Agreement of Purchase And Sale And Joint Escrow Instructions

AGREEMENT OF PURCHASE AND SALE
AND JOINT ESCROW INSTRUCTIONS


TO: First American Title
Insurance Company
345 California Street, Escrow Officer: Virginia Breffman
Suite 2400 Title Order No: SP-276188
San Francisco, CA 94103-3047
Tel.: 415-837-2220
Facsimile: 415-398-1750


THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS ("Agreement") is made and entered into as of the 8th day of April, 1998, and constitutes an agreement by which Macor, Inc., a California corporation ("Seller"), agrees to sell, and SKS Investments LLC, a Delaware limited liability company ("Buyer"), agrees to purchase, on the terms and conditions set forth below:
A. That certain real property located at 1950 - 17th Street in San Francisco, California, as more particularly described in the April 8, 1998, Commitment prepared by First American Title Insurance Company ("Escrow Holder") on Exhibit "A" attached hereto (the "Report"), together with any and all rights, privileges, tenements, hereditaments, entitlements, easements, rights-of-way and appurtenances belonging or appertaining to the same (collectively, the "Land"), together with all buildings and improvements located on the Land (collectively, the "Improvements"). The Land and the Improvements are collectively referred to herein as the "Property."


B. Buyer intends to demolish the Improvements.


The terms and conditions of this Agreement and the instructions to Escrow Holder with regard to the escrow ("Escrow") created pursuant hereto are set forth below.


1. Purchase and Sale. For valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller agrees to sell the Property to Buyer, and Buyer agrees to purchase the Property from Seller, upon the terms and conditions herein set forth.


2. Deposit. Within two (2) business days following the mutual execution of this Agreement, Buyer will deposit into the Escrow the sum of One Hundred Thousand Dollars ($100,000)in immediately available funds (the "Initial Deposit"). Concurrently with Buyer's delivery of the Due Diligence Waiver pursuant to Section 7(a)(i), Buyer will make an additional deposit of Four Hundred Thousand Dollars ($400,000) (the "Additional Deposit"). The Initial Deposit and the Additional Deposit, together with the interest earned thereon, are hereinafter collectively
1 referred to as the "Deposit"). Upon Buyer's delivery of such Due Diligence Waiver, the Deposit will become non-refundable (except as otherwise provided herein) subject only to Seller's fulfillment of its obligations hereunder. The Deposit will be credited against the Purchase Price. The Deposit will be invested by Escrow Holder in an interest- bearing account acceptable to Buyer with all interest accruing thereon to be credited to the account of Buyer.


3. Purchase Price; Optional Reduction in Purchase Price.


(a) Purchase Price. The purchase price ("Purchase Price") for the Property will be Five Million Seven Hundred Thousand Dollars ($5,700,000). Buyer will deposit prior to the Close of Escrow (as such term is defined in Section 5(b)) immediately available funds (which will include the Deposit) in an amount equal to the Purchase Price.


(b) Environmental Remediation Credit. Buyer will be entitled to a credit against the Purchase Price equal to fifty percent (50%) of all environmental remediation costs required to remediate the Property up to a maximum credit of Two Hundred Fifty Thousand Dollars ($250,000). Buyer's environmental consultant in good faith will estimate and reasonably itemize such remediation costs in writing prior to the end of the Due Diligence Period.


(c) Landfill Disposal Obligation. As additional consideration for the Property, Buyer will cause all contaminated soil removed from either the Property or the sites in San Francisco controlled by Buyer or its affiliates at: 475 Brannan Street; the block bounded by Bryant Street, York Street and 19th and 20th Streets; and 500 Treat Street, to be placed in a landfill reasonably designated by Norcal Waste Systems at prevailing and competitive fees.


4. Certain Covenants of Seller and Buyer.


(a) Documents. Seller has provided Buyer with copies of the documents listed in Exhibit "B" attached hereto (the "Documents").


(b) Access to Property. From and after payment of the Initial Deposit until the Close of Escrow, Buyer, its agents, contractors and subcontractors will have the right to enter upon the Property, at reasonable times during ordinary business hours, to make any and all inspections and tests as may be necessary or desirable in Buyer's sole judgment and discretion. Buyer will use care and consideration in connection with any of its inspections. Buyer will indemnify and hold Seller harmless from any and
2 all damage or destruction arising out of or resulting from the negligence of Buyer, its agents, contractors and/or subcontractors in connection with such entry and/or activities upon the Property.


Buyer will have the right to contact any governmental or quasi-governmental entity or authority to investigate any matters relating to the Property. Seller agrees to cooperate reasonably with the Buyer in Buyer's inspection of the Property.


(c) Operation of Property. Seller covenants that from and after the date of this Agreement and to and until the Close of Escrow, Seller will:


(i) No Contracts. Not, without Buyer's prior written consent, enter into any lease or other agreement or contract that in any way affects the Property and that will survive the Close of Escrow;


(ii) No Encumbrances. Not alienate, lien, encumber or otherwise transfer any of the Property, or any interest therein except as may be required by law; and


(iii) Notice of Change of Condition. Promptly notify Buyer of any change in any condition with respect to the Property that materially and adversely affects the Land.


