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1992-53319~I~,CORDI'NG i~EQUESTED BY ' C~ICAGO TITLE MAIL TAX STATEMENT TO Same as below WHEN RECORDED MAIL TO Name [T~ CITY OF ElqCINITAS Street AT~: WARREN H. SHAFER Address 527 ENCINITAS BLVD. City &: State IENCINITAS, CA. 92024 COMPANY 1402 ORDER NO. 925247--16 ESCROW NO. 12138-L SPACE ABOVE RECORDER'S USE ONLY GRANT DEED (INOIVIDUA , requested by The City of _ Encinitas ~ '^ . The undersigned grantor(s) declare(s): Free recording Documentary transfer tax is $ (XX) Computed on full walue of property conv~ed, or ( ) Computed on full value less value of liens and encumbrances remaining at time of sale. ( ) Unincorporated area ( X ) City of ENCINI~AS Zax Parcel No. 258-090-16 FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, DAVID R. SOMERVILLE AND STELCA A. SOMERVILLE, TRUSTEES OF THE SOMERVILL FAMILY TRUST DATED FEBRUARY 27, 1980 AND JAMES H. HARKER, AS TRUSTEE OF THE HARKER 1976 FAMILY TRUST DATED APRIL 21, 1976 hereby GRANT(S) to THE CITY OF ENCINITAS, A MUNICIPAL CORPORATION the following described real property in the County of SAN DIEGO PARCEL 1: , State of California: ALL THAT PORTION OF EAST BLOCK 5 OF ENCINITAS, IN THE COUNTY OF SAN DIEGO, ACCORDING TO MAP THEREOF NO. 148, FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAN DIEGO COUNTY JUNE 12, 1883, AS MORE PARTICULARLY DESCRIBED IN THE ATTACHED LEGAL DESCRIPTION MARKED EXHIBIT "A" COMPRISING ONE PAGE. Dated JANUARY 16, 1992 ~s~i'~LCA A SOMERVILLE, XRUSTEE~ x~.~.J~ES~ H. HARKER, TRUSTEE STATE OF CALIFORNIA / s.s. County of SAN DIEGO ~~'~ 7~' 19~ On this / ~ ~ ~dayo e, the undersigned, a Notary said County and State personally appeared ~~~. ~,,U~./).//'~ ~._.~ , ~ ~' personally known to me (or proved to me on th~/basis of satisfactory evidence) to be the person .~ whose name ,~ ~ subscribed to the within instrument and acknowledged that WITNESS my hand and official seal. N r6tlt~uhlic In and for said County and State. executed the same. (Notary Seal) Public in and for FD-13B (Rev. 9/88) MAIL TAX STATEMENT AS DIRECTED ABOVE Order No: 925247 -16 DESCRIPTION EXHIBIT "A" PARCEL 1: Ail that portion of East Block 5 of Encinitas, in the County of San Diego, State of California, according to Map thereof No. 148, filed in the Office of the County Recorder of San Diego County, June 12, 1883, which lies Westerly of the following described line: BEGINNING at a point on the Northerly line of said East Block 5, distant thereon South 83° 23' 30" West, 232.95 feet from the Northeasterly corner thereof; thence South 0© 46' 27" West, 202.08 feet, more or less, to the Northwesterly corner of land described in deed to the County of San Diego, recorded September 10, 1959 in Book 7872, Page 347 of Official Records; thence along the Westerly line thereof, South 0° 46' 27" West, 202.00 feet, more or less, to the intersection with the Southerly line of said East Block 5. Together with that portion of the South 10 feet of "D" Street adjoining said East Block 5 on the North, which lies Easterly of a 25 foot radius curve, concave Southeasterly, that is tangent both to the Easterly line of the Westerly 30 feet of said Block and to the North line of said South 10 feet and Westerly of the Northerly prolongation of the Easterly line of the land described above. Also that portion of the North 10 feet of the "E" Street adjoining said East Block 5 on the South, which lies Easterly of a 25 foot radius curve, concave Northeasterly, that is tangent both the South line of said North 10 feet and to the Easterly line of the Westerly 30 feet of said Block and Westerly of the Southerly prolongation of the Easterly line of the land described above, as vacated and closed to public use by Resolution No. 95 of the Board of Supervisors of the County of San Diego, dated June 28, 1960 and recorded 3uly 14, 1960 as File No. 142424 of Official Records. PARCEL 2: The Westerly 6 feet of the Easterly 232.95 feet (measured on the North line) of the Northerly 202.00 feet (measured on the West line) of East Block 5 of Encinitas, County of San Diego, State of California, according to Map thereof No. 148, filed in the Office of the County Recorder of San Diego County, June 16, 1883. Together with that portion of the South 10 feet of "D" Street adjoining said Parcel 2 on the North, as vacated and closed to public use by Resolution No. 140 of the Board of Supervisors of the County of San Diego, dated May 23, 1961 and recorded June 1, 1961 as File No. 94253 of Official Records. STATE OF CALIFORNIA ) (Acknowledgement) ) ss. County of ~ ) Onthis -~-~-{'kdayof _-~A~JblPde'-Y , in the year19 7.~ ,beforemo, ~-I~1~1~ a Notary Public in and-for the, said County and State~.residing therein, duly commissioned and sworn, personally appeared IA/,~I~/~J H- --.-~'"/'/~ F~/'~ ' personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s): (r'] INDIVIDUAL). Whose name is subscribed tO this instrument, and acknowledged that he (she or they) executed it. 1*4 d N l (~ ~ ~,'o, C--- ~and (~' CORPORATION) Who executed the within instrument as - '~ secretary, on behalf of the corporation therein named, and acknowledged to me that such corporation executed the within instrument pursuant to its articles and by-laws and a resolution of its ~,~r~..~4~h~s. (El PARTNERSHIP) That __executed the within instrument on behalf of the part- nership, and acknowledged to me that the partnership executed it, IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal, in and for said County and State, the d~aya..nd year first abo.ye written. Notary Public in and for said County and State of California My commission expires: ~t~ ~,c~ ~ ! c~.~ FD-1B 1404 CERTIFICATE OF ACCEPT/%NCE This is to certify that the interest in real property conveyed by the Deed dated January 16, 1992 from David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 1980 and James H. Harker, as Trustee of the Harker 1976 Family Trust dated April 21, 1976 to THE CITY OF ENCINITAS, a municipal corporation, is hereby accepted by the undersigned officer on behalf of The City Of Encinitas pursuant to authority ~ confirmed by City Council action on July 10 , 1991 and the Grantee consents to recordation thereby its duly authorized officer. Dated: THE CITY OF ENCINITAS, a municipal corporation by: v CALIFORNIA LAND TITLE ASSOCIATION STANDARD COVERAGE POLICY 1990 SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS. CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation, herein called the Company, insures, as of Date of Policy shown in Schedule A, against loss or damage, not exceeding the Amount of Insurance stated in Schedule A. sustained or incurred by the insured by reason of: 1. Title to the estate or interest described in Schedule A being vested other than as stated therein: 2. Any defect in or lien or encumbrance on the title: 3. Unmarketability of the title; 4. Lack of a right of access to and from the land: and in addition, as to an insured lender only: 5. The invalidity or unenforceability of the lien of the insured mortgage upon the title: 6. The priority of any lien or encumbrance over the lien of the insured mortgage, said mortgage being shown in Schedule B in the order of its priority; 7. The invalidity or unenforceability of any assignment of the insured mortgage, provided the assignment is shown in Schedule B, or the failure of the assignment shown in Schedule B to vest title to the insured mortgage in the named insured assignee free and clear of all liens. The Company will also pay the costs, attorneys' fees and expenses incurred in defense of the title or the lien of the insured mortgage, as insured, but only to the extent provided in the Conditions and Stipulations. In Witness Whereof, CHICAGO TITLE INSURANCE COMPANY has caused this policy to be signed and sealed as of Date of Policy shown in Schedule A, the policy to become valid when countersigned by an authorized signatory. Issued by: CHICAGO TITLE COMPANY 925 "B" Street San Diego, CA 92101 (619) 239-6081 CHICAGO TITLE INSURANCE COMPANY By: President By: Secretary EXCLUSIONS FROM COVERAGE The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage, costs, attorneys' fees or expenses which arise by reason of: 1. (a) Any law, ordinance or governmental regulation (including but not limited to building and zoning laws, ordinances, or regulations) restrict- ing, regulating, prohibiting or relating to (i) the occupancy, use, or enjoyment of the land; (ii) the character, dimensions or location of any improvement now or hereafter erected on the land; (iii) a separation in ownership or a change in the dimensions or area of the land or any parcel of which the land is or was a part; or (iv) environmental protection, or the effect of any violation of these laws, ordinances or governmental regulations, except to the extent that a notice of the enforcement thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. (15) Any governmental police power not excluded by (a) above, except to the extent that a notice of the exercise thereof or a notice of a defect, lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy. 2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy, but not excluding from coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge. 3. Defects, liens, encumbrances, adverse claims or other matters: (a) whether or not recorded in the public records at Date of Policy, but created, suffered, assumed or agreed to by the insured claimant; (b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy; (c) resulting in no loss or damage to the insured claimant; (d) attaching or created subsequent to Date of Policy; or (e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or the estate or interest insured by this policy. 4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy, or the inability or failure of any subsequent owner of the indebtedness, to comply with applicable doing business laws of the state in which the land is situated. 5. Invalidity or unenforceability of the lien of the insured mortgage, or claim thereof, which arises out of the transaction evidenced by the insured mortgage and is based upon usury or any consumer credit protection or truth in lending law. 6. Any claim, which arises out of the transaction vesting in the insured the estate or interest insured by this policy or the transaction creating the interest of the insured lender, by reason of the operation of federal bankruptcy, state insolvency, or similar creditors' rights laws. CONDITIONS AND STIPULATIONS 1. DEFINITION OF TERMS The following terms when used in this policy mean: (a) "insured": the insured named in Schedule A, and, subject to any rights or defenses the Company would have had against the named insured, those who succeed to the interest of the named insured by operation of law as distinguished from purchase including, but not limited to, heirs, distributees, devisees, survivors, personal representatives, next of kin, or corporate or fiduciary successors. The term "insured" also includes (i) the owner of the indebtedness secured by the insured mortgage and each successor in ownership of the indebtedness except a successor who is an obligor under the provisions of Section 12(c) of these Conditions and Stipulations (reserving, however, all rights and defenses as to any successor that the Company would have had against any predecessor insured, unless the successor acquired the indebtedness as a purchaser for value without knowledge of the asserted defect, lien, encumbrance, adverse claim or other matter insured against by this policy as affecting title to the estate or interest in the land); (ii) any governmental agency or governmental instrumentality which is an insurer or guarantor under an insurance contract or guaranty insuring or guaranteeing the indebtedness secured by the insured mortgage, or any part thereof, whether named as an insured herein or not; (iii) the parties designated in Section 2(a) of these Conditions and Stipula- tions. (b) "insured claimant": an insured claiming loss or damage. (c) "insured lender": the owner of an insured mortgage. (d) "insured mortgage": a mortgage shown in Schedule B, the owner of which is named as an insured in Schedule A. (e) "knowledge" or "known": actual knowledge, not constructive knowl- edge or notice which may be imputed to an insured by reason of the public records as defined in this policy or any other records which impart construc- tive notice of matters affecting the land. (f) "land": the land described or referred to in Schedule A, and improve- ments affixed thereto which by law constitute real property. The term "land" does not include any property beyond the lines of the area described or referred to in Schedule A, nor any right, title, interest, estate or easement in abutting streets, roads, avenues, alleys, lanes, ways or waterways, but noth- ing herein shall modify or limit the extent to which a right of access to and from the land is insured by this policy. (g) "mortgage": mortgage, deed of trust, trust deed, or other security instrument. (h) "public records": records established under state statutes at Date of Policy for the purpose of imparting constructive notice of matters relating to real property to purchasers for value and without knowledge. (i) "unmarketability of the title": an alleged or apparent matter affecting the title to the land, not excluded or excepted from cover~qe, which would entitle a purchaser of the estate or interest described in ,dule A or the insured mortgage to be released from the obligation to purchase by virtue of a contrac- tual condition requiring the delivery of marketable title. 2. CONTINUATION OF INSURANCE (a) After Acquisition of Title by Insured Lender. If this policy insures the owner of the indebtedness secured by the insured mortgage, the coverage of this policy shall continue in force as of Date of Policy in favor of (i) such insured who acquires all or any part of the estate or interest in the land by foreclosure, trustee's sale, conveyance in lieu of foreclosure, or other legal manner which discharges the lien of the insured mortgage; (ii) a transferee of the estate or interest so acquired from an insured corporation, provided the transferee is the parent or wholly-owned subsidiary of the insured corporation, and their corporate successors by operation of law and not by purchase, subject to any rights or defenses the Company may have against any predecessor insureds; and (iii) any governmental agency or governmental instrumentality which acquires all or any part of the estate or interest pursuant to a contract of insurance or guaranty insuring or guaranteeing the indebtedness secured by the insured mortgage. (b) After Conveyance of Title by an Insured, The coverage of this policy shall continue in force as of Date of Policy in favor of an insured only so long as the insured retains an estate or interest in the land, or holds an indebtedness secured by a purchase money mortgage given by a purchaser from the insured, or only so long as the insured shall have liability by reason of cove- nants of warranty made by the insured in any transfer or conveyance of the estate or interest. This policy shall not continue in force in favor of any pur- chaser from an insured of either (i) an estate or interest in the land, or (ii) an indebtedness secured by a purchase money mortgage given to an insured. (c) Amount of Insurance. The amount of insurance after the acquisition or after the conveyance by an insured lender shall in neither event exceed the least of: (i) the amount of insurance stated in Schedule A; (ii) the amount of the principal of the indebtedness secured by the insured mortgage as of Date of Policy, interest thereon, expenses of foreclosure, amounts advanced pursuant to the insured mortgage to assure compliance with laws or to protect the lien of the insured mortgage prior to the time of acquisition of the estate or interest in the land and secured thereby and reasonable amounts expended to prevent deterioration of improvements, but reduced by the amount of all payments made; or (iii) the amount paid by any governmental agency or governmental instru- mentality, if the agency or instrumentality is the insured claimant, in the acqui- sition of the estate or interest in satisfaction of its insurance contract or guar- anty. 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT An insured shall notify the Company promptly in writing (i) in case of any litigation as set forth in Sectien 4(a) below, (ii) in case knowledge shall come to an insured hereunder of ~laim of title or interest which is adverse to the title to the estate or interes ~,~e lien of the insured mortgage, as insured, and SCHEDULE A Amount of Insurance: $5,875,000.00 Date of Policy: January 31, 1992 1. Name of Insured: THE CITY OF ENCINITAS at 8:00 A.M. Policy No: 925247 Premium: $5,640.00 .16 2. The estate or interest in the land which is covered by this policy is: A FEE 3. Title to the estate or interest in the land is vested in: THE CITY OF ENCINITAS, a municipal corporation The land referred to in this policy is situated in the State of California, County of San D±o~Io and is described as follows: SEE ATTACHED DESCRIPTION CLTAOA88 -- 11/29/88 This Policy valid only if Schedule B is attached. Policy No. Page 1 925247 -16 DESCRIPTION PARCEL 1: Ail that portion of East Block 5 of Encinitas, in the County of San Diego, State of California, according to Map thereof No. 148, filed in the Office of the County Recorder of San Diego County, June 12, 1883, which lies Westerly of the following described line: BEGINNING at a point on the Northerly line of said East Block 5, distant thereon South 83° 23' 30" West, 232.95 feet from the Northeasterly corner thereof; thence South 0° 46' 27" West, 202.08 feet, more or less, to the Northwesterly corner of land described in deed to the County of San Diego, recorded September 10, 1959 in Book 7872, Page 347 of Official Records; thence along the Westerly line thereof, South 0° 46' 27" West, 202.00 feet, more or less, to the intersection with the Southerly line of said East Block 5. Together with that portion of the South 10 feet of "D" Street adjoining said East Block 5 on the North, which lies Easterly of a 25 foot radius curve, concave Southeasterly, that is tangent both to the Easterly line of the Westerly 30 feet of said Block and to the North line of said South 10 feet and Westerly of the Northerly prolongation of the Easterly line of the land described above. Also that portion of the North 10 feet of the "E" Street adjoining said East Block 5 on the South, which lies Easterly of a 25 foot radius curve, concave Northeasterly, that is tangent both the South line of said North 10 feet and to the Easterly line of the Westerly 30 feet of said Block and Westerly of the Southerly prolongation of the Easterly line of the land described above, as vacated and closed to public use by Resolution No. 95 of the Board of Supervisors of the County of San Diego, dated June 28, 1960 and recorded July 14, 1960 as File No. 142424 of Official Records. PARCEL 2: The Westerly 6 feet of the Easterly 232.95 feet (measured on the North line) of the Northerly 202.00 feet (measured on the West line) of East Block 5 of Encinitas, County of San Diego, State of California, according to Map thereof No. 148, filed in the Office of the County Recorder of San Diego County, June 16, 1883. Together with that portion of the South 10 feet of "D" Street adjoining said Parcel 2 on the North, as vacated and closed to public use by Resolution No. 140 of the Board of Supervisors of the County of San Diego, dated May 23, 1961 and recorded June 1, 1961 as File No. 94253 of Official Records. Policy No. 925247 16 SCHEDULE B EXCEPTIONS FROM COVERAGE This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or expenses) which arise by reason of: PART I Taxes or assessments which are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings, whether or not shown by the records of such agency or by the public records. 2. Any facts, rights, interests or claims xvhich are not shown by the public records but which could be ascertained by an inspection of the land or which may be asserted by persons in possession thereof. 3. Easements, liens or encumbrances, or claims thereof, which are not shown by the public records. 4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c) are shown by the public records. PART II 1. Second installment, general and special taxes for the fiscal year 1991-92. 2 o The Lien of Supplemental Taxes, if any, assessed pursuant to the provisions of Senate Bill No. 813 (1983) of the State of California. 3. An easement for the purpose shown below and rights incidental thereto as set forth in a document Granted to: COUNTY OF SAN DIEGO Purpose: Public highway Recorded: July 9, 1960 as File No. 135375, Official Records Affects: The route thereof affects a portion of said land and is more fully described in said document. Said instrument additionally contains the privilege and right to extend drainage structures and excavation and embankment slopes beyond the limits of the above described right of way where required for the construction and maintenance thereof. 4. An agreement, and the terms and conditions as contained therein Dated: February 27, 1961 By and Between: San Dieguito Irrigation District and A.M. Brown and E.F. Peterson Recorded: March 1, 1961, as File No. 36052 of Official Records CLTAOB88 -- 11/29/8~ Policy No. Page 2 925247 -16 SCHEDULE B (CONT.) Part II Regarding: Conditions requiring the installation of a fence; maintenance of vegetation and erosion control Reference is made to said document for full particulars. Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of any mortgage or deed of trust made in good faith and for value. 5. An easement for the purpose shown below and rights incidental thereto as set forth in a document Granted to: Purpose: Recorded: Affects: SAN DIEGO GAS & ELECTRIC COMPANY Public utilities, ingress and egress April 11, 1961 as File No. 62393, Official Records The route thereof affects a portion of said land and is more fully described in said document. 6. An easement for the purpose shown below and rights incidental thereto as set forth in a document Granted to: Purpose: Recorded: Affects: SAN DIEGO GAS & ELECTRIC COMPANY Public utilities, ingress and egress August 7, 1961 as File No. 134823, Official Records The route thereof affects a portion of said land and is more fully described in said document. Restrictions on the use, by the owners of said land, of the easement area as provided in the document referred to above. 7. A covenant and agreement Executed by: DAVID SOMERVILLE et al In favor of: CITY OF ENCINITAS Recorded: October 11, 1988 as File No. 88-516546, Official Records Which among other things provides: Encroachment maintenance and removal covenant encroachment Permit No. 8037P 8. A covenant and agreement Executed by: In favor of: Recorded: DAVID R. SOMERVILLE AND STELCAA. SOMERVILLE, Trustees of the Somerville Family Trust dated February 27, 1980, et al CITY OF ENCINITAS October 14, 1988 as File No. 88-525669, Official CLTASgC-- 12/16/88 Policy No. Page 3 925247 -16 SCHEDULE B (CONT.) Part II Records Which among other things provides: Various conditions regarding driveways Reference is made to said document for full particulars. 9. An agreement for improvements in a public right of way, wherein said owner grants said City a lien upon the land herein described and agrees, covenants and promises, upon the terms, covenants and conditions therein contained to install and construct or cause to be installed or constructed certain public improvements, Dated: City of: Owner: Recorded: February 10, 1989 ENCINITAS DAVID R. AND STELCAA. SOMERVILLE AND JAMES HARKER March 8, 1989 as File No. 89-118020, Official Records END OF SCHEDULE B ag CLTAgSC-- 12/16/88 EXHIBIT ~C~ RIDER tO CHICAGO TITLE INSURANCE COMPANY POLICY NO. 000925247 NO ENDORSEMENT ISSUED IN CONNECTION WITH THE POLICY AND RELATING TO COVENANTS, CONDITIONS OR RESTRICTIONS PROVIDES COVERAGE FOR ENVIRONMENTAL PROTECTION. which might cause loss or~ damage for which the ,~pany may be liable by virtue of this policy, or (iii) if title to the estate or interest or the lien of the insured mortgage, as insured, is rejected as unmarketable. If prompt notice shall not be given to the Company, then as to that insured all liability of the Company shall terminate with regard to the matter or matters for which prompt notice is required; provided, however, that failure to notify the Company shall in no case prejudice the rights of any insured under this policy unless the Company shall be prejudiced by the failure and then only to the extent of the prejudice. 