<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
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(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to __________
Commission file number 1-10153
HOMEFED CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 33-0304982
----------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
529 East South Temple, Salt Lake City, Utah 84102
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(Address of principal executive offices) (Zip Code)
(801) 521-1066
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(Registrant's telephone number, including area code)
N/A
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(Former name, former address and former fiscal year, if
changed since last report)
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 No [X]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed
all documents and reports required to be filed by Sections 12, 13
or 15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes [X] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date. On August 10, 1996,
there were 10,000,000 outstanding shares of the Registrant's Common Stock, par
value $.01 per share.
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HomeFed Corporation and Subsidiaries
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
(Amounts in thousands, except par value)
----------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Land and real estate held for development $ 20,148 $ 22,069
Cash and cash equivalents 1,756 2,373
Restricted cash 1,091 1,105
Investments 85 83
Deposits and other assets 1,133 1,221
------------ ------------
TOTAL $ 24,213 $ 26,851
============ ============
LIABILITIES
Notes payable $ 27,750 $ 27,122
Accounts payable and accrued liabilities 692 594
------------ ------------
Total liabilities 28,442 27,716
------------ ------------
STOCKHOLDERS' DEFICIT
Common Stock, $.01 par value;
100,000,000 shares authorized;
10,000,000 shares outstanding 100 100
Additional paid-in-capital 339,904 339,904
Accumulated deficit (344,233) (340,869)
------------ ------------
Total stockholders' deficit (4,229) (865)
------------ ------------
TOTAL $ 24,213 $ 26,851
============ ============
</TABLE>
See notes to interim consolidated financial statements.
2
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HomeFed Corporation and Subsidiaries
Consolidated Statements of Operations
For the periods ended June 30, 1996 and 1995
(Amounts in thousands, except per share amounts)
(Unaudited)
------------------------------------------------
<TABLE>
<CAPTION>
For the Three For the Six
Month Period Ended Month Period Ended
June 30, June 30,
----------------------- ------------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Sales of residential properties $ 1,015 $ 1,777 $ 2,362 $ 3,859
Cost of sales 1,193 1,750 2,560 3,718
---------- ---------- ---------- ----------
Gross profit (loss) (178) 27 (198) 141
Provision for losses on real estate
investments 1,017 - 1,017 -
Interest expense 772 - 1,535 -
General and administrative expenses 360 307 682 635
---------- ---------- ---------- ----------
Loss from operations (2,327) (280) (3,432) (494)
Other income - net 53 19 108 33
---------- ---------- ---------- ----------
Loss before reorganization items (2,274) (261) (3,324) (461)
Reorganization items:
Professional fees - 11 - 99
---------- ---------- ---------- ----------
Loss before income taxes (2,274) (272) (3,324) (560)
Income tax expense (11) (3) (40) (5)
---------- ---------- ---------- ----------
Net loss $ (2,285) $ (275) $ (3,364) $ (565)
========== ========== ========== ==========
Primary loss per common share: $ (0.23) $ (0.03) $ (0.34) $ (0.06)
========== ========== ========== ==========
Fully diluted loss per common share: $ (0.23) $ (0.03) $ (0.34) $ (0.06)
========== ========== ========== ==========
</TABLE>
See notes to interim consolidated financial statements.
3
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HomeFed Corporation and Subsidiaries
Consolidated Statements of Changes in Stockholders' Deficit
For the six months ended June 30, 1996 and 1995
(Amounts in thousands)
(Unaudited)
____________________________________________
<TABLE>
<CAPTION>
Common
Shares Additional Total
$.01 Par Paid-In Accumulated Stockholders'
Value Capital Deficit Deficit
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Balance, January 1, 1995 $ 215 $ 338,529 $ (445,589) $ (106,845)
Net loss (565) (565)
------------- ------------- ------------- -------------
Balance, June 30, 1995 $ 215 $ 338,529 $ (446,154) $ (107,410)
============= ============= ============= =============
Balance, January 1, 1996 $ 100 $ 339,904 $ (340,869) $ (865)
Net loss (3,364) (3,364)
------------- ------------- ------------- -------------
Balance, June 30, 1996 $ 100 $ 339,904 $ (344,233) $ (4,229)
============= ============= ============= =============
</TABLE>
See notes to interim consolidated financial statements.
4
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HomeFed Corporation and Subsidiaries
Consolidated Statements of Cash Flows
For the six months ended June 30, 1996 and 1995
(Amounts in thousands)
(Unaudited)
____________________________________________
<TABLE>
<CAPTION>
1996 1995
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (3,364) $ (565)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Accrued interest added to principal 1,503 114
Provision for losses on real estate investments 1,017 -
Changes in operating assets and liabilities:
Land and real estate held for development 904 (2,392)
Deposits and other assets 88 8
Accounts payable and accrued liabilities 98 63
Decrease (increase) in restricted cash 14 (8)
---------- ----------
Net cash provided by (used in) operating activities 260 (2,780)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in investments (2) -
---------- ----------
Net cash used in investing activities (2) -
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Additions to notes payable 1,190 3,097
Repayments of notes payable (2,065) (48)
---------- ----------
Net cash provided by (used in) financing activities (875) 3,049
---------- ----------
Net increase (decrease) in cash (617) 269
Cash and cash equivalents, beginning of period 2,373 1,085
---------- ----------
Cash and cash equivalents, end of period $ 1,756 $ 1,354
========== ==========
</TABLE>
See notes to interim consolidated financial statements.
5
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HOMEFED CORPORATION AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies. The unaudited
interim consolidated financial statements, which reflect all
adjustments (consisting only of normal recurring items) that
management believes necessary to present fairly results of
interim operations, should be read in conjunction with the
Notes to Consolidated Financial Statements (including the
Summary of Significant Accounting Policies) included in the
audited consolidated financial statements for HomeFed
Corporation ("HomeFed" or the "Company") for the year ended
December 31, 1995, which are included in the Company's Annual
Report on Form 10-K for such year (the "1995 10-K"). Results
of operations for interim periods are not necessarily
indicative of annual results of operations. The consolidated
balance sheet at December 31, 1995 was extracted from the
Company's audited consolidated financial statements in the 1995
10-K, and does not include all disclosures required by
generally accepted accounting principles for annual financial
statements.
2. Chapter 11 Bankruptcy and Plan of Reorganization. On July 3,
1995, the Company emerged from Chapter 11 Bankruptcy protection
pursuant to its court approved plan of reorganization (the
"Plan"). The Plan was principally funded by a $20,000,000
convertible note (the "Convertible Note") issued to Leucadia
Financial Corporation ("LFC"), an indirect wholly-owned
subsidiary of Leucadia National Corporation, and by LFC's
purchase of 2,700,000 newly issued $.01 par value common shares
("Common Stock") of the Company for $810,000.
As part of the Plan, the Company settled pending litigation
with the Resolution Trust Company (the "RTC") in its capacity
as receiver and conservator of HomeFed Bank, F.S.B. ("HomeFed
Bank"), a former subsidiary of the Company. Under the RTC
settlement, the Company paid the RTC $3,100,000 and the Company
received a receivership certificate from the RTC which was
redeemed by the RTC for $1,402,000. In addition, the RTC
settlement provides that the Company is entitled to receive
$850,000 from any tax refunds received by the RTC relating to
HomeFed Bank for years prior to 1992. The Company has not
recorded an asset related to such tax refunds and no assurances
can be given that any such tax refunds will actually be
received.
Also under the Plan, general unsecured creditors, principally
the holders of the Company's convertible subordinated
debentures, received a pro rata share of (i) $16,900,000, (ii)
the Company's rights to the RTC tax refund relating to HomeFed
Bank and the $1,402,000 receivership certificate proceeds,
(iii) 1,500,000 shares of Common Stock valued by the Bankruptcy
6
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Court at $.30 per share, and (iv) an interest in the litigation
trust described below.
The Plan also provided for the issuance of 5,800,000 new shares
of Common Stock to the pre-effective date stockholders of the
Company and the old shares of common stock (approximately
21,484,000 shares) were canceled. As a result of shares
received as a general unsecured creditor and shares purchased
as described above, LFC owns approximately 41.2% of the
Company's Common Stock, without giving effect to the Common
Stock that LFC may acquire in the future pursuant to the terms
of the Convertible Note.
The Company's Restated Certificate of Incorporation contains
certain transfer restrictions with respect to the Company's
stock. Generally, such provisions restrict a person's ability
to accumulate 5% or more of the Company's Common Stock, as well
as the ability of a 5% stockholder to acquire additional shares
of Common Stock, in each case, after giving effect to numerous
rules of attribution, aggregation and calculation. In addition,
pursuant to the Plan, the Company is prohibited from issuing
additional shares of stock until July 3, 1999. The Company's
Restated Certificate of Incorporation further prohibits the
Company from issuing or redeeming any shares of stock as long
as the Convertible Note is outstanding. None of the foregoing
restrictions will prevent LFC's exchange of the Convertible
Note for Common Stock.
Certain pending claims are being prosecuted by a litigation
trust created for the benefit of the Company's creditors under
the Plan. Pursuant to the Plan, the Company loaned $250,000 to
the trust in order to pay litigation costs. The loan will be
repaid with interest in 1996, but the Company will not
otherwise receive any benefits from the trust. This loan is
included in other assets in the consolidated balance sheets.
3. Earnings Per Share. Primary loss per share of Common Stock for
all periods presented was calculated by dividing net loss by
the 10,000,000 shares of Common Stock issued on July 3, 1995.
Primary loss per share calculations based upon the pre-
effective date outstanding shares are not meaningful.
Fully diluted loss per share of Common Stock was calculated as
described above and, for the periods ended June 30, 1996,
conversion of the Convertible Note was not assumed since the
effect of such assumed conversion would have been to decrease
loss per share. The number of shares used to calculate fully
diluted loss per share was 10,000,000 for each of the three-
month and six-month periods ended June 30, 1996 and 1995.
4. Related Party Transactions. Notes payable consist primarily of
the Convertible Note issued to LFC and a note issued to LFC as
part of LFC's agreement to provide construction financing to
the Company, as described below. The Convertible Note bears
interest at 12% per annum payable quarterly; however, interest
7
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is only paid if the Company has sufficient funds available, as
determined pursuant to the provisions of the loan agreement.
Unpaid interest is added to the principal balance each quarter.
Interest accrued during the six-month period ended June 30,
1996 of $1,288,000 was not paid and was added to the principal
balance as of June 30, 1996.
The construction financing bears interest based on the prime
rate, and any unpaid interest is added to the principal balance
at the end of each month. The interest rate at June 30, 1996
was 9.50%. Interest accrued during the six-month period ended
June 30, 1996 on the construction financing totaled $268,000,
of which $52,000 was paid to LFC and $216,000 was added to the
principal balance during such period. Payments of principal
and interest on the loans are payable on demand, and if
payments are not made upon demand, the applicable interest rate
is increased by 3% per annum. A payment equal to 110% of the
construction cost of the property being released is required in
order to release property from the construction financing lien.
As of June 30, 1996, the balance of the construction financing
loan was $5,130,000.
Pursuant to an Administrative Services Agreement dated March 1,
1996 (the "Administrative Services Agreement"), LFC has agreed
to provide administrative services to the Company for an annual
fee of $141,000, payable in monthly installments, through March
1, 1997. After March 1, 1997, the Administrative Services
Agreement provides that LFC and the Company will negotiate in
good faith to determine the compensation to be paid to LFC
under the Administrative Services Agreement for subsequent
periods. The Administrative Services Agreement will terminate
on March 1, 1999; provided, however, that LFC may terminate the
Administrative Services Agreement prior to March 1, 1999, upon
30 days written notice, if the Company and LFC are unable to
reach an agreement regarding the compensation to be paid to LFC
for periods after March 1, 1997. Administrative fees paid to
LFC for the six-month period ended June 30, 1996 totaled
$73,000.
5. Paradise Valley. The Company has entered into an agreement to
sell 124 improved lots at the Paradise Valley Project to The
Forecast Group, L.P. for a cash purchase price of $5,316,000.
In addition, the Company has granted options to The Forecast
Group, L.P. to purchase an additional 75 unimproved and 81
partially improved lots from the Company for a total of
$5,781,950. Subject to certain conditions, including the
completion of a satisfactory feasibility review by the buyer,
the sale of the 124 lots is expected to close no later than
October 2, 1996, at which time the purchase price for such lots
will be paid to the Company. The options expire 330 days after
such closing. The Company is currently evaluating the real
estate market to determine the timing of development of the
remaining sites in the project.
8
<PAGE>
6. Provision for Losses on Real Estate Investments. During the
three months ended June 30, 1996, the Company recorded a loss
of $1,017,000. The loss was due to the Company's decision not
to complete the home development on the four detached single-
family residential sites at the Paradise Valley Project as
originally planned. The Company ceased building additional
homes at these sites and it is in the process of selling off
all remaining homes in inventory. The Company accepted a cash
offer for 124 unbuilt lots and granted options for the purchase
of 156 unbuilt lots as mentioned in Note 5 above.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The purpose of this section is to discuss and analyze the
Company's consolidated financial condition, liquidity and capital
resources and results of operations. This analysis should be read
in conjunction with the Management's Discussion and Analysis of
Financial Condition and Results of Operations contained in the
Company's 1995 10-K.
GENERAL
The Company is a holding company primarily engaged in the
investment in and development of residential real estate projects
in Northern California, through its wholly-owned subsidiaries
HomeFed Communities, Inc. and HomeFed Resources Corporation. The
Company's subsidiaries enter into contracts with local builders and
developers to provide construction, marketing and management
services.
LIQUIDITY AND CAPITAL RESOURCES
For the six-month period ended June 30, 1996, net cash was
provided by operating activities, principally from sales of real
estate. For the six-month period ended June 30, 1995, net cash was
used by operating activities, principally for real estate
development projects and to pay reorganization expenses. The
Company is a holding company whose principal source of funds is
dividends or borrowings from its subsidiaries. As a result, the
Company is dependent upon the cash flow, if any, from the real
estate development projects of its subsidiaries in order to pay its
expenses. The Company expects such cash flows will be sufficient
to cover overhead expenses and, pending receipt of funds from the
Forecast Group, L.P., the Company expects cash flows will also be
sufficient to permit debt service payments on the Convertible Note
beginning in 1997. As more fully described in the 1995 10-K, no
principal payments are due on the Convertible Note until July 1998
and accrued interest is only required to be paid under certain
conditions. Any unpaid interest is added to the principal balance
of the note on a quarterly basis.
LFC has agreed to provide up to an aggregate of $15,000,000 of
construction financing to certain of the Company's subsidiaries and
their affiliates while the Convertible Note is outstanding. The
construction financing is collateralized by certain assets of the
Company's subsidiaries or their affiliates, including real estate
under development. To facilitate the sale of property to home
buyers, LFC has agreed to release property from the construction
financing lien when it receives 110% of the assigned cost of
construction as a payment towards the outstanding loan. The
construction financing bears interest based upon the prime rate,
and any unpaid interest is added to the principal balance at the
end of each month. As of June 30, 1996, the outstanding balance on
this loan was approximately $5,130,000. The Company believes that
the construction financing provided by LFC will be adequate to
10
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complete its current development plans. Any additional financing
required from a lender other than LFC cannot be collateralized by
any of the Company's assets without LFC's consent. Accordingly,
the Company may be unable to obtain additional financing from
sources other than LFC.
The Company expects to receive proceeds, net of selling costs, of
$5,205,000 in 1996 from the sale of 124 improved lots at the
Paradise Valley Project. See Note 5 to the Company's Interim
Financial Statements. The Company intends to use a portion of the
proceeds from such sale to repay the outstanding balance of the
construction financing provided by LFC. The Company has also
granted options to purchase 75 unimproved and 81 partially improved
lots from the Company for a total of $5,781,950. It is uncertain
whether the options will be exercised; however, if such options are
exercised, the Company expects to use the proceeds from the sale of
the lots covered by such options for future real estate
development, debt service payments on the Convertible Note and for
working capital needs.
RESULTS OF OPERATIONS
Sales of real estate properties decreased in the 1996 periods
as compared to the 1995 periods due to reduced sales of new home
inventory. The higher sales in the 1995 periods were primarily the
result of a sales program to complete and sell all remaining homes
at the Company's Carson Creek Project in 1995.
The decrease of cost of sales in the 1996 periods as compared
to the 1995 periods reflects the reduced level of sales. Gross
profit percentages reflect the mix of homes sold.
During the three months ended June 30, 1996, the Company
recorded a provision for losses on real estate investments of
$1,017,000 related to the Company's decision not to complete the
four detached single-family residential sites at the Paradise
Valley Project as originally planned.
Interest expense on the Convertible Note to LFC was
approximately $654,000 and $1,288,000 for the three-month and six-
month periods ended June 30, 1996. No interest expense was
incurred on the Convertible Note for the same periods in 1995.
Interest expense on the construction financing loan relating to
substantially completed homes in inventory was $116,000 and
$242,000 for the three-month and six-month periods ended June 30,
1996. All interest was capitalized on the construction financing
loan for the same periods in 1995.
Income tax expense for all periods presented principally
relates to state franchise taxes. The Company has not recorded
federal income tax benefits for its operating losses due to the
uncertainty of sufficient future taxable income which is required
in order to record such tax benefits.
11
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PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS
The Annual Meeting of Stockholders of the Company was held on May
15, 1996. At the meeting:
1. The following persons were elected as Directors of the
Company to serve until the next Annual Meeting or until
their successors are elected and qualified.
Name Votes For Votes Withheld
----------------- --------- --------------
Timothy Considine 8,467,222 36,228
Michael A. Lobatz 8,466,124 37,326
Patricia A. Wood 8,466,475 36,975
2. The selection of Coopers & Lybrand L.L.P. as independent
auditors to audit the Consolidated Financial Statements of
the Company and its subsidiaries for the year ended
December 31, 1996 was ratified by the stockholders as
follows:
Votes For: 8,453,210
Votes Against: 11,479
Abstentions 38,761
Broker Non-Votes 0
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed with this report.
10.1 Paradise Valley Unit 1 and Unit 2 Purchase Agreement and
Escrow Instructions, dated June 19, 1996, between Paradise
Valley Communities No. 1 and The Forecast Group, L.P.
10.2 Paradise Valley Unit 3 Option to Purchase Real Property
and Escrow Instructions, dated June 19, 1996, between
Paradise Valley Communities No. 1 and The Forecast Group,
L.P.
10.3 Paradise Valley Unit 4 Option to Purchase Real Property
and Escrow Instructions, dated June 19, 1996, between
Paradise Valley Communities No. 1 and The Forecast Group,
L.P.
27 Financial Data Schedule
(b) No report on Form 8-K was filed during the quarter for
which this report is filed.
12
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SIGNATURES
Pursuant to the requirements 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.
HOMEFED CORPORATION
/s/ Corinne A. Maki
---------------------------------
CORINNE A. MAKI, Treasurer
(Authorized Signatory and
Principal Financial and
Accounting Officer)
Date: August 13, 1996
13
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INDEX TO EXHIBITS
Exhibits
10.1 Paradise Valley Unit 1 and Unit 2 Purchase Agreement and
Escrow Instructions, dated June 19, 1996, between
Paradise Valley Communities No. 1 and The Forecast Group,
L.P.
10.2 Paradise Valley Unit 3 Option to Purchase Real Property
and Escrow Instructions, dated June 19, 1996, between
Paradise Valley Communities No. 1 and The Forecast Group,
L.P.
10.3 Paradise Valley Unit 4 Option to Purchase Real Property
and Escrow Instructions, dated June 19, 1996, between
Paradise Valley Communities No. 1 and The Forecast Group,
L.P.
27 Financial Data Schedule.
14
PARADISE VALLEY UNIT 1 AND UNIT 2
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
BETWEEN
PARADISE VALLEY COMMUNITIES NO. 1
("Seller")
AND
THE FORECAST GROUP (Registered Trademark), L.P.
("Buyer")
<PAGE>
PARADISE VALLEY UNIT 1 AND UNIT 2
_____________________________
PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
THIS PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS
("Agreement") is made and effective as of June 19, 1996 by and
between Paradise Valley Communities No. 1, a California general
partnership ("Seller"), and The Forecast Group (Registered
Trademark), L.P., a California limited partnership ("Buyer"),
with reference to the facts set forth below.
A. Seller is the owner of that certain land situated in
the City of Fairfield, County of Solano, State of California,
more particularly described in Exhibits A-1 and A-2, both of
which are attached hereto and incorporated herein ("Land"). The
Land is a portion of a residential subdivision consisting of four
units, or neighborhoods. The Land consists of two units, or
neighborhoods, each of which is referred to herein as a "Unit."
Unit 1 consists of 56 single-family residential lots, 40 of which
are subject to this Agreement, and Unit 2 consists of 104 single-
family residential lots, 84 of which are subject to this
Agreement. The term "Lots" refers to the single-family
residential lots located in Units 1 and 2 that are specifically
described in Exhibits A-1 and A-2, respectively. Units 1 and 2
also consist of certain infrastructure improvements and
amenities, as described in the maps described in Exhibits A-1 and
A-2, respectively ("Subdivision Maps"), and related improvement
plans and specifications described in Exhibit B, attached hereto
("Improvements").
B. Buyer desires to purchase the Property (as defined
herein) and Seller desires to sell the Property to Buyer in
accordance with the terms and provisions set forth below.
NOW, THEREFORE, in consideration of the recitals set forth
above, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
agree as set forth below.
ARTICLE 1
DEFINED TERMS
Terms used in this Agreement with their initial letters
capitalized and not otherwise defined shall have the meanings set
forth below.
1.1 Agreement. The term "Agreement" shall mean this
Purchase Agreement and Escrow Instructions between Seller and
Buyer.
1
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1.2 Approved Exceptions. The term "Approved Exceptions"
shall mean those exceptions to title that are approved in
accordance with this Agreement.
1.3 Business Day. The term "Business Day" shall mean any
day other than a Saturday, Sunday or legal holiday in the State
of California. All periods of time described in this Agreement
that are not expressly measured by Business Days shall be
measured by calendar days.
1.4 Buyer. The term "Buyer" shall mean The Forecast Group
(Registered Trademark), L.P. a California limited partnership.
1.5 CLTA Owner's Title Policy. The term "CLTA Owner's
Title Policy" shall mean the California Land Title Association
("CLTA") owner's policy of title insurance to be issued by the
Title Company upon the Close of Escrow pursuant to the terms of
this Agreement.
1.6 Cash. The term "cash" shall mean: (i) currency of the
United States of America, (ii) cashier's check(s) currently dated
and payable to Escrow Agent or Seller, as required under this
Agreement, drawn and paid through a California banking or savings
and loan institution, tendered to Escrow Agent or Seller, as
required under this Agreement one (1) Business Day before funds
are required to be delivered under this Agreement, or (iii) an
amount credited by wire transfer into Escrow Agent's or Seller's
bank account, as required under this Agreement.
1.7 Close of Escrow. The term "Close of Escrow" shall mean
the consummation of the purchase of the Property by Buyer from
Seller and the recordation of Seller's Grant Deed(s) in
accordance with the terms and provisions of this Agreement.
1.8 Closing Date. The term "Closing Date" shall mean the
date on which the closing will be held for the sale of the
Property as set forth in Section 8.1 of this Agreement.
1.9 County. The term "County" shall mean the County of
Solano, in the State of California.
1.10 Effective Date. The term "Effective Date" shall mean
June 19, 1996, the date on which this Agreement is effective and
deemed to have been made.
1.11 Escrow. The term "Escrow" shall mean the escrow opened
by Escrow Agent pursuant to the terms of this Agreement.
1.12 Escrow Agent. The term "Escrow Agent" shall mean
Chicago Title Company, 604 Empire Street, Fairfield, California
94533 ("Chicago Title").
2
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1.13 Feasibility Review Period. The term "Feasibility
Review Period" shall mean the period of time which commences on
the Effective Date, and terminates at midnight of the sixtieth
(60th) day thereafter.
1.14 Governmental Action. The term "Governmental Action"
shall mean (a) any order of a court of competent jurisdiction,
and/or (b) any enactment, by the initiative or referendum process
or otherwise, of any Governmental Agencies (as defined below)
affecting the Property, either directly or indirectly, including,
but not limited to, limitation on the number of permits or
licenses that can be issued, declaration of policy, resolution,
ordinance, statute, regulation, or any other enactment of any
Governmental Agency (as defined below) and irrespective of
whether the orders or enactments listed immediately above contain
the words "moratorium," "moratoria" or similar words.
1.15 Governmental Agencies. The term "Governmental
Agencies" shall mean any local, county, state and/or federal
governmental or quasi-governmental agencies, authorities or
regulatory bodies and any public or private utility companies
having jurisdiction over the Property.
1.16 Opening of Escrow. The term "Opening of Escrow" shall
mean the date Escrow Agent executes the Consent of Escrow Agent
attached hereto, which consent shall be executed by Escrow Agent
upon delivery of this Agreement to Escrow Agent.
1.17 Preliminary Report. The term "Preliminary Report"
shall mean the Preliminary Title Report issued by the Title
Company to be reviewed by Buyer during the Feasibility Review
Period.
1.18 Property Documents. The term "Property Documents"
shall mean the documents delivered by Seller to Buyer in
connection with its feasibility studies pursuant to Section 4.1
of this Agreement. The Property Documents are listed in Exhibit
B, attached hereto.
1.19 Property. The term "Property" shall mean the Land, the
Lots, the Improvements, the Subdivision Maps and any public or
private entitlements, utility deposits, the non-exclusive use of
the names "New Providence" and "Antigua," maps, plans, soils
reports, environmental reports, marketing studies, development
agreements, permits and similar items that relate to the
development, sale and use of the Lots as single-family
residential building lots.
1.20 Purchase Price. The term "Purchase Price" shall mean
the total consideration to be paid by Buyer to Seller for the
purchase of the Property as set forth in Article 2 of this
Agreement.
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1.21 Seller. The term "Seller" shall mean Paradise Valley
Communities No. 1, a California general partnership.
1.22 Title Company. The term "Title Company" shall mean
Chicago Title.
