exv10w38



 






Exhibit 10.38




AGREEMENT OF PURCHASE AND SALE




     THIS AGREEMENT OF PURCHASE AND SALE (this “Agreement”) dated as of May 19, 2005, is
between OTR, an Ohio general partnership (“Seller”) acting as the duly authorized nominee of the
Board of the State Teachers Retirement System of Ohio (“STRS Ohio”), and Hines REIT Properties,
L.P., a Delaware limited partnership (“Buyer”).



RECITALS:




     A. Seller owns a certain fee simple interest in real estate improved by an office park
consisting of multiple buildings comprising approximately 255,263 rentable square feet of
space and related parking garages and structures in San Mateo, California, and commonly known as
1900 and 2000 Alameda de Las Pulgas, which property is more fully described in this
Agreement.



     B. Seller desires to sell the Property to Buyer, and Buyer desires to acquire the
Property from Seller, all upon the terms and subject to the conditions contained in this
Agreement.



     NOW, THEREFORE, in consideration of the mutual covenants and promises set forth in this
Agreement, and for other valuable consideration, receipt of which is hereby acknowledged, Seller
and Buyer agree as follows:



AGREEMENT:




     1. AGREEMENT TO BUY AND SELL.



     Seller shall sell and convey to Buyer, and Buyer shall purchase and accept from Seller, all of
Seller’s right, title, estate, and interest in and to:



     (a) the
land described on Schedule 1(a), which is attached to and made a part
of this Agreement, together with all easements, privileges, and appurtenant rights belonging
or in any way appertaining to the land (collectively, the “Land”);



     (b) all buildings and improvements on the Land, including, without limitation,
the building and parking structure described in Recital A above, all gas and electric systems,
lighting, heating, ventilating, and air conditioning equipment and systems, elevators,
radiators, incinerators, furnaces, hot water heaters, water, sewage, and plumbing systems, fire
protection and security systems, and all other fixtures attached to the Land and buildings (collectively,
the “Improvements”, and together with the Land, the “Real Property”);



     (c) all furnishings, furniture, equipment, supplies, and other personal property
as are owned by Seller and are currently located in, on, or about and are used for the
operation, management, administration or repair of the Real Property, including, without limitation, the



 









 




items
described on Schedule 1(c), which is attached to and made a part of this Agreement, and any
similar items acquired by Seller and located at the Real Property after the date of this Agreement
and prior to the Closing (collectively, the “Personal Property”);




          (d) those leases and tenancies described on Schedule 1 (d), which is attached
to and made a part of this Agreement and which sets forth all of the leases and tenancies
affecting the Real Property as of the date of this Agreement, and any leases and tenancies
affecting the Real Property that are entered into by Seller after the date of this Agreement
and prior to the Closing in accordance with the terms of this Agreement (collectively, the “Tenant
Leases”), together with any security deposits held by Seller and Seller’s rights under all
guaranties, letters of credit or other instruments that guarantee the performance of the
obligations of the tenants (or any of them) under the Tenant Leases;



          (e) those
contracts described on Schedule 1(e), which is attached to and made
a part of this Agreement and which sets forth all of the service and operating agreements
affecting the Property as of the date of this Agreement, to the extent assignable, and any
other service and operating agreements pertaining to the Property that are entered into by Seller
after the date of this Agreement and prior to the Closing in accordance with the terms of this
Agreement (collectively, the “Service Contracts”); provided, however, that in no event shall
Buyer assume any property management or leasing agreements for the Property; and



          (f) all intangible property owned by Seller and used in connection with the
Real Property and Personal Property, including a nonexclusive right to all trademarks and
trade names used in connection with the Property (including a nonexclusive right to the name
“California Casualty Plaza”), all plans and specifications and other architectural and
engineering drawings, if any, in the possession of Seller which were prepared in connection with the
construction of the Improvements and all licenses, permits, warranties and guaranties with
respect to the Property to the extent assignable (collectively, the “Intangible Property”).



     All of the foregoing assets and properties to be acquired by Buyer pursuant to this
Agreement are collectively referred to in this Agreement as the “Property”.



     2. PURCHASE PRICE.



          (a) Subject to the charges and prorations set forth in section 12 of this Agreement,
Buyer shall pay to Seller at Closing (as hereinafter defined) the sum of Fifty-Eight Million Five
Hundred Thousand and No/100 Dollars (US$58,450,000.00) (the “Purchase Price”) for the purchase of
the Property. The Purchase Price shall be payable in cash or other immediately available United
States funds. Notwithstanding the foregoing, in the event the Morgan Stanley Lease Condition (as
hereinafter defined) is not satisfied prior to the Closing Date (as hereinafter defined), the sum
of $450,000.00 (the “Lease Holdback”) shall be withheld from the Purchase Price and deposited into
an escrow with the Escrow Agent (as hereinafter defined). The Escrow Agent shall hold and disburse
the Lease Holdback pursuant to an escrow agreement (the “Holdback Escrow Agreement”), the form of
which shall be agreed by Buyer and Seller prior to the expiration of the Due Diligence Period (as
hereinafter defined). The Holdback Escrow Agreement shall provide that the Lease Holdback shall be
released (i) to Seller only if the Morgan Stanley Lease Condition is satisfied on or before the
date that is 180





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days after the Closing Date, or (ii) to Buyer in the event the Morgan Stanley Lease Condition is
not satisfied on or before the date that is 180 days after the Closing Date. As used herein, the
“Morgan Stanley Lease Condition” shall mean that (x) the lease currently being negotiated with
Morgan Stanley (the “Morgan Stanley Lease”) has been fully executed and delivered by all parties
thereto, and (y) such lease contains substantially the same terms as those described in the letter
dated March 2, 2005, addressed to Mr. Bob Garner of Cornish & Carey Commercial (a copy of which is
attached as Schedule 2(a) hereto) (the “Morgan LOI”). After the end of the Due Diligence Period,
Buyer shall have the right, but not the obligation, to take over the primary role of negotiating
the Morgan Stanley Lease consistent with the Morgan LOI upon notice to Seller, Buyer shall have the
right to negotiate directly with the tenant under the Morgan Stanley Lease, provided that, prior to
Closing, any change in the material terms of the Morgan Stanley Lease which differs from the terms
set forth in the Morgan LOI shall require the prior consent of Seller before Buyer may agree to any
such terms. Buyer and Seller agree to cooperate reasonably in the negotiation of the Morgan Stanley
Lease.




          (b) Within two (2) business days after the execution and delivery of this
Agreement by both parties, Buyer shall deposit the sum of One Million Dollars ($1,000,000.00)
(the “Initial Deposit”) with Escrow Agent. If Buyer does not terminate this Agreement prior to
the expiration of the Due Diligence Period pursuant to Section 5(b) below, then, not later
than one (1) business day after the expiration of the Due Diligence Period, Buyer shall deposit an
additional One Million Dollars ($1,000,000.00) (the “Additional Deposit”) with Escrow Agent;
the Initial Deposit and, if made, the Additional Deposit (as defined below) and any Extension
Deposits (as defined below), together with all interest earned thereon, are referred to
collectively in this Agreement as the “Deposit”. If Buyer closes the transaction contemplated by this
Agreement, the Deposit shall be applied to the Purchase Price. The Escrow Agent shall hold the
Deposit as provided in this Agreement in an interest bearing account at a commercial bank
reasonably acceptable to Seller and Buyer, and all interest earned thereon shall become a part
of the Deposit for all purposes hereunder.




          (c) In addition to the Deposit, Buyer has delivered to Seller, and Seller has
acknowledged receipt of, the sum of One Hundred Dollars ($100.00) (the “Independent
Consideration”), as consideration for Buyer’s right to purchase the Property and for Seller’s
execution, delivery and performance of this Agreement. The Independent Consideration is in
addition to and independent of any other consideration or payment provided for in this
Agreement, is non-refundable and shall be retained by Seller notwithstanding any other
provision of this Agreement.




     3. ESCROW AGENT.



     The Title Company (as hereinafter defined) shall serve as escrow agent for the transaction
contemplated in this Agreement (“Escrow Agent”). This Agreement shall serve as escrow instructions,
and Escrow Agent has signed this Agreement in the space provided to indicate that Escrow Agent
accepts its appointment as the Escrow Agent.



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     4. TITLE; SURVEY.



          (a) Buyer acknowledges receipt of a preliminary title report no. NCS-153865-
5M dated as of March 8, 2005 (the “Title Report”) issued by First American Title Insurance
Company, 555 Marshall St., Redwood City, CA 94063, Attention: Karen Matsunaga (the “Title
Company”) with respect to the Real Property and copies of the underlying documents for each of
the exceptions to coverage identified in the Title Report.




          (b) Within two (2) business days after execution and delivery of this
Agreement by both parties, Seller shall deliver to Buyer copies of the most recent existing ALTA
survey of the Real Property in Seller’s possession. If Buyer desires an updated survey of the Real
Property (the “Updated Survey”), Buyer shall cause to be prepared the Updated Survey, at Buyer’s
sole cost. Buyer shall provide such surveyor with a copy of the Title Report to aid in preparing
the Survey. Buyer shall have the Updated Survey completed, and a copy delivered to Seller and to
the Title Company, no later than three (3) days prior to the expiration of the Due Diligence Period
(as hereinafter defined). If Buyer does not obtain and deliver the Updated Survey as provided
above, then any reference in this Agreement to “Updated Survey” shall be ignored as if no Updated
Survey was contemplated.




          (c) On or before 5:00 p.m. (PST) on the day which is five (5) days prior to the
expiration of the Due Diligence Period, Buyer shall deliver to Seller written notice that
Buyer either:




               (i) approves and accepts Seller’s title as it appears in the Title Report and on the
Updated Survey, or



               (ii) objects to any matters set forth in the Title Report or on the
Updated Survey, which matters shall be described in Buyer’s notice of objection with sufficient
particularity to allow Seller to identify them.



     If Buyer fails to deliver notice as provided in this subsection, then except as provided
below, Buyer shall be deemed to have approved and accepted title to the Property as shown in the
Title Report and on the Updated Survey (if any), and all such matters shown in the Title Report and
on the Updated Survey (if any) shall be considered “Permitted Exceptions”.



          (d) Except as provided below, any matters set forth in the Title Report or on
the Updated Survey to which Buyer does not object as provided in the previous subsection shall
be considered “Permitted Exceptions.” In addition, the following matters set forth in the
Title Report or on the Updated Survey shall be deemed to be Permitted Exceptions: (i) those created
by or to be assumed by Buyer pursuant to the express terms of this Agreement; (ii) zoning
ordinances or other matters of local law; and (iii) general and special real estate taxes and
assessments that are a lien on the date of Closing, but are not yet due and payable.




