EX-10.37 5 h12901exv10w37.htm PURCHASE AND SALE AGREEMENT exv10w37
 

EXHIBIT 10.37

PURCHASE AND SALE AGREEMENT

BETWEEN

NUEVO ENERGY COMPANY

AND

TONNER HILLS SSP, LLC AND TONNER HILLS 680 LLC

(Tonner Hills Surface Fee Interest
with Shea Program Obligations)

 


 

AGREEMENT
TABLE OF CONTENTS

                 
DESCRIPTION
      PAGE NO.
RECITALS         1  
ARTICLE 1 Land and Maps     2  
  Section 1.1   Definitions     2  
  Section 1.2   Governmental Approvals, Including A Level Map     8  
  Section 1.3   Approval Conditions     8  
  Section 1.4   Agreement Conditions     9  
ARTICLE 2 Purchase Price; Esscrow     9  
  Section 2.1   Purchase of the Land     9  
  Section 2.2   Purchase Price, Development Reimbursement Monies, Buyer Tax Responsibility     9  
  Section 2.3   Deposit; Opening of Escrow; Close of Escrow     12  
  Section 2.4   Liquidated Damages/Losses     13  
  Section 2.5   Buyer’s DD Period; Return of Documents     14  
  Section 2.6   Conditions to Close of Escrow     16  
  Section 2.7   Bankruptcy - Insolvency     17  
ARTICLE 3 Representations and Warranties; AS IS Purchase; Disclaimers and Required Disclosures; Governmental Approvals; Development Costs, Taxes and Assessments; Insurance; Indemnities
    17  
  Section 3.1   Authorization of Buyer     17  
  Section 3.2   Covenants by Nuevo     21  
  Section 3.3   Covenants by Buyer;     22  
  Section 3.4   Governmental Approvals     25  
  Section 3.5   Development Costs Requirements, Conditions, Taxes and Assessments     26  
  Section 3.6   Insurance     27  
  Section 3.7   Indemnity     31  
  Section 3.8   Survival of Covenants     34  
  Section 3.9   No Hazardous Substances     34  
  Section 3.9   Resolution of Indemnity Obligations     38  
ARTICLE 4 Further Documentation     39  
  Section 4.1   Grant Deed; Title Insurance     39  
  Section 4.2   PAPA TDs and Buyer Grant of Easements to Nuevo     41  
  Section 4.3   Development Declaration     41  
  Section 4.4   Natural Hazard Zones     41  
  Section 4.5   Corporate Guaranty     41  
  Section 4.6   Rights of Way and Contracts; Non-Exclusive Assignment of Contract Rights and Bill of Sale; Aera Agreement     41  
ARTICLE 5 General Provisions     41  
  Section 5.1   Notices     41  

Agreement

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  Section 5.2   Payments; Interest     43  
  Section 5.3   Condemnation     43  
  Section 5.4   Signing of Maps and Documents     44  
  Section 5.5   Captions     44  
  Section 5.6   Governing Law and Venue     44  
  Section 5.7   Time of the Essence; Successors and Assigns     44  
  Section 5.8   Remedies     45  
  Section 5.9   ARBITRATION OF DISPUTES/ATTORNEYS’ FEES     46  
  Section 5.10   Severability     47  
  Section 5.11   Gender and Number     48  
  Section 5.12   Real Estate Brokerage Commission     48  
  Section 5.13   Waiver of Jury Trial     48  
  Section 5.14   Survival of Certain Covenants     48  
  Section 5.15   Assignment of Warranties and Plans     48  
  Section 5.16   Recording     48  
  Section 5.17   Conflicts     48  
  Section 5.18   Independent Obligations     49  
  Section 5.19   Assignment of Agreement; Preauthorized Transfers     49  
  Section 5.20   No Partnership or Agency     50  
  Section 5.21   Resolution of Contractual Uncertainties     50  
  Section 5.22   Confidentiality     50  
  Section 5.23   Assignment of Unrecorded License Agreements/Leases/Consultants’ Contracts     51  
  Section 5.24   Notice on Approved Transfer     51  
  Section 5.25   Entire Agreement; Exhibits; Counterparts     52  
  Section 5.26   Stand Alone Insurance     52  
  Section 5.27   Further Assurances and Cooperation     53  
  Section 5.28   Intent of Definitions     54  
  Section 5.29   Exclusive Relationship     54  
  Section 5.30   Assignment, Assumption and Substitution     54  
  Section 5.31   Assumption of Obligations Under the Agreement     55  
  Section 5.32   Unocal Asset Purchase Agreement     56  
  Section 5.33   Like-Kind Exchange     56  
  Section 5.34   Oil Well Exhibit     56  
  Section 5.35   Permit Program     56  
  Section 5.36   Aera Program (Wildcatter Park)     57  
  Section 5.37   Hover Program (Adjacent Parcel)     57  
  Section 5.38   Oil Assets/Oil Operations     57  
  Section 5.39   Satisfaction of Conditions (Section 2.3)     57  
  Section 5.40   Constructive Meaning of Certain Provisions     57  
  Section 5.41   Alternate Discharge of Program Responsibilities     58  
  Section 5.42   Option to Convert PAPA TD’s Into SPC Guaranty (“SPC Guaranty”)     58  
  Section 5.43   No Participation by Bred Tonner Investors, L.P. (“BTI”); Waiver Release, Defense and Indemnity     59  
  Section 5.44   Mineral PAPA Cooperation     59  

Agreement

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EXHIBIT DESCRIPTION

         
EXHIBIT “A”
  -   LEGAL DESCRIPTION OF THE LAND
EXHIBIT “B”
  -   DEPICTION OF THE LAND
EXHIBIT “C”
  -   TONNER HILLS AREA PLAN (INCORPORATED BY
REFERENCE)
EXHIBIT “D”
  -   ESCROW INSTRUCTIONS
EXHIBIT “E”
  -   PM NOTE AND PM TD
EXHIBIT “F”
  -   NON-EXCLUSIVE ASSIGNMENT OF NUEVO’ S CONTRACT
RIGHTS AND BILL OF SALE
EXHIBIT “G”
  -   GRANT DEEDS
EXHIBIT “H”
  -   PRELIMINARY TITLE REPORTS FOR THE LAND
(DEVELOPMENT AREAS AND REMAINDER PARCELS)
EXHIBIT “I”
  -   DEVELOPMENT DECLARATION
EXHIBIT “J”
  -   NATURAL HAZARD ZONES
EXHIBIT “K”
  -   PAPA AND PAPA TDs (BUYER’S/NUEVO’S IMPROVEMENTS AND SATISFACTION OF CONDITIONS, PROGRAM AND BUYER’S FURTHER PAYMENTS AND PERFORMANCE)
EXHIBIT “L”
  -   DD SUBORDINATION AGREEMENT (DEVELOPMENT
DECLARATION – WITH SPC GUARANTY)
EXHIBIT “M”
  -   EASEMENT AGREEMENT
EXHIBIT “N”
  -   OPERATOR’S OIL WELLS AND CHANGING HOUSE
EXHIBIT “0”
  -   AERA AGREEMENT
EXHIBIT “P”
  -   CORPORATE GUARANTY
EXHIBIT “Q”
      UNRECORDED CONTRACTS, AGREEMENTS, EASEMENTS
AND LICENSES
EXHIBIT “R”
  -   OPTION B PAPA
EXHIBIT “S”
      SPC GUARANTY
 
IMPORTANT:   THIS INSTRUMENT, THE CONFIDENTIALITY AGREEMENT BETWEEN THE PARTES, DATED MARCH 6 2003, AND THE ACCESS AGREEMENT BETWEEN THE PARTIES, DATED MARCH 6, 2003, REPRESENT THE ENTIRE AGREEMENT OF THE PARTES CONCERNING THE SUBJECT MATTER HEREOF AND ALL OTHER PREVIOUS COMMUNICATIONS AND WRITINGS ARE MERGED HEREIN AND SHALL HAVE NO EFFECT.

Agreement

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PURCHASE AND SALE AGREEMENT

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

RECITALS

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

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

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

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

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

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

ARTICLE 1
Land and Maps

          Section 1.1 Definitions.

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

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

               1.1.3 “Aera” shall mean Area Energy LLC.

