout(s) each and every Year during the term hereof at times
and rates of delivery requested by Water User(s), subject to the
pro visions of this Water Service Contract and the Rules and
Regulations adopted by the Board.
(g) District means Tulare Lake Basin Water Storage District.
(h) District Rate means the acre foot unit cost of available Table
A water, that includes all State charges and the District Water
Service Charge.
(i) District Water Service Charge means the charge that Water
User(s) shall pay (per Section 6) District for costs of
operation, maintenance and replacement of Project Facilities and
costs of District's administration of the State Contract, the
Water Service Contract and other matters directly associated with
and attributed to the delivery of Project Water.
(j) Interruptible Water means water available from the Delta at
various times during the Year and further defined by the State
Contract.
(k) Non-District Water means water conveyed through Project
Facilities per Rules and Regulations that is neither contracted
for by District, nor for the benefit of District as a whole.
(l) Off-Aqueduct Charge means the annual charges by the State for
Off-Aqueduct Power Facilities allocated among Water Users.
(m) Project Facilities means District's transmission system,
including installations and related facilities owned, controlled
and operated by District having the purpose of diversion,
conveyance, control, measurement and delivery of water.
(n) Project Water means all water obtained by, or available to,
District under the State Contract, including Annual Entitlement,
Interruptible Water and Turnback Water.
(o) Rules and Regulations means rules and regulations as adopted
by the Board pursuant to Section 43003 of the Water Code, and as
such Rules and Regulations may be amended from time to time.
(p) State means the State of California acting by and through the
Department of Water Resources.
(q) State Contract means the Water Supply Contract between
District and the State of California, Department of Water
Resources, dated December 20, 1963, and any amendments of said
State Contract which have been executed or may be executed during
the term of this Water Service Contract.
(r) Supplemental Water means all non-Project Water obtained by, or
available to, District and delivered through Project Facilities,
including California Drought Bank Water and Supplemental Purchase
Water, but excepting Non-District Water.
(s) Supplemental Water Charge means the charge in dollars per acre
foot which Water User shall pay for all costs attributed to
Supplemental Water.
(t) Table A Water means an amount of water in each Year equal to
Water User's allocated share of Annual Entitlement under the
terms of the State Contract.
(u) Trust Fund means the Agricultural Rate Management Trust Fund
established by the Monterey Amendment (Amendment No. 25 to the
State Contract) that shall, to the extent there are funds
available in the District's account in the Trust Fund, and as
requested by the District, (1) make distribution to the State on
the District's behalf, or (2) make distribution to the District
which shall in turn make the payment to the State in years when
(1) the District's Table A entitlement, by April 15th of that
year, is less than 100% of the District's annual requested Table
A entitlement, or (2) on April 15th of any year, irrigable lands
are flooded in the District. The District's account in the Trust
Fund shall be funded by monies collected by the District from the
Water Users.
(v) Trust Fund Accounts means the individual Water Users' accounts
that shall be established by the District to administer the Trust
Fund internally among the Water Users.
(w) Turnback Water means water purchased by District under the
State Contract, Article 56(d).
(x) Turnback Water Charge means the charge in dollars which Water
User(s) shall pay for all costs attributed to Turnback Water.
(y) Turnout(s) means any structure constructed for the purpose of
diverting water to the Water Users from Project Facilities, or
Turnout C in Reach 8d of the California Aqueduct.
(z) Water Availability Charge means the charge the Water User
shall pay each Year on Table A Water, regardless of whether or
not all or a portion of Table A Water is delivered to, or taken
by, Water User and shall include the District Water Service
Charge.
(aa) Water Service Contract means this two (2) Year agreement for
water service between District and Water User(s).
(bb) Water Use Charge (State Variable Delivery Charge) means the
charge in dollars per acre foot which Water User shall pay for
each acre foot of Project Water delivered to Water User under
provisions of this Water Service Contract.
(cc) Water User(s) means that person or entity owning land within
the boundaries of District, or the successor in interest, who has
executed a Water Service Contract or who has been assessed
pursuant to and under the provisions of said Section 44030 of the
California Water Code.
(dd) Year means the twelve-month period from and including January
1 of any Year through December 31 of said Year.
2. INTERLAKE AGREEMENT CONTROVERSY
District and Water User(s) expressly recognize that a
controversy exists as to the meaning and effect of the Interlake
Agreement, dated January 7, 1930 and it is expressly understood
that the transmission of water through Project Facilities for use
within District, except as may otherwise be permitted under
Section 15(a) of the State Contract, is not to be and shall not
be construed as ownership or operation of distribution facilities
within District and that said controversy is expressly left
unresolved and undetermined.
3. CONTRACT WATER SERVICE
(a) The provisions for payment for Contract Water Service shall
become effective on the date of execution of this Water Service
Contract, regardless of whether or not Water User takes delivery
of his Contract Amount of Water, unless otherwise provided
herein.
(b) Subject to the provisions of this Water Service Contract,
District agrees to furnish Contract Water Service to each Water
User in each Year, at Turnout(s), his respective Contract Amount
of Water, subject to the availability of Project Water.
(c) In the event that District obtains an increase in its Project
Water or an allocation of Supplemental Water, Water User may, at
his option, participate therein with other Water Users, in
proportion to the Water User's respective Table A Water.
(d) District agrees that it shall at all times endeavor, through
State Contract, to obtain and deliver at Turnouts, the full
Contract Amount of Water to Water Users at the least cost,
subject to the provisions of the Rules and Regulations.
(e) Interruptible Water shall be made available and delivered in
accordance with the terms of the State Contract. District shall
make Interruptible Water available to Water Users to the extent
Interruptible Water is available to District.
(f) Under the terms of the State Contract, District is permitted
to carry over water for delivery in the subsequent Year(s). In no
event shall a Water User be permitted to carry over water into
the succeeding Year(s), unless the District has been permitted to
do so in accordance with provisions of the State Contract. In the
event there is inadequate carryover space to accommodate all
carryover requests, Water User's share of District carryover
space shall be in proportion to the Water User's respective Table
A Water as compared to other Water Users' respective Table A
Entitlement that are requesting to carry over water. Any and all
Carryover Water shall be at risk of displacement or conversion in
the event the State is in need or requires project storage space.
Water User shall not be entitled to any reimbursement for or
replacement of Carryover Water lost.
(g) District is subject to delivery priorities established by the
State Contract. District shall attempt to deliver all waters to
Water User in accordance with his delivery request. In the event
Project Facilities are inadequate at any time to carry all of the
water requested by Water Users for delivery, allocation of
conveyance capacity will be made in accordance with the Rules and
Regulations.
4. CONDITIONS OF DELIVERY OF WATER
(a) Water furnished under this Water Service Contract shall be
used by Water User for agricultural purposes only. Said water is
in a raw untreated condition and, as a result, is considered to
be unfit for human consumption without treatment.
(b) District shall deliver water to Turnouts through Project
Facilities in accordance with the Rules and Regulations.
(c) Only District employees shall operate Project Facilities.
Water User hereby agrees District and/or its employees shall have
full authority to stop water delivery to Water User when the
amount of water ordered and available pursuant to this Water
Service Contract has been delivered or in the event the Water
User is in breach or default of this Water Service Contract.
(d) District shall not be responsible for the control, carriage,
handling, use, disposal, or distribution of water delivered to
Water User hereunder outside Project Facilities. Water User does
hereby agree to indemnify and shall assume the defense of and
hold harmless District, and its officers, agents and employees
from any and all loss, damage liability, claims, or causes of
action of every nature whatsoever, for damage to or destruction
of property, including District property, or for injury to or
death of persons, in any manner arising out of or incidental to
the control, carriage, handling, disposal or distribution of
water outside such Project Facilities.
(e) The character and quality of water furnished hereunder may
vary from time to time, and District does not guarantee in any
respect the character or quality of the water delivered pursuant
to this Water Service Contract.
(f) District may temporarily discontinue or reduce the amount of
water to be furnished to Water User as herein provided, for the
purpose of investigation, inspection, maintenance, repair or
rep lacement, as may be reasonably necessary, of any of the
Project Facilities for the furnishing of water to Water User, or
of the facilities of the State. To the extent practicable,
District shall give Water User notice in advance of such
temporary discontinuance or reduction, except in case of
emergency, in which case no notice need be given. In no event
shall any liability accrue against District, or any of its
officers, agents or employees, for any damage, direct or
indirect, arising from such temporary discontinuance or reduction
of water deliveries.
(g) District shall not be liable for the failure to perform any
portion of this Water Service Contract to the extent that such
failure is caused by the failure of the State to perform any
obligation imposed on the State by the State Contract; provided,
however, that to the extent that District obligations are reduced
by such failure on the part of the State, District shall make
commensurate reduction in the obligations of Water User.
(h) In the event of any suspension, discontinuance, or reduction
under the terms hereof, District shall upon the resumption of
service, to the extent it may be possible to do so and within the
ability of Water User to accept same, make every reasonable
effort to deliver, within the same Year, the quantity of water
which would have been furnished to Water User in the absence of
such event or contingency. In the event District is unable to
deliver the water in the same year, the Water User may then
schedule the delivery of said undelivered water for the
subsequent year, to the extent water is available under the State
Contract.
(i) After initiation of Contract Water Service, there may at times
occur a shortage in the quantity of water available for
furnishing any water to Water User pursuant to this Contract, and
that in no event shall any liability accrue against District, its
officers, agents or employees, for any damage, direct or
indirect, arising from a shortage due to problems of delivery,
drought, or any other cause whatsoever, including but not limited
to regulatory restrictions on Delta exports, flood, lightening
and earthquake; provided, however, that such shortage shall be a
shortage beyond and outside of the control of District.
(j) Delivery adjustments from the California Aqueduct through
Project Facilities shall be allocated monthly among the Water
Users based on their respective monthly deliveries of all water
com pared with the total monthly deliveries of water through
Project Facilities. Such adjustments shall be equalized for all
water deliveries at Year-end.
(k) Conveyance Capacity of District's Lateral A is subject to and
limited by the Agreement dated January 2, 1968, by and between
District and the Empire West Side Irrigation District.
(l) It is recognized and understood that Project Facilities will
also be used to convey water made available to District under the
terms of the Agreement dated April 26, 1967, by and between the
County of Kings of the State of California and the District. Said
water shall be allocated in proportion to Water Users' respective
Table A Water.
(m) It is recognized and understood that Project Facilities will
also be used from time to time to convey water made available to
lands outside District boundaries in accordance with the
provisions contained in the Department of Water Resources' letter
dated July 10, 1970, and in "POLICY RE DELIVERY OF STATE PROJECT
WATER TO LAND OUTSIDE OF DISTRICT BY ACTION OF THE BOARD OF
DIRECTORS JANUARY 3, 1973," and further specified in "AGREEMENT
BETWEEN TULARE LAKE BASIN WATER STORAGE DISTRICT (HEREIN TERMED
DISTRICT) AND 'WATER USER' (HEREIN TERMED WATER USER) IN SUPPORT
OF REQUEST FOR STATE CONSENT TO DISPOSITION OF PROJECT WATER
OUTSIDE THE BOUNDARIES OF DISTRICT.", all as may be amended.
5. TIME OF DELIVERY OF WATER
(a) Water User shall make application for water deliveries under
the Rules and Regulations
(b) Consistent with the design and operational objectives of
Project Facilities and giving consideration to requests for water
service from all Water Users, District shall schedule water
deliveries and deliver water to Water User as nearly in
accordance with Water User's request as is practicable. District
determination with regard to scheduling of water deliveries shall
be final and conclusive; provided, however, that District, its
officers, agents and employees shall have acted in good faith and
without partiality toward or bias against any Water User.
(c) Except as otherwise provided in Paragraph 3(f) hereof, and in
the event Water User is unable to use all or any part of his
Contract Amount of Water in any given Year, District shall, to
the extent permitted under the terms of the State Contract and as
may be allowed by the State, carry over such water for future
delivery in the immediate subsequent year at the option of Water
User. Any additional charges resulting from such Carryover Water
shall be paid by Water User.
(d) Upon expiration of this Water Service Contract, any water or
any dollar credits as a remit of Carryover Water shall remain, to
the extent permitted under the terms of the State Contract and as
may be allowed by the State, credited to the account of Water
User and shall be delivered or the dollars credited in accordance
with the provisions of this Water Service Contract.
6. PAYMENTS AND PROCEDURES FOR DISTRICT BILLINGS FOR CONTRACT
WATER SERVICE
(a) On or before September 1 of each Year, District shall notify
Water User in writing of the estimated total monthly amount of
the Water Availability Charge and Water Use Charges for Table A
Water for the following Year. The Water Availability Charge
shall be billed on a monthly basis. Payment on said charges must
be received by District within thirty (30) days from date of
billing.
(b) The Water Availability Charge shall be Water User's share of
District's fixed or recurring costs based in proportion to Water
User's respective Table A Water, including, but not necessarily
limited to, the following:
(I) Capital Cost Component of the Delta Water Charge and
the Transportation Charge.
(II) Minimum Operation, Maintenance, Power, and
Replacement Component of the Delta Water Charge and the
Transportation Charge.
(III) Replacement Charge.
(IV) Off-Aqueduct Charge.
(V) Water Revenue Bond Surcharge.
(VI) District Water Service Charge.
(VII) Other State Charges.
(c) District shall bill each Water User his Water Use Charge,
monthly on or about the tenth (10th) day following the month that
delivery was made. District must receive payment on such
charge(s) not later than thirty (30) days from date of invoice.
Water Use Charge shall include, but not be limited to, the
following:
(I) Project and Carryover Water - The variable or
non-recurring costs associated with the delivery of Project
Water or Carryover Water. Such charges shall be made on a
uniform basis, in dollars per acre foot of water delivered
from Project Facilities, and shall include, but not
necessarily be limited to the Variable Operation,
Maintenance, Power, and Replacement Component of the Delta
Water Charge and the Transportation Charge.
(II) Interruptible Water - In addition to the costs
specified in Paragraph 6(c)(I) any State administrative
charges, as provided in State Contract.
(III) Turnback Water - All charges imposed under State
Contract for such deliveries, including a portion of the
Delta Water Charge and those costs specified in Paragraph
6(c)(l) above.
(IV) Other Project Water - All charges imposed under the
State Contract for such deliveries.
(d) Supplemental Water Charge shall include all charges imposed by
separate Contract with State for deliveries of Supplemental
Water.
(e) Following receipt of any adjusted water cost information from
State, District shall provide each Water User an adjusted
accounting of the water charge(s), based upon District's adjusted
payment obligations to State and the actual quantities of water
delivered to Water User. District shall include with said
adjusted accounting either:
(I) A statement of credit to Water User for overpayment
showing the amount that shall be deducted from the next
installment of Water User's payment obligations to District,
or
(II) An invoice statement for Water User's additional
payment obligations that shall be due and payable within
thirty (30) days from date of billing.
(f) The District Water Service Charge adjustment shall be based on
actual expenditures at Year-end and credited or charged to the
Water Users in accordance with Paragraph 6(f)(I) & (II).
(g) Under the provisions of the State Contract and the
administrative procedures of the State, it is expected that there
will continue to be occasions when District will not receive
final power cost information on various categories of Project
Water and/or Supplemental Water delivered to District until one
year or more after the date of delivery of such water. Such final
cost information may indicate that upward and/or downward power
cost adjustments will be applicable to such delivered water. All
such upward and/or downward power cost adjustments shall be
allocated in proportion to the Water Users respective Project
Water and/or Supplemental Water delivered in the subject Year of
adjustment.
(h) The State shall determine annually the Off-Aqueduct Charge
based on costs for energy required for requested water
deliveries. A Year-end adjustment shall be made based upon actual
water deliveries and upon the net Off-Aqueduct charge. In the
event the quantity of Project Water delivered by District in Year
is zero, then the Off-Aqueduct Charge shall be allocated
uniformly to the Water Users in proportion to Water User's
respective Table A Water.
(i) The charges provided for herein are authorized by Sections
43006 and 47180 of the California Water Code and are intended to
be provisionally in lieu of assessments authorized under said
Code. Nothing contained herein shall limit the power of District
to levy assessments from time to time in accordance with
benefits, as provided in said California Water Code, to collect
such amounts as may be found necessary by District to meet its
financial obligations.
(j) No water shall be delivered to Water User if such Water User
is delinquent in the payment of any charges under this Water
Service Contract, delinquent in any assessment levied by
District, or in violation of any of the Rules and Regulations. In
addition to the other remedies provided herein and by law, the
Board may reallocate a Water User's water in the manner provided
in Paragraph 6(o) herein in the event he fails to cure a
delinquency or violation within ten (10) days of notice of such.
Any violation of the Rules and Regulations must be cured within
five (5) days of notice of such violation. Should Water User
fail to timely cure the violation, he shall be considered in
default of this Water Service Contract.
