Exhibit 10.10
PURCHASE AND SALE AGREEMENT
THE DYLAN POINT LOMA
San Diego, CA
BETWEEN
MONARCH AT POINT LOMA OWNER, LLC
AS SELLER
AND
LIPT SAN DIEGO, INC.
AS PURCHASER
Dated: November 9, 2015 (the “Effective Date”)

TABLE OF CONTENTS
1.THE PROPERTY    
1.1Description    1
1.2“As‑Is” Purchase    2
1.3Agreement to Convey    3
2.PRICE AND PAYMENT    
2.1Purchase Price    4
2.2Payment    4
2.3Closing    5
3.INSPECTIONS AND APPROVALS    
3.1Inspections    5
3.2Title and Survey    6
3.3Contracts    8
3.4Permitted Encumbrances    8
3.5Intentionally Omitted    9
3.6Delivery of Title Policy at Closing    9
4.SELLER’S COVENANTS FOR PERIOD PRIOR TO CLOSING    
4.1Insurance    9
4.2Operation    9
4.3New Contracts    10

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4.4New Leases    10
4.5Marketing Plan    10
4.6Notice of Significant Events    11
4.7Marketing    11
4.8Assignments and Transfers    11
4.9Development Plans    11
4.10Architect Agreement    12
4.11Warranties and Guarantees    12
4.12Change of Property Manager    12
4.13Intentionally Omitted    12
4.14Development    12
4.15Development Meetings    13
4.16Taxes    14
4.17Removal    14
4.18Sale of Property    14
4.19Mortgages    14
4.20Zoning    14
4.21Licenses & Approvals    14
4.22Tax Contests    14
4.23Tentative Maps    14
4.24Estoppel Certificate and Subordination of Affordable Housing DOT    15
5.REPRESENTATIONS AND WARRANTIES    
5.1By Seller    15
5.2By Purchaser    20
5.3Brokerage Commission    20
6.COSTS AND PRORATIONS    
6.1Purchaser’s Costs    21
6.2Seller’s Costs    21
6.3Prorations    22
6.4Taxes    22
6.5In General    22
6.6Purpose and Intent    22
6.7Post-Closing Adjustment    23
6.8Survival    23
7.DAMAGE, DESTRUCTION OR CONDEMNATION    
7.1Material Event    23
7.2Immaterial Event    23
7.3Termination and Return of Deposit    23
7.4California Civil Code Section 1662    24
8.NOTICES    
9.CLOSING AND ESCROW    

    
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9.1Escrow Instructions    25
9.2Seller’s Deliveries    25
9.3Purchaser’s Deliveries    27
9.4Possession    27
9.5Insurance    27
9.6Post‑Closing Collections    27
9.7Punch-List Hold Back    27
9.8Condominium Prohibition    28
10.DEFAULT; FAILURE OF CONDITION    
10.1Purchaser Default    29
10.2Seller Default    30
10.3Failure of Condition    30
11.MISCELLANEOUS    
11.1Entire Agreement    31
11.2Severability; Construction    31
11.3Applicable Law; Venue    32
11.4Assignability    32
11.5Successors Bound    32
11.6Breach    32
11.7No Public Disclosure    33
11.8Captions    33
11.9Attorneys’ Fees    33
11.10No Partnership    33
11.11Time of Essence    33
11.12Counterparts    33
11.13Recordation    33
11.14Intentionally Omitted    33
11.15Tax Protest    33
11.16Survival and Limitation of Representations and Warranties;
Seller’s Knowledge    34
11.17Calculation of Time Periods    34
11.18Section 1031 Exchange    35
11.19Limitation of Liability    35
11.20Jury Waiver    35
11.21Prohibited Persons and Transactions    35
11.22Survival    36

    
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LIST OF EXHIBITS
Exhibit 1    Defined Terms
Exhibit 2    Development Plans
Exhibit 1.1.1    Legal Description
Exhibit 1.1.6    Rent Roll
Exhibit 1.1.9    Warranties and Guarantees
Exhibit 3.1.1    Set Deliverables
Exhibit 3.2(a)    Title Commitment
Exhibit 3.2(b)    Permitted Survey Exceptions
Exhibit 3.6    Title Commitment
Exhibit 3.3    List of Service Contracts
Exhibit 4.4    Leasing Parameters
Exhibit 5.1.20    Licenses & Approvals
Exhibit 5.1.22    Material Documents
Exhibit 9.1    Escrow Instructions
Exhibit 9.2.1    Form of Grant Deed
Exhibit 9.2.2    Form of Bill of Sale and Assignment and Assumption Agreement
Exhibit 9.2.6    Form of FIRPTA Affidavit
Exhibit 9.2.7    Form of Tenant Notice Letter
Exhibit 9.2.10     Reaffirmation of Representations and Warranties

PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT (this “Agreement”), dated as of the Effective
Date, is made by and between Seller and Purchaser. Capitalized terms used and
not defined this Agreement shall have the meanings ascribed to such terms on
Exhibit 1 attached hereto.
A G R E E M E N T S:
NOW, THEREFORE, in consideration of the covenants, promises and undertakings set
forth herein, and for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Purchaser agree as
follows:

    
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1.
The Property

1.1    Description. Subject to the terms and conditions of this Agreement, and
for the consideration herein set forth, Seller agrees to sell and transfer,
respectively, and Purchaser agrees to purchase and acquire, all of Seller’s
right, title, and interest in, to and under the following (collectively, the
“Property”):
1.1.1    Certain land (the “Land”) more specifically described in Exhibit 1.1.1
attached hereto, which Land is commonly known as The Dylan Point Loma, 2930
Barnard Street and 3907-3907 Chapman Street, San Diego, California 92110;
1.1.2    The buildings, parking areas, improvements, and fixtures now or
hereafter situated on the Land (including, without limitation, as part of the
Development) (the “Improvements”);
1.1.3    All furniture, personal property, machinery, apparatus, software (to
the extent transferrable without the consent of any third party), Intellectual
Property and equipment currently or hereafter owned or licensed by Seller and
used in the operation, leasing, repair and maintenance of the Land and
Improvements and now or hereafter situated thereon (collectively, the “Personal
Property”). The Personal Property to be conveyed is subject to depletions,
replacements and additions in the ordinary course of Seller’s business
consistent with past practices;
1.1.4    All easements, hereditaments, and appurtenances belonging to or inuring
to the benefit of Seller and pertaining to the Land, if any;
1.1.5    Any street or road abutting the Land to the center lines thereof;
1.1.6    The leases or occupancy agreements (including any letters of intent),
including those in effect on the Effective Date and any new leases or occupancy
agreements entered into pursuant to Section 4.4, which as of the Closing affect
all or any portion of the Land or Improvements (the “Leases”); the Leases
existing as of the Effective Date are listed on Exhibit 1.1.6 attached hereto,
together with any security deposits (including security deposits in the form of
letters of credit) actually held by Seller with respect to any such Leases;
1.1.7    Subject to Section 3.3, all contracts and agreements (including,
without limitation, the Development Contracts) relating to the operation or
maintenance of the Land, Improvements or Personal Property, or the construction
and development of the Development, the terms of which extend beyond midnight of
the day preceding the Closing Date;
1.1.8    Any right Seller may have with respect to the common name of the
Property, together with the right to use any trade names and copyrights owned by
Seller, if any, with respect to the Property; provided, however, in no event
shall the Property include any rights to the name “Monarch” and derivations
thereof;
1.1.9    Any warranties and all guarantees now or hereafter in effect with
respect to the Property, including, without limitation, those under and/or
relating to the Development, the

    
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Development Plans and/or the Development Contracts; to Seller’s knowledge the
warranties and guarantees existing as of the Effective Date are listed on
Exhibit 1.1.9 attached hereto and incorporated herein (the “Warranties and
Guarantees”);
1.1.10    All licenses, approvals, and permits issued by any governmental
authority in connection with the Property together with, to the extent
transferrable without the consent of any third party, all other intangible
rights and benefits in connection with or accruing from the Property (“Licenses
& Approvals”);
1.1.11    The Development Plans and, to the extent in Seller’s possession or
reasonable control, all other plans, specifications and manuals relating to the
Property; and
1.1.12    The Books and Records.
1.2    “As‑Is” Purchase. Subject to the Seller Representations and the covenants
of Seller set forth in this Agreement, the Property is being sold in an “AS IS,
WHERE IS” condition and “WITH ALL FAULTS.” Subject to the Seller
Representations, no representations or warranties have been made or are made and
no responsibility has been or is assumed by Seller or by any partner, officer,
person, firm, agent, attorney or representative acting or purporting to act on
behalf of Seller as to (i) the condition or state of repair of the Property;
(ii) the compliance or non-compliance of the Property with any applicable laws,
regulations or ordinances (including, without limitation, any applicable zoning,
building or development codes and Environmental Laws); (iii) the value, expense
of operation, or income potential of the Property; (iv) any other fact or
condition which has or might affect the Property or the condition, state of
repair, compliance, value, expense of operation or income potential of the
Property or any portion thereof; (v) whether the Property contains asbestos or
harmful or toxic substances or pertaining to the extent, location or nature of
same; or (vi) any other matter related in any way to the Property and the
Development. The parties agree that all understandings and agreements heretofore
made between them or their respective agents or representatives are merged in
this Agreement and the Exhibits hereto annexed, which alone fully and completely
express their agreement, and that if the Closing occurs, Purchaser will have
been afforded with the opportunity for full investigation of the Property,
neither party relying upon any statement or representation by the other other
than the Seller Representations or unless such statement or representation is
specifically embodied in this Agreement or the Exhibits annexed hereto. Subject
to the Seller Representations and as except as expressly set forth herein,
Purchaser forever releases and discharges Seller, Seller’s affiliates, Seller’s
investment advisor and manager, the partners, trustees, shareholders, directors,
officers, attorneys, employees and agents of each of them, and their respective
heirs, successors, personal representatives and assigns (collectively, the
“Releasees”) from any and all demands, claims (including, without limitation,
causes of action in tort), legal or administrative proceedings, losses,
liabilities, damages, penalties, fines, liens, judgments, costs or expenses
whatsoever (including, without limitation, attorneys’ fees and costs), whether
direct or indirect, known or unknown, foreseen or unforeseen (collectively,
“Claims”), that may arise on account of or in any way be connected with the
Development, the Property, the physical condition thereof, any law or regulation
applicable thereto (including, without limitation, claims under the Clean Air
Act (42 U.S.C. 7401, et seq.), as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended (42 U.S.C. Section

    
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9601, et seq.), the Resource Conservation and Recovery Act of 1976 (42 U.S.C.
Section 6901, et seq.), as amended, the Clean Water Act (33 U.S.C. Section 1251,
et seq.), as amended, the Safe Drinking Water Act (49 U.S.C. Section 1801, et
seq.), as amended, the Hazardous Materials Transportation Act (49 U.S.C. Section
1801, et seq.), as amended, and the Toxic Substances Control Act (15 U.S.C.
Section 2601, et seq.), and the other matters described in this Section 1.2.
Subject to the Seller Representations, and as except as expressly set forth
herein, Purchaser, upon Closing, shall be deemed to have released Seller and all
other Releasees from any and all Claims, matters arising out of latent or patent
defects or physical conditions, violations of applicable laws (including,
without limitation, any environmental laws) and any and all other acts,
omissions, events, circumstances or matters related in any way to the
Development and the Property. Without limiting the scope or generality of the
foregoing release and waiver provisions, and subject to the Seller
Representations and except as expressly set forth herein, those provisions shall
specifically include and cover (1) any claim for or right to indemnification,
contribution, subrogation or other compensation, including any claim based on or
arising under any Environmental Law now or hereafter in effect, and (2) any
claim for or based on trespass, nuisance, waste, negligence, ultrahazardous
activity, strict liability, indemnification, contribution or other theory
arising under the common law of the state of where the Property is located (or
any other applicable jurisdiction) or arising under any applicable law now or
hereafter in effect. Subject to the provisions set forth in this Agreement, as
part of the provisions of this Section 1.2, but not as a limitation thereon,
Purchaser hereby agrees, represents and warrants that the matters released
herein are not limited to matters which are known or disclosed, and that the
matters released herein include claims of which Purchaser is presently unaware
or which Purchaser does not presently suspect to exist which, if known by
Purchaser, would materially affect Purchaser’s release of Seller, and Purchaser
hereby waives any and all rights and benefits which it now has, or in the future
may have conferred upon it, by virtue of the provisions of federal, state or
local law, rules and regulations. PURCHASER SPECIFICALLY WAIVES ALL RIGHTS UNDER
CALIFORNIA CIVIL CODE SECTION 1542 AND ANY STATE OR FEDERAL LAW OF SIMILAR
EFFECT. 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 OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH
IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH
THE DEBTOR.”
Notwithstanding anything to the contrary set forth in this Section 1.2, the
foregoing release with respect to post-closing claims is not intended to and
does not cover (i) any claims arising from a breach of Seller's Representations,
which shall be governed by the terms and provisions of this Agreement applicable
thereto, (ii) Seller’s fraud, or (iii) any other breach by Seller of an express
obligation of Seller under this Agreement which by its terms survives Closing
(the “Seller Surviving Obligations”).
1.3    Agreement to Convey. Seller agrees to convey, and Purchaser agrees to
accept, title to the Land and Improvements by Grant Deed in the form attached
hereto as Exhibit 9.2.1 (the “Deed”) in the condition described in Section 3.4
and title to the Personal Property, by Bill of Sale,

    
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and Assignment and Assumption Agreement without warranty as to the title or the
condition of such personalty (other than the Seller Representations).

