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HomeMy WebLinkAboutR30750 Exchange Agreement and Jt Escrow Timothy R. Palmer & Lee Anna Palmer (44845 & 44900 San Clemente Cl) 05262011Contract No. R30750 PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: APPROVAL OF EXCHANGE AGREEMENT AND JOINT ESCROW INSTRUCTIONS BETWEEN PALM DESERT REDEVELOPMENT AGENCY AND TIMOTHY R. PALMER AND LEE ANNA PALMER, AS TRUSTEES OF THE TIMOTHY R. AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996 ("PALMER"). SUBMITTED BY: Bryce L. White, Project Administrator PROPERTY OWNER: Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. and Lee Anna Palmer Revocable Trust Dated November 25, 1996 DATE: May 26, 2011 CONTENTS: Aerial Map Exchange Agreement Recommendation By Minute Motion that the Agency Board: 1. Conduct a public hearing and receive comment and testimony regarding Exchange Agreement and Joint Escrow Instructions between Palm Desert Redevelopment Agency and Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. and Lee Anna Palmer Revocable Trust dated November 25, 1996. 2. Approve Exchange Agreement and Joint Escrow Instructions between Palm Desert Redevelopment Agency and Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. and Lee Anna Palmer Revocable Trust dated November 25, 1996. 3. Authorize the Executive Director to execute Exchange Agreement and Joint Escrow Instructions between Palm Desert Redevelopment Agency and Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. and Lee Anna Palmer Revocable Trust dated November 25, 1996, and all documents related to the acquisition of 44-900 E. San Clemente Circle (APN 627-074-006) for $302,500 and disposition of 44-845 San Clemente Circle (APN 627-071-023) for $71,682. Funds are available in Account No. 850- 4341-433-4001. 4. Authorize staff to reimburse the Agency using Housing Set -Aside funds if a determination is made to develop the property or a portion thereof for future low/moderate income affordable housing. G IrdalBryce Wh,telAIessandro Alley Improvement ProjectlAlessandro Alley Palmer SR 5-26-2011.doc Staff Report Approve Exchange Agreement between RDA and Palmer May 26, 2011 Page 2of4 Executive Summary Pursuant to Section 33431 of the California Community Redevelopment Law, Notice of Public Hearing for Exchange Agreement and Joint Escrow Instructions between Palm Desert Redevelopment Agency and Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. and Lee Anna Palmer Revocable Trust dated November 25, 1996 ("Palmer") was published. This Agreement provides for a 16,057 square foot portion of the real property identified as APN 627-071-023, and located at 44-845 San Clemente Circle, which is now owned by the Agency, to be exchanged for real property identified as APN 627-074-006, located at 44-900 E. San Clemente Circle, which is now owned by Palmer. The Agency Board has authorized design and engineering to widen and improve Alessandro Alley. To fully implement the project, the City needs to acquire 27 feet from the residential properties bordering the alley. Timothy R. and Lee Anna Palmer Trust owns the improved property located at 44-900 E. San Clemente Circle, APN 627-074-006, which is adjacent to Alessandro Alley. The subject property is approximately 7,823 square feet with a 1,446 square foot residence. Palmer's property is zoned R-1 (Single Family Residential) with a nonconforming window tinting business. Staff has negotiated with the Palmers over the last three years. The Exchange Agreement provides consideration for acquisition of Palmer's property, including relocation costs, for $302,500 and for disposition of Agency's property for $71,682. Backaround The proposed Alessandro Alley Improvement Project will consist of the following improvements: • Acquisition of 27 feet from adjacent residential properties to the north. • Widening the alley to the full 24-foot width (improved traffic circulation). • Creating new parking spaces. • Providing landscaping, lighting, and block wall improvements along the entire alley from Las Palmas Avenue to Monterey Avenue. • Closure of San Marcos Avenue between San Clemente Circle and Alessandro Alley. The Palmer's property is located at 44-900 E. San Clemente Circle (APN 627-074-006) and is adjacent to the proposed Alessandro Alley Improvement Project. The subject property is approximately 7,823 square feet with a 1,446 square foot residence and attached garages. The property is zoned R-1 (Single Family Residential) with a nonconforming window tinting business. Acquisition of the southerly 27 feet (1,865 square feet) that is needed for the Alessandro Alley Improvement Project would result in the removal of the garages and part of the southern portion of the house. In order to fully implement the proposed project which includes removal of the San Marcos Avenue street improvements between San Clemente Circle and Alessandro Alley, the deconstruction of all of the property improvements is required. The remainder of the property may be joined with the City -owned vacant lot on the east side if a determination is made to develop the properties for future low/moderate affordable housing. G.IrdalBryce WhitelAlessandro Alley Improvement Project\Alessandro Alley Palmer SR 5-26-2011.doc Staff Report Approve Exchange Agreement between RDA and Palmer May 26, 2011 Page 3 of 4 Acquisition of the Palmer's property is important for the full implementation of the Alessandro Alley Improvement Project as follows: • The current nonconforming window tinting business in this location is undesirable and creates blight. • The existing buildings are within a few feet of the existing 20 foot right-of-way and will create a traffic bottleneck when the balance of the alley is widened to 24 foot width. • The residence and garages front on San Marcos Avenue preventing closure of the street and proposed pedestrian improvements between San Clemente Circle and Alessandro Alley. On December 9, 2010, the City Council approved the acquisition of the subject property for $192,500 and all inclusive residential/business relocation related benefits of $110,000 totaling $302,500 and the Agency authorized reimbursement to the City for those costs. The Exchange Agreement provides the acquisition by the Agency of the Palmer's property for $302,500. The Agency's proposed purchase of Palmer's property is for a redevelopment purpose and a public use for the Alessandro Alley Improvement Project. The Agency -owned property at 44-845 San Clemente Circle consists of a 17,697 square foot parcel with a 1,331 square foot residence and an attached garage. The property is zoned R-1 (Single Family Residential) and backs up to the Alessandro Alley. The southerly 27 feet (1,640 square feet) is necessary to implement the Alessandro Alley improvements. The City Council approved the purchase of the subject property on April 24, 2009, and the Agency Board approved reimbursement to the City and for the Housing Authority to reimburse the Agency using Housing Set -Aside funds if it is determined that the property qualifies as low/moderate affordable housing. It has been determined that the improvements are not suitable for low/moderate affordable housing, and would require significant improvements to bring the property up to current code requirements. Removal of the existing improvements would provide a remainder vacant lot of approximately 16,057 square feet. On August 26, 2010, the Agency Board deleted 44-845 San Clemente Circle from the award of contract for deconstruction of properties associated with the Alessandro Alley Improvement Project due to negotiations with Palmers for sale of the subject property. If the improvements were to be deconstructed the remaining land value would be $71,682. On November 18, 2010, the City Council approved conveyance of 44-845 San Clemente Circle to the Agency. The Exchange Agreement provides for disposition of Agency property for $71,682 which is the land value remaining if the subject property were to be deconstructed. The Agency will also remove all lead, asbestos, mold, and trees; replace the water supply line for the water meter to the house and all hot and cold water lines; remove the abandoned septic tank; waive all building permit fees for renovation; and, provide a gate through the block wall along the rear property line which is part of the Alessandro Alley Improvements. The subject property is within the original survey area of Project Area No. 1. Notice of Public Hearing for disposition of the subject property was noticed for April 14, 2011, and has been continued to the present date. G:IrdalBryce White Alessandro Alley Improvement ProjectlAlessandro Alley Palmer SR 5-26-2011.doc Staff Report Approve Exchange Agreement between RDA and Palmer May 26, 2011 Page 4 of 4 Therefore staff recommends that the Agency Board hold a public hearing pursuant to Section 33431 of the California Community Redevelopment Law for Exchange Agreement and Joint Escrow Instructions between Palm Desert Redevelopment Agency and Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. and Lee Anna Palmer Revocable Trust dated November 25, 1996 ("Palmer"). Staff further recommends that, following conclusion of the public hearing, the Agency Board approve the subject Exchange Agreement. Submitted By: Project Admfr Tstrator knet Mi Moore, Director of Housing Department Head: • McCarthy, ACM Rede oment Ao• :val: John t 1. Wohlmuth, Executive Director rtin Alvarez, Redevelopment Manager Paul S. Gibson, Director of Finance ON ?mod • »-- 0 BY RDA VERIFIED BY__. , l Original on file with City 1lerk Office G:IrdalBryce WhitelAlessandro Alley Improvement ProjectlAlessandro Alley Palmer SR 5-26-2011.doc EXCHANGE AGREEMENT AND JOINT ESCROW INSTRUCTIONS BETWEEN PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic "Agency" AND TIMOTHY R. PALMER AND LEE ANNA PALMER, AS TRUSTEES OF THE TIMOTHY R. PALMER AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996 "Palmer" DATED: May 26, 2011 P6402-0201 \1332518v3.doc Execution Date: DEFINED TERMS May 26, 2011 Agency: Palm Desert Redevelopment Agency, a public body, corporate and politic Agency's Address: 73-510 Fred Waring Drive Palm Desert, CA 92260 Attn: Executive Director Phone No.: (760) 346-0611 Fax No. (760) 341-6372 Palmer: Timothy R. Palmer and Lee Anna Palmer, as Trustees of the Timothy R. Palmer and Lee Anna Palmer Revocable Trust dated November 25, 1996 Palmer's Address: 44900 East San Clemente Circle Palm Desert, California 92260 Phone No.: (760) 346-4671 Agency's Counsel: Richards, Watson & Gershon 355 South Grand Avenue, 40th Floor Los Angeles, California 90071-3101 Attn: Jim G. Grayson, Esq. Phone No.: (213) 253-0260 Fax No.: (213) 626-0078 Agency Property: Palmer Property: Closing Date: Title Company: That certain real property located in the City of Palm Desert, County of Riverside, State of California as described on Exhibit A attached hereto and all rights and appurtenances pertaining thereto and improvements located thereon. That certain real property located in the City of Palm Desert, County of Riverside, State of California as described on Exhibit B attached hereto and all rights and appurtenances pertaining thereto and improvements located thereon. On or before July 15, 2011. First American Title Insurance Company 323 Court Street San Bernardino, CA 62401 Attn: Josh Guzman/Porscha Peterson Phone No.: (951) 787-1762 Fax No.: (866) 292-6890 P6402-0201 \ 13 32518v3.doc Escrow Holder: Lawyers Title 47040 Washington Street, Suite 3101 La Quinta, CA 92253 Attn: Carin Moon Phone No.: (760) 564-2092 Fax No.: (760) 564-6194 Brokers: None. Lease Agreement: That certain Lease Agreement is attached hereto as Exhibit E. Hazardous Material: Means any substance, material or waste which is or becomes, regulated by any local governmental authority, the State of California or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "acutely hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Section 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 Control 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 Response 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) friable asbestos, (vii) polychlorinated byphenyls, (viii) listed under Article 9 or defined as "hazardous" or "extremely hazardous" pursuant to Article 11 of Title 22 of the California Code of Regulations, Chapter 20, (ix) designated as "hazardous substances" pursuant to Section 311 of the Clean Water Act (33 U.S.C. Section 1317), (x) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act (42 U.S.C. Sections 6901, et seq.), (xi) defined as "hazardous substances" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. Sections 9601, et seq.), (xii) Methyl -Tertiary Butyl Ether, or (xiii) any other substance, whether in the form of a solid, liquid, gas or any other form whatsoever, which by any Governmental Requirements either requires special handling in its use, transportation, generation, collection, storage, handling, treatment or disposal, or is defined as "hazardous" or harmful to the environment. P6402-0201 \ 1332518v3. doc EXCHANGE AGREEMENT AND JOINT ESCROW INSTRUCTIONS THIS EXCHANGE AGREEMENT AND JOINT ESCROW INSTRUCTIONS (this "Agreement") is made and entered into as of the Execution Date by and between Agency and Palmer. In consideration of the mutual covenants and agreements contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Agency and Palmer agree as follows: 1. Obligations of Agency With Respect to Agency Property. The Agency, at its sole cost and expense, shall undertake and complete the actions with respect to the Agency Property described in Exhibit F attached hereto (collectively, the "Agency Actions"). Except as otherwise provided in Exhibit F. the Agency shall endeavor in good faith to complete the Agency Actions prior to the Closing Date. If such Agency Actions are not completed prior to the Closing Date, the Closing (as defined below) shall nevertheless occur on the Closing Date, and the Agency shall complete such Agency Actions as soon as reasonably practicable thereafter. Palmer hereby grants to Agency a license to access the Agency Property after the Closing for all purposes necessary to undertake and complete the Agency Actions. 2. Exchange. Agency hereby agrees to convey the Agency Property to Palmer and, in exchange Palmer hereby agrees to convey the Palmer Property to Agency, on the terms and conditions set forth in this Agreement. 3. Consideration. (a) Consideration for Agency Property. As the consideration to the Agency in return for Agency's conveyance to Palmer of the Agency Property, Palmer shall, at the Closing (as defined below), (i) convey the Palmer Property to the Agency or its nominee, and (ii) pay to Agency Seventy -One Thousand Six Hundred Eighty Two Dollars ($71,682.00) (the "Palmer Cash Payment"). At Closing, the amount of the Palmer Cash Payment shall be deducted from the amount of the Cash Payment (as hereinafter defined) to be paid to Palmer and thereby be deemed paid by Palmer as required by Section 3(a)(ii). (b) Consideration for the Palmer Property. As the consideration to Palmer in return for Palmer's conveyance to Agency of the Palmer Property, Agency shall, at the Closing, (i) convey the Agency Property to Palmer or its nominee, and (ii), subject to the deduction of the amount of the Palmer Cash Payment described in the last sentence of Section 3(a), pay to Palmer Three Hundred Two Thousand Five Hundred Dollars ($302,500.00) payable by wire transfer or other immediately available funds (the "Cash Payment"). 