EX-10 8 ex10a24.htm OPTION AGREEMENT [LONG FORM VACANT LAND]
                                                   OPTION AGREEMENT

                                     AND JOINT ESCROW INSTRUCTIONS

                                                            by and between

                                   REYNEN & BARDIS (KMS PLACER), L.P.,
                                               a California limited partnership

                                                                ("Seller")

                                                                     and

                                          ACE HARDWARE CORPORATION,
                                                      a Delaware corporation

                                                                ("Buyer")

                                                        Property located in

                                                  Placer County, California

                                                    Dated January 13, 2003

ARTICLE 1    OPTION; COVENANTS DURING OPTION PERIOD; PRELIMINARY
            CLOSING
            1.1    Grant of Option
            1.2    Term of Option
            1.3    Exercise of Option; Sale of Property
            1.4    Failure to Exercise Option
            1.5    Deposit with Escrow
            1.6    Restrictions on Transfer by Seller
            1.7    Existing Loan
                    1.7.1    Loan
                    1.7.2    Request for Notice of Default
                    1.7.3    Credit Against Purchase Price
                    1.7.4    Non-Disturbance
                    1.7.5    Use of Option Consideration to Cure Loan Default
            1.8    Restrictions During Option Period
            1.9    Preliminary Closing
            1.10  CUP Substantial Compliance Letter
ARTICLE 2    PURCHASE AND SALE; PROPERTY
            2.1    Sale to Buyer
            2.2    Property
ARTICLE 3    PURCHASE PRICE
ARTICLE 4    PAYMENT OF PURCHASE PRICE
            4.1    Option Consideration
            4.2    Buyer's Deposit of Balance of Purchase Price
ARTICLE 5    ESCROW
            5.1    Opening of Escrow
            5.2    Close of Escrow
            5.3    Failure to Close on Closing Date
ARTICLE 6    CONDITION OF TITLE
            6.1    Approved Condition of Title
            6.2    New Title Matters
ARTICLE 7    TITLE POLICY
ARTICLE 8    CONDITIONS TO CLOSE ESCROW
            8.1    Conditions to Buyer's Obligations Which Must be Satisfied or
Waived
                     Prior to Expiration of the Contingency Period
                    8.1.1    Approval of Title
                    8.1.2    Review and Approval of Documents and Materials
                    8.1.3    Approval of Inspections and Studies
                    8.1.4    Commitment to Issue Title Policy
                    8.1.5    Hazardous Materials
                    8.1.6    Natural Hazard Disclosure Statement
                    8.1.7    Special Tax Disclosures
                    8.1.8    No Moratorium
            8.2    Conditions to Buyer's Obligations Which Must be Satisfied or
Waived
                     Prior to Close of Escrow
                    8.2.1    Performance of Seller's Obligations
                    8.2.2    Truth of Seller's Representations
                    8.2.3    No Alteration of Approved Condition of Title or
Leases
                    8.2.4    Truthfulness of Representations at Closing
                    8.2.5    Title Policy
            8.3    Conditions to Seller's Obligations
                    8.3.1    Performance of Buyer's Obligations
                    8.3.2    Truth of Buyer's Representations
ARTICLE 9    DEPOSITS BY SELLER INTO ESCROW
            9.1    Deposits by Seller into Escrow
ARTICLE 10    DEPOSITS BY BUYER INTO ESCROW
            10.1    Deposits by Buyer into Escrow
ARTICLE 11    COSTS AND EXPENSES
ARTICLE 12    PRORATIONS
ARTICLE 13    DISBURSEMENTS AND OTHER ACTIONS BY ESCROW HOLDER
            13.1    Prorations
            13.2    Recording
            13.3    Funds
            13.4    Title Policy
            13.5    Original Documents
            13.6    Copies of Documents
ARTICLE 14    SELLER'S DISCLAIMER,  REPRESENTATIONS AND
            WARRANTIES
            14.1    DISCLAIMER
            14.2    Representations and Warranties in General
                    14.2.1    Knowledge Representations
                    14.2.2    Effect of Documents and Materials
                    14.2.3    Interpretation and Effect of Disclosures
                    14.2.4    Restatement
            14.3    Representations and Warranties by Seller
                    14.3.1    Authority
                    14.3.2    No Grants
                    14.3.3    Hazardous Materials
                    14.3.4    No Default
                    14.3.5    No Violation
                    14.3.6    No Claims
                    14.3.7    No Condemnation
                    14.3.8    No Third Party Consents
                    14.3.9    Existing Leases
                    14.3.10  Documents and Materials
                    14.3.11  No Attachments
ARTICLE 15    BUYER'S REPRESENTATIONS AND WARRANTIES
            15.1    Representations and Warranties in General
            15.2    Representations and Warranties by Buyer
                    15.2.1    Authority
                    15.2.2    Feasibility Period
                    15.2.3    Reliance on Own Investigation
                    15.2.4    No Attachments
ARTICLE 16    DISCOVERY OF INACCURACY IN WARRANTIES AND
            REPRESENTATIONS
            16.1    Notice
            16.2    Right to Terminate
ARTICLE 17    INDEMNITY; EXCULPATION
            17.1    Buyer's Indemnity
            17.2    Seller's Indemnity
            17.3    Exculpation
            17.4    Release
ARTICLE 18 TERMINATION OF AGREEMENT
            18.1    Termination Prior to Expiration of Contingency Period
            18.2    Liquidated Damages
            18.3    Default by Seller
ARTICLE 19    DAMAGE OR CONDEMNATION BEFORE CLOSING
ARTICLE 20    NOTICES
ARTICLE 21    BROKERS
ARTICLE 22    LEGAL FEES
ARTICLE 23    ASSIGNMENT
ARTICLE 24    INFORMATION REPORT
ARTICLE 25    MISCELLANEOUS
            25.1    Survival of Covenants
            25.2    Further Assurances
            25.3    Time of Essence
            25.4    Counterparts
            25.5    Captions; Recitals
            25.6    No Obligations to Third Parties
            25.7    Exhibits
            25.8    Amendment of this Agreement
            25.9    Waiver
            25.10  Applicable Law
            25.11  Fees and Other Expenses
            25.12  Entire Agreement
            25.13  Successors and Assigns
            25.14  Time Period Computation
            25.15  Cooperation in Drafting
            25.16  Severability
            25.17  Waiver of Jury Trial
            25.18  No Merger
            25.19  Possession
ARTICLE 26    RETURN OF DOCUMENTS AND FUNDS UPON TERMINATION
            26.1    Return of Seller's Funds and Documents
            26.2    Return of Buyer's Funds and Documents
            26.3    No Effect on Rights of Parties
            26.4    Payment of Termination Fee
ARTICLE 27    EXCHANGE
ARTICLE 28    GENERAL REFERENCE FOR DISPUTE RESOLUTION

TABLE OF EXHIBITS

Exhibit A-As Is Certificate
Exhibit B-Memorandum of Option
Exhibit C-Memorandum of Lease
Exhibit D-Estoppel Certificate
Exhibit E-Land Legal Description
Exhibit F-Visual Map
Exhibit G-Grant Deed
Exhibit H-Special Tax Disclosure
Exhibit I-Bill of Sale
Exhibit J-Assignment of Contracts
Exhibit K-Assignment of Existing Leases
Exhibit L-General Assignment
Exhibit M-Seller's Certificate

DEFINED TERMS

"Approved Condition of Title" is defined in Article 6.

"Appurtenances" is defined in Section 2.2.ii.

"Assignment of Contracts" is defined in Article 9(iii).

"Assignment of Existing Leases" is defined in Section 9.1(iv).

"Benefited Party" is defined in Section 16.2.

"Bill of Sale" is defined in Section 9.1(ii).

"Buyer" shall mean Ace Hardware Corporation, a Delaware corporation.

"Buyer Indemnified Parties" is defined in Section 17.2.

"Claims" is defined in Section 17.1.

"Close of Escrow" is defined in Section 5.2.

"Closely-held corporation" shall mean any corporation not listed on the New
York, American or Pacific stock exchanges.

"Closing Date" is defined in Section 5.5.

"Code" is defined in Section 6.1(ii).

"Contingency Period" is defined in Section 8.1.

"Contingency Period Conditions Waiver" is defined in Section 1.9(i).

"Continuing Duties" is defined in Section 18.1.

"CUP" is defined in Section 1.10.

"CUP Substantial Compliance Letter" is defined in Section 1.10.

"Deed of Trust" is defined in Section 1.7.1.

"Documents and Materials" is defined in Section 8.1.2.

"Environmental Law" is defined in Section 8.1.2(ix).

"Environmental Report" is defined in Section 8.1.2(ix).

"Escrow" is defined in Section 1.5.

"Estoppel Certificate" is shown on Exhibit D.

"Exchange" is defined in Article 27.

"Exercise Notice" is defined in Section 1.3.

"Existing Leases" is defined in Recital B.

"General Assignment" is defined in Section 9.1(vi).

"Governmental Notices" is defined in Section 8.1.2(ii).

"Grant Deed" shall mean the form conveying the Property to Buyer, recorded in
the Official Records of Placer County, California.

"Hazardous Materials" is defined in Section 8.1.2(ix).

"Improvements" is defined in Section 2.2(iv).

"Information Report" is defined in Article 24.

"Increased Coverage Endorsement" is defined in Section 1.9(x).

"Intangible Property" is defined in Section 2.2(iii).

"Land" is defined in Section 2.2(iii).

"Lease" is defined in Recital C.

"Leasehold Policy" is defined in Section 1.9(x).

"Lender" is defined in Section 1.7.1.

"Loan" is defined in Section 1.7.1.

"Memorandum of Ground Lease" is defined in Section 1.9 (v).

"Memorandum of Option is defined in Section 1.9 (iv) and is shown on Exhibit B.

"Nondisturbance Agreement" is defined in Section 1.7.4.

"Option" is defined in Section 1.1.

"Option Consideration" is defined in Section 1.9(iii).

"Option Exercise Period" is defined in Section 1.3.

"Option Termination Date" is defined in Section 1.2.

"Preliminary Closing" is defined in Section 1.9.

"Property" is defined in Recital A and further defined in Section 2.2.

"Purchase Price" is defined in Article 3.

"Representing Party" is defined in Section 16.2.

"Sale" is defined in Section 1.6.

"Seller" shall mean Reynen & Bardis (KMS Placer), L.P., a California limited
partnership.

"Seller Indemnified Parties" is defined in Section 17.1.

"Seller Nonrecourse Party, Seller Nonrecourse Parties" are defined in
Section 17.3.

"Seller's Certificate" is defined in Section 9.1.(v).

"Termination Demand" is defined in Section 5.3.

"Title Company" is defined in Article 7.

"Title Documents" is defined in Section 8.1.1.

"Title Policy" is defined in Article 7.

"Title Report" is defined in Section 8.1.1(i).

"Visual Map" shall mean the cross-hatched area attached as Exhibit F.

OPTION AGREEMENT AND JOINT ESCROW INSTRUCTIONS

TO:                                                        Escrow
No.__________________________
Placer Title Company                             Escrow Officer:    Sue Weaver
1512 Eureka Road, #120                       Telephone:    (916) 782-3711
Roseville, CA 95661                              Title Order
No._______________________
Attention: Sue Weaver                            Title Officer:    Kevin Kormylo
                                                              Telephone:   
(916) 624-8141

This Option Agreement and Joint Escrow Instructions (this "Agreement") is
entered into as of January 13, 2003, by and between REYNEN & BARDIS (KMS
PLACER), L.P., a California limited partnership ("Seller"), and ACE HARDWARE
CORPORATION, a Delaware corporation ("Buyer"), agree as follows.

RECITALS

        A.    Seller is the owner of that certain real property located in the
County of Placer, State of California, consisting of certain improvements and
land as more specifically described below (and defined below as the "Property").

        B.    As of the date hereof, Seller leases portions of the Property to
Pacific Gas & Electric Company, to Hewlett-Packard Company and to Buyer on long
term leases, and to other tenants on month-to-month or short term leases
(collectively, and as further described below, the "Existing Leases").

        C.    Seller and Buyer acknowledge that: (i) Seller and Buyer desire to
execute a long-term ground lease (the "Lease") as of the Preliminary Closing (as
defined below); (ii) as a concession to Buyer, Seller agreed to grant to Buyer
an option to purchase the Property provided that Buyer will cooperate with
Seller in consummating an exchange since Seller does not desire to convert
Seller's investment to cash but rather desires to maintain its investment in
real property; (iii) Buyer desires to develop the Property for use as a
distribution center for its products and such other uses as Buyer may desire;
(iv) Buyer desires to commence construction of additional buildings and related
improvements on the Property by February 15, 2003; and (v) in order to
accommodate Buyer's desire to acquire the Property and commence construction
while simultaneously allowing Seller to complete an exchange, Seller and Buyer
agreed that, if Buyer exercises the Option (as defined below), the Close of
Escrow (as defined below) will occur on September 10, 2003 after written notice
by Buyer to Seller given anytime after July 31, 2003 and on or before August 29,
2003.

        NOW, THEREFORE, for good and valuable consideration, receipt of which is
hereby acknowledged, Seller and Buyer agree as follows:

AGREEMENT

ARTICLE 1    OPTION; COVENANTS DURING OPTION PERIOD; PRELIMINARY CLOSING

        1.1    Grant of Option. Upon the terms and conditions set forth herein,
Seller hereby grants to Buyer an exclusive option to purchase the Property
("Option").

