EXHIBIT 10.46

REAL PROPERTY OPTION AND SALE AGREEMENT
AND JOINT ESCROW INSTRUCTIONS

     THIS REAL PROPERTY OPTION AND SALE AGREEMENT AND JOINT ESCROW INSTRUCTIONS
(this “Agreement”) is made as of October 1, 2002 by and between AMB PROPERTY,
L.P., a Delaware limited partnership (“Seller”), and HYSEQ, INC., a Nevada
corporation (“Buyer”).

RECITALS:

     A.     Seller is the owner of the Property (hereinafter defined).

     B.     Seller desires to afford Buyer an option to Purchase the Property,
and Buyer desires to acquire an option to purchase the Property, upon the terms
and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual promises herein, the parties
agree as follows:

Article 1: DEFINITIONS

     1.1 Defined Terms. As used in this Agreement, the following words and
phrases shall have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms defined):

          “Additional Option Consideration” has the meaning set forth in Section
2.2.3.

          “Approved Conditions of Title” has the meaning set forth in
Section 3.2.3.

          “Appurtenances” means, collectively, all easements, rights, licenses,
covenants and other matters of record appurtenant to and benefiting the Property
including any rights (such as rights and authorizations in permits or licenses)
which benefit the Property but which may or may not be of record, but excluding
trade names of Seller or its affiliates.

          “Business Day” means those weekdays on which Bank of America, N.A., a
national banking association, is open for business to the public and is
conducting its customary banking transactions in the State of California.

          “Buyer’s Option Note” means the promissory note in the original
principal amount of TWO MILLION SIX HUNDRED THOUSAND DOLLARS ($2,600,000), to be
delivered by Buyer to Seller in payment of a portion of the Option Consideration
pursuant to Section 2.2 and, if the Option is exercised, in payment of a portion
of the Purchase Price pursuant to Section 2.5, in the form and substance of
Exhibit D attached hereto.

          “Buyer’s Purchase Note” means the secured promissory note in the
original principal amount of TEN MILLION EIGHT HUNDRED THOUSAND DOLLARS
($10,800,000), to be delivered by Buyer to Seller in payment of a portion of the
Purchase Price pursuant to Section 2.5, in the form and substance of Exhibit E
attached hereto.

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          “Buyer’s Title Policy” means an ALTA Owners Policy of Title Insurance
(including such endorsements as Buyer may reasonably specify) insuring Buyer in
the amount of the Purchase Price (or such lower amount that Buyer determines)
that fee simple title to the Property is vested in Buyer, subject only to the
Approved Conditions of Title.

          “Closing” means the procedures which culminate in the purchase and
sale of the Property which this Agreement contemplates; the Closing entails,
among other things, satisfaction or waiver of the conditions precedent in
Article 5 hereof, delivery of the Purchase Price and the Loan Documents to
Seller, and recordation of the Grant Deed, the Deed of Trust and the
Subordination Agreement.

          “Closing Date” means the date on which the Closing is to occur
pursuant to Section 6.1. If Buyer and Seller shall agree in writing to conduct
the Closing upon some other date (which must be a Business Day), then “Closing
Date” shall mean such other date.

          “Contracts” has the meaning set forth in Section 3.3.2(a).

          “Deed of Trust” means a first deed of trust, assignment of rents and
leases, security agreement and fixture filing, in the form and substance
attached hereto as Exhibit F. The Deed of Trust shall be made by Buyer, as
trustor, to the Title Company, as trustee, in favor of Seller, as beneficiary,
to secure Buyer’s obligations under the Buyer’s Purchase Note (and not under the
Buyer’s Option Note for which the Letter of Credit shall instead serve as
collateral during the “Extension Period” under the Buyer’s Option Note) and
shall be subject only to such liens and encumbrances as approved by Seller in
writing prior to the Closing Date.

          “Disclosure Statement” has the meaning set forth in Section 3.3.2(c).

          “Due Diligence Materials” has the meaning set forth in
Section 3.3.2(a).

          “Effective Date” means the date this Agreement, the Lease Termination
Agreement and the Guaranty are each fully executed and delivered by the parties
hereto and thereto.

          “Escrow” means the escrow facilities and account established at the
offices of the Title Company. Buyer and Seller shall utilize the Escrow for
purposes of closing the transactions which this Agreement contemplates.

          “Escrow Holder” means the Title Company, in its capacity as the escrow
holder with respect to the Escrow.

          “Exception Matters” has the meaning set forth in Section 3.3.4.

          “Existing Guaranty” means that certain Guaranty of Lease executed by
Guarantor in favor of Seller in connection with the Existing Lease.

          “Existing Lease” means the Lease Agreement dated June 23, 2000 by and
between Buyer, as tenant, and Seller, as landlord, as amended by the First
Amendment to Lease

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Agreement dated as of December 14, 2000, whereby Seller has heretofore leased a
portion of the Property to Buyer.

          “Grant Deed” means the grant deed in the form of Exhibit C attached
hereto by which Seller causes title to the Property to be conveyed to Buyer at
Closing.

          “Guarantor” means George Rathmann, an individual.

          “Guaranty” means the Guaranty in the form and substance of Exhibit G
attached hereto and executed by Guarantor in favor of Seller pursuant to
Section 2.1.

          “Improvements” means all improvements and fixtures situated on the
Real Property.

          “Initial Option Consideration” has the meaning set forth in
Section 2.2.1.

          “Initial Transaction Consideration” has the meaning set forth in
Section 2.1.1.

          “Junior Deed of Trust” means the deed of trust in the form of
Exhibit O attached hereto to be executed by Buyer in favor of Guarantor. The
Junior Deed of Trust shall be subordinated to the Deed of Trust pursuant to the
terms of the Subordination Agreement.

          “Lease” means any tenant lease, license or occupancy agreement
covering the Property, other than the Existing Lease.

          “Lease Termination Agreement” means the Lease Termination Agreement of
even date herewith by and between Buyer and Seller, whereby Seller and Buyer
have agreed to terminate the Existing Lease, subject to the terms and conditions
set forth therein.

          “Letter of Credit” means the irrevocable standby letter of credit to
be delivered by Buyer to Seller at the Closing pursuant to the terms of the Deed
of Trust, in the form and substance of Exhibit K attached hereto, and issued by
Union Bank of California, N.A., or such other bank acceptable to Seller. The
Letter of Credit shall be in the initial amount of $2,600,000, provided that on
each anniversary of the Closing, Seller shall cause the amount drawable under
the Letter of Credit to be reduced by the amount of principal payments made by
Buyer during the previous calendar year under Buyer’s Option Note as provided
under the Letter of Credit.

          “Loan Documents” means, collectively, the Buyer’s Option Note, the
Buyer’s Purchase Note, the Letter of Credit, the Deed of Trust and the
Subordination Agreement.

          “Official Records” means the Official Records of the County of Santa
Clara, State of California.

          “Option” means the option granted by Seller to Buyer in accordance
with the terms hereof.

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          “Option Consideration” means, collectively, the Initial Option
Consideration and the Additional Option Consideration. The Option Consideration
shall create an Option for the Option Period.

          “Option Legal Opinion” means a legal opinion in form and substance
acceptable to Seller in its sole discretion, opining to Seller that: (a) the
Buyer’s Option Note, when executed, is a legal, valid and binding instrument,
enforceable against Buyer in accordance with its terms; (b) Buyer is duly
formed, validly existing and in good standing in the state of its formation;
(c) Buyer is qualified to do business and is in good standing in the State of
California; (d) Buyer has all requisite power and authority to enter into the
Buyer’s Option Note; (e) the Buyer’s Option Note has been duly authorized,
executed and delivered by Buyer; and (f) such other matters, incident to the
transactions contemplated hereby, as Seller may reasonably request.

          “Option Payment Date” means November 1, 2002, the date upon which the
Initial Option Consideration and the first installment of the Additional Option
Consideration is due and payable pursuant to Section 2.2.

          “Option Period” means the period between the Option Payment Date and
the earlier of (a) the date Buyer exercises the Option pursuant to Section 2.3,
(b) 5:00 PM on April 30, 2003, unless sooner terminated pursuant to Section 2.4,
or (c) the date of notice by Buyer to Seller electing to terminate the Option
early pursuant to Section 2.4.

          “Personal Property” means the equipment, furniture and fixtures and
other personal property, if any, which are actually owned by Seller, located on
the Real Property and used exclusively for the Property.

          “Phase 1 Environmental Report” has the meaning set forth in
Section 3.3.2.

          “Property” means, collectively, (i) the Real Property, including all
Appurtenances (to the extent transferable), (ii) the Improvements, and (iii) the
Personal Property.

          “Purchase Price” shall mean the principal amount of FIFTEEN MILLION
THREE HUNDRED THOUSAND DOLLARS ($15,300,000), which Buyer shall be obligated to
pay to Seller in the manner specified in Section 2.5 hereof.

          “Real Property” means that certain real property located in the County
of Santa Clara, State of California, commonly known as 225, 249 and 257 Humboldt
Court, Sunnyvale, California, and more particularly described in Exhibit A
attached hereto.

          “Reaffirmation of Guaranty” means the Reaffirmation of Guaranty duly
executed by Guarantor in favor of Seller with respect to the Existing Guaranty,
in the form and substance of Exhibit G-1 attached hereto.

          “Report” means the preliminary title report issued by the Title
Company covering the Property, as such Report may be updated from time to time.
A copy of the Report is attached hereto as Exhibit O.

