EX-10.1






PURCHASE AND SALE AGREEMENT




AND ESCROW INSTRUCTIONS




BY AND BETWEEN




HCP, INC.,




a Maryland corporation




and




HCPI/INDIANA, LLC,




a Delaware limited liability company




(collectively, “Seller”)




and




G&E HEALTHCARE REIT MEDICAL PORTFOLIO 3, LLC

a Delaware limited liability company




(“Buyer”)




Dated effective as of May 30, 2008




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TABLE OF CONTENTS




Page




















































































2






	 	 	 	 	 	 	 	 	 
	EXHIBITS
	 	 	 	 
	A
	 	 	—	 	 	PROPERTY ADDRESSES AND DESCRIPTIONS
	B
	 	 	—	 	 	LIST OF EXCLUDED PERSONAL PROPERTY
	C
	 	 	—	 	 	ESCROW GENERAL PROVISIONS
	D
	 	 	—	 	 	LIST OF PROPERTY DOCUMENTS
	E
	 	 	—	 	 	FORM OF ESNDA
	F
	 	 	—	 	 	FORM OF DEED
	G
	 	 	—	 	 	FORM OF BILL OF SALE
	H
	 	 	—	 	 	FORM OF ASSIGNMENT AND ASSUMPTION OF LEASES
	I
	 	 	—	 	 	FORM OF ASSIGNMENT AND ASSUMPTION OF CONTRACTS AND INTANGIBLES
	J
	 	 	—	 	 	FORM OF TENANT NOTICE
	K
	 	 	—	 	 	FORM OF FIRPTA CERTIFICATE
	L
	 	 	—	 	 	FORM OF OWNER’S AFFIDAVIT
	M
	 	 	—	 	 	[RESERVED]
	N
	 	 	—	 	 	FORM OF RELEASE OF CLAIMS
	O
	 	 	—	 	 	8-K AUDIT LETTER






	 	 	 
	SCHEDULES

	 	

	 

	 	

	1.1(d)-1

1.1(d)-2

1.3

4.5(b)(ii)

5.1(d)

	 	LIST OF LEASES AND TENANTS AS OF THE EFFECTIVE DATE

LIST OF SECURITY DEPOSITS AS OF THE EFFECTIVE DATE

PURCHASE PRICE ALLOCATIONS

SPECIFIED EXISTING LEASES

LITIGATION






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PURCHASE AND SALE AGREEMENT




AND ESCROW INSTRUCTIONS




THIS PURCHASE AND SALE AGREEMENT AND ESCROW INSTRUCTIONS (this “Agreement”) is made
effective as of May 30, 2008 (the “Effective Date”), by and between HCP, INC., a Maryland
corporation (“HCP”), and HCPI/INDIANA, LLC, a Delaware limited liability company
(“HCP/Indiana”, and together with HCP, “Seller”), and G&E HEALTHCARE REIT MEDICAL
PORTFOLIO 3, LLC, a Delaware limited liability company (“Buyer”).



ARTICLE I.




PURCHASE AND SALE




Section 1.1 Agreement of Purchase and Sale. Subject to the terms and conditions
hereinafter set forth, Seller agrees to sell and convey or cause to be sold and conveyed to Buyer,
and Buyer agrees to purchase from Seller, all of Seller’s right, title and interest in and to the
following:



(a) the fee interest in and to those certain tracts or parcels of land situated in the State
of Indiana and more particularly described on Exhibit A attached hereto and made a part
hereof, in each case together with all easements, rights and appurtenances pertaining to such
property, including any right, title and interest of Seller in and to adjacent streets, alleys or
rights-of-way (the property described in clause (a) of this Section 1.1 being herein
referred to as the “Land”). The addresses for the parcels of Land are also set forth on
Exhibit A;



(b) the commercial buildings located on the Land, and any and all other buildings, structures,
fixtures and other improvements affixed to or located on the Land, excluding trade fixtures owned
by tenants (the property described in clause (b) of this Section 1.1 being herein referred
to collectively as the “Improvements”);



(c) all tangible personal property which is owned by Seller, located upon the Land or within
the Improvements, and used exclusively in connection with the operation or occupation of all or any
part of the Land and Improvements, including, without limitation, any appliances, furniture,
carpeting, draperies and curtains, tools and supplies, and other items of personal property (the
“Personal Property”); provided, however, that Personal Property shall specifically exclude
(i) any tangible personal property owned by tenants or other occupants of the Properties (as such
term is defined in Section. 1.2 hereof), and (ii) those specific items of tangible personal
property listed on Exhibit B as “Excluded Personal Property”;



(d) to the extent they are in effect on the date of the Closing (as such term is defined in
Section 4.1 hereof), any and all of Seller’s right, title and interest (i) as
landlord/lessor in and to the leases, licenses, and occupancy agreements, including all amendments
or modifications thereto or supplements thereof, covering all or any portion of the Real Properties
(as such term is defined in Section 1.2 hereof) (collectively, the “Leases”), (ii)
in and to all rents and other sums due under the Leases (collectively, the “Rents”) and
(iii) any and all unapplied security deposits, prepaid rent, guaranties, letters of credit and
other similar charges and credit enhancements providing additional security for the Leases in
Seller’s possession or control or for which Seller is responsible under the Leases (collectively,
the “Security Deposits”). Attached hereto as Schedule 1.1(d)-1 is a list of all
Leases to which Seller is a party and the common name of the tenant thereunder. Schedule
1.1(d)-2 attached hereto sets forth the amount of any Security Deposit that has been provided
to Seller in connection with each such Lease, and if such Security Deposit was provided in a form
other than cash, the form thereof, in each case as of the Effective Date;



(e) any and all of Seller’s right, title and interest in and to all assignable Operating
Agreements (as defined in Section 3.3 hereof) which have not been terminated pursuant to
the terms of this Agreement prior to the Closing (collectively, the “Assigned Operating
Agreements”); and



(f) to the extent assignable, all of Seller’s right, title and interest in and to (i) all
warranties and guaranties (express or implied) issued to Seller in connection with the Improvements
or the Personal Property, (ii) all permits, licenses, approvals and authorizations issued by any
governmental authority in connection with the Properties, (iii) all reports, test results,
environmental assessments, surveys, plans and specifications, and (iv) the non-exclusive use of
each facility and building name identified on Exhibit A (but only to the extent that
Seller owns or has any right to use the same) (the property described in this clause (f) being
sometimes herein referred to collectively as the “Intangibles”).



Section 1.2 Property Defined. The Land and the Improvements are hereinafter sometimes
referred to, with respect to each tract or parcel more particularly described in Exhibit A,
individually as a “Real Property,” and, with respect to all such tracts or parcels more
particularly described in Exhibit A, collectively as the “Real Properties.” The
Real Property, the Personal Property, the Leases, the Rents, the Security Deposits, the Assigned
Operating Agreements and the Intangibles are hereinafter sometimes referred to, with respect to
each tract or parcel more particularly described in Exhibit A, individually as a
“Property”, and, with respect to all such tracts or parcels more particularly described in
Exhibit A, collectively as the “Properties.”



Section 1.3 Purchase Price. Subject to the terms and conditions hereof, Seller shall
sell and Buyer shall purchase the Properties for the amount of Ninety Million One Hundred Thousand
Dollars ($90,100,000) (as increased or decreased by prorations and adjustments as herein provided)
(the “Purchase Price”). The parties hereby agree that the Purchase Price shall be
allocated among each Property as set forth on Schedule 1.3 attached hereto (the
“Allocated, Purchase Price”). The parties agree that the Allocated Purchase Price has been
arrived at by a process of arm’s-length negotiations, including, without limitation, the parties’
best judgment as to the fair market value of each respective Property, and the parties specifically
agree to the Allocated Purchase Price as final and binding, and will consistently reflect those
allocations on their respective federal, state and local tax returns, including any state, county
and other local transfer or sales tax declarations or forms to be filed in connection with this
transaction, which obligations shall survive the Closing.



Section 1.4 Payment of Purchase Price. The Purchase Price, as increased or decreased
by prorations and adjustments as herein provided, shall be payable in full at the Closing in cash
by wire transfer of immediately available funds to a bank account designated by Seller in writing
to Buyer prior to the Closing. Not less than one (1) “Business Day” (as defined in
Section 10.21 hereof) prior to the Closing, Buyer shall deposit into “Escrow” (as
defined in Section 1.5 hereof), in cash or other immediately available funds, the full
amount of the Purchase Price, less the Deposit previously deposited by Buyer into Escrow, and as
increased or decreased by prorations and adjustments as herein provided.



Section 1.5 Opening of Escrow; Deposit. Within three (3) days following the mutual
execution and delivery of this Agreement, (i) the parties shall establish an escrow (the
“Escrow”) with First American Title Insurance Company (the “Escrow Holder” and
“Title Company”), (ii) the parties shall deposit with the Escrow Holder a fully executed
original or original counterpart(s) of this Agreement, and (iii) Buyer shall deposit with the
Escrow Holder a sum equal to One Million Dollars ($1,000,000) (the “Deposit”) in good funds
either by certified bank or cashier’s check or by federal wire transfer, which shall be allocated
to each Property in the same percentage allocations as the Purchase Price is allocated to each
Property (with respect to each Property, the “Allocated Deposit”). Escrow Holder shall
hold the Deposit in an interest-bearing account of a federally insured bank or savings and loan
association reasonably acceptable to Buyer and Seller, and shall otherwise handle the Deposit in
accordance with the terms and conditions of this Agreement. All interest accrued on the Deposit
shall be added to and become part of the Deposit. Subject to Section 4.11 hereof, the
entire Deposit together with all interest accrued thereon shall be credited to the Purchase Price
upon the Closing Date. The failure of Buyer to timely deliver any portion of the Deposit hereunder
shall be a material default, and shall entitle Seller, at Seller’s sole option, to terminate this
Agreement immediately and retain any portion of the Deposit previously delivered by Buyer as its
sole and exclusive remedy for such default hereunder, at law and in equity. Except as otherwise
specifically provided in this Agreement, the Deposit (including the accrued interest thereon) shall
be nonrefundable upon expiration of the Contingency Period.



Section 1.6 Deposit as Liquidated Damages. AFTER THE EXPIRATION OF THE CONTINGENCY
PERIOD, IN THE EVENT THE SALE OF THE PROPERTIES AS CONTEMPLATED HEREUNDER IS NOT CONSUMMATED BY
REASON OF (i) BUYER’S DEFAULT UNDER THIS AGREEMENT WHICH IS NOT CURED WITHIN THE CURE PERIOD
SPECIFIED IN SECTION 6.1, OR (ii) FAILURE OF THE CONDITION SET FORTH IN SECTIONS 4.9(c)
or (d) TO BE SATISFIED, THEN THE DEPOSIT (INCLUDING ALL INTEREST EARNED FROM THE INVESTMENT
THEREOF) SHALL BE DELIVERED TO SELLER AS LIQUIDATED DAMAGES. THE PARTIES RECOGNIZE THAT SELLER’S
ACTUAL DAMAGES IN THE EVENT THE SALE IS NOT CONSUMMATED AS A RESULT OF SUCH A BUYER DEFAULT OR
FAILURE OF THE CONDITION SET FORTH IN SECTIONS 4.9(c) or (d) TO BE SATISFIED ARE



EXTREMELY DIFFICULT OR IMPRACTICABLE TO DETERMINE AT THE EFFECTIVE DATE. THEREFORE, BY
SEPARATELY EXECUTING THIS SECTION 1.6 BELOW, THE PARTIES ACKNOWLEDGE THAT THE AMOUNT OF THE
DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE PARTIES’ REASONABLE ESTIMATE OF SELLER’S
DAMAGES AND NOT A PENALTY, AND SHALL BE SELLER’S SOLE AND EXCLUSIVE REMEDY AGAINST BUYER ARISING
FROM A FAILURE OF THE SALE TO CLOSE AS A RESULT OF SUCH A BUYER’S DEFAULT OR FAILURE OF THE
CONDITION SET FORTH IN SECTIONS 4.9(c) or (d) TO BE SATISFIED, BOTH AT LAW AND IN EQUITY.
NOTWITHSTANDING THE FOREGOING, IN NO EVENT SHALL THIS SECTION 1.6 LIMIT THE DAMAGES
RECOVERABLE BY EITHER PARTY AGAINST THE OTHER PARTY DUE TO THE OTHER PARTY’S OBLIGATION TO
INDEMNIFY SUCH PARTY IN ACCORDANCE WITH THIS AGREEMENT OR THE “OTHER TRANSACTION DOCUMENTS” (AS
DEFINED IN SECTION 10.6 HEREOF) OR BY REASON OF THE OTHER PARTY’S OBLIGATION TO PAY THE
PREVAILING PARTY’S ATTORNEYS’ FEES AND COSTS PURSUANT TO SECTION 10.17 HEREOF. BY
SEPARATELY EXECUTING THIS SECTION 1.6. BELOW OR ON THE NEXT PAGE, BUYER AND SELLER
ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTOOD THE ABOVE PROVISION COVERING LIQUIDATED DAMAGES, AND
THAT EACH PARTY WAS REPRESENTED BY COUNSEL WHO EXPLAINED THE CONSEQUENCES OF THIS LIQUIDATED
DAMAGES PROVISION AT THE TIME THIS AGREEMENT, WAS EXECUTED. THE PROVISIONS OF THIS SECTION
1.6 SHALL SURVIVE THE TERMINATION OF THIS AGREEMENT.



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







4






[Signature Page for Section 1.6]




	 	 	 
	HCP, INC., a Maryland corporation

By: /s/ Thomas Klaritch

Name: Thomas Klaritch

Its: Executive Vice President

	 	G&E HEALTHCARE REIT MEDICAL

PORTFOLIO 3, LLC, a Delaware limited

liability company

By: /s/ Shannon K S Johnson

Name: Shannon K S Johnson

Its: Authorized Signatory
	HCPI/INDIANA, LLC,

a Delaware limited liability company,

By: HCP, Inc, a Maryland corporation

its Managing Member

By: /s/ Thomas Klaritch

Name: Thomas Klaritch

Title: Executive Vice President

	 	



















[Remainder of Page Left Intentionally Blank]




Section 1.7



5



Escrow Holder. By its execution and delivery of this Agreement, Escrow Holder agrees
to be bound by the terms and conditions of this Agreement to the extent applicable to its duties,
liabilities and obligations as “Escrow Holder.” Escrow Holder shall hold and dispose of
the Deposit in accordance with the terms of this Agreement. Escrow Holder shall incur no liability
in connection with the safekeeping or disposition of the Deposit for any reason other than Escrow
Holder’s breach of contract, willful misconduct or negligence. If Escrow Holder is in doubt as to
its duties or obligations with regard to the Deposit, or if the Escrow Holder receives conflicting
instructions from Buyer and Seller with respect to the Deposit, the Escrow Holder shall not be
required to disburse the Deposit and may, at its option, continue to hold the Deposit until both
Buyer and Seller agree as to its disposition, or until a final judgment is entered by a court of
competent jurisdiction directing its disposition, or the Escrow Holder may interplead the Deposit
in accordance with the laws of the State of California. Escrow Holder shall not be responsible for
any interest on the Deposit except as is actually earned, or for the loss of any interest resulting
from the withdrawal of the Deposit prior to the date interest is posted thereon. The Escrow
General Provisions are attached hereto as Exhibit C and made a part hereof. In the event
of any conflict between the terms and provisions of this Agreement and the Escrow General
Provisions, the terms and provisions of this Agreement shall control.



Section 1.8 Independent Contract Consideration. Notwithstanding anything in this
Agreement to the contrary, One Hundred and No/100 Dollars ($100.00) of the Deposit is delivered to
the Escrow Holder for delivery to Seller as “Independent Contract Consideration”, and the
Deposit is reduced by the amount of the Independent Contract Consideration so delivered to Seller,
which amount has been bargained for and agreed to as consideration for Seller’s execution and
delivery of this Agreement.



ARTICLE II.




TITLE AND SURVEY




Section 2.1 Title Contingency Period. During the period beginning on the Effective
Date and ending at 5:00 p.m. Los Angeles, California time on the thirtieth (30th) day following the
Effective Date (hereinafter referred to as the “Title Contingency Period”), Buyer shall
have the right to review and investigate any and all conditions and aspects of title to the Real
Properties. Without limiting the foregoing, Buyer shall have the right to review: (a) a current
preliminary title report or title commitment prepared by the Title Company covering each of the
Real Properties and all underlying exceptions, which shall be obtained by Buyer from the Title
Company (the “Title Commitments”), and (b) a copy of the most current ALTA survey of each
of the Real Properties in Seller’s possession and control, if any (the “Existing Surveys”)
(the items referred to in clauses (a) and (b) of this Section 2.1 are hereinafter referred
to as the “Title Contingency Items”); provided, however, in no event shall the Title
Contingency Period be extended or delayed if Seller does not possess or is unable to locate an
Existing Survey of any of the Real Properties. During the Title Contingency Period, Buyer shall
also have the right to obtain and review additional documentation relating to the ownership of the
Real Properties including, without limitation, a new or updated ALTA survey of each of the Real
Properties prepared by a licensed surveyor or engineer, obtained by Buyer at Buyer’s sole cost (the
“New Surveys”); provided, however, that in no event shall the Title Contingency Period be
extended or delayed in order to permit Seller to obtain or review any New Surveys.