(k) In the event District is unable to meet its total financial
obligation to the State due to failure by one or more of the
Water Users to remit payment as provided in this Water Service
Contract that would result in delinquency charges by the State,
District shall make payment to the State of those funds which are
available from Water Users prior to the State's delinquency date.
Remaining payments received from the delinquent Water User(s),
including State delinquency charges, will be forwarded to the
State as they are received to be credited against District's
delinquent account. The delinquent Water User shall be
responsible for any and all State delinquency charges, and other
charges accrued on the outstanding delinquency. District shall
bill each delinquent Water User his pro rata share of such
charges, considering both the amounts and periods of time of the
delinquency. In addition, each such delinquent Water User shall
be obligated to pay any District interest, penalties, or other
charges, all as hereinafter provided.
(l) In the event any charge or any obligation of the Water User
arising from this Water Service Contract remains unpaid for a
period of thirty (30) days after invoice date, it shall thereupon
become delinquent and a penalty of ten percent (10%) shall be
added thereto and it shall thereafter bear interest at the rate
of twelve percent (12%) per annum, shall be recorded as a lien on
the Water User's land, and shall be collectible, all as provided
in Sections 47181 to 47185, inclusive, and Section 43003 of said
California Water Code and in any other manner authorized by law.
Any Water User who shall become delinquent in any payment due
hereunder shall be considered in default of this Water Service
Contract.
(m) Monies received from Water User shall be first applied to the
oldest outstanding invoices and any penalties or interest
thereon. District imposed penalties and interest collected from
Water User(s) shall be deposited in the District's State Water
Fund Account for the benefit of all Water Users.
(n) Delinquent Water User shall reimburse District for all costs,
including, but not limited to, administrative costs and attorneys
fees associated with the collection of delinquent payments,
penalties, and interest.
(o) Water User's failure or refusal to accept delivery of his
Contract Amount of Water in any Year shall in no way relieve
Water User of the payment obligations provided for herein. Should
any Water User not accept delivery of his Contract Amount of
Water, then the District, at the request of Water User shall make
reasonable efforts to dispose of any water made available to, but
not required by, Water User. In disposing of any such water,
District shall first make the water available to other Water
Users within the District at the District rate. The District
shall then make reasonable efforts to dispose of the water on the
open market. Each Water User shall be deemed a third party
beneficiary of each of the other Water User contracts and shall
have a right of first refusal to purchase the water being
disposed of. Revenue derived from the disposition of the water
shall be first credited against the Water User's payment
obligations hereunder. Any surplus revenues from the disposition
of the water shall be deposited into District's State Water
Project Fund Account for the benefit of all Water Users.
(p) Purchasers outside of District and/or Water User(s) who
purchase water on the open market, pursuant to Paragraph 6(o)
above, for use outside District shall reimburse District for all
of its out of pocket costs associated with the processing of the
transfer of said water out of the District. Three percent (3%) of
the total amount of water to be transferred will be contributed
to the District to offset delivery losses in Project Facilities.
7. ADMINISTRATION OF THE TRUST FUND AND TRUST FUND ACCOUNTS
(a) Trust Fund. The provisions of this Contract shall be subject
to the terms of the Trust Fund.
(b) Water User Accounts. The District shall create and maintain
individual Water User accounts to internally administer the
District's account in the Trust Fund. The Water User's Trust Fund
Account shall be credited with all amount , s paid into the Trust
Fund by the Water User. The amounts withdrawn from the Trust Fund
per the request of Water User, shall be debited against the Water
User's Trust Fund Account to reduce the Water User's State
billing(s), as hereinafter provided.
(c) Payments into the Trust Fund. The District shall monthly bill
each Water User, based on the Water User's percentage of Annual
Entitlement, for the District's payments to the State and
required contributions to the Trust Fund. Payment of said
billings shall be subject to Paragraph 6(1) hereof.
(d) Payments out of the Trust Fund.
(1) Years of Less Than 100% Table A Allocation. In any
year in which the State's allocation of Annual Entitlement
to the District by April 15th of that year is less than one
hundred percent (100%) of the District's requested Annual
Entitlement for that year, at the direction of the Water
User, the District shall request the Trustee of the Trust
Fund to the extent there are funds in the Water User's
Account, distribute to the State (or the District) amounts
specified in Article 51(h)(4)(I) of the State Contract. The
District shall debit each Water User's Trust Fund Account by
the amount of reduction the respective Water Users received
on his State billings.
(2) Flood Irrigable Lands. In any year in which there
are irrigable lands within the District which are flooded on
April 15th of that year, at the direction of any Water User
whose lands are flooded, the District shall request the
Trustee of the Trust Fund, to the extent there are funds in
the Water User's Account, to distribute to the State (or the
District) amounts specified in Article 5l(h)(4)(ii) of the
State Contract. The District shall debit the Water User's
Trust Fund Account by the amount of reduction the Water User
received on his State billings. In no event shall the
District request on behalf of a Water User a reduction in
his State billings in an amount in excess of the balance in
that Water User's Trust Fund Account. Reductions in billings
to the District as a result of Water User requests for
distributions from the Trust Fund shall be allocated to
those Water Users with flooded irrigable lands who have
requested distribution from the Trust Fund.
8. WATER TRANSFERS
(a) Water User may transfer any portion of his Contract Amount of
Water to his lands or lands that he farms outside of the District
boundaries provided all the following conditions are met:
(I) The water proposed to be transferred is first
offered to the other Water Users in the District at the
District Rate and is refused by the other Water Users.
(II) Water User may not replace the transferred water
with groundwater to irrigate the lands in the District.
(III) The transfer will not injure or have an adverse
affect on any other Water User in the District.
(IV) The Water User contributes 3% of the water to be
transferred to the District to offset delivery losses in
Project Facilities.
(V) The transfer will not adversely affect the
historical water balance in the District, which water
balance includes Project Waters, groundwater, and local
surface waters.
(VI) The transfer shall be consistent with the adopted AB
3030 Tulare Lake Bed Coordinated Groundwater Management Plan
to the extent the District is a participant in said Plan.
(VII) The Water User has first obtained the approval of
the Board.
(VIII) District has received approval from the State and
the State Water Resources Control Board, if required.
(IX) District and/or Water User has obtained all the
necessary approvals, permits or licenses to transfer the
water.
(b) Not less than fifteen (15) days prior to a regular District
Board Meeting, Water User shall submit a written request to the
District for permission to transfer water that shall include all
of the following:
(I) A description of the proposed transfer.
(II) Identification and ownership/operator of lands
outside the District on which the transferred water will be
applied.
(III) Quantity of water to be transferred
(IV) A proposed monthly delivery schedule of the
transferred water - dates and quantities.
(V) Identification of lands in the District that will be
fallowed.
(VI) If land will not be fallowed, the source of
replacement surface water to irrigate the lands in the
District that would otherwise have been irrigated with the
transferred water.
(VII) Explanation of how the District's water balance
will not be adversely affected.
(c) After receipt of a Water User request to transfer, the
District shall circulate to the other Water Users a notice of the
proposed transfer. The notice shall advise the other Water Users
that they may purchase their proportionate share (based on Table
A Water of those desiring to purchase) of the water proposed to
be transferred. Water Users desiring to purchase a portion of the
water to be transferred shall advise the District in writing of
such intent no later than the time and date set forth in the
notice from the District. Only Water Users who have timely filed
a written notice of intent to purchase shall be eligible to do
so.
(d) At the next regular Board Meeting, following receipt of a
transfer request pursuant to Paragraph 8(b) above, the Board
shall consider the request. The Board may deny a request to
transfer if any of the transfer conditions in Paragraph 8(a) are
not satisfied.
(I) In the event requests from Water Users to purchase
the water proposed to be transferred equals or exceeds the
amount of water proposed to be transferred, the transfer
request shall be denied. If denied, the Water User proposing
to transfer shall then have seven (7) days to advise the
District in writing whether he will then use the water in
the District or release the water to the District for
allocation to the other Water Users submitting requests to
purchase such water. Should he fail to advise the District
of his intentions, the water will remain with the Water
User.
(II) In the event requests to purchase from the other
Water Users are less than the amount of water proposed to be
transferred, the Board may authorize the transfer in the
amount proposed to be transferred, less the requests to
purchase. The remaining amount shall be subject to the
immediately foregoing paragraph.
(e) Water User shall reimburse District for all out of pocket
expenses associated with the processing of the water transfer
request. District shall not be responsible for the failure of any
agency or entity to approve the requested water transfer and
Water User agrees to indemnify and shall assume the defense of
and hold District, its officers, agents and employees harmless
from any and all loss, damage, liability, claims or causes of
action of every nature whatsoever.
(f) This section shall not apply to a Water User that purchases
another Water User's Table A Water at the open market rate under
Paragraph 6(o) above, for the purpose of using the same on his
lands or lands that he farms outside of the District boundaries.
The Water User may take delivery of such water outside the
District boundaries without complying with this section.
9. NOTICE
Any Notice or Announcement which the provisions hereof
contemplate shall be given to one of the parties hereto by the
other in writing and shall be deemed to have been given if
deposited in the United States mail on the part of District in a
postage-prepaid envelope addressed to Water User at the address
shown on District Records, and on the part of Water User in a
postage-prepaid envelope, addressed to District at 1109 Whitley
Avenue, Corcoran, California 93212, or such other address as from
time to time may be designated by written notice from one party
to the other, provided, however, that this Article shall not
preclude the effective service of any such Notice or Announcement
by other means.
10. TERM OF CONTRACT
This Water Service Contract shall be effective on January 1,
1997, and shall remain in effect for a period of two (2) Years,
terminating December 31, 1998.
11. CONTRACT AMENDMENTS OR MODIFICATIONS
This Water Service Contract may be renewed, amended,
modified, or prematurely terminated only upon the mutual written
consent of the parties.
12. RIGHTS OF LANDOWNERS REGARDING ALLOCATION OF PROJECT WATER
Upon termination of this Water Service Contract, any
Landowner shall have the right to contract with the District for
his share of Project Water on the same terms and conditions as
the other Water Users.
13. CONTRACT ASSIGNMENT, SALE OR TRANSFER
The right to receive Project Water under and pursuant to
this Water Service Contract shall not be assigned, sold or
otherwise transferred without the prior written consent of the
District. Disposition of any Project Water surplus to the needs
of Water User shall be reallocated or disposed of in the manner
provided in Paragraph 6(o) hereof.
14. RELATIONSHIP TO STATE CONTRACT
This Water Service Contract is made subject to any and all
requirements imposed upon District or Water User by the terms of
the State Contract and nothing in this Water Service Contract
shall be deemed to require District or Water User to perform any
obligation in conflict with the State Contract. The State
Contract is hereby incorporated herein by this reference in all
respects as though set forth in full at this point, and any
amendments thereto.
15. GENERAL
(a) Any waiver or claim of waiver at any time by either party to
this Water Service Contract of its rights with respect to
default, or any other matter arising in connection with this
Water Service Contract, shall not be deemed to be a waiver with
respect to any subsequent default or matter.
(b) Nothing contained in this Water Service Contract shall be
construed as in any manner abridging, limiting or depriving
District or Landowners of any means of enforcing any remedy,
either at law or in equity, for the breach of any of the
provisions hereof which it would otherwise have.
(c) Where the terms of this Water Service Contract provide for
action to be based upon the opinion or determination of either
party to this Water Service Contract, whether or not stated to be
conclusive, said terms shall not be construed as permitting such
action to be predicated upon arbitrary, capricious, or
unreasonable opinions or determinations.
(d) Captions accompanying sections of this Water Service Contract
are for convenience of reference and do not form a part of this
Water Service Contract.
(e) Water Service Contracts executed by District for agricultural
water service shall be uniform with respect to basic terms and
conditions.
(f) It is agreed by the parties that time is of the essence in
Water Service Contract.
(g) Nothing herein contained shall be deemed to require the
performance of any act which shall constitute the modification or
abandonment of Project Facilities, nor be deemed to prevent the
exercise of any powers contained in the California Water Storage
District Law regarding the modification or abandonment of the
Project Facilities.
TULARE LAKE BASIN WATER STORAGE DISTRICT
By: _____________________ Date: _______________________
President
By: _____________________ Date: _______________________
Secretary
WATER USER:
SOUTHLAKE AQUISITION CORP.
By: /s/ Date: 1/17/97
12/10/96
LANDOWNER'S REQUESTED PARTICIPATION
TOTAL CONTRACT AMOUNT OF WATER TO BE DESIGNATED
ON EXHIBIT A, AS MODIFIED, OF SHORT TERM STATE WATER
SERVICE CONTRACT FOR 1997 and 1998 STATE PROJECT WATER
Reference is made to the Short Term State Water Service
Contract for the 1997 and 1998 Water Years and to the Rules and
Regulations currently in effect, and particularly to Paragraph 1
of said Rules and Regulations addressing "Policy Regarding
Allocation of Project Water."
Please indicate:
____ (a) I desire to purchase my proportionate share of State
Project Water, as shown on Exhibit A of my Short Term
Contract.
(b) I desire to purchase my proportionate share of additional
total Contract water which may be available from
undersubscription of other landowners:
____ (I) Proportional share of Total Undersubscription;
____ (II) Up to a total Contract Amount of Water equal to
_____ acre feet.
____ (c) I desire to purchase less than my proportionate share,
specifically a total Contract amount of ______ acre
feet per year.
____ (d) I do not desire to purchase any State Project Water in
1997 and 1998.
I hereby name my authorized agent on all State Project Water
matters to be:
_______________________________________________
SOUTHLAKE AQUISITION CORP.
Signed: /s/ BB
Dated: 1/17/97
EXHIBIT A
12/16/96
1997-1998 SHORT TERM STATE WATER SERVICE CONTRACT
BETWEEN
TULARE LAKE BASIN WATER STORAGE DISTRICT
AND
LANDOWNER (WATER USER)
The allocation of Project Water to SOUTHLAKE AQUISITION CORP. is
0.5315% of the District's Table A Entitlement. Said percentage is
based upon the attached parcel ownership list, as such ownership
relates to total assessed land within District. This percentage
shall be adjusted to reflect other landowner participation, as
provided in this Contract and the Amended Rules and Regulations.
Such percentage has been applied in accordance with this
Contract.
The adjusted quantities of Annual Entitlement of District and
Water User's Table A Water are shown below for the period of this
Short Term State Water Service Contract, all quantities being in
acre feet.
Annual Entitlement Annual Water User's
For the Years of District Table A Water-A.F.
1997 & 1998 118,500 630 A.F.
The Water User's Table A Water shall be adjusted to reflect the
Water User's adjusted percentage of participation.
Tulare Lake Basin Water Storage District 12/17/96
1997 and 1998 Short-Term State Water Service Contract
Exhibit A
Tract APN SECTR ACREAGE Parcel List
9730 SOUTHLAKE AQUISITION CORP.
9001A 311-020-210 08-23-23 160.00
9001B 311-020-220 08-23-23 160.00
9002 311-060-020 15-23-23 22.80
9014 311-010-020 18-23-23 640.00
982.80
NINTH AMENDED
RULES AND REGULATIONS
GOVERNING THE TRANSMISSION OF WATER UNDER THE
WATER SUPPLY CONTRACT
BETWEEN THE
STATE OF CALIFORNIA, DEPARTMENT OF WATER RESOURCES
AND THE
TULARE LAKE BASIN WATER STORAGE DISTRICT
Pursuant to the requirements of Section 43003, Article 1,
Chapter 1, Division 14, Water Code of the State of California,
the Board of Directors of the Tulare Lake Basin Water Storage
District hereby adopts these Rules and Regulations governing the
transmission of water under the Water Supply Contract between the
State of California and the Tulare Lake Basin Water Storage
District through District's Project Facilities designated as
Laterals A and B to the District, except as may otherwise be
permitted under Section 15(a) of said Contract.
The District expressly recognizes that a controversy exists
as to the meaning and effect of the Interlake Agreement and it is
expressly understood that the transmission of water through
Laterals A and B to the District for use within the District,
except as may otherwise be permitted under Section 15(a) of the
State Contract, is not to be and shall not be construed as
ownership or operation of distribution facilities within
District, and that said controversy is expressly left unresolved
and undetermined.
1. Policy Regarding Allocation of Project Water
It is the policy of the Board of Directors of this
District that:
(a) The District's ability to deliver State Project
Water to District's Water Users is limited to the use of
Laterals A and B and Turnout C, hereinafter termed "Project
Facilities". Subject to the foregoing and the express and
distinct understanding that nothing herein contained shall
ever be so construed as to impose on the District or create
for District any obligation or liability to District's
landowners not existing under the adopted Projects of
District, the Interlake Agreement, the pertinent provisions
of the Water Code of the State of California or other
applicable law, all landowners shall be given the
opportunity to receive their proportionate share of
District's State Project Water supply and/or other water on
a uniform basis per assessed acre, under terms and
conditions set forth in the Water Service Contract.
