89-152 De Anza Raquet Club site purchase, Reso 7972 APN 326-29-22 L,nw OFFICES OF flTHEQTOn & STEvEns
300 THIRD STREET, SUITE 7
LOS ALTOS, CA 94022
MICHAEL fl. PTHEVoH TELEPHONE (41S) 941-4790 MICHflEL K. STEVEHS
(A PROFESSIONAL CORPORATION) FAX (41 S) 941-694B
January 29 , 1990
The Honorable Mayor &
Members of the City Council
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
Re : City of Cupertino v. DeAnza Properties
Proposed Settlement of Litigation
I represent DeAnza Residential Suites , whose general partner ,
Mr . John Vidovich, has authorized me to make an offer of
settlement for the pending arbitration relating to the acquisition
of the DeAnza. Racquet Club.
My clients will settle for the sum of $8, 000 , 000 cash,
payable within 60 days . This offer is open until 9 : 00 p.m.
tonight, January 29 , 1990 .
My clients sincerely hope that this matter can be resolved by
a settlement, thus making further expenses to both sides
unnecessary.
Very truly yours ,
Michael Atherton
MA/gps
cc: John Vidovich
j -
GG
ALI-
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P"e'Nucimb t"o.- r-40 FCC IN A0007MANCE
7V P— — WITH GOV CODE 6103 i-ILLD Proh RECORD
011 AT REQUEST OF
CITY r
j
FEE
N U0 V89
RES0=CN NO. 7972 NOV ZO 12 06 P1
A RES01UrICN OF TIHIE C= oouNCIL OF = CITY OF OFFICIAL RECORDS
aJPERZM. -A CLARA COUNTY
XjnMUZIl� MM=C" OF "ZIMW" BETWEEN TIHIE CITY OF LAURIE KANE
C TP AND MANZA BESIDE?= SUITES M ESTABLISH RECORDER
A PROCEMW FM rpImMINIM A FAIR AND EaUjM%BM
PRICE FIOR PROFIERly 1== AT M =M3CST CMOM
OF STEVENS a= BOULEVARD AND STELLIM R= L172PAGE 413
WHEPEAS, the City of Cupertino has expressed an interest in purchase
of certain improved real property atthe northwest corner of Stevens Creek
Boulevard and Stalling Road; and
MERFM, the City and owner have not been able to agree cn a purchase
price for said real property; and
WHEREAS, an agreement has been prepared to provide a procedure for
determining a fair and equitable price to be paid to the owner (M&1bit
A)
NOW, UIRE, BE IT RESOLVED that the City Council of the City of
Cupertino hereby authorizes the Mayor and City Clerk to execute said
agreement on behalf of the City of Cupertino.
PASSED AND ADOPTED at a regular meeting of the City ccx=il of the
City of Cupertino this 6th day of November 1989, by the
following vote:
Vote Members of the City Council
AYES: Gatto, Johnson, Koppel, Rogers, Plungy
NOES: None
y,,,T. `•,';7 H i N
TH 117; 1 S TVI�;,ATFUF KIAT T HIF -1-17 'Py
INSTRUMENT ��I�.p.r-[IRREC
ABSENIT: None 0 F T H E O'M 131 t�AL- -IN THIS OFFICE.
ABS'MM: None E IIY CLEF FIRE' NO
OF E; -RTI
ATTEST: APPROVED: E93
CI LERK.
Isl Dorothy Cornelius Isl John J. Plungy, Jr.
City Clerk Mayor, City of Cupertino
r. L1 72EAGE 414
r •
AGREEMENT FOR THE ACQUISITION
OF REAL PROPERTY
THIS AGREEMENT dated I3oY_e bm_er :6z , 1989, is be-
tween the City of Cupertino, (hereinafter referred to as
"City" ) a general law city organized under the laws of
the State of California and DeAnza Residential Suites,
(hereinafter referred to as "Owner" ) , a limited partner-
ship organized and operating under the laws of the State
of California.
WHEREAS, Owner is the sole owner and title holder
to certain improved real property at the northwest cor-
ner of Stevens Creek Blvd. and Stelling Avenue in the
City of Cupertino more particularly described as
follows :
All of Parcel B, as shown upon that certain
Parcel Map filed for record in the office of
the Recorder of the County of Santa Clara,
State of California on September 3, 1975 in
Book 361 of Maps, at page 2. (APN 326-29-22)
WHEREAS, said improved real property is the cur-
rent site of -the DeAnza Racquet Club, a private recre-
ation facility which includes buildings, tennis courts,
a swimming pool, paved parking lot, and various other
improvements; and
WHEREAS, City and Owner cannot agree as to a pur-
chase price for said real property, but desire by this
Agreement to provide a procedure for determining a fair
. ���kN A L 1
L1 I2PAGE 415
and equitable price to be paid to Owner;
NOW, THEREFORE, IT IS HEREBY AGREED as follows:
1 . Acquisition of Real Property. Upon determi-
nation of the purchase price pursuant to the provisions
of this Agreement, and subject to paragraph 14 of this
Agreement regarding abandonment of eminent domain pro-
ceedings Owner shall sell and City shall purchase the
real property described hereinabove including all im-
provements and fixtures attached to the land free and
clear of all liens, encumbrances, taxes, assessments,
and leases whether recorded or unrecorded other than
exceptions 3, 4, and 5 listed on Schedule B of the
Preliminary Report dated April 14, 1989 issued by Valley
Title Company under Escrow No. 198065 - B.
City shall also pay all costs of escrow and
recording fees incurred in this transaction, including
documentary stamp tax, and title insurance policy
expenses . Escrow costs and recording fees shall not,
however, include reconveyance fees, trustee 's fees,
forwarding fees, or penalty of any full reconveyance of
deed of trust or full release of mortgage paid.
2. Proration of Taxes. In the event City ac-
quires fee title to said real property under the terms
of this Agreement, taxes shall be prorated in accordance
with Revenue and Taxation Code Section 5082 as of the
recordation date of the deed or order of condemnation,
or taking of physical possession, as the case may be.
2
L 1 l 2 PAGE 416
Further, Owner authorizes City to deduct and
pay from the purchase price any amount necessary to sat-
isfy any delinquent taxes due , together with penalties
and interest on them, and any delinquent or nondelin-
quent assessments or bonds, which are to be cleared from
the title to said property.