Section 2.2 Title Examination.



(a) Buyer shall notify Seller in a reasonably detailed writing (the “Title Objection
Notice”) prior to the expiration of the Title Contingency Period which exceptions to title
(including survey matters), if any, will not be accepted by Buyer and the specific grounds for
disapproval thereof. Any exception to title, encumbrance or other matter which is disclosed in the
Title Contingency Items or any New Surveys and which Buyer fails to disapprove prior to the
expiration of the Title Contingency Period shall be deemed conclusively to have been approved by
Buyer. If Buyer delivers any Title Objection Notice to Seller, then Seller shall have two (2)
Business Days after receipt of the Title Objection Notice to notify Buyer in writing that Seller
either (i) will remove such objectionable exception from title on or before the Closing, or (ii)
elects not to cause such exception to be removed (a “Non-Removal Notice”); provided,
however, that any Title Objection Notice which has been delivered by Buyer to Seller prior to the
Effective Date shall be deemed to have been received by Seller on the Effective Date for the
purposes of this Section 2.2. If Seller delivers a written notice to Buyer that Seller will
remove such objectionable exception from title but fails to timely do so, then Buyer shall have the
right to terminate this Agreement with respect to all (but not less than all) of the Properties, in
which event, the provisions of Section 3.7 hereof shall apply. If Seller fails to notify
Buyer of its election within said two (2) Business Day period, then Seller shall be deemed to have
delivered a Non-Removal Notice as to that exception. Any updates to any Existing Surveys or New
Surveys shall be Buyer’s sole responsibility, both as to performance and payment of costs therefor.
If Seller gives (or is deemed to have given) Buyer a Non-Removal Notice, then Buyer shall have
until the date that is three (3) Business Day after the date that Seller shall have given (or be
deemed to have given) the Non-Removal Notice to notify Seller in writing that Buyer elects to
either (A) nevertheless proceed with the purchase and take title to the Properties subject to such
exceptions, or (B) terminate this Agreement with respect to all, but not less than all, of the
Properties, in which event the provisions of Section 3.7 hereof shall apply. If Buyer
fails to notify Seller in writing of its election on or prior to the expiration of such three (3)
Business Day period, then Buyer shall be deemed to have elected to proceed with the purchase and
take title to the Properties subject to such exceptions without any reduction in the Purchase
Price. The operation of the notice and response provisions of this Section 2.2 shall
extend the Closing Date only as necessary to effectuate the provisions of this Section 2.2.



(b) Buyer may, at or prior to Closing, notify Seller in writing (the “Gap Notice”) of
any objection to any liens, encumbrances, easements, restrictions, conditions, covenants, rights,
rights-of-way, or other matters affecting title to the Properties (each, an “Intervening
Lien”) (i) raised by the Title Company after the expiration of the Title Contingency Period and
prior to the Closing or otherwise disclosed on any update or revision to any New Survey received by
Buyer after the expiration of the Title Contingency Period and prior to the Closing, and (ii) which
(A) was not disclosed by the Title Company or by any Existing Survey, New Survey or any other
materials made available to Buyer, prior to 5:00 p.m. Los Angeles, California time on the date
which is two (2) Business Days prior to the expiration of the Title Contingency Period, (B) was not
known to Buyer prior to the expiration of the Title Contingency Period, or (C) would not have been
disclosed by a reasonable physical inspection of the Properties prior to the expiration of the
Title Contingency Period. Buyer must notify Seller of such objection to any such Intervening Liens
within three (3) Business Days of receiving written notice of, or materials disclosing, the
existence of such Intervening Liens (provided, however, if receipt of written notice of, or
materials disclosing, such additional title matters is less than three (3) Business Days prior to
the Closing Date, then the Closing Date shall be extended to permit the procedures in this section
to be implemented or Seller shall have the right to terminate this Agreement in Seller’s sole
discretion). Failure to timely deliver a Gap Notice to Seller shall be deemed to be Buyer’s
approval of any such Intervening Lien. If Buyer sends a Gap Notice to Seller, then Buyer and
Seller shall have the same rights and obligations with respect to such Gap Notice as apply to a
Title Objection Notice under Section 2.2(a).



Section 2.3 Permitted Exceptions. The Properties shall be conveyed subject to the
following matters, which are hereinafter referred to as the “Permitted Exceptions”:



(a) those matters that are either approved or deemed approved by Buyer in accordance with
Section 2.2 and Section 2.3 hereof;



(b) the rights of tenants or other occupants under the Leases, any subleases and any other
occupancy agreements under the Leases or otherwise entered into pursuant to Section 5.5(b);



(c) the lien of all ad valorem real estate taxes and assessments not yet due and payable as of
the date of Closing, subject to proration as herein provided;



(d) local, state and federal laws, ordinances or governmental regulations, including, but not
limited to building and zoning laws, ordinances and regulations, now or hereafter in effect
relating to the Properties; and



(e) items shown on the Title Commitments, Existing Surveys or New Surveys and not objected to
by Buyer, or waived or deemed waived by Buyer in accordance with Section 2.2 hereof and if
Buyer does not obtain New Surveys, those matters which would be disclosed by an accurate survey or
inspection of the Properties.



Section 2.4 Conveyance of Title. At Closing, Seller shall convey and transfer, or
cause to be conveyed or transferred, to Buyer with respect to each Real Property, fee simple title
to such Real Property by execution and delivery of the Deeds (as defined in Section 4.2(a)
hereof). Evidence of delivery of such fee title shall be the issuance by the Title Company of
current ALTA Standard Coverage Owner’s Policies of Title Insurance (or its equivalent in the
applicable jurisdictions) (each a “Title Policy”, and collectively, the “Title
Policies”) covering each Real Property, in the full amount of the Allocated Purchase Price for
such Real Property, showing fee title to such Real Property vested exclusively in Buyer, subject
only to the Permitted



Exceptions (or the Title Company’s written commitment to issue such Title Policies). Except as
provided below and in Section 4.6 hereof, the cost of the Title Policies shall be paid by
Seller. If prior to Closing, Buyer shall deliver to the Title Company New Surveys meeting the
minimum standards as required by the Title Company for issuance of ALTA Extended Owner’s Policies
of Title Insurance (or its equivalent in the applicable jurisdictions), then Buyer shall be
entitled to obtain ALTA Extended Coverage Owner’s Policies (or its equivalent in the applicable
jurisdictions) in lieu of ALTA Standard Coverage Owner’s Policies (or its equivalent in the
applicable jurisdictions) so long as the Closing is not thereby delayed. Buyer shall pay the
additional premium for such extended coverage policies, including any endorsements thereto, unless
such endorsement is necessary to cure an objectionable exception identified in Section
2.2(a) above that Seller has agreed to remove (“Curative Endorsements”), and the cost
of any New Surveys.



ARTICLE III.




REVIEW OF PROPERTY




Section 3.1 Right of Inspection.



(a) During the period from the Effective Date and ending at 5:00 p.m. Los Angeles, California
time on the thirtieth (30th) day following the Effective Date (hereinafter referred to as the
“Contingency Period”), Buyer shall have the right (i) to review and investigate any and all
conditions and aspects of the Properties in its sole discretion (except as expressly provided below
and except for title and survey matters, which shall be governed by Article II hereof),
(ii) to receive and review copies of those items listed in Exhibit D attached hereto
(except to the extent identified in such Exhibit D as items to be made available for
Buyer’s inspection and review at Seller’s offices or at the offices of Seller’s property manger)
(the “Property Documents”) to the extent in Seller’s possession or control, and (iii) at
Buyer’s sole cost and expense, to make physical inspections of and conduct tests and reviews upon
the Properties, including, but not limited to, an inspection of the environmental condition thereof
pursuant to the terms and conditions of this Agreement and to examine such other documents and
files (i.e., in addition to the Property Documents) concerning the ownership, use, occupancy,
leasing, maintenance, operation and development of the Properties that are within Seller’s
possession or control. The Property Documents shall be (if they have not already been) made
available to Buyer through the secure website (the “E-Room”) to which Buyer has previously
been granted access on or before one (1) Business Day after the Effective Date. All other
documents and files within Seller’s possession or control shall be made available for Buyer’s
review at Seller’s offices or at the offices of Seller’s property manager. If required by law,
Seller shall provide a Natural Hazards Disclosure Report or similar disclosure report as may be
required or proscribed by the applicable jurisdictions prior to the expiration of the Contingency
Period.



(b) Notwithstanding anything to the contrary contained in Section 3.1(a) hereof
(except to the extent listed on Exhibit D), Buyer acknowledges that it shall have no right
to examine any of the following documents in connection with its review of the Properties: (i)
partnership, limited liability company or corporate records of Seller, (ii) internal memoranda of
Seller, (iii) financial projections or budgets prepared by or for Seller, (iv) appraisals prepared
by or for Seller, (v) accounting or tax records of Seller, (vi) similar proprietary, confidential
or privileged information, and (vii) any internal memoranda relating to the foregoing
(collectively, the “Confidential Documents”). In addition, notwithstanding anything to the
contrary contained in Section 3.1(a) hereof, Buyer shall have no right to examine any cost
estimates relating to any work recommended by and included as a part of any physical inspection,
engineering or other system reports prepared by or for Seller relating to the Properties
(collectively, the “Physical Inspection Reports”), and Seller shall have the right to
redact such cost estimates from such Physical Inspection Reports prior to Buyer’s examination of
the same.



(c) All on-site inspections of the Properties shall be undertaken in accordance with the terms
and conditions of that certain Access Agreement, dated of even date with the Effective Date, by and
between Seller and Buyer (as may be amended, modified, supplemented and amended and restated from
time to time, the “Access Agreement”). Upon request by Seller, Buyer will furnish to
Seller (without representation or warranty of any kind, express or implied), all non-proprietary
inspection reports prepared for Buyer with respect to the Properties by independent third parties
(provided that in no event shall Buyer be required to deliver any Confidential Documents or other
attorney-client communications or any internal memoranda prepared by counsel to Buyer or any
physical inspection reports except for the Physical Inspection Reports described in Section
3.1(b) hereof) at no charge to Seller. Buyer agrees to protect, indemnify, defend (with counsel
satisfactory to Seller) and hold Seller and Seller’s employees, officers, directors,
representatives, invitees, tenants, agents, contractors, servants, attorneys, shareholders,
participants, affiliates, partners, members, parents, subsidiaries, successors and assignees, free
and harmless from and against any claim for liabilities, losses, costs, expenses (including
reasonable attorneys’ fees), damages or injuries arising out of, or resulting from, the inspection
of the Properties by Buyer or its agents or consultants; provided, however, that Buyer shall not be
responsible for any liability, damage, loss, cost or expense arising out of Buyer’s discovery of a
pre-existing condition at any of the Properties, including reporting any such condition to the
appropriate authorities if required to do so by law and Seller shall be solely responsible for any
liability, damage, loss, cost or expense arising out of Buyer’s discovery of such pre-existing
condition at any of the Properties, and for compliance with any reporting obligation that arises
from such discovery. Notwithstanding anything to the contrary in this Agreement, (1) Buyer shall
not be relieved of its obligation to indemnify, defend and hold harmless Seller to the extent that
any pre-existing condition is aggravated by Buyer and/or Buyer’s representatives in connection with
any inspection of the Properties, and (2) Buyer’s obligation to indemnify, defend and hold harmless
Seller pursuant to this Section 3.1(c) shall survive Closing or any termination of this
Agreement until such time as it is determined by final judgment that any claims against Buyer for
such matters indemnified under this paragraph are fully and finally barred as to Buyer by the
applicable statute of limitations.



(d) Buyer’s right of access to the Properties shall also include the right during the
Contingency Period to meet and confer with tenants of the Properties in accordance with the terms
and conditions of the Access Agreement.



Section 3.2 Environmental Reports. BUYER ACKNOWLEDGES THAT BUYER HAS RECEIVED COPIES
OF THE ENVIRONMENTAL REPORTS LISTED ON EXHIBIT D (THE “ENVIRONMENTAL REPORTS”)
WHICH WERE MADE AVAILABLE ON THE E-ROOM AS PART OF THE PROPERTY DOCUMENTS WITHOUT REPRESENTATION
AND WARRANTY. SELLER SHALL HAVE NO LIABILITY OR OBLIGATION WHATSOEVER FOR ANY INACCURACY IN OR
OMISSION FROM ANY ENVIRONMENTAL REPORT. BUYER SHALL HAVE NO CLAIMS AGAINST THE PREPARER OF ANY
ENVIRONMENTAL REPORT PROVIDED BY SELLER. BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR TO THE
EXPIRATION OF THE CONTINGENCY PERIOD, ITS OWN INVESTIGATION OF THE ENVIRONMENTAL CONDITION OF THE
PROPERTIES TO THE EXTENT BUYER DEEMS SUCH AN INVESTIGATION TO BE NECESSARY OR APPROPRIATE.



Section 3.3 Operating Contracts. As part of the Property Documents, Seller shall
deliver to Buyer a schedule listing all service contracts, vending machine, telecommunications and
other facilities leases, utility contracts, maintenance contracts, management contracts, leasing
contracts, equipment leases, brokerage and leasing commission agreements and other agreements
relating to the upkeep, repair, maintenance, management, leasing or operation of the Land,
Improvements or Personal Property (collectively, the “Operating Agreements”) and copies
thereof; provided, however, that notwithstanding anything to the contrary in Section 3.1
hereof, such schedule and copies shall be provided within five (5) Business Days following the
Effective Date. Buyer shall have the right, in its sole discretion, to request that Seller provide
notice of termination of any Operating Agreement that is terminable by notice to the other party
thereto in accordance with its terms by delivering to Seller written notice of such election (the
“Contract Termination Notice”) on or before the expiration of the Contingency Period. If
Buyer timely delivers a Contract Termination Notice with respect to any such Operating Agreement,
Seller shall, within five (5) Business Days after receipt of such Contract Termination Notice and
after the end of the Contingency Period and provided that this Agreement has not otherwise been
terminated in accordance with its terms, provide such notice of termination to the counter party to
such Operating Agreement, specifying a termination date for such Operating Agreement to be the
later of (i) the Closing Date or (ii) the earliest possible date for termination of the Operating
Agreement in accordance with the terms thereof. If Buyer fails to deliver the Contract Termination
Notice within such time period, Buyer shall be deemed to have elected to not have Seller deliver a
termination notice with respect to any such Operating Agreement. To the extent not terminated as
of the Closing Date pursuant to the terms of this Section 3.3, at Closing, Buyer shall
assume all assignable Operating Agreements then in effect, and each such assignable Operating
Agreement then in effect shall be deemed an “Assigned Operating Agreement”. All Assigned
Operating Agreements assumed by Buyer at the Closing will be assumed only with respect to any
obligations arising thereunder from and after the Closing, as more particularly described in this
Agreement and the Exhibits hereto and subject to the prorations and adjustments provided herein.



Section 3.4 No Financing Contingency. It is expressly agreed that there shall not be
any conditions making Buyer’s obligations under this Agreement contingent upon the obtaining of any
financing by Buyer. The purchase of the Properties under this Agreement shall be on an “ALL CASH”
basis, to be paid in accordance with Section 4.3 of this Agreement.



Section 3.5 [Intentionally Omitted].



Section 3.6 Due Diligence; Right of Termination. If for any reason whatsoever, Buyer
determines that the Properties or any aspect thereof is unsuitable for Buyer’s acquisition, Buyer
shall have the right to terminate this Agreement with respect to all, but not less than all, of the
Properties by giving written notice thereof to Seller prior to the expiration of the Contingency
Period, and if Buyer gives such notice of termination within the Contingency Period, then this
Agreement shall terminate in accordance with the provisions of Section 3.7 below. If Buyer
fails to give Seller a notice of termination prior to the expiration of the Contingency Period,
subject to the other terms and conditions of this Agreement, then Buyer shall be deemed to have
elected to proceed with the purchase of the Properties pursuant to the terms of this Agreement;
provided, however, Buyer’s approval (or deemed approval) of title and survey matters shall at all
times be governed by Article II hereof.



