exv10w6






Exhibit 10.6




MEMBERSHIP INTEREST PURCHASE AGREEMENT




     THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”) is entered into as of the 30th
day of April, 2008 (the “Effective Date”), by and between STIRR Black Canyon, LLC, a Delaware
limited liability company (the “Seller”), Pacific Office Properties, L.P., a Delaware limited
partnership (the “Purchaser”), and POP/BC Mezzanine, L.L.C., a Delaware limited liability company,
(the “Company”), all of whom or which shall sometimes collectively be referred to herein as the
“Parties” and individually as a “Party.” Capitalized terms used in this Agreement without
definition shall, unless the context clearly indicates otherwise, have the meanings ascribed to
such terms in the Operating Agreement (as defined below).



RECITALS




     A. Seller is currently the managing member of the Company, which is governed by that certain
Limited Liability Company Agreement of POP/BC Mezzanine, L.L.C. dated as of December 19, 2006, as
amended and restated pursuant to that certain Amended and Restated Limited Liability Company
Agreement of POP/BC Mezzanine, LLC, dated as of April 1, 2007 (the “Operating Agreement”).



     B. Seller currently owns a 17.5% membership interest in the Company (the “Seller’s Membership
Interest”).



     C. The Company is the sole member of POP/Black Canyon, LLC, a Delaware limited liability
company (“Project Owner”; and together with the Company, each a “POP Affiliate” and collectively
the “POP Affiliates”).



     D. Project Owner owns that certain two story office building located at 16404 North Black
Canyon Highway in Phoenix, Arizona, and containing approximately 220,205 rentable square feet (the
“Building”). The Building is leased to certain tenants, principally for commercial office
purposes. For purposes of this Agreement, the term “Project” shall mean, collectively: (i) all of
the parcels of land described on Exhibit A attached hereto (collectively, the “Land”), together
with all rights, easements and interests appurtenant thereto, including, but not limited to, any
streets or other public ways adjacent to said Land; (ii) all improvements located on the Land,
including, but not limited to, the Building, and all other structures, and to the extent not owned
by tenants or utility, management or other service providers, all systems, and utilities associated
with, and utilized in the ownership and operation of the Building (all such improvements being
collectively referred to herein as the “Improvements”); (iii) all personal property not owned by
any tenant or utility, management or other service provider at the Building and either (A) located
on or in the Land or Improvements, or (B) used in connection with the operation and maintenance of
the Project (collectively, the “Personal Property”), including, without limitation, all fixtures
and other built-in improvements and equipment necessary to operate the Project; (iv) all building
materials, supplies, hardware, carpeting and other inventory maintained in connection with the
ownership and operation of the Land and/or Improvements and not owned by tenants at the Building or
utility, management or other service













 







providers (collectively, the “Inventory”); (v) all trademarks, tradenames, development rights
and entitlements and other intangible property used or useful in connection with the foregoing
(collectively, the “Intangible Personal Property”); (vi) the Project Owner’s interest in all leases
and other agreements (including, without limitation, any amendment or other modification of a
lease) to occupy, or concerning the occupancy of, all or any portion of the Land and/or
Improvements in effect on the date hereof or into which the Project Owner enters prior to closing
hereunder, (collectively, the “Leases”); and (vii) Seller’s interest, if any, in and to any and all
leasing, service and management contracts pursuant to which services are provided in connection
with the ownership and operation of the Building.



     E. Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, all of
Seller’s Membership Interest in the Company upon the terms and conditions set forth in this
Agreement.



     NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the Parties hereby agree as follows:



     1. Purchase, Sale and Assignment of Sellers’ Membership Interest. Purchaser hereby
agrees to purchase and acquire from Seller all of the Seller’s Membership Interest in the Company,
and Seller hereby agrees to transfer, assign and convey to Purchaser all of Seller’s Membership
Interest in the Company, subject to and in accordance with the terms and conditions of this
Agreement (the “Assignment”), which Assignment shall be effective as of the Effective Date of this
Agreement. Concurrently herewith Seller and Purchaser shall each execute and deliver counterparts
of the Assignment of Membership Interest in the form attached hereto as Exhibit B (the “Members
Instrument”). For purposes of this Agreement, the term “Seller’s Membership Interest” includes,
without limitation: (a) all of Seller’s right, title and interest in and to the Company and the
Company’s properties, assets, interest and rights of any kind, whether direct or indirect, tangible
or intangible, real or personal, including, without limitation, all capital, profits, losses and
distributions of cash flow of the Company; (b) Seller’s entitlement to any priority returns, if
any, from the Company; and (c) any and all other rights, privileges, preferences and obligations
granted to Seller or that Seller may have or hold in the Company, including, but not limited to,
the rights, privileges, preferences and obligations granted to the Managing Member.