4. Payment of Deed of Trust or Mortgage. all
money payable under this Agreement, up to and including
the total amount of unpaid principal and interest on any
note secured by a deed of trust or mortgage, and all
amounts due and payable in accordance with the terms and
conditions of the deed of trust or mortgage shall on
demand be made payable to the beneficiary or mortgagee.
The beneficiary or mortgagee shall furnish Owner with
good and sufficient receipt showing the money credited
against the indebtedness secured by the deed of trust or
mortgage.
5. Lease Warranty. Prior to recordation of a
deed or order of condemnation, as the case may be, Owner
shall warrant that there are no oral or written leases
on all or a portion of said real property exceeding the
period of one month, and Owner further agrees to hold
City harmless and reimburse City for any and all of its
losses and expenses occasioned by reason of any lease of
said property held by any tenant of Owner for a period
exceeding one month. City shall promptly tender the
defense of any such claim, and Owner shall assume the
defense of such claim.
3
L172PAGE 417
6. Relocation Costs. In the event City acquires
fee title to said real property under the terms of this
Agreement, whether by settlement or by judgment, Owner
shall hold City harmless from any moving or relocation
expenses incurred by Owner or by any tenant of Owner
under the applicable provisions of the California Re-
location Assistance Act. Should any person make claim
for any such moving or relocation assistance, then City
shall promptly tender the defense of this claim and
Owner shall assume the defense of such claim.
7. Possession. Unless otherwise agreed in writ-
ing, or as provided in § CCP 1255.410 et seq. related to
possession prior to judgment, City shall take possession
of said real property upon recordation of the deed or
order of condemnation, as the case may be, which conveys
title to said real property. Owner shall be entitled to
all rents from said real property up to and including
the date of transfer of title. All rents collected by
Owner applicable to any period after date of transfer
shall be paid to City. Either party to this Agreement
receiving rents to which the other party is entitled
shall forthwith pay that amount to the other as is
necessary to comply with the provisions of this
paragraph. In no event, however, shall City be
responsible for collection of rents applicable to the
period up to and including the date of transfer of
title.
4
L 1 l 2 PAGE 418
8. Condition of the Premises. The City shall
have the right upon reasonable notice to enter and
inspect the real property, and may perform such
non-destructive tests as it deems warranted. City shall
defend Owner and hold Owner harmless from any claims or
expenses resulting from such inspections, including but
not limited to, any mechanic 's liens. Owner makes no
warranties as to the condition of the property, and City
makes the purchase in reliance on its own inspection and
the inspection of its consultants. The sale of the
property is strictly "as is" , and the purchase price
shall reflect and take into account the physical
condition of the property. City is acquiring the
property subject to any and all defects, whether they be
latent or patent. However, the Owner shall, between the
time of execution of this Agreement and the time
physical possession of the City is taken provide
reasonable maintenance on the property and shall not
commit any waste thereon.
9. Escrow. In the event that a purchase price
for said property is established under the provisions of
this Agreement, the transaction will be handled through
an escrow selected by the parties which shall either be
Santa Clara Land Title or Valley Title Company.
10. Determination of Purchase Price. Upon execu-
tion of this Agreement, the parties shall attempt in
good faith to negotiate a purchase price for said real
5
L 1 <2 PAGE 419
property. If the parties are unable agree on said
price, either party, upon written notice to the other,
at any time beyond forty-five (45) days from the date
this Agreement is executed may suspend settlement
negotiations.
11 . Eminent Domain. Upon the giving of said
notice described in paragraph 10 of this Agreement by
either party to the other, the City shall, within sixty
(60) days, commence the eminent domain process to
acquire said real property. At any time during said
process, including actual litigation, the parties may
settle the issue of the purchase price for said real
property by mutual written agreement.
12. Eminent Domain Award. In the event that
parties are unable to resolve their differences as to
the purchase price and the issue of just compensation is
determined by a finder of fact whether jury, court or
arbitrator and an award is made, Owner shall transfer
title to said real property to City upon the following
basis:
a) if the award is $7,000,000 or less, the
City may purchase said real property for the amount of
the award by payment of cash within 60 days from the
date the award becomes final .
b) if the award is greater than $7,000,000,
then the City may purchase said real property for the
amount of the award in three equal annual installments,
6
L 1 2PAGE 420
one-third due within 60 days of the award becoming
final, one-third twelve ( 12) months later, and the final
third twenty-four (24) months after the first payment is
made. Interest at the rate of 4.75% per annum shall
accrue on the unpaid balance. In order to secure pay-
ment of said balance, the City and Owner shall agree
upon a process which will allow for the City to pur-
chase legally said property over the period of two years.
Notwithstanding the award, Owner may elect to receive
the full cash price in lieu of installments by agreeing
to transfer title to said real property for a total pur-
chase price of $7,000,000.
c) notwithstanding paragraph 12(b) of this
Agreement, if the award is in excess of $8,000,000, City
may acquire title to said property for a total payment
of the award less a credit equal to an amount that the
award exceeds $8,000,000, provided, however, that said
credit shall not exceed $500,000. 00.
By way of example, if the award is
$7,000,000 the City may purchase said real property for
$7,000,000 in cash payable 60 days from the date the
award becomes final . If the award is $7,500,000, the
City may purchase said property for $7,500,000 payable
in three equal annual installments subject to Owner 's
right to receive $7,000,000 in cash in lieu of payments.
If the award is $8, 100,000, City may purchase said
property for $8,000,000 in three equal annual install-
7
L 1 ' PAGE 421
ments. If the award is $8,900,000, City may purchase
said property for $8,400,000 in three equal annual in-
stallments.
As used in this Agreement, the term "award"
means all amounts due and owing to Owner or his tenants
as a result of an action brought by the City in eminent
domain to acquire said property and all improvements
thereon including , but not limited to, value of the
take, severance damages, damages for wrongful pre-
condemnation activities, moving and relocation expenses,
loss of goodwill, interest, costs and attorney's fees,
if any. All terms of this Agreement shall be incor-
porated into, and become part of, any judgment of con-
demnation rendered with respect to said real property.
