G REIT, Inc.



 



EXHIBIT 10.01


AGREEMENT OF PURCHASE AND SALE

AND JOINT ESCROW INSTRUCTIONS



     THIS AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS (THIS
“Agreement”) is made as of May 6, 2003 (“Effective Date”), between LNR HARBOR
BAY, LLC, a Delaware limited liability company (“Seller”), and TRIPLE NET
PROPERTIES, LLC, a Virginia limited liability company (“Buyer”).


RECITALS:



     A. Seller is the owner of the Property described herein.


     B. Seller desires to sell and Buyer to buy the Property, subject to
satisfaction of the conditions contained herein.


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


AGREEMENT:



     1. Certain Basic Definition


     For purposes of this Agreement, the following terms shall have the following
definitions:


          1.1 “Additional Deposit” means the sum of Two Hundred Thousand Dollars ($200,000.00).



          1.2 “Broker” means CB Richard Ellis and Triple Net Realty, Inc.



          1.3 “Buyer’s Address” means;



                 Triple Net Properties, LLC

                 1551 North Tustin Avenue, Suite 650

                 Santa Ana, California 92705

                 Attn: Mr. Anthony W. Thompson and Theresa T. Hutton

                 Telephone: (714) 667-8252, ext. 219

                 Facsimile: (714) 667-6860


 






 


                 with a copy to:


                 Louis J. Rogers, Esquire

                 Hirschler Fleischer

                 701 East Byrd Street, 15th Floor

                 Richmond, VA 23219

                 Telephone: (804) 771-9567

                 Facsimile: (804) 644-0957


          1.4 “Closing Date” means June 2, 2003; provided, however, Buyer shall have
the right to extend the Closing Date to July 2, 2003 (“Extension Date”) upon
delivery to Seller and Escrow Holder on or before the scheduled Closing Date of
its election to so extend the Closing Date, together with an extension deposit
payable to Escrow Holder in the amount of One Hundred Thousand and No/100
Dollars ($100,000.00)(“Extension Deposit”). Such Extension Deposit if made
shall be applied and credited toward payment of the Purchase Price upon the
Close of Escrow and shall be nonrefundable to Buyer when made unless the Close
of Escrow does not occur due to (i) the non-satisfaction of a condition to the
Close of Escrow for Buyer’s benefit pursuant to Section 3.3 hereof, (ii) a
casualty or condemnation of the Property, as provided in Section 8.3 hereof, or
(iii) a default by Seller.



          1.5 “Contracts” means all licenses, permits, contracts, and agreements in
effect as of the Close of Escrow relating to the Property, which are to be
assigned to Buyer pursuant to the Assignment and Assumption Agreement
referenced in Section 6.2.3, which Contracts are identified on Schedule “1” to
Exhibit “D” attached hereto and incorporated herein by this reference.



          1.6 “Deposit(s)” means the Initial Deposit, the Additional Deposit and the
Extension Deposit.



          1.7 “Due Diligence Materials” means all due diligence materials listed on
Exhibit “E” attached hereto, all of which Seller has delivered to Buyer on or
before April 16, 2003 for purposes of Buyer’s due diligence review of the
Property.



          1.8 “Due Diligence Period” means the period beginning on April 16, 2003
and ending at 5:00 p.m. Pacific Standard Time on May 16, 2003.



          1.9 “Escrow Holder” means First American Title Company.



          1.10 “Escrow Holder’s Address” means:



                 First American Title Company

                 1 First American Way

                 Santa Ana, CA 97207

                 Attention: Ms. Terri Hovdestad

                 Telephone: (714) 800-3167

                 Facsimile: (714) 800-3267

                 email: thovdestad@firstam.com


-2-






 


          1.11 “Initial Deposit” means an initial deposit in the sum of One Hundred
Thousand Dollars ($100,000.00).



          1.12 “Leases” means all leases affecting the Real Property, which Leases
are identified on Schedule “1” to Exhibit “D” attached hereto.



          1.13 “Permitted Exceptions” means all matters affecting title to the
Property which Buyer does not disapprove of on or before May 10, 2003, as
provided in Section 4.1 hereof.



          1.14 “Personal Property” means all tangible and intangible personal
property owned by Seller and located on or used solely in connection with the
ownership and/or operation of the Real Property, including, specifically,
without limitation, the items identified on Exhibit “1” to Exhibit “C”, and all
other equipment, furniture, tools and supplies located at the Real Property,
and all related intangibles used solely in connection with the ownership and/or
operation of the Real Property. Provided Buyer and Seller consummate the
transaction contemplated by this Agreement, effective from and after the Close
of Escrow, Seller hereby quitclaims to Buyer a perpetual license (to the extent
Seller has any interest in the name “Bay View”) to use the name “Bay View” in
connection with Buyer’s ownership and operation of the Real Property. In no
event shall the furniture, equipment, computers or other personal property
belonging to Lennar Partners of Los Angeles, Inc., occupying Suite 100 in the
Building, be deemed Personal Property, or any other form of property, to which
Buyer will be acquiring title under this Agreement.



          1.15 “Property” means the Real Property, Personal Property, Leases
(including all deposits and letter of credit held by Seller in connection with
the Leases), Warranties and Contracts, collectively.



          1.16 “Purchase Price” means the sum of Twelve Million One Hundred Eighty
Thousand and No/100 Dollars ($12,180,000.00).



          1.17 “Real Property” means the real property commonly known as Bay View
Building A, consisting of one (1) office building (the “Building”) containing
approximately 61,463 rentable square feet (approximately 58,698 usable square
feet), the street address of which is 1600 Harbor Bay Parkway, Alameda,
California, and more particularly described in Exhibit “A” attached hereto and
incorporated herein by this reference, together with any other improvements, if
any, now or hereafter located thereon and all easements and rights appurtenant
to such real property.



          1.18 “Seller’s Address” means:



                 LNR HARBOR BAY, LLC,

                 c/o Lennar Partners

                 18401 Von Karman Ave., Suite 540

                 Irvine, CA 92612

                 Attention: Mr. Kevin Hanson

                 Facsimile: (949) 442-6175


-3-






 


                 with a copy to:


                 Allen Matkins

                 1900 Main Street, Suite 500

                 Irvine, CA 92614

                 Attention: David W. Wensley, Esq.

                 Facsimile: (949) 553-8354


          1.19 “Title Company” means First American Title Insurance Company, having
an address of 1 First American Way, Santa Ana, California 92707-5913.



          1.20 “Warranties” means any and all warranties, guaranties and the like in
effect as of the Close of Escrow relating to the Property which are to be
assigned to Buyer pursuant to the Assignment and Assumption Agreement
referenced in Section 6.2.3.



     2. Sale of Property; Purchase Price


          2.1 Sale of Property. Seller shall sell the Property to Buyer, and Buyer
shall purchase the Property from Seller, for the Purchase Price on the terms
and conditions of this Agreement.



          2.2 Purchase Price. The Purchase Price shall be payable as follows:



               2.2.1 Initial Deposit. Concurrently with the execution of this Agreement
by Buyer, Buyer shall deliver to Escrow Holder the Initial Deposit in the form
of a wire transfer or cash or cashier’s check drawn on good and sufficient
funds on a federally insured bank in the State of California and made payable
to the order of Escrow Holder. If Buyer fails to approve of the results of its
investigation of the Property (including availability of financing) prior to
the expiration of the Due Diligence Period, this Agreement and the Escrow
created hereby shall be automatically terminated and the Deposit, plus any
accrued interest thereon, less any escrow cancellation fees shall be refunded
to Buyer. Upon the expiration of the Due Diligence Period, the Initial Deposit
shall become non-refundable and shall either be applied toward the payment of
the Purchase Price on the Close of Escrow or retained by Seller if the Close of
Escrow does not occur for any reason unless due to (i) the non-satisfaction of
a condition to the Close of Escrow for Buyer’s benefit pursuant to Section 3.3
hereof, (ii) a casualty or condemnation of the Property, as provided in Section
8.3 hereof, or (iii) a default by Seller.



               2.2.2 Additional Deposit. Upon the expiration of the Due Diligence Period,
Buyer shall deliver to Escrow Holder the Additional Deposit in the form of a
wire transfer or cash or cashier’s check drawn on good and sufficient funds on
a federally insured bank in the State of California and made payable to the
order of Escrow Holder. The Additional Deposit shall be nonrefundable when
placed into Escrow, and shall either be applied toward the payment of the
Purchase Price on the Close of Escrow or retained by Seller if the Close of
Escrow does not occur for any other reason unless due to a default by Seller.



               2.2.3 Balance. Buyer shall deposit into Escrow an amount (“Cash Balance”),
in immediately available federal funds equal to the Purchase Price minus the
Deposit and increased by the amount of any credits due or any items chargeable
to Buyer under this

-4-






 




Agreement. Buyer shall deposit the Cash Balance into Escrow no later than
one (1) business day before the Closing Date or such earlier date as may be
required by the Escrow Holder under applicable law such that Escrow Holder will
be in a position to disburse the cash proceeds to Seller on the Closing Date.


          2.3 Interest. At the request of the Buyer, all funds received from or for
the account of Buyer shall be deposited by Escrow Holder in an interest-bearing
account with a federally insured state or national bank (“Account”).



     3. Closing.


          3.1 Escrow. Upon the execution of this Agreement by Buyer and Seller, and
the acceptance of this Agreement by Escrow Holder in writing, this Agreement
shall constitute the joint escrow instructions of Buyer and Seller to Escrow
Holder to open an escrow (“Escrow”) for the consummation of the sale of the
Property to Buyer pursuant to the terms of this Agreement. Upon Escrow Holder’s
receipt of the Initial Deposit and Escrow Holder’s written acceptance of this
Agreement, Escrow Holder is authorized to act in accordance with the terms of
this Agreement. Buyer and Seller shall execute Escrow Holder’s general escrow
instructions upon request; provided, however, that if there is any conflict or
inconsistency between such general escrow instructions and this Agreement, this
Agreement shall control. Upon the Close of Escrow, Escrow Holder shall pay any
sum owed to Seller with immediately available federal funds.



          3.2 Closing Date. The Escrow shall close (“Close of Escrow”) on or before
the Closing Date.



          3.3 Buyer’s Conditions to Closing. The Close of Escrow is subject to and
contingent on the satisfaction of the following conditions or the waiver of
same by Buyer:



               3.3.1 Inspections. Prior to the expiration of the Due Diligence Period,
Buyer shall have approved or waived objection to the physical condition of the
Property, at Buyer’s sole cost and expense.