     2. Purchase Price. As consideration for the Assignment, on and as of the Effective
Date, Purchaser shall pay to Seller the sum of One Million Thirty Thousand Dollars and No Cents
($1,030,000) (the “Purchase Price”). The Purchase Price shall be payable by Purchaser to Seller by
delivery to Seller of a Promissory Note in the amount of the Purchase Price, in the form attached
here to as Exhibit C.



     3. Representations and Warranties of Seller. Seller hereby represents and warrants to
Purchaser that the following matters are true and correct as of the Effective Date and covenants as
follows:




          3.1 Seller’s Member Interest. (i) At Closing, Seller shall own the Seller’s Member
Interest, free and clear of any and all liens, encumbrances and interests of any third parties
(except those of the holder of the Property Indebtedness, if any); (ii) at Closing, Seller



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shall have good right and lawful authority to assign, transfer and deliver (or to direct the
assignment, transfer and delivery of) the Seller’s Member Interest and the Members Instrument as
provided herein; (iii) the execution and delivery of the Members Instrument and the assignment and
transfer of the Seller’s Member Interest to Purchaser does not, to Seller’s knowledge, conflict
with any material agreement, contract or other obligation or restriction affecting or binding upon
Seller, the Seller’s Member Interest, or the underlying Project; and (iv) to Seller’s knowledge,
no authorization, approval or other action by and, no notice to or filing with, any governmental
authority is required for assignment and transfer of the Seller’s Member Interest to Purchaser or
for the execution or delivery of the Members Instrument.




          3.2 Descriptive Information. The descriptive information concerning the Project set
forth in Recital D and in all exhibits referred to in Recital D are, to Seller’s knowledge,
complete, accurate, true and correct in all material respects.




          3.3 Title to Project. The Company indirectly holds, through its ownership of the
Project Owner, fee simple title to the Land and the Building, subject only to the Permitted
Exceptions. The ownership structure of the Project is depicted and summarized on Exhibit
D attached hereto and incorporated herein by this reference.




          3.4 Seller’s Deliveries. All items delivered by Seller pursuant to this Agreement,
are, to Seller’s knowledge, true, accurate, correct and complete in all material respects, and
fairly present the information set forth in a manner that is not materially misleading. Seller
has delivered or made available to Purchaser copies of all of the Leases and other material
agreements relating to or affecting the ownership and operation of the Project and to Seller’s
knowledge, such copies are true and complete.




          3.5 Defaults. To Seller’s knowledge, neither the execution of this Agreement nor the
consummation of the transactions contemplated by this Agreement will: (i) conflict with, or result
in a breach of, the terms, conditions or provisions of, or constitute a default under, any
agreement or instrument to which either POP Affiliate is a party or by which either POP Affiliate
or the Project is bound, (ii) violate any restriction, requirement, covenant or condition to which
either POP Affiliate is subject or by which either POP Affiliate or the Project is bound,
(iii) constitute a violation of any applicable code, resolution, law, statute, regulation,
ordinance, rule, judgment, decree or order applicable to either POP Affiliate, or (iv) result in
the cancellation of any contract or Lease pertaining to the Project; except in any instance in any
of (i) – (iv) such as would not have a Material Adverse Effect.




          3.6 Contracts. To Seller’s knowledge, and except with respect to property management
agreements and other service agreements that are normal and customary for the operation of the
Project, there are no contracts relating to the management, leasing, operation, maintenance or
repair of the Project, except those which may be terminated without penalty or other payment by
the Project Owner (or its assignee, including Purchaser, or successor) upon no more than thirty
(30) days’ prior notice.