4. DEFENSE AND PROSECUTION OF ACTIONS; DUTY OF INSURED CLAIMANT TO COOPERATE (a) Upon written request by an insured and subject to the options contained in Section 6 of these Conditions and Stipulations, the Company, at its own cost and without unreasonable delay, shall provide for the defense of such insured in litigation in which any third party asserts a claim adverse to the title or interest as insured, but only as to those stated causes of action alleging a defect, lien or encumbrance or other matter insured against by this policy. The Company shall have the right to select counsel of its choice (subject to the right of such insured to object for reasonable cause) to represent the insured as to those stated causes of action and shall not be liable for and will not pay the fees of any other counsel. The Company will not pay any fees, costs or expenses incurred by the insured in the defense of those causes of action which allege matters not insured against by this policy. (b) The Company shall have the right, at its own cost, to institute and prosecute any action or proceeding or to do any other act which in its opinion may be necessary or desirable to establish the title to the estate or interest or the lien of the insured mortgage, as insured, or to prevent or reduce loss or damage to the insured. The Company may take any appropriate action under the terms of this policy, whether or not it shall be liable hereunder, and shall not thereby concede liability or waive any provision of this policy. If the Company shall exercise its rights under this paragraph, it shall do so diligently. (c) Whenever the Company shall have brought an action or interposed a defense as required or permitted by the provisions of this policy, the Company may pursue any litigation to final determination by a court of competent juris- diction and expressly reserves the right, in its sole discretion, to appeal from any adverse judgment or order. (d) In all cases where this policy permits or requires the Company to prose- cute or provide for the defense of any action or proceeding, an insured shall secure to the Company the right to so prosecute or provide defense in the action or proceeding, and all appeals therein, and permit the Company to use, at its option, the name of such insured for this purpose. Whenever requested by the Company, an insured, at the Company's expense, shall give the Com- pany all reasonable aid (i) in any action or proceeding, securing evidence, obtaining witnesses, prosecuting or defending the action or proceeding, or effecting settlement, and (ii) in any other lawful act which in the opinion of the Company may be necessary or desirable to establish the title to the estate or interest or the lien of the insured mortgage, as insured. If the Company is prejudiced by the failure of an insured to furnish the required cooperation, the Company's obligations to the insured under the policy shall terminate, includ- ing any liability or obligation to defend, prosecute, or continue any litigation, with regard to the matter or matters requiring such cooperation. 5. PROOF OF LOSS OR DAMAGE In addition to and after the notices required under Section 3 of these Condi- tions and Stipulations have been provided the Company, a proof of loss or damage signed and sworn to by the insured claimant shall be furnished to the Company within 90 days after the insured claimant shall ascertain the facts giving rise to the loss or damage. The proof of loss or damage shall describe the defect in, or lien or encumbrance on the title, or other matter insured against by this policy which constitutes the basis of loss or damage and shall state, to the extent possible, the basis of calculating the amount of the loss or damage. If the Company is prejudiced by the failure of an insured claimant to provide the required proof of loss or damage, the Company's obligations to such insured under the policy shall terminate, including any liability or obliga- tion to defend, prosecute, or continue any litigation, with regard to the matter or matters requiring such proof of loss or damage. In addition, an insured claimant may reasonably be required to submit to examination under oath by any authorized representative of the Company and shall produce for examination, inspection and copying, at such reason- able times and places as may be designated by any authorized representative of the Company, all records, books, ledgers, checks, correspondence and memoranda, whether bearing a date before or after Date of Policy, which reasonably pertain to the loss or damage. Further, if requested by any author- ized representative of the Company, the insured claimant shall grant its per- mission, in writing, for any authorized representative of the Company to exam- ine, inspect and copy all records, books, ledgers, checks, correspondence and memoranda in the custody or control of a third party, which reasonably pertain to the loss or damage. All information designated as confidential by an insured claimant provided to the Company pursuant to this Section shall not be disclosed to others unless, in the reasonable judgment of the Company, it is necessary in the administration of the claim. Failure of an insured claimant to submit for examination under oath, produce other reasonably requested information or grant permission to secure reasonably necessary information from third parties as req= ;in this paragraph, unless prohibited by law or governmental regulation, -,~.~11 terminate any liability of the Company under this policy as to that insured for that claim. 6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS; TERMINATION OF LIABILITY In case of a claim under this policy, the Company shall have the following additional options: (a) To Pay or Tender Payment of the Amount of Insurance or to Purchase the Indebtedness. (i) to pay or tender payment of the amount of insurance under this policy together with any costs, attorneys' fees and expenses incurred by the insured claimant, which were authorized by the Company, up to the time of payment or tender of payment and which the Company is obligated to pay; or (ii) in case loss or damage is claimed under this policy by the owner of the indebtedness secured by the insured mortgage, to purchase the indebted- ness secured by the insured mortgage for the amount owing thereon together with any costs, attorneys' fees and expenses incurred by the insured claimant which were authorized by the Company up to the time of purchase and which the Company is obligated to pay. If the Company offers to purchase the indebtedness as herein provided, the owner of the indebtedness shall transfer, assign, and convey the indebted- ness and the insured mortgage, together with any collateral security, to the Company upon payment therefor. Upon the exercise by the Company of the option provided for in paragraph a(i), all liability and obligations to the insured under this policy, other than to make the payment required in that paragraph, shall terminate, including any liability or obligation to defend, prosecute, or continue any litigation, and the policy shall be surrendered to the Company for cancellation. Upon the exercise by the Company of the option provided for in paragraph a(ii) the Company's obligation to an insured lender under this policy for the claimed loss or damage, other than the payment required to be made, shall' terminate, including any liability or obligation to defend, prosecute or continue any litigation. (b) To Pay or Otherwise Settle With Parties Other than the Insured or With the Insured Claimant. (i) to pay or otherwise settle with other parties for or in the name of an insured claimant any claim insured against under this policy, together with any costs, attorneys' fees and expenses incurred by the insured claimant which were authorized by the Company up to the time of payment and which the Company is obligated to pay; or (ii) to pay or otherwise settle with the insured claimant the loss or damage provided for under this policy, together with any costs, attorneys' fees and expenses incurred by the insured claimant which were authorized by the Company up to the time of payment and which the Company is obligated to pay. Upon the exercise by the Company of either of the options provided for in paragraphs (b)(i) or b(ii), the Company's obligations to the insured under this policy for the claimed loss or damage, other than the payments required to be made, shall terminate, including any liability or obligation to defend, prose- cute or continue any litigation. 7. DETERMINATION AND EXTENT OF LIABILITY This policy is a contract of indemnity against actual monetary loss or dam- age sustained or incurred by the insured claimant who has suffered loss or damage by reason of matters insured against by this policy and only to the extent herein described. (a) The liability of the Company under this policy to an insured lender shall not exceed the least of: (i) the Amount of Insurance stated in Schedule A, or, if applicable, the amount of insurance as defined in Section 2 (c) of these Conditions and Stipulations; (ii) the amount of the unpaid principal indebtedness secured by the insured mortgage as limited or provided under Section 8 of these Conditions and Stipulations or as reduced under Section 9 of these Conditions and Stipulations, at the time the loss or damage insured against by this policy occurs, together with interest thereon; or (iii) the difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy. (b) In the event the insured lender has acquired the estate or interest in the manner described in Section 2(a) of these Conditions and Stipulations or has conveyed the title, then the liability of the Company shall continue as set forth in Section 7(a) of these Conditions and Stipulations. (c) The liability of the Company under this policy to an insured owner of the estate or interest in the land described in Schedule A shall not exceed the least of: (i) the Amount of Insurance stated in Schedule A; or, (ii) the difference between the value of the insured estate or interest as insured and the value of the insured estate or interest subject to the defect, lien or encumbrance insured against by this policy. (d) The Company will pay only those costs, attorneys' fees and expenses incurred in accordance with Section 4 of these Conditions and Stipulations. 8. LIMITATION OF LIABILITY (a) If the Company establishes the title, or removes the alleged defect, lien or encumbrance, or cures the lack of a right of access to or from the land, or cures the claim of unmarketability of title, or otherwise establishes the lien of the insured mortgage, all as insured, in a reasonably diligent manner by any method, including litigation and the completion of any appeals therefrom, it shall have fully performed its obligations with respect to that matter and shall not be liable for any loss or damage caused thereby. (b) In the event of any litigation, including litigation by the Company or with the Company's consent, the Company shall have no liability for loss or dam- age until there has been a final determination by a court of competent jurisdic- tion, and disposition of all appeals therefrom, adverse to the title or, if applica- ble, to the lien of the insured mortgage, as insured. (c) The Company shall not be liable for loss or damage to any insured for liability voluntarily assumed by the insured in settling any claim or suit without the prior written consent of the Company. (d) The Company shall not be liable to an insured lender for: (i) any indebt- edness created subsequent to Date of Policy except for advances made to protect the lien of the insured mortgage and secured thereby and reasonable amounts expended to prevent deterioration of improvements; or (ii) construc- tion loan advances made subsequent to Date of Policy, except construction loan advances made subsequent to Date of Policy for the purpose of financing in whole or in part the construction of an improvement to the land which at Date of Policy were secured by the insured mortgage and which the insured was and continued to be obligated to advance at and after Date of Policy. 9. REDUCTION OF INSURANCE; REDUCTION OR TERMINATION OF LIABILITY (a) All payments under this policy, except payments made for costs, attor- neys' fees and expenses, shall reduce the amount of the insurance pro tanto. However, as to an insured lender, any payments made prior to the acquisition of title to the estate or interest as provided in Section 2(a) of these Conditions and Stipulations shall not reduce pro tanto the amount of the insurance afforded under this policy as to any such insured except to the extent that the payments reduce the amount of the indebtedness secured by the insured mortgage. (b) Payment in part by any person of the principal of the indebtedness, or any other obligation secured by the insured mortgage, or any voluntary partial satisfaction or release of the insured mortgage, to the extent of the payment, satisfaction or release, shall reduce the amount of insurance pro tanto. The amount of insurance may thereafter be increased by accruing interest and advances made to protect the lien of the insured mortgage and secured thereby, with interest thereon, provided in no event shall the amount of insur- ance be greater than the Amount of Insurance stated in Schedule A. (c) Payment in full by any person or the voluntary satisfaction or release of the insured mortgage shall terminate all liability of the Company to an insured lender except as provided in Section 2(a) of these Conditions and Stipula- tions. 10. LIABILITY NONCUMULATIVE It is expressly understood that the amount of insurance under this policy shall be reduced by any amount the Company may pay under any policy insuring a mortgage to which exception is taken in Schedule B or to which the insured has agreed, assumed, or taken subject, or which is hereafter exe- cuted by an insured and which is a charge or lien on the estate or interest described or referred to in Schedule A, and the amount so paid shall be deemed a payment under this policy to the insured owner. The provisions of this Section shall not apply to an insured lender, unless such insured acquires title to said estate or interest in satisfaction of the indebtedness secured by an insured mortgage. 11. PAYMENT OF LOSS (a) No payment shall be made without producing this policy for endorse- ment of the payment unless the policy has been lost or destroyed, in which case proof of loss or destruction shall be furnished to the satisfaction of the Company. (b) When liability and the extent of loss or damage has been definitely fixed in accordance with these Conditions and Stipulations, the loss or damage shall be payable within 30 days thereafter. 12. SUBROGATION UPON PAYMENT OR SETTLEMENT (a) The Company's Right of Subrogation, Whenever the Company shall have settled and paid a claim under this policy, all right of subrogation shall vest in the Company unaffected by any act of the insured claimant. The Company shall be subrogated to and be entitled to all rights and remedies which the insured claimant would have had against any person or property in respect to the claim had this policy not been issued. If requested by the Company, the insured claimant shall transfer to the Company all rights and remedies against any person or property necessary in order to perfect this right of subrogation. The insured claimant shall permit the Company to sue, compromise or settle in the name of the insured claimant and to use the name of the insured claimant in any transaction or litigation involving these rights or remedies. If a payment on account of a claim does not fully cover the loss of the Reorder Form No. 8223 insured claimant, the Company shall be subrogated (i) as to an insured owner, to all rights and remedies in the proportion which the Company's payment bears to the whole amount of loss; and (ii) as to an insured lender, to all rights and remedies of the insured claimant after the insured claimant shall have recovered its principal, interest, and costs of collection. If loss should result from any act of the insured claimant, as stated above, that act shall not void this policy, but the Company, in that event, shall be required to pay only that part of any losses insured against by this policy which shall exceed the amount, if any, lost to the Company by reason of the impair- ment by the insured claimant of the Company's right of subrogation. (b) The Insured's Rights and Limitations. Notwithstanding the foregoing, the owner of the indebtedness secured by an insured mortgage, provided the priority of the lien of the insured mortgage or its enforceability is not affected, may release or substitute the personal liability of any debtor or guarantor, or extend or otherwise modify the terms of payment, or release a portion of the estate or interest from the lien of the insured mortgage, or release any collateral security for the indebtedness. When the permitted acts of the insured claimant occur and the insured has knowledge of any claim of title or interest adverse to the title to the estate or interest or the priority or enforceability of the lien of the insured mortgage, as insured, the Company shall be required to pay only that part of any losses insured against by this policy which shall exceed the amount, if any, lost to the Company by reason of the impairment by the insured claimant of the Compa- ny's right of subrogation. (c) The Company's Rights Against Non-insured Obligors, The Company's right of subrogation against non-insured obligors shall exist and shall include, without limitation, the rights of the insured to indem- nities, guaranties, other policies of insurance or bonds, notwithstanding any terms or conditions contained in those instruments which provide for subroga- tion rights by reason of this policy. The Company's right of subrogation shall not be avoided by acquisition of an insured mortgage by an obligor (except an obligor described in Section l(a)(ii) of these Conditions and Stipulations) who acquires the insured mort- gage as a result of an indemnity, guarantee, other policy of insurance, or bond and the obligor will not be an insured under this policy, notwithstanding Sec- tion l(a)(i) of these Conditions and Stipulations. 13. ARBITRATION Unless prohibited by applicable law, either the Company or the insured may demand arbitration pursuant to the Title Insurance Arbitration Rules of the American Arbitration Association. Arbitrable matters may include, but are not limited to, any controversy or claim between the Company and the insured arising out of or relating to this policy, any service of the Company in connec- tion with its issuance or the breach of a policy provision or other obligation. All arbitrable matters when the Amount of Insurance is $1,000,000 or less shall be arbitrated at the option of either the Company or the insured. All arbitrable matters when the Amount of Insurance is in excess of $1,000,000 shall be arbitrated only when agreed to by both the Company and the insured. Arbitra- tion pursuant to this policy and under the Rules in effect on the date the demand for arbitration is made or, at the option of the insured, the Rules in effect at Date of Policy shall be binding upon the parties. The award may include attorneys' fees only if the laws of the state in which the land is located permit a court to award attorneys' fees to a prevailing party. Judgment upon the award rendered by the Arbitrator(s) may be entered in any court having jurisdiction thereof. The law of the situs of the land shall apply to an arbitration under the Title Insurance Arbitration Rules. A copy of the Rules may be obtained from the Company upon request. 14. LIABILITY LIMITED TO THIS POLICY; POLICY ENTIRE CONTRACT (a) This policy together with all endorsements, if any, attached hereto by the Company is the entire policy and contract between the insured and the Com- pany. In interpreting any provision of this policy, this policy shall be construed as a whole. (b) Any claim of loss or damage, whether or not based on negligence, and which arises out of the status of the lien of the insured mortgage, or of the title to the estate or interest covered hereby, or by any action asserting such claim shall be restricted to this policy. (c) No amendment of or endorsement to this policy can be made except by a writing endorsed hereon or attached hereto signed by either the President, a Vice President, the Secretary, an Assistant Secretary, or validating officer or authorized signatory of the Company. 15. SEVERABILITY In the event any provision of this policy is held invalid or unenforceable under applicable law, the policy shall be deemed not to include that provision and all other provisions shall remain in full force and effect. 16, NOTICES, WHERE SENT All notices required to be given the Company and any statement in writing required to be furnished the Company shall include the number of this policy and shall be addressed to the Company at the issuing office or to: Chicago TiU ,~ursnce Company Claims Dep~ ,~nt 111 West Wa~'n~ngton Street Chicago, Illinois 60602 · ~o be correct, th~ ~o~a~y ' %~'ssu~es ~o l~ab~t'Y for ~ loss' oCcurinS by ~eason o~ ~ . ', -' . ~ . ',' ' ~0~<~Z · o - ~ ~ "~0 '~0 N~OD I o~ I g~l'~ ~ ~' ...., .~ .... .. ~ ~ ~....' · . ~1 ~ ---=-- M, 8'097 0 I ~ I · o I ~o w c~ Z F. SIGFIUND LUTHER ATTORNEY AT LAW 450 "B" STREET, SUITE 1820 SAN DIEGO, CALIFORNIA 92101 {619) 239-O75S FAX (619} 239-OS~I July 10, 1991 Warren H. Shafer City of Encinitas 527 Encinitas Boulevard Encinitas, California 92024 Re: Vulcan Square Dear Mr. Shafer: Accompanying this letter are three counterpart originals of the proposed Purchase and Sale Contract. Each of the accompanying documents bears the signatures of James H. Harker, Trustee, David R. Somerville, Trustee and Stelca A. Somerville, Trustee. The purchase and sale contract as signed by my clients represents the terms and conditions under which they are willing to sell to the City of Encinitas their ownership interest in Vulcan Square in lieu of proceeding by way of eminent domain. If the form and content of the purchase and sale contract is acceptable to the City of Encinitas, I request that (1) all of the originals of the Purchase and Sale Contract be (i) duly executed by an appropriately authorized representative of the City (I believe that to be you), (ii) dated as of the date the document is signed by the City and (2) two of the fully signed originals be delivered to my clients on or before August 9, 1991, at 5:00 p.m., at their office in Solana Beach. My clients will keep one of the original% and deliver the other to escrow. If a counterpart original of the Purchase and Sale Contract is not delivered to my clients on or before August 9, 1991, at 5:00 p.m., then the offer represented by the Purchase and Sale Contract shall expire and be deemed automatically withdrawn. FSL/kaf Enclosures cc: James H. Harker HASKINS, NUGENT & NEWNI-IAH ATTOI=INEY~ AT LAW ~o~o SrCONO AVENUe. SUITE ~aoo SAN DI]~GO, CALIFORNIA ~2101-3044 LA JOLLA OFFICE PROSPECT STREET. SUITE 3OS LA JOLLA, CALIFORNIA 920'a7 ESCONDIDO OFFICE TELEPHONE (619) 74~-r>101 August 23, 1991 Mr. Jim Benson Assistant city Manager City of Encinitas 527 Encinitas Blvd. Encinitas, Ca. 92024 Mr. James Harker P.O. Box 1117 Solana Beach, Ca. 92075 F. Sigmund Luther, Esq. 450 B Street - Suite 1820 San Diego, Ca. 92101 Gentlemen: I enclose a revised copy of the Agreement of Purchase and Sale for your review. Please look it over and then give me a call. Sincerely, DH:dc Enclosure AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS VULCAN SQUARE SHOPPING CENTER TABLE OF CONTENTS Page 1. Purchase and Sale ................... 