               3.3.2 Title Policy. Prior to or at the Closing Date, the Title Company
shall be committed to issue or shall have issued the Title Policy (as defined
herein in Section 4) complying with the requirements of Section 4 below.



               3.3.3 Covenants. Prior to or at the Closing Date, Seller shall have
performed and satisfied all agreements and covenants required hereby to be
performed by Seller.



               3.3.4 Due Diligence Materials. Prior to the expiration of the Due
Diligence Period, Buyer shall have approved all Due Diligence Materials
provided by Seller for Buyer’s review.



               3.3.5 Representations and Warranties of Seller. All of the
representations, warranties and agreements of Seller set forth in this
Agreement shall be true and correct as of the date hereof and as of the Close
of Escrow.

-5-






 



                3.3.6 Title Report. As of the Closing Date, there shall be no change in
the matters reflected in the Title Report as approved or deemed approved by
Buyer pursuant to Section 4.1, and there shall not exist any encumbrance or
title defect affecting the Real Property not described in the Title Report
except for the Permitted Exceptions or matters to be satisfied at the Close of
Escrow.



               3.3.7 Termination of Management Agreement and Other Contracts. Unless
Seller receives notice from Buyer at least thirty (30) days prior to the Close
of Escrow, effective as of the Close of Escrow, any management agreement
affecting the Real Property shall be terminated by Seller and any and all
termination fees incurred as a result thereof shall be the sole obligation of
Seller. Provided Buyer gives Seller written notice (on or before the expiration
of the Due Diligence Period) of the Contracts which Buyer elects not to assume,
Seller shall, at its sole cost and expense, terminate all such Contracts on or
before the Close of Escrow.



               3.3.8 Insurance Certificates. Seller shall deliver to Buyer copies of
tenant insurance certificates.



               3.3.9 No Defaults Under Leases. No tenant shall be in monetary default or
material non-monetary default under its Lease nor shall any tenant have given
notice that it is discontinuing operations at the Real Property nor shall any
tenant have filed bankruptcy or sought any similar debtor protective measure or
be the subject of an involuntary bankruptcy.



               3.3.10 SNDA. If Buyer’s lender requires the execution of subordination,
non-disturbance and attornment agreements (“SNDAs”) from tenants of the Real
Property as a condition to closing the loan to Buyer, Buyer’s obligations under
this Agreement shall be subject to the delivery of SNDAs in form and substance
acceptable to Buyer’s lender.



               3.3.11 Estoppel Certificates. Seller shall obtain and deliver to Buyer, no
later than ten (10) days prior to Close of Escrow, estoppel certificates from
all four (4) tenants of the Real Property (the “Required Estoppels”). Seller
agrees to ask each of the tenants of the Real Property to execute the estoppel
form provided by, or otherwise approved by, Buyer, but Seller shall only be
obligated to obtain estoppel certificates from each such tenant on the form
required by the Lease for each such tenant. If Seller is unable to obtain a
Required Estoppel from Lennar Partners of Los Angeles, Inc. despite diligent
commercially reasonable efforts to do so, Seller may deliver to Buyer an
estoppel certificate executed by Seller and otherwise in a form reasonably
approved by Buyer as to the Required Estoppel for Lennar Partners of Los
Angeles, Inc.; provided, however, Seller shall thereafter continue to use
diligent commercially reasonable efforts to obtain the Required Estoppels from
Lennar Partners of Los Angeles, Inc. Whether executed by the tenant or by
Seller, the matters certified in the estoppel certificates shall be subject to
Buyer’s reasonable approval. Buyer shall notify Seller within three (3)
business days following receipt of a copy of any executed estoppel certificate
of Buyer’s approval or disapproval and the basis of such disapproval, if
disapproved. If Buyer reasonably disapproves of any estoppel certificate, and
Seller is unable to deliver a reasonably acceptable estoppel certificate prior
to the Close of Escrow, and, without such estoppel certificate Seller will have
failed to deliver the Required Estoppels, this Agreement shall automatically
terminate, Buyer shall be entitled to a refund of the Deposit without any
further action required by any party, and neither party shall have any further
obligation to the other. In addition to the foregoing, Seller

-6-






 




shall use diligent commercially reasonable efforts to obtain any and all
subordination, attornment and non-disturbance agreements required by Buyer’s
lender. Notwithstanding anything to the contrary contained herein, Seller shall
have the right (exercisable by Seller in its sole and absolute discretion) to
extend (or to further extend, if the Closing Date has already been extended
pursuant to Section 1.4 above) the Closing Date for an additional ten (10)
business days to obtain the Required Estoppel from The State of California —
Employment Development Department, upon delivery to Buyer and Escrow Holder on
or before the scheduled Closing Date (as the same may be extended pursuant to
Section 1.4 above) of its election to so extend (or further extend, as
applicable) the Closing Date.


               3.3.12 Non-Cash Security Deposits. If any security deposits under the
Leases are in the form of letters of credit or other financial instruments
other than cash (the “Non-Cash Security Deposits”), Seller will use its
commercially reasonable effort to, upon the Close of Escrow, cause Buyer to be
named as beneficiary under the Non-Cash Security Deposits (and Buyer shall pay
all assignment fees and other transfer costs in connection therewith).



     Buyer shall notify Seller of Buyer’s approval or disapproval or the
non-satisfaction, if at all, of the matters described in Sections 3, 4 and 5 by
written notice delivered to Seller and Escrow Holder by the earlier of the date
set forth for disapproval thereof or the expiration of the Due Diligence
Period. Buyer’s failure to approve any of the matters described in Sections 3,
4 or 5 by the expiration of the Due Diligence Period or such earlier date as is
specified in this Agreement in the manner described shall be deemed Buyer’s
disapproval of such matter. In no event shall Buyer have the right to
disapprove any such item after the expiration of the Due Diligence Period.


          3.4 Seller’s Conditions to Closing. The obligations of Seller to
consummate the transactions provided for herein are subject to and contingent
upon the satisfaction of the following conditions or the waiver of same by
Seller in writing:



               3.4.1 Representations and Warranties. All representations and warranties
of Buyer contained in this Agreement shall be true and correct as of the date
made and as of the Close of Escrow with the same effect as though such
representations and warranties were made at and as of the Close of Escrow.



               3.4.2 Covenants. Buyer shall have performed and satisfied all agreements
and covenants required hereby to be performed by Buyer prior to or at the Close
of Escrow.



               3.4.3 Contracts. On or prior to the expiration of the Due Diligence
Period, Buyer shall give Seller written notice of the Contracts which Buyer has
elected not to assume.



     4. Title Matters


          4.1 Preliminary Title Report. As of April 16, 2003, Seller (or the Title
Company) has delivered to Buyer a current preliminary title report, along with
legible copies of all underlying title documents listed as exceptions in
Schedule B thereto and a copy of the most recent survey (“Survey”) pertaining
to the Property which was in Seller’s possession,

-7-






 




(collectively, the “Title Report”) on the Property showing the status of
title to the Property as of the date of the Title Report. Buyer shall have
until May 10, 2003 (the “Title Review Period”) to give written notice to Seller
that Buyer has disapproved any exception to title which is not a Permitted
Exception. If any supplement or amendment to the Title Report is issued
(including without limitation a supplement issued on review of the Survey)
which shows any additional exception to title (which is other than any
Permitted Exception), and if the Title Review Period has expired, then Buyer
shall have eleven (11) business days from the date of such supplement or
amendment to the Title Report (the “Extended Title Review Period”) within which
to give Seller written notice of disapproval of such additional exception to
title. Any exceptions which are timely disapproved of by Buyer pursuant to this
section shall be herein collectively called the “Title Objections”. If Buyer
fails to give notice of disapproval to Seller within the relevant Title Review
Period or Extended Title Review Period, as the case may be, then Buyer shall
conclusively be deemed to have approved the status of title as shown by the
Title Report and any supplement or amendment to the Title Report, including all
exceptions to title disclosed therein, if any, which shall be deemed “Permitted
Exceptions”. If Buyer gives Seller written notice of disapproval within the
Title Review Period or Extended Title Review Period, as the case may be, then
Buyer shall conclusively be deemed to have approved the status of title as
shown by the Title Report and any supplement or amendment to the Title Report,
including all exceptions to title disclosed therein, if any, which shall be
deemed “Permitted Exceptions”. If Buyer gives Seller written notice of
disapproval within the Title Review Period or Extended Title Review Period, as
the case may be, then, at Seller’s sole discretion, Seller may elect (but shall
not be obligated) to remove, or cause to be removed at its expense, any Title
Objections. Seller shall notify Buyer in writing within five (5) business days
after receipt of Buyer’s notice of Title Objections whether Seller elects to
remove the same. Seller’s failure to notify Buyer shall be deemed Seller’s
election not to remove such Title objection. If Seller is unable to remove or
endorse over any Title Objections prior to the Closing, or if Seller elects not
to remove one or more Title Objections, then, within five (5) business days of
Seller’s notification to Buyer, Buyer may provide Seller with notice that it
has elected to terminate this Agreement, in which event the Deposit(s) shall be
paid to Buyer and, thereafter, the parties shall have no further rights or
obligations hereunder except for obligations which expressly survive the
termination of this Agreement, or, Buyer shall be deemed to waive such Title
Objections, in which event such Title Objections shall be deemed “Permitted
Exceptions” and the Closing shall occur as herein provided without any
reduction of or credit against the Purchase Price. If Seller fails, by the date
which is one (1) business day before the Close of Escrow, to cure or delete as
exceptions to Buyer’s title Policy any Disapproved Items which Seller agreed to
use commercially reasonable efforts to cure or delete in Seller’s Title Notice,
Buyer, as its sole right, shall elect either (i) to waive its disapproval of
such Disapproved Items and proceed to the Close of Escrow, or (ii) to terminate
this Agree ment by giving Seller and Escrow Agent written notice of such
election on or before the Close of Escrow, in which event Escrow Holder shall
return the Deposit(s) to Buyer. If Buyer fails to give Seller and Escrow Agent
written notice of its election of (i) or (ii) above on or before the Close of
Escrow, Buyer shall be deemed to have elected to terminate this Agreement and
the Escrow created hereby, in which event Escrow Holder shall return the
Deposit(s) to Buyer


          4.2 Discharge of Title Objections. If on the Closing Date there are any
Title Objections which Seller has elected to pay and discharge, Seller may use
any portion of the Cash Balance to satisfy the same, provided Seller shall
deliver to Buyer at the Close of Escrow, instruments in recordable form and
sufficient to satisfy such Title Objections of record, together with the cost
of recording or filing such instruments, or provided that Seller shall cause
the Title Company to insure over the same, without any additional cost to
Buyer, whether such insurance is made available in consideration of payment,
bonding, indemnity of Seller or otherwise.

