ex10-1




EXHIBIT 10.1



AGREEMENT OF PURCHASE AND SALE



      THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) is entered into as
of March 8, 2001 (the “Effective Date”), by and among G & W/LAKEVILLE CORPORATE
CENTER, LLC, a California limited liability company (“Seller”), and REGAN
HOLDING CORP., a California corporation (“Buyer”).


      THIS AGREEMENT IS ENTERED INTO on the basis of the following facts,
intentions and understandings of the parties:


      A. Seller is the owner of the land (the “Land”) and the improvements
located thereon (the “Improvements”), commonly known as 2084 Lakeville Highway
and 2090 Marina Avenue in the City of Petaluma, County of Sonoma, State of
California. The Land is more particularly described in Exhibit A, attached
hereto. The Land and the Improvements are hereinafter collectively referred to
as the “Real Property.”


      B. The Real Property is subject to that certain Lakeville Industrial
Center Net Lease (the “Lease”) dated October 28, 1998, entered into between
Seller, as Landlord, and Buyer, as Tenant. Pursuant to the Lease, Seller
granted to Buyer an option to purchase the Property. Buyer has exercised its
option to purchase the Property.


      C. Seller now desires to sell the Property (as hereinafter defined) to
Buyer, and Buyer desires to purchase the Property from Seller, in accordance
with the terms of the Lease and this Agreement.


      NOW THEREFORE, for valuable consideration, the receipt and adequacy of
which are hereby acknowledged, Seller and Buyer hereby agree as follows:


      1. Purchase and Sale of Property. Seller shall sell to Buyer, and Buyer shall
purchase from Seller, on the terms, covenants and conditions set forth in this
Agreement, the following described property (collectively, the “Property”):


      
      1.1. Real Property. The Real Property, together with all minerals, oil, gas
and other hydrocarbon substances thereon and all easements, access rights, air,
water and riparian rights, development rights, solar rights and all tenements,
privileges and appurtenances pertaining thereto;



      
      1.2. Personal Property. All fixtures, equipment, machinery, building
materials, furniture, furnishings and other personal property located on,
attached to, or used in connection with the operation and maintenance of the
Real Property that are owned by Seller (collectively, the “Personal Property”);

1.








      
      1.3. Intangible Property. Seller’s interest in any and all intangible personal
property arising out of or in connection with the ownership or operation of the
Real Property,
including (i) the right to use the current names of the Real Property, (ii)
all licenses, permits, certificates of occupancy and franchises issued to
Seller by federal, state or local municipal authorities relating to the use,
maintenance, occupancy or operation of the Real Property, (iii) all warranties
given by third parties with respect to the Real Property, and (iv) all service,
equipment, maintenance, construction and employment agreements (collectively,
the “Service Contracts”) entered into by Seller with respect to the Real
Property and listed on Exhibit B, attached hereto, which Buyer elects to have
assigned to it pursuant to the provisions of this Agreement (collectively, the
“Intangible Property”); and




      
      1.4. Lease. The Lease, together with all security and damage deposits held by
Seller in accordance with the terms of the Lease.


      2. Purchase Price. Buyer shall pay to Seller the purchase price (the “Purchase
Price”) in the amount of Ten Million Six Hundred Thousand Dollars ($10,600,000)
for the Property. The Purchase Price shall be paid in the manner described in
Section 4.


      3. Deposit. Within two (2) business days after the execution of this
Agreement, Buyer and Seller shall open an escrow account (the “Escrow”) with
North American Title (“Escrow Holder”), and Buyer shall deposit with Escrow
Holder by cashier’s check or immediately available federal wire transfer cash
in the amount of Forty Thousand Dollars ($40,000) (the “Deposit”). Escrow
Holder shall place the Deposit in an interest-bearing account at an institution
acceptable to Buyer, to be held as a deposit on account of the Purchase Price.
(The Deposit and all interest earned thereon shall hereinafter collectively be
referred to as the “Earnest Money Deposit.”) Upon Close of Escrow, the Earnest
Money Deposit shall be applied against the Purchase Price.


      4. Payment of Purchase Price. On or before Close of Escrow, Buyer shall
deposit with Escrow Holder by immediately available federal wire transfer or
cashier’s check an additional amount equal to the difference between the
Purchase Price and the Earnest Money Deposit, plus or minus the closing
adjustments and prorations described in Section 11.7.


      5. Remedies; Liquidated Damages.



      
      5.1. Remedies. If the transfer of the Property from Seller to Buyer does not
close as a result of a default by Seller under this Agreement, Buyer’s sole
remedy shall be either (but not both) (i) the return of the Earnest Money
Deposit and reimbursement of Buyer’s actual expenses incurred in connection
with this transaction, not to exceed Fifty Thousand Dollars ($50,000), or (ii)
an action for specific performance of this Agreement (with Buyer thereby
waiving any other remedy which Buyer may have against Seller at law or in
equity).




      
      5.2. LIQUIDATED DAMAGES. IF THE TRANSFER OF THE PROPERTY FROM SELLER TO BUYER
IS NOT CONSUMMATED DUE TO A DEFAULT BY BUYER

2.








UNDER THIS AGREEMENT, SELLER SHALL
HAVE THE RIGHT TO TERMINATE THIS AGREEMENT IN WRITING IMMEDIATELY AND WITHOUT
FURTHER OBLIGATION TO BUYER. SELLER SHALL BE ENTITLED TO RETAIN ANY PORTION OF
THE EARNEST MONEY DEPOSIT THEN HELD BY ESCROW HOLDER AS LIQUIDATED
DAMAGES AND AS SELLER’S SOLE REMEDY. NOTWITHSTANDING THE FOREGOING, THIS
PROVISION SHALL NOT LIMIT SELLER’S RIGHT TO OBTAIN REIMBURSEMENT FOR ATTORNEYS’
FEES AND COSTS, AFFECT BUYER’S RESTORATION OBLIGATIONS, OR WAIVE OR AFFECT
BUYER’S INDEMNITY OBLIGATIONS AND SELLER’S RIGHTS TO THOSE INDEMNITY
OBLIGATIONS UNDER THIS AGREEMENT. THE PARTIES AGREE THAT SELLER’S ACTUAL
DAMAGES AS A RESULT OF BUYER’S DEFAULT UNDER THIS AGREEMENT WOULD BE DIFFICULT
OR IMPOSSIBLE TO DETERMINE, AND THE EARNEST MONEY DEPOSIT IS THE BEST ESTIMATE
OF THE AMOUNT OF DAMAGES SELLER WOULD SUFFER AS A RESULT OF SUCH DEFAULT.
SELLER HEREBY WAIVES THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 3389. THE
PARTIES WITNESS THEIR AGREEMENT TO THIS LIQUIDATED DAMAGES PROVISION BY
INITIALING THIS SECTION:



	 	 	 
	Seller:  (/s/MTW)		
Buyer:  (/s/HLS)



      6. Due Diligence.



      
      6.1. Seller’s Studies. Seller either has or will provide to Buyer within two
(2) business days after the Effective Date copies of the documents and
materials (the “Due Diligence Documents”) described in Exhibit C, attached
hereto. In addition, Seller shall make available at Seller’s office for
Buyer’s review all studies, reports, maps, surveys, and other documents
relating to the Property and the Lease in Seller’s possession or control
(together with the Due Diligence Documents hereinafter referred to as the “Due
Diligence Materials”).