2.    PRICE AND PAYMENT.
2.1    Purchase Price. Purchaser agrees to pay to Seller at Closing, subject to
the terms of this Agreement, (x) for the acquisition of the Land, a purchase
price equal to $30,000,000 and (y) for Seller to complete the Development, a
purchase price equal to $60,000,000 (collectively, the “Purchase Price”). Seller
and Purchaser acknowledge and agree that such calculation represents an arm’s
length agreement based on the best judgment of Seller and Purchaser as to the
fair market value of the Property and the cost to complete the Development. The
purchase price for the Development shall not be subject to increase if the cost
to complete the Development exceeds $60,000,000 or decrease if the cost to
complete the Development is less than $60,000,000. Seller and Purchaser shall
file their respective federal, state and local tax returns and related tax
documents consistent with this Section 2.1.
2.2    Payment. Payment of the Purchase Price is to be made in cash as follows:
2.2.1    Deposit. Within two (2) Business Days of the execution of this
Agreement, Purchaser shall deposit $3,000,000, with the Title Company as an
earnest money deposit (the “Initial Deposit”). Within two (2) Business Days
following Substantial Completion of Phase I, Purchaser shall deposit with the
Title Company an additional $1,000,000, as an additional earnest money deposit
(the “Phase I Deposit”). Within two (2) Business Days following Substantial
Completion of Phase II, Purchaser shall deposit with the Title Company an
additional $1,000,000, as an additional earnest money deposit (the “Phase II
Deposit”). Within two (2) Business Days following Substantial Completion of
Phase III, Purchaser shall deposit with the Title Company an additional
$1,000,000, as an additional earnest money deposit (the “Phase III Deposit”, the
Initial Deposit, together with the Phase I Deposit, the Phase II Deposit and the
Phase III Deposit, in each case when made pursuant to the terms hereof, is
referred to herein collectively as, the “Deposit”).
2.2.2    The Deposit will be placed with and held in escrow by the Title
Company, in immediately available funds in an interest-bearing account invested
at Purchaser’s election. Any interest earned on the Deposit shall not be
considered as part of the Deposit and shall be disbursed by the Title Company
from time to time as directed by Purchaser. Upon delivery of the Initial
Deposit, the Initial Deposit shall be non-refundable to Purchaser, subject only
to the provisions of this Agreement which expressly provide for a return of the
Deposit to Purchaser (the “Refund Conditions”). Each of the Phase I Deposit, the
Phase II Deposit, and the Phase III Deposit shall be non-refundable to Purchaser
upon delivery, subject only to the Refund Conditions. Except as otherwise
provided in this Agreement, the Deposit will be applied to the Purchase Price at
Closing.
2.2.3    Prior to or contemporaneous with the execution hereof by Purchaser and
Seller, Purchaser has paid to Seller $100.00 (the “Independent Contract
Consideration”), which amount Seller and Purchaser bargained for and agreed to
as consideration for Seller’s execution and delivery of this Agreement. The
Independent Contract Consideration is non-refundable and in

    
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addition to any other payment or deposit required by this Agreement, and Seller
shall retain the Independent Contract Consideration notwithstanding any other
provision of this Agreement to the contrary.
2.2.4    Subject to the terms of this Agreement, at Closing, Purchaser shall pay
Seller the balance of the Purchase Price (i.e., net of the Deposit), subject to
adjustment for the prorations as provided herein, to the Title Company for
disbursement to Seller no later than 1:00 p.m. Pacific Time on the Closing Date
via wire transfer in immediately available funds.
2.3    Closing. Subject to the terms and conditions set forth herein, payment of
the Purchase Price and the closing hereunder (the “Closing”) will take place on
the Closing Date pursuant to an escrow closing, provided Purchaser does not
terminate this Agreement prior to such date pursuant to an express termination
right set forth in this Agreement. The Closing will take place at the offices of
the Title Company at 11:00 a.m. local San Diego time or at such other time and
place as may be agreed upon in writing by Seller and Purchaser. Closing shall
occur through an escrow with the Title Company. Funds shall be deposited into
and held by the Title Company in a closing escrow account with a bank
satisfactory to Purchaser and Seller. Upon satisfaction or completion of all
closing conditions and deliveries at or prior to Closing, the parties shall
direct the Title Company to immediately record and deliver the closing documents
to the appropriate parties and make disbursements according to the closing
statements executed by Seller and Purchaser.

3.    INSPECTIONS AND APPROVALS.
3.1    Inspections.
3.1.5    On or prior to the date hereof, Seller has delivered (or made available
via an electronic datasite) the following items: (i) the Leases, (ii) the
Service Contracts, the Development Contracts and the Architect Agreement, (iii)
the Warranties and Guarantees, (iv) the Licenses and Approvals, (v) to the
extent such items exist and are in Seller’s possession or reasonable control,
environmental reports relating to the Property, (vi) the Development Plans,
(vii) current insurance certificates relating to the Property, and (viii) to the
extent such items exist and are in Seller’s possession or reasonable control,
the items set forth on Exhibit 3.1.1 (the “Set Deliverables”). In addition to
the Set Deliverables, Seller shall deliver to Purchaser within two (2) days
after Purchaser’s request therefor, such other information and documentation
relating to the Property that Purchaser reasonably requests (to the extent in
Seller’s or Property Manager’s possession or reasonably obtainable by Seller or
Property Manager) (the foregoing, together with the Set Deliverables shall be
referred to herein as the “Seller Deliverables”). Seller Deliverables shall
exclude any confidential information, internal financial analyses or privileged
information. Commencing on the date of this Agreement and continuing through the
Closing Date or earlier termination of this Agreement, Seller agrees to allow
Purchaser and Purchaser’s engineers, architects, employees, agents and
representatives (collectively, “Purchaser Agents”) reasonable access, during
normal business

    
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hours, to the Property and to the records of the Property, if any, maintained by
Seller or the Property Manager for the purpose of inspecting the Property
(“Purchaser’s Inspection”).
3.1.6    Purchaser agrees that, in making any permitted physical or
environmental inspections of the Property, Purchaser (on behalf of itself and
all of Purchaser Agents entering onto the Property) shall carry not less than
$2,000,000 in the aggregate and $1,000,000 per occurrence of commercial general
liability insurance insuring all activity and conduct of Purchaser and such
representatives while exercising such right of access and naming Seller and the
Property Manager as additional insureds. Purchaser represents and warrants that
it carries not less than $2,000,000 in the aggregate and $1,000,000 per
occurrence of commercial general liability insurance with contractual liability
endorsement which insures Purchaser’s indemnity obligations hereunder, and will
provide Seller with written evidence of same prior to entry on the Property.
3.1.7    Purchaser agrees that in exercising its right of access hereunder,
Purchaser will not and will cause Purchaser Agents to not unreasonably interfere
with the Development or the activity of Tenants or any persons occupying or
providing service at the Property. Purchaser shall, at least twenty-four (24)
hours prior to any on-site Purchaser’s Inspection, give Seller notice by email
or phone of its intention to conduct any such on-site Purchaser’s Inspection, so
that Seller shall have an opportunity to have a representative present during
any such on-site Purchaser’s Inspection (provided that the unavailability of any
such representatives shall not delay or prevent such on-site Purchaser’s
Inspection). Purchaser agrees to cooperate with any reasonable request by Seller
in connection with the timing of any such on-site Purchaser’s Inspection.
3.1.8    In no event shall Purchaser or any Purchaser Agent perform any
invasive, subsurface or destructive testing of any kind at the Property,
including, without limitation, a Phase II Environmental Site Assessment, or
otherwise damage or alter the physical condition of the Property. Purchaser’s
Inspection shall be conducted at Purchaser’s sole cost and expense and in
accordance in all material respects with all requirements of applicable law.
3.1.9    Except for the Seller Representations, Seller makes no representations
or warranties as to the truth, accuracy, completeness, methodology of
preparation or otherwise concerning any engineering or environmental reports or
any other materials, data or other information supplied to Purchaser in
connection with Purchaser’s inspection of the Property, including, without
limitation the Seller Deliverables. It is the parties’ express understanding and
agreement that any materials which Purchaser is allowed to review are provided
only for Purchaser’s convenience in making its own examination and determination
prior to the Effective Date as to whether it wishes to purchase the Property,
and, in doing so, except for the Seller Representations, Purchaser shall rely
exclusively on its own independent investigation and evaluation of every aspect
of the Property and not on any materials supplied by Seller. Except as expressly
set forth herein and except for the Seller Representations, Purchaser expressly
disclaims any intent to rely on any such materials provided to it by Seller in
connection with its inspection and agrees that it shall rely solely on its own
independently developed or verified information.
3.1.10    PURCHASER AGREES TO INDEMNIFY, DEFEND, AND HOLD SELLER HARMLESS FROM
ANY LOSS, INJURY, DAMAGE, CLAIM, LIEN, COST OR EXPENSE, INCLUDING REASONABLE
ATTORNEYS’ FEES AND COSTS, ACTUALLY

    
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INCURRED BY SELLER AND ARISING OUT OF PURCHASER’S INSPECTIONS ON THE PROPERTY;
PROVIDED, HOWEVER, THAT THE FOREGOING SHALL NOT APPLY TO THE MERE DISCOVERY BY
PURCHASER OR ANY PURCHASER AGENT OF ANY EXISTING DAMAGE TO, OR DESTRUCTION OF,
THE PROPERTY. THIS SECTION 3.1 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.
3.1.11    Purchaser shall keep the Property free from any liens arising out of
Purchaser’s Inspections. If any such lien at any time shall be filed, Purchaser
shall cause the same to be discharged of record within thirty (30) days after
knowledge by Purchaser thereof by satisfying the same or, if Purchaser, in its
discretion and in good faith, determines that such lien should be contested,
then Purchaser may discharge such lien of record by recording a bond, to the
extent the same is permitted under any loan secured by the Property.
3.2    Title and Survey.
(a)    Prior to the execution of this Agreement, the Title Company has issued to
Purchaser the commitment for title insurance on the Land, and delivered copies
of all items shown as exceptions to title therein (collectively, the “Title
Commitment”), attached hereto as Exhibit 3.2(a), and an existing survey of the
Land and Improvements (the “Survey”).
(b)    All matters shown on Schedule B, Section Two of the Title Commitment and
the Survey shall be deemed to be approved by Purchaser and a “Permitted
Encumbrance” as provided in Section 3.4 hereof, except that (i) if Closing
occurs after June 30, 2016, the exception for general and special taxes and
assessments for the fiscal year 2015-2016 shall be replaced with an exception
for general and special taxes and assessments for the fiscal year 2016-2017,
(ii) the deed of trust in favor of Wells Fargo Bank, National Association
recorded July 11, 2014 as Instrument No. 2014-0289163 of the Official Records of
San Diego County, California (“Official Records”) shall not be a Permitted
Encumbrance, and shall be removed by Seller as set forth in Section 3.2(c)
below, and (iii) the survey exceptions listed on Exhibit 3.2(b) as in effect on
the Effective Date are Permitted Encumbrances (collectively, the “Existing
Encroachments”). Nothing set forth in this Section 3.2(b) or Section 3.4.3 below
shall be deemed to relieve Seller of its obligation to pay taxes prior to
delinquency pursuant to Section 4.2 below or otherwise modify the terms and
provisions of Section 6.4 of this Agreement with respect to the prorations.
(c)    Notwithstanding anything to the contrary foregoing, in all events, Seller
will cause to be removed, paid off, redeemed and/or discharged at its expense on
or before the Closing Date, (or, if Seller, in its discretion and in good faith,
determines that any lien should be contested, then Seller may, so long as Seller
is contesting such lien in good faith and by appropriate legal proceedings,
discharge such lien of record by recording a bond in the records of the county
in which the Property is located), (i) any of the following: any mortgage,
monetary judgment, deed of trust, lien, mechanics lien, materialman lien or
other evidence of a monetary charge against the Property (except as set forth in
Sections 3.4.3 and 3.4.4 below); provided, however, that if any of the foregoing
described in this item (i) was caused or created other than by, through or under
Seller or its Affiliates and Seller has not elected to cure the same prior to
Closing in accordance with the terms and provisions of this Agreement, then
Purchaser’s sole remedy shall be to terminate this Agreement at any time prior
to Closing, in which case the Deposit shall be returned to Purchaser and the
parties hereto