Section 3.7 Rights Upon Termination. If this Agreement is terminated by Buyer in the
manner and within the applicable time period(s) provided pursuant to the provisions of this
Agreement, or because of a failure of a condition precedent to the parties’ obligations hereunder
as set forth in Section 4.7 and Section 4.9 below, then (i) each party shall
promptly execute and deliver to the Escrow Holder such documents as Escrow Holder may reasonably
require to evidence such termination, (ii) the Deposit shall be returned to Buyer, (iii) all
instruments in Escrow shall be returned to the party depositing the same, (iv) at the request of
Seller, Buyer shall return or destroy all items previously delivered by Seller to Buyer and/or
furnish to Seller (without representation or warranty of any kind, express or implied), all
non-proprietary inspection reports prepared for Buyer with respect to the Properties by independent
third parties (provided that in no event shall Buyer be required to deliver any attorney-client
communications or any internal memoranda prepared by counsel to Buyer), (v) Buyer and Seller shall
each pay one-half (1/2) of all Escrow and title cancellation charges (except as otherwise provided
for in this Agreement), and (vi) neither party shall have any further rights, obligations or
liabilities whatsoever to the other party concerning the Properties by reason of this Agreement,
except for any indemnity obligations of either party pursuant to the provisions of this Agreement
or the Other Transaction Documents or otherwise expressly stated in this Agreement or the Other
Transaction Documents to survive termination. Notwithstanding the foregoing, in the event of a
termination of this Agreement pursuant to Section 6.2, then the Deposit shall be disbursed
to Seller in accordance with Section 1.6 hereof. Notwithstanding the foregoing, if Closing
does not occur as a result of Seller’s failure to satisfy any of its obligations set forth in
Section 4.7, or as a result of Buyer’s failure to satisfy any of its obligations set forth
in Section 4.9, then the party failing to satisfy its obligations shall pay all title and
Escrow charges and expenses. The provisions of this Section 3.7 shall survive the Closing,
but shall not limit the rights of (x) any party under Section 6.1 and Section 6.2,
in the event of a default under this Agreement by the other party, or (y) Seller under Section
1.6 in the event of the failure of the condition in Sections 4.9(c) or (d) to
be satisfied.



ARTICLE IV.




CLOSING




Section 4.1 Time and Place. The consummation of the transaction contemplated hereby
(“Closing”) shall occur on or before the thirtieth (30th) day following the expiration of
the Contingency Period (the actual date on which Closing shall occur being referred to herein as
the “Closing Date”). The term “Closing” is used in this Agreement to mean the time
and date the transactions hereby are closed with respect to the Properties and the Title Policies
are issued (or the Title Company has provided its written commitment to issue such Title Policies),
regardless of whether the Deeds are actually recorded in the Official Records of the Recorder of
the County in which the Properties are situated.



Closing shall be consummated through the Escrow administered by the Escrow Holder. At Closing,
Seller and Buyer shall perform the obligations set forth in, respectively, Section 4.2 and
Section 4.3 hereof, the performance of which obligations shall be covenants to the parties
to perform and shall be concurrent conditions.



Section 4.2 Seller’s Obligations at Closing. Except as otherwise expressly provided
below, at or prior to Closing, Seller shall:



(a) with respect to each Real Property, deliver or cause to be delivered to Buyer through
Escrow an original duly executed and acknowledged special warranty deed in substantially the form
attached hereto as Exhibit F, but with such changes thereto as are required by any
applicable laws in the jurisdiction where such Real Property is located (the “Deed”);



(b) with respect to each Property, deliver or cause to be delivered to Buyer through Escrow
two (2) original counterparts of a duly executed bill of sale in the form attached hereto as
Exhibit G (the “Bill of Sale”);



(c) with respect to each Property, deliver or cause to be delivered to Buyer through Escrow
two (2) original counterparts of a duly executed assignment and assumption agreement (the
“Assignment of Leases”) in the form attached hereto as Exhibit H;



(d) with respect to each Property, deliver or cause to be delivered to Buyer through Escrow
two (2) original counterparts of a duly executed assignment and assumption agreement (the
“Assignment of Contracts and Intangibles”) in the form attached hereto as Exhibit
I;



(e) deliver to Buyer through Escrow executed notices in the form attached hereto as
Exhibit J (the “Tenant Notices”);



(f) if any representation or warranty of Seller needs to be modified due to changes since the
Effective Date, deliver to Buyer a duly executed original certificate of Seller (“Seller’s
Closing Certificate”), dated as of the Closing Date and executed on behalf of Seller by a duly
authorized officer thereof, updating the representations and warranties contained in Section
5.1 below to the Closing Date and identifying any representation or warranty which is not, or
no longer is, true and correct and explaining the state of facts giving rise to the change. In no
event shall Seller be liable to Buyer for, or be deemed to be in default under this Agreement by
reason of, any breach of representation or warranty which results from any change that (i) occurs
between the Effective Date and the date of Closing, and (ii) is expressly permitted under the terms
of this Agreement or is beyond the reasonable control of Seller to prevent. The occurrence of a
change in a representation and warranty shall, if materially adverse to Buyer, as determined by
Buyer in Buyer’s reasonable good faith business judgment, constitute the non-fulfillment of the
condition set forth in Section 4.7(b) hereof, unless such matter is cured at least one (1)
Business Day prior to Closing. If, despite changes or other matters described in Seller’s Closing
Certificate, the Closing occurs, Seller’s representations and warranties set forth in this
Agreement shall be deemed to have been modified by all statements made in such certificate;



(g) deliver to the Title Company or Escrow Holder such evidence as either may reasonably
require as to the authority of the person or persons executing documents on behalf of Seller;



(h) deliver to Buyer through Escrow a certificate in the form attached hereto as Exhibit
K duly executed by Seller, stating that Seller is not a “foreign person”, a “foreign
corporation”, a “foreign partnership”, a “foreign trust”, a “foreign estate”, or a “disregarded
entity” as defined in the Federal Foreign Investment in Real Property Tax Act of 1980 and the 1984
Tax Reform Act, along with any applicable State or local law equivalent;



(i) within thirty (30) days following the Closing, deliver to Buyer outside of Escrow or at
the Properties all original Leases, together with all original leasing and property files and
records which are material in connection with the continued operation, leasing and maintenance of
the Properties (but excluding any Confidential Documents), in each case to the extent in the
possession of Seller. Prior to delivery of the foregoing, Seller may, at its sole cost, make a copy
of all files, records and documents which Seller has delivered to Buyer. In addition, for a period
of twelve (12) months after the Closing or until the particular Property is sold by Buyer,
whichever is earlier, Buyer shall use commercially reasonable efforts to provide Seller copies
(without representation or warranty of any kind, express or implied), at Seller’s sole cost and
expense, of all files, records and documents delivered to Buyer in connection with the Closing to
the extent in Buyer’s possession, promptly after the receipt of an advance written request by
Seller; provided that Buyer shall have no monetary liability for failure to comply with this
clause. The provisions of this Section 4.2(i) shall survive the Closing;



(j) deliver an owner’s affidavit with regard to each Property to the Escrow Holder in
substantially the form attached hereto as Exhibit L, but with such changes thereto as are
necessary to provide the information required by such affidavit with respect to such Property;



(k) deliver to Buyer possession and occupancy of the Properties, subject to the Permitted
Exceptions;



(l) execute and deliver a closing statement acceptable to Seller through



Escrow;



(m) perform and satisfy all agreements and covenants required hereby to be performed by Seller
prior to or at the Closing;



(n) to the extent reasonably required by the Title Company, deliver a gap indemnity agreement
with regard to each Property to Escrow Holder in a form reasonably acceptable to Seller and the
Title Company; and



(o) deliver such additional documents as shall be reasonably required to consummate the
transaction contemplated by this Agreement, including the Sales Disclosure Form required by the
State of Indiana to be completed on State Form 46021, as amended.



Section 4.3 Buyer’s Obligations at Closing. At, or prior to Closing, Buyer



shall:



(a) pay to Seller through Escrow the full amount of the Purchase Price (due credit shall be
given for the Deposit as provided herein), as increased or decreased by prorations and adjustments
as herein provided in immediately available wire transferred funds pursuant to Section 1.4
hereof;



(b) with respect to each Property, deliver or cause to be delivered to Seller through Escrow
two (2) original counterparts of a duly executed Assignment of Contracts and Intangibles;



(c) if any representation or warranty of Buyer needs to be modified due to changes since the
Effective Date, deliver to Seller a duly executed original certificate of Buyer (“Buyer’s
Closing Certificate”), dated as of the Closing Date and executed on behalf of Buyer by a duly
authorized officer thereof, updating the representations and warranties contained in Section
5.3 below to the Closing Date and identifying any representation or warranty which is not, or
no longer is, true and correct and explaining the state of facts giving rise to the change. In no
event shall Buyer be liable to Seller for, or be deemed to be in default hereunder by reason of,
any breach of representation or warranty set forth in Section 5.3 hereof which results from
any change that (i) occurs between the Effective Date and the date of Closing, and (ii) is
expressly permitted under the terms of this Agreement or is beyond the reasonable control of Buyer
to prevent. The occurrence of a change in a representation or warranty shall, if materially
adverse to Seller, as determined by Seller in Seller’s reasonable good faith business judgment,
constitute the non-fulfillment of the conditions set forth in Section 4.9(c) hereof, unless
such matter is cured at least one (1) Business Day prior to Closing. If, despite changes or other
matters described in Buyer’s Closing Certificate, the Closing occurs, Buyer’s representations and
warranties set forth in this Agreement shall be deemed to have been modified by all statements made
in such certificate;



(d) deliver to the Title Company or Escrow Holder such evidence as either may reasonably
require as to the authority of the person or persons executing documents on behalf of Buyer;



(e) with respect to each Property, deliver or cause to be delivered to Seller through Escrow
two (2) original counterparts of a duly executed Assignment of Leases;



(f) execute and deliver a closing statement acceptable to Buyer through Escrow;



(g) perform and satisfy all agreements and covenants required hereby to be performed by Buyer
prior to or at the Closing;



(h) execute and deliver and cause any Buyer-Affiliated Assignee (as defined in Section
10.3 hereof), if applicable, to execute and deliver to Seller a release of claims (the
“Release”) in the form attached hereto as Exhibit N; and



(i) deliver such additional documents as shall be reasonably required to consummate the
transaction contemplated by this Agreement, including the Sales Disclosure Form required by the
State of Indiana to be completed on State Form 46021, as amended.



Section 4.4 Escrow Holder’s Obligations at Closing. The Escrow Holder shall undertake
the following at or promptly after Closing:



(a) If necessary, the Escrow Holder is authorized and instructed to insert the date Escrow
closes as the effective date of any documents conveying interests herein or which are to become
operative as of the Closing Date;



(b) Cause the Deeds and any other recordable instruments which the parties so direct to be
recorded in the Official Records of the Recorder of the County in which the Properties are located.
If permitted by applicable law, the Escrow Holder is hereby instructed not to affix the amount of
any Transfer Tax (as defined in Section 4.6(b)(v) hereof) on the face of the Deeds, but to
pay on the basis of a separate affidavit of Seller not made a part of the public record;



(c) Cause each non-recorded document to be delivered to the party acquiring rights thereunder,
or for whose benefit such document was obtained;



(d) Deliver to Buyer the Title Policies; and



(e) Deliver to Seller the Purchase Price and such other funds, if any, as may be due to Seller
by reason of credits under this Agreement, less all items chargeable to Seller under this
Agreement.



(f) Comply with all applicable federal, state and local reporting and withholding requirements
relating to the close of the transactions contemplated herein. Without limiting the generality of
the foregoing, to the extent the transactions contemplated by this Agreement involve a real estate
transaction within the purview of Section 6045 of the Internal Revenue Code of 1986, as amended
(the “Internal Revenue Code”), the Escrow Holder shall have sole responsibility to comply
with the requirements of Section 6045 of the Internal Revenue Code (and any similar requirements
imposed by state or local law). For purposes hereof, HCP’s



tax identification number is 33-0091377 and HCP/Indiana’s tax identification number is 33-0828747.
The Escrow Holder shall defend, indemnify and hold Buyer, Seller and their counsel free and
harmless from and against any and all liability, claims, demands, damages and costs, including
reasonable attorney’s fees and other litigation expenses, arising or resulting from the failure or
refusal of the Escrow Holder to comply with such reporting requirements.



Section 4.5 Credits and Prorations.



(a) All income and expenses of the Properties shall be apportioned as of 12:01 a.m. on the day
of Closing as if Buyer were vested with title to the Properties during the entire day upon which
Closing occurs. Such prorations, if and to the extent known and agreed upon as of the Closing,
shall be paid by Buyer to Seller (if the prorations result in a net credit to Seller) or by Seller
to Buyer (if the prorations result in a net credit to Buyer) by increasing or reducing the cash to
be paid by Buyer at the Closing. Any such prorations not determined or not agreed upon as of the
Closing shall be paid by Buyer to Seller, or by Seller to Buyer, as the case may be, in cash as
soon as practicable following the Closing. Such prorated items include without limitation the
following:



(i) all Rents and any other income with respect to the Properties received by the Closing, if
any;



(ii) taxes and assessments (including personal property taxes on the Personal Property) levied
against the Properties;



(iii) any improvement assessment liens or other similar assessments which encumber the
Properties, it being understood that Seller shall have no obligation to pay all or any portion of
the principal amount of any such assessments, except to the extent required under the terms of such
assessments to be paid prior to Closing;



(iv) utility charges for which Seller is liable, if any, such charges to be apportioned at
Closing tentatively on the basis of the most recent meter reading occurring prior to Closing (dated
not more than fifteen (15) days prior to Closing) or, if unmetered, on the basis of a current bill
for each such utility and adjusted when actual information is available;



(v) all amounts payable with respect to the Operating Agreements and all Leasing Commissions
and Tenant Inducement Costs as provided in Section 4.5(b)(vii) hereof; and



(vi) any other operating expenses or other items pertaining to the Properties which are
customarily prorated between a buyer and a seller in the County in which the Properties are
located.



(b) Notwithstanding anything contained in Section 4.5(a) hereof with respect to each
Property:



(i) Rent actually received under the Leases shall be apportioned as of the Closing Date. With
respect to any Rent arrearages existing under the Leases on the Closing Date, after Closing, Buyer
shall promptly pay to Seller any Rent actually collected by Buyer that is applicable to the period
preceding the Closing Date and Seller shall promptly pay to Buyer any Rent actually collected by
Seller that is applicable to the period on or after the Closing Date; provided, however, that (i)
all Rent received by Seller or Buyer within the first ninety (90) day period after the Closing
shall be applied first to delinquent Rent, if any, in the order of its maturity, and then to
current Rent, and (ii) all Rent received by Seller or Buyer after the first ninety (90) day period
after the Closing shall be applied first to then current Rent and then to delinquent Rent, if any,
in the inverse order of maturity. After the Closing, Buyer shall make good faith efforts to
collect all Rent arrearages in accordance with Buyer’s normal collection practices; provided,
however, that Buyer need not institute litigation to collect Rent due under such Lease prior to
Closing. Seller shall be permitted to pursue collection of any Rent arrearages applicable to the
period prior to the Closing, provided that Buyer shall not incur any (and Seller shall indemnify,
defend and hold Buyer harmless against) all cost, expense or liability in connection therewith and
provided further that Seller shall not commence any, legal or equitable proceedings against any
tenant with respect to the collection of any Rent arrearages following the Closing;



(ii) At Closing, Seller shall credit to the account of Buyer the amount of any cash Security
Deposits held by Seller pursuant to the Leases (to the extent such Security Deposits have not been
applied against delinquent Rents under the Leases) and any interest earned thereon which by law or
the terms of the Leases is required to be paid or refunded to tenants under the Leases;



(iii) All real property taxes and assessments assessed or levied against or with respect to
the Property in 2007, which are due and payable in 2008, and for all tax years prior thereto
(including for the tax year 2006, which taxes were not timely billed in 2007, and therefore are now
payable in 2008) shall be the responsibility of Seller. All real property taxes and assessments
assessed or levied against or with respect to the Property for 2008, which are due and payable in
2009, and for all tax years thereafter shall be the responsibility of Buyer. At Closing, Seller
shall pay all real property taxes and assessments assessed or levied against or with respect to the
Property for which Seller is responsible as herein provided, to the extent the same are known and
due and payable as of the Closing Date. If the actual amount of any real property taxes and
assessments assessed or levied against or with respect to the Property for which Seller is
responsible as herein provided are known as of the Closing Date, but not yet due and payable as of
the Closing Date, then Buyer shall assume responsibility for the same and Buyer shall receive a
credit against the Purchase Price at the Closing for such real property taxes and assessments and
Buyer shall thereafter pay such real property taxes and assessments when due. If the actual amount
of any real property taxes and assessments assessed or levied against or with respect to the
Property for which Seller is responsible as herein provided are not yet known as of the Closing
Date, then the parties shall estimate such real property taxes and assessments based upon the most
recent assessment or available estimates and the following shall apply: (i) Buyer shall receive a
credit against the Purchase Price at the Closing for such estimated amount of such real property
taxes and assessments for which Seller is responsible as herein provided; (ii) Buyer shall assume
responsibility for payment of such taxes and assessments and shall pay the same when due; and (iii)
the parties shall re-prorate such taxes and assessments after the actual assessment(s) are known;



(iv) Charges referred to in Section 4.5(a) hereof (including real property taxes and
assessments pursuant to Section 4.5(a)(iii) hereof) which are payable by any tenant
directly to a third party or which are reimbursable as Additional Rent as provided below shall not
be apportioned hereunder and Buyer shall look solely to the tenant responsible therefor for the
payment of such charges; provided however, that with respect to this Section 4.5 (b)(iv),
the same shall not apply to the extent that any such tenant(s) has paid such property taxes and/or
assessments to Seller or its agent as a part of Additional Rent, or otherwise, for any period for
which such taxes and assessments remain unpaid and outstanding in respect of the Real Estate.  For
purposes of clarity, if Seller has collected such amounts from any such tenant(s) in respect of
accrued but unpaid taxes and assessments for which Buyer is responsible or for which Buyer has
otherwise agreed to assume payment as provided in Section 4.5(b)(iii) above, Seller shall
credit the same against the Purchase Price for the benefit of Buyer at Closing as further provided
in Section 4.5(b)(vi); provided, however, that Seller shall not credit any such amounts
against the Purchase Price to the extent that Seller is responsible for the payment of such
property taxes and/or assessments pursuant to Section 4.5(b)(iii) above. If Seller shall
have paid any of such charges on behalf of any tenant, and shall not have been reimbursed therefor
by the time of Closing, Buyer shall credit to Seller an amount equal to all such charges so paid by
Seller.



