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2007-072 - Approving An Agreement Of Purchase And Sale And Escrow Instructions To Acquire Real Property Located At 15900 Los Gatos Boulevard From Verizon California Inc.RESOLUTION 2007 -072 RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS APPROVING AN AGREEMENT OF PURCHASE AND SALE AND ESCROW INSTRUCTIONS TO ACQUIRE REAL PROPERTY LOCATED AT 15900 LOS GATOS BOULEVARD FROM VERIZON CALIFORNIA INC. WHEREAS, Verizon California, Inc. owns real property located at 15900 Los Gatos Boulevard, which includes a 1 -story building containing approximately 8,600 square feet of space on an approximately 1.09 acre parcel; and WHEREAS, the Town desires to purchase that improved real property for the operation and providing of police services; and WHEREAS, representatives of the Town and Verizon have negotiated the terms of a proposed Agreement of Purchase and Sale and Escrow Instructions, attached hereto and incorporated herein as Exhibit "A ", and WHEREAS, the Town and Verizon desire to go forward with the proposed acquisition, subject to the terms and conditions of the proposed Agreement. RESOLVED, by the Town Council of the Town of Los Gatos, County of Santa Clara, State of California, that: The a proposed Agreement of Purchase and Sale and Escrow Instructions is hereby approved in substantially the same form as Exhibit "A" hereto. 2. 'The Town Manager is hereby authorized to execute an Agreement of Purchase and Sale and Escrow Instructions in substantially the same form as Exhibit "A" hereto. 3. The Town Manager is hereby authorized to draw $50,000 from available Town contingency funds for purposes of making the required initial refundable deposit pursuant to the Agreement of Purchase and Sale and Escrow Instructions. PASSED AND ADOPTED at a regular meeting of the Town Council of the Town of Los Gatos, California on the 4th day of June 2007, by the following vote. AYES: Steve Glickman, Diane McNutt, Barbara Spector, Mike Wasserman, and Mayor Joe Pirzynski NAYS: None ABSENT: ABSTAIN: SIGNED: MAYOR OF THE TOWN OF LOS GATOS LOS GATOS, CALIFORNIA ATTEST: w CLER OF THE TOWN OF LOS GATOS LC�S ATOS, CALIFORNIA 00-1 '14: RQ Vt ikl. ak C COORRACIbl"It I m-- 4,7113-1 Cox, alked - not DWMW"W N ..Q . , - PQ2 22 9'T 62 CLERK DEP rTM A fl , • o yo fi v uld'us thahe- —At"BUY01wouldS T6 .99 MCI off"} py-lbrAb-4 ".PL Thlt- %4d'bft you v qpp . fxt oat vqwo:#1 Dr aid to -6 au , �g - 30yorip.g., rp vl h as to , I fitonin Jit To . ....... . . c; ca. o "I"'o T"llimA c late 00s., . - I '' A 7 P to 1.4 -Apt. �kal at 010 omwt' raprMehfadws, of Id m Palm wrof In 0. ekBy upon boyor W.ddl ' The t w1k plp wft e.;b ... Vt.; pro. 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Ou 10 Met yer shall r . -PS 1sceYl - .0.*. e.o. j SA 0 T va V Wgr M. 41A . 0 p at, , - w4t ameude� �.Oovoa the U61h .;s -b my -be 10 ;y p iumptadd in c rc lee t claws o,*f s4w a' 7 i a, w low 419 mltg* Mqy be.ex utetl.6 ti u # t e cau c j � Y- fugsimile Ht ql.i.; 110, QQ3 W19 14c 20 March 19.,20' tYi� stp e lop, cc" d V"D IVF,RIZ' ALIFORNU-1 a. Approved as to form: 'jATTEST FOR THE TOWN awl I C awl wator P. Korb, TXown ttomey PO4 GATOS m i COMMERCIAL REAL ESTATE SERVICES Jeffrey L. Hardy Senior Vice President CB Richard Ellis, Inc. Brokerage Services March 12, 2007 Mr. Erik L. Hallgrimson Ms. Maryanna McSwain CPS CORFAC International 475 El Camino Real, Suite 100 Santa Clara, CA 95050 Re: Property ocated in Los Gatos, California Dear Erik and Maryanna: CBRE CB RICHARD ELLIS CB Richard Ellis, Inc. Two Palo Alto Square, Suite 100 3000 El Camino Real Palo Alto, CA 94306 (650) 494 -5122 Tel (650) 494 -5102 Fax ieff.hardy @cbre.com www.cbre.com This letter shall serve as a response to the offer dated February 13, 2007 to purchase the Property described below. Buyer: Town of Los Gatos Seller: Verizon California Inc., a California corporation. Property Description: A 1 -story building (in cold dark shell condition) containing approximately 8,600 square feet of space on an approximate 1.09 acre parcel commonly known as 15900 Los Gatos Boulevard, Los Gatos, California (a portion of APN 523 -01 -010). Purchase Price: $3,200,000 all cash. Deposit: Upon the date of full execution of the Purchase Agreement, Buyer shall deliver to escrow a deposit in the amount of Fifty Thousand and 00 /100 Dollars ($50,000), which shall be applicable to the Purchase Price. Buyer shall deposit an additional deposit of Fifty Thousand and 00 /100 Dollars ($50,000) prior to the end of the Due Diligence Period , and the entire deposit of One Hundred Thousand and 00 /100 ($100,000) shall be released to Seller at the end of the Due Diligence March 12, 2007 Page 2 of 11 Period. Escrow and Title: Escrow and title shall be opened at Fidelity National Title Company, office to be selected by Seller. Escrow and Title Escrow charges