    
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shall have no further obligations hereunder except for the express obligations
of the parties under this Agreement which by their terms survive termination of
this Agreement (the “Surviving Obligations”); and (ii) any other lien or any
encumbrance affecting title to the Property arising after the date of the Title
Commitment or Survey (each of the foregoing described in the foregoing clauses
(i) or (ii), a “Must Remove Title Objection”); provided, however, that any of
the matters described in the foregoing clause (ii) shall only constitute a Must
Remove Title Objection if Seller shall have provided Purchaser with written
notice thereof promptly upon becoming aware thereof (but in no event later than
two (2) Business Days prior to the Closing Date) and Purchaser shall have failed
to object in writing to any such matter within five (5) Business Days following
receipt of such written notice (and if such five (5) Business Day period would
extend beyond the Closing Date, then the Closing Date shall be automatically
adjourned to the date that is two (2) Business Days following the expiration of
such five (5) Business Day period). In no event shall any of the following
constitute a Must Remove Title Objection: (A) a notice of completion recorded
with respect to the Development; (B) a memorandum, easement or similar document
required to be recorded pursuant to an Approved Contract; or (C) any other
non-monetary encumbrance required to be recorded by any governmental authority
or Seller’s Lender; provided, however, that if any of the foregoing described in
this item (C) are reasonably likely to have a material adverse effect on the
Property following Closing, Purchaser shall have the right to object in writing
to such encumbrance as set forth above.
3.3    Contracts. The list of service contracts relating to the operation or
maintenance of the Land, Improvements or Personal Property in effect as of the
Effective Date, if any, is attached hereto as Exhibit 3.3 (together with any
other service contracts entered into in accordance with terms and provisions of
this Agreement, other than the Development Contracts, collectively, the “Service
Contracts”). At least forty-five (45) days prior to the Closing Date, Purchaser
shall notify Seller in writing if Purchaser elects to terminate at Closing any
of the Service Contracts which may be terminated on 30 days’ notice or less,
without fee or penalty (such notice, “Notice of Termination” and the contracts
so elected, the “Terminated Contracts”). If Purchaser delivers the Notice of
Termination, then Seller shall, at its expense, deliver a termination notice at
or prior to Closing with respect to any such Service Contracts which may be
terminated on 30 days’ notice or less, without fee or penalty. Seller
acknowledges and agrees that Purchaser has elected to assume all Service
Contracts that will not be terminated pursuant to a Notice of Termination (such
assumed contracts being referred to herein as the “Approved Contracts”).
3.4    Permitted Encumbrances. The term “Permitted Encumbrances” shall mean:
3.4.1    All exceptions which Purchaser has approved or is deemed to have
approved pursuant to Section 3.2 hereof;
3.4.2    All Approved Contracts, Development Contracts and Leases which
Purchaser has approved or is deemed to have approved pursuant to this Agreement;
and
3.4.3    The lien of non‑delinquent real estate taxes and assessments that are
apportioned between Purchaser and Seller pursuant to Section 6.4 hereof; and
3.4.4    Any liens or encumbrances created by Purchaser.

    
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Notwithstanding the foregoing, the Permitted Encumbrances shall not include any
Must Remove Title Objection, which shall be paid off and discharged at or before
Closing by Seller.
3.5    Intentionally Omitted.
3.6    Delivery of Title Policy at Closing. As a condition to Purchaser’s
obligation to close, the Title Company shall deliver to Purchaser at Closing a
2006 ALTA Form Owner’s Policy of Title Insurance, with “extended coverage” over
mechanics liens and claims and matters arising during the “gap” period and
containing such endorsements thereto as Purchaser may require and the Title
Company has committed to issue prior to the Effective Date (collectively, the
“Title Policy”) issued by the Title Company as of the date and time of the
recording of the Deed, in the amount of the Purchase Price, and in the form
attached hereto as Exhibit 3.6 insuring Purchaser as owner of indefeasible fee
simple title to the Property, subject only to the Permitted Encumbrances. Seller
shall execute at Closing an owner’s affidavit and gap indemnity reasonably
acceptable to the Title Company to facilitate the issuance of the Title Policy
(“Owner’s Affidavit”), and shall deliver such other documents (including but not
limited to Seller’s organizational documents, a good standing certificate and
authorizing resolutions) reasonably as required by the Title Company. The Title
Policy may be delivered after the Closing if at the Closing the Title Company
issues a currently effective, duly-executed “marked-up” Title Commitment and
irrevocably commits in writing to issue the Title Policy in the form of the
“marked-up” Title Commitment promptly after the Closing Date.

4.    SELLER’S COVENANTS FOR PERIOD PRIOR TO CLOSING. Until Closing:
4.1    Insurance. Seller shall keep the Property insured under its current or
comparable policies (evidence of which policies have been provided to Purchaser
as part of the Seller Deliverables), including, but not limited, to Seller’s
coverage against fire and other hazards.
4.2    Operation. Seller shall operate and maintain the Property in accordance
with Seller’s existing practices and perform all obligations to be performed by
Seller under the Leases, the Approved Contracts, the Warranties and Guarantees,
the Licenses & Permits, the Development Contracts, the Loan Documents, the
Property Management Agreement and applicable law. In addition, Seller agrees, to
at its expense, take such steps prior to Closing as are reasonably necessary to
transfer to Purchaser at Closing all Leases, Approved Contracts, Warranties and
Guarantees, Licenses & Permits, the Architect Agreement, Development Contracts
and Development Plans. In addition, except as required by this Agreement, Seller
covenants and agrees that, between the Effective Date and the Closing, without
the prior written consent of Purchaser, Seller shall not, make any material
change in the operation of the Property, provided, however, that the Development
in accordance with the terms and provisions of this Agreement shall not be
considered a material change in the operation of the Property. Additionally,
Seller covenants and agrees with Purchaser that between the Effective Date and
the Closing: (i) Seller shall maintain or cause to be maintained its books of
account and records in the usual, regular and ordinary manner, in accordance
with accounting principles and applied on a basis, consistent with that used in
keeping its books in prior years, and (ii) Seller shall pay (subject to legal
rights of appeal and protest) prior to delinquency

    
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all taxes, ad valorem, other real property, occupancy, personal property,
intangible and sales taxes due and payable by Seller with respect to the
Property.
4.3    New Contracts. Seller may enter into, amend or modify only those
third-party Service Contracts which are necessary to carry out its obligations
under Section 4.2 and which shall be cancelable (including, after giving effect
to any such amendment or modification) without charge, fee or penalty on not
more than thirty (30) days prior written notice. If Seller enters into any such
third-party Service Contract (or any such amendment or modification of a
third-party Service Contract), Seller shall promptly provide written notice
thereof to Purchaser and unless Purchaser, within five (5) Business Days
thereafter, notifies Seller in writing of its intention to have such third-party
Service Contract (including, after giving effect to any such amendment or
modification) terminated at or prior to Closing, it shall be treated as an
Approved Contract under Section 3.3.
4.4    New Leases.
(a)    Between the date of execution of this Agreement and Closing, Seller will
not lease any space in the Improvements, amend terminate or accept surrender of
any Lease, except on terms and conditions approved by Purchaser, which approval
shall not unreasonably be withheld, delayed or conditioned. Seller shall furnish
Purchaser with all material information pertaining to the proposed agreement or
Lease and/or proposed tenant, as reasonably requested by Purchaser. Seller shall
not issue any approvals, consents or waivers to the Tenant under any Leases that
obligate Purchaser to incur any additional costs, liabilities or obligations, in
each case without the prior written consent of Purchaser, which consent may be
granted or withheld in Purchaser’s sole and absolute discretion.
(b)    Notwithstanding anything contained in this Section 4.4 to the contrary,
(I) Seller may enter into, and/or amend, modify or renew, any residential Lease
without the consent of Purchaser if (i) such new residential Lease, or
amendment, modification or renewal, is in accordance with the leasing parameters
set forth on Exhibit 4.4 attached hereto, (ii) with respect to any new
residential Lease, such new residential Lease is on Property Manager’s form of
residential Lease reasonably approved by Seller and Purchaser, and (iii) the
term of any such new residential Lease, or the term of any Lease after giving
effect to any such amendment, modification or renewal, is not less than six (6)
months or greater than eighteen (18) months, and (II) Seller may terminate any
residential Lease in accordance with all applicable laws upon a default by the
Tenant thereunder.
(c)    If Purchaser does not notify Seller of its consent or non-consent with
respect to any matter for which Purchaser has a consent right pursuant to this
Section 4.4 within three (3) Business Days after Seller requests such consent
from Purchaser (which request for consent shall include all materials and
information reasonably necessary for Purchaser to make an informed decision as
to whether to grant or withhold Purchaser’s consent), then Purchaser shall be
deemed to have consented to the matter in question.
4.5    Marketing Plan. Seller shall (and Seller shall cause Property Manager to)
use commercially reasonable efforts to implement a marketing and pre-leasing
plan jointly approved by Purchaser and Seller for the leasing of residential
apartment units in the Property.  Representatives of Seller and Purchaser shall
meet as needed, as mutually agreed by Seller and Purchaser in the exercise of
their reasonable discretion, to review the implementation of such marketing
plan. 

    
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4.6    Notice of Significant Events. Seller agrees that it shall promptly (and
in all events within two (2) Business Days of gaining actual knowledge) notify
Purchaser in writing upon Seller's discovery or learning of (i) the filing,
service or commencement of any litigation or other legal proceedings related to
the Property (including but not limited to any lease or loan applicable thereto)
or Seller (or the receipt of any written threat thereof) which, if adversely
determined, would reasonably be expected to have an adverse effect on the
Property following Closing, (ii) any written claim or notice that the Property
or any aspect thereof fails to comply with or is in violation of any applicable
law or regulation, (iii) any casualty damage of any kind to the Property (other
than of a de minimus nature), or (iv) the filing or commencement of, or any plan
for or threat of, any proceeding relating to eminent domain, condemnation, or
foreclosure with respect to the Property.
4.7    Marketing. Seller shall: (A) not, directly or indirectly, initiate,
solicit or engage in discussions or negotiations with, or provide any
information to, or respond to, any person, or pursue or market any transaction,
in each case regarding the purchase and sale of the Property, other than to
Purchaser or (B) not, directly or indirectly, accept any offers for, or enter in
any term sheet, letter of intent, purchase and sale agreement or other
agreement, regarding the purchase and sale of the Property other than to
Purchaser.
4.8    Assignments and Transfers. Prior to Closing, Seller shall (at its own
expense) take any steps which are a prerequisite to the assignment and transfer
to Purchaser at closing of all Warranties and Guarantees, Licenses and
Approvals, Approved Contracts, Development Contracts and Development Plans. Such
obligation shall include, but not be limited to, the obtaining of any required
consents, the arranging of any required inspections, and the payment of any
required fees.
4.9    Development Plans and Development Contracts.
(a)    Except for Permitted Changes (as defined below), Seller shall not change,
amend or modify the Development Plans without the prior written consent of
Purchaser, which consent may not be unreasonably withheld. Except for Permitted
Changes, Seller shall not enter into amend, modify or supplement, or terminate
any Development Contract without the prior written consent of Purchaser, which
consent may not be unreasonably withheld. Purchaser shall have the right (at its
sole cost and expense) to have the Purchaser Architect receive, review and
approve any Development Contract or any change, amendment or modification to the
Development Plans or any Development Contract. A change to the Development Plans
or any Development Contract shall be a “Permitted Change” for the purposes of
this Section 4.9 if (i) the total cost to complete the Development, as a result
of such change, does not decrease by more than $50,000, or (ii) such change is
required in order to comply with any applicable laws, codes or regulations or
the requirements of any applicable governmental authority; provided, however, no
change described in the foregoing clause (ii) shall be deemed a Permitted Change
if the change would result in a reduction of the number of units to be included
in any Building.
(b)    If Purchaser does not notify Seller of its consent or non-consent with
respect to any matter for which Purchaser has a consent right pursuant to this
Section 4.9 within forty-eight (48) hours (not including Saturdays, Sundays or
legal holidays) after an RFI, submittal or change order with respect to such
matter has been sent by email to the Purchaser Architect and Brian Kuzniar with
the phrase “Purchaser Consent Required” (or a substantially similar phrase
alerting Purchaser

    
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Architect and Brian Kuzniar that, in Seller’s opinion, Purchaser’s consent is
required) appearing in the subject line or the first line of the email, then
Purchaser shall be deemed to have consented to the matter in question. Any
consents requested by Seller at a Weekly Meeting (as hereinafter defined)
pursuant to Section 4.15 at which Purchaser or Purchaser Architect are present
(either in person or telephonically) and with respect to which an RFI, submittal
or change order has been provided by email in accordance with this Section 4.9
shall be deemed requested pursuant to this Section 4.9. Notwithstanding the
foregoing in this Section 4.9(b), Purchaser shall have the right at any time
upon written notice to Seller to replace Brian Kuzniar for the purposes of this
Section 4.9(b) with any other employee of Purchaser or its Affiliates.
4.10    Architect Agreement. Seller shall not change, amend, terminate or modify
the Architect Agreement without the prior written consent of Purchaser, which
consent may be granted or withheld in Purchaser’s sole and absolute discretion.
4.11    Warranties and Guarantees. Seller shall not release or modify or consent
to the release or modification of any of the Warranties and Guarantees without
the prior written consent of Purchaser, which consent may be granted or withheld
in Purchaser’s sole and absolute discretion. Seller agrees to use commercially
reasonable efforts to enforce, prior to Closing (i) all applicable rights and
remedies available to Seller under any Development Contracts and (ii) all
Warranties and Guarantees, in each case with respect to any deficiency in the
Development. Purchaser acknowledges that, as a result of the release set forth
in Section 1.2 above, from and after Closing, except for (a) a breach of any
Seller Representations or Seller Surviving Obligations discovered after Closing
for which written notification of a claim has been sent by Purchaser to Seller
prior to the expiration of the Survival Period pursuant to Section 11.16 below,
Purchaser shall not have any Claim against Seller with respect to any deficiency
in the Development, and that Purchaser shall be entitled to pursue its rights
under such Development Contract or such Warranties and Guarantees assigned to
Purchaser at Closing pursuant to this Agreement. The covenants of Seller set
forth in this Section 4.11 shall survive Closing.
4.12    Change of Property Manager. Seller shall not, without the prior written
consent of Purchaser, remove or replace the Property Manager or amend, modify or
terminate the Property Management Agreement.
4.13    Intentionally Omitted.
4.14    Development.
(a)    Seller shall (at Seller’s sole cost and expense) diligently and
continuously pursue the development and construction of each Phase and the
Development as a whole in a good, workmanlike and lien-free manner in accordance
with the Development Plans, the Architect Agreement, the Development Contracts
and in compliance with all applicable laws, ordinances, rules, codes and
regulations of any governmental authority. Seller shall be responsible for
obtaining all permits, approvals and licenses necessary to complete the
Development. Seller shall obtain and maintain all Licenses & Approvals necessary
for the lien-free development and construction of each Phase and the Development
as a whole in accordance with the Development Plans, the Architect Agreement and
the Development Contracts and in compliance with all applicable laws,
ordinances,

