Exhibit 10.1

 

PURCHASE AND SALE AGREEMENT

[Marquette Mall, Michigan City, Indiana]

 

THIS PURCHASE AND SALE AGREEMENT (this “Agreement”) is made as of the
             day of                     , 2004 by and between FIRST CAPITAL
INCOME PROPERTIES, LTD. – SERIES XI, an Illinois limited partnership (“Seller”)
and CANNON COMMERCIAL, INC., a California corporation (“Purchaser”).

 

RECITALS:

 

A. Seller is the owner of certain real estate in the County of LaPorte, State of
Indiana, which parcel is more particularly described on Exhibit A attached
hereto (the “Land”) upon which is located a retail shopping center and office
building commonly known as Marquette Mall (the “Improvements”). The Land and the
Improvements are collectively referred to as the “Real Property.”

 

B. Seller desires to sell, and Purchaser desires to purchase, the Property (as
such term is hereinafter defined), each in accordance with and subject to the
terms and conditions set forth in this Agreement.

 

THEREFORE, in consideration of the above Recitals, the mutual covenants and
agreements herein set forth and the benefits to be derived therefrom, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Purchaser and Seller agree as follows:

 

  1. PURCHASE AND SALE

 

Subject to and in accordance with the terms and conditions set forth in this
Agreement, Seller shall convey to Purchaser (i) the Real Property together with
any and all of Seller’s rights, easements and privileges presently thereon or
appertaining thereto, (ii) all buildings and improvements owned by Seller and
located on the Real Property, (iii) the leases of the Real Property as of the
date hereof and other leases entered into in accordance with this Agreement, and
all amendments thereto (the “Leases”) and all security or other deposits held by
Seller under the Leases; (iv) the tangible personal property set forth on
Exhibit B attached hereto (subject to ordinary depletion) (the “Tangible
Personal Property”); (v) to the extent assignable, any and all of the agreements
and equipment leases set forth on Exhibit C attached hereto and other agreements
entered into in accordance with this Agreement, and all amendments thereto (the
“Service Contracts”); and (vi) (A) to the extent assignable, the right (if any)
to use the name “Marquette Mall”; and (B) to the extent assignable and obtained,
all certificates of occupancy and other permits, licenses and certificates held
by Seller with respect to the Property (collectively, “Permits and Licenses”);
(items (i) through (vi) above are collectively referred to in this Agreement as
the “Property”). All of the foregoing expressly excludes all property owned by
the tenants or other users or occupants of the Property and any refund of taxes
or payment of condemnation awards applicable to the period prior to the Closing
Date (as defined in Section 4.A hereof).

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  2. PURCHASE PRICE

 

The purchase price to be paid by Purchaser to Seller for the Property is Six
Million Nine Hundred Fifty Thousand and No/100 Dollars ($6,950,000.00) (the
“Purchase Price”). The Purchase Price shall be paid as follows:

 

A. Earnest Money. Purchaser shall, within two (2) Business Days from the date of
this Agreement, deliver to Chicago Title Insurance Company (“Escrowee”) pursuant
to the fully executed escrow agreement attached as Exhibit J the amount of Two
Hundred Thousand and No/100 Dollars ($200,000.00) (“Earnest Money”). If the
transaction closes in accordance with the terms of this Agreement, at Closing,
the Earnest Money shall be delivered by Escrowee to Seller as part payment of
the Purchase Price. If the transaction fails to close due to a default on the
part of Purchaser, the Earnest Money shall be delivered by Escrowee to Seller as
liquidated damages in accordance with Section 7.A below. If the transaction
fails to close due to a default on the part of Seller, or if Purchaser
terminates the Agreement in accordance with the terms of Sections 3.B or 4.B
(i)(k) or Article 10 of this Agreement, the Earnest Money shall be delivered by
Escrowee to Purchaser, subject to the provisions of Section 7.B below. Interest
earned on the Earnest Money shall be deemed as part of the Earnest Money for
purposes of this Agreement.

 

B. Cash at Closing. At Closing, Purchaser shall pay to Seller, by wire
transferred current federal funds, an amount (the “Cash Payment”) equal to the
Purchase Price minus the Earnest Money, and plus or minus, as the case may
require, the closing prorations and adjustments to be made pursuant to Section
4.C. below.

 

  3. EVIDENCE OF TITLE

 

A. Title Examination; Commitment for Title Insurance. Seller has delivered to
Purchaser a title insurance commitment (the “Title Commitment”) with respect to
the Real Property from Chicago Title Insurance Company (the “Title Insurer”).
Seller has instructed the Title Insurer to deliver to Purchaser and Seller
copies of the Title Commitment and all instruments referenced in Schedule B
thereof.

 

B. Survey.

 

During the Review Period (as defined in Article 10 below), Purchaser may employ
a surveyor or surveying firm to prepare a survey (the “Survey”) of the Property.
Purchaser shall instruct said surveyor to deliver a copy of the Survey to
Purchaser Seller and the Title Insurer. The cost of the Survey shall be divided
equally between Purchaser and Seller, whether or not the transaction
contemplated by this Agreement closes. The provisions of the immediately
preceding sentence shall survive the termination of this Agreement.

 

C. Title Objections; Cure of Title Objections.

 

If the Title Commitment or Survey discloses exceptions other than those
exceptions which are listed on Exhibit D, then, by the earlier of (i) expiration
of the Review Period or (ii) seven (7) Business Days after its receipt of the
same, Purchaser shall notify Seller of any such exceptions to which it objects.
Any such exceptions not objected to by Purchaser as aforesaid shall become
“Permitted Exceptions”. If Purchaser objects to any such exceptions,

 

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Seller shall have ten (10) days after it receives notice of Purchaser’s
objections to notify Purchaser of which, if any, such exceptions Seller shall
cause to be removed by waiver or endorsement by the Title Insurer. If Seller
fails to notify Purchaser within said ten (10) day period that Seller will
remove such exceptions, Purchaser shall have the option, as its sole and
exclusive remedy, by written notice given no later than five (5) Business Days
after expiration of such ten (10) day period, to either (a) waive the
unsatisfied objections and close, or (b) terminate this Agreement and obtain a
return of the Earnest Money. If Purchaser does not elect to terminate this
Agreement, Purchaser shall consummate the Closing and accept title to the
Property subject to all such exceptions, in which event, all such exceptions
shall be deemed Permitted Exceptions.

 

  4. CLOSING

 

A. Closing Date. The “Closing” of the transaction contemplated by this Agreement
(that is, the payment of the Purchase Price, the transfer of title to the
Property and the satisfaction of all other terms and conditions of this
Agreement) shall occur at the Chicago office of the Title Insurer at 10:00 a.m.
on the twentieth (20th) Business Day (hereinafter defined) after the expiration
of the Review Period. The “Closing Date” shall be the date of Closing, provided
the Cash Payment has been wired to Title Insurer by 12:00 noon Central Time on
that day; otherwise the Closing Date shall be deemed to be the next Business
Day. If the date for Closing above provided for falls on a Saturday, Sunday or
legal holiday, then the Closing Date shall be the next Business Day.