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

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

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

               1.1.7 “City” shall mean Brea, California.

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

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

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

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

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

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

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

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

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

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

               1.1.17 Intentionally Omitted.

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

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

               1.1.19 INTENTIONALLY OMITTED.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 2
Purchase Price; Escrow

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

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

          The Purchase Price shall consist of:

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

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

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

             
EVENT   AMOUNT   METHOD
(a) Close of Escrow
Reimbursement for procurement and payment by Nuevo of the Stand-Alone (Environmental) Insurance Policy required of Buyer in Section 5.26
  $ 212,695     Cash through Escrow
 
           
(b) Permit Program: Later of Close of Escrow OR
          Cash at Close of Escrow; and/or within four (4) business days of Event
 
           
   (i) Provision by Seller to Shea of a copy of the approval by the United States Fish & Wildlife Service (“USFWS”) of the Habitat Mitigation and Monitoring Plan (“Restoration Plan”)
  $ 2,000,000     Wire transfer to Seller’s Account
 
           
   (ii) Provision by Seller to Shea of a copy of the written certification (“Certification”) by the permitted wildlife biologist designated as the monitor within the Restoration Plan stating that the
  $ 3,000,000     Wire transfer to Seller’s Account

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Development Planning Area 7 habitat restoration area (“HRA”) is being utilized by the California gnatcatcher in accordance with the USFWS Biological Opinion Standard (“BOS”).
           
 
           
   (iii) Provision by Seller to Shea of the Certification by the permitted wildlife biologist designated as the monitor within the Restoration Plan stating that the Development Planning Area 4 HRA is occupiable by California gnatcatchers in accordance with the USFWS BOS.
  $ 1,500,000     Wire transfer to Seller’s Account
 
           
   (iv) One (1) year after Nuevo’s completion of the initial scope of work required by the Restoration Plan for the Remaining Habitat Restoration Area.
  $ 2,000,000     Wire transfer to Seller’s Account

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

             
BUYER ‘S INITIALS  -s- [ILLEGIBLE]
      NUEVO’S INITIAL  -s- [ILLEGIBLE]    

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

               2.6.11 Nuevo is not in material default under the Agreement.

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

ARTICLE 3
Representations and Warranties; AS IS Purchase; Disclaimers and
Required Disclosures; Governmental Approvals; Development Costs,
Taxes and Assessments; Insurance; Indemnities

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          Section 3.2 Covenants by Nuevo.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          Section 3.4 Governmental Approvals

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

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

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

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

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

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

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

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

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

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

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

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

          Section 3.6 Insurance.

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

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

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

                         3.6.1.1.2. Owners’ and Contractors’ Protective Liability;

                         3.6.1.1.3. Severability of Interest and Cross Liability clauses;

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

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

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

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

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

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

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

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

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

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

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

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

                    3.6.4.4 Contain severability of interest and cross liability clauses.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

             
BUYER’S INITIALS  -s- [ILLEGIBLE]
  NUEVO’S INITIALS  -s- [ILLEGIBLE]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

         
         
-s- [ILLEGIBLE]   -s- [ILLEGIBLE]   -s- [ILLEGIBLE]

 
 
 
 
 
Buyers   Shea   TH 680
Initials   Initials   Initials

ARTICLE 4

Further Documentation

          Section 4.1 Grant Deed; Title Insurance.

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

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

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

                    4.1.2.2 Taxes and assessments not yet payable;

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

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 5

General Provisions

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

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

             
  If to Nuevo:        
 
           
        Nuevo Energy Company
        1021 Main, Suite 2100
        Houston, Texas 77002
      Attn:   David A.Leach
      Fax:   (713) 374-4899
      Phone:   (713) 374-4802
      Email:   leachd@nuevoenergy.com
 
           
      and    
 
           
      Attn:   George B. Nilsen
      Fax :   (713) 374-4981
      Phone:   (713) 374-4973
      Email:   nilseng@nuevoenergy.com
 
           
  Copy to:        
 
           
        Ullom Associates
        16149 Redmond Way, Ste. 401
        Redmond, Washington 98052
      Fax:   (425) 836-2870
      Phone:   (425) 836-2728
      Email:   ullomiw@aol.com
 
           
      and    
 
           
        Nossaman, Guthner, Knox & Elliott, LLP
        18101 Von Karman Avenue, Suite 1800
        Irvine, California 92612-1047
      Attn:   William P. Tanner, 111
      Fax:   (949) 833-7878
      Phone:   (949) 833-7800
      Email:   wtanner@nossaman.com
 
           
  To Buyer:        
 
           
        Tonner Hills SSP, LLC
        603 S. Valencia Avenue
        Brea, CA 92823
        Attention: Alan Toffoli
        Fax: (714)985-3605
        Phone: (714) 792-2504
        Attn: Alan Toffoli
        Email:alan.toffoli@sheahomes.com

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

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

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

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

          Section 5.3 Condemnation.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

             
BUYER’S INITIALS  -s- [ILLEGIBLE]
  NUEVO’S INITIALS  -s- [ILLEGIBLE]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          Section 5.20 No Partnership or Agency.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                     
NUEVO ENERGY COMPANY, a Delaware
corporation
  TONNER HILLS SSP, LLC, a Delaware
limited liability company
 
                   
By:   -s- [ILLEGIBLE]
  By: Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
                   
 
                   
Title:   CEO       By: Standard Pacific Corp., a Delaware
corporation, its sole member
                   
 
                   
By:
  -s- [ILLEGIBLE]           By:   -s- [ILLEGIBLE]
 
 
             
 
Title:
  [ILLEGIBLE]           Title:   AUTHORIZED REP.
               
 
                   
              By:   -s- [ILLEGIBLE]
                 
 
              Title:   AUTHORIZED REP.
                 
“SELLER”   By: Shea Tonner Hills, LLC, a Delaware
limited liability company, a member
 
                   
            By: Shea Homes Limited Partnership, a
California limited partnership, its sole
member
 
                   
                By: J.F. Shea LLC, a Delaware limited liability company, its General Part
 
                   
              By:   -s- [ILLEGIBLE]
                 
 
              Title:   UP
                 
 
                   
              By:   -s- [ILLEGIBLE]
                 
 
              Title:   [ILLEGIBLE]
                 

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    TONNER HILLS 680 LLC, a Delaware limited
liability company
 
                       
    By:   Tonner Hills SSP, LLC, a Delaware
limited liability company, its sole
member
 
                       
        By:   Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
 
                       
            By:   Standard Pacific Corp., a Delaware corporation, its sole member
 
                       
              By:   -s- [ILLEGIBLE]    
                   
 
              Title:   AUTHORIZED REP.    
                   
 
                       
              By:   -s- [ILLEGIBLE]    
                   
 
              Title:   AUTHORIZED REP.    
                   
 
                       
        By:   Shea Tonner Hills, LLC, a
Delaware limited liability
company, a member
 
                       
            By:   Shea Homes Limited
Partnership, a California
limited partnership, its sole
member
 
                       
                By:   J.F. Shea LLC, a Delaware limited liability company, its General Partner
 
                       
                  By:   -s- [ILLEGIBLE]
                     
 
                  Title:   VP
                     
 
                       
                  By:   -s- [ILLEGIBLE]
                     
 
                  Title:   [ILLEGIBLE]
                     

61


 

ASSUMPTION OF OBLIGATIONS

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

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

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

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

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

62


 

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

                     
      , a           , a

 ,
     
 ,
   

 
     
 
   
 
                   
By:
          By:        
 
 
         
 
   
 
                   
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          By:        
 
 
         
 
   
 
                   
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      , a           , a

 ,
     
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          By:        
 
 
         
 
   
          Its:        
             
 
   
 
                   
By:
          By:        
 
 
         
 
   
          Its:        
             
 
   

63


 

Exhibit “A”
Legal Description of the Land

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

PARCEL 1

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

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

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

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

Page 1 of 4


 

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

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

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

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

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

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

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

Page 2 of 4


 

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

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

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

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

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

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

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

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

PARCEL 2

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

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

Page 3 of 4


 

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

PARCEL 3

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

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

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

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

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

     
(STAMP)
  PREPARED BY: THE KEITH COMPANIES
UNDER THE DIRECTION OF:
 