          3.7 Leases. With respect to each Lease and to Seller’s knowledge:



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               (a) such Lease is legal, valid, binding, enforceable and in full force and effect in
accordance with its respective terms, subject to the qualification that the enforceability thereof
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
similar laws, now or hereafter in effect, affecting creditors’ rights generally, and except that
the availability of equitable remedies, including specific performance, is subject to the
discretion of the court before which any proceeding for the enforcement thereof may be brought and
further subject to any other legal defenses to enforcement that may be available to the lessor
theunder;



               (b) neither the landlord under such Lease nor any other party to such Lease is in breach or
default (subject to applicable notice and cure periods) that would have a Material Adverse Effect;
and no event has occurred that permits termination, modification or acceleration, such that any
such termination, modification or acceleration would have a Material Adverse Effect;



               (c) neither the landlord under the Lease nor any other party to such Lease has repudiated (in
writing) any provision thereof, such that any such repudiation would have a Material Adverse
Effect;



               (d) subject to Section 3.14, neither Seller nor the POP Affiliate has received any written
notice of any pending disputes under such Lease, nor is there any forbearance program in effect as
to such Lease, such that any such forbearance program would have a Material Adverse Effect; and



               (e) neither Seller, the Company nor the Project Owner has received any written notice from any
governmental authority having jurisdiction over the Project (“Governmental Authority”) alleging the
failure of either or both of the Project and the tenant under the applicable Lease to comply with
all applicable laws, rules and regulations in all material respects, such that any such failure
would have a Material Adverse Effect.




          3.8 Physical Condition. To Seller’s knowledge, all of (a) the Building and (b) the
other Improvements that are material to the operation of the Project are in good operating
condition and repair, subject only to ordinary wear and tear, maintenance and capital expenditures
in the ordinary and normal course of the ownership and operation of the Project. To Seller’s
knowledge, there is no existing patent or latent structural or other physical defect or deficiency
in the condition of the Project, or any component or portion thereof, that would have a Material
Adverse Effect.




          3.9 Compliance with Laws and Codes. To Seller’s knowledge, the Project, and the use
and operation thereof, is (or the use and operation of any component, portion or area of the
Project is) in material compliance with applicable municipal and other governmental laws,
ordinances, regulations, codes. The Project Owner possesses the material licenses, permits and
authorizations for the use, occupancy and operation of the Project as it is presently being
operated, except where such violation or failure would not have a Material Adverse Effect. To
Seller’s knowledge, no notice, citation, summons or order has been issued, nor has Seller or
either POP Affiliate received any written notice from any Governmental Authority that any
investigation or review is pending or threatened by such Governmental



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Authority with respect to any alleged violation by the Project Owner of any such laws,
statutes, rules, regulations or orders, except where the failure to comply with the same would not
have a Material Adverse Effect.




          3.10 Litigation. There are no pending, or to Seller’s knowledge, threatened
judicial, municipal or administrative proceedings affecting the Project or against the Project
Owner affecting the use, ownership or operation of the Project or any portion thereof, except in
any such case as would not have a Material Adverse Effect.




          3.11 Insurance. Project Owner now has in force customary insurance relating to the
Project, or as may be required by any lender in connection with the Property Indebtedness with
respect to the Project (the “Insurance”). To Seller’s knowledge, Project Owner has not received
any written notice of cancellation or non-renewal with respect to, or disallowance of any claim
for any matter related to the Project under, any policy evidencing the Insurance. To Seller’s
knowledge, neither Project Owner nor the Company has been refused any Insurance related to the
Project, nor, to Seller’s knowledge, has the coverage of Project Owner or the Company been limited
by any insurance carrier to which either of them has applied for Insurance or with which either of
them has carried Insurance during the last five years (or any shorter period of time, as the case
may be, in which the Project Owner has held an interest in the Project).




          3.12 Authority. Seller has obtained, or will obtain by Closing, all necessary
consents for the execution and delivery of this Agreement and the Member Instrument by Seller.
The performance of this Agreement by Seller has been duly authorized by Seller and this Agreement
is the valid and binding obligation of Seller and enforceable against Seller in accordance with
its terms, except to the extent enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws or equitable principals and doctrines of
general application. The Purchase Price with respect to the Project has been approved by Seller.
To Seller’s knowledge, neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will (i) result in a breach of, default under, or acceleration
of, any agreement to which Seller or the Company or the Project Owner is a party or by which
Seller, the Company, the Project Owner or the Project is bound; or (ii) violate any restriction,
court order, agreement or other legal obligation to which any one or more of Seller, the Company,
the Project Owner and any of the Project is subject, in either case which would have a Material
Adverse Effect.