        1.2    Term of Option. The term of the Option shall commence on the date
of this Agreement (as set forth in the introductory paragraph hereof), and shall
expire at 5:00 p.m. Pacific Time on August 29, 2003 ("Option Termination Date"),
unless previously exercised or cancelled pursuant to the terms of this
Agreement.

        1.3    Exercise of Option; Sale of Property. Except as provided in
Section 1.5, if Buyer elects to exercise the Option, Buyer shall do so by
delivering written notice ("Exercise Notice") to Seller and to Escrow Holder (as
defined below) of its election to so exercise at any time from and after July 1,
2003 and on or before August 29, 2003 (the "Option Exercise Period"). Upon
exercise of the Option by Buyer, Seller shall sell and convey to Buyer, and
Buyer shall purchase from Seller, the Property on the terms and conditions
contained herein.

        1.4    Failure to Exercise Option. If, after closing pursuant to the
Preliminary Closing, Buyer fails to exercise the Option prior to expiration of
the Option Exercise Period, the Option shall automatically terminate and the
provisions of Section 18.2 below shall apply.

        1.5    Deposit with Escrow. The terms and conditions of the Option
granted hereunder and Seller's sale of the Property to Buyer, and the
instructions to Escrow Holder with regard to the escrow (the "Escrow") created
pursuant hereto are as set forth in this Agreement. Within five (5) business
days of the execution of this Agreement, Seller and Buyer shall deliver a fully
executed original counterpart of this Agreement and a fully executed and
notarized original of the Memorandum of Option (as defined below) to Escrow
Holder.

        1.6    Restrictions on Transfer by Seller. During the term of the Option
(and if exercised, until the Close of Escrow), in no event shall Seller directly
or indirectly, voluntarily or by operation of law, sell, exchange, convey,
transfer, contract to sell, dispose of, or further encumber the Property or any
part thereof or any interest therein, or be divested of title to the Property or
any part thereof or interest therein (individually or collectively, as the
context may require, a "sale") without obtaining the prior written consent of
Buyer, which consent may be given or withheld in Buyer's sole discretion. For
purposes of this Section, the term "sale" shall include, without limitation, if
Seller or a general partner or a member of Seller is a partnership, limited
liability company, joint venture, trust or closely-held corporation, the
issuance, sale, conveyance, transfer, disposition or encumbering of more than
fifty percent (50%) of any class of the currently issued and outstanding capital
stock of Seller or of a general partner or member of Seller or of the beneficial
interest of such partnership, limited liability company, joint venture or trust,
or a change of any general partner or any member or any joint venture, either
voluntarily, involuntarily or otherwise. For purposes of this Section, the term
"closely-held corporation" shall mean any corporation not listed on any of the
New York, American or Pacific stock exchanges. The transfer by any partner or
member of Seller or by any direct or indirect interest holder in any partner or
member of Seller, to the extent the transfer consists solely of an inter vivos
gift or testamentary transfer to any spouse, parent, sibling, in-law, child or
grandchild of such partner, member or interest holder, or to a trust for the
benefit of such partner, member or interest holder, or such spouse, parent,
sibling, in-law, child or grandchild of such partner, member or interest holder,
shall not be deemed a "sale" for purposes of this Section. At Buyer's option,
any sale of the Property or any part thereof in violation of this Section shall
be deemed null and void. The restrictions set forth in this Section shall
survive the exercise by Buyer of the Option and shall continue to the Close of
Escrow, but shall terminate if Buyer does not timely exercise the Option.

        1.7    Existing Loan.

                1.7.1    Loan. Seller informs Buyer that as of the date of this
Agreement, the Property is encumbered by a Deed of Trust (the "Deed of Trust")
dated August 19, 2001 executed by Seller for the benefit of Western Sierra
National Bank ("Lender"), recorded as Document No. 2002-0100927 in the Official
Records of Placer County, California and securing certain financing by Lender to
Seller in the original principal amount of Twelve Million Seven Hundred Eighty
Thousand Dollars ($12,780,000) (the "Loan"). Any documents or instruments
evidencing or securing the Loan are referred to herein as the "Loan Documents."
Seller and Buyer acknowledge that Seller shall be required to pay off the Loan
in full and remove all Loan Documents from title to the Property at the Close of
Escrow.

                1.7.2    Request for Notice of Default. Seller and Buyer agree
that Buyer may record in Placer County, California, one or more Requests for
Notice of Default with respect to the Loan. Seller agrees that Buyer may cure
any monetary default under the Loan on behalf of Seller. Additionally, Seller
agrees to notify Buyer of any notice of default or other notice received by
Seller from Lender with respect to any default in connection with the Loan.

                1.7.3    Credit Against Purchase Price. In addition to any other
rights or remedies Buyer may have at law, in equity or pursuant to any other
agreement (including, the Nondisturbance Agreement (as defined below)), any sums
paid by Buyer to Lender to cure any default under the Loan may, at Buyer's
election, be credited against the Purchase Price at the Close of Escrow.

                1.7.4    Non-Disturbance. As a condition for the benefit of
Buyer which must be satisfied during the Contingency Period (as defined below),
Lender, Seller and Buyer shall execute and acknowledge a separate nondisturbance
agreement ("Nondisturbance Agreement") for the benefit of Buyer, in such form
and containing such provisions as reasonably acceptable to Buyer, including a
provision that provides if the interest of Seller in the Property is transferred
by reason of any foreclosure of the Deed of Trust or by deed in lieu or in aid
thereof, Lender or any such transferee of the Property shall be bound to Buyer,
and Buyer shall be bound to Lender or such transferee, under all of the terms,
covenants and conditions of this Agreement and the Lease for the balance of the
term of this Agreement and the term of the Lease, respectively, with the same
force and effect as if Lender or such transferee were the original seller under
this Agreement and the original lessor under the Lease.

                1.7.5    Use of Option Consideration to Cure Loan Default. Buyer
may, at its sole option, elect to use all or any part of the Option
Consideration from time to time to cure any default under the Loan which it is
entitled to cure pursuant to the Nondisturbance Agreement, upon presentation by
Buyer to Escrow Holder of a copy of the notice of such default sent by Lender
and a certificate executed by Buyer stating its intent to use the amount stated
in such certificate to cure the default, provided that Buyer may use the Option
Consideration only to the extent reasonably necessary to cure the default then
existing under the Loan. Buyer shall have no obligation to restore any amounts
of the Option Consideration so used to Escrow.

        1.8    Restrictions During Option Period. During the term of this
Option, and continuing until the Close of Escrow if the Option is exercised by
Buyer, Seller shall not intentionally take any action with respect to the
Property that interferes with or in any way affects the permitting, development
or construction by Buyer of improvements on the Property.

        1.9    Preliminary Closing. Seller and Buyer intend to conduct a
"Preliminary Closing" on January 15, 2003, pursuant to which the following shall
occur:

                (i)    Within the Contingency Period, Buyer shall waive the
conditions set forth in Section 8.1 by delivering a written notice to Escrow
Holder and Seller (the "Contingency Period Conditions Waiver").

                (ii)    Buyer shall also deliver a fully executed "As Is
Certificate" attached as Exhibit A to Escrow Holder.

                (iii)    Buyer shall deposit One Million Dollars ($1,000,000) in
consideration of the grant of the Option ("Option Consideration") plus its share
of the Preliminary Closing costs with Escrow Holder. Upon consummation of the
Preliminary Closing, the Option Consideration shall be nonrefundable except as
otherwise provided in Section 1.10 and Section 4.1.

                (iv)    Buyer and Seller shall execute and acknowledge a
memorandum of the Option in the form of Exhibit B hereto ("Memorandum of
Option") and deposit it with Escrow Holder.

                (v)    Buyer and Seller shall each execute counterparts of the
Lease, and deposit it with Escrow Holder.

                (vi)    Buyer and Seller shall each execute and acknowledge a
memorandum of the Lease in the form attached hereto as Exhibit C (the
"Memorandum of Ground Lease") and deposit it with Escrow Holder;

                (vii)    Buyer shall execute a counterpart of the Development
Management Agreement (the "Development Management Agreement") to be entered into
between Buyer and KMS Development, LLC, an affiliate of Seller
("KMS Development"), and Seller shall cause KMS Development to execute a
counterpart, in the form approved by Buyer, Seller and KMS Development and shall
deposit it with Escrow Holder;

                (viii)    Buyer and Seller shall each execute and acknowledge
counterparts of the Nondisturbance Agreement, and deposit them with Escrow
Holder, and Seller shall arrange for the deposit with Escrow of an executed and
acknowledged counterpart of the Nondisturbance Agreement by Lender.

                (ix)    Seller shall deliver to Buyer an estoppel certificate
from Seller with respect to each of the Existing Leases and an estoppel
certificate from each tenant under the Existing Leases which estoppel
certificates shall be in the form of Exhibit D hereto ("Estoppel Certificate").

                (x)    Title Company shall have irrevocably committed to issue
its leasehold policy of title insurance (the "Leasehold Policy") ensuring
Buyer's leasehold interest under the Lease and option rights under this
Agreement. The Leasehold Policy shall insure Buyer's interest in the Property as
optionee in the amount of Twenty-One Million Dollars ($21,000,000) and as lessee
under the Lease, with exceptions as delineated in Sections 6.1(i), (ii), (iv),
(v) and (vi), and shall contain an endorsement permitting Buyer to increase the
amount of coverage from time to time by the amounts expended by Buyer on the
construction of additional buildings and improvements on the Property but not to
exceed a total coverage amount of Forty Million Dollars ($40,000,000)
("Increased Coverage Endorsement"). Buyer shall pay the cost of the Leasehold
Policy and any costs attributable to the Increased Coverage Endorsement.

                (xi)    Escrow Holder shall close the Preliminary Closing on
January 15, 2003, by recording the Memorandum of Option, the Memorandum of Lease
and the Nondisturbance Agreement in the Official Records of Placer County,
delivering the Leasehold Policy to Buyer, delivering the As Is Certificate to
Seller, delivering the counterparts of the Lease and the Development Management
Agreement executed by the other to Seller and Buyer, and depositing the Option
Consideration in an interest-bearing account as provided in Section 4.1.

                If the Preliminary Closing is not closed on January 15, 2003 or
if Buyer fails to timely deliver the Contingency Period Conditions Waiver, As Is
Certificate or the Option Consideration, then this Agreement shall automatically
terminate and neither party shall have any further rights, duties or obligations
hereunder except as provided in Section 18.1.

                If Seller is unable to deliver the Estoppel Certificates from
each tenant under the Existing Leases by January 15, 2003, after using
reasonable efforts to do so, Buyer's sole option shall be to waive the condition
for the delivery of the Estoppel Certificates from the tenants or elect to
terminate this Agreement and the Lease. If Buyer elects to waive the delivery of
the Estoppel Certificates, Buyer and Seller shall continue to use reasonable
efforts to obtain the Estoppel Certificates from the tenants until the Closing.

        1.10    CUP Substantial Compliance Letter. Seller and Buyer acknowledge
that Buyer is concerned about the conformity of its contemplated construction of
additional buildings and improvements on the Property with the existing
Conditional Use Permit issued by the County of Placer for the Property (the
"CUP"). Seller is working with the County of Placer to obtain a letter from the
County of Placer to Buyer (and if desired by Seller, to Seller), in content
reasonably acceptable to Buyer, confirming the substantial compliance of Buyer's
contemplated construction with the CUP (the "CUP Substantial Compliance
Letter"). Notwithstanding the consummation of the Preliminary Closing or any
other provision to the contrary in this Agreement or in the Lease or the
Development Management Agreement, Seller and Buyer agree that if the CUP
Substantial Compliance Letter is not issued by the City and delivered to Buyer
on or before February 14, 2003, Buyer at its sole option may elect to terminate
this Agreement by written notice to Seller and to Escrow Holder on or before
February 21, 2003. Upon Buyer's timely issuance of such written notice to
Seller, (i) this Agreement shall automatically terminate and neither party shall
have any further rights or obligations hereunder, (ii) the Option Consideration
shall be promptly returned to Buyer, together with all accrued interest thereon,
and (iii) the Ground Lease and the Development Management Agreement shall be
automatically terminated and of no further force or effect. In such event, Buyer
shall be responsible for the payment of any title insurance premiums charged by
the Title Company for the Leasehold Policy.

ARTICLE 2    PURCHASE AND SALE; PROPERTY

        2.1    Sale to Buyer. Subject to the delivery or deemed delivery of the
Exercise Notice, 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.

        2.2    Property. As used herein, the "Property" shall mean:

                (i)    That certain real property (the "Land") consisting of
approximately 82+ gross acres of land more particularly described in Exhibit E
attached hereto (and depicted as the cross-hatched area on the Visual Map
attached hereto as Exhibit F (the "Visual Map"));

                (ii)    All rights, privileges, easements, tenements,
hereditaments, rights of way and appurtenances which belong to or appertain to
the Land and/or are owned by Seller, including, without limitation, rights to
all minerals, oil, gas and other hydrocarbon substances on and under the Land
and rights and water stock, if any, relating to the Land (collectively, the
"Appurtenances"); and

                (iii)    All intangible property owned or held by Seller in
connection with the Land or the use thereof, including, without limitation, the
right to use any trade name now used in connection with the Land (including,
without limitation, the name "Placer Sierra Business Park") and all permits,
maps, surveys, plans, leases, licenses, franchises, rental contracts and
agreements (collectively, the "Intangible Property"); and

                (iv)    The Land is improved with an approximately 627,000
square foot building and related improvements (the "Improvements").