4. Title Review of Agency Property. Palmer has been furnished with and hereby acknowledges receipt of a preliminary commitment for the Agency Property ("Agency Property Title Commitment"), together with complete and legible copies of all documents referred to as exceptions identified in Schedule B thereof. Palmer shall conduct its review of the Agency Property Title Commitment in accordance with the following procedures: P6402-0201\1332518v3.doc (a) Palmer's Notice. Palmer shall have ten (10) business days after the Execution Date to notify the Agency in writing of its approval and/or disapproval of each exception in Schedule B of the Agency Property Title Commitment ("Agency Title Matters"). Exceptions not disapproved by Palmer within this time period shall automatically be deemed "Permitted Exceptions." Notwithstanding the foregoing, exceptions that evidence the delinquent obligation to pay money ("Monetary Exceptions") shall be automatically deemed disapproved. (b) The Agency's Notice. The Agency shall have ten (10) business days after receipt of Palmer's notification in which to notify Palmer whether or not it elects to cure or remove any of the disapproved exceptions identified in Palmer's notice given pursuant to Section 4(a). The Agency's failure to so notify Palmer within this time period shall constitute the Agency's election to not remove any such exceptions. The Agency shall remove all exceptions it elects to remove on or before Closing. Notwithstanding the foregoing, the Agency agrees to remove all Monetary Exceptions at or prior to Closing. (c) Palmer's Election. If the Agency does not elect to, or is deemed to have elected not to, remove all exceptions disapproved by Palmer, Palmer may, no later than ten (10) business days after expiration of the ten (10) business day period described in Section 4(b), elect by written notice to the Agency to either (a) continue this Agreement and proceed with Closing, in which event the disapproved exceptions that the Agency has not elected to remove shall become Permitted Exceptions, or (b) terminate this Agreement without liability to either party, in which case all of the parties' rights and obligations hereunder (other than those which are intended to survive such termination by the express terms hereof) shall terminate as well. Upon such termination, each party shall promptly take any and all actions necessary to cancel "Escrow" (as defined below) and to cause any documents or monies deposited therein to be returned to the depositing party. (d) New Exceptions. The notice and response procedure of this Section 4 shall be repeated for any additional title exceptions of which Palmer is notified by the Title Company after the Execution Date, except that if the time period for delivery of any notice extends beyond the Closing Date, then the Closing shall be extended for whatever period of time is necessary to accommodate such notice period(s). Notwithstanding any other provision of this Agreement, the Agency shall not record or authorize for recording any lien or encumbrance against the Agency Property that would extend beyond the Closing Date without the prior written approval of Palmer. 5. Title Review of the Palmer Property. The Agency has been furnished with and hereby acknowledges receipt of a preliminary commitment for the Palmer Property ("Palmer Property Title Commitment"), together with complete and legible copies of all documents referred to as exceptions identified in Schedule B thereof. The Agency shall conduct its review of the Title Commitment in accordance with the following procedures: (a) The Agency's Notice. The Agency shall have ten (10) business days after the Execution Date to notify Palmer in writing of its approval and/or disapproval of each exception in Schedule B of the Palmer Property Title Commitment ("Palmer Title Matters"). Exceptions not disapproved by the Agency within this time period shall automatically be deemed 2 P6402-0201 1 1332518v3.doc Permitted Exceptions. Notwithstanding the foregoing, Monetary Exceptions shall be automatically deemed disapproved. (b) Palmer's Notice. Palmer shall have ten (10) business days after receipt of the Agency's notification in which to notify the Agency whether or not it elects to cure or remove any of the disapproved exceptions identified in Agency's notice pursuant to Section 5(a). Palmer's failure to so notify the Agency within this time period shall constitute Palmer's election to not remove any such exceptions. Palmer shall remove all exceptions it elects to remove on or before Closing. Notwithstanding the foregoing, Palmer agrees to remove all Monetary Exceptions at or prior to Closing. (c) The A2encv's Election. If Palmer does not elect to, or is deemed to have elected not to, remove all exceptions disapproved by the Agency, the Agency may, no later than ten (10) business days after expiration of the ten (10) business day period described in Section 5(b), elect by written notice to Palmer to either (a) continue this Agreement and proceed with the Closing, in which event the disapproved exceptions that Palmer has not elected to remove shall become Permitted Exceptions, or (b) terminate this Agreement without liability to either party, in which case all of the parties' rights and obligations hereunder (other than those which are intended to survive such termination by the express terms hereof) shall terminate as well. Upon such termination, each party shall promptly take any and all actions necessary to cancel Escrow and to cause any documents or monies deposited therein to be returned to the depositing party. (d) New Exceptions. The notice and response procedure of this Section 5 shall be repeated for any additional title exceptions of which the Agency is notified by the Title Company after the Execution Date, except that if the time period for delivery of any notice extends beyond the Closing Date, then the Closing shall be extended for whatever period of time is necessary to accommodate such notice period(s). Notwithstanding any other provision of this Agreement, Palmer shall not record or authorize for recording any lien or encumbrance against the Palmer Property that would extend beyond the Closing Date without the prior written approval of the Agency. 6. The Agency's Due Diligence Contingency. (a) Due Diligence. The Agency's obligation to acquire the Palmer Property and Palmer's obligations to convey the Palmer Property to the Agency are contingent upon the Agency determining, in the exercise of its sole and absolute discretion, that it is satisfied with its due diligence of all aspects of the Palmer Property ("Agency Due Diligence Contingency"). (b) Property Documents. Within ten (10) business days after the Execution Date, Palmer shall provide to the Agency copies of any and all information regarding the Palmer Property in Palmer's possession or control, including but not limited to the following: soil reports, environmental or hazardous waste studies, engineering studies or any other studies or reports relating to the physical condition of the property or any agreements relating to the physical condition or use and development of the Palmer Property, if any ("Palmer Property Documents"). 3 P6402-0201\1332518v3.doc (c) Right of Access. The Agency and its agents, employees and designees shall be afforded reasonable access and entry onto the Palmer Property during the Due Diligence Period to conduct such studies, tests, inspections and other investigations as determined by the Agency in its sole and absolute discretion in order to fully investigate the Palmer Property. All such studies, tests, inspections and other investigations shall occur at the Agency's sole cost and expense. The Agency shall provide Palmer with at least two (2) business days' advance written notice prior to entering upon the Palmer Property. The Agency shall indemnify, defend and hold Palmer harmless from any claim, liability, loss or expense asserted against Palmer or the Palmer Property in connection with the Agency's or its agents', employees' and designees' entry on the Palmer Property, and, so long as this Agreement has not been terminated by the Agency due to Palmer's nonperformance, the Agency shall provide Palmer, at no cost to Palmer, copies of all reports issued in connection with the tests, studies, inspections and/or other investigations conducted by the Agency on the Palmer Property. (d) Due Diligence Period. The Agency shall have thirty (30) days from the Execution Date ("Agency Due Diligence Period") within which to determine the Agency's satisfaction in its sole and absolute discretion with the Agency Due Diligence Contingency. If the Agency is not satisfied with the Agency Due Diligence Contingency within the Agency Due Diligence Period, the Agency may terminate this Agreement by delivering written notice of such termination to Palmer on or before the expiration of the Agency Due Diligence Period, in which case all of the parties' rights and obligations hereunder (other than those which are intended to survive such termination by the express terms hereof) shall terminate as well. Upon such termination, each party shall promptly take any and all actions necessary to cancel Escrow and to cause any documents or monies deposited therein to be returned to the depositing party. If the Agency does not provide written notice of termination of this Agreement within the Agency Due Diligence Period, the Agency Due Diligence Contingency shall be deemed to have been satisfied and waived, and this Agreement shall continue in full force and effect. (e) Condition of the Palmer Property. The waiver or satisfaction of the Agency Due Diligence Contingency shall constitute the Agency's determination that it is satisfied with its investigation of the condition of the Palmer Property and all material facts bearing on its purchase of the Palmer Property. Except for Palmer's express representations and warranties under this Agreement, the Agency will acquire the Palmer Property "AS IS", with any and all faults and defects. 7. Palmer's Due Diligence Contingency. (a) Due Diligence. Palmer's obligation to acquire the Agency Property and the Agency's obligations to convey the Agency Property to Palmer are contingent upon Palmer determining, in the exercise of its sole and absolute discretion, that it is satisfied with its due diligence of all aspects of the Agency Property ("Palmer Due Diligence Contingency"). (b) Property Documents. Within ten (10) business days after the Execution Date, the Agency shall provide to Palmer copies of any and all information regarding Agency Property in the Agency's possession or control, including but not limited to the following: soil reports, environmental or hazardous waste studies, engineering studies or any other studies or reports relating to the physical condition of the property or any agreements relating to the 4 P6402-0201\1332518v3.doc physical condition or use and development of the Agency Property, if any ("Agency Property Documents"). (c) Right of Access. Palmer and its agents, employees and designees shall be afforded reasonable access and entry onto the Agency Property during the Due Diligence Period to conduct such studies, tests, inspections and other investigations as determined by Palmer in its sole and absolute discretion in order to fully investigate the Agency Property. All such studies, tests, inspections and other investigations shall occur at Palmer's sole cost and expense. Palmer shall provide the Agency with at least two (2) business days' advance written notice prior to entering upon the Agency Property. Palmer shall indemnify, defend and hold the Agency harmless from any claim, liability, loss or expense asserted against the Agency or the Agency Property in connection with Palmer's or its agents', employees' and designees' entry on the Agency Property, and, so long as this Agreement has not been terminated by Palmer due to the Agency's nonperformance, Palmer shall provide the Agency, at no cost to the Agency, copies of all reports issued in connection with such studies, tests, inspections and/or other investigations conducted by Palmer on the Agency Property. (d) Due Diligence Period. Palmer shall have thirty (30) days from the Execution Date ("Palmer Due Diligence Period") within which to determine Palmer's satisfaction in its sole and absolute discretion with the Palmer Due Diligence Contingency. If Palmer is not satisfied with the Palmer Due Diligence Contingency within the Palmer Due Diligence Period, Palmer may terminate this Agreement by delivering written notice of such termination to the Agency on or before the expiration of the Palmer Due Diligence Period, in which case all of the parties' rights and obligations hereunder (other than those which are intended to survive such termination by the express terms hereof) shall terminate as well. Upon such termination, each party shall promptly take any and all actions necessary to cancel Escrow and to cause any documents and monies deposited therein to be returned to the depositing party. If Palmer does not provide written notice of termination of this Agreement within the Palmer Due Diligence Period, the Palmer Due Diligence Contingency shall be deemed to have been satisfied and waived, and this Agreement shall continue in full force and effect. (e) Condition of the Agency Property. The waiver or satisfaction of the Palmer Due Diligence Contingency shall constitute Palmer's determination that it is satisfied with its investigation of the condition of the Agency Property and all material facts bearing on its acquisition of the Agency Property. Except for the Agency's express representations and warranties contained in this Agreement, Palmer will acquire the Agency Property "AS IS", with any and all faults and defects. 8. Escrow and Closing. (a) Opening of Escrow. For the purposes of this Agreement, the escrow ("Escrow") shall be deemed opened (the "Opening of Escrow") on the date that Escrow Holder receives a copy of this Agreement fully executed by Agency and Palmer. Escrow Holder shall promptly notify Agency and Palmer in writing of the date of the Opening of Escrow. Agency and Palmer agree to execute, deliver and be bound by any reasonable or customary supplemental escrow instructions or other instruments reasonably required by Escrow Holder to consummate the transaction contemplated by this Agreement; provided, however, that no such instruments 5 P6402-0201\1332518v3.doc shall be inconsistent or in conflict with, amend or supersede any portion of this Agreement. If there is any conflict or inconsistency between the terms of such instruments and the terms of this Agreement, then the terms of this Agreement shall control. (b) Closing. For purposes of this Agreement, the "Closing" shall be the date that both the "Agency Deed" and the "Palmer Deed" (as those terms are defined below) are recorded pursuant to applicable law in the Official Records of the County of Riverside, California. Unless changed in writing by Agency and Palmer, and provided all of Agency's Contingencies and Palmer's Contingencies have been satisfied or waived in writing by Agency and Palmer, respectively, the Closing shall occur on the Closing Date; provided, however, that if either Agency or Palmer is not prepared for the Closing, the Closing Date shall automatically be extended by three (3) business days. In no event shall the Closing occur sooner than the fifteen (15) day following approval or waiver of the last of Agency's Contingencies and Palmer's Contingencies, unless a sooner date is mutually approved. In no event shall the Closing occur after, and this Agreement shall automatically terminate if the Closing has not occurred on or before, July 15, 2011. 9. Agency's Conditions Precedent and Termination Right. (a) Agency's Conditions Precedent. The Closing and Agency's obligation to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Agency's Contingencies"), which are for Agency's benefit only. (i) Due Diligence Contingency_ . The Agency's Due Diligence Contingency has been satisfied or waived. (ii) Title Policy. On or before the Closing, the Title Company shall, upon payment of the Title Company's regularly scheduled premium, have agreed to issue to Agency a CLTA standard coverage owner's policy of title insurance naming Agency as the insured (such policy being referred to herein as the "Agency's Title Policy") in the amount of Three Hundred Two Thousand Five Hundred Dollars ($302,500.00) showing fee title to the Palmer Property vested solely in the Agency and subject only to (i) the standard, preprinted exceptions to the Agency's Title Policy (but not including any arbitration rights); (ii) a lien (or liens) to secure payment of real estate taxes or assessments not yet delinquent; (iii) matters affecting the Palmer Property created by or approved by the Agency; and (iv) Permitted Exceptions. (iii) No Changes. As of the Closing, the physical condition of the Palmer Property shall be substantially the same as the condition existing as of the expiration of the Agency Due Diligence Period. (iv) Representations and Warranties. All representations and warranties of Palmer contained in this Agreement shall be materially true and correct as of the date made and as of the Closing with the same effect as if those representations and warranties were made at and as of the Closing. 