          3.13 Environmental Matters.



               (a) To Seller’s knowledge, there is no Environmental Claim (as hereinafter defined) pending or
threatened against (i) the Project or (ii) the Project Owner and that relates to the Project and
that would have a Material Adverse Effect.



               (b) To the knowledge of Seller, there are no past (during the period of time in which the
Project Owner has had an interest in the Project) or present actions, activities, circumstances,
conditions, events or incidents, including, without limitation, the handling, manufacture,
treatment, storage, use, generation, release, emission, discharge, presence or disposal of any
Hazardous Substances (as hereinafter defined), either collectively, individually,



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or severally, that constitute a violation of any Environmental Laws and that would have a
Material Adverse Effect.



               (c) To the knowledge of Seller, there has been no release of any Hazardous Substance on, in,
at, under or from the Project during the period of time that the Project Owner has held an interest
in the Project, which release would have a Material Adverse Effect.



               (d) To the knowledge of Seller: (i) there are no above ground or underground storage tanks
currently located on any Land on which the Project is situated, such that the existence thereof
would have a Material Adverse Effect; and (ii) there are no friable asbestos or friable asbestos
containing materials on the Project, such that the existence thereof would have a Material Adverse
Effect.



     For purposes of this Section, the following definitions will apply:




     “Environmental Laws” means all applicable laws, statutes, enactments, orders,
regulations, rules and ordinances of any governmental authority relating to
pollution or protection of human health, safety, the environment, natural resources
or laws relating to releases or threatened releases of Hazardous Substances into the
indoor or outdoor environment (including, without limitation, ambient air, surface
water, groundwater, land, surface and subsurface strata) or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, release,
transport or handling of Hazardous Substances, including, without limitation (as
applicable), the Comprehensive Environmental Response, Compensation and Liability
Act (42 U.S.C. §9601 et seq.), the Hazardous Materials
Transportation Act (49 U.S.C. App. §1801 et seq.), the Resource
Conservation and Recovery Act (42 U.S.C. §6901 et seq.), the Clean
Water Act (33 U.S.C. §1251 et seq.), the Clean Air Act (42 U.S.C.
§ 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. §2601
et seq.) and the Occupational Safety and Health Act, 29 U.S.C. §653
et seq.), all as amended from time to time and the regulations
promulgated pursuant thereto.




     “Hazardous Substances” means any chemicals, materials or substances which are
defined or regulated as dangerous, toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous or as a
pollutant or contaminant under any Environmental Law, including but not limited to
urea-formaldehyde, polychlorinated biphenyls, asbestos or asbestos-containing
materials, petroleum and petroleum products.




     “Environmental Claim” means any claim, order, investigation, action, suit,
proceeding, injunction, demand, citation, summons, directive, fine, penalty,
assessment or violation of or under any Environmental Laws, including, without
limitation, any claim, order, investigation, action, suit, proceeding, injunction,
demand, citation, summons, directive, fine, penalty, assessment or violation brought
or issued by any Governmental Authority, and any written notice



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advising the Project Owner of any of the foregoing or of any fact, event or
condition that is the basis for the assertion of any of the foregoing.



               (e) Seller has no knowledge of any release, discharge, spillage, uncontrolled loss, seepage or
filtration of oil, petroleum or chemical liquids or solids, liquid or gaseous products or any
hazardous waste or hazardous substance (as those terms are used in the Comprehensive Environmental
Response, Compensation and Liability Act of 1986, as amended, the Resource Conservation and
Recovery Act of 1976, as amended, or in any other applicable federal, state or local laws,
ordinances, rules or regulations relating to protection of public health, safety or the
environment, as such laws may be amended from time to time) at, upon, under or within the Project
that would have a Material Adverse Effect.




          3.14 Lease Controversies. To Seller’s knowledge, no proceeding, suit or litigation
relating to any Lease, is pending or, to Seller’s actual knowledge, threatened, that would have a
Material Adverse Effect.




          3.15 Rent Roll. Seller has delivered to Purchaser a rent roll for the Project on
Seller’s usual and customary form, which rent roll is true, correct and complete in all material
respects.




          3.16 United States Person. Seller is a “United States Person” within the meaning of
Section 1445(f)(3) of the Code, as amended, and shall execute and deliver an “Entity Transferor”
certification at Closing.