    
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rules, codes and regulations of any governmental authority. Seller shall cause
Substantial Completion of the Development as a whole to occur in accordance with
the Development Plans, the Architect Agreement and the Development Contracts and
in compliance with all applicable laws, ordinances, rules, codes and regulations
of any governmental authority, on or prior to the Substantial Completion Date.
(b)    Seller shall provide Purchaser with written notice (the “Final CO
Notice”) at least thirty (30) (but not more than sixty (60)) days prior to the
date on which Seller anticipates that the Final Certificate of Occupancy for the
Development as a whole will be issued.
(c)    At least fifteen (15) days prior to Seller’s anticipated Walk-Through
Date (as defined below) with respect to any Building, Phase or the Development
as a whole, Seller shall provide Purchaser with written notice of the date on
which Seller proposes to conduct a final walk through (each, a “Walk-Through”)
at such Building, Phase or the Development as a whole. Within five (5) Business
Days after Seller has delivered to Purchaser such notice, Purchaser and Seller
shall select the date of the Walk-Through with respect to such Building, Phase
or the Development as a whole (each, a “Walk-Through Date”), which date shall be
within such fifteen (15) day period. On such scheduled Walk-Through Date,
representatives of Purchaser and Seller shall conduct a Walk-Through of the
Property and the Development to assess the status of completion of such
Building, Phase or the Development as a whole and whether Substantial Completion
of such Building, such Phase or the Development as a whole has occurred. In
addition, during any such Walk-Through of the Property and the Development,
Seller and Purchaser (acting in good faith and in a commercially reasonable
manner) shall list any Punch-List Items with respect to such Building, Phase or
the Development as a whole. In the event that Purchaser’s representatives fail
to attend a Walk-Through, the items listed on the punch-list prepared or
confirmed by Seller at such Walk-Through shall be the Punch-List Items with
respect to such Walk-Through. Purchaser’s deposit of the Phase I Deposit, Phase
II Deposit and the Phase III Deposit shall be conclusive evidence that Purchaser
has agreed that Substantial Completion of all Buildings within the applicable
Phase has occurred.
(d)    In the event of a dispute (each, a “Dispute”) between Seller and
Purchaser regarding either (i) whether the Substantial Completion of a Building,
Phase or the Development as a whole has occurred pursuant to this Agreement or
(ii) the estimated cost of the Punch-List Items for a Building, Phase or the
Development as a whole, Seller and Purchaser shall attempt, in good faith, to
resolve such Dispute within thirty (30) days. In the event that such Dispute is
not resolved within thirty (30) days of written demand from one party to the
other, the Dispute shall be referred to the Development Architect or other
applicable consultant of Seller responsible for the work in question, with
instructions to determine whether Seller or Purchaser is correct regarding the
Dispute and notify the parties of such determination within fifteen (15) days
thereafter. The decision of the Development Architect or consultant with respect
to any Dispute shall be final and binding on the parties. The Closing Date shall
be extended to the extent necessary to afford the parties the opportunity to
resolve any such Dispute in the manner set forth in this Section 4.14.
4.15    Development Meetings. Seller conducts a weekly meeting on Tuesdays at
9:00 a.m. Pacific time at the Property (each, a “Weekly Meeting”) to review the
status of the Development and any applicable changes to the Development Plans.
Purchaser, Purchaser’s or its Affiliates’

    
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employees, and Purchaser’s representative from Pond, Robinson & Associates LP
(or any replacement of Pond, Robinson & Associates LP designated by Purchaser
upon written notice to Seller during the term of this Agreement, “Purchaser
Architect”) may attend such Weekly Meetings (either in person or
telephonically). Purchaser shall use commercially reasonable efforts to cause
its Purchaser Architect to attend at least one Weekly Meeting per month (whether
in person or telephonically). If any changes to the Development Plans or
Development Contracts are proposed at a regular Weekly Meeting, then so long as
the RFI, submittal or change order with respect to such changes is provided as
described in Section 4.9(b) above, Purchaser shall have forty-eight (48) hours
(not including Saturdays, Sundays or legal holidays) after receipt of the RFI,
submittal or change order to approve or disapprove such change in writing
pursuant to Section 4.9(b) above.
4.16    Taxes. Seller shall pay (subject to legal rights of appeal and protest)
prior to delinquency all real property taxes, ad valorem, other real property,
occupancy, personal property, intangible and sales taxes due and payable by
Seller with respect to the Property.
4.17    Removal. Seller shall not remove from the Land any portion of the
Personal Property other than in the normal course of business without the prior
written consent of Purchaser, unless the same is no longer needed or useful in
the operation of the Property or the same is replaced, prior to Closing, with
similar items of at least equal suitability, quality and value, free and clear
of any liens and encumbrances.
4.18    Sale of Property. During the term of this Agreement, Seller shall (A)
not sell the Property (or any portion thereof or any direct or indirect interest
therein) to any person or entity other than Purchaser or (B) not directly or
indirectly transfer, sell or otherwise dispose of the Land or any portion
thereof or direct or indirect interest therein without the prior written consent
of Purchaser except transfers required in connection with any condemnation or
taking in lieu thereof.
4.19    Mortgages. Except as permitted by the express terms of this Agreement,
Seller shall not create any new mortgage, deed of trust, pledge, lien or other
encumbrance affecting the Property which will not be satisfied at or before
Closing without Purchaser’s consent, which consent may be granted or withheld in
Purchaser’s sole and absolute discretion.
4.20    Zoning. Seller shall not, without the prior written approval of
Purchaser, change or attempt to change, directly or indirectly, the current
zoning of the Property.
4.21    Licenses & Approvals. Seller shall not, without the prior written
approval of Purchaser, cancel, amend or modify, in a manner adverse to the
Property, any License or Approval held by Seller with respect to the Property,
the Development or any part thereof which would be binding upon Purchaser after
the Closing.
4.22    Tax Contests. Seller may commence any proceeding to contest any taxes
with respect to the Property for any taxable period which includes the Closing
Date or for any taxable period prior to the taxable period which includes the
Closing Date upon prior-written notice to Purchaser.
4.23    Tentative Maps. Purchaser acknowledges that Seller is currently
processing applications with the City of San Diego for tentative maps (the
“Tentative Maps”) for the creation

    
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of 176 residential condominium units for the portion of the Land located at 2930
Barnard Street and 4 residential condominium units for the portion of the Land
located at 3901-3907 Chapman Street. Without any representation or warranty as
to whether the City of San Diego will approve the Tentative Maps or the
Tentative Maps will be recorded against the Property, Seller shall use
commercially reasonable efforts to obtain the approval of the City of San Diego
with respect to the Tentative Maps, with such changes and agreements as may be
required by the City of San Diego and any other applicable authorities. In no
event shall Purchaser have any right or remedy if the Tentative Maps are not
approved by the City of San Diego prior to Closing, including without
limitation, the right to terminate this Agreement or to receive any credit,
reduction or adjustment to the Purchase Price.
4.24    Estoppel Certificate and Subordination of Affordable Housing DOT. Seller
shall cooperate with Purchaser, at Purchaser’s written request and without any
additional cost or liability to Seller, in Purchaser’s attempts to obtain (i) a
commercially reasonable estoppel certificate executed by the Commission, in form
and content reasonably consistent with the forms of estoppel certificate
provided by the Commission in the past, and (ii) subordination agreement (as set
forth in Section 4(a) of the Affordable Housing Agreement and Section 14 of the
Affordable Housing DOT) subordinating the Affordable Housing DOT to any deed of
trust executed by Purchaser in connection with any financing obtained by
Purchaser for the acquisition of the Property, in form and substance reasonably
acceptable to Purchaser, Purchaser’s lender and the Commission. In no event
shall receipt of such estoppel certificate constitute a condition to Purchaser’s
obligations under this Agreement.

5.    REPRESENTATIONS AND WARRANTIES.

5.1    By Seller. Seller represents and warrants to Purchaser as of the
Effective Date (except as expressly set forth below) and, subject to Section
5.1.26 below, as of the Closing Date, as follows:
5.1.1    Seller is duly organized and validly existing under the laws of the
State in which it was organized, is authorized to do business in the State in
which the Land is located, has duly authorized the execution and performance of
this Agreement, and such execution and performance will not violate any material
term of its organizational documents.
5.1.2    The authorization, execution and delivery of this Agreement (and the
Seller Closing Documents) and the consummation of the transactions contemplated
hereby and thereby and the performance of Seller’s obligations hereunder and
under such Seller Closing Documents, will not, with or without the giving of
notice or passage of time or both, violate, conflict with or result in the
breach of any terms or provisions of or require any notice, filing, registration
or further consent, approval or authorization under (i) any statutes, laws,
rules, ordinances or regulations of any governmental body applicable to Seller,
the Property or the Development, (ii) any judgment, decree, writ, injunction,
order or award of any arbitrator, court or governmental authority binding upon
Seller or any of Seller’s assets or properties, or (iii) any instrument or
agreement to which

    
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Seller may be bound or relating to or affecting the Property or any portion
thereof. Furthermore, Seller has the requisite power and authority to own,
lease, and operate the Property and conduct its business as and where the same
is now owned, leased or operated.
5.1.3    There is no existing or pending litigation, proceedings, suits, actions
or claims with respect to the Property; nor, to the best of Seller’s knowledge,
have any such litigation, proceedings, suits, actions or claims been threatened
or asserted in writing, which could have an adverse effect on the Property or
Seller’s ability to consummate the transactions contemplated hereby.
5.1.4    Seller has not received any written notice from any governmental
authority of a violation of any governmental requirements (including
Environmental Laws and zoning and building laws) on the Property, which has not
been remedied and, to the best of Seller’s knowledge, no such violation exists.
5.1.5    Except as may be required under the Affordable Housing Documents, no
filing with, and no permit, authorization, consent or approval of, any
governmental authority or other person or entity is necessary for the
consummation by Seller of the transaction contemplated by this Agreement.
5.1.6    No Hazardous Materials have been constructed, deposited, placed,
discharged, stored, or otherwise located on, under or in the Property in
violation of Environmental Laws by Seller or, to its knowledge, any third party,
including, without limitation, any Tenant at the Property. To Seller’s
knowledge, (A) the Property has not previously been used as a landfill or as a
dump for garbage or refuse, (B) no Hazardous Materials have been released into
the environment or discharged at, on, from or under the Property, and (C) no
portion of the Property contains any Hazardous Materials in violation of
Environmental Law, including, without limitation, any asbestos or asbestos
containing materials, polychlorinated biphenyls and radon. To Seller’s
knowledge, there are no underground storage tanks at the Property.
5.1.7    Seller has not received, with respect to the Property, written notice
from any governmental authority with respect to assessments or notices of
charges, regarding any change to the zoning classification, any special
assessment, cost sharing obligations, cost contribution, and any condemnation
proceedings or proceedings to widen or realign any street or highway adjacent to
the Property which are not expressly disclosed by the Title Commitment. To
Seller’s knowledge, no such action, assessment, or notice of contribution is
pending or has been threatened in writing by any governmental authority against
Seller or the Property which Seller has not previously provided to Purchaser.
5.1.8    The list of Service Contracts in Exhibit 3.3 is true, correct and
complete, and true, accurate and complete copies of all Service Contracts have
been delivered to Purchaser. To Seller’s knowledge, all of the Service Contracts
are in full force and effect, have not been amended or modified except as
disclosed on Exhibit 3.3 and there are no defaults by Seller thereunder, nor are
there any defaults by the vendors under such Service Contracts.

