THIS PURCHASE AGREEMENT (the "Agreement") is made this first day of October, 2002 between the City of Sunnyvale, a charter city ("City" @ or "Buyer"), and Melvin Shimada ("Owner" or "Seller"), with reference to the following:

Owner owns a parcel of real property located in Santa Clara County, commonly described as 239 Commercial Street, Sunnyvale, California. This parcel is recorded in the County Tax Assessor roll as APN 205-34-007.

The City is in need of expansion at its Municipal Corporation Yard (the "Project").

The City desires to acquire the property described above in order to construct the Project. In the absence of this Agreement, it would have been necessary for the City to acquire the property by prosecuting an eminent domain action to acquire the property.

The "Effective Date" hereof shall be the date on which all parties have executed and delivered an original of this Purchase Agreement into Escrow. In the event this Agreement has not been deposited into escrow on or before October 18, 2002, it shall be null and void with no further contractual obligations between the parties.

Section 1. IDENTIFICATION OF THE PROPERTY.

The property that will be acquired pursuant to this Agreement consists of the real property in the City of Sunnyvale, Santa Clara County, California, described in the attached Exhibit A (the "Property").

The sale does not include any personal property, but in the event that any tenant shall, upon departure, leave behind any personal property of any type or kind, City shall take responsibility for such matters without recourse to Owner.

Section 2. PURCHASE AND SALE.

Owner agrees to sell the Property to the City and the City agrees to purchase the Property from Owner, subject to the terms and conditions set forth in this Agreement.

Section 3. PURCHASE PRICE.

The purchase price shall be two million five hundred thirty thousand dollars and no cents. ($2,530,000.00).

Section 4. PAYMENT OF PURCHASE PRICE, DEPOSIT.

The purchase price shall be paid in cash at the Closing (as defined below). Promptly following the execution of this Agreement, the City shall deposit the sum of One Hundred Thousand Dollars ($100,000.00) (the "Deposit") with the Title Company (as defined below in section 5). At the Closing, the Deposit will be applied or credited to payment of the purchase price.

If this Agreement is terminated prior to the Contingency Approval Date defined in Section 8(a), the Title Company shall return the Deposit to the City, provided, however, if after said Contingency Approval Date the City fails to deliver the purchase price to the Title Company or refuses to accept conveyance of the Property and the City is otherwise obligated under this Agreement to so deliver or accept conveyance, then the Deposit shall be paid to Owner as liquidated damages. If the Contingency Approval Date passes without termination by City, then the Title Company shall forthwith, and without need for further instructions or approvals for either party, disburse and release the Deposit to Owner upon Owner’s written request.

THE CITY AND OWNER HAVE AGREED TO SAID LIQUIDATED DAMAGES BECAUSE IT WOULD BE EXTREMELY DIFFICULT OR IMPRACTICAL TO DETERMINE OWNER’S ACTUAL DAMAGES IN THE EVENT OF SUCH A DEFAULT BY THE CITY AND BY THEIR INITIALS BELOW THE CITY AND OWNER INDICATE THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION.

 Section 5. OPENING ESCROW.

Promptly following execution of this Agreement, the parties shall open an escrow with the San Jose commercial office of Chicago Title Company (the "Title Company") located at 110 W. Taylor Street, San Jose, CA 95110, fax (408) 282-1404, phone (408) 292-4212, escrow officer Sharman McKenna, for conveyance of the Property to the City. The parties shall provide escrow instructions to the Title Company consistent with this Agreement.

Section 6. CLOSE OF ESCROW AND CONDITIONS TO CLOSE OF ESCROW.

The escrow for the conveyance of the Property shall close (the "Closing") as specified in Section 9 of this Agreement. At the Closing, the Owner shall convey the Property to the City and the City shall pay the purchase price to the Owner. At the Closing the Property shall be conveyed to the City by grant deed.

The following are conditions to the closing which conditions may be waived solely by the City:

Section 7. STATUS OF TITLE.