          3.17 Condemnation. Seller has no knowledge of pending or contemplated condemnation or
other governmental taking proceedings affecting all or any part of the Project.




          3.18 Disclosure. To Seller’s knowledge, no representation or warranty in this
Agreement, no exhibit attached hereto with respect to the Project, and no schedule contained in
this Agreement contains any untrue statement of a material fact, or omits to state a material fact
necessary in order to make the statements contained therein not misleading, or necessary in order
to provide Purchaser with adequate information as to the Project and the management, operation,
maintenance and repair thereof. To Seller’s knowledge, there is no fact known to Seller which
has, or which, to Seller’s knowledge, could reasonably have been foreseen by Seller as likely to
have, a Material Adverse Effect on the management, operation, maintenance and repair of the
Project which has not been disclosed herein, in any schedule attached hereto, or in any written
document furnished by Seller to Purchaser under this Agreement or in connection with the
transactions contemplated hereby.




          3.19 Ownership Structure. The equity ownership of the Company and the Project Owner,
including percentage interests of ownership, is described on the organizational chart attached
hereto as Exhibit D and incorporated herein by this reference.




          3.20 Tax-Related Issues. To the knowledge of Seller, each POP Affiliate has timely
filed with the appropriate taxing authorities all returns (including without limitation
informational returns and other material information) in respect of Federal, State and local taxes
(collectively “Taxes”) required to be filed through the date hereof (and for which an extension
has not been obtained) and will timely file any such returns required to be filed (i) on



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or prior to the Closing Date and (ii) with respect to all periods ending on or before the
Closing Date. The returns and other information filed (or to be filed) are complete and accurate
in all material respects. All material Taxes of each POP Affiliate in respect of periods
beginning before the Closing Date have been timely paid, or will be timely paid prior to the
Closing Date, or will be subject to Closing proration pursuant to this Agreement and, to the
knowledge of Seller, each POP Affiliate has no material liability for Taxes in excess of the
amounts so paid. All material Taxes that any POP Affiliate has been required to collect or
withhold have been duly collected or withheld and, to the extent required when due, have been or
will be (prior to Closing Date) duly paid to the proper taxing authority and no material
deficiencies for Taxes of any POP Affiliate have been claimed, proposed or assessed by any taxing
or other governmental authority. There are no pending or threatened audits, investigations or
claims for or relating to any material additional liability to any POP Affiliate in respect of
Taxes, and there are no matters under discussion with any governmental authorities with respect to
Taxes that in reasonable judgment of Seller, is likely to result in a material additional
liability for Taxes. To the knowledge of Seller, there are no liens for Taxes (other than for
current Taxes not yet due and payable) on any of the assets of any POP Affiliate. Seller is a
United States person within the meaning of Section 7701 of the Code.




          3.21 No Other Representation or Warranty. Except as expressly set forth in this
Section 3, Seller makes no express or implied warranty of any kind whatsoever. ALL IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE ARE EXPRESSLY EXCLUDED AND
EXCEPT TO THE LIMITED AND SPECIFIC EXTENT PROVIDED HEREIN OR IN THE MASTER AGREEMENT TO THE
CONTRARY, CONTRIBUTION OF THE PROJECT IS ON A STRICT “AS-IS” BASIS. Subject to Seller’s
representations and warranties in this Section 3, Purchaser hereby acknowledges that Purchaser
has, to the extent desired and deemed consistent with good commercial practice and at Purchaser’s
sole cost and expense, completed an investigation and inspection of the Project including, without
limitation, such investigations to determine whether or not Purchaser has the necessary
governmental approvals to utilize the Project for Purchaser’s proposed use, investigations
regarding lot line/boundary line adjustments affecting the Project and compliance/non-compliance
of the Project with applicable setback requirements (including, without limitation, side yard
setbacks), such investigations to determine whether or not the necessary utilities are in order to
support Purchaser’s proposed use, such soils, engineering and environmental studies as may be
necessary to assess the condition of the Project and the suitability of the Project for
Purchaser’s intended uses, and inspection(s) of the structure, roof, heating, ventilation, air
conditioning, electrical and plumbing systems and other components of the Building, the parking
areas and other common areas located in, on or about the Project. The foregoing acknowledgment by
Purchaser shall not be deemed to waive or qualify Seller’s representations and warranties in this
Section 3.