(iv) Maintenance of Land. Not: (i) permit any active waste or act that would tend to diminish the value of the Land; (ii) store, manufacture, use or sell any hazardous or toxic substances on, in or under the Property except in the course of Seller's ordinary commercial operations; or (iii) cause any liens, encumbrances or easements to be placed on the Property, or, except in an emergency, enter into any agreement regarding the repair, improvement or any other matter affecting the Property that would be binding on Buyer or the Property after the Close of Escrow without the consent of Buyer which will not be unreasonably withheld or delayed.


(v) Maintenance of Insurance. Maintain all the insurance policies affecting the Property in full force and effect.
3
5. Escrow.


(a)) Opening of Escrow. Promptly following execution of this Agreement, the parties hereto will cause a copy of this Agreement (showing the signatures of the parties thereon) to be delivered to Escrow Holder. For purposes of this Agreement, the Escrow will be deemed opened on the date Escrow Holder will have received such copy of this Agreement plus the Initial Deposit. Escrow Holder will notify Buyer and Seller, in writing, of the date Escrow is opened and will return to each of the parties a copy of the last page of this Agreement duly executed by Escrow Holder. In addition, Buyer and Seller will execute, deliver and be bound by any reasonable and customary supplemental escrow instructions of Escrow Holder or other instruments as may reasonably be required by Escrow Holder in order to consummate the transaction contemplated by this Agreement. Any such supplemental instructions will not conflict with, amend or supersede any portions of this Agreement. If there is any inconsistency between such supplemental instructions and this Agreement, this Agreement will control.


(b) Close of Escrow. For purposes of this Agreement, the "Close of Escrow" will be defined as the date that the Grant Deed, the form of which is attached hereto as Exhibit "C" ("Grant Deed") conveying the Real Property to Buyer, is recorded in the Official Records of San Francisco County, California. The Close of Escrow will occur between June 30, 1998, and July 31, 1998, as determined by Seller by written notice to Buyer on or before June 3, 1998 (the "Closing Date").


6. Title.


(a) Condition of Title. It will be a condition to the Close of Escrow that title to the Real Property be conveyed to Buyer by Seller by the Grant Deed subject to all of the exceptions in the Report and subject to non-delinquent taxes and assessments and matters which would be disclosed by an ALTA Survey of the Real Property and free and clear of all occupants and tenancies ("Approved Condition of Title"). Seller covenants and agrees that during the term of this Escrow, it will not voluntarily cause title to the Real Property to differ from the Approved Condition of Title.


(b) Title Policy. At the Close of Escrow, Seller will convey title to the Real Property to Buyer in fee simple subject only to the Approved Condition of Title. Title will be evidenced by the willingness of the Escrow Holder to issue its ALTA Extended Coverage Owner's Form Policy of Title Insurance, with such endorsements as Buyer may reasonably require, in the amount of the Purchase Price
4 (or any lesser amount agreed to by Buyer in its sole discretion) showing title to the Property vested in Buyer subject only to the Approved Condition of Title (the "Title Policy").


7. Certain Conditions to Close of Escrow.


(a) Conditions to Buyer's Obligations. The Close of Escrow and Buyer's obligation to consummate the transaction contemplated by this Agreement are subject to the satisfaction, in Buyer's sole and absolute discretion, of each of the following conditions for Buyer's benefit:


(i) Due Diligence Period. Buyer will have until noon PDT on May 29, 1998, to review and approve the Property (the "Due Diligence Period"). If Buyer does not notify Seller in writing before the end of the Due Diligence Period that Buyer is satisfied with the Property (the "Due Diligence Waiver"), then this Agreement will be terminated and the Deposit will be returned to Buyer.


(ii) Underground Storage Tank Removal. During the Due Diligence Period, Seller will have removed, at Seller's expense, an underground storage tank which Seller believes is located on the east central portion of the Property, and Seller will have provided Buyer with all information available to Seller with respect to such removal and related soil remediation or removal.


(iii) Title. On the Closing Date, Seller will deliver insurable title to the Real Property to the Buyer in fee simple, subject only to the Approved Condition of Title, and the Escrow Holder will be committed to issue the Title Policy upon payment of the scheduled premium.


(iv) Deposits. Seller will have made the deposits set forth in Section 8 hereof.


(v) Representations, Warranties and Covenants of Seller. Seller will have duly performed each and every agreement to be performed by Seller hereunder. The representations and warranties of Seller contained herein will be true and correct in all material respects as of the Closing Date.


(vi) No Material Adverse Changes. At the Closing Date, there will have been no material adverse changes in the physical condition of the Land.


(b) Conditions to Seller's Obligations. The Close of Escrow and Seller's obligation to consummate the transaction contemplated by this Agreement are subject to the satisfaction of each of the following conditions for Seller's
5 benefit:


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