          “Seller Parties” has the meaning set forth in Section 3.3.2(b).

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          “Seller’s Knowledge” has the meaning set forth in Section 4.1.

          “Seller’s Title Policy” has the meaning set forth in Section 5.1.7.

          “Subordination Agreement” means the Subordination and Intercreditor
Agreement to be entered into by and between Guarantor and Seller, in the form
and substance of Exhibit H attached hereto.

          “Title Company” means First American Title Company, whose office, for
purposes of the transactions which this Agreement contemplates, is located at
the address set forth in Section 10.6; provided, however, that Buyer agrees that
the Title Company can be Chicago Title Insurance Company if it matches the quote
for the premium for the Seller’s Title Policy obtained by Buyer from First
American Title Company.

          “Warrant” means a warrant to purchase shares of Buyer’s common stock,
$.001 par value (“Common Stock”), to be delivered by Buyer to Seller on the
Option Payment Date. The Warrant shall be in the form and substance of Exhibit L
attached hereto and shall be dated as of the Option Payment Date. The Warrant
shall have an exercise price per share equal to two (2) times the weighted
trading average stock price for the ten (10) most recent trading days preceding
the Option Payment Date on which days the Buyer’s Common Stock is listed or
admitted to trading on a principal national securities exchange. Notwithstanding
the foregoing, if Buyer’s Common Stock is not listed or admitted to trading on a
principal national securities exchange on any of the ten (10) consecutive
trading days preceding the Option Payment Date, then Buyer’s Board of Directors
may elect to set the exercise price per share at such lower amount as they shall
determine in good faith to be equal to two (2) times the fair market value of
the Company’s Common Stock as of the Option Payment Date. Notwithstanding the
foregoing, Seller may elect, in its sole and absolute discretion, by notifying
Buyer in writing within thirty (30) days after issuance of the Warrant, to cause
an independent investment banking firm (selected by the American Arbitration
Association in accordance with its rules) to determine the fair market value of
the Company’s Common Stock as of the Option Payment Date (“Independent Price
Determination”). Upon such determination, the original Warrant issued hereunder
shall be amended to provide for a revised exercise price equal to two (2) times
the fair market value of the Common Stock as so determined and the maximum
number of shares of Common Stock to be issued upon exercise of the Warrant shall
also be revised in accordance with the Share Formula (as defined below). If the
revised exercise price determined as a result of the Independent Price
Determination is less than the original exercise price provided under the
Warrant, all costs incurred in connection with the Independent Price
Determination shall be paid by Buyer; in all other instances such costs shall be
borne entirely by Seller. The maximum number of shares of Common Stock to be
issued upon exercise of the Warrant shall be equal to the quotient determined by
dividing (X) the Black Scholes Warrant Valuation by (Y) the exercise price per
share as determined above; provided that such quotient shall be rounded up to
the nearest whole number (“Share Formula”). The parties agree that, for the
purposes of determination of the value of the Warrant, the “Black Scholes
Warrant Valuation” shall be Two Hundred Thousand Dollars ($200,000).

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ARTICLE 2: OPTION AND AGREEMENT OF PURCHASE AND SALE

     2.1 Purchase and Sale; Initial Consideration.

          2.1.1 Pursuant to the provisions of this Agreement, effective as of
November 1, 2002, Seller hereby grants to Buyer an Option to buy the Property
and if the Option is validly exercised by Buyer hereunder, Buyer shall purchase
the Property from Seller for the Purchase Price; provided however, that
concurrently with the execution of this Agreement by the parties, in
consideration for Seller entering into this Agreement and the Lease Termination
Agreement, Buyer shall deliver to Seller the original Guaranty and the original
Reaffirmation of Guaranty; provided, further however, that the failure of
Guarantor to deliver the Reaffirmation of Guaranty shall in no event affect
Seller’s rights or remedies under the Existing Guaranty or the enforceability
thereof against Guarantor. The delivery of the Guaranty and the Reaffirmation of
Guaranty described above shall be collectively referred to as the “Initial
Transaction Consideration.” If any of the Initial Transaction Consideration is
not duly executed and delivered to Seller concurrently with the execution of
this Agreement, this Agreement and the Lease Termination Agreement shall be null
and void and of no force or effect, Buyer shall be in default under the Existing
Lease for failure to pay rent and other amounts due for October, 2002, and the
Existing Lease and the Existing Guaranty shall continue in full force and effect
as if this Agreement and the Lease Termination Agreement had never been
executed. The provisions of this Section 2.1 shall survive any termination of
this Agreement

          2.1.2 For purposes of this Agreement, the Escrow shall be deemed
opened on the date Escrow Holder shall have received from Buyer a fully executed
copy of this Agreement, which shall occur no later than October 25, 2002. Escrow
Holder shall notify Buyer and Seller in writing of the date Escrow is opened.

     2.2 Option Consideration.

          2.2.1 Initial Option Consideration. On or before 5:00 PM on the Option
Payment Date, Buyer or Guarantor, as applicable, shall deliver to Seller or as
directed by Seller to the account of Seller:

               (a) the amount of One Million Seven Hundred Thousand Dollars
($1,700,000) in immediately available funds, which amount shall be paid by
Guarantor directly to Seller from Guarantor’s funds which have not been received
from Buyer;

               (b) the original Buyer’s Option Note, duly executed by Buyer in
favor of Seller;

               (c) the amount of Ninety-Five Thousand Dollars ($95,000), in
immediately available funds, representing the first installment of the
Additional Option Consideration payable by Buyer pursuant to Section 2.2.3;

               (d) the original Warrant, duly executed by Buyer;

               (e) the original Option Legal Opinion, duly executed by Buyer’s
legal counsel and dated as of the Option Payment Date; and

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               (f) the most recent financial statements or balance sheet of
Guarantor, certified by Guarantor to Seller as being true and correct in all
material respects and fairly representing the financial condition of Guarantor.

The funds paid under subsection (a) above, the Warrant and the Buyer’s Option
Note shall be collectively referred to herein as the “Initial Option
Consideration”. If any of the Initial Option Consideration or other items above
is not duly executed (as applicable) and delivered so as to be effective on or
before 5:00 p.m. on the Option Payment Date, then this Agreement shall
terminate, Buyer shall be in default under the Existing Lease for failure to pay
rent and any other sums due thereunder for October, 2002, the Option shall be
null and void, and neither party shall have any further rights, obligations or
liabilities hereunder, except pursuant to this Section 2.2 and any other
provisions of this Agreement which expressly survive such termination, and
except that such termination shall in no event affect any of Seller’s rights or
remedies under the Guaranty, the Existing Lease, the Lease Termination Agreement
and the Existing Guaranty, as reaffirmed by the Reaffirmation of Guaranty, which
Seller, Buyer and Guarantor acknowledge and agree shall survive any termination
of this Agreement. The provisions of this Section 2.2 shall survive any
termination of this Agreement.

          2.2.2 Recordation of Memorandum and Quitclaim Deed.

               (a) Upon making the Initial Option Consideration, Buyer shall be
entitled to require Seller and Escrow Holder to record a memorandum of the
Option against the Property, in the form attached hereto as Exhibit M (the
“Memorandum”). Following Buyer’s delivery of the Initial Transaction
Consideration pursuant to Section 2.1.1, Seller shall duly execute and
acknowledge the Memorandum and deliver the Memorandum in recordable form to
Escrow Holder. Escrow Holder shall record the Memorandum in the Official Records
following Seller’s written confirmation to Escrow Holder that Seller has
received the Initial Option Consideration. Notwithstanding anything to the
contrary set forth herein, Seller shall have no obligation to deliver the
Memorandum to Escrow Holder unless and until Buyer delivers the Quitclaim Deed
to Seller pursuant to subsection (b) below.

               (b) Upon expiration of the Option or upon earlier termination of
the Option for any reason pursuant to the terms of this Agreement, Seller shall
and is hereby instructed to record a quitclaim deed with respect to the Option
in the Official Records relinquishing all of Buyer’s right, title and interest
against the Property in the form attached hereto as Exhibit N (the “Quitclaim
Deed”) without any notice to or any action on the part of Buyer. At the time of
Buyer’s delivery of the Initial Transaction Consideration pursuant to
Section 2.1.1, Buyer shall duly execute and acknowledge the Quitclaim Deed and
deliver the Quitclaim Deed in recordable form to Seller. The Quitclaim Deed
shall not be held in Escrow. If the Quitclaim Deed is received by Escrow Holder,
Escrow Holder shall promptly deliver the same to Seller. Buyer shall promptly
upon request execute, acknowledge and deliver any documents reasonably requested
by Seller, including without limitation, a new quitclaim deed if required, to
evidence termination of the Option and this Agreement and permit recordation of
the Quitclaim Deed when required hereunder, as a condition to any termination of
this Agreement by Buyer as provided herein. The foregoing obligation shall
survive any termination of this Agreement.

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          2.2.3 Additional Option Consideration. Commencing as of the Option
Payment Date and continuing on the first day of each calendar month thereafter
during the Option Period, Buyer shall pay to Seller, as a portion of the Option
Consideration, the sum of Ninety-Five Thousand Dollars ($95,000) per month
(collectively, the “Additional Option Consideration”). Notwithstanding anything
to the contrary set forth herein, in the event that Buyer fails to pay Seller
any installment of the Additional Option Consideration within five (5) days
after written notice from Seller that the same is overdue, the Option and the
Option Agreement shall be deemed terminated pursuant to Section 2.4 and Seller
shall have the rights set forth in Section 2.4 as a result of such termination.