(v) As to utility charges referred to in Section 4.5(a)(iv) hereof, Seller may upon
notice to Buyer elect to pay one or more of all of said items accrued to the date hereinabove fixed
for apportionment directly to the person or entity entitled thereto, and to the extent Seller so
elects, such item shall not be apportioned hereunder, and Seller’s obligation to pay such item
directly in such case shall survive the Closing or any termination of this Agreement;



(vi) Any percentage rent, charges for real estate taxes, parking charges, operating and
maintenance expenses, escalation rents or charges, electricity charges, cost of living increases or
any other charges of a similar nature other than fixed or base Rent under the Leases (collectively,
the “Additional Rents”) shall be prorated on the Closing Date between Buyer and Seller
based on the best estimate of Buyer and Seller (and taking into account the prior year adjustments
and a good faith estimate of any real property taxes and assessments). Prior to Closing, Seller
shall deliver to Buyer for its review and approval a preliminary statement setting forth its
estimate of the proration of such Additional Rents. Buyer and Seller shall complete a final
proration of Additional Rents as soon as practicable after Closing, but in any event within ninety
(90) days thereafter; provided, however, if such final proration cannot be reasonably completed
within such ninety (90) day period because any real estate taxes and assessments for any applicable
period are not yet known, then such final proration shall be completed as soon as such taxes and
assessments are actually known. Prior to Closing, and as part of the preliminary statement, Seller
shall provide Buyer with information regarding Additional Rents which were received by Seller prior
to closing and the amount of reimbursable expenses paid by Seller prior to Closing. On or before
the date which is sixty (60) days after Closing, Buyer shall deliver to Seller a reconciliation of
all expenses reimbursable by tenants under the Leases, and the amount of Additional Rents received
by Seller and Buyer relating thereto (the “Reconciliation”); provided, however, that if
such Reconciliation cannot reasonably be completed within such sixty (60) day period because any
real estate taxes or assessments for any applicable period are not yet known, then such
Reconciliation shall be prepared by Buyer and delivered to Seller promptly following the date the
same are actually known. Upon reasonable notice and during normal business hours, each party shall
make available to the other all information reasonably required to confirm the Reconciliation. In
the event of any overpayment of Additional Rents by the tenants to Seller, Seller shall promptly,
but in no event later than fifteen (15) days after receipt of the Reconciliation, pay to Buyer the
amount of such overpayment and Buyer, as the landlord under the particular Leases, shall pay or
credit to each applicable tenant the amount of such overpayment. In the event of an underpayment
of Additional Rents by the tenants to Seller, Buyer shall pay to Seller the amount of such
underpayment within fifteen (15) days following Buyer’s receipt of any such amounts from the
tenants and after the Closing Buyer shall make good faith efforts to collect any underpayments
(including for any real estate taxes and assessments that are not yet known, when such amounts are
known) in accordance with Buyer’s normal collection practices; provided, however, that Buyer need
not institute litigation to collect the same under any Lease. Notwithstanding anything to the
contrary herein, Seller shall deliver to Buyer or credit against the Purchase Price at Closing any
amounts collected by Seller on account of Additional Rents from tenants, which based upon Seller’s
estimates, exceeds the actual Additional Rent owing from such tenants through the Closing (i.e.,
amounts collected from such tenants on account of Additional Rent in excess of such tenants’ actual
year-to-date share of expenses for which the same have been collected); and



(vii) On the Closing Date, Buyer shall be responsible for the payment of (A) all “Tenant
Inducement Costs” (as hereinafter defined) and “Leasing Commissions” (as hereinafter
defined), which become due and payable (whether before or after Closing) as a result of any
“New Lease Documents” (as hereinafter defined) executed prior to Closing and approved or
deemed approved by Buyer pursuant to Section 5.5(b), and all other reasonable third party
attorneys’ fees that are incurred by Seller in connection therewith and evidenced by an invoice
from any such third party attorney (“Legal Fees”), (B) all Tenant Inducement Costs, Leasing
Commissions and Legal Fees with respect to those Leases or amendments to Leases identified on
Schedule 4.5(b)(vii) hereof (herein, the “Specified Existing Leases”), and (C) all
Tenant Inducement Costs, Leasing Commissions and Legal Fees with respect to New Lease Documents,
signed or entered into from and after the date of Closing; provided, however, that to the extent
any tenant under a New Lease Document signed or executed after the Effective Date commences payment
of Rent under such New Lease Document prior to the Closing, then with respect to such Tenant
Inducement Costs, Leasing Commissions and Legal Fees relating thereto, the same shall be prorated
between Buyer and Seller, with Buyer responsible for that portion thereof equal to the number of
days in the stated term of such New Lease Document after the Closing and Seller responsible for
that portion thereof equal to the number of days in the stated term prior to the Closing; provided
further, however, that should any such Leasing Commissions, Tenant Inducement Costs or Legal Fees
be due and payable prior to Closing, Seller shall pay such commission or cost and upon Closing,
Seller shall receive a credit equal to the amount of such Leasing Commissions, Tenant Inducement
Costs or Legal Fees paid. The term “Tenant Inducement Costs” shall mean any payments
required under a Lease to be paid by the landlord thereunder to or for the benefit of the tenant
thereunder which is in the nature of a tenant inducement, including specifically, without
limitation, tenant improvement cost, lease buyout costs, and moving, design, refurbishment, free
rent, and club membership allowances. The term “Leasing Commissions” includes all expenses
connected with or arising out of the negotiation, execution and delivery of the Leases, including
brokers’ commissions, leasing fees and legal fees, if any. Notwithstanding anything to the
contrary contained in this Agreement, Seller shall be solely responsible for all Leasing
Commissions, Tenant Inducement Costs and Legal Fees incurred with respect to all Leases executed or
signed prior to the Effective Date (other than the Specified Existing Leases); provided, however,
that to the extent that any Tenant Inducement Costs for which Seller is responsible as herein
provided are unpaid, unexpired or otherwise apply to any period after the Closing Date or any
Leasing Commissions or Legal Fees are unpaid as of the Closing Date, Buyer shall receive a credit
against the Purchase Price for all such Tenant Inducement Costs, Leasing Commissions and Legal
Fees. In such event, from and after the Closing Buyer shall assume all obligations for any Tenant
Inducement Costs, Leasing Commissions or Legal Costs for which Seller is otherwise responsible as
herein provided to the extent of any credit received by Buyer against the Purchase Price at the
Closing.



(c) Seller may prosecute an appeal of the real property tax assessment for any tax years prior
to and including the tax year 2007 (which taxes are payable in 2008), and may take related action
which Seller deems appropriate in connection therewith. Buyer shall cooperate with Seller in
connection with any appeal and collection of a refund of real property taxes and assessments for
any tax year prior to and including 2007 (which amounts are payable in 2008), but shall not be
obligated to incur any expense in connection therewith. Seller shall own and hold all right, title
and interest in and to such appeal and refund respecting all tax years prior to and including the
tax year 2007, and all amounts payable in connection therewith shall be paid directly to Seller by
the applicable authorities. If such refund or any part thereof is received by Buyer, Buyer shall
promptly pay to Seller any amounts relating to any tax year prior to and including 2007. Any
refund received by Seller shall be distributed as follows: first, to reimburse Seller and Buyer for
all costs, if any, incurred in connection with the appeal; second, with respect to refunds payable
to tenants of the Properties pursuant to the Leases, to such tenants in accordance with the terms
of such Leases; and third, to Seller to the extent such appeal covers any tax year prior to and
including 2007, and to Buyer to the extent such appeal covers any tax year after 2007. If, solely
as a result of any appeal by Seller of the real property tax assessment for any tax years prior to
and including 2007, an increase in or additional real estate taxes are levied against any Real
Property then, subject to the provisions of Section 4.5(b) hereof, Seller shall reimburse
Buyer for all such increase or additional real estate taxes attributable to any tax year prior to
and including 2007, unless such increases are payable by any tenant.



(d) Except as otherwise provided herein, any revenue or expense amount which cannot be
ascertained with certainty as of Closing shall be prorated on the basis of the parties’ reasonable
estimates of such amount, and shall be the subject of a final proration sixty (60) days after
Closing, or as soon thereafter as the precise amounts can be ascertained. Buyer shall promptly
notify Seller when it becomes aware that any such estimated amount has been ascertained. Once all
revenue and expense amounts have been ascertained, Buyer shall prepare a final proration statement
which shall be subject to Seller’s approval, which shall not be unreasonably withheld, conditioned
or delayed. Upon Seller’s acceptance and approval of any final proration statement submitted by
Buyer, such statement shall be conclusively deemed to be accurate and final. Any such revenue or
expense amount shall be paid by Buyer to Seller, or Seller to Buyer, as the case may be, in cash as
soon as practicable following Closing.



(e) Seller and Buyer agree that (i) on the Closing Date, the Property will not be subject to
any financing under which any entity comprising the Seller is the borrower; and (ii) none of the
Seller’s insurance policies (if any) relating to the Properties will be assigned to Buyer and Buyer
shall be responsible for arranging for its own insurance as of the Closing Date. Notwithstanding
the foregoing, Buyer acknowledges that Seller has incurred certain indebtedness secured by a lien
on the Methodist Medical Plaza II Property (the “Identified Debt”). At Closing, Buyer
shall take title to such Property subject to the Identified Debt and, immediately upon Closing
through Escrow, pay-off in full the entire outstanding amount owing in connection with the
Identified Debt, including, without limitation, the entire principal amount thereof, all accrued
and unpaid interest thereon, and any prepayment premiums, yield maintenance premiums or similar
costs in connection therewith (collectively, the “Pay-Off Costs”). Prior to the Closing,
and as a condition to Buyer’s agreement to take the Methodist Medical Plaza II Property subject to
the Identified Debt and pay off the same at Closing, Seller shall obtain a so-called pay-off letter
from the lender of the Identified Debt, which letter shall specify the total Pay-Off Costs
therefore and that such Identified Debt must be paid in full immediately upon the Closing (the
“Pay-Off Letter”) and deliver a copy of the same to Buyer and Escrow Holder. The total
Pay-Off Costs paid by Buyer through Escrow to the lender of the Identified Debt shall be credited
against the Allocated Purchase Price for such Property and the total Purchase Price at Closing. If
Seller is unable to deliver the Pay-Off Letter on or prior to the Closing, then Seller shall be
solely responsible for paying in full the Identified Debt at Closing through Escrow out of the
proceeds otherwise payable to Seller in connection with the transactions contemplated hereby. If
Seller delivers the Pay-Off Letter on or prior to the Closing, and Buyer takes title to the
Methodist Medical Plaza II Property subject to the Identified Debt and pays through Escrow
immediately upon the Closing all Pay-Off Costs in connection therewith as herein provided, Seller
hereby agrees to indemnify, defend (with counsel reasonably satisfactory to Buyer) and hold Buyer
and its successors and assigns harmless against all cost, expense or liability in connection
therewith, including, without limitation, for any additional amounts claimed due and owing by the
lender of such Identified Debt or any other obligations of the “borrower” (other than the Pay-Off
Costs) in connection with the Identified Debt. The provisions of this Section 4.5(e) shall
survive the Closing and shall not be subject to the survival and liability limitations set forth in
Section 5.2 hereof.



(f) The provisions of this Section 4.5 shall survive Closing.



Section 4.6 Transaction Taxes and Closing Costs



(a) Seller and Buyer shall execute such returns, questionnaires and other documents as shall
be required with regard to all applicable real property transaction taxes imposed by applicable
federal, state or local law or ordinance.



(b) Seller shall pay the fees of any counsel representing Seller in connection with this
transaction. Seller shall also pay the following costs and expenses:



(i) one-half (1/2) of the escrow fee, if any, which is charged by the Escrow Holder;



(ii) with respect to each Property, the premium for the ALTA Standard Coverage Owner’s Policy
of Title Insurance (or its equivalent in applicable jurisdiction) to be issued to Buyer by the
Title Company at Closing; and



(iii) the cost of any Curative Endorsements;



(iv) except as expressly provided in Section 4.5 hereof, all costs incurred in
connection with the prepayment, satisfaction or reconveyance of any loan under which Seller is the
borrower and which is secured by any of the Properties, including, without limitation, all
prepayment, reconveyance and recording fees, penalties or charges, and any legal fees associated
therewith; and



(v) all documentary transfer tax or similar tax (including, without limitation, City, County
and State documentary transfer taxes, as applicable) which becomes payable by reason of the
transfer of the Properties by Seller to Buyer (collectively, “Transfer Taxes”).



(c) Buyer shall pay the fees of any counsel representing Buyer in connection with this
transaction. Buyer shall also pay the following costs and expenses:



(i) one-half (1/2) of the escrow fee, if any, which is charged by the Escrow Holder;



(ii) the fees for recording the Deeds;



(iii) with respect to each Property, the premium for any extended portion of the Owner’s
Policy of Title Insurance (or its equivalent in applicable jurisdiction) to be issued to Buyer by
the Title Company at Closing; and



(iv) the cost of all endorsements for each Title Policy, excluding all Curative Endorsements;



(v) the cost of any New Surveys and Buyer’s own due diligence expenses.



(d) The Personal Property is included in this sale without charge, however, Buyer shall be
responsible for the amount of any and all sales or similar taxes payable in connection with the
transfer of the Personal Property.



(e) All costs and expenses incident to this transaction and the Closing thereof, and not
specifically described above or elsewhere in this Agreement shall be allocated in accordance with
the closing customs for the County in which the Property is located.



(f) The provisions of this Section 4.6 shall survive the Closing.



Section 4.7 Conditions Precedent to Obligation of Buyer. The obligation of Buyer to
consummate the transaction contemplated hereunder shall be subject to the fulfillment on or before
the date of Closing (unless another date is specified) of all of the conditions set forth in this
Section 4.7, any or all of which may be waived by Buyer in its sole and absolute
discretion. In the event Buyer terminates this Agreement, which termination shall apply to all,
but not less than all, of the Properties, due to the non-satisfaction of any such conditions, then
the termination provisions set forth in Section 3.7 hereof shall apply.



(a) Seller shall have delivered to Buyer (or to Buyer through the Escrow Holder) all of the
items required to be delivered to Buyer at or prior to the Closing pursuant to the terms of this
Agreement, including but not limited to, those provided for in Section 4.2 hereof;



(b) All of the representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects as of the Closing Date as if made at and as of such time
(with appropriate modification as permitted under this Agreement);



(c) Seller shall have performed and observed, in all material respects, all covenants and
agreements of this Agreement to be performed and observed by Seller as of the date of Closing;



(d) The Title Company shall have issued or is irrevocably committed to issue the Title
Policies;



(e) No “Major Tenant” (as defined in Section 4.7(h) hereof) shall be in
material default under its Lease with regard to any matter that was not previously disclosed in any
ESNDA (excluding all Unacceptable ESNDAs) delivered pursuant to this Agreement nor shall any Major
Tenant, in each case subsequent to the Effective Date, have (i) given notice that it is
discontinuing operations at any Property, (ii) filed bankruptcy or sought any similar debtor
protective measure or (iii) be the subject of an involuntary bankruptcy;



(f) As of the Closing Date, no Seller shall have commenced (within the meaning of any
Bankruptcy Law) a voluntary case, nor shall there have been commenced against any Seller an
involuntary case, nor shall any Seller have consented to the appointment of a Custodian of it or
for all or any substantial part of its property, nor shall a court of competent jurisdiction have
entered an order or decree under any Bankruptcy Law that is for relief against any Seller in an
involuntary case or appoints a Custodian of any Seller for all or any substantial part of its
property. The term “Bankruptcy Law” means Title 11, U.S. Code, or any similar state



law for the relief of debtors. The term “Custodian” means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law; and



(g) Seller shall have obtained all third party consents necessary for the transfer or sale of
the Properties to Buyer on or before the “Approval Date” (as defined in Section
4.9(e) hereof).



