Exhibit 10.1


 


REAL ESTATE
PURCHASE AND SALE AGREEMENT


 


PRINCIPAL LIFE
INSURANCE COMPANY,


an Iowa
corporation, for its Principal U.S. Property Separate Account, SELLER


 


and


 


HARVARD PROPERTY
TRUST, LLC,


a Delaware limited
liability company, BUYER


 

















 


TABLE OF CONTENTS
TO


REAL ESTATE
PURCHASE AND SALE AGREEMENT


 


	
  1.

  	
   

  	
  Property Included in Sale

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  Purchase Price/Remedies

  	
  2

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Title to the Property

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Title and Survey Review

  	
  3

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Buyer’s Due Diligence

  	
  5

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
   

  	
  Buyer’s Conditions to Closing

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
   

  	
  Seller’s Conditions to Closing

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
   

  	
  The Closing

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
   

  	
  Representations and Warranties

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
   

  	
  Leasing and Indemnification

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
   

  	
  Seller’s Covenants

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
   

  	
  Condition of Property

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
   

  	
  Possession

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
   

  	
  Casualty/Condemnation

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  15.

  	
   

  	
  Tax-Deferred Exchange

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  16.

  	
   

  	
  Miscellaneous

  	
  21

  



 

















 


REAL ESTATE
PURCHASE AND SALE AGREEMENT


 


THIS REAL ESTATE PURCHASE AND SALE AGREEMENT (this “Agreement”),
is made as of the 19th day of September, 2008 (the “Agreement Date”) by and
between PRINCIPAL LIFE INSURANCE COMPANY, an Iowa corporation, for its
Principal U.S. Property Separate Account, herein referred to as “Seller,” and
HARVARD PROPERTY TRUST, LLC, a Delaware limited liability company, herein
referred to as “Buyer.”


 


RECITALS:


 


WHEREAS, Seller desires to sell certain improved real
property along with certain related personal and intangible property and other
items as more particularly set forth herein, and Buyer desires to purchase said
real, personal and intangible property and other items on the terms and
conditions set forth herein;


 


NOW, THEREFORE, in consideration of the foregoing and
the mutual undertakings set forth herein, and for good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Buyer and Seller hereby agree as follows:


 


1.                                       Property Included in Sale. 
Seller hereby agrees to sell and convey to Buyer, and Buyer hereby
agrees to purchase from Seller, the following:


 


(a)                                  That certain real property commonly known
as 1875 Lawrence Street, Denver, Colorado, as more particularly described in Exhibit A
attached hereto (the “Real Property”);


 


(b)                                 Seller’s interest in all rights,
privileges and easements appurtenant to the Real Property, including, without
limitation, all minerals, oil, gas and other hydrocarbon substances as well as
all development rights, air rights, water, water rights (and water stock, if
any) relating to the Real Property and any easements, rights-of-way or other
appurtenances used in connection with the beneficial use and enjoyment of the
Real Property (collectively, the “Appurtenant Rights”);


 


(c)                                  Seller’s interest in all improvements and
fixtures located on the Real Property, including all buildings and structures
presently located on the Real Property, all apparatus, equipment and appliances
used in connection with the operation or occupancy of the Real Property, such
as heating and air conditioning systems and facilities used to provide any
utility services, refrigeration, ventilation, garbage disposal, recreation or
other services on the Real Property (all of which are collectively referred to
as the “Improvements”);


 


(d)                                 Seller’s interest in any tangible or
intangible personal property owned by Seller and used in the ownership, use and
operation of the Real Property, Appurtenant Rights, and Improvements,
including, without limitation, the right to use any trade name (excepting 


 


1

















 


those including the name “Principal”)
and all other names, logos, and designs now used in connection with the Real
Property (collectively, the “Personal Property”);


 


(e)                                  Seller’s interest in all written
agreements pursuant to which any portion of the Real Property is used or
occupied by anyone other than Seller (collectively, the “Leases”); and


 


(f)                                    Seller’s interest in the following: (i) any
contract rights and agreements relating to the ownership, use, upkeep, repair,
if any, maintenance and operation of the Real Property, Personal Property,
Appurtenant Rights, or Improvements which Buyer elects to assume pursuant to Section 5
below; (ii) all licenses, permits, warranties and guaranties, certificates
of occupancy and other consents or approvals from governmental authorities
related to the Real Property, Personal Property, Appurtenant Rights, or
Improvements; (iii) all plans and specifications, drawings including CADD
drawings, reports, books, studies, operating manuals and any other items used
in the operation of the Real Property, Personal Property, Appurtenant Rights,
or Improvements; (iv) all marketing materials and prepaid advertising
related to the Real Property; and (v) all keys and combinations to locks
related to the Real Property, Personal Property, Appurtenant Rights and
Improvements (collectively, the “Related Property”).


 


All of the items referred
to in Subsections (a), (b), (c), (d), (e) and (f) above are
hereinafter collectively referred to as the “Property.”


 


2.                                       Purchase Price/Remedies.


 


(a)                                  Subject to credits,
adjustments and prorations for which provisions are hereinafter made in this
Agreement, the total purchase price (the “Purchase Price”) for the Property is
Thirty-Five Million Dollars ($35,000,000). 
The Purchase Price is payable by wire transfer of immediately available
funds in U.S. dollars via the federal bank wire transfer system deliverable no
later than 2:00 p.m. Central Standard Time on the Closing Date (as defined
herein) to Chicago Title Insurance Company, Attention: Ted Darby, 2001 Bryan
Street, Suite 1700, Dallas, Texas 75201 (telephone: 214-965-1666; fax:
214-965-1621) (the “Title Company”) at Closing.


 


(b)                                 Within two (2) business days after
the Agreement Date, Buyer shall deposit into escrow with the Title Company the
sum of $1,000,000 as the earnest money deposit (the “Initial Deposit”).  Provided that Buyer elects to proceed under
this Agreement on or prior to the Approval Date, Buyer shall deposit an
additional $1,000,000 (the “Additional Deposit”) within two (2) business
days after the Approval Date.  (The
Initial Deposit and Additional Deposit, together with any interest earned on
such sums, shall be referred to herein as the “Deposit.”)  The Deposit shall be payable by wire transfer
of immediately available funds in U.S. dollars via the federal bank wire
transfer system.  Any interest earned by
the Deposit shall be considered part of the Deposit.  Except as otherwise provided in this
Agreement, the Deposit shall be held by the Title Company in a federally
insured interest bearing account and applied against the cash portion of the
Purchase Price at Closing, subject to disbursement in accordance with the terms
and provisions of this Agreement.


 


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(c)                                  In the event the Buyer shall fail to
close in breach of this Agreement or otherwise commit a default hereunder that
results in the failure of the subject transaction to close, Seller’s sole and
exclusive remedy (except as provided below) shall be to terminate this
Agreement by written notice to Buyer and the Title Company, in which case the
Deposit shall be paid to Seller as liquidated damages. Buyer and Seller hereby
agree that upon such termination, the Seller shall have no right to recover any
additional damages by reason of the Buyer’s failure to close, and Seller shall
be released from its obligations hereunder and the  Deposit shall represent and be liquidated
damages payable to Seller in such event as a fair and reasonable sum to
recompense Seller in light of Seller’s removal of the Property from the market
and the costs incurred, labor and services performed and the loss of its
bargain, all of which are difficult to ascertain. This termination right and
liquidated damages shall constitute Seller’s sole and exclusive remedy except
for those certain indemnifications of Seller by Buyer otherwise provided for in
this Agreement.


 


(d)                                 In the event that Seller shall be in
default hereunder and such default is not cured by the fifth (5th)
business day after written notice thereof from Buyer, Buyer’s sole and
exclusive remedy shall be either:  (i) to
terminate this Agreement by written notice to Seller and the Title Company, in
which case the Deposit shall be returned to Buyer and Seller shall pay to Buyer
the Transaction Costs of Buyer (as defined below); or (ii) if Seller’s
default results from its failure to transfer possession and title to the
Property to Buyer at Closing to enforce specific performance.  Except as otherwise provided in this
Agreement, in no event shall Seller or Buyer be liable to the other party for
any actual, consequential, punitive, treble, exemplary, speculative or other
damages.  As used in this Agreement, “Transaction
Costs of Buyer” means Buyer’s actual out-of-pocket costs incurred in connection
with the negotiation and performance of this Agreement, including attorneys’
fees, and Buyer’s evaluation of the Property in an amount not to exceed
$150,000.


 


3.                                       Title to the Property. 
At the Closing, Seller shall convey to Buyer and Buyer shall accept
marketable and insurable title to the Real Property, all rights, privileges and
easements appurtenant thereto, and the Improvements, by duly executed and
acknowledged special warranty deed attached hereto as Exhibit F
(the “Deed”), subject only to the Permitted Exceptions (hereinafter
defined).  Evidence of delivery of
marketable and insurable fee simple title shall be the issuance of a current
ALTA Owner’s Policy of Title Insurance (the “Title Policy”), in the full amount
of the Purchase Price by the Title Company, insuring fee simple title to the
Real Property, Improvements, and Appurtenant Rights in the Buyer.