2 2. Purchase Price ..................... 2 3. Payment of Purchase Price ............... 2 4. Condition of Title ................... 3 5. Escrow ......................... 3 6. Conditions to the Close of Escrow ........... 3 7. Deliveries to Escrow Holder .............. 9 8. Deliveries to Buyer Upon Close of Escrow ........ 11 9. Title Insurance .................... 11 10. Costs and Expenses ................... 11 11. Prorations ....................... 12 12. Disbursements and Other Actions by Escrow Holder .... 13 13. Seller's Representations and Warranties ........ 14 14. Buyer's Representations and Warranties ......... 20 15. Condemnation and Destruction .............. 21 16. Indemnification .................... 22 17. Notices ........................ 24 18. No Brokeraqe Commissions ................ 25 19. Required Actions of Buyer and Seller .......... 25 20. Entry ......................... 25 21. Leqal and Equitable Enforcement of this Agreement . . . 26 22. Seller's Replacement Property ............. 27 23. Miscellaneous ..................... 27 i Exhibits A B C D E F G H I J K Page of First Reference Legal Description 1 Surveyor's Certificate 4 Expiration Notice 6 Chapel Letter 6 Grant Deed 9 Quitclaim Deed 2 General Assignment 9 Transferor's Certificate of Non-Foreign Status 10 (F1RPTA Certificate) Asbestos Remediation 2 Memorandum of Purchase 2 Escrow General Conditions 3 ii · ,QREF~ENT OF PURCHASE ~1~ S~%LE JOINT ESCROW INSTRUCTIONS To: Escrow No. Escrow Officer: Cal-West Escrow Co. 320 N. Highway 101 Encinitas, Ca. 92024 Lorraine Martin THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of the 29th day of August, 1991, by and between James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended, whose post office address is P.O. Box 1117, Solana Beach, California 92075 (collectively "Seller"), and the City of Encinitas, a municipal corporation, whose address is 527 Encinitas Boulevard, Encinitas, California 92024 ("Buyer"). A. Seller is the owner of the Real Property located in the City of Encinitas ("City"), County of San Diego ("County"), State of California ("State") and more particularly described in Exhibit "A" attached hereto. B. The Real Property is improved with the Improvements. C. The Real Property and Improvements are sometimes herein collectively referred to as the "Project" which is commonly known as Vulcan Square Shopping Center. D. The Project is presently encumbered by that certain Deed of Trust and Assignment of Rents ("Existing Trust Deed") dated March 17, 1989, made by David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust, dated February 27, 1980, as to an undivided one-half interest and James H. Harker, as Trustee of the Harker 1976 Family Trust, dated April 21, 1976 as to an undivided one-half interest, as Trustor, for the benefit of San Dieguito National Bank, a national bank ("Existing Lender"), as Beneficiary, and recorded in the Official Records on March 21, 1989 as File No. 89-143345. The Existing Trust Deed secures payment of an indebtedness with an outstanding unpaid balance of Five Hundred Ten Thousand One Hundred Twenty-eight Dollars and Ninety- one Cents ($510,128.91) as of August 1, 1991 ("Existing Financing"). The Existing Financing is evidenced by that certain Promissory Note ("Existing Note") dated March 17, 1989 made payable by the foregoing to Existing Lender in the original stated principal amount of six Hundred Thousand Dollars ($600,000). E. Buyer is a municipal corporation with power of eminent domain, and Buyer has identified the Project as being suitable for the relocation of Buyer's city offices. Buyer and Seller have each previously obtained appraisal reports prepared by competent appraisers pertaining to the value of the Project. The parties desire to avoid the expenses and delays which would be incurred in connection with a contested condemnation proceeding, including, but not necessarily limited to, rental loss to Seller as a consequence of threatened condemnation. F. Capitalized terms shall have the meanings set forth following the use of such terms. If no definition is so set forth such capitalized terms shall have the meanings set forth in the Glossary of Terms attached hereto. G. Buyer desires to purchase from Seller, and Seller desires to sell to Buyer, the Property. The terms of this Agreement and the Escrow Holder's instructions are as follows: 1. Purchase and Sale. Seller agrees to sell to Buyer, and Buyer agrees to purchase from Seller, the Property upon the terms and conditions set forth in this Agreement. 2. Purchase Price. The Purchase Price ("Purchase Price") for the Property shall be Five Million Eight Hundred Seventy Five Thousand Dollars ($5,875,000.00). 3. Payment of Purchase Price. The Purchase Price shall be payable as follows: (a) Deposit. Upon the Opening of Escrow, Buyer shall deposit into Escrow cash or Cash Equivalent in the amount of One Hundred Fifty Thousand Dollars ($150,000.00) ("Deposit"). The Deposit shall be invested by Escrow Holder in a federally-insured interest-bearing account with any interest accruing thereon to be paid or credited to Buyer. (b) Upon approval by Buyer of the Title Documents (paragraph 6(a)(i)), Inspections and Studies (paragraph 6(a)(iii)), and the Asbestos Remediation in accordance with the provisions of Exhibit "I", Buyer shall instruct Escrow to release the Deposit (the "Release") to Seller, with any interest earned thereon to be released to Buyer. The Deposit shall be applied to the Purchase Price and, in the event of a default by Buyer hereunder, shall be liquidated damages to Seller as provided below. Concurrently with the Release, Escrow Holder shall (i) record the "Memorandum of Purchase" in the form attached as Exhibit "J", which shall be executed by Buyer and Seller and delivered to Escrow Holder prior 2 to the Release, and (ii) deliver the "Quitclaim Deed" executed by Buyer, in the form attached as Exhibit "F", to F. Sigmund Luther, Esq., counsel to Seller, providing for the conveyance by Buyer to Seller of any rights under the Memorandum of Purchase. Seller's counsel may record the Quitclaim Deed only after the expiration of ten days from the date of receipt by Buyer of a written notice of termination from Seller, given in good faith ("Termination Notice"), asserting Seller's belief that the Agreement has been terminated by reason of failure of a condition, or breach by the Buyer, specifying with particularity the condition or breach relied upon. Should Buyer disagree, Buyer may commence an action and file a notice of pendency of action within such ten-day period. (c) Cash Balance. At least twenty-four (24) hours before the Closing Date, Buyer shall deposit into Escrow cash or Cash Equivalent by wire transfer in the amount of the balance of the Purchase Price. (d) At the Close of Escrow, the Existing Financing shall be paid in full from Seller's proceeds. (e) Subject to a possible holdback pursuant to paragraph 6(a)(iv), Escrow Holder shall disburse the balance of funds pursuant to paragraph 12. 4. Condition of Title. At the Close of Escrow, fee simple title to the Project shall be conveyed to Buyer by Seller by the Grant Deed, subject only to the following matters ("Approved Title Conditions"): (a) a lien for real property taxes, not then delinquent; (b) matters of title respecting the Project approved by Buyer in accordance with Paragraph 6(a)(i); and (c) matters affecting the condition of title to the Project created by or with the written consent of Buyer. 5. Escrow. (a) Openinq of Escrow. Buyer and Seller shall promptly cause the Opening of Escrow by delivering a fully executed copy of this Agreement to Escrow Holder. The Close of Escrow shall occur on the Closing Date. Buyer and Seller shall execute and deliver to Escrow Holder any additional or supplementary instructions as may be necessary or convenient to implement the terms of this Agreement and close the transaction contemplated hereby. Buyer and Seller shall also execute such reasonable general provisions as Escrow Holder may require, which shall be attached to this Agreement as Exhibit K. 6. Conditions to the Close of Escrow. (a) Conditions Precedent to Buyer's Obliqations. The Close of Escrow and Buyer's obligations with respect to the transaction contemplated by this Agreement are subject 3 to the satisfaction, not later than the Closing Date (unless otherwise provided) of the following conditions, and the obligations of the parties with respect to such conditions are as follows: (i) Title. Buyer shall have approved the legal description of the Real Property attached hereto as Exhibit "A" and any matters of title as disclosed by the following documents and instruments ("Title Documents"): (A) a standard preliminary title report dated, or updated, on or after the date of this Agreement issued by the Title Company with respect to the Project ("Standard Preliminary Report"); (B) an "extended coverage" supplemental title report dated on or after the date of this Agreement issued by the Title Company with respect to the Project; (C) an A.L.T.A. survey ("Survey") of the Project prepared on or after the date of this Agreement together with a certificate from Nasland Engineering (Don Nasland), a licensed surveyor ("Surveyor's Certificate") which Surveyor's Certificate shall be in the form of the Surveyor's Certificate attached hereto as Exhibit "B" and incorporated herein by this reference, duly executed after the date of this Agreement; and (D) legible copies of all documents, whether recorded or unrecorded, referred to in the preliminary title report, supplemental title report or Survey. Seller shall cause the Title Company to deliver the items listed under paragraph (A) and those documents referred to in the Preliminary Title Report under paragraph (D) of the Title Documents to Buyer within ten (10) days after the Opening of Escrow, and Buyer shall obtain delivery of the remaining documents. Buyer shall have until the Contingency Date to give the Seller and the Escrow Holder written notice ("Buyer's Title Notice") of Buyer's disapproval of the legal description or any Title Document. The failure of Buyer to give Buyer's Title Notice shall be deemed to constitute approval of the legal description and all Title Documents. In the event of Buyer's disapproval of any matters of title shown in the Title Documents, within ten (10) days after Buyer's Title Notice, Seller shall give Buyer written notice ("Seller's Title Notice") of those disapproved title matters, if any, which Seller shall eliminate from the Title Policy and as exceptions to title to the Project; Seller shall only be responsible, if Seller so elects, for removal of items contained, and documents referred to in the Standard Preliminary Report. As to Title Documents for which Seller has no responsibility, Buyer may elect to approve or disapprove them within the Contingency Period. If Buyer approves of Seller's Title Notice, Seller shall eliminate by the Closing Date those disapproved matters set forth in Seller's Title Notice from the Title Policy and as exceptions to title to the Project. Notwithstanding the foregoing, Buyer hereby objects to all liens evidencing monetary encumbrances (other than liens for non- delinquent property taxes), and Seller agrees to cause all such liens to be eliminated at Seller's sole cost (including all prepayment penalties and charges) on or prior to the Close of Escrow. (ii) Review and Approval of Documents. Upon Opening of Escrow, Seller shall deliver to Buyer (or at Seller's option, make available to Buyer at Seller's office) for Buyer's review and approval the documents and materials respecting the Property set forth below. Seller has delivered to Buyer 263 pages of materials and documents relating to the Property (the "Delivered Documents"), which Seller believes constitutes, with the exception of the Plans, all materials and documents affecting the Property of a material nature, and which include the items described in subparagraphs (A) through (N) below. Except for the Plans, Seller believes the remaining materials and documents located at Seller's office are not essential to Buyer's decision to purchase the Property, but Buyer is welcome to review them. Buyer shall have until the Contingency Date (or such other date as may be specified) to review and approve the documents and materials delivered by Seller to Buyer. blank) (A) Personal Property Inventory. (Intentionally left (B) Rent Roi1. (Intentionally left blank) (C) Tenant Lease. A copy of the Tenant Lease and copies of all documents, agreements and other writings referenced in and affecting the Tenant Lease. Seller has represented to Buyer that the only Tenant is Calvary Chapel North Coast ("Chapel"), and Seller has delivered to Buyer a true copy of the Chapel Lease together with all amendments and supplements thereto. Whenever the term "Tenant Lease" appears in this Agreement, it shall mean the Chapel lease. (D) Service Contracts. A list and legible copies of all Service Contracts relative to the Project identifying the names of the parties thereto and the date of such Service Contracts and all amendments, modifications and supplements thereto. Any Service Contract disapproved by Buyer in writing to Seller on or prior to the Contingency Date shall be terminated by Seller, without cost or liability to Buyer, on or prior to the Closing Date and such disapproved Service Contract shall no longer be a Service Contract for purposes of this Agreement. (E) Operating Expense Statements. A list and copies of all Operating Expenses. (F) Records and Plans. A list and copies of all Records and Plans in Seller's possession or reasonably available to Seller. (G) Architect's Certificates. it has no architect's certificates. Seller represents that blank) (H) Governmental Compliance. (Intentionally left (I) Licenses and Permits. Licenses and Permits. A list and copies of all (J) Existing Financing Documents. A list and copies of the Existing Financing Documents. (K) Insurance Policies. A list and copies of all hazard, rent loss, liability, worker's compensation and other insurance policies currently in effect with respect to the Project, and copies of all claims and settlements made within the three most recent years of Fifty Thousand Dollars ($50,000.00) or more. (L) Property Tax Bill. Copies of the bills issued for the three (3) most recent years for all real property taxes and personal property taxes and copies of all notices or documents for any assessments or bonds relating to the Project. (M) UCC Searches. Results of a current search ("UCC Search") of all Uniform Commercial Code filings with respect to Seller and with respect to the Property. Buyer shall cause Escrow Holder to make the UCC search. (N) Other Information. Ail other information and legible copies of any additional documents in Seller's possession which, in the Buyer's good faith judgment, may materially affect the economic or physical condition of the Project. In this regard, Seller represents that in Seller's good faith judgment, except for the Plans, Seller has delivered to Buyer all such information and documents. (iii) Inspections and Studies. On or before the Contingency Date, Buyer shall have approved the results of any and all inspections, investigations, tests and studies (including, without limitation, investigations with regard to zoning, building codes and other governmental regulations, architectural inspections, engineering tests, economic feasibility studies and soils, seismic and geologic reports) with respect to the Project (including all structural and mechanical systems and leased areas) as Buyer may elect to make or obtain. The cost of any such inspections, tests and studies shall be borne by Buyer. (iv) Chapel Notices; Holdback. Seller shall have delivered a notice to Chapel, immediately upon release of the Deposit to Seller, in the form attached as Exhibit C ("Expiration Notice"), confirming the expiration date of the Chapel Lease. Promptly after opening of Escrow, Seller shall use its reasonable best efforts to obtain the signature(s) of Chapel's governing body to a letter of acknowledgement of lease expiration, in the form attached as Exhibit D ("Chapel Letter"). Seller acknowledges the importance to Buyer of obtaining possession of the entire Project at Close of Escrow, 6 enabling Buyer promptly to commence its remodelling work, and thereby vacate its existing leased premises at the earliest possible date. Should Chapel fail to vacate by the Close of Escrow, therefore, the following shall apply: 1. Escrow shall retain the sum of Twenty-eight Thousand Four Hundred Seventy-five Dollars ($28,475) (the "Holdback") from Seller's proceeds, to be held and disbursed by Escrow Holder as provided herein. 2. Buyer shall immediately file, serve and diligently prosecute such notices and lawsuit as are necessary to evict Chapel from the Project at the earliest possible date and recover against the Chapel a judgment for possession and damages for unlawful detention. to Seller. Upon obtaining judgment, Buyer shall assign it 4. Buyer shall submit to Seller and Escrow Holder a written statement ("Buyer's Cost Notice"), certified by Buyer's authorized representative as correct, stating (i) the amount of Buyer's attorney's fees and costs incurred in the Chapel eviction proceeding (which amount shall be limited to reasonable attorneys' fees and, in no event, shall exceed $5,000); (ii) the reasonable rental value of the Project area actually occupied by Chapel from the Close of Escrow until its complete vacation of such premises, based upon Chapel's existing per square foot rental rate (total monthly rent now is $14,237.38); and (iii) an itemization of the amount, if any, of costs incurred by Buyer following Chapel's vacation of such premises properly deductible from Chapel's security deposit; and (iv) the amount of any rent and attorneys' fees actually received by Buyer from Chapel. Unless contested by notice in writing from Seller to Buyer and Escrow Holder within five (5) days of receipt of Buyer's Cost Notice, Escrow shall disburse to Buyer the total of items (i) and (ii), less item (iii), deduct any additional reasonable fees and costs of Escrow Holder, and disburse the balance to Seller. As used herein, "the amount of any rent and attorneys' fees actually received by Buyer from Chapel" shall include the amount Buyer may deduct from Chapel's security deposit for attorneys' fees incurred in connection with the eviction and damages for unlawful detention provided that the balance of Chapel's security deposit is sufficient to pay in full any claim by Buyer against Chapel for damage to the premises upon Chapel's vacation of such premises. 5. Should Buyer elect to allow Chapel to remain for a period of time ("Buyer's Election") rather than immediately prosecuting its eviction proceeding, Buyer shall be entitled to no portion of the Holdback, which upon such election and after five (5) days written notice from Seller to Buyer and Escrow Holder of Seller's claim of Buyer's Election, uncontested by Buyer, shall be 7 disbursed to Seller. (v) Tenant Estoppel Certificate. (Intentionally left blank) (vi) Moratorium. (Intentionally left blank) (vii) Representations, Warranties and Covenants. Seller shall have duly performed each and every agreement to be performed by Seller hereunder and Seller's representations, warranties and covenants set forth in this Agreement shall be true and correct as of the Closing Date. (viii) No Material Chanqes. At the Closing Date, there shall have been no material adverse changes in the physical condition of the Project as provided in paragraph 15(b). (ix) Seller's Deliveries. Seller shall have delivered the items described in Paragraph 6(a), Paragraph 7(a) and Paragraph 8. (x) Title Insurance. As of the Close of Escrow, the Title Company shall have issued or shall have committed to issue the Title Policy to Buyer. ~ The conditions set forth in this Paragraph 6(a) are solely for the benefit of Buyer and may be waived only by Buyer. Buyer shall at all times have the right to waive any condition. Such waiver or waivers shall be in writing to Seller. The waiver by Buyer of any condition shall not relieve Seller of any liability or obligation with respect to any representation, warranty, covenant or agreement of Seller. All approvals given by Buyer under this Paragraph 6(a) shall be in writing, and except for the procedures regarding Title in paragraph 6(a)(i), the failure of Buyer to approve any matter requiring its approval under this Paragraph 6(a) by the time therefor shall be deemed disapproval thereof by Buyer. Neither Seller nor Buyer shall act or fail to act for the purpose of permitting or causing any condition to fail (except to the extent Buyer, in its own discretion, exercises its right to disapprove any such items or matters). (b) Conditions Precedent to Seller's Obliqations. The Close of Escrow and Seller's obligations with respect to the transactions contemplated by this Agreement are subject to Buyer's delivery to Escrow Holder on or before the Closing Date for disbursement as provided herein of the Purchase Price and the documents and materials described in Paragraph 7(b), and Buyer having duly performed each and every agreement to be performed by Buyer. (c) Failure of Conditions to Close of Escrow. In the event any of the conditions set forth in Paragraph 6(a) or Paragraph 6(b) are not timely satisfied or waived, for a reason 8 other than the default of Buyer or Seller under this Agreement: (i) This Agreement, the Escrow and the rights and obligations of Buyer and Seller shall terminate, except as otherwise provided herein. However, no such termination shall occur until (A) Buyer has had the opportunity to waive any condition for Buyer's benefit within two (2) business days after the later of Buyer's receipt of written notice from Seller or Buyer's discovery, that such condition will not be satisfied, and (B) Buyer does not elect to waive such condition; and (ii) Escrow Holder is hereby instructed to promptly return to Seller and Buyer all funds (including the Deposit and interest thereon unless Buyer is in default hereunder) and documents deposited by them, respectively, into Escrow which are held by Escrow Holder on the date of said termination (less, in the case of the party otherwise entitled to such funds, however, the amount of any cancellation charges required to be paid by such party under Paragraph 6(d)). (d) In the event this Escrow terminates because of the nonsatisfaction of any condition for a reason other than the default of Buyer or Seller under this Agreement, the cancellation charges required to be paid by and to Escrow Holder and the Title Company shall be borne one-half (1/2) by Seller and one-half (1/2) by Buyer and all other charges shall be borne by the party incurring same. 7. Deliveries to Escrow Holder. (a) By Seller. Seller hereby covenants and agrees to deliver or caused to be delivered to Escrow Holder on or prior to the Closing Date the following instruments and documents, the delivery of each of which shall be a condition to the performance by Buyer of its obligations under the terms of this Agreement: (i) A Grant Deed ("Grant Deed") duly executed and acknowledged in recordable form by Seller, conveying the Project to Buyer subject only to the Approved Title Conditions. The Grant Deed shall be in the form of, and upon the terms contained in, Exhibit "E" attached hereto. (ii) Bill of Sale. (Intentionally left blank) (iii) Assiqnment of Leases. (Intentionally left blank) (iv) General Assiqnment. An assignment ("General Assignment"), duly executed by Seller, assigning to Buyer all of Seller's right, title and interest in and to all Service Contracts, Licenses and Plans and all Records and Plans. The General Assignment shall be in the form of, and upon the terms contained in, Exhibit "G" attached hereto. (v) Non-Foreiqn Certification. A certification duly executed by Seller under penalty of perjury in the form of, and upon the terms set forth in, the Transferor's Certificate of Non- Foreign Status attached hereto as Exhibit "H" ("FIRPTA Certificate"), setting forth Seller's address and federal tax identification number and certifying that Seller is a "United States Person" and that Seller is not a "foreign person" in accordance with and/or for the purpose of the provisions of Sections 7701 and 1445 (as may be amended) of the Internal Revenue Code of 1954, as amended, and any regulations promulgated thereunder. left blank) (vi) Tenant Notification Letter. (Intentionally (vii) Chanqe of Address. Written notices executed by Seller to taxing authorities having jurisdiction over the Project, changing the address for service of notice and delivery of statements and bills, the form of which notice shall be furnished to Seller by Buyer prior to Close of Escrow. (viii) Proof of Authority. Such proof of Seller's authority and authorization to enter into this Agreement and consummate the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Seller to act for and bind Seller as may be reasonably required by Title Company and/or Buyer. Buyer shall review such proof within the later of five (5) days of receipt of such instruments and documents, or the expiration of the Contingency Period, and shall approve or disapprove in accordance with the paragraph following 6 (a) (x) . (ix) Lien Affidavits. Any lien affidavits or mechanic's lien indemnifications as may be reasonably requested by the Title Company in order to issue the Title Policy. (b) By Buyer. Buyer hereby covenants and agrees to deliver or cause to be delivered to Escrow Holder on or prior to the Closing Date the following instruments and documents, the delivery of each of which shall be a condition to the performance by Seller of Seller's obligations under the terms of this Agreement and to the Close of Escrow: (i) Purchase Price. The Purchase Price in accordance with Paragraph 3. (ii) Prorations. The amount due Seller, if any, after the prorations are computed in accordance with Paragraph 11. 