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COMMERCIAL PROPERTY PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS

Real Estate Purchase and Sale Agreement

COMMERCIAL PROPERTY PURCHASE AGREEMENT
 
AND JOINT ESCROW INSTRUCTIONS
 
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This Real Estate Purchase and Sale Agreement involves

TRI VALLEY CORP

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Title: COMMERCIAL PROPERTY PURCHASE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
Governing Law: California     Date: 4/24/2007
Industry: Oil and Gas Operations    

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EXHIBIT 10.5

 

COMMERCIAL PROPERTY PURCHASE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS

(NON-RESIDENTIAL)

(C.A.R. Form CPA, Revised 10/03)

 

Date:     May 24, 2006         , at                 Bakersfield                              , California      

 

 

1.

OFFER:

 

 

A.

THIS IS AN OFFER FROM ______ Jong Uk Byum                         ("Buyer"),
[  ] Individual(s) [  ] A Corporation [  ] A Partnership [  ] An LLC [  ] An LLP or
[  ] Other                 .

 

B.

THE REAL PROPERTY TO BE ACQUIRED is described as      220 Industrial St.           , Assessor's Parcel     No. 14038001, 14039005, situated in           Bakersfield            , County of           Kern           , California ("Property").

 

C.

THE PURCHASE PRICE offered is           Five Million Two Hundred Fifty Thousand           Dollars           $5,250,000             .

 

D.

CLOSE OF ESCROW shall occur on ___________ (date) (or [  ]    90    Days After Acceptance.)

 

2.

FINANCE TERMS: Obtaining the loans below is a contingency of this Agreement unless (i) either 2L or 2K is checked below; or (ii) otherwise agreed in writing. Buyer shall act diligently and in good faith to obtain the designated loans. Obtaining deposit, down payment, and closing costs is not a contingency. Buyer represents that funds will be good when deposited with Escrow Holder.

 

 

A.

INITIAL DEPOSIT : Buyer has given a deposit in the amount of
to the agent submitting the offer (or to [  ]), be given upon acceptance),
by Personal Check for [  ]                   ), made payable to        Title Co.
       
, which shall be held uncashed until Acceptance and then deposited
within 5 business days after Acceptance or [  ]                   , with Escrow
Holder, or [  ] Info Broker's trust account.

$     25,000.00 

 

B.

INCREASED DEPOSIT : Buyer shall deposit with Escrow Holder an
increased deposit in the amount of
within        Days After Acceptance, or [  ]                                      


$                      

 

C.

FIRST LOAN IN THE AMOUNT OF

$          T B D   

 

 

New First Deed of Trust in favor of [  ] Lender   [  ] Seller

 

 

OR

[  ] ASSUMPTION of (or [  ] "subject to") Existing First Deed of Trust

 

 

 

encumbering the Property, securing a note payable at maximum interest
of                       %, fixed rate, or            % initial adjustable rate with a
maximum interest rate of          %, balance due in              years,
amortized over             years (if checked: q and with a margin not to
exceed         % tied to the following Index          ). Buyer shall pay loan
fees/points not to exceed                                                                         .
Additional terms:                                                                                  
                                                         

 

 

D.

SECOND LOAN IN THE AMOUNT OF
NEW Second Deed of Trust in favor of [  ] Lender [  ] Seller

$          T B D   

 

OR

[  ] ASSUMPTION of (or [  ] "subject to") Existing Second Deed of Trust encumbering the Property, securing a note payable at maximum interest of _         % tied to the following index          ). Buyer shall pay loan fees/points not to exceed          .
Additional terms:                                                                                     
                                                         

 

 

E.

ADDITIONAL FINANCING TERMS:                                               

$                    

 

F.

BALANCE OF PURCHASE PRICE (not including costs of obtaining
loans and other closing costs) in the amount of
To be deposited with Escrow Holder within sufficient time to close
escrow.


$ 5,225,000.00

 

G.

PURCHASE PRICE (TOTAL)

$ 5,250,000.00

 

 

H.

LOAN APPLICATIONS: Within 7 (or [  ]    21    ) Days After Acceptance, Buyer shall provide Seller a letter from lender or mortgage loan broker stating that, based on a review of Buyer's written application and credit report, Buyer is prequalified or preapproved for any NEW loan specified above.

 

I.

VERIFICATION OF DOWN PAYMENT AND CLOSING COSTS : Buyer (or Buyer's lender or loan broker pursuant to 2H) shall, within 7 (or [  ]    21    ) Days After Acceptance, provide Seller written verification of Buyer's down payment and closing costs.

 

J.