     4. Representations and Warranties of Purchaser, and by the Managing Members of the
Company. Purchaser and the Members of the Company hereby represent and warrant to Seller that
as of the Effective Date:




          4.1 Purchaser has all requisite power and authority to execute and deliver this Agreement and
to perform all of its obligations hereunder and consummate the



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transactions contemplated hereby. All requisite partnership and other actions have been
taken to authorize and approve the execution, delivery and performance by Purchaser of this
Agreement and the transactions contemplated hereby.




          4.2 The execution, delivery and performance by Purchaser of this Agreement, and the
consummation of the transactions contemplated hereby, will not (a) violate any provision of the
organizational documents of Purchaser; (b) violate, conflict with or result in a breach of or
default under any term or provisions of any contract or agreement to which Purchaser is a party or
by or to which Purchaser or any of its assets or properties are or may be bound or subject; or (c)
violate any order, judgment, injunction, award or decree of any court or arbitration body, or any
governmental, administrative or regulatory authority or any other body, by or to which Purchaser
is or may be bound.




          4.3 Purchaser and the Members of the Company will execute and deliver all documents,
agreements and instruments reasonably necessary or required in order to consummate the Assignment
and the transactions contemplated in this Agreement.



     5. Survival. Unless expressly provided otherwise in another part of this Agreement,
all representations and warranties made in this Agreement by Seller or Purchaser shall survive the
Closing for a period of one hundred twenty (120) days, and in the event that Purchaser determines
(acting in good faith) that a breach of any one or more of such representations or warranties
occurred prior to Closing, then, in order to preserve its claim, Purchaser shall be required to
file suit against Seller in connection with such breach within the aforesaid one hundred twenty
(120) day survival period. If Purchaser fails to timely comply with the foregoing sentence, then
Purchaser shall automatically be deemed to have irrevocably waived its right to any remedy with
respect to any representation or warranty allegedly breached (prior to Closing) by Seller. As used
in this Agreement with respect to any representation or warranty, the “knowledge” of Seller refers
to the actual knowledge of any or all of Jay H. Shidler, Lawrence J. Taff and James C. Reynolds.



     6. Limitation of Liability. All liabilities and obligations of each Party under this
Agreement shall be those of such Party only. Neither Party shall, under any circumstances, look to
any person or entity other than the other party, including, but not limited to, any affiliate of
such other party, for performance or satisfaction of such party’s obligations and liabilities in
connection with this Agreement. Without limiting the foregoing, none of the REIT or any Affiliate
of Purchaser or Seller, as the case may be, or their respective members, partners and shareholders,
shall incur any liability under any document or agreement required in connection with this
Agreement, and neither Party shall be required (in connection with this Agreement) to execute any
document or agreement that does not expressly exculpate and release such parties and their
respective successors, assigns, affiliates, officers, shareholders, partners, employees, agents and
representatives from any liability or obligation arising out of, or in connection with, this
Agreement.



     7. Availability of Records; Audit Representation Letter. Upon Purchaser’s request,
for a period of two (2) years after Closing, Seller shall (i) make its records (financial or
otherwise) maintained in connection with the ownership and operation of Seller’s interest in the
Project (the “Records”) available to Purchaser for inspection, copying and audit by Purchaser’s



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designated accountants. Without limitation of the foregoing in this Section 7, Seller agrees
to abide by the terms of Exhibit D attached hereto. At any time within two (2) years after the
Closing, Seller further agrees to provide to Purchaser’s designated independent auditor, upon
request of Purchaser or such auditor: (a) access (to the same extent to which Purchaser would be
entitled to such access) to the books and records of the Project and all related information
(including the information listed on Exhibit D) regarding the period for which Purchaser is
required to have the Project audited under the regulations of the Securities and Exchange
Commission, and (b) a representation letter delivered by each managing agent of the Project
regarding the books and records of the Project, in substantially the form as attached hereto as
Exhibit E.