10 8. Deliveries to Buyer Upon Close of Escrow. Seller shall deliver possession of the Property to Buyer upon the Close of Escrow, subject only to the possible holdover occupancy of Chapel. Further, Seller hereby covenants and agrees to deliver to Buyer, on or prior to the Closing Date, the following items, the delivery of each of which shall be a condition to the performance by Buyer of its obligations under the terms of this Agreement: (a) Tenant Lease. Originals of the Tenant Lease or, to the extent the original Tenant Lease is unavailable, a duplicate original thereof with a certificate executed by Seller warranting the authenticity of such duplicate original. (b) Rent Roi1. (Intentionally left blank) (c) Service Contracts. Originals of all Service Contracts or, to the extent an original Service Contract is unavailable, a duplicate original thereof with a certificate executed by Seller warranting the authenticity of such duplicate original. (d) Records and Plans. Originals of the Records and Plans, in Seller's possession, except for those Records to be retained by Seller which Buyer has reviewed at Seller's office. (e) Keys. Keys to all entrance doors to the Improvements , which keys shall be properly tagged for identification. (f) Personal Property. (Intentionally left blank) (g) Licenses and Permits. Originals of all Licenses and Permits or, to the extent an original of a License or Permit is unavailable, a duplicate original thereof with a certificate executed by Seller warranting the authenticity of such duplicate original. (h) Operatinq Expenses Statement. A certified statement setting forth the operating expenses incurred by Seller for the year in which this Agreement is executed. 9. Title Insurance. At the Close of Escrow, Seller shall cause the Title Company to issue to Buyer, upon payment of premium as provided in paragraph 10, an A.L.T.A. 1990 Form B Owner's Policy of Title Insurance with any title endorsements requested by Buyer showing fee title to the Project vested in Buyer subject only to the Approved Title Conditions ("Title Policy"). The Title Policy shall be issued with liability in an amount equal to the Purchase Price. 10. which would be Costs and Expenses. charged for a Seller shall pay (a) the premium C.L.T.A. title policy, (b) all 11 documentary transfer taxes, (c) one-half (1/2) of all escrow fees and costs, (d) all sales and gross receipts taxes, and (e) Seller's share of prorations. Buyer shall pay the excess premium over the C.L.T.A. amount for the Title Policy, the costs of survey, any document recording charges, one-half (1/2) of all escrow fees and costs and Buyer's share of prorations. Buyer and Seller shall each pay all legal and professional fees and fees of other consultants incurred by Buyer and Seller', respectively. All other costs and expenses shall be allocated between Buyer and Seller in accordance with the customary practice in the County. 11. Prorations. (a) General. Revenues and other income, if any, from the Property, and real property taxes and operating expenses, if any, affecting the Property shall be prorated as of 11:59 P.M. on the day preceding the Close of Escrow. For purposes of calculating prorations, Buyer shall be deemed to be in title to the Property, and therefore entitled to the income and responsible for the expenses, for the entire day upon which the Close of Escrow occurs. (b) Rentals. (Intentionally left blank) (c) Delinquent Rentals. (Intentionally left blank) (d) left blank) Operating Cost Pass-Throuqhs, Etc. (Intentionally (e) Prepaid Rentals. (Intentionally left blank) (f) Taxes and Assessments. Ail non-delinquent real estate taxes on the Property shall be prorated as of the Close of Escrow based on the actual current tax bill, but if such tax bill has not yet been received by Seller by the Close of Escrow then current year's taxes shall be deemed to be one hundred two percent (102%) of the amount of the previous year's tax bill. All delinquent taxes and all assessments, if any, on the Property shall be paid at the Close of Escrow from funds accruing to Seller. All supplemental taxes billed after the Close of Escrow for periods prior to the Close of Escrow shall be paid promptly by Seller. (g) Operatinq Expenses. Ail utility service charges for electricity, heat and air conditioning service, other utilities, common area maintenance, taxes (other than real estate taxes) such as rental taxes, other expenses incurred in operating the Property that Seller customarily pays, and any other costs incurred in the ordinary course of business or the management and operation of the Project shall be prorated on an accrual basis. Seller shall pay all such expenses that accrue prior to the Close of Escrow and Buyer shall pay all such expenses accruing on the Close of Escrow and thereafter. To the extent possible, Seller and Buyer shall obtain billings and meter readings as of the Close of Escrow to aid 12 in such prorations. (h) Commissions. Seller shall pay in full all leasing commissions with respect to the Tenant Leases entered into as of or prior to the Close of Escrow without contribution or proration from Buyer. (i) Tenant Deposits. Buyer shall be credited with the sum of $14,050, being the Chapel security deposit, should Chapel remain in possession on the Closing Date, in which case Buyer shall (subject to the provisions of paragraph 6(a) (iv) concerning the Chapel Holdback) assume the Liability to Chapel for return of the deposit at the time the Chapel vacates. (j) Capital Expenditures. Ail capital and other improvements (including labor and materials) which are performed or contracted for by Seller at or prior to the Close of Escrow shall be paid by the Seller, without contribution or proration from Buyer. (k) Service Contracts. Amounts payable under Service Contracts shall be prorated on an accrual basis. Seller shall pay all amounts due thereunder which accrue prior to the Close of Escrow and Buyer shall pay all amounts accruing on the Close of Escrow and thereafter. (1) Method of Proration. Ail prorations shall be made in accordance with customary practice in the County, except as expressly provided herein. Buyer and Seller shall prepare a schedule of tentative prorations prior to the Closing Date. Such prorations, if and to the extent known and agreed upon as of the Close of Escrow, shall be paid by Buyer to Seller (if the prorations result in a net credit to the Seller) or by Seller to Buyer (if the prorations result in a net credit to the Buyer) by increasing or reducing the cash to be paid by Buyer at the Close of Escrow. Any such prorations not determined or not agreed upon as of the Close of Escrow shall be paid by Buyer to Seller, or by Seller to Buyer, as the case may be, in cash as soon as practicable following the Close of Escrow. A copy of the schedule of prorations as agreed upon by Buyer and Seller shall be delivered to Escrow Holder at least three (3) business days prior to the Closing Date. 12. Disbursements and Other Actions by Escrow Holder. At the Close of Escrow, Escrow Holder shall promptly undertake all of the following in the manner hereinbelow indicated: (a) Funds. Disburse all funds deposited with Escrow Holder by Buyer in payment of the Purchase Price as follows: (i) Deduct all items chargeable to the account of Seller pursuant to Paragraph 6(a) (iv), if any, and Paragraph 10. 13 (ii) If, as the result of the prorations and credits pursuant to Paragraph 11, amounts are to be charged to account of Seller, deduct the total amount of such charges. (iii) Disburse the balance of the Purchase Price to Seller promptly upon the Close of Escrow. (iv) Disburse the remaining balance of the funds, if any, to Buyer promptly upon the Close of Escrow. (b) Recording. Cause the Grant Deed and any other documents which the parties hereto may mutually direct to be recorded in the Official Records and obtain conformed copies thereof for distribution to Buyer and Seller. (c) Title Policy. Title Policy to Buyer. Direct the Title Company to issue the (d) Disbursement of Documents to Buyer. Disburse to Buyer the General Assignment, the FIRPTA Certificate, the change of address notices duly executed by Seller and any other documents (or copies thereof) deposited into Escrow by Seller pursuant hereto. 13. Seller's Representations and Warranties. In addition to any express agreements of Seller contained herein, the following constitute representations and warranties of Seller to Buyer: (a) Representations Reqardinq Seller's Authority. (i) Seller has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby. (ii) Ail requisite action (trust, partnership or otherwise) has been taken by Seller in connection with the entering into of this Agreement, the instruments referenced herein, and the consummation of the transactions contemplated hereby. No consent of any partner, creditor, investor, judicial or administrative body, Authority or other party is required. (iii) The individuals executing this Agreement and the instruments referenced herein on behalf of Seller and the partners, officers or trustees of Seller, if any, have the legal power, right, and actual authority to bind Seller to the terms and conditions hereof and thereof. (iv) This Agreement and all documents required hereby to be executed by Seller are and shall be valid, legally binding obligations of and enforceable against Seller in accordance with their terms, subject only to applicable bankruptcy, insolvency, reorganization, moratorium laws or similar laws or equitable principles affecting or limiting the rights of 14 contracting parties generally. (v) Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the documents referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note, or other evidence of indebtedness or any contract, indenture, mortgage, deed of trust, loan, partnership agreement, lease or other agreements or instruments to which Seller is a party or affecting the Project. The triggering of the due-on-sale clause in the Existing Financing shall not constitute a breach of this provision. (vi) The Sellers are licensed California real estate brokers. (b) Warranties and Representations Pertainina to Real Estate and Leqal Matters. (i) true and correct. The information contained in the Recitals is (ii) To the best of Seller's knowledge, there are no pending, threatened or contemplated actions, suits, arbitrations, claims or proceedings, at law or in equity, affecting the Property or in which Seller is, or to the best of Seller's knowledge will be, a party by reason of Seller's ownership of the Property, including, but not limited to, judicial, municipal or administrative proceedings in (1) eminent domain (other than as set forth in the Recitals), (2) unlawful detainer or Tenant evictions, (3) collections, (4) alleged building code, health and safety or zoning violations, (5) employment discrimination or unfair labor practices, or worker's compensation, and/or (6) personal injuries or property damages alleged to have occurred at the Project or by reason of the condition or use of the Property. (iii) No attachments, execution proceedings, assignments for the benefit of creditors, insolvency, bankruptcy, reorganization or other proceedings are pending or threatened against Seller or, to the best of Seller's knowledge, any general partners of Seller, nor are any of such proceedings contemplated by Seller or, to the best of Seller's knowledge, any general partner of Seller. (iv) (Intentionally left blank) (v) (Intentionally left blank) (vi) To the best of Seller's knowledge, and with 15 the exception of the shed which is approximately 10 feet by 40 feet on the southwest corner of the Real Property, the Improvements have been constructed in accordance with applicable building codes pursuant to appropriately issued building permits. (vii) (Intentionally left blank) (viii) Seller is the legal fee simple titleholder of the Project and has good and marketable title to the Project, free and clear of all liens, encumbrances, claims, covenants, conditions, restrictions, easements, rights of way, options, judgments or other matters, except as disclosed by the Title Documents. There shall be no voluntary change in the ownership, operation or control of Seller from the date hereof until the Close of Escrow. (ix) (Intentionally left blank) (x) To the best of Seller's knowledge, there are no defects in the major systems of the Improvements (including, but not limited to, the roofs, exterior walls, structural components and utility, plumbing, electrical, sprinkler and other mechanical systems) which would materially affect Buyer's use of the Project for its intended purpose. (xi) To the best of Seller's knowledge, there are no defects or conditions of the soil which will materially impair Buyer's intended use and operation of the Project. (xii) Within the three years preceding the Opening of Escrow, neither Seller, nor, to the best of Seller's knowledge, any Tenant has received any notices from any insurance company of any defects or inadequacies in the Property. (xiii) (Intentionally left blank) (xiv) (Intentionally left blank) (xv) Seller has not entered into any other contracts for the sale of the Property, nor do there exist any rights of first refusal or options to purchase the Property. (xvi) To the best of Seller's knowledge, there has been no release in or upon the Project of any hazardous waste (as such term is defined in California Health and Safety Code Section 25117). Seller has previously disclosed to Buyer that the southwest corner of the Real Property was previously operated as an automotive service station. Seller has previously provided to Buyer a report prepared by Geocon which did not disclose the presence of any hazardous waste upon the portion of the Real Property previously operated as an automotive service station. Seller recommends (and as is otherwise provided in this Agreement allows) that Buyer conduct Buyer's own investigation regarding the tential presence on the Project of any Hazardous Materials. ~~~ 16 (xvii) (Intentionally left blank) (xviii) (Intentionally left blank) Leases. (c) Representations Pertaining to Service Contracts; No (i) With the exception of the Operating Expense Statements which have been previously provided to Buyer (which documents are compilations of other original documents maintained by Seller), all documents delivered by Seller to Buyer are accurate copies of the originals. With respect to the Operating Expense Statements, the Operating Expense Statements fairly present the information set forth in a manner which is not misleading and are otherwise true, complete and correct in all material respects. (ii) There will be no leases, subleases, occupancies or tenancies in effect pertaining to the Project at Close of Escrow, with the possible exception of a holdover occupancy by Chapel, and Seller has no knowledge of any oral agreements with anyone with respect to the occupancy of the Project. (iii) To the best of Seller's knowledge, there are no service or maintenance contracts, warranties, guarantees or bonds (whether oral or written) which affect or will affect or which are or will be obligations of the Buyer or the Project, other than the Service Contracts. Except for the alarm contract, all of the Service Contracts may be terminated without penalty or other payment on thirty (30) days or less notice. (iv) The documents which Seller has previously delivered to Buyer and/or will make available to Buyer at Seller's office are all documents which are within the possession of, under the control of or reasonably available to, Seller, pertaining to the Property. (v) To the best of Seller's knowledge, the Operating Expense Statements are complete and accurate in all material respects as of the date thereof, and were prepared by Seller in the ordinary course of Seller's business from records maintained by Seller in the ordinary course of Seller's business. (vi) To the best Seller's knowledge, there is no current default or breach under the terms and provisions of any of the Title Documents, or the Service Contracts; the Service Contracts have not been, and will not be, amended or modified except as indicated herein. (vii) (Intentionally left blank) 17 (viii) (Intentionally left blank) (ix) There are no Employment Contracts and no employees of Seller who, by reason of any Governmental Regulations, or for any other reason whatsoever would become employees of Buyer as a result of the purchase of the Project by Buyer. (x) No leasing or brokerage fees or commissions of any nature whatsoever shall be or become due or owing to any person, firm, corporation or entity whomsoever after the Close of Escrow with respect to the Tenant Leases. (d) Representations, Warranties and Covenants Regarding Operation of the Project Through the Close of Escrow. (i) Seller hereby agrees, through and including the Close of Escrow and at the Seller's sole cost and expense, to (A) keep all existing insurance policies affecting the Project in full force and effect, (B) use due diligence and its best efforts to keep in full force and effect and/or renew all Licenses and Permits, (C) make all regular payments of interest and principal on the Existing Financing, (D) provide all services and to continue to operate, manage and maintain the Project (including mechanical equipment of every kind used in the operation thereof) in such condition so that the Project shall be in the same condition on the Close of Escrow as on the date hereof, reasonable wear and tear excepted, (E) comply with all Governmental Regulations, (F) deliver to Buyer copies of any Operating Expense Statements prepared after the date of this Agreement, and (G) keep Buyer timely advised of any repair or improvement required to keep the Project in such condition as aforesaid and which costs in excess of Twenty-Five Thousand Dollars ($25,000.00). (ii) Seller hereby agrees that Seller will not hereafter modify, extend or otherwise change any of the terms, covenants or conditions of the Tenant Lease, or enter into new leases or any other obligations or agreements affecting the Project, other than allowing the local realty board to conduct a seminar in Space 9 of the Project on September 11, 1991. (iii) Except as otherwise provided herein, Seller will not extend, renew, modify or replace any of the Service Contracts without the prior written consent of Buyer. If Buyer does not disapprove any request of Seller regarding a Service Contract within ten (10) business days of such request, Buyer shall be deemed to have approved such request. (iv) Seller will not, without the prior written consent of Buyer, convey any interest in the Licenses and Permits, the Records or Plans or any of the Property, and Seller will not subject the Property to any additional liens, encumbrances, covenants, conditions, easements, rights of way or similar matters 18 after the date of this Agreement which will not be eliminated prior to the Close of Escrow. (v) Seller will not make any Property, except in the ordinary course Property in its present condition. alterations to the of maintaining the (vi) Upon the close of escrow and subject to the provisions of the exhibit hereto pertaining to asbestos remediation, Seller shall deliver to Buyer vacant space in the Improvements in a broom-clean condition. (vii) Seller has paid or will pay in full, prior to the Close of Escrow, all bills and invoices for labor, goods, materials and services of any kind relating to the Property and utility charges, relating to the period prior to the Close of Escrow. Any alterations, installations, decorations and other work required to be performed under the Tenant Lease will by the Close of Escrow be completed and paid for in full. Any brokerage fee or similar commission which is or will become due and payable in connection with any Tenant Lease has been or will be paid by Seller prior to the Close of Escrow. (viii) Seller shall promptly notify Buyer of any change in any condition with respect to the Property or of any event or circumstance which makes any representation or warranty of Seller under this Agreement untrue or misleading, or any covenant of Buyer under this Agreement incapable or less likely of being performed, it being understood that the Seller's obligation to provide notice to Buyer shall in no way relieve Seller of any liability for a breach by Seller of any of its representations, warranties or covenants under this Agreement. (e) Asbestos Remediation. The matter of asbestos remediation shall be dealt with in accordance with the provisions of Exhibit "I" ("Asbestos Remediation"). (f) General Representation. No representation, warranty or statement of Seller in this Agreement or in any document, certificate or schedule furnished or to be furnished to Buyer pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact necessary to make the statements or facts contained therein not misleading. Except as is expressly provided in this Agreement, Seller makes no representations or warranties of any kind whatsoever, either directly or through agents, pertaining to the Property and/or the transaction contemplated to be effected hereby. Seller's representations and warranties made in this Paragraph 13 shall be continuing and shall be true and correct as of the Close of Escrow with the same force and effect as if remade by Seller in a separate certificate at that time. The truth and 19 accuracy of Seller's representations and warranties made herein shall constitute a condition for the benefit of Buyer to the Close of Escrow (as elsewhere provided herein) and shall survive, and shall not merge into, the Close of Escrow and the recording of the Grant Deed in the Official Records. 