(b) In the event that all or a portion of District's
State Water Project Table A Water is not subscribed by
landowners in accordance with their respective percentages
of assessed lands within District, other Water Users in
District will be afforded the opportunity to subscribe for
quantities in excess of their respective percentages.
(c) In the event Water Users subscribe for quantities
in excess of their respective percentages of assessed lands
within District, as provided for in subparagraph (b) above,
the reallocable quantity will be apportioned to said Water
Users on a pro rata basis per assessed acre of the Water
User.
(d) In the event the under-subscribed quantity is in
excess of the quantity requested by over-subscribing Water
Users, then, and in that event, assessments will be levied
from time to time all as provided for in Section 44030 of
the California Water Code (California Water Storage District
Law). District will, however, make reasonable efforts to
dispose of the under-subscribed quantities of water at the
best prices available for the accounts of the under-
subscribing Water Users.
2. Delivery To Lands Outside District Boundaries
Deliveries of water from Project Facilities to lands
outside District boundaries shall be made in accordance with
the provisions contained in "POLICY RE DELIVERY OF STATE
PROJECT WATER TO LAND OUTSIDE OF DISTRICT BY ACTION OF THE
BOARD OF DIRECTORS JANUARY 3, 1974" and further specified in
"AGREEMENT BETWEEN TULARE LAKE BASIN WATER STORAGE DISTRICT
(HEREIN TERMED DISTRICT) AND 'WATER USER' (HEREIN TERMED
WATER USER) IN SUPPORT OF REQUEST FOR STATE CONSENT TO
DISPOSITION OF PROJECT WATER OUTSIDE THE BOUNDARIES OF
DISTRICT", all as may be amended. Copies of both documents
are on file in the offices of the District.
3. Irrigation Year
The irrigation year means the twelve-month period from
and including January 1 of any year through the 31st of
December of said year.
4. Management Of Project Facilities
The Project Facilities of District, are under the
exclusive management and control of the Board of Directors
through its authorized agents, and no other persons shall
have any right to interfere with, operate or manage the said
Project Facilities in any manner.
5. Water User
Water User means that person or entity owning land
within the boundaries of District, or the successor in
interest, who has executed a Short Term State Water Service
Contract with said District or who has been assessed
pursuant to and under the provisions of said Section 44030
of the Water Code.
6. Authorized Agent(s) Of Water Users
Each Water User who desires water service shall advise
the District in writing the names of his authorized agent(s)
and such authorized agent(s) may be changed from time to
time by the Water User by giving such notice, in writing, to
the District.
7. Water Orders
(a) All Water Users' orders for Project Water,
Supplemental Water and Non-District Water deliveries shall
be made to the District office or District personnel 24
hours prior to actual delivery. Annual requested monthly
deliveries shall be submitted on forms provided, on or
before October 1 of each year, to allow District to comply
with the requirements of the State and District's
operational requirements.
(b) Delivery Schedule requirements of the State
include, but are not limited to, the following:
(1) On or before October 1 of each year, District
must submit in writing to the State a preliminary Table
A Water delivery schedule and, if appropriate, a
carryover water delivery schedule, indicating the
amounts of water desired by the District during each
month of the succeeding year.
(2) On December 1 of each year, the State shall
determine and furnish to District the water delivery
schedule for the next succeeding year which shall show
the amounts of Table A Water to be delivered to
District during each month of that year.
(3) A water delivery schedule may be amended by
the State upon District's written request. Requested
amendments shall be submitted by the Water user in time
for the District to submit the desired change on or
before the 20th of the month prior to the month or
months the desired change is to become effective, and
shall be subject to review and modification by the
State in like manner as the schedule itself.
(c) From time to time there may be made available to
District other Project Water including Turnback Water,
Interruptible Water, and Supplemental Water from other
sources delivered through Project Facilities. The District
shall promptly notify the Water users of the availability
and estimated cost of said water and the allocated amounts
to each Water User based upon respective percentage of Table
A Water. Water Users desiring to participate shall enter
into an agreement with the District for the delivery of such
water.
(d) It is expected that, under normal operational
conditions, and within the limitations of contract
obligations and capacities of the Project Facilities, it
will generally be possible to accommodate Water Users'
requests for water deliveries and changes in daily water
deliveries provided that advance notice is given by such
Water Users to District in accordance with the operating
procedures of the State.
8. Continual Delivery
Delivery of Water shall be made continually, day and
night.
9. Proration Of Available Capacity
At any time or location where total Water User requests
for delivery capacity in Project Facilities exceeds the
actual capacity of Project Facilities, then the actual
capacity of Project Facilities will be allocated among those
Water Users requesting delivery capacity in proportion to
the respective percentages of Table A Water which each
requesting Water User has contracted for under the Short
Term State Water Service Contracts. Water Users may use
their allocated share of delivery capacity in Project
Facilities to take delivery of any type of water,
irrespective of the source.
10. Charge For Water Spilled
If water is ordered, and the Water user is not ready or
able to receive water or continue to take delivery at the
times of requested delivery, said Water User shall be
charged for any water spilled until the State, at District's
notification, has effected a change at the Turnout(s) in the
California Aqueduct, unless another Water User or Users
agrees to take said water. In the event no other Water User
or Users agrees to take said water, District shall notify
the State as soon as reasonably possible.
11. No Water Delivery If Water User Is Delinquent
No water will be delivered to Water user if he is
delinquent in the payment of any charges under the Short
Term State Water Service Contract and/or for any assessments
levied under said California Water Code.
12. Grievances
Any grievance or complaint of a Water User that cannot
be settled directly with the Operations Superintendent,
shall be appealed to the District Manager and, from his
decision, appeal may be made to the Board of Directors,
provided, however, no such Water User shall be precluded
from taking any legal action available in a court of
competent jurisdiction after exhausting these administrative
remedies.
13. Inspection Of Records
Water Users may inspect records of cost, water delivery
and other matters pertinent to the Short Term State Water
Service Contracts at the District's office during regular
business hours.
14. Water Shortages
Pursuant to powers granted by Section 43004 of the
California Water Code, in the event of shortage of Project
Water, water will be apportioned to each Water User within
District, on a pro rata basis relating to their respective
contract quantities of Table A Water.
15. Responsibility For Damage To District Property
Each landowner and/or Water User shall be responsible
to District for all damage to District property caused by
negligent or careless acts of himself or his agent. All
such damage will be repaired by District or to District's
specifications and the cost thereof shall be borne by the
landowner and/or Water User.
16. Limitations Of District Responsibility
District shall not be liable for any damages of any
kind or nature resulting directly or indirectly from any
private ditch or the water flowing therein, or for
negligent, wasteful or other use or handling of water by the
users thereof. District's responsibility shall absolutely
cease when the water leaves the Project Facilities.
17. Encroachment On Project Facilities
(a) No opening shall be made or structure placed in
any Project Facilities, except by District, or with written
approval of the District's Board of Directors.
(b) A permit for encroachment shall be required before
any irrigation or drainage ditches, fences, pipelines, or
other encroachments from private sources will be permitted
to be used within any District right-of-way.
(c) The work for all encroachments on Project
Facilities shall be constructed and maintained to District's
specifications at the sole expense of the applicant.
(d) Any person using any District right-of-way for any
purpose assumes all risk of so doing and by his use accepts
responsibility for any damage to District property resulting
therefrom and also for any damage or claims of damage to
private property caused by such damage to District property.
(e) Any Water User constructing or doing work on
District right-of-way or Project Facilities shall first
enter into an agreement which shall, among other things,
provide a hold harmless to the District.
(f) Access roads along Laterals A and B banks may be
used by landowners at such time and in such a manner that
neither the road nor the bank is damaged, within terms and
conditions to be set from time to time by the Board.
(g) No livestock may be pastured, or allowed to
trespass, upon Project Facilities at any time.
(h) No waste of any kind shall be either dumped into
Project Facilities or placed on or adjacent to the banks of
Project Facilities where it might fall, slide or be blown
into the Project Facilities.
(i) No tail water from any source shall be spilled
into Project Facilities, except by District or with the
written approval of the District's Board of Directors.
18. Non-District Water Charge
The District shall bill non-Water Users a wheeling
charge, at a unit rate to be set by the Board of Directors,
for water conveyed through Project Facilities. Water Users
will not be billed for Non-District Water conveyed through
Project Facilities.
19. Authority Of Rules And Regulations
(a) These Rules and Regulations are made to govern
transmission of water under the Water Supply Contract
between the State of California, Department of Water
Resources, and the Tulare Lake Basin Water Storage District,
and the Short Term State Water Service Contract between the
District and its Water users, and any amendments to the
foregoing. In the event of a conflict between such
Contracts and these Rules and Regulations, reconciliation
amendments shall be adopted as soon as reasonably possible.
In the event the conflict is not or cannot be reconciled,
the Water Supply Contract and the Short Term State Water
Service Contract shall govern.
(b) Pursuant to said Section 43003 of the Water Code
of the State of California, District may enter into long-
term water service contracts with landowners in District,
which contracts may, in the discretion of the Board,
provide, among other things, that the obligations are a lien
on the land with the same force and effect and priority as
an assessment lien if such contract is recorded in the
office of the County Recorder in the County in which such
land is situated and such contracts may provide for delivery
of water outside District's boundaries as contemplated by
Article 15(a) of the Water Supply Contract and the
obligations resulting from such deliveries may likewise be
secured by a lien on lands within the boundaries of
District. The Short Term State Water Service Contracts
entered into between District and Water User shall not be
recorded.
20. Changes In Rules And Regulations
These Rules and Regulations shall become effective
immediately and may be changed from time to time by
resolution of the District's Board of Directors.
21. Enforcement Of Rules And Regulations
The Manager of District shall be responsible for the
enforcement of the Rules and Regulations. Refusal to comply
with any of the Rules and Regulations shall be sufficient
cause for the termination of water service, and water
service shall not again be furnished until full compliance
has been made with all the requirements herein set forth.
In no event shall any liability accrue against District or
any of its officers, agents or employees, for damage, direct
or indirect, arising from such temporary discontinuance or
reduction of water deliveries; provided, however, that
liability of District hereunder shall be governed by and
under the provisions of the Government Code of the State of
California, commonly known as the "Claims Against Public
Entities Statute", Section 810 et seq. of said Code and
applicable law with respect thereto and as said Code and law
may be interpreted by courts of competent jurisdiction; and,
provided further that in the event a grievance or complaint
is being processed pursuant to Section 12 hereof, any action
hereunder shall be suspended pending decision of the Board
of Directors.
EXHIBIT "G"
to PURCHASE AGREEMENT dated _______________ between
Southlake Acquisition Corporation and Jim Joseph Revocable Trust,
"Owner"; and Dana C. Hair "Buyer."
There are no items in Exhibit "G."
AGREEMENT FOR THE PURCHASE AND SALE OF REAL PROPERTY
THIS AGREEMENT FOR THE PURCHASE AND SALE OF REAL PROPERTY is
made and entered into this 21st Day of February, 1997 by and
between Celebrate L.L.C. and/or assignee (hereinafter referred to
as "Buyer") and S.H.F. Acquisition Corp. ("Seller"), with
reference to the following facts:
A. Seller is the owner of a parcel of vacant land consisting of
approximately .82 gross acres described as a portion of the W2
SW4 SW4 SE4 NW4 of Section 33, Township 19S and Range 61E, M.D.M.
(hereinafter referred to as the "Property"). The property is
further described as Arroyo Grande Unit 3 consisting of 4 lots.
B. Buyer now desires to purchase from Seller and Seller desires
to sell to Buyer the Property.
NOW THEREFORE, in consideration of the mutual covenants, premises
and agreements contained herein, the parties hereto do hereby
agree as follows:
1. PURCHASE AND SALE. Buyer shall purchase from Seller, upon
the terms and conditions set forth, the Property. Purchase shall
be in the form of cash or certified funds at the close of escrow.
2. PURCHASE PRICE. The purchase price to be paid for the
Property shall be exactly ONE HUNDRED THOUSAND DOLLARS
($100,000.00). Said sum shall by paid as follows:
a) Upon the acceptance of this offer to purchase, the Buyer
shall deposit into escrow FIVE THOUSAND DOLLARS ($5,000 00).
Said deposit shall be applicable to purchase price. Upon
satisfaction of the contingencies contained in paragraph 6,
at Buyer's sole discretion, the earnest money deposit shall
be increased to TEN THOUSAND DOLLARS ($10,000.00) and become
non-refundable in the event Buyer fails to close. In the
event Buyer elects to cancel prior to expiration of the
contingency period, the initial deposit of FIVE THOUSAND
DOLLARS ($5,000.00) shall be released to the Buyer without
further instructions from Seller.
3. TITLE TO THE PROPERTY. Title conveyed is to be subject to
encumbrances, easements, rights of way, restrictions, conditions
and covenants of record as shown on a current preliminary title
report provided through escrow to be furnished at Seller's
expense. Buyer shall have ten (10) working days following
receipt of said report to approve the condition of title,
provided that if written disapproval is not received by Buyer
within said period, Buyer shall be deemed to have accepted the
condition of the title. Seller agrees to deliver, at his
expense, good and merchantable title as evidenced by a policy of
title insurance to the Buyer. The Buyer, at his option, may
terminate this offer to purchase and his earnest money shall be
returned if the Seller fails to deliver good and merchantable
title as herein provided.
4. DISCLOSURE OF CONDITIONS. Buyer shall take title subject to
declarations, covenants, conditions and restrictions, articles of
incorporation, bylaws, rules and regulations currently in force,
to be delivered to Buyer. Buyer shall be deemed to have approved
said documents unless written notice to the contrary is delivered
to Seller within ten (10) working days of receipt by Buyer.
5. ESCROW. The purchase and sale provided for herein shall be
consummated through an escrow to be opened with Fidelity National
Title (Regina Kington). THE ESCROW SHALL BE DEEMED OPEN WHEN
BUYER AND SELLER HAVE EXECUTED AND DEPOSITED SIGNED ESCROW
INSTRUCTIONS WITH THE ESCROW COMPANY (THE OPENING OF ESCROW).
Said escrow shall be upon the usual form of instructions of the
escrow holder for transactions of the type provided for herein,
except that said instructions shall incorporate ail terms and
provisions of this Agreement, and in additions shall provide the
following:
a) to close escrow 75 days from opening escrow or
recordation of final map whichever is later but in no event
later than 9/1/97;
b) promptly after the opening of escrow, Seller shall cause
to be procured and delivered for Buyer's approval the
Preliminary Title Report and copies of documents referred to
in paragraph 3;
c) Seller shall pay a Documentary Transfer Tax, and all
other fees and costs shall be divided in accordance with the
usual practices of the escrow holder;
d) real property taxes shall be prorated to Close of Escrow;
e) any Special Assessments or Fees outstanding on the
Property shall be paid by Seller;
f) in the event of any conflict between the terms of this
agreement and the terms of the escrow, the terms of this
agreement shall prevail except where the escrow instructions
specifically provide otherwise.
If escrow fails to close as the result of Buyer's default, all
monies deposited by Buyer into escrow shall be considered as
liquidated damages to the Seller. If escrow fails to close as a
result of Seller's default, Buyer shall be entitled to seek
specific performance remedies. The provisions of this paragraph
shall be the sole remedies available to each respective party
hereunder in the event of a default under this agreement.
6. CONTINGENCIES. The purchase of the Property is contingent
upon:
a) Buyer's approval of the Preliminary Title Report and all
documents described within the Preliminary Title Report,
issued by Fidelity National Title Company concerning the
property as described in paragraph (3).
b) Buyer's approval of all surveys and engineering as to
soils conditions, dirt balance, hydrology, sewer and water
availability, tortoise mitigation and on and off site costs
and feasibility studies, all to be completed at Buyer's
expense, at Buyers option.
c) Buyer's approval of a Phase I Environmental Site
Assessment to be performed by (Buyer to select) at Buyer's
expense, at Buyers option.
The above contingencies are solely for the Buyer's benefit. Each
of the contingencies must be approved in writing, by Buyer on or
before 45 days from the Opening of Escrow. Should Buyer not
approve for any reason whatsoever, any one of the above
contingencies, then he shall have the right to terminate this
Agreement on or before the expiration of the contingency period.
In the event Buyer terminates this Agreement due to his
disapproval of one or more of the contingencies, any deposits
made by Buyer shall be immediately returned to Buyer less any
escrow costs incurred and Buyer shall have no further obligations
under this agreement. Buyer shall be solely responsible for all
costs involved in satisfying the above contingencies.