                The Land, the Appurtenances, the Intangible Property and the
Improvements are collectively referred to herein as the "Property."

ARTICLE 3    PURCHASE PRICE

        The total purchase price (the "Purchase Price") for the Property shall
be Twenty-One Million Dollars ($21,000,000).

ARTICLE 4    PAYMENT OF PURCHASE PRICE

        4.1    Option Consideration. The Option Consideration shall be invested
by Escrow Holder in an interest bearing account acceptable to Buyer with all
interest accruing thereon paid to Buyer on demand or, at Buyer's election,
credited to the Purchase Price upon the Close of Escrow (as defined below).
Subject to Sections 1.9, 1.10 and 18.1 hereof, the Option Consideration shall be
applied to the Purchase Price upon the Close of Escrow and shall be
nonrefundable to Buyer when made unless the consummation of the transaction
contemplated hereby fails to occur by reason of the nonsatisfaction of a
condition to the Close of Escrow for Buyer's benefit or by reason of a default
by Seller in any of its obligations hereunder, in which event the Option
Consideration, together with all interest accrued thereon, shall be returned to
Buyer.

        4.2    Buyer's Deposit of Balance of Purchase Price. Prior to the Close
of Escrow, Buyer shall deposit, or cause to be deposited with Escrow Holder, the
amount of the Purchase Price by wire transfer, cashier's check or other
immediately available funds, less the sum of the Option Consideration, including
any accrued interest thereon, plus or minus Escrow Holder's estimate of Buyer's
share of closing costs, prorations and other charges payable by or chargeable to
Buyer pursuant to this Agreement.

ARTICLE 5    ESCROW

        5.1    Opening of Escrow. For purposes of this Agreement, the Escrow
shall be deemed opened the date Escrow Holder shall have received an executed
counterpart of this Agreement from both Buyer and Seller. In addition, Buyer and
Seller shall execute, deliver and be bound by any reasonable or 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 shall 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 shall control.

        5.2    Close of Escrow. For purposes of this Agreement, the "Close of
Escrow" shall be defined as the date that the Grant Deed, the form of which is
attached hereto as Exhibit G (the "Grant Deed") conveying the Property to Buyer,
is recorded in the Official Records of Placer County, California. If Buyer
delivers the Exercise Notice to Seller, Escrow shall close on September 10, 2003
("Closing Date").

        5.3    Failure to Close on Closing Date. If the Escrow is not in a
condition to be closed on the Closing Date without the fault of Seller or Buyer,
Escrow Holder shall close the Escrow as soon thereafter as is possible, unless
Escrow Holder has received written demand to terminate the Escrow (a
"Termination Demand") from a party who is not in default in the performance of
any of its obligations hereunder. In the event of a termination pursuant to this
Section 5.3, Section 18.2 or 18.3 below, as the case may be, shall apply.

ARTICLE 6    CONDITION OF TITLE

        6.1    Approved Condition of Title. It shall be a condition to the Close
of Escrow and a covenant of Seller that title to the Property be conveyed to
Buyer by Seller by the Grant Deed in a condition of title (the "Approved
Condition of Title"), subject only to the following exceptions:

                (i)    A lien to secure payment of real estate taxes, bonds and
assessments, not delinquent;

                (ii)    The lien of supplemental taxes assessed pursuant to
Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation
Code (the "Code"), but only to the extent that such supplemental taxes are
attributable to the transaction contemplated by this Agreement. Buyer shall be
responsible for any supplemental taxes assessed pursuant to the Code to the
extent that such taxes relate to new construction occurring after the
Preliminary Closing and before the Close of Escrow. Seller shall be responsible
for, and hereby indemnifies Buyer and the Property against, any supplemental
taxes assessed, whether prior to or following the Preliminary Closing and/or the
Close of Escrow, as a result of (a) events occurring prior to the Preliminary
Closing or (b) events which occur from or after the Preliminary Closing and
prior to the Close of Escrow, which events constitute a "Change of Ownership"
(as such term is defined by California Revenue and Taxation Code Section 62 et
seq.) due to actions by Seller or Seller's members and/or principals (except for
and excluding the Option and the Lease);

                (iii)    Matters affecting the Approved Condition of Title
created by Buyer, or approved by Buyer, which approval shall not be unreasonably
withheld, including without limitation those dedications and easements, if any,
required to facilitate Buyer's construction and development of the Property;

                (iv)    Nonmonetary exceptions which are disclosed by the Title
Report (as defined below) and approved or deemed approved by Buyer in accordance
with Section 8.1.1 hereof. Seller shall be obligated to remove at or before the
Close of Escrow, the Deed of Trust, any other deeds of trust, mortgages, or
other monetary liens or encumbrances disclosed by the Title Report (except for
bonds and assessments and any monetary liens or encumbrances created by or on
behalf of Buyer in connection with Buyer's construction and development of the
Property);

                (v)    The exceptions shown on the standard printed CLTA title
policy form; and

                (vi)    The Existing Leases.

        Seller's indemnification of the Title Company (as defined below) to
induce it to insure any otherwise unpermitted exception to title shall not be
allowed except with the prior written consent of Buyer after full disclosure to
Buyer of the nature and substance of such exception and indemnity.

        6.2    New Title Matters. From and after the Preliminary Closing, Seller
will not cause title to the Property to differ from the Approved Condition of
Title described in Sections 6.1(i), (ii), (iv), (v) and (vi) without Buyer's
consent which shall not be unreasonably withheld. Any other liens, encumbrances,
easements, restrictions, conditions, covenants, rights, rights of way or other
matters affecting the Approved Condition of Title which may appear of record or
be revealed after the date of the Title Report and which are (i) not insured
against and (ii) which are not approved by Buyer (which approval will not be
unreasonably withheld) must be eliminated or ameliorated to Buyer's satisfaction
by Seller before the Close of Escrow as a condition to the Close of Escrow for
Buyer's benefit.

ARTICLE 7    TITLE POLICY

        Title shall be evidenced by the irrevocable commitment of Placer Title
Company ("Title Company") to issue a CLTA extended coverage owner's form policy
of title insurance (the "Title Policy") in the amount of the Purchase Price (or
such increased amount as shown in the Leasehold Policy pursuant to the Increased
Coverage Endorsement), showing title to the Property vested in Buyer in the
Approved Condition of Title.

        If requested by Buyer, the Title Policy may be upgraded to an ALTA
policy with such endorsements as Buyer may reasonably request. The Title
Company's providing (or not providing) any requested endorsements or ALTA
coverage shall not be a condition to Close of Escrow.

ARTICLE 8    CONDITIONS TO CLOSE ESCROW

        8.1    Conditions to Buyer's Obligations Which Must be Satisfied or
Waived Prior to Expiration of the Contingency Period. Subject to the delivery of
the Exercise Notice, the Close of Escrow and Buyer's obligation to consummate
the transaction contemplated by this Agreement are subject to the satisfaction
(or Buyer's waiver) of the following conditions for Buyer's benefit on or before
the expiration of the period (the "Contingency Period") commencing on the date
hereof and expiring on Contingency Period January 15, 2003. Seller and Buyer
acknowledge that the expiration of the Contingency Period shall be coincident
with the Preliminary Closing.

                8.1.1    Approval of Title. On or before the expiration of the
Contingency Period, Buyer shall have approved the legal description of the Land
attached hereto as Exhibit E and any matters of title as disclosed by the
following documents (the "Title Documents") which have been delivered to Buyer
at Seller's sole cost and expense:

                         (i)    the Title Company's preliminary report (Order
No. 101-21984) (the "Title Report") dated as of November 26, 2002 with respect
to the Property; and

                        (ii)    legible copies of all documents, whether
recorded or unrecorded, referred to in any part of the Title Report.

        Notwithstanding anything to the contrary contained in this Section
8.1.1, Buyer hereby objects to all liens evidencing monetary encumbrances (other
than liens for non-delinquent property taxes, bonds and special assessments).
Seller shall to cause all such liens to be eliminated at Seller's sole cost and
expense (including all prepayment penalties and charges) before the Close of
Escrow.

                8.1.2    Review and Approval of Documents and Materials. On
December 10, 11 and 12, 2002 ("Review Date") Seller made available to Buyer, for
inspection by Buyer, all documents and materials in the possession of Seller or
its agents or reasonably available to Seller or its agents regarding the
Property (the "Documents and Materials"). Buyer has copied, or will copy, any
and all of the Documents and Materials which Buyer desires and, on or before the
expiration of the Contingency Period, Buyer shall have approved the Documents
and Materials. At Buyer's request, Seller shall make the Documents and Materials
available for additional review and inspection by Buyer at any time after the
date of this Agreement. Upon the Close of Escrow, Seller shall deliver the
Documents and Materials to Buyer. The Documents and Materials include, but are
not limited to:

                         (i)    Any and all licenses, permits and agreements
affecting or relating to the ownership, subdivision, possession or development
of the Land in the possession or control or Seller, its agents or
representatives.

                        (ii)    Copies of all applications, correspondence,
notices, and other written communications (collectively, "Governmental Notices")
to or from any governmental entity, department or agency regarding the Property,
any portion thereof, or any permit, approval, consent or authorization with
respect to the development of the Property which are in the possession or
control of Seller, its agents or representatives, if any. Seller shall deliver
to Buyer any Governmental Notice received after the Review Date.

                        (iii)    Copies of the most recent survey(s), if any,
pertaining to the Property or any portion thereof which are in the possession or
control of Seller, its agents or representatives, including a survey acceptable
to the Title Company for the issuance of the Title Policy (which shall be
obtained by Seller or updated from a prior survey at Seller's sole cost and
expense).

                        (iv)    Any and all tentative, parcel and/or final maps,
development plans, site plans, building permits, certificates of occupancy,
specifications or any other governmentally approved or processed documents
relating to the subdivision or development of the Property which are in the
possession or control of Seller, its agents or representatives.

                        (v)    Any and all reports, projections, studies or
other documents or written information pertaining to the Property which are in
the possession or control of Seller, its agents or representatives.

                        (vi)    Any and all property tax statements pertaining
to the Property which are in the possession or control of Seller, its agents or
representatives.

                        (vii)    Any and all soils reports, engineering data and
other data or studies pertaining to the Property or any portion thereof which
are in the possession or control or Seller, its agents or representatives.

                        (viii)    Copies of the Existing Leases.

                        (ix)    Any study or report (the "Environmental Report")
with respect to the presence and/or possible presence in, on, or about the
Property of Hazardous Materials. As used herein, (A) "Hazardous Materials" means
any chemical, substance, material, controlled substance, object, condition,
waste, living organism or combination thereof which is or may be hazardous to
human health or safety or to the environment due to its radioactivity,
ignitability, corrosivity, reactivity, explosivity, toxicity, carcinogenicity,
mutagenicity, phytotoxicity, reproductive toxicity, infectiousness or other
harmful or potentially harmful properties or effects, including, without
limitation, petroleum and petroleum products, asbestos, radon, polychlorinated
biphenyls (PCBs), and all of those chemicals, substances, materials, controlled
substances, objects, conditions, wastes, living organisms or combinations
thereof which are now or become in the future listed, defined or regulated in
any manner by any Environmental Law based upon, directly or indirectly, such
properties or effects; and (B) "Environmental Law" means any and all federal,
state or local environmental, health and/or safety-related laws, regulations,
standards, decisions of the courts, ordinances, rules, codes, orders, decrees,
directives, guidelines, permits or permit conditions, currently existing and as
amended, enacted, issued or adopted in the future which are or become applicable
to the Property. Seller shall cooperate with Buyer in causing any such
Environmental Report to be certified in favor of Buyer.

                        (x)    Any improvement plans and any other plans and
specifications relating to Improvements, including any and all building
department changes, and any landscape, lighting and signage plans.

                        (xi)    Any and all contracts relating to the
construction and installation of the Improvements, together with a copy of all
warranties and guarantees applicable thereto.

                        (xii)    Any and all subdivision maps and development
and/or other agreements with the County of Placer and/or other governmental
entities with jurisdiction, which agreements relate to the development and/or
improvement of the Property.

                        (xiii)    A copy of the Loan Documents.

                8.1.3    Approval of Inspections and Studies. On or before the
expiration of the Contingency Period, Buyer shall have approved the results of
any and all inspections, investigations, tests and studies (including, without
limitation, investigations with regard to zoning, building codes and other
governmental regulations, architectural inspections, engineering tests, economic
feasibility studies and soils, seismic and geologic reports) with respect to the
Property (including all structural and mechanical systems and leased areas, if
any) as Buyer may elect to make or obtain. The failure of Buyer to disapprove
such results on or before the expiration of the Contingency Period shall be
deemed to constitute Buyer's approval of the results. The cost of any such
inspections, tests and studies shall be borne by Buyer. In addition to Buyer's
rights of possession under the Lease, during the term of this Agreement, Buyer,
its agents, contractors and subcontractors shall have the right to enter upon
those portions of the Property subject to the Existing Leases, 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
shall use care and consideration in connection with any of its inspections. From
and after the execution of this Agreement, Buyer and Buyer's representatives,
agents, consultants and designees shall further be entitled to communicate
directly with any and all governmental and quasi-governmental bodies and
agencies having jurisdiction over the Property in connection with Buyer's
proposed purchase, development or operation of the Property. (The exercise by
Buyer of any of the preceding or any other act of Buyer shall not negate any
representation, warranty or covenant of Seller or modify any of Buyer's rights
or Seller's obligations in the event of any breach by Seller of any of Seller's
representations, warranties or covenants under this Agreement.) Buyer shall
indemnify and hold Seller and the Property harmless from any and all costs,
expenses (including reasonable attorneys' fees), liabilities, and damages
arising out of or resulting from the actions of Buyer, its agents, contractors
and/or subcontractors in connection with such entry and/or activities upon the
Property. Buyer's obligation to indemnify Seller pursuant to this Section 8.1.3.
shall remain in full force and effect notwithstanding any termination of this
Agreement including, without limitation, any termination pursuant to this
Section 8.