      
      6.2. Survey. During the Due Diligence Period, Buyer, at Buyer’s sole cost and
expense, shall the right to have an ALTA survey (the “Survey”) prepared of the
Real Property.




      
      6.3. Right of Entry. During the period (the “Contract Period”) commencing on
the Effective Date and ending on the earlier of Close of Escrow or termination
of this Agreement, Buyer’s representatives, agents, consultants and contractors
shall have the right to enter the Real Property to conduct investigations of
the Property and the physical and economic conditions thereof, including the
conduct of such engineering, economic feasibility and soil tests as Buyer may
desire (each, a “Buyer Inspection”), pursuant to the following terms and
conditions:




      
      
      6.3.1. Buyer’s Expense. Each Buyer Inspection shall be at Buyer’s sole cost
and expense.

3.








      
      
      6.3.2. No Interference. Any entry by Buyer or its representatives, agents,
consultants or contractors shall not interfere with Seller’s use of the Real
Property.6.3.3. Seller’s Approval Rights. Seller shall have the right to
approve of any proposed physical testing or drilling of the Real Property,
which approval may be withheld by Seller in its sole and absolute
discretion.6.3.4. Restoration. Buyer, at Buyer’s sole cost and expense, shall
restore the Real Property to its condition existing immediately prior to
Buyer’s Inspections if, for any reason, the Property is not transferred by
Seller to Buyer. The restoration obligation contained in this Section 6.3.4
shall survive the termination of this Agreement.




      
      
      6.3.5. Indemnity. Buyer shall indemnify, defend and hold harmless Seller for,
from and against any and all claims, damages, costs, liabilities and losses
(including mechanics’ liens) and expenses (including, without limitation,
reasonable attorneys’ fees) arising out of any entry by Buyer or its agents,
representatives, consultants or contractors on the Real Property. The
indemnity obligations contained in this Section 6.3.5 shall survive Close of
Escrow or any termination of this Agreement.



      
      6.4. Designation of Representatives. Seller and Buyer each shall designate one
(1) representative to act for them in scheduling and arranging visits to and
inspections of the Real Property and in coordinating the delivery of and/or
access to the Due Diligence Materials pursuant to Section 6.1 above. Buyer’s
Representative and Seller’s Representative are identified in the Summary of
Certain Terms. Each party shall have the right to change its respective
representative by notice to the other party given in accordance with Section
15.7.



      
      6.5. Disapproval of Seller’s Studies or Buyer’s Inspections.




      
      
      6.5.1. Termination Notice. Buyer shall have the right, at any time during the
period (the “Due Diligence Period”) commencing on the Effective Date and ending
at 6:00 p.m. Pacific Standard Time on the thirtieth (30th) day after the
Effective Date to disapprove of the results of Buyer’s review of the Due
Diligence Materials, Buyer’s Inspections of the Real Property or any aspect of
this transaction, by notifying Seller in writing (a “Termination Notice”). If
Buyer fails to provide Seller with a Termination Notice prior to the expiration
of the Due Diligence Period, then Buyer shall be deemed to have approved the
results of Buyer’s review of the Due Diligence Materials and Buyer’s
Inspections.



      
      
      6.5.2. Result of Termination Notice. If Buyer delivers a Termination Notice to
Seller during the Due Diligence Period, then this Agreement shall terminate and
Seller shall immediately direct Escrow Holder to return the Earnest Money
Deposit to Buyer.



      
      6.6. Title Review. Buyer shall notify Seller in writing (the “Title Objection
Notice”) prior to the expiration of the Due Diligence Period if Buyer objects
to the condition of title as shown on a title report (the “Title Report”) for
the Real Property issued by North American Title (“Title Company”) or any items
shown on the Survey. Buyer shall be deemed to have approved the condition of
title as shown on the Title Report and the Survey if Buyer fails to

4.








deliver to
Seller the Title Objection Notice prior to the expiration of the Due Diligence
Period. If Buyer timely delivers to Seller the Title Objection Notice, Seller
shall notify Buyer in writing within three (3) business days after Seller’s
receipt of the Title Objection Notice of Seller’s election to either (i) cure
or satisfy all or some of the objection(s) (the “Objections”) set forth in the
Title Objection Notice and/or (ii) not to cure or satisfy any of the
Objections. Seller shall have until Close of Escrow to cure or satisfy any
Objections that Seller elects to cure or satisfy and Seller’s failure to do so
by Close of Escrow shall constitute a default by Seller under this
Agreement. If Seller fails to notify Buyer in writing of its election within
the three (3) business day period referenced above, Seller shall be deemed to
have elected not to cure or satisfy all of the Objections. If Seller notifies
Buyer in writing of its election not to cure or satisfy any of the Objections
or is deemed to have elected not to cure or satisfy any of the Objections, then
Buyer shall either: (A) waive the Objections and proceed with Close of Escrow
pursuant to all of the terms of this Agreement, with a reduction in the
Purchase Price equal to the cost of curing the Objections as reasonably
estimated by Buyer, or (B) terminate this Agreement by written notice to
Seller. Buyer shall notify Seller in writing of its election either to
terminate this Agreement or waive the Objections pursuant to the foregoing
sentence within three (3) business days after Buyer’s receipt of Seller’s
response to the Title Objection Notice. If Buyer fails to notify Seller in
writing of its election to either terminate this Agreement or waive the
Objections within the time period provided above, Buyer shall be deemed to have
terminated this Agreement. If Buyer terminates this Agreement pursuant to this
Section, Seller shall immediately direct Escrow Holder to return the Earnest
Money Deposit to Buyer.



      
      6.7. Modification of Title Report. In the event that Title Company issues any
modification or supplement to the Title Report between the end of the Due
Diligence Period and Close of Escrow that is not the result of activities of
Buyer or any of Buyer’s agents, representatives, consultants or contractors,
and, if, in Buyer’s reasonable judgment, the change materially and adversely
affects the Real Property or Buyer’s projected use thereof, Buyer shall have
three (3) business days after receipt of the modification or supplement to the
Title Report in which to object thereto by written notice to Seller. If Buyer
objects to such a change, Seller shall have three (3) days after the date
Seller receives Buyer’s objection notice (and, if necessary, Close of Escrow
shall be extended by the number of days necessary to give Seller this full
three (3) day period) in which to notify Buyer in writing of its election
either to satisfy or cure Buyer’s objection or not to satisfy or cure Buyer’s
objection. Seller shall have until Close of Escrow to cure or satisfy any
objections that Seller elects to cure or satisfy and Seller’s failure to do so
by Close of Escrow shall constitute a default by Seller under this Agreement.
Seller shall be deemed to have elected not to cure or satisfy all of Buyer’s
objections if Seller fails to notify Buyer in writing of its election within
the three (3) day period referenced above. If Seller notifies Buyer in writing
of its election not to satisfy the objection or Seller is deemed to have
elected not to cure or satisfy Buyer’s objection, then Buyer shall either: (A)
waive the objection and proceed with Close of Escrow pursuant to all of the
terms of this Agreement, or (B) terminate this Agreement. Buyer shall notify
Seller in writing of its election either to terminate this Agreement or waive
its objection within three (3) business days after the earlier of Buyer’s
receipt of Seller’s written notice election not to cure Buyer’s objection or
the expiration of the three (3) day period within which Seller was required to
notify Buyer of its election. If

5.