          (e) If Buyer notifies Seller that the condition of title as shown in the Title
Report and on the Survey is unacceptable, then Seller shall have thirty (30) days during which
it may attempt to cure such defects. Notwithstanding the foregoing, Seller shall have no
affirmative obligation under this Agreement to expend any funds or incur any liabilities to
cause any title exceptions to be removed from the Title Report or insured over, except that Seller
shall




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pay or discharge any lien or encumbrance arising after the date hereof and voluntarily created or
assumed by Seller and not created by or resulting from the acts of Buyer or other parties not
related to Seller. Subject to Buyer’s approval, which shall not be unreasonably withheld,
conditioned or delayed, Seller shall have the right to cure any defect by causing the Title Company
to insure over it at no cost or expense to Buyer. If said thirty (30) day period extends beyond the
Closing Date (as hereinafter defined), the Closing Date shall be postponed to permit Seller a
reasonable time within which to effect a cure of such defects. If Seller fails to cure such
defects, then Buyer may elect either to terminate this Agreement or Buyer may accept such title as
Seller is able to convey, without reduction in the Purchase Price. If Buyer elects to terminate
this Agreement, Buyer shall deliver to Seller written notice of its decision to terminate this
Agreement within five (5) days after the end of Seller’s thirty (30) day cure period, whereupon all
documents and funds (including, without limitation, the Deposit), except the Independent
Consideration, previously deposited into escrow shall be returned to the party so depositing same
and neither party shall have any further liability to the other hereunder, except as otherwise
provided herein. If Buyer does not elect to terminate this Agreement within said five (5) day
period, then Buyer shall be deemed to have waived such termination right and to have elected to
accept such title as Seller is able to convey, without reduction in the Purchase Price.




     5. BUYER’S DUE DILIGENCE.



          (a) Buyer shall have until 5:00 p.m. (PST) on May 23, 2005 (the “Due Diligence Period”)
to make such inquiries and review such documents regarding the market conditions, the financial and
physical condition of the Property, environmental matters, zoning, governmental compliance,
financing and such other inquiries and documents as Buyer deems appropriate. Buyer shall have
reasonable access to the Property for the purpose of making, at Buyer’s sole cost and expense,
surveys, soil tests, inspections and other investigations and tenant interviews upon at least
twenty-four (24) hours prior notice to Seller (which notice may be by telephone); provided,
however, that (a) except as provided below, Buyer shall permit representatives of Seller to be
present during any and all such surveys, tests, inspections and investigations, (b) without
obtaining Seller’s prior written consent, which may be withheld in Seller’s reasonable discretion,
(i) Buyer shall only conduct visual inspections, and (ii) Buyer shall not make excavations or test
borings, drill wells, or engage in any activities in, on or around the Property that damage the
Property (provided, however, that nothing herein shall prohibit Buyer or any of its engineers or
contractors from performing non-invasive activities such as a Phase I environmental assessment or
report, testing for mold, moisture-related conditions, asbestos and asbestos containing materials,
seismic evaluations, air quality tests or any similar test which does not result in any material
damage to the Property) and (c) Buyer’s investigation of the Property shall be subject to the
rights of existing tenants. Buyer’s right of entry onto the Property shall be for the limited
purpose of performing such surveys, tests, inspections and investigations, and tenant interviews
and Buyer shall have no right to use the Property for any other purpose until after the Closing.
Buyer shall conduct such surveys, tests, inspections and investigations in a manner not
unreasonably disruptive to tenants or to the operation of the Property. Notwithstanding anything to
the contrary contained herein, Seller shall request of California Casualty Management Company that
Buyer have the opportunity to conduct one or more interviews and other meetings with
representatives of California Casualty Management Company without any representatives or agents of
Seller being present, provided that Seller shall not be in default of this Agreement if California
Casualty Management Company refuses to




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agree, and provided further that Seller shall not be required to make any indemnity, representation
or further assurance to California Casualty Management Company in order to cause that tenant to
agree to meet with Seller. Seller shall also make available for inspection by Buyer copies of the
documents and other materials that the property manager currently maintains in its possession or
are otherwise reasonably available to Seller or Seller’s property manager, Seagate Properties, Inc.
(“Seagate”), including, without limitation, the documents and other materials listed on Schedule
5(a) (collectively, the “Due Diligence Documents”). For the purposes of this Agreement, any item in
the possession of or control of Seagate relating to the Property and in the property management
office at the Property or at Seagate’s corporate office shall be deemed to be under the possession
and control of Seller. Notwithstanding any provision hereof to the contrary, Buyer shall not have
the right to review or copy any Excluded Documents. “Excluded Documents” are documents involving
Seller’s financing or refinancing of the Property, any purchase or escrow agreements, any
correspondence pertaining to Seller’s acquisition of the Property, any documents pertaining to the
potential acquisition of the Property by any past or prospective purchaser (excluding any due
diligence investigation reports, if any, received by Seller from any such prospective purchaser),
appraisals of the Property, internal budgets, internal financial projections, analyses, documents
or provisions of documents which are subject to confidentiality covenants, and any other internal
or confidential, privileged or proprietary documents or communications. Before entering the
Property, Buyer shall obtain and furnish to Seller a certificate of insurance showing that Buyer
maintains commercial general liability insurance with a reputable insurer licensed in the state in
which the Property is located, with a Best’s rating of A10 or better, providing minimum limits of
liability of One Million Dollars ($1,000,000) per occurrence, Two Million Dollars ($2,000,000)
aggregate, with an umbrella excess liability policy in minimum amount of Five Million Dollars
($5,000,000) per occurrence bodily injury/ property and Five Million Dollars ($5,000,000) aggregate
damage/occurrence, naming Seller as an additional insured. Such certificate shall expressly
provide that such insurance may not be canceled or reduced in scope or coverage without at least
thirty (30) days’ prior written notice to Seller.




          (b) On or before the expiration of the Due Diligence Period, Buyer shall have
the right, in Buyer’s sole and absolute discretion, to terminate this Agreement, by delivering
to Seller written notice of its decision to terminate this Agreement. If Buyer elects to
terminate this Agreement, all documents and funds (including, without limitation, the Deposit), except the
Independent Consideration, previously deposited into escrow shall be returned to the party so
depositing same and neither party shall have any further liability to the other hereunder,
except as otherwise provided herein. If Buyer does not elect to terminate this Agreement on or before
the expiration of the Due Diligence Period, then Buyer shall be deemed to have waived such
termination right under this Section 5(b).




          (c) Buyer shall (i) indemnify, defend and hold Seller harmless from and
against any and all liability, claims, demands, damages or expenses of any kind, including
reasonable attorneys’ fees, directly or indirectly caused by Buyer’s entry upon or activities
at the Property or the making of such tests and investigations, and (ii) restore the Property as
nearly as practicable to the condition existing immediately prior to the performance of such tests and
investigations. Notwithstanding the foregoing, Buyer’s indemnification obligations hereunder
shall expressly exclude consequential or punitive damages, and Buyer shall have no liability
arising out of the discovery of any liabilities, conditions or other matters at the Property
which




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Buyer did not cause, contribute to or exacerbate. This subsection 5(c) shall have survive the
termination of, or the closing of the transactions contemplated by, this Agreement.




          (d) If the Closing does not take place for any reason whatsoever, Buyer shall not,
directly or indirectly, disclose to any person or party or use in any manner any information of
Seller acquired by Buyer with respect to Seller or the Property, except as may be required by law
or as may be necessary to comply with any applicable federal or state securities laws, rules, or
regulations or in connection with filings made with the Securities and Exchange Commission, the New
York Stock Exchange or any similar agency or body; provided, however, the foregoing shall not
prohibit Buyer, its affiliates or any entity advised by its affiliates, from disclosing (i) any
such information if required by subpoena or other legal action in connection with any agency,
administrative, regulatory or other similar filing, report or disclosure by any such parties, (ii)
as may be necessary in connection with any court action or proceeding with respect to this
Agreement provided the Buyer provides Seller with prompt written notice of such request so that
Seller may seek an appropriate protective order and/or waive Buyer’s compliance, or (iii) any
information published as public knowledge or which is generally available in the public domain.
Upon termination of this Agreement for any reason other than Closing, Buyer shall return to Seller
any and all documents, information and property of Seller in Buyer’s possession and shall also
deliver to Seller copies of all surveys and third-party reports prepared for the benefit of Buyer
in connection with the Property, without representation, warranty or liability of any kind. This
subsection 5(d) shall survive the termination of this Agreement.




     6. ESTOPPEL CERTIFICATES AND SNDAS.



     As a condition to Closing, Seller shall obtain and deliver to Buyer Acceptable Estoppel
Certificates (as hereinafter defined) from (i) all Major Tenants (as hereinafter defined), and (ii)
from a sufficient number of non-Major Tenant’s such that, when considered with the estoppel
certificates received from Major Tenants, Buyer shall have received Acceptable Estoppel
Certificates from tenants occupying 82% of the leased area of the Property (the Acceptable Estoppel
Certificates described in clauses (i) and (ii), the “Required Estoppel Certificates”); provided,
however, Seller shall request Acceptable Estoppel Certificates from all tenants of the Property.
Seller shall use commercially reasonable efforts to obtain and deliver the Required Acceptable
Estoppel Certificates to Buyer prior to the expiration of the Due Diligence Period, and shall
deliver to Buyer a copy of each executed Required Estoppel Certificate and any other estoppel
certificate that Seller obtains not later than one (1) business days after receipt thereof. Seller
shall have no obligation to update any such estoppel certificate prior to Closing. In order to
facilitate the timely receipt of Acceptable Estoppel Certificates, (x) Seller shall prepare drafts
of the estoppel certificates, utilizing the form attached as Schedule 6A, for all tenants except
California Casualty Management Company, for which Seller shall use the form attached as Schedule 6B
(either form, as applicable, the “Approved Estoppel Form”) with the requisite information completed
for the applicable tenant, and submit such drafts to Buyer for its review promptly upon execution
of this Agreement, (y) Buyer shall either approve or request changes to such drafts within three
(3) business days after Buyer’s receipt thereof, and (z) provided Buyer shall have approved the
applicable estoppel certificate(s), Seller shall submit the same to the tenants of the Property
promptly. As used herein, the term “Major Tenants” shall mean California Casualty Management
Company, Mark Logic and CFN.



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     For purposes hereof, the term “Acceptable Estoppel Certificate “ shall mean either (i) an
estoppel certificate in the form of the Approved Estoppel Form; (ii) an estoppel certificate in the
form the Approved Estoppel Form with such deletions or changes thereto made by the tenant so long
as such estoppel certificate contains, at a minimum, the matters which such tenant is required to
address in an estoppel certificate as required by such tenant’s Tenant Lease; (iii) an estoppel
certificate in the form required by such tenant’s Tenant Lease (provided Seller first requests such
tenant to provide an estoppel certificate in the form of the Approved Estoppel Form); or (iv) with
respect to California Casualty Management Company, an estoppel certificate on the Approved Estoppel
Form set forth on Schedule 6B; provided, however, notwithstanding the foregoing, (i) an estoppel
certificate shall be deemed an Acceptable Estoppel Certificate only to the extent that such
estoppel certificate does not reveal any material adverse matters, and (ii) the tenant estoppel
certificate from California Casualty Management Company shall not be acceptable unless it is in the
form described in subsection (iv) above, and is in compliance with the terms and provisions of
California Casualty Management Company’s Tenant Lease.