7. DUE DILIGENCE STUDIES. It is hereby agreed that, in the
event that this escrow does not close, that the Buyer shall
furnish at no expense to Seller, all surveys, engineering,
feasibility studies, reports and any and all other materials in
Buyer's possession that may pertain to the development of the
property. Buyer hereby agrees to indemnify Seller from any
claims, liens damages and expenses (including attorney's fees)
arising from or in connection with such entry.
8. OFFER EXPIRATION. Unless the Seller's acceptance of this
offer to purchase is delivered to Buyer before 5PM, the 25th day
of February, 1997, this offer shall be deemed revoked.
9. AGENCY DISCLOSURE. See attached agency disclosure forms.
10. NOTICES. Any and all notices, demands, or other
communications required or desired to be given hereunder shall be
in writing and shall be validly given or made to another party if
served either personally or if deposited in the United States
mail certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communication be
serviced personally, service shall be conclusively deemed made at
the time of such personal service. If such notice, demand or
other communication be given by mail, such shall be conclusively
deemed given forty-eight (48) hours after the deposit thereof in
the United States mail addressed to the party to whom such
notice, demand or other communication is to be given as
hereinafter set forth.
To Buyer: Celebrate L.L.C.
2317 Glassport Cir.
N. Las Vegas, NV 89030
Ann: Harry Shull
To Seller: S.H.F. Acquisition Corp.
4045 Spencer Street, Ste. 206
Las Vegas, NV 89119
Attn: Jim Dale
Any party hereto may change its' address for the purpose of
receiving notices, demands and other communications as herein
provided by written notice given in the manner aforesaid to the
other party or parties hereto. After opening of escrow, a copy
of all notices, demands and other communications shall be given
to the escrow office.
11. APPLICABLE LAWS AND SEVERABILITY. This document shall, in
all respects, be governed by the laws of the State of Nevada
applicable to agreements executed and to be wholly performed with
the State of Nevada. Nothing contained herein shall be construed
so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision contained
herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to
contract, the latter shall prevail but the provision of this
document which is affected shall be curtailed and limited only to
the extent necessary to bring it within the requirements of the
law.
12. ENTIRE AGREEMENT. The foregoing represents the entire
Agreement between the parties and no verbal statements made by
any party are a part hereof unless incorporated in writing. In
the event either party shall prevail in any legal action
commenced to enforce this agreement, he shall be entitled to all
costs incurred in such action including attorney's fees, costs
and expenses as may be fixed by the Court.
13. MODIFICATIONS OR AMENDMENTS. No amendment, change or
modification of this document shall be valid unless in writing
and signed by ail parties hereto.
14. SUCCESSORS OR ASSIGNS. All of the terms and provisions
contained herein shall inure to the benefit of and shall be
binding upon the parties hereto and their respective successors
and assigns.
15. TIME OF THE ESSENCE. Time is of the essence of this
Agreement and all terms, provisions, covenants and conditions
hereof.
16. BUYER'S STATEMENT. Buyer states that Buyer will personally
inspect said property and is buying said property on his own
inspection and not on any representation(s) of Seller or Seller's
Agent(s). Buyer accepts that the only guarantees given by Seller
are those of title and there are no other guarantees given by
Seller as to, but not limited to, condition, zoning, fitness for
use for any certain purpose, soils tests, percolation tests,
improvements, presence or absence of utilities, or paving.
17. SELLER'S STATEMENT. The sale of Unit 3 is contingent upon
the successful completion of the sale of Units 2A and 2B (53 lots
of Arroyo Grande Estates).
18. DISCLOSURE. Seller is aware that Buyer is a Nevada Real
Estate Licensee.
19. DISCLOSURE. Seller warrants no knowledge of soil
contamination.
COUNTER OFFER
The Agreement For the Purchase and Sale of Real Property made by
Celebrate L.L.C. to purchase the real property commonly known as
Phases 3 Arroyo Grande Estates dated February 21, 1997 is not
accepted in its present form, but the following COUNTER OFFER is
hereby submitted:
CHANGE TO READ AS FOLLOWS
B. ... desires to sell to Buyer the Property, as is.
CHANGE TO READ AS FOLLOWS
5a. Close of escrow shall be no later than July 1, 1997.
ADD NEW PARAGRAPH
5g. Escrow shall be deemed to be opened on the first
business day following the signing of this document by both
the Seller and Buyer, and Buyer is notified in of Sellers
signing in writing.
CHANGE TO READ AS FOLLOWS
6a. Seller will provide Buyer a copy of a current
Preliminary Title Report, and . . .
ADD NEW PARAGRAPH
6d. Buyer shall, within thirty (30) days of receipt of the
Preliminary Title Report and supporting documentation,
provide written notice to seller of any items unacceptable
to Buyer. Seller shall have 10 days to agree to remove such
items, and in the event seller is unwilling or unable to do
so, this agreement shall terminate and the escrow be
canceled. Buyers failure to object to the exceptions in the
preliminary title report, within 30 days, set forth above
shall be deemed an approval of the Preliminary Title Report.
The above also applies to paragraph 4 of Purchase Agreement.
ADD NEW PARAGRAPH
6e. Buyer and Buyer's experts shall exercise care in
entering upon and inspecting the property. Buyer hereby
agrees to defend, indemnify, and hold the Seller, its
officials, employees, and agents, harmless from damages,
losses, cost expenses, and liabilities, (including legal
fees), incurred by Seller arising out of and resulting from
Buyer's and Buyer's experts entry upon and inspection of the
property.
The undersigned Buyers, offer and agree to purchase said property
on the terms and conditions herein stated and acknowledges
receipt of a copy of this agreement from the Broker named above.
Date: 2/21/97 Time: 10:45 am BUYER: /S/
Address: 2317 Glassport Cir. City: North Las Vegas State: NV
Date: 2/26/97 Time: 8:35 am SELLER: SHF Acquisition Corp.
by: /s/ James H. Dale
President
Address: 4045 S. Spencer St. Ste. 206 City: Las Vegas State: NV
AGREEMENT FOR THE PURCHASE AND SALE OF REAL PROPERTY
THIS AGREEMENT FOR THE PURCHASE AND SALE OF REAL PROPERTY is
made and entered into this 21st Day of February, 1997 by and
between Celebrate L.L.C. and/or assignee (hereinafter referred to
as "Buyer") and S.H.F. Acquisition Corp. ("Seller"), with
reference to the following facts:
A. Seller is the owner of a parcel of vacant land consisting of
approximately eleven (11) gross acres described as a portion of
the SW4 NW4 of Section 33, Township 19S and Range 61E, M.D.M.
(hereinafter referred to as the "Property"). The property is
further described as Arroyo Grande Unit 2A and 2B consisting of
53 lots.
B. Buyer now desires to purchase from Seller and Seller desires
to sell to Buyer the Property.
NOW THEREFORE, in consideration of the mutual covenants, premises
and agreements contained herein, the parties hereto do hereby
agree as follows:
1. PURCHASE AND SALE. Buyer shall purchase from Seller, upon
the terms and conditions set forth, the Property. Purchase shall
be in the form of cash or certified funds at the close of escrow.
2. PURCHASE PRICE. The purchase price to be paid for the
Property shall be exactly FIVE HUNDRED SIXTY ONE THOUSAND EIGHT
HUNDRED DOLLARS ($561,800.00). Said sum shall by paid as
follows:
a) Buyer shall deposit into escrow FIVE THOUSAND DOLLARS
($5,000 00). Said deposit shall be applicable to purchase
price. Upon satisfaction of the contingencies contained in
paragraph 6, at Buyer's sole discretion, the earnest money
deposit shall be increased to TWENTY FIVE THOUSAND DOLLARS
($25,000.00) and become non-refundable in the event Buyer
fails to close. In the event Buyer elects to cancel prior
to expiration of the contingency period, the initial deposit
of FIVE THOUSAND DOLLARS ($5,000.00) shall be released to
the Buyer without further instructions from Seller.
b) Buyer shall reimburse, to Seller, SEVENTY TWO THOUSAND
NINE HUNDRED FIFTY SEVEN DOLLARS ($72,957.00), for prepaid
deposits for water fees, from proceeds of a construction
loan.
3. TITLE TO THE PROPERTY. Title conveyed is to be subject to
encumbrances, easements, rights of way, restrictions, conditions
and covenants of record as shown on a current preliminary title
report provided through escrow to be furnished at Seller's
expense. Buyer shall have ten (10) working days following
receipt of said report to approve the condition of title,
provided that if written disapproval is not received by Buyer
within said period, Buyer shall be deemed to have accepted the
condition of the title. Seller agrees to deliver, at his
expense, good and merchantable title as evidenced by a policy of
title insurance to the Buyer. The Buyer, at his option, may
terminate this offer to purchase and his earnest money shall be
returned if the Seller fails to deliver good and merchantable
title as herein provided.
4. DISCLOSURE OF CONDITIONS. Buyer shall take title subject to
declarations, covenants, conditions and restrictions, articles of
incorporation, bylaws, rules and regulations currently in force,
to be delivered to Buyer. Buyer shall be deemed to have approved
said documents unless written notice to the contrary is delivered
to Seller within ten (10) working days of receipt by Buyer.
5. ESCROW. The purchase and sale provided for herein shall be
consummated through an escrow to be opened with Fidelity National
Title (Regina Kington). THE ESCROW SHALL BE DEEMED OPEN WHEN
BUYER AND SELLER HAVE EXECUTED AND DEPOSITED SIGNED ESCROW
INSTRUCTIONS WITH THE ESCROW COMPANY (THE OPENING OF ESCROW).
Said escrow shall be upon the usual form of instructions of the
escrow holder for transactions of the type provided for herein,
except that said instructions shall incorporate ail terms and
provisions of this Agreement, and in additions shall provide the
following:
a) to close escrow 75 days from opening escrow or
recordation of final map whichever is later but in no event
later than 9/1/97;
b) promptly after the opening of escrow, Seller shall cause
to be procured and delivered for Buyer's approval the
Preliminary Title Report and copies of documents referred to
in paragraph 3;
c) Seller shall pay a Documentary Transfer Tax, and all
other fees and costs shall be divided in accordance with the
usual practices of the escrow holder;
d) real property taxes shall be prorated to Close of Escrow;
e) any Special Assessments or Fees outstanding on the
Property shall be paid by Seller;
f) in the event of any conflict between the terms of this
agreement and the terms of the escrow, the terms of this
agreement shall prevail except where the escrow instructions
specifically provide otherwise.
If escrow fails to close as the result of Buyer's default, all
monies deposited by Buyer into escrow shall be considered as
liquidated damages to the Seller. If escrow fails to close as a
result of Seller's default, Buyer shall be entitled to seek
specific performance remedies. The provisions of this paragraph
shall be the sole remedies available to each respective party
hereunder in the event of a default under this agreement.
6. CONTINGENCIES. The purchase of the Property is contingent
upon:
a) Buyer's approval of the Preliminary Title Report and all
documents described within the Preliminary Title Report,
issued by Fidelity National Title Company concerning the
property as described in paragraph (3).
b) Buyer's approval of all surveys and engineering as to
soils conditions, dirt balance, hydrology, sewer and water
availability, tortoise mitigation and on and off site costs
and feasibility studies, all to be completed at Buyer's
expense, at Buyers option.
c) Buyer's approval of a Phase I Environmental Site
Assessment to be performed by (selected by buyer) at Buyer's
expense, at Buyers option.
The above contingencies are solely for the Buyer's benefit. Each
of the contingencies must be approved in writing, by Buyer on or
before 45 days from the Opening of Escrow. Should Buyer not
approve for any reason whatsoever, any one of the above
contingencies, then he shall have the right to terminate this
Agreement on or before the expiration of the contingency period.
In the event Buyer terminates this Agreement due to his
disapproval of one or more of the contingencies, any deposits
made by Buyer shall be immediately returned to Buyer less any
escrow costs incurred and Buyer shall have no further obligations
under this agreement. Buyer shall be solely responsible for all
costs involved in satisfying the above contingencies.
7. DUE DILIGENCE STUDIES. It is hereby agreed that, in the
event that this escrow does not close, that the Buyer shall
furnish at no expense to Seller, all surveys, engineering,
feasibility studies, reports and any and all other materials in
Buyer's possession that may pertain to the development of the
property. Buyer hereby agrees to indemnify Seller from any
claims, liens damages and expenses (including attorney's fees)
arising from or in connection with such entry.
8. OFFER EXPIRATION. Unless the Seller's acceptance of this
offer to purchase is delivered to Buyer before 5PM, the 25th day
of February, 1997, this offer shall be deemed revoked.
9. AGENCY DISCLOSURE. See attached agency disclosure forms.
10. NOTICES. Any and all notices, demands, or other
communications required or desired to be given hereunder shall be
in writing and shall be validly given or made to another party if
served either personally or if deposited in the United States
mail certified or registered, postage prepaid, return receipt
requested. If such notice, demand or other communication be
serviced personally, service shall be conclusively deemed made at
the time of such personal service. If such notice, demand or
other communication be given by mail, such shall be conclusively
deemed given forty-eight (48) hours after the deposit thereof in
the United States mail addressed to the party to whom such
notice, demand or other communication is to be given as
hereinafter set forth.
To Buyer: Celebrate L.L.C.
2317 Glassport Cir.
N. Las Vegas, NV 89030
Ann: Harry Shull
To Seller: S.H.F. Acquisition Corp.
4045 Spencer Street, Ste. 206
Las Vegas, NV 89119
Attn: Jim Dale
Any party hereto may change its' address for the purpose of
receiving notices, demands and other communications as herein
provided by written notice given in the manner aforesaid to the
other party or parties hereto. After opening of escrow, a copy
of all notices, demands and other communications shall be given
to the escrow office.
11. APPLICABLE LAWS AND SEVERABILITY. This document shall, in
all respects, be governed by the laws of the State of Nevada
applicable to agreements executed and to be wholly performed with
the State of Nevada. Nothing contained herein shall be construed
so as to require the commission of any act contrary to law, and
wherever there is any conflict between any provision contained
herein and any present or future statute, law, ordinance or
regulation contrary to which the parties have no legal right to
contract, the latter shall prevail but the provision of this
document which is affected shall be curtailed and limited only to
the extent necessary to bring it within the requirements of the
law.
12. ENTIRE AGREEMENT. The foregoing represents the entire
Agreement between the parties and no verbal statements made by
any party are a part hereof unless incorporated in writing. In
the event either party shall prevail in any legal action
commenced to enforce this agreement, he shall be entitled to all
costs incurred in such action including attorney's fees, costs
and expenses as may be fixed by the Court.
13. MODIFICATIONS OR AMENDMENTS. No amendment, change or
modification of this document shall be valid unless in writing
and signed by ail parties hereto.
14. SUCCESSORS OR ASSIGNS. All of the terms and provisions
contained herein shall inure to the benefit of and shall be
binding upon the parties hereto and their respective successors
and assigns.
15. TIME OF THE ESSENCE. Time is of the essence of this
Agreement and all terms, provisions, covenants and conditions
hereof.
16. BUYER'S STATEMENT. Buyer states that Buyer will personally
inspect said property and is buying said property on his own
inspection and not on any representation(s) of Seller or Seller's
Agent(s). Buyer accepts that the only guarantees given by Seller
are those of title and there are no other guarantees given by
Seller as to, but not limited to, condition, zoning, fitness for
use for any certain purpose, soils tests, percolation tests,
improvements, presence or absence of utilities, or paving.
17. DISCLOSURE. Seller is aware that Buyer is a Nevada Real
Estate Licensee.
18. DISCLOSURE. Seller warrants no knowledge of soil
contamination.
The undersigned Buyers, offer and agree to purchase said property
on the terms and conditions herein stated and acknowledges
receipt of a copy of this agreement from the Broker named above.
Date: 2/21/97 Time: 10:45 am BUYER: /S/
Address: 2317 Glassport Cir. City: North Las Vegas State: NV
Date: 2/26/97 Time: 8:35 am SELLER: SHF Acquisition Corp.
by: /s/ James H. Dale
President
Address: 4045 S. Spencer St. Ste. 206 City: Las Vegas State: NV
COUNTER OFFER
The Agreement For the Purchase and Sale of Real Property made by
Celebrate L.L.C. to purchase the real property commonly known as
Phases 2A & 2B Arroyo Grande Estates dated February 21, 1997 is
not accepted in its present form, but the following COUNTER OFFER
is hereby submitted:
CHANGE TO READ AS FOLLOWS
2b... from proceeds of a construction loan. Buyer shall
reimburse seller for these fees at close of escrow, or as an
alternative shall create a note and first trust deed,
secured by the property, in favor of the seller. The note
shall bear interest at 10% per annum and shall mature no
later than 90 days from close of escrow.
CHANGE TO READ AS FOLLOWS
5a. Close of escrow shall be no later than July 1, 1997.