    
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5.1.9    Seller is not a "foreign person" within the meaning of Section 1445 of
the Code, as amended (i.e., Seller is not a foreign corporation, foreign
partnership, foreign trust, foreign estate or foreign person as those terms are
defined in the Code).
5.1.10    Except for items being paid by Seller at Closing or prorated at
Closing, there are no outstanding accounts payable or unpaid debts relating to
the Property that would be binding on Purchaser or the Property, including,
without limitation, any unpaid charges, debts, liabilities, claims or
obligations arising from the construction, occupancy, ownership, use or
operation of the Property, which could give rise to any mechanic’s or
materialmen’s or other statutory liens against any portion of the Property.
5.1.11    Seller does not have any employees, and following the Closing,
Purchaser shall have no obligation to employ or continue to employ any
individual employed by Seller or at the Property. There are no employment,
collective bargaining or similar agreements or arrangements with Seller or with
respect to the Property, which will be binding on Purchaser after the Closing.
5.1.12    Seller (and if Seller is a partnership, each of its partners, whether
general or limited) is solvent, and has not made a general assignment for the
benefit of creditors or a transfer in fraud of creditors, or been adjudicated as
bankrupt or insolvent, nor has a receiver, liquidator, custodian, or trustee of
any of them or any of their respective properties (including the Property) been
appointed or taken possession of any of their respective properties, or a
petition filed by or against any of them for bankruptcy, composition,
rearrangement, extension, reorganization, or arrangement pursuant to title 11 of
the United States Code or any similar present or future federal or state
insolvency or bankruptcy law or statute, or any proceeding instituted for the
dissolution or liquidation of any of them.
5.1.13    
(a)    As of the Effective Date, there are no Leases in effect with respect to
the Property and there is no person in occupancy of the Property.
(b)    At least two (2) Business Days prior to Closing, Seller shall deliver to
Purchaser a current (dated within three (3) days of the Closing Date) certified
rent roll (the “Rent Roll”) with respect to the Property. As of Closing, the
Rent Roll shall be, to Seller’s knowledge, true, correct and complete in all
material respects.
5.1.14    Seller has not granted any person or entity any purchase options,
rights of first refusal, rights of first offer or similar rights with respect to
the Property or any direct or indirect interest therein.
5.1.15     The Seller’s Deliverables consist of copies of the same documents
that are used and relied upon by Seller in its ownership and operation of the
Property.
5.1.16    Property Manager is the property manager of the Property and Seller
has made available to Purchaser true, correct and complete copies of all
agreements with the Property Manager relating in any way to the Property.

    
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5.1.17    Seller has not received notice of, and Seller has not initiated, any
pending or contemplated proceedings or governmental action to modify the zoning
classification of the Property.
5.1.18    The Property to be conveyed, assigned and delivered to Purchaser
pursuant to this Agreement comprises all of the assets, property, rights and
interest (contractual or otherwise) used in the operation of the Property as
presently conducted.
5.1.19    Seller has not received written notice (including any written notice
received by Property Manager and provided by Property Manager to Seller) of any
condemnation or eminent domain proceeding pending against the Property or any
part thereof and, to Seller's knowledge, no condemnation or eminent domain
proceedings are threatened against any portion of the Property.
5.1.20    Seller currently possesses all requisite material Licenses & Approvals
necessary to own, maintain, operate and use the Property and to develop and
construct the Development. Exhibit 5.1.20 annexed hereto sets forth a true,
correct and complete list of all Licenses & Approvals. Seller has not received
any written notice from any governmental authority or other person or entity of
(i) any violation, default, intended or threatened non-renewal, suspension or
revocation of any License or Approval, or (ii) any failure by Seller to obtain a
License or Approval required for the use, occupancy or operation of the Property
or the Development that has not been cured, and there is no violation, default
or any basis for any non-renewal, suspension or revocation of any License or
Approval.
5.1.21    Seller is not, and is not acting on behalf of, (i) an “employee
benefit plan” (as defined in Section 3(3) of ERISA) that is subject to Title I
of ERISA, (ii) a “plan” as defined in Section 4975(e)(1) of the Code that is
subject to Section 4975 of the Code (each of the foregoing a “Plan”), (iii) an
entity or account the assets of which constitute “plan assets” of one or more
such Plans within the meaning of Department of Labor Regulation 29 CFR
Section 2510.3-101, as modified by Section 3(42) of ERISA or (iv) a
“governmental plan” within the meaning of Section 3(32) of ERISA.
5.1.22    Seller has made available to Purchaser true, correct and complete
copies of the following (collectively, the “Material Documents”): (i) the
Development Plans, (ii) the Development Contracts, (iii) the Architect
Agreement, (iv) the Warranties and Guarantees, (v) the Property Management
Agreement, and (vi) Licenses & Approvals. To Seller’s knowledge the list of
Material Documents in Exhibit 5.1.22 is true, correct and complete. All of the
Material Documents are in full force and effect, to Seller’s knowledge, have not
been amended or modified except as disclosed on Exhibit 5.1.22 and, to Seller’s
knowledge, there is no default by any party under any Material Document.
5.1.23    (a) All taxes for the Property which would be delinquent if unpaid
will be paid in full or prorated, at Closing, as part of the prorations pursuant
to the provisions of Section 6.4; provided, however, that if any taxes for the
Property are payable in installments, such representation and warranty shall
apply only to such installments which would be delinquent if unpaid at the
Closing, (b) Seller has not received any notice (including any written notice
received by Property Manager and provided by Property Manager to Seller) for an
audit of any taxes which

    
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has not been resolved or completed, (c) Seller is not currently contesting any
taxes, and (d) there is no currently pending appeal or abatement proceeding with
respect to the real estate taxes assessed on the Land and Improvements.
5.1.24    The Seller Knowledge Person has both familiarized itself with and
inquired of the Property Manager with respect to the Seller Representations.
5.1.25    Seller has delivered to Purchaser true, correct and complete copies of
the Affordable Housing Documents, including all amendments, modifications and
supplements thereto. The Affordable Housing Documents are in full force and
effect, and have not been modified, amended or extended. Neither Seller nor any
of its affiliates which is a party to the Affordable Housing Documents has
received any written notice of any default under such document which remains
uncured, nor to Seller’s current actual knowledge, does there exist any state of
facts which with the passage of time or the giving of notice, or both, would
give rise to a default under the Affordable Housing Documents. The Affordable
Housing Documents shall not be modified or amended in any respect on or after
the date hereof without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld with regard to immaterial modifications.
Seller shall timely perform all of its obligations (if any), and shall use
commercially reasonable efforts to cause the Commission to perform all of its
obligations (if any) under the Affordable Housing Documents on or after the date
hereof through the Closing.
5.1.26    From and after the Effective Date, Purchaser and Seller shall advise
the other in writing of any information it receives which indicates that a
Seller Representation is, or has become, untrue in any material respect. Seller
shall have fifteen (15) days from receipt of Purchaser’s written notice to
attempt to remedy the breach or inaccuracy in such representation or warranty;
provided, however, if remedy is possible, but it is not reasonably possible to
remedy such breach or inaccuracy within fifteen (15) days, then Seller shall
have such time as is reasonably required to remedy such breach or inaccuracy,
not to exceed ninety (90) days in the aggregate, so long as Seller commences
cure within fifteen (15) days from receipt of Purchaser’s written notice and
thereafter diligently pursues such cure to completion. The Closing Date shall be
adjourned (subject to Section 10.3.5 of this Agreement) to the date that is
three (3) Business Days following the expiration of the cure period permitted by
the immediately preceding sentence. In the event Seller is unwilling or unable
to remedy such inaccuracy within such cure period, Purchaser shall have the
right, as its sole and exclusive remedy, exercisable by giving written notice to
Seller and Escrow Holder within five (5) days after the expiration of Seller’s
cure period, either (i) to terminate this Agreement and receive the return of
the Deposit and, if such inaccuracy occurred as a result of a breach by Seller
of its obligations under this Agreement, a reimbursement from Seller of
Purchaser’s actual out-of-pocket costs related to the Property and this
Agreement up to a maximum amount of $200,000.00, or (ii) to consummate the
transaction contemplated by this Agreement. If Purchaser elects to proceed with
the Closing after Purchaser has received Seller’s written notice of any actual
or alleged inaccuracy or breach of any Seller Representation or after Purchaser
has obtained actual knowledge of any such change in circumstances, then (a) the
Seller Representations shall be deemed revised in accordance with the change in
circumstances as disclosed in such written notice from Seller or actually known
to Purchaser, (b) Purchaser shall have waived any right or remedy concerning
such change in circumstances, and (c) Seller shall be fully and forever released
and discharged from any

    
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liability or obligation with respect to such change in circumstances. Seller’s
liability to Purchaser by reason of a breach or default of any of any Sellers
Representations shall be governed by Section 11.16.
5.2    By Purchaser. Purchaser represents and warrants to Seller as follows:
5.2.5    Purchaser is duly organized, validly existing and in good standing
under the laws of the State in which it was organized, is authorized to do
business in the State in which the Land is located, has duly authorized the
execution and performance of this Agreement, and such execution and performance
will not violate any material term of its organizational documents.
5.2.6    No petition in bankruptcy (voluntary or otherwise), assignment for the
benefit of creditors, or petition seeking reorganization or arrangement or other
action under federal or state bankruptcy laws is pending against or contemplated
by Purchaser.
5.2.7    Purchaser acknowledges that, prior to the Effective Date, Purchaser has
had sufficient opportunity to inspect the Property and the Material Documents
fully and completely at its expense in order to ascertain to its satisfaction
the extent to which the Property complies with applicable zoning, building,
environmental, health and safety and all other laws, codes and regulations.
5.2.8    Purchaser acknowledges that, prior to the Effective Date, Purchaser has
had sufficient opportunity to review the Material Documents, Seller
Deliverables, contracts, expenses and other matters relating to the Property and
Development in order to determine, based upon its own investigations,
inspections, tests and studies, whether to purchase the Property.
5.2.9    Purchaser will not use the assets of an employee benefit plan as
defined in Section 3(3) of ERISA and covered under Title I, Part 4 of ERISA or
Section 4975 of the Code, in the performance or discharge of its obligations
hereunder, including the acquisition of the Property.
5.3    Brokerage Commission. Each of Seller and Purchaser represents to the
other that it has had no dealings, negotiations, or consultations with any
broker, representative, employee, agent or other intermediary in connection with
the Agreement or the sale of the Property, except for Broker, who will be paid
by Purchaser upon the Closing of the transaction contemplated hereby and not
otherwise, pursuant to a separate written agreement between Purchaser and
Broker. Said commission shall in no event be earned, due or payable unless and
until the transaction contemplated hereby is closed and fully consummated
strictly in accordance with the terms and conditions of this Agreement. Seller
and Purchaser agree that each will indemnify, defend and hold the other free and
harmless from the claims of any other broker(s) (and, in the case of Purchaser’s
indemnity of Seller, the Broker), representative(s), employee(s), agent(s) or
other intermediary(ies) claiming to have represented Seller or Purchaser,
respectively, or otherwise to be entitled to compensation in connection with
this Agreement or in connection with the sale of the Property. The terms and
provisions of this Section 5.3 shall survive Closing hereunder.

    
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6.    COSTS AND PRORATIONS.
6.1    Purchaser’s Costs. Purchaser shall pay the following costs of closing
this transaction:
6.1.10    The fees and disbursements of its counsel, the Purchaser Architect and
any engineer or other consultants engaged by Purchaser in connection with
Purchaser’s Inspections, if any;
6.1.11    Any and all recording fees associated with the recordation of a
mortgage obtained by Purchaser in connection with the acquisition of the
Property, if any;
6.1.12    One-half of any escrow fees;
6.1.13    The cost of all endorsements to the Title Policy, including “extended
coverage” and “gap coverage”;
6.1.14    The brokerage commission (if any) payable to Broker pursuant to
Section 5.3; and
6.1.15    Any other costs or expense(s) required to be paid by Purchaser
pursuant to the express terms and provisions of this Agreement.
6.2    Seller’s Costs. Seller shall pay the following costs of closing this
transaction:
6.2.1    The fees and disbursements of Seller’s counsel;
6.2.2    The cost of the premium for the standard coverage portion of the Title
Policy;
6.2.3    All costs relating to the Survey, including, without limitation, its
initial preparation and any update, recertification or changes thereto;
6.2.4    One-half of any escrow fees;
6.2.5    Transfer taxes relating to the recordation of the Deed;
6.2.6    Any and all recording fees attributable to the recordation of the Deed
and release of any documents or instruments constituting Must Remove Title
Objections;
6.2.7    Any cost to transfer the Approved Contracts, the Warranties and
Guaranties and Licenses and Approvals to Purchaser at Closing.
6.2.8    All costs of the Development;
6.2.9    Any other costs or expense(s) required to be paid by Seller pursuant to
the express terms and provisions of this Agreement.
Any costs not addressed above that must be paid in order to effectuate the
Closing shall be paid in accordance with local custom.