ARTICLE 2
AGREEMENT OF PURCHASE AND SALE
2.1 Agreement for Purchase and Sale. In consideration of
the payment of the Purchase Price, Seller agrees to sell the
Property to Buyer and Buyer agrees to purchase the Property from
Seller on the terms and conditions set forth in this Agreement.
2.2 Purchase Price. The purchase price ("Purchase Price")
for the Property is Five Million Three Hundred Sixteen Thousand
and 00/100 Dollars ($5,316,000).
2.3 Payment of Purchase Price. The Purchase Price shall be
paid in accordance with the provisions set forth below.
2.3.1 Cash to be deposited into
Escrow on the Opening of Escrow
("Buyer's Deposit") $ 100,000
2.3.2 Additional cash to be deposited
into Escrow upon and together
with Buyer's delivery of a Notice
of Approval under Section 4.3 $ 100,000
2.3.3 Additional cash to be deposited
into Escrow upon Close of Escrow $ 5,116,000
Total Purchase Price: $ 5,316,000
===========
2.4 Nonrefundability of Deposits. The cash deposited into
escrow pursuant to Sections 2.3.1, above, shall be fully
refundable to Buyer at any time prior to the expiration of the
Feasibility Review Period. If Buyer delivers to Seller a Notice
of Approval pursuant to Section 4.3 of this Agreement, the
deposits described in Sections 2.3.1 and 2.3.2 shall thereupon
immediately become nonrefundable and be distributed by the Escrow
Agent to the Seller. Any funds released from Escrow to Seller
under this Section 2.4 shall apply to the Purchase Price upon the
Close of Escrow. Regardless of whether Escrow closes, however,
any funds released from Escrow to Seller shall constitute
nonrefundable consideration for Seller's taking the Property off
the market, unless Escrow fails to close due a default under or
breach of this Agreement by Seller, in which event, such deposits
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shall be returned to Buyer or, if the Buyer elects the remedy of
specific performance of this Agreement, applied to the Purchase
Price.
2.5 Assumption of Liabilities. Upon the terms and subject
to the conditions contained in this Agreement, Buyer shall assume
effective as of the time of day on the Closing Date that Escrow
Agent telephonically or in writing notifies Seller and Buyer that
Escrow has closed Seller's obligations under the Property
Documents.
ARTICLE 3
OPEN AND CLOSE OF ESCROW AND DELIVERY OF DOCUMENTS
3.1 Opening of Escrow. Upon execution of this Agreement,
Buyer and Seller shall open Escrow by depositing with Escrow
Agent a fully executed original of this Agreement for use as
escrow instructions. Buyer shall also deposit into escrow the
Buyer's Deposit. Escrow Agent shall execute the Consent of
Escrow Agent ("Consent") which appears at the end of this
Agreement and deliver a fully executed Consent to Buyer and
Seller. Escrow Agent's general conditions ("General Conditions")
are attached hereto as Exhibit C and incorporated herein by
reference to the extent they are not inconsistent with the
provisions of this Agreement. If there is any inconsistency
between the provisions of the General Conditions and this
Agreement, the provisions of this Agreement shall control. If
Escrow Agent requires additional instructions, the parties agree
to make any deletions, substitutions and additions as the parties
shall mutually approve as long as such deletions, substitutions
or additions do not materially alter the terms of this Agreement.
3.2 Buyer's Deliveries. Buyer shall, at least one (1)
Business Day prior to the Close of Escrow (unless required to be
delivered at an earlier date under the terms of this Agreement),
deliver to Escrow Agent each of the following:
3.2.1 Purchase Price. The balance of the cash portion
of the Purchase Price;
3.2.2 Documents. Fully executed and, where
appropriate, notarized counterparts of the documents required to
be executed by Buyer under this Agreement;
3.2.3 Prorations, Fees and Costs. The amount, if any,
required of Buyer under Article 9 of this Agreement entitled
"Prorations, Fees and Costs" and any other amounts payable upon
the Close of Escrow under any other provisions of this Agreement;
and
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3.2.4 General. Such other documents, instruments and
certificates as Seller may reasonably require to carry out the
intent of this Agreement; provided, however, that Buyer shall not
be obligated to incur any financial liability or obligation in
connection with the furnishing of any such documents, instruments
or certificates.
3.3 Seller's Deliveries. Seller shall, at least one (1)
Business Day prior to the Close of Escrow (unless required to be
delivered at an earlier date under the terms of this Agreement),
deliver to Escrow Agent each of the following:
3.3.1 Certificate of Non-Foreign Status. Prior to the
Close of Escrow, Seller shall execute and deposit into Escrow a
Certificate of Non-Foreign Status certifying that Seller is a
non-foreign person in the form attached hereto as Exhibit D and
incorporated herein ("Certificate of Non-Foreign Status").
3.3.2 Grant Deeds, Bill of Sale and Assignment of
Leases. Prior to the Close of Escrow, Seller shall execute,
acknowledge and deposit into Escrow Grant Deed(s) in the form
attached hereto as Exhibit E; and
3.3.3 General. Such other documents, instruments and
certificates as Buyer may reasonably require to carry out the
intent of this Agreement; provided, however, that Seller shall
not be obligated to incur any financial liability or obligation
in connection with the furnishing of any such documents,
instruments or certificates.
ARTICLE 4
FEASIBILITY REVIEW
4.1 Feasibility Review Period; Delivery of Property
Documents. During the Feasibility Review Period, Buyer shall
analyze the feasibility of its purchase and use of the Property.
Buyer is solely responsible for any and all costs incurred by
Buyer in connection with its review and/or investigations of the
matters set forth in this Article 4. Seller has delivered to
Buyer the Property Documents. During the Feasibility Review
Period, Buyer shall review and analyze the Property Documents to
determine their individual and collective impact on the Property
and its purchase and use by Buyer.
4.1.1 Review of Preliminary Report. Within five (5)
days after the Effective Date of this Agreement, Seller shall
cause to be provided to Buyer a Preliminary Report issued by the
Title Company ("Preliminary Report"), together with legible
copies of all recorded documents described in the Preliminary
Report. Buyer shall have the right to review and approve the
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Preliminary Report during the Feasibility Review Period. If any
title exceptions are recorded against the Property before the
Close of Escrow in addition to those specified in the Preliminary
Report, Escrow Agent shall cause the Title Company to issue a
supplemental preliminary report ("Supplemental Report"). Buyer
shall have until the expiration of the Feasibility Review Period
with respect to any title exceptions shown in the Preliminary
Report, and five (5) Business Days after receipt of any
Supplemental Report, to review the title exceptions shown therein
and to deliver to Seller notice of approval or disapproval of any
title exceptions disclosed in any such report. Buyer's delivery
of the Notice of Approval described in Section 4.3 shall be
deemed approval of the exceptions to title shown on the
Preliminary Report and any Supplemental Report issued as of the
date of such Notice of Approval. Any title exceptions approved
by Buyer are referred to herein as "Approved Exceptions." If any
title exceptions are specifically disapproved, and Seller elects,
within five (5) Business Days after the date of Buyer's
disapproval, not to cure the disapproved item, then Buyer shall
have five (5) Business Days after the receipt of Seller's notice
of election not to cure the disapproved item to waive its prior
disapproval. If Buyer does not deliver notice of its election to
waive its prior disapproval, then the disapproved and uncured
item will be deemed disapproved. If a title exception is
disapproved and uncured, Buyer may terminate the Escrow by
delivering a written notice of termination to Seller and the
Escrow Agent. Upon such termination, any deposits theretofore
paid to Seller or Escrow Agent (regardless of whether such
deposits were released to Seller) shall be immediately returned
to Buyer, and this Agreement shall be terminated. Seller shall
thereupon be released from its obligation to sell the Property to
Buyer, and Buyer shall be released from any obligation to
purchase the Property.
4.1.2 Governmental Actions. Buyer shall review and
consider the impact on the Property of any and all applicable
governmental ordinances, rules and regulations, and evaluate the
effect of any pending or threatened Governmental Actions
pertaining to the Property.
4.1.3 Studies and Investigations. Buyer shall conduct
such independent investigations, studies and tests as it deems
necessary or appropriate concerning Buyer's proposed use, sale,
development and/or the suitability of the Property for Buyer's
intended purposes. Such investigations may include, without
limitation, soils and engineering tests, hazardous studies,
investigations concerning the availability of the approvals
required from any Governmental Agencies for Buyer's proposed use
of the Property, investigations regarding the existence on the
Property of any threatened or endangered species, and of any
archaeological artifacts on the Property, the imposition or
increase of any fees, charges or exactions by any Governmental
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Agencies and such economic feasibility and marketing studies as
Buyer deems appropriate.
4.1.4 Physical Inspection. During the Feasibility
Review Period, Buyer shall have the right to inspect and approve
of the physical condition of the Property and shall conduct any
soil, hazardous waste or engineering studies with respect to the
Property as Buyer may deem necessary or appropriate. All such
studies and inspections shall be conducted by Buyer at its sole
expense.
4.2 Additional Information from Seller. During the
Feasibility Review Period, Seller shall provide Buyer with such
Additional Information (as hereinafter defined) as Buyer
reasonably may determine to be necessary to complete its
investigation of the Property, and Seller shall, and shall cause
its agents, employees and consultants to, respond to questions
posed by Buyer with respect to the Property. As used herein, the
term "Additional Information" shall mean and refer to information
in the possession and/or control of Seller concerning (i) the
Property and (ii) material changes in information and documents
previously provided to Buyer by Seller during the Feasibility
Review Period.
4.3 Satisfaction of Feasibility Review. At any time during
the Feasibility Review Period, Buyer shall have the right to
terminate this Agreement if Buyer disapproves of any aspect of
the Property or the feasibility of Buyer using the Property as
Buyer intends. If Buyer approves of the Property and elects to
continue this Agreement beyond the Feasibility Review Period,
Buyer shall, prior to expiration of the Feasibility Review
Period, deliver notice of such election ("Notice of Approval") to
Seller and Escrow Agent. In such event, the terms and provisions
of this Agreement shall continue in full force and effect,
subject to the provisions of Section 4.1.1 regarding disapproved
and uncured title exceptions shown in any Supplemental Report.
The parties acknowledge and agree that the continued
effectiveness of this Agreement shall be conditioned upon Buyer's
delivery of a Notice of Approval and that Buyer's delivery of a
Notice of Approval shall be deemed to be its approval of all
aspects of the Property, including, without limitation, title
issues, with the exception of matters specifically set forth in
this Agreement for which Buyer has continuing rights of approval
after the Feasibility Review Period. Buyer's failure to deliver
its Notice of Approval before expiration of the Feasibility
Review Period shall be deemed to be Buyer's disapproval of the
Property. If no Notice of Approval has been delivered by the
expiration of the Feasibility Review Period, or within the period
described in Section 4.1.1 with respect to any title exception
shown in any Supplemental Report that is disapproved and uncured,
this Agreement shall upon such expiration immediately terminate,
and Escrow Agent shall return all funds, less applicable Escrow
cancellation charges, and documents to the parties who deposited
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them. Seller shall thereupon be released from its obligation to
sell the Property to Buyer, and Buyer shall be released from any
obligation to purchase the Property. Buyer shall also deliver to
Seller, without warranty, any documents related to the Property
which Buyer has created during the Feasibility Review Period.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSE OF ESCROW
5.1 Subject to Satisfaction or Waiver. The Closing of the
purchase and sale described in this Agreement and the obligations
of the parties under this Agreement shall be subject to
satisfaction or waiver (by the party in whose favor the condition
precedent has been established) of all the conditions precedent
set forth below.
5.1.1 Title Policy. Escrow Agent shall be
unconditionally committed to procure from the Title Company the
CLTA Owner's Title Policy for the Property with a liability limit
in the amount of the Purchase Price insuring fee title vested in
Buyer. Buyer shall take title to the Property subject only to:
(a) Non-delinquent general, special and supplemental taxes, bonds
and assessments, including Mello-Roos bonds, if any; (b) any
matters set forth in the printed form portion of the CLTA Owner's
Title Policy; (c) the Approved Exceptions; and (d) any items
caused or permitted to be placed of record by Buyer as of the
Close of Escrow.
5.1.2 Seller's Performance. Seller shall have duly
performed each and every undertaking and agreement to be
performed by it hereunder prior to the Close of Escrow.
5.1.3 Buyer's Performance. Buyer shall have duly
performed each and every undertaking and agreement to be
performed by it hereunder prior to the Close of Escrow.
5.2 Failure of Conditions Precedent. The conditions
precedent in Sections 5.1.1 and 5.1.2 are for Buyer's benefit and
can be waived only by Buyer. The condition precedent in Section
5.1.3 is for Seller's benefit and can be waived only by Seller.
In the event that any of the conditions precedent set forth above
is neither satisfied nor waived by the Closing Date, the party
for whose benefit the condition has been created may terminate
the Escrow and this Agreement by giving a written notice of
termination to the other party and Escrow Agent, specifying the
reason for termination and the condition precedent that has not
been satisfied. Upon receipt of such notice of termination,
Escrow Agent shall return to Buyer any funds that have not at the
time of termination been released to Seller pursuant to this
Agreement, less applicable Escrow cancellation charges, and any
documents to the parties who deposited them. If Buyer terminates
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the Escrow and this Agreement because a condition precedent set
forth in Section 5.1.1 or 5.1.2 is not satisfied, Seller
immediately shall return to Buyer any funds theretofore disbursed
to Seller from the Escrow. Seller shall thereupon be released
from its obligation to sell the Property to Buyer, and Buyer
shall be released from its obligation to purchase the Property.
5.3 Copy of Documents to Other Party. Each party will,
concurrently with its delivery to Escrow Agent of any documents
described in this Article 5, deliver a copy of the same to the
other party.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 No Concern. Escrow Agent shall have no concern with,
liability or responsibility for, this Article.
6.2 Additional Escrow Instructions. Buyer and Seller
covenant and agree that they will execute any additional escrow
instructions not inconsistent with the terms of this Agreement as
shall be reasonably required by Escrow Agent.
6.3 Cooperation. Buyer and Seller acknowledge that it may
be necessary to execute documents other than those specifically
referred to herein in order to complete the acquisition of the
Property as provided herein. Both Buyer and Seller hereby agree
to cooperate with each other by executing such other documents or
taking such other action as may be reasonably necessary to
complete this transaction in accordance with the intent of the
parties as evidenced in this Agreement.
6.4 Entry Upon Property. After execution of this
Agreement, Buyer and its designated agents and independent
contractors shall have the right to enter upon the Property to
conduct surveys, soils tests, physical inspections,
investigations and studies so long as Buyer has provided prior
reasonable notice of such entry to Seller and such activities
will not interfere with Seller's ownership and maintenance of the
Property. Seller and Seller's agents shall reasonably cooperate
with Buyer, provided that such investigations and studies shall
be at the sole cost and expense of Buyer. Buyer agrees to repair
any damage caused by Buyer or its agents or independent
contractors to the Property and further agrees to indemnify,
protect, defend (with legal counsel acceptable to both Buyer and
Seller) and hold Seller harmless from and against any costs,
expenses, losses, attorneys' fees and liabilities (including,
without limitation, claims of mechanics' liens) incurred or
sustained by Seller either prior or subsequent to the Close of
Escrow as a result of the conduct of Buyer, its agents, or
independent contractors under this Section 6.4. The covenants
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contained in this Section 6.4 shall survive the Close of Escrow
or earlier termination of this Agreement.
6.5 Indemnities of Buyer. Buyer agrees that it will
protect, defend, indemnify and hold Seller harmless from and
against all actions, causes of action, suits, claims, costs,
losses, penalties, damages, liabilities and expenses of any kind
whatsoever, including reasonable attorneys' fees ("Claims"),
based upon or arising out of: (i) any Claim for personal injury
or property damage occurring on or about the Property after the
Closing Date or in connection with Buyer's or its agents' or
independent contractors' access to the Property prior to the
Closing Date; (ii) any Claims related to construction defects,
soil subsidence or other similar claims related to the Land (to
the extent it is transferred to Buyer under this Agreement), the
Lots or the Improvements or any other improvements of any kind
made thereto or constructed thereon; (iii) any other Claim
arising out of Buyer's ownership or operation of the Property
after the Closing Date.
6.6 Indemnities of Seller. Seller agrees that it will
protect, indemnify, defend and hold Buyer harmless from and
against all Claims based upon or arising out of: (i) any claim
for personal injury or property damage occurring on or about the
Property prior to the Closing Date (except those resulting from
Buyer's access to the Property prior to the Closing Date); and
(ii) any liability or obligation which Buyer is not obligated to
assume under this Agreement. Notwithstanding the foregoing
sentence, Seller shall not be obligated to protect, defend,
indemnify or hold Buyer harmless from any Claims related to
construction defects, soil subsidence or other similar claims
related to the Land (except to the extent it is not transferred
to Buyer under this Agreement), the Lots or the Improvements or
any other improvements of any kind made thereto or constructed
thereon.
6.7 Bonds. Seller will ensure acceptance by the City of
Fairfield of the Improvements for Unit 1 and Unit 2, as shown on
the final Subdivision Map therefor, and Dover/Foothill Boulevard.
Buyer will provide maintenance bonds for Unit 1 and Unit 2 and
Dover/Foothill Boulevard upon the earlier of (i) Close of Escrow
or (ii) acceptance by the City of Fairfield of the required work.
6.8 Recreational Facility. Seller shall construct a
recreational facility, as described in the plans therefor
included in the Project Documents, upon the close of escrow for
the sale of the 351st home sold at the Paradise Valley
development. Buyer shall provide Seller quarterly reports
indicating the number of closings in any given quarter to
facilitate Seller's compliance with this requirement. Prior to
the expiration of the Feasibility Review Period, Seller shall
provide Buyer with evidence of Seller's compliance with the
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agreement Seller has entered into with the City of Fairfield
regarding the construction of the recreational facility.
6.9 Cost Sharing Agreement. Buyer acknowledges that Seller
is involved in a Cost Sharing Agreement with Arcadia Homes and
Winncrest Development. This Cost Sharing Agreement provides for
the completion of all infrastructure, common amenities,
landscaping and other similar items on parcels at the Paradise
Valley project. Buyer covenants and agrees to supply Seller with
any information on actual or estimated costs of improvements as
may be requested and required by Seller for reporting purposes
under the Cost Sharing Agreement.
6.10 Water and Sewer Line Reimbursements. Buyer
acknowledges that Seller is currently working with the City of
Fairfield on reimbursements for increasing the size of various
water and sewer lines. Any reimbursements for infrastructure,
including the water and sewer lines, provided by Seller shall be
the sole property of Seller, and Buyer shall deliver such
reimbursement payments to Seller if they are received by Buyer
after the Close of Escrow.
6.11 Pacific Gas & Electric Deposits. At the Close of
Escrow, Buyer shall reimburse Seller for any Pacific Gas &
Electric deposits for Unit 1 and Unit 2 at the rate of 80% of the
balance as of the Close of Escrow. As of May 31, 1996, the
balance for gas and electric deposits held by Pacific Gas &
Electric was $164,457.26 for Unit 1 and $113,371.27 for Unit 2.
The balance of such deposits as of the Close of Escrow shall be
determined as soon as practicable after the Close of Escrow, and
Buyer shall deliver Seller payment for 80% of such balance within
10 days after the final determination of such balance. Upon the
Close of Escrow, all such deposits shall be transferred to Buyer.
6.12 Transfer of Entitlements. Seller shall cooperate with
Buyer and execute, deliver, acknowledge and record such
documents, instruments and certificates as Buyer may reasonably
require to effect the transfer of any entitlements applicable to
the Land, the Lots and the Improvements from the City of
Fairfield or any other Governmental Agency to Buyer.
6.13 Confidentiality. The parties hereto agree that they
shall maintain in confidence and not disclose any information,
including, without limitation, the Purchase Price and the price
per Lot, related to this Agreement, the Land, the Lots, the
Improvements or any other Property without the prior written
consent of the other party to this Agreement. The preceding
sentence shall not prevent either party from disclosing the terms
and conditions of this Agreement and any and all information
regarding the Land, the Lots, the Improvements and the Property
to the parties' respective counsel and Governmental Agencies,
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such as the Securities Exchange Commission, having jurisdiction
over either party.
6.14 Possession. Possession of the Property shall be
delivered by Seller to Buyer on the Closing Date upon recordation
of the Grant Deed(s).
6.15 Survival of Covenants and Agreements. The covenants
and agreements set forth in Sections 6.5, 6.6, 6.7, 6.8, 6.9,
6.10, 6.11, 6.12 and 6.13 of this Agreement shall survive the
Close of Escrow.
ARTICLE 7
ACKNOWLEDGMENTS AND REPRESENTATIONS
7.1 Seller's Representations.
7.1.1 No Rights to Acquire Property. No person,
firm or entity other than Buyer has any rights in, or right to
acquire, the Property or any part thereof, and as long as this
Agreement remains in force, Seller will not, without Buyer's
prior written consent, lease, transfer, mortgage, pledge, or
convey, its interest in the Property, or any portion thereof, nor
any right therein or grant any right or option to anyone to
effect any such transaction.
7.1.2 Organization. Seller is a general
partnership duly organized and validly existing under the laws of
the State of California with full power to enter into this
Agreement.
7.1.3 Authority. The execution and delivery of
this Agreement have been duly authorized and approved by all
requisite partnership action, and the consummation of the
transactions contemplated hereby will be duly authorized and
approved by all requisite partnership action of Seller.
7.1.4 FIRPTA Affidavit. Seller is not a foreign
corporation, foreign partnership, foreign trust or foreign estate
(as those terms are defined in the Internal Revenue Code and the
Treasury Regulations promulgated thereunder) but rather a
partnership formed under the laws of one of the United States.
Seller understands and agrees that the certification made in this
section 7.1.4 may be disclosed to the Internal Revenue Service by
Buyer and that any false statement contained herein could be
punished by fine, imprisonment or both.
7.1.5 Latent Defects. Seller has no actual
knowledge of any latent defects on, in, under or above the Land,
the Lots or the Improvements (to the extent completed as of the
date of this Agreement). For purposes of this representation,
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the actual knowledge of Seller shall mean the actual knowledge of
only Patricia A. Wood and no other person.
7.2 Buyer's Representations.
7.2.1 Organization. Buyer is a limited partnership
duly organized, validly existing and in good standing under the
laws of the State of California with full power to enter into
this Agreement.
7.2.2 Authority. The execution and delivery of
this Agreement have been duly authorized and approved by all
requisite partnership action of Buyer and the consummation of the
transactions contemplated hereby will be duly authorized and
approved by all requisite partnership action of Buyer.
7.3 Purchase "As-Is"; Limitation of Liability.
7.3.1 Buyer acknowledges that (i) except for
Section 7.1.5, Seller is not making and has not made any
warranties or representations, express or implied, as to the
legal, physical and/or financial condition now or in the future
of the Land, the Lots, the Improvements or any Property, and (ii)
Buyer is buying the Property in an "as-is" condition based solely
on Buyer's own studies and investigations.
7.3.2 Buyer acknowledges that Seller shall have no
liability for any latent or patent defects discovered upon the
Property following the Close of Escrow.
7.3.3 Buyer confirms, acknowledges and agrees that
no officer, director, employee or representative of Seller or
Seller's partners (whether or not such individual has signed this
Agreement on behalf of Seller) makes any express or implied
representation or warranty of any kind or nature whatsoever
concerning the Land, the Lots, the Improvements or any of the
Property. Buyer further acknowledges, confirms and agrees that
any liability with respect of this Agreement and the transactions
contemplated herein shall result in the liability of Seller or
Seller's general partners only and not any individual officer,
director, employee or representative of Seller or Seller's
partners. Buyer therefore confirms, acknowledges and agrees that
Buyer may seek recourse only against Seller or Seller's general
partners for any liability arising out of or in connection with
this Agreement and the transactions contemplated hereby.
7.4 Survival. The representations made by Seller in
Sections 7.1.1, 7.1.2, 7.1.3, 7.1.4 and 7.1.5, and by Buyer in
Sections 7.2.1 and 7.2.2, and the acknowledgments and covenants
of Buyer in Sections 7.3.1, 7.3.2 and 7.3.3 of this Agreement
shall survive the Close of Escrow.
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ARTICLE 8
THE CLOSE OF ESCROW
8.1 Close of Escrow. Unless the parties mutually agree
upon an earlier closing date, Escrow shall close on that date
which is 105 days after the Effective Date ("Closing Date").
8.2 Closing Procedure. Escrow Agent shall close the Escrow
on or before the Closing Date by (i) recording Seller's Grant
Deed(s) and such other documents as may be necessary to procure
the Title Policy and satisfy the terms and conditions of this
Agreement and (ii) delivering funds and documents as set forth in
Article 10 entitled "Recordation and Distribution of Funds and
Documents" WHEN AND ONLY WHEN each of the following requirements
has been satisfied:
8.2.1 Funds and Instruments. All funds and
instruments required pursuant to Articles 2 and 3 have been
delivered to Escrow Agent.
8.2.2 Satisfaction of Conditions Precedent. Each
of the conditions precedent set forth in Section 5.1 has been, or
upon such closing shall be, satisfied as provided for in Section
5.1.
8.2.3 Recordation. Escrow Agent shall have
recorded the documents deposited into Escrow for recordation in
the Official Records of the County.
8.3 Earlier Closing; Later Closing. If all of the
conditions set forth in Sections 8.2.1 and 8.2.2 are satisfied at
a date earlier than the Closing Date, Escrow Agent shall close
the Escrow at such earlier date provided Escrow Agent obtains the
written consent of Buyer and Seller to do so. The Closing Date
may be extended by agreement of both Buyer and Seller.
8.4 Termination of Escrow. If Escrow Agent cannot close
the Escrow on or before the Closing Date, it will, nevertheless,
close the Escrow when all conditions have been satisfied or
waived as provided for in this Agreement, notwithstanding that
one or more of such conditions has not been timely performed,
unless (i) a notice of termination has theretofore been delivered
to Escrow Agent in accordance with the provisions of Section 5.2,
13.1 or 13.2, or (ii) after the Closing Date and prior to the
Close of Escrow, Escrow Agent receives a written notice to
terminate the Escrow and this Agreement from a party who, at the
time such notice is delivered, is not in default hereunder. The
right to terminate the Escrow and this Agreement under the
provisions of clause (ii) of this Paragraph 8.4 shall be
optional, not mandatory; no delay in the giving of such notice
shall affect the rights hereunder of the party giving the same.