Buyer terminates this Agreement pursuant to
this Section, (i) this Agreement, and all of the obligations, rights and
liabilities of Buyer and Seller to each other hereunder shall terminate; and
(ii) Seller shall immediately direct Escrow Holder to return the Earnest Money
Deposit to Buyer.



      
      6.8. Service Contracts. Buyer shall notify Seller in writing prior to the end
of the Due Diligence Period as to which (if any) Service Contracts Buyer shall
assume at Close of Escrow. Seller shall terminate all other Service Contracts
by Close of Escrow.



      
      6.9. Assumption of Bonds. Notwithstanding anything to the contrary contained
in Section 11.7 of this Agreement, Buyer agrees to purchase the Property
subject to outstanding bonds attributable to and unpaid assessments assessed
against the Property (with no adjustment to the Purchase Price).


      7. Status



      
      7.1. As-Is Purchase. Except as otherwise provided in Section 14.2, Seller
hereby specifically disclaims any warranty, guaranty or representation, oral or
written, past, present or future, of, as to or concerning (i) the nature and
condition of the Property, including, but not by way of limitation, the water,
soil, geology, environmental conditions (including the presence or absence of
any Hazardous Materials (defined below)), and the suitability thereof for any
and all activities and uses which Buyer may elect to conduct thereon; (ii) the
nature and extent of any right-of-way, lease, possessory interest, lien,
encumbrance, license, reservation, condition or otherwise; and (iii) the
compliance of the Property or its operation with any laws, ordinances or
regulations of any government or other body. The sale of the Property as
provided for herein is made on an “AS IS” basis, and Buyer expressly
acknowledges that, in consideration of the agreements of Seller herein, and
except as otherwise expressly specified herein, SELLER MAKES NO WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING,
BUT IN NO WAY LIMITED TO, ANY WARRANTY OF CONDITION, HABITABILITY,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY. The term
“Hazardous Materials” shall mean any substance: (i) the presence of which
requires investigation or remediation under any federal, state or local
statute, regulation, ordinance, order, action, policy or common law; (ii) which
is or becomes defined as a “hazardous waste,” “hazardous substance,” pollutant
or contaminant under any federal, state or local statute, regulation,
ordinance, rule, directive or order or any amendments thereto (hereinafter
referred to as “Environmental Laws”) including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.) and/or the Resource Conservation and Recovery Act (41
U.S.C. Section 6901 et seq.); (iii) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is or becomes regulated by any governmental authority, agency,
department, commission, board, agency or instrumentality of the United States,
the State of California or any political subdivision thereof; (iv) which
contains gasoline, diesel fuel or other petroleum hydrocarbons; (v) which
contains polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde foam
insulation; or (vi) radon gas.

6.








      7.2. Release. Excluding any claim that Buyer may have against Seller as a
result of any breach by Seller of any of Seller’s representations or warranties
set forth in Section 14.2, effective as of Close of Escrow, Buyer, for itself
and its agents, affiliates, successors and assigns, hereby releases and forever
discharges Seller and its officers, directors, shareholders, members, partners,
agents, affiliates, successors and assigns (collectively, “Seller’s Parties”)
from, and waives any right to proceed against Seller or Seller’s Parties for,
any and all costs, expenses, claims, liabilities and demands (including
attorneys’ fees and costs) at law or in equity, whether known or unknown,
arising out of the physical, environmental, economic, legal or other condition
of the Property, including any claims for contribution pursuant to the
Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any other Environmental Laws which Buyer has or may have in the future.
Without limiting the foregoing, Buyer hereby specifically waives the provisions
of Section 1542 of the California Civil Code which provide:



		
	 	“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 hereby specifically acknowledges that Buyer has carefully reviewed this
Section 7.2, and discussed its import with legal counsel, is fully aware of its
consequences, and that the provisions of this Section 7.2 are a material part
of this Agreement.



	 	 
	Buyer 
(/s/HLS)	
(X) agrees.




      
      8. Operation of Property. Seller hereby covenants with Buyer that during the
Contract Period:


      
      
      8.1. Leases, Contracts. Seller shall not enter into, amend or terminate any
lease, service contract or any other agreement or contract affecting or
relating to the Real Property that will survive Close of Escrow (including any
Service Contract) without the prior written consent of Buyer, which consent
shall not be unreasonably withheld;



      
      
      8.2. Insurance. All insurance coverage carried by Seller with respect to the
Real Property and in effect as of the Effective Date shall remain continuously
in full force and effect;



      
      
      8.3. Maintenance. Seller shall continue to maintain the Real Property in
substantially the same manner in which Seller is maintaining the Real Property
as of the Effective Date;

7.







      
      
      8.4. Personal Property. Seller shall not remove any Personal Property from the
Real Property unless it is replaced with a comparable item of equal quality and
quantity as existed at the time of such removal and shall maintain the Personal
Property in good condition and repair.




      
      
      8.5. Withdrawal. Seller shall withdraw the Property from the market and not
enter into any agreement to sell the Property to any other party or otherwise
negotiate with any other party concerning a sale of the Property.


      9. Grant Deed. Seller shall convey to Buyer all of its interest in the Real
Property by a grant deed (the “Deed”) in the form of Exhibit D, attached
hereto.


      10. Conditions Precedent. In addition to the documents and funds which must be
placed into Escrow prior to Close of Escrow as stated in Section 11 of this
Agreement, the following are conditions precedent to Close of Escrow:



      
      
      10.1. Seller. The following are conditions precedent to Seller’s obligation to
proceed with Close of Escrow:



      
      
      
      10.1.1. No Proceedings. No suit, action or other proceeding (instituted by any
party other than Seller) shall be pending which seeks, nor shall there exist
any judgment the effect of which is, to restrain the purchase and sale of the
Property;



      

      
      
      10.1.2. Buyer’s Representations True and Correct. Buyer’s representations and
warranties set forth herein shall be true and correct in all material respects
on Close of Escrow;


      

      
      
      10.1.3. Performance of Covenants. Buyer shall have performed all of Buyer’s
covenants and agreements contained in this Agreement that are required to be
performed by Buyer prior to or on Close of Escrow; and



      

      
      
      10.1.4. Authority. Buyer shall have provided to Seller and Title Company prior
to Close of Escrow evidence of authority for Buyer to enter into this Agreement
and purchase the Property from Seller.