 

B. Closing Documents

 

(i) Seller. In addition to the other items and documents required elsewhere
under this Agreement to be delivered to Purchaser at Closing, Seller shall also
execute and/or deliver (or cause to be delivered) to Purchaser the following at
Closing:

 

(a) a limited recordable warranty deed (the “Deed”) of the Real Property to
Purchaser, in form acceptable to the Title Insurer, and as attached hereto as
Exhibit L, duly acknowledged, in proper form for recording and subject only to
the Permitted Exceptions as set forth on Exhibit D-2;

 

(b) a bill of sale with respect to the Tangible Personal Property in the form
attached as Exhibit E;

 

(c) a letter advising tenants under the Leases, service providers under the
Service Contracts, and (x) JT Marquette, L.L.C. (“JT”), successor-in-interest to
RCW, Inc. of Illinois, under that certain Common Area Agreement dated as of
December 1, 1992, recorded at the LaPorte County, Indiana Recorder’s Office (the
“County Recorder”) as Document No. 92-21636, by and between Seller and JT, as
amended by that certain First Amendment to Common Area Agreement dated as of
March 30, 1999, recorded at the County Recorder as Document No. 99-07614 (as
amended, the “Walgreens REA”), and (y) Sears, Roebuck and Co. (“Sears”, and
together with JT, sometimes hereinafter referred to individually as an “REA
Party,” and, collectively, as the “REA Parties”), under that certain Grant and
Declaration of Easements and Covenants dated as of May 5, 1999, by and between
Seller and Sears, recorded at the County Recorder as Document No. 99-18689 (the
“Sears REA”, and together with the Walgreen’s REA, sometimes hereinafter
referred to individually as the “REA,” and, collectively, as the “REAs”), of the
change in ownership of the property in form attached as Exhibit F-1, Exhibit F-2
and Exhibit F-3 (the “Notices”), respectively;

 

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(d) an Assignment and Assumption of Leases and an Assignment and Assumption of
Service Contracts, in the forms attached as Exhibits G and H;

 

(e) (i) the originals (or if not available, copies) of the Leases and the
Service Contracts and amendments thereto, (ii) the originals (or if not
available, copies) of any Permits and Licenses, and (iii) all keys to the
Property in Seller’s possession;

 

(f) A Non-Foreign Certification in the form attached as Exhibit I;

 

(g) a closing statement to be prepared by Seller and executed by Seller and
Purchaser, setting forth the prorations and adjustments to the Purchase Price as
required by Section 4.C. below;

 

(h) the updated schedule of past-due rents for the Property, if any, as
described in Section 4.C.(i)(b) below;

 

(i) evidence of a termination of any management agreement to which Seller is a
party affecting the Property;

 

(j) an affidavit of title, containing such reasonable terms and conditions as
may be required by Title Insurer to enable Title Insurer to insure Purchaser’s
title to the Property in conformity with Section 3 of this Agreement;

 

(k) a written statement of Seller setting forth, to Seller’s Knowledge
(hereafter defined), any changes in Seller’s representations and warranties
which have occurred since the effective date of such representations and
warranties. In the event Seller is unable to certify that there have been no
material adverse changes in Seller’s representations and warranties, Purchaser
shall have the right as its sole remedy to terminate this Agreement, in which
event the Earnest Money shall be returned to Purchaser, and neither party shall
have any further obligations hereunder except for those obligations which by
their terms survive the termination of this Agreement;

 

(l) Sales Disclosure Form (State Form 46021);

 

(m) Responsible Property Transfer Law Statement;

 

(n) All existing surveys, blueprints, drawings, plans and specifications for or
with respect to the Property or any part thereof, to the extent the same are
owned by Seller and in Seller’s possession;

 

(o) Copies of all financial information, rent rolls, operating expense and tax
information and history (in order to perform reconciliations at the end of the
existing year), tenant correspondence, repair logs, complaint logs and other
books and records relating to the tenants of the Property, but excluding
internal correspondence, analyses, appraisals, projections or similar items, in
each case to the extent in Seller’s possession;

 

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(p) Such further instruments as may be necessary to record the Deed; and

 

(q) Evidence reasonably satisfactory to the Title Company respecting the due
organization of Seller and the due authorization and execution by Seller of this
Agreement and the documents required to be delivered hereunder.

 

(ii) Purchaser. At Closing, Purchaser shall deliver or cause to be delivered to
Seller the following:

 

(a) the Cash Payment;

 

(b) the Assignment and Assumption of Leases and Assignment and Assumption of
Service Contracts, in the forms attached as Exhibits G and H;

 

(c) the closing statement referred to in Section 4.B.(i)(g) above;

 

(d) a written statement of Purchaser setting forth, to Purchaser’s Knowledge
(hereafter defined), any changes in Purchaser’s representations and warranties
which have occurred since the effective date of such representations and
warranties. In the event Purchaser is unable to certify that there have been no
material adverse changes in Purchaser’s representations and warranties, Seller
shall have the right to terminate this Agreement, in which event the Earnest
Money shall be delivered to Seller, and neither party shall have any further
obligations hereunder except for those obligations which by their terms survive
the termination of this Agreement;

 

(e) Sales Disclosure Form (State Form 46021);

 

(f) Responsible Property Transfer Law Statement.

 

(g) The Notices;

 

(h) Such further instruments as may be necessary to record the Deed; and

 

(i) Evidence reasonably satisfactory to Seller and the Title Company respecting
the organization of Purchaser and the due authorization and execution by
Purchaser of this Agreement and documents required to be delivered hereunder.

 

C. Closing Prorations and Adjustments

 

(i) The following items are to be prorated or adjusted (as appropriate) as of
11:59 p.m. on the day before the Closing Date and reprorated (if necessary)
pursuant to Section 4.C.(ii) below, it being understood that for purposes of
prorations and adjustments, Seller shall be deemed the owner of the Property on
the day before the Closing Date, and Purchaser shall be deemed the owner of the
Property on the Closing Date:

 

(a) real estate and personal property taxes shall be prorated (on a per diem
basis) on a cash basis based on the calendar year of Closing (on the basis of
the most recent ascertainable tax or assessment bill if the current bill is not
then available).

 

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(b) the “minimum” or “base” rent and estimated payments of “Percentage Rent”
(hereafter defined) collected from tenants under the Leases; provided, however,
that rent and all other sums which are due and payable to Seller as of Closing
by any tenant but uncollected as of the Closing shall not be adjusted, but
Purchaser shall cause the rent and other sums for the period prior to Closing to
be remitted to Seller if, as and when collected, but only if there is no
deficiency in the then current rent. At Closing, Seller shall deliver to
Purchaser a schedule of all such past due but uncollected rent and other sums
owed by tenants. Purchaser shall include the amount of such rent and other sums
in the bills thereafter submitted to the tenants in question after the Closing.
Purchaser shall not be obligated to commence a lawsuit to collect any such sums
or to evict any tenant for the failure to pay any such sums but Seller shall
retain the right to do so after the Closing provided Seller may not seek to
terminate any Lease or evict any tenant.