 


4.                                       Title and
Survey Review.


 


(a)                                  Within five (5) days
after the Agreement Date, Seller shall deliver to Buyer (1) a current
title commitment (the “Title
Commitment”) covering the Property, showing all matters affecting title
to the Property and binding the Title Company to issue at Closing an Owner’s
Policy of Title Insurance, on the form customarily used in the area in which
the Property is located, in the full amount of the Purchase Price pursuant to
subsection (c) below, and (2) copies of all instruments (the “Exception Instruments”) referenced in
the Title Commitment.


 


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(b)                                 Seller has
furnished to Buyer an existing Survey (the “Survey”) of the Property prepared by a reputable and duly
licensed surveyor or surveying firm. Buyer shall be responsible for obtaining
an update to the Survey (the “Updated
Survey”) at Buyer’s cost.


 


(c)                                  After receipt
of the last of the Title Commitment, copies of the Exception Instruments, and
the Survey, Buyer shall have a period of ten (10) days to review the state
of Seller’s title to the Property (the “Title
Review Period”). If the Survey, the Title Commitment or the Exception
Instruments reflect or disclose any defect, exception or other matter affecting
the Property (“Title Defects”)
that is unacceptable to Buyer for any reason whatsoever, then prior to the
expiration of the Title Review Period, Buyer may provide Seller with written
notice of its objections, and Seller shall have ten (10) days (the “Cure Period”) from the date of the
notice to remove or cure any Title Defects to the satisfaction of Buyer. Seller
shall use its reasonable, good faith efforts to remove or cure the Title
Defects to Buyer’s satisfaction. If Seller does not cure any or all of the
Title Defects within the Cure Period, Seller shall notify Buyer in writing,
prior to the expiration of the Cure Period, of its election not to cure such
Title Defects, and Buyer may, prior to the later of (i) five (5) days
after receipt of Seller’s notice of its election not to cure, or (ii) the
Approval Date (hereinafter defined) either (A) terminate this Agreement by
written notice delivered to Seller, or (B) elect to waive any uncured
Title Defect. If Buyer elects to proceed under this Agreement by written notice
delivered to Seller prior to the expiration of the time period referenced in
the immediately preceding sentence, then any Title Defects that Seller has not
cured shall be deemed waived by Buyer. If Buyer shall fail to notify Seller in
writing of any objections to the state of Seller’s title to the Property as
shown by the Title Commitment, the Exception Documents, Survey or if Buyer
elects to waive all or any of the Title Defects, or is deemed to have waived
all or any of the Title Defects, then any exceptions to Seller’s title to which
Buyer has not objected or which have been objected to and waived by Buyer and
which are disclosed by the Title Commitment shall be considered to be “Permitted Exceptions.” If Buyer
terminates this Agreement pursuant to this section, then neither Seller nor
Buyer shall have any further rights or obligations under this Agreement, and
the Deposit shall be promptly returned to Buyer.


 


Notwithstanding the
foregoing provisions, in the event Buyer has any objections to the Updated
Survey, Buyer shall have until the Approval Date to determine whether or not
such objections are acceptable to Buyer.


 


(d)                                 Notwithstanding
anything to the contrary contained herein, Seller shall be obligated to remove
(or cause the Title Company to affirmatively insure over) at Seller’s
expense:  (i) any mortgages or deeds
to secure debt securing any financing obtained by Seller; (ii) any
mechanics or materialmen’s liens for work done by or on behalf of Seller; and (iii) any
other monetary liens against Seller (provided Seller shall not be obligated to
expend more than $100,000 in connection with this clause (iii)). 
The “Permitted Exceptions” shall be collectively defined as: (1) those
covenants, conditions and restrictions of record which are reviewed and
approved (or deemed approved) by Buyer pursuant to Section 4(a); (2) the
lien of general real estate taxes for the current calendar year and subsequent
years which are not yet due or payable; and (3) the Leases.


 


4

















 


5.                                       Buyer’s Due Diligence. 
Buyer shall be allowed to conduct the following due diligence prior to
purchasing the Property:


 


(a)                                  Buyer’s review of the operating
statements of the Property for the previous two (2) calendar years as well
as the current calendar year-to-date.


 


(b)                                 Buyer’s review of copies of a current
rent roll and any tenant leases, and any amendments and modifications thereto,
currently in Seller’s Possession.


 


(c)                                  Buyer’s review of copies of any site
plans and building drawings and specifications currently in Seller’s Possession
..


 


(d)                                 Buyer’s review of copies of any
maintenance and service agreements currently in force and in Seller’s
Possession.  Buyer shall provide written
notice to Seller no less than three (3) business days prior to the
Approval Date of those agreements Buyer wishes to assume.  In the absence of such notice, Seller shall
terminate all agreements.


 


(e)                                  Buyer’s review of certain environmental
reports prepared for Seller and currently in Seller’s Possession as described
on Exhibit J hereto.  Seller
is providing such environmental reports to Buyer for informational purposes
only and Buyer shall not rely on such environmental reports in determining
whether to purchase the Property.  In the
event the transaction contemplated herein does not close for any reason
whatsoever, Buyer shall immediately return the environmental reports to Seller.


 


(f)                                    Buyer’s review of the
documents and other items listed on Exhibit N attached hereto and
made a part hereof, it being agreed that Seller shall deliver the documents and
other items listed on Exhibit N to Buyer within five (5) days
after the Agreement Date, to the extent that Seller has not previously
delivered same to Buyer; provided that such documents and other items are in
Seller’s, or in Seller’s property management company’s, possession or control
(hereafter “Seller’s Possession”).


 


The items referred to
above in Section 4 and Subsections 5(a)-(f) (including all documents and other items listed on Exhibit N
shall be collectively referred to as the “Due Diligence Items.”  Buyer hereby acknowledges the receipt of the
Due Diligence Items, with the exception of the Title Commitment and the
Exception Documents (which will be delivered or caused to be delivered pursuant
paragraph 4(a) herein).  The Due Diligence Items contain confidential
material, data and information and by accepting delivery of same Buyer hereby
acknowledges that the Due Diligence Items will be relied upon at Buyer’s own
risk (except to the extent otherwise expressly set forth in this Agreement) and
further that the Due Diligence Items will be kept confidential at all times by
Buyer and its agents, employees and representatives (collectively the “Representatives”;
and the confidentiality requirement set forth in this Section is referred
to herein as the “Confidentiality Requirement.” 
The Due Diligence Items will be kept confidential and shall not, without
Seller’s prior written consent (which consent shall not be unreasonably
withheld or delayed) be disclosed by the Buyer or by its Representatives.  If such consent is granted, the information
shall not be disclosed prior to Seller’s receipt of an


 


5

















 


Acknowledgment
and Disclaimer Agreement from the person or entity to whom the Information is
being disclosed in substantially similar form as that which Buyer executed in
connection with its potential purchase of the Property.  Moreover, the Buyer agrees to reveal the Due
Diligence Items only to those of its Representatives who need to know the Due
Diligence Items and who are informed by the Buyer of the confidential nature of
the Due Diligence Items.  However,
notwithstanding the foregoing provisions or anything else to the contrary
contained in this Agreement, (i) Buyer may disclose the Due Diligence
Items and related information to its affiliates, consultants, attorneys,
accountants, prospective investors and lenders, and others who need to know
such information for the purpose of assisting Buyer in connection with the
possible purchase of the Property; (ii) the covenants of confidentiality
set forth herein shall not be applicable to any information published by Seller
as public knowledge or otherwise available in the public domain without breach
of this Agreement; (iii) Buyer shall be permitted to disclose such
information as may be recommended by legal counsel for Buyer in order to comply
with all financial reporting, securities laws and other legal requirements
applicable to Buyer, including any required disclosures to the Securities and
Exchange Commission; and (iv) any duty of confidentiality set forth in
this Agreement shall terminate upon Closing.


 


The
Buyer hereby releases and discharges any and all claims it may have against
Seller or its consultant arising out of the delivery of the Due Diligence Items
to the Buyer or any inaccuracy of the Due Diligence Items unless otherwise
expressly provided in this Agreement. 
Further, the Buyer hereby agrees to indemnify and hold Seller harmless
from any and all claims arising out of Buyer’s actions with respect to the Due
Diligence Items.  The Buyer agrees that
if it or its Representatives commit a breach of any of the provisions of this
Confidentiality Requirement, Seller shall have the right and remedy to
institute proceedings to obtain immediate injunctive relief for any breach or
threatened breach hereof, it being hereby acknowledged and agreed that any such
breach or threatened breach may cause irreparable injury to Seller and its
affiliates and that money damages will not provide an adequate remedy to Seller
and its affiliates.  This stipulation
with respect to damages incurred by Seller upon a breach of this
Confidentiality Requirement by the Buyer shall be limited to use in an action
for injunctive relief.  Further, nothing
herein shall be construed to limit any other remedy available to Seller.