shall be paid one -half each by Buyer Charges: and Seller. Seller will pay for a CLTA title policy. If Buyer desires an ALTA policy or additional endorsements, the additional cost will be at Buyer's expense. Proration of Taxes: As a utility, Seller is assessed by the California State Board of Equalization and pays its real property taxes for the entire tax fiscal year during which the close of escrow occurs even though Seller may own the Property for less than the entire fiscal year and such payment may be due following the close of escrow. Therefore, at the close of escrow, Buyer shall be debited and Seller shall be credited for an amount equal to the real estate taxes on the Property for the portion of the tax fiscal year following the close of escrow. "AS IS" Purchase: Buyer shall be purchasing the Property "AS IS," based entirely upon Buyer's own independent investigation of the Property, without representation or warranty of any kind regarding the condition of the Property from Seller. Exclusive Right to Upon full execution of this letter, Seller agrees to deliver Negotiate: to Buyer a draft of the Purchase Agreement within five (5) business days for review and execution by Buyer. For a period of fifteen (15) business days following execution hereof, Seller grants Buyer the exclusive right to negotiate a mutually agreeable Purchase Agreement and warrants to not engage in either Letter of Intent or Purchase Agreement negotiations with any third party during said time. Said fifteen (15) business day period shall be extended day for day beyond the five (5) business days which Seller fails to deliver a draft Purchase Agreement. March 12, 2007 Page 3 ofl 1 Liquidated Damages: The Deposit shall serve as liquidated damages in the event that escrow fails to close as a result of Buyer's default. If escrow fails to close as a result of Seller's default, Buyer's exclusive remedy shall be liquidated damages equal to Buyer's due diligence costs not to exceed $100,000. Due Diligence Period: The Due Diligence Period shall expire sixty (60) days from execution of a Purchase Agreement. Buyer to have access to the Property to allow for all necessary inspections and testing. Buyer acknowledges that Seller is unable to provide documents relating to the Property except Seller shall. provide environmental reports pertaining to the Property located at the offices of Seller's Environmental Compliance Department. Hazardous Materials: Buyer shall release Seller from, and indemnify and hold Seller harmless from and against, any and all claims arising out of or related to hazardous materials on or under the Property and any cleanup of any or all hazardous materials which might remain or subsequently be placed on or under the Property. The Due Diligence Period is intended to be used for Buyer's careful study of the environmental condition of the Property. In the event there are known hazardous materials and Buyer does not terminate the Agreement, Seller shall, at Seller's sole and absolute discretion, either (a) remediate contamination, if any, to legally acceptable levels, in which case the close of escrow shall be delayed pending such remediafion, or (b) terminate the Agreement; provided, however, that Buyer shall have the option to terminate the Agreement and recover Buyer's deposit in the event the Seller's remediation efforts are protracted beyond a reasonable period to be determined in the Purchase Agreement and mutually agreed upon by the parties. The provisions of attached Exhibit "A" shall be included in the Purchase Agreement, except that Paragraph 6.4 of Exhibit "A" shall be amended to provide the Buyer the right to terminate consistent with this Paragraph. Right of Entry: Within five (5) days of full execution of a Letter of Intent., Seller shall provide Buyer with a letter agreement on March 12, 2007 Page 4 of 11 Seller's standard form providing Buyer with a right of entry upon the Property for the purpose of conducting tests and inspections subject to the terms of such letter, Buyer shall indemnify and hold Seller harmless from all liability, including attorney's fees and costs, arising out of or in connection with this right of entry. Buyer shall restore the Property to its condition prior to Buyer's entry on the Property. Buyer shall maintain the confidentiality of all information relating to its investigation of the Property. Limitation of Liability: Seller shall have no liability for any speculative, special, consequential, punitive, or other damages other than actual damages. Seller's maximum liability under the purchase agreement shall be limited to $50,000. Close of Escrow: The close of escrow shall be fifteen (15) days after expiration of the Due Diligence Period, but no later than June 30, 2007; provided, however, Seller shall have the right to extend the Close of Escrow at its sole