-8-






 



           4.2 Title Insurance. At the Close of Escrow, the Title Company shall issue
to Buyer, at Seller’s sole cost and expense, a CLTA Owner’s Form of title
insurance policy (the “Title Policy”), in the amount of the Purchase Price
which is allocated to the Real Property, insuring that title to the Real
Property is vested in Buyer subject only to the Permitted Exceptions. Buyer
shall have the right to procure an ALTA Extended Coverage Owner’s Policy of
Title Insurance (“ALTA Policy”) as long as the issuance of the ALTA Policy does
not delay or extend the Closing Date. Buyer shall pay for the increased cost of
such ALTA Policy, the cost of any survey that the Title Company requires for
issuance of an ALTA Policy as provided in Section 4.4 below, and for the cost
of any other increase in the amount or scope of title insurance if requested by
Buyer. Buyer may request that the Title Company provide, at Buyer’s sole cost
and expense, such endorsements (or amendments) to the Owner’s Title Policy as
Buyer may reasonably require, provided that (a) such endorsements (or
amendments) shall be at no cost or additional liability to Seller, (b) except
as otherwise provided in this Agreement or as offered by Seller to cure a Title
Objection, Buyer’s obligations under this Agreement shall not be conditioned
upon Buyer’s ability to obtain such endorsements and, if Buyer is unable to
obtain such endorsements, Buyer shall nevertheless be obligated to proceed to
close the transaction contemplated by this Agreement (the “Transaction”)
without reduction of or set off against the Purchase Price, and (c) the Close
of Escrow shall not be delayed as a result of Buyer’s request.



     5. Inspections


          5.1 Notice. Buyer shall have the right to commence Buyer’s physical
inspections of the Property, after Buyer’s and Seller’s execution of this
Agreement and Buyer’s delivery of the Initial Deposit, upon two (2) business
days prior written notice to Seller and after Seller’s receipt of written
evidence that Buyer has procured the insurance required by subsection 5.3 of
this Agreement and Seller’s approval of Buyer’s proposed entry onto the
Property. Buyer’s physical inspection of the Property shall be conducted during
normal business hours at times mutually acceptable to Buyer and Seller.



          5.2 Testing and Surveys. Buyer acknowledges that prior to the expiration
of the Due Diligence Period: (i) Buyer has or will have, at Buyer’s sole cost
and expense, conducted such surveys and inspections, and made such boring,
percolation, geologic, environmental and soils tests and other studies of the
Property; and (ii) Buyer has or will have had adequate opportunity to make such
inspection of the Property (including an inspection for compliance with
applicable zoning, land use, environmental and other laws, regulations and
restrictions), as Buyer has, in Buyer’s discretion, deemed necessary or
advisable as a condition precedent to Buyer’s purchase of the Property and to
determine the physical, environmental and land use characteristics of the
Property (including, without limitation, its subsurface) and its suitability
for Buyer’s intended use. Notwithstanding the foregoing, Buyer shall notify
Seller before contacting any governmental authorities in accordance with
subsection 5.6 hereof and no invasive testing, borings, removal of soil samples
or removal of core samples shall be done without the prior written approval of
Seller in its sole and absolute discretion.



          5.3 Insurance. Buyer shall obtain or cause its consultants to obtain, at
Buyer’s sole cost and expense prior to commencement of any investigative
activities on the Property, a policy of commercial general liability insurance
in a form acceptable to Seller, covering any and all liability of Buyer and
Seller with respect to or arising out of any investigative activities. Such

-9-






 




policy of insurance shall be kept and maintained in force during the term
of this Agreement and so long thereafter as necessary to cover any claims of
damages suffered by persons or property resulting from any acts or omissions of
Buyer, Buyer’s employees, agents, contractors, suppliers, consultants or other
related parties. Such policy of insurance shall have liability limits of not
less than Two Million Dollars ($2,000,000.00) combined single limit per
occurrence for bodily injury, personal injury and property damage liability and
shall name Seller as an additional insured.


          5.4 Indemnity. Buyer shall protect, indemnify, defend and hold the
Property, Seller and Seller’s officers, directors, shareholders, participants,
affiliates, employees, representatives, invitees, agents and contractors free
and harmless from and against any and all claims, damages, liens, stop notices,
liabilities, losses, costs and expenses, including reasonable attorneys’ fees
and court costs, arising out of or related (directly or indirectly) to Buyer’s
conducting such inspections, surveys, tests, and studies, including, without
limitation, repairing any and all damage to any portion of the Property
resulting from such inspections, surveys, tests, and studies, provided such
repair shall take place only following at least two (2) business days prior
written notice to and approval by Seller. Buyer shall keep the Property free
and clear of any mechanics’ liens or materialmen’s liens related to Buyer’s
right of inspection and the activities contemplated by subsections 4.4, 5.1 and
5.2 of this Agreement. Buyer’s indemnification obligations set forth herein
shall survive the Close of Escrow and shall not be merged with the Deed, and
shall survive the termination of this Agreement and Escrow prior to the Close
of Escrow.



          5.5 Disclosure. Except as is expressly provided in this Agreement, it is
understood that Seller does not make any representation or warranty, express or
implied, as to the accuracy or completeness of any information contained in
Seller’s files or in the documents produced by Seller, including, without
limitation, any environmental audit or report. Buyer acknowledges that Seller
and Seller’s affiliates shall have no responsibility for the contents and
accuracy of such disclosures, and Buyer agrees that the obligations of Seller
in connection with the purchase of the Property shall be governed by this
Agreement irrespective of the contents of any such disclosures or the timing or
delivery thereof.



          5.6 Due Diligence. Buyer and Seller acknowledge and agree that as of April
16, 2003, Seller has delivered and Buyer has received, for Buyer’s review,
copies of all of the Due Diligence Materials set forth on Exhibit “E”. Buyer
shall review for approval all Due Diligence Materials within the Due Diligence
Period. Seller acknowledges Buyer may desire to discuss or otherwise inquire
about plans, documents, agreements and other records of various governmental
entities, districts and utilities regarding the Property or otherwise
impacting, restricting, or affecting its use or value (“Governmental Records”)
with various governmental entities and utilities and the other Due Diligence
Materials with third parties. In this regard, Buyer is permitted to contact all
necessary third parties and discuss with such third parties the Governmental
Records and other Due Diligence Materials; provided, however, Seller is first
given a reasonable written notice and opportunity to be present at such contact
or discussions at a time and location mutually agreed upon by all parties.
Additionally, Buyer may contact or hold discussions with any tenants or
property managers of the Property, provided, Seller is first given a reasonable
opportunity to be present at such contacts or discussions at a time and
location mutually agreed upon by all parties.

-10-






 



           5.7 Termination Upon Disapproval. This Agreement shall terminate (i) if
Buyer notifies Seller in writing prior to the expiration of the Due Diligence
Period that Buyer has decided not to proceed with the purchase of the Property
for any reason including without limitation, Buyer’s disapproval of the
physical condition of the Property, the Survey, or any of the Due Diligence
Materials provided to Buyer during the Due Diligence Period, or (ii) upon
Buyer’s failure to approve, prior to the expiration of the Due Diligence Period
or such earlier date as is specified in this Agreement, of any of the matters
described in subsection 3.3 (subject to Seller’s right to remove or cure
disapproved items, or to obtain a bond or title endorsement). Upon termination
of this Agreement pursuant to this subsection: (a) each party shall promptly
execute and deliver to Escrow Holder such documents as Escrow Holder may
reasonably require to evidence such termination, (b) Escrow Holder shall return
all documents to the respective parties who delivered such documents to Escrow,
(c) Escrow Holder shall remit all funds deposited into Escrow together with any
accrued interest on such funds to the party entitled thereto pursuant to
subsection 2.2, (d) Buyer shall pay fifty percent (50%) of Escrow Holder’s
title and escrow cancellation fees, if any, (e) Buyer shall return to Seller
(1) all Due Diligence Materials previously delivered by Seller to Buyer, and
(2) provided Seller reimburses Buyer for Buyer’s actual out-of-pocket costs in
obtaining same, all other Due Diligence Materials in Buyer’s possession
relating to the Property, including without limitation, any tests or studies
prepared by or on behalf of Buyer with respect to the Property, and (f) the
respective obligations of Buyer and Seller under this Agreement shall
terminate; provided, however, notwithstanding the foregoing, Buyer’s indemnity
obligations under subsections 5.3 and 5.4 above, shall survive any such
termination of the Agreement, and the termination of this Agreement shall not
release any other indemnity obligation of Buyer.



     6. Escrow Matters


          6.1 Closing Costs and Charges.



               6.1.1 Seller’s Costs. Seller shall pay (a) one-half (1/2) of Escrow
Holder’s fees, (b) the premium for the CLTA portion of the Title Policy, (c)
all expenses and charges incurred in connection with the discharge of
delinquent taxes, if any, which may be required in order for the Title Company
to issue the Buyer’s Title Policy, (d) all documentary transfer taxes payable
in connection with the transfer of the Property, (e) Seller’s share of
prorations as determined in accordance with Section 6, and (f) all document
recording charges.



               6.1.2 Buyer’s Costs. Buyer shall pay (a) one-half (1/2) of the Escrow
Holder’s fee, (b) all costs and premiums to obtain (i) any endorsements to the
Title Policy requested by Buyer or (ii) ALTA coverage if requested by Buyer,
(c) cost of updating the ALTA Survey previously delivered by Seller to Buyer,
(d) all costs of Buyer’s due diligence, and (e) Buyer’s share of prorations as
determined in accordance with Section 6.



               6.1.3 Other Costs. All other costs, if any, shall be apportioned in the
customary manner for real property transactions in the County where the Real
Property is located.