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8.4.1 Notice of Termination. Escrow Agent shall
have no liability or responsibility for determining whether or
not a party giving a notice of termination is or is not in
default hereunder. Within two (2) working days after receipt of
such notice from one party, Escrow Agent shall deliver one copy
of such notice to the other party. Unless written objection to
termination of the Escrow is received by Escrow Agent within ten
(10) days after Escrow Agent so delivers such notice, (i) Escrow
Agent shall forthwith terminate the Escrow and return all
documents, funds or other items held by it to the party
depositing same, except that Escrow Agent may retain such
documents and other items usually retained by escrow agents in
accordance with standard escrow termination procedures and
practices, and (ii) each party shall forthwith pay to Escrow
Agent one-half of Escrow Agent's reasonable escrow termination
charges. Notwithstanding the foregoing provisions of this
Section 8.4.1, Escrow Agent may (i) retain any funds on deposit
with it until such time as its Escrow termination charges are
paid in full and/or (ii) deduct from any cash held by it
sufficient funds to pay for its Escrow termination charges in
full. If written objection to the termination of the Escrow is
delivered to Escrow Agent within such 10-day period, Escrow Agent
is authorized to hold all funds and instruments delivered to it
in connection with the Escrow and may, in Escrow Agent's sole
discretion, take no further action until otherwise directed
either by the parties' mutual written instructions or final order
of a court of competent jurisdiction.
8.4.2 Return of Deposits. If the Escrow is
terminated under either Section 13.1 or Section 13.2 or as a
result of Seller's default under or breach of this Agreement,
Seller shall return to Buyer any funds disbursed from the Escrow
to Buyer prior to the termination of the Escrow.
ARTICLE 9
PRORATIONS, FEES AND COSTS
9.1 Prorations. Escrow Agent will prorate as of the Close
of Escrow between the parties, in cash, county, city and special
district (if any) real property taxes and assessments for the
Property based on the latest information available to Escrow
Agent.
9.2 Thirty Day Month. All prorations and/or adjustments
called for in this Agreement are to be made on the basis of a
thirty (30) day month, unless otherwise specifically instructed
in writing.
9.3 Seller's Fees and Costs. Seller shall pay (i) one-half
of Escrow Agent's escrow fee, (ii) usual Seller's document-
drafting and recording charges, (iii) the title insurance premium
16
<PAGE>
for the CLTA Owner's Title Policy and any indorsements reasonably
requested by Buyer's lender, and (iv) the County Documentary
Transfer Tax in the amount determined by Escrow Agent and the
County Recorder.
9.4 Buyer's Fees and Costs. Buyer shall pay (i) one-half
of Escrow Agent's escrow fee, (ii) usual Buyer's document-
drafting and recording charges and (iii) the additional premium
for an American Land Title Association (ALTA) title insurance
policy, if Buyer desires that Title Company issue such a policy.
9.5 Escrow Cancellation Charges Due to a Default.
Notwithstanding the provisions of Section 9.3 and 9.4 above, if
Escrow fails to close due to Seller's default, Seller shall pay
all Escrow cancellation charges. If Escrow fails to close due to
Buyer's default, Buyer shall pay all Escrow cancellation charges.
If Escrow fails to close for any reason other than the foregoing,
Buyer and Seller shall each pay one-half of any Escrow
cancellation charges. "Escrow cancellation charges" means all
fees, charges and expenses incurred by Escrow Agent, including
all expenses incurred in connection with issuance of the
Preliminary Report and other title matters.
ARTICLE 10
RECORDATION AND DISTRIBUTION OF FUNDS AND DOCUMENTS
10.1 Disbursements. Except as provided in Section 10.4,
below, all disbursements by Escrow Agent shall be made by checks
of Escrow Agent.
10.2 Recorded Documents. Escrow Agent shall cause the
County Recorder of the County to mail Seller's Grant Deed (and
each other documents which are herein expressed to be, or by
general usage are, recorded) after recordation, to the grantee,
beneficiary or person (i) acquiring rights under said document or
(ii) for whose benefit said document was acquired.
10.3 Unrecorded Documents. Escrow Agent shall, at the Close
of Escrow, deliver by certified mail, overnight courier or United
States mail (or will hold for personal pickup, if requested) one
(1) copy of each unrecorded document received hereunder by Escrow
Agent to the payee or person (i) acquiring rights under said
document or (ii) for whose benefit said document was acquired.
10.4 Payment of Funds at Close of Escrow. Escrow Agent
shall, at the Close of Escrow, deliver by wire transfer, in
accordance with Seller's instructions (or will hold for personal
pickup, if requested) (i) to Seller, or order, the cash, plus any
proration or other credits to which Seller will be entitled less
any appropriate proration, deposits or other charges, and (ii) to
17
<PAGE>
Buyer, or order, any excess funds theretofore delivered to Escrow
Agent by Buyer.
10.5 Conformed Copies. Escrow Agent shall, at the Close of
Escrow, deliver to Seller and Buyer a copy of the Seller's Grant
Deed(s) (conformed to show recording date) and conformed copies
of each document recorded to place title in the condition
required by this Agreement.
ARTICLE 11
REMEDIES
11.1 Liquidated Damages to Seller. If all of the conditions
to Closing for Buyer's benefit have either been satisfied or
waived by Buyer by the Closing Date, and the purchase and sale of
the Property described herein fails to close due to default by
Buyer, it is agreed that the amounts released from Escrow to
Seller under this Agreement ("Released Amount") shall be retained
and accepted by Seller as liquidated damages and not as a penalty
and Seller shall be released from its obligation to sell the
Property to Buyer, and Buyer shall be released from its
obligation to purchase the Property. It is agreed that the
Released Amount constitutes a reasonable estimate of the damages
to Seller. Buyer and Seller agree that it is impossible or
impractical presently to predict what monetary damages Seller
would suffer in such event. Buyer desires to limit the monetary
damages for which Buyer might be liable hereunder and Buyer and
Seller desire to avoid the costs and delays they would incur if a
lawsuit were commenced to collect damages and therefore agree
that the liquidated damages provided hereunder shall constitute
Seller's sole and exclusive remedy hereunder. By the act of an
authorized representative of each party affixing its initials
herein, each party specifically confirms the accuracy of the
above statements and its agreement with them.
/s/ P.W. /s/ J.C.
--------------------- --------------------
Seller's Initials Buyer's Initials
11.2 Specific Performance. If all of the conditions to
Closing for Seller's benefit have either been satisfied or waived
by Seller by the Closing Date, and the purchase and sale of the
Property described herein fails to close due to default by
Seller, Buyer shall be entitled to bring an action for specific
performance of Seller's obligations under this Agreement.
18
<PAGE>
ARTICLE 12
ASSIGNABILITY
12.1 Assignment. Neither party shall voluntarily or by
operation of law assign or otherwise transfer any of its rights
or obligations under this Agreement without obtaining the prior
written consent of the other party, which consent may not be
unreasonably withheld. Notwithstanding the foregoing sentence,
Buyer shall have the right to assign its rights under this
Agreement without consent of Seller to a corporation,
partnership, limited liability company or other entity in which
the beneficial owners of at least 51% of the equity interest in
such entity own at least 51% of the equity interests in Buyer,
provided that Buyer shall remain liable for, and be responsible
for the performance of, any and all liabilities, obligations,
representations, covenants and agreements under this Agreement.
ARTICLE 13
EMINENT DOMAIN AND MATERIAL LOSS
13.1 Eminent Domain. In the event that, prior to the Close
of Escrow, all or any material portion of the Property is taken
or appropriated by any public or quasi-public authority under the
power of eminent domain, or Seller receives actual notice of any
pending or threatened condemnation proceedings, then either Buyer
or Seller may terminate this Agreement without further liability
hereunder and the parties shall proceed in accordance with
Section 8.4, and, in such event, any portion of Buyer's Deposit,
regardless of whether or not it has been released from Escrow to
Seller, shall be immediately returned to Buyer, and any
condemnation proceeds shall be the sole property of Seller. If
neither Seller nor Buyer elects to terminate this Agreement in
the event of any such taking, or threat of taking, and provided
that all conditions precedent to the Close of Escrow have either
been satisfied or waived, Escrow shall close in accordance with
this Agreement, and Seller shall assign to Buyer all of its
right, title and interest in any condemnation proceeds or award
made by the governmental entity.
13.2 No Material Loss. If, prior to the Close of Escrow,
and subject to the satisfaction or waiver of all conditions
precedent in favor of Buyer and Seller, the Property shall suffer
a Material Loss, Buyer shall have the right to elect, within 30
days of receipt of notice of such Material Loss, (a) to terminate
this Agreement under Section 8.4.1 and receive a return of
Buyer's Deposit or (b) to purchase the Property as provided in
this Agreement and receive an assignment of any insurance
proceeds Seller receives, or to which Seller is or may become
entitled, with respect to such Material Loss upon Seller's
receipt of such proceeds. The parties acknowledge and agree in
19
<PAGE>
no event shall the Close of Escrow be extended due to a Material
Loss. Notwithstanding the foregoing, the assignment of any
insurance proceeds as provided herein shall not include any
proceeds received for items not related to the physical condition
of the Property, such as proceeds from Seller's business
interruption insurance, if any. For purposes of this Agreement,
a "Material Loss" means a loss resulting from a casualty that
either (i) diminishes the value of the Property in an amount of
at least 10% of the Purchase Price or (ii) results in a loss of
at least 10% of the aggregate square footage of the Land as of
the Effective Date.
ARTICLE 14
GENERAL PROVISIONS
14.1 Attorneys' Fees. In any event any action, arbitration,
mediation or other dispute resolution proceeding shall be
instituted between Seller and Buyer in connection with this
Agreement, the party prevailing in such proceeding shall be
entitled to recover from the other party all of its costs of such
proceeding, including, without limitation, attorneys' fees and
costs as fixed by the court therein.
14.2 Captions. The captions used herein are for convenience
only and are not a part of this Agreement and do not in any way
limit or amplify the terms and provisions hereof.
14.3 Construction of Agreement. The agreements contained
herein shall not be construed in favor of or against either
party, but shall be construed as if both parties prepared this
Agreement.
14.4 Counterparts. This Agreement may be executed in
counterparts, all of which, when taken together, shall constitute
a fully executed original.
14.5 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof and all prior and contemporaneous
agreements, representations, negotiations and understandings of
the parties hereto, oral or written, are hereby superseded and
merged herein. The foregoing sentence shall in no way affect the
validity of any instruments executed by the parties in the form
of the exhibits attached to this Agreement.
14.6 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are incorporated herein by reference. Any
Exhibits or Schedules that are to be attached to the Agreement
after the Effective Date but prior to the Close of Escrow, shall
be initialled by Buyer and Seller on each page and, once so
20
<PAGE>
initialled, shall be sent to Escrow Agent for attachment to this
Agreement.
14.7 Gender and Number. The use herein of (i) the neuter
gender includes the masculine and the feminine and (ii) the
singular number includes the plural, whenever the context so
requires.
14.8 Governing Law. This Agreement and the documents in the
forms attached as exhibits hereto shall be governed by and
construed under the laws of the State of California. This
Agreement shall be deemed made and entered into in the County.
14.9 Joint and Several Liability. If any party consists of
more than one person or entity, the liability of each such person
or entity signing this Agreement shall be joint and several.
14.10 Modification. No modification, waiver, amendment,
discharge or change of this Agreement shall be valid unless the
same is in writing and signed by the party against which the
enforcement of such modification, waiver, amendment, discharge or
change is or may be sought.
14.11 Real Estate Brokerage Commission. Seller shall
pay a real estate brokerage commission in the amount of $160,000
to Fred Harris upon the Close of Escrow. Except as provided in
the preceding sentence, neither party is obligated to pay any
real estate, brokerage or other commission or fee in connection
with the purchase and sale of the Property. Each party hereby
indemnifies, protects, defends (with legal counsel reasonably
acceptable to the other party) and holds the other party free and
harmless from and against any and all costs and liabilities,
including, without limitation, reasonable attorneys' fees and
costs, for causes of action or proceedings which may be
instituted by any broker, agent or finder, licensed or otherwise,
claiming through, under or by reason of the conduct of such party
in connection with this transaction.
14.12 No Partnership or Joint Venture. Seller or Buyer
shall not, by virtue of this Agreement, in any way or for any
reason be deemed to have become a partner of the other in the
conduct of its business or otherwise, or a joint venturer. In
addition, by virtue of this Agreement there shall not be deemed
to have occurred a merger of any joint enterprise between Buyer
and Seller.
14.13 Notice and Payments. Any notice to be given or
other document to be delivered by any party to the other or
others hereunder, and any payments from Buyer to Seller, may be
delivered in person or by facsimile transmission (provided that a
confirming copy is sent by mail or overnight delivery as herein
specified) to an officer of any party, or may be deposited in the
21
<PAGE>
United States mail, duly certified or registered, return receipt
requested, with postage prepaid, or by Federal Express or other
similar overnight delivery service, and addressed to the party
for whom intended, as follows:
To Seller at its business office:
Paradise Valley Communities No. 1
529 East South Temple
Salt Lake City, Utah 84102
Attention: Patricia A. Wood
Facsimile No.: (801) 524-1751
With a copy to:
K. Michael Garrett, Esq.
Duckor Spradling & Metzger
401 West A Street, Suite 2400
San Diego, California 92101
Facsimile No.: (619) 231-6629
To Buyer at its business office:
The Forecast Group (Registered Trademark), L.P.
10670 Civic Center Drive
Rancho Cucamonga, California 91730
Facsimile No.: (909) 980-7305
With a copy to:
General Counsel
c/o The Forecast Group (Registered Trademark), L.P.
10670 Civic Center Drive
Rancho Cucamonga, California 91730
Facsimile No.: (909) 987-8958
To Escrow Agent:
Chicago Title Company
604 Empire Street
Fairfield, California 94533
Facsimile No.: (707) 425-4810
Any party hereto may from time to time, by written notice to the
other, designate a different address which shall be substituted
for the one above specified. Unless otherwise specifically
provided for herein, all notices, payments, demands or other
communications given hereunder shall be in writing and shall be
deemed to have been duly given and received (i) upon personal
delivery, or (ii) as of the third business day after mailing by
United States registered or certified mail, return receipt
22
<PAGE>
requested, postage prepaid, addressed as set forth above, or
(iii) the immediately succeeding Business Day after deposit with
Federal Express or other similar overnight delivery system.
14.14 Remedies Cumulative. All rights and remedies of
Buyer and Seller contained in this Agreement shall be construed
and held to be cumulative.
14.15 Severability. In the event that any phrase,
clause, sentence, paragraph, section, article or other portion of
this Agreement shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of
competent jurisdiction to be illegal, null or void or against
public policy, the remaining portions of this Agreement shall not
be affected thereby and shall remain in force and effect to the
fullest extent permissible by law.
14.16 Successors and Assigns. Subject to the
restrictions and prohibitions on assignment set forth in Article
12, each and all of the covenants and conditions of this
Agreement shall inure to the benefit of and shall be binding upon
the successors-in-interest, assigns, and legal representatives of
the parties hereto. As used in the foregoing, "successors" shall
refer to the parties' interest in the Property and to the
successors to all or substantially all of their assets and to
their successors by merger or consolidation.
14.17 Waiver. No waiver by Buyer or Seller of a breach
of any of the terms, covenants or conditions of this Agreement by
the other party shall be construed or held to be a waiver of any
succeeding or preceding breach of the same or any other term,
covenant or condition herein contained. No waiver of any default
by Buyer or Seller hereunder shall be implied from any omission
by the other party to take any action on account of such default
if such default persists or is repeated, and no express waiver
shall affect a default other than as specified in such waiver.
The consent or approval by Buyer or Seller to or of any act by
the other party requiring the consent or approval of the first
party shall not be deemed to waive or render unnecessary such
party's consent or approval to or of any subsequent similar acts
by the other party.
14.18 Gender and Number. In this Agreement (unless the
context requires otherwise), the masculine, feminine and neuter
genders and the singular and the plural include one another.
23
<PAGE>
14.19 Time of the Essence. Time is of the essence of
each and every provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the Effective Date.
SELLER:
PARADISE VALLEY COMMUNITIES NO. 1,
a California general partnership
By: HomeFed Communities, Inc., a
California corporation,
General Partner
By: /s/ Patricia A. Wood
---------------------------
Patricia A. Wood,
President
By: HomeFed Resources Corporation,
a California corporation,
General Partner
By: /s/ Patricia A. Wood
---------------------------
Patricia A. Wood,
President
BUYER:
THE FORECAST GROUP (Registered
Trademark), L.P., a California
limited partnership
By: FORECAST (Registered
Trademark) HOMES, INC., a
California corporation, General
Partner
By: /s/ Joe Carmen
--------------------------
Its: Executive Vice President
--------------------------
24
<PAGE>
CONSENT OF ESCROW AGENT
The undersigned Escrow Agent hereby agrees to (i)
accept the foregoing Agreement, (ii) be Escrow Agent under said
Agreement and (iii) be bound by said Agreement in the performance
of its duties as Escrow Agent; provided, however, the undersigned
shall have no obligations, liability or responsibility under (i)
this Consent or otherwise unless and until said Agreement, fully
signed by the parties, has been delivered to the undersigned or
(ii) any amendment to said Agreement unless and until the same
shall be accepted by the undersigned in writing.
Dated: June 20, 1996 (the "Opening of the Escrow")
Chicago Title Company
By: /s/ Terri Piper
-----------------------
Its: C.S.E.O.
--------------------
<PAGE>
LIST OF EXHIBITS
Exhibit A-1. . . . . . . . . . .Legal Description of Land--Unit 1
Exhibit A-2. . . . . . . . . . .Legal Description of Land--Unit 2
Exhibit B. . . . . . . . . . . . . . . . . . . Property Documents
Exhibit C. . . . . . . . . . . . . . General Conditions of Escrow
Exhibit D. . . . . . . . . . . .Certificate of Non-Foreign Status
Exhibit E. . . . . . . . . . . . . . . . . . . . . .Grant Deed(s)
<PAGE>
EXHIBIT A-1
Legal Description of land
Unit 1
<PAGE>
PARADISE VALLEY NORTH UNIT NO. 1
ALL THAT REAL PROPERTY SITUATE IN THE CITY OF FAIRFIELD, COUNTY
OF SOLANO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
LOTS 1 THROUGH 6, 14 THROUGH 34, 38 THROUGH 40, AND 47 THROUGH
56, AS SHOWN ON THAT CERTAIN MAP ENTITLED: "FINAL MAP OF
PARADISE VALLEY NORTH UNIT NO. 1, BEING ALL OF PARCEL 1 OF THE
PARCEL MAP ENTITLED 'LANDS OF ANDERSON & ROWLAND' FILED IN BOOK
34, PARCEL MAPS AT PAGE 8, SOLANO COUNTY RECORDS," FILED OCTOBER
2, 1989 IN THE OFFICE OF THE RECORDER OF SOLANO COUNTY IN BOOK 57
OF MAPS AT PAGE 27, SOLANO COUNTY RECORDS.
APN'S: 167-392-040; 167-392-050; 167-393-010 THROUGH 060; 167-401-040 THROUGH
180; 167-402-010 THROUGH 110; 167-403-020 THROUGH 070
Exhibit A-1
<PAGE>
EXHIBIT A-2
Legal Description of Land
Unit 2
<PAGE>
PARADISE VALLEY NORTH UNIT NO. 2
ALL THAT REAL PROPERTY SITUATE IN THE CITY OF FAIRFIELD, COUNTY
OF SOLANO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
LOT 1, LOTS 6 THROUGH 10, 21 THROUGH 74, AND 81 THROUGH 104, AS
SHOWN ON THAT CERTAIN MAP ENTITLED: "PARADISE VALLEY NORTH UNIT
NO. 2, BEING ALL OF LOT 61 AS SHOWN ON THE FINAL MAP OF PARADISE
VALLEY NORTH UNIT NO. 1 AS FILED IN BOOK 57 OF MAPS AT PAGE 27,
SOLANO COUNTY RECORDS," FILED SEPTEMBER 27, 1990 IN THE OFFICE OF
THE RECORDER OF SOLANO COUNTY IN BOOK 59 OF MAPS AT PAGE 62,
SOLANO COUNTY RECORDS.
APN'S: 167-451-010 THROUGH 150; 167-452-010 THROUGH 200; 167-461-010;
167-461-060 THROUGH 100; 167-461-220 THROUGH 320; 167-462-010 THROUGH
110; 167-462-180 THROUGH 380
Exhibit A-2
<PAGE>
Paradise Valley Units 1 and 2
Exhibit B
Property Documents
- - Rough Grading and Erosion Plans dated September 1988 (6 copies)
- - Final Map Unit 1 dated September 1988 (6 copies)
- - Final Map Unit 2 dated November 1988 (6 copies)
- - Improvement Plans for Units 1 and 2 dated March 1989
- - Development Agreement dated July 20, 1988
- - First Amendment to Development Agreement dated September 15, 1994
(not yet fully executed)
- - Second Amendment to Development Agreement (not yet dated or fully executed)
- - Covenants, Conditions, and Restrictions dated August 25, 1995
- - Anderson Consulting Group Report dated September 15, 1994
- - Department of Real Estate Public Report dated September 1, 1995
- - Letter to City of Fairfield regarding acceptance of improvements dated
May 28, 1996
- - Unapproved Plans for the Paradise Valley Recreation Facility
- - Cost Sharing Agreement dated October 20, 1989
- - Agreement with City of Fairfield regarding construction of recreational
facility dated August 31, 1995
- - Utility Deposit Balances dated May 31, 1996
- - Paradise Valley Master Association documents dated September 1995
- - Paradise Valley Master Association Bylaws dated August 21, 1995
- - Information regarding improvement bonds and maintenance obligations for
Units 1 and 2 and Dover/Foothill Boulevard
<PAGE>
EXHIBIT C
General Conditions of Escrow
<PAGE>
GENERAL PROVISIONS
1. The phrase "close of escrow" (for COE) as used in this
escrow means the date on which documents are recorded,
unless otherwise specified.
2. Recordation of any instruments delivered through this
escrow, if necessary or proper for the issuance of the
policy of title insurance called for, is authorized.
3. No examination or insurance as to the amount or payment of
personal property taxes is required unless specifically
requested.
4. You and any of your affiliates or employees are authorized
to use the information and documents in this escrow for any
purpose. You are further authorized to furnish to any
broker or lender identified with this transaction or anyone
acting on behalf of such broker or lender, any instructions,
amendments, statements, or notices of cancellation given in
connection with this escrow.
5. All written notices, communications, change of instructions
and documents are required to be delivered timely at the
office of Chicago Title Company as set forth herein.
6. All funds received in this escrow shall be deposited with
other escrow funds in one or more escrow (demand) accounts
of Chicago Title Company in any state or national bank. The
parties to this escrow understand that the escrow accounts
you maintain with the depository institutions contribute to
your value as a customer of these institutions which, in
turn, may make available to Chicago Title Company an array
of bank services, accommodations or other benefits. You
shall have no obligation to account for the value realized
by Chicago Title Company from these services, accommodations
or other benefits. All disbursements shall be made by your
check, unless otherwise instructed. You shall not be
responsible for any delay in closing if funds received by
escrow are not available for immediate withdrawal. Chicago
Title Company may, at its option, require concurrent
instructions from all principals prior to release of any
funds on deposit in this escrow.
7. If demand to cancel is submitted after the Time Limit Date,
any principal so requesting you to cancel this escrow shall
file notice of demand to cancel in your office in writing.
You shall within three (3) working days thereafter mail by
certified mail one copy of such notice to each of the other
principals at the address stated in this escrow. Unless
written objection thereto is filed in your office by a
principal within fifteen (15) calendar days after the date
of such mailing, you are instructed to cancel this escrow.
If this is a sale escrow, you may return the lender's papers
and/or funds upon lender's demand.
8. In the event that this escrow is canceled, any fees or
charges due Chicago Title Company including cancellation
fees and any expenditures incurred or authorized shall be
paid from funds on deposit unless otherwise specifically
agreed to or determined by a court of competent
jurisdiction. Upon payment thereof, return documents and
monies to the respective parties depositing same, or as
ordered by the court, and void any executed instruments.
9. If there is no written activity by a principal to this
escrow within any six-month period after the Time Limit Date
set forth herein, Chicago Title Company may, at its option,
terminate its agency obligation and cancel this escrow,
returning all documents, monies or other items held, to the
respective parties entitled thereto, less any fees and
charges as provided herein.
10. If, for any reason, funds are retained or remain in escrow
after the closing date, you may deduct therefrom a
reasonable charge as custodian, of not less than $25.00 per
month, unless otherwise specified.
<PAGE>
11. In the event that you should receive or become aware of
conflicting demands or claims with respect to this escrow,
or the rights of any of the parties hereto, or any money or
property deposited herein, you shall have the absolute right
at your option to discontinue any or all further acts until
such conflict is resolved to your satisfaction.
12. In the event that any Offer to Purchase, Deposit Receipt, or
any other form of Purchase Agreement is deposited in this
escrow, it is understood that such document will be
effective only as among the parties signing said document.
You as escrow holder are not to be concerned with the terms
of such document and are relieved of all responsibility in
connection therewith. You are to be concerned only with the
directives specifically set forth in these escrow
instructions and amendments thereto. Further, you are not
to be concerned or liable for items designated as
"memoranda" in these escrow instructions nor with any other
agreement or contract between the parties.
13. You are released from and shall have no liability,
obligation or responsibility with respect to (a) withholding
of funds pursuant to Section 1445 of the Internal Revenue
Code of 1986 as amended, and to Sections 18662 and 18668 of
the California Revenue and Taxation Code, (b) advising the
parties as to the requirements of said Section 1445, (c)
determining whether the transferor is a foreign person or a
non-resident under such Section, nor (d) obtaining a
nonforeign affidavit or other exemption from withholding
under said Sections nor otherwise making any inquiry
concerning compliance with such Sections by any party to the
transaction.
14. The parties hereto, by execution of these instructions
acknowledge that the escrowholder assumes no responsibility
or liability whatsoever for the supervision of any act or
the performance of any condition which is a condition
subsequent to the closing of this escrow.