14. Buyer's Representations and Warranties. In addition to any express agreements of Buyer contained herein, the following constitute representations and warranties of Buyer to Seller: (a) Power. Buyer has the legal power, right and authority to enter into this Agreement and the instruments referenced herein, and to consummate the transactions contemplated hereby. (b) Requisite Action. Ail requisite action has been taken by Buyer in connection with the entering into this Agreement and the instruments referenced herein, and the consummation of the transactions contemplated hereby. (c) Authority. The individuals executing this Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof. (d) Validity. This Agreement and all documents required hereby to be executed by Buyer are and shall be valid, legally binding obligations of and enforceable against Buyer in accordance with their terms. (e) Conflicts. Neither the execution and delivery of this Agreement and documents referenced herein, nor the incurrence of the obligations set forth herein, nor the consummation of the transactions herein contemplated, nor compliance with the terms of this Agreement and the documents referenced herein conflict with or result in the material breach of any terms, conditions or provisions of, or constitute a default under, any bond, note, or other evidence of indebtedness or any contract, indenture, or other agreements or instruments to which Buyer is a party. (f) General Representation. No representation, warranty or statement of Buyer in this Agreement or in any document, certificate or schedule furnished or to be furnished to Seller pursuant hereto contains or will contain any untrue statement or a material fact, omits or will omit to state a material fact necessary to make the statements or facts contained therein not misleading. (g) Buyer's Investiqation. Buyer represents and warrants that Buyer has or will have employed consultants as Buyer has deemed necessary and has conducted investigations of the Property to determine its suitability for the use proposed by Buyer. Buyer acknowledges that, on or prior to the Closing Date, Buyer has or will have examined and approved all things concerning the Property which Buyer deems material to Buyer's decision to purchase the Property including, but not limited to, topography, geology, condition of the soil, condition of title to the Property and condition of the Improvements. Buyer further acknowledges and agrees that, except as specifically provided herein, Buyer is relying upon Buyer's own investigation and is not relying upon any information, whether written or oral, provided to Buyer by Seller and/or any broker and/or agent involved in the transaction evidenced by this Agreement. Anything in the foregoing notwithstanding, however, no investigations by Buyer shall relieve Seller of liability or responsibility for Seller's warranties, representations and covenants made herein. Buyer's representations and warranties made in this Paragraph 14 shall be continuing and shall be true and correct as of the Close of Escrow with the same force and effect as if remade by Buyer in a separate certificate at that time. The truth and accuracy of Buyer's representations and warranties made herein shall constitute a condition for the benefit of Seller to the Close of Escrow and shall survive, and shall not merge into the Close of Escrow or the recordation of the Grant Deed in the Official Records. 15. Condemnation and Destruction. (a) Eminent Domain or Taking. If, prior to the Close of Escrow, any material portion of the Real Property is taken or if the access thereto or available parking area therefor is reduced or restricted or if any of the rentable square footage of the Improvements is taken, by eminent domain or otherwise by an authority other than Buyer (or is the subject of a pending, threatened or contemplated taking which has not been consummated), Seller shall immediately notify Buyer of such fact. In such event, Buyer shall have the option, in its sole and absolute discretion, to terminate this Agreement upon written notice to Seller given not later than ten (10) days after receipt of Seller's notice. If this Agreement is so terminated, the provisions of Paragraph 6(c) shall govern. If Buyer does not exercise this option to terminate this Agreement, or if there has not been a material taking by eminent domain or otherwise to give rise to such option, neither party shall have the right to terminate this Agreement, but the Seller shall assign and turn over, and the Buyer shall be entitled to receive and keep, all awards for the taking by eminent domain which accrue to Seller and the parties shall proceed to the Close of Escrow pursuant to the terms hereof, without modification of the terms of this Agreement and without any reduction in the Purchase Price. Unless or until this Agreement is terminated, Seller shall take no action with respect to any eminent domain proceeding without the prior written consent of Buyer. 21 (b) Fire or Casualty. Prior to the Close of Escrow, and notwithstanding the pendency of this Agreement, the entire risk of loss or damage by earthquake, flood, landslide, fire or other casualty shall be borne and assumed by Seller, except as otherwise provided in this Paragraph 15(b). If, prior to the Close of Escrow, any part of the Improvements is damaged or destroyed by earthquake, flood, landslide, fire or other casualty, Seller shall immediately notify Buyer of such fact. If such damage or destruction is "material", Buyer shall have the option to terminate this Agreement upon written notice to the Seller given not later than ten (10) days after receipt of Seller's notice. For purposes hereof, "material" shall be deemed to be any uninsured damage or destruction to the Project or any insured damage or destruction where the cost of repair or replacement is estimated to be Fifty Thousand Dollars ($50.000.00) or more or shall take more than ninety (90) days to repair, in Buyer's good faith judgment; provided, however, in the case of uninsured damage or destruction, Seller may, at Seller's option, elect to repair such damage and destruction and keep this Agreement in full force and effect so long as such repair can be and is completed by Seller prior to the Closing Date. If this Agreement is so terminated, the provisions of Paragraph 6(c) shall govern. If Buyer does not exercise this option to terminate this Agreement, or if the casualty is not material, neither party shall have the right to terminate this Agreement but Seller shall assign and turn over, and Buyer shall be entitled to receive and keep, all insurance proceeds payable to it with respect to such destruction (which shall then be repaired or not at Buyer's option and cost), plus Seller shall pay over to Buyer an amount equal to the deductible amount with respect to the insurance and the parties shall proceed to the Close of Escrow pursuant to the terms hereof without modification of the terms of this Agreement and without any reduction in the Purchase Price. If Buyer does not elect to terminate this Agreement by reason of any casualty, Buyer shall have the right to participate in any adjustment of the insurance claim. 16. Indemnification. (a) Indemnification of Buyer. Seller hereby agrees to indemnify Buyer against, and to hold Buyer harmless from, all losses, damages, costs and expenses, including without limitation reasonable legal fees and disbursements, incurred by Buyer relating to the Property which arise or result from acts, occurrences or matters that took place prior to the Close of Escrow, and/or acts, occurrences or matters the existence or occurrence of which constitute a violation of one or more representations, warranties or covenants of Seller hereunder, and do not relate to obligations or liabilities expressly assumed by Buyer hereunder; provided, however, nothing contained herein shall obligate Seller with respect to, or negate or modify any liability of Buyer for breach of Buyer's representations, warranties and covenants in this Agreement. Buyer shall not be entitled to any such indemnification 22 or hold harmless, and Seller shall have no liability for such indemnification or hold harmless, or any other liability hereunder, with respect to any representation, warranty, agreement or covenant made or arising hereunder, and Buyer hereby waives and releases all claims against Seller hereunder, unless claim with respect to such liability is made by Buyer to Seller within twenty-four (24) months after the Close of Escrow, such written notice to Seller to set forth the specific breach or basis of liability asserted. (b) Defense of Claims Aqainst Buyer. With respect to any claim for which Buyer has requested indemnification under Paragraph 16(a) above, Seller will be entitled to assume the defense of any related litigation, arbitration or other proceeding, provided that Buyer may at its election and expense, participate in such defense, and provided further that in the event of any difference of opinion or strategy with respect to the defense of such action or the assertion of counterclaims to be brought with respect thereto, Seller's counsel will, after consultation with Buyer's counsel, determine the actual strategy, defense and counterclaim to be employed. At Seller's reasonable request, Buyer will cooperate with Seller in the preparation of any defense to any such claim, and Seller will reimburse Buyer for any reasonable expenses incurred in connection with such request. If Seller does not elect to assume the defense of any such matter, Seller shall have the right, at its sole expense, to employ separate counsel acceptable to Buyer and participate in such defense, provided that in the event of any difference of opinion or strategy with respect to the defense of such action or the assertion of counterclaims to be brought with respect thereto, Buyer's counsel will, after consultation with Seller's counsel, determine the actual strategy, defense and/or counterclaim to be employed. (c) Indemnification of Seller. Buyer hereby agrees to indemnify Seller against, and to hold Seller harmless from, all losses, damages, costs and expenses, including without limitation legal fees and disbursements, incurred by Seller relating to the Property which (i) arise or result from acts, occurrences or matters that take place after the Close of Escrow; provided, however, nothing contained herein shall obligate Buyer with respect to, or negate or modify any liability of Seller for a breach of Seller's representations, warranties and covenants in this Agreement, or (ii) arise or result from a breach by Buyer of its agreements, covenants, representations or warranties herein, or (iii) arise after Closing under obligations expressly assumed by Buyer. (d) Defense of Claims Aqainst Seller. With respect to any claim for which Seller has requested indemnification under Paragraph 16(c) above, Buyer will be entitled to assume the defense of any related litigation, arbitration or other proceeding, provided that Seller may at its election and expense, participate in such defense, and provided further that in the event of any 23 difference of opinion or strategy with respect to the defense of such action or the assertion of counterclaims to be brought with respect thereto, Buyer's counsel will, after consultation with Seller's counsel, determine the actual strategy, defense and counterclaim to be employed. At Buyer's reasonable request, Seller will cooperate with Buyer in the preparation of any defense to any such claim, and Buyer will reimburse Seller for any reasonable expenses incurred in connection with such request. If Buyer does not elect to assume the defense of any such matter, Buyer shall have the right, at its sole expense, to employ separate counsel acceptable to Seller and participate in such defense, provided that in the event of any difference of opinion or strategy with respect to the defense of such action or the assertion of counterclaims to be brought with respect thereto, Seller's counsel will, after consultation with Buyer's counsel, determine the actual strategy, defense and/or counterclaim to be employed. (e) Hazardous Materials. Notwithstanding the provisions of paragraphs 16 (a), (b), (c) and (d), the parties hereby acknowledge and agree that, with respect to any liability arising out of or pertaining to Hazardous Materials (1) the provisions of Paragraphs 16 (a), (b), (c) and (d) shall not be applicable and (2) the respective liabilities and responsibilities of the parties shall be determined and defined by Governmental Regulations and decisional law which may from time to time be applicable. 17. Notices. Ail notices or other communications required or permitted hereunder shall be in writing, and shall be personally delivered (including by means of professional messenger service) or sent by registered or certified mail, postage prepaid, return receipt requested, or by facsimile transmission followed by delivery of a "hard" copy, and shall be deemed received upon the date of receipt thereof. To Buyer: City of Encinitas 527 Encinitas Boulevard Encinitas, California 92024 Attn: Warren H. Shafer Telephone: 944-5057 Telecopy No. 632-9836 With a copy to: Deane Haskins, Esq. Haskins, Nugent & Newnham 1010 Second Ave. - Suite 2200 San Diego, California 92101 Telephone: 236-1323 Telecopy No. 238-0465 To Seller: James H. Harker P.O. Box 1117 Solana Beach, California 92075 24 With a copy to: F. Sigmund Luther, Esq. 450 "B" Street - suite 1820 San Diego, California 92101 Telephone: 239-0755 Telecopy No. 239-0541 To Escrow Holder: Cal-West Escrow Co. 320 N. Highway 101 Encinitas, Ca. 92024 Attn: Lorraine Martin, Escrow Officer Telephone: 455-9050 Telecopy No. 943-0122 Notice of change of address shall be given by written notice in the manner detailed in this Paragraph 17. 18. No Brokeraqe Commissions. Seller represents and warrants to Buyer, and Buyer represents and warrants to Seller, that except for James M. Hicks, Seller's licensed California Real Estate Broker, no broker or finder has been engaged by it, respectively, in connection with any of the transactions contemplated by this Agreement, or to its knowledge is in any way connected with any of such transactions. In the event of any such claims for brokers' or finders' fees or commissions in connection with the negotiation, execution or consummation of this Agreement, then Buyer shall indemnify, save harmless and defend Seller from and against such claims if they shall be based upon any statement or representation or agreement by Buyer, and Seller shall indemnify, save harmless and defend Buyer if such claims shall be based upon any statement, representation or agreement made by Seller. 19. Required Actions of Buyer and Seller. Buyer and Seller agree to execute all such instruments and documents and to take all actions pursuant to the provisions hereof in order to consummate the purchase and sale herein contemplated and shall use their good faith efforts to accomplish the Close of Escrow in accordance with the provisions hereof. 20. Entry. Buyer and Buyer's representatives, agents and designees shall have the right, at reasonable times and upon reasonable notice to Seller to enter upon the Property, at Buyer's own cost, for any purpose in connection with its proposed purchase, development or operation of the Property, including, without limitation, the right to examine all books, records and files of Seller relating to the Property and the right to make such inspections, investigations and tests (including all leased areas and mechanical systems) as Buyer may elect to make or obtain. Seller agrees to make all such books, records and files available to Buyer and Buyer's attorneys, accountants and other representatives at any time during business hours upon reasonable 25 notice from Buyer. Following Buyer's inspection of the Property, Buyer shall at its cost return the Property to its prior condition. From and after the execution of this Agreement, Buyer shall be entitled to communicate directly with the Tenants and the Authorities in connection with Buyer's proposed purchase, development or operation of the Property. The exercise by Buyer of any of the preceding or any other acts of Buyer shall not negate any representation, warranty or covenant of Seller or modify any of Buyer's rights or Seller's obligations in the event of any breach by Seller of any of its representations, warranties or covenants under this Agreement. Buyer hereby indemnifies Seller from any and all liabilities and losses (including mechanics' liens) arising out of any such entry by Buyer or its agents, designees or representatives, except those arising out of the presence of Hazardous Materials in, on, under or about the Project. Buyer shall have no liability to Seller for any actions taken by any Authority regarding Hazardous Materials by reason of contacts and inquiries made by Buyer of such Authority. 21. Leqal and Equitable Enforcement of this Aqreement. (a) Default by Seller. In the event the Close of Escrow and the consummation of the transactions herein contemplated do not occur by reason of any default by Seller, Buyer shall have the  right to pursue any remedy available to it at law or equity, including the specific performance of this Agreement. (b) Default by Buyer. IN THE EVENT THE CLOSING AND THE ONSUMMATION OF THE TRANSACTION HEREIN CONTEMPLATED DOES NOT OCCUR S HEREIN PROVIDED BY REASON OF ANY DEFAULT OF BUYER, BUYER AND ELLER AGREE THAT IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES WHICH SELLER MAY SUFFER. THEREFORE BUYER AND SELLER DO HEREBY AGREE THAT A REASONABLE ESTIMATE OF THE TOTAL NET DETRIMENT THAT SELLER WOULD SUFFER IN THE EVENT THAT BUYER DEFAULTS AND FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY IS AND SHALL BE, AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY) AN AMOUNT EQUAL TO THE DEPOSIT (WHICH INCLUDES ANY ACCRUED INTEREST THEREON). SAID AMOUNT SHALL BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR THE BREACH OF THIS AGREEMENT BY BUYER, ALL OTHER CLAIMS TO DAMAGES SUCH AS INVERSE CONDEMNATION OR OTHER REMEDIES BEING HEREIN EXPRESSLY WAIVED BY SELLER. THE PAYMENT OF SUCH AMOUNT AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTION 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 and 1677. SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. UPON DEFAULT BY BUYER, THIS AGREEMENT SHALL BE TERMINATED AND NEITHER PARTY SHALL HAVE ANY FURTHER RIGHTS OR OBLIGATIONS HEREUNDER, EACH TO THE OTHER EXCEPT FOR THE RIGHT OF SELLER TO COLLECT SUCH LIQUIDATED DAMAGES FROM BUYER AND ESCROW HOLDER. 26 Ir~' §- Initfals 22. Seller's Replacement Property. The parties acknowledge that the sale of the Real Property as provided in this Contract constitutes a sale in lieu of condemnation. The parties further acknowledge and agree that it is Seller's intention to utilize the proceeds from the sale of the Real Property to acquire other real property which will qualify for deferral of income tax pursuant to Internal Revenue Code Section 1033. Buyer agrees that Buyer will cooperate with Seller in all respects to facilitate Seller's acquisition of property which qualifies for deferral of income tax pursuant to Internal Revenue Code Section 1033; provided, however, Buyer shall not be required to incur any additional out-of-pocket expenses beyond these which are identified in this Contract and Close of Escrow shall not be delayed thereby. 23. Miscellaneous. (a) Partial Invalidity. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each such term and provision of this Agreement shall be valid and be enforced to the fullest extent permitted by law. (b) Waivers. No waiver of any breach of any covenant or provision herein contained shall be deemed a waiver of any preceding or succeeding breach thereof, or of any other covenant or provision herein contained. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act except those of the waiving party, which shall be extended by a period of time equal to the period of the delay. (c) Survival of Covenants. The covenants, agreements, representations and warranties made herein shall survive the Close of Escrow and shall not merge into the Grant Deed and the recordation thereof in the Official Records. (d) Successors and Assiqns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. (e) Professional Fees. In the event of the bringing of any action or suit by a party hereto against another party hereunder by reason of any breach of any of the covenants, agreements or provisions on the part of the other party arising out 27 of this Agreement, then in that event the prevailing party shall be entitled to have and recover of and from the other party all costs and expenses of the action or suit, including actual attorneys' fees, accounting and engineering fees, and any other professional fees resulting therefrom. (f) Entire Agreement. This Agreement (including all Exhibits attached hereto) is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter hereof and supersedes all prior understandings with respect thereto. This Agreement may not be modified, changed, supplemented or terminated, nor may any obligations hereunder be waived, except by written instrument signed by the party to be charged or by its agent duly authorized in writing or as otherwise expressly permitted herein. The parties do not intend to confer any benefit hereunder on any person, firm or corporation other than the parties hereto. (g) Time of Essence. Seller and Buyer hereby acknowledge and agree that time is strictly of the essence with respect to each and every term, condition, obligation and provision hereof and that failure to timely perform any of the terms, conditions, obligations or provisions hereof by either party shall constitute a material breach of and a non-curable (but waivable) default under this Agreement by the party so failing to perform. (h) Construction. Headings at the beginning of each paragraph and subparagraph are solely for the convenience of the parties and are not a part of the Agreement. Whenever required by the context of this Agreement, the singular shall include the plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared the same. Unless otherwise indicated, all references to paragraphs and subparagraphs are to this Agreement. All exhibits referred to in this Agreement and the Glossary of Terms are attached and incorporated by this reference. In the event the date on which Buyer or Seller is required to take any action under the terms of this Agreement is not a business day, the action shall be taken on the next succeeding business day. (i) Governing Law. The parties hereto acknowledge that this Agreement has been negotiated and entered into in the State. The parties hereto expressly agree that this Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State. 28 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year hereinabove written. "Buyer" "Seller" The City of Encinitas VD~vid R.'~'Smerville, Trustee 29 GLOSS~RY OF TER~S (1) "Authorities" means any governmental or quasi-governmental body or agency having jurisdiction over the Project and/or Seller including, without limitation, the State, the City and the County. (2) "Broker" means James M. Hicks. (3) "Cash Equivalent" means a wire transfer of funds or a certified or bank cashier's check drawn on a reputable bank licensed to do business in the State. (4) "Close of Escrow" means the date the Grant Deed is recorded in the official Records. (5) "Closing Date" means the date which is the later of (1) January 31, 1992, or (2) such other date as mutually agreed upon by Buyer and Seller. (6) "Contingency Date" means the date which is thirty (30) days after Opening of Escrow (as defined herein). (7) (Intentionally left blank) (8) "Escrow" means the above-referenced escrow opened with Escrow Holder for the consummation of the transaction described in this Agreement. (9) "Escrow Holder" means Cal-West Escrow Co. (10) "Existing Financing Documents" means the Existing Note, Existing Trust Deed, and all other documents referenced in Recital D, including any security agreements, UCC financing statements, loan applications and agreements, guaranties, and any other documents evidencing, securing payment of, or in any way connected with the Existing Financing. (11) (Intentionally left blank) (12) "Governmental Regulations" means any laws, ordinances, rules, requirements, resolutions, policy statements and regulations (including, without limitation, those relating to land use, subdivision, zoning, environmental, toxic or hazardous waste, occupational health and safety, water, earthquake hazard reduction, and building and fire codes) of the Authorities bearing on the construction, alteration, rehabilitation, maintenance, use, operation or sale of the Project. 