Acquisition And Development Agreement

This Acquisition and Development Agreement (the "Agreement) is entered into on this ___ day of November, 1996 by and between THE GYMBOREE CORPORATION, a Delaware corporation (hereinafter "TGC"), and CARL D. PANATTONI and WICKLAND PROPERTIES) a California corporation (hereinafter individually and collectively, "Developer").


RECITALS


WHEREAS:


A. Developer is the owner of a certain tract of land in Dixon, California
as generally outlined on the attached Exhibit A (the "Tract"); and


B. Developer intends to develop the Tract into a business park to be
called the Dixon Commerce Center (the "Business Park") for lease or
sale for purposes of industrial, warehouse, distribution, research and
development, and similar uses; and


C. TGC wishes to locate the Project in the Business Park on certain terms
and conditions.


NOW THEREFORE, in consideration of the mutual promises and covenants as incorporated herein, the parties do agree as follows:


1. DEFINITIONS


"Agreement." This Acquisition and Development Agreement.


"Closing" or "Close of Escrow." Recordation of the Deed.


"Closing Date." That date upon which Closing occurs, in no event to occur earlier than five (5) business days after completion of all of the conditions of this Agreement.


"Code." The Internal Revenue Code of 1986 as amended.


"Construction Contract." The Agreement between TGC (as the "Owner") and Developer (as the "Design/Builder") in a form to be mutually agreed upon by the parties hereto within thirty (30) days after execution of this Agreement and attached hereto as Exhibit E and made a part hereof by reference.


"Contingency Period." The period of time commencing on the date of execution hereof (the "Execution Date") and ending at 5:00 p.m. PDT on the fifteenth (15th) business day after the Execution Date.


"Deed." The Grant Deed conveying title to the Property as provided Section 3.5(a).


"Deposit." An amount equal to Twenty Thousand and no/100 Dollars ($20,000).


-1-


2


"Developer Offsite Improvements." Infrastructure improvements to be constructed by Developer in connection with the development of the Business Park consisting of storm drainage to the property line of the Property in accordance with plans and specifications reasonably approved by TGC, sufficient for the City of Dixon to issue a certificate of occupancy upon completion of the building and exterior areas on the Property, without the necessity for completion of any further Offsite Improvements. In no event shall the Developer Offsite Improvements include either the Preliminary Offsite Improvements or the Secondary Offsite Improvements as defined herein.


"Disapproved Exceptions." The exceptions to title described in the Preliminary Report to which TGC objects by written notice to Developer within the Review Period.


"East Street. That certain street running from Vaughn Road along the eastern boundary of the Property as shown on Exhibit C attached hereto. This is a definition for identification purposes only in this Agreement and does not imply that the name of the street shall be other than as may be mutually agreeable to Developer and TGC.


"Environmental Laws." (See "Hazardous Materials" below.)


"Escrow." That certain escrow to be opened with the Escrow Holder in respect of this Agreement and the Closing thereof


Escrow Holder. Chicago Title Company, 388 Market Street, 13th Floor, San Francisco, California 94111; telephone (415) 788-0871, fax (415) 956-2175.


"Force Majeure." As used in this Agreement, the term "Force Majeure" means delay resulting from causes beyond a party's reasonable control (excluding financial reasons) such as strikes, walkouts or other labor disputes, acts of God, inability to obtain labor, materials or merchandise, governmental restrictions, regulations or controls, judicial orders, war, riot or civil commotion, fire or casualty. The party obligated to perform shall give prompt notice to the other as soon as reasonably possible after the onset of such delay stating the cause and an estimate of the duration thereof.