     Additionally, Seller shall submit to the tenants of the Property such subordination,
non-disturbance and attornment agreements as may be requested by Buyer or Buyer’s lender; provided,
however, Buyer’s receipt of such subordination, non-disturbance and attornment agreements shall not
constitute a condition to Closing.



     7. OPERATION OF THE PROPERTY PRIOR TO CLOSING.



          (a) From the date of this Agreement to the Closing Date, Seller shall:




               (i) continue to maintain and operate the Property in accordance with Seller’s past
practices;



               (ii) maintain and keep in full force and effect insurance on the Property in amounts
currently in effect; and



               (iii) comply with the terms and provisions of all existing Tenant Leases and Service
Contracts in all material respects;



               (iv) deliver written notice to Buyer of any defaults under the Tenant Leases which are
known (or become known) to Seller;



               (v) deliver to Buyer any written notice received by Seller relating to the Property from
any governmental authority, insurance carrier or tenant;



               (vi) not make any material alterations to the Property without the prior written consent
of Buyer other than as required under the Tenant Leases or by law (and, in the event any such
alterations are so required, Seller shall promptly notify Buyer prior to the commencement thereof);



               (vii) not enter into any contract or agreement regarding the sale,
financing or other disposition of all or any part of, or any interest in, the Property or authorize
any broker, agent or other party to do so on its behalf;



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               (viii) not sell, assign, or convey any right, title or interest whatsoever in or to the
Property, or create or permit to exist any lien, encumbrance, or charge thereon (other than the
Permitted Exceptions);



               (ix) update all documents delivered, or made available, to Buyer
pursuant to this Agreement from time to time, as appropriate and provide Buyer with copies of such
updates; and



               (x) not knowingly take or omit to take any action that would have the effect of
violating any of the representations, warranties, covenants, and agreements of Seller contained in
this Agreement.



          (b) During the period between the date of execution of this Agreement and the
end of the Due Diligence Period, Seller will not enter into any new Tenant Lease or occupancy
agreement affecting the Property (collectively, “New Lease”), or modify or amend in any
material respect, or terminate, any of the existing Tenant Leases, without Buyer’s prior
written consent in each instance, which consent shall not be unreasonably withheld. After the end of
the Due Diligence Period, Seller shall not enter into any New Lease, or modify or amend in any
material respect, or terminate, any of the existing Tenant Leases, without the prior written
consent of Buyer, which may be withheld in Buyer’s sole and absolute discretion. Buyer shall
advise Seller, in writing, whether Buyer approves or disapproves any proposed New Lease or
any such proposed modification, amendment or termination, within one (1) business day after
Buyer’s receipt of Seller’s written request therefor, each of which requests shall be
accompanied by (i) a term sheet describing the material terms of the proposed transaction, and (ii)
appropriate financial information on the applicable tenant and such other information as Buyer may
reasonably require. If Buyer fails to notify Seller within such one (1) business day period,
Buyer shall be deemed to have disapproved the proposed transaction. Notwithstanding the foregoing,
prior to executing any such New Lease or any modification, amendment or termination of any
existing Lease, Seller shall provide Buyer with copies of the execution versions thereof, and
in the event such New Lease, modification, amendment or termination varies in any material
respect from the terms identified in the term sheet previously provided to and approved by
Buyer, Buyer shall again have the right to approve such New Lease, modification, amendment or
termination and shall advise Seller, in writing, of Buyer approval or disapproval, within
three (3) business day after Buyer’s receipt of such execution versions thereof.




          (c) If Buyer timely disapproves of any proposed New Lease or any proposed
modification, amendment or termination of an existing Tenant Lease, (x) prior to the
expiration of the Due Diligence Period, Seller may nevertheless enter into such transaction (provided,
however, Buyer shall have no responsibility or liability for any free rent, tenant improvement
allowances, brokerage commissions or other costs and expenses arising out of or in connection
therewith, and Seller shall be solely liable therefor), or (y) after the expiration of the Due
Diligence Period, Seller shall not enter into such New Lease. As of Closing, Buyer shall
assume and be responsible for (and to the extent previously paid by Seller, reimburse Seller on the
date of Closing for) any and all tenant improvement allowances, brokerage commissions and out-of-
pocket costs and expenses actually paid or incurred by Seller arising out of or in connection
with only those New Leases approved (or deemed approved) by Buyer and entered into by Seller
pursuant to the foregoing provisions of subsection 7(b) and this subsection (c). Seller shall
pay




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or provide an appropriate credit to Buyer at Closing for all other free rent, tenant improvement
allowances, brokerage commissions and out-of-pocket costs and expenses (i) arising under New Leases
or modification or amendments of existing Tenant Leases not approved by Buyer as provided in clause
(x) above, and (ii) which are due and payable under any Tenant Leases existing as of the date
hereof.




          (d) After the date hereof, Seller shall not, without Buyer’s prior consent in each
instance (which consent shall not be unreasonably withheld, conditioned or delayed), enter into any
new Service Contracts affecting the Property, except for agreements which are terminable on or
prior to Closing, which agreements shall be terminated by Seller on or before Closing. Buyer shall
advise Seller in writing whether Buyer approves or disapproves any such new agreements,
modifications or terminations requiring its approval within three (3) business days after Buyer’s
receipt of the proposed document. If Buyer fails to notify Seller within such period, Buyer shall
be deemed to have approved the proposed document. All new Service Contracts approved or deemed
approved by Buyer under this subsection (d), as well as any existing Service Contract which Buyer
does not elect to have Seller terminate at Closing as hereinafter provided, shall be assigned to
and assumed by Buyer upon Closing pursuant to the Assignment of Service Contracts and Intangible
Property (as hereinafter defined). On or prior to the last day of the Due Diligence Period, Buyer
shall advise Seller in writing of any existing Service Contracts which Buyer requires Seller to
terminate at Closing, and Seller shall terminate all such designated Service Contracts effective as
of the Closing Date, and all termination fees or other expenses required in connection therewith
shall be paid by Seller at or prior to Closing.




     8. REPRESENTATIONS AND WARRANTIES.



          (a) Seller represents and warrants to Buyer as follows:




               (i) Seller is and will be on the Closing Date a general partnership duly organized and
validly existing under the laws of the State of Ohio, and qualified to do business in the State of
California, and Seller has and will have on the Closing Date all necessary power and authority to:
(A) carry on the business for which it has been organized; (B) own and operate the Property; and
(C) enter into and perform Seller’s obligations under this Agreement.



               (ii) Seller has taken all actions required to be taken under the laws of the State of
Ohio and under Seller’s partnership agreement to approve or authorize the execution and delivery of
this Agreement and consummation of the transactions contemplated in this Agreement.



               (iii) Neither the execution of this Agreement nor the consummation of the transactions
contemplated in this Agreement will constitute a violation of, be in conflict with, or constitute a
default under (or with the passage of time or delivery of notice, or both, would constitute a
default under) any term or provision of Seller’s partnership agreement or any other agreement,
lease, or other instrument to which the Property is bound.



               (iv) Seller has no employees performing services at the Property.



               (v) To Seller’s knowledge, except as disclosed on Schedule 8(a)(v), which is attached to
and made a part of this Agreement (as such Schedule may be updated in



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writing by Seller prior to the Closing, subject to the terms of the last paragraph of this
subsection 8(a)), no litigation, proceeding, or action is pending or threatened against or relating
to the Property or Seller.




               (vi) No condemnation proceeding is pending or threatened against or, to Seller’s
knowledge, relating to the Property.



               (vii) As of the Closing, except for the Tenant Leases and the Service
Contracts assumed (or deemed assumed) by Buyer in accordance with this Agreement, there will not be
any outstanding contracts for any improvements to the Property or any other contracts affecting or
in any way relating to the Property, including any construction, management, leasing or listing
agreements, or any other written or oral agreements with adjacent or nearby property owners or
lessees, or other third parties, which will be binding on Buyer.



               (viii) To Seller’s actual knowledge, the rent roll attached hereto as
Schedule 8(a)(viii) is a true copy of such rent roll for the Property prepared by Seller’s property
manager, Seagate Properties, Inc., as of the date set forth thereon in the ordinary course of
business; however, such rent roll is not certified and constitutes only the working rent roll
utilized by Seagate Properties, Inc. in the ordinary course of its business in operating the
Property as of the date set forth thereon. Any item in the possession of Seagate Properties, Inc.
shall be deemed to be under the control of Seller.



               (ix) As to the Tenant Leases,



                    (1) complete, true, and correct copies of all Tenant Leases
disclosed on Schedule l(d), including all modifications and amendments thereof or thereto have been
delivered to Buyer or have been made available to Buyer in the office of Seller’s property manager;



                    (2) except as disclosed on Schedule 8(a)(ix)(2), which is
attached to and made a part of this Agreement (as such Schedule may be updated in writing by Seller
prior to the Closing, subject to the terms of the last paragraph of this subsection 8(a)), to
Seller’s knowledge, neither Seller nor any tenant under any Tenant Lease is in default under any
Tenant Lease, and no condition exists nor has any event occurred that by notice, the passage of
time, or otherwise, would constitute an event of default under any Tenant Lease; and



                    (3) to Seller’s knowledge, the rents and other charges set forth
on the Rent Roll are the actual rents and other charges presently being collected by Seller under
the Tenant Leases for the calendar months immediately preceding the date of this Agreement, no
tenant is entitled to any free rent, concessions, improvement or refurbishment allowances, rebates
or refunds, except as set forth on the Rent Roll or in any Tenant Lease; and except as set forth on
the Rent Roll or in any Tenant Lease, no tenant has prepaid any rents or other charges for more
than one (1) month in advance.



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               (x) As to the Service Contracts,



                    (1) complete, true, and correct copies of all written Service
Contracts disclosed on Schedule l(e), including all modifications and amendments thereof or
thereto, have been delivered to Buyer; and



                    (2) except as disclosed on Schedule 8(a)(x)(2) which is
attached to and made a part of this Agreement (as such Schedule may be updated in writing by Seller
prior to the Closing, subject to the terms of the last paragraph of this subsection 8(a)), to
Seller’s knowledge, neither Seller nor any other party under any Service Contract is in default
under any Service Contract, and no condition exists nor has any event occurred that by notice, the
passage of time, or otherwise, would constitute an event of default under any Service Contract.



               (xi) Seller has received no notice from a public authority that there are contemplated
improvements to or adjoining the Real Property by public authority, the cost of which are to be
assessed as special taxes against the Real Property.