13. Waiver of Attorney' s Fees and Costs. In con-
sideration of the other provisions of this Agreement,
Owner hereby agrees that he shall not seek, nor recover
litigation expenses, as defined in § 1235. 140 of the
Code of Civil Procedure which could be awarded in any
eminent domain proceeding brought by the City to acquire
said property under the terms of this Agreement includ-
ing, but not limited to, litigation expenses awarded by
the Court upon a finding that City's offer was unreason-
able (§ 1250.410 CCP) , or litigation costs and damages
awarded based upon abandonment or dismissal of, the
action by City (§ 1268. 610 CCP, § 1235. 140 CCP) .
8
L I 72P46E 422
Notwithstanding the above, Owner shall be entitled to
his ordinary costs as provided in § 1268.710 CCP.
14. Abandonment of Proceedings. Provided that
City does not take physical possession of said real
property, nothing in this Agreement precludes City's
right to abandon any eminent domain proceeding to
acquire said real property at any time within 30 days
after any award or judgment becomes final as prescribed
in S 1268.510 California Code of Civil Procedure. In
the event of such abandonment, this Agreement shall be
rescinded and neither party shall have any obligation to
purchase or sell said real property. In the event of
such abandonment, Owner shall not seek nor recover any
damages, including damages for loss of use or loss of
opportunity proximately caused to Owner by such abandon-
ment nor shall he seek or recover any litigation ex-
penses which would otherwise be awarded pursuant to CCP
Sections 1235. 140 or 1268.610. Nothing in the Agreement
precludes the Owner from objecting to the abandonment
for the reasons provided in § CCP 1268. 510(b) .
15. Consideration of Alternative Uses Subsequent
to Abandonment. Notwithstanding any provision to the
contrary contained in paragraph 14 of this Agreement,
upon abandonment by City of any eminent domain proceed-
ing to acquire said real property, City shall hold
general plan hearings to consider alternative uses for
the property. This paragraph shall not be construed as
9
L 1 2 PAGE 423
an admission by City that the present land use designa-
tion or zoning for said real property is unreasonable or
that said designation or zoning constitutes a taking of
property without just compensation.
16. Non-admissability of this Agreement. Neither
this Agreement, nor any portion thereof, shall be admiss-
ible in any direct eminent domain action brought by City
nor shall it be admitted into evidence in any judicial
proceedings, including arbitration, for the purpose of
establishing the value of said real property.
17 . Integration; Modification. This Agreement
constitutes the entire Agreement of the parties. All
oral or written promises or agreements regarding the
purchase of the subject property made prior to, or at
the same time as, the execution of this Agreement are
void and have no further force or effect. Any
subsequent modification of this Agreement must be in
writing and executed by the parties.
18. Binding on Successors - Covenant Running With
the Land. This Agreement is binding upon the parties,
their heirs, successors, successors in interest, and
assigns. The parties also agree that this Agreement
constitutes a covenant running with the subject property
and may be recorded by either party at that party's
option.
19 . Effect of This Agreement Upon Powers of the
City. Nothing in this Agreement shall require City to
10
7
L 172PAGE 424
take any action which it cannot legally take nor shall
it obligate the City to take any particular action which
_requires an evidentiary hearing before such action is
taken.
20 . Notice. For purpose of giving any notice re-
quired under this Agreement, either party may personally
deliver said notice to the other or deposit said notice
with the United States Post Office, postage prepaid to
the following addresses:
a) For City
Donald Brown
City Manager
City of Cupertino
10300 Torre Avenue
Cupertino, CA 95014
b) For Owner
DeAnza Residential Suites
c/o John Vidovich
21 . Authority. The signatories to this Agreement
warrant that each has authority to execute this
Agreement and to bind the parties to its terms.
22. Sale Under Threat of Condemnation. Any sale
of the property to City, other than as the result of a
final judgment in an eminent domain proceeding, shall be
deemed to be a sale under threat of condemnation.
11
L 17 2 PAJL425
IN WITNESS WHEREOF, the undersigned have executed
(L�' oeiaLerr
this Agreement this day ofA1989.
DEANZA RESIDENTIAL SUITES
By T F
n Vidovich, General Partner
CITY OF CUPERTINO -
B
e
Jr ,n P ngy, Mayo Cit y Cle `
CHARLES ILIAN
City Attorney
STATE OF CALIFORNIA )
COUNTY OF SANTA CLARA) SS
On this 26th day of October, 1989 , before me, the
undersigned Notary Public, personally appeared John Vidovich,
personally known to me or proved to me on the basis of satis-
factory evidence, to be the person who executed the within
instrument on behalf of the partnership, and acknowledged
to me that the partnership executed it.
WITNESS my hand and official seal.
Icl _i
��t^ct''?,�; Nt7l',4i•f (�liGll ' C'"�61f�•F?(*Jf>El �
otary P lic
My comm. aka hru
12
Cit,4 of Cupertino
10300 Torre Avenue i P.O. Box 580
Cupertino,California 95014 Cupertino,California 95015
Telephone: (408) 252-4505
December 21, 1989
De Anza Residential Suites
John Vidovich
1307 S. Mary Avenue
Sunnyvale, CA 94086
AGREEMENT - CITY OF CUPERTINO RESOLUTION NO. 7972
We are enclosing to you for your files one (1) copy of the recorded document
of the Agreement by and between the City of Cupertino and De Anza Residential
Suites, along with Resolution No. 7972.
Sincerely,
jDOROTHY CORNELIUS
CITY CLERK.
CITY OF CUPERTINO
i
LC„LTA STANDARD COVERAGE 1988,
SCHEDULE A
=OFFICE FILE NUMBER POLICY NUMBER DATE OF POLICY AMOUNT OF INSURANCE PREMIUM AMOUNT
Si 198056 205 0025 03 002415 3March 29, 1990 4 5
at 8 :00 A.M. $ 7,900,000 .00 $ 11 733 .75
1. Name of Insured:
THE CITY OF CUPERTINO
2. The estate or interest in the land which is covered by this Policy is:
A Fee
3. Title to the estate or interest in the land is vested in:
THE CITY OF CUPERTINO, a Municipal Corporation
4. The land referred to in this Policy is described as follows:
All that certain parcel of land situated in the City of Cupertino,
County of Santa Clara, State of California, described as follows:
All of Parcel B, as shown upon that certain Parcel Map filed for rec.ord
in the office of the Recorder of the County of Santa Clara, State of
California on September 3, 1975 in Book 361 of Maps, at page 2 .