 
  /s/ KATHLEEN SUSAN TETREAULT
 
  KATHLEEN SUSAN TETREAULT P.L.S. 7297
MY LICENSE EXPIRES 12/31/2004
 
   
  August 20, 2003
JN: 13207.00

Page 4 of 4


 

(DEPICTION OF THE MAP)

 


 

(DEPICTION OF THE LAND MAP)

 


 

(DEPICTION OF THE LAND MAP)

 


 

(DEPICTION OF THE LAND MAP)

 


 

AGREEMENT
EXHIBIT “C”

TONNER HILLS AREA PLAN
(INCORPORATED BY REFERENCE)

 


 

Revised 11/23/03

AGREEMENT

EXHIBIT “D”

ESCROW INSTRUCTIONS

Exhibit “D”
Escrow Instructions

 


 

ESCROW INSTRUCTIONS

     
TO:
  First American Title Insurance Company (“Escrowholder” or
  “Escrow Agent”)
  2 First American Way
  Santa Ana, California 92707
  Fax No.: (714) 800-4793
  Phone: (714) 800-4830
 
   
Escrow Officer:
  Christine Sidney/Dan Estrella
 
   
Title Officer:
  Ronald Gomez
 
   
Escrow No.:
  NCS 63040-SAl(CS)
 
   
Seller:
  Nuevo Energy Company
 
   
Seller’s Address:
  1021 Main Street
  Suite 2100
  Houston, Texas 77002
  Attn: David A. Leach
  Fax No.: (713) 374-4899
  Phone: (713) 374-4802
  Email: Leachd@nuevoenergy.com
 
   
Buyer:
  Tonner Hills SSP, LLC and Tonner Hills 680 LLC
 
   
Buyer’s Address:
  Tonner Hills SSP, LLC (“Shea”)
  603 S. Valencia Avenue
  Brea, CA 92823
  Attention: Alan Toffoli
  Fax: (714) 985-3605
  Phone: (714) 792-2504
  Attn: Alan Toffoli
  Email: alan.toffoli@sheahomes.com
     
  Tonner Hills 680 LLC (“TH 680”)
  603 S. Valencia Avenue
  Brea, CA 92823
  Attention: Joe Fleischaker
  Fax: (714) 985-3605
  Phone: (713) 792-2592
  Email: joe.fleischaker@sheahomes.com

1

Exhibit “D”
Escrow Instructions

 


 

     
Subject Property or Land:
  In the County of Orange,
  State of California, described as:
  (See Legal Description in the PSA)

                    Date: December 8, 2003

Exhibit “D”
Escrow Instructions

2

 


 

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

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

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

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

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

Exhibit “D”
Escrow Instructions

3


 

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

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

     

     
Endorsement    
Form Number
  Description
General Endorsements
   
100
  Compliance with CC&Rs, encroachments and minerals modified for Owner
103.7
  Access to open streets
116
  Street address
116.4
  Contiguity
Specific Endorsements
   
110.7
  Ensure against loss from enforcement of lien for title exception number 3.
103.1
  Ensure against loss from use or maintenance of easement for title exception numbers 4, 13, 24
100.29
  Ensure against loss from surface breakage for title exception number 20.

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

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

Exhibit “D”
Escrow Instructions

4

 


 

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

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

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

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

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

Exhibit “D”
Escrow Instructions

5


 

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

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

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

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

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

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

Exhibit “D”
Escrow Instructions

6

 


 

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

Exhibit “D”
Escrow Instructions

7


 

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

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

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

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

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

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

Exhibit “D”
Escrow Instructions

8


 

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

     8. Time of the Essence.

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

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

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

Exhibit “D”
Escrow Instructions

9

 


 

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

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

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

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

Exhibit “D”
Escrow Instructions

10

 


 

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

                     
NUEVO ENERGY COMPANY, a Delaware
corporation
  Tonner Hills SSP, LLC, a Delaware
limited liability company
 
                   
By:  
 
  By: Standard Pacific of Tonner Hills, LLC,
a Delaware limited liability company,
a member
                     
 
                   
Title:  
 
          By: Standard Pacific Corp., a Delaware
corporation, its sole member
                   
 
                   
By:
              By    
 
 
             
 
Title:
              Title    
 
 
             
 
 
                   
              By    
                 
 
              Title    
                 
 
    “SELLER”   By: Shea Tonner Hills, LLC, a Delaware
limited liability company,
a member
 
                   
            By: Shea Homes Limited Partnership, a
California limited partnership, its sole
member
 
                   
                By: J.F. Shea LLC, a Delaware limited liability company, its General Partner
 
                   
              By    
                 
 
              Title    
                 
 
 
                   
              By    
                 
 
              Title    
                 
 

Exhibit “D”
Escrow Instructions

11

 


 

             
    TONNER HILLS 680 LLC, a Delaware
limited liability company
 
           
  By:        
       
 
      By:    
         
 
      By:    
         
 
 
           
  By:        
       
 
      By:    
         
 
      By:    
         
 

Exhibit “D”
Escrow Instructions

12

 


 

ATTACHMENT “1” TO ESCROW INSTRUCTIONS

(Certificate of Non-Foreign Status)

Exhibit “D”
Escrow Instructions

 


 

CERTIFICATE OF NON-FOREIGN STATUS

California Revenue and Taxation Code Sections 18662 and 18668 require that a purchaser of a California real property interest withhold tax if (a) the seller’s last known street address is located outside the boundaries of California at the time title to the California property is transferred or (b) if funds from the transaction will be disbursed to a financial intermediary of Seller. In addition, Section 1445 of the Internal Revenue code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a “foreign person.” To inform the transferee that withholding of tax is not required upon the disposition of a California real property interest by NUEVO ENERGY COMPANY, a Delaware corporation (“Seller”), the undersigned certifies the following on behalf of Seller:

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

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

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

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

Exhibit “D”
Escrow Instructions

 


 

Revised: 11/22/03

EXHIBIT “E”

PURCHASE MONEY
PROMISSORY NOTE
(“PM NOTE”)

PURCHASE MONEY
TRUST DEED

(“PM TD”)

 


 

EXHIBIT “E”

PM NOTE

 


 

PURCHASE MONEY PROMISSORY NOTE (“NOTE” or “PM NOTE”)
SECURED BY PURCHASE MONEY DEED OF TRUST
(TOWER HILLS)

Principal Sum:$______   Irvine, California

          , 2003          

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

II.   TERMS OF PAYMENT.

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

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

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

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

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

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

 
 
 
  Maker’s Initials   Holder’s Initials  

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

IV.   DEFAULT.

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

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

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

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

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

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

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

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

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

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

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

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

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

4


 

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

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

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VII. GENERAL PROVISIONS REGARDING THE PM NOTE.

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

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

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

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

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

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

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

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

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

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

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

                 
        “Maker”        
 
    TONNER HILLS SSP, LLC, a Delaware limited liability company
                 
    By: Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
                 
      By: Standard Pacific Corp., a Delaware corporation, its sole member
                 
        By:        
           
        Title:        
           
                 
        By:        
           
        Title:        
           
                 
    By: Shea Tonner Hills, LLC, a Delaware limited liability company, a member
                 
        By: Shea Homes Limited Partnership, a California limited partnership, its sole member
                 
          By: J.F. Shea LLC, a Delaware limited liability company, its General Partner
                 
            By:    
               
            Title:    
               
                 
            By:    
               
            Title:    
               

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    TONNER HILLS 680 LLC, a
Delaware limited liability company

 
 
    By:   , a
     

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

 
               
        By:      
           
 
 
        Title:      
           
 
 
        By:      
           
 
 
        Title:      
           
 

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Revised 11/22/03

EXHIBIT “E”

PM TD

 


 

RECORDING REQUESTED BY AND
WHEN RECORDED RETURN TO:

NUEVO ENERGY COMPANY
1021 Main, Suite 2100
Houston, TX 77002
Attn: David A. Leach

DEED OF TRUST, SECURITY AGREEMENT, AND FIXTURE FILING
WITH ASSIGNMENT OF RENTS

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

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

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

 


 

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

ARTICLE 1. BASIC PROVISIONS.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

     2.12 Insurance Proceeds.

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

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

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

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

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

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

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

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

     2.15 Environmental Provisions.

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

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

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

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

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

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

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

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

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

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

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

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

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

ARTICLE 3. ASSIGNMENT OF RENTS AND PROFITS.