 


(g)                                 Buyer’s review of the physical and
environmental characteristics and condition of the Property.  Seller agrees to provide Buyer access to the
Property following the Agreement Date for the purpose of performing, at Buyer’s
sole cost and expense, studies, physical inspections, investigations and tests
on the Property (the “Tests”) provided that no such Tests shall be conducted
without at least two (2) business days prior telephone or written notice
to Seller and Seller’s prior approval of such Tests, which approval shall not
be unreasonably withheld.  Seller’s
execution of this Agreement shall constitute its consent to a non-invasive
Phase I environmental site assessment being performed on the Property.  All forms of invasive Tests are prohibited
without Seller’s prior written consent, which consent may be granted or
withheld in Seller’s sole discretion. 
Invasive Tests hereunder include, but are not limited to any tests or
testing beyond a Phase I environmental site assessment, such as collecting or
testing asbestos, water, radon, soil or air samples.  Buyer’s access is further conditioned on
Buyer providing Seller with certificates of insurance listing Seller as an
additional insured on all insurance policies evidencing that Buyer’s agents or
contractors performing said Tests have


 


6

















 


insurance in types and
amounts satisfactory to Seller as determined by Seller in its reasonable
discretion as more specifically set forth on Exhibit H attached
hereto and hereby made a part hereof. 
Buyer shall be required to conduct such Tests in a manner as to not
disturb or interfere with the current use of the Property and upon completion
of such Tests, Buyer agrees at its sole cost to restore the Property to the
condition it was in immediately prior to such Tests, including, but not limited
to the immediate removal of anything placed on the Property in connection with
such Tests.  Copies of any reports,
letters or other written information generated as a result of such Tests shall
be provided to Seller if the sale contemplated by this Agreement does not close
for any reason.  Buyer shall indemnify,
defend (with counsel reasonably satisfactory to Seller), and hold Seller
harmless from and against any and all liability, loss, cost, damage, or expense
(including, without limitation, attorney’s fees and costs) which Seller may
sustain or incur by reason of or in connection with any Tests made by Buyer or
Buyer’s agents or contractors relating to or in connection with the Property,
or entries by Buyer or its agents or contractors onto the Property.  Notwithstanding
any provision to the contrary in this Agreement, the indemnity obligations of
Buyer under this Agreement shall survive any termination of this Agreement or
the delivery of the deed and the transfer of title pursuant to this Agreement.


 


(h)                                 Buyer has advised Seller that Buyer must
cause to be prepared up to three (3) years of audited financial statements
in respect of the Property in compliance with the policies of Buyer and certain
laws and regulations, including, without limitation, Securities and Exchange
Commission Regulation S-X. Seller agrees to use reasonable efforts to cooperate
with Buyer’s auditors in the preparation of such audited financial statements
(it being understood and agreed that the foregoing covenant shall survive the
Closing). Without limiting the generality of the preceding sentence (i) Seller
shall, during normal business hours, allow Buyer’s auditors reasonable access
to such books and records maintained by Seller (and Seller’s manager of the
Property) in respect of the Property as necessary to prepare such audited
financial statements; (ii) Seller shall use reasonable efforts to provide
to Buyer such financial information and supporting documentation as are
necessary for Buyer’s auditors to prepare audited financial statements; (iii) if
Buyer or its auditors require any information that is in the possession of the
party from which Seller purchased the Property, Seller shall contact such prior
owner of the Property and use commercially reasonable efforts to obtain from
such party the information requested by Buyer; (iv) Seller will make
available for interview by Buyer and Buyer’s auditors the manager of the
Property or other agents or representatives of Seller responsible for the
day-to-day operation of the Property and the keeping of the books and records
in respect of the operation of the Property; and (v) if Seller has audited
financial statements with respect to the Property, Seller shall promptly
provide Buyer’s auditors with a copy of such audited financial statements. If
after the Closing Date Seller obtains an audited financial statement in respect
of the Property for a fiscal period prior to the Closing Date that was not
completed as of the Closing Date, then Seller shall promptly provide Buyer with
a copy of such audited financial statement, and the foregoing covenant shall
survive Closing. It shall be a condition precedent to the obligations of Buyer
under this Agreement that Seller shall have complied with the covenants set
forth in this subsection (h) as of the Closing Date.


 


If on or before 5:00 p.m.
Central Standard Time on October 1, 2008 (the “Approval Date”), Buyer
elects to proceed under this Agreement, Buyer shall give Seller written notice
(“Notice to


 


7

















 


Proceed”) at any time
prior to 5:00 p.m. Central Standard Time on or before the Approval Date.
Upon giving the Notice to Proceed, this Agreement shall continue in full force
and effect. If Buyer does not provide the Notice to Proceed on or before 5:00 p.m.
Central Standard Time on the Approval Date, this Agreement shall immediately
terminate (except for the indemnity obligations of Buyer to Seller under this
Agreement which shall survive termination of this Agreement) and the Deposit
shall be returned to Buyer, as Buyer’s sole and exclusive remedy.  It is understood and agreed that Buyer may
refuse or fail to give a Notice to Proceed in its sole and unfettered
discretion, for any reason or for no reason, and shall not be obligated to give
any explanation to Seller in connection therewith.


 


6.                                       Buyer’s Conditions to Closing. 
The following conditions are conditions precedent to Buyer’s obligation
to purchase the Property:


 


(a)                                  The Title Company has committed to issue
to Buyer, upon payment of the title premium therefor, a standard form Owner’s
Title Policy in the amount of the Purchase Price in accordance with the Title
Commitment, insuring that Buyer is the fee simple owner of the Real Property
and Improvements subject only to the Permitted Exception and otherwise as
described in and in accordance with Section 4 of this Agreement (the “Title
Policy”).


 


(b)                                 The representations and warranties made
by Seller in this Agreement shall be true and correct in all material respects
as of the Closing Date.


 


(c)                                  Seller shall not be in default of this
Agreement.


 


(d)                                 The Tenant Estoppel Condition (as hereinafter
defined) shall be timely satisfied.


 


In the event that the
conditions set forth above in this Section 6 are not satisfied (and Buyer
is not otherwise in default of this Agreement), Buyer may elect, at its sole
discretion, to terminate this Agreement, or waive satisfaction of the condition
and close escrow in either instance by giving written notice to Seller.  In the event Buyer so elects to terminate
this Agreement, the Deposit shall be returned to Buyer.


 


7.                                       Seller’s Conditions to Closing. 
The following conditions are conditions precedent to Seller’s obligation
to sell the Property:


 


(a)                                  The approval of
the applicable committee of Seller (the “Committee”), which approval Buyer
acknowledges Seller will seek on or prior to October 10, 2008 (but, in any
event after the Approval Date has passed and Buyer has failed to exercise its
right of termination of this Agreement under Section 4).  Seller makes no representation with regard to
the likelihood of approval of this Agreement or the transaction contemplated
herein by its Committee.  Promptly after
the Committee has made its determination with respect to this Agreement, Seller
shall send Buyer written notice (the “Committee Notice”) stating whether or not
the Committee has approved this Agreement and the transaction contemplated
herein.  If for any reason Seller’s
Committee disapproves this Agreement or the transaction contemplated herein,
this Agreement


 


8
















 


shall
terminate, the Title Company shall return the Deposit to Buyer, Seller shall
reimburse Buyer upon demand all Transaction Costs of Buyer incurred prior to
the date of such determination in an amount not to exceed $150,000 and neither
party shall have any further obligations or rights hereunder.  In the event that Buyer has not received a
Committee Notice as of 5:00 p.m., Central Standard Time, on October 10,
2008, Buyer shall have the option to either (i) extend the time for
receipt of the Committee Notice until 5:00 p.m., Central Standard Time, on
October 17, 2008, or (ii) terminate this Agreement by written notice
to Seller, in which event the Title
Company shall return the Deposit to Buyer, Seller shall reimburse Buyer upon
demand all Transaction Costs of Buyer incurred prior to the date of such
determination in an amount not to exceed $150,000, and neither party shall have
any further obligations or rights hereunder.  If Buyer elects to extend the time for
receipt of the Committee Notice pursuant to clause (i) of the preceding
sentence and the Committee Notice is still not received as of 5:00 p.m.,
Central Standard Time, on October 17, 2008, then this Agreement shall
terminate upon the terms and conditions set forth in clause (ii) of the
preceding sentence.


 


(b)           Buyer shall not be in default under
this Agreement.  In the event that the
conditions set forth above in this Section 7 are not satisfied (and Seller
is not otherwise in default of this Agreement), Seller may elect, at its sole
discretion, to terminate this Agreement or waive satisfaction of the condition
and close escrow.  In the event Seller so
elects to terminate this Agreement and Buyer is not in default hereunder, the
Deposit shall be returned to the Buyer.