option for up to ninety (90) days in order to obtain subdivision approval. Other Conditions: Buyer shall not be permitted to assign its rights under the Agreement without Seiler's consent, which may be withheld in Seller's sole and absolute discretion. Seller shall reserve an access and utility easement across a portion of the property and a storm drain easement across a portion of the Property. The Purchase Agreement shall be drafted by Seller's counsel. Contingency: Seller's obligation to sell the Property is contingent upon Seller obtaining (a) final approval of the sale from its Executive Management, and (b) approval by the appropriate public agency of a parcel map creating a separate legal lot for the Property. In the event that the sale is not closed due to Seller's inability to obtain said approvals, the earnest money deposit shall be returned to Buyer. Buyer's obligation to purchase the Property shall also be contingent on such parcel map approval. Property Documents: Seller shall provide the following documents for review by Buyer: 1) Survey, 2) Title Report and 3) Approved Tentative Parcel Map and Conditions of Approval. March 12, 2007 Page 5 of 11 Representation: Buyer and Seller both acknowledge and accept that CB Richard Ellis Inc. represents Verizon California Inc., and CPS CORFAC International ( "Broker ") represents Buyer. Buyer represents that Seller shall not be required to pay a commission of more than 2.5% of the Purchase Price to Buyer's broker. Acknowledgement: The parties further acknowledge and agree to the following: a. Broker makes no representations or warranties with respect to the physical and environmental condition of the Property, including subsurface conditions. Broker has no specific expertise with respect to making an environmental assessment of the Property, including matters relating to the disposal of hazardous or toxic substances or waste, and environmental problems which may be posed by the Property being within as Special Studies Zone as designated under the Alquist- Priolo Special Studies Zone Act (Earthquake Zones), Sections 2621 -2630, inclusive, of the California Public Resources Code or a HUD Flood zone, as set forth in the U.S. Department of Housing and Urban Development "Special Flood Zone Area Maps ", as applicable. b. Broker has not made an independent investigation of the Property or determination with respect to the physical and environmental condition of the Property, including without limitation, the existence or nonexistence of any underground tanks, pumps, piping, toxic or hazardous substances on the Property. March 12, 2007 Page 6 of] 1 Likewise, no investigation has been made to ensure compliance with the Americans with Disabilities Act ( "ADA "). This Act may require a variety of changes to a facility, depending on its use, including potential removal of barriers to access by disabled persons or provision of auxiliary aids and services for hearing, vision or speech impaired persons. Broker urges all parties to obtain independent legal and technical advice with respect to the physical, environmental condition and ADA complicate of the Property. The parties agree that it will rely solely on its own investigation and or that of a licensed professional specializing in these areas and not of the Broker. Expiration Date: This letter shall be valid through Thursday, March 15, 2007. UNLESS AND UNTIL A PURCHASE AGREEMENT AND ESCROW INSTRUCTIONS ARE FULLY EXECUTED BY BOTH PARTIES, NEITHER PARTY WILL HAVE ANY RIGHTS OR OBLIGATIONS HEREUNDER. ONLY A FULLY EXECUTED PURCHASE AGREEMENT WILL BIND EITHER PARTY. SELLER EXPRESSLY RESERVES THE RIGHT TO MARKET THE PROPERTY TO ANY OTHER PARTY WITHOUT OBLIGATION TO POTENTIAL BUYER AT ANY TIME PRIOR TO THE FULL EXECUTION OF A PURCHASE AND SALE AGREEMENT, EACH PARTY ACKNOWLEDGES THAT A PURCHASE CONTRACT WILL INCLUDE BUT NOT BE LIMITED TO THE BUSINESS POINTS REFERENCED HEREIN. Sincerely, Approved as to form: ;Ii •• K rry orb, Town Attomef' Agreel"nd Accepted: Town of Los ATTEST FOR THE TOWN OF LOS GATOS _.,p5 clerk mitl3gtrator March 12, 2007 Page 7 ofl l ATTACHED EXHIBIT "A" - HAZARDOUS MATERIALS PROVISIONS FROM MASTER PURCHASE AND SALE AGREEMENT 6. Hazardous Material 6.1 Definition of Hazardous Material As used herein, the term "Hazardous Material" means any hazardous or toxic substance, material, or waste which is or becomes regulated by any local governmental authority, the State of California or the United States Government. The term "Hazardous Material" includes, without limitation, any material or substance which is (i) defined as "hazardous waste," "extremely hazardous waste," or "restricted hazardous waste" under Sections 25115, 25117 or.25122.7, or listed pursuant to Section 25140, of the California Health and Safety Code, Division 20, Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous substance" under Section 25316 of the California Health and Safety Code, Division 20, Chapter 6.8 (Carpenter- Presley- Tanner Hazardous Substance Account Act), (iii) defined as a "hazardous material," "Hazardous substance," or "hazardous waste" under Section 25501 of the California Health and Safety Code, Division 20, Chapter 6.95 (Hazardous Materials Release Response Plans and Inventory), (iv) defined as a "hazardous substance" under Section 25281 of the California Health and Safety Code, Division 20, Chapter 6.7 (Underground Storage of Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under Article 9 or defined as "hazardous"' or "extremely hazardous" pursuant to Article 4 of Title 22 of the Administrative Code, Division 4.5, Chapter 11, (viii) defined as a "hazardous waste," "hazardous substance" or similar term under the Federal Water Pollution Control Act (33 U.S.C. §1317), (ix) defined as a "hazardous waste" pursuant to Section 1004 of the Federal Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), (x) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C. §9601 et seq. (42 U.S.C. §9601), or (xi) which requires investigation or remediation under any federal, state or local statute, regulation, ordinance, order, action, policy or common law. 6.2 Presence of Hazardous Material Buyer acknowledges that the Property may or may not contain certain Hazardous Materials and that Seller makes no representation or warranty to Buyer regarding the presence or absence of any Hazardous Materials on or under the Property. It shall be Buyer's responsibility under this Paragraph 6 to examine the Property and to review such reports or other documents it deems necessary to March 12, 2007 Page 8 of] l satisfy itself as to the presence or absence of any such Hazardous Materials. 6.3 Right to Inspect Prior to the expiration of the Feasibility Period, Buyer shall have the right, at its cost and expense, to conduct such physical inspections of the Property as necessary in order to determine the presence or absence of Hazardous Material on or under the Property. Such inspections by Buyer shall not interfere with the ongoing operations at the Property, shall be conducted at reasonable times and under reasonable circumstances and shall be subject to the prior approval of Seller. Buyer shall promptly deliver the results of such inspections to Seller. 6.4 Cleanup of Hazardous Material If, prior to the expiration of the Feasibility Period, either Seller or Buyer determines that a legally unacceptable level, according to applicable governmental standards, of Hazardous Material exists on or under the Property, then Buyer may, in Buyer's sole discretion, terminate this Agreement. In such case, Buyer shall bear its own inspection costs, and the provisions of Paragraph 2,11 shall apply. If Buyer elects not to so terminate this Agreement, then Seller may, in Seller's sole discretion, either (1) terminate this Agreement, in which event the provisions of Paragraph 2.11 shall apply, or (2) commence to remove such Hazardous Material from the Property in which event the Close of Escrow shall be delayed until following Seller's completion of such removal. If Seller commences to remove such Hazardous Material, Seller shall thereafter diligently proceed with such removal at Seller's sole cost and expense, and in accordance with all applicable laws, rules, and regulations. 6.5 Buyer's inspection If Seller elects to remove such Hazardous Material pursuant to Paragraph 6.4 above, upon completion of such removal, Seller shall deliver to Buyer and to Escrow Holder notice stating that such removal has been completed. Within thirty (30) days following Buyer's receipt of such notice, Buyer shall inspect the Property in order to determine the presence or absence of Hazardous Material on or under the Property; provided, however, that Seller shall have the right to reasonably approve Buyer's agent who is to conduct such inspection. If such inspection reveals that the level of Hazardous Material remaining on or under the Property is at or less than the allowable level under applicable governmental rules or regulations, then Buyer shall be obligated to proceed to the Close of Escrow, and the Close of Escrow shall occur upon the first to occur of (1) the Closing Date, if such removal of Hazardous Material is completed at such time, or (2) within two (2) weeks following Buyer's inspection. March 12, 2007 Page 9 of 11 6.6 Indemnification If the parties proceed to the Close of Escrow, Buyer shall indemnify, defend and hold Seller harmless from any and all claims, demands (including demands by any governmental agency), liabilities, costs, expenses, penalties, damages, losses and liens, including without limitation reasonable attorneys' fees, arising out of or with respect to (1) Hazardous Material on or under the Property, or migrating