-11-






 




          6.2 Deposit of Documents and Funds by Seller. Not later than one (1)
business day prior to the Closing Date, Seller shall deposit the following
items into Escrow, each of which shall be duly executed and acknowledged by
Seller where appropriate:



               6.2.1 A grant deed duly executed and acknowledged by Seller substantially
in the form of Exhibit “B” attached hereto and incorporated herein by this
reference (the “Deed”);



               6.2.2 Two (2) counterparts of a bill of sale, duly executed by Seller,
conveying to Buyer, without warranty, all of Seller’s right, title, and
interest in and to the Personal Property if any, substantially in the form of
Exhibit “C” attached hereto and incorporated herein by this reference (“Bill of
Sale”);



               6.2.3 Two (2) counterparts of an assignment and assumption, duly executed
by Seller, assigning to Buyer, without warranty, all of Seller’s right, title,
and interest in and to all Leases, Warranties and Contracts, all to the extent
transferable by Seller, in the form of Exhibit “D” attached hereto and
incorporated herein by this reference (“Assignment and Assumption”);



               6.2.4 The Required Estoppels described in Section 3.3.11 and the SNDAs
described in Section 3.3.10;



               6.2.5 Other documents pertaining to Seller’s authority to record the Deed
that may reasonably be required by Escrow Holder to close the Escrow in
accordance with this Agreement;



               6.2.6 Such other documents as Escrow Holder may require from Seller in
order to issue the Title Policy;



               6.2.7 To Buyer, all keys to all buildings and other improvements located
on the Real Property, combinations to any safes thereon, and security devices
therein in Seller’s possession;



               6.2.8 A letter from Seller addressed to each tenant informing such tenant
of the change in ownership as set forth;



               6.2.9 To Buyer, the original Leases; and



               6.2.10 To Buyer, all records and files solely relating to the management
or operation of the Real Property, including, without limitation, all insurance
policies, all service contracts, property tax bills, and all calculations used
to prepare statements of rental increases under the Leases and statements of
common area charges, insurance, property taxes and other charges which are paid
by tenants of the Real Property.



          6.3 Deposit of Documents and Funds by Buyer. Not later than one (1)
business day prior to the Closing Date, Buyer shall deposit the following items
into Escrow:



               6.3.1 The Cash Balance;



-12-






 




               6.3.2 Two (2) counterparts of the Assignment and Assumption, duly executed by Buyer;



               6.3.3 Two (2) counterparts of the Bill of Sale, duly executed by Buyer; and



               6.3.4 All other funds and documents as may reasonably be required by
Escrow Holder to close the Escrow in accordance with this Agreement.



          6.4 Delivery of Documents and Funds at Closing. Provided that all
conditions to closing set forth in this Agreement have been satisfied or, as to
any condition not satisfied, waived by the party intended to be benefitted
thereby, on the Closing Date Escrow Holder shall conduct the closing by
recording or distributing the following documents and funds in the following
manner:



               6.4.1 Recorded Documents. Record the Deed in the Official Records of the
County in which the Real Property is located;



               6.4.2 Buyer’s Documents. Deliver to Buyer: (a) the original Buyer’s Title
Policy, (b) an original fully-executed counterpart of the Bill of Sale, and (c)
an original fully-executed counterpart of the Assignment and Assumption.



               6.4.3 Seller’s Documents; Purchase Price. Deliver to Seller: (a) the
Purchase Price, (b) such other funds, if any, as may be due to Seller by reason
of credits under this Agreement, less all items chargeable to Seller under this
Agreement, (c) an original fully-executed counterpart of the Assignment and
Assumption and (d) an original fully-executed counterpart of the Bill of Sale.



          6.5 Items to be Prorated. The following shall be prorated between Seller
and Buyer as of the Closing Date with Buyer being deemed the owner of the
Property as of the Closing Date:



               6.5.1 Taxes and Assessments. All non-delinquent taxes, assessments and
other governmental impositions of any kind or nature affecting the Property,
including, without limitation, any supplemental tax bills, special assessments
or similar charges (collectively, “Taxes”), which relate to the tax year within
which the Close of Escrow occurs based upon the actual number of days in the
tax year. With respect to any portion of the Taxes which are payable by any
tenant directly to the authorities, no proration or adjustment shall be made.
The proration for Taxes shall be based upon the most recently issued tax bill
for the Property. If the most recent tax bill is not for the current tax year,
then the parties shall reprorate within thirty (30) days of the receipt of the
tax bill for the current tax year. Upon the Closing Date and subject to the
adjustment provided above, Buyer shall be responsible for real estate taxes and
assessments on the Property payable from and after the Closing Date. In no
event shall Seller be charged with or be responsible for any increase in the
taxes or assessments on the Property resulting from the sale of the Property or
from any improvements made or leases entered into after the Closing Date. With
respect to all periods for which Seller has paid Taxes, Seller hereby reserves
the right to institute or continue any proceeding or proceedings for the
reduction of the assessed valuation of the Property, and its sole discretion,
to settle the same.

-13-






 




Seller shall have sole authority to control the progress of, and to make
all decisions with respect to, such proceedings but shall provide Buyer with
copies of all communications with the taxing authorities. All net tax refunds
and credits attributable to any period prior to the Closing Date which Seller
has paid or for which Seller has given a credit to Buyer shall belong to and be
the property of Seller, provided, however, that any such refunds and credits
that are the property of tenants under Leases shall be promptly remitted by
Seller directly to such tenants or to Buyer for the credit of such tenants. All
net tax refunds and credits attributable to any period subsequent to the
Closing Date shall belong to and be the property of Buyer. Buyer agrees to
cooperate with Seller in connection with the prosecution of any such
proceedings and to take all steps, whether before or after the Closing Date, as
may be necessary to carry out the intention of this subparagraph, including the
delivery to Seller, upon demand, of any relevant books and records, including
receipted tax bills and canceled checks used in payment of such taxes, the
execution of any and all consent or other documents, and the undertaking of any
acts necessary for the collection of such refund by Seller. Buyer agrees that,
as a condition to the transfer of the Property by Buyer, Buyer will cause any
transferee to assume the obligations set forth herein.


               6.5.2 Rents. Buyer will receive a credit at closing for all rents
collected by Seller prior to the Close of Escrow and allocable to the period
from and after the Closing Date based upon the actual number of days in the
month. Except as otherwise provided below, no credit shall be given to Seller
for accrued and unpaid rent or any other non-current sums due from tenants
until these sums are paid, and Seller shall retain the right to collect any
such rent provided Seller does not sue to evict any tenants or terminate any
tenant Leases. Notwithstanding the immediately preceding sentence to the
contrary, Buyer and Seller acknowledge and agree that The State of California
(“State”) is a tenant of the Real Property and that the State pays its rental
obligations in arrears. Accordingly, upon the Close of Escrow, Buyer shall
credit Seller an amount equal to all accrued and unpaid rent under the State’s
Lease for the month in which the Close of Escrow occurs. Buyer shall cooperate
with Seller after the Close of Escrow to collect any rent under the tenant
Leases which has accrued as of the Closing Date; provided, however, Buyer shall
not be obligated to sue any tenants or exercise any legal remedies under the
Leases or to incur any expense over and above its own regular collection
expenses. All payments collected from tenants after the Close of Escrow shall
first be applied to the month in which the Close of Escrow occurs, then to any
rent due to Buyer for the period after the Close of Escrow and finally to any
rent due to Seller for periods prior to the Close of Escrow; provided, however,
notwithstanding the foregoing, if Seller collects any payments from tenants
after the Close of Escrow through its own collection efforts, Seller may first
apply such payments to rent due Seller for periods prior to the Close of
Escrow.



               6.5.3 CAM Expenses. To the extent that tenants are reimbursing the
landlord for common area maintenance and other operating expenses
(collectively, “CAM Charges”), CAM Charges shall be prorated upon the Close of
Escrow and again subsequent to the Close of Escrow but, in any event, within
one (1) year following the Closing Date, as of the Closing Date on a
lease-by-lease basis with each party being entitled to receive a portion of the
CAM Charges payable under each Lease for the CAM Lease year in which the Close
of Escrow occurs, which portion shall be equal to the actual CAM Charges
incurred during the party’s respective periods of ownership of the Property
during the CAM Lease Year. As used herein, the term “CAM Lease Year” means the
twelve (12) month period as to which annual CAM Charges are owed under each
Lease. Five (5) days prior to the Close of Escrow Seller shall

-14-






 




submit to Buyer an itemization of its actual CAM Charges through such date
and the amount of CAM Charges received by Seller as of such date, together with
an estimate of CAM Charges to be incurred to, but not including, the Closing
Date. If Seller has received CAM Charges payments in excess of its actual CAM
Charges, then Buyer shall be entitled to receive a credit against the Purchase
Price for the excess and Buyer shall refund such excess to the tenants under
the Leases in accordance with the terms of the Leases. If Seller has received
CAM Charges payments less than its actual CAM Charges, then to the extent the
Leases provide for a “true up” at the end of the CAM Lease Year, Seller shall
be entitled to receive any deficit but only after Buyer has received any true
up payment from the tenants. Upon receipt by either party of any CAM Charge
true up payment from a tenant, the party receiving the same shall provide to
the other party its allocable share of the “true up” payment within five (5)
days of the receipt thereof.


     To assist Buyer in preparing “true up” reconciliation at the end of the
CAM Lease Year, Seller shall deliver to Buyer upon the Closing Date records of
all of Seller’s CAM Charge.


               6.5.4 Operating Expenses. All operating expenses (including all charges
under the service contracts and agreements assumed by Buyer) shall be prorated,
and as to each service provider, operating expenses payable or paid to such
service provider in respect to the billing period of such service provider in
which the Closing Date occurs (the “Current Billing Period”), shall be prorated
on a per diem basis based upon the number of days in the Current Billing Period
prior to the Closing Date and the number of days in the Current Billing Period
from and after the Closing Date, and assuming that all charges are incurred
uniformly during the Current Billing Period. If actual bills for the Current
Billing Period are unavailable as of the Closing Date, then such proration
shall be made on an estimated basis based upon the most recently issued bills,
subject to readjustment upon receipt of actual bills.



               6.5.5 Security Deposits; Prepaid Rents. Buyer shall be credited and Seller
shall be debited with an amount equal to all prepaid rentals and other tenant
charges and tenant security deposits (including any portion thereof which may
be designated as prepaid rent) actually being held by Seller under the Leases,
except to the extent that as of Close of Escrow Seller transfers to Buyer
control of accounts holding tenant deposits, or letters of credit, certificates
of deposit, or other forms of tenant deposits held in separately maintained
accounts pursuant to the Leases. If any security deposits are in the form of
Non-Cash Security Deposits, Seller will, upon the Close of Escrow cause Buyer
to be named as beneficiary under the Non-Cash Security Deposits (and Buyer
shall pay all assignment fees and other transfer costs in connection
therewith).