ADD NEW PARAGRAPH
5g. Escrow shall be deemed to be opened on the first
business day following the signing of this document by both
the Seller and Buyer, and Buyer is notified in writing of
sellers signing.
CHANGE TO READ AS FOLLOWS
6a. Seller will provide Buyer a copy of a current
Preliminary Title Report, and . . .
ADD NEW PARAGRAPH
6d. Buyer shall, within thirty (30) days of receipt of the
Preliminary Title Report and supporting documentation,
provide written notice to seller of any items unacceptable
to Buyer. Seller shall have 10 days to agree to remove such
items, and in the event seller is unwilling or unable to do
so, this agreement shall terminate and the escrow be
canceled. Buyers failure to object to the exceptions in the
preliminary title report, within 30 days, set forth above
shall be deemed an approval of the Preliminary Title Report.
The above also applies to paragraph 4 of Purchase Agreement.
ADD NEW PARAGRAPH
6e. Buyer and Buyer's experts shall exercise care in
entering upon and inspecting the property. Buyer hereby
agrees to defend, indemnify, and hold the Seller, its
officials, employees, and agents, harmless from damages,
losses, cost expenses, and liabilities, (including legal
fees), incurred by Seller arising out of and resulting from
Buyer's and Buyer's experts entry upon and inspection of the
property.
ADD NEW PARAGRAPH
6f. Prior to commencement of construction, Buyer shall
replace existing performance bond for off site improvements,
posted by the Seller with the City of North Las Vegas, with
either a new bond or other collateral acceptable to the City
of North Las Vegas.
ADD NEW PARAGRAPH
6g. All fees, entitlements, and permits paid or received to
date, by the seller, except the water fees, shall be
transferred to the benefit of the Buyer at close of escrow.
Seller will cooperate with Buyer in signing any
documentation required by the City of North Las Vegas or
Buyer's Lender to effectuate such transfer. Water fees will
be transferred, to Buyer, upon payment of the amount stated
in paragraph 2b. Seller will further cooperate in signing
any and all documentation to effectuate this transfer. Note
and Trust Deed would be considered payment as stated in para
2b. at close of escrow.
All other terms and conditions, of the Original Agreement for
Purchase, shall remain the same.
Seller's reserve the right to accept any other offer prior to
purchaser's acceptance of this counter offer and seller's agent
being so advised in writing.
This counter offer, upon execution by both parties, shall become
a part of the Original Agreement for Purchase.
Unless the Buyer's acceptance of this Counter Offer, to the
Original Agreement for Purchase, is delivered to Seller before
5PM, THE 26TH DAY OF FEBRUARY, 1997, this offer shall be deemed
revoked.
Date: 2/25/97 Time: 9:25 AM SELLER: SHF Acquisition Corporation
by:/s/ James H. Dale, President
Date: 2/25/97 Time: 11:55 AM BUYER: /s/
PURCHASE AND OPTION AGREEMENT
by and between
SHF ACQUISITION CORPORATION
and
MURIETA INVESTORS, LLC
dated October 7, 1996
TABLE OF CONTENTS
Page No.
1. Purchase and Sale . . . . . . . . . . . . . . . . . . . . . 2
2. Option to Purchase . . . . . . . . . . . . . . . . . . . . 2
2.1 Option Consideration . . . . . . . . . . . . . . . . . 2
2.2 Term of Option . . . . . . . . . . . . . . . . . . . . 2
2.3 Exercise of Option . . . . . . . . . . . . . . . . . . 2
3. Purchase Price . . . . . . . . . . . . . . . . . . . . . . 3
3.1. Purchase Price for Phase I Lots . . . . . . . . . . . 3
3.1.1 Deposit . . . . . . . . . . . . . . . . . . . . 4
3.1.2 Remainder of Phase I Closing Amount . . . . . . 4
3.1.3 Phase I Success Payments . . . . . . . . . . . . 4
3.2 Purchase Price for Option Lots . . . . . . . . . . . . 4
3.2.1 First Six Option Lots . . . . . . . . . . . . . 4
3.2.2 Second Six Option Lots . . . . . . . . . . . . . 5
3.2.3 Remainder of Option Lots . . . . . . . . . . . . 5
3.3 Payment of Purchase Price for the Option Payments . . 5
3.3.1 Option Lots Closing Amount . . . . . . . . . . . 5
3.3.2 Option Lots Success Payments . . . . . . . . . . 6
3.4 Buyer's Obligation to Build Homes on Lots . . . . . . 6
4. LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . . . . 6
5. Title . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
5.1 Condition of Title . . . . . . . . . . . . . . . . . . 6
5.2 Phase I Title Policy . . . . . . . . . . . . . . . . . 7
5.3 Option Lots Title Policy. . . . . . . . . . . . . . . . 7
6. Escrow and Closing . . . . . . . . . . . . . . . . . . . . 7
6.1 Opening of Escrow . . . . . . . . . . . . . . . . . . . 7
6.2 Phase I Closing Date . . . . . . . . . . . . . . . . . 7
6.3 Option Lots Closing Date. . . . . . . . . . . . . . . . 7
6.4 Seller's Deposits . . . . . . . . . . . . . . . . . . . 8
6.5 Buyer's Deposits . . . . . . . . . . . . . . . . . . . 8
6.6 Closing Costs . . . . . . . . . . . . . . . . . . . . . 8
6.7 Prorations . . . . . . . . . . . . . . . . . . . . . . 8
6.8 Possession . . . . . . . . . . . . . . . . . . . . . . 9
7. Feasibility Study . . . . . . . . . . . . . . . . . . . . . 9
8. Investigation of the Property . . . . . . . . . . . . . . . 9
8.1 Delivery of Documents . . . . . . . . . . . . . . . . . 9
8.2 Access and Processing . . . . . . . . . . . . . . . . .10
8.2.1 Access . . . . . . . . . . . . . . . . . . . . .10
i
8.2.2 Processing . . . . . . . . . . . . . . . . . . .10
9. Buyer's Condition to Close . . . . . . . . . . . . . . . .10
10. Seller's Condition to Close. . . . . . . . . . . . . . . . 11
11. Representations Warranties and Covenants . . . . . . . . . 12
11.1 Seller's Representations Warranties and Covenants . . 12
11.2 Buyer's Representations and Warranties . . . . . . . 15
12. Condemnation . . . . . . . . . . . . . . . . . . . . . . . 15
13. Sale of Seller's Remaining Property . . . . . . . . . . . 16
14. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 16
15. General Provisions . . . . . . . . . . . . . . . . . . . . 16
15.1 Counterparts . . . . . . . . . . . . . . . . . . . . 16
15.2 Entire Agreement . . . . . . . . . . . . . . . . . . 16
15.3 Partial Invalidity . . . . . . . . . . . . . . . . . 16
15.4 Choice of Law . . . . . . . . . . . . . . . . . . . 17
15.5 Waiver of Covenants, Conditions or Remedies . . . . 17
15.6 Legal Advice . . . . . . . . . . . . . . . . . . . . 17
15.7 Time of the Essence . . . . . . . . . . . . . . . . 17
15.8 Attorneys' Fees . . . . . . . . . . . . . . . . . . 17
15.9 Assignment . . . . . . . . . . . . . . . . . . . . . 17
15.10 Notices . . . . . . . . . . . . . . . . . . . . . . 17
15.11 Confidentiality . . . . . . . . . . . . . . . . . . 18
15.12 Exclusivity . . . . . . . . . . . . . . . . . . . . 19
15.13 Memorandum of Agreement . . . . . . . . . . . . . . 19
EXHIBIT A LEGAL DESCRIPTION OF SELLER'S PROPERTY . . . . . . . 21
EXHIBIT B LEGAL DESCRIPTION OF THE PHASE I LOTS . . . . . . . . 22
EXHIBIT C BLANKET ASSIGNMENT AND BILL OF SALE . . . . . . . . . 23
EXHIBIT D WHITNER RESEARCH GROUP PRICE LIST . . . . . . . . . . 24
EXHIBIT E FIRPTA AFFIDAVIT . . . . . . . . . . . . . . . . . . 25
EXHIBIT F DEFINITION OF HAZARDOUS SUBSTANCE . . . . . . . . . . 26
EXHIBIT G MEMORANDUM OF AGREEMENT . . . . . . . . . . . . . . . 28
ii
PURCHASE AND OPTION AGREEMENT
This PURCHASE AND OPTION AGREEMENT (this "Agreement") is
made and entered into as of October 7, 1996 (the "Effective
Date"), by and between SHF ACQUISITION CORPORATION, a Nevada
corporation ("Seller"), and MURIETA INVESTORS, LLC, a California
limited liability company ("Buyer").
RECITALS
A. Seller and Buyer have previously entered into a
Purchase and Option Agreement dated April 27, 1996, and the
parties acknowledge that such agreement has terminated on its own
terms and is of no further force or effect.
B. Seller is the owner of certain real property ("Seller's
Property") located in the development commonly known as Unit 6 of
Rancho Murieta (the "Development"), County of Sacramento
("County"), State of California ("State"), as more particularly
described on EXHIBIT "A" attached hereto.
C. Seller desires to sell to Buyer six (6) legally
subdivided and finished residential lots, lot numbers 3106, 3103,
3113, 3166, 3190 and 3192 (the "Phase I Lots") located within
Seller's Property, as more particularly described in EXHIBIT "B"
attached hereto, and Buyer desires to purchase the Phase I Lots,
in accordance with terms and conditions contained in this
Agreement.
D. Seller further desires to grant to Buyer the option to
purchase a maximum of thirty-four (34) (the "Maximum Option
Lots") additional legally subdivided and finished residential
lots (the "Option Lots") located within Seller's Property, and
Buyer desires to obtain the option to purchase the Option Lots,
in accordance with terms and conditions contained in this
Agreement. The Option Lots shall be selected by Buyer from all
of the lots constituting Seller's Property at the time of
exercising each option to purchase such Option Lots and Seller
shall have the right to reasonably disapprove of such Option Lots
selected by Buyer. The Phase I Lots and the Option Lots shall be
collectively referred to herein as the "Property."
E. As used herein, the Property shall include the real
property described above and all of Seller's right, title and
interest in and to all entitlements, easements, rights, mineral
rights, oil and gas rights, water, water rights, air rights,
development rights and privileges appurtenant to such real
property and all improvements located on such real property.
Notwithstanding the foregoing, neither the Property, nor any
other rights transferred pursuant to this Agreement or the
Blanket assignment and Bill of Sale attached hereto as Exhibit
"C", (the "Assignment"), shall include any rights or obligations
of Seller under that certain Reimbursement Agreement between
Seller and Rancho Murieta Community Services District, dated
August 18, 1995 (the "Reimbursement Agreement").
1
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereby agree as follows:
1. PURCHASE AND SALE. Seller agrees to sell the Phase I
Lots to Buyer, and Buyer agrees to purchase the Phase I Lots from
Seller, subject to the terms and conditions of this Agreement.
2. OPTION TO PURCHASE. Seller hereby grants to Buyer,
within the time period and upon the terms and conditions of this
Agreement, the exclusive right and option (the "Option") to
purchase the Option Lots. Subject to the following sentence,
Buyer shall have the right to exercise the Option in multiple
phases and in such increments as Buyer desires, in its sole and
absolute discretion, until Buyer has purchased all of the Option
Lots. If Buyer fails to exercise the Option to purchase at least
six (6) of the Option Lots, with no more than three (3) of such
six (6) Option Lots being located on the fairway of the golf
course on Seller's Property, during any Option Period (as defined
below in Section 2.2), then the Maximum Option Lots shall be
reduced by the number of the Option Lots less than six (6) which
Buyer failed to exercise the Option to purchase during such
Option Period.
2.1 OPTION CONSIDERATION. The Option is granted for
the Option Term (as defined below in Section 2.2) in
consideration of Buyer's payment to Seller of One Dollar ($1.00)
and other valuable consideration, the receipt and adequacy of
which are hereby acknowledged by Seller. Regardless of whether
the Option is exercised pursuant to the terms of this Agreement,
the One Dollar ($1.00) consideration paid by Buyer to Seller
pursuant to this Section 2.1 shall not be applied to the Purchase
Price for the Phase I Lots (as defined below in Section 3.1) or
the Purchase Price for the Option Lots (as defined below in
Section 3.2), and shall be retained by Seller as earned
consideration for the granting of the Option.
2.2 TERM OF OPTION. The term of the Option (the
"Option Term") shall commence on the date (the "Option
Commencement Date") that is eight (8) months following the Phase
I Closing Date (as defined below in Section 6.2) and shall expire
on the date that is twenty four (24) months following the Option
Commencement Date, unless extended by a written agreement
executed by both Seller and Buyer. The "Option Periods" shall be
those consecutive four month periods commencing on the Option
Commencement Date and expiring on the expiration of the Option
Term.
2.3 EXERCISE OF OPTION. Each Option shall be exercised
by Buyer's delivery, during the respective Option Period, of
written notice of exercise of each Option (the "Option Exercise
Notice") to Seller and Buyer's deposit into the Escrow (as
defined below in Section 6.1) of the sum of Twenty-Five Thousand
Dollars ($25,000) (the "Option Deposit") in cash (or in the form
of a wire transfer or other immediately available funds) for each
Option exercised. Upon Buyer's deposit of the Option Deposit
2
into the Escrow, the Option Deposit shall be non-refundable,
except as expressly set forth in this Agreement. The Option
Deposit shall be credited to the applicable Option Lots Closing
Amount (as defined below in Section 3.3.1) at the applicable
Option Lots Close of Escrow (as defined below in Section 6.3).
The Option Exercise Notice shall specify the Option Lots which
the exercise of the Option applies and set forth the date of the
closing on such Option Lots which shall not be sooner than ten
(10) days following the date of the Option Exercise Notice and
not later then thirty (30) days following the date of the Option
Exercise Notice. Seller shall have the right to reasonably
disapprove of any of the Option Lots selected from Seller's
Property in the Option Exercise Notice by providing Buyer with
written notice of disapproval of such Option Lots within five (5)
days of the date of the Option Exercise Notice. If Buyer does
not receive Seller's written notice of disapproval during such
five (5) day period, Seller shall be deemed to have approved of
the Option Lots selected by Buyer. If Buyer does receive written
notice of Seller's reasonable disapproval of any such Option Lots
during such five (5) day period, Buyer shall have the right to
select other Option Lots from Seller's Property, which must be
reasonably approved by Seller, to replace those Option Lots
disapproved by Seller. Buyer shall have the right to reasonably
extend the closing date set forth in the Option Exercise Notice
if Seller disapproves of any Option Lots selected by Buyer.
3. PURCHASE PRICE.
3.1 PURCHASE PRICE FOR PHASE I LOTS. The purchase
price for the Phase I Lots (the "Purchase Price for the Phase I
Lots") shall be the sum of (a) Two Hundred Forty Thousand Dollars
($240,000), (b) Thirty-Three Thousand One Hundred Seventy Two and
40/100 Dollars ($33,172.40) for park fees payable to Rancho
Murieta Association (the "Current Park Fees"), and (c) twenty
percent (20%) of the lesser of (i) the Gross Sales Price (as
hereinafter defined), or (ii) the Base Sales Price (as
hereinafter defined), of each of the Phase I Lots, as improved
with a fully completed single-family home, resold by Buyer, LESS
Forty Thousand Dollars ($40,000) for each such lot (the "Phase I
Success Payments"). The term "Base Sales Price" as used in this
Agreement shall mean the greater of (y) the price recommended by
the Whitney Research Group, as set forth in EXHIBIT "D" attached
hereto, plus a reasonable adjustment for "bonus rooms" offered to
specific home buyers, or (z) the listed or advertised price for
standard homes offered by Buyer, plus a reasonable adjustment for
"bonus rooms" offered to specific home buyers. If the home sizes
constructed by Buyer vary from the recommended sizes of the
Whitney Research Group, comparable Base Sale Prices shall be
reasonably agreed to by Buyer and Seller for each of such homes.
The term "Gross Sales Price" as used herein shall mean the gross
proceeds of cash and other consideration received by Buyer
(whether through escrow or outside of escrow) from the sale of
any relevant lot hereunder, (including the cost of all
improvements, extras, upgrades or additional items), less any
rebates, credits, discounts or other forms of price reduction.
The Purchase Price for the Phase I Lots, less the Phase I Success
Payments shall be referred to herein as the "Phase I Closing
Amount." The Purchase Price for the Phase I Lots shall be
payable by Buyer to Seller as follows:
3
3.1.1 DEPOSIT. Within five (5) days of the
Effective Date, Buyer shall deposit in the Escrow the sum of
Twenty-Five Thousand Dollars ($25,000) (the "Deposit") in cash
(or in the form of a wire transfer or other immediately available
funds). If Buyer does not terminate this Agreement prior to the
expiration of the Feasibility Period (as defined below in Section
7), then upon the expiration of the Feasibility Period, the
Deposit shall be non-refundable, except as expressly set forth in
this Agreement. The Deposit and the Option Deposit (if such
deposit has been made by Buyer pursuant to Section 2.3 hereof)
shall be held by the Escrow Agent (as defined below in Section
6.1) in an insured interest-bearing account with an institutional
lender acceptable to Buyer and Seller, with interest accruing for
the benefit of Buyer. The Deposit shall be credited to the Phase
I Closing Amount at the Phase I Close of Escrow (as defined below
in Section 6.2).