               (xii) The environmental reports made available to Buyer in connection with this Agreement
as set forth in Section 5(a) above are complete copies of all of the environmental reports
regarding the presence of Hazardous Substances (as defined in Section 16(f) below) in connection
with the Property in Seller’s possession or under Seller’s control.



               (xiii) Seller has not received any written notice from any insurance
company or board of fire underwriters of any defects or inadequacies in or on the Property or any
part or component thereof that would adversely affect the insurability of the Property or cause any
increase in the premiums for insurance for the Property.



               (xiv) There are no lease brokerage agreements, leasing commission
agreements or other agreements providing for payments of any amounts for leasing activities or
procuring tenants with respect to the Property or any portion or portions thereof other than as
disclosed in Schedule 8(a)(xv) attached hereto. All leasing commissions, brokerage fees and
property management fees due and payable under the agreements disclosed on such Schedule have been
or shall be paid by Seller in full.



               (xv) Neither Seller nor any partner or other constituent of Seller has
filed for bankruptcy, is subject to an involuntary bankruptcy proceeding, or has been adjudicated
bankrupt, admitted in writing its inability to pay its debts as they become due or had a receiver
appointed for any of its assets. Seller has not commenced any dissolution proceedings.



               (xvi) Seller has not received any written notices from any governmental agency, authority,
board or any tenant regarding the failure of any portion of the Property to comply with any codes,
ordinances, statutes or other laws applicable to the Property, including without limitation any
applicable environmental law, and to Seller’s knowledge, there exists no proceeding, investigation
or inquiry regarding any alleged violation.



               (xvii) Seller does not hold “plan assets” as defined in regulations at 29 C.F.R. Section
25610.3-101, of any “plan” within the meaning of Section 3(3) of the Employee



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Retirement Income Security Act of 1974, as amended, or Section 4975(e) of the Internal Revenue
Code of 1986, as amended.




     If at any time before the Closing Seller or Buyer discovers facts, or facts arise, that make
one or more of the representations and warranties made by Seller in this subsection 8(a) materially
inaccurate, Seller or Buyer (as the case may be) shall immediately notify the other in writing of
such facts (in the case of a discovery by Seller, such notification may be in the form of providing
an update to any applicable Schedule referenced above in this subsection 8(a)). Thereafter, Seller
may elect to correct the representation and warranty and to cure the matter referred to so that its
representations and warranties are no longer materially inaccurate, or may decline to do so. If
Seller declines to cure such matter or if such cure is not completed to Buyer’s reasonable
satisfaction by Closing, Buyer may, at its option, (i) proceed to purchase the Property pursuant to
this Agreement, in which case Buyer’s objection to the inaccuracy of Seller’s representations and
warranties shall be deemed waived by Buyer, or (ii) terminate this Agreement and, if such
inaccuracy is in any of the representations and warranties made by Seller in subsections 8(a)(i),
(a)(ii) or (a)(iii) and is attributable to events or circumstances that existed prior to the
execution of this Agreement or to acts or omissions of Seller between the date of this Agreement
and the Closing, be entitled to the remedies provided in Section 15(a). Additionally, if Buyer
elects to terminate this Agreement, all documents and funds (including, without limitation, the
Deposit), except the Independent Consideration, previously deposited into escrow shall be returned
to the party so depositing same and neither party shall have any further liability to the other
hereunder, except as otherwise provided herein.



     When the phrase “to Seller’s knowledge” or similar phrase is used, it shall mean the current
actual, as distinguished from implied, imputed or constructive, knowledge of Julia Viskanta, who is
the employee of Seller with day-to-day responsibility for the Property, without any obligation to
make any independent inquiry or investigation whatsoever, except for a duty to inquire of Sue
McCullough, the on-site property manager who is an employee of Seagate Properties, Inc., and with
respect to Section 8(a)(xiii), of Seller’s risk management department. Nothing in this Agreement,
under any circumstance whatsoever, shall be deemed to create or impose any personal liability of
any kind whatsoever on Julia Viskanta, Sue McCullough, or any other employee of Seller. The
representations and warranties of Seller set forth in this section 8(a) shall survive for the
period of six (6) months after the Closing and thereafter shall be of no further force or effect.



          (b) Buyer represents and warrants to Seller as follows:




               (i) Buyer is a limited partnership duly organized, validly existing and in good
standing under the laws of the State of Delaware, and Buyer has and will have on the Closing Date
all necessary power and authority to: (A) carry on the business for which it has been organized;
(B) own and operate the Property; and (C) enter into and perform Buyer’s obligations under this
Agreement.



               (ii) Buyer has taken all actions required to be taken under the laws of the State of
Delaware and under Buyer’s partnership agreement to approve or authorize the execution and delivery
of this Agreement and consummation of the transactions contemplated in this Agreement.



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               (iii) Neither the execution of this Agreement nor the consummation of the transactions
contemplated in this Agreement will constitute a violation of, be in conflict with, or constitute a
default under (or with the passage of time or delivery of notice, or both, would constitute a
default under) any term or provision of Buyer’s partnership agreement or any other agreement or
other instrument to which Buyer is bound.



               (iv) Buyer is not controlled by, a person who during the preceding three (3) years was
employed by, an officer of, or a board member of STRS Ohio, and no employee of Buyer who holds a
fiduciary, administrative, supervisory, or trust position, or any other position in which such
person would be involved on behalf of Buyer in decisions or recommendations pertaining to the
Property, is a person who during the preceding three (3) years was employed by, an officer of, or a
board member of STRS Ohio.



     9. CONDITIONS PRECEDENT TO CLOSING.



          (a) Buyer’s obligations under this Agreement are expressly conditioned upon
completion or satisfaction of the following conditions:




               (i) The Title Company shall, at Closing, be ready, willing and able to issue to Buyer
an ALTA extended coverage (Form 1970-10/17/70)) owner’s policy of title insurance for the Property
in an amount equal to the Purchase Price insuring fee simple title to the Property in Buyer,
subject only to the Permitted Exceptions (and, if Buyer did not deliver an Updated Survey to Seller
and the Title Company at least three (3) days prior to the expiration of the Due Diligence Period,
an exception for such matters as would be shown on an accurate survey of the Property) and
containing such endorsements as the Title Company shall have committed to issue as of the end of
the Due Diligence Period (said commitment to be evidenced by a pro forma policy containing such
endorsements provided to Seller) (the “Policy”);



               (ii) Seller shall have deposited with the Escrow Agent all documents required of Seller
to be delivered into Escrow hereunder;



               (iii) The representations and warranties of Seller contained in
subsection 8(a) of this Agreement shall be true and correct in all material respects as of the
Closing Date;



               (iv) Seller shall have performed, in all material respects, all covenants, agreements and
undertakings of Seller contained in this Agreement;



               (v) Originals of all Required Estoppel Certificates shall have been delivered to
Buyer; and



               (vi) No material adverse change shall occur with respect to the
Property or any Major Tenant from the expiration of the Due Diligence Period through the
Closing Date.



          (b) Seller’s obligations to perform hereunder are expressly contingent and
conditional upon the satisfaction of the following conditions:




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               (i) Buyer shall have deposited or have caused to be deposited with the Escrow Agent all
documents and funds required of Buyer to be deposited into Escrow hereunder; and



               (ii) The representations and warranties of Buyer contained in
subsection 8(b) of this Agreement shall be true and correct in all material respects as of the
Closing Date.



          (c) The parties acknowledge that the conditions precedent set forth in subsection (a)
above are for the benefit of Buyer and that the conditions precedent set forth in subsection (b)
above are for the benefit of Seller. Unless otherwise specifically set forth herein, the date by
which the conditions precedent must be satisfied shall be the Closing Date. If any of the
conditions precedent set forth in subsection (a) or subsection (b) above are not satisfied on or
before the date by which they are required to be satisfied, the party for whose benefit the
condition precedent exists shall have the right to terminate this Agreement by written notice of
termination given to the other party within ten (10) days after the date by which the condition
must be satisfied. If such notice of termination is given, all documents and funds, except the
Independent Consideration, previously deposited into escrow shall be returned to the party so
depositing same, except if the events described in subsections 9(b)(i) and 9(b)(ii) are not
satisfied, the Deposit shall be transferred to Seller and neither party shall have any further
liability to the other hereunder, except as otherwise provided herein. Notwithstanding the
foregoing, a party for whose benefit the condition precedent exists shall have the right to waive
satisfaction thereof, in which event this Agreement shall proceed to Closing as otherwise provided
herein. Unless notice of failure to satisfy conditions precedent is given as above provided, all
conditions precedent shall be deemed satisfied.




     10. RISK OF LOSS.



          (a) If any part of the Property is damaged or destroyed by fire or any other
cause (“Damage”) or subject to a pending, threatened, or completed taking by condemnation or
eminent domain, or a proposed conveyance under threat of either (“Taking”), Seller shall
promptly notify Buyer of the same.




          (b) If the extent of the Damage is in excess of One Million Dollars
($1,000,000.00), as set forth in an estimate (the “Estimate”) made by a contractor selected by
Seller and approved by Buyer, said approval not to be unreasonably withheld, conditioned or
delayed, or if the Taking materially adversely affects the operation of the Property as it
existed prior to the Taking, then Buyer may terminate this Agreement by giving written notice of such
termination to Seller within ten (10) days after Seller delivers to Buyer a copy of the
Estimate or notice of the Taking, as applicable. If the extent of the Damage is less than or equal to One
Million Dollars ($1,000,000.00) as set forth in the Estimate, and the Damage is not fully
covered by Seller’s insurance, then Buyer may terminate this Agreement by giving written notice of
such termination to Seller within said ten (10) day period unless Seller either repairs the Damage
prior to the Closing or agrees to credit against the Purchase Price the estimated cost of such
Damage less the cost of any repairs performed by Seller prior to the Closing (the “Uninsured Damage
Credit”). If Buyer terminates this Agreement pursuant to this subsection 10(b), all documents
and funds, except the Independent Consideration, previously deposited into escrow shall be




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returned to the party so depositing same and neither party shall have any further liability to the
other hereunder, except as otherwise provided herein.




          (c) If this Agreement is not terminated pursuant to subsection 10(b) above, Seller may
elect to either (i) repair and restore the Property in a good and workmanlike manner or (ii) at
Closing assign to Buyer Seller’s rights to the proceeds of any compensation or insurance (including
rental value or business interruption insurance to the extent allocable to any period of time after
the Closing) payable on account of such Taking or Damage, and in the case of Damage Buyer shall
receive a credit against the Purchase Price in an amount equal to (i) the deductible applicable to
any Damage covered by Seller’s insurance plus (ii) the Uninsured Damage Credit, if any, agreed to
by Seller pursuant to subsection 10(b) above. In the case of any Taking, Seller shall assign to
Buyer at Closing all right, title and interest of Seller in and to any awards or other payments
made or to be made in connection therewith (or in connection with any deeds-in-lieu or other
conveyances with respect thereto).