               6.5.6 Leasing Costs.



                    (i) Seller shall receive a credit upon the Close of Escrow for all leasing
costs, including tenant improvement costs and allowances, and its pro-rata
leasing commissions, previously paid by Seller in connection with any tenant
Lease or modification to an existing tenant Lease which was entered into after
the Effective Date and which is approved or deemed approved by Buyer pursuant
to this Agreement, which approval included approval of the tenant improvement
costs. Seller’s pro-rata share shall be equal to a fraction which has as its

-15-






 




numerator the number of months left in the base term of the Lease after
the Closing Date and which has as its denominator the number of months in the
base term of the Lease.


                    (ii) Seller shall pay for all tenant improvement allowances and leasing
commissions with respect to the premises leased as of the Effective Date by the
tenants pursuant to the tenant Leases in effect as of the Effective Date, to
the extent that such improvement allowances and leasing commissions are unpaid
as of the Closing Date.



          6.6 Calculation; Reproration. Seller shall prepare and deliver, or cause
Escrow Holder to prepare and deliver, to Buyer no later than five (5) days
prior to the Closing Date an estimated closing statement which shall set forth
the costs payable under Section 6.5.4 and the prorations and credits provided
for in this Section 6.5.7 and Section 6.5.5 and elsewhere in this Agreement.
Any item which cannot be finally prorated because of the unavailability of
information shall be tentatively prorated on the basis of the best data then
available and adjusted when the information is available in accordance with
this Section 6.5.7. Buyer shall notify Seller and Escrow Holder within two (2)
days after its receipt of such estimated closing statement of any items which
Buyer disputes, and the parties shall attempt in good faith to reconcile any
differences not later than one (1) day before the Closing Date. The estimated
closing statement as adjusted as aforesaid and approved in writing by the
parties (which shall not be withheld if prepared in accordance with this
Agreement) shall be referred to herein as the “Closing Statement”. If the
prorations and credits made under the Closing Statement shall prove to be
incorrect or incomplete for any reason, then either party shall be entitled to
an adjustment to correct the same; provided, however, that any adjustment shall
be made, if at all, within sixty (60) days after the Closing Date (except with
respect to CAM Charges and Taxes, in which case such adjustment shall be made
within thirty (30) days after the information necessary to perform such
adjustment is available), and if a party fails to request an adjustment to the
Closing Statement by a written notice delivered to the other party within the
applicable period set forth above (such notice to specify in reasonable detail
the items within the Closing Statement that such party desires to adjust and
the reasons for such adjustment), then the prorations and credits set forth in
the Closing Statement shall be binding and conclusive against such party.



          6.7 Items Not Prorated. Seller and Buyer agree that (a) on the Closing
Date, the Property will not be subject to any financing arranged by Seller; (b)
none of the insurance policies relating to the Property will be assigned to
Buyer and Buyer shall be responsible for arranging for its own insurance as of
the Closing Date; and (c) utilities, including telephone, electricity, water
and gas, shall be read on the Closing Date and Buyer shall be responsible for
all the necessary actions needed to arrange for utilities to be transferred to
the name of Buyer on the Closing Date, including the posting of any required
deposits and Seller shall be entitled to recover and retain from the providers
of such utilities any refunds or overpayments to the extent applicable to the
period prior to the Closing Date, and any utility deposits which it or its
predecessors may have posted. Accordingly, there will be no prorations for debt
service, insurance or utilities. In the event a meter reading is unavailable
for any particular utility, such utility shall be prorated in the manner
provided in Section 6.5.5 above.

-16-






 



           6.8 Indemnification. Buyer and Seller shall each indemnify, protect,
defend and hold the other harmless from and against any claim in any way
arising from the matters for which the other receives a credit or otherwise
assumes responsibility pursuant to this Section.



          6.9 Survival. Sections 6.5, 6.6, 6.8 and 6.9 shall survive the Close of
Escrow.



     7. Property “AS IS”


          7.1 No Side Agreements or Representations. No person acting on behalf of
Seller is authorized to make, and by execution hereof, Buyer acknowledges that
no person has made, any representation, agreement, statement, warranty,
guarantee or promise regarding the Property or the transaction contemplated
herein or the zoning, construction, physical condition or other status of the
Property except as may be expressly set forth in this Agreement or the Deed,
the Bill of Sale or the Assignment and Assumption to be delivered by Seller
into Escrow. No representation, warranty, agreement, statement, guarantee or
promise, if any, made by any person acting on behalf of Seller which is not
contained in this Agreement will be valid or binding on Seller.



          7.2 AS IS CONDITION. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
AGREEMENT, BUYER ACKNOWLEDGES AND AGREES THAT SELLER HAS NOT MADE, DOES NOT
MAKE AND SPECIFICALLY NEGATES AND DISCLAIMS ANY REPRESENTATIONS, WARRANTIES,
PROMISES, COVENANTS, AGREEMENTS OR GUARANTEES OF ANY KIND OR CHARACTER
WHATSOEVER, WHETHER EXPRESS IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE,
OF, AS TO, CONCERNING OR WITH RESPECT TO (I) VALUE; (II) THE INCOME TO BE
DERIVED FROM THE PROPERTY; (III) THE SUITABILITY OF THE PROPERTY FOR ANY AND
ALL ACTIVITIES AND USES WHICH BUYER MAY CONDUCT THEREON, INCLUDING, WITHOUT
LIMITATION, THE POSSIBILITIES FOR FUTURE DEVELOPMENT OF THE PROPERTY; (IV) THE
HABITABILITY, MERCHANTABILITY, MARKETABILITY, PROFITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OF THE PROPERTY; (V) THE MANNER, QUALITY, STATE OF REPAIR OR
LACK OF REPAIR OF THE PROPERTY; (VI) THE NATURE, QUALITY OR CONDITION OF THE
PROPERTY, INCLUDING, WITHOUT LIMITATION, THE WATER, SOIL AND GEOLOGY; (VII) THE
COMPLIANCE OF OR BY THE PROPERTY OR ITS OPERATION WITH ANY LAWS, RULES,
ORDINANCES OR REGULATIONS OF ANY APPLICABLE GOVERNMENTAL AUTHORITY OR BODY;
(VIII) THE MANNER OR QUALITY OF THE CONSTRUCTION OR MATERIALS, IF ANY,
INCORPORATED INTO THE PROPERTY; (IX) COMPLIANCE WITH ANY ENVIRONMENTAL
PROTECTION, POLLUTION OR LAND USE LAWS, RULES, REGULATION, ORDERS OR
REQUIREMENTS, INCLUDING, WITHOUT LIMITATION, TITLE III OF THE AMERICANS WITH
DISABILITIES ACT OF 1990, THE VISUAL ARTISTS RIGHTS ACT, THE FEDERAL WATER
POLLUTION CONTROL ACT, THE FEDERAL RESOURCE CONSERVATION AND RECOVERY ACT, THE
U.S. ENVIRONMENTAL PROTECTION AGENCY REGULATIONS AT 40 C.F.R., PART 261, THE
COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND LIABILITY ACT OF 1980,
AS AMENDED, THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976, THE CLEAN WATER
ACT, THE SAFE DRINKING WATER ACT, THE HAZARDOUS MATERIALS TRANSPORTATION ACT,
THE TOXIC

-17-






 




SUBSTANCE CONTROL ACT, AND REGULATIONS PROMULGATED UNDER ANY OF THE
FOREGOING; (X) THE PRESENCE OR ABSENCE OF HAZARDOUS MATERIALS AT, ON, UNDER, OR
ADJACENT TO THE PROPERTY; (XI) THE CONTENT, COMPLETENESS OR ACCURACY OF THE DUE
DILIGENCE MATERIALS OR PRELIMINARY REPORT REGARDING TITLE; (XII) THE CONFORMITY
OF THE IMPROVEMENTS TO ANY PLANS OR SPECIFICATIONS FOR THE PROPERTY, INCLUDING
ANY PLANS AND SPECIFICATIONS THAT MAY HAVE BEEN OR MAY BE PROVIDED TO BUYER;
(XIII) THE CONFORMITY OF THE PROPERTY TO PAST, CURRENT OR FUTURE APPLICABLE
ZONING OR BUILDING REQUIREMENTS; (XIV) DEFICIENCY OF ANY UNDERSHORING; (XV)
DEFICIENCY OF ANY DRAINAGE; (XVI) THE FACT THAT ALL OR A PORTION OF THE
PROPERTY MAY BE LOCATED ON OR NEAR AN EARTHQUAKE FAULT LINE; (XVII) THE
EXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE
PROPERTY; OR (XVIII) WITH RESPECT TO ANY OTHER MATTER. BUYER FURTHER
ACKNOWLEDGES AND AGREES THAT HAVING BEEN GIVEN THE OPPORTUNITY TO INSPECT THE
PROPERTY AND REVIEW INFORMATION AND DOCUMENTATION AFFECTING THE PROPERTY, BUYER
IS RELYING SOLELY ON ITS OWN INVESTIGATION OF THE PROPERTY AND REVIEW OF SUCH
INFORMATION AND DOCUMENTATION, AND NOT ON ANY INFORMATION PROVIDED OR TO BE
PROVIDED BY SELLER. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT ANY INFORMATION
MADE AVAILABLE TO BUYER OR PROVIDED OR TO BE PROVIDED BY OR ON BEHALF OF SELLER
WITH RESPECT TO THE PROPERTY WAS OBTAINED FROM A VARIETY OF SOURCES AND THAT
SELLER HAS NOT MADE ANY INDEPENDENT INVESTIGATION OR VERIFICATION OF SUCH
INFORMATION AND, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
MAKES NO REPRESENTATIONS AS TO THE ACCURACY OR COMPLETENESS OF SUCH
INFORMATION. BUYER AGREES TO FULLY AND IRREVOCABLY RELEASE SELLER FROM ANY AND
ALL CLAIMS THAT THEY MAY NOW HAVE OR HEREAFTER ACQUIRE AGAINST SELLER FOR ANY
COSTS, LOSS, LIABILITY, DAMAGE, EXPENSE, DEMAND, ACTION OR CAUSE OF ACTION
ARISING FROM SUCH INFORMATION OR DOCUMENTATION. EXCEPT AS OTHERWISE EXPRESSLY
PROVIDED IN THIS AGREEMENT, SELLER IS NOT LIABLE OR BOUND IN ANY MANNER BY ANY
ORAL OR WRITTEN STATEMENTS, REPRESENTATIONS OR INFORMATION PERTAINING TO THE
PROPERTY, OR THE OPERATION THEREOF, FURNISHED BY ANY REAL ESTATE BROKER, AGENT,
EMPLOYEE, SERVANT OR OTHER PERSON. BUYER FURTHER ACKNOWLEDGES AND AGREES THAT
TO THE MAXIMUM EXTENT PERMITTED BY LAW, THE SALE OF THE PROPERTY AS PROVIDED
FOR HEREIN IS MADE ON AN “AS IS” CONDITION AND BASIS WITH ALL FAULTS, AND THAT
SELLER HAS NO OBLIGATIONS TO MAKE REPAIRS, REPLACEMENTS OR IMPROVEMENTS EXCEPT
AS MAY OTHERWISE BE EXPRESSLY STATED HEREIN. BUYER REPRESENTS, WARRANTS, AND
COVENANTS TO SELLER, WHICH REPRESENTATION, WARRANTY, AND COVENANT SHALL SURVIVE
THE CLOSE OF ESCROW AND NOT BE MERGED WITH THE DEED, THAT, EXCEPT FOR SELLER’S
EXPRESS REPRESENTATIONS AND WARRANTIES SPECIFIED IN THIS AGREEMENT, BUYER IS
RELYING SOLELY UPON BUYER’S OWN INVESTIGATION OF THE PROPERTY.