15. In the absence of instructions to the contrary, you are
hereby authorized to utilize wire services, overnight, next
day, or other expedited delivery services (as opposed to the
regular U.S. Mail) and to charge the respective party's
account accordingly.
16. If you pay a demand to reconvey a revolving line of credit
or equityline deed of trust, you are hereby instructed on my
behalf and for my benefit, to request that the lender
issuing said demand cancel said revolving line or equityline
of credit.
17. You are authorized to destroy or otherwise dispose of any
and all documents, papers, instructions, correspondence and
other material pertaining to this escrow at the expiration
of six (6) years from the close of escrow or cancellation
thereof, without liability and without further notice.
IMPORTANT NOTICE
Except for wire transfers, funds remitted to this escrow are subject to
availability requirements imposed by Section 12413.1of the California
Insurance Code. CASHIER'S, CERTIFIED or TELLER'S checks, payable to CHICAGO
TITLE COMPANY are generally available for disbursement on the next business
day following the date of deposit.
Other forms of payment may cause extended delays in the closing of your
transaction pursuant to the requirements imposed by State Law.
(Wire transfer information available upon request)
ALL PARTIES TO THIS ESCROW ACKNOWLEDGE THAT CHICAGO TITLE COMPANY DOES NOT
PROVIDE LEGAL ADVICE NOR HAS IT MADE ANY INVESTIGATION, REPRESENTATIONS OR
ASSURANCES WHATSOEVER REGARDING THE LEGAL ASPECTS OR COMPLIANCE OF THIS
TRANSACTION WITH ANY TAX, SECURITIES OR ANY OTHER STATE OR FEDERAL LAWS.
IT IS RECOMMENDED THAT THE PARTIES OBTAIN INDEPENDENT LEGAL COUNSEL AS TO
SUCH MATTERS.
<PAGE>
EXHIBIT D
CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as
amended ("Code"), provides that a transferee (buyer) of a U.S.
real property interest must withhold tax if the transferor
(seller) is a foreign person. Sections 18805 and 26131 of the
California Revenue and Taxation Code provide that a transferee
(buyer) of a California real property interest must withhold tax
if withholding is required by Section 1445 of the United States
Internal Revenue Code.
To inform The Forecast Group (Registered Trademark), L.P.
("Transferee"), that withholding of tax under Section 1445 of the
Code is not required upon disposition of certain real property to
the Transferee by Paradise Valley Communities No. 1, a California
general partnership, ("Transferor"), the undersigned hereby
represents and certifies the following on behalf of the
Transferor:
1. The undersigned is the duly qualified and acting
officer of the Transferor;
2. The Transferor 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),
but rather is a corporation formed under the laws of one of the
United States;
3. The Transferor's U.S. employer identification number is
52-1671038;
4. The Transferor's address is 529 East South Temple, Salt
Lake City, Utah 84102-1089;
<PAGE>
5. The Transferor understands that this certification may
be disclosed to the Internal Revenue Service and/or the
California Franchise Board by the Transferee and that any false
statement contained herein could be punished by fine,
imprisonment, or both.
Under penalty of perjury, the undersigned declares that the
undersigned has examined this certification and to the best of
its knowledge and belief it is true, correct, and complete.
Dated: June 17, 1996 TRANSFEROR:
PARADISE VALLEY COMMUNITIES NO. 1,
a California general partnership
By: HomeFed Communities, Inc., a
California corporation,
General Partner
By: /s/ Patricia A. Wood
-----------------------
Patricia A. Wood,
President
By: HomeFed Resources Corporation,
a California corporation,
General Partner
By: /s/ Patricia A. Wood
-----------------------
Patricia A. Wood,
President
<PAGE>
EXHIBIT E
Grant Deed(s)
[To Be Prepared and Attached Prior to Close of Escrow]
PARADISE VALLEY UNIT 3
OPTION TO PURCHASE REAL PROPERTY AND ESCROW INSTRUCTIONS
BETWEEN
PARADISE VALLEY COMMUNITIES NO. 1
("Seller")
AND
THE FORECAST GROUP (Registered Trademark), L.P.
("Buyer")
<PAGE>
PARADISE VALLEY UNIT 3
_____________________________
OPTION TO PURCHASE REAL PROPERTY AND ESCROW INSTRUCTIONS
THIS OPTION TO PURCHASE REAL PROPERTY AND ESCROW
INSTRUCTIONS ("Agreement") is made and effective as of June 19,
1996 by and between Paradise Valley Communities No. 1, a
California general partnership ("Seller"), and The Forecast Group
(Registered Trademark), L.P., a California limited partnership
("Buyer"), with reference to the facts set forth below.
A. Seller is the owner of that certain land situated in
the City of Fairfield, County of Solano, State of California,
more particularly described in Exhibit A attached hereto and
incorporated herein ("Land"). The Land is a portion of a
residential subdivision ("Subdivision") consisting of four units,
or neighborhoods. The Land consists of one unit or neighborhood,
which is referred to herein as a "Unit." Unit 3 consists of
undeveloped land, which has been subdivided into 75 single-family
residential lots pursuant to the map described in Exhibit A
("Subdivision Map"). The term "Lots" refers to the single-family
residential lots located in Unit 3 that are specifically
described in Exhibit A, attached hereto. Work on the Lots in
Unit 3 and the infrastructure improvements and amenities
("Improvements") for Unit, as described in the Subdivision Map
and related improvement plans and specifications described in
Exhibit B, attached hereto has not begun. The Lots and
Improvements are not complete.
B. Buyer has entered into a Purchase Agreement and Escrow
Instructions dated June 19, 1996 ("Purchase Agreement"), and an
Option To Purchase Real Property and Escrow Instructions dated
June 19, 1996 ("Option Contract"), pursuant to which Buyer has
agreed or obtained an option to purchase from Seller certain
single-family residential lots located on land near or adjacent
to the Lots and comprising a portion of the Subdivision. Buyer
desires to obtain an option to purchase the Property (as defined
herein) and Seller desires to grant to Buyer an option to
purchase the Property in accordance with the terms and provisions
set forth below.
NOW, THEREFORE, in consideration of the recitals set forth
above, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
agree as set forth below.
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ARTICLE 1
DEFINED TERMS
Terms used in this Agreement with their initial letters
capitalized and not otherwise defined shall have the meanings set
forth below.
1.1 Agreement. The term "Agreement" shall mean this Option
to Purchase Real Property and Escrow Instructions between Seller
and Buyer.
1.2 Approved Exceptions. The term "Approved Exceptions"
shall mean those exceptions to title that are approved in
accordance with this Agreement.
1.3 Business Day. The term "Business Day" shall mean any
day other than a Saturday, Sunday or legal holiday in the State
of California. All periods of time described in this Agreement
that are not expressly measured by Business Days shall be
measured by calendar days.
1.4 Buyer. The term "Buyer" shall mean The Forecast Group
(Registered Trademark), L.P. a California limited partnership.
1.5 CLTA Owner's Title Policy. The term "CLTA Owner's
Title Policy" shall mean the California Land Title Association
("CLTA") owner's policy of title insurance to be issued by the
Title Company upon the Close of Escrow pursuant to the terms of
this Agreement.
1.6 Cash. The term "cash" shall mean: (i) currency of the
United States of America, (ii) cashier's check(s) currently dated
and payable to Escrow Agent or Seller, as required under this
Agreement, drawn and paid through a California banking or savings
and loan institution, tendered to Escrow Agent or Seller, as
required under this Agreement one (1) Business Day before funds
are required to be delivered under this Agreement, or (iii) an
amount credited by wire transfer into Escrow Agent's or Seller's
bank account, as required under this Agreement.
1.7 Close of Escrow. The term "Close of Escrow" shall mean
the consummation of the purchase of the Property by Buyer from
Seller and the recordation of Seller's Grant Deed(s) in
accordance with the terms and provisions of this Agreement.
1.8 Closing Date. The term "Closing Date" shall mean the
date on which the closing will be held for the sale of the
Property as set forth in Section 8.1 of this Agreement.
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1.9 County. The term "County" shall mean the County of
Solano, in the State of California.
1.10 Effective Date. The term "Effective Date" shall mean
June 19, 1996, the date on which this Agreement is effective and
deemed to have been made.
1.11 Escrow. The term "Escrow" shall mean the escrow opened
by Escrow Agent pursuant to the terms of this Agreement.
1.12 Escrow Agent. The term "Escrow Agent" shall mean
Chicago Title Company, 604 Empire Street, Fairfield, California
94533 ("Chicago Title").
1.13 Feasibility Review Period. The term "Feasibility
Review Period" shall mean the period of time which commences on
the Effective Date, and terminates at midnight of the three
hundred thirtieth day (330th) after Buyer's close of escrow under
the Purchase Agreement.
1.14 Governmental Action. The term "Governmental Action"
shall mean (a) any order of a court of competent jurisdiction,
and/or (b) any enactment, by the initiative or referendum process
or otherwise, of any Governmental Agencies (as defined below)
affecting the Property, either directly or indirectly, including,
but not limited to, limitation on the number of permits or
licenses that can be issued, declaration of policy, resolution,
ordinance, statute, regulation, or any other enactment of any
Governmental Agency (as defined below) and irrespective of
whether the orders or enactments listed immediately above contain
the words "moratorium," "moratoria" or similar words.
1.15 Governmental Agencies. The term "Governmental
Agencies" shall mean any local, county, state and/or federal
governmental or quasi-governmental agencies, authorities or
regulatory bodies and any public or private utility companies
having jurisdiction over the Property.
1.16 Opening of Escrow. The term "Opening of Escrow" shall
mean the date Escrow Agent executes the Consent of Escrow Agent
attached hereto, which consent shall be executed by Escrow Agent
upon delivery of this Agreement to Escrow Agent.
1.17 Preliminary Report. The term "Preliminary Report"
shall mean the Preliminary Title Report issued by the Title
Company to be reviewed by Buyer during the Feasibility Review
Period.
1.18 Property Documents. The term "Property Documents"
shall mean the documents delivered by Seller to Buyer in
connection with its feasibility studies pursuant to Section 4.1
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<PAGE>
of this Agreement. The Property Documents are listed in Exhibit
B, attached hereto.
1.19 Property. The term "Property" shall mean the Land and
the Subdivision Map and the Lots and the Improvements to the
extent completed, and any public or private entitlements, maps,
utility deposits, plans, soils reports, environmental reports,
marketing studies, development agreements, permits and similar
items that relate to the development, sale and use of the Lots as
single-family residential building lots.
1.20 Purchase Price. The term "Purchase Price" shall mean
the total consideration to be paid by Buyer to Seller for the
purchase of the Property as set forth in Article 2 of this
Agreement.
1.21 Seller. The term "Seller" shall mean Paradise Valley
Communities No. 1, a California general partnership.
1.22 Title Company. The term "Title Company" shall mean
Chicago Title.
ARTICLE 2
GRANT OF OPTIONS AGREEMENT OF PURCHASE AND SALE
2.1 Grant of Option. In consideration of Buyer's entering
into the Purchase Agreement and Buyer's delivery of $1,000 cash
("Option Payment") to Seller, Seller hereby grants to Buyer the
right and option to purchase and acquire the Property at the
Purchase Price and upon the terms and conditions hereinbelow set
forth. The option granted herein shall expire at midnight on the
three hundred thirtieth day (330th) after the date upon which the
close of escrow occurs under the Purchase Agreement (the
"Expiration Date") unless extended by mutual agreement of Buyer
and Seller.
2.2 Purchase Price. The purchase price ("Purchase Price")
for the Property is Two Million One Hundred Seventy-One Thousand
Three Hundred and 00/100 Dollars ($2,171,300).
2.3 Payment of Purchase Price. The Purchase Price shall be
paid in cash upon the Close of Escrow. The Option Payment shall
be credited against the Purchase Price.
2.4 Assumption of Liabilities. Upon the terms and subject
to the conditions contained in this Agreement, Buyer shall assume
effective as of the time of day on the Closing Date that Escrow
Agent telephonically or in writing notifies Seller and Buyer that
Escrow has closed Seller's obligations under the Property
Documents, which include, without limitation, the obligation to
complete the Lots and any necessary Improvements in accordance
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<PAGE>
with the Subdivision Map and all applicable documents,
instruments, codes, ordinances, regulations and permits.
ARTICLE 3
EXERCISE OF OPTION;
OPEN AND CLOSE OF ESCROW; DELIVERY OF DOCUMENTS
3.1 Exercise of Option. Buyer shall exercise the option to
purchase the Property under this Agreement by delivering to
Seller, or on before the Expiration Date, a written notice of
Buyer's exercise of the option to purchase the Property under
this Agreement ("Notice of Exercise"). Buyer shall the right to
exercise the option to purchase the Property under this Agreement
if, and only if, there shall be no default by Buyer under the
Purchase Agreement at the time of Buyer's delivery of the Notice
of Exercise. If the Notice of Exercise is not delivered to
Seller on or before the Expiration Date, Buyer's option to
purchase the Property and this Agreement shall immediately
terminate upon the Expiration Date. Upon any such termination of
the option to purchase the Property, the Buyer will execute,
acknowledge and deliver to the Seller a quit claim deed and such
other documentation as Seller may determine to be reasonable and
necessary in order to evidence the termination of any interest of
Buyer in the Property.
3.2 Opening of Escrow. Upon Buyer's timely delivery to
Seller of the Notice of Exercise, Buyer and Seller shall open
Escrow by depositing with Escrow Agent a fully executed original
of this Agreement for use as escrow instructions, and Escrow
Agent shall execute the Consent of Escrow Agent ("Consent") which
appears at the end of this Agreement and deliver a fully executed
Consent to Buyer and Seller. Seller shall also deposit the
Option Payment into Escrow upon the opening of Escrow. Escrow
Agent's general conditions ("General Conditions") are attached
hereto as Exhibit C and incorporated herein by reference to the
extent they are not inconsistent with the provisions of this
Agreement. If there is any inconsistency between the provisions
of the General Conditions and this Agreement, the provisions of
this Agreement shall control. If Escrow Agent requires
additional instructions, the parties agree to make any deletions,
substitutions and additions as the parties shall mutually
approve, as long as such deletions, substitutions or additions do
not materially alter the terms of this Agreement.
3.3 Buyer's Deliveries. Buyer shall, at least one (1)
Business Day prior to the Close of Escrow (unless required to be
delivered at an earlier date under the terms of this Agreement),
deliver to Escrow Agent each of the following:
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<PAGE>
3.3.1 Purchase Price. Cash in the amount of the
Purchase Price, less the Option Payment;
3.3.2 Documents. Fully executed and, where
appropriate, notarized counterparts of the documents required to
be executed by Buyer under this Agreement;
3.3.3 Prorations, Fees and Costs. The amount, if any,
required of Buyer under Article 9 of this Agreement entitled
"Prorations, Fees and Costs" and any other amounts payable upon
the Close of Escrow under any other provisions of this Agreement;
and
3.3.4 General. Such other documents, instruments and
certificates as Seller may reasonably require to carry out the
intent of this Agreement; provided, however, that Buyer shall not
be obligated to incur any financial liability or obligation in
connection with the furnishing of any such documents, instruments
or certificates.
3.4 Seller's Deliveries. Seller shall, at least one (1)
Business Day prior to the Close of Escrow (unless required to be
delivered at an earlier date under the terms of this Agreement),
deliver to Escrow Agent each of the following:
3.4.1 Certificate of Non-Foreign Status. Prior to the
Close of Escrow, Seller shall execute and deposit into Escrow a
Certificate of Non-Foreign Status certifying that Seller is a
non-foreign person in the form attached hereto as Exhibit D and
incorporated herein ("Certificate of Non-Foreign Status").
3.4.2 Grant Deeds. Prior to the Close of Escrow,
Seller shall execute, acknowledge and deposit into Escrow Grant
Deed(s) in the form attached hereto as Exhibit E; and
3.4.3 General. Such other documents, instruments and
certificates as Buyer may reasonably require to carry out the
intent of this Agreement; provided, however, that Seller shall
not be obligated to incur any financial liability or obligation
in connection with the furnishing of any such documents,
instruments or certificates.
ARTICLE 4
FEASIBILITY REVIEW
4.1 Feasibility Review Period; Delivery of Property
Documents. During the Feasibility Review Period, Buyer shall
analyze the feasibility of its purchase and use of the Property.
Buyer is solely responsible for any and all costs incurred by
Buyer in connection with its review and/or investigations of the
matters set forth in this Article 4. Seller shall, within sixty
6
<PAGE>
(60) days after the Effective Date, deliver to Buyer the Property
Documents. During the Feasibility Review Period, Buyer shall
review and analyze the Property Documents to determine their
individual and collective impact on the Property and its purchase
and use by Buyer.
4.1.1 Review of Preliminary Report. Within sixty (60)
days after the Effective Date of this Agreement, Seller shall
cause to be provided to Buyer a Preliminary Report issued by the
Title Company ("Preliminary Report"), together with legible
copies of all recorded documents described in the Preliminary
Report. Buyer shall have the right to review and approve the
Preliminary Report during the Feasibility Review Period. If any
title exceptions are recorded against the Property before the
Close of Escrow in addition to those specified in the Preliminary
Report, Escrow Agent shall cause the Title Company to issue a
supplemental preliminary report ("Supplemental Report"). Buyer
shall have until the expiration of the Feasibility Review Period
with respect to any title exceptions shown in the Preliminary
Report, and five (5) Business Days after receipt of any
Supplemental Report, to review the title exceptions shown therein
and to deliver to Seller notice of approval or disapproval of any
title exceptions disclosed in any such report. Buyer's delivery
of the Notice of Approval described in Section 4.3 shall be
deemed approval of the exceptions to title shown on the
Preliminary Report and any Supplemental Report issued as of the
date of such Notice of Approval. Any title exceptions approved
by Buyer are referred to herein as "Approved Exceptions." If any
title exceptions are specifically disapproved, and Seller elects,
within five (5) Business Days after the date of Buyer's
disapproval, not to cure the disapproved item, then Buyer shall
have five (5) Business Days after the receipt of Seller's notice
of election not to cure the disapproved item to waive its prior
disapproval. If Buyer does not deliver notice of its election to
waive its prior disapproval, then the disapproved and uncured
item will be deemed disapproved. If a title exception is
disapproved and uncured, Buyer may terminate the Escrow by
delivering a written notice of termination to Seller and the
Escrow Agent. Upon such termination, any deposits theretofore
paid to Seller or Escrow Agent (regardless of whether such
deposits were released to Seller) shall be immediately returned
to Buyer, and this Agreement shall be terminated. Seller shall
thereupon be released from its obligation to sell the Property to
Buyer, and Buyer shall be released from any obligation to
purchase the Property.
4.1.2 Governmental Actions. Buyer shall review and
consider the impact on the Property of any and all applicable
governmental ordinances, rules and regulations, and evaluate the
effect of any pending or threatened Governmental Actions
pertaining to the Property.
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4.1.3 Studies and Investigations. Buyer shall conduct
such independent investigations, studies and tests as it deems
necessary or appropriate concerning Buyer's proposed use, sale,
development and/or the suitability of the Property for Buyer's
intended purposes. Such investigations may include, without
limitation, soils and engineering tests, hazardous studies,
investigations concerning the availability of the approvals
required from any Governmental Agencies for Buyer's proposed use
of the Property, investigations regarding the existence on the
Property of any threatened or endangered species, and of any
archaeological artifacts on the Property, the imposition or
increase of any fees, charges or exactions by any Governmental
Agencies and such economic feasibility and marketing studies as
Buyer deems appropriate.
4.1.4 Physical Inspection. During the Feasibility
Review Period, Buyer shall have the right to inspect and approve
of the physical condition of the Property and shall conduct any
soil, hazardous waste or engineering studies with respect to the
Property as Buyer may deem necessary or appropriate. All such
studies and inspections shall be conducted by Buyer at its sole
expense.
4.2 Additional Information from Seller. During the
Feasibility Review Period, Seller shall provide Buyer with such
Additional Information (as hereinafter defined) as Buyer
reasonably may determine to be necessary to complete its
investigation of the Property, and Seller shall, and shall cause
its agents, employees and consultants to, respond to questions
posed by Buyer with respect to the Property. As used herein, the
term "Additional Information" shall mean and refer to information
in the possession and/or control of Seller concerning (i) the
Property and (ii) material changes in information and documents
previously provided to Buyer by Seller during the Feasibility
Review Period.
4.3 Satisfaction of Feasibility Review. At any time during
the Feasibility Review Period, Buyer shall have the right to
terminate this Agreement if Buyer disapproves of any aspect of
the Property or the feasibility of Buyer using the Property as
Buyer intends. If Buyer approves of the Property and elects to
continue this Agreement beyond the Feasibility Review Period,
Buyer shall, prior to expiration of the Feasibility Review
Period, deliver notice of such election ("Notice of Approval") to
Seller and Escrow Agent. In such event, the terms and provisions
of this Agreement shall continue in full force and effect,
subject to the provisions of Section 4.1.1 regarding disapproved
and uncured title exceptions shown in any Supplemental Report.
The parties acknowledge and agree that the continued
effectiveness of this Agreement shall be conditioned upon Buyer's
delivery of a Notice of Approval and that Buyer's delivery of a
Notice of Approval shall be deemed to be its approval of all
aspects of the Property, including, without limitation, title
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<PAGE>
issues, with the exception of matters specifically set forth in
this Agreement for which Buyer has continuing rights of approval
after the Feasibility Review Period. Buyer's failure to deliver
its Notice of Approval before expiration of the Feasibility
Review Period shall be deemed to be Buyer's disapproval of the
Property. If no Notice of Approval has been delivered by the
expiration of the Feasibility Review Period, or within the period
described in Section 4.1.1 with respect to any title exception
shown in any Supplemental Report that is disapproved and uncured,
this Agreement shall upon such expiration immediately terminate,
and Escrow Agent shall return all funds, less applicable Escrow
cancellation charges, and documents to the parties who deposited
them. Seller shall thereupon be released from its obligation to
sell the Property to Buyer, and Buyer shall be released from any
obligation to purchase the Property. Buyer shall also deliver to
Seller, without warranty, any documents related to the Property
which Buyer has created during the Feasibility Review Period.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSE OF ESCROW
5.1 Subject to Satisfaction or Waiver. The Closing of the
purchase and sale described in this Agreement and the obligations
of the parties under this Agreement shall be subject to
satisfaction or waiver (by the party in whose favor the condition
precedent has been established) of all the conditions precedent
set forth below.
5.1.1 Title Policy. Escrow Agent shall be
unconditionally committed to procure from the Title Company the
CLTA Owner's Title Policy for the Property with a liability limit
in the amount of the Purchase Price insuring fee title vested in
Buyer. Buyer shall take title to the Property subject only to:
(a) Non-delinquent general, special and supplemental taxes, bonds
and assessments, including Mello-Roos bonds, if any; (b) any
matters set forth in the printed form portion of the CLTA Owner's
Title Policy; (c) the Approved Exceptions; and (d) any items
caused or permitted to be placed of record by Buyer as of the
Close of Escrow.
5.1.2 Seller's Performance. Seller shall have duly
performed each and every undertaking and agreement to be
performed by it hereunder prior to the Close of Escrow.
5.1.3 Buyer's Performance. Buyer shall have duly
performed each and every undertaking and agreement to be
performed by it hereunder prior to the Close of Escrow.
5.1.4 Closing Under Purchase Agreement. Buyer shall
have closed escrow under the Purchase Agreement and acquired the
Property described therein.
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5.1.5 Improvement Bonds. In accordance with Section
6.7, Buyer shall have replaced the existing improvement bonds
affecting the Lots with improvement bonds obtained by Buyer and
shall have obtained a release of Seller with respect to any
liability for such replaced improvement bonds.
5.2 Failure of Conditions Precedent. The conditions
precedent in Sections 5.1.1 and 5.1.2 are for Buyer's benefit and
can be waived only by Buyer. The conditions precedent in
Sections 5.1.3, 5.1.4 and 5.1.5 are for Seller's benefit and can
be waived only by Seller. In the event that any of the
conditions precedent set forth above is neither satisfied nor
waived by the Closing Date, the party for whose benefit the
condition has been created may terminate the Escrow and this
Agreement by giving a written notice of termination to the other
party and Escrow Agent, specifying the reason for termination and
the condition precedent that has not been satisfied. Upon
receipt of such notice of termination, Escrow Agent shall return
any funds that have been deposited in Escrow to the person who
made such deposit, less applicable Escrow cancellation charges,
and any documents to the parties who deposited them. If Buyer
terminates the Escrow and this Agreement because a condition
precedent set forth in Section 5.1.1 or 5.1.2 is not satisfied,
Seller immediately shall return to Buyer any funds theretofore
disbursed to Seller from the Escrow. Seller shall thereupon be
released from its obligation to sell the Property to Buyer, and
Buyer shall be released from its obligation to purchase the
Property.
5.3 Copy of Documents to Other Party. Each party will,
concurrently with its delivery to Escrow Agent of any documents
described in this Article 5, deliver a copy of the same to the
other party.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 No Concern. Escrow Agent shall have no concern with,
liability or responsibility for, this Article.
6.2 Additional Escrow Instructions. Buyer and Seller
covenant and agree that they will execute any additional escrow
instructions not inconsistent with the terms of this Agreement as
shall be reasonably required by Escrow Agent.
6.3 Cooperation. Buyer and Seller acknowledge that it may
be necessary to execute documents other than those specifically
referred to herein in order to complete the acquisition of the
Property as provided herein. Both Buyer and Seller hereby agree
to cooperate with each other by executing such other documents or
taking such other action as may be reasonably necessary to
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complete this transaction in accordance with the intent of the
parties as evidenced in this Agreement.