6 P6402-0201 \ 1332518v3.doc (v) No Default. As of the Closing, Palmer shall not be in Default (as defined below). (b) Termination Right. Should any of Agency's Contingencies not be met, Agency may, by written notice to Palmer, terminate this Agreement. In the event that this Agreement is so terminated, any escrow, title or other cancellation fees shall be shared equally by Agency and Palmer unless Palmer is in default hereunder, in which case Palmer shall pay all such fees. (c) Waiver. The Agency may waive any of Agency's Contingencies. 10. Palmer's Conditions Precedent and Termination Right. (a) Palmer's Conditions Precedent. The Closing and Palmer's obligation to consummate the transaction contemplated by this Agreement are subject to the timely satisfaction or written waiver of the following conditions precedent (collectively, "Palmer's Contingencies"), which are for Palmer's benefit only. (i) Due Diligence Contingency. Palmer's Due Diligence Contingency has been satisfied or waived. (ii) Title Policy. On or before the Closing, the Title Company shall, upon payment of the Title Company's regularly scheduled premium, have agreed to issue to Palmer a ALTA standard coverage owner's policy of title insurance naming Palmer, as the insured (such policy being referred to herein as "Palmer's Title Policy") in the amount of Seventy -One Thousand Six Hundred Eighty -Two Dollars ($71,682.00) showing fee title to the Agency Property vested solely in Palmer and subject only to (i) the standard, preprinted exceptions to Palmer's Title Policy (but not including any arbitration rights); (ii) a lien (or liens) to secure payment of real estate taxes or assessments not yet delinquent; (iii) matters affecting the Agency Property created by or approved by Palmer; and (iv) Permitted Exceptions. (iii) No Changes. As of the Closing, the physical condition of the Agency Property shall be substantially the same as the condition existing as of the expiration of the Palmer Due Diligence Period. (iv) Representations and Warranties. All representations and warranties of Agency contained in this Agreement shall be materially true and correct as of the date made and as of the Closing with the same effect as if those representations and warranties were made at and as of the Closing. (v) No Default. As of the Closing, Agency shall not be in Default. (b) Termination Right. Should any of Palmer's Contingencies not be met, Palmer may, by written notice to Agency, terminate this Agreement. In the event that this Agreement is so terminated, any escrow, title or other cancellation fees shall be shared equally by Agency and Palmer unless Agency is in default hereunder, in which case Agency shall pay all such fees. 7 P6402-0201\1332518v3.doc (c) Waiver. Palmer may waive any of Palmer's Contingencies. 11. Agency's Deliveries to Escrow Holder. On or before the Closing, Agency shall deposit, or cause to be deposited, with Escrow Holder the following items, duly executed and, where appropriate, acknowledged ("Agency's Delivered Items"): (a) Payments. The Cash Payment. (b) Deed. The grant deed in the form attached hereto as Exhibit C (the "Agency Deed"). (c) FIRPTA. The Certification of Non -Foreign Status in accordance with Internal Revenue Code Section 1445 (the "Agency FIRPTA Certificate"). (d) 593-C Form. A Withholding Exception Certificate (Form 593(c)) as contemplated by California Revenue and Taxation Code § 18662 (the "Agency Withholding"). (e) Lease Agreement. The Lease Agreement. (f) Authority. Such evidence of Agency's authority and authorization to enter into this Agreement and to consummate the Closing as may be reasonably requested by Palmer and/or the Title Company. (g) Further Documents, Funds or Items. Any other documents, funds or items, including, but not limited to, funds sufficient to pay for "Agency's Costs" (as defined below), reasonably required for the Closing. 12. Palmer's Deliveries to Escrow Holder. On or before the Closing, Palmer shall deposit, or cause to be deposited, with Escrow Holder the following items, duly executed and, where appropriate, acknowledged ("Palmer's Delivered Items"): (a) Deed. The grant deed in the form attached hereto as Exhibit D (the "Palmer Deed"). (b) FIRPTA. The Certification of Non -Foreign Status in accordance with Internal Revenue Code Section 1445 (the "Palmer FIRPTA Certificate"). (c) 593-C Form. A Withholding Exception Certificate (Form 593(c)) as contemplated by California Revenue and Taxation Code § 18662 (the "Palmer Withholding"). (d) Lease Agreement. The Lease Agreement. (e) Authority. Such evidence of Palmer's authority and authorization to enter into this Agreement and to consummate the Closing as may be reasonably requested by Agency and/or the Title Company. 8 P6402-0201 \1332518v3.doc (f) Further Documents. Funds or Items. Any other documents, funds or items, including, but not limited to, funds sufficient to pay for "Palmer's Costs" (as defined below), reasonably required for the Closing. 13. Costs and Expenses. (a) Agency Costs. If the Closing is consummated, then Agency shall bear the following costs and expenses: (i) the Escrow Holder's fee; (ii) the cost of the Agency's Title Policy and Palmer's Title Policy; (iii) all document recording fees; (iv) the cost of all endorsements to Agency's Title Policy; (v) Agency's share of all charges prorated under this Agreement; and (vi) all documentary transfer taxes (collectively, "Agency's Costs"). (b) Palmer Costs. If the Closing is consummated, then Palmer shall bear the following costs and expenses: (i) the cost of all endorsements to Palmer's Title Policy; and (ii) Palmer's share of all charges prorated under this Agreement (collectively, "Palmer's Costs"). (c) Generally. If, through no fault of either Agency or Palmer, the Closing fails to take place, Agency and Palmer shall share equally all of Escrow Holder's fees and charges; provided, however, that if the Closing fails to occur as the result of the Default of either party, then such defaulting party shall bear all Escrow Holder's fees and expenses. Each party shall bear the costs of its own attorneys and consultants in connection with the negotiation and preparation of this Agreement and the consummation of the Closing. All other costs and expenses (except as set forth in this Section 13) shall be allocated between Agency and Palmer in accordance with the customary practice of the County of Riverside, California. The items provided in this Section 13(c) are hereinafter referred to as "General Expenses." 14. Prorations. Property taxes and assessments will be prorated as of the Closing based on a 30 day month and 360 day year. 15. Closing Procedure. When the Title Company is ready to issue Agency's Title Policy and Palmer's Title Policy and all required documents and funds have been deposited with Escrow Holder, Escrow Holder shall immediately close Escrow in the manner and order provided below. (a) Recording. Escrow Holder shall cause the Agency Deed, the Palmer Deed, and any other documents that the parties may mutually direct, to be recorded pursuant to applicable law in the Official Records of the County of Riverside, California, and obtain conformed copies thereof for distribution to Agency and Palmer. (b) Disburse Funds. Escrow Holder shall debit or credit (as provided herein) all Agency's Costs, Palmer's Costs and General Expenses, disburse the Cash Payment to Palmer and disburse the remaining funds, if any, to the party entitled thereto. (c) Documents to Agency. Escrow Holder shall deliver to Agency the original Palmer FIRPTA Certificate, Palmer Withholding, a conformed copy of both the Palmer Deed and the Agency Deed, and a fully executed copy of the Lease Agreement. 9 P6402-0201 \ 13 32518 v3. doc (d) Documents to Palmer. Escrow Holder shall deliver to Palmer the original Agency FIRPTA Certificate, Agency Withholding, and a conformed copy of both the Palmer Deed and the Agency Deed, and a fully executed copy the Lease Agreement. (e) Title Policy. Escrow Holder shall cause the Title Company to issue Agency's Title Policy to Agency and Palmer's Title Policy to Palmer. (f) Closing Statement. Escrow Holder shall forward to both Agency and Palmer a separate accounting of all funds received and disbursed for each party in connection with the Closing. (g) Informational Reports. Escrow Holder shall file any information reports required by Internal Revenue Code Section 6045(e), as amended. 16. Representations and Warranties. (a) Agency's Representations and Warranties. In consideration of Palmer entering into this Agreement and as an inducement to Palmer to acquire the Agency Property, Agency makes the following representations and warranties as of the Execution Date and at and as of the Closing, each of which is material and is being relied upon by Palmer. (i) Power. Agency has the legal power, right and authority to enter into this Agreement and the instruments attached hereto and referenced herein, and to consummate the transaction contemplated hereby. (ii) Requisite Action. All requisite action has been taken by Agency in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any administrative body, governmental authority or other party shall be required for Agency to consummate the transaction contemplated by this Agreement. (iii) Individual Authority. The individuals executing this Agreement and the instruments referenced herein on behalf of Agency have the legal power, right and actual authority to bind Agency to the terms and conditions hereof and thereof. (iv) No Conflict. Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or instruments referenced herein or therein 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, lease or other agreement or instrument to which any of the Agency is a party or that affect the Agency Property. (v) No Bankruptcy. No bankruptcy or other insolvency proceeding has been filed or threatened by or against the Agency. 10 P6402-0201 \ 1332518v3.doc (vi) Property Documents. All of the copies of the Agency Property Documents delivered to Palmer are true and complete copies of their respective originals. (vii) Compliance with Laws and Codes. Agency has not received any written notice of any current alleged violations of any law, statute or regulation at or about the Agency Property. (viii) Environmental. Except as described in the Agency Property Documents, or as otherwise disclosed in writing to Palmer prior to the end of the Due Diligence Period, to Agency's actual knowledge, there are no Hazardous Substances or materials located on or under the Agency Property and Agency has received no notice of any Hazardous Materials located on or under the Agency Property. (ix) No Defaults. Agency has received no written notice of default under any of the Agency Property Documents or Agency Title Matters, nor has Agency received written notice of any event that with notice or the passage of time, or both, would constitute a default thereunder. (x) No Liens or Prior Transfers. Agency has not previously assigned, transferred, conveyed or encumbered (or entered into any agreement to do any of the foregoing) any or all of its right, title or interest in or to the Agency Property. (xi) No Tax or Economic Advice. Agency has not received or relied on any tax or economic advice from Palmer or Palmer's Counsel with respect to the transactions contemplated by this Agreement or to the economic advisability or feasibility of such transactions. (b) Palmer's Representations and Warranties. In consideration of Agency entering into this Agreement and as an inducement to Agency to acquire the Palmer Property, Palmer makes the following representations and warranties as of the Execution Date and at and as of the Closing, each of which is material and is being relied upon by Agency. (i) Power. Palmer has the legal power, right and authority to enter into this Agreement and the instruments attached hereto and referenced herein, and to consummate the transaction contemplated hereby. (ii) Requisite Action. All requisite action has been taken by Palmer in connection with entering into this Agreement and the instruments referenced herein; and, by the Closing, all such necessary action will have been taken to authorize the consummation of the transaction contemplated hereby. By the Closing no additional consent of any individual, director, shareholder, partner, member, manager, trustee, trustor, beneficiary, creditor, investor, judicial or administrative body, governmental authority or other party shall be required for Palmer to consummate the transaction contemplated by this Agreement. (iii) Individual Authority. The individuals executing this Agreement and the instruments referenced herein on behalf of Palmer have the legal power, right and actual authority to bind Palmer to the terms and conditions hereof and thereof. 11 P6402-0201\1332518v3.doc (iv) No Conflict. Neither the execution or delivery of this Agreement or the documents or instruments referenced herein, nor incurring the obligations set forth herein, nor the consummation of the transaction contemplated herein, nor compliance with the terms of this Agreement or the documents or instruments referenced herein or therein 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, lease or other agreement or instrument to which Palmer is a party or that affect the Palmer Property. (v) No Bankruptcy. No bankruptcy or other insolvency proceeding has been filed or threatened by or against Palmer. (vi) Property Documents. All of the copies of the Palmer Property Documents delivered to Agency are true and complete copies of their respective originals. (vii) Compliance With Laws and Codes. Palmer has not received any written notice of any current alleged violations of any law, statute or regulation at or about the Palmer Property. (viii) Environmental. Except as described in the Palmer Property Documents, or as otherwise disclosed in writing to Agency prior to the end of the Agency Due Diligence Period, to Palmer's actual knowledge, there are no toxic or otherwise hazardous substances or materials located on or under the Palmer Property and Palmer has received no notice of any Hazardous Materials located on or under the Palmer Property. (ix) No Defaults. Palmer has received no written notice of default under any of the Palmer Property Documents or the Palmer Title Matters, nor has Palmer received written notice of any event that with notice or the passage of time, or both, would constitute a default thereunder. (x) No Liens or Prior Transfers. Palmer has not previously assigned, transferred, conveyed or encumbered (or entered into any agreement to do any of the foregoing) any or all of its right, title or interest in or to the Palmer Property. (xi) No Tax or Economic Advice. Palmer has not received or relied on any tax or economic advice from Agency or Agency's Counsel with respect to the transactions contemplated by this Agreement or to the economic advisability or feasibility of such transactions. 17. Events of Default and Rights of Termination and Other Remedies. (a) Defaults — General. Failure or delay by either party to perform any term or provision of this Agreement shall constitute a "Default" under this Agreement fifteen (15) days following receipt of written notice specifying the default complained of. Notwithstanding the foregoing, a failure in performance by the Agency for the reason described in Section 17(c)(iii) below shall not constitute a Default under this Agreement. 