 


8.                                       The
Closing.


 


(a)           The
Closing hereunder shall be held and delivery of all items to be made at the
Closing under the terms of this Agreement shall be made at the offices of the
Title Company within ten (10) days after Seller’s Committee approval, or such other date prior thereto as Buyer and
Seller may mutually agree in writing; provided, however, should such date fall
during the final two (2) business days of any calendar month, the date
shall automatically be extended to the first business day of the following
calendar month such that closing will not occur during the final two (2) business
days of any calendar month (the “Closing Date”).  Except as otherwise provided herein, such
date may not be extended without the prior written approval of both Seller and
Buyer.  In
the event the Closing does not occur on or before the Closing Date, the Title
Company shall, subject to the provisions of Section 2, and unless it is
notified by both parties to the contrary, within three (3) business days
after the Closing Date, return to the depositor thereof items which may have
been deposited pursuant to this Agreement. 
Any such return shall not, however, relieve either party hereto of any
liability it may have for its wrongful failure to close.


 


(b)                                 At
or before the Closing, Seller shall deliver to the Title Company, and the Title
Company will deliver to Buyer, the following:


 


(i)            the Deed conveying to the Buyer the
Property as required by Section 3 above;


 


(ii)           originals or copies of all leases
(and amendments thereto, if any) in Seller’s Possession covering any portion of
the Property, any security deposits relating thereto in


 


9

















 


Seller’s Possession, and
an executed Assignment and Assumption of Leases in the form attached hereto as Exhibit B;


 


(iii)          Seller’s Non-Foreign Certification in
the form attached as Exhibit C;


 


(iv)          notices to the tenants at the Property
in the form attached as Exhibit D, executed by Seller;


 


(v)           the executed Assignment of
Warranties, Guaranties and Service Contracts in the form attached hereto as Exhibit E;


 


(vi)          an
executed Bill of Sale in the form attached hereto as Exhibit G;


 


(vii)         if
required by the Title Company, evidence of required limited liability company
authority and an incumbency certificate to evidence the capacity of the
signatory for Seller;


 


(viii)        to
the extent in Seller’s Possession all keys, codes and other security devices
for each parcel of the Property;


 


(ix)           a
Closing Statement, mutually acceptable to Buyer and Seller, prepared in
accordance with the terms of this Agreement; and


 


(x)            any
other documents (a) which Seller is obligated to deliver to Buyer pursuant
to this Agreement, (b) that may be requested by the Title Company in order
to issue the Title Policy and acceptable to Seller in Seller’s reasonable
discretion, and (c) that are necessary in order to effectuate the transfer
of the Property as contemplated by this Agreement (x) in accordance with
the terms of this Agreement or (y) pursuant to any applicable law, rule or
regulation.


 


(c)                                  At
or before the Closing, Buyer shall deliver to escrow the Purchase Price and an
executed Assignment and Assumption of Lessor’s Interest In Leases in the form
attached hereto as Exhibit B.


 


(d)                                 Seller
and Buyer shall each deposit such other instruments as are reasonably required
by the Title Company to close the escrow and consummate the purchase of the
Property in accordance with the terms hereof.


 


(e)                                  Proration.


 


(i)            In each proration set forth below, the portion thereof
applicable to the period beginning at 12:01 a.m. on the Closing Date shall
be credited to Buyer and the portion thereof applicable to the period ending at
such time shall be credited to Seller (such that income


 


10

















 


and expenses run to Buyer
starting on the Closing Date). 
Prorations shall be calculated on the basis of a 366-day year.


 


(A)          Collected Rent and Other Lease
Amounts.  All collected rent,
collected tenant reimbursements for Operating Expenses (as defined below), and
other collected income for the month of Closing under leases in effect on the
Closing Date shall be prorated as of the Closing Date.  Buyer shall be credited with any rent and
other income collected by Seller before the Closing Date but applicable to any
period of time from and after the Closing Date. 
Uncollected rent and other income shall not be prorated on the Closing
Date.  Any rent received by Seller after
the Closing Date with respect to time periods from and after the Closing Date
shall be delivered to Buyer within ten (10) days of Seller’s receipt.  Buyer shall apply rent and other income from
tenants that are collected after the Closing Date first to the obligations then
owing to Buyer for its period of ownership and to those reasonable attorney fees
incurred by Buyer in collecting said amount, remitting the balance, if any, to
Seller.  Buyer will make reasonable
efforts, without expense or suit, to collect any delinquent rents from tenants
applicable to any periods before the Closing Date.  Seller may pursue collection as to any rent
not collected by Buyer within 90 days following the Closing Date, provided that
Seller shall have no right to institute litigation or terminate any lease or
any tenant’s occupancy under any lease in connection therewith.  Seller is not restricted in any way from
collecting any rent or other income owed by past tenants who are no longer in
occupancy on the Closing Date.


 


(B)           Operating Expenses.  Operating expenses such as utilities, common
area maintenance and other operating costs and expenses in connection with the
ownership, operation, maintenance and management of the Real Property
(collectively “Operating Expenses”) shall also be prorated as of the Closing
Date, based on the number of days of ownership by each party in the calendar
month during which Closing occurs.  Those
Operating Expenses being paid directly by tenants shall not be prorated.  Further, taxes shall be prorated as set forth
in Section 8(e)(i)(C) below and insurance costs shall not be
prorated.


 


(C)           Taxes and Assessments.  Real estate taxes and assessments imposed by
any governmental authority shall be prorated as of the Closing Date based upon
the tax bill(s) received for and applicable to the period(s) in which
the Closing Date occurs; or, to the extent such tax bill(s) and applicable
amount(s) are not available by the Closing Date, based on the most recent
ascertainable assessed values and tax rates. 
Seller shall receive a credit for any taxes and assessments paid by
Seller for the period during which the Closing Date occurs from the Closing
Date to the end of the applicable taxing period, and Buyer shall receive a
credit for any taxes or assessments not paid by Seller for the taxing period up
to the Closing Date.  All refunds or tax
savings relating to real estate taxes or assessments shall inure to the benefit
of Seller if such refunds or tax savings relate to any period for which Seller
owned the Property.  Buyer shall remit to
Seller any such refund or tax savings relating to such period promptly upon
Buyer’s receipt, after deducting any amounts due to tenants under the
Leases.  Any additional taxes or
assessments relating to the tax year(s) in which the Closing occurs or
prior years arising out of a change in the use of the Property or a change in
ownership shall be assumed by Buyer effective as of the Closing Date and paid
by Buyer when due and payable, and Buyer shall


 


11

















 


indemnify Seller from and against any and all
such taxes, which indemnification obligation shall survive the Closing.


 


(D)          Leasing Commissions and Cost of
Tenant Finish.  At Closing, Buyer
shall assume the obligation to pay all leasing commissions and the costs of
tenant finish due on or after the Closing Date or that become due during the
pendency of this Agreement with respect to the portion of the term of any
lease, expansion or renewal on or after the Closing Date, to the extent that
Buyer had the opportunity to review, and has approved in writing, such lease,
expansion or renewal.  Buyer specifically
agrees that Buyer shall be obligated to pay all costs of tenant finish relating
to that certain lease by Water Management Consultants, Inc. (“WMC”)
regardless of when such payments to WMC are due; provided, however, that in no
event shall Buyer’s liability for such costs exceed $349,084 in the
aggregate.  Leasing commissions or tenant
finish costs that are payable on a monthly or other periodic basis during the
lease terms shall be prorated between the parties in the same manner as
Operating Expenses.  Any leasing
commissions and costs of tenant finish with regard to new leases of the
Property entered into subsequent to the Agreement Date and prior to Closing
(the “New Leases”) shall be prorated between Buyer and Seller on the Closing
Date based upon the revenue from such New Leases received by Seller prior to
Closing and the revenue to be received by Buyer for the term of the New Leases
commencing on the Closing Date; provided, however, that Buyer shall have no
obligation to pay any costs associated with a New Lease unless Buyer had the
opportunity to review such Lease and approved same in writing prior to the
execution thereof.


 


(E)           Tenant Deposits.  All cash tenant security deposits actually
received by Seller (and interest thereon if required by law or contract to be
earned thereon) and not theretofore applied to tenant obligations under the
leases shall be transferred or credited to Buyer at Closing or placed in escrow
if required by law.  Seller agrees that
after the Agreement Date, Seller will not apply tenant security deposits
towards the payment of rent under the Leases. 
As of the Closing, Buyer shall assume Seller’s obligations related to
tenant security deposits.  Buyer will
indemnify, defend, and hold Seller harmless from and against all demands and
claims made by tenants with respect to any security deposits actually delivered
to Buyer and will reimburse Seller for all attorneys’ fees incurred or that may
be incurred as a result of any such claims or demands as well as for all loss,
expenses, verdicts, judgments, settlements, interest, costs and other expenses
incurred or that may be incurred by Seller as a result of any such claims or
demands by tenants.