SCHEDULE A
CLTA Standard Coverage- 1988 This Policy valid only if Schedule B is attached.
Reorder Form No. 3243 (Rev. 1/89)
SCHEDULE B
File Number SJ 198056
EXCEPTIONS FROM COVERAGE
This policy does not insure against loss or damage (and the Company will not pay costs, attorneys' fees or
expenses) which arise by reason of:
PART I
1. Taxes or assessments which are not shown as existing liens by the records of any taxing authority that
levies taxes or assessments on real property or by the public records.
Proceedings by a public agency which may result in taxes or assessments, or notices of such proceedings,
whether or not shown by the records of such agency or by the public records.
2. Any facts, rights, interests or claims which are not shown by the public records but which could be
ascertained by an inspection of the land or which may be asserted by persons in possession thereof.
3. Easements, liens or encumbrances,,or claims thereof, which are not shown by the public records.
4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a
correct survey would disclose, and which are not shown by the public records.
5. (a) Unpatented mining claims; (b) reservations or exceptions in patents or in Acts authorizing the issuance
thereof; (c) water rights, claims or title to water, whether or not the matters excepted under (a), (b), or (c)
are shown by the public records.
PART II
1. An easement for the purpose shown below and rights incidental thereto
as set forth in a document
Granted to: City of Cupertino, a municipal corporation
(No representation is made as to the present
ownership of said easement)
Purpose: right of way for emergency access
Recorded: November 20, 1975
Book B729, Page 406, of Official Records.
Affects:
Beginning at the most Northeasterly corner of Parcel "B" as shown on
that certain Map recorded in Book 361 of Maps, at page 2, Santa Clara
County Records, said corner being the Easterly terminus of the course N.
890 52 ' 19" E. 175 .92 feet, as shown on said parcel map; thence along a
common line of Parcels "A" and "B" as shown on said parcel map S. 890 52 '
19" W. 101 .00 feet to the TRUE POINT OF BEGINNING; thence continuing
along said common line S . 890 52 ' 19" W. 20 . 00 feet; thence leaving said
common line S . 00 07 ' 41" E. 49 . 00 feet; thence N. 890 52 ' 19" E. 120 .89
feet to a point on the Easterly boundary of said Parcel "B"; thence along
said Easterly boundary of Parcel "B" North 20 . 00 feet; thence leaving
said Easterly boundary of Parcel "B" S. 890 52' 19" W. 100 . 94 feet;
thence N. 00 07 ' 41" W. 29 .00 feet to the TRUE POINT OF BEGINNING.
(Cont ' d on next page)
SCHEDULE B
CLTA Standard Coverage—1988
Reorder Form No.12201
PAGE
(Schedule B continued)
J
Pollcy Number: 05 0025 0 3 002415
Owners
Policy Number:
Loan
2. An easement for the purpose shown below and rights incidental thereto
as set forth in a document
Granted to: City of Cupertino, a municipal corporation
(No representation is made as to the present
ownership of said easement)
Purpose: right of way for public utilities
Recorded: April 14, 1976
Book B969, Page 573, of Official Records.
Affects:
Being a portion of that certain parcel of land shown as Parcel "B" on
that certain Parcel Map recorded in Book 361 of Maps, at page 2, Santa
Clara County Records, being more particularly described as follows:
Beginning at the most Northwesterly corner of said parcel; thence
along the Westerly line of said parcel S. 0° 02' 03" E. 259 .97 feet;
thence leaving said Westerly line along the general Southwesterly line of
said parcel, along a tangent curve to the left, having a radius of 20 .00
feet, through a central angle fo 410 24 ' 3511 an arc length of 14 .45 feet
to a point in a line that is parallel with and 5 .00 feet Easterly,
measured at right angles from said Westerly line of Parcel "B" ; thence
leaving said general Southwesterly line along said parallel line N. 01
02 ' 0311 W. 273 .21 feet to a point in the general Northerly line of said
parcel; thence leaving said parallel line, along said general Northerly
line- S. 890 521 1911 W. 5.00 feet to the Point of Beginning.
3 . An easement for the purpose shown below and rights incidental thereto
as set forth in a document
Granted to: City of Cupertino, a municipal corporation
(No representation is made as to the present
ownership of said easement)
Purpose: use for sidewalk purposes
Recorded: November 13, 1986
Book J922, Page 1179, of Official Records .
Affects:
Commencing at intersection of the monument line of Stelling Road and
Stevens Creek Boulevard as shown upon that certain parcel map which map
was recorded in Book 361 of Maps at page 2, Santa Clara County Records;
(Cont' d on next page)
POLICY INSERT
Added Page
Reorder Form No. 3237(Rev. 2189)
PAGE ,
(Schedule B continued)
Pollcy Number: 05 0025 0 3 002415
Owners
Policy Number:
Loan
thence S . 891 52' 19" W. 169 .00 feet along the monument line of Stevens
Creek Boulevard; thence N. 0° 07' 41" W. 45.00 feet to the True Point of
Beginning; thence S . 890 52 ' 19" W. 21 .00 feet along the existing
right-of-line of Stevens Creek Boulevard; thence N. 10 23 ' 00" W. 4 .59
feet; thence N. 880 37 ' 00" E. 21 .005 feet; thence S . 10 23 ' 00" E. 5.05
feet to the True Point of Beginning.
4 . Agreement for the acquisition of real property between the City of
Cupertino and DeAnza Residential Suites, a limited partnership organized
and operating under the laws of the State of California, recorded
November 20, 1989 in Book L172 of Official Records, page 413 .
5 . Any rights of the parties in possession of said land, based on an
unrecorded lease, or leases, as disclosed by an inspection.