12 P6402-0201\1332518v3.doc (b) Institution of Legal Actions. In addition to any other rights or remedies, either party may institute legal action to cure, correct, or remedy any default, to recover damages for any default, or to obtain specific performance or any other remedy consistent with the purpose of this Agreement, except that there shall be no right to terminate this Agreement except as set forth in Sections 17(c) and 17(d). Such legal actions must be instituted in the Superior Court of the County of Riverside, State of California, in any other appropriate court in that County, or in the Federal District Court in the Central District of California. (c) Right of Termination by Agency Prior to Conveyance. In addition to any other remedies at law or equity available to Agency, Agency may terminate this Agreement if (1) any of the events described in (i), (ii) or (iii) below occurs, (2) any pertinent cure period applicable thereto has expired and such Default remains uncured, and (3) Agency delivers a written termination notice to Palmer. (i) Palmer fails to perform a material obligation hereunder, which failure constitutes a Default; or (ii) Any condition precedent to Agency's obligation to convey the Agency Property has not been satisfied as and at the times provided in this Agreement; or (iii) Legislation is enacted by the State of California after the Execution Date which, in the opinion of counsel to the Agency, may materially impair or prohibit the purchase of the Palmer Property or the conveyance of the Agency Property in the manner consistent with the provisions of this Agreement. Upon any such termination by Agency in accordance with this Section 17(c), (A) any remaining rights of Palmer regarding the Agency Property, or arising from this Agreement, shall be deemed terminated; (B) except in the event of a Default, neither Palmer nor Agency shall have any further rights against or liability to the other under this Agreement regarding the Agency Property; and (C) all monies or documents deposited by any party into the Escrow shall be returned to the party making such deposit. (d) Right of Termination by Palmer Prior to Conveyance. In addition to any other remedies at law or equity available to Palmer, Palmer may terminate this Agreement if (1) any of the events described in (i), (ii) or (iii) below occurs, (2) any pertinent cure period applicable thereto has expired and such Default remains uncured and (3) Palmer delivers a written termination notice to Agency: (i) Agency fails to perform a material obligation hereunder, which failure constitutes a Default; or (ii) Any condition precedent to Palmer's obligation to purchase the Agency Property has not been satisfied as and at the times provided in this Agreement; or (iii) The Agency has failed to perform its obligations under this Agreement for the reason described in Section 17(c)(iii) above. 13 P6402-0201 \1332518v3.doc Upon any such termination by Palmer in accordance with this Section 17(d), (A) any remaining rights of Agency regarding the Palmer Property, or arising from this Agreement, shall be deemed terminated; (B) except in the event of a Default, neither Palmer nor Agency shall have any further rights against or liability to the other under this Agreement regarding the Palmer Property; and (C) all monies or documents deposited by any party into the Escrow shall be returned to the party making such deposit. 18. General Provisions. (a) Entire Agreement. THE PARTIES HERETO EXPRESSLY AGREE AND CONFIRM THAT THIS AGREEMENT IS EXECUTED WITHOUT RELIANCE ON ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR PROMISES OF ANY KIND WHICH ARE NOT EXPRESSLY CONTAINED IN THIS AGREEMENT. THIS AGREEMENT SUPERSEDES ANY PRIOR AGREEMENTS, NEGOTIATIONS AND COMMUNICATIONS, ORAL OR WRITTEN, AND CONTAINS THE ENTIRE AGREEMENT BETWEEN, AND THE FINAL EXPRESSION OF, AGENCY AND PALMER WITH RESPECT TO THE SUBJECT MATTER HEREOF. NO SUBSEQUENT AGREEMENT, REPRESENTATION OR PROMISE MADE BY EITHER PARTY HERETO, OR BY OR TO AN EMPLOYEE, OFFICER, AGENT OR REPRESENTATIVE OF EITHER PARTY HERETO SHALL BE OF ANY EFFECT UNLESS IT IS IN WRITING AND EXECUTED BY THE PARTY TO BE BOUND THEREBY. (b) Damage to Agency Property. If, prior to the Closing, all or any portion of the Agency Property is damaged by any earthquake, flood, severe precipitation or other casualty (collectively, for purposes of this Section 18(b) only, "Damage") which materially adversely affects the development of the Agency Property, then the following procedures shall apply: (i) Less than $50,000. If the estimated aggregate cost of repair and/or replacement of the Damage is Fifty Thousand and No/100 Dollars ($50,000.00) or less, Palmer shall: (A) proceed with the Closing and take the Agency Property subject to such Damage; and (B) be entitled to receive any insurance proceeds for such Damage. (ii) Greater than $50,000. If the estimated aggregate cost of repair and/or replacement is greater than Fifty Thousand and No/100 Dollars ($50,000.00) as reasonably determined by Palmer, Palmer may elect to either: (A) terminate this Agreement by written notice to Agency, and neither party shall have any further liability to the other hereunder, except as otherwise provided herein; or (B) proceed with the Closing and take the Agency Property subject to such Damage by giving written notice to Agency within thirty (30) days after the date of such Damage, in which case Palmer shall be entitled to receive any insurance proceeds for such Damage. (c) Damage to the Palmer Property. If, prior to Closing, all or any portion of the Palmer Property is damaged by earthquake, food, severe precipitation or other casualty (collectively, for purposes of this Section 19(c) only, "Damage") that materially adversely affects the developability of the Palmer Property, then the following procedures shall apply: 14 P6402-0201 \13 32518v3.doc (i) Less than $50.000. If the estimated aggregate cost of repair and/or replacement of the Damage is Fifty Thousand and No/100 Dollars ($50,000.00) or less, Agency shall: (A) proceed with the Closing and take the Palmer Property subject to such Damage; and (B) be entitled to receive any insurance proceeds for such Damage. (ii) Greater than $50,000. If the estimated aggregate cost of repair and/or replacement is greater than Fifty Thousand and No/100 Dollars ($50,000.00) as reasonably determined by Agency, Agency may elect to either: (A) terminate this Agreement by written notice to Palmer, and neither party shall have any further liability to the other hereunder, except as otherwise provided herein; or (B) proceed with the Closing and take the Palmer Property subject to such Damage by giving written notice to Palmer within thirty (30) days after the date of such Damage, in which case Agency shall be entitled to receive any insurance proceeds for such Damage. (d) Condemnation. If any portion of the Agency Property shall be taken or appropriated by a public or quasi public authority exercising the power of eminent domain, Palmer shall have the right, at its option, to (i) terminate this Agreement, or (ii) proceed with the acquisition of the Agency Property and receive all of the award or payment made in connection with such taking. If any portion of the Palmer Property shall be taken or appropriated by a public or quasi public authority exercising the power of eminent domain, Agency shall have the right, at its option, to (1) terminate this Agreement, or (2) proceed with the acquisition of the Palmer Property and receive all of the award or payment made in connection with such taking. (e) Notices. Any notice, request, direction, demand, consent, waiver, approval or other communication required or permitted to be given hereunder shall not be effective unless it is given in writing and shall be delivered (i) in person, (ii) by certified mail, postage prepaid, return receipt requested, (iii) by facsimile, or (iv) by a commercial overnight courier that guarantees next day delivery and provides a receipt, and addressed to the parties at the addresses stated in the "Defined Terms" section at the beginning of this Agreement , or at such other address as either party may hereafter notify the other in writing as aforementioned. Service of any such notice or other communications so made shall be deemed effective on the day of actual delivery (whether accepted or refused) as evidenced by confirmed answerback if by facsimile (provided that if any notice or other communication to be delivered by facsimile is unable to be transmitted because of a problem affecting the receiving party's facsimile machine, the deadline for receiving such notice or other communication shall be extended through the next business day), as shown by the addressee's return receipt if by certified mail, and as confirmed by the courier service if by courier; provided, however, that if such actual delivery occurs after 5:00 p.m. (local time where received) or on a non business day, then such notice or demand so made shall be deemed effective on the first business day following the day of actual delivery. No communications via electronic mail shall be effective to give any notice, request, direction, demand, consent, waiver, approval or other communications hereunder. (f) Brokers. Each party hereto hereby represents and warrants to the other that it has dealt with no broker or finder in connection with this transaction. Each party hereto agrees to indemnify, defend and hold harmless the other party from and against any and all losses, liens, claims, judgments, liabilities, costs, expenses or damages (including reasonable attorneys' fees and court costs) of any kind or character arising out of or resulting from any 15 P6402-0201 \1332518v3.doc agreement, arrangement or understanding alleged to have been made by such party or on its behalf with any broker or finder in connection with this Agreement or the transaction contemplated hereby. The foregoing indemnity shall survive the Closing or the termination of this Agreement and shall not be limited by any provision of this Agreement. (g) Legal Fees. If either Agency or Palmer brings any action or suit against the other for any matter relating to or arising out of this Agreement, or if either party appears in any bankruptcy proceeding relating to the other party, then the prevailing party in such action, suit or proceeding, whether by final judgment or out of court settlement, shall be entitled to recover from the other party all costs and expenses of suit, including actual attorneys' fees. Any judgment or order entered in any final judgment shall contain a specific provision providing for the recovery of all costs and expenses of suit, including actual attorneys' fees incurred in enforcing, perfecting and executing such judgment. For the purposes of this Section 19(g), such costs and expenses shall include, but not be limited to, in-house and outside attorneys' fees, costs and expenses incurred in the following: (i) post judgment motions; (ii) contempt proceedings; (iii) garnishment, levy, and debtor and third party examinations; (iv) discovery; (v) bankruptcy proceedings and appearances; and (vi) appeals. (h) Assignment. Neither party may assign, transfer or convey its rights under this Agreement without the consent of the other party, which may be granted or withheld in its sole and absolute discretion. With respect to any assignment, transfer or conveyance permitted pursuant to this Section 19(h), the assignor shall provide the other party with an executed copy of an agreement between the assignor and any such assignee whereby such assignee assumes and agrees to perform the assignor's obligations hereunder with respect to transferring and/or obtaining title to the Palmer Property/Agency Property, as applicable, at least five (5) business days before the Closing. No such permitted assignment, transfer or conveyance shall release Agency or Palmer from their obligations hereunder. Any assignment, transfer or conveyance in violation of this Section 19(h) shall be null and void but shall nonetheless constitute a default/breach by the party attempting to complete any such prohibited assignment, transfer or conveyance. (i) Survival. Except as expressly provided herein to the contrary, none of the covenants, representations, warranties, releases, waivers and indemnities set forth in this Agreement shall survive the Closing or the earlier termination of this Agreement. (j) Cooperation. Agency and Palmer agree to execute such instruments and documents and to diligently undertake such actions as may be reasonably required in order to consummate the Closing and shall use commercially reasonable efforts to accomplish the Closing in accordance with the provisions hereof. (k) Computation of Time Periods. If the Closing or any other date or time period provided for in this Agreement is or ends on a Saturday, Sunday, or federal, state or legal holiday, then such date shall automatically be extended until 5:00 p.m., Pacific Time on the next day that is not a Saturday, Sunday, or federal, state or legal holiday. (1) Counterparts: Facsimile Signatures. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original, but all of which, together, shall 16 P6402-0201 \1332518v3.doc constitute but one and the same instrument. A facsimile signature shall be deemed an original signature. (m) Captions. Any captions to, or headings of, the sections or subsections of this Agreement are solely for the convenience of the parties hereto, are not a part of this Agreement, and shall not be used for the interpretation or determination of the validity of this Agreement or any provision hereof. (n) No Obligations to Third Parties. The execution and delivery of this Agreement shall not be deemed to confer any rights upon, nor obligate any of the parties to this Agreement to, any person or entity other than the parties hereto. (o) Exhibits. The exhibits attached hereto are incorporated herein by this reference for all purposes. (p) Amendment to this Agreement. The terms of this Agreement may not be modified or amended except by an instrument in writing executed by each of the parties hereto. (q) Waiver. The waiver or failure to enforce any provision of this Agreement shall not operate as a waiver of any future breach of any such provision or any other provision hereof. (r) Applicable Law. This Agreement shall be governed by and construed in accordance with the local law of the State of California. (s) Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the permitted successors and assigns of the parties hereto. (t) Construction. The parties hereto hereby acknowledge and agree that (i) each party hereto is of equal bargaining strength; (ii) each party has actively participated in the drafting, preparation and negotiation of this Agreement; (iii) this Agreement has been heavily negotiated and represents an arm's length transaction and the culmination of several months of drafting and negotiation; (iv) each party has consulted with such party's own independent counsel and such other professional advisors as such party has deemed appropriate, relating to any and all matters contemplated under this Agreement; (v) each party and such party's counsel and advisors have reviewed this Agreement; (vi) each party has agreed to enter into this Agreement following such review and the rendering of such advice; and (vii) any rule of construction to the effect that ambiguities are to be resolved against the drafting parties shall not apply in the interpretation of this Agreement, or any portions hereof, or any amendments hereto. (u) As -Is Conveyance/Agency Property. PALMER ACKNOWLEDGES AND AGREES THAT PALMER WILL BE CONCLUDING THE ACQUISITION OF THE AGENCY PROPERTY BASED SOLELY UPON PALMER'S INSPECTION AND INVESTIGATION OF THE AGENCY PROPERTY, AND, EXCEPT WITH RESPECT TO THE ACTIONS TO BE