    
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6.3    Prorations. All costs, expenses and revenues relating to the Property
shall be prorated as of the Closing Date and be adjusted against the Purchase
Price due at Closing such that Seller is entitled to retain any revenues (and
obligated to pay any costs) that accrued for the period prior to the Closing
Date and Purchaser shall receive a credit for all revenues (and shall pay all
costs) relating to the Closing Date and thereafter. The following items shall be
prorated in accordance with the foregoing sentence (which items are used as
examples and not meant to be an all-inclusive list of items to be prorated):
(a) rents, including base or minimum rent, and additional rent (including
estimates for taxes, insurance and operating expenses), and any other amounts
actually collected from Tenants and other persons using or occupying the
Property as of the Closing Date; (b) personal property taxes, installment
payments of special assessment liens, sewer charges, utility charges (utility
charges shall be prorated based on the last reading of meters prior to Closing
performed at Seller’s request, if possible) and normally prorated operating
expenses actually billed or paid as of the Closing Date; and (c) amounts owed by
Seller or paid under the Assumed Contracts as of the Closing Date. Any
outstanding leasing commissions and finder’s fees under a Lease executed prior
to the Closing Date shall be paid by Seller, or credited in full by Seller to
Purchaser, at or prior to Closing.
6.4    Taxes. General real estate taxes and special assessments relating to the
Property for the tax year in which Closing occurs shall be prorated as of the
Closing Date, on an accrual basis. If Closing shall occur before the actual
taxes and special assessments payable during such year are known, the
apportionment of taxes shall be upon the basis of (i) the most recent tax
assessment of the Property and (ii) the most recent tax rate applicable to the
Property, provided that, if the taxes and special assessments payable during the
tax year in which Closing occurs are thereafter determined to be more or less
than the taxes payable during the preceding year (after any appeal of the
assessed valuation thereof is concluded), Seller and Purchaser shall promptly
(within thirty (30) days of receipt of the final tax bill for the tax year in
which Closing occurs, except in the case of an ongoing tax protest) adjust the
proration of such taxes and special assessments, and Seller or Purchaser, as the
case may be, shall pay to the other any amount required as a result of such
adjustment and this covenant shall not merge with the deed delivered hereunder
but shall survive the Closing. In the event the Property has been assessed for
property tax purposes at such rates as could result in “roll back” taxes upon
changes in land usage or ownership of the Property, Purchaser and Seller agree
to prorate all such taxes in the manner set forth above.
6.5    In General. Any other costs or charges of closing this transaction not
specifically mentioned in this Agreement shall be prorated and adjusted in
accordance with the proration method set forth above. All prorations shall be
made on a 365-day calendar year basis, based on the actual number of days in the
applicable month.
6.6    Purpose and Intent. Except as expressly provided herein, the purpose and
intent as to the provisions of prorations and apportionments set forth in this
Section 6 and elsewhere in this Agreement is that Seller shall bear all expenses
of ownership and operation of the Property and shall receive all income
therefrom accruing through midnight at the end of the day preceding the Closing
Date and Purchaser shall bear all such expenses and receive all such income
accruing thereafter. On or prior to the date occurring seven (7) calendar days
prior to the Closing, Seller shall provide to Purchaser a draft proration
statement with respect to the Property, which draft

    
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proration statement shall include back-up figures. Purchaser and Seller shall
cooperate to finalize such proration statement in accordance with the terms of
this Section 6.
6.7    Post-Closing Adjustment. Within ninety (90) days of Closing, Purchaser
and Seller will make a further post-Closing adjustment for taxes, charges and
other items which may have accrued or been incurred prior to the Closing Date,
but not billed or paid at that date.
6.8    Survival. The obligations of Purchaser and Seller contained in this
Section 6 shall survive the Closing.

7.    DAMAGE, DESTRUCTION OR CONDEMNATION.
7.1    Material Event. If, prior to Closing, the number of parking spaces on the
Property are materially reduced, or the buildings are damaged and the cost of
repair exceeds $2,500,000.00 (as reasonably determined by a
nationally-recognized engineer mutually and reasonably acceptable to the
parties), or any access point to the Property is rendered completely unusable,
or is destroyed or taken under power of eminent domain and the cost or repair
exceeds $2,500,000.00 (as reasonably determined by a nationally-recognized
engineer mutually and reasonably acceptable to the parties), as a result of
casualty or condemnation (a “Material Event”), Purchaser may elect to terminate
this Agreement by giving written notice of its election to Seller within seven
(7) days after receiving notice of such destruction or taking and a written
request from Seller that Purchaser make its election on account of such casualty
or condemnation. If Purchaser does not give such written notice within such
seven (7) day period, then Purchaser shall be deemed to have elected to
terminate this Agreement. If Purchaser elects in writing to proceed to Closing
within such seven (7) day period, then this transaction shall be consummated on
the Closing Date and at the Purchase Price provided for in Section 2, and Seller
will assign to Purchaser the physical damage proceeds, as well as any rights to
proceeds of rent loss insurance applicable to the period after closing, of any
insurance policy(ies) payable to Seller, or Seller’s portion of any condemnation
award, in both cases, up to the amount of the Purchase Price, and, if an insured
casualty, pay or credit to Purchaser the amount of any deductible but not to
exceed the amount of the loss.
7.2    Immaterial Event. If, prior to Closing, the Property is subject to a
casualty or a condemnation event that is not a Material Event, Purchaser shall
close this transaction on the date and at the Purchase Price agreed upon in
Section 2, and Seller will assign to Purchaser the physical damage proceeds, as
well as any rights to proceeds of rent loss insurance applicable to the period
after closing, of any insurance policies payable to Seller, or Seller’s rights
to any portion of any condemnation award, and, if an insured casualty, pay or
credit to Purchaser the amount of any deductible. In the event of any uninsured
loss, Seller shall provide Purchaser with a credit against the Purchase Price in
an amount equal to such uninsured loss.
7.3    Termination and Return of Deposit. If Purchaser elects to terminate this
Agreement pursuant to this Section 7, Seller shall promptly direct the Title
Company to return the Deposit to Purchaser, and neither party shall have any
further liability hereunder except for the Surviving Obligations.

    
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7.4    California Civil Code Section 1662. Seller and Purchaser each expressly
waive the provisions of California Civil Code Section 1662 and hereby agree that
the provisions of this Agreement shall govern the parties’ obligations in the
event of any damage or destruction to the Real Property or the taking of all or
any part of the Real Property, as applicable.

8.    NOTICES. Any notice required or permitted to be given hereunder shall be
deemed to be given (i) when hand delivered or (ii) one (1) Business Day after
pickup by Emery Air Freight, Airborne, Federal Express, or similar overnight
express service, or (iii) when sent by .pdf attachment to email, or by facsimile
(only as provided below) in either case addressed to the parties at their
respective addresses referenced below:
If to Seller:    Monarch at Point Loma Owner, LLC
    7727 Herschel Avenue
    La Jolla, CA 92037
    Attention:
    Telephone:
    Email:
With a copy to:    Solomon Ward Seidenwurm & Smith LLP
401 B Street, Suite 1200
San Diego, California 92101
    Attention:  
    Telephone:
    Email:

If to Purchaser:    c/o LaSalle Investment Management, Inc.
200 E. Randolph Drive, 44th Floor
Chicago, IL 60601
Attention:  
Telephone:
Facsimile:
Email:
With a copy to:    c/o LaSalle Investment Management, Inc.
200 E. Randolph Drive, 44th Floor
Chicago, IL 60601
Attention:
Facsimile:
Email:
With a copy to:    Kirkland and Ellis LLP
    300 North LaSalle
    Chicago, IL 60654
    Attention:
Facsimile:
Email:

    
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If to Title Company:    First American Title Company,
4380 La Jolla Village Drive, Suite 110
San Diego, California 92122
    Attn:
    Telephone:
    Facsimile:
    Email:

or in each case to such other address as either party may from time to time
designate by giving notice in writing to the other party. Except for facsimile
and .pdf notices between 9:00 a.m. and 6:00 p.m. Chicago, Illinois time on a
Business Day that are followed up by an overnight courier delivery, telephone,
.pdf and facsimile numbers are for informational purposes only. Effective notice
will be deemed given only as provided above.
9.    CLOSING AND ESCROW.
9.1    Escrow Instructions. Upon execution of this Agreement, the parties shall
deliver an executed counterpart of this Agreement to the Title Company to serve
as the instructions to the Title Company as the escrow holder for consummation
of the transaction contemplated which instructions are supplemented by the
instructions included hereto as Exhibit 9.1. Seller and Purchaser agree to
execute such additional and supplementary escrow instructions as may be
appropriate to enable the Title Company to comply with the terms of this
Agreement; provided, however that in the event of any conflict between the
provisions of this Agreement and any supplementary escrow instructions, the
terms of this Agreement shall prevail.
9.2    Seller’s Deliveries. Seller shall deliver to the Title Company at the
Closing (or with respect to the items described in Sections 9.2.3(i), 9.2.4 and
9.2.5 by making available at the Property) (except as expressly set forth in
Section 9.2.15 and Section 9.2.16 below) the following original documents, each
executed and, if required, acknowledged (the “Seller Closing Documents”):
9.2.1    The Deed, subject only to the Permitted Encumbrances.
9.2.2    A Bill of Sale and Assignment and Assumption Agreement in the form
attached hereto as Exhibit 9.2.2, together with any consents required in
connection with the execution and delivery thereof.
9.2.3    (i) The Leases described in Section 1.1.6 which are still in effect as
of Closing and any new Leases entered into pursuant to Section 4.4; and (ii) a
current Rent Roll with respect to the Property dated no earlier than two (2)
Business Days prior to Closing and certified by Seller to be true, correct and
complete. To the extent any security deposits are non-cash (e.g., letters of
credit), Seller shall deliver into escrow an application for transfer of such
letter of credit to Purchaser, executed by Seller, together with the original
letter of credit. Facilitating the actual transfer of such letter of credit
after Closing, as well as the payment of any fees for such transfer, shall be
the sole responsibility of Purchaser and Seller shall have no liability therefor
provided that Seller shall cooperate in connection therewith.

    
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9.2.4    Originals (or copies if originals are not available) of all Approved
Contracts, Development Contracts, Development Plans and the Architect Agreement.
9.2.5    All Books and Records.
9.2.6    An affidavit pursuant to the Foreign Investment and Real Property Tax
Act in the form attached hereto as Exhibit 9.2.6 and a California Form 593-C
certification.
9.2.7    A letter notifying Tenants of the conveyance of the Property in the
form attached hereto as Exhibit 9.2.7 or on such other form as is reasonably
requested by Purchaser.
9.2.8    A settlement statement and such other documents as are reasonably
necessary to consummate the Closing as contemplated herein.
9.2.9    Written evidence of Seller’s power and authority to enter into this
transaction reasonably acceptable to the Title Company.
9.2.10    Written certificate in the form attached hereto as Exhibit 9.2.10 that
all Seller Representations remain true, correct and complete in all material
respects as of the Closing Date, subject to Section 5.1.26.
9.2.11    The Owner’s Affidavit.
9.2.12    Provided that Purchaser delivers evidence to Seller at least
forty-five (45) days prior to Closing that Purchaser has entered into a new
property management agreement with Property Manager to be effective as of
Closing, evidence of the termination of the Property Management Agreement
effective as of Closing.
9.2.13    An assignment and assumption of the Affordable Housing Agreement (as
required by Section 10 of the Affordable Housing Agreement) assigning the
Affordable Housing Agreement to Purchaser, in form and substance reasonably
acceptable to Purchaser and the Commission, approved by the Commission and duly
executed by Seller and the Commission.
9.2.14    An assignment and assumption of the Affordable Housing DOT (as
required by Section 14 of the Affordable Housing DOT) assigning the Affordable
Housing DOT to Purchaser, in form and substance reasonably acceptable to
Purchaser, Seller and the Commission, approved by the Commission and duly
executed by Seller and the Commission.
9.2.15    At least five (5) days prior to the Closing Date, Seller shall have
delivered to Purchaser a current ALTA “as built” survey of the Property (i)
reflecting the completion of the Development and (ii) that does not reflect any
encroachments over (a) utility, gas or sewer lines, (b) Property boundary lines,
(c) set back lines, or (d) easements, in each case other than the Existing
Encroachments, which ALTA survey shall be certified to Purchaser and shall be
prepared in accordance with the 2011 minimum standard detail requirements for
ALTA/ACSM land title surveys, jointly established and adopted by ALTA and NSPS.

    
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9.2.16    Final Certificates of Occupancy with respect to each Building in the
Development.
9.2.17    Any other documents or agreements reasonably required to consummate
the transaction contemplated by this Agreement, including, without limitation,
transfer tax declarations or returns.
9.3    Purchaser’s Deliveries. At the Closing, Purchaser shall (i) pay Seller
through the Title Company the Purchase Price by no later than 1:00 p.m. Pacific
time on the Closing Date; (ii) execute and deliver to the Title Company the
agreements and statements referred to in Sections 9.2.2, 9.2.7, 9.2.13 and
9.2.14, duly executed by Purchaser; (iii) deliver to the Title Company written
evidence of Purchaser’s power and authority to enter into this transaction
reasonably acceptable to the Title Company; and (iv) execute and deliver to the
Title Company a settlement statement and such other documents or agreements
reasonably required to consummate the transaction contemplated by this
Agreement, including, without limitation, transfer tax declarations or returns.
9.4    Possession. Purchaser shall be entitled to possession of the Property
upon conclusion of the Closing, subject to the Permitted Encumbrances.
9.5    Insurance. Seller shall terminate its policies of insurance as of 3:00
p.m. Pacific Time on the Closing Date, and Purchaser shall be responsible for
obtaining its own insurance thereafter.
9.6    Post‑Closing Collections. Purchaser shall use commercially reasonable
efforts (without filing suit) during the three (3) month period immediately
following Closing to collect and promptly remit to Seller rents or other amounts
due Seller for the period prior to Closing. So long as Purchaser uses
commercially reasonable efforts, Seller shall have no right to pursue Tenants
for amounts due to Seller for the period prior to Closing. Purchaser shall apply
such rents or other amounts received, first for the account of Purchaser for
amounts currently due to Purchaser (including for the month in which the Closing
occurs); second, after subtracting any allocable management fees and other costs
of collection, to Seller for any and all amounts due to Seller for periods prior
to Closing; and the balance to be retained by Purchaser. If Seller shall receive
any rents or other amounts after Closing, all such amounts shall be promptly
remitted to Purchaser and, if such amounts relate to the period of Seller’s
ownership, they shall applied in accordance with this Section 9.6. This Section
shall survive Closing.
9.7    Punch-List Hold Back.
(a)    Seller shall cause the Punch-List Items to be completed and corrected at
Seller’s expense as soon as possible following the Walk-Through for each
Building, Phase or Development as a whole (as applicable). Purchaser hereby
grants Seller (and its contractors and agents) the right to access the Property
after the Closing to complete the Punch-List Items for the Development as a
whole, provided that Seller (and its contractors and agents) shall do so in a
manner reasonably designed to minimize interference with (x) the use and
operation of the Property, or (y) the occupancies and quiet enjoyment of the
Tenants of the Property.