     2.3 Exercise of the Option. On or before 5:00 PM on April 30, 2003, Buyer
may exercise the Option only by:

          2.3.1 notifying Seller in writing that it has exercised the Option and
that each of Buyer’s representations and warranties set forth in Section 4.2 are
true and correct in all material respects as of the date of such notice;

          2.3.2 delivering to Escrow Holder the balance of the Purchase Price in
accordance with Section 2.5; and

          2.3.3 immediately proceeding with the Closing in accordance with this
Agreement.

The exercise of the Option shall require all of the foregoing and by exercising
the Option, Buyer shall be conclusively deemed to have approved the Property and
the title thereto and condition thereof and to have waived the contingencies set
forth in Sections 3.2 and 3.3 hereof.

     2.4 Failure to Exercise the Option. Should Buyer, upon written notice to
Seller, terminate the Option at any time during the Option Period, or should
Buyer fail to exercise the Option (and immediately proceed with the Closing of
the Escrow) in accordance with the requirements of this Agreement (including,
without limitation, payment and performance of all obligations under this
Agreement required for a valid exercise of the Option) prior to the expiration
of the Option Period, or fail to pay any installment of the Additional Option
Consideration when and as required pursuant to Section 2.2.3, then in any such
event (a) the outstanding principal balance and any other amounts accrued under
the Buyer’s Option Note shall be immediately due and payable pursuant to the
terms set forth therein and together with all other Option Consideration
(including, without limitation, the Warrant) shall be deemed earned and may be
retained by Seller, (b) Seller is hereby instructed to record the Quitclaim Deed
in the Official Records without any notice to or action on the part of the
Buyer, (c) if requested by Seller pursuant to Section 3.3.3, Buyer shall deliver
to Seller any Due Diligence Materials specifically requested by Seller prior to
such termination, and (d) this Agreement shall terminate, the Option shall be
null and void, and neither party shall have any further rights, obligations or
liabilities hereunder, except pursuant to this Section 2.4 and any other
provisions of this Agreement which expressly survive such termination, and
except that such termination shall in no event affect any of Seller’s rights or
remedies under the Lease Termination Agreement, the Buyer’s Option Note or the
Guaranty which Seller, Buyer and Guarantor acknowledge and agree shall survive
any termination of this Agreement. Buyer and Guarantor hereby acknowledge and
agree that in the

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event of any termination of the Option or this Agreement pursuant to this
Section 2.4, or pursuant to Article 3, Article 5 or Article 7, or the avoidance,
for any reason, by Buyer, Buyer’s successors or Buyer’s creditors of all or any
part of Buyer’s payment or performance obligations under this Agreement and/or
any other agreement executed by the parties in connection herewith, neither
Buyer nor Guarantor shall have any right to a refund by Seller of any portion of
the Option Consideration paid by Guarantor or Buyer to Seller, of any portion of
the Additional Option Consideration paid to Seller pursuant to Section 2.2.3, of
any portion of the Termination Fee (as defined in the Termination Agreement)
paid to Seller, or of any amounts payable under the Buyer’s Option Note or the
Guaranty, which amounts shall be deemed fully earned when paid to Seller (except
to the extent specifically provided in Section 5.3). The provisions of this
Section 2.4 shall survive any termination of this Agreement.

     2.5 Payment of Purchase Price. The Purchase Price (with full credit as
provided hereinbelow for the Option Consideration then paid by Buyer to Seller)
shall be paid by Buyer to Seller through Escrow as follows:

          2.5.1 immediately available funds in an amount equal to ONE MILLION
NINE HUNDRED THOUSAND DOLLARS ($1,900,000) against which payment obligation
shall be credited (a) the full amount of the cash portion of the Option
Consideration then paid by Buyer to Seller pursuant to Section 2.2.1(a) and
(b) the amount of the $200,000 value of the Warrant;

          2.5.2 the delivery of the original Buyer’s Purchase Note, duly
executed by Buyer in favor of Seller, and the conversion by its terms of the
Buyer’s Option Note previously executed and delivered by Buyer from partial
payment of the Option Consideration to partial payment of the Purchase Price;
and

          2.5.3 the delivery of the original Letter of Credit.

     2.6 Closing Costs and Prorations.

          2.6.1 Closing Costs.

               (a) Seller will pay: (i) one-half of all escrow fees and costs;
(ii) all documentary transfer taxes; and (iii) Seller’s share of prorations.

               (b) Buyer will pay: (i) all premiums for the Buyer’s Title Policy
and the Seller’s Title Policy, including the cost of any endorsements thereto,
(ii) all document recording charges; (iii) one-half of all escrow fees and
costs; (iv) the cost of any survey; and (v) Buyer’s share of prorations.

               (c) Each party shall pay its own legal and professional fees and
fees of other consultants incurred by such party in connection with this
Agreement and the transactions contemplated hereby, except to the extent
provided in Paragraph 7 of the Lease Termination Agreement. All other normal
costs and expenses will be allocated between Buyer and Seller in accordance with
the customary practice in the county in which the Property is located.

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          2.6.2 Prorations. The following prorations shall be done and
adjustments shall be made as follows:

               (a) Real and personal property taxes and assessments on the
Property shall be prorated on the basis that Seller is responsible for (i) all
such taxes for the fiscal year of the applicable taxing authorities occurring
prior to the Current Tax Period (as hereinafter defined) and (ii) that portion
of such taxes for the Current Tax Period determined on the basis of the number
of days which have elapsed from the first day of the Current Tax Period to the
Closing Date, inclusive, whether or not the same shall be payable prior to the
Closing Date. The phrase “Current Tax Period” refers to the fiscal year of the
applicable taxing authority in which the Closing Date occurs. In the event that
as of the Closing Date the actual tax bills for the year or years in question
are not available and the amount of taxes to be prorated as aforesaid cannot be
ascertained, then rates and assessed valuation of the previous year, with known
changes, shall be used, and when the actual amount of taxes and assessments for
the year or years in question shall be determinable, then such taxes and
assessments will be reprorated between the parties to reflect the actual amount
of such taxes and assessments.

               (b) Rentals and other payments (including, without limitation,
common area maintenance charges and payments for real property taxes and
insurance premiums) shall be prorated as of the Closing Date.

               (c) Gas, water, electricity, heat, fuel, sewer and other
utilities and the operating expenses relating to the Real Property shall be
prorated as of the Closing Date. If the parties are unable to obtain final meter
readings as of the Closing Date, such expenses shall be estimated as of the
Closing Date on the basis of the prior operating history of the Property.

               (d) Seller shall be credited in Escrow with any refundable
deposits held by any utility, governmental agency or service contractor, to the
extent such deposits are assigned to Buyer on the Closing Date.

               (e) Buyer shall be charged for those prepaid expenses paid by
Seller directly or indirectly allocable to any period from and after the Closing
Date, including, without limitation, annual permit and confirmation fees, fees
for licenses and all security or other deposits paid by Seller to third parties
which Buyer elects to assume and to which Buyer then shall be entitled to the
benefits and refund following the Closing Date.

               (f) At least one (1) Business Day prior to the Closing Date, the
parties shall agree upon an estimate of all of the prorations to be made and
submit a statement to the Escrow Holder setting forth the same. In the event
that any prorations, apportionments or computations made under this
Section 2.6.2 shall require final adjustment, then the parties shall make the
appropriate adjustments promptly when accurate information becomes available and
either party hereto shall be entitled to an adjustment to correct the same. Any
corrected adjustment or proration shall be paid in cash to the party entitled
thereto. The provisions of this Section 2.6.2 shall survive the Closing and the
recordation of the Grant Deed.

               (g) The amount of any security deposits held by Seller under any
Lease shall be credited against the Purchase Price.

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          2.6.3 Form of Payments. Any payment of money which this Agreement
obligates a party to make on or prior to the Closing Date shall be made in the
form of cash, federal wire transfer, a cashier’s check issued by any state or
national bank doing business in the State of California, or other form of
immediately available funds.

ARTICLE 3: CLOSING CONDITIONS

     3.1 Prior to Closing. The obligations of the parties under the provisions
of this Section 3.1 are for the time period between the Option Payment Date and
the Closing Date.

          3.1.1 Operation of the Property. Seller, at Seller’s expense, shall
have the right to continue to operate the Property and enter into Contracts in
the ordinary course of Seller’s business, provided that during the Option
Period, Seller shall not enter into any new Lease, any encumbrance (other than
an Approved Condition of Title) which would materially and adversely affect the
condition of title to the Property, or any new Contract that is not terminable
(i) upon Closing or (ii) with 30 days’ prior written notice, without Buyer’s
prior written consent, which consent shall not be unreasonably withheld,
conditioned or delayed. Seller shall have the right to extend the Closing Date
for up to 30 days (or such longer period of time as is reasonably required) in
order to terminate or eliminate any such Lease, encumbrance or Contract not so
approved by Buyer.

          3.1.2 Inspection. Buyer shall have the right to inspect the Property
pursuant to the provisions of Section 3.3.

     3.2 Title.

          3.2.1 Review. Buyer has heretofore approved the legal description of
the Real Property and any matters of title as disclosed by the following
documents (collectively with any Survey (defined below), the “Title Documents”)
prepared at Buyer’s sole cost and expense and delivered by the Title Company to
Buyer: (a) the Report; and (b) legible copies of all documents, whether recorded
or unrecorded, referred to in the Report, as and if obtainable by the Title
Company. Buyer shall have approved during the Option Period any amendments or
supplements to the Report and to any other Title Documents. Buyer acknowledges
that Seller has heretofore delivered to Buyer a copy of the existing survey of
the Real Property in Seller’s possession. At Buyer’s sole cost and expense,
Buyer may, during the Option Period, have an ALTA as-built survey of the Real
Property prepared by a licensed engineer or surveyor and contracted and paid for
by Buyer (the “Survey”).