 


(F)           Utility Deposits.  Buyer shall take all steps necessary to
effectuate the transfer of all utilities to its name as of the Closing Date,
and where necessary, post deposits with the utility companies.  Seller shall ensure that all utility meters
are read as of the Closing Date.  Seller
shall be entitled to recover any and all deposits held by any utility company
as of the Closing Date.


 


(G)           Insurance.  The fire, hazard, and other insurance
policies relating to the Property shall be cancelled by Seller as of the
Closing Date and shall not, under any circumstances, be assigned to Buyer.  All unearned premiums for fire and any
additional hazard


 


12

















 


insurance premium or other insurance policy
premiums with respect to the Property shall be retained by Seller.


 


(H)          Pass Through Expenses.  Seller, as landlord under the Leases, may be
currently collecting from tenants under the Leases additional rent or charges
to cover Operating Expenses and other costs (“Pass Through Expenses”).  No later than May 15, 2009, Seller and
Buyer shall reconcile Pass Through Expenses for 2008 and make any necessary
adjustments to the prorations of expenses made at Closing.  Buyer shall be responsible for administering
all reconciliations and other adjustments with such tenants in accordance with the
Leases.


 


(I)            Final Adjustments After Closing.  If final prorations for those items addressed
herein cannot be made on the Closing Date, then Buyer and Seller agree to
allocate such items on an accrual basis as soon as invoices or bills are
available, but with such final adjustment(s) to be made no later than two
hundred seventy (270) days after the Closing Date.  Income and expenses shall be received and
paid by the parties on an accrual basis with respect to their period of
ownership.  Seller shall not, however, be
charged for any increase in Operating Expenses due to increased costs caused by
Buyer subsequent to the Closing. 
Payments in connection with such final adjustments shall be due within
fifteen (15) days of mutual agreement of the amount(s) due.  Each party shall have reasonable access to,
and the right to inspect and audit the other party’s supporting documentation
to confirm the final prorations, provided at least three (3) business days’
advance notice is given by the auditing party to the audited party.


 


(f)                                    The
costs incurred in this transaction shall be allocated as follows:


 


(i)            Title Policy.  Seller shall pay standard rates for the Title
Policy.  Buyer shall pay for any special
endorsements to the title policy and any extended coverage.


 


(ii)           Transfer Taxes and Recording Fees.  Buyer shall pay the cost of any transfer
taxes and/or recording fees applicable to the sale.


 


(iii)          Survey.  Seller shall pay the cost of any update of
the Survey, but Buyer shall pay for any changes to the updated Survey.


 


(iv)          Escrow Fees.  Buyer and Seller shall split any escrow fees
and/or costs.


 


(v)           Counsel Fees.  Each party shall pay its own legal fees and
expenses.


 


(vi)          Other Costs.  All other costs of the Closing not addressed
in clauses (i) –(vi) above shall be allocated between Buyer and Seller
as is customary in the county in which the Real Property is located.


 


13

















 


9.                                       Representations and Warranties.


 


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


 


(i)            Seller is an Iowa corporation duly
organized and validly existing under the laws of the State of Iowa and is in good standing under the
laws of the state in which the Property is located.


 


(ii)           All closing documents executed by
Seller which are to be delivered to Buyer at the Closing are or at the Closing
will be duly authorized, executed, and delivered by Seller, are or at the
Closing will be legal, valid, and binding obligations of Seller and other than
Seller’s Committee approval, no further action or approval is necessary to
constitute this Agreement as a binding and enforceable obligation of Seller,
are sufficient to convey title, and do not violate any provisions of any
agreement to which Seller is a party or to which it is subject.


 


(iii)          Seller and each person or entity
owning an interest in Seller is (a) (i) not currently identified on
the Specially Designated Nationals and Blocked Persons List maintained by the
Office of Foreign Assets Control, Department of the Treasury (“OFAC”) and/or on any other similar
list maintained by OFAC pursuant to any authorizing statute, executive order or
regulation (collectively, the “List”),
and (ii) not a person or entity with whom a citizen of the United States
is prohibited to engage in transactions by any trade embargo, economic
sanction, or other prohibition of United States law, regulation, or Executive
Order of the President of the United States, (b) none of the funds or
other assets of Seller constitute property of, or are beneficially owned,
directly or indirectly, by any Embargoed Person (as hereinafter defined), (c) no
Embargoed Person has any interest of any nature whatsoever in Seller (whether
directly or indirectly), (d) Seller has implemented procedures, and will
consistently apply those procedures, to ensure the foregoing representations
and warranties remain true and correct at all times.


 


The term “Embargoed Person” means any person,
entity or government subject to trade restrictions under U.S. law, including
but not limited to, the International Emergency Economic Powers Act, 50 U.S.C.
§1701 et seq., The Trading with the Enemy Act, 50 U.S.C. App. 1 et seq., and
any Executive Orders or regulations promulgated thereunder with the result that
the investment in Seller is prohibited by law or Seller is in violation of law.


 


Seller also
shall require, and shall take reasonable measures to ensure compliance with the
requirement, that no person who owns any other direct interest in Seller is or
shall be listed on any of the Lists or is or shall be an Embargoed Person.  This Section shall not apply to any
person to the extent that such person’s interest in the Seller is through a
U.S. Publicly-Traded Entity.  As used in
this Agreement, “U.S. Publicly-Traded Entity” means a Person (other than an
individual) whose securities are listed on a national securities exchange, or
quoted on an automated quotation system, in the United States, or a
wholly-owned subsidiary of such a person.


 


14

















 


(iv)            Except as otherwise disclosed to
Buyer in the Due Diligence Items, to the Seller’s Knowledge (as hereinafter
defined), there are no liens, security interests, covenants, conditions,
restrictions, rights-of-way, easements or encumbrances of any kind or character
whatsoever, encumbering the Property other than those set forth in the Title
Commitment and/or Survey.


 


(v)             Except as set forth on Exhibit K,
there is no pending litigation which materially affects the use and operation
of the Property or Seller’s ability to fulfill all of its obligations under
this Agreement, legal proceedings or administrative actions against Seller or
any portion of the Property, and Seller has received no written notice of same.


 


(vi)          Except as otherwise provided in the
Due Diligence Items, to the Seller’s Knowledge, Seller has not received written
notice of any existing or pending condemnation proceedings or deeds in lieu of
condemnation affecting the Premises, and to Seller’s knowledge no such
proceedings are threatened.


 


(vii)         Seller is not a foreign corporation,
foreign partnership, foreign trust or foreign estate (as defined in the
Internal Revenue Code (“Code”)).


 


(viii)        Except as provided in the Due Diligence
Items, to the Seller’s Knowledge, Seller has not received a written notice that
the Property is in violation of any governmental order, regulation, statute,
code or ordinance dealing with the use, construction, operation, safety and/or
maintenance thereof, or existing zoning and building codes and other applicable
laws and governmental regulations regarding the operation of the Property in
accordance with its present usage.


 


(ix)           To Seller’s
Knowledge and except as provided in the Leases, the Title Commitment and in the
other Due Diligence Items, no person, firm or entity, other than Buyer has any
right to acquire the Property or any part thereof.


 


(x)            Except as
otherwise provided in paragraph (8)(e)(i)(D), and except as otherwise set forth
in the tenant estoppel certificates, and except as otherwise set forth herein,
to the Seller’s Knowledge, Seller has completed all tenant improvements
specified in any Lease existing at the Effective Date to be the responsibility
of landlord with respect to the current term of such Lease, and to Seller’s
knowledge, except as otherwise set forth in the tenant estoppel certificates,
Seller has paid all tenant improvement allowances required to be paid by
landlord under the Leases existing at the Effective Date with respect to the
current term of such Leases.


 


(xi)           Except as otherwise provided in paragraph 8(e)(i)(D), to the Seller’s
Knowledge, there will be no accrued brokerage commission for the current term
of any Lease existing at the Agreement Date which will remain unpaid after
Closing.