 

(c) to the extent not set forth on the schedule of uncollected rent described in
Section 4.C.(i)(b) above, “percentage” or “overage” rent (“Percentage Rent”)
that is (1) attributable to any Percentage Rent lease year in which the Closing
Date falls and (2) not yet determinable as of the Closing Date (collectively,
“Current Year Percentage Rent”), shall be prorated as follows: promptly upon
receipt by Purchaser, Purchaser shall furnish to Seller copies of all sales
reports from tenants relative to Current Year Percentage Rent, including,
without limitation, all sales reports with respect to any tenants whose
Percentage Rent lease years have expired as of the Closing but whose sales
reports were not delivered to Seller as of the Closing Date and sales reports of
any tenants whose Percentage Rent lease years expire after the Closing, and the
amount of any Current Year Percentage Rent shall be payable in accordance with
such tenant’s Lease as existing as of the Closing Date, and Purchaser shall (to
the extent not paid to Seller by way of estimated payments from the tenant prior
to Closing) pay to Seller a portion of such rent based upon the apportionment
being made as of the Closing Date (in proportion to the relative number of days
in the subject Percentage Rent Lease year occurring prior and subsequent to the
Closing Date), promptly after the date when such rent is received from the
tenant;

 

(d) Seller, as landlord under the Leases, is currently collecting from tenants
additional rent to cover taxes, insurance, utilities, maintenance and other
operating costs and expenses incurred by Seller (such expenses, collectively
“Expenses” and such collections, collectively “Collections”). Non-delinquent
Collections for the month in which Closing occurs shall be prorated in the same
manner as other rents. Within sixty (60) days after the Closing occurs, Seller
shall calculate the Expenses incurred and Collections received for the year of
Closing by Seller and shall prepare and present to Purchaser for its review and
approval, which approval shall not be unreasonably withheld or delayed, a
calculation of the Collections received and Expenses incurred by Seller. Seller
shall make any necessary adjusting payment to Purchaser, due to any
over-collection by Seller, within forty five (45) days after presentment to, and
approval by, Purchaser of Seller’s calculation and Purchaser shall make any
necessary adjusting payment to Seller, due to any under-collection by Seller,
within thirty (30) days after presentment to, and approval by Purchaser of
Seller’s calculation. Either party may inspect the other’s books and records
related to the Property to confirm the calculation.

 

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(e) Seller is currently collecting from JT an annual payment to cover JT’s share
of common area charges under the Walgreens REA (the “JT CAM”). Non-delinquent JT
CAM for the calendar year in which Closing occurs shall be prorated based upon
the number of days Seller and Purchaser each own the Property during the
calendar year in which the Closing occurs. Any JT CAM which is due and payable
to Seller as of Closing but which is uncollected as of Closing shall not be
adjusted, but Purchaser shall cause any such delinquent JT CAM and other sums
attributable to the period prior to Closing to be promptly remitted to Seller
if, as and when collected. At Closing, Seller shall retain the right to commence
a lawsuit for the failure of JT to pay any of the sums described in this clause
(e) after Closing, provided Seller may not seek to terminate the Walgreens REA.

 

(f) If Closing occurs, Purchaser shall be responsible for the payment of all
Tenant Inducement Costs (as hereinafter defined) and leasing commissions which
become due and payable after Closing (A) as a result of any renewal option or
expansion option with respect to existing Leases, which option has not been
exercised as of the date hereof, (B) under any new Leases entered into after the
date hereof to the extent such new Lease is approved or deemed approved by
Purchaser in accordance with Section 5.A hereof, or (C) which are set forth in a
Lease, have not accrued prior to Closing and are due and payable after Closing.
Seller shall be responsible for the payment of all Tenant Inducement Costs and
leasing commissions which are not described in clause (A), (B) or (C) of the
preceding sentence. If, as of the date of Closing, Seller shall have paid any
Tenant Inducement Costs or leasing commissions for which Purchaser is
responsible pursuant to the foregoing provisions, Purchaser shall reimburse
Seller therefor at Closing. If, as of the Closing, Seller shall not have paid
any Tenant Inducement Costs or leasing commissions for which Seller is
responsible, Purchaser shall receive a credit at Closing in such amounts. For
purposes hereof, the term “Tenant Inducement Costs” shall mean any out-of-pocket
payments required under a Lease to be paid by the landlord thereunder to or for
the benefit of the tenant thereunder which is in the nature of a tenant
inducement, including, specifically, without limitation, tenant improvement
costs, signage costs, lease buyout costs, and moving, design, refurbishment and
club membership allowances (but excluding legal fees incurred in connection with
the preparation and negotiation of the lease). The term “Tenant Inducement
Costs” shall not include loss of income resulting from any free rental period,
it being agreed that Seller shall bear the loss resulting from any free rent
period until the date of Closing and Purchaser shall bear such loss from and
after the date of Closing.

 

(g) the amount of all security deposits held by Seller under the Leases shall be
credited to Purchaser at Closing;

 

(h) to the extent not paid directly by tenants, gas, water, electric, telephone
and all other utility and fuel charges, fuel on hand (at cost plus sales tax),
and any deposits with utility companies assigned to Purchaser (to the extent
possible, utility prorations will be handled by final meter readings obtained
from the utility providers at least two (2) Business Days preceding the Closing
Date);

 

(i) amounts due and prepayments under the Service Contracts assigned to
Purchaser under this Agreement;

 

(j) assignable license and permit fees;

 

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(k) other similar items of income and expenses of operation if and to the extent
not paid or reimbursed by Tenants.

 

(ii) If any item of income or expense set forth in this Section 4.C. is subject
to final adjustment after Closing, then Seller and Purchaser shall make, and
each shall be entitled to, an appropriate reproration to each such item promptly
when accurate information becomes available. Any such reproration shall be paid
promptly in cash to the party entitled thereto.

 

(iii) The terms of this Section 4.C., to the extent they call for adjustments,
prorations or payments after Closing (collectively, “Post-Closing Adjustments”),
shall survive the Closing.

 

(iv) Purchaser shall indemnify, defend (with counsel reasonably acceptable to
Seller) and hold Seller and its employees and agents, and each of them, harmless
from and against any and all losses, claims, damages and liabilities (including,
without limitation, reasonable attorneys’ fees incurred in connection therewith)
arising out of or accruing under the Sears REA and/or the Walgreens REA from and
after the date of Closing, and such indemnity shall survive the Closing.

 

D. Transaction Costs

 

Purchaser and Seller shall equally divide any escrow fees. Seller shall pay the
cost of the base title insurance premium and any transfer tax fee or similar
charge. Purchaser shall pay any recording fee or similar charge, the cost of any
endorsements to the title insurance policy (including for extended coverage),
the cost of any loan policy, and the cost of the Survey, if any. Seller and
Purchaser shall, however, be responsible for the fees of their respective
attorneys.

 

E. Possession

 

Upon Closing, Seller shall deliver to Purchaser possession of the Property in
accordance with the terms of this Agreement.

 

  5. OPERATION OF PROPERTY PRIOR TO CLOSING

 

Notwithstanding anything to the contrary contained herein:

 

A. Prior to the expiration of the Review Period, Seller may modify, extend,
renew, cancel or terminate any Lease or Service Contract, and may enter into any
new lease or service contract without prior notice to, or consent of, Purchaser;
provided, however, Seller shall promptly notify Purchaser after Seller’s
execution of any such document. After expiration of the Review Period, Seller
may not modify, extend, renew, cancel or terminate any Lease or Service
Contract, or enter into any proposed lease or service contract which is not
terminable as of Closing without Purchaser’s consent. Should Seller seek in
writing Purchaser’s consent for any such action, Purchaser shall respond in
writing to Seller (therein giving consent or specifying the precise nature of
Purchaser’s objection to the action) within five (5) Business Days of receipt of
Seller’s request. If Purchaser does not respond within said five (5) Business
Day period, Purchaser shall be deemed conclusively to have consented to the
action requested by Seller.

 

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B. From the date hereof until the Closing or earlier termination of this
Agreement, Seller shall not remove (or direct the removal of) any item of
Tangible Personal Property except as may be required for repair or replacement
or to retire obsolete property.