          3.2.2 Buyer’s Approval of Supplemental Title Matters. Provided that
Buyer has exercised the Option pursuant to Section 2.3, Buyer may disapprove any
exceptions to title which are first disclosed to Buyer after the expiration of
the Option Period and prior to the Closing (collectively, the “Supplemental
Exceptions”) within two (2) Business Days after the date on which a Supplemental
Exception is first disclosed to Buyer. If Buyer disapproves of a Supplemental
Exception, then Buyer may either (i) terminate this Agreement, in which event
the provisions of Section 2.4 shall apply, or (ii) waive its disapproval and
take title to the Property subject to such Supplemental Exception. If Buyer does
not provide notice of its disapproval or waiver within such two-Business Day
period, Buyer shall be deemed to have approved such Supplemental Exception

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and to have elected to proceed with the purchase of the Property.
Notwithstanding anything to the contrary contained herein, (a) in no event shall
Buyer’s disapproval of any Supplemental Exception entitle Buyer to any refund of
the Option Consideration should Buyer fail to exercise the Option pursuant to
Section 2.3, and (b) Buyer’s purchase of the Property shall constitute a
conclusive expression of Buyer’s satisfaction with respect to any Supplemental
Exception.

          3.2.3 Condition of Title. It shall be a condition to the Closing for
Buyer’s benefit that title to the Real Property be conveyed to Buyer by Seller
by the Grant Deed, subject only to the following approved conditions of title
(collectively, “Approved Conditions of Title”):

               (a) a lien to secure payment of real estate taxes, not
delinquent;

               (b) the lien of the Deed of Trust and of the Junior Deed of
Trust;

               (c) the lien of supplemental taxes assessed pursuant to
Chapter 3.5 commencing with Section 75 of the California Revenue and Taxation
Code;

               (d) the rights of any tenant in possession under a Lease;

               (e) matters affecting the Property created by or with the written
consent of Buyer;

               (f) any Supplemental Exceptions which Buyer fails to disapprove
pursuant to Section 3.2.2 and any Exception Matters pursuant to Section 3.3.4;
and

               (g) exceptions which are disclosed in the Report, or which may be
disclosed by a search of the public records or by a physical inspection or a
survey of the Property.

     3.3 Inspection of Property.

          3.3.1 License. Subject to Section 3.3.2 Seller hereby grants Buyer a
license to enter the Property during reasonable hours and in such manner as is
reasonably necessary or appropriate to inspect the Property. Before entering the
Property, Buyer shall provide Seller with evidence of liability insurance with
coverage of not less than One Million Dollars ($1,000,000) with Seller, and its
partners, officers, agents and employees being named as additional insureds.
Buyer shall keep the Property free and clear of any and all mechanic’s liens,
materialmen liens and liens of any other kind (collectively, “Liens”) arising
out of any work performed, materials furnished or obligations incurred by the
Buyer.

          3.3.2 Buyer’s Due Diligence and Seller’s Disclosure.

               (a) Subject to the provisions of subsection (b) below, during the
Option Period, Buyer shall be permitted to make a complete review and inspection
of the physical, legal, economic and environmental condition of the Property,
including, without limitation, any land use entitlements, applications and
approvals, proposals or agreements, current files and records maintained by
Seller or its agents relating to the Property, boundary and other survey-related
issues relating to the Property, soil condition, archaeological matters,
geological and seismic condition,

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PCB, hazardous waste, toxic substance or other environmental matters, compliance
with health, safety, land use and zoning laws, regulations and orders, and all
other information pertaining to the Property. Buyer acknowledges that Buyer has
received from Seller a “Phase 1 Environmental Site Assessment” with respect to
the Property prepared by URS Corporation and September 24, 2002 (the “Phase 1
Environmental Report”) which Buyer has approved. In connection with such review,
Buyer shall be entitled to review any Leases and any insurance policies,
maintenance contracts, service contracts, reciprocal easement agreements,
utility will-serve letters and any other contracts or agreements affecting or
relating to the leasing, ownership, operation, maintenance, construction or
development of the Property which will remain in effect following the Closing
Date, including, without limitation, copies of any guaranties and warranties
with respect thereto (collectively, the “Contracts”). Notwithstanding the
foregoing, Buyer’s review hereunder shall not include a review of Seller’s
internal economic memoranda or reports, attorney-client privileged materials or
Seller’s appraisals of the Property, if any, or any broker listing agreements or
management agreements which listing agreements and management agreements shall
be terminated by Seller as of the Closing. The materials previously delivered or
hereafter delivered to, or otherwise made available for review by, Buyer
pursuant to the preceding sentences or otherwise are referred to collectively in
this Agreement as the “Due Diligence Materials”. Buyer’s exercise of the Option
shall represent a decision and undertaking by Buyer to assume fully the risk
that Buyer has failed completely and adequately to review and consider any or
all of such matters. But for Buyer’s satisfaction, Buyer would not exercise the
Option; but for Buyer’s willingness by exercise of the Option to express such
satisfaction and assume any risk as to the character of its review and
consideration of such matters, Seller would not have entered into this
Agreement. Buyer shall have a continuing right of inspection and review of the
Property during the Option Period, subject to subsection (b) below.
Notwithstanding anything to the contrary contained herein, (i) in no event shall
Buyer’s inspection and review of any Due Diligence Materials during the Option
Period entitle Buyer to any refund of the Option Consideration should Buyer fail
to exercise the Option pursuant to Section 2.3, and (ii) Buyer’s exercise of the
Option pursuant to Section 2.3 shall constitute a conclusive expression of
Buyer’s satisfaction with respect to the Due Diligence Materials.

               (b) Buyer’s exercise of the right of inspection and review set
forth in subsection (a) shall be subject to the following limitations: (i) any
entry onto the Property by Buyer, its agents or representatives, shall be during
normal business hours, following reasonable prior notice to Seller and, at
Seller’s discretion, accompanied by a representative of Seller; (ii) Buyer shall
not conduct any drilling, test borings or other disturbance of the Property for
review of soils, compaction, environmental, structural or other conditions
without Seller’s prior written consent, which consent may be withheld or
conditioned by Seller in its sole discretion; (iii) Buyer shall exercise
reasonable diligence not to disturb the use or occupancy or the conduct of
business at the Property; and (iv) Buyer shall indemnify, defend and hold
Seller, its partners, including, without limitation, AMB Property Capital
Partners, AMB Property Corporation and their respective shareholders, beneficial
owners, agents, representatives, employees, managers, affiliates, directors and
officers and each of them, and their respective successors and assigns
(collectively “Seller Parties”), free and harmless from and against any and all
suits, causes of action, legal or administrative proceedings, claims, demands,
actual, consequential and punitive damages, losses, costs, liabilities,
penalties, interest, expenses, Liens, and reasonable attorneys’ fees and costs
incurred in enforcing this indemnity (collectively, “Claims”) to the extent
caused

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by any entry upon, inspection or testing of the Property pursuant to this
Agreement or by any acts or omissions of Buyer, its employees, agents and
independent contractors.

               (c) Buyer and Guarantor acknowledge that (i) Buyer has entered
into this Agreement with the intention of making and relying upon its own
investigation of the physical, environmental, economic and legal condition of
the Property, (ii) except as expressly set forth in this Agreement, Seller is
not making and has not at any time made any warranty or representation of any
kind, expressed or implied, with respect to the Property, including, without
limitation, warranties or representations as to habitability, merchantability,
fitness for a particular purpose, title, zoning, tax consequences, latent or
patent physical or environmental condition, utilities, operating history or
projections, valuation, compliance with law or the accuracy or completeness of
any Due Diligence Materials, (iii) neither Buyer nor Guarantor is relying upon
or is entitled to rely upon any representations and warranties made by Seller or
anyone acting or claiming to act on Seller’s behalf, which are not expressly set
forth in this Agreement, and (iv) the Due Diligence Materials may include
reports prepared for Seller by third parties (including, without limitation, the
Phase 1 Environmental Report) as to which neither Buyer nor Guarantor has any
right of reliance as against Seller or any Seller Parties, and that Buyer and
Guarantor have or shall conduct an independent evaluation of such reports and
conditions and that Seller has made no representation whatsoever as to accuracy,
completeness or adequacy of any such reports. Buyer and Guarantor further
acknowledge that they have not received from Seller any accounting, tax, legal,
architectural, engineering, property development or other advice with respect to
this transaction and is relying solely upon the advice of its own accounting,
tax, legal, architectural, engineering, property development and other advisors.
Based upon the order of Buyer’s familiarity with and due diligence relating to
the Property and pertinent knowledge as to the market in which the Property is
situated and in direct consideration of Seller’s decision to sell the Property
to Buyer for the Purchase Price and not to pursue available disposition
alternatives, Buyer shall purchase the Property in an “as is, where is and with
all faults” condition on the Closing Date and assumes fully the risk that
adverse latent or patent physical, environmental, economic or legal conditions
may not have been revealed by its investigations. Buyer specifically undertakes
and assumes all risks associated with the matters disclosed by Seller on the
disclosure statement attached hereto as Schedule 1 (the “Disclosure Statement”).
Seller and Buyer acknowledge that the compensation to be paid to Seller for the
Property has taken into account that the Property is being sold subject to the
provisions of this Section 3.3.2.