30 (13) "Hazardous Material" means any hazardous or toxic substance, material or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined as a "hazardous waste," "extremely hazardous waste" or "restricted hazardous waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to Section 25140 of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Collection Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as hazardous or extremely hazardous pursuant to Article 11 of Title 22 of the California Administrative Code, Division 4, Chapter 20, (viii) designated as a "hazardous substance" pursuant to Section 311 of the Federal Water Pollution Control Act, 33 U.S.C. 5 1251 et seq. (33 U.S.C. 5 1321), (ix) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. 5 6901 et seq. (42 U.S.C. 5 6903), or (x) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act of 1980. as amended, 42 U.S.C. 5 9601 et seq. (42 U.S.C. 8 9601). (14) "Improvements" means all buildings, fixtures, structures, parking areas, landscaping and other improvements constructed and located on the Real Property, together with all machinery and mechanical, electrical, HVAC and plumbing systems used in the operation thereof, but excluding any such items owned by Tenants in possession or public or private utilities or contractors under contract. (15) "Licenses and Permits" means (A) all licenses, permits, certificates of occupancy, approvals, dedications, subdivision maps and entitlements issued, approved or granted by Authorities or otherwise in connection with the Project; (B) all right, title and interest of Seller in and to the use of the name "Vulcan Square" and any and all other trade names and logos used by Seller in the operation and identification of the Project; (C) any and all development rights and other intangible rights, titles, interests, privileges and appurtenances owned by Seller and in any way related to or used in connection with the Project and its operation; and (D) all licenses, consents, easements, rights of way and approvals required from private parties to make use of utilities and to insure vehicular and pedestrian ingress and egress to the Project. 31 (16) "Official Records" means the official Records of the County. (17) "Opening of Escrow" means the date on which a fully executed copy of this Agreement is delivered to Escrow Holder by Buyer and Seller. (18) "Operating Expense Statements" means all monthly expense statements respecting the Project for the three (3) most recent calendar years prior to the Closing Date and, to the extent available, the current fiscal year, all of which shall be certified by Seller as having been prepared in accordance with Seller's customary accounting practice in the ordinary course of business. (19) (Intentionally left blank) (20) "Property" means, collectively, the Real Property, the Improvements, the Licenses and Permits, and all of Seller's interest in the Tenant Leases, Tenant Deposits and Service Contracts. (21) "Real Property" means that certain real property located in the City and County containing approximately 180,477 square feet and more particularly described in Exhibit "A" attached hereto and incorporated herein by this reference, together with all right, title and interest of the Seller in and to all streets, alleys, easements and rights-of-way in, on, across, in front of, abutting or adjoining said real property. (22) "Records and Plans" means (A) all financial and other books and records maintained in connection with the operation of the Property (excluding the Operating Expense Statements and those materials reviewed by Buyer at Seller's office); (B) all preliminary, final and proposed building plans and specifications (including "as-built" drawings) respecting the Improvements, and (C) all structural reviews, architectural drawings and engineering, soils, seismic, geologic and architectural Reports, studies and certificates and other documents pertaining to the Project; as to subparagraphs (B) and (C), all such items shall be limited to those which are within the possession of, under the control of, or reasonably available to Seller. (23) "Service Contracts" means the service contracts for alarm service, gardening, sweeping and security patrols, relating to the Project (other than the Existing Financing Documents and the Title Documents) together with all supplements, amendments and modifications thereto relating to the Property. (24) (Intentionally left blank) (25) "Tenant Lease" means the Chapel Lease. 32 (26) "Tenant" means Chapel. (27) "Title Company" means Chicago Title Company. (28) "To the best of Seller's knowledge" or other references herein to Seller's knowledge means the actual knowledge Seller has by reason of continued involvement with the Property as developer (as to those portions of the Property developed or rehabilitated by Seller), owner, managing agent and leasing agent. 33 PARCE~ !: ALL THAT PORTION OF EAST BLOCK $ OF EI~CIr~ITAS, IN TIlE COUNTY OF SAN DIEGO, STATE OF CAf~IFOi~NIA, Accoru)I~JG TO ~.~P T~EREO~ []O'. 149, FILED IN THE OFFICE OF TIlE COUN~ R~O~E~ OF SAID SAN DIEGO COUNt, JUNE 12, 1883, ~IHICH LIES ~STE~Y OF TIIE FOLLOWIHG DE~RZBED I, ZNE: BEGINI~ING AT .A POINT ON TIlE I-]ORTIIEilLY LI~IE OF SAID EAST IJLOC.~ 5, DISTAI~T TilEf~EON SOUTH 03'23'3Q' ~EST~ 232.95 FEET FRO~-! THE NOi~THEAST.~RLY CORt.'F.I~ TIIEREOF~ TiIENCE SOUTH 0'46 ' 27' ~EST, 202.0§ FEET, [.[OPE OS LESS, TO Tile NOftT[~'fESTERLY CO~I.IER OF LANP DESCI~II]I~D IN ~JEED TO TIIE COU,~]TY OF SAN DIEGO, f~ECOI~DI~D SEPTEIiBEI~ ~10, 1959 BOOK 7872', PAGE 347 OF' OFFICIAL RECORDS; Ti]E~]CE ALOIIG Tile WESTERLY L~NE TIIEi~EOF, SOUTil 0~46'27' k'CJT, 20~2.00 FEET, HOPE OI~ LESS, TO~ THE INTEr(SECTION WITiI THE soUTHEI~LY X~INE OF SAID EAST B~OC.K TOGETII.~.7 ~{~TH THAT PORTION OF TIlE ~ouTH 10 FEET OF 'O' STREET ADJOINING SAID F. AST ELOCK 5 ON THE ~IORTII, t'~flICll LIES EASTERLY OF A 25 FOOT ilAIJlUS CUP,~E, CONCA~i~ SOUTHEASTERLY, T!!AT IS TANGEtlT DOTll TO T~iE IJASTERLY LIeIE Bt' Til[~ ~flJSTERLY 30 FEINT OF SA!D _".LOCK AI~D TO Tt]E NORTii LINE OF SAID SOUTil 10 FF~I~T [t~tO %IESTERLY OF TIlE HORT[tEELY PROLONGATION OF T,tlE ]~ASTERLY LItlF~ OF THE LAND DESCRIBED ABOV13. ALSO TiIAT PORTION OF T}iF. NOftTJl 10 FEET OF TIIE 'E' STi~EET ADJO]NI~G SAID EAST DLOCI{ 50;] T[~E SOUTI], t'~iJ~C~] LIES EASTERLY OF A 25 FOOT P~DIUS CUR~, CONCA~ NO~TII~AST~P~Y, TIIAT IS TAtIG~NT POTit TIlE SOUTN LINE OF SAI~ NO,TIt ~0 F~T A~ TO Tti~ ~ASTERLY LIN~ OF TIIE W~ST~.Y 30 FEET OF .SAID BLOCK A~ t~STEllLY OF TIIC SOUTIIC~LY PROLONGATION OF TII~ ~AST~LY LIN~ OF TIlE I,AN0 DESCRIBED A00~, VACAT~ A~ CLOSEO TO PUBLIC US~ DY ~ESOLUTION NO. 95 OF Tile OF .GUP~VISO~S OF Tile COUN'~ OF SAN DI~GO, DAT~O JUNE 20, l~60' A~ ~O~ED JULY 14, 1960 AS FILE NO. 142424 OF OFFICI~ R~O~S. PARCEL ~: Tile WESTEftLY 6 FEET OF TIII~ EASTEi~L't 232.95 FEET (tI."'.ASURED ON TIlE NOflTii LINE) O[~ Tili~ NOflTIIERL¥ 202.00 FEET (t-I~ASUflED Oil TIlE WEST I,~[NE}' OF EAST BLOCK 5 OF ENCII~][TAS, COUNTY OF SAN D]~EGO~ STATI~ CAL!FOI'IN!A, ACCOI1D~NG TO 14AP TiIEPEOt' NO. 140, F~.LI~;O IN T!iE OFF~CI~ OF' TIIE KECOF,.DER OF' SA~D COUNT'f, JUI41~, ].6, 1883. TOGF.'I'Ii~i~ WITli TrlAT PORTION OF TII]~ SOUTil 10 FE~f~T OF "D" STi'I~.T Ai3JOII4~_NG SAID PAi~CBL 2 ON TIIE IIOflTi], AS VACATEI3 AI~D Cf.,OS~I3 TO PUI3LIC USE BY RESOLUTIOiI ~O. 140 OF THE BO~i'{D OF SUPEI~V~SOKS Or' Tii~ COU,'I'i'f OF SAN DIEGO, UATi~3 14~Y 23, 19~1 AND ftI~COi'{DED ,'~UNi~ 1, 1961 AS F.~r.t~ NO. 942S3 OF OFFICIAL RECORDS. 34 EXHIBIT B SURVEYOR'S CERTIFICATE RECITALS A. The City of Encinitas, a municipal corporation ("Buyer"), has executed an Agreement of Purchase and Sale and Joint Escrow Instructions in connection with the purchase by Buyer or its assignee of the property commonly known as Vulcan Square Shopping Center, City of Encinitas, County of San Diego, State of California ("Property"). B. The undersigned has been furnished with Preliminary Title Report No. issued for the Property by Chicago Title Company ("Title Company"), dated as of ("Title Report"). C. The undersigned has made or caused to be made a physical inspection of the Property by its representatives. D. The undersigned has prepared or caused to be prepared under its supervision a survey of the Property dated , bearing Job No. ("Survey"). E. The undersigned acknowledges that Buyer, its successors, assigns and lenders may rely upon the representations contained in this certificate in purchasing and financing the Property. NOW, THEREFORE, the undersigned hereby certifies as follows: 1. The Survey has been prepared in accordance with the Survey requirements attached hereto and correctly shows (a) the boundary lines of the Property and (b) the location of all easement and rights-of-way disclosed by the Title Report and the physical inspection of the Property made by the undersigned. 2. The Survey correctly shows the site, location, type and relation of buildings and other structures ("Improvements") to the property lines of the Property. 3. Except as shown on the Survey, there are no visible easements or rights-of-way across the Property or any other easements or rights-of-way across the Property of which the undersigned has been advised. 35 4. Except as shown on the Survey, the walls of the Improvements are plumb and there are no encroachments by the Improvements into adjacent property or into easement areas of others. 5. Except as shown on the Survey, there are no encroachments by buildings and structures located on adjacent property onto the Property, or into the areas of any easements existing for the benefit of and appurtenant to the property. 6. Except as shown on the Survey, none of the Improvements encroaches upon any building restriction line or set-back area established by any zoning ordinance or any agreement disclosed by the Title Report. 7. The Property does not lie within flood hazard areas in accordance with the document entitled "Department of Housing and Urban Development, Federal Insurance Administration - Special Flood Hazard Area Maps." 8. The Improvements shown on the Survey constitute all of the improvements on the Property and are within the boundary lines of the Property. 9. These are no violations of zoning ordinances, restrictions or other rules and regulations with reference to the location or use of the Improvements on the Property. 10. Ail utility services required for the operation of the Improvements on the Property either enter through adjoining public streets or pass through or are located on adjoining private land. The Survey shows the location of all utilities and the point of entry of any utilities which pass through or are located on adjoining private land. 11. The Improvements on the Property have direct access to the following dedicated public ways: 12. The Survey shows the location and direction of all storm drainage systems for the collection and disposal of all roof and surface drainage. 13. The Survey shows any discharge into streams, rivers or other conveyance systems. 14. The Survey and the information, courses and distances shown therein, including, without limitation, all set-backs and yard lines, are correct. 36 15. The Property is zoned, which zoning permits the use of the Property for __. IN WITNESS WHEREOF, the undersigned has executed this Surveyor's Certificate this day , 1991. By: Ail surveys to be submitted include the following: 1. The certification of a licensed surveyor who should affix his seal, date the survey with the date of its delivery to Chicago Title Company, manually sign the survey and complete a Surveyor's Certificate in the form attached hereto as Exhibit A". 2. The naming of Deane Haskins, Esq. as one of the recipients of the survey. 3. The location and dimension of any buildings and distances to lot lines, including interior court dimensions, balcony and patio dimensions, roof, overhead and building set-back lines, curb cuts, fences, driveways, number of on-site parking spaces, covered and open (including number and type of vehicles that may be parked under applicable zoning, e.g., standard or compact). 4. The location and dimensions of building foundations and all structures or improvements on the property, including sidewalks, stoops, fences, parking areas, walls and street lighting, the square footage and number of stories of all structures. Specify which improvements are under construction, if any. 5. A full legal description and street address of the parcel, and a certification that the legal description is a true, correct and complete description of the parcel and all rights appurtenant thereto. The point of beginning of the property description and the relation thereof to the monument from which it is fixed should be shown. 6. The identification of all perimeter property lines and, where applicable, a description of all curbs. 7. The identification of the number of square feet and acres contained in the parcel. 8. The Identification of all public streets adjacent to the property, and any right-of-way lines, including their distance 37 from the nearest intersecting public streets, and access routes from the property to public streets. 9. The location and dimensions of all easements which either benefit or burden the property and the identity of each such easement, including book and page number or document number of the instrument creating the easement. 10. The identification of all utility lines for sewer, water, gas, electric and telephone service, storm drains, sanitary sewers, light poles and cable television which service the property and improvements thereon to the point of connection with the public system. 11. The location and dimensions of any encroachments or a positive statement that there are no encroachments. 12. The location of all water courses and wetlands. 13. The illustration of all roof and surface drainage lines, including their outfalls. 14. 15. 16. The name and width of adjoining streets or alleys. The street number of the property and improvements. Six (6) copies of the survey are required. 38 EXHIBIT C EXPIRATION NOTICE TO: Calvary Chapel North Coast Vulcan Square Shopping Center 505-561 Vulcan Avenue Encinitas, California 92024 FROM: James H. Harker David R. Somerville Stelca A. Somerville Landlord RE: Lease for the Above Premises NOTICE IS HEREBY GIVEN that the Lease dated under which you occupy the above premises (the "Lease") expires on January 31, 1992. The Landlord has sold the Vulcan Square Shopping Center to the City of Encinitas, and the close of escrow is scheduled for January 31, 1992. The City shall on close of escrow immediately commence extensive renovations and remodelling of the entire center, to prepare it for occupancy by the City of Encinitas offices, and will have contractors ready to go to work on that date. The City has informed the Landlord that it must vacate its existing premises, which it leases, sometime in late 1992, and will need every bit of the time from January 31, 1992 to accomplish its remodelling so as to enable it to occupy the premises. This Notice confirms the expiration of your Lease. The Landlord will not extend the term of the Lease, and you must completely vacate the premises, including removal of all of your furniture, fixtures, equipment, supplies and all other personal property by that date, leaving the premises in broom-clean condition. Failure to so vacate shall subject you to legal proceedings by the City to obtain possession. LANDLORD By James H. Harker By David R. Somerville By Stelca A. Somerville 39 EXHIBIT D TO: James H. Harker David R. Somerville Stelca A. Somerville City of Encinitas Dear Ladies and Gentlemen: The governing body of Calvary Chapel North Coast has been informed that the City of Encinitas has purchased the Vulcan Square Shopping Center, and that the close of escrow date is the same as the expiration date under Calvary Chapel's lease of the premises. We acknowledge that the City intends to commence extensive remodelling of the entire Center immediately upon close of escrow, which will require Calvary Chapel to vacate the premises, with all of its furniture, fixtures, equipment, supplies and personal property, by January 31, 1992. We further acknowledge that we are actively seeking other locations for our Church, and fully expect to vacate the premises by January 31, 1992. Yours very truly, Calvary Chapel North Coast BYl 40 EXHIBIT E RECORDING REQUESTED BY and WHEN RECORDED MAIL TO: Attn: MAIL TAX STATEMENTS TO: Same as above (Above Space For Recorder's Use Only) GRANT DEED The undersigned grantor declares: No Documentary Transfer Tax, pursuant to Section 11911 of the Revenue and Taxation Code. City of Encinitas FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended, hereby GRANTS to The City of Encinitas, a municipal corporation, the following described real property located in the City of Encinitas, County of San Diego, State of California: See Exhibit "A" attached hereto and incorporated herein by this reference. DATED: , 1991. JAMES H. HARKER, Trustee DAVID R. SOMERVILLE, Trustee STELCA A. SOMERVILLE, Trustee 41 STATE OF CALIFORNIA COUNTY OF SAN DIEGO On , 1991, before me, the undersigned, a Notary Public in and for said State, personally appeared James H. Harker, David R. Somerville and Stelca A. Somerville, personally known to me (or proved to me on the basis of satisfactory evidence) to be persons whose names are subscribed to the within instrument and acknowledged that they executed the same. WITNESS my hand and official seal. Notary Public in and for said State 42 ~EGAL DEBCRIPTION ALI, TIIAT PORTION OF EAST BLOCK 5 OF ENCINITAS, IH Tile COUNTY OF SAN DIEGO, STATE OF CA[,IFOftNIA, ACCORDING TO MAP THEREOF FILED IN THE OFFICE OF Tile COUNTY RECORDER OF SAID SAN DIEGO COUNTY · JUNE 12, 1883, WHICIi LIES I~?ESTERLY OF Tile FOLLOWI[IG DESCRIBED LINE: BEGINNING AT .A POINT ON TIlE 1.1ORTiIERLY LI~IE OF SAID EAST BLOCK 5, DISTAt;T TIIEREON SOUTH 03'23'3(J" WEST· 232.95 FEET FROI. I TIlE IIORTHEAST-'Z.-RLY CORI.'ER TIIEREOF; TIIEI:CE SOUTH 0'46'27' WEST, 202.08 FEET, I. IORE OK LESS, TO TIrE NOIITii%~STER[,Y CORI.IER OF LAND OESCRIBEO IN DEED TO Tile COU,~ITY OF SAN DIEGO, RECORDED SEPTEliBER 10~ 1959 BOOK 7872', PAGF.. 3t7 OF OFFICIAL RECORDS~ TilEMCE ALOilG TIlE WESTERLY LINE TIIEREOF, SOUTii 0046'27' WEST, 2012.00 FEET, HORE On LESS, TO. THE INTERSECTION WITi! THE souTI4EI1L¥ I,INE OF SAID EAST BI,OCX 5. TOGETII.~,q WITH TliAT PORTION OF TIIE $ooTil 10 FEET OF 'D' STREET ADJOINING SAID EAST ELDER 5 ON TIIE NORTil, t'lfilCll LIES EASTERLY OF A 25 FOOT RADIUS CUP%/E, CO~R2AVE 5OUTHEASTERLY, THAT IS TANGEIIT DOTll TO THE EASTERLY I, II'IE OF TIIE WESTERLY 30 FEET OF SAID .".LOCK A[~D TO THE NORTil LINE OF SAID SOUTH 10 FEET AHD ~IESTERLY OF' TIlE HORTHERLY PROLOliGATION OF THE EASTERLY Lille OF THE LAND DESCRIBED ABOVE. Ar~SO Ti~AT PORTION OF Tt~E NORTIf 10 FEET OF TI~E "E# STREET ADJOINING SAID EAST BLOCK 5 Oll Tile 5OUTII~ t')iI!Cii LIES EASTERLY OF A 25 FOOT P~DIU~ CU~ CONCA~ NO~TIIEAST~P~Y~ TIIAT IS TA[1GE~T DOTI~ TIlE 5OUT~ ~INE OF SAID NO,Tit 10 FEET A~ TO TIlE EASTERLY LINE O~ TIlE ~ESTE~,Y 30 FEET OF SAID BLOCK A~ I~STEilI~[ OF Tile SOUTIIER~Y PROLONGATION OF Tile EASTERLY LINE OF Tile LAND DESCRIBED AOO~t AS VACAT~ A~ CLOSED TO PUBLIC USE UY RESOLUTION NO. 95 OF TIlE BOAF~ OF SUPERVISORS OF Tile COUII'~ OF SAN DIEGO~ DATED JUNE 20, 1960' A~ ~O~ED JULY 14~ 19~0 AS FILE MO. 142424 OF OFFICI~ R~O~S, PARCEL 2: TIlE WESTERLY 6 FEET OF TIIE EA.~TEilLY 232.95 FEET (II.'i..ASURED ON TIlE NORTll LINE) OF TIIE NOflTilERLY 202.00 FEET (MEASURED Ofi TIlE WEST LINE)' OF EAST BLOCK 5 OF ENCIilITAS, COUN'f"£ OF SAN DIEGO, STATE OF CALIFORNIA, ACCORDING TO 14AP TI[EREOF HO. 140, FILED IN TIlE OFFICE OF TIlE RECORDER OF SAID COUtrl'~', JUNE 1.6, 1883. TOGETIIER WlTll THAT. PORTION OF Tile SOUTll 10 FEEET OF "O" STREET ADJOIi.I_rNG SAID PARCEL 2 ON TIlE IIORTII, AS VACATED AND CLOSED TO PUDLIC USE BY RESOLUTIOiI F/O. 140 OF THE BOARD 0~' SUi>~,RVISOR$ 0~' Tile COUIlT~Z OF SAN DiBGO, DATED [~AY 23, 1961 AND RECORDED JUNE 1, 1961 Ag FILE NO. 94253 or OFFICIAL RECORDS. 43 RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: EXHIBIT F Attn: MAIL TAX STATEMENTS TO: Same as above (Above Space for Recorder's Use) QUITCLAIM DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, The City of Encinitas, a municipal corporation, hereby conveys all right, title and interest in and to the real property described below, to James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended. See Exhibit "A" attached hereto and incorporated herein by this reference. DATED: , 1991 The City of Encinitas By. STATE OF CALIFORNIA ) COUNTY OF SAN DIEGO ) On , 1991, before me, the undersigned, a Notary Public in and for said County and State, personally appeared , personally known to me or proved to me on the basis of satisfactory evidence to be the of the corporation that executed the within instrument on behalf of the corporation therein named, and acknowledged to me that such corporation executed the within instrument pursuant to its by-laws or a resolution of its Board of Directors. WITNESS my hand and official seal. 44 Notary Public DESCRIPTION ALE, TilAT PORTION OF EAST BLOCK 5 OF EI~CIt~ITAS, IN Tile cOuNTY OF SAN DIEGO, STATE OF CALIFOi~NIA, ACCOI1DIHG TO {I.~P THEREOF IlO. 148, FILED IN THE OFFICE OF THE COUN~ R~O~ER OF SAID SAN DIEGO COUN~, JUNE 12, 1883, WHICH LIES t~STERLY OF TIlE FOLLOWI[{G DE~RIB~D LINE: BEGINUING AT .A POINT ON TiIE I.IORTIIERLY LIHE OF SAID EAST BLOCK 5, DISTAHT TIlEr(EON SOUTH 83'23 '30' WEST, 232.95 FEET FROU TIlE NORTHEASTERLY CORt.'F.R TIIEREOF; TiIENCE SOUTH 0'46'27' ~rEST, 202.08 FEET, /.[OPE OR LESS, TO TIIE NOI~TI~'~STEr(LY CORNER OF LAUD DESCI2Ii]ED IN DEEP TO TIIE COUNTY OF SAN DIEGO, RECORDED SEPTEUBER 10, 1959 Ill BOOK 7872', PAGE 347 OF OFFICIAL RECORDS) TilENCE ALOUG Tile WESTERLY LINE TIIEREOF, SOUTll 0~46'27' k'CET, 202.00 FEET, HO~E Or( LESS, TO. TSE INTEr{SECTION WITII THE sOUTHEF~LY LINE OF SAID EAST BLOCK 5. TOGETII.~,~ HITH T~AT PORTION OF TIIE $ouTIt 10 FEET OF 'D' STREET ADJOINING SAID EAST ELOCK 5 ON TIIE HORTii, HHICII LIES EASTERLY OF A 25 FOOT RADIUS CUnv~, COHCAVE SOUTHEASTERLY, TI{AT IS TANGEUT BOTU TO THE EASTERLY L~HE OF TUE %H3STERLY 30 FEET OF SA!D .".LOCK AHD TO TIlE NORTii LINE OF SAID SOUTU 10 FEET AHD S)ESTEr(LY OF TIlE HORTHEIILY PROLOHGATION OF THE EASTERLY LIHE OF THE LAND DESCr(IBED ABOVe. · ALSO TiIAT PORTIOM OF TIlE NOI1TI[ 10 FEET OF TIIE 'E# STREET ADJOINII~G SAID EAST DLOCK 5 Oil TIlE SOUTil, !'Ill!CII LIES EASTERLY OF A 25 FOOT P~DIUS CUEV"Z, CONCAVE, NOI~TUEASTE."~LY, TIIAT IS TAHGENT DOTH TIlE 5OUTH LINE OF SAID UORTI{ 10 FEET A~ro TO TIlE EASTERLY LINE OF TIlE WESTERLY 30 FEET OF SAID BLOCK A~) %vT~STEIH,? OF Tile SOUTIIE~LY PROLONGATION OF TIlE EASTEi~LY LINE OF TIlE LAND DESCRIBED ADOVE, AS VACATD7 AND CLOSEO TO PUBLIC USE DY ]2ESOLUTION NO. 95 OF THE 130AF~) OF 5UPEP. VISOI2S OF TIlE COUNTY OF SAN DIEGO, DATED JUNE 28, 1960' AND RF~iORDED JULY 14, 1960 AS FILE NO. 142424 OF OFFICIAL RECOIH)S. PARCEL 2: TIlE WESTEIU.,Y 6 FEET OF TIlE EASTEilLY 232.95 FEET (tlEASURED ON TIlE NORTIi LINE) OF TIIE NOr(TIIERLY 202.00 FEET (IqEASUREO ON TIlE WEST LINE}' OF KAST BLOCK 5 OF ENCIUfTAS, COUNTY OF SAN DIEGO~ STATE OF CALIFORNIA, ACCORDING TO 14AP TIIEPEOF HO. 14§, FT. LEO IN TIlE OFFICE OF TIlE RECORDER OF SAIO COUNT'I, JUNE ].6, 1803. TOGETilEI1 WITil TfiAT . PORTION OF Tile SOUT[I 10 FE~ET OF #D" STREET Af)JOIl.lr_NG 5AID PRf~CEL 2 ON TIlE NOI~Tii, AS VACATED AI~D CLOSED TO PUBLIC USE BY r(ESOLUTIOiI WO. 140 OF THE BOARD OF SUPERVISORS OF Tile COU:~Vk' or SAN VIEGO, DATED I4AY 23, 1961 AND r(ECORDED JUNE 1, 1961 AS FILE NO. 94253 OF OFFICIAL RECORDS. 