 

  6. REPRESENTATIONS

 

A. Seller’s Representations and Warranties: Seller represents and warrants to
Purchaser, that as of the date of this Agreement (unless otherwise stated
below):

 

(i) Seller is a duly formed and validly existing limited partnership under the
laws of Illinois.

 

(ii) Seller has the full legal right, power and authority to execute and deliver
this Agreement and all documents now or hereafter to be executed by it pursuant
hereto (collectively, the “Seller’s Documents”), to consummate the transaction
contemplated in this Agreement, and to perform its obligations under this
Agreement and the Seller’s Documents. The person signing this Agreement on
behalf of Seller is authorized to do so.

 

(iii) Seller has not been served with any litigation which is still pending with
respect to the Property that would adversely affect Seller’s ability to perform
its obligations under this Agreement, or that would materially and adversely
affect the financial condition or operation of the Property, nor to Seller’s
Knowledge, has any such litigation been filed.

 

(iv) (a) To Seller’s Knowledge as of the date hereof, (1) the information
contained in the schedule of leases attached to and made a part of this
Agreement as Exhibit L (the “Lease Schedule”) is complete and accurate; and (2)
there are no leases other than those set forth in the Lease Schedule.

 

(b) To Seller’s Knowledge, except as set forth in the Lease Schedule, as of the
date hereof:

 

  (1) Seller holds no security or other tenant deposits.

 

  (2) Each Lease is in full force and effect.

 

  (3) No written notice of an existing and uncured default has been delivered by
Seller or any tenant under any Lease.

 

If any Lease contains provisions which are inconsistent with the foregoing
representations and warranties, such representations and warranties shall be
deemed modified to the extent necessary to eliminate such inconsistency and to
conform such representations and warranties to the provisions of such Lease.

 

(v) To Seller’s Knowledge, Exhibit C attached to and made apart of this
Agreement is a complete list of the Service Contracts. No written notice of an
existing default has been delivered by Seller or any tenant under any Service
Contract.

 

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(vi) Seller has not received written notice of any violations of any laws or
other requirements of any governmental authority having jurisdiction over the
Property which remain outstanding.

 

B. Purchaser’s Representations and Warranties. Purchaser represents and warrants
to Seller that as of the date of this Agreement:

 

(i) Purchaser is a duly formed and validly existing corporation organized under
the laws of California.

 

(ii) Purchaser has the full legal right, power and authority to execute and
deliver this Agreement and all documents now or hereafter to be executed by
Purchaser pursuant to this Agreement (collectively, the “Purchaser’s
Documents”), to consummate the transaction contemplated hereby, and to perform
its obligations hereunder and under Purchaser’s Documents.

 

C. Seller and Purchaser shall be deemed to remake and restate the
representations and warranties set forth in this Section 6 above as of Closing.
Should Seller proceed to Closing with the Knowledge of Purchaser’s violation of
any representation or warranty contained in this Section 6, Seller will be
conclusively deemed to have waived any remedy therefor. Should Purchaser proceed
to Closing with Knowledge of Seller’s violation of any representation or
warranty of Seller contained in this Section 6, Purchaser will be conclusively
deemed to have waived any remedy therefor, including any adjustment in Purchase
Price.

 

D. The representations and warranties set forth in Section 6 above, as of the
date made (or deemed made) shall survive Closing for a period of two hundred
seventy (270) days from and after the Closing, but any claims thereunder must be
made in writing within said two hundred seventy (270) day period or they shall
thereafter be deemed lapsed, and to be null and void.

 

E. The term “Seller’s Knowledge” as used in this Agreement means the actual
knowledge possessed by George Touras (without investigation or inquiry) (and not
imputed or implied knowledge). George Touras is the person who would most likely
possess actual knowledge of material facts regarding the Property that would
render Seller’s representations and/or warranties untrue, inaccurate or
incomplete. The term “Purchaser’s Knowledge” as used in this Agreement means the
actual knowledge possessed by Kamyar Mateen. Notwithstanding anything contained
herein to the contrary, neither George Touras or Kamyar Mateen shall have any
personal liability or obligation whatsoever with respect to any of the matters
set forth in this Agreement or any of Seller’s or Purchaser’s representations
and/or warranties herein being or becoming untrue, inaccurate or incomplete in
any respect.

 

F. In the event that, prior to Closing, Purchaser obtains knowledge that, as of
Closing, Seller is in breach of any of the representations and warranties set
forth herein, or Seller otherwise discloses to Purchaser facts that are
inconsistent with or different from the information set forth in the
representations and warranties herein, and the Closing occurs, then the
representations and warranties herein shall be deemed to be modified and/or
superseded by such certificates or other documents (and, in such event, Seller
shall no longer have any liability hereunder with respect to the portion of
representation or warranty modified or superseded herein, as applicable).

 

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  7. CASUALTY LOSS AND CONDEMNATION

 

If, prior to Closing, the Property or any part thereof shall be condemned, or
destroyed or damaged by fire or other casualty, Seller shall promptly so notify
Purchaser. In the event the effect of such condemnation or casualty occurring
prior to Closing is “material” (hereinafter defined), Purchaser shall have the
option by written notice to Seller within twenty (20) days of receipt of
Seller’s notice to Purchaser, either to terminate this Agreement or to
consummate the transaction contemplated by this Agreement notwithstanding such
condemnation, destruction or damage. Purchaser’s failure to timely provide such
written notice shall be deemed Purchaser’s election to close. If Purchaser
elects to consummate the transaction contemplated by this Agreement or fails to
timely elect to terminate this Agreement, or if a casualty or condemnation is
immaterial, Purchaser shall be entitled (a) in the event of a condemnation, to
receive the condemnation proceeds, and (b) in the event of a casualty, to settle
the loss under all policies of insurance applicable to the destruction or damage
and receive the proceeds of insurance applicable thereto, and Seller shall, at
Closing, execute and deliver to Purchaser all customary proofs of loss,
assignments of claims and other similar items. If, upon a material condemnation
or casualty prior to Closing, Purchaser timely elects to terminate this
Agreement, the Earnest Money shall be returned to Purchaser, in which event this
Agreement shall, without further action of the parties, become null and void and
neither party shall have any further rights or obligations under this Agreement.
For purposes of this provision, a condemnation or casualty loss shall be deemed
to be “material” if in the event of condemnation, the value of the Property
taken or in the event of a casualty, the cost of repairing or restoring the
premises in question, would be equal to or greater than Two-Hundred Fifty
Thousand and No/100 Dollars ($250,000.00). The provisions of this Section 7
shall supersede the provisions of any law regarding the allocation of the risk
of loss between purchasers and sellers. Notwithstanding anything to the contrary
contained in this Agreement, Seller discloses to Purchaser that Seller is in
negotiations with the Indiana Department of Transportation for certain permanent
and temporary conveyances in lieu of condemnation, as described on the attached
Exhibit M. Seller reserves the right to meet with governmental officials with
respect to any pending conveyance in lieu of condemnation and retains all rights
to cause such conveyances to occur prior to Closing and retains all rights with
respect to any award or payment made or to be made in connection therewith. No
award or payment made to Seller shall reduce the Purchase Price to be paid
hereunder.