               (d) Consistent with the foregoing, effective as of the Closing
Date, Buyer and Guarantor, for themselves and their respective officers,
directors, shareholders, beneficial owners, agents, affiliates, successors and
assigns, hereby releases and forever discharges Seller and each other Seller
Party from any and all rights, claims and demands at law or in equity, whether
known or unknown at the time of this Agreement, which Buyer or Guarantor has or
may have in the future, arising out of the physical, environmental, economic or
legal condition of the Property, including, without limitation, all claims in
tort or contract and any claim for indemnification or contribution arising under
the Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. Section 9601, et. seq.) or any similar federal, state or local statute,
rule or ordinance relating to liability of property owners for environmental
matters. Buyer and Guarantor specifically waive any statutory or common law
right they may have to receive disclosures from Seller or any other Seller
Party, including, without limitation, any disclosures as to the Property’s
location within any area designated as a special flood

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hazard area, dam failure inundation area, earthquake fault zone, seismic hazard
zone, high fire severity area or wildland fire area, by any federal, state or
local agency. Without limiting the foregoing, Buyer and Guarantor, upon Closing,
shall be deemed to have waived, relinquished and released Seller and all other
Seller Parties from and against any and all matters arising out of latent or
patent defects or physical conditions, violations of applicable laws and any and
all other acts, omissions, events, circumstances or matters affecting the
Property. For the foregoing purposes, Buyer and Guarantor each hereby
specifically waives the provisions of Section 1542 of the California Civil Code
and any similar law of any other state, territory or jurisdiction. Section 1542
provides:

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

     Buyer and Guarantor hereby specifically acknowledge that they have
carefully reviewed this subsection and discussed its import with legal counsel
and that the provisions of this subsection are a material part of this
Agreement.

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Buyer’s Initials

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Guarantor’s Initials

     Buyer shall indemnify, defend and hold Seller and each other Seller Party
harmless from and against any and all Claims in connection with or relating
directly or indirectly to the Property and arising out of or resulting from acts
or omissions of Buyer, its agents, contractors, affiliates, employees,
successors and assigns, occurring from and after the Closing Date.
Notwithstanding anything to the contrary contained herein, the foregoing release
shall not extend to any fraudulent act by Seller or any claim arising out of
Seller’s breach of any covenant, representation or warranty set forth in this
Agreement.

               (e) Seller and Buyer agree that the provisions of this
Section 3.3.2 shall survive the Closing and any termination of this Agreement.

          3.3.3 Reports. If this Agreement is terminated for any reason prior to
the Closing, Buyer shall deliver to Seller, without cost to Seller, a list of
all surveys, plans, environmental studies, architectural and engineering plans,
demographic studies, appraisals and non-financial other materials and reports
developed by or on behalf of Buyer prior to the termination of this Agreement,
and Buyer shall return to Seller any such items requested by Seller but only to
the extent specifically requested by Seller in writing. The provisions of this
Section 3.3.3 shall survive any termination of this Agreement.

          3.3.4 As used herein, the term “Exception Matter” shall refer to a
matter disclosed to Buyer in writing or discovered by Buyer before the Closing
including without limitation in any Due Diligence Materials, that would make a
representation or warranty of Seller

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contained in this Agreement untrue or incorrect, including, without limitation,
matters disclosed in writing to Buyer by Seller or by any other person. If Buyer
obtains actual knowledge of any Exception Matter after the date hereof, Buyer
may terminate this Agreement upon written notice to Seller if Seller elects not
to cure or remedy any such Exception Matter, provided that notwithstanding
anything to the contrary contained herein, (a) Buyer may terminate this
Agreement with respect to an Exception Matter of which it obtains actual
knowledge prior to the end of the Option Period and, if Buyer elects to exercise
the Option and to proceed with the purchase of the Property at the end of the
Option Period, Buyer shall be deemed to have waived any objections to such
Exception Matter, and (b) Buyer may terminate this Agreement after the Option
Period because of an Exception Matter only if the facts making the
representation and warranty untrue or incorrect, along with other Exception
Matters, if any, which have made representations and warranties untrue or
incorrect after the Contingency Period, have a material adverse impact on the
value of the Property of five percent (5%) or more of the value thereof. If
Buyer obtains actual knowledge of any Exception Matter before the Closing, but
nonetheless elects to proceed with the acquisition of the Property, Buyer shall
consummate the acquisition of the Property subject to such Exception Matter and
Seller shall have no liability with respect to such Exception Matter,
notwithstanding any contrary provision, covenant, representation or warranty
contained in this Agreement. If Buyer elects to terminate this Agreement on the
basis of any Exception Matter in accordance with this Section, Buyer shall so
notify Seller in writing and the provisions of Section 2.4 shall apply. Upon any
such termination of this Agreement, Buyer shall, if requested by Seller pursuant
to Section 3.3.3, return to Seller any Due Diligence Materials specifically
requested by Seller and neither party shall have any further rights or
obligations hereunder, except for those provisions that expressly survive such
termination. Notwithstanding anything to the contrary set forth herein, in no
event shall Buyer’s disapproval of any Exception Matter or termination of this
Agreement pursuant to this Section 3.3.4, entitle Buyer or Guarantor to a refund
of any Option Consideration. Seller shall have no obligation to cure or remedy
any Exception Matter, and, subject to Buyer’s right to terminate this Agreement
as set forth above, Seller shall have no liability whatsoever to Buyer with
respect to any Exception Matters. Seller and Buyer shall promptly inform each
other in writing of any Exception Matter of which either party obtains actual
knowledge.

ARTICLE 4: REPRESENTATIONS, WARRANTIES AND COVENANTS

     4.1 Seller’s Representations, Warranties and Covenants. Seller hereby
represents, warrants and covenants to Buyer that:

          4.1.1 Capacity of Seller. Seller is duly formed, validly existing and
in good standing under the laws of the State of Delaware and is qualified to do
business in and is in good standing under the laws of the State of California.
Seller has the power and authority to enter into this Agreement. Seller’s
representatives are duly authorized to execute and deliver this Agreement on
behalf of Seller, to execute and deliver the instruments specified herein, and
generally to perform Seller’s obligations hereunder and thereunder. This
Agreement and all documents executed by Seller which are to be delivered to
Buyer under this Agreement do not and at the time of delivery will not violate
any provision of any agreement, mortgage or deed of trust or judicial order to
which Seller is a party or to which Seller is subject.

          4.1.2 Insolvency. Seller has not (a) made a general assignment for the
benefit of creditors, (b) filed any voluntary petition in bankruptcy or suffered
the filing of any involuntary

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petition by Seller’s creditors, (c) suffered the appointment of a receiver to
take possession of all, or substantially all, of Seller’s assets, (d) suffered
the attachment or other judicial seizure of all, or substantially all, of
Seller’s assets, (e) admitted in writing its inability to pay its debts as they
come due, or (f) made an offer of settlement, extension or composition to its
creditors generally. Seller is solvent and able to pay its debts and as they
become due

          4.1.3 No Litigation. Except as has been heretofore disclosed by Seller
to Buyer or as set forth in the Disclosure Statement or the Due Diligence
Materials, to Seller’s Knowledge, Seller has received no written notice of any
pending or threatened litigation, actions, suits or proceedings affecting all or
any portion of the Property, including, without limitations any eminent domain
proceedings.

          4.1.4 Compliance. Except as has been heretofore disclosed by Seller to
Buyer or as set forth in the Disclosure Statement or the Due Diligence
Materials, to Seller’s Knowledge, Seller has received no written notice from any
governmental authority that the Property is presently in violation of any
applicable laws, rules, regulations, codes or ordinances.

          4.1.5 Leases. Seller has not heretofore entered into any Lease other
than the lease by and between Seller, as landlord, and Grinding and Dicing
Service, Inc., as tenant, as amended, a copy of which has been provided to
Buyer, and to Seller’s Knowledge, there exists no other Lease affecting the
Property or any portion thereof (other than Leases entered into in accordance
with Section 3.1.1). To Seller’s Knowledge, Seller is not in default under any
such Lease.

          4.1.6 Environmental. To Seller’s Knowledge, Seller has received no
written notice from any governmental authority that the Property is presently in
violation of any applicable environmental law.

Each of the representations and warranties of Seller contained in this Section
4.1 shall be deemed remade by Seller as of the Closing. For purposes of this
Section 4.1, the term “Seller’s Knowledge” shall mean the current, actual
knowledge of John Rossi, Amy Pallas and John Baruh, without any duty of inquiry
or constructive knowledge. None of the foregoing named individuals shall be
personally liable for a breach of any representation or warranty set forth
herein. The representations and warranties of Seller contained in Sections 4.1.3
through Section 4.1.6 shall survive for a period of six (6) months after the
Closing Date (the “Survival Period”), and shall be subject to the provisions of
Section 9.1 hereof. Any claim which Buyer may have at any time against Seller
for a breach of any such representation or warranty, whether known or unknown,
which is not asserted by written notice to same prior to the expiration of the
Survival Period, and as to which a legal action has not been filed within two
(2) months following the Survival Period, shall be deemed waived, unless
otherwise expressly agreed in writing by the parties.