(h) Within five (5) Business Days following the Effective Date, Buyer shall prepare and
deliver to Seller a completed Estoppel, Subordination, Nondisturbance and Attornment Agreement in
substantially the applicable form attached hereto as Exhibit E (the “ESNDAs”) with
respect to each tenant under a Lease of the Property. Within two (2) Business Days after receipt
by Seller of such completed ESNDAs from Buyer, Seller shall deliver such completed ESNDAs to each
applicable tenant and request that the same be signed by the applicable tenant and returned to
Seller within ten (10) days after Seller’s delivery thereof. Seller shall use commercially
reasonable efforts to obtain an executed ESNDA from each of the tenants under the Leases on or
prior to five (5) Business Days before Closing; provided, however, that in no event shall Seller be
required to declare an event of default under any Lease for a tenant’s failure to deliver an ESNDA
or otherwise be required to institute legal proceedings against any tenant in connection therewith.
It shall be a condition to Buyer’s obligation to close hereunder that Seller obtain and provide
Buyer with ESNDAs from all tenants under the Leases whose leased premises, in the aggregate,
comprise at least eighty percent (80%) of the rentable square feet of the Properties (in the
aggregate) that is leased as of the Effective Date, and which must include each tenant leasing
10,000 rentable square feet or more (each, a “Major Tenant”). Buyer shall have three (3)
Business Days after receipt of each ESNDA executed by the applicable tenant to review and approve
such ESNDAs; provided, however, that Buyer shall be required to approve an ESNDA unless it (i)
contains a material discrepancy (as determined by Buyer in Buyer’s reasonable good faith business
judgment) from the applicable Lease, (ii) deviates in a substantial and materially adverse manner
from the applicable form ESNDA attached hereto as Exhibit E (as determined by Buyer in
Buyer’s reasonable good faith business judgment), or (iii) discloses an alleged material breach (as
determined by Buyer in Buyer’s reasonable good faith business judgment) by Seller, as landlord,
under any Lease (each an “Unacceptable ESNDA”). Notwithstanding the preceding sentence,
any deviation from, or changes by a tenant to, the applicable form ESNDA attached hereto as
Exhibit E that are necessary to conform such form ESNDA to the applicable provisions of the
subject Lease shall not provide the basis for Buyer to deem such ESNDA an Unacceptable ESNDA. If
Buyer timely notifies Seller of any Unacceptable ESNDA, Seller shall have until the earlier of five
(5) days after notice from Buyer or the Closing to cure such matter and cause the applicable tenant
to execute a replacement ESNDA removing all references to the matter to which Buyer had objected.
If Seller is unable to cure such matter and/or obtain a replacement ESNDA executed by the
applicable tenant, then Buyer’s sole remedy shall be to either (i) waive the requirement for
delivery of such ESNDA and proceed to Closing without any abatement in the Purchase Price, or (ii)
terminate this Agreement in its entirety in which case the provisions of Section 3.7 hereof
shall apply. In no event shall Seller be liable to Buyer for, or be deemed to be in default under
this Agreement by reason of, the failure to obtain an executed ESNDA from the tenants under the
Leases. Notwithstanding anything to the contrary in this Section 4.7(h), (x) Seller shall not be
required to execute any ESNDA as the “Landlord” under the applicable Lease, (y) Buyer shall execute
each ESNDA as the “Landlord” and shall cause its lender to execute each such ESNDA as the
“Mortgagee” and (z) Buyer shall not be entitled to terminate this Agreement in the event that
Seller, Buyer and/or Mortgagee fail to so execute each ESNDA.



Section 4.8 REA Estoppels. Buyer shall also have the right to seek and approve of estoppel
certificates (“REA Estoppels”) from any parties to or owners of property subject to any
material reciprocal construction, easement, operating or similar agreement affecting any Property
and from the declarant, architectural committee and/or association, as applicable, under any
declaration of covenants, conditions or restrictions affecting any Property, all such agreements
and declarations being referred to herein as an “REA”. Within five (5) Business Days
following the Effective Date, Buyer shall prepare and deliver to Seller completed REA Estoppels in
forms reasonably acceptable to Buyer and Seller for delivery to any such parties to REAs (the
“REA Parties”) that Buyer desires to obtain. Within two (2) Business Days after receipt of
such completed REA Estoppels from Buyer, Seller shall deliver such completed REA Estoppels to the
applicable REA Parties and request that such REA Party sign and return such completed REA Estoppel
to Seller within ten (10) days after Seller’s delivery thereof; provided, however, that if Seller
does not have the current address or contact information for any such REA Party, then Seller shall
use good faith, commercially reasonable efforts to obtain such information and deliver the
completed REA Estoppel to the applicable REA Party as soon as reasonably practicable. If, after
using good faith, commercially reasonable efforts to obtain such information, Seller is unable to
obtain a current address or contact information for any such REA Party, Seller shall promptly
notify Buyer thereof in writing and shall be relieved of any further obligation to deliver an REA
Estoppel to any such REA Party as to which such information is unavailable. Seller shall use
commercially reasonable efforts to obtain an executed REA Estoppel from each REA Party requested by
Buyer; provided, however, that (a) in no event shall Seller be required to declare an event of
default under any REA for such REA Party’s failure to deliver an REA Estoppel or otherwise be
required to institute legal proceedings against any REA Party in connection therewith, and (b) it
shall not be a condition to Buyer’s obligation to close hereunder that Seller obtain and provide
Buyer with any REA Estoppel, it being understood and agreed that Seller’s inability or failure to
obtain any such REA Estoppels shall not give rise to any right of Buyer to terminate this Agreement
with respect to all or any of the Properties. Notwithstanding the foregoing, if Seller is unable
or fails to obtain any such REA Estoppel, it shall be a condition to Buyer’s obligation to close
hereunder on the Property encumbered by the applicable REA that the Title Company issue (y) an ALTA
9.5 endorsement to any Owner’s Policy of Title Insurance to be issued to Buyer by the Title Company
with respect to the Property encumbered by the applicable REA, which endorsement shall be
unqualified with respect to the nonexistence of violations of such REA and (z) an ALTA 9.3
endorsement to any Lender’s Policy of Title Insurance to be issued to Buyer’s lender by the Title
Company with respect to the Property encumbered by the applicable REA, which endorsement shall be
unqualified with respect to the nonexistence of violations of such REA. If Seller is unable or
fails to obtain any such REA Estoppel and the Title Company is unwilling or unable to issue such
endorsements, then Buyer’s sole remedy shall be to either (i) waive the requirement that Seller
obtain such REA Estoppel and such endorsements and proceed to Closing without any abatement in the
Purchase Price, or (ii) terminate this Agreement in its entirety in which case the provisions of
Section 3.7 hereof shall apply. If Seller obtains any such REA Estoppel, however, Seller
shall deliver the same to Buyer and Buyer shall have three (3) Business Days after receipt of each
executed REA Estoppel to review and approve such REA Estoppel; provided, however, that Buyer shall
be required to approve an REA Estoppel unless it (i) contains a material discrepancy (as determined
by Buyer in Buyer’s reasonable good faith business judgment) from the terms of the applicable REA,
(ii) deviates in a substantial and materially adverse manner from the form delivered to the
applicable REA Party (as determined by Buyer in Buyer’s reasonable good faith business judgment),
or (iii) discloses an alleged material breach (as determined by Buyer in Buyer’s reasonable good
faith business judgment) by Seller under such REA (each an “Unacceptable REA Estoppel”).
Notwithstanding the preceding sentence, any deviation from, or changes by an REA Party to, the
applicable form REA Estoppel prepared by Buyer that are necessary to conform such form to the
applicable provisions of the subject REA shall not provide the basis for Buyer to deem such REA
Estoppel an Unacceptable REA Estoppel. If Buyer timely notifies Seller of any Unacceptable REA
Estoppel, Seller shall have until the earlier of five (5) Business Days after notice from Buyer or
the Closing to cure such matter and cause the applicable REA Party to execute a replacement REA
Estoppel removing all references to the matter to which Buyer had objected. If Seller is unable to
cure such matter and/or obtain a replacement REA Estoppel, then Buyer’s sole remedy shall be to
either (i) waive Buyer’s disapproval of the Unacceptable REA Estoppel and proceed to Closing
without any abatement in the Purchase Price, or (ii) terminate this Agreement in its entirety in
which case the provisions of Section 3.7 hereof shall apply. In no event shall Seller be
liable to Buyer for, or be deemed to be in default under this Agreement by reason of, the failure
to obtain an executed REA Estoppel from any REA Parties.



Section 4.9 Conditions Precedent to Obligation of Seller. The obligation of Seller to
consummate the transaction contemplated hereunder shall be subject to the fulfillment on or before
the date of Closing (unless another date is specified) of all of the following conditions, any or
all of which may be waived by Seller in its sole and absolute discretion:



(a) Seller shall have received the Purchase Price as adjusted as provided herein, and payable
in the manner provided for in this Agreement;



(b) Buyer shall have delivered to Seller (or to Seller through the Escrow Holder) all of the
items required to be delivered to Seller at or prior to the Closing pursuant to the terms of this
Agreement, including but not limited to, those provided for in Section 4.3 hereof;



(c) All of the representations and warranties of Buyer contained in this Agreement shall be
true and correct in all material respects as of the date of Closing (with appropriate modification
as permitted under this Agreement);



(d) Buyer shall have performed and observed, in all material respects, all covenants and
agreements of this Agreement to be performed and observed by Buyer as of the date of Closing;



(e) Within five (5) days following the expiration of the Contingency Period (the “Approval
Date”), this Agreement and the transactions contemplated hereby shall have been approved by the
Board of Directors of HCP; and



(f) Seller shall have obtained all third party consents necessary for the transfer or sale of
the Properties to Buyer by the Approval Date.



Notwithstanding anything to the contrary in this Agreement, if the conditions set forth in
Section 4.9(e) or (f) hereof are not satisfied by the Approval Date, then Buyer
shall be entitled to receive the actual documented out-of-pocket costs and expenses, including,
without limitation, all attorneys fees, that it has theretofore incurred in connection with this
transaction, not to exceed the aggregate amount of Three Hundred Thousand Dollars ($300,000).



Section 4.10 Additional Conditions Relating to Certain Preemptive Rights. Seller and
Buyer acknowledge and agree that each Property identified on Exhibit A as a “Preemptive
Rights Property” is subject to a right of first offer, right of first refusal or similar
pre-emptive right to purchase in favor of a third party (each, a “Preemptive Right”).
Within five (5) Business Days after the Effective Date, Seller shall prepare and deliver (unless
the same has previously been prepared and delivered) to the applicable holder of each such
Preemptive Right (each, a “Right Holder”) a notice (each, a “Right Notice”) that is
effective to offer or otherwise trigger such Right Holder’s Preemptive Right with respect to the
applicable Preemptive Right Property(ies) in accordance with the terms thereof. Each such Right
Notice shall also request that such Right Holder affirmatively waive in writing such Preemptive
Right with respect to the transactions contemplated hereby in writing. Seller shall concurrently
provide Buyer with a copy of each such Right Notice that is sent to a Right Holder and shall use
commercially reasonable efforts to obtain such written affirmative waiver from each Right Holder of
its Preemptive Right with respect to the transactions contemplated hereunder, it being understood
and agreed, however, that each Preemptive Right may survive the transactions contemplated hereby
with respect to any future sale or other transfer of such Preemptive Right Property to a subsequent
purchaser. In no event shall Seller be liable to Buyer for, or be deemed to be in default under
this Agreement by reason of, the failure of Seller to obtain a written affirmative waiver of any
Preemptive Right by any Right Holder. Notwithstanding anything in this Agreement to the contrary,
Seller’s obligation to sell, or cause to be sold, each Preemptive Rights Property shall be subject
to and contingent upon the current Right Holder having, to the extent applicable and required to
terminate the applicable Preemptive Right or such Preemptive Right to lapse with respect to the
transactions contemplated by this Agreement, either (i) executed a written affirmative waiver
thereof, or (ii) elected not to or failed to exercise timely such Preemptive Right to purchase such
Property in accordance with the terms of such Preemptive Right. Seller shall promptly notify Buyer
and Escrow Holder in writing if and when either of the conditions set forth in clause (i) or (ii)
have been satisfied (the “Waiver Notice”) and (a) if the condition in clause (i) above has
been satisfied, a copy of the written affirmative waiver shall be enclosed with the Waiver Notice,
and (b) if the condition in clause (ii) has been satisfied, an executed written statement from
Seller certifying that the applicable Right Holder has failed to timely exercise its Preemptive
Right in accordance with the terms of any such Preemptive Right shall be enclosed with the Waiver
Notice. In the event either clause (i) or (ii) is not satisfied with respect to any Preemptive
Rights Property prior to the expiration of the Contingency Period or the applicable Right Holder
under a Preemptive Right timely exercises its Preemptive Right with respect to any Preemptive Right
Property prior to the expiration of the Contingency Period, then in either case such Property shall
automatically be deemed and treated as a “Removed Property” (as defined in Section
4.11 hereof) for all purposes under this Agreement.



Section 4.11 Termination of Agreement With Respect to Certain Properties.  This
Agreement may be terminated with respect to one or more Properties, but less than all, only for the
following reasons:



(a) If the condition set forth in Section 4.10 hereof with respect to any Preemptive
Rights Property is not satisfied or the applicable Right Holder under a Preemptive Right timely
exercises its Preemptive Right with respect to any Preemptive Right Property, or



(b) Buyer exercises its right to terminate this Agreement with respect to one or more
Properties, but less than all, pursuant to and in accordance with Article VII hereof.



Any Property as to which this Agreement is terminated pursuant to either subsection (a) or (b)
above shall be excluded from the transactions contemplated by this Agreement and shall be known as
a “Removed Property.” If any Property becomes a Removed Property the following shall
apply: (i) the Purchase Price payable on the Closing Date for all of the Properties minus the
Removed Property (the “Remaining Properties”) shall be reduced by the Allocated Purchase
Price of the Removed Property, (ii) the Allocated Deposit for the Removed Property shall be
returned to Buyer and the Deposit shall be reduced accordingly, (iii) Buyer and Seller shall each
be liable for one-half of any escrow fees or charges allocated to the Removed Property, (iv) Buyer
and the Seller shall promptly execute and deliver to Escrow Holder or the Title Company such
documents as Escrow Holder or the Title Company may reasonably require to evidence the withdrawal
of the Removed Property, (v) all instruments in escrow with respect to such Removed Property shall
be returned to the party depositing the same, (vi) Buyer shall return all items relating to such
Removed Property previously delivered by Seller to Buyer (without representation or warranty of any
kind, express or implied), and all non-proprietary inspection reports prepared for Buyer with
respect to any Removed Property by independent third parties (provided that in no event shall Buyer
be required to deliver any attorney-client communications or any internal memoranda prepared by
counsel to Buyer), (vii) all of Seller’s and Buyer’s rights, liabilities, obligations,
representations and warranties with respect to such Removed Property shall be void and of no
further force and effect, except for any indemnity obligations of any party with respect to such
Removed Property pursuant to the provisions of this Agreement or the Other Transaction Documents or
otherwise expressly stated in this Agreement or the Other Transaction Documents to survive
termination with respect to the Removed Properties, and (viii) all of Seller’s and Buyer’s rights,
liabilities, obligations, representations and warranties with respect to the Remaining Properties,
together with all of the other applicable terms of this Agreement, shall remain in full force and
effect with respect to all Remaining Properties. Notwithstanding anything to the contrary
contained herein, if any Preemptive Rights Property becomes a Removed Property by reason of clause
(a) above, and Buyer proceeds to Closing on all then Remaining Properties, then at Closing Seller
shall reimburse Buyer for its actual documented out-of-pocket costs and expenses that it has
theretofore incurred in connection with this transaction relating to any such Preemptive Rights
Property that has become a Removed Property pursuant to clause (a) above through the date thereof
(including a portion of any such costs and expenses that are not directly attributable to any
particular Property (the “Non-Property Specific Costs”) and that were incurred prior to the
date such Preemptive Rights Property became a Removed Property as determined by multiplying Buyer’s
total incurred Non-Property Specific Costs by a fraction, the numerator of which consists of the
aggregate rentable square feet of the Removed Property, and the denominator of which consists of
the aggregate rentable square feet of all of the Properties) and any escrow and title fees or
charges allocated to the Removed Property, but in no event to exceed the aggregate amount of
Seventeen Thousand Dollars ($17,000.00) per Removed Property. The provisions of this Section
4.11 shall survive the Closing or any earlier termination of this Agreement.



ARTICLE V.




REPRESENTATIONS, WARRANTIES AND COVENANTS




Section 5.1 Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer as of the Effective Date, and as of the Closing Date:



(a) Organization and Qualification. HCP has been duly organized, is validly existing
under the laws of the State of Maryland, and is qualified to do business in the State in which the
Properties owned by HCP are located. HCPI/Indiana has been duly organized, is validly existing
under the laws of the State of Delaware, and is qualified to do business in the State in which the
Properties owned by HCPI/Indiana are located. Seller has full power and authority to enter into
this Agreement and, subject to the satisfaction of the conditions set forth in Sections
4.9(e) and (f) and 4.10 hereof, to perform this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement has been duly and
validly authorized by all necessary action on the part of each Seller and, subject to the
satisfaction of the conditions set forth in Sections 4.9(e) and (f) and
4.10 hereof, the performance of this Agreement and the execution, delivery and performance
of all documents contemplated hereby by the Seller has been duly and validly authorized by all
necessary action on the part of each Seller. Subject to the satisfaction of the condition set
forth in Section 4.9(e) hereof , this Agreement is a legal, valid and binding obligation of
each Seller, enforceable against each Seller in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar laws
affecting the rights of creditors generally. The person signing this Agreement on behalf of each
Seller is authorized to do so.