3.1.2 REMAINDER OF PHASE I CLOSING AMOUNT. Prior
to the Phase I Close of Escrow, Buyer shall deposit in the Escrow
the remaining portion of the Phase I Closing Amount, in cash (or
in the form of a wire transfer or other immediately available
funds), for payment to Seller at the Phase I Close of Escrow.
3.1.3 PHASE I SUCCESS PAYMENTS. Upon the closing
of the resale of each of the Phase I Lots by Buyer, Buyer shall
arrange for the Phase I Success Payments, in cash (or in the form
of a wire transfer or other immediately available funds), to be
paid directly from the closing on such lots to Seller.
3.2 PURCHASE PRICE FOR OPTION LOTS. The purchase
price for the Option Lots (the "Purchase Price for the Option
Lots") shall be as follows:
3.2.1 FIRST SIX OPTION LOTS. For the first six
(6) Option Lots purchased by Buyer, the sum of (a) the number of
Option Lots multiplied by Forty Thousand Dollars ($40,000), (b)
the amount allocable for park fees to such lots which is
outstanding to the Rancho Murieta Association as of the date of
Buyer's purchase of such lots, such amount to be paid to the
Rancho Murieta Association (the Current Park Fee is applicable to
the Option Lots as of the Effective Date, but it is adjusted
annually at the end of each calendar year) (the sum of items (a)
and (b) of this Section 3.2.1 shall be collectively referred to
herein as the "First Six Option Lots Closing Amount"), and (c)
twenty percent of the lesser of (i) the Gross Sales Price, or
(ii) the Base Sales Price, of each of the first six (6) Option
Lots, as improved with a fully completed single-family home,
resold by Buyer, PLUS ten percent (10%) of the Gross Sales Price
less the Base Sales Price (assuming the Gross Sales Price is
greater than the Base Sales Price), LESS Forty Thousand Dollars
($40,000) for each such Option Lot (the total of this subheading)
(c) shall be referred to herein as the "First Six Option Lots
Success Payment").
3.2.2 SECOND SIX OPTION LOTS. For the second six
(6) Option Lots purchased by Buyer, the sum of (a) the number of
Option Lots multiplied by Forty-Five Thousand Dollars ($45,000),
(b) the amount allocable for park fees to such lots which is
outstanding to the Rancho Murieta Association as of the date of
Buyer's Purchase of such lots, such amount to be paid to the
Rancho Murieta Association (the Current Park Fee is applicable to
4
the Option Lots as of the Effective Date, but it is adjusted
annually at the end of each calendar year) (the sum of items (a)
and (b) of this Section 3.2.2 shall be collectively referred to
herein as the "Second Six Option Lots Closing Amount"), and (c)
twenty percent of the lesser of (i) the Gross Sales Price, or
(ii) the Base Sales Price, of each of the second six (6) Option
Lots, as improved with a fully completed single-family home,
resold by Buyer, PLUS fifteen percent (15%) of the Gross Sales
Price less the Base Sales Price (assuming the Gross Sales Price
is greater than the Base Sales Price), LESS Forty-Five Thousand
Dollars($45,000) for each such Option Lot (the total of this
subheading (c) shall be referred to herein as the "Second Six
Option Lots Success Payment").
3.2.3 REMAINDER OF OPTION LOTS. For the
remainder of the Option Lots purchased by Buyer, the sum of (a)
the number of Option Lots multiplied by Forty Five Thousand
Dollars ($45,000), (b) the amount allocable for park fees to such
lots which is outstanding to the Rancho Murieta Association as of
the date of Buyer's purchase of such lots, such amount to be paid
to the Rancho Murieta Association (the Current Park Fee is
applicable to the Option Lots as of the Effective Date, but it is
adjusted annually at the end of each calendar year) (the sum of
items (a) and (b) of this Section 3.2.3 shall be collectively
referred to herein as the "Remainder of Option Lots Closing
Amount"), and (c) twenty percent of the Gross Sales Price of each
of the remaining Option Lots, as improved with a fully completed
single-family home, resold by Buyer, LESS Forty Five Thousand
Dollars ($45,000) for each such Option Lot (the total of this
subheading (c) shall be referred to herein as the "Remaining
Option Lots Success Payment"). The First Six Option Lots Closing
Amount, the Second Six Option Lots Closing Amount and the
Remainder of Option Lots Closing Amount shall be collectively
referred to herein as the "Option Lots Closing Amount." The
First Six Option Lots Success Payment, the Second Six Option Lots
Success Payment and the Remaining Option Lots Success Payment
shall be collectively referred to herein as the "Option Lots
Success Payment."
3.3 PAYMENT OF PURCHASE PRICE FOR THE OPTION PAYMENTS.
The Purchase Price for the Phase I Lots and the Purchase Price
for the Option Lots shall be collectively referred to herein as
the "Purchase Price." The Purchase Price for the Option Lots
shall be payable by Buyer to Seller as follows:
3.3.1 OPTION LOTS CLOSING AMOUNT. Prior to the
Close of Escrow for each group of Option Lots, Buyer shall
deposit in the Escrow the Option Lots Closing Amount for the
applicable group of Option Lots, less the Option Deposit, in cash
(or in the form of a wire transfer or other immediately available
funds), for payment to Seller at the Close of Escrow for such
Option Lots.
3.3.2 OPTION LOTS SUCCESS PAYMENTS. Upon the
closing of the resale of each of the Option Lots by Buyer, Buyer
shall arrange for the applicable Option Lots Success Payment, in
cash (or in the form of a wire transfer or other immediately
available funds), to be paid directly from the closing on each of
such Option Lots to Seller.
5
3.4 BUYER'S OBLIGATION TO BUILD HOMES ON LOTS. Buyer
agrees to sell each of the Phase I Lots and the Option Lots
improved with a single family residence thereon, except (i) in
circumstances where Seller has consented in writing to the sale
of a bare lot, or (ii) Seller has transferred all of its interest
in Seller's Property, except for the Property. In either of such
circumstances, a success fee (the "Bare Lot Success Fee") shall
be payable by Buyer to Seller for each such lot, in the amount of
therefor, twenty percent (20%) of the Gross Purchase Price, but
with no reduction of the Forty Thousand Dollars ($40,000) credit
(in the case of the Phase I Lots and the first six (6) Option
Lots purchased by Buyer) or Forty-Five Thousand Dollars $45,000
(in the case of all other Option Lots), as the case may be, to
which Buyer would otherwise be entitled hereunder where an
improved lot is being resold by Buyer.
4. LIQUIDATED DAMAGES. BUYER AND SELLER AGREE THAT SHOULD
BUYER FAIL TO COMPLETE THE PURCHASE AS HEREIN PROVIDED BY REASON
OF DEFAULT OF BUYER, THE PARTIES HERETO, BY INITIALING THIS
AGREEMENT AT THE END OF THIS PARAGRAPH, AGREE THAT IT WOULD BE
IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES IN CASE
OF BUYER'S FAILURE TO COMPLETE THE PURCHASE DUE TO BUYER'S
DEFAULT, THAT THE AMOUNT OF THE DEPOSIT PROVIDED FOR IN PARAGRAPH
3.1.1 IS A REASONABLE ESTIMATE OF SELLER'S DAMAGES, AND THAT AS
SELLER'S SOLE REMEDY FOR BUYER'S BREACH OF THIS AGREEMENT, IN LAW
OR IN EQUITY, SELLER MAY RETAIN THE AMOUNT OF THE DEPOSIT.
Buyer's Initials /s/ Seller's Initials /s/
5. TITLE.
5.1 CONDITION OF TITLE. Seller shall have the Escrow
Agent prepare and deliver to Buyer a preliminary title report
(the "Title Report") with respect to the Property (with legible
copies of all documents referenced therein as exceptions to
title) on or prior to five (5) days following the Effective Date.
The Title Report shall specify which exceptions apply to the
Phase I Lots and which apply to the Option Lots. Within fifteen
(15) days of Buyer's receipt of the Title Report, Buyer shall
notify Seller in writing which exceptions contained in the Title
Report, if any, Buyer disapproves; all other exceptions in the
Title Report shall be referred to as "Permitted Exceptions."
Seller shall have ten (10) days after receipt of such notice to
advise Buyer in writing of any disapproved exceptions which will
not be removed by Seller from record title to the Phase I Lots
and those Option Lots selected by Buyer, at or prior to each of
the Phase I Close of Escrow and the Option Lots Close of Escrow
(collectively, the "Close of Escrow"); provided, if Seller does
not respond in such ten (10) day period, Seller shall remove all
such disapproved exceptions from record title to the Phase I Lots
and the Option Lots at or prior to each Close of Escrow for each.
If Seller gives Buyer notice prior to expiration of such ten (10)
day period of disapproved exceptions that Seller is unable or
unwilling to remove from record title to the Phase I Lots or the
Option Lots, Buyer may elect to terminate this Agreement at any
6
time prior to the Phase I Close of Escrow; or, alternatively,
Buyer may elect to waive its objections to such disapproved
exceptions and to classify the exceptions contained in Seller's
notice as Permitted Exceptions. Following Seller's receipt of
Buyer's written notice approving the Feasibility Matters (as
defined below in Section 7.1), Seller shall not, without Buyer's
prior written consent, permit any new exceptions to title to be
placed on the Phase I lots. At any time prior to the expiration
of the Option, Seller agrees not to permit or to cause exceptions
to title to Seller's Property, except for such lots within
Seller's Property which Seller reasonably disapproves as Option
Lots or which are sold by Seller pursuant to Section 13 hereof,
to occur with respect to each group of Option Lots which pose a
material risk to Seller's ability to convey good title to the
Property to Seller in accordance with the terms of this
Agreement.
5.2 PHASE I TITLE POLICY. At the Phase I Close of
Escrow, Seller shall convey fee title to the Phase I Lots to
Buyer by grant deed (the "Phase I Grant Deed"). At the Phase I
Close of Escrow, the Escrow Agent shall issue a CLTA owner's
policy (or an ALTA owner's policy, if Buyer so elects) of title
insurance, (the "Phase I Title Policy") to Buyer in the amount of
the estimate Purchase Price for Phase I Lots, subject only to the
Permitted Exceptions applicable to the Phase I Lots.
5.3 OPTION LOTS TITLE POLICY. At the Close of Escrow
for each group of the Option Lots, Seller shall convey fee title
to the particular group of the Option Lots to Buyer by grant deed
(the "Option Lots Grant Deed"). At the Close of Escrow for each
group of Option Lots, the Escrow Agent shall issue a CLTA owner's
policy (or an ALTA owner's policy, if Buyer so elects) of title
insurance (the "Option Lots Title Policy"), to Buyer in the
amount of the estimated Purchase Price for the particular group
of Option Lots, subject only to the Permitted Exceptions
applicable to the particular group of Option Lots.
6. ESCROW AND CLOSING.
6.1 OPENING OF ESCROW. Within three (3) business days
after the Effective Date, Buyer or Seller shall open an escrow
(the "Escrow") with Old Republic Title Company, Sacramento,
California (the "Escrow Agent"), by depositing with Escrow Agent
a copy of the fully executed Agreement, or executed counterparts
hereof.
6.2 PHASE I CLOSING DATE. The closing on the Phase I
Lots shall occur on or before October 18, 1996 (the "Phase I
Closing Date"). The "Phase I Close of Escrow" shall be deemed to
occur at the moment the Phase I Grant Deed is recorded in the
County Recorder's Office (the "Official Records").
6.3 OPTION LOTS CLOSING DATE. Pursuant to Section 2.3
hereof, the Closing Date for each group of Option Lots shall be
the date set forth in the Option Exercise Notice. The "Option
Lots Close of Escrow" shall be deemed to occur at the moment each
applicable Option Lots Grant Deed is recorded in the Official
Records.
7
6.4 SELLER'S DEPOSITS. Prior to each Close of Escrow,
Seller shall deposit into the Escrow all of the following:
6.4.1 The Phase I Grant Deed or the applicable
Option Lots Grant Deed, as the case may be, duly executed and
acknowledged by Seller conveying fee title to Buyer;
6.4.2 A FIRPTA Affidavit in the form attached
hereto as Exhibit "E", duly executed by Seller certifying that
Seller is not a foreign person within the meaning of Section 1445
of Internal Revenue Code;
6.4.3 A California state tax withholding
certificate satisfying the requirements of California Revenue and
Taxation Code Section 18662 and 18668 (the "California Tax
Certificate");
6.4.4 The Assignment duly executed by Seller; and
6.4.5 Such escrow instructions and additional
documents and instruments as may be reasonably necessary to close
the Escrow pursuant to this Agreement.
6.5 BUYER'S DEPOSITS. Prior to each Close of Escrow,
Buyer shall deposit into the Escrow:
6.5.1 Cash or wired funds in the amount
sufficient to pay the balance of the Phase I Closing Amount or
the applicable Option Lots Closing Amount, as the case may be,
plus Buyer's share of closing costs; and
6.5.2 Such escrow instructions and additional
documents and instruments as may be reasonably necessary to close
the Escrow pursuant to this Agreement.
6.6 CLOSING COSTS. Seller shall pay such portion of
the premium(s) for Buyer's Phase I Title Policy and each of the
Option Lots Title Policies, if applicable, equal to standard CLTA
owner's coverage and Buyer shall pay any portion of such
premium(s) above the standard CLTA owner's coverage. In
connection with each Close of Escrow, Buyer and Seller shall pay
all other costs related to the transaction in the manner
consistent with common practice in residential bulk lot
transactions in the County. Each party shall be responsible for
paying their own legal costs relating to this transaction.
6.7 PRORATIONS. Seller shall pay at each Close of
Escrow any delinquent real property taxes and the prorated amount
of all assessments encumbering the Phase I Lots or the Option
Lots, as the case may be, or any portion thereof, including the
County Improvement Assessment "1915 Bond Act" for the Rancho
Murieta Community Services District No. 1 (the "Improvement Act
Bonds"), and the Elk Grove Unified School District Community
8
Facilities District No. 1, in accordance with the "Mello-Roos
Community Faculty Facilities Act of 1982" (the "Mello-Roos
Bonds"). All current, non-delinquent real property taxes and
assessments for the Phase I Lots or the Option Lots, as the case
may be, shall be prorated at each Close of Escrow on the basis of
the most recent tax information. Said prorations shall be based
on a thirty (30) day month.
6.8 POSSESSION. Upon each Close of Escrow, exclusive
possession of and title to the Phase I Lots or the Option Lots,
as the case may be, shall be conveyed to the Buyer, subject only
to the applicable Permitted Exceptions.
7. FEASIBILITY STUDY. Buyer shall have the period from
the Effective Date until 5 p.m. on the date which is thirty (30)
calendar days following the Effective Date (the "Feasibility
Period") to:
7.1 Review, in its sole and absolute discretion, the
suitability of the Property for Buyer's use and development,
including, without limitation, any governmental land regulations,
zoning ordinances, architectural and design approvals,
development costs, financial and market feasibility, the status
of the entitlements of the Property (including, without
limitation, the subdivision map status of the Phase I Lots), the
presence of "Hazardous Substances" (as defined in Exhibit "F"
attached hereto), existing or potential assessments imposed on
the Property and the physical condition of the Property (the
"Feasibility Matters");
7.2 Approve or disapprove of the Feasibility Matters;
and
7.3 Deliver to Seller and Escrow Agent written notice
of Buyer's approval, conditional approval or disapproval of the
Feasibility Matters or any of them. If Buyer disapproves of any
of the Feasibility Matters, then this Agreement shall terminate,
Escrow Agent shall immediately return the Deposit to Buyer
without any additional instructions from Seller, Buyer and Seller
shall share equally any Escrow and title cancellation charges,
the Escrow shall be terminated, and the parties shall have no
further rights or obligations under this Agreement.
8. INVESTIGATION OF THE PROPERTY.
8.1 DELIVERY OF DOCUMENTS. Within five (5) days after
the Effective Date, Seller shall provide Buyer with complete
copies of all of the following documents and materials in
Seller's possession, or readily obtainable by Seller, concerning
the Property and its improvement, development and operation
(collectively, the "Reports"): studies; reports; correspondence;
agreements; documents; affordable housing agreements and
materials; plans; maps; CC&Rs; home owners' association formation
documents, budgets, correspondence or other materials; permits;
and entitlements. The Reports shall include, without limitation,
the Environmental Report (as hereinafter defined), and copies of
any and all other environmental reports and materials, if any,
relating to the Property that are in Seller's possession.