     4.2 Buyer’s Representations, Warranties and Covenants. Buyer hereby
represents, warrants and covenants to Seller that:

          4.2.1 Buyer has the power and authority to enter into this Agreement.
Buyer’s representatives are duly authorized to execute and deliver this
Agreement on behalf of Buyer, to execute and deliver the instruments specified
herein, and generally to perform Buyer’s

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obligations hereunder and thereunder. This Agreement and all documents executed
by Buyer which are to be delivered to Seller at Closing do not and at the time
of Closing will not violate any provision of any agreement or judicial order to
which Buyer is a party or to which Buyer is subject.

          4.2.2 Buyer has not (a) made a general assignment for the benefit of
creditors, (b) filed any voluntary petition in bankruptcy or suffered the filing
of any involuntary petition by Buyer’s creditors, (c) suffered the appointment
of a receiver to take possession of all, or substantially all, of Buyer’s
assets, (d) suffered the attachment or other judicial seizure of all, or
substantially all, of Buyer’s assets, (e) admitted in writing its inability to
pay its debts as they come due, or (f) made an offer of settlement, extension or
composition to its creditors generally. Buyer is solvent and able to pay its
debts and as they become due.

          4.2.3 Buyer is duly formed, validly existing and in good standing
under the laws of the State of Nevada and is qualified to do business in and in
good standing under the laws of the State of California.

          4.2.4 The financial statements or balance sheet of Guarantor delivered
to Seller pursuant to Section 2.2.1(f) and the financial statements of Buyer
delivered to Seller pursuant to Section 5.1.4 are each true and correct in all
material respects and fairly present the financial condition of Guarantor and
Buyer, respectively, as of the respective dates thereof, and no material adverse
change has occurred in the financial condition or Guarantor or Buyer since the
respective dates thereof.

     Each of the representations and warranties of Buyer contained in this
Section 4.2 shall be deemed remade by Buyer as of the Closing and shall survive
the Closing.

     ARTICLE 5: CONDITIONS PRECEDENT TO CLOSING

     5.1 For Seller. Seller shall not be obligated to close the transaction
contemplated herein unless, within the time specified (or, if no time is
specified, then at or prior to the Closing Date), each of the following
conditions shall have been waived by Seller or satisfied:

          5.1.1 Deliveries by Buyer: Buyer shall have deposited the following in
Escrow:

               (a) the cash portion of the Purchase Price for the Property, each
of the original Loan Documents (duly executed and acknowledged, as applicable)
(except the Buyer’s Option Note previously delivered to Seller which shall be
earned and retained by Seller notwithstanding any termination of this
Agreement), the Letter of Credit in the manner prescribed by Section 2.5 and
Buyer’s share of the closing costs and prorations in accordance with
Section 2.6;

               (b) two (2) executed counterparts of the general assignment in
the form attached hereto as Exhibit I (the “General Assignment”);

               (c) two (2) executed counterparts of the assignment of contracts
and assumption agreement in the form attached hereto as Exhibit J (the
“Assignment of Contracts”);

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               (d) such other documents or instruments reasonably required by
Seller or the Title Company to issue the Seller’s Title Policy or to consummate
the transactions contemplated by this Agreement.

          5.1.2 Option Consideration. Buyer shall have timely paid to Seller all
of the Option Consideration, including each installment of the Additional Option
Consideration pursuant to Section 2.2.3.

          5.1.3 No Default. No material default on the part of Buyer shall exist
under this Agreement, the Buyer’s Option Note or the Lease Termination
Agreement, and each of the representations and warranties of Buyer set forth in
Section 4.2 shall be true and correct as of the Closing Date.

          5.1.4 Financial Condition of Buyer. Buyer has provided to Seller (a) a
copy of the audited financial statement of Buyer for the last fiscal year of
Buyer (ending more than 90 days prior to the Closing Date) which is certified by
the chief financial officer of Buyer to be a true and complete copy of the same
and (b) the quarterly financial statement of Buyer for the most recently ended
fiscal quarter as prepared by Buyer and certified by the chief financial officer
of Buyer to be a true and complete copy of the same.

          5.1.5 Opinion of Buyer’s Counsel. Seller shall have received from a
third party legal counsel for Buyer a duly executed original legal opinion dated
as of the Closing Date, in form and substance acceptable to Seller, opining to
Seller that: (a) upon due authorization, execution and recordation or filing as
may be specified in the opinion, each of the Loan Documents to which Buyer is a
party are and shall be legal, valid and binding instruments, enforceable against
Buyer in accordance with their respective terms; (b) Buyer is duly formed,
validly existing and in good standing in the state of its formation and is
qualified to do business in and is good standing in the State of California, and
has all requisite power and authority to enter into the Loan Document to which
it is a party; (c) each of the Loan Documents to which Buyer is a party has been
duly authorized, executed and delivered by Buyer; (d) the interest rate terms in
the Loan Documents do not violate any applicable usury laws; and (e) such other
matters, incident to the transactions contemplated hereby, as Seller may
reasonably request.

          5.1.6 Opinion of Guarantor’s Counsel. Seller shall have received from
legal counsel for Guarantor a duly executed original legal opinion dated as of
the Closing Date, in form and substance acceptable to Seller, opining to Seller
that: (a) upon due execution and recordation or filing as may be specified in
the opinion, the Subordination Agreement is and shall be a legal, valid and
binding instrument, enforceable against Guarantor in accordance with its terms;
(b) the Subordination Agreement has been duly executed and delivered by
Guarantor; and (c) such other matters, incident to the transactions contemplated
hereby, as Seller may reasonably request.

          5.1.7 Title Insurance. The Title Company shall be prepared to issue to
Seller an ALTA Lender’s Policy of Title Insurance (1970 Form), in form and
substance satisfactory to Seller, providing that the Deed of Trust is a valid
lien upon the Property for the full principal amount secured thereby and is
prior and superior to all other liens and encumbrances thereon, including the
Junior Deed of Trust, except those approved by Seller in writing prior to the
Closing Date, with such endorsements as Seller may require (“Seller’s Title
Policy”).

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          5.1.8 Junior Deed of Trust. The Junior Deed of Trust shall be in the
form of Exhibit P attached hereto with no material changes thereto or, if none
is so attached, as otherwise approved by Seller in writing.

     5.2 For Buyer. Buyer shall not be obligated to close the transaction
contemplated herein unless within the time specified (or, if no time is
specified, then at or prior to the Closing Date), each of the following
conditions shall have been waived by Buyer or satisfied:

          5.2.1 Deliveries by Seller. Seller shall have deposited the following
in Escrow:

               (a) the Grant Deed, executed in recordable form by Seller
sufficient to convey fee simple title to the Property to Buyer;

               (b) an executed bill of sale (“Bill of Sale”) in the form
attached hereto as Exhibit B;

               (c) a Transferor’s Certificate of Non Foreign Status (“FIRPTA
Certificate”) properly executed by Seller;

               (d) two (2) executed counterparts of the General Assignment;

               (e) two (2) executed counterpart of the Assignment of Contracts;

               (f) Seller’s share of the closing costs and prorations in
accordance with Section 2.6; and

               (g) such other documents or instruments reasonably required by
the Title Company to consummate the transactions contemplated by this Agreement.

          5.2.2 No Default. No material default on the part of Seller shall
exist under this Agreement.

          5.2.3 Tenant Estoppel. Buyer shall have received a tenant estoppel
certificate, in form and substance reasonably satisfactory to Buyer, from every
tenant under any Lease which is not contemplated to be terminated at Closing;
provided that Buyer shall have requested that such tenant execute the estoppel
certificate during the Option Period. Seller shall reasonably cooperate with
Buyer’s efforts to obtain any such estoppel certificate.

          5.2.4 Title Insurance. The Title Company shall be prepared to issue to
Buyer the Buyer’s Title Policy.

     5.3 Effect of Failure of Conditions. If any condition precedent specified
in Sections 5.1 and 5.2 is not, on or before 1:00 PM (Pacific Standard Time) on
the Closing Date, either waived in writing (by Seller as to Section 5.1 and by
Buyer as to Section 5.2) or satisfied, then, at the election of the party whom
the failed condition was to benefit, which election shall be delivered in
writing to the Title Company and the other party, (a) the Escrow shall
terminate, (b) Seller shall and is hereby instructed to record the Quitclaim
Deed in the Official Records without

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any notice to or action on the part of Buyer, (c) the outstanding principal
balance and any other amounts accrued under the Buyer’s Option Note shall be
immediately due and payable pursuant to the terms set forth therein and together
with all other Option Consideration (including, without limitation, the Warrant
and the Guaranty) shall be deemed earned and may be retained by Seller, (d) this
Agreement shall terminate and neither party shall have any further rights,
obligations or liabilities hereunder except pursuant to those provisions with
expressly survive such termination, except that such termination shall in no
event affect any of Seller’s rights or remedies under the Buyer’s Option Note or
the Guaranty which Seller, Buyer and Guarantor acknowledge and agree shall
survive any termination of this Agreement, except to the extent specifically
provided below, (e) if requested by Seller pursuant to Section 3.3.3, Buyer
shall deliver to Seller any Due Diligence Materials specifically requested by
Seller prior to such termination, and (f) the Title Company shall return all of
the documents and instruments held in Escrow to the party depositing the same
and for whose benefit the failed condition exists (except the Option
Consideration, the Buyer’s Option Note and the Guaranty previously delivered to
Seller which shall be earned and retained by Seller notwithstanding any
termination of this Agreement except to the extent specifically provided below).
No failure of any condition precedent shall affect the right of Seller to retain
any portion of the Termination Fee pursuant to the Lease Termination Agreement
or any Option Consideration paid to it prior to the termination of the Option
and to declare all sums due and payable under the Buyer’s Option Note pursuant
to the terms thereof; provided that if (i) Seller fails to convey the Property
to Buyer pursuant to the Grant Deed solely as a result of an intentional
material default by Seller in its obligations to convey the Property hereunder
which default is not cured within 30 days after written notice thereof from
Buyer to Seller or such longer period of time as may be necessary to cure such
default (but not as a result of a failure of a condition or an occurrence
described in Article 7) and (ii) as a direct result of such default by Seller,
Buyer is unable to seek and obtain the remedy of specific performance pursuant
to Section 9.1, Seller shall refund to Buyer the Option Consideration but not
any portion of the Termination Fee, and except that the Guaranty shall only
terminate as to the obligations described in Section 1.1 thereof. The provisions
of this Section 5.3 shall survive any termination of this Agreement.