(b) No Conflicts. The execution and delivery by Seller of, and subject to the
satisfaction of the condition set forth in Section 4.9(e) hereof, the performance of and
compliance by Seller with, the terms and provisions of this Agreement, do not (i) conflict with, or
result in a breach of, the terms, conditions or provisions of, or constitute a default under,
Seller’s charter, articles or certificate of incorporation, formation or organization, bylaws or
other documents or instruments which establish and/or set forth the rules, procedures and rights
with respect to Seller’s governance, including, without limitation, any stockholders, limited
liability company, operating or partnership agreement related to Seller, in each case as amended,
restated, supplemented and/or modified and in effect as of the date hereof, (ii) to Seller’s
knowledge, constitute a violation of any applicable code, resolution, law, statute, regulation,
ordinance or rule applicable to Seller, or (iii) to Seller’s knowledge, constitute a violation of
any judgment, decree or order applicable to Seller.



(c) Seller Not a Foreign Person; Patriot Act Compliance.



(i) Seller is not a “foreign person” within the meaning of Section 1445(f)(3) of the Internal
Revenue Code of 1986, as amended.



(ii) To the extent applicable to Seller, to Seller’s knowledge Seller has complied in all
material respects with the International Money Laundering Abatement and Anti-Terrorist Financing
Act of 2001, which comprises Title III of the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (the “Patriot
Act”) and the regulations promulgated thereunder, and the rules and regulations administered by
the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”), to the extent
such Laws are applicable to Seller. Seller is not included on the List of Specially Designated
Nationals and Blocked Persons maintained by the OFAC, or is a resident in, or organized or
chartered under the laws of, (A) a jurisdiction that has been designated by the U.S. Secretary of
the Treasury under Section 311 or 312 of the Patriot Act as warranting special measures due to
money laundering concerns or (B) any foreign country that has been designated as non-cooperative
with international anti-money laundering principles or procedures by an intergovernmental group or
organization, such as the Financial Action Task Force on Money Laundering, of which the United
States is a member and with which designation the United States representative to the group or
organization continues to concur.



(d) Litigation. To Seller’s knowledge, except as disclosed on Schedule 5.1(d)
attached hereto, Seller is not a party to any ongoing or pending actions, suits, arbitrations,
unsatisfied orders or judgments, government investigations or proceedings which, if adversely
determined, could individually or in the aggregate materially and adversely affect the Properties
or otherwise materially interfere with the consummation of the transaction contemplated by this
Agreement.



(e) Employees. There are no on-site employees of Seller at the Properties, and
following the Closing Date, Buyer shall have no obligation to employ or continue to employ any
individual employed by Seller or its affiliates in connection with the Properties.



(f) Compliance with Laws and Environmental Conditions. To Seller’s knowledge, except
as expressly set forth in the Property Documents, Seller has not received any written notice from
any governmental or quasi-governmental authority of any violations of any applicable federal, state
or local laws, statutes, rules, regulations, ordinances, orders or requirements (collectively,
“Laws”) noted or issued by any governmental authority having jurisdiction over or affecting
the Properties, including, without limitation, Laws relating to “Hazardous Materials.” For purposes
of this Agreement, “Hazardous Materials” are substances defined as: “toxic substances,” “toxic
materials,” “hazardous waste,” “hazardous substances,” “pollutants,” or “contaminants” as those
terms are defined in the Resource, Conservation and Recovery Act of 1976, as amended (42 U.S.C. §
6901 et seq.), the Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended .(42 U.S.C. § 9601 et seq.), the Hazardous Materials Transportation Act, as amended (49
U.S.C. § 1801 et sec.), the Toxic Substances Control Act of 1976, as amended (15 U.S.C. § 2601 et
seq.), the Clean Air Act, as amended (42 U.S.C. § 1251 et seg.) and any other federal, state or
local law, statute, ordinance, rule, regulation, code, order, approval, policy and authorization
relating to health, safety or the environment; asbestos or asbestos-containing materials; lead or
lead-containing materials; oils; petroleum-derived compounds; pesticides; or polychlorinated
biphenyls.



(g) Leases. Schedule 1.1(d) attached hereto sets forth a correct list of all
Leases to which Seller is a party, the common name of the tenant thereunder, and the amount of any
Security Deposit that has been provided to Seller in connection with each such Lease. No Security
Deposit held by Seller is in a form other than cash.



(h) Condemnation Proceedings. To Seller’s knowledge, there are no presently pending
or contemplated proceedings to condemn the Properties or any portion thereof.



(i) Operating Agreements. To Seller’s knowledge, except for the Operating Agreements,
Seller has not directly entered into any third party agreements, written or oral, relating to the
upkeep, repair, maintenance, management, leasing or operation of the Land, Improvements or Personal
Property or any portion thereof.



(j) IRPTL. To Seller’s knowledge, none of the Properties qualify as “property” (I.C.
13-11-2-174) as used in the Indiana Responsible Property Transfer Law (“IRPTL”) (I.C.
13-25-3-1 through 13-25-3-15) and, therefore, the transfers contemplated by this Agreement are not
subject to the provisions of IRPTL.



The term “knowledge” as used herein with respect to Seller, shall mean the current
actual and not implied or constructive knowledge, and without the duty of investigation or
independent inquiry, of Glenn Preston, Vice President of HCP and Drew Cressman, Director, Asset
Management (“Seller’s Designated Representatives”). Notwithstanding anything to the
contrary contained herein, neither Seller’s Designated Representatives, nor any of Seller’s
Designated Representatives’ agents, representatives or designees, shall be personally liable for
any inaccuracy or breach by Seller of the representations and warranties contained herein or
elsewhere in this Agreement and/or any other document or instrument executed by Seller in
connection with or pursuant to this Agreement.



Section 5.2 Survival of Seller’s Representations and Warranties. The representations
and warranties of Seller set forth in Section 5.1, as updated in accordance with
Section 4.2(f) of this Agreement, and/or set forth in any estoppel certificate or other
document or agreement delivered by Seller pursuant to this Agreement or in connection with the
consummation of the transactions contemplated hereby (all such representations and warranties of
Seller, collectively, the “Seller’s Representations”), shall survive Closing for a period
of twelve (12) months. No claim for a breach of any Seller’s Representation shall be actionable or
payable unless each of the following conditions is satisfied: (a) the valid claims for all such
breaches, if any, collectively aggregate more than Two Hundred Fifty Thousand Dollars ($250,000),
(b) written notice containing a description of the nature of such breach shall have been given by
Buyer to Seller prior to the expiration of said twelve (12) month period and an action shall have
been commenced by Buyer against Seller within sixty (60) days after the termination of the survival
period provided for above in this Section 5.2, and (c) the Closing has occurred and Buyer
did not have verifiable knowledge that the applicable Seller’s Representation was incorrect prior
to Closing. Buyer agrees to concurrently seek recovery against Seller and under any insurance
policies, the Title Policies and other applicable agreements, and Seller shall not be liable to
Buyer to the extent Buyer’s claim is actually satisfied from any sums recovered from such insurance
policies, Title Policies or other applicable agreements. Notwithstanding any provision of this
Agreement to the contrary, in no event shall (i) Seller’s aggregate liability to Buyer for breach
of any Seller’s Representations exceed an amount equal to three percent (3%) of the Purchase Price,
as increased or decreased by prorations and adjustments as herein provided, or (ii) Seller be
liable for any consequential damages of Buyer or any punitive damages.



Section 5.3 Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as of the Effective Date and as of the Closing Date that:



(a) Organization and Qualification. Buyer has been duly organized and is validly
existing and in good standing under the laws of its State of incorporation/formation and is, or
will be prior to Closing, in good standing in the States in which the Properties are located. Buyer
has, or will have prior to Closing, full power and authority to enter into this Agreement, to
perform this Agreement and to consummate the transactions contemplated hereby. The execution,
delivery and performance of this Agreement and all documents contemplated hereby by Buyer has been
duly and validly authorized by all necessary action on the part of Buyer and this Agreement is a
legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its
terms, subject to the effect of applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws affecting the rights of creditors generally. The person signing
this Agreement on behalf of each Seller is authorized to do so.



(b) No Conflicts. The execution and delivery by Buyer of, and the performance of and
compliance by Buyer with, the terms and provisions of this Agreement, do not (i) conflict with, or
result in a breach of, the terms, conditions or provisions of, or constitute a default under,
Buyer’s charter, articles or certificate of incorporation, formation or organization, bylaws or
other documents or instruments which establish and/or set forth the rules, procedures and rights
with respect to Buyer’s governance, including, without limitation, any stockholders, limited
liability company, operating or partnership agreement related to Buyer, in each case as amended,
restated, supplemented and/or modified and in effect as of the date hereof, (ii) to Buyer’s
knowledge, constitute a violation of any applicable code, resolution, law, statute, regulation,
ordinance or rule applicable to Buyer, or (iii) to Buyer’s knowledge, constitute a violation of any
judgment, decree or order applicable to Buyer.



(c) Absence of Litigation. To Buyer’s knowledge, there is no action, suit,
arbitration, unsatisfied order or judgment, government investigation or proceeding pending against
Buyer which, if adversely determined, could individually or in the aggregate materially interfere
with the consummation of the transaction contemplated by this Agreement.



(d) No Bankruptcy. Buyer has not made a general assignment for the benefit of
creditors or filed a petition for voluntary bankruptcy or filed a petition or answer seeking
reorganization or an arrangement or composition, extension or readjustment of its indebtedness, and
to Buyer’s knowledge no involuntary bankruptcy action has been filed or threatened against Buyer.



(e) ERISA Compliance. Buyer is not acquiring the Properties with the assets of an
“employee benefit plan” under, and as such term is defined in, the Employee Retirement Income
Security Act of 1974.



(f) Patriot Act Compliance. To the extent applicable to Buyer, to Buyer’s knowledge,
Buyer has complied in all material respects with the Patriot Act and the regulations



promulgated thereunder, and the rules and regulations administered by OFAC, to the extent such Laws
are applicable to Buyer. Buyer is not included on the List of Specially Designated Nationals and
Blocked Persons maintained by the OFAC, or is a resident in, or organized or chartered under the
laws of, (A) a jurisdiction that has been designated by the U.S. Secretary of the Treasury under
Section 311 or 312 of the Patriot Act as warranting special measures due to money laundering
concerns or (B) any foreign country that has been designated as non-cooperative with international
anti-money laundering principles or procedures by an intergovernmental group or organization, such
as the Financial Action Task Force on Money Laundering, of which the United States is a member and
with which designation the United States representative to the group or organization continues to
concur.



(g) Compliance at Closing. The representations and warranties contained in



this Section 5.3 shall be deemed to have been made again as of the Closing.



The term “knowledge” as used herein with respect to Buyer shall mean the current
actual and not implied or constructive knowledge, and without duty investigation or independent
inquiry of Danny Prosky, Executive Vice President of Acquisitions, Health Care Properties, Grubb &
Ellis Realty Investors (the “Buyer’s Designated Representatives”). Notwithstanding
anything to the contrary contained herein, neither Buyer’s Designated Representatives, nor any of
Buyer’s Designated Representatives’ agents, representatives or designees, shall be personally
liable for any inaccuracy or breach by Buyer of the representations and warranties contained herein
or elsewhere in this Agreement and/or any other document or instrument executed by Buyer in
connection with or pursuant to this Agreement.



Section 5.4 Survival of Buyer’s Representations and Warranties. The representations
and warranties of Buyer set forth in Section 5.3 hereof, as updated as of the Closing in
accordance with Section 4.3(c) of this Agreement, shall survive Closing for a period of
twelve (12) months. No claim for a breach of any representation or warranty of Buyer shall be
actionable or payable unless written notice containing a description of the nature of such breach
shall have been given by Seller to Buyer prior to the expiration of said twelve (12) month period.
Notwithstanding any provision of this Agreement to the contrary, in no event shall Buyer be liable
for any consequential damages of Seller or any punitive damages.



Section 5.5 Covenants of Seller. Until the Closing Date or the sooner



termination of this Agreement, each Seller covenants as follows:



(a) Maintenance/Operation. Seller shall conduct its business with respect to the
Properties in a reasonable and prudent manner in the ordinary course of its business consistent
with past practice.



(b) Leases. Following the Effective Date and prior to the expiration of the
Contingency Period, Seller shall have the right to enter into any amendment, renewal or expansion
of an existing Lease or any new Lease respecting the Property (as applicable, each a “New Lease
Document”); provided, however, that Seller shall, within two (2) Business Days thereof, provide
an executed copy of such New Lease Document (together with any brokerage agreements, listing
agreements or other agreements relating to the payment of any Leasing Commissions, Tenant
Inducement Costs and/or Legal Fees incurred in connection with such New Lease Document together
with whatever credit and background information, if any, Seller then possesses with respect to any
party subject to each New Lease Document) to Buyer for its review during the Contingency Period as
part of Buyer’s due diligence respecting the Property; and provided further that if Buyer has not
disapproved of any such New Lease Document prior to the expiration of the Contingency Period, or
three (3) Business Days after receipt of a New Lease Document, whichever is later, such New Lease
Document shall be deemed approved. From and after the expiration of the Contingency Period, or
three (3) Business Days after receipt of a New Lease Document, whichever is later, any New Lease
Document which Seller wishes to execute shall be submitted to Buyer prior to execution by Seller.
Buyer shall have three (3) Business Days after its receipt thereof to notify Seller in writing of
either its approval or disapproval thereof, including all Tenant Inducement Costs and Leasing
Commissions to be incurred in connection therewith. If Buyer informs Seller within such three (3)
Business Day period that Buyer does not approve such New Lease Document, which approval may be
given or withheld in Buyer’s sole discretion, then this Agreement shall continue in full force and
effect and Seller shall not enter into such New Lease Document. If Buyer fails to notify Seller in
writing of its approval or disapproval within such three (3) Business Day period set forth above,
then Buyer shall be deemed to have approved of such New Lease Document. At Closing, Buyer shall
reimburse Seller for any Tenant Inducement Costs, Leasing Commissions or Legal Fees incurred by
Seller pursuant to Section 4.5(b)(vii) hereof.



(c) Representations and Warranties. Seller shall not take any action that would cause
any of the representation or warranties of Seller contained herein (with appropriate modifications
permitted under this Agreement), to become inaccurate in any material respect or any of the
covenants of Seller to be breached in any material respect. If, at any time after execution of
this Agreement and prior to Closing, Seller becomes aware of any fact or information which makes a
representation or warranty of Buyer contained in this Agreement untrue in any material respect,
Seller shall promptly disclose such fact in writing to Buyer.



(d) Liens. Subject to Seller’s rights under Section 10.3, Seller shall not
sell, assign, or convey any right, title, or interest whatsoever in or to the Properties, or create
any lien, security interest, easement, encumbrance, charge, or condition affecting the Properties
(other than the Permitted Exceptions).



(e) Operating Agreements. Following the Effective Date and prior to the expiration of
the Contingency Period, Seller shall have the right to enter into any amendment or renewal of an
Operating Agreement or any new Operating Agreement respecting the Properties (as applicable, each a
“New Operating Agreement Document”); provided, however, that Seller shall concurrently
provide an executed copy of such New Operating Agreement Document to Buyer for its review during
the Contingency Period as part of Buyer’s due diligence respecting the Property; and provided
further that if Buyer has not disapproved of any such New Operating Agreement Document prior to the
expiration of the Contingency Period or three (3) Business Days after receipt of a New Operating
Agreement Document, whichever is later, such New Operating Agreement Document shall be deemed
approved, subject to Buyer’s rights pursuant to Section 3.3 hereof. From and after the
expiration of the Contingency Period, any New Operating Agreement Document which Seller wishes to
execute shall be submitted to Buyer prior to execution by Seller. Buyer shall have three (3)
Business Days after its receipt thereof to notify Seller in writing of either its approval or
disapproval thereof. If Buyer informs Seller within such three (3) Business Day period that Buyer
does not approve such New Operating Agreement Document, which approval may be given or withheld in
Buyer’s sole discretion, then this Agreement shall continue in full force and effect and Seller
shall not enter into such New Operating Agreement Document. If Buyer fails to notify Seller in
writing of its approval or disapproval within such three (3) Business Day period set forth above,
then Buyer shall be deemed to have approved of such New Operating Agreement Document.



(f) Compliance. Seller shall use commercially reasonable efforts to comply timely
with all material obligations to be performed by it under the Leases.



(g) Tenant Defaults. Seller shall provide Buyer with copies of (a) any default
letters sent to or received from tenants under the Leases and, (b) any copies of correspondence
received from a tenant under the Leases that it is discontinuing operations at any Property or
seeking to re-negotiate its Lease and (c) notices of bankruptcy filings received with respect to
any tenant under the Leases, in each case to the extent received by Seller subsequent to the
Effective Date.