6.4 Entry Upon Property. After execution of this
Agreement, Buyer and its designated agents and independent
contractors shall have the right to enter upon the Property to
conduct surveys, soils tests, physical inspections,
investigations and studies so long as Buyer has provided prior
reasonable notice of such entry to Seller and such activities
will not interfere with Seller's ownership and maintenance of the
Property. Seller and Seller's agents shall reasonably cooperate
with Buyer, provided that such investigations and studies shall
be at the sole cost and expense of Buyer. Buyer agrees to repair
any damage caused by Buyer or its agents or independent
contractors to the Property and further agrees to indemnify,
protect, defend (with legal counsel acceptable to both Buyer and
Seller) and hold Seller harmless from and against any costs,
expenses, losses, attorneys' fees and liabilities (including,
without limitation, claims of mechanics' liens) incurred or
sustained by Seller either prior or subsequent to the Close of
Escrow as a result of the conduct of Buyer, its agents, or
independent contractors under this Section 6.4. The covenants
contained in this Section 6.4 shall survive the Close of Escrow
or earlier termination of this Agreement.
6.5 Indemnities of Buyer. Buyer agrees that it will
protect, defend, indemnify and hold Seller harmless from and
against all actions, causes of action, suits, claims, costs,
losses, penalties, damages, liabilities and expenses of any kind
whatsoever, including reasonable attorneys' fees ("Claims"),
based upon or arising out of: (i) any Claim for personal injury
or property damage occurring on or about the Property after the
Closing Date or in connection with Buyer's or its agents' or
independent contractors' access to the Property prior to the
Closing Date; (ii) any Claims related to construction defects,
soil subsidence or other similar claims related to the Land (to
the extent it is transferred to Buyer under this Agreement), the
Lots or the Improvements or any other improvements of any kind
made thereto or constructed thereon; (iii) any other Claim
arising out of Buyer's ownership or operation of the Property
after the Closing Date.
6.6 Indemnities of Seller. Seller agrees that it will
protect, indemnify, defend and hold Buyer harmless from and
against all Claims based upon or arising out of: (i) any claim
for personal injury or property damage based upon an event
occurring on or about the Property prior to the Closing Date
(except those resulting from Buyer's access to the Property prior
to the Closing Date); and (ii) any liability or obligation which
Buyer is not obligated to assume under this Agreement.
Notwithstanding the foregoing sentence, Seller shall not be
obligated to protect, defend, indemnify or hold Buyer harmless
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from any Claims related to construction defects, soil subsidence
or other similar claims related to the Land (except to the extent
it is not transferred to Buyer under this Agreement), the Lots or
the Improvements or any other improvements of any kind made
thereto or constructed thereon.
6.7 Bonds. Prior to the Close of Escrow, Buyer will obtain
and provide improvement bonds for the Lots and related
Improvements, deliver to Seller evidence of such bonds and obtain
Seller's release under any bonds applicable to the Lots or
Improvements.
6.8 Recreational Facility. Seller shall construct a
recreational facility, as described in the plans therefor
included in the Project Documents, upon the close of escrow for
the sale of the 351st home sold at the Paradise Valley
development. Buyer shall provide Seller quarterly reports
indicating the number of closings in any given quarter to
facilitate Seller's compliance with this requirement. Prior to
the expiration of the Feasibility Review Period, Seller shall
provide Buyer with evidence of Seller's compliance with the
agreement Seller has entered into with the City of Fairfield
regarding the construction of the recreational facility.
6.9 Cost Sharing Agreement. Buyer acknowledges that Seller
is involved in a Cost Sharing Agreement with Arcadia Homes and
Winncrest Development. This Cost Sharing Agreement provides for
the completion of all infrastructure, common amenities,
landscaping and other similar items on parcels at the Paradise
Valley project. Buyer covenants and agrees to supply Seller with
any information on actual or estimated costs of improvements as
may be requested and required by Seller for reporting purposes
under the Cost Sharing Agreement.
6.10 Water and Sewer Line Reimbursements. Buyer
acknowledges that Seller is currently working with the City of
Fairfield on reimbursements for increasing the size of various
water and sewer lines. Any reimbursements for infrastructure,
including the water and sewer lines, provided by Seller shall be
the sole property of Seller, and Buyer shall deliver such
reimbursement payments to Seller if they are received by Buyer
after the Close of Escrow.
6.11 Pacific Gas & Electric Deposits. Buyer and Seller
acknowledge that there are no Pacific Gas & Electric deposits or
other utility deposits applicable to the Lots.
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6.12 Transfer of Entitlements. Seller shall cooperate with
Buyer and execute, deliver, acknowledge and record such
documents, instruments and certificates as Buyer may reasonably
require to effect the transfer of any entitlements applicable to
the Land, the Lots and the Improvements from the City of
Fairfield or any other Governmental Agency to Buyer.
6.13 Confidentiality. The parties hereto agree that they
shall maintain in confidence and not disclose any information,
including, without limitation, the Purchase Price and the price
per Lot, related to this Agreement, the Land, the Lots, the
Improvements or any other Property without the prior written
consent of the other party to this Agreement. The preceding
sentence shall not prevent either party from disclosing the terms
and conditions of this Agreement and any and all information
regarding the Land, the Lots, the Improvements and the Property
to the parties' respective counsel and Governmental Agencies,
such as the Securities Exchange Commission, having jurisdiction
over either party.
6.14 Completion of Lots. Buyer acknowledges that no work on
the Lots and Improvements has been done and the Lots and
Improvements are not complete. Buyer covenants and agrees to
complete the Lots and the related Improvements in accordance with
the Subdivision Map and any and all applicable documents,
instruments, codes, ordinances, regulations and permits.
6.15 Possession. Possession of the Property shall be
delivered by Seller to Buyer on the Closing Date upon recordation
of the Grant Deed(s).
6.16 Survival of Covenants and Agreements. The covenants
and agreements set forth in Sections 6.5, 6.6, 6.8, 6.9, 6.10,
6.11, 6.12, 6.13, and 6.14 of this Agreement shall survive the
Close of Escrow.
ARTICLE 7
ACKNOWLEDGMENTS AND REPRESENTATIONS
7.1 Seller's Representations.
7.1.1 No Rights to Acquire Property. No person,
firm or entity other than Buyer has any rights in, or right to
acquire, the Property or any part thereof, and as long as this
Agreement remains in force, Seller will not, without Buyer's
prior written consent, lease, transfer, mortgage, pledge, or
convey, its interest in the Property, or any portion thereof, nor
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any right therein, or grant any right or option to anyone to
effect any such transaction.
7.1.2 Organization. Seller is a general
partnership duly organized and validly existing under the laws of
the State of California with full power to enter into this
Agreement.
7.1.3 Authority. The execution and delivery of
this Agreement have been duly authorized and approved by all
requisite partnership action, and the consummation of the
transactions contemplated hereby will be duly authorized and
approved by all requisite partnership action of Seller.
7.1.4 FIRPTA Affidavit. Seller is not a foreign
corporation, foreign partnership, foreign trust or foreign estate
(as those terms are defined in the Internal Revenue Code and the
Treasury Regulations promulgated thereunder) but rather a
partnership formed under the laws of one of the United States.
Seller understands and agrees that the certification made in this
section 7.1.4 may be disclosed to the Internal Revenue Service by
Buyer and that any false statement contained herein could be
punished by fine, imprisonment or both.
7.1.5 Latent Defects. Seller has no actual
knowledge of any latent defects on, in, under or above the Land,
the Lots or the Improvements (to the extent completed as of the
date of this Agreement). For purposes of this representation,
the actual knowledge of Seller shall mean the actual knowledge of
only Patricia A. Wood and no other person.
7.2 Buyer's Representations.
7.2.1 Organization. Buyer is a limited partnership
duly organized, validly existing and in good standing under the
laws of the State of California with full power to enter into
this Agreement.
7.2.2 Authority. The execution and delivery of
this Agreement have been duly authorized and approved by all
requisite partnership action of Buyer and the consummation of the
transactions contemplated hereby will be duly authorized and
approved by all requisite partnership action of Buyer.
7.3 Purchase "As-Is"; Limitation of Liability.
7.3.1 Buyer acknowledges that (i) the Land does not
have on it finished Lots or Improvements, (ii) no work has been
done with respect to the Lots and the Improvements, (iii) the
Lots and related Improvements are not complete, (iv) except for
Section 7.1.5, Seller is not making and has not made any
warranties or representations, express or implied, as to the
legal, physical and/or financial condition now or in the future
of the Land, the Lots, the Improvements or any Property, and (v)
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Buyer is buying the Property in an "as-is" condition based solely
on Buyer's own studies and investigations.
7.3.2 Buyer acknowledges that Seller shall have no
liability for any latent or patent defects discovered upon the
Property following the Close of Escrow.
7.3.3 Buyer confirms, acknowledges and agrees that
no officer, director, employee or representative of Seller or
Seller's partners (whether or not such individual has signed this
Agreement on behalf of Seller) makes any express or implied
representation or warranty of any kind or nature whatsoever
concerning the Land, the Lots, the Improvements or any of the
Property. Buyer further acknowledges, confirms and agrees that
any liability with respect of this Agreement and the transactions
contemplated herein shall result in the liability of Seller or
Seller's general partners only and not any individual officer,
director, employee or representative of Seller or Seller's
partners. Buyer therefore confirms, acknowledges and agrees that
Buyer may seek recourse only against Seller or Seller's general
partners for any liability arising out of or in connection with
this Agreement and the transactions contemplated hereby.
7.4 Survival. The representations made by Seller in
Sections 7.1.1, 7.1.2, 7.1.3, 7.1.4 and 7.1.5, and by Buyer in
Sections 7.2.1 and 7.2.2, and the acknowledgments and covenants
of Buyer in Sections 7.3.1, 7.3.2 and 7.3.3 of this Agreement
shall survive the Close of Escrow.
ARTICLE 8
THE CLOSE OF ESCROW
8.1 Close of Escrow. If Buyer timely exercises its option
to purchase the Property under this Agreement, then, unless the
parties mutually agree upon an earlier closing date, Escrow shall
close on the date that is three hundred sixty (360) days after
the date upon which buyer closes escrow under the Purchase
Agreement and acquires the property described therein ("Closing
Date").
8.2 Closing Procedure. Escrow Agent shall close the Escrow
on or before the Closing Date by (i) recording Seller's Grant
Deed(s) and such other documents as may be necessary to procure
the Title Policy and satisfy the terms and conditions of this
Agreement and (ii) delivering funds and documents as set forth in
Article 10 entitled "Recordation and Distribution of Funds and
Documents" WHEN AND ONLY WHEN each of the following requirements
has been satisfied:
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8.2.1 Funds and Instruments. All funds and
instruments required pursuant to Articles 2 and 3 have been
delivered to Escrow Agent.
8.2.2 Satisfaction of Conditions Precedent. Each
of the conditions precedent set forth in Section 5.1 has been, or
upon such closing shall be, satisfied as provided for in Section
5.1.
8.2.3 Recordation. Escrow Agent shall have
recorded the documents deposited into Escrow for recordation in
the Official Records of the County.
8.3 Earlier Closing; Later Closing. If all of the
conditions set forth in Sections 8.2.1 and 8.2.2 are satisfied at
a date earlier than the Closing Date, Escrow Agent shall close
the Escrow at such earlier date provided Escrow Agent obtains the
written consent of Buyer and Seller to do so. The Closing Date
may be extended by agreement of both Buyer and Seller.
8.4 Termination of Escrow. If Escrow Agent cannot close
the Escrow on or before the Closing Date, it will, nevertheless,
close the Escrow when all conditions have been satisfied or
waived as provided for in this Agreement, notwithstanding that
one or more of such conditions has not been timely performed,
unless (i) a notice of termination has therefore been delivered
to Escrow Agent in accordance with the provisions of Section 5.2,
13.1 or 13.2, or (ii) after the Closing Date and prior to the
Close of Escrow, Escrow Agent receives a written notice to
terminate the Escrow and this Agreement from a party who, at the
time such notice is delivered, is not in default hereunder. The
right to terminate the Escrow and this Agreement under the
provisions of clause (ii) of this Paragraph 8.4 shall be
optional, not mandatory; no delay in the giving of such notice
shall affect the rights hereunder of the party giving the same.
8.4.1 Notice of Termination. Escrow Agent shall
have no liability or responsibility for determining whether or
not a party giving a notice of termination is or is not in
default hereunder. Within two (2) working days after receipt of
such notice from one party, Escrow Agent shall deliver one copy
of such notice to the other party. Unless written objection to
termination of the Escrow is received by Escrow Agent within ten
(10) days after Escrow Agent so delivers such notice, (i) Escrow
Agent shall forthwith terminate the Escrow and return all
documents, funds or other items held by it to the party
depositing same, except that Escrow Agent may retain such
documents and other items usually retained by escrow agents in
accordance with standard escrow termination procedures and
practices, and (ii) each party shall forthwith pay to Escrow
Agent one-half of Escrow Agent's reasonable escrow termination
charges. Notwithstanding the foregoing provisions of this
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Section 8.4.1, Escrow Agent may (i) retain any funds on deposit
with it until such time as its Escrow termination charges are
paid in full and/or (ii) deduct from any cash held by it
sufficient funds to pay for its Escrow termination charges in
full. If written objection to the termination of the Escrow is
delivered to Escrow Agent within such 10-day period, Escrow Agent
is authorized to hold all funds and instruments delivered to it
in connection with the Escrow and may, in Escrow Agent's sole
discretion, take no further action until otherwise directed
either by the parties' mutual written instructions or final order
of a court of competent jurisdiction.
8.4.2 Return of Deposits. If the Escrow is
terminated under either Section 13.1 or Section 13.2 or as a
result of Seller's default under or breach of this Agreement,
Seller shall return to Buyer any funds disbursed from the Escrow
to Buyer prior to the termination of the Escrow.
ARTICLE 9
PRORATIONS, FEES AND COSTS
9.1 Prorations. Escrow Agent will prorate as of the Close
of Escrow between the parties, in cash, county, city and special
district (if any) real property taxes and assessments for the
Property based on the latest information available to Escrow
Agent.
9.2 Thirty Day Month. All prorations and/or adjustments
called for in this Agreement are to be made on the basis of a
thirty (30) day month, unless otherwise specifically instructed
in writing.
9.3 Seller's Fees and Costs. Seller shall pay (i) one-half
of Escrow Agent's escrow fee, (ii) usual Seller's document-
drafting and recording charges, (iii) the title insurance premium
for the CLTA Owner's Title Policy and any indorsements reasonably
requested by Buyer's lender, and (iv) the County Documentary
Transfer Tax in the amount determined by Escrow Agent and the
County Recorder.
9.4 Buyer's Fees and Costs. Buyer shall pay (i) one-half
of Escrow Agent's escrow fee, (ii) usual Buyer's document-
drafting and recording charges and (iii) the additional premium
for an American Land Title Association (ALTA) title insurance
policy, if Buyer desires that Title Company issue such a policy.
9.5 Escrow Cancellation Charges Due to a Default.
Notwithstanding the provisions of Section 9.3 and 9.4 above, if
Escrow fails to close due to Seller's default, Seller shall pay
all Escrow cancellation charges. If Escrow fails to close due to
Buyer's default, Buyer shall pay all Escrow cancellation charges.
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If Escrow fails to close for any reason other than the foregoing,
Buyer and Seller shall each pay one-half of any Escrow
cancellation charges. "Escrow cancellation charges" means all
fees, charges and expenses incurred by Escrow Agent, including
all expenses incurred in connection with issuance of the
Preliminary Report and other title matters.
ARTICLE 10
RECORDATION AND DISTRIBUTION OF FUNDS AND DOCUMENTS
10.1 Disbursements. Except as provided in Section 10.4,
below, all disbursements by Escrow Agent shall be made by checks
of Escrow Agent.
10.2 Recorded Documents. Escrow Agent shall cause the
County Recorder of the County to mail Seller's Grant Deed (and
each other documents which are herein expressed to be, or by
general usage are, recorded) after recordation, to the grantee,
beneficiary or person (i) acquiring rights under said document or
(ii) for whose benefit said document was acquired.
10.3 Unrecorded Documents. Escrow Agent shall, at the Close
of Escrow, deliver by certified mail, overnight courier or United
States mail (or will hold for personal pickup, if requested) one
(1) copy of each unrecorded document received hereunder by Escrow
Agent to the payee or person (i) acquiring rights under said
document or (ii) for whose benefit said document was acquired.
10.4 Payment of Funds at Close of Escrow. Escrow Agent
shall, at the Close of Escrow, deliver by wire transfer, in
accordance with Seller's instructions (or will hold for personal
pickup, if requested) (i) to Seller, or order, the cash, plus any
proration or other credits to which Seller will be entitled less
any appropriate proration, deposits or other charges, and (ii) to
Buyer, or order, any excess funds theretofore delivered to Escrow
Agent by Buyer.
10.5 Conformed Copies. Escrow Agent shall, at the Close of
Escrow, deliver to Seller and Buyer a copy of the Seller's Grant
Deed(s) (conformed to show recording date) and conformed copies
of each document recorded to place title in the condition
required by this Agreement.
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ARTICLE 11
REMEDIES
11.1 Liquidated Damages to Seller. If all of the conditions
to Closing for Buyer's benefit have either been satisfied or
waived by Buyer by the Closing Date, and the purchase and sale of
the Property described herein fails to close due to default by
Buyer, it is agreed that the amounts released from Escrow to
Seller under this Agreement ("Released Amount") shall be retained
and accepted by Seller as liquidated damages and not as a penalty
and Seller shall be released from its obligation to sell the
Property to Buyer, and Buyer shall be released from its
obligation to purchase the Property. It is agreed that the
Released Amount constitutes a reasonable estimate of the damages
to Seller. Buyer and Seller agree that it is impossible or
impractical presently to predict what monetary damages Seller
would suffer in such event. Buyer desires to limit the monetary
damages for which Buyer might be liable hereunder and Buyer and
Seller desire to avoid the costs and delays they would incur if a
lawsuit were commenced to collect damages and therefore agree
that the liquidated damages provided hereunder shall constitute
Seller's sole and exclusive remedy hereunder. By the act of an
authorized representative of each party affixing its initials
herein, each party specifically confirms the accuracy of the
above statements and its agreement with them.
/s/ P.W. /s/ J.C.
--------------------- --------------------
Seller's Initials Buyer's Initials
11.2 Specific Performance. If all of the conditions to
Closing for Seller's benefit have either been satisfied or waived
by Seller by the Closing Date, and the purchase and sale of the
Property described herein fails to close due to default by
Seller, Buyer shall be entitled to bring an action for specific
performance of Seller's obligations under this Agreement.
ARTICLE 12
ASSIGNABILITY
12.1 Assignment. Neither party shall voluntarily or by
operation of law assign or otherwise transfer any of its rights
or obligations under this Agreement without obtaining the prior
written consent of the other party, which consent may not be
unreasonably withheld. Notwithstanding the foregoing sentence,
Buyer shall have the right to assign its rights under this
Agreement without consent of Seller to a corporation,
partnership, limited liability company or other entity in which
the beneficial owners of at least 51% of the equity interest in
such entity own at least 51% of the equity interests in Buyer,
provided that Buyer shall remain liable for, and be responsible
19
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for the performance of, any and all liabilities, obligations,
representations, covenants and agreements under this Agreement.
ARTICLE 13
EMINENT DOMAIN AND MATERIAL LOSS
13.1 Eminent Domain. In the event that, prior to the Close
of Escrow, all or any material portion of the Property is taken
or appropriated by any public or quasi-public authority under the
power of eminent domain, or Seller receives actual notice of any
pending or threatened condemnation proceedings, then either Buyer
or Seller may terminate this Agreement without further liability
hereunder and the parties shall proceed in accordance with
Section 8.4, and, in such event, any portion of Buyer's Deposit,
regardless of whether or not it has been released from Escrow to
Seller, shall be immediately returned to Buyer, and any
condemnation proceeds shall be the sole property of Seller. If
neither Seller nor Buyer elects to terminate this Agreement in
the event of any such taking, or threat of taking, and provided
that all conditions precedent to the Close of Escrow have either
been satisfied or waived, Escrow shall close in accordance with
this Agreement, and Seller shall assign to Buyer all of its
right, title and interest in any condemnation proceeds or award
made by the governmental entity.
13.2 No Material Loss. If, prior to the Close of Escrow,
and subject to the satisfaction or waiver of all conditions
precedent in favor of Buyer and Seller, the Property shall suffer
a Material Loss, Buyer shall have the right to elect, within 30
days of receipt of notice of such Material Loss, (a) to terminate
this Agreement under Section 8.4.1 and receive a return of
Buyer's Deposit or (b) to purchase the Property as provided in
this Agreement and receive an assignment of any insurance
proceeds Seller receives, or to which Seller is or may become
entitled, with respect to such Material Loss upon Seller's
receipt of such proceeds. The parties acknowledge and agree in
no event shall the Close of Escrow be extended due to a Material
Loss. Notwithstanding the foregoing, the assignment of any
insurance proceeds as provided herein shall not include any
proceeds received for items not related to the physical condition
of the Property, such as proceeds from Seller's business
interruption insurance, if any. For purposes of this Agreement,
a "Material Loss" means a loss resulting from a casualty that
either (i) diminishes the value of the Property in an amount of
at least 10% of the Purchase Price or (ii) results in a loss of
at least 10% of the aggregate square footage of the Land as of
the Effective Date.
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ARTICLE 14
GENERAL PROVISIONS
14.1 Attorneys' Fees. In any event any action, arbitration,
mediation or other dispute resolution proceeding shall be
instituted between Seller and Buyer in connection with this
Agreement, the party prevailing in such proceeding shall be
entitled to recover from the other party all of its costs of such
proceeding, including, without limitation, attorneys' fees and
costs as fixed by the court therein.
14.2 Captions. The captions used herein are for convenience
only and are not a part of this Agreement and do not in any way
limit or amplify the terms and provisions hereof.
14.3 Construction of Agreement. The agreements contained
herein shall not be construed in favor of or against either
party, but shall be construed as if both parties prepared this
Agreement.
14.4 Counterparts. This Agreement may be executed in
counterparts, all of which, when taken together, shall constitute
a fully executed original.
14.5 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof and all prior and contemporaneous
agreements, representations, negotiations and understandings of
the parties hereto, oral or written, are hereby superseded and
merged herein. The foregoing sentence shall in no way affect the
validity of any instruments executed by the parties in the form
of the exhibits attached to this Agreement.
14.6 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are incorporated herein by reference. Any
Exhibits or Schedules that are to be attached to the Agreement
after the Effective Date but prior to the Close of Escrow, shall
be initialled by Buyer and Seller on each page and, once so
initialled, shall be sent to Escrow Agent for attachment to this
Agreement.
14.7 Gender and Number. The use herein of (i) the neuter
gender includes the masculine and the feminine and (ii) the
singular number includes the plural, whenever the context so
requires.
14.8 Governing Law. This Agreement and the documents in the
forms attached as exhibits hereto shall be governed by and
construed under the laws of the State of California. This
Agreement shall be deemed made and entered into in the County.
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14.9 Joint and Several Liability. If any party consists of
more than one person or entity, the liability of each such person
or entity signing this Agreement shall be joint and several.
14.10 Modification. No modification, waiver, amendment,
discharge or change of this Agreement shall be valid unless the
same is in writing and signed by the party against which the
enforcement of such modification, waiver, amendment, discharge or
change is or may be sought.
14.11 Real Estate Brokerage Commission. Seller shall
pay a real estate brokerage commission in the amount of $65,200
to Fred Harris upon the Close of Escrow. Except as provided in
the preceding sentence, neither party is obligated to pay any
real estate, brokerage or other commission or fee in connection
with the purchase and sale of the Property. Each party hereby
indemnifies, protects, defends (with legal counsel reasonably
acceptable to the other party) and holds the other party free and
harmless from and against any and all costs and liabilities,
including, without limitation, reasonable attorneys' fees and
costs, for causes of action or proceedings which may be
instituted by any broker, agent or finder, licensed or otherwise,
claiming through, under or by reason of the conduct of such party
in connection with this transaction.
14.12 No Partnership or Joint Venture. Seller or Buyer
shall not, by virtue of this Agreement, in any way or for any
reason be deemed to have become a partner of the other in the
conduct of its business or otherwise, or a joint venturer. In
addition, by virtue of this Agreement there shall not be deemed
to have occurred a merger of any joint enterprise between Buyer
and Seller.
14.13 Notice and Payments. Any notice to be given or
other document to be delivered by any party to the other or
others hereunder, and any payments from Buyer to Seller, may be
delivered in person or by facsimile transmission (provided that a
confirming copy is sent by mail or overnight delivery as herein
specified) to an officer of any party, or may be deposited in the
United States mail, duly certified or registered, return receipt
requested, with postage prepaid, or by Federal Express or other
similar overnight delivery service, and addressed to the party
for whom intended, as follows:
To Seller at its business office:
Paradise Valley Communities No. 1
529 East South Temple
Salt Lake City, Utah 84102
Attention: Patricia A. Wood
Facsimile No.: (801) 524-1751
22
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With a copy to:
K. Michael Garrett, Esq.
Duckor Spradling & Metzger
401 West A Street, Suite 2400
San Diego, California 92101
Facsimile No.: (619) 231-6629
To Buyer at its business office:
The Forecast Group (Registered Trademark), L.P.
10670 Civic Center Drive
Rancho Cucamonga, California 91730
Facsimile No.: (909) 980-7305
With a copy to:
General Counsel
c/o The Forecast Group (Registered Trademark), L.P.
10670 Civic Center Drive
Rancho Cucamonga, California 91730
Facsimile No.: (909) 987-8958
To Escrow Agent:
Chicago Title Company
604 Empire Street
Fairfield, California 94533
Facsimile No.: (707) 425-4810
Any party hereto may from time to time, by written notice to the
other, designate a different address which shall be substituted
for the one above specified. Unless otherwise specifically
provided for herein, all notices, payments, demands or other
communications given hereunder shall be in writing and shall be
deemed to have been duly given and received (i) upon personal
delivery, or (ii) as of the third business day after mailing by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth above, or
(iii) the immediately succeeding Business Day after deposit with
Federal Express or other similar overnight delivery system.
14.14 Remedies Cumulative. All rights and remedies of
Buyer and Seller contained in this Agreement shall be construed
and held to be cumulative.
14.15 Severability. In the event that any phrase,
clause, sentence, paragraph, section, article or other portion of
this Agreement shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of
competent jurisdiction to be illegal, null or void or against
public policy, the remaining portions of this Agreement shall not
23
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be affected thereby and shall remain in force and effect to the
fullest extent permissible by law.