UNDERTAKEN BY AGENCY AND DESCRIBED IN SECTION 1 ABOVE, THAT PALMER WILL BE PURCHASING THE AGENCY PROPERTY ON AN "AS IS, WHERE IS" BASIS, WITH ALL FAULTS, LATENT AND PATENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, PALMER ACKNOWLEDGES AND 17 P6402-0201\1332518v3.doc AGREES THAT AGENCY HAS NOT MADE, IS NOT HEREBY MAKING AND AGENCY HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, EXCEPT THOSE EXPRESSLY CONTAINED IN SECTION 16(a) OF THIS AGREEMENT, ON WHICH PALMER IS RELYING AS TO ANY MATTER CONCERNING THE AGENCY PROPERTY, INCLUDING, WITHOUT LIMITATION, MATTERS RELATING TO THE ZONING, LAND -USE OR OTHER ENTITLEMENTS, THE ENVIRONMENTAL CONDITION OF THE AGENCY PROPERTY (INCLUDING, WITHOUT LIMITATION, THE EXISTING ENVIRONMENTAL CONDITION), AND/OR SOILS, SEISMIC, GEOTECHNICAL AND/OR OTHER MATTERS RELATING TO THE CONDITION OF THE AGENCY PROPERTY. PALMER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE AGENCY PROPERTY BY OR ON BEHALF OF AGENCY, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL REPORTS AND THE OTHER DOCUMENTS AND INSTRUMENTS TO BE DELIVERED TO, OR OTHERWISE MADE AVAILABLE TO, PALMER WAS OBTAINED FROM A VARIETY OF SOURCES, THAT AGENCY HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION, THAT ALL SUCH INFORMATION HAS BEEN AND SHALL BE PROVIDED SOLELY AS AN ACCOMMODATION TO PALMER, THAT AGENCY MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY, TRUTHFULNESS OR COMPLETENESS OF SUCH INFORMATION. AS PART OF PALMER'S AGREEMENT TO PURCHASE AND ACCEPT THE AGENCY PROPERTY "AS -IS, WHERE -IS," AND "WITH ALL FAULTS", AND NOT AS A LIMITATION ON SUCH AGREEMENT, PALMER HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL ACTUAL OR POTENTIAL CLAIMS OR RIGHTS AGAINST THE AGENCY PARTIES (AS HEREINAFTER DEFINED) ARISING OUT OF THE INACCURACY OR INCOMPLETENESS OF ANY MATERIALS SO FURNISHED, ARISING OUT OF OR IN CONNECTION WITH THE ENVIRONMENTAL CONDITION OF THE AGENCY PROPERTY AND ANY AND ALL ACTUAL OR POTENTIAL CLAIMS OR RIGHTS PALMER MIGHT HAVE REGARDING ANY FORM OF REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE, RELATING TO THE AGENCY PROPERTY OTHER THAN IN CONNECTION WITH THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN SECTION 16(a) OF THIS AGREEMENT. SUCH WAIVER IS ABSOLUTE, COMPLETE, TOTAL AND UNLIMITED IN ANY WAY. SUCH WAIVER INCLUDES, BUT IS NOT LIMITED TO, A WAIVER OF EXPRESS WARRANTIES, IMPLIED WARRANTIES, WARRANTIES OF FITNESS FOR A PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF HABITABILITY, STRICT LIABILITY RIGHTS, AND CLAIMS, LIABILITIES, DEMANDS OR CAUSES OF ACTION OF EVERY KIND AND TYPE, WHETHER STATUTORY, CONTRACTUAL OR UNDER TORT PRINCIPLES, AT LAW OR IN EQUITY, INCLUDING, BUT NOT LIMITED TO, CLAIMS REGARDING DEFECTS WHICH MIGHT HAVE BEEN DISCOVERABLE, CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE, PRODUCT LIABILITY CLAIMS, PRODUCT LIABILITY TYPE CLAIMS, ALL OTHER EXISTING OR LATER CREATED OR CONCEIVED STRICT LIABILITY OR STRICT LIABILITY TYPE CLAIMS AND RIGHTS, AND ANY AND ALL CLAIMS RELATING TO THE ENVIRONMENTAL 18 P6402-0201\1332518v3.doc CONDITION OF THE AGENCY PROPERTY. EFFECTIVE UPON THE CLOSING DATE, AND TO THE FULLEST EXTENT PERMITTED BY LAW, PALMER HEREBY RELEASES, DISCHARGES AND FOREVER ACQUITS AGENCY AND EVERY ENTITY AFFILIATED WITH AGENCY AND ALL OF ITS AND THEIR RESPECTIVE PARTNERS, MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS, ATTORNEYS AND INDEPENDENT CONTRACTORS AND THE SUCCESSOR OF EACH AND EVERY ONE OF THEM (COLLECTIVELY, THE "AGENCY PARTIES") FROM ALL DEMANDS, CLAIMS, LIABILITIES, OBLIGATIONS, COSTS AND EXPENSES WHICH PALMER MAY SUFFER OR INCUR RELATING TO THE AGENCY PROPERTY. SPECIFICALLY, AND NOT BY WAY OF LIMITATION, PALMER HEREBY RELEASES, DISCHARGES AND FOREVER ACQUITS THE AGENCY PARTIES FROM ALL DEMANDS, CLAIMS, LIABILITIES, OBLIGATIONS, COSTS AND EXPENSES ARISING OUT OF OR OTHERWISE RELATING TO THE ENVIRONMENTAL CONDITION OF THE PROPERTY. AS PART OF THE PROVISIONS OF THIS SECTION, BUT NOT AS A LIMITATION THEREON, PALMER HEREBY AGREES, REPRESENTS AND WARRANTS THAT THE MATTERS RELEASED HEREIN ARE NOT LIMITED TO MATTERS WHICH ARE KNOWN OR DISCLOSED, AND PALMER HEREBY WAIVES ANY AND ALL RIGHTS AND BENEFITS WHICH IT NOW HAS, OR IN THE FUTURE MAY HAVE CONFERRED UPON IT, BY VIRTUE OF THE PROVISIONS OF FEDERAL, STATE OR LOCAL LAWS, RULES OR REGULATIONS, INCLUDING WITHOUT LIMITATION, SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA OR ANY SIMILAR STATUTE, LAW, RULE OR REGULATION OF ANY OTHER STATE. PALMER ACKNOWLEDGES THAT SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA PROVIDES AS FOLLOWS: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTION THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." IN THIS CONNECTION AND TO THE FULLEST EXTENT PERMITTED BY LAW, PALMER HEREBY AGREES, REPRESENTS AND WARRANTS THAT PALMER REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW UNKNOWN TO PALMER MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND PALMER FURTHER AGREES, REPRESENTS AND WARRANTS THAT THE WAIVERS AND RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION AND THAT PALMER NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT THE AGENCY PARTIES FROM ANY SUCH UNKNOWN CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND EXPENSES WHICH MIGHT IN ANY WAY BE INCLUDED IN THE WAIVERS AND MATTERS RELEASED AS SET FORTH IN THIS SECTION. THE PROVISIONS OF THIS SECTION ARE MATERIAL AND INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION GIVEN TO AGENCY BY PALMER IN EXCHANGE FOR AGENCY'S 19 P6402-020111332518v3.doc PERFORMANCE HEREUNDER. AGENCY HAS GIVEN PALMER MATERIAL CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR PALMER AGREEING TO THE PROVISIONS OF THIS SECTION. AGENCY AND PALMER HAVE EACH INITIALED THIS SECTION TO FURTHER INDICATE THEIR AWARENESS AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF. AGENCY PALMER (v) As -Is Conveyance/Palmer Property. AGENCY ACKNOWLEDGES AND AGREES THAT AGENCY WILL BE CONCLUDING THE PURCHASE OF THE PALMER PROPERTY BASED SOLELY UPON AGENCY'S INSPECTION AND INVESTIGATION OF THE PALMER PROPERTY, AND THAT AGENCY WILL BE PURCHASING THE PALMER PROPERTY ON AN "AS IS, WHERE IS" BASIS, WITH ALL FAULTS, LATENT AND PATENT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, AGENCY ACKNOWLEDGES AND AGREES THAT PALMER HAS NOT MADE, IS NOT HEREBY MAKING AND PALMER HEREBY EXPRESSLY DISCLAIMS AND NEGATES ANY REPRESENTATIONS OR WARRANTIES OF ANY KIND WHATSOEVER, EITHER EXPRESS OR IMPLIED, EXCEPT THOSE EXPRESSLY CONTAINED IN SECTION 16(b) OF THIS AGREEMENT, ON WHICH AGENCY IS RELYING AS TO ANY MATTER CONCERNING THE PALMER PROPERTY, INCLUDING, WITHOUT LIMITATION, MATTERS RELATING TO THE ZONING, LAND - USE OR OTHER ENTITLEMENTS, THE ENVIRONMENTAL CONDITION OF THE PALMER PROPERTY (INCLUDING, WITHOUT LIMITATION, THE EXISTING ENVIRONMENTAL CONDITION), AND/OR SOILS, SEISMIC, GEOTECHNICAL AND/OR OTHER MATTERS RELATING TO THE CONDITION OF THE PALMER PROPERTY. AGENCY ACKNOWLEDGES AND AGREES THAT ANY INFORMATION PROVIDED OR TO BE PROVIDED WITH RESPECT TO THE PALMER PROPERTY BY OR ON BEHALF OF PALMER, INCLUDING, WITHOUT LIMITATION, THE ENVIRONMENTAL REPORTS AND THE OTHER DOCUMENTS AND INSTRUMENTS TO BE DELIVERED TO, OR OTHERWISE MADE AVAILABLE TO, AGENCY WAS OBTAINED FROM A VARIETY OF SOURCES, THAT PALMER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH INFORMATION, THAT ALL SUCH INFORMATION HAS BEEN AND SHALL BE PROVIDED SOLELY AS AN ACCOMMODATION TO AGENCY, THAT PALMER MAKES NO REPRESENTATIONS OR WARRANTIES AS TO THE ACCURACY, TRUTHFULNESS OR COMPLETENESS OF SUCH INFORMATION. AS PART OF AGENCY'S AGREEMENT TO PURCHASE AND ACCEPT THE PALMER PROPERTY "AS -IS, WHERE -IS," AND "WITH ALL FAULTS", AND NOT AS A LIMITATION ON SUCH AGREEMENT, AGENCY HEREBY UNCONDITIONALLY AND IRREVOCABLY WAIVES ANY AND ALL ACTUAL OR POTENTIAL CLAIMS OR RIGHTS AGAINST THE PALMER PARTIES (AS HEREINAFTER DEFINED) ARISING OUT OF THE INACCURACY OR INCOMPLETENESS OF ANY MATERIALS SO FURNISHED, ARISING OUT OF OR IN CONNECTION WITH THE ENVIRONMENTAL CONDITION OF THE PALMER PROPERTY AND ANY AND ALL ACTUAL OR POTENTIAL CLAIMS OR RIGHTS AGENCY MIGHT HAVE REGARDING ANY FORM OF REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR TYPE, RELATING TO THE PALMER PROPERTY OTHER THAN IN CONNECTION WITH 20 P6402-0201 \ 1332518 v3.doc THOSE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN SECTION 16(b) OF THIS AGREEMENT. SUCH WAIVER IS ABSOLUTE, COMPLETE, TOTAL AND UNLIMITED IN ANY WAY. SUCH WAIVER INCLUDES, BUT IS NOT LIMITED TO, A WAIVER OF EXPRESS WARRANTIES, IMPLIED WARRANTIES, WARRANTIES OF FITNESS FOR A PARTICULAR USE, WARRANTIES OF MERCHANTABILITY, WARRANTIES OF HABITABILITY, STRICT LIABILITY RIGHTS, AND CLAIMS, LIABILITIES, DEMANDS OR CAUSES OF ACTION OF EVERY KIND AND TYPE, WHETHER STATUTORY, CONTRACTUAL OR UNDER TORT PRINCIPLES, AT LAW OR IN EQUITY, INCLUDING, BUT NOT LIMITED TO, CLAIMS REGARDING DEFECTS WHICH MIGHT HAVE BEEN DISCOVERABLE, CLAIMS REGARDING DEFECTS WHICH WERE NOT OR ARE NOT DISCOVERABLE, PRODUCT LIABILITY CLAIMS, PRODUCT LIABILITY TYPE CLAIMS, ALL OTHER EXISTING OR LATER CREATED OR CONCEIVED STRICT LIABILITY OR STRICT LIABILITY TYPE CLAIMS AND RIGHTS, AND ANY AND ALL CLAIMS RELATING TO THE ENVIRONMENTAL CONDITION OF THE PALMER PROPERTY. EFFECTIVE UPON THE CLOSING DATE, AND TO THE FULLEST EXTENT PERMITTED BY LAW, AGENCY HEREBY RELEASES, DISCHARGES AND FOREVER ACQUITS PALMER AND EVERY ENTITY AFFILIATED WITH PALMER AND ALL OF ITS AND THEIR RESPECTIVE PARTNERS, MEMBERS, OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES, AGENTS, ATTORNEYS AND INDEPENDENT CONTRACTORS AND THE SUCCESSOR OF EACH AND EVERY ONE OF THEM (COLLECTIVELY, THE "PALMER PARTIES") FROM ALL DEMANDS, CLAIMS, LIABILITIES, OBLIGATIONS, COSTS AND EXPENSES WHICH AGENCY MAY SUFFER OR INCUR RELATING TO THE PALMER PROPERTY. SPECIFICALLY, AND NOT BY WAY OF LIMITATION, AGENCY HEREBY RELEASES, DISCHARGES AND FOREVER ACQUITS THE PALMER PARTIES FROM ALL DEMANDS, CLAIMS, LIABILITIES, OBLIGATIONS, COSTS AND EXPENSES ARISING OUT OF OR OTHERWISE RELATING TO THE ENVIRONMENTAL CONDITION OF THE PALMER PROPERTY. AS PART OF THE PROVISIONS OF THIS SECTION, BUT NOT AS A LIMITATION THEREON, AGENCY HEREBY AGREES, REPRESENTS AND WARRANTS THAT THE MATTERS RELEASED HEREIN ARE NOT LIMITED TO MATTERS WHICH ARE KNOWN OR DISCLOSED, AND AGENCY HEREBY WAIVES ANY AND ALL RIGHTS AND BENEFITS WHICH IT NOW HAS, OR IN THE FUTURE MAY HAVE CONFERRED UPON IT, BY VIRTUE OF THE PROVISIONS OF FEDERAL, STATE OR LOCAL LAWS, RULES OR REGULATIONS, INCLUDING WITHOUT LIMITATION, SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA OR ANY SIMILAR STATUTE, LAW, RULE OR REGULATION OF ANY OTHER STATE. AGENCY ACKNOWLEDGES THAT SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA PROVIDES AS FOLLOWS: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTION THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." IN THIS CONNECTION AND TO THE FULLEST EXTENT PERMITTED BY LAW, AGENCY HEREBY AGREES, REPRESENTS AND WARRANTS THAT AGENCY 21 P6402-0201\1332518v3.doc REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW UNKNOWN TO AGENCY MAY HAVE GIVEN OR MAY HEREAFTER GIVE RISE TO CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND EXPENSES WHICH ARE PRESENTLY UNKNOWN, UNANTICIPATED AND UNSUSPECTED, AND AGENCY FURTHER AGREES, REPRESENTS AND WARRANTS THAT THE WAIVERS AND RELEASES HEREIN HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF THAT REALIZATION AND THAT AGENCY NEVERTHELESS HEREBY INTENDS TO RELEASE, DISCHARGE AND ACQUIT THE PALMER PARTIES FROM ANY SUCH UNKNOWN CAUSES OF ACTION, CLAIMS, DEMANDS, DEBTS, CONTROVERSIES, DAMAGES, COSTS, LOSSES AND EXPENSES WHICH MIGHT IN ANY WAY BE INCLUDED IN THE WAIVERS AND MATTERS RELEASED AS SET FORTH IN THIS SECTION. THE PROVISIONS OF THIS SECTION ARE MATERIAL AND INCLUDED AS A MATERIAL PORTION OF THE CONSIDERATION GIVEN TO PALMER BY AGENCY IN EXCHANGE FOR PALMER'S PERFORMANCE HEREUNDER. PALMER HAS GIVEN AGENCY MATERIAL CONCESSIONS REGARDING THIS TRANSACTION IN EXCHANGE FOR AGENCY AGREEING TO THE PROVISIONS OF THIS SECTION. PALMER AND AGENCY HAVE EACH INITIALED THIS SECTION TO FURTHER INDICATE THEIR AWARENESS AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF. PALMER AGENCY (w) Relocation Assistance. (i) It is understood and agreed between Palmer and the Agency that the conveyance of the Agency Property to Palmer and the payment of the Cash Payment to Palmer, as set forth in this Agreement, represents an all inclusive settlement and is full and complete payment of compensation for the Agency's acquisition of the Palmer Property and includes and satisfies any and all other payments, if any, that the law may require the Agency to pay to Palmer arising out of the Agency's acquisition of the Palmer Property, including without limitation relocation assistance and benefits, claims for severance and other damages, attorney's fees, interest, expenses of litigation, expert's fees, precondemnation damages, inverse condemnation, owner participation rights under any redevelopment plan and loss of business goodwill under the Eminent Domain Law, Code of Civil Procedure Section 1263.510, and all costs and expenses whatever in connection therewith. (ii) It is further understood that based on the acknowledgment of the consideration described in (i) above, Palmer covenants and agrees to take full responsibility for moving all of its personal property, if any, from the Palmer Property. (iii) It is further understood that neither the Agency nor the City of Palm Desert ("City") will have any further obligation to Palmer under any federal or state relocation laws or regulations, including without limitation, the Uniform Relocation Assistance and Real Subject Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et seq.), if applicable, or under Title 1, Division 7, Chapter 1 of the Government Code of the State of 22 P6402-0201 \ 13 3 2518 v 3. doc California (Section 7260 et seq.), or the Relocation Assistance and Real Subject Property Acquisition Guidelines (Chapter 6 of Title 25 of the California Code of Regulations). (iv) This Agreement is a voluntary agreement and Palmer hereby fully releases the Agency and the City, their respective officials, counsel, employees, and agents, from all claims and causes of action by reason of any damage which has been sustained, or may be sustained, as a result of the Agency's or City's efforts to acquire the Palmer Property or any preliminary steps thereto. (v) Palmer may have sustained damages, losses, costs or expenses in connection with the Agency's acquisition of the Palmer Property that are presently unknown and unsuspected, and such damages, losses, costs or expense which may have been sustained, may give rise to additional damages, loss, costs or expenses in the future. Nevertheless, Palmer hereby acknowledges that this Agreement has been negotiated and agreed upon in light of that situation, and hereby expressly waives any and all rights that Palmer may have under California Civil Code Section 1542, or under any statute or common law or equitable principle of similar effect. California Civil Code Section 1542 provides as follows: "A general release does not extend to claims which the Creditor does not know or suspect to exist in his or her favor at the time of executing the release, which if known by him or her must have materially affected his or her settlement with the debtor." Palmer's Initials Agency's Initials (vi) This section will survive the Closing. [This Space Intentionally Left Blank; Signatures on the Next Page] 23 P6402-0201 \1332518v3. doc IN WITNESS WHEREOF, the parties hereto have executed this Exchange Agreement and Joint Escrow Instructions as of the Execution Date. AGENCY: PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic ATTEST: APPROVED AS TO FORM: Agency Attorney PALMER: By: Name: Its: TIMOTHY R. PALMER AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996 TIMOTHY R. PALMER, Trustee LEE ANNA PALMER, Trustee P6402-0201 \1332518v3.doc 24 EXHIBIT A LEGAL DESCRIPTION OF AGENCY PROPERTY THE REAL PROPERTY LOCATED IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: LOT 118 