                8.1.4    Commitment to Issue Title Policy. As contemplated by
Section 1.10 above, on or before the expiration of the Contingency Period, the
Title Company has irrevocably committed to issue the Option Title Policy
insuring Buyer's leasehold interest under the Lease and Buyer's option to
acquire fee simple title to the Property is vested in Buyer or its permitted
assignee in the Approved Condition of Title.

                8.1.5    Hazardous Materials. On or before expiration of the
Contingency Period Buyer shall be satisfied, in its sole and subjective
discretion, that (i) the Property is free of Hazardous Materials; and (ii) the
presence, handling, use, transport, storage, generation and disposal of
Hazardous Materials in, on, or about the Property has been at all times and is
in compliance with all applicable federal, state, county and local governmental
laws, ordinances, rules, regulations, resolutions, policy statements, permits
and the like relating to environmental matters. Buyer, at its sole cost and
expense, shall have the right to perform an environmental inspection and audit
of the Property which may include, without limitation, Buyer's inspection and
testing of the physical condition of the Property in accordance with the
provisions of Section 8.1.3. above.

                8.1.6    Natural Hazard Disclosure Statement. Seller has
previously delivered to Buyer a natural hazard disclosure report prepared by a
reputable third party preparer disclosing whether or not the Property is located
within (i) a special flood hazard zone designated by the Federal Emergency
Management Agency (Government Code Section 8589.3); (ii) an area of potential
flooding shown on an inundation map under Government Code Section 8959.5
(Government Code Section 8959.4); (iii) a very high fire hazard severity zone
designated by Government Code Section 51179 (Government Code Section 51183.5);
(iv) a wild land area that may contain substantial force fire risks and hazards
under Public Resources Code Section 4125 (Public Resources Code Section 4136);
(v) an earthquake fault zone under Public Resources Code Section 2622 (Public
Resources Code Section 2621.9); or (vi) a seismic hazard zone under Public
Resources Code Section 2629 (Public Resources Code Section 2694). Buyer shall
review and approve or disapprove the Natural Hazard Disclosure Statement prior
to expiration of the Contingency Period.

                8.1.7    Special Tax Disclosures. Seller has disclosed that the
Property may lie within several community facilities districts and several
special assessment districts. Buyer acknowledges that Seller will comply with
the provisions of California Government Code Section 53341.5 by providing the
form of disclosure required by that section within ten (10) days after execution
hereof, which will be reviewed and, if acceptable, executed by Buyer prior to
expiration of the Contingency Period and delivered to Escrow Holder. A form copy
of the special tax disclosure is attached at Exhibit H.

                8.1.8    No Moratorium. Buyer shall satisfy itself during the
Contingency Period that there is no reassessment, reclassification, rezoning or
other statute, law, judicial or administrative decision, proceeding, ordinance
or regulation (including amendments and modifications of any of the foregoing)
pending or proposed to be imposed by any governmental or quasi-governmental
bodies or agencies having jurisdiction over the Property or any public or
private utility having jurisdiction over the Property which would adversely
affect, in Buyer's reasonable judgment, the acquisition, development, sale or
use of the Property.

        8.2    Conditions to Buyer's Obligations Which Must be Satisfied or
Waived Prior to Close of Escrow. For the benefit of Buyer, Close of Escrow shall
be conditioned upon the occurrence and/or satisfaction of each of the following
conditions (or Buyer's waiver thereof).

                8.2.1    Performance of Seller's Obligations. As of the Close of
Escrow, Seller shall have performed all of the obligations required to be
performed by Seller under this Agreement.

                8.2.2    Truth of Seller's Representations. All representations
and warranties made by Seller to Buyer in this Agreement shall be true and
correct as of the date of this Agreement and as of the Close of Escrow.

                8.2.3    No Alteration of Approved Condition of Title or Leases.
From and after the date hereof, without the approval of Buyer, Seller shall not
have executed nor consented to the execution of any instrument which may result
in an alteration of the Approved Condition of Title.

                8.2.4    Truthfulness of Representations at Closing. Except as
expressly herein otherwise provided, the representations and warranties of
Seller set forth in this Agreement shall be true on and as of the Close of
Escrow as if those representations and warranties were made on and as of such
time.

                8.2.5    Title Policy. The Title Company shall be irrevocably
committed to issue the Title Policy ensuring that fee title to the Property
(subject to the exceptions described in Section 6.1) is vested in Buyer.

        8.3    Conditions to Seller's Obligations. For the benefit of Seller,
the Close of Escrow shall be conditioned upon the occurrence and/or satisfaction
of each of the following conditions (or Seller's waiver thereof).

                8.3.1    Performance of Buyer's Obligations. As of the Close of
Escrow, Buyer shall have timely performed all of the obligations required by the
terms of this Agreement to be performed by Buyer.

                8.3.2    Truth of Buyer's Representations. All representations
and warranties made by Buyer to Seller in this Agreement shall be true and
correct as of the Close of Escrow.

ARTICLE 9    DEPOSITS BY SELLER INTO ESCROW

        9.1    Deposits by Seller into Escrow. At least one business day before
the Close of Escrow, Seller shall deposit or cause to be deposited with Escrow
Holder the following documents and instruments:

                (i)    The Grant Deed, duly executed by Seller, acknowledged and
in recordable form, attached hereto as Exhibit G ;

                (ii)    A Bill of Sale conveying the Intangible Property in the
form attached hereto as Exhibit I (the "Bill of Sale");

                (iii)    An Assignment of Contracts in the form attached hereto
as Exhibit J (the "Assignment of Contracts");

                (iv)    An assignment and assumption of the Existing Leases in
the form of Exhibit K ("Assignment of Leases");

                (v)    A General Assignment in the form attached hereto as
Exhibit L (the "General Assignment");

                (vi)    A certificate of nonforeign status ("Seller's
Certificate"), duly executed by Seller, in the form attached hereto as Exhibit M
; and

                (vii)    An Estoppel Certificate for each of the Existing Leases
executed by Seller as of no more than ten (10) days prior to the Closing Date,
and, if available from each tenant under the Existing Leases after reasonable
efforts by Seller to obtain, an Estoppel Certificate from each tenant dated as
of no more than ten (10) days prior to the Closing Date or, if an Estoppel
Certificate was provided at the Preliminary Closing by such tenant, written
confirmation that the information contained in such prior Estoppel Certificate
remains true and correct as of a date no more than ten (10) days prior to the
Closing Date (such Estoppel Certificates to be in the form of Exhibit D attached
hereto).

ARTICLE 10    DEPOSITS BY BUYER INTO ESCROW

        10.1    Deposits by Buyer into Escrow. Buyer shall deposit or cause to
be deposited with Escrow Holder the following documents:

                (i)    The funds which are to be applied towards the payment of
the Purchase Price in the amounts and at the times designated in Section 2 above
(as reduced by the prorations and credits heretofore or hereinafter provided);

                (ii)    A Preliminary Change in Ownership Report in form and
substance acceptable to the county assessor for Placer County, California; and

                (iii)    An Assignment of Existing Leases.

ARTICLE 11    COSTS AND EXPENSES

        The cost and expense of the CLTA Title Policy shall be paid by Seller
and the ALTA increment and endorsements (if any) shall be paid by Buyer. Buyer
shall receive a credit in the amount of __________________________ Dollars
($_________) on account of __________________. The escrow fee of Escrow Holder
shall be shared equally by Seller and Buyer. Seller shall pay all documentary
transfer taxes payable in connection with the recordation of the Grant Deed. The
amount of such transfer taxes shall not be posted on the Grant Deed, but shall
be supplied by separate affidavit. Buyer and Seller shall pay, respectively,
Escrow Holder's customary charges to buyers and sellers for document drafting,
recording and miscellaneous charges. If, as a result of no fault of Buyer or
Seller, Escrow fails to close, Buyer and Seller shall share equally all of
Escrow Holder's reasonable fees and charges.

ARTICLE 12    PRORATIONS

        Except as provided in the Lease, real property taxes, special taxes,
assessments, utility fees and/or deposits, and personal property taxes with
respect to the Property shall be prorated between Seller and Buyer as of the
Close of Escrow. Prorations of taxes and assessments with respect to the
Property shall be based upon the latest available tax information so that Seller
shall be responsible for all such taxes and assessments levied against the
Property to and including the day before the Close of Escrow, and Buyer shall be
responsible for all taxes and assessments levied against the Property from and
after the day before the Close of Escrow. If any errors or omissions are made
regarding adjustments and prorations as aforesaid, the parties shall make the
appropriate corrections promptly upon the discovery thereof. If any estimations
are made at the Close of Escrow regarding adjustments or prorations, the parties
shall make the appropriate correction promptly when accurate information becomes
available. Any corrected adjustment or proration shall be paid in cash to the
party entitled thereto.

ARTICLE 13    DISBURSEMENTS AND OTHER ACTIONS BY ESCROW HOLDER

        Upon the Close of Escrow, the Escrow Holder shall promptly undertake all
of the actions set forth in this Article 13.

        13.1    Prorations. Prorate all matters described in Section 12 above,
based upon the statement delivered into Escrow signed by the parties.

        13.2    Recording. Cause the Grant Deed and any other documents which
the parties hereto may mutually direct to be recorded in the Official Records of
Placer County, California, in the order requested by the parties. Escrow Holder
is instructed not to affix the amount of documentary transfer tax on the face of
the Grant Deed, but to supply such amount by separate affidavit.

        13.3    Funds. All funds deposited with Escrow Holder by Buyer toward
payment of the Purchase Price shall be disbursed to Seller after first deducting
therefrom all items which are, pursuant to this Agreement, chargeable to the
account of Seller. All funds deposited with Escrow Holder by Buyer toward
payment of such other items as are chargeable to the account of Buyer pursuant
to this Agreement shall be disbursed and applied to the payment of such costs
and the balance of such funds, if any, shall be disbursed to Buyer.

        13.4    Title Policy. Direct the Title Company to issue the Title Policy
to Buyer.

        13.5    Original Documents. Deliver to Buyer the Bill of Sale, the
Assignment of Contracts, the General Assignment and Seller's Certificate.

        13.6    Copies of Documents. Deliver to Buyer and Seller, copies of all
documents delivered to either party hereto or recorded pursuant to this
Agreement.

ARTICLE 14    SELLER'S DISCLAIMER, REPRESENTATIONS AND WARRANTIES

        14.1    DISCLAIMER. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
EXPRESSLY SET FORTH IN THIS AGREEMENT OR THE LEASE, SELLER HAS NOT MADE ANY
REPRESENTATIONS, WARRANTIES, GUARANTIES, PROMISES, STATEMENTS OR ASSURANCES
WHATSOEVER, EXPRESS OR IMPLIED, DIRECTLY OR THROUGH ANY EMPLOYEE OR AGENT, AS TO
THE CONDITION OF THE PROPERTY OR ANY OTHER MATTER, INCLUDING, BUT NOT LIMITED
TO, HAZARDOUS MATERIALS. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING IN ANY
WAY, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN THE LEASE, SELLER
EXPRESSLY DISCLAIMS MAKING OR HAVING MADE ANY REPRESENTATIONS OR WARRANTY WITH
RESPECT TO THE DOCUMENTS AND MATERIALS FURNISHED BY SELLER. BUYER ACKNOWLEDGES
AND AGREES THAT EXCEPT FOR SELLER'S EXPRESS COVENANTS, REPRESENTATIONS AND
WARRANTIES CONTAINED IN THIS AGREEMENT AND THE LEASE, SELLER SPECIFICALLY
DISCLAIMS: (A) ALL MATTERS RELATING TO THE TITLE TOGETHER WITH ALL GOVERNMENTAL
AND OTHER LEGAL REQUIREMENTS SUCH AS TAXES, ASSESSMENTS, ZONING, USE PERMIT
REQUIREMENTS, BUILDING PERMIT REQUIREMENTS, BUILDING CODES AND OTHER DEVELOPMENT
REQUIREMENTS; (B) THE PHYSICAL CONDITION OF THE PROPERTY; (C) ALL OTHER MATTERS
OF ANY SIGNIFICANCE AFFECTING THE PROPERTY, WHETHER PHYSICAL IN NATURE OR
INTANGIBLE IN NATURE, SUCH AS THE POLITICAL CLIMATE WITH RESPECT TO THE
GOVERNMENTAL AGENCIES THAT HAVE JURISDICTION OVER THE PROPERTY, DEVELOPMENT OF
THE PROPERTY OR THE OPERATION OF THE PROPERTY; (D) THE EXISTENCE, QUALITY,
NATURE, ADEQUACY AND PHYSICAL CONDITION OF UTILITIES SERVING THE PROPERTY; (E)
THE ECONOMICS OF THE PRESENT OR FUTURE OWNERSHIP AND/OR OPERATION OF THE
PROPERTY; AND (F) THE EXISTENCE OF HAZARDOUS MATERIALS IN, UNDER OR AFFECTING
THE PROPERTY; AND, BUYER IS PURCHASING THE PROPERTY "AS IS-WITH ALL DEFECTS"
BASED UPON BUYER'S OWN INSPECTION OF THE PROPERTY.