14.16 Successors and Assigns. Subject to the
restrictions and prohibitions on assignment set forth in Article
12, each and all of the covenants and conditions of this
Agreement shall inure to the benefit of and shall be binding upon
the successors-in-interest, assigns, and legal representatives of
the parties hereto. As used in the foregoing, "successors" shall
refer to the parties' interest in the Property and to the
successors to all or substantially all of their assets and to
their successors by merger or consolidation.
14.17 Waiver. No waiver by Buyer or Seller of a breach
of any of the terms, covenants or conditions of this Agreement by
the other party shall be construed or held to be a waiver of any
succeeding or preceding breach of the same or any other term,
covenant or condition herein contained. No waiver of any default
by Buyer or Seller hereunder shall be implied from any omission
by the other party to take any action on account of such default
if such default persists or is repeated, and no express waiver
shall affect a default other than as specified in such waiver.
The consent or approval by Buyer or Seller to or of any act by
the other party requiring the consent or approval of the first
party shall not be deemed to waive or render unnecessary such
party's consent or approval to or of any subsequent similar acts
by the other party.
14.18 Gender and Number. In this Agreement (unless the
context requires otherwise), the masculine, feminine and neuter
genders and the singular and the plural include one another.
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14.19 Time of the Essence. Time is of the essence of
each and every provision of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the Effective Date.
SELLER:
PARADISE VALLEY COMMUNITIES NO. 1,
a California general partnership
By: HomeFed Communities, Inc., a
California corporation,
General Partner
By: /s/ Patricia A. Wood
-----------------------
Patricia A. Wood,
President
By: HomeFed Resources Corporation,
a California corporation,
General Partner
By: /s/ Patricia A. Wood
-----------------------
Patricia A. Wood,
President
BUYER:
THE FORECAST GROUP (Registered
Trademark), L.P., a California
limited partnership
By: FORECAST (Registered
Trademark) HOMES, INC., a
California corporation, General
Partner
By: /s/ Joe Carmen
--------------------------
Its: Executive Vice President
--------------------------
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CONSENT OF ESCROW AGENT
The undersigned Escrow Agent hereby agrees to (i)
accept the foregoing Agreement, (ii) be Escrow Agent under said
Agreement and (iii) be bound by said Agreement in the performance
of its duties as Escrow Agent; provided, however, the undersigned
shall have no obligations, liability or responsibility under (i)
this Consent or otherwise unless and until said Agreement, fully
signed by the parties, has been delivered to the undersigned or
(ii) any amendment to said Agreement unless and until the same
shall be accepted by the undersigned in writing.
Dated: June 20, 1996 (the "Opening of the Escrow")
Chicago Title Company
By: /s/ Terri Piper
----------------------
Its: C.S.E.O.
------------------
<PAGE>
LIST OF EXHIBITS
Exhibit A. . . . . . . . . . . . . . . .Legal Description of Land
Exhibit B. . . . . . . . . . . . . . . . . . . Property Documents
Exhibit C. . . . . . . . . . . . . . General Conditions of Escrow
Exhibit D. . . . . . . . . . . .Certificate of Non-Foreign Status
Exhibit E. . . . . . . . . . . . . . . . . . . . . .Grant Deed(s)
<PAGE>
EXHIBIT A
Legal Description of Land
<PAGE>
PARADISE VALLEY NORTH UNIT NO. 3
ALL THAT REAL PROPERTY SITUATE IN THE CITY OF FAIRFIELD, COUNTY
OF SOLANO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
LOTS 1 THROUGH 75, AS SHOWN ON THAT CERTAIN MAP ENTITLED: "FINAL
MAP OF PARADISE VALLEY NORTH, UNIT NO. 3, BEING ALL OF PARCEL 4
AS SHOWN ON THE PARCEL MAP FILED IN BOOK 34 OF PARCEL MAPS AT
PAGE 08, SOLANO COUNTY RECORDS", FILED JUNE 11, 1991 IN THE
OFFICE OF THE RECORDER OF SOLANO COUNTY IN BOOK 60 OF MAPS AT
PAGE 82, SOLANO COUNTY RECORDS, AND AS AMENDED BY THAT CERTAIN
CERTIFICATE OF CORRECTION FOR SUBDIVISIONS RECORDED SEPTEMBER 23,
1991 IN BOOK 1991 AS INSTRUMENT NO. 1991-00069160, SOLANO COUNTY
RECORDS.
APN'S: 167-511-010 THROUGH 060; 167-511-080 THROUGH 340; 167-512-010 THROUGH
200; 167-513-010 THROUGH 140; 167-514-010 THROUGH 080
<PAGE>
Paradise Valley Unit 3
Exhibit B
Property Documents
- - Rough Grading and Erosion Plans dated March 1990 (6 copies)
- - Final Map Unit 3 dated July 1989 (6 copies)
- - Improvement Plans for Unit 3 dated July 1989 (6 copies)
- - Development Agreement dated July 20, 1988
- - First Amendment to Development Agreement dated September 15, 1994
(not yet fully executed)
- - Second Amendment to Development Agreement (not yet dated or fully executed)
- - Covenants, Conditions, and Restrictions dated August 25, 1995
- - Anderson Consulting Group Report dated September 15, 1994
- - Department of Real Estate Public Report dated September 1, 1995
- - Letter to City of Fairfield regarding acceptance of improvements dated
May 28, 1996
- - Unapproved Plans for the Paradise Valley Recreation Facility
- - Cost Sharing Agreement dated October 20, 1989
- - Agreement with City of Fairfield regarding construction of recreational
facility dated August 31, 1995
- - Utility Deposit Balances dated May 31, 1996
- - Paradise Valley Master Association documents dated September 1995
- - Paradise Valley Master Association Bylaws dated August 21, 1995
- - Information regarding improvement bonds and maintenance obligations for
Units 3
<PAGE>
EXHIBIT C
General Conditions of Escrow
<PAGE>
GENERAL PROVISIONS
1. The phrase "close of escrow" (for COE) as used in this
escrow means the date on which documents are recorded,
unless otherwise specified.
2. Recordation of any instruments delivered through this
escrow, if necessary or proper for the issuance of the
policy of title insurance called for, is authorized.
3. No examination or insurance as to the amount or payment of
personal property taxes is required unless specifically
requested.
4. You and any of your affiliates or employees are authorized
to use the information and documents in this escrow for any
purpose. You are further authorized to furnish to any
broker or lender identified with this transaction or anyone
acting on behalf of such broker or lender, any instructions,
amendments, statements, or notices of cancellation given in
connection with this escrow.
5. All written notices, communications, change of instructions
and documents are required to be delivered timely at the
office of Chicago Title Company as set forth herein.
6. All funds received in this escrow shall be deposited with
other escrow funds in one or more escrow (demand) accounts
of Chicago Title Company in any state or national bank. The
parties to this escrow understand that the escrow accounts
you maintain with the depository institutions contribute to
your value as a customer of these institutions which, in
turn, may make available to Chicago Title Company an array
of bank services, accommodations or other benefits. You
shall have no obligation to account for the value realized
by Chicago Title Company from these services, accommodations
or other benefits. All disbursements shall be made by your
check, unless otherwise instructed. You shall not be
responsible for any delay in closing if funds received by
escrow are not available for immediate withdrawal. Chicago
Title Company may, at its option, require concurrent
instructions from all principals prior to release of any
funds on deposit in this escrow.
7. If demand to cancel is submitted after the Time Limit Date,
any principal so requesting you to cancel this escrow shall
file notice of demand to cancel in your office in writing.
You shall within three (3) working days thereafter mail by
certified mail one copy of such notice to each of the other
principals at the address stated in this escrow. Unless
written objection thereto is filed in your office by a
principal within fifteen (15) calendar days after the date
of such mailing, you are instructed to cancel this escrow.
If this is a sale escrow, you may return the lender's papers
and/or funds upon lender's demand.
8. In the event that this escrow is canceled, any fees or
charges due Chicago Title Company including cancellation
fees and any expenditures incurred or authorized shall be
paid from funds on deposit unless otherwise specifically
agreed to or determined by a court of competent
jurisdiction. Upon payment thereof, return documents and
monies to the respective parties depositing same, or as
ordered by the court, and void any executed instruments.
9. If there is no written activity by a principal to this
escrow within any six-month period after the Time Limit Date
set forth herein, Chicago Title Company may, at its option,
terminate its agency obligation and cancel this escrow,
returning all documents, monies or other items held, to the
respective parties entitled thereto, less any fees and
charges as provided herein.
10. If, for any reason, funds are retained or remain in escrow
after the closing date, you may deduct therefrom a
reasonable charge as custodian, of not less than $25.00 per
month, unless otherwise specified.
<PAGE>
11. In the event that you should receive or become aware of
conflicting demands or claims with respect to this escrow,
or the rights of any of the parties hereto, or any money or
property deposited herein, you shall have the absolute right
at your option to discontinue any or all further acts until
such conflict is resolved to your satisfaction.
12. In the event that any Offer to Purchase, Deposit Receipt, or
any other form of Purchase Agreement is deposited in this
escrow, it is understood that such document will be
effective only as among the parties signing said document.
You as escrow holder are not to be concerned with the terms
of such document and are relieved of all responsibility in
connection therewith. You are to be concerned only with the
directives specifically set forth in these escrow
instructions and amendments thereto. Further, you are not
to be concerned or liable for items designated as
"memoranda" in these escrow instructions nor with any other
agreement or contract between the parties.
13. You are released from and shall have no liability,
obligation or responsibility with respect to (a) withholding
of funds pursuant to Section 1445 of the Internal Revenue
Code of 1986 as amended, and to Sections 18662 and 18668 of
the California Revenue and Taxation Code, (b) advising the
parties as to the requirements of said Section 1445, (c)
determining whether the transferor is a foreign person or a
non-resident under such Section, nor (d) obtaining a
non-foreign affidavit or other exemption from withholding
under said Sections nor otherwise making any inquiry
concerning compliance with such Sections by any party to the
transaction.
14. The parties hereto, by execution of these instructions
acknowledge that the escrow holder assumes no responsibility
or liability whatsoever for the supervision of any act or
the performance of any condition which is a condition
subsequent to the closing of this escrow.
15. In the absence of instructions to the contrary, you are
hereby authorized to utilize wire services, overnight, next
day, or other expedited delivery services (as opposed to the
regular U.S. Mail) and to charge the respective party's
account accordingly.
16. If you pay a demand to reconvey a revolving line of credit
or equity line deed of trust, you are hereby instructed on
my behalf and for my benefit, to request that the lender
issuing said demand cancel said revolving line or equity
line of credit.
17. You are authorized to destroy or otherwise dispose of any
and all documents, papers, instructions, correspondence and
other material pertaining to this escrow at the expiration
of six (6) years from the close of escrow or cancellation
thereof, without liability and without further notice.
IMPORTANT NOTICE
Except for wire transfers, funds remitted to this escrow are subject to
availability requirements imposed by Section 12413.1 of the California
Insurance Code. CASHIER'S, CERTIFIED or TELLER'S checks, payable to CHICAGO
TITLE COMPANY are generally available for disbursement on the next business day
following the date of deposit.
Other forms of payment may cause extended delays in the closing of your
transaction pursuant to the requirements imposed by State Law.
(Wire transfer information available upon request)
ALL PARTIES TO THIS ESCROW ACKNOWLEDGE THAT CHICAGO TITLE COMPANY DOES NOT
PROVIDE LEGAL ADVICE NOR HAS IT MADE ANY INVESTIGATION, REPRESENTATIONS OR
ASSURANCES WHATSOEVER REGARDING THE LEGAL ASPECTS OR COMPLIANCE OF THIS
TRANSACTION WITH ANY TAX, SECURITIES OR ANY OTHER STATE OR FEDERAL LAWS.
IT IS RECOMMENDED THAT THE PARTIES OBTAIN INDEPENDENT LEGAL COUNSEL AS TO
SUCH MATTERS.
<PAGE>
EXHIBIT D
CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as
amended ("Code"), provides that a transferee (buyer) of a U.S.
real property interest must withhold tax if the transferor
(seller) is a foreign person. Sections 18805 and 26131 of the
California Revenue and Taxation Code provide that a transferee
(buyer) of a California real property interest must withhold tax
if withholding is required by Section 1445 of the United States
Internal Revenue Code.
To inform The Forecast Group (Registered Trademark), L.P.
("Transferee"), that withholding of tax under Section 1445 of the
Code is not required upon disposition of certain real property to
the Transferee by Paradise Valley Communities No. 1, a California
general partnership, ("Transferor"), the undersigned hereby
represents and certifies the following on behalf of the
Transferor:
1. The undersigned is the duly qualified and acting
officer of the Transferor;
2. The Transferor 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),
but rather is a corporation formed under the laws of one of the
United States;
3. The Transferor's U.S. employer identification number is
52-1671038;
4. The Transferor's address is 529 East South Temple, Salt
Lake City, Utah 84102-1089;
<PAGE>
5. The Transferor understands that this certification may
be disclosed to the Internal Revenue Service and/or the
California Franchise Board by the Transferee and that any false
statement contained herein could be punished by fine,
imprisonment, or both.
Under penalty of perjury, the undersigned declares that the
undersigned has examined this certification and to the best of
its knowledge and believe it is true, correct, and complete.
Dated: June 19, 1996 TRANSFEROR:
PARADISE VALLEY COMMUNITIES NO. 1,
a California general partnership
By: HomeFed Communities, Inc., a
California corporation,
General Partner
By: /s/ Patricia A. Wood
------------------------
Patricia A. Wood,
President
By: HomeFed Resources Corporation,
a California corporation,
General Partner
By: /s/ Patricia A. Wood
------------------------
Patricia A. Wood,
President
<PAGE>
EXHIBIT E
Grant Deed(s)
[To Be Prepared and Attached Prior to Close of Escrow]
PARADISE VALLEY UNIT 4
OPTION TO PURCHASE REAL PROPERTY AND ESCROW INSTRUCTIONS
BETWEEN
PARADISE VALLEY COMMUNITIES NO. 1
("Seller")
AND
THE FORECAST GROUP (Registered Trademark), L.P.
("Buyer")
<PAGE>
PARADISE VALLEY UNIT 4
_____________________________
OPTION TO PURCHASE REAL PROPERTY AND ESCROW INSTRUCTIONS
THIS OPTION TO PURCHASE REAL PROPERTY AND ESCROW
INSTRUCTIONS ("Agreement") is made and effective as of June 19,
1996 by and between Paradise Valley Communities No. 1, a
California general partnership ("Seller"), and The Forecast Group
(Registered Trademark), L.P., a California limited partnership
("Buyer"), with reference to the facts set forth below.
A. Seller is the owner of that certain land situated in
the City of Fairfield, County of Solano, State of California,
more particularly described in Exhibit A attached hereto and
incorporated herein ("Land"). The Land is a portion of a
residential subdivision ("Subdivision") consisting of four units,
or neighborhoods. The Land consists of one unit or neighborhood,
which is referred to herein as a "Unit." Unit" 4 consists of
partially developed Land, which has been subdivided, pursuant to
the Subdivision Map, described in the map described in Exhibit A.
("Subdivision Map"), into 83 single-family residential lots, 81
of which will be sold to Buyer. The term "Lots" refers to the
single-family residential lots located in Unit 4 that are
specifically described in Exhibit A, attached hereto. Unit 4
also includes certain infrastructure improvements and amenities,
as described in the Subdivision Map and related improvement plans
and specifications described in Exhibit B, attached hereto
("Improvements"). The Lots and Improvements are not complete.
B. Buyer has entered into a Purchase Agreement and Escrow
Instructions dated June 19, 1996 ("Purchase Agreement"), and an
Option To Purchase Real Property and Escrow Instructions dated
June 19, 1996 ("Option Contract"), pursuant to which Buyer has
agreed or obtained an option to purchase from Seller certain
single-family residential lots located on land near or adjacent
to the Lots and comprising a portion of the Subdivision. Buyer
desires to obtain an option to purchase the Property (as defined
herein) and Seller desires to grant to Buyer an option to
purchase the Property in accordance with the terms and provisions
set forth below.
NOW, THEREFORE, in consideration of the recitals set forth
above, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties
agree as set forth below.
1
<PAGE>
ARTICLE 1
DEFINED TERMS
Terms used in this Agreement with their initial letters
capitalized and not otherwise defined shall have the meanings set
forth below.
1.1 Agreement. The term "Agreement" shall mean this Option
to Purchase Real Property and Escrow Instructions between Seller
and Buyer.
1.2 Approved Exceptions. The term "Approved Exceptions"
shall mean those exceptions to title that are approved in
accordance with this Agreement.
1.3 Business Day. The term "Business Day" shall mean any
day other than a Saturday, Sunday or legal holiday in the State
of California. All periods of time described in this Agreement
that are not expressly measured by Business Days shall be
measured by calendar days.
1.4 Buyer. The term "Buyer" shall mean The Forecast Group
(Registered Trademark), L.P. a California limited partnership.
1.5 CLTA Owner's Title Policy. The term "CLTA Owner's
Title Policy" shall mean the California Land Title Association
("CLTA") owner's policy of title insurance to be issued by the
Title Company upon the Close of Escrow pursuant to the terms of
this Agreement.
1.6 Cash. The term "cash" shall mean: (i) currency of the
United States of America, (ii) cashier's check(s) currently dated
and payable to Escrow Agent or Seller, as required under this
Agreement, drawn and paid through a California banking or savings
and loan institution, tendered to Escrow Agent or Seller, as
required under this Agreement one (1) Business Day before funds
are required to be delivered under this Agreement, or (iii) an
amount credited by wire transfer into Escrow Agent's or Seller's
bank account, as required under this Agreement.
1.7 Close of Escrow. The term "Close of Escrow" shall mean
the consummation of the purchase of the Property by Buyer from
Seller and the recordation of Seller's Grant Deed(s) in
accordance with the terms and provisions of this Agreement.
1.8 Closing Date. The term "Closing Date" shall mean the
date on which the closing will be held for the sale of the
Property as set forth in Section 8.1 of this Agreement.
2
<PAGE>
1.9 County. The term "County" shall mean the County of
Solano, in the State of California.
1.10 Effective Date. The term "Effective Date" shall mean
June 19, 1996, the date on which this Agreement is effective and
deemed to have been made.
1.11 Escrow. The term "Escrow" shall mean the escrow opened
by Escrow Agent pursuant to the terms of this Agreement.
1.12 Escrow Agent. The term "Escrow Agent" shall mean
Chicago Title Company, 604 Empire Street, Fairfield, California
94533 ("Chicago Title").
1.13 Feasibility Review Period. The term "Feasibility
Review Period" shall mean the period of time which commences on
the Effective Date, and terminates at midnight of the three
hundred thirtieth day (330th) after Buyer's close of escrow under
the Purchase Agreement.
1.14 Governmental Action. The term "Governmental Action"
shall mean (a) any order of a court of competent jurisdiction,
and/or (b) any enactment, by the initiative or referendum process
or otherwise, of any Governmental Agencies (as defined below)
affecting the Property, either directly or indirectly, including,
but not limited to, limitation on the number of permits or
licenses that can be issued, declaration of policy, resolution,
ordinance, statute, regulation, or any other enactment of any
Governmental Agency (as defined below) and irrespective of
whether the orders or enactments listed immediately above contain
the words "moratorium," "moratoria" or similar words.
1.15 Governmental Agencies. The term "Governmental
Agencies" shall mean any local, county, state and/or federal
governmental or quasi-governmental agencies, authorities or
regulatory bodies and any public or private utility companies
having jurisdiction over the Property.
1.16 Opening of Escrow. The term "Opening of Escrow" shall
mean the date Escrow Agent executes the Consent of Escrow Agent
attached hereto, which consent shall be executed by Escrow Agent
upon delivery of this Agreement to Escrow Agent.
1.17 Preliminary Report. The term "Preliminary Report"
shall mean the Preliminary Title Report issued by the Title
Company to be reviewed by Buyer during the Feasibility Review
Period.
1.18 Property Documents. The term "Property Documents"
shall mean the documents delivered by Seller to Buyer in
connection with its feasibility studies pursuant to Section 4.1
3
<PAGE>
of this Agreement. The Property Documents are listed in Exhibit
B, attached hereto.
1.19 Property. The term "Property" shall mean the Land and
the Subdivision Map and the Lots and the Improvements to the
extent completed and any public or private entitlements, maps,
utility deposits, plans, soils reports, environmental reports,
marketing studies, development agreements, permits and similar
items that relate to the development, sale and use of the Lots as
single-family residential building lots.
1.20 Purchase Price. The term "Purchase Price" shall mean
the total consideration to be paid by Buyer to Seller for the
purchase of the Property as set forth in Article 2 of this
Agreement.
1.21 Seller. The term "Seller" shall mean Paradise Valley
Communities No. 1, a California general partnership.
1.22 Title Company. The term "Title Company" shall mean
Chicago Title.
ARTICLE 2
GRANT OF OPTIONS AGREEMENT OF PURCHASE AND SALE
2.1 Grant of Option. In consideration of Buyer's entering
into the Purchase Agreement and Buyer's delivery of $1,000 cash
("Option Payment") to Seller, Seller hereby grants to Buyer the
right and option to purchase and acquire the Property at the
Purchase Price and upon the terms and conditions hereinbelow set
forth. The option granted herein shall expire at midnight on the
three hundred thirtieth day (330th) after the date upon which the
close of escrow occurs under the Purchase Agreement (the
"Expiration Date") unless extended by mutual agreement of Buyer
and Seller.
2.2 Purchase Price. The purchase price ("Purchase Price")
for the Property is Three Million Six Hundred Ten Thousand Six
Hundred Fifty and 00/100 Dollars ($3,610,650).
2.3 Payment of Purchase Price. The Purchase Price shall be
paid in cash upon the Close of Escrow. The Option Payment shall
be credited against the Purchase Price.
2.4 Assumption of Liabilities. Upon the terms and subject
to the conditions contained in this Agreement, Buyer shall assume
effective as of the time of day on the Closing Date that Escrow
Agent telephonically or in writing notifies Seller and Buyer that
Escrow has closed Seller's obligations under the Property
Documents, which include, without limitation, the obligation to
complete the Lots and any necessary Improvements in accordance
4
<PAGE>
with the Subdivision Map and all applicable documents,
instruments, codes, ordinances, regulations and permits.
ARTICLE 3
EXERCISE OF OPTION;
OPEN AND CLOSE OF ESCROW; DELIVERY OF DOCUMENTS
3.1 Exercise of Option. Buyer shall exercise the option to
purchase the Property under this Agreement by delivering to
Seller, or on before the Expiration Date, a written notice of
Buyer's exercise of the option to purchase the Property under
this Agreement ("Notice of Exercise"). Buyer shall the right to
exercise the option to purchase the Property under this Agreement
if, and only if, there shall be no default by Buyer under the
Purchase Agreement at the time of Buyer's delivery of the Notice
of Exercise. If the Notice of Exercise is not delivered to
Seller on or before the Expiration Date, Buyer's option to
purchase the Property and this Agreement shall immediately
terminate upon the Expiration Date. Upon any such termination of
the option to purchase the Property, the Buyer will execute,
acknowledge and deliver to the Seller a quit claim deed and such
other documentation as Seller may determine to be reasonable and
necessary in order to evidence the termination of any interest of
Buyer in the Property.
3.2 Opening of Escrow. Upon Buyer's timely delivery to
Seller of the Notice of Exercise, Buyer and Seller shall open
Escrow by depositing with Escrow Agent a fully executed original
of this Agreement for use as escrow instructions, and Escrow
Agent shall execute the Consent of Escrow Agent ("Consent") which
appears at the end of this Agreement and deliver a fully executed
Consent to Buyer and Seller. Seller shall also deposit the
Option Payment into Escrow upon the opening of Escrow. Escrow
Agent's general conditions ("General Conditions") are attached
hereto as Exhibit C and incorporated herein by reference to the
extent they are not inconsistent with the provisions of this
Agreement. If there is any inconsistency between the provisions
of the General Conditions and this Agreement, the provisions of
this Agreement shall control. If Escrow Agent requires
additional instructions, the parties agree to make any deletions,
substitutions and additions as the parties shall mutually
approve, as long as such deletions, substitutions or additions do
not materially alter the terms of this Agreement.
3.3 Buyer's Deliveries. Buyer shall, at least one (1)
Business Day prior to the Close of Escrow (unless required to be
delivered at an earlier date under the terms of this Agreement),
deliver to Escrow Agent each of the following:
5
<PAGE>
3.3.1 Purchase Price. Cash in the amount of the
Purchase Price, less the Option Payment;
3.3.2 Documents. Fully executed and, where
appropriate, notarized counterparts of the documents required to
be executed by Buyer under this Agreement;
3.3.3 Prorations, Fees and Costs. The amount, if any,
required of Buyer under Article 9 of this Agreement entitled
"Prorations, Fees and Costs" and any other amounts payable upon
the Close of Escrow under any other provisions of this Agreement;
and
3.3.4 General. Such other documents, instruments and
certificates as Seller may reasonably require to carry out the
intent of this Agreement; provided, however, that Buyer shall not
be obligated to incur any financial liability or obligation in
connection with the furnishing of any such documents, instruments
or certificates.
3.4 Seller's Deliveries. Seller shall, at least one (1)
Business Day prior to the Close of Escrow (unless required to be
delivered at an earlier date under the terms of this Agreement),
deliver to Escrow Agent each of the following:
3.4.1 Certificate of Non-Foreign Status. Prior to the
Close of Escrow, Seller shall execute and deposit into Escrow a
Certificate of Non-Foreign Status certifying that Seller is a
non-foreign person in the form attached hereto as Exhibit D and
incorporated herein ("Certificate of Non-Foreign Status").
3.4.2 Grant Deeds. Prior to the Close of Escrow,
Seller shall execute, acknowledge and deposit into Escrow Grant
Deed(s) in the form attached hereto as Exhibit E; and
3.4.3 General. Such other documents, instruments and
certificates as Buyer may reasonably require to carry out the
intent of this Agreement; provided, however, that Seller shall
not be obligated to incur any financial liability or obligation
in connection with the furnishing of any such documents,
instruments or certificates.