    
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(b)    At the Closing, the parties agree to cause the Title Company to withhold
from the Purchase Price due Seller at the Closing an amount equal to one hundred
fifty percent (150%) of the estimated cost of completing such Punch-List Items
for the Development as a whole after the Closing, as reasonably determined by
Purchaser and reasonably approved by Seller (“Punch-List Holdback”). The
Punch-List Holdback shall be deposited by the Title Company in an
interest-bearing account, with interest accruing for Seller’s benefit, pursuant
to a holdback escrow agreement consistent with the terms hereof and otherwise in
form and substance reasonably acceptable to Seller and Purchaser. The Punch-List
Holdback shall be released to Seller upon the completion and satisfaction of the
following: (a) final completion of all of the Punch-List Items for the
Development as a whole by Seller, which completion thereof has been reasonably
approved by the Development Architect and the Purchaser Architect; and (b)
delivery of final unconditional lien waivers and releases from all of the
contractors, subcontractors and materialmen that have performed work at or
delivered materials to the Development (collectively, (a) and (b) above shall be
referred to as “Punch-List Holdback Conditions”). Any dispute regarding whether
such Punch-List Items for the Development as a whole have been completed shall
be resolved in the manner set forth in Section 4.14(d) above.
(c)    If Seller has not satisfied the foregoing Punch-List Holdback Conditions
within ninety (90) days after the Closing, despite being given reasonable access
to the Property in accordance herewith, then Purchaser shall have the right, but
not the obligation, to undertake to complete the Punch-List Holdback Conditions
by delivering written notice of such election to Seller, in which event Seller
shall promptly reimburse Purchaser the costs and expenses incurred by Purchaser
in connection with completion of such Punch-List Items to the extent Purchaser
is not reimbursed from the Punch-List Holdback for the same. Purchaser shall
have the right to draw upon the Punch-List Holdback to pay for such costs and
expenses and Seller shall receive the balance of the Punch-List Holdback, if
any, following final completion of all Punch-List Holdback Conditions in
accordance with the Development Plans.
(d)    Seller shall indemnify, defend and hold harmless Purchaser and the
Purchaser Related Entities for, from and against any and all Losses incurred by
Purchaser or any of the Purchaser Related Entities arising from or in connection
with Seller’s failure to perform and complete the Punch-List Items in accordance
herewith.
(e)    This Section 9.7 shall survive Closing.

9.8    Condominium Prohibition. Purchaser hereby agrees to the following
covenant (the “Restrictive Covenant”), which shall be included in the Deed:
GRANTEE HEREBY COVENANTS, on behalf of itself and its successors and assigns
that, prior to [INSERT DATE THAT IS 10 YEARS AFTER THE CLOSING DATE], no portion
of the Property shall be (a) sold as a condominium, cooperative, timeshare, or
any similar common interest development, or (b) converted to a common interest
development or condominium project. Any attempted sale of any portion of such
real property in violation of such covenant shall be null and void. This
covenant shall be binding on GRANTEE’s successors in interest and assigns and
shall run with the land until [INSERT DATE THAT

    
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IS 10 YEARS AFTER THE CLOSING DATE], after which time such covenant shall
automatically terminate and cease to be effective.
Purchaser shall further defend, indemnify and hold harmless the Seller and the
Releasees from all claims actually suffered or incurred by Seller or any
Releasee resulting or arising after Closing and made by buyers of interests in
such condominium, common interest development, cooperative, or timeshare project
with respect to the Property or any association administering or managing such a
project alleging defective design or construction (performed either before or
after Close of Escrow), misrepresentation, lack of necessary disclosure, or
similar claims. In the event Purchaser conveys, sells or otherwise transfers the
Property (including, without limitation, any conveyance, sale or transfer of
direct or indirect ownership interests in Purchaser which results in a change of
control of Purchaser), Purchaser shall include in the conveyance documents (a)
an express acknowledgement and covenant by the transferee to comply with the
Restrictive Covenant, and (b) an express waiver and release by such transferee
of Seller and the Releasees from the matters described in Section 1.2, including
without limitation any Claims alleging defective design or construction.
This Section 9.8 shall survive Closing.

10.    DEFAULT; FAILURE OF CONDITION.
10.1    Purchaser Default. IF PURCHASER SHALL DEFAULT IN ITS OBLIGATION TO
ACQUIRE THE PROPERTY ON THE CLOSING DATE PURSUANT TO THIS AGREEMENT (A
“PURCHASER CLOSING DEFAULT”), THEN SO LONG AS SELLER IS NOT THEN IN DEFAULT
UNDER THIS AGREEMENT, THE DEPOSIT SHALL BE RETAINED BY SELLER AS LIQUIDATED
DAMAGES, AND BOTH PARTIES SHALL BE RELIEVED OF AND RELEASED FROM ANY FURTHER
LIABILITY HEREUNDER EXCEPT FOR THE SURVIVING OBLIGATIONS. THE PARTIES HAVE
DISCUSSED AND NEGOTIATED IN GOOD FAITH UPON THE QUESTION OF THE DAMAGES THAT
WOULD BE SUFFERED BY SELLER IN THE EVENT THE CLOSING DOES NOT OCCUR BECAUSE
PURCHASER BREACHES THIS AGREEMENT AND HAVE ENDEAVORED TO REASONABLY ESTIMATE
SUCH DAMAGES AND THEY AGREE THAT (I) SUCH DAMAGES ARE AND WILL BE IMPRACTICABLE
OR EXTREMELY DIFFICULT TO FIX, AND (II) LIQUIDATED DAMAGES IN THE AMOUNT OF THE
DEPOSIT (AS IT MAY BE INCREASED FROM TIME TO TIME) ARE AND WILL BE REASONABLE.

    
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THE PARTIES ACKNOWLEDGE AND AGREE THAT THE PAYMENT OF LIQUIDATED DAMAGES UNDER
THIS SECTION IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF
CALIFORNIA CIVIL CODE SECTION 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE
LIQUIDATED DAMAGES TO SELLER PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671,
1676 AND 1677. IN ACCORDANCE WITH CALIFORNIA CIVIL CODE SECTION 1677, THE TEXT
OF THIS LIQUIDATED DAMAGES PROVISION HAS BEEN PROVIDED IN BOLD TYPE, AND A DULY
AUTHORIZED REPRESENTATIVE OF EACH PARTY HAS INITIALED THIS PROVISION AS SHOWN
IMMEDIATELY BELOW.
SELLER’S INITIALS        PURCHASER’S INITIALS
_________                    _________
10.2    Seller Default. If Seller shall (a) default in its obligation to convey
the Property to Purchaser on the Closing Date pursuant to this Agreement (a
“Seller Closing Default”), (b) otherwise default hereunder or (c) breach or
default under any Loan Document, which breach or default is not cured prior to
acceleration of the Loan, subject to the expiration of the cure period (other
than with respect to any Seller Closing Default) provided under Section 11.6
hereof, then so long as Purchaser is not then in default under this Agreement,
Purchaser shall elect as its sole and exclusive remedy hereunder either to
(i) terminate the Agreement and recover the Deposit and a reimbursement from
Seller of Purchaser’s actual out-of-pocket costs related to the Property and
this Agreement up to a maximum amount of $200,000.00; or (ii) enforce Seller’s
obligations to convey the Property by delivering written notice to Seller within
thirty (30) days after the scheduled Closing which describes such default and
states Purchaser’s election to enforce specific performance and actually filing
suit within sixty (60) days thereafter, provided if such limitation on the time
period to file suit is prohibited or limited by law, the time period shall be
extended to the minimum limitation period allowed by law; provided, however,
that in the event specific performance is not available to Purchaser pursuant to
the foregoing clause (ii) as a result of Seller’s sale of the Property, the
Land, the Improvements or any material portion of the Personal Property in
violation of this Agreement, then Purchaser shall have the right to exercise all
rights and remedies available at law or in equity.
10.3    Failure of Condition. The full satisfaction of each of the conditions
contained in this Section 10.3 by the time of Closing hereunder shall be a
condition to Purchaser’s obligation to close hereunder (collectively,
“Purchaser’s Conditions to Closing”)
10.3.1    All Seller Representations shall continue to be true, correct and
complete in all material respects, except for changes in the Seller
Representations arising from events or circumstances that are not prohibited by
this Agreement and that are disclosed on Schedule I attached to the written
certificate delivered by Seller at Closing pursuant to Section 9.2.10.
10.3.2    Seller shall have performed all of its obligations and not be in
breach or default hereunder, including, without limitation, Seller’s obligations
pursuant to Section 9.2.

    
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10.3.3    The Title Company has issued or irrevocably committed to issue the
Title Policy to Purchaser in accordance with Section 3.6.
10.3.4    Substantial Completion of the Development as a whole shall have
occurred in accordance with Section 4.14 on or prior to the Substantial
Completion Date.
10.3.5    The Closing Date shall have occurred on or before the Outside Closing
Date.
10.3.6    Receipt by Purchaser of (i) if Purchaser obtains permanent financing
for the acquisition of the Property from an institutional lender approved by the
President and CEO of the Commission, a subordination agreement (as set forth in
Section 4(a) of the Affordable Housing Agreement and Section 14 of the
Affordable Housing DOT) subordinating the Affordable Housing DOT to a deed of
trust executed by Purchaser for the benefit of such institutional lender in form
and substance consistent with the Subordination Agreement previously recorded
with respect to the Affordable Housing DOT on July 11, 2014 as Instrument No.
2014-0289164 of the Official Records, approved by the Commission and duly
executed by the Commission; and (ii) the consent of the Commission to the
transaction contemplated by this Agreement.
If any of the Purchaser’s Conditions to Closing are not satisfied in full by the
Closing Date, then so long as Purchaser is not then in default under this
Agreement, Purchaser may elect to either (i) terminate this Agreement and
receive a return of the Deposit, in which event the Deposit shall be returned to
Purchaser and this Agreement shall be deemed null and void, except for the
Surviving Obligations; (ii) waive the condition and proceed to Closing; or (iii)
provide Seller by notice thereof additional time (not to exceed thirty (30)
days) to satisfy and complete such condition, all without prejudice to
Purchaser’s rights and remedies under this Agreement, including, without
limitation, Section 10.2, and under applicable law, on account of a breach or
default by Seller under this Agreement.

11.    MISCELLANEOUS.
11.1    Entire Agreement. This Agreement, together with the Exhibits attached
hereto, all of which are incorporated by reference, is the entire agreement
between the parties with respect to the subject matter hereof, and no
alteration, modification or interpretation hereof shall be binding unless in
writing and signed by both parties.
11.2    Severability; Construction. If any provision of this Agreement or
application to any party or circumstances shall be determined by any court of
competent jurisdiction to be invalid and unenforceable to any extent, the
remainder of this Agreement or the application of such provision to such person
or circumstances, other than those as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision hereof shall be
valid and shall be enforced to the fullest extent permitted by law. All dollar
amounts stated in this Agreement are U.S. dollar amounts. The normal rule of
construction that any ambiguities be resolved against the drafting party shall
not apply to the interpretation of this Agreement or any exhibits or amendments
hereto.