      
      
      10.2. Buyer. The following are conditions precedent to the Buyer’s obligation
to proceed with Close of Escrow:



      
      
      
      10.2.1. Satisfaction With Due Diligence. Buyer’s inspection and approval
during the Due Diligence Period of the Due Diligence Materials, the Lease, the
Service Contracts, the Survey and all other physical, environmental, legal and
any other matters relating to the Property that Buyer may elect to investigate;




      
      
      
      10.2.2. Title. Buyer’s inspection and approval of all title and survey matters
relating to the Property within the time periods provided in Sections 6.6 and
6.7;

8.









      
      
      
      10.2.3. Owner’s Title Policy. Buyer’s receipt prior to Close of Escrow of an
irrevocable written commitment of Title Company to issue, upon the payment of
its regularly scheduled premium, an ALTA Owner’s Policy (1992 Form) of title
insurance, with extended coverage (the “Owner’s Title Policy”) dated as of the
date and time of the recordation of the Deed, in the amount of the Purchase
Price, insuring Buyer that fee simple title to the Real Property is vested in
Buyer, subject only to (i) a lien for real property taxes and assessments not
then delinquent; (ii) matters of title respecting the Real Property approved or
deemed approved by Buyer during the Due Diligence Period; and (iii) matters
affecting the condition of title to the Real Property created by or with the
written consent of Buyer or its agents, representatives, consultants or
contractors;




      
      
      
      10.2.4. Financing. Buyer’s obligations to perform pursuant to this Agreement
are contingent upon Buyer’s ability to obtain financing in an amount of
approximately $5,500.000.00 on terms acceptable to Buyer in sufficient time to
close escrow pursuant to this Agreement . Buyer acknowledges that it will use
it best efforts to obtain financing in as prompt a manner as is commercially
feasible; it being Buyer’s desire to close escrow as soon as possible.



      
      
      
      10.2.5. No Proceedings. As of Close of Escrow, no suit, action or other
proceeding (instituted by any party other than Buyer) shall be pending which
seeks, nor shall there exist any judgment the effect of which is, to restrain
the purchase and sale of the Property;




      
      
      
      10.2.6. Seller’s Representations True and Correct. As of Close of Escrow,
Seller’s representations and warranties set forth in this Agreement shall be
true and correct in all material respects;




      
      
      
      10.2.7. Performance and Covenants. Seller shall have performed all of the
covenants and agreements herein that Seller is required to perform on or before
Close of Escrow.




      
      
      
      10.2.8. Authority. Seller shall have provided to Buyer and Title Company at
Close of Escrow with evidence of authority to enter into this Agreement and
transfer the Property to Buyer.




      
      
      10.3. Failure of Buyer’s Conditions Precedent. If any of Buyer’s conditions
precedent described in Section 10.2 have not been satisfied or waived by the
time provided therein, then this Agreement shall terminate. Upon termination
of this Agreement pursuant to the foregoing sentence, Seller shall direct the
Escrow Holder to return the Earnest Money Deposit to Buyer. If Close of Escrow
fails to occur due to a default under this Agreement by either Seller or Buyer,
the parties’ respective remedies shall be as described in Section 5 hereof.


      11. Escrow.




      
      
      11.1. Time. Close of Escrow shall occur when all documents and funds specified
in this Section 11 have been deposited into Escrow. The failure of Seller or
Buyer to be in a position by the Scheduled Closing Date (as defined in the
Summary of Certain Terms) to


9.









fulfill their respective obligations with respect
to Close of Escrow and thus enable Title Company to cause Close of Escrow to
occur on the Scheduled Closing Date shall constitute a default by the party so
failing.



      
      
      11.2. Documents. On or before the business day immediately preceding the
Scheduled Closing Date, the parties shall deposit into Escrow the funds and
documents described below.



      
      
      
      11.2.1. Seller. Seller shall deposit the following:



      
      
      
      
      
      a. Deed. A duly executed and acknowledged Deed, conveying to Buyer all of its
interest in the Real Property;



      
      
      
      
      
      b. Bill of Sale and Assignment. Two (2) duly executed counterparts of a Bill
of Sale and Assignment (the “Assignment”) in the form of Exhibit E, attached
hereto, transferring to Buyer all of Seller’s interest in the Lease, Personal
Property and Intangible Property;




      
      
      
      
      
      c. Non-Foreign Person Certificate. A duly executed non-foreign person
certificate (the “Non-Foreign Person Certificate”) under Section 1445 of the
Internal Revenue Code in the form of Exhibit F, attached hereto;



      
      
      
      
      
      d. Form 597-W. A duly executed Withholding Exemption Certificate for Real
Estate Sales (Form 597-W) (the “Form 597-W”);



      
      
      
      
      
      e. Seller’s Date Down Certificates. A Seller’s Date Down Certificate
(“Seller’s Date Down Certificate”) in the form of Exhibit G, attached hereto;
and



      
      
      
      
      
      f. Additional Documents. Such additional documents and funds, including
without limitation, escrow instructions consistent with the terms and
conditions of this Agreement, as may be reasonably required of Seller to close
the transaction in accordance with this Agreement.


      
      
      
      11.2.2. Buyer. Buyer shall deposit the following:



      
      
      
      
      
      a. Purchase Price. The Purchase Price, plus or minus the closing adjustments
and prorations due hereunder;


      
      
      
      
      
      b. Assignment. Two (2) duly executed original counterparts of the Assignment;



      
      
      
      
      
      c. Buyer’s Date Down Certificate. A duly executed Buyer’s Date Down
Certificate in the form of Exhibit H, attached hereto; and

10.








      
      
      
      
      
      d. Additional Documents. Such additional documents and funds, including
without limitation, escrow instructions consistent with the terms and
conditions of this Agreement, as may be reasonably required of Buyer to close
the transaction in accordance with this Agreement.




      
      
      11.3. Procedure. Escrow Holder shall close the Escrow as follows:




      
      
      
      
      11.3.1. Record Deed. Record the Deed in the Official Records of Sonoma County,
California and deliver conformed copies thereof to Buyer and Seller;



      
      
      
      
      11.3.2. Purchase Price. Deliver to Seller by wire transfer to the account
designated by Seller in writing, the Purchase Price, minus prorations and
closing costs;



      
      
      
      
      11.3.3. Additional Deliveries to Seller. Deliver to Seller one (1) fully
executed original of the Assignment and Buyer’s Date Down Certificate; and



      
      
      
      
      11.3.4. Additional Deliveries to Buyer. Deliver to Buyer (i) one (1) fully
executed original of the Non-Foreign Certificate, Assignment, Form 597-W, and
Seller’s Date Down Certificate, and (ii) the Owner’s Title Policy.



      
      
      11.4. Possession. Seller shall deliver possession of the Property to Buyer at
Close of Escrow free and clear of all tenants and occupants, except for the
Buyer under the Lease.



      
      
      11.5. Deliveries Outside Escrow. Upon Close of Escrow, Seller shall deliver
(or shall have previously delivered) to Buyer, the following items in Seller’s
possession:



      
      
      
      
      11.5.1. Keys; Security Systems. Keys to all buildings located on the Real
Property and access codes to any security systems comprising part of the
Property;



      
      
      
      
      11.5.2. Approvals. Originals or, to the extent originals are not available,
copies of all governmental licenses, permits and approvals relating to the
occupancy or use of the Real Property;




      
      
      
      
      11.5.3. Project Agreements and Project Documents. Originals, or to the extent
originals are not available, copies of all construction drawings and
specifications (including, without limitation, structural, electrical, HVAC,
mechanical and plumbing plans and specifications) and any addenda thereto, and
all other blueprints, architectural documents, operating manuals and similar
documents, landscaping plans, development plans and shop drawings relating to
the Improvements.