Additionally, Seller shall immediately provide Buyer with any
9
additional Reports on the Property that arise at any time after
the Effective Date and prior to (a) the Option Lots Close of
Escrow, if Buyer has exercised the option, or (b) the expiration
of the Option Term, if Buyer has failed to exercise the Option
prior to the expiration of the Option Term.
8.2 ACCESS AND PROCESSING.
8.2.1 ACCESS. From and after the Effective Date
through each Close of Escrow, Buyer, its agents, employees and
contractors shall have the right to enter the Property for the
purposes of conducting such investigations, inspections and tests
of the Property as Buyer deems necessary in order to determine
the condition and suitability of the Property including, but not
limited to, the Feasibility Matters. Buyer hereby agrees to
indemnify and hold Seller harmless from and against any and all
loss, expense, claim, damage and injury to person or property
resulting from any acts of Buyer, its employees, consultants,
engineers, authorized agents and contractors on the Property in
connection with the performance of any investigation of the
Property as contemplated herein.
8.2.2 PROCESSING. From and after the Effective
Date through each Close of Escrow, Buyer shall have the right to
process all applications, plans, maps, agreements, documents, and
other instruments or entitlements necessary or appropriate for
the development of the Property as contemplated by Buyer,
including, without limitation, to the extent deemed necessary or
advisable by Buyer, home designs and floor plans. Buyer shall
proceed with such processing in a diligent manner at its sole
cost and expense and, upon written request from Seller, shall
advise Seller of the status of any entitlement processing it
performs. Seller shall, at no cost or expense to Seller, other
than general overhead costs and expenses, cooperate with and
assist Buyer in the processing of such items, including without
limitation attending meetings with governmental authorities
relating to the same, and to the extent necessary or appropriate,
executing all such items and materials.
9. BUYER'S CONDITION TO CLOSE.
9.1 Buyer's obligation hereunder to complete the
purchase of each phase of the Property is subject to satisfaction
of the following conditions at or prior to the applicable Closing
Date, each of which is for the sole benefit of Buyer, unless
waived by the Buyer in writing:
9.1.1 Seller shall have timely performed each and
every one of Seller's obligations set forth in this Agreement;
9.1.2 All of the warranties and representations
of Seller set forth in this Agreement shall be true and correct
at the Effective Date and the applicable Close of Escrow;
9.1.3 The Escrow Agent shall issue or provide an
irrevocable commitment to issue the Title Policy to Buyer at the
applicable Close of Escrow;
10
9.1.4 Seller shall have executed and delivered to
the Escrow Agent the FIRPTA Certificate and the California Tax
Certificate; and
9.1.5 No development, building, construction,
water, sewer, utility or other moratorium shall be in existence
on the applicable Closing Date that would prevent or limit the
City, County or any other public agency from issuing building,
grading, sewer or other permits or certificates of occupancy for
any single-family residential unit to be constructed on the
Property by Buyer.
9.2 In the event any of the conditions set forth in
Section 9.1 hereof are not satisfied or waived by Buyer in
writing, as and when required, then this Agreement and the Escrow
established hereunder shall terminate upon written notice by
Buyer to Seller, all documents deposited into Escrow shall be
returned to the party who deposited the same without further
instructions by either party to the Escrow Agent, and the Deposit
and Option Deposit (if such deposit has been made by Buyer
pursuant to Section 2.3 hereof) shall be promptly returned to
Buyer. In such event, Buyer shall retain all rights and remedies
against Seller to the extent Seller has failed to perform any of
its obligations hereunder.
10. SELLER'S CONDITION TO CLOSE.
10.1 Seller's obligation hereunder to complete the sale
of each phase of the Property is subject to satisfaction of the
following conditions at or prior to the Closing Date, each of
which is for the sole benefit of Seller, unless waived by the
Seller in writing.
10.1.1 Buyer shall have timely performed each
and every one of Buyer's obligations set forth in this Agreement;
10.1.2 All of the warranties and representations
of Buyer set forth in this Agreement shall be true and correct
at the Effective Date and the applicable Close of Escrow;
10.2 In the event any of the conditions set forth in
Section 10.1 hereof are not satisfied or waived by Seller in
writing, as and when required, then this Agreement and the Escrow
established hereunder shall terminate upon written notice by
Seller to Buyer, all documents deposited into Escrow shall be
returned to the party the same further instructions by either
party to the Escrow Agent, and Seller shall retain all rights and
remedies against Buyer to the extent Buyer has failed to perform
any of its obligations hereunder, as limited by the provisions of
Section 4 hereof. In such event, the Deposit shall be returned
to Buyer, unless Buyer is in default hereunder.
11
11. REPRESENTATIONS, WARRANTIES AND COVENANTS.
11.1 SELLER'S REPRESENTATIONS, WARRANTIES AND
COVENANTS. In addition to the representations, warranties and
covenants of Seller contained in other sections of this
Agreement, Seller hereby represents, warrants and covenants to
Buyer as follows, all of which shall survive each Close of Escrow
and any investigation or knowledge of Buyer prior to each Close
of Escrow:
11.1.1 Seller is a corporation duly organized,
validly existing and in good standing in the State of Nevada, and
has the full right, capacity, power and authority as the sole
owner in fee simple of the Property to enter into and carry out
the terms of this Agreement. Seller has not alienated,
encumbered, transferred, leased, assigned or otherwise conveyed
its interest in the Property or any portion thereof except as set
forth in the Title Report, nor entered into any Agreement to do
so, nor shall Seller do so prior to each Close of Escrow. The
entering into and performance by Seller of the transactions
contemplated by this Agreement will not violate or breach any
agreement, covenant or obligation binding on Seller. This
Agreement has been duly authorized and executed by Seller and the
parties signing on behalf of Seller, and upon delivery to and
execution by Buyer shall be a valid and binding agreement of
Seller.
11.1.2 For each of the forty (40) lots
comprising the Property, Seller has, to the best of Seller's
knowledge, (a) graded in accordance with all grading plans by the
City, County, State and any other applicable governmental or
quasi-governmental agency, body or authority (and any private
group, if applicable) (individually an "Authority", and
collectively, the "Authorities") having jurisdiction over the
Property, and certified to Buyer with respect to compaction by a
soils engineer licensed and in good standing in the State and
reasonably acceptable to Buyer, and certified by any required
Authority (such engineer's and Authorities' certificates being
referred to herein collectively as the "Engineers'
Certificates"), and suitable for the construction of Buyer's
product; (b) caused all water and sewer services to be installed
and stubbed to the lot, with each respective service including
water meter boxes, meter setter and/or curb stop and sewer
clean-outs set to grade and marked with a protective barrier; (c)
caused all electricity, telephone, and cable television conduit
to be installed and stubbed to the lot lines and capable of being
energized for immediate service upon completion of a
single-family residence on the lot; (d) caused all storm drain,
water, sewer, curb, gutter, sidewalk and pavement frontage
improvements to be constructed and installed; (e) caused all
street signs and striping installed and street lights to be
installed and energized; (f) caused all property corners to be
surveyed and marked and all monumentation, perimeter walls and/or
perimeter landscaping required by the Authorities or the
improvement plans and specifications to be installed; (g) caused
all fees (other than ordinary building permit fees and those
certain park fees payable pursuant to that certain Park
Development Agreement dated February 20, 1991, as amended by that
certain Settlement Agreement Regarding Payment of Park Fees
executed in August, 1994), exactions and assessments (except for
the Improvement Act Bonds and the Mello-Roos Bonds, both of which
shall be paid current by Seller, and prorated) to be paid in full
12
by Seller; and (h) completed any and all off-site improvements,
park area, open space or other public amenities required by the
conditions of approval to the tentative subdivision map(s) and
final map for the Property (the "Final Map") or by applicable
Authorities that are necessary for construction and occupancy of
residential units.
11.1.3 There are no mechanic's or materialman's
liens or similar claims or liens now asserted against the
Property for work performed or commenced prior to the date hereof
other than as described in the Title Report.
11.1.4 Neither Seller nor, to the best of
Seller's knowledge, any third party has used, generated,
manufactured, stored or disposed any Hazardous Substance in, at,
on, under or about the Property or transported any Hazardous
Substance to or from the Property. To the best of Seller's
knowledge, the Property is not in violation, nor has been or is
currently under investigation for violation of any federal, state
or local law, ordinance or regulation relating to industrial
hygiene, worker health and safety, or to the environmental
conditions in, at, on, under or about the Property including, but
not limited to, soil and groundwater conditions, except as
expressly set forth in that certain Level I Hazardous Materials
Site Assessment Rancho Murieta Unit No. 6, dated March, 1992,
prepared by W.E.S. Technology (the "Environmental Report"). To
the best of Seller's knowledge, the Property has not, except as
set forth in the Environmental Report, been subject to, and is
not within 2,000 feet of, a deposit of any Hazardous Substance.
To the best of Seller's knowledge, except as set forth in the
Environmental Report, there has been no discharge, migration or
release of any Hazardous Substance from, into, on, under or about
the Property, and there is not now, nor has there ever been on or
in the Property underground storage tanks or surface or
below-grade impoundments, any asbestos-containing materials or
any polychlorinated biphenyls used in hydraulic oils, electrical
transformers or other equipment. Seller hereby assigns to Buyer
as of each Close of Escrow all claims, counterclaims, defenses or
actions, whether at common law, or pursuant to any other
applicable federal or state or other laws which Seller may have
against any third parties relating to the existence of any
Hazardous Substance in, at, on, under or about the Property.
Moreover, Seller shall defend, indemnify and hold harmless
Buyer and its officers, directors, employees, agents,
shareholders, attorneys and their respective representatives and
successors in interest (collectively, the "Indemnitee") from any
liability, loss, cost, damage or expense, including, without
limitation, court costs, expert witness' fees and attorneys'
fees, that Indemnitee may suffer or incur as a result of any
claim, demand, action, cost or judgment made or obtained by any
individual, partnership, cooperation, entity, governmental agency
or person which arises out of or results from the presence or
existence of Hazardous Substances above, below or on the Property
to the extent that such Hazardous Substances are or were located
in such locations prior to the applicable Close of Escrow.
11.1.5 To the best of Seller's knowledge, there
are no endangered species or protected natural habitat, flora or
fauna located on the Property (other than the requirement that
13
any oak trees removed from the Property must be replaced pursuant
to that certain Sacramento County Ordinance amending Ordinance
No. 77-8D-10G regarding a Planned Unit Development known as
Rancho Murieta), nor are there any areas of the Property that are
or could be designated as wetlands.
11.1.6 There is no pending or threatened suit,
action or arbitration, or legal, administrative, or other
proceeding or governmental investigation, formal or informal,
including but not limited to eminent domain, condemnation,
assessment district or zoning change proceeding, or any judgment,
moratorium or other government policy or practice which affects
the Property or Buyer's anticipated development of the Property.
11.1.7 The Final Map has been approved by all
applicable Authorities, subject only to the conditions indicated
on the face thereof, and provides for the forty (40) lots
comprising the Property.
11.1.8 To the best of Seller's knowledge, all
grading and work of improvement performed by or on behalf of
Seller on the Property has been performed in a good and
workmanlike manner, strictly in accordance with applicable plans
therefor approved by the Authorities, and neither such plans nor
the grading and other work of improvement contain any error,
omission or defect in design, material or workmanship.
11.1.9 Except as set forth on the face of the
Final Map, Seller has not made any commitment or representation
to any government authority, or any adjoining or surrounding
property owner, which would in any way be binding on Buyer or
would interfere with Buyer's ability to develop and improve the
Property as a residential development, and will not make any such
commitment or representation which would affect the Property or
any portion thereof prior to each Close of Escrow, without
Buyer's written consent, which consent Buyer may grant or
withhold in its sole and absolute discretion.
11.1.10 To the best of Seller's knowledge, no
seismic safety problem relating to the Property would prevent or
impair residential development of the Property.
11.1.11 To the best of Seller's knowledge,
Seller is unaware of any other fact that would preclude Buyer
from developing the Property as a single-family residential
subdivision.
Each of the representations and warranties made by Seller in
this Agreement, or in any exhibit or on any document or
instrument delivered pursuant hereto, shall be true and correct
in all material respects on the Effective Date, and shall be
deemed to be made again as of each Close of Escrow, and shall
then be true and correct in all material respects. The truth and
accuracy of each of the representations and warranties, and the
performance of all covenants of Seller contained in this
Agreement, are conditions precedent to the release of the Deposit
14
to Seller and to each Close of Escrow. Seller shall notify Buyer
immediately of any facts or circumstances which are contrary to
the foregoing representations and warranties contained in this
Section 11.1.
11.2 BUYER'S REPRESENTATIONS AND WARRANTIES. In
addition to the representations, warranties and covenants of
Buyer contained in other sections of this Agreement, Buyer hereby
represents, warrants and covenants to Seller as follows, all of
which shall survive each Close of Escrow:
11.2.1 Buyer is a limited liability company
duly organized, validly existing and in good standing in the
State of California, and has the capacity and full power and
authority to enter into and carry out the agreements contained
in, and the transactions contemplated by, this Agreement, and
that this Agreement has been duly authorized and executed by
Buyer and, upon delivery to and execution by Seller, shall be a
valid and binding Agreement of Buyer. Buyer's entering into and
performance by Buyer of the transactions contemplated by this
Agreement will not violate or breach any agreement, covenant or
obligation binding on Buyer.
11.2.2 Buyer and any entity or person that owns
or controls Buyer are not bankrupt or insolvent under any
applicable federal or state standard, have not filed for
protection or relief under any applicable bankruptcy or creditor
protection statute and have not been threatened by creditors with
an involuntary application of any applicable bankruptcy or
creditor protection statute.
11.2.3 Prior to Seller transferring all its
interest in Seller's Remaining Property or Seller giving its
written consent, Buyer shall not resell any of the lots
comprising the Property without a single-family residence being
first constructed on each of such lots.
12. CONDEMNATION. If, prior to either Close of Escrow, any
portion of the Property is taken by any entity by condemnation or
with the power of eminent domain, or if the access thereto is
reduced or restricted thereby (or is the subject of a pending
taking which has not yet been consummated), Seller shall
immediately notify Buyer of such fact. In such event, Buyer
shall have the right, in Buyer's sole discretion, to terminate
this Agreement to all or any portion of the Property upon written
notice to Seller and Escrow Agent not later than seven (7) days
after receipt of Seller's notice thereof. If this Agreement to
any portion of the Property is so terminated, all documents and
funds, relating to such portion of the Property, including the
Deposit, shall be returned by Escrow Agent to each party who so
deposited the same, and neither party shall have any further
rights or obligations under this Agreement relating to such
portion of the Property, except for payment of escrow
cancellation fees which shall be borne equally by Buyer and
Seller. Alternatively, Buyer may proceed to consummate the
transaction provided for herein at Buyer's sole election, in
which event Seller shall assign and turn over, and Buyer shall be
entitled to receive and keep, any and all awards made or to be
made in connection with such condemnation or eminent domain, and
the parties shall proceed to such Close of Escrow pursuant to the
terms hereof, without any reduction in the applicable Purchase
15
Price. Provided that Seller shall be entitled to recover from
Buyer, out of such condemnation proceeds, Seller's reasonable and
necessary attorneys' fees which were directly and solely relative
to such condemnation and which were incurred prior to Buyer's
notice of intention to proceed with consummation of the sale
transaction, and PROVIDED FURTHER that Buyer shall be limited in
recovery rights for condemnation proceeds to making claim against
the condemning governmental agency.
13. SALE OF SELLER'S PROPERTY. Seller is currently engaged
in the process of selling Seller's Property. In the event that
Buyer identifies in writing to Seller a potential purchaser of a
lot within Seller's Property who subsequently consummates a sale
of such lot from Seller, Buyer shall be entitled to receive a six
percent (6%) commission (less any commission payable to a
participating broker in any such transaction) from Seller based
on the purchase price of such lot, which shall be immediately
payable to Buyer on the closing on such lot. Notwithstanding
anything to the contrary in this Section 13 or elsewhere in this
Agreement, Seller shall be free to sell lots within Seller's
Property on an individual basis at any time, provided such sales
do not deprive Buyer from exercising the Option to purchase the
Maximum Option Lots provided for in this Agreement.
14. BROKERS. Each party shall be responsible to pay any
sales or brokerage commission each has incurred in connection
with this transaction. Each party hereto hereby agrees to
indemnify, defend and hold the other harmless from any real
estate brokerage commission, finders fee, and all costs and
expenses (including reasonable attorneys' fees) of investigating
and defending any such claims, payable to any realtor or finder,
which such party may engage or is claimed to have engaged in
connection with this transaction.