 


The foregoing
representations and warranties (“Seller’s Representations”) shall be in full
force and effect on the Agreement Date and at the Closing.  Such representations and warranties shall be
deemed to have been reaffirmed and restated by Seller as of the Closing Date,
except for any 


 


15

















 


change in any of the
foregoing representations or warranties or any breach thereof that occurs and
which is expressly disclosed by Seller to Buyer in writing no later than three (3) business
days prior to the Approval Date (each a “Disclosure” and collectively, the “Disclosures”),
which Disclosures shall thereafter be updated by Seller prior to the Closing
Date.  If a Disclosure discloses a
material change or breach of any of Seller’s Representations and Seller advises
Buyer in such Disclosure that Seller has elected to cure such change or breach,
then Seller shall have a period of twenty (20) days within which to cure such
change or breach.  If Seller elects not
to attempt to cure such change or breach, or if Seller elects to cure such change
or breach but fails to cure same to Buyer’s reasonable satisfaction within the
aforementioned twenty (20) day cure period, Buyer, at its sole option, and as
its sole remedy, may either (A) close and consummate the transaction
contemplated by this Agreement, without reduction in the Purchase Price or (B) terminate
this Agreement by written notice to Seller, in which event the Title Company
shall return the Deposit to Buyer. 
Seller shall reimburse Buyer upon demand all Transaction Costs of Buyer
incurred prior to the date of such determination in an amount not to exceed
$150,000, and neither party shall have any further obligations or rights
hereunder.  Such election shall be made
by Buyer, as applicable, (1) within five (5) days after receipt of
the Disclosure indicating that Seller has elected not to cure such change or
breach, or (2) if Seller elects to cure such change or breach, within five
(5) days after expiration of the aforementioned twenty (20) day cure
period.  Failure of Buyer to cause Seller
to receive notice of such election of Buyer within such five (5) day
period shall conclusively be construed as Buyer’s having elected to terminate
this Agreement pursuant to alternative (B) above.  The Closing Date shall be postponed
automatically, if necessary, to permit the full running of any election period
or cure period set forth in this paragraph. 
For purposes hereof, a change or breach of Seller’s Representations
shall be deemed “material” if it results in a decrease in the value of the
Property, or Buyer being exposed to a cost or liability, in the amount of
Twenty Five Thousand Dollars ($25,000) or more. 
The term “Seller’s Knowledge” as used herein means the actual knowledge
(and not the implied or constructive knowledge) without any duty of
investigation or inquiry of the following persons: Kevin Anderegg, Senior Asset
Manager II, who has responsibility for overseeing the management of the
Property.  All covenants, agreements,
representations and warranties made by Seller in this Agreement shall survive
the Closing for no longer than nine (9) months
and written notification of any claim arising therefrom must be received
in writing by Seller within such nine (9) month
period or such claim shall be forever barred and Seller shall have no liability
with respect thereto.  The aggregate liability
of the Seller, with respect to all claims hereunder, shall not exceed
$1,000,000.  Notwithstanding the
foregoing, no representation, warranty, covenant or agreement made in this
Agreement by Seller shall survive the Closing relative to any matters disclosed
in the Due Diligence Items or known to Buyer to be untrue or incorrect and of
which Seller is not notified by Buyer prior to or at the Closing.  Buyer is deemed to have constructive
knowledge of all information contained in the Due Diligence Items.  Buyer further acknowledges it has a duty of
investigation and inquiry in determining whether or not the Property is
suitable for its purpose.


 


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


 


16

















 


(i)            Buyer is a limited liability
company, duly organized and validly existing under the laws of the State of
Delaware and is in good standing under the laws of the State in which the
Property is located;


 


(ii)           all documents executed by Buyer which
are to be delivered to Seller at Closing are or at the Closing will be duly
authorized, executed, and delivered by Buyer, and are or at the Closing will be
legal, valid, and binding obligations of Buyer, and do not and at the Closing
will not violate any provisions of any agreement to which Buyer is a party or
to which it is subject;


 


(iii)          Buyer shall furnish all of the funds
for the purchase of the Property (other than funds supplied by institutional
lenders which will hold valid mortgage liens against the Property) and such
funds will not be from sources of funds or properties derived from any unlawful
activity;


 


(iv)          Buyer is a sophisticated investor with
substantial experience in investing in assets of the same type as the Property
and has such knowledge and experience in financial and business matters that
Buyer is capable of evaluating the merits and risks of an investment in the
Property;


 


(v)           Buyer (i) is not a U.S. Publicly
Traded Entity, (ii) is not currently identified on the Specially
Designated Nationals and Blocked Persons List maintained by OFAC and/or on any other List, and (iii) is not a person
or entity with whom a citizen of the United States is prohibited to engage in
transactions by any trade embargo, economic sanction, or other prohibition of
United States law, regulation, or Executive Order of the President of the
United States,


 


(vi)          none of the funds or other assets of
Buyer constitute property of, or are beneficially owned, directly or
indirectly, by any Embargoed Person (as hereinafter defined), Buyer has
implemented procedures, and will consistently apply those procedures, to ensure
the foregoing representations and warranties in (v)-(vii) above remain
true and correct at all times.  Buyer
also shall require, and shall take reasonable measures to ensure compliance
with the requirement, that no person who owns any other direct interest in
Buyer is or shall be listed on any of the Lists or is or shall be an Embargoed
Person.  Subsections (v)-(vii) shall
not apply to any person to the extent that such person’s interest in the Buyer
is through a U.S. Publicly-Traded Entity.


 


10.           Leasing and Indemnification.  Buyer acknowledges that Seller may continue
its leasing activity, without Buyer’s approval, until the third (3rd) business day prior to the Approval Date.  Thereafter, Seller shall submit any
prospective leases and any modifications, amendments, renewals (which are not
pre-approved per the terms of the lease) or terminations (other than the
pre-described end of term) of existing leases to Buyer for Buyer’s reasonable
consent, which shall be deemed given if not received in writing by Seller
within five (5) business days after Seller’s written request for
consent.  Any costs of tenant finish and
lease commissions with regard to new leases or renewals of current leases of
the Property entered into subsequent to the


 


17

















 


Agreement Date and prior
to Closing (the “New Leases”), shall be prorated between Buyer and Seller at
Closing, provided the leases are approved by Buyer in accordance with this
Section, and subject to the prorations provisions of Section 7(e) above.  Buyer shall indemnify Seller and Seller shall
be fully released from any and all liability arising as a result of any Future
Leasing Commissions due under any leasing commission agreements affecting the
Property. 
“Future Leasing Commissions” shall be limited to those commissions
resulting from the renewal or extension of any existing lease, the exercise of
any options under an existing lease or the execution of a new lease after the
Closing Date, and shall not include any commissions due and owing on or before
the Agreement Date under the terms of any leases or leasing commission
agreements in existence on the Agreement Date. 
Seller shall indemnify Buyer and Buyer shall be fully released from all
liability arising as a result of any commissions due and owing on or before the
Agreement Date under the terms of any leases or leasing commission agreements
in existence on the Agreement Date.


 


11.                                 Seller’s Covenants. 
Seller agrees that during the period from the Agreement Date through the
Closing Date, or earlier termination of this Contract, Seller will perform the
following covenants:


 


(a)           Seller
shall operate and maintain the Property in a manner generally consistent with
the manner in which Seller has operated and maintained the Property prior to
the Agreement Date, reasonable wear and tear excepted.  Seller shall deliver the Property at Closing in substantially the same
condition as it was on the Agreement Date, reasonable wear and tear
excepted.  None of the Personal
Property shall be removed from the Property, unless replaced by personal
property of equal or greater utility or value.


 


(b)           Seller
shall make commercially reasonable efforts to obtain and deliver to Buyer, no
later than five (5) business days prior to the Closing Date (the “Estoppel
Return Date”), a tenant estoppel certificate in substantially the form of Exhibit I
attached hereto executed by each tenant at the Property; provided, however, the
form of tenant estoppel certificate shall reflect appropriate changes thereto
for any tenant that has specific requirements in its Lease regarding the form
of the tenant estoppel certificate. An executed tenant estoppel certificate in
the form of Exhibit I (as such form may be changed for any tenant
that has specific requirements in its Lease regarding the form of the tenant
estoppel certificate) is herein referred to as a “Tenant Estoppel.” Seller
shall deliver each Tenant Estoppel to Buyer promptly following Seller’s receipt
thereof. Notwithstanding anything contained herein to the contrary, it shall be
a condition precedent to the obligation of Buyer to consummate the transaction
that is the subject of this Agreement that Seller deliver to Buyer, on or
before the Estoppel Return Date, Tenant Estoppels executed by (a) tenants
occupying, in the aggregate, at least eighty percent (80%) of the leased square
footage at the Property, and (b) each tenant that leases more than five
thousand (5,000) square feet at the Property (such condition being herein
referred to as the “Tenant Estoppel Condition”). In the event that Seller is
unable to satisfy the Tenant Estoppel Condition by the Estoppel Return Date,
Seller shall not be in default under this Agreement. However, if the Tenant
Estoppel Condition is not fulfilled as of the Estoppel Return Date, then, for
three (3) business days thereafter, Buyer shall have the option either to (i) waive
the Tenant Estoppel Condition, or (ii) extend the Closing Date for up to
fourteen (14) days to allow Seller more time


 


18
















 


to obtain additional estoppel
certificates.  If Buyer elects to extend
the Closing Date pursuant to clause (ii) of the preceding sentence and the
Tenant Estoppel Condition is still not fulfilled on or before the expiration of
the fourteen (14) day extension period, then Buyer may elect the option set
forth in clause (i) of the preceding sentence or terminate this Agreement
by written notice to Seller, in which event all of the Deposit shall be
returned to Buyer.


 


(c)           Seller shall assist in efforts to
obtain documentation that may be required by a warrantor in order to consummate
an assignment to Buyer of any warranties included in the Property and Buyer
shall pay any fee required to transfer any such warranty.  Failure to obtain or complete such
documentation shall not constitute a default hereunder by either party.