      
      
      
      
      11.5.4. Warranties. Originals or, to the extent originals are not available,
copies of all existing warranties given by third parties with respect to the
Real Property.

11.







      
      
      11.6. Escrow Instructions. This Agreement shall serve as escrow instructions
and an executed copy of this Agreement shall be deposited by Seller and Buyer
with Escrow Holder following the execution and delivery hereof. The parties
agree to execute for the benefit of Escrow Holder such additional escrow
instructions as required, provided that the additional escrow instructions do
not change the terms of this Agreement but merely offer protection to Escrow
Holder. Seller and Buyer hereby designate Escrow Holder as the “Reporting
Person” for the transaction pursuant to Section 6045(e) of the Internal Revenue
Code.



      
      
      11.7. Closing Costs and Prorations.



      
      
      
      
      11.7.1. Closing Costs




      
      
      
      
      
      
      a. Buyer’s Share of Closing Costs. Buyer shall pay the following portions of
the closing costs (the “Closing Costs”) in connection with transfer of the
Property: (A) the title insurance premiums for the Owner’s Title Policy and
any endorsements requested by Buyer; (B) the Escrow fees; and (C) all recording
fees incurred in connection with the Deed.



      
      
      
      
      
      
      b. Seller’s Share of Closing Costs. Seller shall pay the following portions of
the Closing Costs: (A) all City and County documentary transfer taxes; and (B)
all recording fees not the responsibility of Buyer pursuant to Section 11.7.1.a
above.



      
      
      
      
      
      
      c. No Close of Escrow. If Close of Escrow does not occur because of a failure
of either Seller or Buyer to comply with its obligations under this Agreement,
the costs incurred in connection with the Escrow, including the cost of the
Title Report and any cancellation fees or other costs of Title Company, shall
be paid by the defaulting party. If Close of Escrow does not occur because of
any other reason, including any termination of this Agreement by Buyer pursuant
to Sections 6.5, 6.6 or 6.7, such costs shall be paid equally by Buyer and
Seller.



      
      
      
      
      11.7.2. Lease Rentals. All accrued rent (including all accrued operating
expenses and tax escalations and recoveries), charges and revenues of any kind
under the Lease shall be prorated as of 11:59 p.m. Pacific Standard Time on the
day immediately prior to Close of Escrow (the “Proration Date”) based on the
actual number of days in the month in which Close of Escrow occurs. Seller
shall receive a credit at Close of Escrow for any uncollected rent, charges or
revenues for the month in which Close of Escrow occurs. If, after Close of
Escrow, either Buyer or Seller receives any revenue to which it is not entitled
under the terms of this Agreement, the party receiving the revenue shall
promptly forward such amount to the other party.



      
      
      
      
      11.7.3. Re-Proration. There shall be no re-prorations after the Closing Date
of any Tenant reconciliations.

12.








      
      
      
      
      11.7.4. Leasing Costs. All leasing commissions and tenant improvement costs
(collectively, “Leasing Costs”) due or payable in connection with the Lease
shall be paid in full by Seller at or prior to Close of Escrow. Buyer shall be
responsible for all Leasing Costs which shall become due after Close of Escrow
in connection with any other leases entered into by Buyer.



      
      
      
      
      11.7.5. Security Deposits. Buyer shall receive a credit against the Purchase
Price equal to all security deposits currently held by Seller in connection
with the Lease.



      
      
      
      
      11.7.6. Real Estate Taxes. All real and personal property taxes attributable
to the Real Property (to the extent they are not the obligation of the tenant
under the Lease) shall be prorated as of 11:59 p.m. Pacific Standard Time on
the Proration Date based on a 365-day year and the assessed value of the
Property in effect on the Proration Date. Seller shall pay or credit Buyer for
all such taxes attributable to periods through and including the Proration
Date. If at any time after the Proration Date additional or supplemental taxes
(which are not the obligation of the tenant under the Lease) are assessed
against the Real Property by reason of any event occurring prior to or on the
Proration Date, or there is any rebate of such taxes (with Seller being
responsible for the supplemental or additional taxes attributable to the period
prior to and including the Proration Date and Buyer being responsible for the
supplemental or additional taxes attributable to the period after the Proration
Date), Buyer and Seller shall promptly re-
prorate such taxes, and any amounts due from one party to the other shall be
paid in cash at that time. All real and personal property taxes, installments
of bonds, special taxes and assessments, and supplemental or additional taxes
which are the obligations of Buyer as tenant under the Lease shall be
considered to be rent for purposes of prorating such taxes and shall be
prorated among Buyer and Seller pursuant to Section 11.7.2.



      
      
      
      
      11.7.7. Utilities. Buyer shall arrange with all utility services and companies
serving the Real Property to have accounts started in the name of Buyer or its
property manager beginning as of the Closing Date. Buyer and Seller shall
cooperate to have the utility services and companies make utility readings as
of the Proration Date. If readings cannot be made, utility charges shall be
prorated as of 11:59 p.m. Pacific Standard Time on the Proration Date based on
estimates from the latest bills available; provided, in any event, Seller shall
pay, through and including the Proration Date, all utility charges attributable
to the Real Property that are not payable directly by Buyer as tenant under the
Lease. All utility charges attributable to the Real Property that are payable
directly by Buyer as tenant under the Lease shall be considered to be rent for
purposes of prorating such utility charges and shall be prorated among Buyer
and Seller pursuant to Section 11.7.2).




      
      
      
      
      11.7.8. Insurance. Seller shall not assign to Buyer any insurance policies in
connection with the Property.



      
      
      
      
      11.7.9. Calculations for Closing. Seller and Buyer shall provide Escrow Holder
with a preliminary calculation of prorations no later than three (3) days prior
to the


13.









Proration Date and a final calculation no later than one (1) day prior
to the Proration Date. The final calculation shall be executed by each party
and may be relied upon by Escrow Holder in completing the closing adjustments
and prorations. In the event incomplete information is available, or estimates
have been utilized to calculate prorations as of the Proration Date, any
prorations relating thereto shall be further adjusted and completed outside of
Escrow within sixty (60) days after the Proration Date or as soon as possible
after complete information becomes available to Buyer and Seller. Any
adjustments to initial estimated prorations that are required upon review of
such complete information shall be made by Buyer and Seller, with due diligence
and cooperation, by prompt cash payment to the party entitled to a credit as a
result of such adjustments. Any errors or adjustments in calculations of the
foregoing adjustments shall be corrected or adjusted as soon as practicable
after Close of Escrow.



      
      
      
      
      11.7.10. Additional Costs. Buyer and Seller each shall pay their own legal,
lending and other fees and expenses incurred in connection with the
negotiation, documentation and closing of the contemplated transactions.