     8. 8-K Requirements. Upon Purchaser’s request, for a period of two (2) years after
Closing, Seller shall make its records (financial or otherwise) maintained in connection with the
ownership and operation of Seller’s interest in the Project (collectively, the “Records”) available
to the REIT for inspection, copying and audit by the REIT’s designated accountants, and at the
REIT’s expense. Seller (and the LP Unit Recipients) shall provide the REIT, but without
third-party expense to Seller, with copies of, or access to, such factual information as may be
reasonably requested by the REIT, and in the possession or control of Seller (and the LP Unit
Recipients), to enable the REIT to file Form 8-K, if, as and when such filing may be required by
the Securities and Exchange Commission (“SEC”). Without limitation of the foregoing, (i) the REIT
or its designated independent or other accountants may audit the Seller’s operating statements for
the Project, and Seller shall supply such documentation in its possession or control as the REIT or
its accountants may reasonably request in order to complete such audit, and Seller shall execute
the form of audit letter contained in Exhibit E and (ii) Seller shall furnish the REIT with such
financial and other information as may be reasonably required by the REIT or its assigns to make
any required filings with the SEC or any other governmental authority.



     9. Miscellaneous.




          9.1 Certain Defined Terms. As used in this Agreement, the following terms shall have
the meanings provided below:



               (a) “Affiliate” shall mean with to a specified Person, a Person that directly or indirectly
through one or more intermediaries, controls, is controlled by, or is under common control with the
Person specified and shall have such additional meaning as such term has under SEC Rule 12b-2.



               (b) “Closing” shall mean the consummation of the Assignment of the Seller’s Member Interest in
accordance with this Agreement.



               (c) “Permitted Exceptions” shall mean:




	 	(1)	 	real estate taxes and assessments not yet due and payable;
	 
	 	(2)	 	covenants, restrictions, easements and other similar agreements, provided that
the same are not violated by existing improvements or the current use and operation of
the Project, or if so violated that the same do not materially impair the value of




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	 	 	 	the Project and that the violation of the same will not result in a forfeiture or
reversion of title;
	 
	 	(3)	 	zoning laws, ordinances and regulations, building codes and other governmental
laws, regulations, rules and orders affecting the Project, provided that the same are
not violated by existing improvements or the current use and operation of the Project,
or if so violated that the same do not materially impair the value of the Project or
that such violation will not result in a forfeiture or reversion of title;
	 
	 	(4)	 	any minor imperfection of title which (a) does not affect the current use,
operation or enjoyment of the Project, (b) does not render title to the Project
unmarketable or uninsurable, and (c) does not materially impair the value of the
Project;
	 
	 	(5)	 	The Property Indebtedness;
	 
	 	(6)	 	any Leases with respect to the Project; and
	 
	 	(7)	 	any encroachments or any other matters evidenced by Seller’s existing owner’s
policy or Title Commitment or as disclosed by Seller’s existing survey.





               (d) “Person” shall mean any individual, trust or entity of any nature.



               (e) “Material Adverse Effect” shall mean an effect that would reasonably be expected to be
material and adverse to the financial condition, business, or results of operations of Seller, the
POP Affiliates or the Project, or that would materially and adversely affect the ability of Seller
and Purchaser to consummate the transactions hereunder.



               (f) “Property Indebtedness” means, either or both, as the case may be, (a) the unpaid mortgage
debt secured by the Project and (b) the unpaid mezzanine debt secured by a collateral assignment of
indirect ownership interests in the Project.



               (g) “REIT” means Pacific Office Properties Trust, Inc., a Maryland corporation, the sole
general partner of Purchaser.




          9.2 Assignment. This Agreement may not be assigned or transferred without the prior
written consent of Purchaser and Seller.




          9.3 Entire Agreement. This Agreement, including the Exhibits referred to herein,
constitutes the entire contract between the parties with respect to the subject matter covered by
this Agreement. This Agreement supersedes all previous representations, arrangements, agreements
and understandings by and among the parties with respect to the subject matter covered by this
Agreement, and any such representations, arrangements, agreements and understandings are hereby
cancelled and terminated in all respects. This Agreement may not be amended, changed or modified
except by a writing duly executed by the Purchaser and Seller.



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          9.4 Severability. If any provision of this Agreement, or any portion of any such
provision, is held to be unenforceable or invalid, the remaining provisions and portions shall
nevertheless be carried into effect.