to or from the Property at the Close of Escrow or released on or under the Property subsequent thereto, and (2) any clean -up of any and all Hazardous Material which might remain or subsequently be placed on or under the Property. The indemnity provided for herein shall survive the Close of Escrow hereunder and shall not be merged into the Grant Deed. 6.7 Release If the parties proceed to the Close of Escrow, then: 6.7.1 Buyer and its employees, contractors, agents, and each of them, and its successors, assigns, heirs, devisees and executors, agree to forever release, discharge and acquit Seller and its parent, subsidiary and /or affiliate corporations, partnerships (general and limited), partners, directors, officers, shareholders, and employees, and each of them (collectively, "Releasees "), of and from any and all claims, demands, obligations, liabilities, indebtedness, breaches of duty of any relationship, - acts, omissions, misfeasance, malfeasance, cause or causes of action, costs, sums . of money, accounts, compensations, contracts, controversies, promises, damages, costs, losses and expenses, of every type, kind, nature, description or character (including without limitation reasonable attorneys' fees) (collectively "Claims "), and irrespective of how, why or by reason of what facts, whether heretofore or now existing, or which could, might or may be claimed to exist in the future, whether known or unknown, suspected or unsuspected, liquidated or unliquidated, each as if fully set forth herein at length, which in any way arise out of, or are connected with or relate to (1) any Hazardous Material on or under the Property, or migrating to or from the Property, at the Close of Escrow or released on or under the Property subsequent thereto, and (2) any required clean -up of any and all Hazardous Material which might remain or subsequently be placed on or under the Property, including without limitation any personal injuries suffered by any person or persons. The release provided for herein shall survive the Close of Escrow hereunder and shall not be merged into the Grant Deed. 6.7.2 Buyer and its successors, assigns, heirs, devisees and executors, agrees, represents and warrants that the matters released in 6 1 March 12, 2007 Page 10 of 11 Paragraph 6.7.1 hereof are not limited to matters which are known or disclosed, and hereby waives any and all rights and benefits which it now has, or in the future may have, conferred upon it by virtue of the provisions of Section 1542 of the Civil Code of the State of California which provides as follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR." Buyer's Initials Buyer also further expressly waives and relinquishes all statutes, rights, remedies and benefits of all other jurisdictions, state and federal, which are all of the same or * similar import or effect as Section 1542 of the California Civil Code. Buyer's Initials In connection with the release contained in Paragraph 6.7.1, Buyer agrees, represents and warrants that it realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims which are presently unknown, unanticipated and unsuspected, and further agrees, represents and warrants that the release contained in Paragraph 6.7.1 has been negotiated and agreed upon in light of that realization and that it nevertheless hereby intends to release, discharge and acquit Seller and Releasees from any such unknown Claims to the extent provided herein. 6.7.3 Buyer hereby agrees, represents and warrants that it has had advice of counsel of its own choosing in negotiations for and the preparation of this Agreement (including, without limitation, Paragraphs 6.7.1 and 6.7.2 herein), that it has read Paragraph 6.7.1 hereof and Paragraph 6.7.2, that it has had such Paragraphs fully explained by such counsel, and that it is fully aware of their contents and legal effect. 6.7.4 Buyer acknowledges and agrees that no employee, agent, legal counsel, or other representative of Seller, including Seller's Broker (as defined below) has been authorized to make, and in March 12, 2007 Page 11 of l executing this Agreement Buyer has not relied upon, any statement of Seller, Seller's employees, agents, Seller's Broker, or legal counsel, and should Buyer be mistaken in its belief with regard to some issue of fact or law regarding the matters herein released, it specifically agrees to assume the risk of such mistake, if any exists. Buyer hereby acknowledges that Buyer is capable of performing or causing to be performed a thorough and independent investigation, analysis and evaluation of the Property and all other aspects of the transaction contemplated by this Agreement, and that it has had an opportunity to make, and to have its experts make its and their investigation regarding the matters herein released and all laws, rules and regulations related thereto.