> >          /s/                                       /s/       
> > Buyer's Initials                    Seller's Initials

        14.2    Representations and Warranties in General.

                14.2.1    Knowledge Representations. Warranties or
representations of Seller modified by a phrase such as "to the best knowledge"
shall mean that the warranty or representation is given to the extent the
subject matter is within the actual present knowledge of Thomas Manz and Steven
Pease. No knowledge of other persons shall be imputed, and there shall be no
implication or duty of inquiry or investigation. Seller represents to Buyer that
the persons named in this Section 14.2.1 are the persons within Seller who are
most likely to possess substantial information regarding the subject matter of
one or more of Seller's representations and warranties.

                14.2.2    Effect of Documents and Materials. Those items which
are disclosed by the Documents and Materials and all recorded and/or public
documents shall be deemed exceptions to the representations, warranties and
covenants of Seller contained in this Agreement. Notwithstanding the foregoing,
Seller represents and warrants that to the best knowledge of Seller, the
Documents and Materials are true and correct in that the Documents and Materials
made available for review by Buyer are all of the Documents and Materials.

                14.2.3    Interpretation and Effect of Disclosures. The
disclosures by Seller which are contained in this Agreement, and those
disclosures contained in the Documents and Materials, are intended to be
interpreted in light of Buyer's experience, and such disclosures to extent in
conflict with Seller's representations and warranties contained in this
Agreement shall be exceptions to such representations and warranties.

                14.2.4    Restatement. The representations and warranties made
by Seller shall be deemed to be restated by Seller immediately prior to Close of
Escrow. Except as otherwise provided herein, the representations and warranties,
as restated, shall survive the Close of Escrow for a period of twenty-four
months (the "Limitation"). No claim or action may be brought for any breach of
warranty or representation by Buyer on or after the second anniversary of the
Close of Escrow.

        14.3    Representations and Warranties by Seller. Seller acknowledges
that the execution of this Agreement by Buyer is made in material reliance by
Buyer on each and every one of the representations and warranties made by
Seller. Sections 14.3.1, 14.3.2 and 14.3.8 are not subject to the Limitation.
Seller hereby represents and warrants to Buyer that:

                14.3.1    Authority. Seller has the right, power and authority
to enter into this Agreement and to perform its obligations hereunder, and the
person(s) executing this Agreement on behalf of Seller have the right, power and
authority to do so. This Agreement constitutes the legal, valid and binding
obligation of Seller enforceable against Seller in accordance with its terms.
This Agreement does not violate any provision of any other agreement or document
to which Seller is a party or to which Seller is bound.

                14.3.2    No Grants. Seller has not granted to any party other
than Buyer any option, contract or other agreement with respect to a purchase or
sale of the Property or any portion thereof or any interest therein. Nothing in
this representation shall prohibit Seller from entering into any "backup" or
other agreement with respect to the Property which recognizes, and is
subordinate to, the prior right of Buyer to purchase and lease the Property in
accordance with the terms of this Agreement and the Lease.

                14.3.3    Hazardous Materials. To the best knowledge of Seller,
any Hazardous Materials incorporated into the site improvements, have been
incorporated into the site in substantial conformance with applicable laws. With
the exception of any such site improvement Hazardous Materials, neither Seller
nor any agent of Seller has used Hazardous Materials on, from or affecting the
Property in any manner which violates federal, state or local laws, ordinances,
rules, regulations or policies governing the use, storage, treatment,
transportation, manufacture, refinement, handling, production or disposal of
Hazardous Materials, and, to the best of Seller's knowledge, except as disclosed
to Buyer by Seller in writing, no prior owner, tenant, subtenant, occupant,
prior subtenant or prior occupant has used Hazardous Materials on, from or
affecting the Property in any manner which violates federal, state or local
laws, ordinances, rules, regulations or policies governing the use, storage,
treatment, transportation, manufacture, refinement, handling, production or
disposal of Hazardous Materials. Seller has not received any notice of any
violation of federal, state or local laws, ordinances, rules, regulations or
policies governing the use, storage, treatment, transportation, manufacture,
handling, production or disposal of Hazardous Materials, and, to the best of
Seller's knowledge, except as disclosed to Buyer by Seller in writing, there
have been no actions commenced or threatened by any party for noncompliance
therewith.

                14.3.4    No Default. Seller is not in default under, and no
event has occurred which with the giving of notice or the passage of time, or
both, would constitute a default under any contract, transaction, agreement,
covenant, condition, restriction, lease, easement, encumbrance or instrument
pertaining to the Property.

                14.3.5    No Violation. To the best knowledge of Seller, there
is not now, and the closing of the transaction contemplated by this Agreement
shall not constitute, any violation of any law, ordinance, rule, regulation or
administrative or judicial order affecting the Property.

                14.3.6    No Claims. There is no claim or litigation affecting
the Property pending or, to the best of Seller's knowledge, threatened.

                14.3.7    No Condemnation. There are no pending or, to the best
knowledge of Seller, any threatened (and unresolved) condemnation proceedings
affecting the Property, and, to the best knowledge of Seller, no such proceeding
is contemplated by any governmental authority. Seller has received no notice of
any such proceedings.

                14.3.8    No Third Party Consents. No consents or waivers or by
any third party are necessary to permit the consummation by Seller of the
transaction contemplated by this Agreement.

                14.3.9    Existing Leases. Except for the Existing Leases, to
the best of Seller's knowledge, there are no leases or other agreements
affecting or relating to the right of any party with respect to the possession
of the Property or any portion thereof.

                14.3.10  Documents and Materials. To the best knowledge of
Seller, the Documents and Materials made available to Buyer all of the Documents
and Materials in Seller's possession or in the possession of its agents relating
to the Property.

                14.3.11  No Attachments. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy or under any other debtor-relief laws pending or, to
the best of Seller's knowledge, threatened against Seller.

ARTICLE 15    BUYER'S REPRESENTATIONS AND WARRANTIES

        15.1    Representations and Warranties in General. The representations
and warranties made by Buyer shall be deemed to be restated by Buyer immediately
prior to the Close of Escrow. Except as otherwise provided herein, the
representations and warranties, as restated, shall survive the Close of Escrow.

        15.2    Representations and Warranties by Buyer. Buyer acknowledges that
the execution of this Agreement by Seller is made in material reliance by Seller
on each and every one of the representations and warranties made by Buyer. Buyer
hereby represents and warrants to Seller that:

                15.2.1    Authority. Buyer has the right, power and authority to
enter into this Agreement and to perform its obligations hereunder, and the
person(s) executing this Agreement on behalf of Buyer have the right, power and
authority to do so. This Agreement constitutes the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms. This
Agreement does not violate any provision of any other agreement or document to
which Buyer is a party or to which Buyer is bound.

                15.2.2    Feasibility Period. Buyer has been afforded a
reasonable period of time to perform such due diligence as Buyer believes is
reasonably necessary to make the decision to consummate the transactions
described in this Agreement.

                15.2.3    Reliance on Own Investigation. Except for express
representations and warranties made by Seller in this Agreement, Buyer is
relying and shall rely solely upon its own investigation and inspection of the
Property and the improvements thereon and upon the aid and advice of Buyer's
independent expert(s) in purchasing the Property, and shall take title to the
Property without any warranty, express or implied, by Seller or any employee or
agent of Seller.

                15.2.4    No Attachments. There are no attachments, executions
or assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy or under any other debtor-relief laws pending or, to
the best of Buyer's knowledge, threatened against Buyer.

ARTICLE 16    DISCOVERY OF INACCURACY IN WARRANTIES AND REPRESENTATIONS

        16.1    Notice. If, after the date of this Agreement and prior to the
Close of Escrow, either party discovers any inaccuracy in any representation or
warranty under this Agreement, whether made by that party, the discovering party
shall promptly notify the other party in a written notice: setting forth the
particular representation or warranty which is inaccurate, and the nature of the
inaccuracy discovered.

        16.2    Right to Terminate. If the inaccuracy is material, then the
party (the "Benefited Party") shall have the option to terminate this Agreement
within ten (10) calendar days of learning of such inaccuracy by giving notice to
the other party (the "Representing Party"). The Representing Party shall either:
(i) agree to cure the misrepresentation before Close of Escrow; or (ii) refuse
to do so, within five (5) calendar days after delivery of the original notice to
the Benefited Party. If the Representing Party agrees to cure the
misrepresentation, then this Agreement shall continue in full force and effect.
If the Representing Party refuses to do so or fails to respond, then this
Agreement shall terminate at the election of the Benefited Party which election
shall be made in writing and delivered to the Representing Party within twenty
(20) days after delivery of the original notice. Failure of the Benefited Party
to terminate this Agreement within such twenty (20) day period shall be deemed a
waiver of the right to terminate. Except in the case of an intentional
misrepresentation, the Benefited Party's sole remedy shall be to terminate this
Agreement, and if the Benefited Party does terminate this Agreement, the Option
Consideration with interest shall be returned to Buyer and the parties shall
have no further obligation to each other. In the case of an intentional
misrepresentation, the Benefited Party shall have the foregoing described remedy
and any other remedy available at law and in equity including the right to
proceed in accordance with the terms of this Agreement and, in addition, seek
any damages incurred due to such intentional misrepresentation.

ARTICLE 17    INDEMNITY; EXCULPATION

        17.1    Buyer's Indemnity. Buyer hereby agrees to indemnify, defend and
hold Seller, its successors and assigns, partners, shareholders, officers,
directors and/or employees (collectively, "Seller Indemnified Parties"),
harmless from and against any and all obligations, liabilities, claims, liens,
encumbrances, losses, damages, costs and expenses, including, without
limitation, attorneys' fees, whether direct, contingent or consequential
(collectively, "Claims"), incurred or suffered by, or asserted or awarded
against any one or more of the Seller Indemnified Parties relating to or arising
from any one or more of the following: (i) the activities of Buyer, its agents,
employees or contractors on the Property subsequent to its purchase by Buyer;
(ii) any breach of any covenant, representation or warranty of Buyer contained
in this Agreement; or (iii) the violation by Buyer, its agents, employees or
contractors of any federal, state or local law, ordinance or regulation,
occurring or allegedly occurring with respect to the Property during Buyer's
ownership subsequent to the Close of Escrow.

        17.2    Seller's Indemnity. Seller hereby agrees to indemnify, defend
and hold Buyer, its successors and assigns, partners, shareholders, officers,
directors and/or employees (collectively, "Buyer Indemnified Parties") harmless
from and against any and all Claims incurred or suffered by, or asserted or
awarded against any one or more of the Buyer Indemnified Parties relating to or
arising from any one or more of the following: (i) any breach of any covenant,
representation or warranty of Seller contained in this Agreement; or (ii) the
violation of any federal, state or local law, ordinance or regulation, occurring
or allegedly occurring with respect to the Property during Seller's ownership
prior to the Close of Escrow.

        17.3    Exculpation. Notwithstanding anything to the contrary contained
herein, no member of Seller, nor any direct or indirect partner, shareholder,
manager officer, director, trustee or employee in or of any of them (each, a
"Seller Nonrecourse Party," collectively, the "Seller Nonrecourse Parties"),
shall be personally liable in any manner or to any extent under or in connection
with this Agreement, and neither Buyer nor any successor, assignee, partner,
officer, director or employee of Buyer shall have any recourse to any assets of
a Seller Nonrecourse Party other than such party's interest in Seller to satisfy
any liability, judgment or claim that may be obtained or made against any such
Seller Nonrecourse Party under this Agreement or in conjunction with the
Property. The limitation of liability provided in this subsection is in addition
to, and not in limitation of, any limitation on liability applicable to a Seller
Nonrecourse Party provided by law or by this Agreement or any other contract,
agreement or instrument. Buyer agrees that it shall look solely to the assets of
Seller for the enforcement of any claims arising hereunder or related hereto.
The terms of this subsection are a material consideration and inducement to
Seller to enter into this Agreement, and but for the inclusion of such provision
in this Agreement, Seller would not enter into this Agreement.