POLICY INSERT
Added Page
Reorder Form No. 3237 (Rev. 2/89)
Claims Department
P.O.Box 2233
Los Angeles,California 90051
C SECURITY UNION
Title Insurance Company
FF
CALIFORNIA LAND TITLE ASSOCIATION
STANDARD COVERAGE POLICY 1988
05 0025 03 002415
SECURITY UNION TITLE INSURANCE COMPANY
SUBJECT TO THE EXCLUSIONS FROM COVERAGE, THE EXCEPTIONS FROM COVERAGE
CONTAINED IN SCHEDULE B AND THE CONDITIONS AND STIPULATIONS, SECURITY UNION
TITLE INSURANCE COMPANY, a California corporation, herein called the Company, insures, as of
Date of Policy shown in Schedule A, against loss or damage, not exceeding the Amount of Insurance
stated in Schedule A, sustained or incurred by the insured by reason of:
1. Title to the estate or interest described in Schedule A being vested other than as stated
therein;
2. Any defect in or lien or encumbrance on the title;
3. Unmarketability of the title;
4. Lack of a right of access to and from the land;
and in addition, as to an insured lender only:
5. The invalidity or unenforceability of the lien of the insured mortgage upon the title;
6. The priority of any lien or encumbrance over the lien of the insured mortgage, said
mortgage being shown in Schedule B in the order of.its priority;
7. The invalidity or unenforceability of any assignment of the insured mortgage, provided the
assignment is shown in Schedule B,or the failure of the assignment shown in Schedule B to
vest title to the insured mortgage in the named insured assignee free and clear of all liens.
The Company will also pay the costs, attorneys' fees and expenses incurred in defense of the title or
the lien of the insured mortgage, as insured, but only to the extent provided in the Conditions and
Stipulations.
SECURITY UNION TITLE INSURANCE COMPANY
Issued by: By:
VALLEY TITLE COMPANY
San Jose, California 95113 ��� �s �� / �-
,� President
,.:..
.�x.�g4APORAt��,
y. ;mac
Af
r
By:
Authorized Signature Secretary
CLTA STANDARD COVERAGE POLICY 1988
Reorder Form No. 12012
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage,costs,attorneys'fees
or expenses which arise by reason of:
1. (a) Any law,ordinance or governmental regulatioW(including but not limited to building and zoning laws,ordinances,or regulations)restrict-
ing,regulating,prohibiting or relating to(i)the occupancy,use,or enjoyment of the land;(ii)the character,dimensions or location of any
improvement now or hereafter erected on the land;(iii)a separation in ownership or a change in the dimensions or area of the land or any
parcel of which the land is or was a part; or(iv) environmental protection, or the effect of any violation of these laws, ordinances or
governmental regulations,except to the extent that a notice of the enforcement thereof or a notice of a defect,lien or encumbrance resulting
from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.
(b) Any governmental police power not excluded by(a)above,except to the extent that a notice of the exercise thereof or a notice of a defect,
lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of
Policy.
2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy,but not excluding from
coverage any taking which has occurred prior to Date of Policy which would be binding on the rights of a purchaser for value without knowledge.
3. Defects,liens,encumbrances,adverse claims or other matters:
(a) whether or not recorded in the public records at Date of Policy,but created,suffered,assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at Date of Policy, but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to Date of Policy;or
(e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or the
estate or interest insured by this policy.
4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy,or the inability or failure of
any subsequent owner of the indebtedness,to comply with applicable doing business laws of the state in which the land is situated.
5. Invalidity or unenforceability of the lien of the insured mortgage,or claim thereof,which arises out of the transaction evidenced by the insured
mortgage and is based upon usury or any consumer credit protection or truth in lending law.
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS mortgage to be released from the obligation to purchase by virtue of a contrac-
The following terms when used in this policy mean: tual condition requiring the delivery of marketable title.
(a)"insured":the insured named in Schedule A,and,subject to any rights 2. CONTINUATION OF INSURANCE
or defenses the Company would have had against the named insured,those (a)After Acquisition of Title by Insured Lender.If this policy insures the
who succeed to the interest of the named insured by operation of law as owner of the indebtedness secured by the insured mortgage,the coverage of
distinguished from purchase including,but not limited to,heirs,distributees, this policy shall continue in force as of Date of Policy in favor of(i)such insured
devisees, survivors, personal representatives, next of kin, or corporate or who acquires all or any part of the estate or interest in the land by foreclosure,
fiduciary successors.The term"insured"also includes trustee's sale,conveyance in lieu of foreclosure,or other legal manner which
(i)the owner of the indebtedness secured by the insured mortgage and discharges the lien of the insured mortgage;(ii)a transferee of the estate or
each successor in ownership of the indebtedness except a successor who is interest so acquired from an insured corporation, provided the transferee is
an obligor under the provisions of Section 12(c) of these Conditions and the parent or wholly-owned subsidiary of the insured corporation, and their
Stipulations(reserving,however,all rights and defenses as to any successor corporate successors by operation of law and not by purchase,subject to any
that the Company would have had against any predecessor insured, unless rights or defenses the Company may have against any predecessor insureds;
the successor acquired the indebtedness as a purchaser for value without and (iii) any governmental agency or governmental instrumentality which
knowledge of the asserted defect,lien,encumbrance,adverse claim or other acquires all or any part of the estate or interest pursuant to a contract of
matter insured against by this policy as affecting title to the estate or interest in insurance or guaranty insuring or guaranteeing the indebtedness secured by
the land); the insured mortgage.
(ii)any governmental agency or governmental instrumentality which is an (b)After Conveyance of Title by an Insured.The coverage of this policy
insurer or guarantor under an insurance contract or guaranty insuring or shall continue in force as of Date of Policy in favor of an insured only so long as
guaranteeing the indebtedness secured by the insured mortgage,or any part the insured retains an estate or interest in the land,or holds an indebtedness
thereof,whether named as an insured herein or not; secured by a purchase money mortgage given by a purchaser from the
(iii)the parties designated in Section 2(a)of these Conditions and Stipula- insured,or only so long as the insured shall have liability by reason of cove-
tions. nants of warranty made by the insured in any transfer or conveyance of the
(b)"insured claimant":an insured claiming loss or damage. estate or interest.This policy shall not continue in force in favor of any pur-
(c)"insured lender":the owner of an insured mortgage. chaser from an insured of either(i)an estate or interest in the land,or(ii)an
(d)"insured mortgage": a mortgage shown in Schedule B,the owner of indebtedness secured by a purchase money mortgage given to an insured.