LOAN CONTINGENCY REMOVAL: (i) Within 17 (or [  ]    21    ) Days After Acceptance Buyer shall, as specified in paragraph 17, remove the loan contingency, or cancel this Agreement: OR (ii) (if checked) [  ] loan contingency shall remain in effect until the designated loans are funded.

 

K.

APPRAISAL CONTINGENCY AND REMOVAL: This Agreement is (OR, if checked, [  ] is NOT) contingent upon the Property appraising at no less than the specified purchase price, if there is a loan contingency, at the time the loan contingency is removed (or, if checked, [  ] within 17 (or       ) Days After Acceptance), Buyer shall, as specified in paragraph 17, remove the appraisal contingency or cancel this Agreement. If there is no loan contingency, Buyer shall, as specified in paragraph 17, remove the appraisal contingency within 17 (or    30    ) Days After Acceptance.

 

L.

[  ] NO LOAN CONTINGENCY: (If checked): Obtaining any loan in paragraphs 2C, 2D, 2E or elsewhere in the Agreement, is not a contingency of this Agreement. If Buyer does not obtain the loan and as a result Buyer does not purchase the Property, Seller may be entitled to Buyer's other legal remedies.

 

M.

[  ] ALL CASH OFFER: (If checked): No loan is needed to purchase the Property. Buyer shall, within 7 (or [  ]         ) Days After Acceptances, provide Seller written verification of sufficient funds to close this transaction.

 

N.

SELLER FINANCING: For any Seller financing designated above, Buyer is to execute a note secured by a deed of trust in favor of Seller in the terms and conditions set forth in the attached addendum (C.A.R. Form SFA).

 

O.

ASSUMED OR "SUBJECT TO" FINANCING: Seller represents that Seller is not delinquent on any payments due on naly loans. Seller shall, within the time specified in paragraph 17, provide Copies of all applicable notes and deeds of trust, loan balances and current interest rates to Buyer. Buyer shall then, as specified in paragraph 17, remove this contingency or cancel this Agreement. Difference between estimated and actual loan balances shall be adjusted at Close Of Escrow by each down payment, impound accounts. If any, shall be assigned and charged to Buyer and credited to Seller. Seller is advised that Buyer's assumption of an existing loan may not release Seller from liability on that loan. If the Property is acquired subject to an existing loan, Buyer and Seller are advised to consult with legal counsel regarding the ability of an existing lender to call the loan due, and the consequences thereof.

 

3.

CLOSING AND OCCUPANCY:

 

 

A.

Seller-occupied or Vacant Units: Occupancy shall be delivered to Buyer at 5 [  ] AM [X] PM, [  ] on the date of Close of Escrow:
[  ] on                ; or [  ] no later than            Days After Close of Escrow. (C.A.R. Form PAA, paragraph 2) If transfer of title and occupancy do not occur at the same time, Buyer and Seller are advised to (i) enter into a written occupancy agreement; and (ii) consult with their insurance and legal advisors.

 

B.

Tenant-occupied Units: Possession and occupancy, subject to the rights of tenants under existing       , shall be delivered to Buyer on Close of Escrow.

 

C.

At Close Of Escrow, Seller assigns to Buyer any assignable warranty rights for items included in the sale and shall provide any available Copies of such warranties. Brokers cannot and will not determine the assignability of any warranties.

 

D.

At Close Of Escrow, unless otherwise agreed in writing, Seller shall provide keys and/or means to operate all locks, mailboxes, security systems, alarms and garage door openers. If Property is a condominium or located in a condominium or located in a common-interest subdivision, Buyer may be required to pay a deposit to the Owners' Association ("OA") to obtain keys to accessible OA facilities.

 

4.

SECURITY DEPOSITS: Security deposits, if any, to the extent they have not been applied by Seller in accordance with any rental agreement and current Law, shall be transferred to Buyer at Close Of Escrow. Seller shall notify each tenant, in compliance with the Civil Code.

5.

ALLOCATION OF COSTS: (If checked): Unless otherwise specified here, this paragraph only determines who is to pay for the report, inspection, test or service mentioned. If not specified here or elsewhere in this Agreement, the determined or who is to pay for any work recommended or identified by any such report, inspection, test or service shall be by the method specified in paragraph 17.

 

 

A.