        17.4    RELEASE. EXCEPT AS OTHERWISE PROVIDED IN THIS SECTION 17.4,
BUYER, ON ITS OWN BEHALF AND ON BEHALF OF THE BUYER INDEMNIFIED PARTIES, DOES
HEREBY FULLY AND FOREVER WAIVE, RELEASE AND DISCHARGE SELLER AND THE SELLER
INDEMNIFIED PARTIES FROM ANY AND ALL CLAIMS OF ANY NATURE OR SORT, KNOWN OR
UNKNOWN, PAST, PRESENT AND FUTURE, WHICH BUYER MAY HAVE WHICH ARISE OUT OF OR
RELATE IN ANY WAY TO ANY LIABILITY OR RESPONSIBILITY FOR THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ANY INVESTIGATION, CLEAN-UP OR REMEDIATION OF ANY
TOXIC OR HAZARDOUS MATERIALS, ON, IN, UNDER OR ABOUT THE PROPERTY. THIS RELEASE
SHALL NOT APPLY TO ANY CLAIMS TO THE EXTENT: (I) THE SAME WAS CAUSED BY SELLER,
OR ITS EMPLOYEES, AGENTS OR CONTRACTORS; (II) THAT SELLER HAS BREACHED ITS
REPRESENTATIONS AND WARRANTIES OR COVENANTS IN THIS AGREEMENT; OR (III) SELLER
HAS OTHERWISE AGREED IN THIS AGREEMENT AND THE EXHIBITS ATTACHED HERETO. BUYER
AGREES THAT THIS RELEASE IS FULLY EFFECTIVE REGARDLESS OF ANY PRESENT LACK OF
KNOWLEDGE ON THE PART OF ANY PARTY AS TO ANY POSSIBLE CLAIM OR ANY FACTS OR
CIRCUMSTANCES PERTAINING TO THIS MATTER. BUYER EXPRESSLY WAIVES THE BENEFITS AND
PROVISIONS OF SECTION 1542 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA, AND ANY
SIMILAR LAW OF ANY STATE OR TERRITORY OF THE UNITED STATES OR OTHER
JURISDICTION. CIVIL CODE SECTION 1542 PROVIDES AS FOLLOWS:

> > A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW
> > OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
> > IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
> > DEBTOR.
> > 
> > 
> > > >             /s/            
> > > > Signature of Buyer

ARTICLE 18    TERMINATION OF AGREEMENT

        18.1    Termination Prior to Expiration of Contingency Period. If Buyer
fails to effectuate the Preliminary Closing for any reason, then this Agreement
shall be terminated and neither Seller nor Buyer shall have any further rights
or duties hereunder except for the following which are herein referred to as the
"Continuing Duties":

                (i)    Buyer's indemnity obligations under Section 17;

                (ii)    Buyer shall return all Documents and Materials received
and other things received from Seller;

                (iii)    Seller and Buyer shall execute and record, if
necessary, any and all documents reasonably required to terminate the Option;

                (iv)    Seller and Title Company shall return to Buyer any
monies deposited by Buyer; and

                (v)    All escrow cancellation fees shall be paid equally by
Seller and Buyer.

        18.2    Liquidated Damages. IF, AFTER BUYER'S EXERCISE OF THE OPTION,
BUYER COMMITS A MATERIAL DEFAULT UNDER THIS AGREEMENT AND THE CLOSE OF ESCROW
FAILS TO OCCUR BY REASON OF SUCH DEFAULT, THEN IN ANY SUCH EVENT, ESCROW HOLDER
MAY BE INSTRUCTED BY SELLER TO CANCEL THE ESCROW, AND SELLER SHALL THEREUPON BE
RELEASED FROM ITS OBLIGATIONS HEREUNDER. BASED UPON THE CIRCUMSTANCES NOW
EXISTING, KNOWN AND UNKNOWN, IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO
ESTABLISH SELLER'S DAMAGES BY REASON OF BUYER'S DEFAULT. ACCORDINGLY, IN
ADDITION TO SELLER'S RIGHT TO THE OPTION CONSIDERATION PURSUANT TO
SECTION 1.9(iii) ABOVE, SELLER SHALL RETAIN THE OPTION CONSIDERATION AS
LIQUIDATED DAMAGES AND RECEIVE THE BENEFIT OF THE OTHER ITEMS DEFINED IN THIS
SECTION 18.2. IF THE ESCROW AND THIS AGREEMENT ARE TERMINATED AS SET FORTH IN
THIS SECTION, THE LEASE AND THE DEVELOPMENT MANAGEMENT AGREEMENT SHALL REMAIN IN
FULL FORCE AND EFFECT AND BUYER SHALL STILL BE OBLIGATED UNDER THE TERMS OF THE
LEASE AND THE DEVELOPMENT MANAGEMENT AGREEMENT. SELLER AND BUYER ACKNOWLEDGE
THAT THE APPLICABLE FOREGOING AMOUNT OF LIQUIDATED DAMAGES IS REASONABLE AS
LIQUIDATED DAMAGES AND SHALL BE SELLER'S SOLE AND EXCLUSIVE REMEDY IN LIEU OF
ANY OTHER RELIEF, RIGHT OR REMEDY, AT LAW OR IN EQUITY, TO WHICH SELLER MIGHT
OTHERWISE BE ENTITLED BY REASON OF BUYER'S DEFAULT. NOTWITHSTANDING THE
FOREGOING, THE PROVISIONS OF SECTIONS 18.1(i), (ii), (iii), (iv) (WITH RESPECT
TO ANY FUNDS OF BUYER HELD BY ESCROW HOLDER IN EXCESS OF THE OPTION
CONSIDERATION) AND (v) SHALL APPLY. WITHOUT LIMITING THE FOREGOING PROVISIONS OF
THIS PARAGRAPH, SELLER WAIVES ANY AND ALL RIGHTS WHICH SELLER OTHERWISE WOULD
HAVE HAD UNDER CALIFORNIA CIVIL CODE SECTION 3389 TO SPECIFICALLY ENFORCE THIS
AGREEMENT. SELLER AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THIS SECTION 18.2 AND BY THEIR INITIALS IMMEDIATELY BELOW AGREE TO
BE BOUND BY ITS TERMS.

                Seller's Initials:       /s/                                 
Buyer's Initials:       /s/      

        18.3    Default by Seller. If the Preliminary Closing fails to close as
a result of default by Seller, then Buyer's exclusive remedies shall be (i) to
terminate this Agreement in which event the Option Consideration shall be
returned to Buyer and neither Seller nor Buyer shall have any further rights or
duties hereunder except for the Continuing Duties or (ii) to seek to cause
Seller to specifically perform its obligations hereunder. If Escrow fails to
close as a result of default by Seller, then Buyer's exclusive remedies shall be
(i) to terminate this Agreement in which event the Option Consideration shall be
returned to Buyer and neither Buyer nor Seller shall have any further rights or
duties hereunder or (ii) Buyer may seek to cause Seller to specifically perform
its obligations hereunder.

ARTICLE 19    DAMAGE OR CONDEMNATION BEFORE CLOSING

        Seller shall promptly notify Buyer of any casualty to the Property or
any condemnation proceeding commenced before the Close of Escrow. In any such
event, the rights and obligations of Seller and Buyer under this Option
Agreement shall be as set forth in Section 10.3 of the Lease and in Article XI
of the Lease (which provisions are incorporated herein by this reference and
which references to the Lease shall be deemed to refer to this Agreement). If
Buyer elects to terminate this Agreement if so permitted under such provisions,
in addition to any other sums due Buyer by Seller, Buyer shall also be entitled
to the return of the Option Consideration, and Escrow Holder shall promptly
return such funds to Buyer upon receipt of such termination notice.

ARTICLE 20    NOTICES

        Any notice, demand, consent, approval, request or other communication,
required or permitted to be given hereunder, shall be in writing and shall be
deemed to have been delivered (i) on the day personally delivered, (ii) upon
receipt if sent by overnight courier, (iii) on the second business day following
its mailing by registered or certified mail (return receipt requested), postage
prepaid, by deposit in the United States mail, or (iv) on the day received (if
received by 5:00 p.m. local time on a business day [i.e., any day other than a
Saturday or Sunday or California state or federal holiday] and if not so
received then on the next business day) if sent by facsimile and then only if
also sent to the recipient within forty-eight (48) hours pursuant to subparts
(i), (ii) or (iii) of this Section 20, to the parties at the addresses set forth
below:

        if to Buyer:                                    Ace Hardware Corporation
                                                            2200 Kensington
Court
                                                            Oak Brook, IL 60253
                                                            Attn: Rich Sauck,
Corporate Property Manager
                                                            Facsimile: (630)
571-2186

                                                            - and -

                                                            Ace Hardware
Corporation
                                                            2200 Kensington
Court
                                                            Oak Brook, IL 60253
                                                            Attn: General
Counsel
                                                            Facsimile: (630)
990-6856

        with a copy to:                              McDermott, Will & Emery
                                                            18191 Von Karman
Avenue, Suite 500
                                                            Irvine, CA 92612
                                                            Attn: Thomas K.
Brown, Esq.
                                                            Facsimile: (949)
851-9348

        if to Seller:                                    Reynen & Bardis (KMS
Placer), L.P.
                                                            7401 Galilee Road,
Suite 100
                                                            Roseville, CA 95678
                                                            Attn: Tom Manz or
Steve Pease
                                                            Facsimile: (916)
773-5090

        with a copy to:                              Wagner, Kirkman, Blaine &
Youmans
                                                            1792 Tribute Road,
Suite 450
                                                            Sacramento, CA 95815
                                                            Attn: Belan Kirk
Wagner, Esq.
                                                            Facsimile: (916)
920-8608

        Either party may, by notice given as aforesaid, designate a different
address or addresses for notices to be given to it. Notice of change of address
shall be given by written notice in the manner detailed in this Section 20.
Rejection or other refusal to accept or the inability to deliver because of
changed address of which no notice was given shall be deemed to constitute
receipt of the notice, demand, request or communication sent.

ARTICLE 21    BROKERS

        Upon the Close of Escrow, Seller shall pay a real estate brokerage
commission of Three Hundred Thousand Dollars ($300,000) to Todd Sanfilippo and
CB Richard Ellis and a real estate brokerage commission of Five Hundred Thousand
Dollars ($500,000) to David L. Leatherby, Jr. and Colliers International
(collectively, "Brokers") with respect to this transaction in accordance with
Seller's separate agreement with such Brokers. Seller shall indemnify and hold
Buyer free and harmless from such commission obligation. If any additional
claims for brokers' or finders' fees for the consummation of this Agreement
arise, then Buyer shall indemnify, save harmless and defend Seller from and
against such claims if they shall be based upon any statement or representation
or agreement by Buyer, and Seller shall indemnify, save harmless and defend
Buyer if such claims shall be based upon any statement, representation or
agreement made by Seller. Buyer and Seller acknowledge their understanding that
David Lind of CB Richard Ellis Chicago is sharing in the commission payable to
David L. Leatherby Jr. and Colliers International pursuant to a separate
agreement between to CB Richard Ellis Chicago and Colliers International.
Neither Seller nor Buyer shall have any responsibility with respect to such
separate agreement between CB Richard Ellis Chicago and Colliers International.
Buyer acknowledges that some of the members and/or principals of Seller are
licensed real estate brokers.

ARTICLE 22    LEGAL FEES

        In the event of the bringing of any action or suit by a party hereto
against another party hereunder by reason of any breach of any of the covenants
or agreements or any inaccuracies in any of the representations and warranties
on the part of the other party arising out of this Agreement, then in that
event, the prevailing party in such action or dispute, whether by final judgment
or out of court settlement, shall be entitled to have and recover of and from
the other party all costs and expenses of suit, including actual attorneys'
fees.

ARTICLE 23    ASSIGNMENT

        Neither Seller nor Buyer may assign, transfer or convey its rights or
obligations under this Agreement without the prior written consent of the other,
which consent may be granted or withheld in the other's sole discretion. No
assignment shall release the assigning party from any liability under this
Agreement.

ARTICLE 24    INFORMATION REPORT

        Seller and Buyer shall cooperate with Escrow Holder and with each other
in completing the report (the "Information Report") and/or other information
required to be delivered to the Internal Revenue Service pursuant to Internal
Revenue Code Section 6045(e) regarding the real estate sales transaction
contemplated by this Agreement, including, without limitation, Internal Revenue
Service Form 1099-B, as such may be hereinafter modified or amended by the
Internal Revenue Service, or as may be required pursuant to any regulations now
or hereinafter promulgated by the Treasury Department with respect thereto.
Seller and Buyer, their respective employees and attorneys, and Escrow Holder
and its employees, may disclose to the Internal Revenue Service, whether
pursuant to the Information Report or otherwise, any information regarding this
Agreement or the transactions contemplated herein as such party reasonably deems
to be required to be disclosed to the Internal Revenue Service by such party
pursuant to Internal Revenue Code Section 6045(e). Neither Seller nor Buyer
shall seek to hold the other party liable for the disclosure to the Internal
Revenue Service of any such information.

ARTICLE 25    MISCELLANEOUS

        25.1    Survival of Covenants. Except as otherwise limited by the
provisions of this Agreement, the covenants, representations and warranties of
both Buyer and Seller set forth in this Agreement shall survive the recordation
of the Grant Deed and the Close of Escrow.

        25.2    Further Assurances. Buyer and Seller shall execute such
instruments and documents and to undertake diligently such actions as may be
required in order to consummate the purchase and sale herein contemplated and
shall use their best efforts to accomplish the Close of Escrow in accordance
with the provisions hereof.

        25.3    Time of Essence. Time is of the essence of each and every term,
condition, obligation and provision hereof.

        25.4    Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.

        25.5    Captions; Recitals. Any captions to, or headings of, the
sections or subsections of this Agreement are solely for the convenience of the
parties hereto, are not a part of this Agreement, and shall not be used for the
interpretation or determination of the validity of this Agreement or any
provision hereof. All Recitals set forth above are hereby incorporated in the
terms and conditions of this Agreement.

        25.6    No Obligations to Third Parties. Except as to the Escrow Holder
as otherwise expressly provided herein, the execution and delivery of this
Agreement shall not be deemed to confer any rights upon, nor obligate any of the
parties thereto, any person or entity (including without limitation the Brokers)
other than the parties hereto.

        25.7    Exhibits. The exhibits attached hereto are hereby incorporated
herein by this reference.

        25.8    Amendment of this Agreement. The terms of this Agreement may not
be modified or amended except by an instrument in writing executed by each of
the parties hereto.

        25.9    Waiver. The waiver or failure to enforce any provision of this
Agreement shall not operate as a waiver of any future breach of any such
provision or any other provision hereof.