OF PALMA VILLAGE UNIT NO. 7, IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 21 OF MAPS, PAGES 16 THROUGH 18, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, LOCATED WITHIN THE NORTHWEST QUARTER OF SECTION 20, TOWNSHIP 5 SOUTH, RANGE 6 EAST, S.B.M. EXCEPTING THEREFROM THE SOUTHERLY 27.00 FEET. A.P.N. 627-071-023-2 A-1 P6402-0201\1332518v3.doc EXHIBIT B LEGAL DESCRIPTION OF PALMER PROPERTY THE REAL PROPERTY LOCATED IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: LOT 109 OF PALMA VILLAGE UNIT NO. 7, AS SHOWN BY MAP ON FILE IN BOOK 21 PAGE(S) 16, 17, AND 18 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. APN: 627-074-006 B-1 P6402-0201\1332518v3.doc EXHIBIT C AGENCY DEED RECORDING REQUESTED BY: First American Title Insurance Company WHEN RECORDED MAIL TO AND MAIL TAX STATEMENTS TO: Timothy R. Palmer and Lee Anna Palmer Revocable Trust P.O. Box 1484 Rancho Mirage, California 92270 APN: 627-071-023 [Space Above for Recorder's Use Only] This Grant Deed is exempt from Recording Fees pursuant to California Government Code Section 27383. GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic ("Grantor"), GRANTS to TIMOTHY R. PALMER AND LEE ANNA PALMER, AS TRUSTEES OF THE TIMOTHY R. PALMER AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996 (collectively, the "Grantee"), that certain real property located in the City of Palm Desert, County of Riverside, State of California, more particularly described on Exhibit A attached hereto. SUBJECT TO, general and special real property taxes and assessments and supplemental assessments for the current fiscal year and all matters of record. BY ACCEPTANCE HEREOF, Grantee covenants, for itself and its successors and assigns, to refrain from restricting the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the Project on the basis of race, color, creed, religion, ancestry, sex, marital status, national origin or age of any person, nor shall Grantee establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees, or vendees in the Project. All deeds, leases or contracts entered into with respect to the Project shall contain or be subject to substantially the following nondiscrimination/nonsegregation clauses: In deeds: "The grantee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through them, that there shall be no discrimination against or segregation of, any person or group of persons on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, C-1 P6402-0201\1332518v3.doc as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises herein conveyed, nor shall the Grantee himself or herself, or any person claiming under or through him or her, establish or permit any practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, subtenants, sublessees or vendees in the premises herein conveyed. The foregoing covenants shall run with the land. Notwithstanding the immediately preceding paragraph, with respect to familial status, said paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code. With respect to familial status, nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of Section 12955 of the California Government Code shall apply to said paragraph." In leases: "The lessee herein covenants by and for himself or herself, his or her heirs, executors, administrators and assigns, and all persons claiming under or through him or her, and this lease is made and accepted upon and subject to the following conditions: That there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the leasing, subleasing, transferring, use or occupancy, tenure or enjoyment of the premises herein leased nor shall the lessee himself or herself, or any person claiming under or through him or her, establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy of tenants, lessees, sublessees, subtenants or vendees in the premises herein leased. Notwithstanding the immediately preceding paragraph, with respect to familial status, said paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code. With respect to familial status, nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of Section 12955 of the California Government Code shall apply to said paragraph." In contracts: "The contracting party or parties hereby covenant by and for himself or herself and their respective successors and assigns, that there shall be no discrimination against or segregation of any person or group of persons, on account of any basis listed in subdivision (a) or (d) of Section 12955 of the California Government Code, as those bases are defined in Sections 12926, 12926.1, subdivision (m) and paragraph (1) of subdivision (p) of Section 12955, and Section 12955.2 of the California Government Code, in the sale, lease, sublease, transfer, use, occupancy, tenure or enjoyment of the premises, nor shall the contracting party or parties, any subcontracting party or parties, or their respective assigns or transferees, establish or permit any such practice or practices of discrimination or segregation. C-2 P6402-0201 \1332518v3.doc Notwithstanding the immediately preceding paragraph, with respect to familial status, said paragraph shall not be construed to apply to housing for older persons, as defined in Section 12955.9 of the California Government Code. With respect to familial status, nothing in said paragraph shall be construed to affect Sections 51.2, 51.3, 51.4, 51.10, 51.11, and 799.5 of the California Civil Code, relating to housing for senior citizens. Subdivision (d) of Section 51 and Section 1360 of the California Civil Code and subdivisions (n), (o) and (p) of Section 12955 of the California Government Code shall apply to said paragraph." All covenants contained in this Grant Deed shall run with the land for the benefit of, and shall only be enforceable by, Grantor and its successors and assigns, without regard to whether Grantor is or remains an owner of any land or interest therein to which such covenants relate. In the event of a breach of any covenant contained in this Grant Deed, Grantor shall have the right to exercise any right or remedy available at law or in equity to enforce the curing of such breach. [This Space Intentionally Left Blank; Signature on the Next Page] C-3 P6402-0201 \1332518v3.doc IN WITNESS WHEREOF, Grantor has executed this Grant Deed as of 2011. GRANTOR: PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic By: Name: Its: ATTEST: C-4 P6402-0201\1332518v3.doc EXHIBIT A TO AGENCY DEED AGENCY PROPERTY LEGAL DESCRIPTION Real property in the City of Palm Desert, County of Riverside, State of California, described as follows: LOT 118 OF PALMA VILLAGE UNIT NO. 7, IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, AS PER MAP FILED IN BOOK 21 OF MAPS, PAGES 16 THROUGH 18, IN THE OFFICE OF THE COUNTY RECORDER OF SAID COUNTY, LOCATED WITHIN THE NORTHWEST QUARTER OF SECTION 20, TOWNSHIP 5 SOUTH, RANGE 6 EAST, S.B.M. EXCEPTING THEREFROM THE SOUTHERLY 27.00 FEET. APN: 627-071-023 C-5 P6402-0201 \1332518v3.doc State of California County of Riverside ) ) On , before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. (insert name and title of the officer) I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) C-6 P6402-0201 \ 1332518v3.doc EXHIBIT D PALMER DEED RECORDING REQUESTED BY: First American Title Insurance Company WHEN RECORDED MAIL TO AND MAIL TAX STATEMENTS TO: Palm Desert Redevelopment Agency 73510 Fred Waring Drive Palm Desert, CA 92260 Attention: Bryce White APN: 627-074-006 [Space Above for Recorder's Use Only] This Grant Deed is exempt from Recording Fees pursuant to California Government Code Section 27383 and exempt from Documentary Transfer Tax pursuant to California Revenue and Taxation Code Section 11922. GRANT DEED FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, TIMOTHY R. PALMER AND LEE ANNA PALMER, AS TRUSTEES OF THE TIMOTHY R. PALMER AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996, GRANTS to the PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic, that certain real property located in the City of Palm Desert, County of Riverside, State of California, more particularly described on Exhibit A attached hereto. SUBJECT TO, general and special real property taxes and assessments and supplemental assessments for the current fiscal year and all matters of record. [This Space Intentionally Left Blank; Signature on the Next Page] D-1 P6402-0201 \ 13 32518 v3. doc IN WITNESS WHEREOF, the undersigned has executed this Grant Deed as of , 2011. TIMOTHY R. PALMER AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996 TIMOTHY R. PALMER, Trustee LEE ANNA PALMER, Trustee D-2 P6402-0201\1332518v3.doc EXHIBIT A TO PALMER DEED LEGAL DESCRIPTION THE REAL PROPERTY LOCATED IN THE CITY OF PALM DESERT, COUNTY OF RIVERSIDE, STATE OF CALIFORNIA, DESCRIBED AS FOLLOWS: LOT 109 OF PALMA VILLAGE UNIT NO. 7, AS SHOWN BY MAP ON FILE IN BOOK 21 PAGE(S) 16, 17, AND 18 OF MAPS, RECORDS OF RIVERSIDE COUNTY, CALIFORNIA. Property Address: 44900 San Clemente Circle, Palm Desert, CA 92260 D-3 P6402-0201\1332518v3.doc State of California County of Riverside ) ) On , before me, Notary Public, personally appeared who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. (insert name and title of the officer) I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature State of California County of Riverside ) ) On , before me, (Seal) (insert name and title of the officer) Notary Public, personally appeared , who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct. WITNESS my hand and official seal. Signature (Seal) D-4 P6402-0201 \1332518v3.doc CERTIFICATE OF ACCEPTANCE (California Government Code Section 27281) This is to certify that the interest in real property conveyed by the Grant Deed dated , 2011, from TIMOTHY R. PALMER AND LEE ANNA PALMER, AS TRUSTEES OF THE TIMOTHY R. PALMER AND LEE ANNA PALMER REVOCABLE TRUST DATED NOVEMBER 25, 1996 to the PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic (the "Agency"), is hereby accepted by order of the Agency on , 2011 and by the undersigned officer or agent on behalf of the Agency pursuant to the authority conferred by resolution of the Agency on , 2011, and the Agency consents to the recordation thereof by its duly authorized officer. Dated as of: , 2011. D-5 P6402-0201\1332518v3.doc EXHIBIT E LEASE AGREEMENT THIS LEASE AGREEMENT ("Lease"), dated as of May 26, 2011, is between the PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic ("Landlord"), and TIMOTHY R. PALMER and LEE ANNA PALMER, husband and wife (collectively, the "Tenant"). Landlord and Tenant hereby covenant and agree as follows: 1. Basic Lease Information. The Basic Lease Information is hereby incorporated into and made a part of this Lease. 2. Premises. Landlord leases to Tenant and Tenant leases from Landlord on the terms and conditions contained in this Lease the Premises specified in the Basic Lease Information. The Building, the real property upon which the Building stands, common areas, drives, walkways and other amenities appurtenant to or servicing the Building, are all part of the Premises. 3. Term. 3.1 (a) The Premises are leased for an initial term of one hundred eighty (180) days (the "Initial Term") commencing on the Commencement Date as set forth in the Basic Lease Information. The Tenant may at its option extend the term of the Lease for an initial one hundred eighty (180) days beyond the Initial Term (the "Extended Term"). The Tenant shall provide written notice to the Landlord at least thirty (30) days prior to the expiration of the Initial Term if the Tenant wishes to extend the term for such additional one hundred eighty (180) day period. The Tenant's option to extend the term of the Lease for such additional one hundred eighty (180) days shall automatically terminate if Tenant fails to provide written notice of such extension at least thirty (30) days prior to the expiration of the Initial Tenn. As used herein, the term "Term" shall mean the period commencing on the Commencement Date (inclusive) and ending on the Termination Date (inclusive). (b) The Premises shall be deemed tendered to Tenant and acceptable for occupancy in the condition in which they exist as of the Commencement Date, and, except as otherwise expressly provided in that certain Exchange Agreement and Joint Escrow Instructions dated May 26, 2011 by and between Landlord and Tenant, the Landlord shall have no obligation to undertake or complete any repair or construction of or modification thereto during the Term. Within ten (10) days after written request from Landlord, Tenant shall execute and return to Landlord an acknowledgement of the Commencement Date of the term of this Lease. (c) Tenant may terminate this Lease at its option upon thirty (30) days prior written notice to Landlord. 4. Monthly Rental. There shall be no rental payment required during the Initial Term. Tenant shall pay Six Hundred Fifty Dollars ($650.00) monthly to Landlord during the E-1 P 6402 -02 01 \ 13 3 2 518 v3 . doc Extended Term. Any other monetary obligation of Tenant to Landlord under this Lease are also deemed to be rent. 5. Utilities and Operational Expenses. Tenant shall be solely responsible for arranging for the delivery and payment of all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises. 6. Use. 6.1 Use. The Premises shall be used for only single family residence purposes. 6.2 No Nuisance. Tenant shall not allow, suffer or permit the Premises or any use thereof to constitute a nuisance. 6.3 Compliance with Laws. During the Term, Tenant, at Tenant's expense, shall comply with and cause all of Tenant's agents to comply with all applicable laws, ordinances, rules and regulations of governmental authorities applicable to the Premises and the Tenant's use or occupancy thereof 6.4 Hazardous Materials. During the term, Tenant shall not cause or suffer or permit any Hazardous Materials, as defined below, to be brought upon, kept, used, discharged, deposited or leaked in or about the Premises by Tenant or any of Tenant's agents. If Tenant breaches the obligations stated in the preceding sentence, or if the presence of any Hazardous Material on the Premises caused or suffered or permitted by Tenant or any of Tenant's agents results in contamination of the Premises during the Term, or if contamination of the Premises by any Hazardous Material otherwise occurs during the Term, then Tenant shall indemnify, defend and hold Landlord harmless from any and all claims, damages, costs, liabilities and expenses (including, without limitation, diminution in value or use of the Premises, reasonable attorneys' fees, consultant fees and expert fees) which arise during or after the Term as a result of such contamination. This indemnification shall include, without limitation, costs incurred in connection with any investigation of site conditions or any clean-up, remedial, removal or restoration work on or under the Premises required by governmental authorities having jurisdiction with respect to such contamination. "Hazardous Material" means any hazardous or toxic substance, material or waste which is or becomes regulated by any local, state or federal governmental authority or by common law decisions, including without limitation (i) all chlorinated solvents, (ii) petroleum products or by-products, (iii) asbestos and (iv) polychlorinated biphenyls. 7. Alterations and Tenant's Property. 7.1 Alterations. Tenant shall not during the Term make or suffer to be made any alterations, additions or improvements in or to the Premises (herein collectively called "Alterations") without first obtaining Landlord's written consent thereto. Landlord's consent may be withheld in Landlord's sole discretion. 7.2 Removal of Property. All Tenant owned property shall be removed from the Premises at Tenant's sole cost and expense at the expiration or sooner termination of this E-2 P6402-0201 \ 13 32518 v3. doc Lease. Tenant waives and releases its rights under Section 1019 of the California Civil Code, or any similar law, statute or ordinance now or hereafter in effect, to the extent inconsistent with the provisions of this Lease. Tenant's obligations under this section shall survive any termination of this Lease. 