INSPECTIONS AND REPORTS:

 

 

(1) [  ] Buyer [  ] Seller shall pay for sewer connections, if required by Law prior to Close of Escrow

 

 

(2) [  ] Buyer [  ] Seller shall pay to have septic or private sewage disposal system inspected

 

 

(3) [  ] Buyer [  ] Seller shall pay to have domestic wells drilled for water potabiity and productivity

 

 

(4) [  ] Buyer [X] Seller shall pay for natural hazard zone disclosure report prepared by Property ID

 

 

(5) [  ] Buyer [  ] Seller shall pay for the following inspection or report

 

 

(6) [  ] Buyer [  ] Seller shall pay for the following inspection or report

 

B.

GOVERNMENT REQUIREMENTS AND RETROFIT:

 

 

(1) [  ] Buyer [X] Seller shall pay for smoke detector installation and/or water heater bracing, if required by Law. Prior to Close Of Escrow, Seller shall provide Buyer a written statement of compliance in accordance with state and local Law, unless exempt.

 

 

(2) [  ] Buyer [X] Seller shall pay the cost of compliance with any other minimum mandatory government retrofit standards, inspections and reports if required as a condition of closing escrow under any Law.

 

 

(3) [  ] Buyer [X] Seller shall pay for installation of approved fire extinguisher(s), sprinkler(s), and          , if required by Law, which shall be installed prior to Close Of Escrow. Prior to Close Of Escrow Seller shall provide Buyer a written statement of compliance, if required by Law.

 

 

(4) [  ] Buyer [  ] Seller shall pay for natural hazard zone disclosure report prepared by Property ID

 

C.

ESCROW AND TITLE:

 

 

(1) [  ] Buyer [X] Seller shall pay escrow fee                                  

Escrow Holder shall be                                                

 

 

(2) [  ] Buyer [X] Seller shall pay for owner's title insurance policy specified in paragraph 12        Owner's title policy to be issued by                                               

(Buyer shall pay for any title insurance policy insuring Buyer's lender, unless otherwise agreed in writing.)

 

D.

OTHER COSTS:

(1) [  ] Buyer [X] Seller shall pay County transfer tax or transfer fee                   

 

 

(2) [  ] Buyer [  ] Seller shall pay City transfer tax or transfer fee                     

 

 

(3) [  ] Buyer [  ] Seller shall pay HOA transfer fees                              

 

 

(4) [  ] Buyer [  ] Seller shall pay HOA document preparation fees                    

 

 

(5) [  ] Buyer [  ] Seller shall pay for                                          

 

 

(6) [  ] Buyer [  ] Seller shall pay for                                           

 

6.

SELLER DISCLOSURES:

 

 

A.

NATURAL AND ENVIRONMENTAL DISCLOSURES: Seller shall, within the time specified in paragraph 17, if required by Law: (i) deliver to Buyer earthquake guides and questionnaire(s) and environmental hazards booklet (ii) even if exempt from the obligation to provide an NHD, disclose if the Property is located in a Special Flood Hazard Area Potential Flooding (Inundation) Area: Very High Fire Hazard Zone: State Fire Responsibility Area: Earthquake Fault Zone; Seismic Hazard Zone, and (iii) disclose any other zone as required by Law and provide any other information required to those zones.

 

B.

ADDITIONAL DISCLSOURES: Within the time specified in paragraph 17, Seller shall provide to Buyer, in writing, the following disclosures, documentation and information:

 

 

(1) RENTAL SERVICE AGREEMENT(S) : (i) All current leases, rental agreements, service contracts and other agreements pertaining to the operation of the Property;

 

 

(2) INCOME AND EXPENSE STATEMENTS: The books and records, including a statement of income and expense for the 12 months preceding Acceptance. Seller represents that the books and records are those maintained in the ordinary and normal course of business, and used by Seller in the compensation of federal and state income tax returns.

 

 

(3) [  ] TENANT ESTOPPEL CERTIFICATES: (If checked) Tenant estoppel certificates (C.A.R. Form TEC) completed by Seller or Seller's agent and signed by tenants, acknowledging: (i) that tenants' rental or lease agreements are unmodified and in full force and effect (or if modified, stating all such modifications); (ii) that no            defaults exist; and (iii) stating the amount of any prepaid rent or security deposit.

 

 

(4) SURVEYS, PLANS AND ENGINEERING DOCUMENTS: Copies of surveys, photos, specifications and engineering documents, if any, in Seller's possession or control.

 

 

(5) PERMITS: If in Seller's possession. Copies of all permits and approvals concerning the Property, obtained from any governmental entity, including but not limited to, certificates of occupancy, conditional use permits, development plans, and license and permits pertaining to the operation of the Property.

 

 

(6) STRUCTURAL MODIFICATIONS: Any known structural additions or alterations to, or the installation, alterations, repair or replacement of, significant components of the structure(s) upon the Property.