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

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

     3.2 Grant of License.

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

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

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

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

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

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

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

ARTICLE 4. SECURITY AGREEMENT AND FIXTURE FILING.

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

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

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

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

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

ARTICLE 5. DEFAULT AND REMEDIES.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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ARTICLE 6. GENERAL PROVISIONS

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

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

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

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

22


 

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

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

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

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

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

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

23


 

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

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

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

Trustor’s Initials

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

24


 

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

                 
        TRUSTOR:        
 
    TONNER HILLS SSP, LLC, a Delaware limited liability company
                 
    By: Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
                 
        By: Standard Pacific Corp., a Delaware corporation, its sole member
                 
        By:    
           
        Title:    
           
                 
        By:    
           
        Title:    
           
                 
    By: Shea Tonner Hills, LLC, a Delaware limited liability company, a member
                 
        By: Shea Homes Limited Partnership, a California limited partnership, its sole member
                 
            By: J.F. Shea LLC, a Delaware limited liability company, its General Partner
                 
            By:    
             
            Title:    
             
                 
            By:    
             
            Title:    
             

25


 

               
    TONNER HILLS 680 LLC, a
Delaware limited liability company

 
 
    By:    
     

 
               
        By:      
           
 
 
        By:      
           
 
 
    By:    
     

 
               
        By:      
           
 
 
        By:      
           
 

26


 

         
STATE OF CALIFORNIA       )
        ) ss.
COUNTY OF       )

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

     WITNESS my hand and official seal.


                          Notary Public

(SEAL)

         
STATE OF CALIFORNIA       )
        )ss.
COUNTY OF             )

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

     WITNESS my hand and official seal.


                          Notary Public

(SEAL)

 


 

         
STATE OF CALIFORNIA       )
        ) ss.
COUNTRY OF       )

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

     WITNESS my hand and official seal.


                          Notary Public

(SEAL)

         
STATE OF CALIFORNIA       )
        ) ss.
COUNTY OF       )

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

     WITNESS my hand and official seal.


                          Notary Public

(SEAL)

 


 

Exhibit “A”
Legal Description of the Land

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

PARCEL 1

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

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

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

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

Page 1 of 4


 

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

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

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

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

Page 2 of 4


 

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

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

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

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

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

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

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

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

PARCEL 2

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

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

Page 3 of 4


 

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

PARCEL 3

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

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

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

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

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

     
    PREPARED BY: THE KEITH COMPANIES
UNDER THE DIRECTION OF:
     
(STAMP)   -s- KATHLEEN SUSAN TETREAULT
   
  KATHLEEN SUSAN TETREAULT P.L.S. 7297
MY LICENSE EXPIRES 12/31/2004
   
  August 20, 2003
JN: 13207.00

Page 4 of 4


 

(DEPICTION OF THE LAND MAP)


 

(DEPICTION OF THE LAND MAP)


 

(DEPICTION OF THE LAND MAP)


 

(DEPICTION OF THE LAND MAP)


 

Revised 11/22/03

EXHIBIT F
NON-EXCLUSIVE ASSIGNMENT OF CONTRACTS AND BILL OF SALE

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

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

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

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

Exhibit F

Page 1 of 4


 

Revised 11/22/03

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

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

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

Executed this_________________________day of___________________________, 2003.

                 
“ASSIGNOR”       NUEVO ENERGY COMPANY, a Delaware
corporation
   
                 
        By:  
   
        Name:   George B. Nilsen    
        Title:   Senior Vice President    

Exhibit F

Page 2 of 4


 

Revised 11/22/03
                 
 
“ASSIGNEE”   TONNER HILLS SSP, LLC, a Delaware limited liability company
                 
    By:   Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
                 
        By:   Standard Pacific Corp., a Delaware corporation, its sole member
                 
        By:    
           
        Title:    
           
                 
        By:    
           
        Title:    
           
                 
    By:   Shea Tonner Hills, LLC, a Delaware limited liability company, a member
                 
        By: Shea Homes Limited Partnership, a California limited partnership, its sole member
                 
          By: J.F. Shea LLC, a Delaware limited liability company, its General Partner
                 
            By:    
               
            Title:    
               
            By:    
               
            Title:    
               
    TONNER HILLS 680 LLC, a
Delaware limited liability company
 
    By:            
       
 
        By:        
           

Exhibit F

Page 3 of 4


 

Revised 11/22/03
             
        By:    
           
 
    By:        
       
 
        By:    
           
        By:    
           

Exhibit F

Page 4 of 4


 

Revised 11/22/03

ATTACHMENT 1

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

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

 
 
 
 
 
 
57534   ASSIGN BILL OF SALE   5/12/71   5/13/75
11410/1929 OR
  Waste Water
Disposal Company
    119       504  
                                 
57862.2   Easement Agree.       8/7/89
60/368 OR
  Kraemer Imperial
Associates to
UNOCAL
    130       507  
                                 
65186   ROW   10/14/96   12/18/1996 Doc. No.
19960637286
  UNOCAL to NUEVO     A       506  
                                 
55701   Deed       6/10/1957
3936/314 OR
  UNOCAL     88          
                                 
57534.1   QC       8/19/93
93/0558983 DOC
  UNOCAL     120       504.1  

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

     (2)  Waste Water Line Agreements:

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

 
 
 
 
 
 
5/1/1974   11/5/1974       11280/1845     3078     Assign & Bill of Sale   Waste
Water
Disposal
Company
                             
10/1/1995   4/10/1996             Recorder No. 19960175928     Deed & Bill of Sale and Assign.   Unocal
                             
11/2/1955   3/8/1956   U-11   3430/504     Unocal File No. 61987.3- Recorder No. 35165     ROW   Unocal

Attachment 1 to Non-Exclusive Assignment of
Contracts and Bill of Sale
Page 1 of 2

 


 

Revised 11/22/03
                         
        Waste                
        Water       Document        
Dated   Recorded   Co. File No.   Book/Page   Number   Doc. Type   Grantor

 
 
 
 
 
 
4/25/1956   5/1/1956       3493/528   Unocal File No. 61987.47   Q.C. Deed   Waste
Water
Disposal
Company
                         
10/15/1996               Unocal File No. 65186   ROW   Unocal
                         
4/2/1971   No   U-13       Unocal File No. 68869.3   ROW   Unocal
                         
5/10/1928   No   U-14           ROW   West Coast Oil Co.
                         
8/1/1978               Unocal File No. 57635 – ROW Green Map No. 633   ROW   E.H. Associates

Attachment 1 to Non-Exclusive Assignment of
Contracts and Bill of Sale
Page 2 of 2


 

ATTACHMENT 2

List of Unrecorded Contracts, Agreements, Easements and Licenses
(Exhibit Q to PSA)

Contracts

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

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

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

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

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

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

Additional Contracts, Licenses, Easements and Agreements

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

Attachment 2

Page 1 of 3


 

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

Contracts Relating to Entitlement Efforts at Tonner Hills

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

Attachment 2

Page 2 of 3


 

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

Contracts Relating to Revegetation Efforts at Tonner Hills

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

Attachment 2

Page 3 of 3


 

ATTACHMENT 3

List of Recorded Rights of Way and Contracts

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

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

 
 
 
 
 
 
    ROW   4/8/63   4/19/63
6515/482
  Pacific Lighting
Gas Supply Co.
    7     N/A (31.7)
                             