"Hazardous Materials." Any wastes, materials or substances (whether in the form of liquids, solids or gases, and whether or not air-borne), which are or are deemed to be pollutants or contaminants, or which are or are deemed to be hazardous, toxic, ignitable, reactive, corrosive, dangerous, harmful or injurious, or which present a risk, to public health or to the environment, or which are or may become regulated by or under the authority of any applicable local, state or federal laws, judgments, ordinances, orders, rules, regulations, codes or other governmental restrictions, guidelines or requirements, any amendments or successor(s) thereto, replacements thereof or publications promulgated pursuant thereto (collectively "Environmental Laws").


"Land Entitlement Permit(s)." Any and all permits or approvals required by any governmental authority precedent to TGC's ability to legally construct the Project upon the Property including, without limitation, zoning, general plan designation, design or architectural review and approval, zoning variance, planned unit development approval, environmental


-2- 3


impact report, building permit, subdivision map, sewer permit, water permit, or any permit required by any governmental agency or authority in order to construct the Project as designed by TGC.


"Monetary Exceptions." Exceptions to fee simple absolute title to the Property which are removable by the payment of a liquidated sum of money.


"Nonmonetary Exceptions." Exceptions to fee simple absolute title to the Property which are not removable by the payment of a liquidated sum of money.


"Offsite Improvements." The Developer Offsite Improvements, Preliminary Offsite Improvements and Secondary Offsite Improvements shall be known collectively herein as the "Offsite Improvements".


"Preliminary Offsite Improvements." All common infrastructure "improvements constructed or to be constructed in connection with the development of the Business Park including construction, installation, paving and lighting of Vaughn Road (and including the Vaughn Road Project, as defined in Section 5.3(a) hereof), and provision of gas, sewer, electricity, telephone and water to the property line of the Property (including provision of sewer and water on East Street in general conformance with those drawings furnished by Developer attached hereto and incorporated herein as Exhibit J), all in accordance with plans and specifications reasonably approved by TGC within fifteen (15) business days after receipt thereof, all sufficient for the City of Dixon to issue a certificate of occupancy upon completion of the building and exterior areas on the Property, without the necessity for completion of any further Offsite Improvements. In no event shall the Preliminary Offsite Improvements include either the Developer Offsite Improvements or the Secondary Offsite Improvements as defined herein.


"Preliminary Report." A report of the status of title issued by Escrow Holder's title insurance divisions describing the state of title to the Property.


"Project." TGC's distribution facility to be constructed and located on the Property.


"Project Plans." Plans and specifications for construction of the Project on the Property prepared under the direction of TGC in accordance with the guideline specifications attached hereto as Exhibit D, and the Construction Contract.


"Property." All that certain real property described in Exhibit B and delineated in Exhibit C attached hereto and made a part hereof by reference, along with all mineral rights, easements, hereditaments and appurtenances pertaining thereto.


"Purchase Price." An amount equal to Seven Hundred Ninety-Three Thousand Five Hundred and no/100 Dollars ($793,500).


"Restrictions." That certain declaration of restrictions, or covenants, conditions and restrictions which will encumber the Tract and which shall govern the use, design,


-3- 4


maintenance, architecture, construction and other related features of the appearance and operation of the Business Park.


"Review Period." A period ending on the last to occur of fifteen (15) business days from and after (i) the date TGC receives the Preliminary Report together with copies of all instruments giving rise to the exceptions contained therein, or (ii) the date TGC receives notice from the Developer that the tentative subdivision map for the Business Park has been approved by the City of Dixon.


"Secondary Offsite Improvements." Construction, installation, paving, lighting and hydrants in the streets of the Business Park (other than as set forth above under the Preliminary Offsite Improvements) including, without limitation, East Street, all in accordance with plans and specifications reasonably approved by TGC within fifteen (15) business days of receipt thereof. In no event shall the Secondary Offsite Improvements include either the Developer Offsite Improvements or the Preliminary Offsite Improvements as defined herein.


"Situs State." The State of California.


2. PROPERTY


Subject to all of the terms, conditions and provisions of this Agreement, and for the consideration herein set forth, Developer hereby agrees to convey and TGC hereby agrees to accept conveyance of the Property.