 

 

(7) GOVERNMENTAL COMPLIANCE: Any improvements, additions, alterations, or repairs made by Seller, or known to Seller to have been made without required governmental permits, final inspections, and approvals.

 

 

(8) VIOLATION NOTICES: Any notice of violations of any Law            or issued against the Property and actually known to Seller.

 

 

(9) MISCELLANEOUS ITEMS: Any of the following, if actually known to Seller: (i) any current pending lawsuit(s), investigation(s), inquiry(ies), action(s), or other proceeding(s) affecting the Property or the right to use and occupy it (ii) any                       or materialman's            affecting the Property; and (ii) that any tenant of the Property is the subject of a bankruptcy.

 

7.

[X] ENVIRONMENTAL SURVEY (if checked): Within              Days After Acceptance, Buyer shall be provided a phase one environmental survey report paid for and obtained by [  ] Buyer [X] Seller. Buyer shall then, as specified in paragraph 17, remove the contingency or cancel the Agreement.

8.

CONDOMINIUM/PLANNED UNIT DEVELOPMENT DISCLOSURES:

 

 

A.

SELLER HAS: 7 (or [  ]     ) Days After Acceptance to disclose to Buyer whether the Property is a condominium, or is located in a planned unit development or other common interest subdivision

 

B.

If the Property is a condominium or is located in a planned unit development or other common interest subdivision, Seller has 3 (or [  ]     ) Days After Acceptance to request from the OA (C.A.R. Form HOA): (i) Copies of any documents required by Law; (ii) disclosure of any pending or anticipated claim or litigation by or against the OA; (iii) a statement containing the location and number of designated parking and storage spaces; (iv) Copies of the most recent 12 months of OA minutes for regular and special meetings; and (v) the names and contact information of all OAs governing the Property (collectively, "CI Disclosures"). Seller shall itemize and deliver to Buyer all CI Disclosures received from the HOA and any CI Disclosures in Seller's possession. Buyer's approval of Cl Disclosures is a contingency of this Agreement as specified in paragraph 14.

 

9.

SUBSEQUENT DISCLOSURES: In the event Seller, prior to Close of Escrow, becomes aware of adverse conditions materially affecting the Property, or any material inaccuracy in disclosures, information or representations previously provided to Buyer of which Buyer is otherwise unaware. Seller shall promptly provide a subsequent or amended disclosure or notice in writing, covering those items. However, a subsequent or amended disclosure shall not be required for conditions and material inaccuracies disclosed in reports ordered and paid for by Buyer.

10.

CHANGES DURING ESCROW:

 

A. Prior to Close of Escrow, Seller may only engage in the following acts. (Proposed Changes). Subject to Buyer's rights in paragraph 17; (i) rent or lease any vacant unit or other part of the premises; (ii) alter, modify, or            any existing rental or lease agreement; (iii) enter into, alter, modify or extend any service contract(s); or (iv) change the status of the condition of the Property.

 

B. At least 7 (or [  ]     ) days prior to any proposed Changes, Seller shall give written notice to Buyer of any Proposed Changes.

11.

CONDITIONS AFFECTING PROPERTY:

 

 

A.

Unless otherwise agreed: (1) the Property is sold (a) in its PRESENT physical condition as of the date of Acceptance and (b) subject to Buyer's Investigation rights; (ii) the Property, including pool, spa, landscaping and grounds, is to be maintained in substantially the same condition as on the date of Acceptance; and (iii) all debris and personal property not included in the sale shall be removed by Close Of Escrow.

 

B.

SELLER SHALL, within the time specified in paragraph 17, DISCLOSE KNOWN MATERIAL FACTS AND DEFECTS affecting the Property, including known insurance claims within the past five years, AND MAKE OTHER DISCLOSURES REQUIRED BY LAW.

 

C.

NOTE TO BUYER: You are strongly advised to conduct investigations of the entire Property in order to determine its present condition since Seller may not be aware of all defects affecting the Property or other factors that you consider important. Property improvements may not be built according to code, in compliance with current Law, or have had permits issued.

 

D.

NOTE TO SELLER: Buyer has the right to inspect the Property and, as specified in paragraph 17, based upon information discovered in those inspections: (i) cancel this Agreement; or (ii) request that you make Repairs or take other action.

 

12.

ITEMS INCLUDED AND EXCLUDED:

 

 

A.

NOTE TO BUYER AND SELLER: Items listed as included or excluded in the MLS, flyers or marketing materials are not included in the purchase price or excluded from the sale unless specified in 12B or C.

 

B.