      
      
      11.8. Failure to Furnish Non-Foreign Person Certificate. If Seller shall fail
to deposit into Escrow the Non-Foreign Person Certificate as required by this
Agreement, Buyer may at its option either (i) delay Close of Escrow until such
time as Seller has complied with the conditions set forth herein, and such
adjournment shall not place Buyer in default of its obligations hereunder, or
(ii) withhold from the Purchase Price and remit to the Internal Revenue
Service, a sum equal to ten percent (10%) of the gross selling price of the
Property or such other sum as shall be required in accordance with the
withholding obligations imposed upon Buyer
pursuant to Section 1445 of the Code. Such withholding shall not place Buyer
in default under this Agreement, and Seller shall not be entitled to claim that
such withholding shall excuse Seller’s performance under this Agreement.


      12. Brokerage Commission. Upon Close of Escrow, a real estate sales commission
(the “Commission”) shall be paid by Seller to Sabella & Lipman (“Seller’s
Broker”) in an amount as agreed upon in writing between Seller and Broker.
Except for Seller’s payment of such commission (from payment of which Seller
shall indemnify and hold harmless Buyer), each party to this Agreement warrants
to the other that no person or entity can properly claim a right to a real
estate commission, finder’s fee or other real estate brokerage-type
compensation (collectively, “Real Estate Compensation”) based upon the acts of
that party with respect to the transaction contemplated by this Agreement.
Each party hereby agrees to indemnify and defend the other (by counsel
reasonably acceptable to the party seeking indemnification) against and hold
the other harmless from and against any and all loss, damage, liability or
expense, including costs and reasonable attorneys’ fees, resulting from any
claims for Real Estate Compensation by any person or entity based upon such
acts.


      13. Condemnation/Casualty.



      
      
      13.1. Right to Terminate. If before Close of Escrow, all or any portion of the
Property is damaged or destroyed by fire or other casualty, or is taken by
condemnation or


14.









eminent domain (or an action of condemnation or eminent domain
has been commenced or threatened against all or any portion of the Property),
Seller shall promptly notify Buyer of such fact, and Buyer shall have the
option to terminate this Agreement upon notice to Seller on or before the
Closing Date.



      
      
      13.2. Election to Terminate. Upon Buyer’s termination of this Agreement
pursuant to this Section 13, Seller shall immediately instruct Escrow Holder to
return Earnest Money Deposit to Buyer. Upon termination of this Agreement,
neither Buyer nor Seller shall have any further rights or obligations under
this Agreement.



      
      
      13.3. No Election to Terminate. If Buyer does not exercise the option to
terminate this Agreement, neither Buyer nor Seller shall have the right to
terminate this Agreement. However, Buyer shall be entitled to receive and keep
at Close of Escrow all insurance proceeds, in the event of a casualty, and all
rights to receive future awards, in the case of a taking by condemnation or
eminent domain with respect to the Property, and Close of Escrow shall be
consummated pursuant to the terms hereof without any reduction in the Purchase
Price. Until the Close of Escrow or the earlier termination of this Agreement
by Buyer, all such insurance proceeds and awards shall be deposited with Title
Company into Escrow, for disbursement in accordance with the foregoing
provisions.


      14. Representations and Warranties.



      
      
      14.1. Buyer. Buyer represents and warrants to Seller the following:



      
      
      
      
      14.1.1. Authority. Buyer has the full power to execute and deliver and fully
perform its obligations under this Agreement; and this Agreement constitutes a
valid and legally binding obligation of Buyer, enforceable in accordance with
its terms.



      
      
      
      
      14.1.2. No Violation. Neither this Agreement nor anything provided to be done
hereunder violates or shall violate any contract, agreement or instrument to
which Buyer is a party, the effect of which shall be to prohibit or to seek or
purport to prohibit Buyer from fulfilling its obligations under this Agreement.



      
      
      
      
      14.1.3. No Assignment. Buyer has not made (i) a general assignment for the
benefit of creditors; (ii) filed any voluntary petition in bankruptcy or
suffered the filing of an involuntary petition by Buyer’s creditors; (iii)
suffered the appointment of a receiver to take possession of all or
substantially all of Buyer’s assets; (iv) suffered the attachment or other
judicial seizure of all, or substantially all, of Buyer’s assets; (v) admitted
in writing its inability to pay its debts as they become due; or (vi) made an
offer of settlement, extension or composition to its creditors generally.



      
      
      14.2. Seller. Seller represents and warrants to Buyer the following:

15.








      
      
      
      
      14.2.1. Authority. Seller has the full power to execute and deliver and fully
perform its obligations under this Agreement; and this Agreement constitutes a
valid and legally binding obligation of Seller, enforceable in accordance with
its terms.



      
      
      
      
      14.2.2. No Violation. . Neither this Agreement nor anything provided to be
done hereunder violates or shall violate any contract, agreement or instrument
to which Seller is a party, the effect of which shall be to prohibit or to seek
or purport to prohibit Seller from fulfilling its obligations under this
Agreement.



      
      
      
      
      14.2.3. No Assignment. Seller has not (i) made a general assignment for the
benefit of creditors; (ii) filed any voluntary petition in bankruptcy or
suffered the filing of an involuntary petition by its creditors; (iii) suffered
the appointment of a receiver to take possession of all or substantially all of
its assets; (iv) suffered the attachment or other judicial seizure of all, or
substantially all, of its assets; (v) admitted in writing its inability to pay
its debts as they come due; or (vi) made an offer of settlement, extension or
composition to its creditors generally.



      
      
      
      
      14.2.4. No Litigation. Seller has not received any actual notice of any
pending or threatened litigation which would materially and adversely affect
the Property.



      
      
      
      
      14.2.5. Notice of Violations. Except as disclosed in the Due Diligence
Documents, Seller has not received any written notice from any governmental
authority and Seller is not aware of any violation of any law, regulation or
code, including any building code, with respect to the Property which has not
been cured.



      
      
      
      
      14.2.6. No Eminent Domain Action. Seller has not received any written notice
from any governmental authority and Seller is not aware of any eminent domain
proceedings for the condemnation of the Real Property that are threatened or
currently pending.



      
      
      
      
      14.2.7. Service Contracts. The documents constituting the Service Contracts
which are delivered or made available to Buyer pursuant to Section 6.1 are
true, correct and complete copies of the Service Contracts and there is no
default or alleged default by Seller or the vendor under the Service Contracts
that has not been cured.



      
      
      
      
      14.2.8. No Additional Leases. Seller has not entered into or assumed any lease
relating to the Property that is in effect as of the Effective Date except for
the Lease.



      
      
      
      
      14.2.9. Licenses, Permits, Etc. Seller has obtained all approvals, easements
and rights of way which are required by any and all governmental authorities
having jurisdiction over the Property or by private parties for the normal use,
occupancy and operation of the Property and to ensure continued free and
unrestricted vehicular and pedestrian ingress to and egress from the Property;
all such approvals are in full force and effect and, to Seller’s actual
knowledge, there are no facts or circumstances which might result in revocation
of or failure to renew the same; to Seller’s actual knowledge, the Improvements
comply with all applicable laws, statutes, ordinances, rules and regulations of
any and all govern-mental or quasi-governmental

16.








agencies having or claiming
jurisdiction over the Property or the use of all or any part thereof (“Legal
Requirements”) and there are no violations thereof.