    
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11.3    Applicable Law; Venue. THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR
DISPUTE ARISING UNDER OR RELATED TO THIS AGREEMENT, THE RELATIONSHIP OF THE
PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF
THE PARTIES WILL BE GOVERNED BY THE LAWS OF THE STATE WHERE THE PROPERTY IS
LOCATED WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES. THIS AGREEMENT IS
PERFORMABLE IN AND EXCLUSIVE VENUE FOR ANY ACTION BROUGHT WITH RESPECT HERETO
SHALL LIE IN THE STATE COURT FOR THE COUNTY IN WHICH THE LAND IS LOCATED, OR, IF
APPLICABLE, THE UNITED STATES DISTRICT COURT FOR THE DISTRICT IN WHICH THE LAND
IS LOCATED, WITHOUT REGARD TO CONFLICTS IN LAW.
11.4    Assignability. Except for an assignment to a subsidiary or affiliate of
Purchaser with five (5) Business Days’ prior written notice to Seller, Purchaser
may not assign this Agreement without first obtaining Seller’s written consent,
which may be withheld in Seller’s sole and absolute discretion. Any assignment
in contravention of this provision shall be void. No assignment shall release
the Purchaser herein named from any obligation or liability under this
Agreement. Any assignee shall be deemed to have made any and all representations
and warranties made by Purchaser hereunder, as if the assignee were the original
signatory hereto. If Purchaser requests Seller’s written consent to any
assignment, Purchaser shall (1) notify Seller in writing of the proposed
assignment; (2) provide Seller with the name and address of the proposed
assignee; (3) provide Seller with financial information including financial
statements of the proposed assignee (unless such assignee is a newly formed
single purpose entity for the purpose of holding title to the Property) and such
other information as Seller may reasonably request; and (4) provide Seller with
a copy of the proposed assignment.
11.5    Successors Bound. This Agreement shall be binding upon and inure to the
benefit of Purchaser and Seller and their respective successors and permitted
assigns.
11.6    Breach. Should either party be in breach of or default under or
otherwise fail to comply with any of the terms of this Agreement, except for any
Purchaser Closing Default or Seller Closing Default, the complying party shall
have the option to cancel this Agreement if after giving ten (10) days’ written
notice to the other party of the alleged breach or default, such other party
fails to cure such breach within such ten (10) day period; provided, however, if
such breach or default cannot reasonably be cured within such ten (10) day
period, such period shall be extended so long as the defaulting party commences
cure within such ten (10) day period and thereafter diligently pursues such cure
to completion. The non‑defaulting party shall promptly notify the defaulting
party in writing of any such alleged breach, default or failure upon obtaining
knowledge thereof. The Closing Date shall be extended to the extent necessary to
afford the defaulting party the full period within which to cure such breach,
default or failure; provided, however, that if the Closing Date shall have been
once extended as a result of default by a party, such party shall be not be
entitled to any further notice or cure rights with respect to that or any other
default, and in no event shall the Closing Date be extended for more than thirty
(30) days.

    
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11.7    No Public Disclosure. Neither Purchaser nor Seller shall make a public
disclosure of the terms of this transaction, either before or after Closing,
without the prior written consent of Seller, except that Purchaser and Seller
may (i) disclose the terms of the transaction in confidence with proposed joint
venturers or prospective mortgagees, members, officers, directors, trustees,
employees, investors, consultants, advisors, agents, representatives, partners
and/or shareholders (and any of their respective lenders, members, officers,
directors, trustees, employees, consultants, advisors, agents, representatives,
partners and/or shareholders of any of such parties), (ii) disclose any
information with respect to the transaction contemplated herein, any matters set
forth in this Agreement, or any of the terms and provisions of this Agreement if
and to the extent that such disclosure is required by applicable law or a court
or other binding order and (iii) make any public statement, filing or other
disclosure which they reasonably believe to be required under applicable
securities laws, it being understood that this item (iii) shall also apply to
indirect owners, managers or advisors to Purchaser. The provisions of this
Section 11.7 shall survive Closing and any termination of this Agreement.
11.8    Captions. The captions in this Agreement are inserted only as a matter
of convenience and for reference and in no way define, limit or describe the
scope of this Agreement or the scope or content of any of its provisions.
11.9    Attorneys’ Fees. In the event of any litigation arising out of this
Agreement, the prevailing party shall be entitled to reasonable attorneys’ fees
and costs.
11.10    No Partnership. Nothing contained in this Agreement shall be construed
to create a partnership or joint venture between the parties or their successors
in interest.
11.11    Time of Essence. Time is of the essence in this Agreement.
11.12    Counterparts. This Agreement may be executed and delivered in any
number of counterparts, each of which so executed and delivered shall be deemed
to be an original and all of which shall constitute one and the same instrument.
11.13    Recordation. Purchaser and Seller agree not to record this Agreement or
any memorandum hereof.
11.14    Intentionally Omitted.
11.15    Tax Protest. If, as a result of any tax protest or otherwise, any
refund is paid or reduction of any real property or other tax or assessment is
made available relating to the Property with respect to any period after
Closing, Purchaser shall receive such refund or reduction (and if Seller
receives such sum, Seller shall promptly deliver such sums to Purchaser). Seller
shall be entitled to receive or retain any refund relating to the period of
Seller’s ownership of the Property, less the equitable prorated costs of
collection, any amounts to be refunded to Tenants and any other reasonably
incurred expenses or costs relating thereto. The terms of this Section 11.15
shall survive the Closing.

    
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11.16    Survival and Limitation of Representations and Warranties; Seller’s
Knowledge. The Seller Representations and the representations and warranties of
Purchaser set forth in this Agreement are made as of the Effective Date, are
remade as of the Closing Date in accordance with the terms of this Agreement
and, along with the Seller Surviving Obligations, shall survive the Closing for
a period of six (6) months (the “Survival Period”); but written notification of
any claim arising from a breach of the Seller Representations, the
representations and warranties of Purchaser and the Seller Surviving Obligations
by any party must be received by the other party within six (6) months following
the Closing Date or such claim shall be forever barred and the breaching party
shall have no liability with respect thereto. Any action with respect to any
claim made under this Section 11.16 during the Survival Period must be commenced
by the later of (a) sixty (60) days from the date of delivery of notification of
such claim, or (b) the expiration of the Survival Period, and if not commenced
within such time period, such claim shall be forever barred and the breaching
party shall have no liability with respect thereto. In addition, upon any
party’s receipt of a written notification of any such claim of breach, such
party shall first be afforded at least ten (10) days to cure such breach prior
to the other party’s filing any claim in connection therewith. The aggregate
liability of Seller for any breach of the Seller Representations and Seller
Surviving Obligations shall not exceed $1,800,000.00 (the “Liability Cap”); and
recovery of actual damages up to that amount is Purchaser’s sole and exclusive
remedy for any such breach; and no party shall have any liability related
pursuant to this Section 11.16 unless and until the liability of such party
exceeds $150,000.00 in the aggregate (the “Liability Threshold”).
Notwithstanding anything contained in this Section 11.16 to the contrary, the
Survival Period, Liability Cap and Liability Threshold shall not apply to
Section 5.3, Section 6, Section 9.6, Section 9.7, Section 11.7, Section 11.9 or
Section 11.15. For matters disclosed or discovered by any party prior to
Closing, such party’s sole rights and remedies shall be as set forth in Section
10.1 or Section 10.2 (as applicable). Whenever a Seller Representation is made
on the basis of the best knowledge or knowledge of Seller, such Seller
Representation is made solely on the basis of the actual knowledge without
inquiry or investigation of the Seller Knowledge Person; provided, however, that
such Seller Knowledge Person shall have no personal liability with respect to
any such Seller Representation. Seller shall retain cash or cash equivalents of
not less than One Million Dollars ($1,000,000) until the end of the Survival
Period; provided, however, if written notification of a claim in excess of the
Liability Threshold has been sent by Purchaser to Seller prior to the expiration
of the Survival Period, then Seller shall retain cash or cash equivalents of not
less than the lesser of One Million Dollars ($1,000,000) or the amount of such
claim until the first to occur of (a) the date such claim is barred pursuant to
this Section 11.16 for failure to commence an action within the time period
provided above, (b) any lawsuit filed with respect to such claim is dismissed
with prejudice, (c) the date judgment with respect to such claim is entered into
a court of competent jurisdiction, or (d) such claim is otherwise resolved in
writing by the parties. The provisions of this Section 11.16 shall survive the
Closing.
11.17    Calculation of Time Periods. Unless otherwise specified, in computing
any period of time described herein, the day of the act or event after which the
designated period of time begins to run is not to be included and the last day
of the period so computed is to be included at, unless such last day is a
Saturday, Sunday or legal holiday for national banks in the location where the
Property is located, in which event the period shall run until the end of the
next day which is neither a Saturday, Sunday, or legal holiday. The last day of
any period of time described herein shall be deemed to end at 6:00 p.m. San
Diego, California time.

    
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11.18    Section 1031 Exchange. Either party may consummate the purchase or sale
(as applicable) of the Property as part of a so-called like kind exchange (an
“Exchange”) pursuant to § 1031 of the Code, provided that: (a) the Closing shall
not be delayed or affected by reason of the Exchange nor shall the consummation
or accomplishment of an Exchange be a condition precedent or condition
subsequent to the exchanging party’s obligations under this Agreement, (b) the
exchanging party shall effect its Exchange through an assignment of this
Agreement, or its rights under this Agreement, to a qualified intermediary,
(c) neither party shall be required to take an assignment of the purchase
agreement for the relinquished or replacement property or be required to acquire
or hold title to any real property for purposes of consummating an Exchange
desired by the other party; and (d) the exchanging party shall pay any
additional reasonable costs that would not otherwise have been incurred by the
non-exchanging party had the exchanging party not consummated the transaction
through an Exchange (such payment obligation shall survive Closing or any
termination of this Agreement). Neither party shall by this Agreement or
acquiescence to an Exchange desired by the other party have its rights under
this Agreement affected or diminished in any manner or be responsible for
compliance with or be deemed to have warranted to the exchanging party that its
Exchange in fact complies with § 1031 of the Code. Purchaser and Seller shall
reasonably cooperate with each other in connection with an Exchange (such
reasonable cooperation to include the obligation to execute an acknowledgment or
other typical documentation relating to an Exchange).
11.19    Limitation of Liability. Purchaser hereby acknowledges and agrees that
in no event shall any partner, member, manager, shareholder, or officer of
Seller ever be liable to Purchaser as a result of a breach of this Agreement,
and Purchaser agrees to look solely to Seller for satisfaction of any claim,
loss or damage. Seller hereby acknowledges and agrees that in no event shall any
partner, member, manager, shareholder, or officer of Purchaser ever be liable to
Seller as a result of a breach of this Agreement, and Seller agrees to look
solely to Purchaser for satisfaction of any claim, loss or damage.
11.20    Jury Waiver. TO THE EXTENT ENFORCEABLE UNDER CALIFORNIA LAW, PURCHASER
AND SELLER DO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THEIR RIGHT
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF,
OR UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE DOCUMENTS DELIVERED BY
PURCHASER AT CLOSING OR SELLER AT CLOSING, OR ANY COURSE OF CONDUCT, COURSE OF
DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ANY ACTIONS OF EITHER PARTY
ARISING OUT OF OR RELATED IN ANY MANNER WITH THIS AGREEMENT OR THE PROPERTY
(INCLUDING WITHOUT LIMITATION, ANY ACTION TO RESCIND OR CANCEL THIS AGREEMENT
AND ANY CLAIMS OR DEFENSES ASSERTING THAT THIS AGREEMENT WAS FRAUDULENTLY
INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS WAIVER IS A MATERIAL INDUCEMENT
FOR SELLER TO ENTER INTO AND ACCEPT THIS AGREEMENT AND THE DOCUMENTS DELIVERED
BY PURCHASER AT CLOSING.
11.21    Prohibited Persons and Transactions. Purchaser represents that neither
Purchaser nor any of its affiliates, nor any of their respective partners,
members, officers, directors,

    
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shareholders or other equity owners, in each case other than the holder of any
publically traded shares, is, nor will they become, a person or entity with whom
United States persons or entities are restricted from doing business under
regulations of OFAC of the Department of the Treasury (including those named on
OFAC’s Specially Designated Nationals and Blocked Persons List) or under any
statute, executive order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism), or other governmental action and is not and
will not engage in any dealings or transactions or be otherwise associated with
such persons or entities. Seller represents that neither Seller nor any of its
affiliates, nor any of their respective partners, members, officers, directors,
shareholders or other equity owners, in each case other than the holder of any
publically traded shares, is, nor will they become, a person or entity with whom
United States persons or entities are restricted from doing business under
regulations of the OFAC of the Department of the Treasury (including those named
on OFAC’s Specially Designated Nationals and Blocked Persons List) or under any
statute, executive order (including the September 24, 2001, Executive Order
Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten
to Commit, or Support Terrorism), or other governmental action and is not and
will not engage in any dealings or transactions or be otherwise associated with
such persons or entities.
11.22    Survival. This Section 11 shall survive Closing or the earlier
termination of this Agreement.

[Remainder of Page Intentionally Left Blank;
Signature Page Follows]

    
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IN WITNESS WHEREOF, Purchaser and Seller have executed this Agreement on the
date set forth below, effective as of the Effective Date.
SELLER:    MONARCH AT POINT LOMA OWNER, LLC,
a Delaware limited liability company

By: Monarch at Point Loma, Mez Borrower, LLC,
a Delaware limited liability company, its Sole Member

By: Monarch at Barnard, L.P.,
        a Delaware limited partnership, its Sole Member

By: Monarch General Partner, LLC,
        a Delaware limited liability company, its General Partner

By:
 /s/ Rodney F. Stone & William P. Kruer
Name:
Rodney F. Stone and William P Kruer
Title:
 

    
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PURCHASER:     LIPT SAN DIEGO, INC.,
a Delaware corporation

By:
 /s/ Gregory A. Falk
Name:
Gregory A. Falk
Title:
Vice President and Treasurer

    
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By execution hereof, the Title Company hereby covenants and agrees to be bound
by the terms of this Agreement.

FIRST AMERICAN TITLE INSURANCE COMPANY
By:
 /s/ Lynn Graham
Name:
Lynn Graham
Title:
Certified Senior Escrow Officer

Escrow NCS-752128-SD

    
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