    ROW   2/13/65   2/23/65
7422/249
  Pacific Lighting
Gas Supply Co.
    8     317
                             
    Easement   1/15/51   3/15/51
2158/495
  UNOCAL            
                             
    Easement   8/23/88   5/9/89
89-243784
  UNOCAL            
                             
502   ROW   2/22/08   39795   Industrial Oil CO     5     601
                             
5254   ROW       5/17/2001
58/365
Deeds
  Brea Canon Oil CO.     22     602
                             
5254A   ROW       4/28/1930
382/44 OR
  Brea Canon Oil CO.     23     602
                             
52980.1   ROW       4/28/1955
3047/183
OR
  W B Scott
Investment Company
    44     612
                             
53755   Easement       9/27/43
1215/34 OR
  Anaheim Union Water
Company
    52      
                             
53755.2   Mod.       6/7/49
1855/8 OR
  Anaheim Union Water
Company
    53      
                             
53755.3   Mod.       9/23/66
8057/221 OR
  Anaheim Union Water
Company
    54      
                             
53755.4   Easement       1/7/71
9512/924 OR
  State of California     55      
                             
53755.5   Easement       11/18/71
9892/217 OR
  State of California     56      
                             
53755.7   ROW       9/26/72
10343/735 OR
  Anaheim Union Water
Company
    58      
                             
53755.8   Assignment       11/29/72
10465/69 OR
  Continental Mobile
Housing, Inc.
    59      
                             
54507   ROW       1/23/11
195/212
Deeds
  Pacific Electric
Land C
    76      
                             
57241   Easement       9/30/70
451/102 OR
  State of California     112     630
                             
57595   ROW       3/16/77
12106/802 OR
  Moreland Develop C     123      
                             
57595.1   ROW       6/8/77
12233/501 OR
  Moreland Develop C     124      
                             

Page 1 of 5


 

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

 
 
 
 
 
 
57633.1   ROW       7/24/78
1269/1868 OR
  IPS, A General
Partnshp
    125      
                             
57667   ROW       12/14/79
13437/789
OR
  Moreland Develop C     126      
                             
57848   Grant of
Easement
      11/24/86
86/619178
OR
  Fairway Associates     129      
                             
57981   ROW       11/2/89
80-59276 DOC
  Sanitation, Inc.     136     500
                             
58049   ROW       1/25/93
93-054367
DOC
  Sanitation, Inc     137     500
                             
62528           6/23/54
2755/502 OR
  UNOCAL     140      
                             
7070.35   Deed       5/21/58
4291/396 OR
  UNOCAL     159      
                             
7070.44   ROW       1/17/64
6886/922 OR
  UNOCAL     160      
                             
7176.19   Deed       12/28/73
11044/678
OR
  UNOCAL     168      
                             
7176.2   Deed       11/15/47
1599/131 OR
  UNOCAL     169      
                             
    ROW       5-15-97 Document
No. 19970226200
  UNOCAL     A     666
                             
    Deed   8/9/98   8-14-98 1998-
0533265
  UNOCAL     A     736
                             
19990774980   Easement
& Agreement
      11/5/1999 Doc. No.
19990774980
  Unocal and Nuevo     A     402

Contracts/Agreements

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

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

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

Page 2 of 5


 

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

Additional Easements

             
Date   Grantor   Grantee   Rec. Bk./Pg

 
 
 
12/14/1896   The Stearns Ranchos
Company
  Union Oil Company of California   7/10/97
30/11
             
2/21/1928   Brea Canon Oil Company   Waste Water Disposal Company   2/24/28
137/139
             
8/11/1986   City of Brea (County of Orange)   Union Oil Company of California   8/12/86
86-357255
             
10/16/1958   Collier Carbon and Chemical Corporation   Union Oil Company of California   11/3/58
4470/10
             
5/7/1996   Nuevo Energy Company   Union Oil Company of California, dba UNOCAL   5/26/1996
Inst. 19960254739
             
5/12/1902   The Steams Ranchos
Company
  Pacific Coast Oil Company   6/25/02
75/254
             
12/14/1896   The Stearns Ranchos
Company
  Union Oil Company of California   7/10/97
30/11
             
4/19/1913   Union Oil Company of California   Pacific Light & Power Corporation   12/15/13
244/37
             
8/30/1928   Union Oil Company of California   County of Orange   11/8/28
220/38
             
9/17/1940   Union Oil Company of California   The Metropolitan Water District of Southern California   10/29/40
1067/308
             
2/11/1954   Union Oil Company of California   Amoniaco Corporation   2/16/54
2670/114
             
6/7/1957   Union Oil Company of California   Brea Chemical, Inc.   6/10/57
3936/324
             
4/1/1958   Union Oil Company of California   The Metropolitan Water District of Southern California   5/21/58
4291/400
             
7/27/1962   Union Oil Company of California   Boy Scouts of America, Los Angeles Area Council   8/1/62
6245/654

Page 3 of 5


 

             
Date   Grantor   Grantee   Rec. Bk./Pg

 
 
 
10/2/1962   Union Oil Company of California   Southern California Edison Company   1/18/63
6399/705
 
Amended by unrecorded Amendment of Easement dated August 4, 2003 by Nuevo Energy Company, as Grantor to Southern California Edison Company, as Grantee.
 
3/1/1977   Union Oil Company of California   Southern California Edison Company   3/29/77
12123/814
             
9/18/1978   Union Oil Company of California   Southern California Edison Company   2/5/79
13024/1157
             
1/26/1982   Union Oil Company of California   Mobil Oil Corporation   3/31/82
Inst. 82-340271
(Los Angeles County)
             
9/13/1984   Union Oil Company of California   City of Brea   10/11/84
84-421551
             
9/10/1985   Union Oil Company of California   City of Brea   10/7/85
85-382994
             
7/3/1986   Union Oil Company of California   City of Brea   8/13/86
86-359858
             
9/2/1986   Union Oil Company of California   Brea H.O.P.E Inc.   10/1/86
86-459482
             
5/8/1987   Union Oil Company of California   City of Brea   5/11/87
87-26083
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 19960153323
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 19960153324
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 19960153322
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 1996013321
             
11/29/1988   Union Oil Company of California & Shell Oil Company   City of Brea   1/16/69
884/518
             
9/25/1995   Union Oil Company of California dba Unocal   UNOCAL California Pipeline Company   12/18/95
19950565134

Page 4 of 5


 

             
Date   Grantor   Grantee   Rec. Bk./Pg

 
 
 
5/17/1988   Union Oil Company of California, dba UNOCAL   Southern California Edison Company   6/7/88
Inst. 88-268095
             
9/15/1995   Union Oil Company of California, dba UNOCAL   UNOCAL California Pipeline Company   10/25/95
Inst. 19950473641
             
12/11/1995   Union Oil Company of California, dba UNOCAL   Southern California Edison Company   1/4/96
Inst. 19960004773
             
1/14/1915   Union Oil Company of California,
Columbia Oil Producing Company,
General Petroleum Company
  County of Orange   1/21/16
280/244
             
4/17/1954   Union Oil Company of California   The Metropolitan Water District of Southern California   7/8/54
2766/268
             
8/23/1988   Union Oil Company of California   Southern California Edison Company   5/9/1989
89-243784

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

Page 5 of 5


 

Revised 12/1/03

EXHIBIT G

RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:

Tonner Hills SSP, LLC
603 S. Valencia Avenue
Brea, CA 92823
Attention: Alan Toffoli


MAIL TAX STATEMENTS TO ADDRESS ABOVE

SHEA GRANT DEED

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

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

SUBJECT TO:

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

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

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

Exhibit “G”
Page 1 of 5

 


 

Revised 12/1/03

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

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

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

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

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

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

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

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

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

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

Exhibit “G”
Page 2 of 5

 


 

Revised 12/1/03

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

         
Dated:
  NUEVO ENERGY COMPANY, a Delaware
corporation
         
    By:    
       
    Name:    
       
    Title:    
       
         
    By:    
       
    Title:    
       
        GRANTOR                               

Exhibit “G”
Page 3 of 5

 


 

Revised 12/1/03

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

                 
    Dated: _______________
 
    TONNER HILLS SSP, LLC, a Delaware limited
liability company
                 
    By: Standard Pacific of Tonner Hills, LLC, a Delaware limited liability company, a member
                 
      By: Standard Pacific Corp., a Delaware corporation, its sole member
                 
        By:  
        Title:  
                 
        By:  
        Title:  
                 
    By: Shea Tonner Hills, LLC, a Delaware limited
liability company, a member
                 
        By: Shea Homes Limited Partnership, a California limited partnership, its sole member
                 
        By: J.F. Shea LLC, a Delaware limited liability company, its General Partner
                 
        By:  
        Title:  
                 
        By:  
        Title:  
                 
            GRANTEE

Exhibit “G”
Page 4 of 5

 


 

Revised 12/1/03
             
State of California   )        
    )        
County of Orange   )        

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

     WITNESS my hand and official seal.