Owner shall cause the title to the Property to be such that at the Closing, the Title Company is prepared to deliver to the City through escrow, a standard coverage CLTA policy of title insurance in the amount of $2,530,000 insuring fee title to the Property vested in the City free and clear of any liens, encumbrances and interests except as defined below.

Within five (5) days of execution hereof, Owner will supply City with a Preliminary Title Report generated by the Title Company. Within ten (10) days after receipt of such Report, City will give notice of disapproval of any exceptions proposed in such Report. All exceptions shown therein except those disapproved by City will become "Approved Exceptions". In the event City disapproves an exception in such Report, Owner shall have until the Contingency Approval Date to cause removal of such exception, and if Owner cannot do so, and City continues to be unwilling to approve such exception, then Owner may by written notice terminate this Agreement.

Section 8. INSPECTION OF PROPERTY.

(a) For thirty (30) calendar days after the Effective Date (the "Contingency Approval Date"), the City shall have the right to terminate this Agreement by giving written notice to Owner of termination indicating that the Property does not meet the approval of the City. To facilitate the City's determination pursuant to this Section 8, the City and its representatives, contractors and consultants shall have the right, upon reasonable notice to Owner, to enter the Property for the purposes of inspection or testing. The City shall repair any damage to the Property resulting from such inspection or testing and shall indemnify and defend Owner against any claims for damages to person or property arising out of the entry on the Property pursuant to this Section 8 of the City and its representatives, contractors and consultants or the activities carried out during such entry.

(b) City shall promptly deliver copies of all written reports generated from the Section 8(a) inspections to Owner.

(c) Should City terminate this Agreement pursuant to and within the time frames set forth in paragraph (a) above, Title Company shall immediately return the full Deposit to City. Any costs incurred by either party up to such time shall be such party's sole responsibility, except that City shall have the responsibility to repair and indemnify as set forth in Section 8(a).

Section 9. ESCROW; COSTS AND PRORATIONS; POSSESSION.

(a) Prior to the Closing, Owner and City shall make the deliveries into Escrow set forth in this Section 9.

(b) Owner hereby covenants and agrees to deliver or cause to be delivered to the Title Company on or prior to the Closing, the following instruments and documents:

(i) a good and sufficient grant deed, in a form reasonably acceptable to the City, properly executed and acknowledged by Owner in favor of City, the delivery and recordation of which shall vest in City fee title in and to the Property;

(ii) FIRPTA certificate, duly and validly executed by Owner in favor of City, certifying that Owner is not a "foreign person", as that term is defined in Section 1445(f) of the Internal Revenue Code of 1986, as amended;

(iii) a duly and validly executed California Franchise Tax Board Form 597-W by Seller in favor of City as required under California Revenue and Taxation Code Section 18662; and

(iv) such proof of Owner's authority and authorization to enter into this Agreement and the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Owner to act for and bind Owner as may be reasonably required by the Title Company.

(c) The City hereby covenants and agrees to deliver or cause to be delivered to the Title Company on or prior to the Closing, the following instruments and documents:

(i) such proof of City's authority and authorization to enter into this Agreement and the transaction contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of City to act for, bind City and accept conveyance of the Property as may be reasonably required by the Title Company;

(ii) the purchase price and any additional funds necessary for Closing costs.

(d) Unless the parties otherwise mutually agree in writing to an extension, subject to the fulfillment of all conditions precedent set forth in Section 6 and title being in the condition specified in Section 7 above, the Closing shall occur on a date set on ten (10) days written notice to City and Title Company by Owner, not earlier than sixty days after the Effective Date hereof, and not later than one hundred twenty days after such Effective Date.

(e) At the Closing, the Title Company shall record the grant deed conveying the Property to the City, issue to the City the title policy referred to in Section 7 above, deliver the executed Owner Lease to the City and a copy to Owner, and deliver cash in the amount of the purchase price to Owner or to such person or entity as an Owner may direct.