      
      
      
      
      14.2.10. Due Diligence Materials. All Due Diligence Materials and other
information which Seller has provided to Buyer concerning the Property are
correct and complete.



      
      
      
      
      14.2.11. Outstanding Contracts. As of the Closing Date, there will be no
outstanding contracts made by Seller for any improvements to the Property which
have not been fully paid for.




      
      
      
      
      14.2.12. Property. Except for Buyer, no one has any option or right of first
refusal to purchase the Property.



      
      
      
      
      14.2.13. Hazardous Materials.




      
      
      
      
      
      
      
      (i) To Seller’s actual knowledge, the Property is not in violation of any
Environmental Laws.



      
      
      
      
      
      
      
      (ii) Except as disclosed in the Due Diligence Documents, to Seller’s
actual knowledge, there has been no use, presence, disposal, storage,
generation or release (as those terms are used in the Environmental Laws, and
hereinafter collectively referred to as “Use”) of Hazardous Materials on, from
or under the Property during the period that Seller has owned the Property or
any prior period.



      
      
      
      
      
      
      
      (iii) To Seller’s actual knowledge, no enforcement action or litigation
has been brought or threatened against Seller or the Property during the period
that Seller has owned the Property or any prior period, nor any settlements
reached by Seller or any prior owner of or other party having any interest in
the Property, with any party or parties, alleging use of any Hazardous
Materials on, from or under the Property.



      
      
      
      
      
      
      
      (iv) To Seller’s actual knowledge, there are no underground storage tanks
on the Property.



      
      
      
      
      
      
      
      (v) The scope of the representations and warranties set forth in Sections
14.2.13(i), (ii), (iii), (iv) and (v) shall not diminish in any respect any
liability of Seller to Buyer which would otherwise exist under the
Environmental Laws.



      
      
      
      
      14.2.14. Subsequent Changes. Seller will promptly notify Buyer in writing of
any event or occurrence which would cause any of Seller’s above representations
and warranties to cease to be true or correct in any respect.



      
      
      14.3. No Warranties. Except for those representations and warranties expressly
set forth in Section 14.2, the parties understand and acknowledge that no
person acting on behalf of Seller is authorized to make, and by execution
hereof Buyer acknowledges that no person has


17.









made, any representation or
warranty regarding the Property, or the transaction contemplated herein, or
regarding Leases or the zoning, construction, physical condition or other
status of the Real Property. No representation, warranty, agreement,
statement, guaranty or promise, if any, made by any person acting on behalf of
Seller which is not contained in this Agreement shall be valid or binding on
Seller.


      15. Miscellaneous.



      
      
      15.1. Successors and Assigns. This Agreement shall be binding upon the heirs,
executors, administrator, and successors and assigns of Seller and Buyer.
Notwithstanding the forgoing, except in order to effectuate an Exchange,
neither Buyer nor Seller may assign its rights and obligations under this
Agreement without the prior written consent of the other party (which consent
may be withheld in each party’s sole discretion). No assignment by Buyer or
Seller shall result in assigning party being released from any obligations
under this Agreement. Any assignment in violation of this Section shall be
void.



      
      
      15.2. Entire Agreement. This Agreement contains all of the covenants,
conditions and agreements between the parties and shall supersede all prior
correspondence, agreements and understandings, both oral and written.



      
      
      15.3. Attorneys’ Fees. Should either party employ attorneys to enforce any of
the provisions of this Agreement or to protect its interest in any manner
arising under this Agreement, or to recover damages for breach of this
Agreement, or to enforce any judgment relating to this Agreement and the
transaction contemplated hereby, the prevailing party shall be entitled to
reasonable attorneys’ fees and court costs.



      
      
      15.4. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.



      
      
      15.5. Further Assurances. Seller and Buyer shall promptly perform, execute and
deliver or cause to be performed, executed and/or delivered at or after Close
of Escrow any and all acts, deeds and assurances, including the delivery of any
documents, as either party or Escrow Holder may reasonably require in order to
carry out the intent and purpose of this Agreement.



      
      
      15.6. Severability. In case any one (1) or more of the provisions contained in
this Agreement for any reason is held to be invalid, illegal or unenforceable
in any respect, such invalidity, illegality or unenforceability shall not
affect any other provision hereof, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.



      
      
      15.7. Notices.



      
      
      
      
      15.7.1. Means/Receipt. All notices or other communications required or
permitted hereunder shall be in writing, and shall be personally delivered or
sent by registered or certified mail, postage prepaid, return receipt
requested, national overnight courier service (next



18.









business day delivery) or
facsimile, and shall be deemed received upon the earlier of (i) if personally
delivered, the date of delivery to the address of the person to receive such
notice, (ii) if mailed, three (3) business days after the posting by the United
States Post Office, (iii) if sent by national overnight courier service (next
business day delivery), one (1) business day after delivery to such courier
service, or (iv) if given by facsimile, upon electronic evidence of receipt.



      
      
      
      
      15.7.2. Addresses. Any notice to Seller shall be sent to Seller at Seller’s
Address, as stated on page (i) of this Agreement. Any notice to Buyer shall be
sent to Buyer at Buyer’s Address, as stated on page (i) of this Agreement.



      
      
      15.8. Counterparts. This Agreement may be executed in one (1) or more
counterparts, and all the counterparts shall constitute but one (1) and the
same agreement, notwithstanding that all parties hereto are not signatory to
the same or original counterpart.



      
      
      15.9. Time. Time is of the essence of every provision contained in this
Agreement.



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



      
      
      15.11. Survival. Each of the terms, covenants and conditions of this Agreement
contained in this Agreement shall survive the delivery of the Deed to Buyer and
shall not be deemed to have merged into the Deed; provided, however, that
unless Seller or Buyer, as the case may be, receives a written notice regarding
an alleged breach of any representation, warranty or covenant of Seller or
Buyer contained in the Sections referenced above on or prior to the date that
is three (3) months after Close of Escrow, then Seller’s or Buyer’s obligations
and liability with respect to such representation, warranty or covenant, as
applicable, shall terminate on the date that is three (3) months after Close of
Escrow.



      
      
      15.12. Captions. Section titles or captions contained in this Agreement are
inserted as a matter of convenience and for reference, and in no way define,
limit, extent or describe the scope of this Agreement.



      
      
      15.13. Exhibits. All exhibits attached hereto shall be incorporated herein by
reference as if set out herein in full.


      
      
      15.14. Construction. The parties acknowledge that each party and its counsel
have reviewed and revised this Agreement and that the normal rule of
construction to the effect


19.









that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendment or exhibits hereto.



      
      
      15.15. Business Day. As used herein, the term “business day” shall mean any
day other than a Saturday, Sunday or day on which banks in the State of
California are authorized to be closed for business.