ARTICLE 4
FEASIBILITY REVIEW
4.1 Feasibility Review Period; Delivery of Property
Documents. During the Feasibility Review Period, Buyer shall
analyze the feasibility of its purchase and use of the Property.
Buyer is solely responsible for any and all costs incurred by
Buyer in connection with its review and/or investigations of the
matters set forth in this Article 4. Seller shall, within sixty
6
<PAGE>
(60) days after the Effective Date, deliver to Buyer the Property
Documents. During the Feasibility Review Period, Buyer shall
review and analyze the Property Documents to determine their
individual and collective impact on the Property and its purchase
and use by Buyer.
4.1.1 Review of Preliminary Report. Within sixty (60)
days after the Effective Date of this Agreement, Seller shall
cause to be provided to Buyer a Preliminary Report issued by the
Title Company ("Preliminary Report"), together with legible
copies of all recorded documents described in the Preliminary
Report. Buyer shall have the right to review and approve the
Preliminary Report during the Feasibility Review Period. If any
title exceptions are recorded against the Property before the
Close of Escrow in addition to those specified in the Preliminary
Report, Escrow Agent shall cause the Title Company to issue a
supplemental preliminary report ("Supplemental Report"). Buyer
shall have until the expiration of the Feasibility Review Period
with respect to any title exceptions shown in the Preliminary
Report, and five (5) Business Days after receipt of any
Supplemental Report, to review the title exceptions shown therein
and to deliver to Seller notice of approval or disapproval of any
title exceptions disclosed in any such report. Buyer's delivery
of the Notice of Approval described in Section 4.3 shall be
deemed approval of the exceptions to title shown on the
Preliminary Report and any Supplemental Report issued as of the
date of such Notice of Approval. Any title exceptions approved
by Buyer are referred to herein as "Approved Exceptions." If any
title exceptions are specifically disapproved, and Seller elects,
within five (5) Business Days after the date of Buyer's
disapproval, not to cure the disapproved item, then Buyer shall
have five (5) Business Days after the receipt of Seller's notice
of election not to cure the disapproved item to waive its prior
disapproval. If Buyer does not deliver notice of its election to
waive its prior disapproval, then the disapproved and uncured
item will be deemed disapproved. If a title exception is
disapproved and uncured, Buyer may terminate the Escrow by
delivering a written notice of termination to Seller and the
Escrow Agent. Upon such termination, any deposits theretofore
paid to Seller or Escrow Agent (regardless of whether such
deposits were released to Seller) shall be immediately returned
to Buyer, and this Agreement shall be terminated. Seller shall
thereupon be released from its obligation to sell the Property to
Buyer, and Buyer shall be released from any obligation to
purchase the Property.
4.1.2 Governmental Actions. Buyer shall review and
consider the impact on the Property of any and all applicable
governmental ordinances, rules and regulations, and evaluate the
effect of any pending or threatened Governmental Actions
pertaining to the Property.
7
<PAGE>
4.1.3 Studies and Investigations. Buyer shall conduct
such independent investigations, studies and tests as it deems
necessary or appropriate concerning Buyer's proposed use, sale,
development and/or the suitability of the Property for Buyer's
intended purposes. Such investigations may include, without
limitation, soils and engineering tests, hazardous studies,
investigations concerning the availability of the approvals
required from any Governmental Agencies for Buyer's proposed use
of the Property, investigations regarding the existence on the
Property of any threatened or endangered species, and of any
archaeological artifacts on the Property, the imposition or
increase of any fees, charges or exactions by any Governmental
Agencies and such economic feasibility and marketing studies as
Buyer deems appropriate.
4.1.4 Physical Inspection. During the Feasibility
Review Period, Buyer shall have the right to inspect and approve
of the physical condition of the Property and shall conduct any
soil, hazardous waste or engineering studies with respect to the
Property as Buyer may deem necessary or appropriate. All such
studies and inspections shall be conducted by Buyer at its sole
expense.
4.2 Additional Information from Seller. During the
Feasibility Review Period, Seller shall provide Buyer with such
Additional Information (as hereinafter defined) as Buyer
reasonably may determine to be necessary to complete its
investigation of the Property, and Seller shall, and shall cause
its agents, employees and consultants to, respond to questions
posed by Buyer with respect to the Property. As used herein, the
term "Additional Information" shall mean and refer to information
in the possession and/or control of Seller concerning (i) the
Property and (ii) material changes in information and documents
previously provided to Buyer by Seller during the Feasibility
Review Period.
4.3 Satisfaction of Feasibility Review. At any time during
the Feasibility Review Period, Buyer shall have the right to
terminate this Agreement if Buyer disapproves of any aspect of
the Property or the feasibility of Buyer using the Property as
Buyer intends. If Buyer approves of the Property and elects to
continue this Agreement beyond the Feasibility Review Period,
Buyer shall, prior to expiration of the Feasibility Review
Period, deliver notice of such election ("Notice of Approval") to
Seller and Escrow Agent. In such event, the terms and provisions
of this Agreement shall continue in full force and effect,
subject to the provisions of Section 4.1.1 regarding disapproved
and uncured title exceptions shown in any Supplemental Report.
The parties acknowledge and agree that the continued
effectiveness of this Agreement shall be conditioned upon Buyer's
delivery of a Notice of Approval and that Buyer's delivery of a
Notice of Approval shall be deemed to be its approval of all
aspects of the Property, including, without limitation, title
8
<PAGE>
issues, with the exception of matters specifically set forth in
this Agreement for which Buyer has continuing rights of approval
after the Feasibility Review Period. Buyer's failure to deliver
its Notice of Approval before expiration of the Feasibility
Review Period shall be deemed to be Buyer's disapproval of the
Property. If no Notice of Approval has been delivered by the
expiration of the Feasibility Review Period, or within the period
described in Section 4.1.1 with respect to any title exception
shown in any Supplemental Report that is disapproved and uncured,
this Agreement shall upon such expiration immediately terminate,
and Escrow Agent shall return all funds, less applicable Escrow
cancellation charges, and documents to the parties who deposited
them. Seller shall thereupon be released from its obligation to
sell the Property to Buyer, and Buyer shall be released from any
obligation to purchase the Property. Buyer shall also deliver to
Seller, without warranty, any documents related to the Property
which Buyer has created during the Feasibility Review Period.
ARTICLE 5
CONDITIONS PRECEDENT TO CLOSE OF ESCROW
5.1 Subject to Satisfaction or Waiver. The Closing of the
purchase and sale described in this Agreement and the obligations
of the parties under this Agreement shall be subject to
satisfaction or waiver (by the party in whose favor the condition
precedent has been established) of all the conditions precedent
set forth below.
5.1.1 Title Policy. Escrow Agent shall be
unconditionally committed to procure from the Title Company the
CLTA Owner's Title Policy for the Property with a liability limit
in the amount of the Purchase Price insuring fee title vested in
Buyer. Buyer shall take title to the Property subject only to:
(a) Non-delinquent general, special and supplemental taxes, bonds
and assessments, including Mello-Roos bonds, if any; (b) any
matters set forth in the printed form portion of the CLTA Owner's
Title Policy; (c) the Approved Exceptions; and (d) any items
caused or permitted to be placed of record by Buyer as of the
Close of Escrow.
5.1.2 Seller's Performance. Seller shall have duly
performed each and every undertaking and agreement to be
performed by it hereunder prior to the Close of Escrow.
5.1.3 Buyer's Performance. Buyer shall have duly
performed each and every undertaking and agreement to be
performed by it hereunder prior to the Close of Escrow.
5.1.4 Closing Under Purchase Agreement. Buyer shall
have closed escrow under the Purchase Agreement and acquired the
Property described therein.
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5.1.5 Improvement Bonds. In accordance with Section
6.7, Buyer shall have replaced the existing improvement bonds
affecting the Lots with improvement bonds obtained by Buyer and
shall have obtained a release of Seller with respect to any
liability for such replaced improvement bonds.
5.2 Failure of Conditions Precedent. The conditions
precedent in Sections 5.1.1 and 5.1.2 are for Buyer's benefit and
can be waived only by Buyer. The conditions precedent in
Sections 5.1.3, 5.1.4 and 5.1.5 are for Seller's benefit and can
be waived only by Seller. In the event that any of the
conditions precedent set forth above is neither satisfied nor
waived by the Closing Date, the party for whose benefit the
condition has been created may terminate the Escrow and this
Agreement by giving a written notice of termination to the other
party and Escrow Agent, specifying the reason for termination and
the condition precedent that has not been satisfied. Upon
receipt of such notice of termination, Escrow Agent shall return
any funds that have been deposited in Escrow to the person who
made such deposit, less applicable Escrow cancellation charges,
and any documents to the parties who deposited them. If Buyer
terminates the Escrow and this Agreement because a condition
precedent set forth in Section 5.1.1 or 5.1.2 is not satisfied,
Seller immediately shall return to Buyer any funds theretofore
disbursed to Seller from the Escrow. Seller shall thereupon be
released from its obligation to sell the Property to Buyer, and
Buyer shall be released from its obligation to purchase the
Property.
5.3 Copy of Documents to Other Party. Each party will,
concurrently with its delivery to Escrow Agent of any documents
described in this Article 5, deliver a copy of the same to the
other party.
ARTICLE 6
COVENANTS AND AGREEMENTS
6.1 No Concern. Escrow Agent shall have no concern with,
liability or responsibility for, this Article.
6.2 Additional Escrow Instructions. Buyer and Seller
covenant and agree that they will execute any additional escrow
instructions not inconsistent with the terms of this Agreement as
shall be reasonably required by Escrow Agent.
6.3 Cooperation. Buyer and Seller acknowledge that it may
be necessary to execute documents other than those specifically
referred to herein in order to complete the acquisition of the
Property as provided herein. Both Buyer and Seller hereby agree
to cooperate with each other by executing such other documents or
taking such other action as may be reasonably necessary to
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complete this transaction in accordance with the intent of the
parties as evidenced in this Agreement.
6.4 Entry Upon Property. After execution of this
Agreement, Buyer and its designated agents and independent
contractors shall have the right to enter upon the Property to
conduct surveys, soils tests, physical inspections,
investigations and studies so long as Buyer has provided prior
reasonable notice of such entry to Seller and such activities
will not interfere with Seller's ownership and maintenance of the
Property. Seller and Seller's agents shall reasonably cooperate
with Buyer, provided that such investigations and studies shall
be at the sole cost and expense of Buyer. Buyer agrees to repair
any damage caused by Buyer or its agents or independent
contractors to the Property and further agrees to indemnify,
protect, defend (with legal counsel acceptable to both Buyer and
Seller) and hold Seller harmless from and against any costs,
expenses, losses, attorneys' fees and liabilities (including,
without limitation, claims of mechanics' liens) incurred or
sustained by Seller either prior or subsequent to the Close of
Escrow as a result of the conduct of Buyer, its agents, or
independent contractors under this Section 6.4. The covenants
contained in this Section 6.4 shall survive the Close of Escrow
or earlier termination of this Agreement.
6.5 Indemnities of Buyer. Buyer agrees that it will
protect, defend, indemnify and hold Seller harmless from and
against all actions, causes of action, suits, claims, costs,
losses, penalties, damages, liabilities and expenses of any kind
whatsoever, including reasonable attorneys' fees ("Claims"),
based upon or arising out of: (i) any Claim for personal injury
or property damage occurring on or about the Property after the
Closing Date or in connection with Buyer's or its agents' or
independent contractors' access to the Property prior to the
Closing Date; (ii) any Claims related to construction defects,
soil subsidence or other similar claims related to the Land (to
the extent it is transferred to Buyer under this Agreement), the
Lots or the Improvements or any other improvements of any kind
made thereto or constructed thereon; (iii) any other Claim
arising out of Buyer's ownership or operation of the Property
after the Closing Date.
6.6 Indemnities of Seller. Seller agrees that it will
protect, indemnify, defend and hold Buyer harmless from and
against all Claims based upon or arising out of: (i) any claim
for personal injury or property damage occurring on or about the
Property prior to the Closing Date (except those resulting from
Buyer's access to the Property prior to the Closing Date); and
(ii) any liability or obligation which Buyer is not obligated to
assume under this Agreement. Notwithstanding the foregoing
sentence, Seller shall not be obligated to protect, defend,
indemnify or hold Buyer harmless from any Claims related to
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construction defects, soil subsidence or other similar claims
related to the Land (except to the extent it is not transferred
to Buyer under this Agreement), the Lots or the Improvements or
any other improvements of any kind made thereto or constructed
thereon.
6.7 Bonds. Prior to the Close of Escrow, Buyer will obtain
and provide improvement bonds for the Lots and related
Improvements, deliver to Seller evidence of such bonds and obtain
Seller's release under any bonds applicable to the Lots or
Improvements.
6.8 Recreational Facility. Seller shall construct a
recreational facility, as described in the plans therefor
included in the Project Documents, upon the close of escrow for
the sale of the 351st home sold at the Paradise Valley
development. Buyer shall provide Seller quarterly reports
indicating the number of closings in any given quarter to
facilitate Seller's compliance with this requirement. Prior to
the expiration of the Feasibility Review Period, Seller shall
provide Buyer with evidence of Seller's compliance with the
agreement Seller has entered into with the City of Fairfield
regarding the construction of the recreational facility.
6.9 Cost Sharing Agreement. Buyer acknowledges that Seller
is involved in a Cost Sharing Agreement with Arcadia Homes and
Winncrest Development. This Cost Sharing Agreement provides for
the completion of all infrastructure, common amenities,
landscaping and other similar items on parcels at the Paradise
Valley project. Buyer covenants and agrees to supply Seller with
any information on actual or estimated costs of improvements as
may be requested and required by Seller for reporting purposes
under the Cost Sharing Agreement.
6.10 Water and Sewer Line Reimbursements. Buyer
acknowledges that Seller is currently working with the City of
Fairfield on reimbursements for increasing the size of various
water and sewer lines. Any reimbursements for infrastructure,
including the water and sewer lines, provided by Seller shall be
the sole property of Seller, and Buyer shall deliver such
reimbursement payments to Seller if they are received by Buyer
after the Close of Escrow.
6.11 Pacific Gas & Electric Deposits. At the Close of
Escrow, Buyer shall reimburse Seller for any Pacific Gas &
Electric deposits for the Lots at the rate of 80% of the balance
as of the Close of Escrow. The balance of such deposits as of
May 31, 1996 was $123,981.45. The balance of such deposits as of
the Close of Escrow shall be determined as soon as practicable
after the Close of Escrow, and Buyer shall deliver Seller payment
for 80% of such balance within 10 days after the final
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determination of such balance. Upon the Close of Escrow, all
such deposits shall be transferred to Buyer.
6.12 Transfer of Entitlements. Seller shall cooperate with
Buyer and execute, deliver, acknowledge and record such
documents, instruments and certificates as Buyer may reasonably
require to effect the transfer of any entitlements applicable to
the Land, the Lots and the Improvements from the City of
Fairfield or any other Governmental Agency to Buyer.
6.13 Confidentiality. The parties hereto agree that they
shall maintain in confidence and not disclose any information,
including, without limitation, the Purchase Price and the price
per Lot, related to this Agreement, the Land, the Lots, the
Improvements or any other Property without the prior written
consent of the other party to this Agreement. The preceding
sentence shall not prevent either party from disclosing the terms
and conditions of this Agreement and any and all information
regarding the Land, the Lots, the Improvements and the Property
to the parties' respective counsel and Governmental Agencies,
such as the Securities Exchange Commission, having jurisdiction
over either party.
6.14 Completion of Lots. Buyer acknowledges that the Lots
and Improvements are not complete. Buyer covenants and agrees to
complete the Lots and the related Improvements in accordance with
the Subdivision Map and any and all applicable documents,
instruments, codes, ordinances, regulations and permits.
6.15 Completion of Lots 42 and 43. Buyer acknowledges that
Seller is obligated to transfer two finished single-family
residential lots in Unit 4 to Mr. and Mrs. Roland and to Ms.
Anderson. The single-family residential lots that are to be
transferred are referred to on the Subdivision Map as Lots 42 and
43. Buyer covenants and agrees to complete the lots and related
improvements in accordance with the Subdivision Map and the
standards set forth in Section 6.14, above, on behalf of Seller
and to notify Seller in writing when Lots 42 and 43 and the
related Improvements are complete. Upon completion of Lots 42
and 43, Seller shall reimburse Buyer for the cost of such
completion and the Improvements related thereto. Buyer shall
provide Seller an estimate of the costs of completing such Lots
and the related Improvements prior to commencement of any work
thereon. Such estimate shall be consistent with the costs
incurred by Buyer in completing the Lots other than 42 and 43.
6.16 Possession. Possession of the Property shall be
delivered by Seller to Buyer on the Closing Date upon recordation
of the Grant Deed(s).
6.17 Survival of Covenants and Agreements. The covenants
and agreements set forth in Sections 6.5, 6.6, 6.8, 6.9, 6.10,
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6.11, 6.12, 6.13, 6.14 and 6.15 of this Agreement shall survive
the Close of Escrow.
ARTICLE 7
ACKNOWLEDGMENTS AND REPRESENTATIONS
7.1 Seller's Representations.
7.1.1 No Rights to Acquire Property. No person,
firm or entity other than Buyer has any rights in, or right to
acquire, the Property or any part thereof, and as long as this
Agreement remains in force, Seller will not, without Buyer's
prior written consent, lease, transfer, mortgage, pledge, or
convey, its interest in the Property, or any portion thereof, nor
any right therein, or grant any right or option to anyone to
effect any such transaction.
7.1.2 Organization. Seller is a general
partnership duly organized and validly existing under the laws of
the State of California with full power to enter into this
Agreement.
7.1.3 Authority. The execution and delivery of
this Agreement have been duly authorized and approved by all
requisite partnership action, and the consummation of the
transactions contemplated hereby will be duly authorized and
approved by all requisite partnership action of Seller.
7.1.4 FIRPTA Affidavit. Seller is not a foreign
corporation, foreign partnership, foreign trust or foreign estate
(as those terms are defined in the Internal Revenue Code and the
Treasury Regulations promulgated thereunder) but rather a
partnership formed under the laws of one of the United States.
Seller understands and agrees that the certification made in this
section 7.1.4 may be disclosed to the Internal Revenue Service by
Buyer and that any false statement contained herein could be
punished by fine, imprisonment or both.
7.1.5 Latent Defects. Seller has no actual
knowledge of any latent defects on, in, under or above the Land,
the Lots or the Improvements (to the extent completed as of the
date of this Agreement). For purposes of this representation,
the actual knowledge of Seller shall mean the actual knowledge of
only Patricia A. Wood and no other person.
7.2 Buyer's Representations.
7.2.1 Organization. Buyer is a limited partnership
duly organized, validly existing and in good standing under the
laws of the State of California with full power to enter into
this Agreement.
7.2.2 Authority. The execution and delivery of
this Agreement have been duly authorized and approved by all
requisite partnership action of Buyer and the consummation of the
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transactions contemplated hereby will be duly authorized and
approved by all requisite partnership action of Buyer.
7.3 Purchase "As-Is"; Limitation of Liability.
7.3.1 Buyer acknowledges that (i) the Lots and
related Improvements are not complete, (ii) except for Section
7.1.5, Seller is not making and has not made any warranties or
representations, express or implied, as to the legal, physical
and/or financial condition now or in the future of the Land, the
Lots, the Improvements or any Property, and (iii) Buyer is buying
the Property in an "as-is" condition based solely on Buyer's own
studies and investigations.
7.3.2 Buyer acknowledges that Seller shall have no
liability for any latent or patent defects discovered upon the
Property following the Close of Escrow.
7.3.3 Buyer confirms, acknowledges and agrees that
no officer, director, employee or representative of Seller or
Seller's partners (whether or not such individual has signed this
Agreement on behalf of Seller) makes any express or implied
representation or warranty of any kind or nature whatsoever
concerning the Land, the Lots, the Improvements or any of the
Property. Buyer further acknowledges, confirms and agrees that
any liability with respect of this Agreement and the transactions
contemplated herein shall result in the liability of Seller or
Seller's general partners only and not any individual officer,
director, employee or representative of Seller or Seller's
partners. Buyer therefore confirms, acknowledges and agrees that
Buyer may seek recourse only against Seller or Seller's general
partners for any liability arising out of or in connection with
this Agreement and the transactions contemplated hereby.
7.4 Survival. The representations made by Seller in
Sections 7.1.1, 7.1.2, 7.1.3, 7.1.4 and 7.1.5, and by Buyer in
Sections 7.2.1 and 7.2.2, and the acknowledgments and covenants
of Buyer in Sections 7.3.1, 7.3.2 and 7.3.3 of this Agreement
shall survive the Close of Escrow.
ARTICLE 8
THE CLOSE OF ESCROW
8.1 Close of Escrow. If Buyer timely exercises its option
to purchase the Property under this Agreement, then, unless the
parties mutually agree upon an earlier closing date, Escrow shall
close on the date that is three hundred sixty (360) days after
the date upon which buyer closes escrow under the Purchase
Agreement and acquires the property described therein ("Closing
Date").
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8.2 Closing Procedure. Escrow Agent shall close the Escrow
on or before the Closing Date by (i) recording Seller's Grant
Deed(s) and such other documents as may be necessary to procure
the Title Policy and satisfy the terms and conditions of this
Agreement and (ii) delivering funds and documents as set forth in
Article 10 entitled "Recordation and Distribution of Funds and
Documents" WHEN AND ONLY WHEN each of the following requirements
has been satisfied:
8.2.1 Funds and Instruments. All funds and
instruments required pursuant to Articles 2 and 3 have been
delivered to Escrow Agent.
8.2.2 Satisfaction of Conditions Precedent. Each
of the conditions precedent set forth in Section 5.1 has been, or
upon such closing shall be, satisfied as provided for in Section
5.1.
8.2.3 Recordation. Escrow Agent shall have
recorded the documents deposited into Escrow for recordation in
the Official Records of the County.
8.3 Earlier Closing; Later Closing. If all of the
conditions set forth in Sections 8.2.1 and 8.2.2 are satisfied at
a date earlier than the Closing Date, Escrow Agent shall close
the Escrow at such earlier date provided Escrow Agent obtains the
written consent of Buyer and Seller to do so. The Closing Date
may be extended by agreement of both Buyer and Seller.
8.4 Termination of Escrow. If Escrow Agent cannot close
the Escrow on or before the Closing Date, it will, nevertheless,
close the Escrow when all conditions have been satisfied or
waived as provided for in this Agreement, notwithstanding that
one or more of such conditions has not been timely performed,
unless (i) a notice of termination has theretofore been delivered
to Escrow Agent in accordance with the provisions of Section 5.2,
13.1 or 13.2, or (ii) after the Closing Date and prior to the
Close of Escrow, Escrow Agent receives a written notice to
terminate the Escrow and this Agreement from a party who, at the
time such notice is delivered, is not in default hereunder. The
right to terminate the Escrow and this Agreement under the
provisions of clause (ii) of this Paragraph 8.4 shall be
optional, not mandatory; no delay in the giving of such notice
shall affect the rights hereunder of the party giving the same.
8.4.1 Notice of Termination. Escrow Agent shall
have no liability or responsibility for determining whether or
not a party giving a notice of termination is or is not in
default hereunder. Within two (2) working days after receipt of
such notice from one party, Escrow Agent shall deliver one copy
of such notice to the other party. Unless written objection to
termination of the Escrow is received by Escrow Agent within ten
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(10) days after Escrow Agent so delivers such notice (i) Escrow
Agent shall forthwith terminate the Escrow and return all
documents, funds or other items held by it to the party
depositing same, except that Escrow Agent may retain such
documents and other items usually retained by escrow agents in
accordance with standard escrow termination procedures and
practices, and (ii) each party shall forthwith pay to Escrow
Agent one-half of Escrow Agent's reasonable escrow termination
charges. Notwithstanding the foregoing provisions of this
Section 8.4.1, Escrow Agent may (i) retain any funds on deposit
with it until such time as its Escrow termination charges are
paid in full and/or (ii) deduct from any cash held by it
sufficient funds to pay for its Escrow termination charges in
full. If written objection to the termination of the Escrow is
delivered to Escrow Agent within such 10-day period, Escrow Agent
is authorized to hold all funds and instruments delivered to it
in connection with the Escrow and may, in Escrow Agent's sole
discretion, take no further action until otherwise directed
either by the parties' mutual written instructions or final order
of a court of competent jurisdiction.
8.4.2 Return of Deposits. If the Escrow is
terminated under either Section 13.1 or Section 13.2 or as a
result of Seller's default under or breach of this Agreement,
Seller shall return to Buyer any funds disbursed from the Escrow
to Buyer prior to the termination of the Escrow.
ARTICLE 9
PRORATIONS, FEES AND COSTS
9.1 Prorations. Escrow Agent will prorate as of the Close
of Escrow between the parties, in cash, county, city and special
district (if any) real property taxes and assessments for the
Property based on the latest information available to Escrow
Agent.
9.2 Thirty Day Month. All prorations and/or adjustments
called for in this Agreement are to be made on the basis of a
thirty (30) day month, unless otherwise specifically instructed
in writing.
9.3 Seller's Fees and Costs. Seller shall pay (i) one-half
of Escrow Agent's escrow fee, (ii) usual Seller's document-
drafting and recording charges, (iii) the title insurance premium
for the CLTA Owner's Title Policy and any indorsements reasonably
requested by Buyer's lender, and (iv) the County Documentary
Transfer Tax in the amount determined by Escrow Agent and the
County Recorder.
9.4 Buyer's Fees and Costs. Buyer shall pay (i) one-half
of Escrow Agent's escrow fee, (ii) usual Buyer's document-
drafting and recording charges and (iii) the additional premium
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for an American Land Title Association (ALTA) title insurance
policy, if Buyer desires that Title Company issue such a policy.
9.5 Escrow Cancellation Charges Due to a Default.
Notwithstanding the provisions of Section 9.3 and 9.4 above, if
Escrow fails to close due to Seller's default, Seller shall pay
all Escrow cancellation charges. If Escrow fails to close due to
Buyer's default, Buyer shall pay all Escrow cancellation charges.