        25.10  Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California.

        25.11  Fees and Other Expenses. Except as otherwise provided herein,
each of the parties shall pay its own fees and expenses in connection with this
Agreement.

        25.12  Entire Agreement. This Agreement supersedes any prior agreements,
negotiations and communications, oral or written, and contains the entire
agreement between Buyer and Seller as to the subject matter hereof. No
subsequent agreement, representation, or promise made by either party hereto, or
by or to an employee, officer, agent or representative of either party shall be
of any effect unless it is in writing and executed by the party to be bound
thereby.

        25.13  Successors and Assigns. Subject to the terms of Section 23 above,
this Agreement shall be binding upon and shall inure to the benefit of the
successors and assigns of the parties hereto.

        25.14  Time Period Computation. All periods of time referred to in this
Agreement shall include all Saturdays, Sundays and California state or national
holidays; provided that if the last date to perform any act or give any notice
with respect to this Agreement shall fall on a Saturday, Sunday or California
state or national holiday, such act or notice shall be timely performed or given
on the next succeeding day which is not a Saturday, Sunday or California state
or national holiday.

        25.15  Cooperation in Drafting. Both Seller and Buyer have cooperated in
the drafting and preparation of this Agreement. Therefore, in any construction
to be made of this Agreement, such construction shall not be construed against
any party.

        25.16  Severability. If any provision of this Agreement is determined by
a court of competent jurisdiction to be invalid or unenforceable, the remainder
of this Agreement shall nonetheless remain in full force and effect.

        25.17  WAIVER OF JURY TRIAL. BUYER AND SELLER HEREBY WAIVE ANY RIGHT TO
TRIAL BY JURY IN ANY ACTION, CLAIM, OR LAWSUIT FILED IN CONNECTION WITH THIS
AGREEMENT.

        25.18  No Merger. All warranties, representations, covenants and other
obligations contained in this Agreement shall survive recordation and delivery
of the Grant Deed.

        25.19  Possession. Subject to the Existing Leases, possession of the
Property shall be transferred to Buyer at the Close of Escrow.

ARTICLE 26    RETURN OF DOCUMENTS AND FUNDS UPON TERMINATION

        26.1    Return of Seller's Funds and Documents. Except as otherwise
expressly provided herein, if the Escrow is terminated for any reason (other
than the default of Seller), within fifteen (15) calendar days after such
termination, (i) Buyer shall deliver to Seller all funds, documents and
materials, if any, previously delivered to Buyer by Seller, and (ii) Escrow
Holder shall deliver to Seller all funds, documents and materials deposited by
Seller and then in Escrow Holder's possession.

        26.2    Return of Buyer's Funds and Documents. Except as otherwise
expressly provided herein, if the Escrow is terminated for any reason (other
than the default of Buyer), within fifteen (15) calendar days after such
termination, (i) Seller shall deliver to Buyer all funds, documents and
materials, if any, previously delivered by Buyer to Seller, and shall pay to
Buyer such other amounts, if any, as may required by the terms of this
Agreement, and (ii) Escrow Holder shall deliver to Buyer all funds, documents
and materials deposited by Buyer and then in Escrow Holder's possession.

        26.3    No Effect on Rights of Parties. The return of documents as set
forth above shall not affect the right of either party to seek such legal or
equitable remedies as such party may have with respect to the enforcement of
this Agreement.

        26.4    Payment of Termination Fee. Escrow Holder may condition its
deliveries hereinabove provided upon payment by the party requesting delivery of
a termination fee. Notwithstanding the foregoing, any termination fee shall be
paid (or reimbursed) by the defaulting party, or paid one-half (2) by each party
if neither party is then in default.

ARTICLE 27    EXCHANGE

        Buyer acknowledges that Seller may desire to engage in a tax-deferred
exchange ("Exchange") pursuant to Section 1031 of the Internal Revenue Code. To
effect this Exchange, and notwithstanding anything to the contrary in this
Agreement, Seller may assign its rights in, and delegate its duties under, this
Agreement, as well as transfer the Property, to any exchange accommodator which
Seller shall determine. As an accommodation to Seller, Buyer agrees to cooperate
with Buyer in connection with the Exchange, including the execution of documents
therefor, provided the following terms and conditions are satisfied:

                (i)    There shall be no liability to Buyer and Buyer shall have
no obligation to take title to any property in connection with the Exchange;

                (ii)    Buyer shall in no way be obligated to pay any escrow
costs, brokerage commissions, title charges, survey costs, recording costs or
other charges incurred with respect to any exchange property and/or the
Exchange, and Seller shall reimburse Buyer for any professional fees, including
actual attorneys' fees, which Buyer may incur with respect thereto;

                (iii)    If, for any reason, the Close of Escrow does not occur,
Buyer shall have no responsibility or liability to any third party involved in
the exchange transaction;

                (iv)    Buyer will not be required to make any representations
or warranties nor assume any obligations, nor spend any sum or incur any
personal liability whatsoever in connection with the Exchange;

                (v)    Any such exchange transaction shall not delay the Close
of Escrow; and

                (vi)    Any sums due Buyer in the event the Close of Escrow does
not occur by reason of a Seller default or a failure of a condition for Buyer's
benefit, including return of the Option Consideration, shall be the obligation
of Seller notwithstanding any delegation of duties hereunder to an exchange
accommodator, and Seller shall remain personally liable therefor.

ARTICLE 28    GENERAL REFERENCE FOR DISPUTE RESOLUTION

        ANY CONTROVERSY, CLAIM, ACTION OR DISPUTE ARISING OUT OF OR RELATING TO
THIS AGREEMENT SHALL BE HEARD BY A REFERENCE PURSUANT TO THE PROVISIONS OF
CALIFORNIA CODE OF CIVIL PROCEDURE SECTIONS 638 THROUGH 645.1, INCLUSIVE,
ACCORDING TO THE FOLLOWING PROCEDURES:

                (i)    THE PARTIES SHALL AGREE UPON A SINGLE REFEREE WHO SHALL
THEN TRY ALL ISSUES, WHETHER OF FACT OR LAW, AND REPORT A FINDING AND JUDGMENT
THEREON. IF THE PARTIES ARE UNABLE TO AGREE UPON A REFEREE WITHIN TEN (10) DAYS
OF A WRITTEN REQUEST TO DO SO BY ANY PARTY, THEN ANY PARTY MAY THEREAFTER SEEK
TO HAVE A REFEREE APPOINTED PURSUANT TO CALIFORNIA CODE OF CIVIL PROCEDURE
SECTIONS 638 AND 640;

                (ii)    THE PARTIES AGREE THAT THE REFEREE SHALL HAVE THE POWER
TO DECIDE ALL ISSUES OF FACT AND LAW AND REPORT HIS/HER DECISION THEREON, AND TO
ISSUE ALL LEGAL AND EQUITABLE RELIEF APPROPRIATE UNDER THE CIRCUMSTANCES OF THE
CONTROVERSY BEFORE HIM/HER; PROVIDED, HOWEVER, THAT TO THE EXTENT THE REFEREE IS
UNABLE TO ISSUE AND/OR ENFORCE ANY SUCH LEGAL AND EQUITABLE RELIEF, EITHER PARTY
MAY PETITION THE COURT TO ISSUE AND/OR ENFORCE SUCH RELIEF ON THE BASIS OF THE
REFEREE'S DECISION;

                (iii)    THE CALIFORNIA EVIDENCE CODE RULES OF EVIDENCE AND
PROCEDURE RELATING TO THE CONDUCT OF THE HEARING, EXAMINATION OF WITNESSES AND
PRESENTATION OF EVIDENCE SHALL APPLY;

                (iv)    ANY PARTY DESIRING A STENOGRAPHIC RECORD OF THE HEARING
MAY SECURE A COURT REPORTER TO ATTEND THE HEARING; PROVIDED, THE REQUESTING
PARTY NOTIFIES THE OTHER PARTIES OF THE REQUEST AND PAYS FOR THE COSTS INCURRED
BY THE COURT REPORTER;

                (v)    THE REFEREE SHALL ISSUE A WRITTEN STATEMENT OF DECISION
WHICH SHALL BE REPORTED TO THE COURT IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL
PROCEDURE SECTION 643 AND MAILED PROMPTLY TO THE PARTIES;

                (vi)    JUDGMENT MAY BE ENTERED ON THE DECISION OF THE REFEREE
IN ACCORDANCE WITH CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 644, AND THE
DECISION MAY BE EXCEPTED TO, CHALLENGED AND APPEALED ACCORDING TO LAW;

                (vii)    THE PARTIES SHALL PROMPTLY AND DILIGENTLY COOPERATE
WITH ONE ANOTHER AND THE REFEREE, AND SHALL PERFORM SUCH ACTS AS MAY BE
NECESSARY TO OBTAIN A PROMPT AND EXPEDITIOUS RESOLUTION OF THE DISPUTE OR
CONTROVERSY IN ACCORDANCE WITH THE TERMS HEREOF; AND

                (viii)    THE COST OF SUCH PROCEEDING, INCLUDING BUT NOT LIMITED
TO THE REFEREE'S FEES, SHALL INITIALLY BE BORNE EQUALLY BY THE PARTIES TO THE
DISPUTE OR CONTROVERSY. HOWEVER, THE PREVAILING PARTY IN SUCH PROCEEDING SHALL
BE ENTITLED, IN ADDITION TO ALL OTHER COSTS, TO RECOVER ITS CONTRIBUTION FOR THE
COST OF THE REFERENCE AND ITS REASONABLE ATTORNEYS' FEES AS ITEMS OF RECOVERABLE
COSTS.

>           /s/                                                        
> /s/        
> Buyer's Initials                                       Seller's Initials
> 
> This Agreement is executed and effective as of the day and year first above
> written.
> 
> 
> > > > > > BUYER:
> > > > > > 
> > > > > > ACE HARDWARE CORPORATION,
> > > > > > a Delaware corporation
> > > > > > 
> > > > > > By:       /s/         
> > > > > > David F. Hodnik
> > > > > > Its: President/Chief Executive Officer
> > > > > > 
> > > > > > SELLER:
> > > > > > 
> > > > > > REYNEN & BARDIS (KMS PLACER), L.P.,
> > > > > > a California limited partnership
> > > > > > 
> > > > > > By:R&B HOMES, LLC
> > > > > > A California Limited Liability Company
> > > > > > Its: General Partner
> > > > > > 
> > > > > > By:       /s/         
> > > > > > JOHN D. REYNEN
> > > > > > Its: Managing Member
> > > > > > 
> > > > > > By:       /s/         
> > > > > > CHRISTO D. BARDIS
> > > > > > Its: Managing Member

CONSENT OF ESCROW HOLDER

            Placer Title Company hereby acknowledges that on January 13, 2003,
it received a fully executed counterpart of the foregoing Option Agreement and
Joint Escrow Instructions and the Option Consideration and that the Escrow was
opened on such date. Escrow Holder agrees to act as Escrow Holder thereunder and
to be bound by and perform the terms thereof as such terms apply to Escrow
Holder.

> > > > > > PLACER TITLE COMPANY
> > > > > > 
> > > > > > By:       /s/         
> > > > > > Its: Commercial Escrow Officer

EXHIBIT A

"AS IS" CERTIFICATE

        Ace Hardware Corporation, a Delaware corporation ("Buyer"),
and Reynen & Bardis (KMS Placer),
L.P., a California limited
partnership ("Seller"), have entered into this "As Is"
Certificate ("Certificate") as of
the latest date set forth
after the signatures below with respect to the following facts:

        A.    Buyer and Seller entered into that certain "Option
Agreement" dated for reference purposes January 13,
2003 ("Option Agreement") with regard to the Property as defined therein.

        B.    As additional consideration to Seller, Buyer has agreed
to purchase the Property in its present condition "AS-IS, WHERE
IS, WITH ALL FAULTS" on the terms and conditions set forth in
the Option Agreement.

NOW, THEREFORE, Buyer and Seller agree as follows:

1.   Terms. All capitalized terms shall have the meanings set
forth in the Option Agreement.

2.   Inspection. Buyer acknowledges that, prior to Close of Escrow, it or its
agents or contractors shall have thoroughly inspected the Property and observed
the physical characteristics and condition of the Property and otherwise
investigated that the status of the Property, including without limitation, the
matters set forth below.

3.    Acknowledgements by Buyer. Buyer further acknowledges that, except as may
be specifically set forth in the Option Agreement, neither Seller nor any of
Seller's employees, agents, brokers or representatives have made any
representations, warranties or agreements by or on behalf of Seller as to any
matters concerning the Property upon which Buyer has relied, including, without
limitation, (i) the habitability, merchantability, or fitness, suitability,
value or adequacy of the Property for any particular use; (ii) the compliance of
the Property or operations on the Property with any applicable codes, laws,
statutes, ordinances, regulations, rules, covenants, conditions or restrictions
of any governmental or quasi-governmental entity or of any other person or
entity; (iii) the suitability of the topography; (iv) the availability of water
rights or utilities; (v) the present and future zoning, subdivision and any and
all other land use matters; (vi) the condition of the soil, subsoil, or
groundwater (including, without limitation, the presence or absence of Hazardous
Substances, materials or wastes therein, thereon or on adjacent or neighboring
properties); (vii) the purpose(s) to which the Property is suited; (viii)
drainage or flooding; (ix) access to public roads or proposed routes of roads or
extensions thereof; (x) the quality, nature, adequacy and physical condition of
the Property and any improvements located thereon, including, without
limitation, the structural elements, foundation, roof, appurtenances,
electrical, mechanical, plumbing, sewage and utility systems, facilities and
appliances; and (xi) the condition of title to the Property; (xii) the leases,
service contracts, and other agreements affecting the Property.