ARTICLE 6: CLOSING PROCEDURES

     6.1 Closing Date. Closing shall be scheduled to occur on the Closing Date
which shall be the earlier of (a) ten (10) Business Days after the date Buyer
exercises the Option pursuant to Section 2.3 (subject to Buyer’s right to extent
the Closing as provided herein), (b) May 10, 2003, or (c) such other date as
Buyer and Seller may agree to in writing.

     6.2 Supplemental Escrow Instructions. Each party shall submit its own
separate written instructions which shall, however, implement and be consistent
with and shall not contradict the provisions of this Agreement.

     6.3 Disbursements and Other Actions by Escrow Holder. Upon the Closing of
Escrow, Escrow Holder shall promptly undertake all of the following in the
following manner:

          6.3.1 prorate all matters referenced in Section 2.6.2 based upon the
statement delivered into Escrow signed by the parties;

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          6.3.2 cause the following documents to be recorded in the Official
Records in the following order: (a) the Grant Deed, (b) the Deed of Trust,
(c) the Subordination Agreement and (d) the Junior Deed of Trust;

          6.3.3 concurrent with the recording of the instruments described in
subparagraph (b) above, disburse from funds deposited by Buyer with Escrow
Holder towards payment of all items (including, without limitation, the cash
portion of the Purchase Price) chargeable to the account of Buyer pursuant
hereto in payment of such costs, and disburse the balance of such funds, if any,
to Buyer;

          6.3.4 deliver to Seller (i) fully executed originals the Buyer’s
Purchase Note, the General Assignment, the Assignment of Contracts, and any
other document which is to be delivered to Seller hereunder or deposited into
the Escrow for the benefit of Seller, and (ii) upon recordation in the Official
Records, conformed and recorded copies of each of the Deed of Trust, the
Subordination Agreement and the Junior Deed of Trust;

          6.3.5 deliver to Buyer (i) fully executed originals of the Bill of
Sale, the FIRPTA Certificate, the General Assignment, the Assignment of
Contracts and any other documents which are to be delivered to Buyer hereunder,
and (ii) conformed and recorded copies of each of the Subordination Agreement,
the Deed of Trust and the Junior Deed of Trust; and

          6.3.6 direct the Title Company to issue the Buyer’s Title Policy to
Buyer and the Seller’s Title Policy to Seller.

     6.4 Other Seller Deliveries. Within five (5) business days after the
Closing Date, Seller shall deliver to Buyer copies (or originals, if available)
of all Contracts and other Due Diligence Materials, except for Seller’s general
ledger and other internal books or records which shall be retained by Seller.
Seller shall deliver to Buyer all keys to the Property in Seller’s possession on
the Closing Date and all other security devices and passcodes.

     ARTICLE 7: POSSESSION; RISK OF LOSS; AND INDEMNIFICATION

     7.1 Possession and Risk of Loss. Seller shall deliver possession of the
Property to Buyer on the Closing Date. Subject to the terms of this Article 7,
all risk of material or immaterial loss and damage (including condemnation of
the Property) by casualty or any other cause shall be and remain with Seller
until the Closing Date. On or after the Closing Date, all risk of material or
immaterial loss and damage to the entirety of the Property shall pass to Buyer.

          7.1.1 In the event that prior to the Closing Date, the Property, or
any portion thereof, is materially destroyed or materially damaged or any
material portion of the Property is condemned by right of eminent domain, Buyer
shall have the right, exercisable by giving written notice to Seller within ten
(10) days after receipt of written notice of such damage, destruction, or
eminent domain either (a) to terminate this Agreement, in which event any
documents in Escrow shall be returned to the party depositing the same (except
the Buyer’s Option Note and Guaranty previously delivered to Seller and the
other Option Consideration and the Termination Fee which shall be earned and
retained by Seller notwithstanding any such termination of this Agreement), and
neither party hereto shall have any further rights or obligations hereunder
(except that such termination shall in no event affect any of Seller’s rights or
remedies under the

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Buyer’s Option Note or the Guaranty or the Lease Termination Agreement which
Seller, Buyer and Guarantor acknowledge and agree shall survive any termination
of this Agreement), or (b) to accept the Property in its then-current condition
and to proceed with the consummation of the transaction contemplated by this
Agreement, without any reduction in the Purchase Price, and to receive an
assignment and assumption of all of Seller’s rights to any insurance proceeds
payable by reason of such damage or destruction, net of collection costs and
costs of repair reasonably incurred by Seller and not reimbursed and a credit at
Closing against the Purchase Price in the amount of the deductible portion of
Seller’s insurance for such damage or destruction. If Buyer elects to proceed
under clause (b) above, Seller shall not compromise, settle or adjust any claims
to such proceeds without Buyer’s prior written consent, which consent may be
withheld in Buyer’s reasonable discretion.

          7.1.2 In the event that, prior to the Closing Date, there is any
non-material damage or destruction to the Property, or any part thereof, or any
non-material portion of the Property is subject to a taking by right of eminent
domain, Buyer shall be bound to purchase the Property as required by the terms
of this Agreement without regard to the occurrence or effect of any damage to or
destruction of the Property or condemnation of the Property by right of eminent
domain, provided that the occurrence of any damage or destruction is covered by
Seller’s insurance for the Property and involves repair costs of less than Three
Million Dollars ($3,000,000), and any condemnation does not affect the use and
value of the Property in other than a minor or immaterial manner. If Buyer is so
bound to purchase the Property notwithstanding the occurrence of damage,
destruction or condemnation, then upon the Closing: Buyer shall receive a credit
against the Purchase Price for the Property in the amount (net of collection
costs and costs of repair reasonably incurred by Seller and not then reimbursed)
of any insurance proceeds or condemnation award collected and retained by Seller
as a result of any such damage or destruction or condemnation plus (in the case
of damage) the amount of the deductible portion of Seller’s insurance policy,
and Seller shall assign to Buyer all rights to such net insurance proceeds or
condemnation awards as shall not have been collected prior to the close of
escrow (and the Buyer’s Purchase Note shall be reduced by a corresponding
amount). Seller shall not compromise, settle or adjust any claims to such
proceeds without Buyer’s prior written consent, which consent may be withheld in
Buyer’s reasonable discretion.

          7.1.3 For purposes of this Article 7 only, damage to the Real Property
or a taking of a portion thereof shall be deemed to involve a material portion
thereof if (a) the estimated cost of restoration or repair of such damage or the
amount of the condemnation award with respect to such taking shall exceed Three
Million Dollars ($3,000,000) or (b) the damage to the Property is not covered by
Seller’s insurance for the Property.

     ARTICLE 8: COMMISSIONS

     8.1 Commissions. Each party hereby represents and warrants to the other
that it has no agreement or contact with any broker or finder in connection with
the transaction contemplated herein. Each party hereby agrees to indemnify and
defend the other against and hold the other harmless from any and all Claims
resulting from any claim for a finder’s fee, broker’s commission or other
brokerage-type compensation arising out of or resulting from a breach of such
party’s representation and warranty set forth in this Section 8.1. The
provisions of this Section 8.1 shall survive the Closing and any termination of
this Agreement.

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     ARTICLE 9 REMEDIES FOR BREACH

     9.1 Remedies. Upon any breach of or default under this Agreement or the
Lease Termination Agreement by a party hereto, the other party may exercise
separately or in combination, serially or cumulatively, all the remedies
available at law or in equity with respect to such breach or default, including
the remedy of specific performance. Notwithstanding anything to the contrary set
forth in this Section 9.1 or elsewhere in this Agreement, Buyer hereby agrees
that any recovery against Seller hereunder or under the Lease Termination
Agreement or any documents entered into in connection herewith or therewith
shall be limited to Seller’s interest in the Property. Any recovery by Buyer
under this Agreement in lieu of specific performance shall further be limited to
Buyer’s actual out-of-pocket third party costs and expenses only up to an
aggregate maximum of One Hundred Fifty Thousand Dollars ($150,000), without any
right to damages, including, without limitation any punitive and/or
consequential damages; provided that Buyer’s recovery of any out-of-pocket
expenses hereunder shall be net of any out-of-pocket costs and expenses incurred
by Seller as a result of any breach or default by Buyer hereunder and any
default in payment of any sums by Buyer under the Buyer’s Option Note or any
Loan Documents; and provided further, that Buyer shall not be entitled to any
recovery from Seller hereunder for any individual claim under Ten Thousand
Dollars ($10,000) except to the extent such claims exceed Thirty Thousand
Dollars ($30,000) in the aggregate. The provisions of this Section 9.1 shall
survive the Closing and any termination of this Agreement.