 

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  8. BROKERAGE

 

Seller has engaged Trammell Crow Company (represented by Whitney Knoll (“TCC”)
to act as its broker in connection with the sale of the Property. Seller shall
pay any commission or fee due TCC in connection with this transaction. Purchaser
and Seller each hereby represents and warrants to the other that it has not
dealt with any broker, finder or other party in connection with the negotiation
of this Agreement or otherwise in connection with the Property, except TCC.
Seller and Purchaser shall each indemnify and hold the other harmless from and
against any and all claims of all other brokers and finders claiming by, through
or under the indemnifying party and in any way related to the sale and purchase
of the Property, this Agreement or otherwise, including, without limitation,
attorneys’ fees and expenses incurred by the indemnified party in connection
with such claim.

 

  9. DEFAULT AND REMEDIES

 

A. Notwithstanding anything to the contrary contained in this Agreement, if
Closing does not occur solely due to a default by Seller hereunder, Purchaser
may (A) as Purchaser’s sole and exclusive remedy, terminate this Agreement and
thereupon shall be entitled to (i) the immediate return of the Earnest Money,
together with all accrued interest thereon, and (ii) a reimbursement from the
Seller of all of Purchaser’s costs and expenses incurred by Purchaser in
connection with negotiating and preparing this Agreement, examining and
inspecting the Property, and preparing for Closing (including, without
limitation, all reasonable attorneys’ fees), not to exceed Fifty Thousand and
No/100 Dollars ($50,000.00), in which event this Agreement shall be null and
void, and neither party shall have any rights or obligations under this
Agreement (except as may expressly survive termination of this Agreement), or
(B) as Purchaser’s sole and exclusive remedy, enforce specific performance
hereof; provided an action is filed within one-hundred eighty (180) days of the
termination of this Agreement. In no event shall Seller be liable to Purchaser
for any actual, punitive, speculative, consequential or other damages, except as
specified above

 

B. If Purchaser fails to complete closing in accordance with the terms of this
Agreement, then this Agreement may be terminated by Seller and Seller shall
(subject to Section 3.B) be entitled to the Earnest Money as Seller’s sole
remedy and as liquidated damages. Seller and Purchaser acknowledge and agree
that: (i) the Earnest Money is a reasonable estimate of and bears a reasonable
relationship to the damages that would be suffered and costs incurred by Seller
as a result of having withdrawn the Property from sale and the failure of
Closing to occur due to a default of Purchaser under this Agreement; (ii) the
actual damages suffered and costs incurred by Seller as a result of such
withdrawal and failure to close due to a default of Purchaser under this
Agreement would be extremely difficult and impractical to determine; (iii)
Purchaser seeks to limit its liability under this Agreement to the amount of the
Earnest Money in the event this Agreement does not close due to a default by
Purchaser under this Agreement; and (iv) such amount shall constitute valid
liquidated damages; provided, however, that the foregoing shall not limit
Seller’s recourse against Purchaser under Sections 8, 10.A and 11.

 

C. After Closing and subject to any limitations set forth in this Agreement,
including but not limited to Sections 12.J and 12.L, Seller and Purchaser shall,
subject to the terms and conditions of this Agreement, have such rights and
remedies as are available at law or in equity, but only for such obligations as
expressly survive Closing; except that neither Seller nor Purchaser shall be
entitled to recover from the other consequential, exemplary, punitive or special
damages.

 

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  10. CONDITION PRECEDENT

 

A. Review Period. Purchaser shall have a period of fifteen (15) Business Days
beginning on the date hereof within which to inspect and investigate the
Property and its operations (the “Review Period”). If Purchaser determines that
the Property is unsuitable for its purposes and notifies Seller of such decision
within the Review Period, the Earnest Money shall be returned to Purchaser, at
which time this Agreement shall be null and void and neither party shall have
any further rights or obligations under this Agreement, except those which by
their terms expressly survive such termination. Seller shall cooperate with
Purchaser to allow Purchaser and Purchaser’s Representatives access to the
Property, to allow Purchaser and Purchaser’s Representatives access to all
non-proprietary information and documentation, and otherwise to promptly deliver
such non-proprietary information and documentation to Purchaser, relating to the
Property and its operations as Purchaser may reasonably request but excluding
internal correspondence, analyses, appraisals, projections or similar items.
Subject to Section 2.A, Purchaser’s failure to terminate this Agreement pursuant
to this Section 10.A within the Review Period shall be deemed a waiver by
Purchaser of the condition contained in this Section 10.A. Purchaser’s right of
inspection pursuant to this Section 10.A is and shall remain subject to the
rights of tenants under the Leases and other occupants and users of the
Property. No inspection shall be undertaken without 48 hours’ prior verbal
notice to Seller. Seller shall have the right to be present at any or all
inspections. Neither Purchaser nor its agents or representatives shall contact
any tenants without the prior consent of Seller. No inspection shall involve the
taking of samples or other physically invasive procedures without the prior
consent of Seller. Purchaser shall restore the Property to its condition
existing prior to the inspection of the Property hereunder. Notwithstanding
anything to the contrary contained in this Agreement, Purchaser shall indemnify,
defend (with counsel reasonably acceptable to Seller) and hold Seller and its
employees and agents, and each of them, harmless from and against any and all
losses, claims, damages and liabilities (including, without limitation,
attorneys’ fees incurred in connection therewith) arising out of or resulting
from Purchaser’s exercise of its rights under this Section 10.A and such
indemnity shall survive the Closing and any termination of this Agreement.

 

B. Estoppel Certificates. As a condition to Purchaser’s obligation to close
hereunder, Purchaser shall have received estoppel certificates (“Estoppel
Certificates”) from (i) individual tenants occupying in excess of 5,000 square
feet and such additional tenants as are necessary, if any, such that Estoppel
Certificates are executed by tenants occupying at least eighty percent (80%) of
the rentable space actually leased as of the date of Closing pursuant to valid
and existing Leases (excluding license agreements and any agreements with a term
of one year or less) (“Required Tenants”), and (ii) the REA Parties with respect
to the REAs, each in the form and content as set forth herein (the aforesaid
acceptable Estoppel Certificates to be delivered are collectively referred to as
the “Required Estoppel Certificates”). The Estoppel Certificates delivered to
the tenants for execution shall be in the form of Exhibit N attached hereto (the
“Form Tenant Estoppel Certificate”). The Estoppel Certificates delivered to the
REA Parties for execution shall be in the form of Exhibit O attached hereto (the
“Form REA Estoppel Certificate”). The Estoppel Certificates executed by tenants
shall be in substantially the form of the Form Tenant Estoppel Certificate;
provided, however, that an Estoppel Certificate executed by a tenant shall not
be deemed an unacceptable Estoppel Certificate for purposes of this Section

 

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10.B if it (a) does not contain the information requested in item 4 on the Form
Tenant Estoppel Certificate, or (b) contains the qualification by the tenant of
any statement as being to its knowledge or as being subject to any similar
qualification, or (c) does not contain any more information than that which the
tenant is required to give in any such certificate pursuant to its Lease, or (d)
fails to certify to Purchaser’s lender. The Estoppel Certificates executed by
the REA Parties shall be in substantially the form of the Form REA Estoppel
Certificate; provided, however that an Estoppel Certificate executed by an REA
Party shall not be deemed an unacceptable Estoppel Certificate for purposes of
this Section 10.B if it (x) contains the qualification by the REA Party of any
statement as being to its knowledge or as being subject to any similar
qualification, or (y) fails to certify to Purchaser’s lender.