          9.5 Remedies. All rights and remedies of the parties are separate and cumulative,
and no one of them, whether exercised or not, shall be deemed to be to the exclusion of or to
limit or prejudice any other legal or equitable rights or remedies which the parties may have,
except as otherwise expressly limited herein. Subject to the limitations or remedies imposed
elsewhere in this Agreement, the parties shall not be deemed to waive any of their rights or
remedies thereunder, unless such waiver is in writing and signed by the party to be bound. No
delay or omission on the part of either party in exercising any right or remedy shall operate as a
waiver of such right or remedy or any other right or remedy. A waiver on any one occasion shall
not be construed as a bar or waiver of any right or remedy on any future occasion.




          9.6 Headings. The headings contained in this Agreement are for convenience only and
are not a part of this Agreement, and do not in any way interpret, limit or amplify the scope,
extent or intent of this Agreement, or any of the provisions of this Agreement.




          9.7
Counterparts. This Agreement may be executed in counterparts, each of which shall constitute an original, but all of which together shall constitute one and the same
agreement. This Agreement may be executed and delivered by facsimile transmission with the same
force and effect as an ink-signed document.




          9.8 Governing Law; Jurisdiction and Venue. This Agreement shall be governed by and
interpreted in accordance with the laws (other than that body of law relating to conflicts of law)
of the State of California. The proper venue for any claims, causes of action or other
proceedings concerning this Agreement shall be in the state and federal courts located in the
State of California.




          9.9 No Third Party Beneficiary. This Agreement creates rights and duties only
between the parties, and no third party is or shall be deemed to be or shall have any rights as a
third party beneficiary, except as explicitly set forth herein.




          9.10 Binding Effect. This Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors, assigns and legal and personal
representatives.




          9.11 Notices. All notices required or permitted hereunder shall be given in writing
and shall be effective for all purposes if hand delivered or sent by (a) certified or registered
United Sates mail, postage prepaid, return receipt requested, (b) expedited prepaid delivery
service, either commercial or United States Postal Service, with proof of attempted delivery, or
(c) telecopier (with answer back acknowledged), addressed as follows (or such other address and
person or entity as shall be designated from time to time by any party hereto, as the case may be,
to the other parties hereto in the manner proved for in this Section 5.10:



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	 	If to Seller:
	 	STIRR Black Canyon, LLC
	 

	 	 	 	10188 Telesis Court, Suite 222
	 

	 	 	 	San Diego, California 92121
	 

	 	 	 	Attention: Lawrence J. Taff
	 
	 	 	 	 
	 

	 	If to Purchaser:
	 	Pacific Office Properties, L.P.
	 

	 	 	 	233 Wilshire Boulevard, Suite 830
	 

	 	 	 	Santa Monica, California 90401
	 

	 	 	 	Attention: Jim Kasim
	 
	 	 	 	 
	 

	 	If to Company:
	 	POP/BC Mezzanine, LLC
	 

	 	 	 	10188 Telesis Court, Suite 222
	 

	 	 	 	San Diego, California 92121
	 

	 	 	 	Attention: Lawrence J. Taff






[Remainder of Page Intentionally Left Blank]




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



	 	 	 	 	 
	 	SELLER:


STIRR Black Canyon, LLC

a Delaware limited liability company

 	 
	 	By:  	JCR Manager, LLC
 	 
	 	 	a Delaware limited liability company 	 
	 	 	Its Manager 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	/s/ Lawrence J. Taff	 
	 	 	Lawrence J. Taff 	 
	 	 	Its Vice President 	 
	 



	 	 	 	 	 
	 	PURCHASER:


PACIFIC OFFICE PARTNERS, LP

a Delaware limited partnership

 	 
	 	By:  	Pacific Office Properties Trust, Inc.
 	 
	 	 	a Maryland corporation 	 
	 	 	Its General Partner 	 
	 



	 	 	 	 	 
	 	 	 
	 	By:  	/s/ James M. Kasim 	 
	 	 	Name:  	James M. Kasim 	 
	 	 	Its: Chief Financial Officer 	 
	 



[Signature Page to Membership Interest Purchase Agreement]





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SCHEDULE OF EXHIBITS




	 	 	 
	A

	 	Legal Description of Project
	 
	 	 
	B

	 	Member Instrument
	 
	 	 
	C

	 	Promissory Note
	 
	 	 
	D

	 	Organizational Chart
	 
	 	 
	E

	 	SEC Reporting Requirements
	 
	 	 
	F

	 	Form of Audit Representation Letter






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