45 EXHIBIT G ~ENEI~.L ~SSIGNI~ENT This General Assignment ("the AsSignment'') is made this day of , 1991, by James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended (collectively "Assignor") in favor of The City of Encinitas, a municipal corporation ("Assignee"). In accordance with that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated as of August 29, 1991 ("the Agreement") respecting the sale of certain real property in the City of Encinitas, County of San Diego, State of California, commonly known as "Vulcan Square Shopping Center" which is more particularly described in Exhibit "A" to the Agreement, Assignor hereby assigns, transfers, quitclaims and conveys all of Assignor's right, title and interest, if any, in and to the Service Contracts (as defined in the Agreement), Licenses and Permits (as defined in the Agreement) and all other tangible and intangible rights appurtenant or pertaining to the Property, including, without limitation, the use of the name "Vulcan Square Shopping Center". This Assignment shall be binding upon and inure to the benefit of the successors, assignees, personal representatives, heirs and legatees of all the respective parties hereto. IN WITNESS WHEREOF, Assignor and Assignee have executed and delivered this Assignment as of the day and year first above written. ASSIGNOR ASSIGNEE THE CITY OF ENCINITAS James H. Harker By. David R. Somerville Stelca A. Somerville 46 EXHIBIT H TI~ANSFEROR'S CERTIFICATION OF NON-FOREIGN STATUS To inform The City of Encinitas ("Transferee") that withholding of tax under Section 1445 of the Internal Revenue Code of 1986, as AMENDED ("Code"), will not be required upon the transfer of certain real property to the Transferee by James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended ("Transferor"), the undersigned hereby certifies the following on behalf of the Transferor: 1. The Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Code and the Income Tax Regulations promulgated thereunder); 2. The Transferor's U.S. employer identification/ social security number is ; and 3. The Transferor's office/personal residence address is c/o James H. Harker, P.O. Box 1117, Solana Beach, California 92075. The Transferor understands that this Certification may be disclosed to the Internal Revenue Service by the Transferor and that any false statement contained herein could be punished by fine, imprisonment, or both. The Transferor understands that the Transferee is relying on this Certification in determining whether withholding is required upon said transfer. The Transferor hereby agrees to indemnify, defend and hold the Transferee harmless from and against any and all obligations, liabilities, claims, losses, actions, causes of action, rights, demands, damages, costs and expenses of every kind, nature or character whatsoever (including, without limitation, actual attorneys' fees and court costs) incurred by the Transferee as a result of: (i) the Transferor's failure to pay U.S. Federal income tax which the Transferor is required to pay under applicable U.S. laws or (ii) any false or misleading statement contained herein. 47 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 the Transferor. Date: , 1991. James H. Harker, Trustee David R. Somerville, Trustee Stelca A. Somerville, Trustee 48 EXHIBIT I Asbestos Remediation Within 90 days following Buyer's approval of the Title Documents and physical condition of the Property as provided above, Seller shall complete at Seller's expense the removal of asbestos containing building materials (referred to herein as "ACBM", and includes building materials containing friable, non-friable, or both ACBM), which are identified in the report by ABATEC, Inc., dated July 16, 1990; provided, however, if, after reasonable efforts, Seller is unable to obtain the cooperation of Calvary Chapel North Coast in connection with removal of materials containing non-friable asbestos within the leased premises occupied by Calvary Chapel North Coast, then the following shall apply: (1) Within 30 days following the later of (i) the Closing or (ii) the date on which Calvary Chapel North Coast vacates the Property, Seller shall cause the materials containing ACBM to be removed from the leased premises occupied by Calvary Chapel North Coast. (2) Removal of ACBM from the leased premises occupied by Calvary Chapel North Coast shall not constitute a condition to either the Closing or the release of the $150,000 Deposit. (3) Escrow Holder shall retain from Seller's proceeds a sum twice the amount sufficient to pay the estimated cost of the removal of the ACBM from the leased premises occupied by Calvary Chapel North Coast, such estimated costs to be set forth in a certificate to be furnished to Escrow Holder by Buyer's asbestos consultant; such proceeds shall be held by Escrow Holder until the earlier of (i) Buyer's approval of a Completion Notice (defined below) with respect to such removal or (ii) Buyer's failure, within the time prescribed below, to disapprove a Completion Notice with respect to such removal. If, following Buyer's inspection of the Property, Buyer determines that additional ACBM corrective/remediation work should be accomplished, Seller will cause such work to be accomplished provided (1) all such work shall be performed under Seller's supervision but at Buyer's cost and (2) no such work shall be commenced unless and until the Deposit has been released to Seller. The parties acknowledge and agree that Seller's obligation to remove the ACBM does not impose upon Seller the obligation to (1) replace the suspended ceiling, ceiling tiles, air conditioning ducts, lighting fixtures and/or any other similar fixtures which are required to be removed in order to allow the removal of ACBM ceiling insulation material containing asbestos and/or (2) replacement of floor covering over the areas from which Seller 49 will be removing the ACBM floor tiles. Seller also agrees to provide to Buyer copies of the reports prepared by ABATEC, Inc., (25422 Trabucco Road, Suite 105-332, E1 Toro, California 92630). The parties agree that the condition specified in this Section regarding ACBM removal shall be satisfied as follows: (1) Upon completion of ACBM removal, Seller shall deliver to Escrow Holder and Buyer a written notice ("the Completion Notice") prepared by Abatec Inc., or such other licensed asbestos removal contractor approved in writing by Buyer and Seller which states that (subject to the possible exception for ACBM within the leased premises occupied by Calvary Chapel North Coast), all ACBM identified in the ABATEC, Inc. report described above have been removed. (2) Within 24 hours following receipt of the Completion Notice, Escrow Holder shall cause to be personally delivered to Buyer a copy of the Completion Notice. (3) The condition shall be deemed satisfied and the funds (i.e., either the $150,000 Deposit or the amount held by Escrow following the Closing for completion of removal of ACBM, as the case may be) shall be released to Seller upon the earlier of (i) receipt by Escrow Holder of Buyer's approval of the Completion Notice or (ii) the date and time which is six Business Days following Buyer's receipt of the Completion Notice and within said six-day period Buyer shall have failed to deliver to Escrow Holder Buyer's written notice of Buyer's disapproval of the Completion Notice. Buyer agrees that, unless Buyer has an objective good faith belief, based upon advice from Buyer's asbestos consultant, that the removal work has not been completed as stated in the Completion Notice(s), Buyer shall (i) promptly deliver to Escrow approval of the Completion Notice(s) and (ii) not deliver to Escrow written notice of disapproval of the Completion Notice. Seller makes the following statement regarding asbestos removal: The work of removing the ACBM has been accomplished at Buyer's request. If Seller were not selling the Property to Buyer and Buyer had not requested the ACBM to be removed, Seller would not have caused the asbestos to be removed. Asbestos removal contractors have advised Seller that removal of the asbestos may be neither necessary or desirable. 50 EXHIBIT J RECORDING REQUESTED BY AND WHEN RECORDED MAIL TO: MAIL TAX STATEMENTS TO: Same as above (Above Space for Recorder's Use) MEMORANDUM OF PURCHASE THIS MEMORANDUM OF PURCHASE ("Memorandum") is made this day of , 1991, by and between James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca A. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended ("Seller"), and The City of Encinitas, a municipal corporation ("Buyer"). 1. This Memorandum is executed in reference to that certain Agreement of Purchase and Sale and Joint Escrow Instructions dated August 29, 1991, by and between Seller and Buyer (the "Agreement"). 2. The real property which is the subject of this Memorandum and of the Agreement is described on Exhibit "A" attached hereto (the "Real Property"). 3. For valuable consideration, Seller has agreed to sell the Real Property to Buyer on the terms and conditions described in the Agreement. 4. The terms and conditions of the Agreement are incorporated herein by reference. This Memorandum is prepared for the purpose of recordation and in no way modifies the terms and conditions of the Agreement. If there is any inconsistency between the terms and conditions of this Memorandum and the terms and conditions of the Agreement, the terms and conditions of the Agreement shall control. 51 IN WITNESS WHEREOF, the parties have executed this Memorandum of Purchase as of the date first above written. SELLER: BUYER: The City of Encinitas James H. Harker, Trustee By David R. Somerville, Trustee Stelca A. Somerville 52 EXHIBIT K ESCROW HOLDER GENERAL CONDITIONS 53 Purchase and Sale Contract This Purchase and Sale Contract (,,Contract") is made as of , 1991 (,,Effective Date") by and between (1) James H. Harker, Trustee of the Harker 1976 Family Trust dated April 21, 1976, as amended, and David R. Somerville and Stelca &. Somerville, Trustees of the Somerville Family Trust dated February 27, 1980, as amended, whose post office address is P.O. Box 1117, Solana Beach, California 92075 (collectively ,,Seller,'), and city of Encinitas, a public corporation, whose address is 527 Encinitas Boulevard, Encinitas, California 92024 ("Buyer"). Whereas Seller is the owner of certain real property in Encinitas, California, which is described with greater particularity hereinbelow ("the Real Property"), Whereas Buyer is a chartered city with power of eminent domain, Whereas Buyer has identified the Real Property as being suitable for the relocation of Buyer's city offices, Whereas Buyer and Seller have each previously obtained appraisal reports prepared by competent appraisers pertaining to the value of the Real Property, Whereas the parties desire to avoid the expenses and delays which would be incurred in connection with a contested condemnation proceeding including, but not necessarily limited to, rental loss to Seller as a consequence of threatened condemnation, Now, therefore, Seller and Buyer hereby agree as follows: Section 1 - Definitions. The following terms shall have the following definitions in this Contract: 1.1 Business Day(s). Any day other than a Saturday, Sunday or legal holiday recognized in the State of California. 1 2 Buyer's Counsel F Sigmund Luther Esq. 1.3 Cash. A cashier's check drawn by a California bank or savings and loan and/or immediately available funds which are wire transferred to Escrow's general account. 1.4 Closinq. The time and date when the Deed (defined below) is recorded in the County Recorder's office of San Diego County and payments required by the terms of this Contract are made to Seller. 93/somvagre 1.5 Closing Date. The date which is the later of (1) January 31, 1992, or (2) such other date as mutually agreed upon by Buyer and Seller. 1.6 Deed. The grant deed to be used to convey to Buyer fee title to the Real Property. Such deed shall be in Escrow's standard form. 1.7 Effective Date. The date specified above. 1.8 Escrow. Cal West Escrow (Encinitas), or any other escrow company mutually acceptable to Buyer and Seller. 1.9 Event of Default. Any of the events of default described in the section hereof entitled "Default and Remedies." 1.10 Improvements. Ail buildings and other improvements located on the Land and all fixtures therein. 1.11 Initial Deposit. The $150,000 payment to be made by Buyer and deposited with Escrow as provided below in the section hereof entitled "Initial Deposit." 1.12 Land. The fee simple parcel of land located in Encinitas, California, more particularly described in Exhibit 1 attached hereto. 1.13 Permitted Encumbrances. The encumbrances to title to the Real Property as described in the Title Report. 1.14 Purchase Price. The sum of $5,875,000.00, being the purchase price of the Real Property payable as set forth in the section hereof entitled "Payment of Purchase Price." 1.15 Real Property. The Land and the Improvements. 1.16 Tenant Leases. Those certain leases of portions of the Real Property under which Seller is Landlord. 1.17 Title Company. Chicago Title Insurance Company, or any other title insurance company designated by Buyer and authorized to do business in the State of California. 1.18 Title Policy. The Title Policy shall be a California Land Title Association ("CLTA") owner's policy of title insurance. Section 2 - Sale and Purchase of Property. Seller hereby agrees to sell the Real Property to Buyer and Buyer hereby agrees to purchase the Real Property from Seller at the price and on the terms, covenants and conditions set forth in this Contract. Section 3 - Payment of Purchase Price. Seller the Purchase Price as follows: 93/somvagre Buyer shall pay to 3.1 Initial Deposit. Buyer will deposit cash in the sum of $150,000 into Escrow upon opening of escrow. Upon satisfaction of the special conditions provided below regarding Buyer's approval of the Title Report and Seller's completion of the asbestos removal as provided in the report prepared by ABATEC, Inc., Buyer shall instruct Escrow to release to Seller the $150,000 Initial Deposit. Prior to the release to Seller of the Initial Deposit, any interest accrued on the Initial Deposit shall be for Buyer's benefit and may be released to Buyer at the time the Initial Deposit is released to Seller. The Initial Deposit will be applied to the Purchase Price and, in the event of a default by Buyer hereunder, will be liquidated damages to Seller as provided below. 3.2 Balance of Purchase Price. The balance of the Purchase Price shall be paid in cash at the Closing. Section 4 - Escrow. Escrow shall act as escrow under this Contract. An executed copy of this Contract shall be delivered to Escrow by both parties on the Effective Date, and the parties hereby instruct Escrow to act in accordance with the terms of this Contract. Buyer and Seller shall execute such further escrow instructions as may be required by Escrow to consummate the transactions contemplated by this Contract, but in the event of any conflict between the provisions of such escrow instructions and this Contract, the provisions of this Contract shall control. 4.1 Buyer's Deliveries to Escrow. Buyer shall make the following deliveries to Escrow: 4.1.1 Concurrently with delivery of signed copies of this Agreement, Buyer will deliver to Escrow, as part of the Purchase Price, the $150,000 Initial Deposit. 4.1.2 No later than 12:00 noon on the second regular Business Day before the Closing Date, Buyer shall deliver to Escrow cash in an amount equal to the sum of (1) the balance of the Purchase Price and (2) Buyer's costs, fees and prorations. Buyer's obligation under this paragraph to deliver funds is subject to Buyer's receipt of telephonic or other notification by Escrow that, except for the delivery, escrow is in condition to be closed. Escrow shall be instructed to give the telephonic or other notification to Buyer when this escrow can, except as to the receipt and disbursement of cash and the recording of documents, be closed. 4.2 Seller's Deliveries to Escrow. No later than 3:00 p.m. of the last regular Business Day before the Closing Date, Seller shall deliver to Escrow: 4.2.1 The Seller's Grant Deed. The Deed conveying the Real Property to Buyer, signed and acknowledged by Seller and such person(s) Title Policy. 93/somvag re as Title Company requires in order to issue the 4.2.2 Discharge of Encumbrances, Seller's Charges. If the funds deposited with Escrow by Buyer are insufficient to (1) discharge all encumbrances other than the Permitted Encumbrances and (2) pay the charges to Seller's prorations, fees and costs, Seller will deliver to Escrow sufficient funds and instruments to discharge and pay such encumbrances and charges. 4.2.3 Affidavit of Non-Foreign Status. An affidavit pursuant to Internal Revenue Code section 1445, fully signed and acknowledged, by Seller. Section 5 - Buyer's Special Conditions Precedent. 5.1 Special Conditions. Buyer's obligations under this contract (including, without limitation, the obligation to deliver to Escrow the Purchase Price) are subject to each of the following special conditions: 5.1.1 Title Documents. Within 30 days after Buyer's receipt thereof, Buyer's delivery to Escrow of written notice of Buyer's review and approval of a preliminary report of title issued by the Title Company covering the Real Property together with copies of all instruments described in the title report and evidencing or affecting exceptions to title thereto with a plat of all easements (the title report, copies of exceptions and the plat of easements are referred to herein as the "Title Report"). The exceptions to the Title Report shall constitute "Permitted Encumbrances,, for all purposes of this Contract. 5.1.2 Tenant Leases. Within 30 days after Buyer's receipt thereof, Buyer's delivery to Escrow of written notice of Buyer's review and approval of a true and correct copy of the Tenant Leases together with any amendments, supplements and lease assignments relating thereto. Within 10 days after the Effective Date, Seller shall deliver to Buyer such documents. Nothing contained in this section shall be construed as altering Seller's obligation provided below to deliver to Buyer possession of the Real Property free and clear of any claim for possession other than possession by Calvary Chapel North Coast. 5.1.3 Inspection of the Real Property. Within 30 days after the Effective Date, Buyer's delivery to Escrow of written notice of Buyer's review and approval of the physical condition of the Real Property. After the Effective Date, Buyer and its agents, employees and contractors shall be afforded reasonable access to the Real Property during normal business hours, upon reasonable notice to Seller for the purpose of making such investigations as Buyer deems prudent with respect to the physical condition of the Real Property, including, but not limited to, engineering tests and so-called "Phase I" environmental assessment. Seller shall cooperate fully to assist Buyer in completing such inspection(s). All costs incurred by Buyer in connection with Buyer's inspection of the Real Property shall be borne by Buyer. 93/somvagre Buyer shall indemnify and hold Seller harmless from and against any claims and or expenses arising out of or relating to Buyer's inspection of the Real Property. 5.1.4 Asbestos Remediation. Within 90 days following Buyer's approval of the Title Report and physical condition of the Real Property as provided above, completion by Seller at Seller's expense of the removal of asbestos containing materials which are identified in the report by ABATEC, Inc., dated July 16, 1990; provided, however, if, after reasonable efforts, Seller is unable to obtain the cooperation of Calvary Chapel North Coast in connection with removal of materials containing non- friable asbestos within the leased premises occupied by Calvary Chapel North Coast, then the following shall apply: (1) Within 30 days following the later of (i) the Closing or (ii) the date on which Calvary Chapel North Coast vacates the Real Property, Seller shall cause the materials containing non-friable asbestos to be removed from the leased premises occupied by Calvary Chapel North Coast. (2) Removal of the materials containing the non-friable asbestos from the leased premises occupied by Calvary Chapel North Coast shall not constitute a condition to either the Closing or the release of the $150,000 Initial Deposit. (3) Seller shall instruct Escrow to retain in escrow from Seller's proceeds an amount sufficient to pay the estimated cost of the removal of the asbestos containing materials from the leased premises occupied by Calvary Chapel North Coast; such proceeds shall be held by Escrow until the earlier of (i) Buyer's approval of a Completion Notice (defined below) with respect to such removal or (ii) Buyer's failure, within the time prescribed below, to disapprove a Completion Notice with respect to such removal. If, following Buyer's inspection of the Real Property, Buyer determines that additional corrective/remediation work should be accomplished, Seller will cause such work to be accomplished provided (1) all such work shall be performed under Seller's supervision but at Buyer's cost and (2) no such work shall be commenced unless and until the Initial Deposit has been released to Seller. The parties acknowledge and agree that Seller's obligation to remove the asbestos containing materials does not impose upon Seller the obligation to (1) replace the suspended ceiling, ceiling tiles, air conditioning ducts, lighting fixtures and/or any other similar fixtures which are required to be removed in order to allow the removal of the ceiling insulation material containing friable asbestos and/or (2) replacement of floor covering over the areas from which Seller will be removing the non-friable asbestos floor tiles. Seller also agrees to provide to Buyer copies of the reports prepared by GeoRemediation, Inc., (17141 Murphy Avenue, Irvine, California 92714) and ABATEC, Inc., (25422 Trabucco Road, suite 105-332, E1 Toro, California 92630). The parties agree that the condition specified in this Section regarding asbestos removal shall be 3/somvagre satisfied as follows: 5 (1) Upon completion of the removal, Seller shall deliver to Escrow a written notice ("the Completion Notice") prepared by a licensed asbestos removal contractor which states that (subject to the possible exception for non-friable asbestos within the leased premises occupied by Calvary Chapel North Coast), all asbestos containing materials identified in the ABATEC, Inc., report described above have been removed. (2) Within 24 hours following receipt of the Completion Notice, Escrow shall cause to be personally delivered to Buyer a copy of the Completion Notice. (3) The condition shall be deemed satisfied and the funds (i.e., either $150,000 Initial Deposit or the amount held by Escrow following the Closing for completion of removal of non-friable asbestos, as the case may be) shall be released to Seller upon the earlier of (i) receipt by Escrow of Buyer's approval of the Completion Notice or (ii) the date and time which is three Business Days following Buyer's receipt of the Completion Notice and within said three-day period Buyer shall have failed to deliver to Escrow Buyer's written notice of Buyer's disapproval of the Completion Notice. Buyer agrees that, unless Buyer has an objective good faith belief that the removal work has not been completed as stated in the Completion Notice(s), Buyer shall (i) promptly deliver to Escrow approval of the Completion Notice(s) and (ii) not deliver to Escrow written notice of disapproval of the Completion Notice. 5.2 Satisfaction/Waiver. Buyer may unilaterally waive any special condition described above. Satisfaction or waiver of a special condition will be effective only if the same is (1) in writing, (2) signed by Buyer and (3) delivered to Escrow no later than the date such condition is to be satisfied. 