     11. CLOSING.



     The term “Closing” as used in this Agreement shall mean the consummation of the transaction
contemplated under this Agreement, which shall occur on June 2, 2005 (the “Closing Date”)
(provided, however, that if the Closing Date as so determined is the day after a non-business day,
then the Closing Date shall be postponed to the next succeeding business day) in the offices of the
Escrow Agent. Buyer shall have the right to extend the Closing Date up to June 28, 2005 (in one
extension of 18 business days or one or two extensions of 9 business days each) by depositing with
the Escrow Agent for each business day of such extension an additional $100,000 (each such deposit,
the “Extension Deposit”), which Extension Deposit shall be added to and become a part of the
Deposit for all purposes under this Agreement. If Buyer elects the 18 business day extension
option, the entire Extension Deposit (i.e., $1,800,000) shall be deposited with the Escrow Agent on
June 2, 2005. If, however, Buyer elects to exercise the 9 business day extension option(s), an
Extension Deposit of $900,000 shall be deposited with the Escrow Agent on June 2, 2005 and, unless
the Closing occurs on or before June 15, 2005, an additional Extension Deposit of $900,000 shall be
deposited with the Escrow Agent on such date. The Closing shall be deemed to have occurred when the
Deed (as defined below) is recorded. On the Closing Date, Escrow Agent shall file for record the
Deed and such other instruments as Buyer may require to be recorded or as may be necessary to allow
the Title Company to issue the Policy. Subject to the rights of Tenants, Seller shall deliver
possession of the Property to Buyer at Closing.



     12. PRORATIONS AND CHARGES.



          (a) Each of Seller and Buyer shall receive its pro rata share of income and shall be
responsible for its pro rata share of expenses for 2005 (each party’s pro rata share is to be
determined based on the number of days during 2005 which it owned the Property). At Closing, Buyer
and Seller shall prorate as of the Closing Date those items of income and expense that are capable
of an exact determination. For those items of income and expense that are incapable of an exact
determination as of the Closing Date, Buyer and Seller shall make a good faith estimate of the
closing prorations using the most recent ascertainable amounts of or other reliable information in
respect to each such item of income and expense, except that any percentage rent




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payable under the Tenant Leases for 2005 shall not be prorated at the Closing. At least five (5)
business days prior to the Closing Date, Buyer shall provide Seller with notice of the Closing Date
(taking into account any anticipated extensions of the Closing Date pursuant to Section 11 hereof).
At least three (3) business days prior to the Closing Date, provided Buyer has delivered notice of
the Closing Date, as provided in the immediately preceding sentence, Seller shall deliver to Buyer
an initial draft of a proration statement setting forth Seller’s good faith estimates of all items
of income and expense to be prorated hereunder. General real estate taxes and assessments that are
not yet due and payable shall be apportioned using the rates and valuation shown on the latest
available tax bill. Subject to subsections 12(a)(i) through (iii) below, Buyer and Seller shall use
their best efforts to obtain an exact determination of the remaining items of income and expense
within one hundred twenty (120) days after the Closing Date and on or before such date Buyer shall
deliver a report to Seller, indicating which estimated closing items
have been determined, together
with such documentation enabling Buyer to make such exact determination and the amount either owed
by, or owed to, Seller. Seller shall have ten (10) days to review such report and indicate its
approval of such determinations. If Seller fails to object to such report within such 10 day
period, then Seller shall be deemed to have approved such report. After approval or deemed approval
of such report or after receipt of the actual bill for real estate taxes, Buyer shall promptly pay
to Seller any amounts owed to Seller, or if Seller owes Buyer money, Seller shall promptly pay the
amount so owed to Buyer, in each case subject to subsections 12(a)(i) through (iii) below. This
Section 12 shall survive the Closing and the recording of the Deed and shall not be merged thereby.
For purposes of computing any prorations required under this section, the Closing Date shall be a
day of income and expense to Buyer unless the Closing Date occurs on the last day of a month, in
which event the Closing Date shall be a day of income and expense to Seller. Attached as Schedule
12(a) hereto is a true and correct listing of all outstanding tenant improvement allowances and
leasing commission obligations under the existing Tenant Leases.




               (i) Percentage rent payable under any of the Tenant Leases for 2005 shall be
apportioned between Seller and Buyer based on their respective periods of ownership during 2005.
If, in 2006, Buyer receives a payment from a tenant under a Tenant Lease for percentage rent owed
for 2005, then Buyer shall forward Seller’s pro rata share thereof to Seller not later than fifteen
(15) days after Buyer’s receipt thereof.



               (ii) Not later than one hundred twenty (120) days after the Closing,
Seller shall prepare and deliver to Buyer reconciliation statements for each tenant’s share of the
obligations of Tenants for operating costs, taxes, insurance and other items required to be paid by
Tenants according to the Tenant Leases (“Tenant Pass-Throughs”) for the portion of 2005 during
which the Property was owned by Seller. In 2006, Buyer shall prepare reconciliation statements for
each tenant’s share of the Tenant Pass-Throughs for the portion of 2005 during which the Property
was owned by Buyer. Buyer shall then send each tenant the two reconciliation statements (or a
consolidated reconciliation statement) and, if applicable, a bill in the amount of such tenant’s
underpayment. If it is determined that Seller received less than its pro rata share of the Tenant
Pass-Throughs for 2005, then Buyer shall pay Seller the amount owed Seller not later than fifteen
(15) days after Buyer receives the tenant’s reconciliation payment for 2005. If it is determined
that Seller received more than its pro rata share of the Tenant Pass-Throughs for 2005, then Seller
shall pay Buyer the amount owed Buyer not later than fifteen (15) days after



-17-









 




Seller’s receipt of a written demand therefor from Buyer (which demand shall be accompanied by the
reconciliation statement prepared by Buyer for 2005).




          (b) If on the Closing Date, any tenant is delinquent in the payment of rent or
any other monetary obligations, such delinquent rent shall remain the property of Seller and
no proration with respect thereto shall be made at Closing. Seller shall have the right to
collect the same from such tenant, including the right to sue such tenant for nonpayment of rent provided
that in no event may Seller maintain an unlawful detainer action or otherwise seek to
terminate such tenant’s lease or disturb its possession thereunder. Any amounts received from a tenant
after the Closing shall first be applied to the most current monthly rental obligations, then
to any delinquent rental obligation arising after Closing, and then to the oldest receivable. If
rents or any portion thereof received by Seller or Buyer after the Closing are due and payable to the
other party by reason of this allocation, the appropriate sum shall promptly be paid to the other
party.




          (c) At Closing, Seller shall be charged the following:




               (i) prorated general real estate taxes and assessments;



               (ii) the Lease Holdback (if applicable);



               (iii) prorated charges for Service Contracts and any other obligations assumed by Buyer
and any other operating expense items for which payments are made in arrears;



               (iv) prorated prepaid rents and other charges prepaid under the Tenant Leases;



               (v) security deposits held by Seller pursuant to the Tenant
Leases;


               (vi) cost of the title examination and the Title Report;



               (vii) cost of the “CLTA portion” of the Policy and any endorsement thereto to insure
over any title defect;



               (viii) cost of any county real estate transfer tax and conveyance fee, and one-half of any
city transfer tax and conveyance fee;



               (ix) one-half (1/2) of the fees of the Escrow Agent;



               (x) all brokerage fees payable in connection with this transaction, as required by
section 19 of this Agreement;



               (xi) all free rent, tenant improvement costs, tenant improvement


allowances, brokerage commissions and other costs and expenses relating to the Tenant Leases which
are Seller’s obligation under this Agreement; and



               (xii) Seller’s attorneys’ fees.



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          (d) At Closing, Buyer shall be charged the following:




               (i) charges paid in advance by Seller for items assumed by Buyer pursuant to the express
terms of this Agreement (it being agreed that Buyer shall in no event assume or be responsible
for any of Seller’s insurance policies or the premiums therefor);



               (ii) cost of the Updated Survey;



               (iii) cost of recording the Deed and such other instruments as Buyer or the Title Company
may consider necessary or desirable to be recorded;



               (iv) cost of the “ALTA portion” of the Policy and any endorsements (other than those
which are Seller’s obligation under section 12(c)(ix) above) thereto requested by Buyer;



               (v) one-half (1/2) of any city transfer tax of conveyance
fee;



               (vi) one-half (1/2) of the fees of the Escrow Agent;



               (vii) Buyer’s attorneys’ fees; and



               (viii) except as otherwise expressly provided herein, all fees and expenses associated
with Buyer’s due diligence and other inspections of the Property.



     13. INSTRUMENTS OF CONVEYANCE AND OTHER DOCUMENTS.



          (a) No later than one (1) business day prior to the Closing Date, Seller shall fully and
properly execute and deposit with Escrow Agent the following documents:




               (i) a grant deed (the “Deed”) and a separate statement (not to be
recorded) declaring the documentary transfer tax due thereon, each in the forms of Schedule
13(a)(i), which is attached to and made a part of this Agreement;



               (ii) a bill of sale (the “Bill of Sale”) in the form of Schedule 13(a)(ii), which is
attached to and made a part of this Agreement;



               (iii) an assignment of the Tenant Leases (the “Assignment of Leases”), in the form of
Schedule 13(a)(iii), which is attached to and made a part of this Agreement, assigning to Buyer all
of Seller’s right, title, and interest as lessor under the Tenant Leases;



               (iv) an assignment of the Service Contracts and the Intangible Property (the “Assignment
of Service Contracts and Intangible Property”), in the form of Schedule 13(a)(iv), which is
attached to and made a part of this Agreement, assigning to Buyer all of Seller’s right, title, and
interest in and to the Service Contracts and the Intangible Property;



               (v) a counterpart settlement statement (the “Settlement Statement”)
setting forth the Purchase Price and all amounts charged against Seller pursuant to section 12 of
this Agreement;



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               (vi) an affidavit in the form of Schedule 13(a)(vi), which is attached to and made a part
of this Agreement and a California Form 593-W, each regarding the non-foreign status of Seller;



               (vii) a certificate of the Executive Director of STRS Ohio, authorizing the transactions
contemplated hereby (“Seller’s Authorization”);



               (viii) a closing certificate (the “Seller’s Closing Certificate”) in the form of Schedule
13(a)(viii), which is attached to and made a part of this Agreement, stating that there is no
material inaccuracy in representations and warranties of Seller contained in this Agreement and, in
addition, that all such representations and warranties are true and correct in all material
respects without exception as of the Closing Date as if made on and as of the Closing Date (or
specifying in reasonable detail any exceptions that may then exist, provided that Seller shall not
take any action or omit to take any action that would result in any such default or exception);



               (ix) a letter in a form reasonably acceptable to Buyer to each tenant identified on
Schedule l(d) of this Agreement, stating that the Property has been conveyed to Buyer as of the
Closing Date and advising each tenant that all future payments of rent and all other future
correspondence regarding the Property should be delivered to Buyer (the “Tenant Letters”);



               (x) such reasonable and customary owner’s affidavit and indemnities for mechanics’
liens, in each case as may be required by the Title Company to issue the Policy;



               (xi) the Holdback Escrow Agreement (if applicable);



               (xii) such other or further instruments of conveyance, sale, assignment, certification,
and transfer, and shall take or cause to be taken such other or further actions as Buyer or Escrow
Agent may reasonably request to:



                    (1) vest, confirm, or evidence in Buyer title to all of the
Property intended to be conveyed, sold, transferred, assigned, and delivered to Buyer under this
Agreement; and.