8. Repairs and Other Work. 8.1 Tenant's Obligations. Tenant shall at all times during the Term maintain the Premises in the same condition in which they exist as of the Commencement Date, ordinary wear and tear and casualty excepted. Tenant hereby waives and releases its rights under Sections 1941 and 1942 of the California Civil Code or under any similar law now or hereafter in effect, except to the extent expressly provided herein. 8.2 Conditions Applicable to Repairs and Other Work. All repairs made by or on behalf of Tenant or any of Tenant's agents during the Term shall be made and performed (a) at Tenant's cost and expense, (b) by reputable contractors or mechanics reasonably approved by Landlord, (c) in such manner as to be at least equal in quality of materials and workmanship to the original work or installation, (d) in accordance with such reasonable requirements as Landlord may impose with respect to insurance and bonds to be obtained by Tenant in connection with the proposed work, and (e) in compliance with such other requirements as Landlord may reasonably impose (including without limitation a requirement that Tenant furnish Landlord with as -built drawings upon completion of the work). 9. Liens. Tenant shall keep the Premises free from any liens during the term of the Lease, except to the extent caused by Landlord. In the event that Tenant shall not, within fifteen (15) days following notice of the imposition of any such lien, cause same to be released of record by payment or posting of a bond fully satisfactory to Landlord in form and substance, Landlord shall have, in addition to all other remedies provided herein and by law, the right (but not the obligation) to cause the lien to be released by such means as Landlord shall deem proper, including, without limitation, payment of the claim giving rise to such lien. All such sums paid by Landlord and all expenses incurred by it in connection therewith shall be considered rent and shall be payable by Tenant within thirty (30) days after demand. Landlord shall have the right at all times to post and keep posted on the Premises any notices permitted or required by law, or that Landlord shall deem proper for the protection of Landlord, the Premises and any other party having an interest therein, from mechanics', materialmen's and other liens. 10. Inability to Perform. Except to the extent expressly provided herein, if, by reason of acts of God, governmental restrictions, strikes, labor disturbances, shortages of materials or supplies or any other cause or event beyond Landlord's reasonable control, Landlord is unable to fulfill or is delayed in fulfilling any of Landlord's obligations under this Lease or any collateral instrument, no such inability or delay shall (a) constitute an actual or constructive eviction, in whole or in part, (b) entitle Tenant to any abatement or diminution of rent, (c) relieve Tenant from any of its obligations under this Lease, or (d) impose any liability upon Landlord or its agents by reason of inconvenience or annoyance to Tenant or by reason of injury to or interruption of Tenant's business, or otherwise. Tenant hereby waives and releases its right to terminate this Lease under Section 1932(1) and Sections 1941 and 1942 of the California Civil E-3 P6402-0201\1332518v3.doc Code or under any similar laws, statutes or ordinances now or hereafter in effect, except to the extent expressly provided herein. 11. Destruction. 11.1 Repair. Subject to the provisions of Sections 11.3 and 11.4 below, if any portion of the Premises is damaged by any casualty (the "Damaged Property") to the extent that a portion of the Premises is made unusable for the normal operation of Tenant's business on the Premises and the Damaged Property can, in Landlord's reasonable opinion, be repaired during the Term, Landlord shall proceed immediately to make such repairs in accordance with Section 11.4 below (unless this lease is terminated pursuant to this Section 11). Landlord's opinion regarding time to repair shall be delivered to Tenant within thirty (30) days after the date of the damage. Notwithstanding anything to the contrary herein, the total destruction of the Building shall automatically terminate this Lease as of the date of destruction. 11.2 Tenant's Right to Terminate. If such damage causes all or any material portion of the Premises to be unusable by Tenant as a single family residence and in Landlord's reasonable opinion damage to the Premises cannot be repaired during the Term, Tenant may terminate this Lease by delivery of written notice to Landlord within thirty (30) days after the date on which Landlord's opinion regarding time and repair is delivered to Tenant. Upon termination, rent pursuant to Section 5 shall be apportioned as of the date of the damage. 11.3 Landlord's Right to Terminate. In the event (i) the insurance proceeds are not available to the Landlord to pay all of the cost of any damage or destruction of the Premises; or (ii) the Damaged Property cannot, in Landlord's reasonable opinion, be repaired during the Term, Landlord may elect to terminate this Lease as hereinafter provided. Landlord may terminate this Lease for the reason stated in clauses (i) or (ii) of this Section 11.3, by delivery of written notice to Tenant within thirty (30) days after the date of damage or destruction. 11.4 Extent of Repair Obligations. If this Lease is not terminated pursuant to Section 11.2 or Section 11.3 above, Landlord shall repair the structure of the Building and all improvements in the Premises, and Tenant shall repair all other portions of the Premises. All such repairs shall be performed in a good and workmanlike manner and shall restore the items repaired to substantially the same usefulness, design and construction as existed immediately before the damage. All work by Tenant shall be performed in accordance with the requirements of Section 8.2 above. In the event of any termination of this Lease, the proceeds from any insurance paid by reason of damage to or destruction of the Premises or any portion thereof shall belong to and be paid to Landlord, except for proceeds payable under Tenant's fire insurance policies. 11.5 Waiver of Subrogation. As long as their respective insurers so permit, Landlord and Tenant hereby mutually waive their respective rights of recovery against each other for any loss insured by fire, extended coverage and other property insurance policies existing for the benefit of the respective parties. Each party shall apply to their insurers to obtain said waivers. Each party shall obtain any special endorsements, if required by their insurer to evidence compliance with such waiver. E-4 P6402-0201\1332518v3.doc 11.6 Non -Application of Certain Statutes. The provisions of this Lease constitute an express agreement between Landlord and Tenant with respect to any and all damage to, or destruction of, all or any part of the Premises, or any other portion of the Premises. Any statute or regulation of the State of California or any other governmental authority or body, including, without limitation, Sections 1932(2), 1933(4), 1941 and 1942 of the California Civil Code, with respect to any rights or obligations concerning any such damage or destruction, shall have no application to this Lease or any damage or destruction to all or any part of the Premises or any other portion of the Building. 12. Possessory Interest Tax and Other Taxes. Landlord hereby gives Tenant notice, and Tenant acknowledges receipt of such notice, as required pursuant to California Revenue and Taxation Code Section 107.6, that the leasehold interest created by this Lease may result in a possessory interest tax being levied against the Premises, and that in such event Tenant shall be obligated to pay such tax. In addition, Tenant shall be solely responsible for the payment of all other taxes attributable to the Tenant's occupancy and use of the Premises. 13. Assignment. 13.1 Consent Required. Notwithstanding the provisions of Section 21.1 below, neither Tenant nor any sublessee or assignee of Tenant shall, directly or indirectly, voluntarily or by operation of law, sell, assign, encumber, pledge or otherwise transfer or hypothecate all or any part of the Premises or Tenant's leasehold estate hereunder (each such act is herein referred to as an "Assignment"), or sublet the Premises or any portion thereof or permit the Premises to be occupied by anyone other than Tenant (each such act is herein referred to as a "Sublease"), without Landlord's prior written consent in each instance, which consent may be granted or withheld in the Landlord's sole discretion. Any Assignment or Sublease that is not in compliance with this Section 13 shall be void. The acceptance of rent by Landlord from a proposed assignee, sublessee or occupant of the Premises shall not constitute consent to such Assignment or Sublease by Landlord. 13.2 Notice. Any request by Tenant for Landlord's consent to a specific Assignment or Sublease shall include (a) the name of the proposed assignee, sublessee or occupant, (b) the nature of the proposed assignee's, sublessee's or occupant's business to be carried on in the Premises, (c) a copy of the proposed Assignment or Sublease, and (d) such financial information and such other information as Landlord may reasonably request concerning the proposed assignee, sublessee or occupant or its business. Landlord shall respond in writing, stating the reasons for any disapproval, within fifteen (15) business days after receipt of all information reasonably necessary to evaluate the proposed Assignment or Sublease. 13.3 No Release. No consent by Landlord to any Assignment or Sublease by Tenant, and no specification in this Lease of a right of Tenant's to make any Assignment or Sublease, shall relieve Tenant of any obligation to be performed by Tenant under this Lease. The consent by Landlord to any Assignment or Sublease shall not relieve Tenant or any successor of Tenant from the obligation to obtain Landlord's express written consent to any other Assignment or Sublease. E-5 P6402-0201\1332518v3.doc 13.4 Assumption of Obligations. Each assignee or other transferee of Tenant's interest hereunder, other than Landlord, shall assume all obligations of Tenant under this Lease and shall be and remain liable jointly and severally with Tenant for the payment of rent, and for the performance of all the terms, covenants, conditions and agreements herein contained on Tenant's part to be performed for the Term. Each sublessee of all or any portion of the Premises shall, as a condition to such sublease, agree in writing for the benefit of Landlord (a) to comply with and agree to the provisions of this Lease, and (b) that such sublease (and all further subleases of any portion of the Premises) shall terminate upon any termination of this Lease, regardless of whether or not such termination is voluntary, or at the option of Landlord shall attorn to Landlord. 14. Building Services. The Landlord shall have no liability for, or responsibility to provide or maintain, any safety or security devices or services in the Premises or the Building. The risk that any safety or security device, service or program may not be effective, or may malfunction or be circumvented, is assumed by Tenant with respect to Tenant's property and interests, and Tenant shall obtain insurance coverage to the extent Tenant desires protection against criminal acts and other losses. 15. Default. 15.1 Events of Default. The occurrence of any one or more of the following events shall constitute a default or breach of this Lease by Tenant: (a) Failure of Tenant to pay any rent when due, where such failure has not been cured within three (3) days of written notice of such failure. (b) Failure of Tenant to perform any of the provisions of this Lease to be performed by Tenant, other than as described in Section 16.1(a), where such failure shall continue for thirty (30) days after notice of such failure by Landlord to Tenant; provided however, that if the nature of Tenant's default is such that more than thirty (30) days are reasonably required for its cure, then Tenant shall not be deemed to be in default if Tenant commences such cure within such thirty (30) day period and thereafter diligently prosecutes such cure to completion. (c) The filing by or against Tenant of any action or proceeding under any federal or state insolvency, reorganization, bankruptcy or other debtor relief statute now or hereafter existing, (unless in the case of such action taken against Tenant, the same is dismissed within sixty (60) days); or the appointment of a trustee or receiver over or the attachment of Tenant's leasehold estate in the Premises or Tenant's assets at the Premises that is not dismissed within thirty (30) days after the filing thereof. 15.2 Remedies. Upon the occurrence of a default by Tenant under this Lease that is not cured by Tenant within the grace periods specified in Section 15.1, Landlord shall have the following rights and remedies in addition to all other rights and remedies available to Landlord at law or in equity: (a) The rights and remedies provided by California Civil Code Section 1951.2, including, but not limited to, the right to terminate Tenant's right to possession of the E-6 P6402-0201\1332518v3.doc Premises and to recover the amounts specified in California Civil Code Subsections 1951.2(a)(1)-(4); (b) The rights and remedies provided by California Civil Code Section 1951.4, including, without limitation, the right to continue the Lease in effect after Tenant's breach and abandonment and recover rent as it becomes due. Acts of maintenance or preservation, efforts to relet the Premises or the appointment of a receiver upon Landlord's initiative to protect its interest under this Lease shall not of themselves constitute a termination of Tenant's right to possession; (c) The right and power to enter the Premises and remove therefrom all persons and property, to store such property in a public warehouse or elsewhere at the cost of and for the account of Tenant, and to sell such property and apply the proceeds therefrom pursuant to applicable California law; (d) The right to have a receiver appointed for Tenant, upon application by Landlord, to take possession of the Premises, and to apply any monies collected from the Premises; and (e) The right to specific performance of any or all of Tenant's obligations hereunder, and to damages for delay in or failure of such performance. 15.3 Remedies Cumulative. The exercise of any remedy provided by law or the provisions of this Lease shall not exclude any other remedies unless they are expressly excluded by this Lease. Tenant hereby waives any right of redemption or relief from forfeiture following termination of, or exercise of any remedy by Landlord with respect to, this Lease. 16. Fees and Expenses; Indemnity; Payment. 16.1 Landlord's Right to Remedy Defaults. If Tenant shall default in the performance of any of its obligations under this Lease after notice and expiration of the applicable cure period, Landlord may remedy such default at Tenant's expense, without thereby waiving any other rights or remedies of Landlord with respect to such default. Notwithstanding the foregoing, Landlord shall have the right to cure any failure by Tenant to perform any of its obligations under this Lease without notice to Tenant if such failure results in an immediate threat to life or safety of any person, or impairs the Building or its efficient operation. 