If Escrow fails to close for any reason other than the foregoing,
Buyer and Seller shall each pay one-half of any Escrow
cancellation charges. "Escrow cancellation charges" means all
fees, charges and expenses incurred by Escrow Agent, including
all expenses incurred in connection with issuance of the
Preliminary Report and other title matters.
ARTICLE 10
RECORDATION AND DISTRIBUTION OF FUNDS AND DOCUMENTS
10.1 Disbursements. Except as provided in Section 10.4,
below, all disbursements by Escrow Agent shall be made by checks
of Escrow Agent.
10.2 Recorded Documents. Escrow Agent shall cause the
County Recorder of the County to mail Seller's Grant Deed (and
each other documents which are herein expressed to be, or by
general usage are, recorded) after recordation, to the grantee,
beneficiary or person (i) acquiring rights under said document or
(ii) for whose benefit said document was acquired.
10.3 Unrecorded Documents. Escrow Agent shall, at the Close
of Escrow, deliver by certified mail, overnight courier or United
States mail (or will hold for personal pickup, if requested) one
(1) copy of each unrecorded document received hereunder by Escrow
Agent to the payee or person (i) acquiring rights under said
document or (ii) for whose benefit said document was acquired.
10.4 Payment of Funds at Close of Escrow. Escrow Agent
shall, at the Close of Escrow, deliver by wire transfer, in
accordance with Seller's instructions (or will hold for personal
pickup, if requested) (i) to Seller, or order, the cash, plus any
proration or other credits to which Seller will be entitled less
any appropriate proration, deposits or other charges, and (ii) to
Buyer, or order, any excess funds theretofore delivered to Escrow
Agent by Buyer.
10.5 Conformed Copies. Escrow Agent shall, at the Close of
Escrow, deliver to Seller and Buyer a copy of the Seller's Grant
Deed(s) (conformed to show recording date) and conformed copies
of each document recorded to place title in the condition
required by this Agreement.
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ARTICLE 11
REMEDIES
11.1 Liquidated Damages to Seller. If all of the conditions
to Closing for Buyer's benefit have either been satisfied or
waived by Buyer by the Closing Date, and the purchase and sale of
the Property described herein fails to close due to default by
Buyer, it is agreed that the amounts released from Escrow to
Seller under this Agreement ("Released Amount") shall be retained
and accepted by Seller as liquidated damages and not as a penalty
and Seller shall be released from its obligation to sell the
Property to Buyer, and Buyer shall be released from its
obligation to purchase the Property. It is agreed that the
Released Amount constitutes a reasonable estimate of the damages
to Seller. Buyer and Seller agree that it is impossible or
impractical presently to predict what monetary damages Seller
would suffer in such event. Buyer desires to limit the monetary
damages for which Buyer might be liable hereunder and Buyer and
Seller desire to avoid the costs and delays they would incur if a
lawsuit were commenced to collect damages and therefore agree
that the liquidated damages provided hereunder shall constitute
Seller's sole and exclusive remedy hereunder. By the act of an
authorized representative of each party affixing its initials
herein, each party specifically confirms the accuracy of the
above statements and its agreement with them.
/s/ P.W. /s/ J.C.
--------------------- --------------------
Seller's Initials Buyer's Initials
11.2 Specific Performance. If all of the conditions to
Closing for Seller's benefit have either been satisfied or waived
by Seller by the Closing Date, and the purchase and sale of the
Property described herein fails to close due to default by
Seller, Buyer shall be entitled to bring an action for specific
performance of Seller's obligations under this Agreement.
ARTICLE 12
ASSIGNABILITY
12.1 Assignment. Neither party shall voluntarily or by
operation of law assign or otherwise transfer any of its rights
or obligations under this Agreement without obtaining the prior
written consent of the other party, which consent may not be
unreasonably withheld. Notwithstanding the foregoing sentence,
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Buyer shall have the right to assign its rights under this
Agreement without consent of Seller to a corporation,
partnership, limited liability company or other entity in which
the beneficial owners of at least 51% of the equity interest in
such entity own at least 51% of the equity interests in Buyer,
provided that Buyer shall remain liable for, and be responsible
for the performance of, any and all liabilities, obligations,
representations, covenants and agreements under this Agreement.
ARTICLE 13
EMINENT DOMAIN AND MATERIAL LOSS
13.1 Eminent Domain. In the event that, prior to the Close
of Escrow, all or any material portion of the Property is taken
or appropriated by any public or quasi-public authority under the
power of eminent domain, or Seller receives actual notice of any
pending or threatened condemnation proceedings, then either Buyer
or Seller may terminate this Agreement without further liability
hereunder and the parties shall proceed in accordance with
Section 8.4, and, in such event, any portion of Buyer's Deposit,
regardless of whether or not it has been released from Escrow to
Seller, shall be immediately returned to Buyer, and any
condemnation proceeds shall be the sole property of Seller. If
neither Seller nor Buyer elects to terminate this Agreement in
the event of any such taking, or threat of taking, and provided
that all conditions precedent to the Close of Escrow have either
been satisfied or waived, Escrow shall close in accordance with
this Agreement, and Seller shall assign to Buyer all of its
right, title and interest in any condemnation proceeds or award
made by the governmental entity.
13.2 No Material Loss. If, prior to the Close of Escrow,
and subject to the satisfaction or waiver of all conditions
precedent in favor of Buyer and Seller, the Property shall suffer
a Material Loss, Buyer shall have the right to elect, within 30
days of receipt of notice of such Material Loss, (a) to terminate
this Agreement under Section 8.4.1 and receive a return of
Buyer's Deposit or (b) to purchase the Property as provided in
this Agreement and receive an assignment of any insurance
proceeds Seller receives, or to which Seller is or may become
entitled, with respect to such Material Loss upon Seller's
receipt of such proceeds. The parties acknowledge and agree in
no event shall the Close of Escrow be extended due to a Material
Loss. Notwithstanding the foregoing, the assignment of any
insurance proceeds as provided herein shall not include any
proceeds received for items not related to the physical condition
of the Property, such as proceeds from Seller's business
interruption insurance, if any. For purposes of this Agreement,
a "Material Loss" means a loss resulting from a casualty that
either (i) diminishes the value of the Property in an amount of
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at least 10% of the Purchase Price or (ii) results in a loss of
at least 10% of the aggregate square footage of the Land as of
the Effective Date.
ARTICLE 14
GENERAL PROVISIONS
14.1 Attorneys' Fees. In any event any action, arbitration,
mediation or other dispute resolution proceeding shall be
instituted between Seller and Buyer in connection with this
Agreement, the party prevailing in such proceeding shall be
entitled to recover from the other party all of its costs of such
proceeding, including, without limitation, attorneys' fees and
costs as fixed by the court therein.
14.2 Captions. The captions used herein are for convenience
only and are not a part of this Agreement and do not in any way
limit or amplify the terms and provisions hereof.
14.3 Construction of Agreement. The agreements contained
herein shall not be construed in favor of or against either
party, but shall be construed as if both parties prepared this
Agreement.
14.4 Counterparts. This Agreement may be executed in
counterparts, all of which, when taken together, shall constitute
a fully executed original.
14.5 Entire Agreement. This Agreement constitutes the
entire agreement between the parties hereto pertaining to the
subject matter hereof and all prior and contemporaneous
agreements, representations, negotiations and understandings of
the parties hereto, oral or written, are hereby superseded and
merged herein. The foregoing sentence shall in no way affect the
validity of any instruments executed by the parties in the form
of the exhibits attached to this Agreement.
14.6 Exhibits and Schedules. All Exhibits and Schedules
attached hereto are incorporated herein by reference. Any
Exhibits or Schedules that are to be attached to the Agreement
after the Effective Date but prior to the Close of Escrow, shall
be initialled by Buyer and Seller on each page and, once so
initialled, shall be sent to Escrow Agent for attachment to this
Agreement.
14.7 Gender and Number. The use herein of (i) the neuter
gender includes the masculine and the feminine and (ii) the
singular number includes the plural, whenever the context so
requires.
21
<PAGE>
14.8 Governing Law. This Agreement and the documents in the
forms attached as exhibits hereto shall be governed by and
construed under the laws of the State of California. This
Agreement shall be deemed made and entered into in the County.
14.9 Joint and Several Liability. If any party consists of
more than one person or entity, the liability of each such person
or entity signing this Agreement shall be joint and several.
14.10 Modification. No modification, waiver, amendment,
discharge or change of this Agreement shall be valid unless the
same is in writing and signed by the party against which the
enforcement of such modification, waiver, amendment, discharge or
change is or may be sought.
14.11 Real Estate Brokerage Commission. Seller shall
pay a real estate brokerage commission in the amount of $108,300
to Fred Harris upon the Close of Escrow. Except as provided in
the preceding sentence, neither party is obligated to pay any
real estate, brokerage or other commission or fee in connection
with the purchase and sale of the Property. Each party hereby
indemnifies, protects, defends (with legal counsel reasonably
acceptable to the other party) and holds the other party free and
harmless from and against any and all costs and liabilities,
including, without limitation, reasonable attorneys' fees and
costs, for causes of action or proceedings which may be
instituted by any broker, agent or finder, licensed or otherwise,
claiming through, under or by reason of the conduct of such party
in connection with this transaction.
14.12 No Partnership or Joint Venture. Seller or Buyer
shall not, by virtue of this Agreement, in any way or for any
reason be deemed to have become a partner of the other in the
conduct of its business or otherwise, or a joint venturer. In
addition, by virtue of this Agreement there shall not be deemed
to have occurred a merger of any joint enterprise between Buyer
and Seller.
14.13 Notice and Payments. Any notice to be given or
other document to be delivered by any party to the other or
others hereunder, and any payments from Buyer to Seller, may be
delivered in person or by facsimile transmission (provided that a
confirming copy is sent by mail or overnight delivery as herein
specified) to an officer of any party, or may be deposited in the
United States mail, duly certified or registered, return receipt
requested, with postage prepaid, or by Federal Express or other
similar overnight delivery service, and addressed to the party
for whom intended, as follows:
22
<PAGE>
To Seller at its business office:
Paradise Valley Communities No. 1
529 East South Temple
Salt Lake City, Utah 84102
Attention: Patricia A. Wood
Facsimile No.: (801) 524-1751
With a copy to:
K. Michael Garrett, Esq.
Duckor Spradling & Metzger
401 West A Street, Suite 2400
San Diego, California 92101
Facsimile No.: (619) 231-6629
To Buyer at its business office:
The Forecast Group (Registered Trademark), L.P.
10670 Civic Center Drive
Rancho Cucamonga, California 91730
Facsimile No.: (909) 980-7305
With a copy to:
General Counsel
c/o The Forecast Group (Registered Trademark), L.P.
10670 Civic Center Drive
Rancho Cucamonga, California 91730
Facsimile No.: (909) 987-8958
To Escrow Agent:
Chicago Title Company
604 Empire Street
Fairfield, California 94533
Facsimile No.: (707) 425-4810
Any party hereto may from time to time, by written notice to the
other, designate a different address which shall be substituted
for the one above specified. Unless otherwise specifically
provided for herein, all notices, payments, demands or other
communications given hereunder shall be in writing and shall be
deemed to have been duly given and received (i) upon personal
delivery, or (ii) as of the third business day after mailing by
United States registered or certified mail, return receipt
requested, postage prepaid, addressed as set forth above, or
(iii) the immediately succeeding Business Day after deposit with
Federal Express or other similar overnight delivery system.
14.14 Remedies Cumulative. All rights and remedies of
Buyer and Seller contained in this Agreement shall be construed
and held to be cumulative.
23
<PAGE>
14.15 Severability. In the event that any phrase,
clause, sentence, paragraph, section, article or other portion of
this Agreement shall become illegal, null or void or against
public policy, for any reason, or shall be held by any court of
competent jurisdiction to be illegal, null or void or against
public policy, the remaining portions of this Agreement shall not
be affected thereby and shall remain in force and effect to the
fullest extent permissible by law.
14.16 Successors and Assigns. Subject to the
restrictions and prohibitions on assignment set forth in Article
12, each and all of the covenants and conditions of this
Agreement shall inure to the benefit of and shall be binding upon
the successors-in-interest, assigns, and legal representatives of
the parties hereto. As used in the foregoing, "successors" shall
refer to the parties' interest in the Property and to the
successors to all or substantially all of their assets and to
their successors by merger or consolidation.
14.17 Waiver. No waiver by Buyer or Seller of a breach
of any of the terms, covenants or conditions of this Agreement by
the other party shall be construed or held to be a waiver of any
succeeding or preceding breach of the same or any other term,
covenant or condition herein contained. No waiver of any default
by Buyer or Seller hereunder shall be implied from any omission
by the other party to take any action on account of such default
if such default persists or is repeated, and no express waiver
shall affect a default other than as specified in such waiver.
The consent or approval by Buyer or Seller to or of any act by
the other party requiring the consent or approval of the first
party shall not be deemed to waive or render unnecessary such
party's consent or approval to or of any subsequent similar acts
by the other party.
14.18 Gender and Number. In this Agreement (unless the
context requires otherwise), the masculine, feminine and neuter
genders and the singular and the plural include one another.
14.19 Time of the Essence. Time is of the essence of
each and every provision of this Agreement.
25
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first above-written.
SELLER:
PARADISE VALLEY COMMUNITIES NO. 1,
a California general partnership
By: HomeFed Communities, Inc., a
California corporation,
General Partner
By: /s/ Patricia A. Wood
------------------------
Patricia A. Wood,
President
By: HomeFed Resources Corporation,
a California corporation,
General Partner
By: /s/ Patricia A. Wood
------------------------
Patricia A. Wood,
President
BUYER:
THE FORECAST GROUP (Registered
Trademark), L.P., a California
limited partnership
By: FORECAST (Registered
Trademark) HOMES, INC., a
California corporation, General
Partner
By: /s/ Joe Carmen
--------------------------
Its: Executive Vice President
--------------------------
25
<PAGE>
CONSENT OF ESCROW AGENT
The undersigned Escrow Agent hereby agrees to (i)
accept the foregoing Agreement, (ii) be Escrow Agent under said
Agreement and (iii) be bound by said Agreement in the performance
of its duties as Escrow Agent; provided, however, the undersigned
shall have no obligations, liability or responsibility under (i)
this Consent or otherwise unless and until said Agreement, fully
signed by the parties, has been delivered to the undersigned or
(ii) any amendment to said Agreement unless and until the same
shall be accepted by the undersigned in writing.
Dated: June 20, 1996 (the "Opening of the Escrow")
Chicago Title Company
By: /s/ Terri Piper
--------------------
Its: C.S.E.O.
----------------
<PAGE>
LIST OF EXHIBITS
Exhibit A. . . . . . . . . . . . . . . .Legal Description of Land
Exhibit B. . . . . . . . . . . . . . . . . . . Property Documents
Exhibit C. . . . . . . . . . . . . . General Conditions of Escrow
Exhibit D. . . . . . . . . . . .Certificate of Non-Foreign Status
Exhibit E. . . . . . . . . . . . . . . . . . . . . .Grant Deed(s)
<PAGE>
EXHIBIT A
Legal Description of land
<PAGE>
PARADISE VALLEY NORTH UNIT NO. 4
ALL THAT REAL PROPERTY SITUATE IN THE CITY OF FAIRFIELD, COUNTY
OF SOLANO, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS:
LOTS 1 THROUGH 41, 44 THROUGH 82, AS THE SAME ARE SHOWN ON THAT
CERTAIN MAP ENTITLED: "FINAL MAP OF PARADISE VALLEY NORTH, UNIT
NO. 4, COUNTY OF SOLANO, FAIRFIELD, CALIFORNIA", WHICH MAP WAS
FILED FOR RECORD IN THE OFFICE OF THE RECORDER OF SOLANO COUNTY
CALIFORNIA ON FEBRUARY 27, 1995 IN BOOK 65 OF MAPS AT PAGE 48:
APN'S: 167-521-010 THROUGH 110; 167-522-010 THROUGH 140; 167-523-010 THROUGH
040; 167-524-010 THROUGH 120; 167-531-010 THROUGH 030; 167-532-020
THROUGH 080; 167-533-010 THROUGH 090; 167-534-010 THROUGH 100;
167-535-010 THROUGH 100
<PAGE>
Paradise Valley Unit 4
Exhibit B
Property Documents
- - Rough Grading and Erosion Plans dated March 1990 (6 copies)
- - Final Map Unit 4 dated December 1990 (6 copies)
- - Improvement Plans for Unit 4 dated December 1990 (6 copies)
- - Development Agreement dated July 20, 1988
- - First Amendment to Development Agreement dated September 15, 1994
(not yet fully executed)
- - Second Amendment to Development Agreement (not yet dated or fully executed)
- - Covenants, Conditions, and Restrictions dated August 25, 1995
- - Anderson Consulting Group Report dated September 15, 1994
- - Department of Real Estate Public Report dated September 1, 1995
- - Letter to City of Fairfield regarding acceptance of improvements dated
May 28, 1996
- - Unapproved Plans for the Paradise Valley Recreation Facility
- - Cost Sharing Agreement dated October 20, 1989
- - Agreement with City of Fairfield regarding construction of recreational
facility dated August 31, 1995
- - Utility Deposit Balances dated May 31, 1996
- - Paradise Valley Master Association documents dated September 1995
- - Paradise Valley Master Association Bylaws dated August 21, 1995
- - Information regarding improvement bonds and maintenance obligations for
Unit 4
<PAGE>
EXHIBIT C
General Conditions of Escrow
<PAGE>
GENERAL PROVISIONS
1. The phrase "close of escrow" (for COE) as used in this
escrow means the date on which documents are recorded,
unless otherwise specified.
2. Recordation of any instruments delivered through this
escrow, if necessary or proper for the issuance of the
policy of title insurance called for, is authorized.
3. No examination or insurance as to the amount or payment of
personal property taxes is required unless specifically
requested.
4. You and any of your affiliates or employees are authorized
to use the information and documents in this escrow for any
purpose. You are further authorized to furnish to any
broker or lender identified with this transaction or anyone
acting on behalf of such broker or lender, any instructions,
amendments, statements, or notices of cancellation given in
connection with this escrow.
5. All written notices, communications, change of instructions
and documents are required to be delivered timely at the
office of Chicago Title Company as set forth herein.
6. All funds received in this escrow shall be deposited with
other escrow funds in one or more escrow (demand) accounts
of Chicago Title Company in any state or national bank. The
parties to this escrow understand that the escrow accounts
you maintain with the depository institutions contribute to
your value as a customer of these institutions which, in
turn, may make available to Chicago Title Company an array
of bank services, accommodations or other benefits. You
shall have no obligation to account for the value realized
by Chicago Title Company from these services, accommodations
or other benefits. All disbursements shall be made by your
check, unless otherwise instructed. You shall not be
responsible for any delay in closing if funds received by
escrow are not available for immediate withdrawal. Chicago
Title Company may, at its option, require concurrent
instructions from all principals prior to release of any
funds on deposit in this escrow.
7. If demand to cancel is submitted after the Time Limit Date,
any principal so requesting you to cancel this escrow shall
file notice of demand to cancel in your office in writing.
You shall within three (3) working days thereafter mail by
certified mail one copy of such notice to each of the other
principals at the address stated in this escrow. Unless
written objection thereto is filed in your office by a
principal within fifteen (15) calendar days after the date
of such mailing, you are instructed to cancel this escrow.
If this is a sale escrow, you may return the lender's papers
and/or funds upon lender's demand.
8. In the event that this escrow is canceled, any fees or
charges due Chicago Title Company including cancellation
fees and any expenditures incurred or authorized shall be
paid from funds on deposit unless otherwise specifically
agreed to or determined by a court of competent
jurisdiction. Upon payment thereof, return documents and
monies to the respective parties depositing same, or as
ordered by the court, and void any executed instruments.
9. If there is no written activity by a principal to this
escrow within any six-month period after the Time Limit Date
set forth herein, Chicago Title Company may, at its option,
terminate its agency obligation and cancel this escrow,
returning all documents, monies or other items held, to the
respective parties entitled thereto, less any fees and
charges as provided herein.
10. If, for any reason, funds are retained or remain in escrow
after the closing date, you may deduct therefrom a
reasonable charge as custodian, of not less than $25.00 per
month, unless otherwise specified.
<PAGE>
11. In the event that you should receive or become aware of
conflicting demands or claims with respect to this escrow,
or the rights of any of the parties hereto, or any money or
property deposited herein, you shall have the absolute right
at your option to discontinue any or all further acts until
such conflict is resolved to your satisfaction.
12. In the event that any Offer to Purchase, Deposit Receipt, or
any other form of Purchase Agreement is deposited in this
escrow, it is understood that such document will be
effective only as among the parties signing said document.
You as escrow holder are not to be concerned with the terms
of such document and are relieved of all responsibility in
connection therewith. You are to be concerned only with the
directives specifically set forth in these escrow
instructions and amendments thereto. Further, you are not
to be concerned or liable for items designated as
"memoranda" in these escrow instructions nor with any other
agreement or contract between the parties.
13. You are released from and shall have no liability,
obligation or responsibility with respect to (a) withholding
of funds pursuant to Section 1445 of the Internal Revenue
Code of 1986 as amended, and to Sections 18662 and 18668 of
the California Revenue and Taxation Code, (b) advising the
parties as to the requirements of said Section 1445, (c)
determining whether the transferor is a foreign person or a
non-resident under such Section, nor (d) obtaining a
non-foreign affidavit or other exemption from withholding
under said Sections nor otherwise making any inquiry
concerning compliance with such Sections by any party to the
transaction.
14. The parties hereto, by execution of these instructions
acknowledge that the escrowholder assumes no responsibility
or liability whatsoever for the supervision of any act or
the performance of any condition which is a condition
subsequent to the closing of this escrow.
15. In the absence of instructions to the contrary, you are
hereby authorized to utilize wire services, overnight, next
day, or other expedited delivery services (as opposed to the
regular U.S. Mail) and to charge the respective party's
account accordingly.
16. If you pay a demand to reconvey a revolving line of credit
or equityline deed of trust, you are hereby instructed on my
behalf and for my benefit, to request that the lender
issuing said demand cancel said revolving line or equityline
of credit.
17. You are authorized to destroy or otherwise dispose of any
and all documents, papers, instructions, correspondence and
other material pertaining to this escrow at the expiration
of six (6) years from the close of escrow or cancellation
thereof, without liability and without further notice.
IMPORTANT NOTICE
Except for wire transfers, funds remitted to this escrow are subject to
availability requirements imposed by Section 12413.1 of the California
Insurance Code. CASHIER'S, CERTIFIED or TELLER'S checks, payable to CHICAGO
TITLE COMPANY are generally available for disbursement on the next business day
following the date of deposit.
Other forms of payment may cause extended delays in the closing of your
transaction pursuant to the requirements imposed by State Law.
(Wire transfer information available upon request)
ALL PARTIES TO THIS ESCROW ACKNOWLEDGE THAT CHICAGO TITLE COMPANY DOES NOT
PROVIDE LEGAL ADVICE NOR HAS IT MADE ANY INVESTIGATION, REPRESENTATIONS OR
ASSURANCES WHATSOEVER REGARDING THE LEGAL ASPECTS OR COMPLIANCE OF THIS
TRANSACTION WITH ANY TAX, SECURITIES OR ANY OTHER STATE OR FEDERAL LAWS.
IT IS RECOMMENDED THAT THE PARTIES OBTAIN INDEPENDENT LEGAL COUNSEL AS TO
SUCH MATTERS.
<PAGE>
EXHIBIT D
CERTIFICATE OF NON-FOREIGN STATUS
Section 1445 of the Internal Revenue Code of 1986, as
amended ("Code"), provides that a transferee (buyer) of a U.S.
real property interest must withhold tax if the transferor
(seller) is a foreign person. Sections 18805 and 26131 of the
California Revenue and Taxation Code provide that a transferee
(buyer) of a California real property interest must withhold tax
if withholding is required by Section 1445 of the United States
Internal Revenue Code.
To inform The Forecast Group (Registered Trademark), L.P.
("Transferee"), that withholding of tax under Section 1445 of the
Code is not required upon disposition of certain real property to
the Transferee by Paradise Valley Communities No. 1, a California
general partnership, ("Transferor"), the undersigned hereby
represents and certifies the following on behalf of the
Transferor:
1. The undersigned is the duly qualified and acting
officer of the Transferor;
2. The Transferor 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),
but rather is a corporation formed under the laws of one of the
United States;
3. The Transferor's U.S. employer identification number is
52-1671038;
4. The Transferor's address is 529 East South Temple, Salt
Lake City, Utah 84102-1089;
<PAGE>
5. The Transferor understands that this certification may
be disclosed to the Internal Revenue Service and/or the
California Franchise Board by the Transferee and that any false
statement contained herein could be punished by fine,
imprisonment, or both.
Under penalty of perjury, the undersigned declares that the
undersigned has examined this certification and to the best of
its knowledge and believe it is true, correct, and complete.
Dated: June 19, 1996 TRANSFEROR:
PARADISE VALLEY COMMUNITIES NO. 1,
a California general partnership
By: HomeFed Communities, Inc., a
California corporation,
General Partner
By: /s/ Patricia A. Wood
-----------------------
Patricia A. Wood,
President
By: HomeFed Resources Corporation,
a California corporation,
General Partner
By: /s/ Patricia A. Wood
-----------------------
Patricia A. Wood,
President
<PAGE>
EXHIBIT E
Grant Deed(s)
[To Be Prepared and Attached Prior to Close of Escrow]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS CONTAINED IN THE BODY OF THE ACCOMPANYING FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,756
<SECURITIES> 85
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 24,213
<CURRENT-LIABILITIES> 0
<BONDS> 27,750
0
0
<COMMON> 100
<OTHER-SE> (4,329)
<TOTAL-LIABILITY-AND-EQUITY> 24,213
<SALES> 2,362
<TOTAL-REVENUES> 2,470
<CGS> 2,560
<TOTAL-COSTS> 2,560
<OTHER-EXPENSES> 682
<LOSS-PROVISION> 1,017
<INTEREST-EXPENSE> 1,535
<INCOME-PRETAX> (3,324)
<INCOME-TAX> 40
<INCOME-CONTINUING> (3,364)
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<NET-INCOME> (3,364)
<EPS-PRIMARY> (0.34)
<EPS-DILUTED> (0.34)
</TABLE>