(h) 8-K and Audit Requirements. Seller acknowledges that it has been advised that
Buyer may assign this Agreement to one or more publicly registered company or the subsidiary of a
publicly registered company that is managed by, sponsored by or under common control with Buyer or
Buyer’s principals (“Registered Company”) and that in such event the assignee will be
required to make certain filings with the Securities and Exchange Commission (the “SEC
Filings”) that relate to the most recent pre-acquisition fiscal year (the “Audited
Year”) and the current fiscal year through the date of acquisition (the “Stub Period”)
for the Properties. To assist the assignee in preparing the SEC Filings, the Seller agrees to
provide the assignee with the following, in each case to the extent relating solely to the
Properties, provided Buyer reimburses Seller for Seller’s reasonable out-of-pocket costs incurred
in connection with creating the same: (i) access to bank statements for the Audited Year and Stub
Period; (ii) rent roll as of the end of the Audited Year and Stub Period; (iii) operating
statements for the Audited Year and Stub Period; (iv) access to the general ledger for the Audited
Year and Stub Period; (v) cash receipts schedule for each month in the Audited Year and Stub
Period; (vi) access to invoices for expenses and capital improvements in the Audited Year and Stub
Period; (vii) accounts payable ledger and accrued expense reconciliations in the Audited Year and
Stub Period; (viii) check register for the three (3) months following the Audited Year and Stub
Period; (ix) the Leases and five (5) year lease schedules, to the extent applicable; (x) copies of
accounts receivable aging as of the end of the Audited Year and Stub Period along with an
explanation for all accounts over thirty (30) days past due as of the end of the Audited Year and
Stub Period; and (xi) a signed 8-K audit letter in the form attached hereto as Exhibit O.
The provisions of the foregoing two (2) sentences shall survive the Closing.



Section 5.6 Covenants of Buyer. Until the Closing Date or the sooner termination of
this Agreement, Buyer shall not take any action that would cause any of the representations or
warranties of Buyer contained herein (with appropriate modifications permitted under this
Agreement) to become inaccurate in any material respect or any of the covenants of Buyer to be
breached in any material respect. If at any time after execution of this Agreement and prior to
Closing, Buyer becomes aware of any fact or information which makes a representation or warranty of
Seller contained in this Agreement untrue in any material respect, Buyer shall promptly disclose
such fact in writing to Seller.



ARTICLE VI.




DEFAULT




Section 6.1 Default by Buyer. If the sale of the Properties as contemplated hereunder
is not consummated due to Buyer’s default hereunder, which remains uncured after five (5) days
written notice from Seller to Buyer identifying such default, then Seller shall be entitled, as its
sole and exclusive remedy, to terminate this Agreement and retain the Deposit as liquidated damages
as more particularly set forth in Section 1.6 hereof. The foregoing notwithstanding, no
right to cure shall extend the Closing Date.



Section 6.2 Default by Seller.



(a) If the sale of the Properties as contemplated hereunder is not consummated due to a
default under this Agreement by Seller, which remains uncured after five (5) days written notice
from Buyer to Seller identifying such default, then Buyer shall be entitled, as its sole and
exclusive remedy, to either (i) receive (x) the return of the Deposit, which return shall operate
to terminate this Agreement and release Seller from any and all liability hereunder (other than
those obligations that expressly survive a termination of this Agreement), and (y) in connection
with any such termination, and solely with regard to any such Seller default of which Buyer does
not have verifiable knowledge prior to the expiration of the Contingency Period, Buyer shall be
entitled to receive the actual documented out-of-pocket costs and expenses that it has theretofore
incurred in connection with this transaction, not to exceed the aggregate amount of Three Hundred
Thousand Dollars ($300,000), or (ii) to enforce specific performance of Seller’s obligation to
consummate this transaction as contemplated by this Agreement. Buyer shall be deemed to have
elected to terminate this Agreement and receive back the Deposit if Buyer fails to file suit for
specific performance against Seller in a court having jurisdiction in the county and state in which
the Property is located, on or before thirty (30) days following the date upon which Closing was to
have occurred. The foregoing notwithstanding, no right to cure shall extend the Closing Date.



[Remainder of Page Intentionally Left Blank]




(b)



6



AS A MATERIAL CONSIDERATION FOR SELLER ENTERING INTO THIS AGREEMENT, BUYER EXPRESSLY WAIVES
FOR ANY DEFAULT BY SELLER (A) ANY RIGHT UNDER CALIFORNIA CODE OF CIVIL PROCEDURE, PART 2, TITLE
4.5, SECTION 4.05 THROUGH 4.05.61 OR ANY OTHER SIMILAR STATE OR FEDERAL STATUTE OR AT COMMON LAW OR
OTHERWISE TO RECORD OR FILE A LIS PENDENS OR A NOTICE OF PENDENCY OF ACTION OR SIMILAR NOTICE
AGAINST ALL OR ANY PORTION OF THE PROPERTIES UNLESS AND UNTIL BUYER HAS ELECTED TO SEEK SPECIFIC
PERFORMANCE OF THIS AGREEMENT AND HAS FILED AN ACTION SEEKING SUCH REMEDY, (B) ANY RIGHT TO SEEK
DAMAGES IN THE EVENT OF SELLER’S DEFAULT HEREUNDER (EXCEPT TO THE EXTENT THAT BUYER IS ENTITLED TO
RECOVER COSTS AND EXPENSES PURSUANT TO SECTION 6.2(a), SECTION 10.17 AND IN CASES
OF FRAUD), AND (C) ITS RIGHT TO BRING ANY ACTION THAT WOULD IN ANY WAY AFFECT TITLE TO OR RIGHT OF
POSSESSION OF ALL OR ANY PORTION OF THE PROPERTIES UNLESS AND UNTIL BUYER HAS ELECTED TO SEEK
SPECIFIC PERFORMANCE OF THIS AGREEMENT AND HAS FILED AN ACTION SEEKING SUCH REMEDY. EXCEPT IN
CASES OF FRAUD, BUYER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389 AND ANY
SIMILAR STATE OR FEDERAL STATUTE. BUYER ACKNOWLEDGES AND AGREES THAT PRIOR TO THE CLOSING, BUYER
SHALL NOT HAVE ANY RIGHT, TITLE OR INTEREST IN AND TO THE PROPERTIES OR ANY PORTION THEREOF UNLESS
AND UNTIL BUYER HAS ELECTED TO SEEK SPECIFIC PERFORMANCE OF THIS AGREEMENT AND HAS FILED AN ACTION
SEEKING SUCH REMEDY. BUYER HEREBY EVIDENCES ITS SPECIFIC AGREEMENT TO THE TERMS OF THIS WAIVER BY
PLACING ITS SIGNATURE OR INITIALS IN THE SPACE PROVIDED HEREINAFTER.



	 	 	 
	     /s/ S J     

	 	     /s/ T K     
	 

	 	 
	Buyer’s Initials

	 	Seller’s Initials

on behalf of each Seller






[Remainder of Page Intentionally Left Blank]




Section 6.3



7



Recoverable Damages. Notwithstanding Section 6.1 and Section 6.2
hereof, in no event shall the provisions of Section 6.1 and Section 6.2 limit the
damages recoverable by either party against the other party due to the other party’s obligation to
indemnify such party in accordance with this Agreement or the non-prevailing party’s obligation to
pay the prevailing party’s attorneys’ fees and costs pursuant to Section 10.17 hereof.



ARTICLE VII.




CASUALTY OR CONDEMNATION




Section 7.1 Risk of Loss. In the event of loss or damage to the Properties, or any
portion thereof, due to damage, fire or other casualty or condemnation, this Agreement shall remain
in full force and effect without any reduction in the Purchase Price, provided that at Closing
Seller shall assign to Buyer all of Seller’s right, title and interest in and to any and all claims
and proceeds Seller may have with respect to any policy of insurance or condemnation awards
relating to the premises in question pursuant to an assignment and assumption agreement mutually
acceptable to both Seller and Buyer, except that (a) in the event of damage, fire or other
casualty, if any such loss or damage is fifteen percent (15%) or more of the Allocated Purchase
Price for any single Property (as determined by an architect or other qualified expert mutually
agreed upon between the parties), then Buyer shall have the right to elect to treat any such
Property as a Removed Property, in which event the provisions of Section 4.11 hereof shall
apply, (b) in the event of damage, fire or other casualty, if any such loss or damage, in the
aggregate, to one or more of the Properties is fifteen percent (15%) or more of the Purchase Price
(as determined by an architect or other qualified expert mutually agreed upon between the parties),
then Buyer shall have the right to elect to terminate this Agreement in its entirety with respect
to all Properties, in which event Section 3.7 hereof shall apply, (c) if before Closing,
proceedings are commenced for the taking by exercise of the power of eminent domain of all or a
“material” (as defined below) part of any single Property or any such taking adversely affects the
use or operation of any Property in a manner that reduces the value of such Property by more than
fifteen percent (15%) of the Allocated Purchase Price (as determined by a third party appraiser
mutually agreed upon between the parties), then Buyer shall have the right to treat any such
Property as a Removed Property, in which event the provisions of Section 4.11 hereof shall
apply, or (d) if before Closing, proceedings are commenced for the taking by exercise of the power
of eminent domain and any such taking adversely affects the use or operation of any one or more of
the Properties by fifteen percent (15%) or more of the Purchase Price (as determined by a third
party appraiser mutually agreed upon between the parties), then Buyer shall have the right to
terminate this Agreement, in which event Section 3.7 hereof shall apply, in each case
exercisable by giving written notice to Seller within at least ten (10) Business Days after Buyer’s
receipt of Seller’s written notice informing Buyer of such damage, fire or other casualty or
condemnation. If Buyer does not elect to treat any single Property as a Removed Property or
terminate this Agreement in its entirety, as applicable, within said ten (10) Business Day period,
then Buyer shall be deemed to have elected to proceed with Closing without any reduction in the
Purchase Price. For the purposes of this Section, the term “material” shall mean a taking
that (a) results in the cancellation of, or rental abatement under, any Major Tenant, (b) has the
effect of decreasing the square footage of the Improvements, or (c) reduces or eliminates access to
any affected Property. Upon Closing, full risk of loss with respect to the Properties shall pass
to Buyer.



ARTICLE VIII.




COMMISSIONS




Section 8.1 Brokerage Commissions. With respect to the transaction contemplated by
this Agreement, Seller and Buyer each represents to the other that no brokerage commission,
finder’s fee or other compensation of any kind is due or owing to any person or entity, other than
Seller’s advisor, Cain Brothers RE LLC (“Seller’s Advisor”). Except for Seller’s Advisor,
whose fees shall be paid by Seller pursuant to the terms of a separate written agreement between
Seller and Seller’s Advisor, each party hereby agrees that if any person or entity makes a claim
for brokerage commissions or finder’s fees related to the sale of the Properties by Seller to
Buyer, and such claim is made by, through or on account of any acts or alleged acts of said party
or its representatives, then said party will protect, indemnify, defend and hold the other party
free and harmless from and against any and all loss, liability, cost, damage and expense (including
reasonable attorneys’ fees) in connection therewith. The provisions of this paragraph shall survive
Closing or any termination of this Agreement.



ARTICLE IX.




DISCLAIMERS AND WAIVERS




Section 9.1 AS IS SALE., DISCLAIMERS. EXCEPT AS EXPRESSLY SET FORTH IN THIS
AGREEMENT:



(a) SELLER IS NOT MAKING AND HAS NOT AT ANY TIME MADE ANY WARRANTIES OR REPRESENTATIONS OF ANY
KIND OR CHARACTER, EXPRESS OR IMPLIED, WITH RESPECT TO THE PROPERTIES, INCLUDING, BUT NOT LIMITED
TO, ANY WARRANTIES OR REPRESENTATIONS AS TO HABITABILITY, MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE.



(b) UPON CLOSING SELLER SHALL SELL AND CONVEY TO BUYER AND BUYER SHALL ACCEPT THE PROPERTIES
“AS IS, WHERE IS CONDITION, WITH ALL FAULTS”. BUYER HAS NOT RELIED AND WILL NOT RELY ON,
AND SELLER IS NOT LIABLE FOR OR BOUND BY, ANY EXPRESS OR IMPLIED WARRANTIES, GUARANTIES,
STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE PROPERTIES OR RELATING THERETO
(INCLUDING SPECIFICALLY, WITHOUT LIMITATION, OFFERING PACKAGES DISTRIBUTED WITH RESPECT TO THE
PROPERTIES) MADE OR FURNISHED BY SELLER OR ANY REAL ESTATE BROKER OR AGENT REPRESENTING OR
PURPORTING TO REPRESENT SELLER, TO WHOMEVER MADE OR GIVEN, DIRECTLY OR INDIRECTLY, ORALLY OR IN
WRITING. ALL MATERIALS, DATA AND INFORMATION DELIVERED BY SELLER TO BUYER IN CONNECTION WITH THE
TRANSACTION CONTEMPLATED HEREBY ARE PROVIDED TO BUYER AS A CONVENIENCE ONLY AND ANY RELIANCE ON OR
USE OF SUCH MATERIALS, DATA OR INFORMATION BY BUYER SHALL BE AT THE SOLE RISK OF BUYER, EXCEPT AS
OTHERWISE EXPRESSLY STATED HEREIN. NEITHER SELLER, NOR ANY, AFFILIATE OF SELLER, NOR THE PERSON OR
ENTITY WHICH PREPARED ANY REPORT OR REPORTS DELIVERED BY SELLER TO BUYER SHALL HAVE ANY LIABILITY
TO BUYER FOR ANY INACCURACY IN OR OMISSION FROM ANY SUCH REPORTS. BUYER ACKNOWLEDGES THAT THE
PURCHASE PRICE REFLECTS AND TAKES INTO ACCOUNT THAT THE PROPERTIES ARE BEING SOLD “AS IS.”



(c) BUYER REPRESENTS AND COVENANTS TO SELLER THAT BUYER HAS CONDUCTED, OR WILL CONDUCT PRIOR
TO CLOSING, SUCH INVESTIGATIONS OF THE PROPERTIES, INCLUDING BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITIONS THEREOF, AS BUYER DEEMS NECESSARY OR DESIRABLE TO SATISFY ITSELF AS TO THE
CONDITION OF THE PROPERTIES AND THE EXISTENCE OR NONEXISTENCE OR CURATIVE ACTION TO BE TAKEN WITH
RESPECT TO ANY HAZARDOUS OR TOXIC SUBSTANCES ON OR DISCHARGED FROM THE PROPERTIES, AND WILL RELY
SOLELY UPON SAME AND NOT UPON ANY INFORMATION PROVIDED BY OR ON BEHALF OF SELLER OR ITS AGENTS OR
EMPLOYEES WITH RESPECT THERETO.



(d) UPON CLOSING, BUYER SHALL ASSUME THE RISK THAT ADVERSE MATTERS, INCLUDING BUT NOT LIMITED
TO, CONSTRUCTION DEFECTS AND ADVERSE PHYSICAL AND ENVIRONMENTAL CONDITIONS, MAY NOT HAVE BEEN
REVEALED BY BUYER’S INVESTIGATIONS, AND BUYER, UPON CLOSING, SHALL BE DEEMED TO HAVE WAIVED,
RELINQUISHED AND RELEASED SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND
AGENTS) FROM AND AGAINST ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION (INCLUDING CAUSES OF ACTION
IN TORT), LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS’ FEES)
OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, WHICH BUYER MIGHT HAVE ASSERTED OR ALLEGED
AGAINST SELLER (AND SELLER’S OFFICERS, DIRECTORS, SHAREHOLDERS, EMPLOYEES AND AGENTS) AT ANY TIME
BY REASON OF OR ARISING OUT OF ANY LATENT OR PATENT CONSTRUCTION DEFECTS OR PHYSICAL CONDITIONS,
VIOLATIONS OF ANY APPLICABLE LAWS AND ANY AND ALL OTHER ACTS, OMISSIONS, EVENTS, CIRCUMSTANCES OR
MATTERS REGARDING THE PROPERTIES.



(e) BUYER ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY LOCAL COUNSEL AND IS FAMILIAR WITH THE
PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:



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



BUYER BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS IT MAY HAVE
THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.



__/s/ S J______

Buyer’s Initials




Section 9.2 Survival of Disclaimers. The provisions of this Article IX shall
survive Closing or any termination of this Agreement, and nothing in this Article IX waives
any claims for fraud.



ARTICLE X.




MISCELLANEOUS




Section 10.1 Confidentiality. Seller and Buyer each agree to maintain the
confidentiality of the terms and provisions of this Agreement. Prior to Closing, Buyer and its
representatives shall hold in confidence all data and information obtained from Seller or its agent
with respect to Seller or its business (other than data and information which is publicly
available), whether obtained before or after the execution and delivery of this Agreement, and
shall not disclose the same to others; provided, however, that Buyer may disclose any data and
information to its employees, officers, directors, lenders, consultants, accountants and attorneys
or to any other persons who are involved in determining the feasibility of Buyer’s acquisition of
the Properties, in each case who agree to treat any such data and information as confidential,
except to the extent (a) required by a court order or by law, or (b) in connection with any legal
proceeding concerning the Property or this Agreement. If this Agreement is terminated or Buyer
fails to perform hereunder, Buyer shall promptly destroy or return to Seller any statements,
documents, schedules, exhibits or other written information obtained from Seller in connection with
this Agreement or the transaction contemplated herein. In the event of a breach or threatened
breach by either party hereto (or its respective agents or representatives) of this Section
10.1, the other party shall be entitled to an injunction restraining the party breaching or
threatening to breach this Section 10.1 (or its respective agents or representatives) from
disclosing, in whole or in part, such confidential information. Nothing herein shall be construed
as prohibiting either party hereto from pursuing any other available remedy at law or in equity for
such breach or threatened breach. The provisions of this Section 10.1 shall survive
Closing or any termination of this Agreement.