                    (2) effectuate, in any other manner, the terms and conditions of
this Agreement.



          (b) No later than one (1) business day prior to the Closing Date, Buyer shall fully
execute and deposit with Escrow Agent the following documents and funds:




               (i) the Purchase Price, subject to the closing adjustments contemplated
hereby;



               (ii) a certified resolution of the general partner of Buyer authorizing the transactions
contemplated hereby (“Buyer’s Resolution”);



               (iii) a certificate (“Buyer’s Closing Certificate”) in the form of Schedule 13(b)(iii),
which is attached to and made a part of this Agreement, stating that there is no




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material inaccuracy in representations and warranties of Buyer contained in this Agreement
and, in addition, that all such representations and warranties are true and correct in all material
respects without exception as of the Closing Date as if made on and as of the Closing Date (or
specifying in reasonable detail any exceptions that may then exist, provided that Buyer shall not
take any action or omit to take any action that would result in any such default or exception);




               (iv) a counterpart Settlement Statement setting forth the Purchase Price and all amounts
applied on behalf of or charged against Buyer pursuant to section 12 of this Agreement;



               (v) the Holdback Escrow Agreement (if applicable); and



               (vi) such other or further instruments of conveyance, sale, assignment, certification,
and transfer, and shall take or cause to be taken such other or further actions Escrow Agent may
reasonably request to:



                    (1) vest, confirm, or evidence in Buyer title to all of the
Property intended to be conveyed, sold, transferred, assigned, and delivered to Buyer under this
Agreement; and



                    (2) effectuate, in any other manner, the terms and conditions of
this Agreement.



     14. DELIVERY AND PAYMENT.



     Upon consummation of the transactions contemplated in this Agreement, Escrow Agent shall
disburse funds and documents as follows:



          (a) To Seller:




               (i) a copy of the Settlement Statement;



               (ii) the Purchase Price, less amounts charged to Seller; and



               (iii) executed originals of the Buyer’s Resolution, the Buyer’s Closing Certificate, and
the Holdback Escrow Agreement (if applicable).



          (b) To Buyer:




               (i) a copy of the Settlement Statement;



               (ii) a conformed copy of the recorded Deed;



               (iii) executed originals of the Bill of Sale, Assignment of Leases, Assignment of
Service Contracts and Intangible Property, Seller’s Closing Certificate, the Holdback Escrow
Agreement (if applicable) and the Tenant Letters and a copy of Seller’s Authorization;



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               (iv) executed originals of all affidavits and other instruments deposited into
escrow pending Closing;



               (v) the Policy; and



               (vi) the balance, if any, in the escrow account to the credit of Buyer by check payable
to Buyer.



     Immediately after Closing, Seller shall deliver, or cause its property manager to deliver, to
Buyer original executed copies of all Tenant Leases and Service Contracts, the original plans and
specifications for the Improvements, building permits, certificates of occupancy, and such other
certificates, licenses, and permits as may be necessary or desirable for operation of the Property,
and the originals or photocopies of all books, accounts, and records relating to the Property and
all keys, locks, security and safe codes, and other similar access items and information for the
Property. Additionally, upon the Closing, Seller and Buyer shall jointly issue a press release
announcing the sale of the Property.



     15. LEGAL AND EQUITABLE ENFORCEMENT OF THIS AGREEMENT.



          (a) Buyer’s Remedies. If the Closing fails to occur on account of Seller’s default under
this Agreement, then as Buyer’s sole remedy for such default Buyer will be entitled either (1) to
terminate this Agreement and receive the return of the Deposit and reimbursement of its reasonable
out-of-pocket expenses incurred in connection with the transaction or this Agreement (including
reasonable attorneys’ fees, consultants’ costs, and travel costs), provided, however, that in no
event shall Seller’s liability under this subsection 15(a) exceed $100,000 or (2) to seek specific
performance of this Agreement, without recovery of any amounts, fees, costs, expenses or damages of
any kind except attorneys’ fees pursuant to section 29 below, by formally filing an action for
specific performance with an appropriate court of competent jurisdiction within the thirty (30) day
period immediately following such default by Seller and serving such action upon Seller within such
thirty (30) day period. Buyer’s failure to timely file such action and serve Seller within such
thirty (30) day period shall be deemed for all purposes to be Buyer’s irrevocable waiver of all
rights to seek specific performance of this Agreement.



EXCEPT AS OTHERWISE EXPRESSLY SET FORTH ABOVE IN THIS SECTION 15, BUYER HEREBY WAIVES ANY RIGHT TO
ANY DAMAGES (WHETHER ACTUAL, INCIDENTAL, CONSEQUENTIAL, PUNITIVE OR OTHERWISE AND WHETHER OR NOT
THE REMEDY OF SPECIFIC PERFORMANCE IS AVAILABLE) OR ANY OTHER LEGAL OR EQUITABLE REMEDY (OTHER THAN
THAT SPECIFIED ABOVE) THAT IT MAY OTHERWISE HAVE FOR SELLER’S DEFAULT.




	 	 	 	 	 	 	 	 	 
	INITIALS:

	 	/s/ STEPHEN A. MITCHELL
	 	 
	 	/s/ CHARLES N. HAZEN	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	SELLER
	 	 	 	BUYER	 	 






          (b) Seller’s Remedy.




               (i) IF THE CLOSING FAILS TO OCCUR ON ACCOUNT OF
BUYER’S DEFAULT UNDER THIS AGREEMENT, THEN, AS SELLER’S SOLE REMEDY FOR SUCH DEFAULT AND UPON
WRITTEN NOTICE OF TERMINATION FROM



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SELLER TO BUYER AND ESCROW AGENT, THE ESCROW AND THIS AGREEMENT SHALL TERMINATE (EXCEPT FOR
THIS SECTION 15(B), AND ALL OTHER PROVISIONS WHICH EXPRESSLY SURVIVE TERMINATION OF THIS AGREEMENT)
AND SELLER SHALL RECEIVE LIQUIDATED DAMAGES AS PROVIDED IN THIS SECTION 15(B).




               (ii) THE PARTIES ACKNOWLEDGE AND AGREE THAT UPON
BUYER’S DEFAULT, SELLER WILL INCUR CERTAIN COSTS AND OTHER DAMAGES IN AN AMOUNT THAT WOULD BE
EXTREMELY DIFFICULT OR IMPRACTICAL TO ASCERTAIN. BUYER ACKNOWLEDGES AND AGREES THAT THE AMOUNT OF
THE DEPOSIT BEARS A REASONABLE RELATIONSHIP TO THE DAMAGES WHICH THE PARTIES ESTIMATE MAY BE
SUFFERED BY SELLER BY REASON OF FAILURE OF THE CLOSE OF ESCROW ON ACCOUNT OF BUYER’S DEFAULT, AND
THE DEPOSIT IS NOT AN AMOUNT UNREASONABLE UNDER THE CIRCUMSTANCES EXISTING AT THE TIME THIS
AGREEMENT IS MADE (BUYER ACKNOWLEDGING AND AGREEING THAT BUYER HAS FULLY CONSIDERED THE PROVISIONS
OF THIS SECTION 15(C) AND SAID CIRCUMSTANCES PRIOR TO ENTERING INTO THIS AGREEMENT AND HAS
CONSULTED WITH BUYER’S COUNSEL WITH RESPECT THERETO).



	 	 	 	 	 	 	 	 	 
	INITIALS:

	 	/s/ STEPHEN A. MITCHELL
	 	 
	 	/s/ CHARLES N. HAZEN	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	SELLER
	 	 	 	BUYER	 	 






          (c) If either party elects to terminate this Agreement pursuant to this section
15, all documents previously deposited into escrow shall be returned to the party so depositing
same and neither party shall have any further liability to the other hereunder, except as otherwise
provided herein. In the event that the Closing fails to occur on account of a default by either
party, said party shall pay all cancellation charges and other fees payable to Escrow Agent and the
Title Company.




     16. PROPERTY CONVEYED “AS-IS”; RELEASE OF SELLER.



          (a)
Disclaimer of Representations and Warranties by Seller. Buyer
acknowledges and agrees that, except as expressly set forth herein, Buyer is acquiring
the Property in its “AS IS” condition, WITH ALL FAULTS, IF ANY, AND, EXCEPT AS
EXPRESSLY SET FORTH HEREIN, WITHOUT ANY WARRANTY, EXPRESS OR
IMPLIED.




          (b)
Sale “As Is”. NOTWITHSTANDING ANYTHING CONTAINED
HEREIN TO THE CONTRARY, IT IS UNDERSTOOD AND AGREED THAT EXCEPT AS
EXPRESSLY SET FORTH HEREIN NEITHER SELLER NOR ANY OF ITS AFFILIATES,
AGENTS, SHAREHOLDERS, MEMBERS, PARTNERS, OFFICERS, PRINCIPALS,
EMPLOYEES OR CONTRACTORS HAS MADE AND IS NOT NOW MAKING, AND
BUYER HAS NOT RELIED UPON AND WILL NOT RELY UPON (DIRECTLY OR
INDIRECTLY), ANY WARRANTIES, REPRESENTATIONS OR GUARANTIES OF ANY
KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT
OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED
TO, WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF








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TITLE (OTHER THAN SELLER’S WARRANTY OF TITLE IMPLIED IN THE GRANT DEED TO BE DELIVERED AT
CLOSING), (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR ANY PORTION THEREOF, (III)
GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUBSIDENCE, SUBSURFACE CONDITIONS, WATER
TABLE, UNDERGROUND WATER RESERVOIRS, LIMITATIONS REGARDING THE WITHDRAWAL OF WATER AND EARTHQUAKE
FAULTS AND THE RESULTING DAMAGE OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND TO THE EXTENT
TO WHICH, THE PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM (SURFACE OR UNDERGROUND),
BODY OF WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY OR SPECIAL FLOOD HAZARD, (V) DRAINAGE, (VI)
SOIL CONDITIONS, INCLUDING THE EXISTENCE OF INSTABILITY, PAST SOIL REPAIRS, SOIL ADDITIONS OR
CONDITIONS OF SOIL FILL, OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY UNDERSHORING,
(VII) ZONING OR OTHER ENTITLEMENTS, OR ANY LAND USE REGULATIONS WHATSOEVER, TO WHICH THE PROPERTY
OR ANY PORTION THEREOF MAY BE SUBJECT, (VIII) THE AVAILABILITY OF ANY UTILITIES TO THE PROPERTY OR
ANY PORTION THEREOF INCLUDING, WITHOUT LIMITATION, WATER, SEWAGE, GAS AND ELECTRIC, (IX) USAGES OF
ADJOINING PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF, (XI) THE VALUE, COMPLIANCE
WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION, AGE, USE, DESIGN, QUALITY, DESCRIPTIONS,
SUITABILITY, OPERATION, TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY PORTION
THEREOF, (XII) ANY INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RIGHTS OR CLAIMS ON OR AFFECTING
OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, (XIII) THE PRESENCE OF HAZARDOUS SUBSTANCES (AS
DEFINED BELOW) IN OR ON, UNDER OR IN THE VICINITY OF THE PROPERTY, (XIV) THE CONDITION OR USE OF
THE PROPERTY OR COMPLIANCE OF THE PROPERTY WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE
OR LOCAL ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES, CODES OR
OTHER SIMILAR LAWS, (XV) THE EXISTENCE OR NON-EXISTENCE OF UNDERGROUND STORAGE TANKS, (XVI) ANY
OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE REAL PROPERTY, (XVII) THE POTENTIAL FOR
FURTHER DEVELOPMENT OF THE PROPERTY, (XVIII) THE MERCHANTABILITY OF THE PROPERTY OR FITNESS OF THE
PROPERTY FOR ANY PARTICULAR PURPOSE.




     BUYER REPRESENTS THAT IT IS A KNOWLEDGEABLE, EXPERIENCED AND SOPHISTICATED BUYER OF REAL
ESTATE AND THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES OF SELLER EXPRESSLY SET FORTH
HEREIN, BUYER HAS RELIED AND SHALL RELY SOLELY ON (I) BUYER’S OWN EXPERTISE AND THAT OF BUYER’S
CONSULTANTS IN PURCHASING THE PROPERTY, AND (II) BUYER’S OWN KNOWLEDGE OF THE PROPERTY BASED SOLELY
ON BUYER’S INVESTIGATIONS AND INSPECTIONS OF THE PROPERTY. THE TERMS AND CONDITIONS OF THIS SECTION
SHALL EXPRESSLY SURVIVE THE CLOSING AND NOT MERGE WITH THE PROVISIONS OF ANY CLOSING DOCUMENTS.
SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS, OR
INFORMATION PERTAINING



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TO THE PROPERTY FURNISHED BY SELLER, ANY REAL ESTATE BROKER, CONTRACTOR, AFFILIATE, AGENT,
EMPLOYEE, SERVANT OR OTHER PERSON, UNLESS THE SAME ARE SPECIFICALLY SET FORTH IN THIS AGREEMENT.
BUYER ACKNOWLEDGES THAT THE PURCHASE PRICE REFLECTS THE “AS IS” NATURE OF THIS SALE AND ANY FAULTS,
LIABILITIES, DEFECTS OR OTHER ADVERSE MATTERS THAT MAY BE ASSOCIATED WITH THE PROPERTY. BUYER
ACKNOWLEDGES AND AGREES THAT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS SECTION ARE AN
INTEGRAL PART OF THIS AGREEMENT AND THAT SELLER WOULD NOT HAVE AGREED TO SELL THE PROPERTY TO BUYER
FOR THE PURCHASE PRICE WITHOUT THE DISCLAIMERS AND OTHER AGREEMENTS SET FORTH IN THIS SECTION.




          (c)
Buyer Represented by Counsel. Buyer hereby represents and warrants to
Seller that: (a) Buyer is not in a significantly disparate bargaining position in relation to
Seller; (b) Buyer is represented by competent legal counsel in connection with the transaction
contemplated by this Agreement; and (c) Buyer is purchasing the Property for business,
commercial, investment or other similar purpose and not for use as Buyer’s residence.




          (d)
Buyer’s Release of Seller. Except for Seller’s representations, warranties
and covenants expressly set forth herein, Buyer and anyone claiming by, through or under Buyer
hereby waives its right to recover from and fully and irrevocably releases Seller and its
employees, officers, directors, representatives, agents, servants, attorneys, affiliates,
parent, subsidiaries, successors and assigns, and all persons, firms, corporations and organizations
in Seller’s behalf (“Released Parties”) from any and all claims, responsibility and/or liability
that it may now have or hereafter acquire against any of the Released Parties for any costs, loss,
liability, damage, expenses, demand, action or cause of action arising from or related to (a)
the condition (including any construction defects, errors, omissions or other conditions, latent
or otherwise, and the presence in the soil, air, structures and surface and subsurface waters of
materials or substances that have been or may in the future be determined to be Hazardous
Substances or otherwise toxic, hazardous, undesirable or subject to regulation and that may
need to be specially treated, handled and/or removed from the Property under current or future
federal, state and local laws regulations or guidelines), valuation, salability or utility of the
Property, or its suitability for any purpose whatsoever, and (b) any information furnished by the Released
Parties under or in connection with this Agreement; provided, however, the foregoing waiver
and release shall not apply to and shall specifically exclude any claims, demands, penalties,
fines, liabilities, settlements, damages, costs or expenses, known or unknown, existing and future,
incurred in connection with or relating to any claims (x) related to the Property accruing
prior to the Closing Date that are made by third parties for personal injury, property damage or death,
(y) based on any gross negligence or willful misconduct of Seller or its officers, directors,
shareholders, agents, affiliates, employees and successors and assigns, or (z) made by third
parties (including governmental authorities) against Buyer or its successors, assigns, agents
or affiliates with respect to Hazardous Substances on, under, adjacent to or otherwise affecting
the Property prior to Closing. This release includes claims of which Buyer is presently unaware or
which Buyer does not presently suspect to exist which, if known by Buyer, would materially
affect Buyer’s release to Seller. Buyer specifically waives the provision of California Civil
Code Section 1542, which provides as follows:




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



	 	 	 	 	 
	 

	 	/s/ CHARLES N. HAZEN
	 	 
	 

	 	 	 	 
	 

	 	BUYER’S INITIALS	 	 






     In this connection and to the extent permitted by law, Buyer hereby agrees, represents
and warrants that Buyer realizes and acknowledges that factual matters now unknown to Buyer may
have given or may hereafter give rise to causes of action, claims, demands, debts, controversies,
damages, costs, losses and expenses which are presently unknown, unanticipated and unsuspected, and
Buyer further agrees, represents and warrants that the waivers and releases herein have been
negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends
to release, discharge and acquit Seller from any such unknown causes of action, claims, demands,
debts, controversies, damages, costs, losses and expenses.



          (e) Buyer’s Waiver of Objections. Buyer acknowledges that, as of the date of
Closing, Buyer will have inspected the Property and observed its physical characteristics and
existing conditions and will have had the opportunity to conduct such investigations and studies on
and of said Property and adjacent areas as Buyer deems necessary, and, except as otherwise
expressly provided in subsection 16(d) above, hereby waives any and all objections to or complaints
regarding the Property and its condition, including, but not limited to, federal, state or common
law based actions and any private right of action under state and federal law to which the Property
is or may be subject, including, but not limited to, CERCLA, RCRA, physical characteristics and
existing conditions, including, without limitation, structural and geologic conditions, subsurface
soil and water conditions and solid and hazardous waste and Hazardous Substances on, under,
adjacent to or otherwise affecting the Property. Except as expressly provided in subsection 16(d)
above, Buyer further hereby assumes the risk of changes in applicable laws and regulations relating
to past, present and future environmental conditions on the Property and the risk that adverse
physical characteristics and conditions, including, without limitation, the presence of Hazardous
Substances or other contaminants, may not have been revealed by Buyer’s investigation.




     Seller has given Buyer material concessions regarding this transaction in exchange for Buyer
agreeing to the provisions of this Section. Seller and Buyer have each initialed this Section to
further indicate their awareness and acceptance of each and every provision hereof.



	 	 	 	 	 	 	 
	 

	 	/s/ STEPHEN A. MITCHELL
	 	/s/ CHARLES N. HAZEN	 	 
	 

	 	 
	 	 	 	 
	 

	 	SELLER’S INITIALS
	 	BUYER’S INITIALS	 






          (f) Hazardous Substances Defined.For purposes of this Agreement,
“Hazardous Substances” means any hazardous, toxic or dangerous waste, substance or material,
pollutant or contaminant, as defined for purposes of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (42 U.S.C. Section 6901 et seq.), as amended (“CERCLA”), or
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.),




-26-









 




as amended (“RCRA”), or any other federal, state or local law, ordinance, rule or
regulation applicable to the Property, or any substance which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous, or any
substance which contains gasoline, diesel fuel or other petroleum hydrocarbons,
polychlorinated biphenyls (PCBs), radon gas, urea formaldehyde, asbestos, mold, lead or
electromagnetic waves.




     17. SURVIVABILITY.



     Except for the rights and obligations of Seller and Buyer in sections 8, 12, 16, 17, 19,
22, 33 and 34 of this Agreement, and obligations of Buyer in subsections 5(c) and 5(d) of this
Agreement, none of the rights and obligations of Buyer and Seller shall survive the Closing or
the termination of this Agreement. Notwithstanding the foregoing sentence, the rights and
obligations of Seller and Buyer in section 33 shall survive for a period of seventy (70) days
after the Closing Date.



     18. NOTICES.



     All notices required to be given or delivered under this Agreement shall be in writing
and shall be deemed validly given (a) immediately upon hand delivery, (b) on the date of
confirmed delivery if delivered by courier or express service or by certified mail, return
receipt requested, or (c) immediately upon the telephonically confirmed receipt of a facsimile
transmission, addressed as follows:



	 	 	 
	If to Seller:

	 	OTR
	 

	 	c/o The State Teachers Retirement System of Ohio
	 

	 	275 East Broad Street
	 

	 	Columbus, Ohio 43215
	 

	 	Attention: Director of Real Estate Assets
	 

	 	Telephone: 614-227-7800
	 

	 	Facsimile: 614-227-7847
	 
	 	 
	 

	 	with duplicate copy, separately mailed, to the same address,
	 

	 	Attention: Real Estate Counsel
	 

	 	Telephone: 614-227-7867
	 

	 	Facsimile: 614-227-7856
	 
	 	 
	 

	 	and a copy to:
	 
	 	 
	 

	 	Allen, Matkins, Leck, Gamble & Mallory LLP
	 

	 	525 South Figueroa Street, 7th floor
	 

	 	Los Angeles, CA 90071
	 

	 	Attention: Kevin A. Corbett
	 

	 	Telephone: 213-622-5555
	 

	 	Facsimile: 213-620-8816
	 
	 	 
	If to Buyer:

	 	Hines REIT Properties, L.P.
	 

	 	c/o Hines Interests Limited Partnership
	 

	 	2800 Post Oak Boulevard, Suite 5000






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	 	Houston, Texas 77056-6118
	 

	 	Attention: Charles N. Hazen
	 

	 	Facsimile: (713)966-7851
	 
	 	 
	 

	 	and a copy to:
	 
	 	 
	 

	 	Hines Interests Limited Partnership
	 

	 	West Regional Office
	 

	 	101 California Street, Suite 1000
	 

	 	San Francisco, California 941 1 1
	 

	 	Attention: James Buie
	 

	 	Facsimile: (415)398-1442
	 
	 	 
	 

	 	and a copy to:
	 
	 	 
	 

	 	Hines Interests Limited Partnership
	 

	 	West Regional Office
	 

	 	101 California Street, Suite 1000
	 

	 	San Francisco, California 941 1 1
	 

	 	Attention: Lisa Lewis
	 

	 	Facsimile: (415)398-1442
	 
	 	 
	 

	 	and a copy to:
	 
	 	 
	 

	 	Baker Botts L.L.P.
	 