-18-






 


BY INITIALING BELOW, BUYER ACKNOWLEDGES THAT (i) THIS SECTION 7.2 HAS BEEN
READ AND FULLY UNDERSTOOD, (ii) BUYER HAS HAD THE CHANCE TO ASK QUESTIONS OF
ITS COUNSEL ABOUT ITS MEANING AND SIGNIFICANCE, AND (iii) BUYER HAS ACCEPTED
AND AGREED TO THE TERMS SET FORTH IN THIS SECTION 7.2.



	 
	 



BUYER’S INITIALS



          7.3 Seller’s Maintenance of the Property. Between the date of execution of
this Agreement and the Closing Date, Seller shall maintain the Property in
substantially the same manner as prior hereto pursuant to Seller’s normal
course of business, subject to reasonable wear and tear and further subject to
the occurrence of any damage or destruction to the Property by casualty or
condemnation of the Property, provided, however, that Seller’s maintenance
obligation under this Section shall not include any obligation to make capital
expenditures or other expenditures not incurred in Seller’s normal course of
business.



     8. Damage or Destruction; Condemnation


          8.1 Material Taking. For purposes of this Agreement, (a) a taking by
eminent domain of a portion of the Property shall be deemed to affect a
“material part” of the Property if the estimated value of the portion of the
Property taken exceeds ten percent (10%) of the Purchase Price, and (b) the
destruction of a “material part” of the Property shall be deemed to mean an
insured or uninsured casualty to the Property following Buyer’s inspection of
the Property and prior to the Close of Escrow having an estimated cost of
repair which equals or exceeds ten percent (10%) of the Purchase Price.



          8.2 Definitions. The phrase “estimated value” shall mean an estimate
obtained from an M.A.I. appraiser, who has at least five (5) years experience
evaluating property located in the County where the Real Property is located,
similar in nature and function to that of the Property, selected by Seller and
approved by Buyer, and the phrase “estimated cost of repair” shall mean an
estimate obtained from an independent contractor selected by Seller and
approved by Buyer. Buyer shall not unreasonably withhold, condition or delay
Buyer’s approval under this Section.



          8.3 Notice; Credit to Buyer. Buyer shall have the right to terminate this
Agreement if, prior to the Closing Date, (i) all or a material part of the
Property is destroyed without fault of Buyer, (ii) a material part of the
Property is taken by eminent domain, (iii) any condemnation of the Property
renders the Property a nonconforming use or causes the Property to be in
violation of applicable zoning requirements, (iv) any portion of the Building
is condemned or (iv) if any tenant elects to terminate its Lease pursuant to
the terms thereof as a result of a casualty (which is not the fault of Buyer)
to, or condemnation of, the Real Property. Buyer shall give written notice of
Buyer’s election to terminate this Agreement within five (5) business days
after Buyer first learns of any damage to or condemnation of the Property which
entitles Buyer to terminate this Agreement. If Buyer does not give such notice,
then this Agreement shall remain in full force and effect and there shall be no
reduction in Purchase Price, but Seller shall, at Close of Escrow, (1) assign
to Buyer (a) any insurance proceeds



-19-






 


payable with respect to such damage; or (b) the entire award payable with
respect to such condemnation proceeding, whichever is applicable, and (2) in
the event of a casualty affecting the Property, credit Buyer against the
Purchase Price an amount equal to (a) all insurance policy deductibles
necessary to receive the proceeds described in item (1)(a) of this sentence
above, and (b) any uninsured loss.


     9. Representations and Warranties


          9.1 By Seller. Seller represents and warrants to Buyer that as of the date
of this Agreement and as of the Closing Date:



               9.1.1 Seller is duly organized, validly existing, and in good standing
under the laws of the state of its formation;



               9.1.2 Seller has the full power and authority to execute, deliver and
perform its obligations under this Agreement;



               9.1.3 The execution, delivery and performance of this Agreement and all
documents contemplated hereby by Seller have been duly and validly authorized
by all necessary action on the part of Seller and all required consents and
approvals have been duly obtained and will not result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture, agreement
or instrument to which Seller is a party or otherwise bound. This Agreement is
a legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, subject to the effect of applicable bankruptcy,
insolvency, reorganization, arrangement, moratorium or other similar laws
affecting the rights of creditors generally;



               9.1.4 Other than Lennar Partners of Los Angeles, Inc., occupying Suite 100
in the Building, there are no on-site employees of Seller at the Real Property,
and following the Close of Escrow, Buyer shall have no obligation to employ or
continue to employ any individual employed by Seller or its affiliates in
connection with the Real Property, including but not limited to any employee of
Lennar Partners of Los Angeles, Inc.;



               9.1.5 To Seller’s actual knowledge, there are no actions, suits or
proceedings pending, or threatened against Seller and affecting any portion of
the Real Property, at law or in equity, or before or by any federal, state,
municipal, or other governmental court, department, commission, board, bureau,
agency, or instrumentality, domestic or foreign;



               9.1.6 To Seller’s actual knowledge, Seller has not received any notice of
any violations of any ordinance, regulation, law, or statute of any
governmental agency pertaining to the Real Property or any portion thereof;



               9.1.7 To Seller’s actual knowledge, the operating statements furnished to
Buyer in connection with or pursuant to this Agreement (a) accurately reflect
in all material respects the financial condition of the Real Property as of the
date reflected in each such statement and (b) do not fail to state any material
liability, contingent or otherwise, or any other material facts the omission of
which would be misleading to Buyer.

-20-






 



                9.1.8 To Seller’s actual knowledge, there are no presently pending or
contemplated proceedings to condemn the Real Property or any part of it. The
“actual knowledge” of Seller, as used in this Section 9.1, means the actual,
present knowledge of Seller as of the date of this Agreement, without any
independent investigation or inquiry of any kind or nature whatsoever.



          9.2 By Buyer. Buyer represents and warrants to Seller that as of the date
of this Agreement and as of the Closing Date:



               9.2.1 Buyer is duly organized, validly existing, and in good standing
under the laws of the state of its formation; and



               9.2.2 Buyer has the full power and authority to execute, deliver and
perform Buyer’s obligations under this Agreement.



     10. Default


          10.1 LIQUIDATED DAMAGES — DEPOSIT. NOTWITHSTANDING ANYTHING TO THE
CONTRARY CONTAINED IN THIS AGREEMENT, IF BUYER HAS NOT TERMINATED THIS
AGREEMENT PRIOR TO THE EXPIRATION OF THE DUE DILIGENCE PERIOD AND IF THE SALE
OF THE PROPERTY TO BUYER IS NOT CONSUMMATED FOR ANY REASON OTHER THAN DUE TO
(I) THE NON-SATISFACTION OF A CONDITION TO THE CLOSE OF ESCROW FOR BUYER’S
BENEFIT PURSUANT TO SECTION 3.3 HEREOF, (II) A CASUALTY OR CONDEMNATION OF THE
PROPERTY, AS PROVIDED IN SECTION 8.3 HEREOF, OR (III) SELLER’S DEFAULT UNDER
THIS AGREEMENT, SELLER SHALL BE ENTITLED TO RETAIN THE DEPOSITS AS SELLER’S
LIQUIDATED DAMAGES. THE PARTIES AGREE THAT IT WOULD BE EXTREMELY IMPRACTICABLE
AND DIFFICULT TO ASCERTAIN THE ACTUAL DAMAGES SUFFERED BY SELLER AS A RESULT OF
BUYER’S FAILURE TO COMPLETE THE PURCHASE OF THE PROPERTY PURSUANT TO THIS
AGREEMENT, AND THAT UNDER THE CIRCUMSTANCES EXISTING AS OF THE DATE OF THIS
AGREEMENT, THE LIQUIDATED DAMAGES PROVIDED FOR IN THIS SECTION REPRESENTS A
REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER WILL INCUR AS A RESULT OF SUCH
FAILURE, PROVIDED, HOWEVER, THAT THIS PROVISION SHALL NOT LIMIT SELLER’S RIGHTS
TO RECEIVE REIMBURSEMENT FOR ATTORNEYS’ FEES, NOR WAIVE OR AFFECT SELLER’S
RIGHTS AND BUYER’S INDEMNITY OBLIGATIONS UNDER OTHER SECTIONS OF THIS
AGREEMENT. THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR
AGREEMENT. THE PARTIES HAVE SET FORTH THEIR INITIALS BELOW TO INDICATE THEIR
AGREEMENT WITH THE LIQUIDATED DAMAGES PROVISION CONTAINED IN THIS SECTION.