Section 10.2 Public Disclosure. Prior to and after the Closing, any press release or
other written release to the public of information with respect to the sale contemplated herein or
any matters set forth in this Agreement will be made only in the form reasonably approved in
writing by Buyer and Seller; provided, however, that any release of information required to be made
pursuant to applicable law, including, without limitation, federal and state securities laws and
the rules and regulations of the NYSE or NASDAQ, shall not require approval from the other party;
provided further, however, that, for the avoidance of doubt, any press release or similar voluntary
written communication to the general public shall require the other party’s written consent which
shall not be unreasonably withheld, conditioned or delayed. The provisions of this Section
10.2 shall survive the Closing or any termination of this Agreement.



Section 10.3 Assignment. Subject to the provisions of this Section 10.3, the
terms and provisions of this Agreement are to apply to and bind the permitted successors and
assigns of the parties hereto. Seller may assign its rights under this Agreement to one or more
affiliates of Seller or a qualified intermediary in connection with a 1031 Exchange (as defined
below) without the consent of Buyer. Any other assignment of Seller’s rights under this Agreement
shall require the consent of Buyer. In no event shall any assignment of this Agreement release or
discharge Seller from any liability or obligation hereunder unless expressly agreed otherwise by
Buyer in writing. Buyer may not assign its rights under this Agreement without first obtaining
Seller’s written approval, which approval may be given or withheld in Seller’s sole discretion;
provided, however, that Buyer shall be permitted to assign this Agreement without the prior consent
of Seller to a Registered Company or one or more entities controlling, controlled by, or under
common control with Buyer (each, a “Buyer-Affiliated Assignee”), provided that (a) Buyer
shall send Seller written notice of its request at least five (5) Business Days prior to Closing,
which request shall include the legal name of the proposed Buyer-Affiliated Assignee or Registered
Company, as applicable, as well as any other information that Seller may reasonably request, (b)
Buyer and the proposed Buyer-Affiliated Assignee or Registered Company, as applicable, shall
execute an assignment and assumption of this Agreement in form and substance reasonably
satisfactory to Seller, and (c) in no event shall any assignment of this Agreement release or
discharge Buyer from any liability or obligation hereunder unless expressly agreed otherwise by
Seller in writing. Notwithstanding any provision herein to the contrary, Seller shall be
permitted, prior to Closing and without the consent of Buyer, to transfer one or more Properties to
one or more affiliates of Seller, provided that (i) in no event shall any such transfer relieve
Seller of Seller’s liability or obligations under this Agreement, (ii) at Closing, Seller shall
cause the Properties to be conveyed to Buyer, (iii) Seller shall send Buyer written notice at least
one (1) day prior to Closing informing Buyer of the legal name of the assignee, and (iv) Seller and
the assignee shall execute an assignment and assumption of this Agreement and a copy shall be
provided to Buyer at Closing.



Section 10.4 Notices. Any notice pursuant to this Agreement shall be given in writing
by (a) personal delivery, (b) reputable overnight delivery service with proof of delivery, United
States Mail, postage prepaid, registered or certified mail, return receipt requested, or legible
facsimile transmission with a confirmation sheet, sent to the intended addressee at the address set
forth below, or to such other address or to the attention of such other person as the addressee
shall have designated by written notice sent in accordance herewith. Any notice so given shall be
deemed to have been given upon receipt or refusal to accept delivery, or, in the case of facsimile
transmission, as of the date of the facsimile transmission provided that an original of such
facsimile is also sent to the intended addressee by means described in clauses (a), (b) or (c)
above. Unless changed in accordance with the preceding sentence, the addresses for notices given
pursuant to this Agreement shall be as follows:



	 	 	 
	If to Seller:

	 	c/o HCP, Inc.

3760 Kilroy Airport Way, Suite 300

Long Beach, CA 90806

Attention: Legal Department

Telephone No.: (562) 733-5100

Facsimile No.: (562) 733-5200
	with a copy to:

	 	Latham & Watkins LLP

650 Town Center Drive, 20th Floor

Costa Mesa, California 92626

Attention: David C. Meckler, Esq.

Telephone No.: (714) 540-1235

Facsimile No.: (714) 755-8290

E-Mail: David.Meckler@LW.com
	If to Buyer:

	 	Grubb & Ellis Realty Investors, LLC

1551 North Tustin Avenue, Suite 200

Santa Ana, California 92705

Re: G&E Healthcare REIT Medical Portfolio 3, LLC

Attention: Mr. Danny Prosky,

Executive Vice President of Acquisitions

Telephone No.: (714) 667-8252

Facsimile No.: (714) 918-9138

E-Mail: danny.prosky@grubb-ellis.com

and
	
 
	 	Attention: Mr. Mat Streiff, Esq.

Real Estate Counsel

Telephone No.: (714) 667-8252

Facsimile No.: (714) 918-9102

E-Mail: mathieu.streiff@grubb-ellis.com
	with a copy to:

	 	Cox, Castle & Nicholson, LLP

2049 Century Park East, 28th Floor

Los Angeles, California 90067

Attn: Joseph E. Magri, Esq.

Phone: (310) 284-2262

Fax: (310) 277-7889

E-Mail: jmagri@coxcastle.com
	If to Title Company:

	 	First American Title Insurance Company

50 South Hope Street, Suite 1950

Los Angeles, CA 90071

Attention: Glen M. Trowbridge Esq.

Phone: (213) 271-1712

Fax: (213) 271-1778

E-Mail: gtrowbridge@firstam.com
	If to Escrow Holder:

	 	First American Title Insurance Company

550 South Hope Street, Suite 1950

Los Angeles, CA 90071

Attention: Barbara Laffer

Phone: (213) 271-1702

Fax: (818) 450-0135

E-Mail: blaffer@firstam.com






Section 10.5 Modifications. This Agreement cannot be changed orally, and no executory
agreement shall be effective to waive, change, modify or discharge it in whole or in part unless
such executory agreement is in writing and is signed by the parties against whom enforcement of any
waiver, change, modification or discharge is sought.



Section 10.6 Entire Agreement. This Agreement, including the exhibits and schedules
hereto, and that certain (a) letter Confidentiality Agreement between Buyer and Seller, dated as of
March 18, 2008 and (b) Access Agreement between Buyer and Seller, dated of even date with the
Effective Date (collectively, the “Other Transaction Documents”), contains the entire
agreement between the parties hereto pertaining to the subject matter hereof and fully supersedes
all prior written or oral agreements and understandings between the parties pertaining to such
subject matter (including, without limitation, that certain proposal letter, dated as of May 7,
2008, submitted by Buyer to Seller’s Advisor, which proposal letter shall be of no further force or
effect from and after the Effective Date).



Section 10.7 Schedules and Exhibits. All references in this Agreement to exhibits and
schedules shall, unless otherwise expressly provided, be deemed to be references to the exhibits
and schedules attached to this Agreement. All such exhibits and schedules attached hereto are
incorporated into this Agreement as though fully set forth herein.



Section 10.8 Further Assurances. Each party agrees that it will execute and deliver
such other documents and take such other action, whether prior or subsequent to Closing, as may be
reasonably requested by the other party to consummate the transaction contemplated by this
Agreement. The provisions of this Section 10.8 shall survive Closing.



Section 10.9 Counterparts. This Agreement may be executed in counterparts, all such
executed counterparts shall constitute the same agreement, and the signature of any party to any
counterpart shall be deemed a signature to, and may be appended to, any other counterpart.



Section 10.10 Electronically Transmitted Signatures. In order to expedite the
transaction contemplated herein, telecopied signatures or signatures sent by electronic mail may be
used in place of original signatures on this Agreement or any document delivered pursuant hereto
(other than the Deeds, the notarized original of which shall be required prior to Closing). Seller
and Buyer intend to be bound by the signatures on the telecopied or electronically mailed document,
are aware that the other party will rely on the telecopied or electronically mailed signatures, and
hereby waive any defenses to the enforcement of the terms of this Agreement based on the form of
signature. Following any facsimile or electronic mail transmittal, the party shall promptly
deliver the original instrument by reputable overnight courier in accordance with the notice
provisions of this Agreement.



Section 10.11 Severability. If any provision of this Agreement is determined by a
court of competent jurisdiction to be invalid or unenforceable, the remainder of this Agreement
shall nonetheless remain in full force and effect; provided that the invalidity or unenforceability
of such provision does not materially adversely affect the benefits accruing to any party
hereunder.



Section 10.12 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to any principle or rule of law
that would require the application of the law of any other jurisdiction. Each party hereby (a)
irrevocably submits to the exclusive jurisdiction of the state and federal courts of the state of
California and consents to service of process of any legal proceeding arising out of, or in
connection with, this Agreement, by any means authorized by the laws of the state of California;
(b) agrees that the state courts of Los Angeles County, California, or in the United States
District Court for the District in which Los Angeles County is located shall be the exclusive venue
and irrevocably waives, to the fullest extent permitted by law, any objection which any party may
now or hereafter have to the laying of venue of any litigation arising out of, or in connection
with, this Agreement, brought in the state courts of Los Angeles County, California, or in the
United States District Court for the District in which Los Angeles County is located; and (c)
irrevocably waives any claim that any litigation brought in any such court has been brought in an
inconvenient forum. Buyer and Seller agree that the provisions of this Section 10.12 shall
survive the Closing or any termination of this Agreement.



Section 10.13 No Third-Party Beneficiary. The provisions of this Agreement and of the
documents to be executed and delivered at Closing are and will be for the benefit of Seller and
Buyer only and are not for the benefit of any third party; and, accordingly, no third party shall
have the right to enforce the provisions of this Agreement or of the documents to be executed and
delivered at Closing.



Section 10.14 Captions. The section headings appearing in this Agreement are for
convenience of reference only and are not intended, to any extent and for any purpose, to limit or
define the text of any section or any subsection hereof.



Section 10.15 Construction. The parties acknowledge that the parties and their
counsel have reviewed and revised this Agreement and that the normal rule of construction to take
effect that any ambiguities are to be resolved against the drafting party shall not be employed in
the interpretation of this Agreement or any exhibits or amendments hereto.



Section 10.16 Recordation. This Agreement many not be recorded by any party hereto
without the prior written consent of the other party hereto. The provisions of this
Section 10.16 shall survive the Closing or any termination of this Agreement.



Section 10.17 Attorneys’ Fees. Notwithstanding anything to the contrary in this
Agreement, in the event either party files a lawsuit or demand for arbitration or other legal
action (including in bankruptcy court) in connection with this Agreement, or any provisions
contained herein or therein, then the party that prevails in such action shall be entitled to
recover, in addition to all other remedies to which it is entitled, reasonable attorneys’ fees and
costs incurred in such action. Any court costs and attorneys’ fees shall be set by the court or
arbitrator and not by jury. The provisions of this Section 10.17 shall survive the Closing
or any termination of this Agreement.



Section 10.18 Time of the Essence. Time is of the essence of each and every provision
of this Agreement.



Section 10.19 Several Liability. Buyer acknowledges and agrees that all of the
obligations of the entities constituting Seller hereunder are several and not joint, and that such
entities shall be personally liable and responsible only for the Property or Properties as to which
it holds title as of the Closing Date.



Section 10.20 Changes to Property Entitlements. Nothing contained in this Agreement
shall be construed as authorizing Buyer to apply for a zone change, variance, subdivision map, lot
line adjustment or other discretionary governmental act, approval or permit with respect to the
Properties prior to the Closing, and Buyer agrees not to do so without Seller’s prior written
approval, which approval may be withheld in Seller’s sole and absolute discretion. Buyer agrees not
to submit any reports, studies or other documents, including, without limitation, plans and
specifications, impact statements for water, sewage, drainage or traffic, environmental review
forms, or energy conservation checklists to any governmental agency, or any amendment or
modification to any such instruments or documents prior to the Closing unless first approved by
Seller, which approval Seller may withhold in Seller’s sole discretion. Buyer’s obligation to
purchase the Properties shall not be subject to or conditioned upon Buyer’s obtaining any
variances, zoning amendments, subdivision maps, lot line adjustment, or other discretionary
governmental act, approval or permit. Nothing herein shall be deemed to prevent or limit Buyer’s
right to seek any zoning or other compliance letter from any applicable governmental authorities.



Section 10.21 Dates. If, pursuant to this Agreement, any date indicated herein falls
on any non-Business Day, the date so indicated shall mean the next Business Day following such
date. As used herein, the term “Business Day” shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a California State or national holiday or a day on which
commercial banks in New York or California are generally not open for business.



Section 10.22 Waiver of Jury Trial. Seller and Buyer, to the extent they may legally
do so, hereby expressly waive any right to trial by jury of any claim, demand, action, cause of
action, or proceeding arising under or with respect to this Agreement, or in any way connected
with, or related to, or incidental to, the dealings of the parties hereto with respect to this
Agreement or the transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and irrespective of whether sounding in contract, tort, or otherwise. To the
extent they may legally do so, Seller and Buyer hereby agree that any such claim, demand, action,
cause of action, or proceeding shall be decided by a court trial without a jury and that any party
hereto may file an original counterpart or a copy of this Section with any court as written
evidence of the consent of the other party or parties hereto to waiver of its or their right to
trial by jury.



Section 10.23 No Waiver. Failure of either party at any time to require performance
of any provision of this Agreement shall not limit the party’s right to enforce the provision.
Waiver of any breach of any provision shall not be a waiver of any succeeding breach of the
provision or a waiver of the provision itself or any other provision.



Section 10.24 1031 Exchange. Seller and Buyer acknowledge and agree that the purchase
and sale of the Properties (or portions thereof) may be part of a multi-property transaction to
qualify as a tax-free exchange, including potentially a so-called reverse Starker exchange
(“1031 Exchange”) under Section 1031 of the Internal Revenue Code of 1986, as amended, for
either Buyer or Sellers. Each party agrees to take commercially reasonable efforts at the other
party’s request to allow such other party to attempt to qualify for a 1031 Exchange by, including,
without limitation: (i) executing and delivering amendments to this Agreement and/or amendments to
and restatements of this Agreement so that the transactions contemplated hereby are incorporated
into one or more cross-contingent agreements; (ii) executing and delivering one or more assignments
of this Agreement or any of the agreements described in the preceding clause (i) from Buyer to an
affiliate of Buyer or from any Seller to an affiliate of Seller or to a qualified exchange
accommodator of either Buyer or Seller or their respective affiliates; and (iii) executing and
delivering such other documents as may be reasonably requested; provided, however, that (a) no
party making such accommodation shall be required to acquire any substitute property, (b) such
exchange shall not affect the representations, warranties, liabilities and obligations of the
parties to each other under this Agreement, (c) no party making such accommodation shall incur any
additional liability, costs or expenses in connection with such exchange and (d) no dates in this
Agreement will be extended as a result thereof. Either party’s failure to effectuate any intended
1031 Exchange shall not relieve such party from its obligations to consummate the purchase and sale
transaction contemplated by this Agreement and the consummation of such 1031 Exchange shall not be
a condition precedent to such party’s obligations under this Agreement.



[Signature Page Follows]






8






IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of the Effective
Date.



	 
	SELLER:

	HCP, INC., a Maryland corporation

By: /s/ Thomas Klaritch

Name: Thomas Klaritch

Its: Executive Vice President

	HCPI/INDIANA, LLC,

a Delaware limited liability company

By: HCP, Inc., a Maryland corporation,

its Managing and Sole Member

By: /s/ Thomas Klaritch

Name: Thomas Klaritch

Its: Executive Vice President







[Signature Pages Continue on Following Page]







9






	 
	BUYER:

	G&E HEALTHCARE REIT

MEDICAL PORTFOLIO 3, LLC, a

Delaware limited liability company

By: /s/ Shannon K S Johnson

Name: Shannon K S Johnson

Its: Authorized Signatory







10




Escrow Holder hereby acknowledges that it has received a fully executed copy (or executed
counterparts) of the foregoing Agreement and agrees to act as the Escrow Holder thereunder and to
be bound by the provisions thereof.



	 	 	 
	ESCROW HOLDER:

	 	

	FIRST AMERICAN TITLE INSURANCE COMPANY

By: /s/ Barbara Laffer

	 	

Date: June 2nd, 2008







	 	 	Name: Barbara Laffer

Title: Escrow Officer





	 	 	 	 	 
	WIRING INSTRUCTIONS
	Wire to:
	 	First American Trust FSB
	 
	 	5 First American Way

	 
	 	Santa Ana, CA  92707

	ABA Number:
	 	 	122241255	 
	For Credit To:
	 	First American Title Insurance Company
	Account Number:
	 	 	3021820000	 
	Reference:
	 	File No.: NCS-351538-BL
	 
	 	Attn:        Barbara Laffer
	 
	 	Phone:     213-271-1702
	Customer Name:
	 	HCPIndiana Portfolio







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