ITEMS INCLUDED IN SALE:
(1) All EXISTING fixtures and fittings that are attached to the Property;
(2) Existing electrical, mechanical, lighting, plumbing and heating fixtures, ceiling fans, fireplace inserts, gas logs and grates, solar systems, built-in appliances, window and door screens, awnings, shutters, window coverings, attached floor coverings, television antennas, satellite dishes, private integrated telephone systems, air coolers conditioners, pool/spa equipment, garage door openers remote controls, mailbox, in-ground landscaping, trees/shrubs, water softeners, water purifiers, security systems/alarms;
(3) a complete inventory of all personal property of Seller currently used in the operation of the Property and included in the purchase price shall be delivered to Buyer within the time specified in paragraph 17.
(4) Seller represents that all items included in the purchase price, unless otherwise specified, are owned by Seller.
(5) All items included shall be transferred free of liens and without Seller warranty.
(6) As additional security for any note in favor of Seller for any part of the purchase price, Buyer shall execute a United States-1 Financing Statement to be filed with the Secretary of State, covering the personal property included in the purchase, replacement thereof, and insurance proceeds.

 

C.

ITEMS EXCLUDED FROM SALE:                                                                               
                                                                                                                                              

 

13.

BUYER'S INVESTIGATION OF PROPERTY AND MATTERS AFFECTING PROPERTY:

 

 

A.

Buyer's acceptance of the condition of, and any other matter affecting the Property is a contingency of this Agreement, as specified in this paragraph and paragraph 17. Within the time specified in paragraph 17, Buyer shall have the right, at Buyer's expense unless otherwise agreed, to conduct inspections, investigations, tests, surveys and other studies ("Buyer investigations") including, but not limited to, the right to: (i) inspect for lead-based paint and other lead-based paint hazards; (ii) inspect for wood destroying pests and organisms; (iii) confirm the insurability of Buyer and the Property; and (iv) satisfy Buyer as to any matter of concern to Buyer, Without Seller's prior written consent, Buyer shall neither make nor cause to be made; (i) invasive or destructive Buyer investigations or; (ii) inspections by any governmental building or zoning inspector, or government employee, unless required by Law.

 

B.

Buyer shall complete Buyer Investigations and, as specified in paragraph 17, remove the contingency or cancel this Agreement. Buyer shall give Seller, at no cost, complete Copies of all Buyer Investigation reports obtained by Buyer. Seller shall make the Property available for all Buyer Investigations. Seller shall have water, gas, electricity and all operable pilot lights on for Buyer's Investigations and through the date possession is made available to Buyer.

 

14.

REPAIRS: Repairs shall be completed prior to final verification of condition unless otherwise agreed in writing. Repairs to be performed at Seller's expense may be performed by Seller or through others, provided that the work complies with applicable Law, including governmental permit, inspection and approval requirements. Repairs shall be performed in a good, skillful manner with materials of quality and appearance comparable to existing materials. It is understood that exact restoration of appearance or cosmetic items following all Repairs may not be possible. Seller shall: (i) obtain receipts Repairs performed by others; (ii) prepare a written statement indicating the Repairs performed by Seller and the date of such Repairs; and (iii) provide Copies of receipts and statements to Buyer prior to final verification of condition.

15.

BUYER INDEMNITY AND SELLER PROTECTION FOR ENTRY UPON PROPERTY: Buyer shall; (i) keep the Property free and clear of liens; (ii) Repair all damage arising from Buyer investigations; and (iii) indemnify and hold Seller harmless from all resulting liability, claims, demands, damages and costs. Buyer shall carry, or Buyer shall require anyone acting on Buyer's behalf to carry policies of liability, workers' compensation and other applicable insurance, defending and protecting Seller from liability for any injuries to persons or property occurring during any Buyer Investigations or work done on the Property at Buyer's direction prior to Close Of Escrow. Seller is advised that certain protections may be afforded Seller by recording a "Notice of Non-Responsibility" (C.A.R. Form NNR) for Buyer Investigations and work done on the Property at Buyer's direction. Buyer's obligations under this paragraph shall survive the termination of this Agreement.

16.

TITLE AND VESTING:

 

 

A.

Within the time specified in paragraph 17, Buyer shall be provided a current preliminary title report, which is only an offer by the title insurer to issue a policy of the incurrence and may not contain every item affecting this. Buyer's review of the preliminary report and any other matters which may affect title are a contingency of this Agreement as specified in paragraph 17.

 

B.

Title is taken in its present condition subject to all encumbrances, easements, covenants, conditions, restrictions, rights and other matters, whether of record or not, as of the date of Acceptance except: (i) monetary liens of record unless Buyer is assuming those obligations or taking the Prop


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