which is named as an insured in Schedule A. (c)Amount of Insurance.The amount of insurance afterthe acquisition or
(e)"knowledge" or "known": actual knowledge, not constructive knowl- after the conveyance by an insured lender shall in neither event exceed the
edge or notice which may be imputed to an insured by reason of the public least of:
records as defined in this policy or any other records which impart construc- (i)the amount of insurance stated in Schedule A;
tive notice of matters affecting the land. (ii)the amount of the principal of the indebtedness secured by the insured
(f)"land":the land described or referred to in Schedule A, and improve- mortgage as of Date of Policy, interest thereon, expenses of foreclosure,
ments affixed thereto which by law constitute real property.The term"land" amounts advanced pursuant to the insured mortgage to assure compliance
does not include any property beyond the lines of the area described or with laws or to protect the lien of the insured mortgage prior to the time,of
referred to in Schedule A,nor any right,title,interest,estate or easement in acquisition of the estate or interest in the land and secured thereby and
abutting streets,roads,avenues,alleys,lanes,ways or waterways,but noth- reasonable amounts expended to prevent deterioration of improvements,but
ing herein shall modify or limit the extent to which a right of access to and from reduced by the amount of all payments made;or
the land is insured by this policy. (iii)the amount paid by any governmental agency or governmental instru-
(g)"mortgage": mortgage, deed of trust, trust deed, or other security mentality,if the agency or instrumentality is the insured claimant,in the acqui-
instrument. sition of the estate or interest in satisfaction of its insurance contract or guar-
(h)"public records": records established under state statutes at Date of anty.
Policy for the purpose of imparting constructive notice of matters relating to 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT
real property to purchasers for value and without knowledge. An insured shall notify the Company promptly in writing(i)in case of any
(i)"unmarketability of the title":an alleged or apparent matter affecting the litigation as set forth in Section 4(a)below,(ii)in case knowledge shall come to
title to the land,not excluded or excepted from coverage,which would entitle a an insured hereunder of any claim of title or interest which is adverse to the
p0rchaser of the estate or interest described in Schedule A or the insured title to the estate or interest orthe lien of the insured mortgage,as insured,and
i
r
4(hich might cause loss or damage for which the Company may be liable by from third parties as required in this paragraph, unless prohibited by law or
virtue of this policy, or(iii) if title to the estate or interest or the lien of the governmental regulation,shall terminate any liability of the Company under„
insured mortgage,as insured,is rejected as unmarketable. If prompt notice this policy as to that insured for that claim.
shall not be given to the Company,then as to that insured all liability of the 6. OPTIONS TO PAY OR OTHERWISE SETTLE CLAIMS;TERMINATION
Company shall terminate with regard to the matter or matters for which prompt OF LIABILITY
notice is required;provided,however,that failure to notify the Company shall
in no case prejudice the rights of any insured under this policy unless the In case of a claim under this policy,the Company shall have the following
Company shall be prejudiced by the failure and then only to the extent of the additional options:
prejudice. (a)To Pay or Tender Payment of the Amount of Insurance or to
Purchase the Indebtedness.
4. DEFENSE AND PROSECUTION OF ACTIONS; DUTY OF INSURED (i)to pay or tender payment of the amount of insurance under this policy
CLAIMANT TO COOPERATE together with any costs,attorneys'fees and expenses incurred by the insured
(a)Upon written request by an insured and subject to the options contained claimant,which were authorized by the Company,up to the time of payment or
in Section 6 of these Conditions and Stipulations, the Company, at its own tender of payment and which the Company is obligated to pay;or
cost and without unreasonable delay,shall provide for the defense of such (ii)in case loss or damage is claimed under this policy by the owner of the
insured in litigation in which any third party asserts a claim adverse to the title indebtedness secured by the insured mortgage, to purchase the indebted-
or interest as insured,but only as to those stated causes of action alleging a ness secured by the insured mortgage for the amount owing thereon together
defect,lien or encumbrance or other matter insured against bythis policy.The with any costs,attorneys'fees and expenses incurred by the insured claimant
Company shall have the right to select counsel of its choice(subject to the which were authorized by the Company up to the time of purchase and which
right of such insured to object for reasonable cause)to represent the insured the Company is obligated to pay.
as to those stated causes of action and shall not be liable for and will not pay If the Company offers to purchase the indebtedness as herein provided,the
the fees of any other counsel.The Company will not pay any fees, costs or owner of the indebtedness shall transfer, assign, and convey the indebted-
expenses incurred by the insured in the defense of those causes of action ness and.the insured mortgage,together with any collateral security,to the
which allege matters not insured against by this policy. Company upon payment therefor.
(b)The Company shall have the right, at its own cost, to institute and Upon the exercise by the Company of the option provided for in paragraph
prosecute any action or proceeding or to do any other act which in its opinion a(i),all liability and obligations to the insured under this policy,other than to
may be necessary or desirable to establish the title to the estate or interest or make the payment required in that paragraph,shall terminate,including any
the lien of the insured mortgage,as insured,or to prevent or reduce loss or liability or obligation to defend,prosecute,or continue any litigation,and the
damage to the insured.The Company may take any appropriate action under policy shall be surrendered to the Company for cancellation.
the terms of this policy,whether or not it shall be liable hereunder,and shall not Upon the exercise by the Company of the option provided for in paragraph
thereby concede liability or waive any provision of this policy.If the Company a(ii)the Company's obligation to an insured lender under this policy for the
shall exercise its rights under this paragraph,it shall do so diligently. claimed loss or damage,other than the payment required to be made,shall
(c)Whenever the Company shall have brought an action or interposed a terminate,including any liability or obligation to defend,prosecute or continue
defense as required or permitted by the provisions of this policy,the Company any litigation.
may pursue any litigation to final determination by a court of competent juris- (b)To Pay or Otherwise Settle With Parties Other than the Insured or
diction and expressly reserves the right,in its sole discretion,to appeal from With the Insured Claimant.
any adverse judgment or order. (i)to pay or otherwise settle with other parties for or in the name of an
(d)In all cases where this policy permits or requires the Company to prose- insured claimant any claim insured against underthis policy,together with any
jute or provide for the defense of any action or proceeding,an insured shall costs,attorneys'fees and expenses incurred by the insured claimant which
secure to the Company the right to so prosecute or provide defense in the were authorized by the Company up to the time of payment and which the
action or proceeding,and all appeals therein,and permit the Company to use, Company is obligated to pay;or
at its option,the name of such insured for this purpose.Whenever requested (ii)to pay or otherwise settle with the insured claimant the loss or damage
by the Company,an insured,at the Company's expense,shall give the Com- provided for under this policy, together with any costs, attorneys' fees and
pany all reasonable aid (i) in any action or proceeding, securing evidence, expenses incurred by the insured claimant which were authorized by the
obtaining witnesses, prosecuting or defending the action or proceeding, or Company up to the time of payment and which the Company is obligated to
effecting settlement,and(ii)in any other lawful act which in the opinion of the pay.