16.2 Indemnity. Except to the extent caused by the negligence or willful misconduct of Landlord, Tenant shall indemnify Landlord, against and save Landlord harmless from and defend Landlord through attorneys reasonably satisfactory to Landlord from and against any and all claims, losses, costs, liabilities, damages and expenses including, without limitation, reasonable attorneys' fees, to the extent incurred in connection with or arising from (a) any default by Tenant in the observance or performance of any of the terius, covenants, conditions or other obligations of this Lease, or the failure of any representation made by Tenant in this Lease, (b) the use or occupancy or manner of use or occupancy of the Premises during the Term by Tenant or any person occupying the Premises, (c) the condition of the Premises during the Term or any occurrence or happening on the Premises between the Commencement Date and the time Landlord has accepted the surrender of the Premises after the expiration or termination E-7 P6402-0201 \ 1332518v3.doc of the Term, (d) any act of Tenant or any subtenant of the Premises or any of their respective employees or invitees while on the Premises, or (e) Landlord's inability to obtain access to any portion of the Premises with respect to which Landlord has not been furnished a key (if locked) or access has been otherwise restricted. 16.3 Interest on Past Due Obligations. Unless otherwise specifically provided herein, any amount due from Tenant to Landlord under this Lease which is not paid within five (5) days from the date when due shall bear interest from the due date until paid at the lesser of the highest rate then permitted by law or a rate per annum which is equal to four percent (4%) plus the highest rate identified by Bank of America NT&SA as its "reference rate" between the date such amount was due and the date such payment was received. The payment of such interest shall not alone excuse or cure any default under this Lease. 17. Access to Premises. Landlord reserves for itself and its agents, employees and independent contractors the right to enter the Premises, subject to Tenant's reasonable requirements for maintaining secure areas, at all reasonable times (upon reasonable telephonic notice) to inspect the Premises, to supply any service to be provided by Landlord to Tenant hereunder, to show the Premises to prospective purchasers, mortgagees, beneficiaries or (during the last twelve (12) months of the Term only) tenants, to post notices of nonresponsibility, to determine whether Tenant is complying with its obligations under this Lease, and to alter, improve or repair the Premises or any other portion of the Building. In the event of an emergency, Landlord shall have the right to enter the Premises at any time without notice. Landlord shall have the right to use any and all means that Landlord may deem necessary or proper to open doors in an emergency, in order to obtain entry to any portion of the Premises. Tenant hereby waives any claim for damages for any injury or inconvenience to or interference with Tenant's business, any loss of occupancy or quiet enjoyment of the Premises, any right to abatement of rent, or any other loss occasioned by Landlord's exercise of any of its rights under this Section 18. Tenant waives all rights to consequential damages (including, without limitation, damages for lost profits and lost opportunities) arising in connection with Landlord's exercise of its right under this Section 17. 18. Notices. Except as otherwise expressly provided in this Lease, any payment required to be made and any bills, statements, notices, demands, requests or other communications given or required to be given under this Lease shall be effective only if rendered or given in writing, sent by personal delivery or registered or certified mail, return receipt requested, or by overnight courier service or by facsimile transmission with a following copy by first class mail, addressed (a) to Tenant at the Premises, (b) to Landlord at the address set forth in the Basic Lease Information or (c) to such other address as either Landlord or Tenant may designate as its new address in California for such purpose by notice given to the other in accordance with the provisions of this Section 18. Any such bill, statement, notice, demand, request or other communication shall be deemed to have been rendered or given on the date of receipt or refusal to accept delivery. 19. No Waiver. No provision of this Lease may be waived, and no breach thereof shall be waived, except by a written instrument signed by the party against which the enforcement of the waiver is sought. No failure by Landlord to insist upon the strict performance of any obligation of Tenant under this Lease, no course of conduct between E-8 P6402-0201 \ 1332518v3.doc Landlord and Tenant, and no acceptance of the keys or to possession of the Premises before the termination of the Term by Landlord or any employee or representative of Landlord shall constitute a waiver of any breach or a waiver or modification of any term, covenant or condition of this Lease. No payment by Tenant of a lesser amount than the aggregate of all rent then due under this Lease shall be deemed to be other than on account of the first items of such rent then accruing or becoming due, unless Landlord elects otherwise. 20. Tenant's Certificates. Tenant, at any time and from time to time, within ten (10) days after written request, shall execute, acknowledge and deliver to Landlord, addressed (at Landlord's request) to any prospective purchaser, ground or underlying lessor or mortgagee or beneficiary of any part of the Premises, an estoppel certificate in form and substance reasonably designated by Landlord. Tenant's failure to do so within such ten (10) day period shall be conclusive upon Tenant that all facts set forth in Landlord's proposed certificate are true and correct. 21. Miscellaneous. 21.1 Successors and Assigns. The terms, covenants and conditions contained in this Lease shall bind and inure to the benefit of Landlord and Tenant and, except as otherwise provided herein, their respective personal representatives and successors and assigns. 21.2 Severability . If any provision of this Lease or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder of this Lease, or the application of such provision to persons or circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby, and each provision of this Lease shall remain in effect and shall be enforceable to the full extent permitted by law. 21.3 Applicable Law. This Lease shall be governed by and construed in accordance with the laws of the State of California. 21.4 Integration. The terms of this Lease (including, without limitation, the Exhibits hereto) are intended by the parties as a final expression of their agreement with respect to such terms as are included in this Lease and may not be contradicted by evidence of any prior or contemporaneous agreement, arrangement, understanding or negotiation (whether oral or written). 21.5 Quiet Eniovment. Upon Tenant paying the rent and performing all of Tenant's obligations under this Lease, Tenant may peacefully and quietly enjoy the Premises during the Term as against all persons or entities claiming by or through Landlord. 21.6 Time of Essence. Time is of the essence of each and every provision of this Lease. 21.7 Broker's Commissions. Each party represents and warrants to the other that it has not entered into any agreement or incurred or created any obligation which might require the other party to pay any broker's commission, finder's fee or other commission or fee relating to the leasing of the Premises, except for the brokers specified in the Basic Lease Information. Each party shall indemnify, defend and hold harmless the other and the other's E-9 P6402-0201\1332518v3.doc constituent partners and their respective officers, directors, agents and employees from and against all claims for any such commissions or fees made by anyone claiming by or through the indemnifying party, except for the brokers named in the Basic Lease Information. 21.8 Recovery Against Landlord. Tenant shall look solely to Landlord's interest in the Premises for the recovery as provided under applicable law of any judgment against Landlord. Landlord, or if Landlord is a partnership, its partners whether general or limited, or if Landlord or any constituent partner of Landlord is a corporation, its directors, officers and shareholders, shall never be personally liable for any such judgment. In the event that any Landlord hereunder sells or conveys its interest in the Building, all liabilities and obligations on the part of such Landlord under this Lease accruing thereafter shall terminate and all such liabilities and obligations shall be binding upon the new owner. 21.9 Counterparts. This Lease may be executed in several counterparts, each of which shall be deemed an original, and all of such counterparts together shall constitute one and the same instrument. 21.10 Amendments. No amendments or modifications of this Lease or any agreements in connection therewith shall be valid unless in writing duly executed by both Landlord and Tenant. No amendment to this Lease shall be binding on any mortgagee or beneficiary of Landlord (or purchaser at any foreclosure sale) unless such mortgagee or beneficiary shall have consented thereto in writing. 21.11 Attorneys' Fees. If Landlord becomes a party to any litigation not initiated by Tenant concerning this Lease or the Premises by reason of any act or omission of Tenant or its authorized representatives, and not by reason of its own act or omission or any act or omission of its authorized representatives, Tenant shall be liable to Landlord for reasonable attorneys' fees and court costs incurred by Landlord in the litigation. If either party commences an action against the other party arising out of or in connection with this Lease, or institutes any proceeding in a bankruptcy or similar court which has jurisdiction over the other party or any or all of its property or assets, the prevailing party shall be entitled to have and recover from the losing party reasonable attorneys' fees and court costs. The fees recoverable, as provided above, shall include fees incurred on appeal and any other post judgment proceeding. 21.12 Relocation Assistance. In consideration of Landlord entering into this Lease, Tenant agrees to take full responsibility for moving its business, and any furnishings, fixtures, equipment and personal property, from the Property and for any resulting loss of business goodwill (the "Relocation"), and Landlord shall have no obligation to provide assistance to Tenant in connection therewith under any federal or state relocation laws or regulations, including, without limitation, the California Relocation Assistance and Real Property Acquisition statutes and guidelines. In connection therewith, and to the fullest extent permitted by law, Tenant further agrees that, effective on the termination of this Lease, Landlord shall be, and hereby is, fully and forever released from any and all claims and liabilities, whether direct or indirect, known or unknown, foreseen or unforeseen, that have arisen, or that may arise, E-10 P6402-0201 \ I 332518v3.doc in connection with the Relocation. By such release, Tenant expressly waives the provisions of California Civil Code Section 1542 that provide: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." and all similar provisions or rules of law. Tenant understands that, by waiving these provisions, Tenant waives the right to make claims against Landlord for matters pertaining to the Relocation that are presently unknown or unanticipated. Tenant's agreement under this Section 21.12 constitutes material consideration for Landlord's agreement to enter into this Lease. Landlord and Tenant have each initialed this Section 21.12 to indicate their acceptance of each and every provision hereof. The provisions of this Section 21.12 shall survive the termination of this Lease. LANDLORD TENANT [signatures on next page] E-11 P6402-0201 \1332518v3.doc IN WITNESS WHEREOF, Landlord and Tenant have each caused their duly authorized representatives to execute this Lease on their behalf as of the date first above written. LANDLORD: PALM DESERT REDEVELOPMENT AGENCY, a public body, corporate and politic By: Name: Title: Attest: TENANT: TIMOTHY R. PALMER LEE ANNA PALMER E- 12 P6402-0201\1332518v3.doc Landlord's Address: BASIC LEASE INFORMATION Palm Desert Redevelopment Agency 73-510 Fred Waring Drive Palm Desert, CA 92260 Attn: Executive Director Phone No.: (760) 346-0611 Fax No.: (760) 341-6372 Tenant's Address: Timothy R. Palmer and Lee Anna Palmer 44900 East San Clemente Circle Palm Desert, California 92260 Phone No.: (760) 346-4671 Commencement Date: Upon close of escrow for Exchange Agreement dated May 26, 2011 between Agency (herein referred to as Landlord) and Palmer (herein referred to as Tenant) (3.1) Termination Date: 180 days from the Commencement Date, or 360 days from the Commencement Date if extended at option of Tenant (3.1) Premises: 44900 East San Clemente Circle, Palm Desert, California 92260. See also aerial photograph attached as Exhibit A. Tenant's Tax Share: 100% (12) Tenant's Expense Share: 100% (5) Use: Single Family Residence (6.1) E-13 P6402-0201 \ 1332518v3.doc Exhibit A to Lease Agreement Aerial Photograph of Premises 44900 San Clemente Circle (APN 627-074-006) Date: ti 3/2011 VICINITY MAP E-14 P6402-0201 \ 13325 18v3.doc EXHIBIT F LIST OF AGENCY ACTIONS As part of the Alessandro Alley Improvement Project (the "Project"), the Agency will also construct on the Agency Property (during the course of construction of the Project and in any event within fourteen (14) months following the Closing)) a new eight (8) foot high slump stone block wall south of the new right of way line adjacent to the new rear property line of the Agency Property, with an eighteen (18) foot opening with a solid metal rolling gate for driveway access to Alessandro Alley. All existing fencing (or temporary fencing) within the right-of-way south of the new property line of the Agency Property shall remain in place until the Agency commences construction of the above -referenced wall. Prior to removal of any such existing fencing, the Agency shall install temporary fencing on the Agency Property approximately five (5) feet north of the new southern property line of the Agency Property, which temporary fencing shall remain in place during the construction of the above -described wall. With respect to the Agency Property, and prior to the Closing Date (unless otherwise provided below), the Agency will: (i) Remove all items in garage. (ii) Remove all abandoned septic tanks. (iii) Remove all trees. (iv) Inspect for and remove/remediate any mold located inside residence. (v) An Asbestos Inspection Report dated October 22, 2008 (attached) detected asbestos in the brown floor tile and associated mastic, which will be removed prior to the Closing Date. Also detected was asbestos in the roofing material and mastic, which will be removed by Agency after the Closing when Palmer is prepared to replace the roof. (vi) Pay for all building permit and related governmental fees for renovation/remodeling of the residence, including for new improvements to be undertaken and completed by Palmer during the Term of the Lease Agreement (including but not limited to, roof replacement, new improvements and additions to the residence; but excluding any detached garage or guest house). (vii) Reimburse Palmer, in an aggregate amount not to exceed One Thousand Dollars ($1,000.00), for premiums paid with respect to standard homeowner's insurance on the Agency Property during which the Term of the Lease Agreement. Such reimbursement will be paid following receipt by the Agency of copies of billing statements from the insurance company and evidence of their payment by Palmer. (viii) Within forty-five (45) days following the Closing, replace the water service line from the water meter to the residence, and replace all hot and cold water lines within the residence. Any damage to the residence resulting from the replacement of the hot and cold water lines will be repaired and paid for by Palmer. F-1 P6402-0201 \ 1332518v3.doc RGON/O WAY MEMO GOf _n z S 15.San Clemente.Cir r mow t ;, ■ e VICINITY MAP 1 EXHIBIT B-1 SCHEMATIC OF PALMER PROPERTY 44900 San Clemente Circle (APN 627-074-006) Date: �G�w �® 312011 Wuu„r evw B-1-1 P6402-0201\1332518v3.doc