 


(d)           Seller shall promptly advise
Purchaser of any written notice of litigation 
received by Seller that will materially and negatively affect the
ownership or operation of the Property and any alleged default by a tenant
under any Leases.


 


(e)           Seller shall not affirmatively
encumber the Property, except as required by court order or as required by law.


 


12.                                 Condition
of Property.  At or before the
Approval Date, Buyer will have approved the physical and environmental
characteristics and condition of the Property, as well as the economic
characteristics of the Property.  Except
as otherwise expressly provided in this Agreement, Buyer hereby waives any and
all defects in the physical, environmental and economic characteristics and
condition of the Property which would be disclosed by such inspection.  Buyer further acknowledges that neither
Seller nor any of Seller’s officers or directors, nor Seller’s employees,
agents, representatives, or any other person or entity acting on behalf of
Seller (hereafter, for the purpose of this Section, such persons and entities
are individually and collectively referred to as the “Seller”), except as
otherwise expressly provided in Section 9(a) herein, have made any
representations, warranties or agreements (express or implied) by or on behalf
of Seller as to any matters concerning the Property, the economic results to be
obtained or predicted, or the present use thereof or the suitability for Buyer’s
intended use of the Property, including, without limitation, the
following:  suitability of the
topography; the availability of water rights or utilities; the present and
future zoning, subdivision and any and all other land use matters; the
condition of the soil, subsoil, or groundwater; the purpose(s) to which
the Property is suited; drainage; flooding; access to public roads; or proposed
routes of roads or extensions thereof. 
Buyer acknowledges and agrees that the Property is to be purchased,
conveyed and accepted by Buyer in its present condition, “as is” and that no
patent or latent defect in the physical or environmental condition of the
Property whether or not known or discovered, shall affect the rights of either
party hereto.  Any documents furnished to
Buyer by Seller relating to the Property including, without limitation, rent
rolls, service agreements, management contracts, maps, surveys, studies, pro
formas, reports and other information, including but not limited to the Due
Diligence Items, shall be deemed furnished as a courtesy to Buyer but without
warranty from Seller, except as otherwise expressly provided in this
Agreement.  All work done in connection
with preparing the Property for the uses intended by Buyer including any and
all fees, studies, reports, approvals, plans, surveys, permits, and any
expenses whatsoever necessary or desirable in connection with Buyer’s
acquiring, developing, using and/or operating the Property shall be obtained
and paid for by, and shall be the sole 


 


19

















 


responsibility of
Buyer.  Buyer has investigated and has
knowledge of operative or proposed governmental laws and regulations including
land use laws and regulations to which the Property may be subject and shall
acquire the Property upon the basis of its review and determination of the
applicability and effect of such laws and regulations.  Except as provided in this Agreement, Buyer
has neither received nor relied upon any representations concerning such laws
and regulations from Seller.


 


Except for claims of
fraud or willful misrepresentation on the part of Seller, and except for those
representations and warranties expressly set forth herein, Buyer, on behalf of
itself and its employees, agents, successors and assigns attorneys and other
representatives, and each of them, hereby releases Seller from and against any
and all claims, demands, causes of action, obligations, damages and liabilities
of any nature whatsoever, whether alleged under any statute, common law or otherwise,
directly or indirectly, arising out of or related to the condition, operation
or economic performance of the Property. 
Seller shall maintain the Property in its present condition until
Closing, reasonable wear and tear excepted.


 


By signing in the space
provided below in this Section 12, Buyer acknowledges that it has read and
understood the provisions of this Section 12.


 


	
   

  	
  Buyer:Harvard Property
  Trust, LLC,

  a Delaware limited liability company  

  
	
   

  	
   

  
	
   

  	
  By:  

  	
   /s/ Gerald J. Reihsen, III 

  
	
   

  	
  Name:

  	
  Gerald J. Reihsen, III 

  
	
   

  	
  Its:

  	
  Executive Vice
  President –

  
	
   

  	
   

  	
  Corporate
  Development & Legal

  
					



 


13.           Possession.  Buyer shall have the right of possession on
the Closing Date, provided, however, that Seller shall allow authorized
representatives of Buyer reasonable access to the Property for the purposes of
satisfying Buyer with respect to satisfaction of any conditions precedent to
the Closing contained herein.


 


14.           Casualty/Condemnation. 
In the event that,
prior to Closing, the Property, or any part thereof,  (i) is
destroyed or materially damaged, and such damage exceeds $500,000, or (ii) if
condemnation proceedings are commenced against the Property,  Buyer shall have the right, exercisable by giving notice of such decision
to Seller within ten (10) business days after receiving written notice of
such damage, destruction or condemnation proceedings, to terminate this
Agreement, in which case neither party shall have any further rights or
obligations hereunder except for express indemnifications as provided hereunder
of Buyer to Seller.   In the event of such termination, the Deposit
shall be returned to Buyer, as Buyer’s sole and exclusive remedy.  If (i) the
casualty damage does not exceed $500,000, or (ii) Buyer elects as set
forth in the preceding sentence to accept the Property, as applicable, Buyer
shall accept the Property in its then condition and proceed with the Closing with no reduction, offset or abatement of the
Purchase Price  and  accept, as its sole recourse
against Seller payment or assignment of (i) applicable insurance proceeds,
if any, from policies of insurance maintained and paid for by


 


20

















 


Seller
covering the Property up to the amount paid by the insurer and necessary to
make the repairs or restorations, or (ii)  any applicable
condemnation award, if any, subject to the rights of tenants to such proceeds
or awards under the Leases, if any.  Seller shall credit the Purchase Price to the extent
any deductible exists that is the Seller’s responsibility under any policies of
insurance, which credit shall not exceed the amount of such damages.  The
Closing shall automatically be extended as may be necessary for the timeframes
set forth herein to run; provided however, the Closing may occur prior to the
final settlement with and payment by the insurer, in the event of casualty
damage or final settlement and payment of condemnation proceeds, if applicable.


 


15.                                 Tax-Deferred
Exchange.  Buyer and Seller agree
that, at either Buyer’s or Seller’s sole election, this transaction shall be
structured as an exchange of like-kind properties under Section 1031 of
the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations
and proposed regulations thereunder.  The
parties agree that if either wishes to make such election, it must do so prior
to the Closing Date.  If either so
elects, the other shall reasonably cooperate, provided any such exchange is
consummated pursuant to an agreement that is mutually acceptable to Buyer and
Seller and which shall be executed and delivered on or before the Closing
Date.  The electing party shall in all
events be responsible for all costs and expenses related to the Section 1031
exchange and shall fully indemnify, defend and hold the other harmless from and
against any and all liability, claims, damages, expenses (including reasonable
attorneys’ and paralegal fees and reasonable attorneys’ and paralegal fees on
appeal), proceedings and causes of action of any kind or nature whatsoever
arising out of, connected with or in any manner related to such 1031 exchange
that would not have been incurred by the non-electing party if the transaction
were a purchase for cash.  The provisions
of the immediately preceding sentence shall survive closing and the transfer of
title to subject Property to Buyer. 
Notwithstanding anything to the contrary contained in this Section:  any such Section 1031 exchange shall be
consummated through the use of a facilitator or intermediary so that Buyer
shall in no event be requested or required to acquire title to any property
other than the Property.


 


16.                                 Miscellaneous.


 


(a)           Notices.  Any notice required or permitted to be given
under this Agreement shall be in writing and shall be deemed to be an adequate
and sufficient notice if given in writing and service is made either by (i) personal
delivery, in which case the service shall be deemed received the date of such
personal delivery, (ii) nationally recognized overnight air courier
service, next day delivery, prepaid, in which case the notice shall be deemed
to have been received one (1) business day following delivery to such
nationally recognized overnight air courier service, or (iii) at the time
of being sent by facsimile or email if delivery thereof is confirmed by sender’s
receipt of a transmission report, generated by sender’s facsimile machine or
email, which confirms that the facsimile or email was successfully transmitted
in its entirety and provided the facsimile or email was forwarded prior to 5:00
Central Standard Time, and to the following street or email addresses or
facsimile numbers:


 


21

















 


If to Seller:


 


	
  Principal Life
  Insurance Company

  c/o Principal Real Estate Investors, LLC

  801 Grand Avenue

  Des Moines, Iowa 50392-0940

  Attn: Morgan Deal

  Phone: 515-235-9119

  Fax: 866-850-4022

  	
   

  	
  With a copy to:

  

  Principal Life Insurance Company

  c/o Principal Real Estate Investors, LLC

  Closing Department

  801 Grand Avenue

  Des Moines, Iowa 50392-5590

  Attn: Donna Lutcavish

  Phone: 515-246-7583

  Fax: 866-850-4022

  

  Ahlers & Cooney, P.C.