	 	2001 Ross Avenue
	 

	 	Dallas, Texas 75201-2980
	 

	 	Attention: Joel M. Overton, Jr.
	 

	 	Facsimile: (214) 661-4938





or to such other person or address as Seller or Buyer shall have given by notice as
herein provided.




     19. BROKER’S COMMISSION.



     Except for Cornish & Carey Commercial (“Broker”), whose fees shall be paid pursuant to a
separate agreement between Seller and Broker, Seller and Buyer each represent and warrant to the
other that the warranting party has had no dealing with any other dealer, real estate agent, or
broker so as to entitle such other dealer, agent, or broker to receive any commission or fee in
connection with sale of the Property to Buyer. If a claim for such commission or fee shall be made,
the party through whom such dealer, agent, or broker claims shall indemnify, defend, and save the
other party harmless from and against any and all claims for any such commission or fee and from
any attorneys’ fees and litigation or other expenses relating to any such claim.



     20. BINDING EFFECT.



     This Agreement shall benefit and bind the parties and the heirs, legal representatives,
successors, and assigns of each of them.



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     21. ASSIGNMENT.



     Notwithstanding the provisions of section 20 of this Agreement, this Agreement may not be
assigned by Buyer without the prior written consent of Seller, which consent shall not be
unreasonably withheld; provided, however, this Agreement and Buyer’s rights hereunder may be
transferred and assigned without Seller’s consent to any entity or entities which are Affiliates
(as hereinafter defined) of Buyer or of Hines Interests Limited Partnership, a Delaware limited
partnership (“Hines”). In the case of any assignment of this Agreement by Buyer, (a) the original
Buyer named herein shall remain liable for the performance of all of any successor Buyer’s
obligations under this Agreement; (b) Seller shall incur no additional expense on account of any
assignment; and (c) Buyer shall disclose the identity of such assignee to Seller and supply to
Seller all information of such assignee as may be reasonably requested by Seller not later than
three (3) business days prior the Closing. For purposes of this section 21, (x) the term
“Affiliate” means any person or entity that directly, or indirectly through one or more
intermediaries, controls, is controlled by or is under common control with Buyer or Hines, as the
case may be, and the term “control” means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of a person or entity, whether through
the ownership of voting securities, by contract or otherwise, and the terms “controlling” and
“controlled” have the meanings correlative to the foregoing.



     22. LIMITED LIABILITY.



     Buyer acknowledges and agrees that its recourse against Seller under this Agreement for a
default by Seller hereunder occurring prior to the Closing is limited to the remedies set forth in
Section 15(a) of this Agreement. In connection with any post-closing remedy which Buyer may have
against Seller, such remedy shall be limited to actual damages incurred by Buyer not to exceed One
Million Dollars ($1,000,000.00). In no event shall Buyer seek or attempt to obtain any recovery or
judgment against any of Seller’s partners (or their constituent partners) or any director, officer,
employee or shareholder of any of the foregoing. In no event shall Buyer be entitled to seek or
obtain any other damages of any kind, including, without limitation, consequential, speculative,
indirect or punitive damages.



     23. SECTION HEADINGS.



     All section headings and other titles and captions used in this Agreement are for
convenience only, do not form a substantive part of this Agreement, and shall not restrict or
enlarge any substantive provisions of this Agreement.



     24. PRONOUNS.



     All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine,
neuter, singular, or plural, as the context and the identity of the person or persons may require.



-29-









 





     25. AGREEMENT IN COUNTERPARTS.



     This Agreement may be executed in counterparts and all such counterparts shall constitute one
agreement binding on all the parties, notwithstanding that all the parties are not signatories to
the same counterpart.



     26. GOVERNING LAW.



     This Agreement shall be governed by the laws of the State of California, without regard to its
conflict of law principles.



     27. TIME OF THE ESSENCE; FAILURE TO ENFORCE NOT A WAIVER.



     Time is of the essence of this Agreement. Except as may be expressly provided in this
Agreement, failure by Seller or Buyer to enforce any right shall not constitute a waiver thereof.



     28. SEVERABILITY.



     If any provision in this Agreement, or its application to any person or circumstance, is held
to be invalid or unenforceable to any extent, that holding shall not affect the remainder of this
Agreement or the application of that provision to persons or circumstances other than that to which
it was held invalid or unenforceable.



     29. ATTORNEYS’ FEES.



     If any dispute between Seller and Buyer relating to the transactions contemplated in this
Agreement should result in arbitration or litigation, the prevailing party shall be reimbursed for
all reasonable costs incurred in connection therewith, including, without limitation, reasonable
attorneys’ fees and court costs.



     30. INTERPRETATION.



     The parties agree that each party and its counsel have reviewed and revised this Agreement and
that the normal rule of construction to the effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement. If any of the
dates specified in this Agreement falls on a Saturday, a Sunday or a day on which governmental
offices or banks are closed in the State of California, then the date of such action shall be
deemed to be extended to the next business day.



     31. FACSIMILE SIGNATURES.



     Any signature on this Agreement, or any amendment or modification thereof or any document or
instrument signed by either of the parties in connection therewith, that is sent by facsimile shall
be considered valid and binding. A party sending a facsimile signature shall on the same day send
the executed document to Escrow Agent and to the other party hereto by mail, courier or overnight
courier.




-30-









 





     32. EXPIRATION OF OFFER.



     When this Agreement is signed by Buyer, it shall constitute an offer to purchase the Property
upon the terms and conditions set forth herein, which offer, unless extended by Buyer in a writing
delivered to Seller or Seller’s agents, shall expire at 5 o’clock p.m. (Pacific Time), May 20,
2005, and may be accepted only by Seller delivering to Buyer a copy of this Agreement duly executed
by Seller and containing on the first page the date of execution by Seller.



     33. COOPERATION WITH BUYER’S AUDITORS AND SEC FILING REQUIREMENTS.



     Prior to and after the Closing Date, Seller shall provide to Buyer (at Buyer’s expense) copies
of, or shall provide Buyer access to, such factual information as may be reasonably requested by
Buyer, and in the possession or control of Seller, or its property manager or accountants, to
enable Buyer (or Hines or an Affiliate of Hines) to allow Buyer’s auditor (Deloitte & Touche LLP or
any successor auditor selected by Buyer) to conduct an audit of the income statements of the
Property for the year to date of the year in which the Closing occurs, plus up to the three (3)
prior calendar years. Buyer shall be responsible for all out-of-pocket costs associated with this
audit. Seller shall cooperate reasonably (at no cost to Seller) with Buyer’s auditor in the conduct
of such audit. In addition, Seller agrees to provide to Buyer’s auditor a letter of representation
in the form attached as Schedule 33 hereto (the “Representation Letter”), and, if requested by such
auditor, historical financial statements for the Property, including income and balance sheet data
for the Property, whether required before or after the Closing Date. Without limiting the
foregoing, (i) Buyer or its designated independent or other auditor may audit Seller’s operating
statements of the Property, at Buyer’s expense, and Seller shall provide such documentation as
Buyer or its auditor may reasonably request in order to complete such audit, and (ii) Seller shall
furnish to Buyer such financial and other information as may be reasonably required by Buyer or any
Affiliate of Buyer to make any required filings with the Securities and Exchange Commission or
other governmental authority; provided, however, that the foregoing obligations of Seller shall be
limited to providing such information or documentation as may be in the possession of, or
reasonably obtainable by, Seller, its property manager or accountants, at no cost to Seller, and in
the format that Seller (or its property manager or accountants) have maintained such information.



     34. COOPERATION WITH BUYER IN THE EVENT OF CERTAIN DISPUTES WITH CALIFORNIA CASUALTY.



     If after the Closing Buyer becomes involved in a dispute with California Casualty Management
Company in connection with that certain provision of its Tenant Lease relating to its rights to
extend or renew the term of its Tenant Lease, Seller agrees to cooperate reasonably with Buyer, as
reasonably necessary (at no material cost to Seller) in order to resolve such dispute. The
provisions of this section 34 shall not be construed to limit or modify in any way the provisions
of section 16 of this Agreement.



[signatures appear on following pages]




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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth at the
beginning of this Agreement.



	 	 	 	 	 	 	 
	 	 	SELLER:	 	 
	 
	 	 	 	 	 	 
	 

	 	OTR,	 	 	 	 
	 	 	an Ohio general partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By :
	 	 /s/ Stephen A. Mitchell 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Stephen A. Mitchell,	 	 
	 

	 	 	 	Partner	 	 
	 
	 	 	 	 	 	 
	 	 	[signatures continue on following pages]	 	 






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	 	 	BUYER:	 	 
	 
	 	 	 	 	 	 
	 	 	HINES REIT PROPERTIES, L.P,	 	 
	 	 	a Delaware limited partnership	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	Hines Real Estate Investment Trust, Inc.,	 	 
	 

	 	 	a Maryland corporation, its general partner	 	 
	 
	 	 	 	 	 	 
	 

	 	 	By: 	/s/ Charles N. Hazen	 	 
	 

	 	 	 	 	 	 
	 

	 	 	Name:  	Charles N. Hazen	 	 
	 

	 	 	 	 	 	 
	 

	 	 	Title:	President	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
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ACCEPTANCE OF ESCROW




     Receipt of an executed copy of the foregoing instrument is hereby acknowledged, and the
undersigned hereby agrees to act as Escrow Agent in accordance with the foregoing agreement.



	 	 	 	 	 
	Dated
6/8/05

	 		 	First American Title Insurance Company
	 
	 	 		 	 
	Escrow
No. NCE 1538655M

	 	By : 	 	/s/ Karen Matsunaga
	 	 	 	 	 
	 	 	 	 	      Karen Matsunaga







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