15. GENERAL PROVISIONS.
15.1 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which, taken together, shall constitute one and the same
instrument.
15.2 ENTIRE AGREEMENT. This Agreement, together with
all exhibits hereto and documents referred to herein, if any,
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof, and supersede all prior
understandings or agreements, including the January 11, 1996
letter agreement between the parties. This Agreement may be
modified only by a writing signed by both parties. All exhibits
to which reference is made in this Agreement are deemed
incorporated in this Agreement whether or not actually attached.
15.3 PARTIAL INVALIDITY. If any provision of this
Agreement is held by a court of competent jurisdiction to be
invalid or unenforceable, the remainder of the Agreement shall
continue in full force and effect and shall in no way be impaired
or invalidated, and the parties agree to substitute for the
invalid or unenforceable provision a valid and enforceable
16
provision that most closely approximates the intent and economic
effect of the invalid or unenforceable provision.
15.4 CHOICE OF LAW. This Agreement and each and every
related document are to be governed by, and construed in
accordance with, the laws of the State of California.
15.5 WAIVER OF COVENANTS, CONDITIONS OR REMEDIES. The
waiver by one party of the performance of any covenant, condition
or promise, or of the time for performing any act, under this
Agreement shall not invalidate this Agreement nor shall it be
considered a waiver by such party of any other covenant,
condition or promise, or of the time for performing any other act
required, under this Agreement. The exercise of any remedy
provided in this Agreement shall not be a waiver of any
consistent remedy provided by law, and the provisions of this
Agreement for any remedy shall not exclude any other consistent
remedies unless they are expressly excluded.
15.6 LEGAL ADVICE. Each party has received independent
legal advice from its attorneys with respect to the advisability
of executing this Agreement and the meaning of the provisions
hereof. The provisions of this Agreement shall be construed as
to the fair meaning and not for or against any party based upon
any attribution of such party as the sole source of the language
in question.
15.7 TIME OF THE ESSENCE. Time shall be of the essence
as to all dates and times of performance, whether they are
contained herein or contained in any escrow instructions to be
executed pursuant to this Agreement.
15.8 ATTORNEYS' FEES. In the event that any party
hereto institutes an action or proceeding for a declaration of
the rights of the parties under this Agreement, for injunctive
relief, for an alleged breach or default of, or any other action
arising out of, this Agreement, or the transactions contemplated
hereby, or in the event any party is in default of its
obligations pursuant thereto, whether or not suit is filed or
prosecuted to final judgment, the non-defaulting party or
prevailing party shall be entitled to its actual attorneys' fees
and to any court costs incurred, in addition to any other damages
or relief awarded.
15.9 ASSIGNMENT. Buyer may not assign this Agreement
or any of its rights and obligations hereunder without the
written consent of Seller, except for transfer to any entity
which is wholly or commonly owned by Buyer. If Seller gives its
written consent to any such assignment by Buyer and such assignee
expressly assumes all of Buyer's obligations under this
Agreement, Buyer shall be fully relieved from any further
liability hereunder. This Agreement shall be binding upon and
shall inure to the benefit of the successors and permitted
assigns of the parties to this Agreement.
15.10 NOTICES. All notices and demands which either
party is required or desires to give to the other shall be given
in writing by certified mail, return receipt requested with
17
appropriate postage paid, by personal delivery, or by private
overnight courier service to the address set forth below for the
respective party, provided that if any party gives notice of a
change of name or address, notices to that party shall thereafter
be given as demanded in that notice. All notices and demands so
given shall be effective only upon receipt or refusal of delivery
by the party to whom notice or demand is being given.
If to Seller: SHF Acquisition Corporation
4045 S. Spencer Street
Suite 206
Las Vegas, NV 89119
Attn: James H. Dale
Telephone Number: (702) 732-7474
Fax Number: (702) 737-1065
With a copy to: Calfee & Young
611 North Street
Woodland, CA 95695
Attn: Christopher J. Konwinski, Esq.
Telephone Number: (916) 666-2185
Fax Number: (916) 666-3123
If to Buyer: Murieta Investors, LLC
c/o Leveraged Equity Management, Inc.
One Market, Suite 2801
San Francisco, California 94105
Attn: Mr. Eric P. Von der Porten
Telephone Number: (415) 284-0778
Fax Number: (415) 284-0784
With a Copy to: Gray Cary Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301
Attn: Thomas M. French, Esq.
Telephone Number: (415) 833-2028
Fax Number: (415) 327-3699
15.11 CONFIDENTIALITY. Buyer and Seller acknowledge
that the terms, conditions and contents of this Agreement are
confidential, and Buyer and Seller each hereby agrees that Buyer
and Seller, and their respective directors, officers, employees,
agents, legal counsel, consultants and independent contractors
(collectively, "Agents") shall keep the terms, conditions and
contents of this Agreement strictly confidential except as
otherwise permitted in this Section 15.11. Accordingly, Buyer
and Seller agree that they shall not, without the prior written
consent of the other, release, publish or otherwise distribute,
and shall not authorize or permit any of its Agents to release,
publish or otherwise distribute, the terms, conditions and
contents of the Agreement to any person other than such party and
18
its Agents for this transaction, but then only to the extent that
any such Agent needs to know the terms, conditions and contents
of the Agreement to evaluate the Property. Notwithstanding
anything to the contrary herein, neither Buyer nor Seller shall
be in breach of its obligations hereunder if it or its Agents:
(a) disclose the existence and terms of this Agreement to the
City and/or any lenders of Seller or Buyer to the extent
reasonably necessary to cause the Close of Escrow to occur as
contemplated herein, provided any such disclosure shall be made
expressly subject to the terms of this Section 15.11; (b) are
required by law to disclose any such matters; (c) disclose the
information contained in the Memorandum of Agreement (as defined
below in Section 15.13).
15.12 EXCLUSIVITY. Seller agrees not to solicit,
discuss, or entertain other offers or proposals relating to the
Property prior to the earlier of: (a) Buyer's termination of this
Agreement pursuant to Section 7 hereof, or (b) the expiration of
the Option Term.
15.13 MEMORANDUM OF AGREEMENT. Buyer shall have the
right to record a memorandum of agreement in the form of Exhibit
"G" attached hereto in the Official Records upon Buyer's written
approval of the Feasibility Matters.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the Effective Date.
SELLER
SHE ACQUISITION CORPORATION,
a Nevada corporation
By: /s/ James H. Dale
Its: President
BUYER:
MURIETA INVESTORS, LLC,
a California limited liability
company
By: /s/ Eric P. Von der Porten
Its: Member
19
ACCEPTANCE BY ESCROW AGENT:
Escrow Agent hereby acknowledges that it has received a fully
executed counterpart of the foregoing Agreement and agrees to act
as Escrow Agent thereunder and to be bound by and perform the
terms thereof as such terms apply to Escrow Agent.
Dated: By:
Name:
Its:
20
EXHIBIT A
LEGAL DESCRIPTION OF SELLER'S PROPERTY
21
EXHIBIT B
LEGAL DESCRIPTION OF THE PHASE I LOTS
22
EXHIBIT C
BLANKET ASSIGNMENT AND BILL OF SALE
Reference is hereby made to (a) that certain property
located in the development commonly known as Village 6 of Rancho
Murieta, County of Sacramento, State of California as more
particularly described on EXHIBIT "A" attached hereto, (b) to the
improvements located thereon, and (c) to the rights, privileges
and entitlements incident thereto (collectively, the "Property").
For good and valuable consideration, receipt of which is
hereby acknowledged, the undersigned, SHF Acquisition
Corporation, a Nevada corporation ("Seller"), does hereby, give,
grant, bargain, sell, transfer, assign, convey and deliver to
Murieta Investors, LLC, a California limited liability company
("Buyer"), all of Seller's right, title and interest in all
assets, rights, materials and/or claims used, owned or held in
connection with the use, management, development or enjoyment of
the Property, including, without limitation: (a) all
entitlements, subdivision agreements and other agreements
relating to the development of the Property; (b) all plans,
specifications, maps, drawings and other renderings relating to
the Property; (c) all warranties, claims and any similar rights
relating to and benefiting the Property or the assets transferred
hereby; (d) all intangible rights, goodwill and rights benefiting
the Property; (e) all development rights benefiting the Property;
(f) all rights, claims or awards benefiting the Property; (g) all
personal property located on or about the Property; and (h) all
rights to receive a reimbursement, credit or refund from the
applicable agency or entity of any deposits or fees paid in
connection with the development of the Property. Notwithstanding
the foregoing, it is acknowledged that none of Seller's rights
and obligations under the Reimbursement Agreement (as defined in
that certain Purchase and Option Agreement between Seller and
Buyer dated __________, 1996) are being assigned to Buyer.
Seller hereby covenants that it will, at any time and from
time to time upon written request therefor, execute and deliver
to Buyer, its nominees, successor and/or assigns, any new or
confirmatory instruments and do and perform any other acts which
Buyer, its nominees, successors and/or assigns, may request in
order to fully transfer possession and control of, and protect
the rights of Buyer, its nominees, successors and/or assigns in,
all the assets of Seller intended to be transferred and assigned
hereby.
SELLER:
SHF ACQUISITION CORPORATION,
a Nevada corporation
By: /s/ James H. Dale
Its: President
23
EXHIBIT D
WHITNER RESEARCH GROUP PRICE LIST
24
EXHIBIT E
FIRPTA AFFIDAVIT
DATE: October 8, 1996
Murieta Investors, LLC
c/o Leveraged Equity Management, Inc.
One Market, Suite 2801
San Francisco, California 94105
Attn: Mr. Eric P. Von der Porten
Re: Internal Revenue Code Section 1445
Dear Eric:
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 U.S. real property interest by the undersigned
hereby certifies the following on behalf of SHF ACQUISITION
CORPORATION, a Nevada corporation ("Seller").
1. Seller is not a foreign corporation, foreign
partnership, foreign trust, or foreign estate (as those terms are
defined in the Internal Revenue Code and Income Tax Regulations):
2. Seller's U.S. employer identification number is 88-0242928;
3. Seller's office address is 4045 S. Spencer St. Ste.
206, Las Vegas, NV 89119; and
4. Seller understands that this certification may be
disclosed to the Internal Revenue Service by transferee and that
any false statement contained herein could be punished by fine,
imprisonment, or both.
Under penalties of perjury, I declare that I have examined
this certification and to the best of my knowledge and belief it
is true, correct and complete, and I further declare that I have
authority to sign this document on behalf of Seller.
SELLER
SHF ACQUISITION CORPORATION,
a Nevada corporation
By: /s/ James H. Dale
Its: President
25
EXHIBIT F
DEFINITION OF HAZARDOUS SUBSTANCE
The term "Hazardous Substance" as used in this Agreement
shall mean any toxic or hazardous substance, material or waste or
any pollutant or contaminant or infectious or radioactive
material, including but not limited to those substances,
materials or wastes regulated now or in the future under any of
the statutes or regulations listed below and any and all of those
substances included within the definitions of "hazardous
substances", "hazardous materials", "hazardous waste", "hazardous
chemical substance or mixture", "imminently hazardous chemical
substance or mixture", "toxic substances", "hazardous air
pollutant", "toxic pollutant" or "solid waste" in the statues or
regulations listed below. Hazardous Substances shall also mean
any and all other similar terms defined in other federal state
and local laws, statutes, regulations, orders or rules and
materials and wastes which are, or in the future become,
regulated under applicable local, state or federal law for the
protection of health or the environment or which are classified
as hazardous or toxic substances, materials or waste, pollutants
or contaminants, as defined, listed or regulated by any federal,
state or local law, regulation or order or by common law
decision, including, without limitation, (a) trichloroethylene,
tetrachloroethylene, perchloroethylene and other chlorinated
solvents, (b) any petroleum products or fractions thereof,
(c) asbestos, (d) polychlorinated biphenyls, (e) flammable
explosives, (f) urea formaldehyde, and (g) radioactive materials
and waste. In addition, a Hazardous Substance shall include:
(1) A "Hazardous Substance", "Hazardous Material",
"Hazardous Waste", or "Toxic Substance" under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
42 U.S.C. Sections 9601, et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Sections 1801, et seq., or the
Resource Conservation and Recovery Act, 42 U.S.C. Sections 6901,
et seq.;
(2) An "Extremely Hazardous Waste", a "Hazardous Waste", or
a "Restricted Hazardous Waste", under Sections 25115, 25117 or
25122.7 of the California Health and Safety Code, or is listed or
identified pursuant to Sections 25140 or 44321 of the California
Health and Safety Code;
(3) A "Hazardous Material", "Hazardous Substance",
"Hazardous Waste", "Toxic Air Contaminant", or "Medical Waste"
under Sections 25281, 25316, 25501, 25501.1, 25023.2 or 39655 of
the California Health and Safety Code;
(4) "Oil" or a "Hazardous Substance" listed or identified
pursuant to Section 311 of the Federal Water Pollution Control
Act, 33 U.S.C. Section 1321, as well as any other hydrocarbon
substance or by-product;
(5) A "Hazardous Waste", "Extremely Hazardous Waste", or an
"Acutely Hazardous Waste" listed or defined pursuant to Chapter
11 of Title 22 of the California Code of Regulations;
26
(6) A chemical listed by the State of California as known to
cause cancer or reproductive toxicity pursuant to Section
25249.8(a) of the California Health and Safety Code;
(7) A material which due to its characteristics or
interaction with one or more other substances, chemical
compounds, or mixtures, damages or threatens to damage, health,
safety, or the environment, or is required by any law or public
agency to be remediated, including remediation which such law or
public agency requires in order for the property to be put to any
lawful purpose;
(8) Any material the presence of which would require
remediation pursuant to the guidelines set forth in the State of
California Leaking Underground Fuel Tank Field Manual, whether or
not the presence of such material resulted from a leaking
underground fuel tank;
(9) Pesticides regulated under the Federal Insecticide,
Fungicide and Rodenticide Act, 7 U.S.C. Sections 136 et seq.;
(10) Asbestos, PCBs, and other substances regulated under the
Toxic Substances Control Act, 15 U.S.C. Sections 2601 et seq.;
(11) Any radioactive material including, without limitation,
any "source material", "special nuclear material", "by-product
material", "low-level wastes", "high level radioactive waste",
"spent nuclear fuel" or "transuranic waste", and any other
radioactive materials or radioactive wastes, however produced,
regulated under the Atomic Energy Act, 42 U.S.C. Sections 2011 et
seq., the Nuclear Waste Policy Act, 42 U.S.C. Sections 10101 et
seq., or pursuant to the California Radiation Control Law,
California Health and Safety Code Sections 25800 et seq.;
(12) Industrial process and pollution control wastes, whether
or not "hazardous" within the meaning of the Resource
Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq.;
(13) Any material regulated under the Occupational Safety and
Health Act, 29 U.S.C. Sections 651 et seq., or the California
Occupational Safety and Health Act, California Labor Code
Sections 6300 et seq.; and/or
(14) Any material regulated under the Clean Air Act, 42
U.S.C. Sections 7401 et seq. or pursuant to Division 26 of the
California Health and Safety Code.
All other laws, ordinances, codes, statutes, regulations,
administrative rules, policies and orders, promulgated pursuant
to said foregoing statutes and regulations or any amendments or
replacement thereof, provided such amendments or replacements
shall in no way limit the original scope and/or definition of
Hazardous Substance defined herein.
27
SUBSIDIARIES OF THE REGISTRANT
M & R CORPORATION ("MRC"), Delaware
M & R Investment Company, Inc. ("MRI"), Nevada
wholly owned by MRC
SHF Acquisition Corporation, Nevada
wholly owned by MRI
Southlake Acquisition Corporation, Nevada
wholly owned by MRI
CONTINENTAL CALIFORNIA CORPORATION, Delaware
wholly owned by Registrant
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet and consolidated statements of income (loss) on pages
F-2 through F-5 of the Company's annual report on Form 10-K and is qualified in
it's entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 1,283
<SECURITIES> 527
<RECEIVABLES> 274
<ALLOWANCES> 141
<INVENTORY> 38
<CURRENT-ASSETS> 0
<PP&E> 2,102
<DEPRECIATION> 424
<TOTAL-ASSETS> 17,126
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
5
<COMMON> 3,900
<OTHER-SE> 6,538
<TOTAL-LIABILITY-AND-EQUITY> 17,126
<SALES> 1,128
<TOTAL-REVENUES> 2,982
<CGS> 1,226
<TOTAL-COSTS> 2,443
<OTHER-EXPENSES> 1,656
<LOSS-PROVISION> 556
<INTEREST-EXPENSE> 230
<INCOME-PRETAX> (1,692)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,692)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,789)
<EPS-PRIMARY> (.29)
<EPS-DILUTED> (.29)
</TABLE>