Signature


             
State of California     )      
      )      
County of Orange     )      

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

     WITNESS my hand and official seal.

Signature


Exhibit “G”
Page 5 of 5

 


 

ATTACHMENT NO. 1

TO

GRANT DEED

PARCEL 1: LEGAL DESCRIPTION OF SHEA DEVELOPMENT AREAS

Attachment 1 to Exhibit “G”

 


 

LEGAL DESCRIPTION

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

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

CONTAINING: 210.149 ACRES, MORE OR LESS

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

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

     
    PREPARED BY OR
UNDER THE DIRECTION OF:
     
(STAMP)   -s- KATHLEEN SUSAN TETREAULT
KATHLEEN SUSAN TETREAULT, P.L.S. 7297
MY LICENSE EXPIRES 12/31/2004
     
    December 4, 2003
JN: 13207.00.000

Page 1 of 1

 


 

[DEPICTION MAP]

Attachment 2 to Exhibit “G”

 


 

ATTACHMENT NO. 2

TO

GRANT DEED

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

Attachment 2 to Exhibit “G”


 

ATTACHMENT NO. 2 A

CORRIDOR EASEMENT

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

Attachment 2A to Exhibit “G”

 


 

[GRANT DEED]

 


 

ATTACHMENT “2”
TENTATIVE TRACT NO. 16047
LOTS “A” & “F”

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

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

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

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

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

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

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

THENCE NORTH 14.12 FEET TO SAID NORTHERLY LINE;

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

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

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

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

Page 1 of 2

 


 

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

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

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

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

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

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

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

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

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

Page 2 of 2

 


 

ATTACHMENT NO. 2 B

STREET EASEMENT

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

Attachment 2B to Exhibit “G”

 


 

[DEPICTION MAP]

 


 

[ATTACHMENT MAP]

 


 

[ATTACHMENT MAP]

 


 

ATTACHMENT NO. 2 C

DRAINAGE EASEMENT

     A non-exclusive easement on, over and under the Adjacent Property for drainage purposes from the Land (as shown on the attachment hereto), as well as the right to connect to and discharge and drain through, any water, sewer and other facilities constructed by Walden on, over and under the Adjacent Property.

Attachment 2C to Exhibit “G”

 


 

EXHIBIT “4A”
LOTS 56 STORM DRAIN EASEMENT

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

A STRIP OF LAND BEING 20.00 FEET WIDE THE CENTERLINE BEING DESCRIBED AS FOLLOWS:

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

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

THENCE ALONG SAID NORTHERLY LINE OF SAID ANNEXATION NORTH 89°53'53'' W 237.23 FEET TO THE POINT OF BEGINNING;

THENCE SOUTH 42°02'32'' WEST 27.29 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 87.50 FEET;

THENCE 85.90 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 56°14'57'';

THENCE SOUTH 14°12'24'' EAST 57.06 FEET TO THE NORTHERLY RIGHT-OF-WAY OF LAMBERT ROAD, BEING 120.00 FEET WIDE, AS SHOWN ON SAID RECORD OF SURVEY.

CONTAINING 0.7 ACRES MORE OR LESS

THE SIDELINES OF SAID STRIP SHALL BE LENGTHENED OR SHORTENED TO TERMINATE NORTHERLY ON THE NORTHERLY LINE OF SAID ANNEXATION, AND SOUTHERLY ON THE NORTHERLY RIGHT-OF-WAY OF SAID LAMBERT ROAD.

ALSO AS SHOWN ON EXHIBIT “4A”, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF.

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

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

Page 1 of 1

 


 

(MAP)

 


 

ATTACHMENT NO. 3

TO

GRANT DEED

(List of Recorded Rights of Way and Contracts — Same as Attachment 3 to Non-Exclusive
Assignment and Bill of Sale)

Attachment 3 to Exhibit “G”

 


 

List of Recorded Rights of Way and Contracts

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

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

 
 
 
 
 
 
    ROW   4/8/63   4/19/63
6515/482
  Pacific Lighting
Gas Supply Co.
    7     N/A
(31.7)
                             
    ROW   2/13/65   2/23/65
7422/249
  Pacific Lighting
Gas Supply Co.
    8     317
                             
    Easement   1/15/51   3/15/51
2158/495
  UNOCAL            
                             
    Easement   8/23/88   5/9/89
89-243784
  UNOCAL            
                             
502   ROW   2/22/08   39795   Industrial Oil CO     5     601
                             
5254   ROW       5/17/2001
58/365
Deeds
  Brea Canon Oil CO     22     602
                             
5254A   ROW       4/28/1930
382/44 OR
  Brea Canon Oil CO     23     602
                             
52980.1   ROW       4/28/1955 3047/183
OR
  W B Scott
Investment Company
    44     612
                             
53755   Easement       9/27/43
1215/34 OR
  Anaheim Union Water
Company
    52      
                             
53755.2   Mod       6/7/49
1855/8 OR
  Anaheim Union Water
Company
    53      
                             
53755.3   Mod       9/23/66
8057/221 OR
  Anaheim Union Water
Company
    54      
                             
53755.4   Easement       1/7/71
9512/924 OR
  State of California     55      
                             
53755.5   Easement       11/18/71
9892/217 OR
  State of California     56      
 
53755.7   ROW       9/26/72 10343/735 OR   Anaheim Union Water
Company
    58      
                             
53755.8   Assignment       11/29/72
10465/69 OR
  Continental Mobile
Housing, Inc.
    59      
                             
54507   ROW       1/23/11
195/212
Deeds
  Pacific Electric
Land C
    76      
                             
57241   Easement       9/30/70
451/102 OR
  State of California     112     630
                             
57595   ROW       3/16/77
12106/802 OR
  Moreland Develop C     123      
                             
57595.1   ROW       6/8/77
12233/501 OR
  Moreland Develop C     124      

Page 1 of 5

 


 

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

 
 
 
 
 
 
57633.1   ROW       7/24/78
1269/1868 OR
  IPS, A General
Partnshp
    125      
                             
57667   ROW       12/14/79
13437/789
OR
  Moreland Develop C     126      
                             
57848   Grant of
Easement
      11/24/86
86/619178
OR
  Fairway Associates     129      
                             
57981   ROW       11/2/89
80-59276 DOC
  Sanitation, Inc.     136     500
                             
58049   ROW       1/25/93
93-054367
DOC
  Sanitation, Inc     137     500
                             
62528           6/23/54
2755/502 OR
  UNOCAL     140      
                             
7070.35   Deed       5/21/58
4291/396 OR
  UNOCAL     159      
                             
7070.44   ROW       1/17/64
6886/922 OR
  UNOCAL     160      
                             
7176.19   Deed       12/28/73
11044/678
OR
  UNOCAL     168      
                             
7176.2   Deed       11/15/47
1599/131 OR
  UNOCAL     169      
                             
    ROW       5-15-97
Document
No.
19970226200
  UNOCAL to NUEVO     A     666
                             
    Deed   8/9/94   8-14-98
1998-0533265
  UNOCAL to NUEVO     A     736
                             
19990774980   Easement & Agreement       11/5/1999 Doc.
No.
19990774980
  Unocal and Nuevo     A     402

Contracts/Agreements

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

Additional Easements

     (1)  Nuevo to UNOCAL dated May 7, 1996, recorded May 21, 1996 as Doc. #19960254739.

     (2)  UNOCAL to UNOCAL California Pipeline Co. dated September 25, 1995, recorded December 19, 1995 as Doc. # 19950565134.