5.3 Termination of this Contract. In the event any of the special conditions precedent above is not satisfied or waived, either party may terminate this Contract by delivering to Escrow a notice of termination and (1) Escrow shall return to Buyer the Initial Deposit made by Buyer and any interest accrued thereon, (2) all costs incurred by each party shall be borne by such party, (3) all costs incurred by Escrow shall be borne by the party responsible for such costs as provided herein and (4) thereafter, no party shall have any further rights or obligations under this Contract. Section 6 - The Closing. The parties further agree: 6.1 Conditions to Closing. Escrow will close this escrow on the Closing Date by (1) filing for record the Deed (and such other documents as may be necessary to procure the Title Policy) and (2) delivering funds and documents to the parties WHEN AND ONLY WHEN each of the following conditions has been satisfied: 93/somvag re 6 6.1.1 Deliveries. Ail funds and documents required to be delivered to Escrow have been delivered to Escrow. 6.1.2 Special Conditions. Each of the conditions set forth in the section entitled "Buyer's Special Conditions Precedent" has been, or upon Closing will be, satisfied or waived in the manner specified in said section. 6.1.3 The Title Policy. Escrow can procure the Title Policy from Title Company, with liability in the amount of the Purchase Price, insuring that fee title to the Real Property vests in Buyer subject only to: (1) and assessments which are, delinquent. General and special real estate taxes as of the close of this escrow, not (2) Supplemental taxes, if any, assessed pursuant to California Revenue and Taxation Code sections 75 and following. (3) The Permitted Encumbrances. (4) Any encumbrance voluntarily imposed by Buyer. 6.1.4 event of default. Event of Default. There does not exist an 6.2 Delayed Closinq. If Escrow cannot close this escrow on or before the Closing Date, it will, nevertheless, close this escrow when all conditions have been satisfied or waived unless, after the Closing Date and prior to the close of this escrow, Escrow receives a written notice to terminate this escrow from a party who, at the time the notice is delivered, is not in default under this Contract. Section 7 - Closing Costs, Prorations. Expenses in connection with the transactions contemplated by this Contract shall be paid as follows: 7.1 Seller's Costs. Seller shall pay for the following: 7.1.1 The Cost of drafting the Deed. 7.1.2 Seller's notary fees; 7.1.3 Customary S~ller's recording and filing fees; 7.1.4 The Documentary transfer tax due on the conveyance and sale of the Real Property to Buyer; 7.1.5 The cost of the Title Policy; and 3/somvagre 7.1.6 One-half of Escrow's fees. 7 7.2 Buyer's Costs. Buyer shall pay for the following: 7.2.1 Costs of Buyer's notary fees; 7.2.2 Customary Buyer's recording and filing fees; and 7.2.3 One-half of Escrow's fees. 7.3 Prorations. Ail non-delinquent real property taxes, rents, security deposits, operating costs (including alarm service), insurance premiums (if policy(ies) assigned) and other items of expense and income pertaining to the Real Property shall be prorated between Seller and Buyer as of the Closing. 7.3.1 Time of Prorations. Prorations shall be made as of 12:01 a.m. on the day of Closing, with Buyer to be entitled to all rent, if any, and to be charged for all expenses for such day. All prorations shall be final except as otherwise provided herein. 7.3.2 Unknown Amounts. In the event that the amount of any prorated items is not known at Closing, the parties agree that such items shall be prorated at Closing upon the basis of the best information available,and shall be adjusted when the actual amount(s) of such items are known, with appropriate charges and credits to be made. In the event, subsequent to the Closing, any adjustment pursuant to this Section shall be necessitated, then either party hereto who is entitled to additional monies shall invoice the other party for such additional amounts as may be owing, and such amount shall be paid within ten days from receipt of the invoice. The provisions of this Section shall survive the Closing. Section 8 - Representations and Warranties. 8.1 Seller's Representations and Warranties. Seller hereby represents and warrants to Buyer that, as of the Effective Date and the Closing, to the best of Seller's knowledge: 8.1.1 Litigation. There are no actions, suits or proceedings pending or, to the knowledge of Seller, threatened against or affecting Seller or the Real Property in any court at law or in equity, or before or by any governmental department, commission, board, bureau, agency or instrumentality, an adverse decision in which might materially affect the Real Property or Seller's ability to perform Seller's obligations under this Contract. 8.1.2 Access. Seller has no knowledge of any facts or conditions that would result in the prevention of access to and from the Real Property on existing highways or roads. 8.1.3 Riqhts of Others. Seller has not granted to any other person any option or right of first refusal which i~ 93/somvagre 8 still effective to acquire all or any portion of the Real Property. Other than Seller's interest and the Tenant Leases, there are no other possessory interests of all or any portion of the Real Property. 8.1.4 Payment of Cost for Labor and Materials. Ail sums payable by reason of any labor or materials heretofore furnished with respect to the Real Property have been, or in the ordinary course prior to Closing will be, paid. 8.1.5 Operation of Property. Pending the Closing, Seller will continue to operate and manage the Real Property in the same manner as prior to the execution of this Contract. 8.1.6 Tenant Leases. The copy of the Tenant Leases delivered (or to be delivered) to Buyer represents the entire agreement between Seller and the tenants under such leases and are the only leases or occupancy agreements with respect to the Real Property. Without limiting the generality of the foregoing, Seller acknowledges that there exists only one Tenant Lease affecting the Real Property which is between Seller and Calvary Chapel North Coast. With respect to the lease between Seller and Calvary Chapel North Coast, Seller warrants, acknowledges and agrees: (1) The lease expires on January 31, 1992. (2) Provided Buyer timely fulfills all obligations under this Contract and timely satisfies or waives all special conditions provided above, Seller will not (i) enter into any amendment, modification and/or extension of the lease between Seller and Calvary Chapel North Coast and/or (ii) take any action which will create in favor of Calvary Chapel North Coast a right to occupy any portion of the Real Property after January 31, 1992, as a month-to-month tenant or otherwise. (3) Upon timely release to Seller of the $150,000 Initial Deposit, Seller shall deliver to Calvary Chapel North Coast written notice which states (i) the lease terminates January 31, 1992, (ii) the lease will not be renewed or extended and (iii) such other matters as Buyer may reasonably request Seller to include in the notice. (4) Notwithstanding that the lease terminates on January 31, 1992, Calvary Chapel North Coast may not have vacated the portion of the Real Property occupied by Calvary Chapel North Coast. This Contract does not impose upon Seller, nor is the Closing conditioned upon, Calvary Chapel North Coast having surrendered prior to the Closing Date physical possession of the portion of the Real Property now occupied by Calvary Chapel North Coast. 8.1.7 Documents Delivered by Seller. Ail informa- tion and documents heretofore delivered to, and/or to be delivered by Seller or on Seller's behalf, to Buyer and relating to the Real 93/somvag re 9 ~~ Property are and/or will be true and accurate information in all material respects, and true and correct copies of such documents. 8.1.8 Seller Not a Foreign Person. Seller is not a "foreign person" within the meaning of Section 1445(f) (3) of the Internal Revenue Code of 1954, as amended, and that Seller will furnish to Buyer, prior to Closing, an affidavit confirming the same. 8.1.9 Survival of Covenants, Representations and Warranties. All of the covenants, representations and warranties of Seller set forth in any and all provisions of this Contract shall survive the Closing and the delivery of the Deed. 8.2 Covenants of Seller. Seller hereby covenants and agrees with Buyer, that from and after the date hereof through the Closing but not thereafter: 8.2.1 No Amendment to Tenant Leases. Seller will not alter, amend or modify the terms or provisions of the Tenant Lease, or enter into any new Tenant Leases without the prior written approval of Buyer, which approval shall be in Buyer's absolute discretion. 8.2.2 No Granting of Interest in Property. Seller will not grant to or purport to create in any third party any interest in the Real Property or any entity holding title to the Real Property without the prior written approval of Buyer. 8.3 Buyer's Investiqation. Buyer represents and warrants that Buyer has or will have employed consultants as Buyer has deemed necessary and has conducted investigations of the Real Property to determine its suitability for the use proposed by Buyer. Buyer acknowledges that, on or prior to the Closing Date, Buyer has or will have examined and approved all things concerning the Real Property which Buyer deems material to Buyer's decision to purchase and Real Property including, but not limited to, topography, geology, condition of the soil, condition of title to the Real Property, condition of the Improvements and actual and projected rental income. Buyer further acknowledges and agrees that, except as specifically provided above in this section hereof entitled "Representations and Warranties," Buyer is relying upon Buyer's own investigation and is not relying upon any information, whether written or oral, provided to Buyer by Seller and/or any broker and/or agent involved in the transaction evidenced by this Contract. Section 9 - Possession. Subject to the possibility that Calvary Chapel North Coast may not have voluntarily surrendered possession prior to the Closing, possession of the Real Property shall be delivered by Seller to Buyer as of 12:01 a.m. on the day of Closing; provided, however, that authorized representatives of Buyer shall have reasonable access to the Real Property for the purposes of (1) ~ 93/somvagre satisfaction of any conditions precedent to the Closing contained herein and (2) Buyer becoming familiar with the operation of the Real Property. Section 10 - Casualty Loss. If, before the Closing, the Improvements shall be damaged by fire, flooding, windstorm, explosion or other casualty, the following provisions shall apply: 10.1 Election by Buyer to Terminate Contract. If the reasonably estimated cost of repairing such damage shall equal or exceed $100,000 (the "Upset Loss Amount,,), Buyer may terminate this Contract by delivery of written notice to Seller within twenty-one (21) days following written notification to Buyer of such casualty damages and Escrow shall return to Buyer the Initial Deposit. 10.2 Seller's Election to Restore Property. In the event of any casualty loss, if this Contract is not so terminated by Buyer, Seller shall either (1) elect, by written notice to Buyer within fourteen (14) days following the last date on which Buyer could have so terminated this Contract, not to restore the Improvements, in which event Buyer shall have the right either to terminate this Contract by written notice to Seller within twenty- one (21) days following its receipt of such notice from Seller, as provided for above, whereupon the Initial Deposit shall be returned to Buyer, or to elect to consummate the acquisition of the Real Property in accordance with this Contract and all insurance proceeds otherwise payable to Seller on account of such casualty to such Improvements shall be transferred to Buyer at Closing, and, pending Closing, Seller shall not adjust or settle such matters with the insurance carriers without the consent of Buyer, or (2) promptly proceed to repair or cause to be repaired that part of the Improvements to substantially its former condition, at Seller' sole expense, and the Closing Date shall be extended for a period equal to the time reasonably required to effect such repairs, but in no event to exceed 180 days from the date of such damage. If the Improvements shall be so damaged, but only to such an extent that the reasonably estimated cost of repairing such damage shall be less than the Upset Loss Amount, Seller shall, at Seller's expense, promptly proceed to repair, or cause to be repaired, that part thereof to substantially its former condition to the extent such repair can be effected within 90 days after the date of such damage, in which event neither Seller nor Buyer shall be entitled to terminate this Contract by reason of such damage and the Closing Date shall be extended for a period equal to the time reasonably required to effect such repairs. Section 11 - Default and Remedies. 11.1 Events of Default. Each of the following shall constitute an "Event of Default" under this Contract: 11.1.1 Seller or Buyer shall fail to pay or deposit with Escrow any sum of money when due under this Contract. 11.1.2 or recording of the Deed, 93/somvagre Seller or Buyer shall, prior to the filing fail to observe or perform any other te~ 11 or provision to be observed or performed by such party under this Contract and such default shall not be cured by the first to occur of the following dates: (1) ten days after written notice is received by the defaulting party informing such party of the default, or within such longer period of time as may be reasonably necessary to cure such default provided that the defaulting party has taken steps in good faith within such period to remedy such default and is continuing to so act with diligence and continuity, or (2) the Closing Date. 11.1.3 Either party shall, after the recording of the Deed, fail to observe or perform any other term or provision to be observed or performed by such party under this Contract within ten (10) days after written notice is received by the defaulting party informing such party of the default, or within such longer period of time as may be reasonably necessary to cure such default provided that such party has taken steps in good faith within such period to remedy such default and is continuing to so act with diligence and continuity. 11.1.4 Any representation or warranty made by Seller or Buyer in this Contract shall be untrue in any material respect as of the date when made, or shall be untrue in any material respect as of the Closing. 11.2 Remedies of Buyer. If any Event of Default shall occur with respect to Seller, then Buyer shall not be obligated to close the acquisition of the Real Property in accordance with this Contract and Buyer shall be entitled to the return of the Initial Deposit. Buyer shall also be entitled to all other legal or equitable remedies available to Buyer because of Seller's default. 11.3 Seller's Remedy. If any Event of Default occurs with respect to Buyer, then Seller may cancel this Contract, whereupon all rights and options of Buyer and duties and obligations of Seller shall terminate and the following provision shall apply: (a) LIQUIDATED DAMAGES. IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE REAL PROPERTY AND SUCH FAILURE CONSTITUTES A BREACH OF THIS CONTRACT, THEN SELLER SHALL BE RELEASED FROM ITS OBLIGATIONS OF SELLING THE REAL PROPERTY TO BUYER; PROVIDED, HOWEVER, THAT BY PLACING THEIR INITIALS BELOW, BUYER AND SELLER AGREE THAT THE INITIAL DEPOSIT IN THE AMOUNT OF $150,000 DESCRIBED ABOVE SHALL CONSTITUTE LIQUIDATED DAMAGES TO THE SELLER FOR ANY SUCH BREACH BY BUYER. BUYER AND SELLER AGREE THAT SAID AMOUNT IS /% REASONABLE AMOUNT FOR LIQUIDATED DAMAGES FOR SUCH A BREACH UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS CONTRACT IS ENTERED INTO AND CONSTITUTES A REASONABLE ESTIMATE OF THE DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTION 1671, ET SEQ. BUYER AND SELLER AGREE THAT IT WOULD BE IMPOSSIBLE OR IMPRACTICAL TO PREDICT WHAT MONETARY DAMAGES SELLER WOULD SUFFER IN SUCH AN EVENT. SAID LIQUIDATED DAMAGES ARE NOT A PENALTY 12 3/somvag re BUT RATHER A LIMITATION OF THE MONETARY DAMAGES FOR WHICH BUYER MIGHT BE LIABLE HEREUNDER, AND BUYER AND SELLER DESIRE TO AVOID THE COSTS AND DELAYS THEY WOULD INCUR IF A L~WSUIT WERE COMMENCED TO COLLECT SUCH DAMAGES. IF THE INITIAL DEPOSIT HAS NOT PREVIOUSLY BEEN RELEASED TO SELLER AT THE TIME OF BUYER'S BREACH, THEN FORTHWITH UPON ANY SUCH BREACH BY BUYER, BUYER SHALL EITHER (1) PAY SUCH SUM TO SELLER, OR (2) INSTRUCT ESCROW TO DELIVER SUCH SUM TO SELLER. Initials of Seller Section 12 - Miscellaneous Provisions. Initials of Buyer 12.1 Time is of the Essence. Time is hereby expressly declared to be of the essence of this Contract. 12.2 No Waiver. Any failure to insist upon strict performance of any of the terms and provisions of this Contract shall not constitute or be deemed to be a waiver of any such term or provision, or constitute an amendment or waiver of any such term or provision by course of performance, and each party, notwithstanding any failure to insist upon strict performance, shall have the right thereafter to insist upon the strict performance of any and all of the terms and provisions of this Contract. 12.3 Survival of Terms. Ail of the agreements, repre- sentations, warranties and obligations of the parties set forth in this Contract shall survive the Closing and the conveyance of the Real Property to Buyer, and shall continue thereafter to be binding upon and inure to the benefit of the parties hereto, and their respective permitted successors and permitted assigns. 12.4 California Law. This Contract shall be governed by and construed under the laws of the State of California. Any legal action hereunder shall be filed in the San Diego judicial system only, and Seller and Buyer hereby unconditionally submit themselves to the jurisdiction of the courts of the State of California and the United States District Court of the Southern District of California. The submission to such jurisdiction shall not prevent Buyer from commencing any action or proceeding in any other court having jurisdiction. 12.5 Attorneys' Fees. Either party hereto shall be entitled to recover from the defaulting party all costs and expenses, including reasonable attorneys fees, incurred by the prevailing party in enforcing any of the terms and provisions of this Contract, in remedying any breach by the other party, 93/somvagre 13 collecting by or against either party to which the other, without any fault on its part, shall be made a party. 12.6 Interpretation of Contract. The parties acknowledge that both parties have caused this Contract to be reviewed and approved by legal counsel of their own choice. 12.7 Sole Agreement. This is the sole and only agree- ment between the parties. Any and all prior oral or written representations, correspondence, letters of intent and agreements are merged into and superseded by this Contract and shall be of no force or effect. Any modifications of this Contract must be in writing and signed by the parties hereto. 12.8 Partial Invalidity. If any provision hereof is held invalid or not enforceable to its fullest extent, such provision shall be enforced to the extent permitted by law, and the validity of the remaining provisions hereof shall not be affected thereby. 12.9 Exhibits. Ail Exhibits, if any, to this Contract are incorporated herein by reference. 12.10 Notices. Ail notices, requests, demands or documents which are required or permitted to be given or served hereunder shall be in writing and personally delivered, or sent by registered or certified mail, postage prepaid, addressed as follows: To Buyer at: City of Encinitas 527 Encinitas Boulevard Encinitas, California 92024 Attn: Warren H. Shafer with a copy to: To Seller at: James H. Harker P.O. Box 1117 Solana Beach, California 92075 with a copy to: F. Sigmund Luther, Esq. 450 "B" Street, Suite 1820 San Diego, California 92101 Such addresses may be changed from time to time by the addressee by serving notice as heretofore provided. Service of such notice or demand shall be deemed complete on the date of actual delivery as shown by the addressee's registry or certification receipt or at the expiration of the third day after the date of mailing (whether or not actually received by the addressee), whichever is earlier in time. ~~93/somvag re 14 12.11 Seller's Replacement Property. The parties acknowledge that the sale of the Real Property as provided in this Contract constitutes a sale in lieu of condemnation. The parties further acknowledge and agree that it is Seller's intention to utilize the proceeds from the sale of the Real Property to acquire other real property which will qualify for deferral of income tax pursuant to Internal Revenue Code section 1033. Buyer agrees that Buyer will cooperate with Seller in all respects to facilitate Seller's acquisition of property which qualifies for deferral of income tax pursuant to Internal Revenue Code section 1033; provided, however, Buyer shall not be required to incur any additional out-of-pocket expenses beyond those which are identified in this Contract. 12.12 Headings of Sections. The headings of Sections and Subsections herein are inserted only for convenience and reference and shall in no way define, limit or describe the scope or intent of any provision of this Contract. In witness whereof, the parties hereto have executed this Contract as of the day and year first above written. Buyer: Seller: City of Encinitas, a Public Corporation By Print Name Title Jam~s H. Harker~-Trustee of the ~ H~a~ker 1976 Family Trust dated VApril 21, 1976 the Somerville Family Trust dated February 27, 1980 Stelca &. Somerville, Trustee of the Somerville Family Trust dated February 27, 1980 15 93/somvagre PARCEL !: ALL T~{A'-" ............. o~o-~r~] OF EAST BLOCX ~ OF ="~iNITAS,~....r': T.qE ~-.~..--~r~'~'z OF SAN DIEGO, STATE OF CALIFORNIA, ACCOFJ31NG TO MAP THEREOF NO. FILED IN THE OFFICE OF THE COUNTY RECORDER OF SAiD SAN DIEGO COUNTY, JUNE !2, !883, WHICH LIES WESTERLY CF THE FOLLOWING DESCRIBED LINE: FEET, }!ORE OR LESS~ TO THE NORTIE'~STERLY CORNER OF LAI~ DESCRi3ED r~ TO .... -3 DE~ THE COUN~ OF SAN D:a,='~, RECOPIED SEPTEI.~ER !0, !959 IN BOCK 787~4, PAGE '047 OF OFFiCiAL REDOES; T':~NC=..-. - ALOUG TIlE ~--c~-o~-,,.~_a:.,= LINE THEP~OF, SOUTH 0~46'27" ~ST, 202.00 FEET, MORE OR LESS, TO .~E INTERSECTION WiTH THE SOU .... RL. LINE OF SAID EAST BL~K 5. TOG~=~R .~"~:~ ......... THAT PORTION OF THE ~an~ I0 FEET OF "D" START ADJOI~IING .... SAiD ~'~. EL~ 5 ON ~'~:!E 'JOO~t, W~ICi{ LiES EASTERLY OF A 25 .00~ ~!US CURVE, COI'~A~ SOUTHEASTERLY, ...... ~=~=IG~J~ BOTH TO ~u~ EASTERLY LI~= OF TEE %~STERLY 30 FEET OF ~n~ ........ o~.=m BL~K AND TO ~=~- NORTH LINE OF SAiD SOUTH !0 FEET Ai'~ WESTERLY OF THE NOR~HEPLY PROLONGATION OF THE EASTERLY r r,,- . ~_~,~ OF THE LAND DESCRIBED ABO~ ALSO TI{AT PORTION OF THE NORTH !0 FEET OF THE "E" STREET ADJO!Ni:~C SAID EAST BLOCK 5 0~? TIlE SOUTH, WHICH LIES EASTERLY OF A 2~ FOOT RADIUS CURVE, CONCAVE~ NORTEEASTEP~LY , T!~AT KS TANGENT BOTU. T.qE SOUTH LINE OF SAiD NORTH !0 FEET AND TO THE EASTERLY LINE OF THE W-ESTEP~LY 30 FEET OF SAID BLOCK A~D %'~ESTERLY OF THE SOUTHERLY PROLONGATION OF T!tE EASTERLY LINE OF THE LAND DESCRIBED ABOVE, AS VACATED AN-D CLOSR~. TO PUBLIC USE DY RESOLUTION NO. 95 OF THE BOAFD OF SUP-E~ViSORS OF THE COUNTY OF SAN DIEGO, DATED JUNE 28, 1960 AND RECORDED JULY 14, 196(] AS FILE NO. 142424 OF OFFICIAL RECORDS. PARCEL 2: THE WESTEP~LY 6 FEET OF THE EASTERLY 232.95 FEET (HEASURL~D ON THE NORTH LINE) OF TtiE NORTHERLY 202.00 FEET (MEASURED ON THE ~,'7EST LINE} OF EAST RLCCK 5 OF ENCiN!TAS, COUNTY OF SAN DIEGO, STATE CF CALiFORNiA, ACCOP. DING TO MAP THEREOF NO. 148, FILED IN TIlE OFFICE OF THE RECORDER OF SAID COUNT'!, JUNE 16, 1883. TOGETHER WITi.-i.T.~L%T PORTION OF THE SOUTII 10 FEEET OF "D" STrCEET ADJO iN! .'.:G SAiD PARCEL 2 ON TIIE !:ORTII, AS VACATE'D ANqD CLOSED TO PUBLIC USE BY RESOLUTICi~ NO. 14(] OF THE BOARD OF SUPERVISORS OF THE COUNTer OF SAN DIEGO, DAT..~c~ ~.TAY 23, 1961 A~'~ RECORDED JUNE !, 1961 AS FILE NO. 94253 OF OFFiCiAL RECORDS.