     ARTICLE 10: MISCELLANEOUS

     10.1 Entire Agreement. This Agreement and the Lease Termination Agreement,
together with all exhibits hereto, constitutes the sole agreement between Buyer
and Seller concerning the purchase and sale transaction contemplated herein and
supersedes any and all oral or written understandings between them pertaining to
the transactions contemplated herein. No representations, warranties or
inducements, express or implied, have been made by either party to the other,
except as set forth herein.

     10.2 Attorneys’ Fees. Each party shall be responsible for its own
attorneys’ fees incurred in connection with the negotiation and preparation of
this Agreement and other instruments or documents mentioned herein; provided
that in the event Buyer does not pay or cause to be paid the Initial Option
Consideration on or before the Option Payment Date, Buyer shall pay Seller’s
attorneys’ fees and costs incurred in connection with the negotiation and
preparation of this Agreement and any documents mentioned herein. If there is
any legal action or proceeding between Seller and Buyer to enforce any provision
of this Agreement or to protect or establish any right or remedy of either party
hereunder, the prevailing party shall be entitled to all costs and expenses,
including reasonable attorneys’ fees and expert witness fees, incurred in
connection with such action and in any appeal in connection therewith.

     10.3 Captions. The captions and headings in this Agreement are for
convenience only, and are not a part of this Agreement, and do not in any way
limit or amplify the provisions hereof.

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     10.4 Modifications. All modifications to this Agreement must be in writing
and signed by Buyer and Seller.

     10.5 Further Documents. From time to time prior to and after the Closing,
each party, at the expense of the requesting party, shall execute and deliver
such instruments of transfer and other documents as may be reasonably requested
by the other party or necessary to carry out the purposes and intent of this
Agreement.

     10.6 Notices. All notices or other communications which this Agreement
contemplates, or requires or permits either party to give to the other, shall be
in writing and shall be personally delivered, transmitted by facsimile, regular
overnight delivery service, or sent by registered or certified mail, return
receipt requested, addressed to the respective parties as follows:

      SELLER:   AMB Property, L.P.
Pier 1, Bay 1
San Francisco, California 94111
Attn.: John Rossi
Tel: (415) 394-9000
Fax: (415) 394-9001
 
with a copy to:
 
    Steppe Stone & Lakey LLP
999 Baker Way, Suite 420
San Mateo, California 94404
Attn: Sara Steppe, Esq.
Tel: (650) 578-8600
Fax: (650) 578-8688

      BUYER:   Hyseq, Inc.
670 Almanor Avenue
Sunnyvale, California 94086
Attn.: Lily Rin-Laures, M.D.
            General Counsel
Tel: (408) 524-8100
Fax: (408) 524-8145
 
with a copy to:      
Dewey Ballantine LLP
333 S. Grand Avenue, 26th Floor
Los Angeles, California 90071
Attn: Bruce W. Fraser, Esq.
Tel: (213) 621-6212
Fax: (213) 621-6100

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      TITLE COMPANY:   First American Title Company
1737 North First Street, Suite 100
San Jose, California 95112
Tel: (408) 451-7800
Attn: Dian Blair, Escrow Officer

The date of any notice or communication shall be deemed to be the date of
receipt if delivered personally or by overnight delivery service, the date of
receipt with confirmed answer back if transmitted by telecopy or the date
seventy-two (72) hours after posting if transmitted by mail. Any party may
change the address for notices by giving notice to the other party in accordance
with this Section 10.6.

     10.7 Governing Law. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of California. Buyer, Guarantor and Seller
each consent to the jurisdiction of any federal or state court within the State
of California having venue in San Francisco, California, and also consent to
service of process by any means authorized by California or federal law.

     10.8 Successors and Assigns. Subject to the limitations set forth herein,
the provisions of this Agreement shall survive recordation of the Grant Deed and
the Closing Date and shall inure to the benefit of and be binding upon Buyer and
Seller and their respective successors and assigns. Seller shall not have the
right to assign this Agreement to any person or entity, other than an affiliate
or subsidiary of Seller, except (a) in conjunction with a sale of the Property
and assignment of this Agreement and the Lease Termination Agreement and
provided that any such assignee assumes Sellers’ obligations under such
agreements or (b) in connection with an exchange pursuant to Section 10.9, or
(c) in connection with a financing of the Property. Buyer shall not have any
right prior to Closing to assign any of its rights or obligations under this
Agreement without the consent of Seller, which consent may be withheld in
Seller’s sole discretion. Without limiting the forgoing, no assignment shall
relieve Buyer of its obligations hereunder.

     10.9 Exchange. The parties to this Agreement acknowledge that Seller may
desire to structure the sale of the Property as an exchange for like-kind
property pursuant to Section 1031 of the Internal Revenue Code of 1986, as
amended, in order to defer recognition of income from the disposition of the
Property and other properties. Buyer agrees to reasonably cooperate with Seller
to accomplish such exchange and Seller hereby agrees that any and all costs
associated with said exchange shall be borne solely by Seller and shall in no
way be attributable to Buyer. In no event shall (a) such cooperation entail any
additional expense or cause any liability whatsoever to the non-exchanging party
and (b) Buyer be required to take title to the exchanged property(ies) to
effectuate the tax deferred exchange contemplated by this Section 10.9. An
assignment to an exchange facilitator pursuant to this Section shall not relieve
either party from any of its obligations hereunder nor shall the ability to
consummate a 1031 exchange be a condition to the Closing. Seller shall have the
right to extend the Closing upon written notice to Buyer, delivered by Seller to
Buyer not later than five (5) Business Days prior to the anticipated Closing
Date, for a period of up to thirty (30) days in order to effectuate an exchange.
The performance by the parties of their obligations under this Agreement shall
not be contingent upon Seller’s ability to effectuate an exchange, provided
Buyer does not take any acts or fail to

26

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take any acts which materially and adversely affect Seller’s ability to
effectuate such an exchange. In the event any exchange contemplated by Seller
shall fail to occur, for whatever reason (excluding the failure by either of the
parties to perform any of its obligations in connection therewith), the purchase
and sale of the Property contemplated herein shall nonetheless occur pursuant to
the terms and provisions of this Agreement.

     10.10 Number and Gender. All personal pronouns used in this Agreement shall
include the other genders. The singular shall include the plural, and plural the
singular, whenever and as often as may be appropriate.

     10.11 No Third Party Beneficiaries. All of the understandings, covenants,
and agreements contained herein are solely for the benefit of Buyer and Seller
and, subject to the limitations set forth in Section 10.8, their respective
successors and permitted assigns, and no other person or party (including
Guarantor) is intended to be benefited, in any way, by this Agreement.

     10.12 Time. Time is of the essence of this Agreement and every provision
hereof.

     10.13 Incorporation of Exhibits. All exhibits referenced in this Agreement
shall be deemed incorporated here by reference as though fully set forth herein.

     10.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be a fully binding and enforceable agreement
against the party signing such counterpart, but all such counterparts shall
together constitute but one agreement.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.

          BUYER:     HYSEQ, INC., a Nevada corporation     By:        

--------------------------------------------------------------------------------

    Name:        

--------------------------------------------------------------------------------

    Title:        

--------------------------------------------------------------------------------

      By:        

--------------------------------------------------------------------------------

    Name:        

--------------------------------------------------------------------------------

    Title:        

--------------------------------------------------------------------------------

 

            SELLER:     AMB PROPERTY, L.P., a Delaware limited
partnership     By: AMB Property Corporation, a
Maryland corporation, its general
partner                 By:          

--------------------------------------------------------------------------------

      Name:          

--------------------------------------------------------------------------------

      Title:          

--------------------------------------------------------------------------------

 

The undersigned Guarantor hereby executes this Agreement as of the date first
written above solely with respect to the covenants, acknowledgments and waivers
set forth in Article 2, Section 3.3, Section 5.3, and the provisions of Section
9.1 and Section 10.7 hereof.

The undersigned, the wife of George Rathmann, hereby consents to the foregoing
covenants, acknowledgments, waivers and provisions of the Option Agreement and
acknowledges that the same create binding obligations of George Rathmann and the
undersigned and of their individual, joint and community assets.

            SPOUSE OF GUARANTOR:   GUARANTOR:    

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

  Frances Joy Rathmann   George Rathmann     SSN #:     SSN #:      

--------------------------------------------------------------------------------

   

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Acceptance by Title Company:

     The undersigned hereby acknowledges that it has received a fully executed
original of the foregoing Real Property Option and Sale Agreement and Joint
Escrow Instructions and agrees to act as escrow holder with respect to the
Escrow thereunder and to be bound by and strictly perform the terms thereof, as
such terms apply to such escrow holder.

              Dated:            

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                          FIRST AMERICAN TITLE COMPANY                     By:  
         

--------------------------------------------------------------------------------

        Name:            

--------------------------------------------------------------------------------

        Its:            

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INDEX OF EXHIBITS

      Exhibit   Title

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

A   Real Property Description       B   Bill of Sale       C   Grant Deed      
D   Buyer’s Option Note       E   Buyer’s Purchase Note       F   Deed of Trust
      G   Guaranty       G-1   Reaffirmation of Guaranty       H   Subordination
Agreement       I   General Assignment       J   Assignment of Contracts       K
  Form of Letter of Credit       L   Form of Warrant       M   Memorandum of
Option       N   Quitclaim Deed       O   Report       P   Form of Junior Deed
of Trust       Schedule 1   List of Disclosures

30