 

In the event Seller is unable to provide to Purchaser the Estoppel Certificates
for the Required Tenants or the REA Parties on or before Closing, Seller may, at
its option, elect to execute and deliver to Purchaser certificates
(individually, a “Seller Estoppel Certificate,” and, collectively, the “Seller
Estoppel Certificates”), substantially in the same form as the certificate
attached hereto as Exhibit P for tenants (the “Form Seller Tenant Estoppel
Certificate”) and Exhibit Q for the REA Parties (the “Form Seller REA Estoppel
Certificate”), covering the particular tenants and/or REA Parties necessary so
that Purchaser shall be deemed to have received, at Closing, Estoppel
Certificates and Seller Estoppel Certificates with respect to the Required
Tenants and the REA Parties. In the event that Seller elects to deliver such
Seller Estoppel Certificates, each statement therein shall survive for a period
terminating on the earlier to occur of (i) the date on which Purchaser has
received an executed Estoppel Certificate signed by the tenant under the Lease
in question or the REA Party under the REA in question, or (ii) one hundred
twenty (120) days from the Closing Date. If Purchaser receives an estoppel
certificate which contains some but not all of the matters set forth in the
Estoppel Certificate (a “Partial Certificate”) and Seller provides a Seller
Estoppel Certificate for such tenant and/or such REA Party, then the Seller
Estoppel Certificate may omit matters contained in the Partial Certificate. In
the event that Seller does not provide to Purchaser either Estoppel Certificates
or Seller Estoppel Certificates for the Required Tenants or the REA Parties,
Purchaser may, by written notice to Seller given on the Closing Date, either (a)
elect not to purchase the Property, in which event the Earnest Money shall be
returned to Purchaser, at which time this Agreement shall terminate and become
null and void and neither party shall have any further rights or obligations
under this Agreement, except for those which expressly survive termination of
this Agreement, or (b) elect to purchase the Property notwithstanding Seller’s
inability to provide the Required Estoppel Certificates, in which event
Purchaser shall be deemed to have waived the condition contained in this Section
10.B. If Purchaser fails to deliver such written notice as described above,
Purchaser shall be deemed to have elected item (b) above.

 

If any Estoppel Certificate contains statements confirming any of Seller’s
representations or warranties set forth herein or in a Seller Estoppel
Certificate, the Seller shall be deemed not to have made such representations or
warranties as to such Lease or REA. If any Estoppel Certificate or Seller
Estoppel Certificate contains statements or allegations that a default or
potential default exists on the part of Seller under the Lease or REA in
question or contains information inconsistent with any representations of Seller
contained in this Agreement or in a Seller Estoppel Certificate and Purchaser
elects to close the purchase and sale transaction contemplated herein
notwithstanding the existence of such statements, allegations or information,
then such Estoppel Certificates and/or Seller Estoppel Certificates shall be
deemed acceptable for purposes of this Section, notwithstanding the existence of
such allegations, statements or information, and Seller shall have no liability
to Purchaser hereunder with respect to the existence of such allegations,
statements or information.

 

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Upon Purchaser’s written request, Seller shall include in any request for a
Tenant Estoppel Certificate sent to a tenant, a form of subordination,
nondisturbance and attornment agreement (“SNDA”) for execution by such tenant
provided (i) Seller receives Purchaser’s written request and form(s) no later
than thirty (30) Business days prior to Closing, (ii) such tenant will be
directed to return the SNDA directly to Purchaser and (iii) receipt of any SNDA
by Purchaser shall not be a condition to Closing.

 

  11. PROPERTY INFORMATION AND CONFIDENTIALITY

 

A. Confidentiality. Except as may be required by law, without the prior written
consent of Seller, and unless the Closing occurs, Purchaser shall not disclose
to any third party the existence of this Agreement or any term or condition
thereof or the results of any inspections or studies undertaken in connection
herewith or make any public pronouncements, issue any press releases or
otherwise furnish the Information (hereinafter defined) or any information
regarding this Agreement, or the transactions contemplated hereby to any third
party; provided, however, that the foregoing shall not be construed to prevent
Purchaser from making (without the consent of, but upon notice to, the other
party) any disclosure required by any applicable law or regulation or judicial
process. For purposes hereof, “Information” shall mean and shall be deemed to
include, without limitation, the following written or oral information provided
by or on behalf of Seller to Purchaser, its agents, employees, representatives,
professional consultants or lenders (collectively, “Purchaser’s
Representatives”) either prior to or following the date of this Agreement: (a)
all documentation and/or information described in or relating to Section 1 of
this Agreement, including, without limitation, Leases, Tangible Personal
Property, Service Contracts and all other information regarding the operation,
ownership, maintenance, management, or occupancy of the Property; (b) the
Survey, if applicable; and (c) any reports, tests, or studies (together with the
results of such studies and tests obtained or provided by, or on behalf of,
Seller).

 

Notwithstanding the foregoing, Seller’s delivery and Purchaser’s use of the
Information are subject to the following terms: Purchaser shall (i) accept and
hold all Information in strict confidence in accordance with the terms of this
Agreement; (ii) not copy, reproduce, distribute or disclose the Information to
any third party other than Purchaser’s Representatives, except as permitted in
the preceding paragraph; (iii) not use the Information for any purpose other
than in connection with the transactions contemplated hereunder; and (iv) not
use the Information in any manner detrimental to Seller or the Property.
Purchaser agrees to transmit the Information only to those Purchaser’s
Representatives who are actively and directly participating in the evaluation of
the acquisition of the Property, who are informed of and who have agreed to
comply with the terms of this Section 11 of this Agreement and who are
instructed not to make use of the Information in a manner inconsistent herewith.
Purchaser shall be responsible for any breach of the terms of this Agreement by
Purchaser’s Representatives or any other person to whom the Information is
communicated. Purchaser agrees to indemnify, defend and hold Seller, its
members, officers, directors, shareholders, partners, employees, beneficiaries,
trustees, agents and representatives harmless against all losses, claims, suits,
damages and liabilities resulting from Purchaser’s breach of this Section 11, as
well as any breach thereof by Purchaser’s Representatives, which indemnification
shall survive the Closing or termination of this Agreement.

 

15

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Notwithstanding anything herein to the contrary, any party to this Agreement
(and any employee, representative, or other agent of any party to this
Agreement) may disclose to any and all persons, without limitation of any kind,
the tax treatment and tax structure of any transaction contemplated by this
agreement and all materials of any kind (including opinions or other tax
analyses) that are provided to it relating to such tax treatment and tax
structure; provided, however, that such disclosure may not be made (i) until the
earlier of (x) the date of the public announcement of discussions relating to
the transaction, (y) the date of the public announcement of the transaction and
(z) the date of the execution of an agreement to enter into the transaction and
(ii) to the extent required to be kept confidential to comply with any
applicable federal or state securities laws. The provisions of this paragraph
are intended to comply with the requirements of the presumption set forth in
Treasury Regulations Section 1.6011-4 (B)(3) and are not intended to permit the
disclosure of any Information that is not subject to the requirements of such
presumption.

 

B. Purchaser hereby agrees it will not release or cause or permit to be released
any press notices, publicity (oral or written) or advertising promotion relating
to, or otherwise announce or disclose or cause or permit to be announced or
disclosed, in any manner whatsoever, the terms, conditions, parties to or
substance of this Agreement or the transactions contemplated herein, without
first obtaining the written consent of Seller, as to the portion of the
disclosure relating to this transaction, the Property or Seller and its
affiliates, which consent shall not be unreasonably withheld. It is understood
that the foregoing shall not preclude Purchaser from discussing the substance or
any relevant details of the transactions contemplated in this Agreement, subject
to the terms of this Section 11, with any of Purchaser’s Representatives
(defined below), accountants, professional consultants or potential lenders, as
the case may be, or prevent Purchaser hereto from complying with applicable laws
or court orders.