Company may be necessary or desirable to establish the title to the estate or Upon the exercise by the Company of either of the options provided for in
interest or the lien of the insured mortgage, as insured. If the Company is paragraphs(b)(i)or b(ii),the Company's obligations to the insured under this
prejudiced by the failure of an insured to furnish the required cooperation,the policy for the claimed loss or damage,other than the payments required to be
Company's obligations to the insured under the policy shall terminate,includ- made, shall terminate, including any liability or obligation to defend, prose-
ing any liability or obligation to defend,prosecute,or continue any litigation, cute or continue any litigation.
with regard to the matter or matters requiring such cooperation.
5. PROOF OF LOSS OR DAMAGE 7. DETERMINATION AND EXTENT OF LIABILITY
In addition to and after the notices required under Section 3 of these Condi- This policy is a contract of indemnity against actual monetary loss or dam-
tions and Stipulations have been provided the Company, a proof of loss or age sustained or incurred by the insured claimant who has suffered loss or
damage signed and sworn to by the insured claimant shall be furnished to the damage reason of matters insured against by this policy and only to the
Company within 90 days after the insured claimant shall ascertain the facts extent herein
in described.
giving rise to the loss or damage.The proof of loss or damage shall describe (a)The liability of the Company under this policy to an insured lender shall
not exceed the(east of:
the defect in, or lien or encumbrance on the title, or other matter insured
against by this policy which constitutes the basis of loss or damage and shall (u the Amountnt of insurance
Insurance statede as defined in Section
Schedule these Conditions and
or, if applicable, the
state,to the extent possible,the basis of calculating the amount of the loss or amount 2 (c) of t
damage.If the Company is prejudiced by the failure of an insured claimant to Stipulations;
provide the required proof of loss or damage,the Company's obligations to (ii)the amount of the unpaid principal indebtedness secured by the
such insured under the policy shall terminate,including any liability or obliga- insured mortgage as limited or provided under Section 8 of these Conditions
tion to defend,prosecute,or continue any litigation,with regard to the matter and Stipulations or as reduced under Section 9 of these Conditions and
or matters requiring such proof of loss or damage. Stipulations, at the time the loss or damage insured against by this policy
In addition,an insured claimant may reasonably be required to submit to occurs,together with interest thereon;or
examination under oath by any authorized representative of the Company (iii)the difference between the value of the insured estate or interest as
and shall produce for examination,inspection and copying,at such reason- insured and the value of the insured estate or interest subject to the defect,
able times and places as may be designated by any authorized representative lien or encumbrance insured against by this policy.
of the Company, all records, books, ledgers, checks, correspondence and (b)In the event the insured lender has acquired the estate or interest in the
memoranda, whether bearing a date before or after Date of Policy, which manner described in Section 2(a)of these Conditions and Stipulations or has
reasonably pertain to the loss or damage.Further,if requested by any author- conveyed the title,then the liability of the Company shall continue as set forth
ized representative of the Company,the insured claimant shall grant its per- in Section 7(a)of these Conditions and Stipulations.
mission,in writing,for any authorized representative of the Company to exam- (c)The liability of the Company under this policy to an insured owner of the
ine, inspect and copy all records, books, ledgers, checks, correspondence estate or interest in the land described in Schedule A shall not exceed the
and memoranda in the custody or control of a third party,which reasonably least of:
pertain to the loss or damage.All information designated as confidential by an (i)the Amount of Insurance stated in Schedule A;or,
insured claimant provided to the Company pursuant to this Section shall not (ii)the difference between the value of the insured estate or interest as
be disclosed to others unless,in the reasonable judgment of the Company,it insured and the value of the insured estate or interest subject to the defect,
is necessary in the administration of the claim.Failure of an insured claimant lien or encumbrance insured against by this policy.
to submit for examination under oath, produce other reasonably requested (d)The Company will pay only those costs,attorneys'fees and expenses
information or grant permission to secure reasonably necessary information incurred in accordance with Section 4 of these Conditions and Stipulations.
EXCLUSIONS FROM COVERAGE
The following matters are expressly excluded from the coverage of this policy and the Company will not pay loss or damage,costs,attorneys'fees
or expenses which arise by reason of:
1. (a) Any law,ordinance or governmental regulation"(including but not limited to building and zoning laws,ordinances,or regulations)restrict-
ing,regulating,prohibiting or relating to(!),the occupancy,use,or enjoyment of the_land;(ii)the character,dimensions or location of any
improvement now or hereafter erected on the land;(iii)a separation in ownership or a change in the dimensions or area of the land or any
parcel of which the land is.or was a part; or(iv) environmental protection, or the effect of any violation of these laws, ordinances or
governmental regulations,except to the extent that a notice of the enforcement thereof ora notice of a defect,lien or encumbrance resulting
from a violation or alleged violation affecting the land has been recorded in the public records at Date of Policy.
(b) Any governmental police power not excluded by(a)above,except to the extent that a notice of the exercise thereof or a notice of a defect,
lien or encumbrance resulting from a violation or alleged violation affecting the land has been recorded in the public records at Date of
Policy.
2. Rights of eminent domain unless notice of the exercise thereof has been recorded in the public records at Date of Policy,but not excluding from
coverage any taking which has occurred priorto Date of Policy which would be binding on the rights of a purchaserfor value without knowledge.