3. ESCROW


3.1. Opening of Escrow. Within two (2) business days after the execution of this Agreement by both parties, 2 signed copy of this Agreement shall be deposited by TGC with the Escrow Holder in order to open the Escrow. References herein to the opening of Escrow shall mean the date that a copy of this Agreement is deposited with Escrow Holder. By such deposit, Escrow Holder is hereby authorized and instructed to act in accordance with the provisions of this Agreement, which Agreement together with Escrow Holder's standard general provisions, shall constitute Escrow Holder's escrow instructions. Developer and TGC shall each deposit such other instruments and funds as are necessary to close the Escrow and complete the conveyance of the Property in accordance with the terms hereof.


3.2, The Closing Date, The Escrow is scheduled to close at the offices of the Escrow Holder after satisfaction of all conditions set forth in this Agreement unless extended by the mutual written agreement of both parties. Time is specifically a matter of essence with respect to the Closing Date, which may not be extended except by mutual consent of the parties. If Escrow shall fail to close because of failure of TGC to comply with the obligations required to be performed by TGC hereunder, the costs incurred through the Escrow to the date the Escrow is terminated, including the cost of the Preliminary Report, shall be paid by TGC. If the Escrow shall fail to close because of failure of Developer to comply with the obligations required to be performed by Developer hereunder, such costs, without limitation of TGC's remedies, shall be paid by Developer. If the Escrow should fail to close for any other reason, the cost of terminating the Escrow shall be divided between the parties.


-4-


5


3.3. Execution of Additional Instructions. The obligations of each party which are herein agreed to be undertaken by each party in the Escrow shall be and are hereby made agreements of such party in and under this Agreement independent of the Escrow. If any requirements relating to the duties or obligations of Escrow Holder hereunder are not acceptable to Escrow Holder, or if Escrow Holder requires additional instructions, the parties agree to make such deletions, substitutions and additions to these escrow instructions relating to such duties or obligations of Escrow Holder or clarification of these instructions as counsel for Developer and for TGC shall mutually approve, and which do not substantially change this Agreement or its intent. Developer and TGC agree to perform, observe and fulfill the requirements of this Agreement notwithstanding said deletions, substitutions or additions to said escrow instructions.


3.4. Closing Costs. Subject to the provisions of Section 3.2 above, the expenses of the Escrow shall be paid by Developer including: (i) an amount equal to the premium for a CLTA Standard Coverage Policy (1990), (ii) any documentary transfer tax on the Deed, and (iii) all sales and excise taxes. TGC shall pay (1) recording charges, (2) Escrow fees and (3) the balance of the premium for the Title Policy which is not paid for by Developer pursuant to clause (i) of this Section 3.4. All other costs and charges of the Escrow for the sale shall be prorated between TGC and the Developer in accordance with the customary practices of Solano County, California.


3.5. Documents to be Delivered by Developer. At the Closing Developer shall deposit into Escrow, for delivery to TGC at the Close of Escrow, the following documents:


(a) The Deed fully executed, in recordable form, sufficient to convey marketable and insurable fee simple title to the Property as previously approved by TGC, in form reasonably satisfactory to TGC.


(b) An assignment to TGC of all land use entitlements, permits and licenses held by Developer relating to the Property or required from governmental authority as a condition to operation or occupation of the Property or any part thereof, together with the originals or true copies thereof.


(c) Such funds necessary to comply with Developer's obligations hereunder regarding prorations.


(d) The affidavit or the qualifying statement described in Section 8.4(a).


(e) The certificate specified in Section 10.1(a)(xii).


(f) The title policy specified in Section 7.2.


(g) A true copy of the recorded Restrictions.


(h) The recorded Option specified in Article 6.


All assignments and other documents hereinabove described shall be in form reasonably satisfactory to TGC's counsel.