Page 2 of 5


 

             
Date   Grantor   Grantee   Rec. Bk./Pg

 
 
 
12/14/1896   The Steams Ranchos
Company
  Union Oil Company of California   7/10/97
30/11
             
2/21/1928   Brea Canon Oil Company   Waste Water Disposal Company   2/24/28
137/139
             
8/11/1986   City of Brea (County of Orange)   Union Oil Company of California   8/12/86
86-357255
             
10/16/1958   Collier Carbon and Chemical Corporation   Union Oil Company of California   11/3/58
4470/10
             
5/7/1996   Nuevo Energy Company   Union Oil Company of California, dba UNOCAL   5/26/1996
Inst. 19960254739
             
5/12/1902   The Stearns Ranchos
Company
  Pacific Coast Oil Company   6/25/02
75/254
             
12/14/1896   The Stearns Ranchos
Company
  Union Oil Company of California   7/10/97
30/11
             
4/19/1913   Union Oil Company of California   Pacific Light & Power Corporation   12/15/13
244/37
             
8/30/1928   Union Oil Company of California   County of Orange   11/8/28
220/38
             
9/17/1940   Union Oil Company of California   The Metropolitan Water District of Southern California   10/29/40
1067/308
             
2/11/1954   Union Oil Company of California   Amoniaco Corporation   2/16/54
2670/114
             
6/7/1957   Union Oil Company of California   Brea Chemical, Inc.   6/10/57
3936/324
             
4/1/1958   Union Oil Company of California   The Metropolitan Water District of Southern California   5/21/58
4291/400
             
7/27/1962   Union Oil Company of California   Boy Scouts of America, Los Angeles Area Council   8/1/62
6245/654
             
10/2/1962   Union Oil Company of California   Southern California Edison Company   1/18/63
6399/705
             
3/1/1977   Union Oil Company of California   Southern California Edison Company   3/29/77
12123/814
             
9/18/1978   Union Oil Company of California   Southern California Edison Company   2/5/79
13024/1157

Page 3 of 5

 


 

             
Date   Grantor   Grantee   Rec. Bk./Pg

 
 
 
1/26/1982   Union Oil Company of California   Mobil Oil Corporation   3/31/82
Inst. 82-340271
(Los Angeles County)
             
9/13/1984   Union Oil Company of California   City of Brea   10/11/84
84-421551
             
9/10/1985   Union Oil Company of California   City of Brea   10/7/85
85-382994
             
7/3/1986   Union Oil Company of California   City of Brea   8/13/86
36-359858
             
9/2/1986   Union Oil Company of California   Brea H.O.P.E Inc.   10/1/86
86-459482
             
5/8/1987   Union Oil Company of California   City of Brea   5/11/87
87-26083
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 19960153323
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 19960153324
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 19960153322
             
3/18/1996   Union Oil Company of California   City of Brea   3/29/96
Inst. 1996013321
             
11/29/1988   Union Oil Company of California & Shell Oil Company   City of Brea   1/16/69
884/518
             
9/25/1995   Union Oil Company of California
dba Unocal
  UNOCAL California Pipeline Company   12/18/95
19950565134
             
5/17/1988   Union Oil Company of California,
dba UNOCAL
  Southern California Edison Company   6/7/88
Inst. 88-268095
             
9/15/1995   Union Oil Company of California,
dba UNOCAL
  UNOCAL California Pipeline Company   10/25/95
Inst. 19950473641
             
12/11/1995   Union Oil Company of California,
dba UNOCAL
  Southern California Edison Company   1/4/96
Inst. 19960004773

Page 4 of 5

 


 

             
Date   Grantor   Grantee   Rec. Bk./Pg

 
 
 
1/14/1915   Union Oil Company of California, Columbia Oil Producing Company,
General Petroleum Company
  County of Orange   1/21/16
280/244
             
4/17/1954   Union Oil Company of California   The Metropolitan Water District of Southern California   7/8/54
2766/268

Page 5 of 5

 


 

ATTACHMENT NO. 4

TO

GRANT DEED

Attachment 4 to Exhibit “G”

 


 

     List of Unrecorded Contracts, Agreements, Easements and Licenses

Contracts

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

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

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

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

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

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

Additional Contracts, Licenses, Easements and Agreements

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

Page 1 of 3


 

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

Contracts Relating to Entitlement Efforts at Tonner Hills

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

Page 2 of 3


 

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

Contracts Relating to Revegetation Efforts at Tonner Hills

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

Page 3 of 3


 

Revised 12/1/03

EXHIBIT G

RECORDING REQUESTED BY AND WHEN
RECORDED MAIL TO:

Tonner Hills 680 LLC
603 S. Valencia
Avenue Brea, CA 92823
Attention: Joe Fleischaker

MAIL TAX STATEMENTS TO ADDRESS ABOVE

TH 680 GRANT DEED

     FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, NUEVO ENERGY COMPANY, a Delaware corporation (“Nuevo” or “Grantor”), hereby grants to TONNER HILLS 680 LLC, a Delaware limited liability company (“Grantee”), the following described real property (“Land” or “Property”) in the County of Orange, State of California:

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

SUBJECT TO:

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

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

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

Exhibit “G”
Page 1 of 5

 


 

Revised 12/1/03

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

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

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

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

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

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

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

Exhibit “G”
Page 2 of 5

 


 

Revised 12/1/03

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

         
Dated:   NUEVO ENERGY COMPANY, a Delaware
corporation
         
    By:    
       
    Name:    
       
         
    Title:    
       
         
    By:    
       
    Title:    
       
        GRANTOR

Exhibit “G”
Page 3 of 5

 


 

Revised 12/1/03

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

             
Dated:   TONNER HILLS 680 LLC, a Delaware limited
liability company

   
             
    By:        
       
             
        By:    
           
        By:    
           
    By:        
       
        By:    
           
        By:    
           
            GRANTEE

Exhibit “G”
Page 4 of 5

 


 

Revised 12/1/03
         
State of California        )
        )
 County of Orange       )

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

     WITNESS my hand and official seal.

Signature


         
State of California       )
      )
County of Orange       )

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

     WITNESS my hand and official seal.

Signature


Exhibit “G”
Page 5 of 5

 


 

ATTACHMENT NO. 1

TO

GRANT DEED

PARCEL 1: LEGAL DESCRIPTION

Attachment 1 to Exhibit “G”

 


 

LEGAL DESCRIPTION

THOSE PORTIONS OF SECTION 1, TOWNSHIP 3 SOUTH, RANGE 10 WEST AND THAT PORTION OF SECTION 7, TOWNSHIP 3 SOUTH, RANGE 9 WEST, SAN BERNARDINO MERIDIAN, AS PER MAP FILED IN BOOK 51, PAGE 7 OF RECORDS OF SURVEY, PORTIONS OF TRACT NO. 16178, AS SHOWN ON A MAP FILED IN BOOK           , PAGES            THROUGH           , INCLUSIVE OF MISCELLANEOUS MAPS, IN CITY OF BREA AND THE UNINCORPORATED TERRITORY OF THE COUNTY OF ORANGE, STATE OF CALIFORNIA, BOTH IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, MORE PARTICULARLY DESCRIBED AS FOLLOWS:

LOT 9 OF SAID TRACT NO. 16178,

TOGETHER WITH LOTS 11 THROUGH 19 INCLUSIVE OF SAID TRACT NO. 16178,

ALSO TOGETHER WITH LOT 21 OF SAID TRACT NO. 16178,

ALSO TOGETHER WITH PARCEL 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:

    THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:

      BEGINNING AT THE SOUTHWESTERLY CORNER OF SAID LOT 11;
 
      THENCE ALONG THE SOUTHERLY BOUNDARY OF SAID LOT 11 NORTH 89°24’21” EAST 495.67 FEET TO THE SOUTHWESTERLY BOUNDARY OF A GRANT DEED TO METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK 8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER;
 
      THENCE SOUTHEASTERLY ALONG SAID SOUTHWESTERLY BOUNDARY SOUTH 28°12’22” EAST 338.56 FEET TO THE NORTHERLY BOUNDARY OF TRACT NO. 12562 AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 4 THROUGH 9 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;
 
      THENCE WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24’21” WEST 659.12 FEET TO THE EASTERLY BOUNDARY OF TRACT NO. 9532 AS SHOWN ON A MAP FILED IN BOOK 454, PAGES 25 THROUGH 28 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;
 
      THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY NORTH 00°39’09” EAST 300.07 FEET TO THE POINT OF BEGINNING.