      16. Deferred Exchange. Either party may consummate the purchase or sale of the
Property as part of a so-called like kind exchange (the “Exchange”) pursuant to
Section 1031 of the Internal Revenue Code of 1986, as amended, provided that
(i) Close of Escrow shall not be delayed or affected by reason of the Exchange,
nor shall the consummation or accomplishment of the Exchange be a condition
precedent or condition subsequent to either party’s obligations under this
Agreement; (ii) the party electing to consummate this transaction as part of an
Exchange (the “Electing Party”) shall effect the Exchange through an assignment
of this Agreement, or its rights under this Agreement, to a qualified
intermediary; (iii) the other party (the “Accommodator”) shall not be required
to take an assignment of the purchase agreement for the relinquished property
or be required to acquire or hold title to any real property for purposes of
consummating the Exchange; and (iv) the Electing Party shall pay any additional
costs that would not otherwise have been incurred by the Accommodator had the
Electing Party not consummated this transaction through the Exchange. The
Accommodator shall not by this Agreement or acquiescence to the Exchange
proposed by the Electing Party have its rights under this Agreement affected or
diminished in any manner or be responsible for compliance with or be deemed to
have warranted to the Electing Party that the Exchange in fact complies with
Section 1031 of the Internal Revenue Code of 1986, as amended.


      17. No Effect on Buyer’s Rights Under Lease Upon Failure to Close. In the
event the Parties fail to close escrow for any reason, such failure to close
shall not terminate or effect in any way, Buyer’s right to continue as the
Tenant pursuant to the Lease and all Addendums
thereto including, but not limited to, the Tenant’s right therein to extend the
term(s) of the Lease, the right of first offer and the right of first refusal.


20.







      IN WITNESS WHEREOF, the parties hereto have executed this Agreement in one
or more counterparts, on the date set forth above, effective as of the date
first above written.



	 	 
	 	“Seller”
	 
	
	
	
	

	 	G & W/LAKEVILLE CORPORATE CENTER, LLC, a
California limited liability company





	 	 
	By:	G&W Ventures, LLC, a California
limited liability company, its Managing
Member
	 
	 	By: /s/ MATTHEW T.
WHITE
	 	

	 	Name: Matthew T. White

	 	

	 	Its:  Manager
	 	






	 	 
	 	“Buyer”
	 
	 	REGAN HOLDING CORP., a California

corporation
	 
	 	By:  /s/ H. LYNN STAFFORD
	 	

	 	Name: H. Lynn Stafford
	 	

	 	Its:    
Chief Information Officer
	 	

	 
	 	By: 
	 	

	 	Name: 
	 	

	 	Its: 
	 	





21.








EXHIBIT A


LAND





The land referred to in this Report is situated in
the County of Sonoma,
 City of Petaluma, State
of California, described as follows:




PARCEL ONE:




PARCELS 1 and 2 as shown and designated upon City of Petaluma Parcel

Map No. 171, filed December 30, 1980 in Book 316 of Maps, Page 22,

Sonoma County Records.




EXCEPTING THEREFROM that portion contained in Deed to the City of

Petaluma, a Municipal Corporation, recorded February 1, 1990 under

Instrument No. 90-11544, and re-recorded March 27, 1990 as Document

No. 90-30132, and re-recorded April 18, 1990 as Document No. 90-38789,

Sonoma County Records.




ALSO EXCEPTING THEREFROM that portion contained in Deed to John M.

Headley, et al, recorded February 1, 1990 as Instrument No. 90-11545,

and re-recorded March 27, 1990 as Document No. 90-30135.




ALSO EXCEPTING THEREFROM that portion contained in the Deed of Trust

to the City of Petaluma recorded June 7, 1996 as Document No.

96-50841, Sonoma County Records.




PARCEL TWO:




AN EASEMENT for public utilities, 10 feet wide, lying Easterly of and

adjacent to, the Westerly line of the above-described Parcel, being

more particularly described as follows:




BEGINNING at Point “X” as set forth in Parcel 1 of Corporation Grant

Deed recorded February 1, 1990 in Document No. 90-11545. Thence along

said line common to Teitler and U-Haul Company South 54 degrees 08

minutes 19 seconds East, 10.00 feet; thence leaving said line and

parallel with the above-described Right-of-Way line South 35 degrees

51 minutes 41 seconds West, 143.47 feet to the point of curvature;

thence on a tangent curve to the right, radius 133 feet, through a

central angle of 27 degrees 28 minutes 28 seconds, an arc length of

63.78 feet to a point on the existing Easterly Right-of-Way line of

Marina Avenue; thence along said line North 35 degrees 51 minutes 41

seconds East, 26.65 feet; thence on a non-tangent curve to the right

whose center bears North 37 degrees 44 minutes 44 seconds West, radius

123 feet, through a central angle of 16 degrees, 23 minutes 35

seconds, an arc length of 35.19 feet to a point of tangency; thence

North 35 degrees 51 minutes 41 seconds East, 143.47 feet to the point

of beginning.




EXCEPTING therefrom all that portion lying within parcel one above.



 






PARCEL THREE:



FOR THE PLACE OF COMMENCEMENT BEGIN at the Northwesterly corner of the

tract of land described in the Deed from Brandon Heirs to A.W. Baker,

dated May 14, 1912 and recorded in Book 73 of Official Records of

Sonoma County, Page 388, said Northwesterly corner being on the

Southerly line of the Lakeville Highway, thence Easterly along the

Southerly line of said Highway, 318.36 feet to a point; thence

Southwesterly and parallel with the Northwesterly line of said tract

of land so conveyed to A.W. Baker, 239.12 feet to the actual place of

commencement; thence Northwesterly at right angles, 100 feet to a

point; thence Northeasterly at right angles, 60 feet to a point on the

Southwesterly line of the land described in the Deed from A.W. Baker,

et al, to Stanley McCutchan, dated October 13, 1927 and recorded June

26, 1928 in Book 205 of Official Records of Sonoma County, Page 149;

thence Southeasterly at right angles and along the Southwesterly line

of said land conveyed to McCutchan, 100 feet to a point; thence

Southwesterly at right angles 60 feet to the place of commencement.




EXCEPTING THEREFROM that portion lying within the City of Petaluma,

Sonoma County, California, being a portion of the Lands of John M.

Headley and Delores A. Headley, husband and wife, co-trustees under a

declaration of trust dated April 2, 1981 and amended June 14, 1982, as

conveyed by Deed recorded under Document No. 90-11543 of Official

Records, Sonoma County Records, and being more particularly described

as follows:




BEGINNING at the most Westerly corner of said lands, also being a

point on the Easterly Right-Of-Way line of Marina Avenue; thence along

said Right-Of-Way line North 35 degrees 51 minutes 41 seconds East,

8.56 feet to a point hereinafter referred to as Point “A”; thence

leaving said Right-Of-Way line in a Southerly direction, on a curve

concave Westerly, with a radius of 155 feet, through a central angle

of 3 degrees 14 minutes 35 seconds, an arc length of 8.77 feet to a

point on the Southwesterly line of said lands; thence along said line

North 54 degrees 08 minutes 19 seconds West, 1.94 feet to the point of

beginning.




A.P. Nos. 005-050-020 and 031