	 	 	 
	 



SELLER’S INITIALS	 	
 



BUYER’S INITIALS



          10.2 Buyer’s Remedies for Seller’s Default. If, at the close of Escrow,
(i) Seller is in default of any of its obligations hereunder, or (ii) any of
Seller’s material

-21-






 




representation or warranties are untrue in any respect, or (iii) the Close
of Escrow otherwise fails to occur by reason of Seller’s failure or refusal to
perform its obligations hereunder in a prompt and timely manner, Buyer shall
have the right, to elect, as its sole and exclusive remedies, to (a) terminate
this Agreement by written notice to Seller, promptly after which the Deposit
shall be returned to Buyer and attempt to obtain damages, if any, not to exceed
the amount set forth in Section 32 hereof, or (b) waive the condition and
proceed to close the Escrow, or (c) pursue the remedy of specific performance.


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


     12. Attorneys’ Fees. If either party hereto brings an action or proceeding
(including any cross-complaint, counterclaim or third-party claim) against the
other party by reason of a default by the other party or otherwise arising out
of this Agreement, the non-prevailing party shall pay to the prevailing party
in such action or proceeding all of the prevailing party costs and expenses of
suit, including reasonable attorney’s fees, which shall be payable whether or
not such action is prosecuted to a judgment. “Prevailing party” within the
meaning of this Section 11 includes a party who dismisses an action for
recovery hereunder in exchange for payment of the sum allegedly due,
performance of covenants allegedly breached, or consideration substantially
equal to the relief sought in the action or proceeding.


     13. Notices. All notices, demands, approvals, and other communications
provided for in this Agreement shall be in writing and shall be effective upon
the earlier of the following to occur: (a) when delivered to the recipient, (b)
three (3) business days after deposit in a sealed envelope in the United States
mail, postage prepaid by registered or certified mail, return receipt
requested, addressed to the recipient as set forth below, or (c) when sent (if
sent by facsimile before 5:00 p.m. Pacific time on a business day) or on the
next business day (if sent by facsimile after 5:00 p.m. Pacific time), all as
evidenced by printout of a confirmation slip from the sender’s machine. All
notices to Seller shall be sent to Seller’s Address or facsimile number. All
notices to Buyer shall be sent to Buyer’s Address or facsimile number. All
notices to Escrow Holder shall be sent to Escrow Holder’s Address or facsimile
number. The foregoing addresses and facsimile numbers may be changed by written
notice given in accordance with this Section. If the date on which any notice
to be given hereunder falls on a Saturday, Sunday or legal holiday, then such
date shall automatically be extended to the next business day immediately
following such Saturday, Sunday or legal holiday.


     14. Amendment; Complete Agreement. All amendments, modifications and
supplements to this Agreement must be in writing and executed by Buyer and
Seller. This Agreement contains the entire agreement and understanding between
Buyer and Seller


-22-






 



concerning the subject matter of this Agreement and supersedes all prior
agreements, terms, understandings, conditions, representations and warranties,
whether written or oral, made by Buyer or Seller concerning the Property or the
other matters which are the subject of this Agreement. This Agreement has been
drafted through a joint effort of the parties and their counsel and, therefore,
shall not be construed in favor of or against either of the parties.


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


     16. Severability. If any provision of this Agreement or application
thereof to any person or circumstance shall to any extent be invalid or
unenforceable, the remainder of this Agreement (including the application of
such provision to persons or circumstances other than those to which it is held
invalid or unenforceable) shall not be affected thereby, and each provision of
this Agreement shall be valid and enforced to the fullest extent permitted by
law.


     17. Counterparts, Headings, and Defined Terms. This Agreement may be
executed in counterparts, each of which shall be an original, but all of which
together shall constitute one agreement. The headings to sections of this
Agreement are for convenient reference only and shall not be used in
interpreting this Agreement.


     18. Time of the Essence. Time is of the essence of this Agreement.


     19. Waiver. No waiver by Buyer or Seller of any of the terms or conditions
of this Agreement or any of their respective rights under this Agreement shall
be effective unless such waiver is in writing and signed by the party charged
with the waiver.


     20. Third Parties. This Agreement is entered into for the sole benefit of
Buyer and Seller and their respective permitted successors and assigns. No
party other than Buyer and Seller and such permitted successors and assigns
shall have any right of action under or rights or remedies by reason of this
Agreement.


     21. Additional Documents. Each party agrees to perform any further acts
and to execute and deliver such further documents which may be reasonably
necessary to carry out the terms of this Agreement.


     22. Independent Counsel. Buyer and Seller each acknowledge that: (i) they
have been represented by independent counsel in connection with this Agreement,
(ii) they have executed this Agreement with the advice of such counsel, and
(iii) this Agreement is the result of negotiations between the parties hereto
and the advice and assistance of their respective counsel. The fact that this
Agreement was prepared by Seller’s counsel as a matter of convenience shall
have no import or significance. Any uncertainty or ambiguity in this Agreement
shall not be construed against Seller because Seller’s counsel prepared this
Agreement in its final form.


     23. Commissions. Buyer and Seller each represent and warrant to the other
that there are no commissions, finder’s fees or brokerage fees arising out of
the transactions contemplated by this Agreement other than a commission payable
by Seller upon Close of Escrow to (i) Triple Net Realty, Inc. in the amount of
Three Hundred Eighty Thousand and No/100 Dollars ($380,000.00) pursuant to a
separate agreement and (ii) CB Richard Ellis pursuant to a separate


-23-






 



 agreement. Buyer shall indemnify and hold Seller harmless from and against
any and all liabilities, claims, demands, damages, costs and expenses,
including, without limitation, reasonable attorneys’ fees and court costs, in
connection with claims for any such commissions, finders’ fees or brokerage
fees arising out of Buyer’s conduct or the inaccuracy of the foregoing
representation and/or warranty of Buyer. Seller shall indemnify and hold Buyer
harmless from and against any and all liabilities, claims, demands, costs and
expenses, including, without limitation, reasonable attorneys’ fees and costs
in connection with claims for any such commissions, finders’ fees or brokerage
fees arising out of Seller’s conduct or the inaccuracy of the foregoing
representation and/or warranty of Seller.


     24. Government Approvals. Nothing contained in this Agreement shall be
construed as authorizing Buyer to apply for a zone change, variance,
subdivision maps, lot line adjustment or other discretionary governmental act,
approval or permit with respect to the Property prior to the Close of Escrow,
and Buyer agrees not to do so without Seller’s prior written approval, which
approval may be withheld in Seller’s sole and absolute discretion. Buyer agrees
not to submit any reports, studies or other documents, including, without
limitation, plans and specifications, impact statements for water, sewage,
drainage or traffic, environmental review forms, or energy conservation
checklists to any governmental agency, or any amendment or modification to any
such instruments or documents prior to the Close of Escrow unless first
approved by Seller, which approval Seller may withhold in Seller’s sole
discretion. Buyer’s obligation to purchase the Property shall not be subject to
or conditioned upon Buyer’s obtaining any variances, zoning amendments,
subdivision maps, lot line adjustment, or other discretionary governmental act,
approval or permit.


     25. Release. Buyer shall rely solely upon Buyer’s own knowledge of the
Property based on its investigation of the Property and its own inspection of
the Property in determining the Property’s physical condition. Buyer and anyone
claiming by, through or under Buyer hereby waives its right to recover from and
fully and irrevocably releases Seller, its employees, officers, directors,
representatives, agents, servants, attorneys, affiliates, parent, subsidiaries,
successors and assigns, and all persons, firms, corporations and organizations
in its behalf (“Released Parties”) from any and all claims 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 any construction defects, errors, omissions or other conditions,
latent or otherwise, including environmental matters, affecting the Property,
or any portion thereof. 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 Buyers release to Seller.


     In this connection and to the extent permitted by law, Buyer hereby
agrees, represents and warrants, which representation and warranty shall
survive the Close of Escrow and not be merged with the Deed, that Buyer
realizes and acknowledges that factual matters now unknown to it 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, which representation and warranty shall survive the Close of Escrow
and not be merged with the Deed, 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


-24-






 



 unknown causes of action, claims, demands, debts, controversies, damages,
costs, losses and expenses which might in any way be included as a material
portion of the consideration given to Seller by Buyer in exchange for Seller’s
performance hereunder.


     Seller has given Buyer material concessions regarding this transaction in
exchange for Buyer agreeing to the provisions of this Section 25. Seller and
Buyer have each initialed this Section 25 to further indicate their awareness
and acceptance of each and every provision hereof.



	 	 	 
	 



SELLER’S INITIALS	 	
 



BUYER’S INITIALS



     26. Assignment. Buyer shall not assign this Agreement without Seller’s
prior written consent, which consent Seller shall not unreasonable withhold,
except that Buyer may assign this Agreement as provided in Section 33 below to
any entity (“Approved Assignee”) which is controlled or managed by Buyer or
Triple Net Realty, Inc., provided the Approved Assignee (i) assumes all of
Buyer’s obligations under this Agreement, and (ii) Buyer remains liable under
the terms and conditions of this Agreement, on a joint and several basis with
such Approved Assignee, for the performance of all of Buyer’s obligations
hereunder. Any purported assignment in violation of the terms of this Agreement
shall be void.


     27. Successors and Assigns. Subject to Section 26 above, this Agreement
shall be binding upon and inure to the benefits of the heirs, successors and
assigns of the parties hereto.


     28. Exhibits. Each reference to a Section, subsection or Exhibit in this
Agreement shall mean the sections or subsections of this Agreement and the
exhibits attached to this Agreement, unless the context requires otherwise.
Each such exhibit is incorporated herein by this reference.


     29. No Reservation of Property. The preparation and/or delivery of
unsigned drafts of this Agreement shall not create any legally binding rights
in the Property and/or obligations of the parties, and Buyer and Seller
acknowledge that this Agreement shall be of no effect until it is duly executed
by both Buyer and Seller. Buyer understands and agrees that Seller shall have
the right to continue to market the Property and/or to negotiate with other
potential purchasers of the Property until the expiration of the Due Diligence
Period and the satisfaction or waiver in writing of all conditions to the
obligations of Buyer under this Agreement.


     30. Duty of Confidentiality. Buyer and Seller represent and warrant that
each shall keep all information and/or reports obtained from the other, or
related to or connected with the Property, the other party, or this
transaction, confidential and will not disclose any such information to any
person or entity, other than to Buyer’s consultants, brokers, attorneys and
accountants employed by Buyer to review such information in connection with
Buyer’s due diligence as to the Property, without obtaining the prior written
consent of the other party, which consent shall not be unreasonably withheld,
conditioned or delayed.


     31. Survival. Unless otherwise specifically set forth in this Agreement,
none of the representations, warranties or indemnities set forth herein shall
survive the Close of Escrow.