3. Defects,liens,encumbrances,adverse claims or other matters:
(a) whether or not recorded in the public records at Date of Policy,but created,suffered,assumed or agreed to by the insured claimant;
(b) not known to the Company, not recorded in the public records at Date of Policy,but known to the insured claimant and not disclosed in
writing to the Company by the insured claimant prior to the date the insured claimant became an insured under this policy;
(c) resulting in no loss or damage to the insured claimant;
(d) attaching or created subsequent to Date of Policy;or
(e) resulting in loss or damage which would not have been sustained if the insured claimant had paid value for the insured mortgage or the
estate or interest insured by this policy.
4. Unenforceability of the lien of the insured mortgage because of the inability or failure of the insured at Date of Policy,orthe inability or failure of
any subsequent owner of the indebtedness,to comply with applicable doing business laws of the state in which the land is situated.
5. Invalidity or unenforceability of the lien of the insured mortgage,or claim thereof,which arises out of the transaction evidenced by the insured
mortgage and is based upon usury or any consumer credit protection or truth in lending law.
CONDITIONS AND STIPULATIONS
1. DEFINITION OF TERMS mortgage to be released from the obligation to purchase by virtue of a contrac-
The following terms when used in this policy mean: tual condition requiring the delivery of marketable title.
(a)"insured":the insured named in Schedule A,and,subject to any rights 2. CONTINUATION OF INSURANCE
or defenses the Company would have had against the named insured,those (a)After Acquisition of Title by Insured Lender.If this policy insures the
who succeed to the interest of the named insured by operation of law as owner of the indebtedness secured by the insured mortgage,the coverage of
distinguished from purchase including,but not limited to,heirs,distributees, this policy shall continue in force as of Date of Policy in favor of(i)such insured
devisees, survivors, personal representatives, next of kin, or corporate or who acquires all or any part of the estate or interest in the land by foreclosure,
fiduciary successors.The term"insured"also includes trustee's sale,conveyance in lieu of foreclosure,or other legal manner which
(i)the owner of the indebtedness secured by the insured mortgage and discharges the lien of the insured mortgage;(ii)a transferee of the estate or
each successor in ownership of the indebtedness except a successor who is interest so acquired from an insured corporation, provided the transferee is
an obligor under the provisions of Section 12(c) of these Conditions and the parent or wholly-owned subsidiary of the insured corporation, and their
Stipulations(reserving,however,all rights and defenses as to any successor corporate successors by operation of law and not by purchase,subject to any
that the Company would have had against any predecessor insured, unless rights or defenses the Company may have against any predecessor insureds;
the successor acquired the indebtedness as a purchaser for value without and (iii) any governmental agency or governmental instrumentality which
knowledge of the asserted defect,lien,encumbrance,adverse claim or other acquires all or any part of the estate or interest pursuant to a contract of
matter insured against by this policy as affecting title to the estate or interest in insurance or guaranty insuring or guaranteeing the indebtedness secured by
the land); the insured mortgage.
(ii)any governmental agency or governmental instrumentality which is an (b)After Conveyance of Title by an Insured.The coverage of this policy
insurer or guarantor under an insurance contract or guaranty insuring or shall continue in force as of Date of Policy in favor of an insured only so long as
guaranteeing the indebtedness secured by the insured mortgage,or any part the insured retains-an estate or interest in the land,or holds an indebtedness
thereof,whether named as an insured herein or not; secured by a purchase money mortgage given by a purchaser from the
(iii)the parties designated in Section 2(a)of these Conditions and Stipula- insured,or only so long as the insured shall have liability by reason of cove-
tions. nants of warranty made by the insured in any transfer or conveyance of the
(b)"insured claimant":an insured claiming loss or damage. estate or interest.This policy shall not continue in force in favor of any pur-
(c)"insured lender":the owner of an insured mortgage. chaser from an insured of either(i)an estate or interest in the.land,or(ii)an
(d)"insured mortgage": a mortgage shown in Schedule B,the owner of indebtedness secured by a purchase money mortgage given to an insured.
which is named as an insured in Schedule A. (c)Amount of Insurance.The amount of insurance after the acquisition or
(e)"knowledge" or "known": actual knowledge, not constructive knowl- after the conveyance by an insured lender shall in neither event exceed the
edge or notice which may be imputed to an insured by reason of the public least of:
records as defined in this policy or any other records which impart construc- (i)the amount of insurance stated in Schedule A;
tive notice of matters affecting the land. (ii)the amount of the principal of the indebtedness secured by the insured
(f)"land":the land described or referred to in Schedule A, and improve- mortgage as of Date of Policy, interest thereon, expenses of foreclosure,
ments affixed thereto which by law constitute real property.The term"land" amounts advanced pursuant to the insured mortgage to assure compliance
does not include any property beyond the lines of the area described or with laws or to protect the lien of the insured mortgage prior to the time,of
referred to in Schedule A,nor any right,title,interest,estate or easement in acquisition of the estate or interest in the land and secured thereby and
abutting streets,roads,avenues,alleys,lanes,ways or waterways,but noth- reasonable amounts expended to prevent deterioration of improvements,but
ing herein shall modify or limit the extent to which a right of access to and from reduced by the amount of all payments made;or
theland is insured by this policy. (iii)the amount paid by any governmental agency or governmental instru-
(g)"mortgage": mortgage, deed of trust, trust deed, or other security mentality,if the agency or instrumentality is the insured claimant,in the acqui-
instrument. sition of the estate or interest in satisfaction of its insurance contract or guar-
(h)"public records": records established under state statutes at Date of anty.
Policy for the purpose of imparting constructive notice of matters relating to 3. NOTICE OF CLAIM TO BE GIVEN BY INSURED CLAIMANT
real property to purchasers for value and without knowledge. An insured shall notify the Company promptly in writing(i)in case of any
(i)"unmarketability of the title":an alleged or apparent matter affecting the litigation as set forth in Section 4(a)below,(ii)in case knowledge shall come td
title to the land,not excluded or excepted from coverage,which would entitle a an insured hereunder of any claim of title or interest which is adverse to the
purchaser of the estate or interest described in Schedule A or the insured title to the estate or interest orthe lien of the insured mortgage,as insured,and
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