(f) The following costs and expenses shall be borne or prorated as follows, at the Closing:

(i) Property taxes shall be prorated at the Closing based on the most current real property tax bill available, including any escaped property taxes which may be assessed after the Closing pertaining to the period prior to transfer of title to City, regardless of when notice thereof is delivered or who receives such notice.

(ii) Rents shall be prorated as of the date of the Closing. Owner shall credit the City all tenant security deposits that it holds.

(iv) All installments of any bond or assessment that is a lien (determined as of the Closing) which installments become due before Closing shall be paid by Owner on or before Closing. In no event will Owner be required to prepay any bonds or assessments on the Property.

(v) City shall pay all title insurance costs and premiums charged in connection with the issuance of the title policy referred to in Section 7 above, including but not limited to any CLTA or ALTA policy.

(vi) All property transfer taxes, if any, shall be paid by the City.

(vii) All escrow fees shall be paid by City.

(viii) Owner and the City shall each pay their own legal fees and expenses incurred in connection with the transaction contemplated herein.

(ix) Owner shall bear all costs of causing the condition of title to the Property to be as set forth in Section 7 above.

(x) Payments under any service contracts related to the Property that the City elects to continue after the Closing shall be prorated as of the date of the Closing.

(g.) Right to exchange. Buyer acknowledges that Seller may desire to effect either a concurrent or a delayed tax deferred exchange of real property pursuant to either Section 1031 of the Internal Revenue Code or Section 1033 of the Internal Revenue Code. If Seller elects to effect such an exchange, Buyer shall cooperate with Seller in this regard, provided, however, that Seller shall bear Buyer's costs and expenses in connection therewith and Seller shall indemnify and hold Buyer harmless from any claims, costs, or liabilities against Buyer, including attorney's fees, arising out of or in connection with Buyer's cooperation with Seller's exchange transaction. Notwithstanding the foregoing, City shall pay and Owner shall not indemnify with regard to any attorney’s fees of City in reviewing and dealing with ordinary and necessary documentation of an exchange.

Section 10. POSSESSION.

Owner shall deliver possession of the Property to the City at the Closing, subject to the Leases.

Section 11. CONDITION OF FEE PARCELS.

The City is acquiring the Property "AS IS", in its present state and condition as of the date of this Agreement, without representation by Owner or its representatives as to any matter, except as expressly set forth herein. Provided Owner has fairly disclosed his knowledge of Hazardous Materials (as defined below), Owner shall have no continuing responsibility or liability to the City with regard to Hazardous Materials on, in, or under the Property, and City accepts the Property AS-IS in regard to Hazardous Materials.

Section 12. OWNER'S REPRESENTATIONS.

Owner hereby represents that, as of the date of this Agreement and as of the Closing:

(a) To the best of Owner's knowledge, there are no Hazardous Materials on the Property which exceed applicable regulatory agency limits such that the owner of the property is legally obligated to remediate or clean up the Property except as disclosed in Exhibit C. For the purposes of this Agreement, the term "Hazardous Materials" shall include, without limitation any hazardous or toxic materials, substances or wastes, such as (i) substances defined as "hazardous substances", "hazardous materials" or "toxic substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (42 USC Section 9601, et seq.) and/or the Hazardous Materials Transportation Act (49 USC Section 1801, et seq.), as either of such acts are amended from time to time; (ii) those materials identified in Sections 66680 through 66685 and Sections 66693 through 66740 of Title 22 of the California Administrative Code, Division 4, Chapter 30, as amended from time to time; (iii) those materials defined in Section 25501(j) of the California Health and Safety Code, as amended from time to time, (iv) any materials, substances or wastes which are toxic, ignitable, corrosive or reactive and which are regulated by any local governmental authority, any City of the State of California or any City of the United States Government; (v) asbestos, petroleum and petroleum based products, urea formaldehyde foam insulation, polychlorinated biphenyls (PCBs), and freon and other chlorofluorocarbons; and (vi) those substances defined as any of the foregoing in the regulations adopted and publications promulgated pursuant to each of the aforesaid laws.