-25-






 


     32. Seller’s Maximum Aggregate Liability. Notwithstanding any provision to
the contrary contained in this Agreement or any documents executed by Seller
pursuant hereto or in connection herewith, the maximum aggregate liability of
Seller, and the maximum aggregate amount which may be awarded to and collected
by Buyer, for any breach of this Agreement by Seller (including, without
limitation, the breach of any representations and warranties contained herein)
and any and all documents executed pursuant hereto or in connection herewith
for which a claim is timely made, within and before thirteen (13) months after
the Closing Date, by Buyer shall not exceed Two Hundred Thousand Dollars
($200,000). The representations and warranties made by Seller in this Agreement
(or any and all documents executed pursuant hereto or in connection herewith)
shall survive the Close of Escrow and not be merged therein for a period of
thirteen (13) months and Seller shall only be liable to Buyer hereunder for a
breach of representation and warranty made herein or in any of the documents
executed by Seller at the Closing with respect to which a claim is made by
Buyer against Seller on or before the last day of the thirteenth (13th) month
after the date of the Closing. Anything in this Agreement to the contrary
notwithstanding, the maximum aggregate liability of Seller for Seller’s
breaches of representations and warranties herein or in any documents executed
by Seller at Closing shall be limited as set forth in this Section.
Notwithstanding the foregoing, however, if the Close of Escrow occurs, Buyer
hereby expressly waives, relinquishes and releases any right or remedy
available to it at law, in equity or under this Agreement to make a claim
against Seller for damages that Buyer may incur, or to rescind this Agreement
and the transaction, as the result of any of Seller’s representations or
warranties being untrue, inaccurate or incorrect if (a) Buyer knew or is deemed
to know that such representation or warranty was untrue, inaccurate or
incorrect at the time of the Close of Escrow, or (b) Buyer’s damages as a
result of such representations or warranties being untrue, inaccurate or
incorrect are reasonably estimated to aggregate less than Ten Thousand Dollars
($10,000.00). In no event shall the Ten Thousand Dollars ($10,000.00) addressed
in the immediately preceding sentence be construed to act or function as a
deductible. The provisions of this section shall survive the Closing and shall
not be merged therein.


     33. Like Kind Exchange. At its option, Seller may structure its
disposition of the Property as a tax-deferred exchange (“Exchange”) pursuant to
Section 1031 of the Internal Revenue Code. If Seller shall elect to undertake
an Exchange, the following terms shall apply:


          (a) Seller, at its option, may assign its right in, and delegate its
duties (in part or in whole) under, this Agreement, as well as the transfer of
its interest in the Property, to an exchange accommodator (“Accommodator”)
selected by Seller, and Seller may add the Accommodator as an additional party
to the Escrow;



          (b) Accommodator shall have no liability to Buyer, and Buyer shall hold
Accommodator harmless from any claims by Buyer in connection with the Exchange;



          (c) Buyer agrees to cooperate with Seller in connection with the Exchange,
including the execution of documents (including, but not limited to, escrow
instructions and amendments to escrow instructions) therefor;

-26-






 



           (d) Buyer shall in no way be obligated to pay any escrow costs, brokerage
commissions, title charges, survey costs, recording costs or other charges
incurred with respect to Seller’s replacement property in the Exchange;



          (e) The Close of Escrow shall not be contingent or otherwise subject to
the consummation of the Exchange;



          (f) Escrow shall timely close in accordance with the terms of this
Agreement notwithstanding any failure, for any reason, of the consummation of
the Exchange;



          (g) Buyer shall have no responsibility or liability on account of the
Exchange to any third party involved in the Exchange;



          (h) Buyer shall not be required to make any representations or warranties
nor assume any obligations, nor spend any out-of-pocket sum in connection with
the Exchange;



          (i) All representations, warranties, covenants and indemnification
obligations of Seller to Buyer whether set forth in this Agreement or otherwise
existing at law or at equity, shall inure to the benefit of Buyer,
notwithstanding the Exchange;



          (j) All representations, warranties, covenants and indemnification
obligations of Buyer to Seller whether set forth in this Agreement or otherwise
existing at law or at equity, shall inure to the benefit of Seller,
notwithstanding the Exchange;



          (k) Seller shall indemnify, protect, defend and hold Buyer harmless from
and against any and all causes of action, claims, demands, liabilities, costs
and expenses, including actual attorneys’ fees and costs, incurred by Buyer in
connection with any third party claims which may arise as a result of or in
connection with the Exchange.



     34. Seller-Covenants: Seller hereby covenants as follows:


          34.1 As of the Effective Date, to cause to be in force fire and extended
coverage insurance upon the Real Property, and public liability insurance with
respect to damage or injury to persons or property occurring on the Real
Property in at least such amounts, and with the same deductibles, as are
maintained by Seller on the date hereof.



          34.2 From and after the expiration of the Due Diligence Period, to not
enter into any new lease with respect to the Real Property, without Buyer’s
prior written consent, which shall not be unreasonably withheld, conditioned or
delayed. Exercise of a mandatory renewal option shall not be considered a new
lease. To the extent specifically disclosed to Buyer in connection with any
request for approval, any brokerage commission and the cost of tenant
improvements or other allowances payable with respect to a new Lease shall be
prorated between Buyer and Seller in accordance with their respective periods
of ownership as it bears to the primary term of the new Lease. Further, from
and after the expiration of the Due Diligence Period, Seller will not modify or
cancel any existing Lease covering space in the Real Property without first
obtaining the written consent of Buyer which shall not be unreasonable
withheld, conditioned or delayed. Buyer shall have five (5) business days
following receipt of a request

-27-






 




for any consent pursuant to this Section 34.2 in which to approve or
disapprove of any new Lease or any modification or cancellation of any existing
Lease. Failure to respond in writing within said time period shall be deemed to
be consent. Following the expiration of the Due Diligence Period, Seller’s
execution of a new lease or modification or cancellation of an existing Lease
following Buyer’s reasonable refusal to consent thereto shall constitute a
default hereunder.


          34.3 From and after the expiration of the Due Diligence Period, to not
sell, assign, or convey any right, title, or interest whatsoever in or to the
Real Property, or create any lien, security interest, easement, encumbrance,
charge, or condition affecting the Real Property (other than the Permitted
Exceptions) which is not removed prior to the Closing Date.



          34.4 From and after the expiration of the Due Diligence Period, to not,
without Buyer’s written approval, (a) amend or waive any right under any
Contract, or (b) enter into any service, operating or maintenance agreement
affecting the Real Property that would survive the Close of Escrow.



          34.5 From and after the expiration of the Due Diligence Period, to fully
and timely comply with all obligations to be performed by it under the Leases
and Contracts, and all Permits, licenses, approvals and laws, regulations and
orders applicable to the Real Property.



          34.6 From and after the expiration of the Due Diligence Period, to provide
Buyer with monthly rent rolls containing the same information in its rent roll
delivered with the Due Diligence Materials.



          34.7 From and after the expiration of the Due Diligence Period, to provide
Buyer with copies of (a) any default letters sent to tenants and, (b) any
copies of correspondence received from a tenant that is “going dark”, seeking
to re-negotiate its lease, contemplating bankruptcy or alleging default and (c)
notices of bankruptcy filings received with respect to any tenant.



     35. Cooperation with S-X 3-14 Audit. Buyer advises Seller that Buyer
intends to assign all of its rights, title and interest in and to this
Agreement. The assignee may be a publicly registered company (“Registered
Company”) promoted by Buyer. The Seller acknowledges that it has been advised
that if the purchaser is a Registered Company, the assignee is required to make
certain filings with the Securities and Exchange Commission (the “SEC Filings”)
that related to most recent pre-acquisition fiscal year (the “Audited Year”)
for the Property. To assist the assignee in preparing the SEC Filings, Seller
agrees to provide the assignee with the following:


          35.1 Access to bank statements for the Audited year;



          35.2 Rent Roll as of the end of the Audited Year;



          35.3 Operating Statements for the Audited Year;



          35.4 Access to the general ledger for the Audited Year;



-28-






 




          35.5 Cash receipts schedule for each month in the Audited Year;



          35.6 Access to invoice for expenses and capital improvements in the Audited Year;



          35.7 Copies of all insurance documentation for the Audited Year; and



          35.8 Copies of accounts receivable aging as of the end of the Audited Year
and an explanation for all accounts over thirty (30) days past due as of the
end of the Audited Year



     The provisions of this Section 35 shall survive the Close of Escrow.


     IN WITNESS WHEREOF, Buyer and Seller do hereby execute this Agreement as
of the date first written above.



	 	 	 	 	 	 	 	 	 
	      SELLER:	 	LNR HARBOR BAY, LLC,
	 	 	a Delaware limited liability company
	 	 	
By:
	 	LEGEND OAKS LIMITED PARTNERSHIP,
	 	 	 	 	a Delaware limited partnership, its member
	 	 	 	 	By:
	 	LENNAR LEGEND OAKS HOLD INGS, INC.
	 	 	 	 	 	 	a Colorado corporation, its member
	 	 	 	 	 	 	By:	 	 
	 	 	 	 	 	 	 	 	
David O. Team or Daniel C. Grable
	 	 	 	 	 	 	 	 	Its: Vice President
	 	 	 	 	 	 	 	 	 
	      BUYER:	 	TRIPLE NET PROP ERTIES, LLC,
	 	 	a Virginia limited liability company
	 	 	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 	 	 
	 	 	 	 	
Anthony W. Thompson, President



-29-






 


Acceptance by Escrow Holder


Escrow Holder acknowledges receipt of the foregoing Agreement and accepts the
instructions contained therein.



	 	 	 	 	 	 	 
	Dated: May 6, 2003	 	FIRST AMERICAN TITLE COMPANY
	 	 	 	 	 	 	 
	 	 	
By:	 	 	 	 
	 	 	 	

	 	 	 	 	Print Name: 
	TERRI HOVDESTAD
	 	 	 	 	 	

	 	 	 	 	Print Title:
	SR. ESCROW OFFICER
	 	 	 	 	 	




-30-






 


EXHIBIT LIST




	 	 	 
	EXHIBIT “A”	 	
Legal Description
	EXHIBIT “B”	 	
Grant Deed
	EXHIBIT “C”	 	
Bill of Sale
	EXHIBIT “D”	 	
Assignment and Assumption
	EXHIBIT “E”	 	
Due Diligence Materials
	EXHIBIT “F”	 	
Form of Tenant Estoppel Certificate




-31-