 

C. The provisions of this Section 11 shall survive the termination of this
Agreement.

 

  12. MISCELLANEOUS

 

A. All understandings and agreements heretofore had between Seller and Purchaser
with respect to the Property are merged in this Agreement, which alone fully and
completely expresses the agreement of the parties.

 

B. Neither this Agreement nor any interest hereunder shall be assigned or
transferred by Purchaser or Seller without the prior written consent of the
other party.

 

C. This Agreement shall not be modified or amended except in a written document
signed by Seller and Purchaser.

 

D. Time is of the essence of this Agreement.

 

E. This Agreement shall be governed and interpreted in accordance with the laws
of the State of Indiana.

 

F. All notices, requests, demands or other communications required or permitted
under this Agreement shall be in writing and delivered personally, by certified
mail,

 

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return receipt requested, postage prepaid, by overnight courier (such as Federal
express), or by facsimile transmission (with confirmation of transmission),
addressed as follows:

 

If to Seller:

   Equity Properties and Development, L.L.C.      2 North Riverside Plaza     
Suite 700      Chicago, Illinois 60606      Attention: George C. Touras, Esquire
     Telephone: 312/466-3635      Fax: 312/454-0359

With copies to:

   Neal, Gerber & Eisenberg LLP      Two North LaSalle, Suite 2100      Chicago,
Illinois 60602      Attention: Douglas J. Lubelchek, Esquire      Telephone:
312/269-5255      Facsimile: 312/269-1747

If to Purchaser:

   Cannon Commercial, Inc.      10850 Wilshire Blvd.      Suite 1050      Los
Angeles, California 90024      Attention: Kamyar Mateen      Telephone:
310/475-5819      Fax: 310/234-9195

With copies to:

   Hirsch & Westheimer, P.C.      700 Louisiana      Suite 2550      Houston,
Texas 77002      Attention: Bradley E. Rauch, Esquire      Telephone:
713/220-9154      Fax: 713/223-9319

 

All notices given in accordance with the terms hereof shall be deemed received
three (3) Business Days after posting (in the case of notices sent by certified
mail), or when delivered personally or otherwise received or receipt is refused
(in the case of all other methods of notice). Either party hereto may change the
address for receiving notices, requests, demands or other communication by
notice sent in accordance with the terms of this Section 12.F.

 

G. ANY INFORMATION, REPORTS, STATEMENTS, DOCUMENTS OR RECORDS (COLLECTIVELY, THE
“DISCLOSURES”) PROVIDED OR MADE TO PURCHASER OR ITS CONSTITUENTS BY SELLER, ITS
AGENTS OR EMPLOYEES CONCERNING THE CONDITION OF THE PROPERTY SHALL NOT BE
REPRESENTATIONS AND WARRANTIES. PURCHASER SHALL NOT RELY ON SUCH DISCLOSURES,
BUT RATHER, PURCHASER SHALL RELY ONLY ON ITS OWN INSPECTION OF THE PROPERTY.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, IT IS UNDERSTOOD AND AGREED
THAT NEITHER SELLER NOR ANY OF SELLER’S AFFILIATES IS MAKING AND HAS NOT AT ANY
TIME MADE ANY

 

17

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WARRANTIES OR REPRESENTATIONS OF ANY KIND OR CHARACTER, EXPRESSED OR IMPLIED,
WITH RESPECT TO THE PROPERTY, INCLUDING BUT NOT LIMITED TO, ANY WARRANTIES OR
REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE, TITLE, ZONING, TAX CONSEQUENCES, LATENT OR PATENT PHYSICAL OR
ENVIRONMENTAL CONDITION, UTILITIES, OPERATING HISTORY OR PROJECTIONS, VALUATION,
GOVERNMENTAL APPROVALS, THE COMPLIANCE OF THE PROPERTY WITH GOVERNMENTAL LAWS,
THE TRUTH, ACCURACY OR COMPLETENESS OF THE PROPERTY INFORMATION OR ANY OTHER
INFORMATION PROVIDED BY OR ON BEHALF OF SELLER TO PURCHASER, OR ANY OTHER MATTER
OR THING REGARDING THE PROPERTY. PURCHASER ACKNOWLEDGES AND AGREES THAT EXCEPT
AS OTHERWISE PROVIDED IN THIS AGREEMENT, AT CLOSING SELLER SHALL SELL AND CONVEY
TO PURCHASER AND PURCHASER SHALL ACCEPT THE PROPERTY “AS IS, WHERE IS, WITH ALL
FAULTS”. EXCEPT TO THE EXTENT EXPRESSLY PROVIDED OTHERWISE IN THIS AGREEMENT,
PURCHASER HAS NOT RELIED AND WILL NOT RELY ON, AND NEITHER SELLER NOR ANY OF
SELLER’S AFFILIATES IS LIABLE FOR OR BOUND BY, ANY EXPRESSED OR IMPLIED
WARRANTIES, GUARANTIES, STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO
THE PROPERTY OR RELATING THERETO (INCLUDING SPECIFICALLY, WITHOUT LIMITATION,
PROPERTY INFORMATION PACKAGES DISTRIBUTED WITH RESPECT TO THE PROPERTY) MADE OR
FURNISHED BY SELLER, ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR PURPORTING
TO REPRESENT SELLER, OR ANY THIRD-PARTY, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR
INDIRECTLY, ORALLY OR IN WRITING. PURCHASER ACKNOWLEDGES THAT PURCHASER HAS
CONDUCTED, OR WILL CONDUCT PRIOR TO CLOSING, SUCH INVESTIGATIONS OF THE
PROPERTY, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND ENVIRONMENTAL
CONDITIONS THEREOF, AS PURCHASER DEEMS NECESSARY TO SATISFY ITSELF AS TO THE
CONDITION OF THE PROPERTY AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION
TO BE TAKEN WITH RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED
FROM THE PROPERTY, AND WILL RELY SOLELY UPON SAME AND NOT UPON ANY INFORMATION
PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR EMPLOYEES WITH RESPECT
THERETO, OTHER THAN SUCH REPRESENTATIONS AND COVENANTS OF SELLER AS ARE
EXPRESSLY SET FORTH IN THIS AGREEMENT. UPON CLOSING, EXCEPT FOR SELLER’S
REPRESENTATIONS AND WARRANTIES THAT WILL SURVIVE CLOSING, PURCHASER SHALL ASSUME
THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED TO CONSTRUCTION DEFECTS
AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN REVEALED BY
PURCHASER’S INVESTIGATIONS, AND PURCHASER, UPON EXPIRATION OF THE REVIEW PERIOD,
SHALL BE DEEMED TO HAVE WAIVED, RELINQUISHED AND RELEASED SELLER AND SELLER’S
AFFILIATES FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION
(INCLUDING CAUSES OF ACTION IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND
EXPENSES (INCLUDING ATTORNEYS’ FEES AND COURT COSTS) OF ANY AND EVERY KIND OR
CHARACTER, KNOWN OR UNKNOWN, WHICH PURCHASER MIGHT HAVE ASSERTED OR ALLEGED
AGAINST SELLER OR SELLER’S AFFILIATES AT ANY TIME BY REASON OF OR ARISING OUT OF
ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS, VIOLATIONS OF
ANY

 