    CONTAINING: 3.977 ACRES, MORE OR LESS

ALSO TOGETHER WITH PARCEL 2 MORE PARTICULARLY DESCRIBED AS FOLLOWS:

    THAT PORTION OF SAID SECTION 1 MORE PARTICULARLY DESCRIBED AS FOLLOWS:

      BEGINNING AT THE SOUTHEAST CORNER OF SAID LOT 11, SAID CORNER ALSO BEING ON THE WESTERLY BOUNDARY OF PARCEL A6471-4, AS CONVEYED BY A FINAL ORDER OF CONDEMNATION RECORDED SEPTEMBER 29, 1970, IN BOOK 9417, PAGE 364 OF OFFICIAL RECORDS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY;
 
      THENCE SOUTHERLY ALONG SAID WESTERLY BOUNDARY SOUTH 10°52’43” WEST 306.11 FEET NORTHERLY BOUNDARY OF TRACT NO. 12563 AS SHOWN ON A MAP FILED IN BOOK 579, PAGES 10 THROUGH 15 INCLUSIVE OF MISCELLANEOUS MAPS, IN THE OFFICE OF SAID COUNTY RECORDER;
 
      THENCE WESTERLY ALONG SAID NORTHERLY BOUNDARY SOUTH 89°24’21” WEST 890.93 FEET TO THE EASTERLY BOUNDARY OF A GRANT DEED TO METROPOLITAN WATER DISTRICT RECORDED FEBRUARY 10, 1967, IN BOOK 8173 AT PAGE 641 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER;

Page 1 of 2

 


 

    THENCE NORTHERLY ALONG SAID EASTERLY BOUNDARY THE FOLLOWING COURSES:

      NORTH 23°43'24'' WEST 110.38 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE EASTERLY AND HAVING A RADIUS OF 100.00 FEET;
 
      NORTHERLY ALONG SAID CURVE 20.51 FEET THROUGH A CENTRAL ANGLE OF 11°45'15'';
 
      NORTH 11°58'09'' WEST 182.51 FEET TO THE SOUTHWEST CORNER OF SAID LOT 12;

    THENCE LEAVING SAID EASTERLY BOUNDARY ALONG THE SOUTHERLY BOUNDARY OF LOTS 12, “B” AND 11 OF SAID TRACT NO. 16178, NORTH 89°24'21'' EAST 1037.25 FEET TO THE POINT OF BEGINNING.

CONTAINING: 6.694 ACRES, MORE OR LESS

ALSO TOGETHER WITH PARCEL 3 MORE PARTICULARLY DESCRIBED AS FOLLOWS:

    BEING THAT PORTION OF SAID SECTION 7 BOUND AS FOLLOWS:

      NORTHERLY BY THE SOUTHERLY BOUNDARY OF SAID LOT 13.
 
      EASTERLY BY THE WESTERLY BOUNDARY OF SAID LOT 13.
 
      SOUTHERLY BY THAT CERTAIN COURSE ALONG THE NORTHERLY BOUNDARY LINE OF TRACT NO. 9577 AS PER MAP FILED IN BOOK 7438 AT PAGES 4 THROUGH 12, INCLUSIVE OF MAPS, IN THE OFFICE OF SAID COUNTY RECORDER, SAID COURSE SHOWN AS BEING (N89°47'11'' W 200.21') ON LAST SAID MAP.
 
      WESTERLY BY THAT CERTAIN COURSE ALONG THE EASTERLY BOUNDARY LINE OF LAST SAID TRACT 9577, SHOWN AS BEING (N 00°12'49'' E 250.00’) ON LAST SAID MAP.

PARCEL 3 ALSO BEING DESCRIBED AS “EXCEPTION A” TO “PROPERTY PARCEL FOUR” IN A CORPORATION GRANT DEED TO STRATHAVEN ESTATES RECORDED MARCH 15, 1966 IN BOOK 7868, PAGE 323 OF OFFICIAL RECORDS, IN THE OFFICE OF SAID COUNTY RECORDER

CONTAINING: 1.148 ACRES, MORE OR LESS

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

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

     
[STAMP]   PREPARED BY OR UNDER THE DIRECTION OF:
    (SIGNATURE)
    KATHLEEN SUSAN TETREAULT, P.L.S. 7297
    MY LICENSE EXPIRES 12/31/2004
     
    December 04, 2003
    JN: 13207.00.000

Page 2 of 2

 


 

(MAP)

 


 

(MAP)

 


 

(MAP)

 


 

ATTACHMENT NO. 2

TO

GRANT DEED

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

Attachment 2 to Exhibit “G”

 


 

ATTACHMENT NO. 2 A

CORRIDOR EASEMENT

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

Attachment 2A to Exhibit “G”

 


 

(MAP)

 


 

ATTACHMENT “2”
TENTATIVE TRACT NO. 16047
LOTS “A” & “F”

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

PARCEL A (TENTATIVE TRACT NO. 16O47 LOT “F”)

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

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

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

THENCE SOUTH 6.05 FEET TO THE BEGINNING OF A NON-TANGENT CURVE CONCAVE SOUTHERLY, AND HAVING A RADIUS OF 45.00 FEET, A RADIAL LINE THROUGH SAID POINT BEARS NORTH 00°50'30'' WEST, SAID POINT BEING ON THE RIGHT-OF-WAY OF PROPOSED STREET “A”;

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

THENCE NORTH 14.12 FEET TO SAID NORTHERLY LINE;

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

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

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

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

Page 1 of 2

 


 

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

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

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

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

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

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

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

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

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

 

Page 2 of 2


 

ATTACHMENT NO. 2 B

STREET EASEMENT

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

Attachment 2B to Exhibit “G”

 


 

(MAP)

 


 

(MAP)

 


 

(MAP)

 


 

ATTACHMENT NO. 2 C

DRAINAGE EASEMENT

     A non-exclusive easement on, over and under the Adjacent Property for drainage purposes from the Land (as shown on the attachment hereto), as well as the right to connect to and discharge and drain through, any water, sewer and other facilities constructed by Walden on, over and under the Adjacent Property.

Attachment 2C to Exhibit “G”


 

EXHIBIT “4A”
LOTS 56 STORM DRAIN EASEMENT

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

A STRIP OF LAND BEING 20.00 FEET WIDE THE CENTERLINE BEING DESCRIBED AS FOLLOWS:

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

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

THENCE ALONG SAID NORTHERLY LINE OF SAID ANNEXATION NORTH 89°53'53'' W 237.23 FEET TO THE POINT OF BEGINNING;

THENCE SOUTH 42°02'32 WEST 27.29 FEET TO THE BEGINNING OF A TANGENT CURVE CONCAVE SOUTHEASTERLY AND HAVING A RADIUS OF 87.50 FEET;

THENCE 85.90 FEET ALONG SAID CURVE THROUGH A CENTRAL ANGLE OF 56°14'57'';

THENCE SOUTH 14°12'24'' EAST 57.06 FEET TO THE NORTHERLY RIGHT-OF-WAY OF LAMBERT ROAD, BEING 120.00 FEET WIDE, AS SHOWN ON SAID RECORD OF SURVEY.

CONTAINING 0.7 ACRES MORE OR LESS

THE SIDELINES OF SAID STRIP SHALL BE LENGTHENED OR SHORTENED TO TERMINATE NORTHERLY ON THE NORTHERLY LINE OF SAID ANNEXATION, AND SOUTHERLY ON THE NORTHERLY RIGHT-OF-WAY OF SAID LAMBERT ROAD.

ALSO AS SHOWN ON EXHIBIT “4A”, ATTACHED HERETO AND BY THIS REFERENCE MADE A PART HEREOF.

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

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

Page 1 of 1

 


 

(MAP)

 


 

ATTACHMENT NO. 3

TO

GRANT DEED

(List of Recorded Rights of Way and Contracts — Same as Attachment 3 to Non-Exclusive
Assignment and Bill of Sale)

Attachment 3 to Exhibit “G”


 

List of Recorded Rights of Way and Contracts

Easements, Licenses, Rights-of-Way, etc

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

 
 
 
 
 
 
    ROW   4/8/63   4/19/63   Pacific Lighting     7     N/A
            6515/482   Gas Supply Co.           (31.7)
                             
    ROW   2/13/65   2/23/65   Pacific Lighting     8     317
            7422/249   Gas Supply Co.            
                             
    Easement   1/15/51   3/15/51