-5- 6


4. PURCHASE PRICE AND DEPOSIT


4.1. Purchase Price. The Purchase Price shall be paid in cash on the Closing Date.


4.2. Assumption of Bonds. At the Closing TGC shall assume any special assessment bonds encumbering the Property in respect of off-site improvements performed for the benefit of the Business Park, which bonds are amortized over not less than fifteen years when assessed and for which the installment payments are includable with the real property tax bill (the "Bonds").


4.3. Deposit.


(a) Upon opening of Escrow, TGC shall deliver the Deposit to the Escrow Holder. The Deposit shall be placed in an interest bearing account at the direction of TGC. All interest earned on such account shall belong to and be remitted to TGC.


(b) Seller agrees that on or before December 31, 1996, the Escrow Holder is directed and authorized to take instruction solely from Buyer regarding the release of the Deposit, and Seller does hereby so instruct the Escrow Holder. Upon Close of Escrow, the Escrow Holder shall release the Deposit to Buyer so long as adequate replacement funds are available in Escrow, or apply the Deposit to the Purchase Price, at the option of Buyer.


5. DEVELOPER OBLIGATIONS


5.1. Construction Pricing.


(a) In the event that a Construction Contract is entered into between TGC and Developer, Developer shall prepare cost estimates and bids for the construction of the Project in accordance with the Project Plans. Within fifteen (15) days following submittal of the final version thereof to Developer, Developer shall submit the completed Construction Contract for the Project, the cost of which shall not exceed Seven Million Eight Hundred Thirty-Three Thousand Seven Hundred Twenty-Four Dollars ($7,833,724) based upon the Proposal. Such Construction Contract shall specify that the Project shall be completed no later than December 1, 1997; and that TGC shall have access to the Project for installation of equipment, supplies and other improvements no later than September 1, 1997. The contract price maximum referenced above shall be exclusive of governmental fees and costs of the Offsite Improvements, but shall include all development services to be provided by Developer, most particularly including, without limitation, all services required to process approval of the Project through all governmental agencies from whom Land Entitlement Permits may be required, including the City of Dixon, the County of Solano and relevant state agencies.


(b) TGC Construction Option. TGC shall have no obligation to enter into the Construction Contract with Developer.


5.2. Closing and Prorations.


(a) All expenses of the Property shall be prorated and apportioned as of 12:01 a.m. on the Closing Date, in order that Developer bear all expenses with respect to the


-6-


7


Property through and including midnight of the day preceding the Closing Date. Any expense amount which cannot be ascertained with certainty as of the Closing Date shall be prorated on the basis of the parties' reasonable estimates of such amount and shall be the subject of a final proration 30 days after the Closing Date or as soon thereafter as the precise amounts can be ascertained. A statement setting forth such agreed prorations shall be delivered to Escrow Holder. Escrow Holder shall not be required to calculate any prorations.


(b) Expenses to be prorated shall include taxes, water rates and sewer rents, if any, gas, electricity and other utility charges, any unfixed meter charges, if any (apportioned on the basis of the last meter reading), and other expenses customarily prorated. If possible, in lieu of prorating, utilities and other expenses shall be contracted for in the name of TGC as of the Closing Date.


5.3. Offsite Improvements.


(a) The Developer Offsite Improvements shall be completed by Developer by no later than June 1, 1997. Preliminary Offsite Improvements shall be completed by no later than December 31, 1996; provided, however, that if Force Majeure prevents completion of the widening and resurfacing of Vaughn Road (the "Vaughn Road Project") by December 1, 1996, the time allowed hereunder for completion of the Vaughn Road Project shall be extended for a period equivalent to the period of such delay caused by the Force Majeure events. All Secondary Offsite Improvements which are required by the City of Dixon or other applicable governmental agency to be completed by Developer shall be completed by no later than June 1, 1997. Plans and specifications for the Offsite Improvements shall be provided to TGC by no later than ten days following date of execution hereof and TGC shall have ten (10) business days thereafter in whi ...