18

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APPLICABLE LAWS (INCLUDING WITHOUT LIMITATION, ANY ENVIRONMENTAL LAWS) AND ANY
AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR MATTERS REGARDING THE
PROPERTY. PURCHASER, ITS SUCCESSORS AND ASSIGNS, HEREBY WAIVE, RELEASE AND AGREE
NOT TO MAKE ANY CLAIM OR BRING ANY COST RECOVERY ACTION OR CLAIM FOR
CONTRIBUTION OR OTHER ACTION OR CLAIM AGAINST SELLER OR SELLER’S AFFILIATES
(HEREAFTER DEFINED) BASED ON (A) ANY FEDERAL, STATE, OR LOCAL ENVIRONMENTAL OR
HEALTH AND SAFETY LAW OR REGULATION, INCLUDING CERCLA OR ANY STATE EQUIVALENT,
OR ANY SIMILAR LAW NOW EXISTING OR HEREAFTER ENACTED, (B) ANY DISCHARGE,
DISPOSAL, RELEASE, OR ESCAPE OF ANY CHEMICAL, OR ANY MATERIAL WHATSOEVER, ON,
AT, TO, OR FROM THE PROPERTY; OR (C) ANY ENVIRONMENTAL CONDITIONS WHATSOEVER ON,
UNDER, OR IN THE VICINITY OF THE PROPERTY.

 

H. If for any reason Purchaser does not consummate the Closing, then Purchaser
shall, upon Seller’s written request, assign and transfer to Seller, without
representation, warranty or recourse, all of its right, title and interest in
and to any and all studies, reports, surveys and other information, data and/or
documents relating to the Property or any part thereof prepared by or at the
request of Purchaser, its employees and agents, and shall deliver to Seller
copies of all of the foregoing.

 

I. After Closing, Seller shall not be liable to Purchaser in respect of
obligations under this Agreement or any documents delivered at Closing which
survive Closing for any amounts less than Twenty Five Thousand and No/100
Dollars ($25,000.00) or in excess of Five Hundred Thousand and No/100 Dollars
($500,000.00) in the aggregate, Purchaser hereby waiving any and all claims it
may have to such recoveries in excess of, or less than, the foregoing amounts.

 

J. Seller and Purchaser hereby designate Title Insurer to act as and perform the
duties and obligations of the “reporting person” with respect to the transaction
contemplated by this Agreement for purposes of 26 C.F.R. Section 1.6045-4(e)(5)
relating to the requirements for information reporting on real estate
transaction closed on or after January 1, 1991. In this regard, Seller and
Purchaser each agree to execute at Closing, and to cause the Title Insurer to
execute at Closing, a Designation Agreement, designating Title Insurer as the
reporting person with respect to the transaction contemplated by this Agreement.

 

K. Purchaser agrees that it does not have and will not have any claims or causes
of action against any disclosed or undisclosed trustee, partner, affiliate,
subsidiary, beneficiary, principal, member, agent, managing entity, shareholder,
director, officer, or employee of Seller (whether direct or indirect),
including, without limitation, their attorneys, accountants, consultants,
engineers, brokers, and advisors (collectively, “Seller’s Affiliates”), arising
out of or in connection with this Agreement or the transactions contemplated
hereby and further agrees not to sue or otherwise seek to enforce any personal
obligation against any of Seller’s Affiliates with respect to any matters
arising out of or in connection with this Agreement or the transactions
contemplated hereby.

 

L. Seller shall have the exclusive right to file and control any tax appeal for
the real estate taxes attributable to the period prior to and including the
calendar year 2003 (the “Pre-2004 Tax Period”) but shall keep Purchaser informed
of the progress and outcome of any

 

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such appeal. To the extent that Seller shall receive a refund therefor, Seller
shall disburse to any tenant not in default under its Lease a portion of such
refund as may be due that tenant under its Lease. Purchaser shall have the
exclusive right to file and control any tax appeal for the real estate taxes
attributable to the period after and including the calendar year 2004 (the “2004
Tax Period”). To the extent that Purchaser shall receive a refund therefor,
Purchaser shall disburse to any tenant not in default under its Lease a portion
of such refund as may be due that tenant under its Lease. The remainder of the
refund, if any, shall be prorated between Purchaser and Seller pursuant to
Section 4.C. after deducting therefrom the cost and expenses reasonably incurred
in pursuing the appeal and not charged to tenants. The terms of this Section
12.M. shall survive the Closing.

 

M. This Agreement may be executed in any number of counterparts, any or all of
which may contain the signatures of less than all of the parties, and all of
which shall be construed together as a single instrument. For purposes of this
Agreement, a facsimile of an executed counterpart shall constitute an original.

 

N. In the event of litigation between the parties with respect to this Agreement
or the transactions contemplated hereby, the prevailing party therein shall be
entitled to recover from the losing party therein its reasonable attorney’s fees
and costs of suit.

 

O. For purposes of this Agreement, the masculine shall be deemed to include the
feminine and the neuter, and the singular shall be deemed to include the plural,
and the plural the singular, as the context may require.

 

P. The invalidity or unenforceability of any provision of this Agreement shall
in no way affect the validity or enforceability of any other provision.

 

Q. The captions contained in this Agreement are not a part of this Agreement.
They are only for the convenience of the parties and do not in any way modify,
amplify or give full notice of any of the terms, covenants or conditions of this
Agreement.

 

R. This Agreement shall inure to the benefit of and be binding upon the parties
hereto and their respective legal or personal representatives, heirs, executors,
administrators, successors, and permitted assigns.

 

S. Each party shall cooperate with the other and shall execute any and all
documents necessary to allow such party (or its affiliates) to effectuate the
conveyance of the Property as an exchange under Section 1031 of the Internal
Revenue Code (“Exchange”); provided however, that at no time shall the
cooperating party be required to take title to real estate other than the
Property or incur any obligations other than those set forth elsewhere in this
Agreement. The exchanging party shall pay all reasonable costs which may be
incurred by the cooperating party in connection with such tax free exchange and
the exchanging party shall indemnify the cooperating party and hold it harmless
from any loss, cost, damage, expense or liability incurred in connection
therewith.

 

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T. Neither this Agreement nor a memorandum thereof shall be recorded by any
party.

 

U. Unless otherwise expressly provided herein, no waiver by Seller or Purchaser
of any provision hereof shall be deemed to have been made unless expressed in
writing and signed by such party. No delay or omission in the exercise of any
right or remedy accruing to Seller or Purchaser upon any breach under this
Agreement shall impair such right or remedy or be construed as a waiver of any
such breach theretofore or thereafter occurring. The waiver by Seller or
Purchaser of any breach of any term, covenant or condition herein stated shall
not be deemed to be a waiver of any other breach, or of a subsequent breach of
the same or any other term, covenant or condition herein contained.

 

V. If any time period under this Agreement ends on a day other than a Business
Day, then the time period shall be extended until the next Business Day. The
term “Business Day” shall mean Monday through Friday excluding holidays
recognized by the state government of the State in which the property is
located.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, Seller and Purchaser have executed and delivered this
Agreement as of the date first above written.

 

SELLER:

FIRST CAPITAL INCOME PROPERTIES, LTD. – SERIES XI,

an Illinois limited partnership

By:

 

First Capital Financial, L.L.C., its General Partner

   

By:

 

 

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Name:

 

 

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Title:

 

 

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PURCHASER:

CANNON COMMERCIAL, INC., a California corporation

By:

 

 

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Name:

 

 

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Title:

 

 

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