(b) There are no leases of or rights to possession to the Property other than the leases described in Exhibit B to this Agreement. (The leases described in Exhibit B are referred to herein as the "Leases").

(c) The information set forth in Exhibit B regarding the Leases (which information includes the name of tenant, approximate amount of space leased, term of lease, options to extend the term, monthly rent, and security deposit) is true and correct as to all tenants other than the City.

Section 13. FULL SETTLEMENT.

Owner understands and agrees that the amounts to be paid to Owner pursuant to Section 3 of this Agreement are in full settlement of all claims, Owner has made or could have made against the City in connection with or related to the City's acquisition of the Property above including but not limited to claims for compensation for the Property, improvements thereon or interests therein, severance damages, loss of goodwill, inverse condemnation, unreasonable precondemnation activities, interest, costs, litigation expenses, and relocation expenses under the Relocation Law (Government Code Sections 7260 et seq.). Except as provided in this Agreement, Owner shall not be entitled to receive and hereby waives all rights to receive any compensation, damages or other amounts by reason of such claims.

Section 14. MISCELLANEOUS PROVISIONS.

(a) This Agreement contains the entire agreement of the parties; any previous understandings of the parties regarding the subject matter hereof are expressly declared null and void and are superseded hereby.

(b) If any term or provision of this Agreement shall, to any extent, be held invalid or unenforceable, the remainder of this Agreement shall not be affected thereby.

(c) No waiver or any breach of any covenant or provision herein contained shall be deemed a waiver of any other covenant or provision herein contained, and no waiver shall be valid unless in writing and executed by the waiving party. No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act.

(d) Headings at the beginning of each paragraph and subparagraph are solely for the convenience of the parties and are not a part of and shall not be used to interpret this Agreement, the singular form shall include plural and the masculine shall include the feminine and vice versa. This Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties have prepared the same. Unless otherwise indicated, all references to paragraphs are to this Agreement. All exhibits referred to in this Agreement are attached hereto and incorporated herein by this reference.

(e) Each and every representation, warranty, covenant and obligation of Owner shall not merge with transfer of title, but shall survive the Closing.

(f) The parties acknowledge they each have received a copy of Seller's broker's disclosure statement, attached hereto for convenience.

(g) This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which taken together shall constitute but one and the same instrument. The execution of this Agreement shall be deemed to have occurred, and this Agreement shall be enforceable and effective, only upon the complete execution of this Agreement by Owner and City.

(h) Time is of the essence of each and every condition herein, and of each term and provision herein.

(i) In any litigation arising under this Agreement, the prevailing party shall be entitled to recover its reasonable attorneys' fees from the other party.

(j) This Agreement shall be governed and construed in accordance with California law.

If the day for performance under any time period specified in this Agreement shall fall on a Saturday, Sunday or holiday observed by the federal government or the State of California, then the time for performance under such time period shall automatically be extended to the next business day. Further, if either party so requests after the complete execution of this Agreement, the parties shall reduce to writing those dates related to performance under this Agreement capable of being ascertained upon such execution.

(k) On Closing, Seller shall pay a Two Percent (2%) commission to be split evenly (1% to each) between Collier’s International and Grubb and Ellis, who are agreed to be representatives of Seller only. Seller shall indemnify, defend and hold the City harmless against any claims from the brokers for or related to their commission.

WHEREFORE, the parties have executed this Agreement on the date written above.

EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY

All that certain real property situated in the City of Sunnyvale, County of Santa Clara, State of California, described as follows:

All of Lot 11 as shown upon that certain map entitled "Tract No. 1025 Industrial Acres Unit No. 1" which Map was filed for record in the Office of the Recorder of the County of Santa Clara, State of California, on August 18, 1952 in Book 40 of Maps, at Page 11.

EXHIBIT B
DESCRIPTION OF LEASES

Return to RTC# 02-398 Attachment A

Return to RTC# 02-398