4.    As Is, Where Is, With All Faults. Buyer acknowledges and agrees that the
Property is to be purchased, conveyed and accepted by Buyer in its present
condition, "AS IS, WHERE IS, WITH ALL FAULTS" and that no present or latent
defect in the condition of the Property whether or not known or discovered,
shall give rise to any claim or cause of action against Seller.  Any documents
furnished to Buyer by Seller relating to the Property including, without
limitation, maps, surveys, studies, pro formas, reports and other information
shall be deemed furnished as a courtesy to Buyer but without warranty from
Seller except as may be specifically set forth in this Agreement.

5.    Buyer's Knowledge and Investigation. Except as provided in the Option
Agreement, Buyer has investigated and has knowledge of operative or proposed
governmental laws and regulations including land use laws and regulations to
which the Property may be subject and shall acquire the Property upon the basis
of its review and determination of the applicability and effect of such laws and
regulations.  Buyer has neither received nor relied upon any representations
concerning such laws and regulations from Seller, Seller's employees, agents or
any other person acting on or in behalf of Seller.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
latest date set forth next to the signatures below.

                                                                                  
"Ace"
Dated:                                                                        
ACE HARDWARE CORPORATION,
                                                                                  
a Delaware Corporation

By: __________________________________
Name:________________________________
Its:___________________________________

Dated:  ________________                                         "Seller"
                                                                                    
REYNEN & BARDIS (KMS PLACER), L.P.,
                                                                                    
a California limited partnership
By: __________________________________
Name:________________________________
Its:___________________________________

By: __________________________________
Name:________________________________
Its:___________________________________

EXHIBIT B

MEMORANDUM OF OPTION

[Attached]

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

McDermott, Will & Emery
18191 Von Karman Avenue, Suite 500
Irvine, CA 92612-0187
Attn: Thomas K. Brown, Esq.

(SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY.)

MEMORANDUM OF OPTION

        This Memorandum of Option ("Memorandum") is dated for reference purposes
only January ____, 2002 and is made between Reynen & Bardis (KMS Placer), L.P.,
a California limited partnership ("Seller"), and Ace Hardware Corporation, a
Delaware corporation ("Buyer"), who agree as follows:

1.        Seller hereby grants to Buyer an option to purchase the real property
described in Exhibit "A" attached hereto and incorporated herein (the
"Property"), which option may be exercised by Buyer by written notice to Seller
commencing on the date hereof but no later than August 29, 2003, on the terms
and conditions set forth in the Option Agreement and Joint Escrow Instructions
("Option Agreement"), between the parties, which Option Agreement is dated of
even date herewith and which provisions are incorporated into this Memorandum by
this reference.

2.        This Memorandum of Option is prepared for the purposes of recordation
and in no way modifies or otherwise affects the terms, conditions and provisions
of the Option Agreement. If any inconsistency exists between this Memorandum and
the Option Agreement, the terms, covenants and conditions of the Option
Agreement shall prevail and control.

3.        If the option granted hereby is not exercised by the date set forth in
Paragraph 1 above, the option as set forth therein shall be of no further force
or effect.

[SIGNATURES ON THE ATTACHED SIGNATURE PAGE]

Signature Page to Memorandum of Option

                    BUYER:
                    ACE HARDWARE CORPORATION,
                    a Delaware corporation

                    By:
                    Print Name:
                    Print Title:

                    SELLER:
                    Reynen & Bardis (KMS Placer), L.P.,
                    a California limited partnership

                    By:
                    Print Name:
                    Print Title:

                    By:
                    Print Name:
                    Print Title:

EXHIBIT "A" TO MEMORANDUM OF OPTION

Legal Description of Property

[ATTACHED]

STATE OF CALIFORNIA                )
                                                           ) ss
COUNTY OF _______________     )

On ______________, 2003, before me, _______________________________, a Notary
Public in and for said State, personally appeared
_______________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the persons acted, executed the instrument.

WITNESS my hand and official seal.

___________________________________

Signature

STATE OF CALIFORNIA                )
                                                           ) ss
COUNTY OF _______________     )

On ______________, 2003, before me, _______________________________, a Notary
Public in and for said State, personally appeared
_______________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the persons acted, executed the instrument.

WITNESS my hand and official seal.

___________________________________

Signature

STATE OF CALIFORNIA                )
                                                           ) ss
COUNTY OF _______________     )

On ______________, 2003, before me, _______________________________, a Notary
Public in and for said State, personally appeared
_______________________________, personally known to me (or proved to me on the
basis of satisfactory evidence) to be the person(s) whose name(s) is/are
subscribed to the within instrument and acknowledged that he/she/they executed
the same in his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of which
the persons acted, executed the instrument.

WITNESS my hand and official seal.

___________________________________

Signature

EXHIBIT C

MEMORANDUM OF LEASE

[Attached]

FORM OF MEMORANDUM OF LEASE

RECORDING REQUESTED BY
AND WHEN RECORDED MAIL TO:

McDermott, Will & Emery
18191 Von Karman Avenue, Suite 500
Newport Beach, California 92612
Attn: Thomas K. Brown, Esq.

(SPACE ABOVE THIS LINE FOR RECORDER'S USE ONLY)

MEMORANDUM OF LEASE

        This Memorandum of Lease ("Memorandum") is made as of January ___, 2003
between Reynen & Bardis (KMS Placer), L.P., a California limited partnership
("Landlord"), and Ace Hardware Corporation, a Delaware corporation ("Tenant"),
who agree as follows:

1.        Landlord hereby leases to Tenant and Tenant hereby hires from Landlord
that certain real property located at 3301 Industrial Avenue, situated in the
County of Placer, State of California, as more particularly described in
Exhibit A attached hereto, (ii) together with two (2) buildings located thereon,
containing approximately 619,688 square feet of space and 8,000 square feet of
space, respectively, associated parking areas and other improvements located
thereon, for a term of twenty (20) years commencing on January 15, 2003 and
expiring on January 14, 2023, unless sooner terminated or extended, on the
terms, conditions and provisions of the Lease. Such terms, conditions and
provisions of the Lease are incorporated into this Memorandum by this reference.

2.        Landlord hereby acknowledges its duty to cooperate fully with Tenant's
(i) construction at the Property and (ii) efforts with respect to easements,
dedications and Governmental Approvals (as defined in the Lease). In furtherance
of such duty, Landlord designates Thomas Manz as its agent with authority to
bind Landlord and execute any and all documents required of Landlord pursuant to
the Lease.

3.        This Memorandum is prepared for the purposes of recordation and in no
way modifies or otherwise affects the terms, conditions and provisions of the
Lease.

4.        This Memorandum may be executed in counterparts, which when taken
together shall constitute one and the same instrument.

LANDLORD:                                                TENANT:

REYNEN & BARDIS (KMS PLACER),        ACE HARDWARE CORPORATION,
L.P., a California limited partnership                  a Delaware corporation

By:                                                                    By:
Name:                                                               Name:
Title:                                                                  Title:

By:
Name:
Title:

EXHIBIT D

ESTOPPEL CERTIFICATE

[Attached]

- Form of Landlord's [Seller's] Certificate

- Form of Tenant's Certificate

SELLER'S ESTOPPEL CERTIFICATE

        This Seller's Estoppel Certificate ("Certificate") is made as of the ___
day of January, 2003, by REYNEN & BARDIS (KMS PLACER), L.P., a California
limited partnership ("Seller"), in favor of ACE HARDWARE CORPORATION, a Delaware
corporation ("Buyer"), with respect to that certain Lease, dated as of
_________________, as amended ("Lease"), by and between Seller and
____________________, a ________________ ("Tenant"), for the certain premises
more fully described in the Lease ("Premises") with reference to the following
facts:

R E C I T A L :

        A.        Seller and Buyer entered into that certain Option Agreement
and Joint Escrow Instructions ("Agreement"), dated as of January __, 2003,
pursuant to which Seller granted the Buyer an exclusive Option to purchase the
"Property" (as defined in the Agreement).

        B.        Pursuant to Section 1.10 of the Agreement, Seller is obligated
to deliver its own Certificate for this Lease if Seller was unable to obtain an
"Estoppel Certificate" from the Tenant with respect to the Premises prior to the
closing of the transaction contemplated by the Agreement.

        NOW, THEREFORE, Seller hereby certifies to Buyer as follows:

        1.        The commencement date under the Lease was ______________;

        2.        The term of the Lease will expire on __________________;

        3.        Tenant has deposited with Seller a Security Deposit of
$_____________;

        4.        Rent has been paid up to the date of _______________, and no
rents or charges have been paid in advance, except for the following rents or
charges which have been paid to the date specified: $____________________ paid
to _____________, 20__; $____________________ paid to _____________, 20__;

        5.        The current monthly rent (including any and all adjustments
pursuant to the terms of the Lease) is ____________________ Dollars
($____________________);

        6.        The Lease (including all Exhibits and Amendments) is in full
force and effect and, to Seller's actual knowledge (as such term is defined in
the Agreement), the Lease has not been assigned, modified, supplemented or
amended in any way, except as follows:

        7.        The Lease, as affected by those changes set forth in
Paragraph 7 above, is attached hereto at Exhibit "A" and represents the entire
agreement between the parties;

        8.        There are no uncured defaults by Seller under the Lease, and
Seller is not aware, without any investigation or inquiry of any kind or nature
whatsoever, of any events or conditions which, with the passage of time or the
giving of notice, or both, would constitute a default by Seller under the Lease,
except as follows:

        9.        At the date hereof, and, to Seller's actual knowledge, there
are no existing defenses or offsets which the Tenant has against the enforcement
of the Lease by Seller;

        10.        To Seller's actual knowledge, Tenant has waived any and all
rights of first refusal to lease all or any portion of the Premises and/or the
real property or land of which the Premises are a part that it may have;

        11.        Tenant acknowledges that it has waived any right to extend
the term of the Lease that it may have; and

        12.        All conditions of the Lease to be performed by Seller and
necessary to the enforceability of the Lease have been satisfied.

        IN WITNESS WHEREOF, Seller has executed this Certificate as of the date
first set forth above.

        REYNEN & BARDIS (KMS PLACER), L.P., a California limited partnership

                                            By: _______________________________
                                            Its: _______________________________

                                            By: _______________________________
                                            Its: _______________________________

EXHIBIT A

[Attach Lease]

TENANT'S ESTOPPEL CERTIFICATE

        This Tenant's Estoppel Certificate dated ___________________, 2003
("Certificate") is provided by the undersigned "Tenant" pursuant to that certain
Lease (the "Lease") dated as of ____________________, by and between Tenant and
Reynen & Bardis (KMS Placer), L.P., a California limited partnership
("Landlord"), with respect to the premises located at 3301 Industrial Avenue,
Rocklin, California, as more fully described in the Lease ("Premises"). Tenant
hereby certifies as follows:

        1.        The commencement date under the Lease was _________________;

        2.        The term of the Lease will expire on __________________;

        3.        Tenant has deposited with Landlord a Security Deposit of
$______________;

        4.        Rent has been paid up to the date of ___________________, and
no rents or charges have been paid in advance, except for the following rents or
charges which have been paid to the date specified: $___________ paid to
_________, 20__; $__________ paid to _____________, 20__;

        5.        The current monthly rent (including any and all adjustments
pursuant to the terms of the Lease) is Dollars ($_________);

        6.        The Lease (including all Exhibits and Amendments) is in full
force and effect and has not been assigned, modified, supplemented or amended in
any way, except as follows:

        7.        The Lease, as affected by those changes set forth in
Paragraph 6 above, is attached hereto at Exhibit "A" and represents the entire
agreement between the parties as to the Premises;

        8.        There are no uncured defaults by Landlord under the Lease, and
Tenant knows of no events or conditions which, with the passage of time or
notice, or both, would constitute a default by Landlord under the Lease, except
as follows:

        9.        At the date hereof, there are no existing defenses or offsets
which the undersigned has against the enforcement of the Lease by Landlord;

        10.        Tenant acknowledges that it has waived any and all right of
first refusal to lease all or any portion of the Premises and/or the real
property or land of which the Premises are a part that it may have;

        11.        Tenant acknowledges that it has waived any right to extend
the term of the Lease that it may have;

        12.        All conditions of the Lease to be performed by Landlord and
necessary to the enforceability of the Lease have been satisfied; and

        13.        Tenant certifies that the above is true and correct and
acknowledges and agrees that this Certificate and the statements contained
herein may be relied on by any purchaser of the Property.

        EXECUTED this _______ day of January, 2003.

        "TENANT"_____________________________,
        a ____________________

        By:
        Print Name:
        Print Title:

EXHIBIT A

[Attach Lease]

EXHIBIT E

LAND LEGAL DESCRIPTION

EXHIBIT F

VISUAL MAP

EXHIBIT G

GRANT DEED

EXHIBIT H

SPECIAL TAX DISCLOSURE

EXHIBIT I

BILL OF SALE

EXHIBIT J

ASSIGNMENT OF CONTRACTS

EXHIBIT K

ASSIGNMENT OF EXISTING LEASES

EXHIBIT L

GENERAL ASSIGNMENT

EXHIBIT M

SELLER'S CERTIFICATE