  100 Court Avenue, Suite 600

  Des Moines, Iowa 50309-2231

  Attn: John H. Bunz

  Phone: 515-246-0336

  Fax: 515-243-2149

  



 


If to Buyer:


 


	
  Harvard Property Trust,
  LLC

  15601 Dallas Parkway

  Suite 600

  Addison, Texas 75001

  Attn: Joe Jernigan

  Phone: 214-655-1600

  Fax: 214-655-1610

  	
   

  	
  With a copy to:

  

  Powell Coleman & Arnold LLP

  8080 North Central Expressway

  Suite 1380

  Dallas, Texas 75206

  Attn: Patrick M. Arnold

  Phone: 214-890-7108

  Fax: 214-373-8768

  



 


or such other address as
either party may from time to time specify in writing to the other.


 


(b)                                 Brokers and Finders.  Each party represents and warrants that it
has not had any contact or dealings regarding the Property, or any
communication in connection with the subject matter of this transaction, through
any licensed real estate broker, entity, agent, commission salesperson, or
other person who will claim a right to compensation or a commission or finder’s
fee as a procuring cause of the sale contemplated herein, except for Cushman
and Wakefield, whose commission shall be paid by Seller. In the event of a
claim for a broker’s or finder’s fee or commissions in connection with the
transactions contemplated by this Agreement, Seller shall indemnify, defend and
hold harmless Buyer from the same if it shall be based upon 


 


22

















 


any statement or
agreement alleged to have been made by Seller, and Buyer shall indemnify,
defend and hold harmless Seller from the same if it shall be based upon any
statement or agreement alleged to have been made by Buyer. No commission shall
be paid or become payable unless the Closing actually occurs. The provisions of
this subsection shall survive Closing and any earlier termination, cancellation
or rescission of this Agreement.


 


(c)           Successors and Assigns.  Buyer may assign its rights under this
Agreement to an Affiliate without the prior written consent of Seller.  For purposes of this Section 16(c), the
term “Affiliate” shall mean: (i) an entity that controls, is controlled
by, or is under common control with Buyer; (ii) any partnership in which
Buyer or Buyer’s controlling member is the general partner; (iii) any fund
or entity sponsored by Buyer; or (iv) any entity that retains Buyer or a
company affiliated with Buyer to manage the Property.  Upon any assignment of this Agreement, the
assignor shall be released from any liability hereunder.  In such event, the Buyer shall provide to
Seller at Closing an Assignment and Assumption of Real Estate Purchase and Sale
Agreement in the form attached hereto as Exhibit M.


 


(d)           Amendments and Terminations.  Except as otherwise provided herein, this
Agreement may be amended or modified by, and only by, a written instrument
executed by Seller and Buyer.


 


(e)           Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the state in which the Property is
located without regard to choice of law rules.


 


(f)            Merger of Prior Agreements.  This Agreement supersedes all prior
agreements and understandings between the parties hereto relating to the
subject matter hereof.


 


(g)           Enforcement.  In the event either party hereto fails to
perform any of its obligations under this Agreement or in the event a dispute
arises concerning the meaning or interpretation of any provision of this
Agreement, the defaulting party or the party not prevailing in such dispute, as
the case may be, shall pay any and all costs and expenses incurred by the other
party in enforcing or establishing its rights hereunder, including, without
limitation, court costs and reasonable attorneys’ fees.  Buyer and Seller both acknowledge each has
been advised by counsel as to their respective rights, duties and obligations
in this Agreement and have had ample opportunity to negotiate same.  Thus, both Buyer and Seller acknowledge that
any ambiguity in this Agreement should not necessarily be resolved against the
drafter of this Agreement.


 


(h)           Time of the Essence.  Time is of the essence of this Agreement.


 


(i)            Counterparts.  This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, but such counterparts when
taken together shall constitute but one Agreement.


 


23

















 


(j)            Survivability.  Except as otherwise provided herein, the
covenants contained in this Agreement shall survive the closing of the purchase
and sale and shall not be deemed merged in the deed, but shall remain in full
force and effect.


 


(k)           No Recordation.  Neither Seller nor Buyer shall record this
Agreement or memorandum thereof in or among the land or chattel records of any
jurisdiction.


 


(l)            Proper Execution.  The submission by Seller to Buyer of this
Agreement in unsigned form shall have no binding force and effect, shall not
constitute an option, and shall not confer any rights upon Buyer or impose any
obligations on Seller irrespective of any reliance thereon, change of position
or partial performance until Seller shall have executed this Agreement and the
Deposit shall have been received by the Title Company.


 


(m)          Computation of Time.  The time in which any act is to be done under
this Agreement is computed by excluding the first day, and including the last
day, unless the last day is a holiday or Saturday or Sunday, and then that day
is also excluded.  Unless expressly
indicated otherwise, (a) all references to time shall be deemed to refer
to Central Standard time, and (b) all time periods shall expire at 5:00 p.m.
Central Standard time.


 


(n)           Incorporation of Recitals and
Exhibits.  All recitals set forth in
this Agreement and exhibits attached and referred to in this Agreement are
hereby incorporated herein as if fully set forth in (and shall be deemed to be
a part of) this Agreement.


 


(o)           WAIVER OF JURY TRIAL. TO THE
EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY IRREVOCABLY WAIVE ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
PROVISIONS OF THIS SECTION SHALL SURVIVE THE CLOSING OR ANY TERMINATION OF
THIS AGREEMENT.


 


(p)           No Third Party Beneficiaries.
Nothing in this Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement on any person other
than the parties hereto and their respective successors and assigns, nor is
anything in this Agreement intended to relieve or discharge the obligation or
liability of any third persons to any party to this Agreement, nor shall any
provision give any third parties any right of subrogation or action over or against
any party to this Agreement. This Agreement is not intended to and does not
create any third party beneficiary rights whatsoever.


 


(q)                                 Limitation
of Liability.  The liability of
Principal Life Insurance Company hereunder is limited to the assets of its
Principal U.S. Property Separate Account.


 


(r)                                    Information
and Audit Cooperation.  At any time
within ninety (90) days after the Closing, Seller shall allow Buyer’s auditors
access to the books and records of Seller and the working papers of Seller’s
independent auditors relating to the operation of the Property for three (3) years
prior to Closing to enable Buyer to comply with any financial reporting 


 


24

















 


requirements applicable
to Buyer.  In addition, upon the earlier
of (i) completion of Buyer’s audit, or (ii) two (2) business
days prior to the Approval Date, Seller shall provide Buyer’s designated
independent auditors a representation letter regarding the books and records of
the Property in substantially the form attached hereto as Exhibit L.


 


[SIGNATURES FOLLOW
ON NEXT PAGE.]


 


25

















 


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


 


	
   

  	
  Seller:

  
	
   

  	
   

  	
   

  
	
   

  	
  PRINCIPAL
  LIFE INSURANCE COMPANY,

  an Iowa corporation, for its Principal U.S.

  Property Separate Account

  
	
   

  	
   

  	
   

  
	
   

  	
  By:
  

  	
  Principal
  Real Estate Investors, LLC,

  
	
   

  	
  a
  Delaware limited liability company, its

  authorized signatory 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Donna H. Lutcavish 

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Donna
  H. Lutcavish 

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Assistant
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Buyer:

  
	
   

  	
   

  	
   

  
	
   

  	
  HARVARD PROPERTY TRUST,
  LLC, a

  Delaware limited liability company 

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Gerald J. Reihsen, III 

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Gerald J. Reihsen, III 

  
	
   

  	
   

  	
   

  
	
   

  	
  Its:

  	
  Executive
  Vice President – 

  
	
   

  	
   

  	
  Corporate
  Development & Legal

  
							



 


26

















 


JOINDER OF TITLE COMPANY


 


Title Company hereby joins in the execution of the
Agreement and agrees to accept, hold and return the Deposit, and disburse any funds
received under the Agreement in accordance with the provisions of such
Agreement. The Title Company shall only be bound to those provisions of the
Agreement relating to title insurance, the Deposit, and the Closing escrow.
Provided that the Title Company complies with such provisions of the Agreement,
the parties to the Agreement agree that the Title Company shall not be liable
for any loss or damage arising thereunder.


 


	
   

  	
  CHICAGO TITLE INSURANCE
  COMPANY

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By: 

  	
  Kerri Majors / al

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Kerri A. Majors

  
	
   

  	
   

  	
   

  
	
   

  	
  Its: 

  	
  Commercial Escrow Officer

  
						



 


27

















 


EXHIBIT “A”


 


LEGAL DESCRIPTION


 


Parcel
1:


 


Lots
25 Through 32, Inclusive, Block 66, East Denver, City and County of Denver,
State of Colorado.


 


Parcel
2:


 


Rights
as contained in that certain agreement dated September 28, 1984, executed
by and between the Financial Center Condominium Association and 19th and
Lawrence Associates, dated September 28, 1984 and recorded May 3,
1985 at reception no. 010099 and July 22, 1985 at reception no. 042212,
City and County of Denver, State of Colorado.


 


Parcel
3:


 


Rights
as created under ordinance no. 210, series of 1982, an ordinance granting a
revocable permit or license, recorded upon the terms and conditions contained
therein on February 2, 2000 at reception no. 16163, City and County of
Denver, State of Colorado.


 


1