Exhibit 10.447


 


PURCHASE AND SALE AGREEMENT 

AND ESCROW INSTRUCTIONS


 


THIS PURCHASE AND SALE
AGREEMENT AND ESCROW INSTRUCTIONS (this “Agreement”) is made and entered into
as of August   , 2004, between GATEWAY PAVILIONS, L.L.C., an
Arizona limited liability company (“Seller”), and INLAND REAL ESTATE
ACQUISITIONS, INC., an Illinois corporation, or its assigns permitted under section 15.2,
below (“Purchaser”), with reference to the following:


 


A.                                   Seller
is the owner of the improved real property (the “Real Property”) described on
Exhibit A attached hereto together with certain personal property located upon
or used in connection with such improved real property and certain other assets
relating thereto, all as more particularly described in section 2, below.


 


B.                                     Seller
desires to sell to Purchaser, and Purchaser desires to purchase from Seller,
the Property (defined in section

2, below) on the terms and subject to the conditions contained in this
Agreement.


 


NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


1.                                       BASIC TERMS AND DEFINITIONS; REFERENCES


 


1.1                                 Basic Terms and Definitions.


 


(a)                                  Effective Date.  The effective date of this Agreement shall be
the date set forth above (“Effective Date”) .


 


(b)                                 Closing Date. 
The Close of Escrow shall occur on December 15, 2004 (the “Closing
Date”).


 


(c)                                  Title Review Period.  The “Title Review Period” shall end at 5:00
p.m. on August 13, 2004.


 


(d)                                 Due Diligence Period.  The “Due Diligence Period” shall end on August 2,
2004, at 5:00 p.m.


 


(e)                                  Escrow Holder.  The escrow holder shall be First American
Title Insurance Company in Chicago, Illinois (“Escrow Holder”).


 


(f)                                    Title Company.  The title
company shall be First American Title Insurance Company (“Title
Company”).


 


1.2                                 References.  All references to Exhibits and
Schedules refer to Exhibits and Schedules attached to this Agreement, and all
such Exhibits and Schedules are incorporated herein by reference.


 


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2.                                       PURCHASE AND SALE.


 


Subject to the terms and
conditions of this Agreement, Seller agrees to sell, assign and transfer to
Purchaser and Purchaser agrees to purchase from Seller, for the purchase price
set forth in section 3 hereof, the following (collectively, the “Property”):


 


2.1                                 The
Real Property, together with the buildings located thereon, all associated
parking areas thereon and all other improvements located thereon (the buildings
and such other improvements are, collectively, the “Improvements”).  All references hereinafter made to the Real
Property shall be deemed to include, to the extent owned by Seller, all rights,
privileges, easements and appurtenances benefiting the Real Property and/or the
Improvements, including, without limitation, all mineral and water rights, and
all easements, rights-of-way and other appurtenances used or connected with the
beneficial use or enjoyment of the Real Property;


 


2.2                                 All
of Seller’s right, title and interest in and to the personal property,
equipment, supplies and fixtures (collectively, the “Personal Property”) listed
on Exhibit B attached hereto or otherwise left on the Real Property at the
Close of Escrow (as defined in section 8.1 hereof) to the extent owned by
Seller;


 


2.3                                 All
of Seller’s right, title and interest in and to any intangible property used or
useful in connection with the foregoing, including, without limitation, all
contract rights, warranties, guaranties, licenses, permits, entitlements, the
name “Gateway Pavilions,” governmental approvals and certificates of occupancy
which benefit the Real Property and/or the Personal Property;


 


2.4                                 All
of Seller’s right, title and interest in and to all leases affecting the Real
Property as of the Close of Escrow listed on the Rent Roll attached hereto as
Exhibit I (the “Rent Roll”), or approved or deemed approved by Purchaser under section 5.3,
below (the “Leases”), together with all security deposits, letters of credit,
guaranties and any other security for the obligations of the tenants under the
Leases delivered to Seller and not theretofore applied to tenant obligations
under the Leases; and


 


2.5                                 All
of Seller’s right, title and interest in, and to the contracts listed on
Exhibit C attached hereto, and all contracts hereafter entered into by Seller
to the extent permitted by the provisions of this Agreement (the “Contracts”).


 


Notwithstanding anything
to the contrary contained herein, but subject to the last sentence of section 10.1,
below, the term “Property” shall expressly exclude: (a) any Rents (as defined
in section 10.1, below) and any other amounts payable by tenants under the
Leases for periods before the Close of Escrow, (b) any Rents or other amounts
payable by any former tenants of the Property, (c) any payments owed to Seller
under the Development Agreement (defined in section 4.l(f), below) or the
Sharing


 


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Agreement (defined in Section 4.5
below) for periods or with respect to events occurring before or after the
Close of Escrow, and (d) with respect to services or materials provided by
Seller before the Closing Date: (i) any site, or monument or pylon sign
reimbursement costs, or similar costs, paid by any tenant or by any occupant
after the Close of Escrow, (ii) any judgments, stipulations, orders or
settlements with any tenants, any occupants, or former tenants or occupants,
paid after the Close of Escrow, for periods or with respect to events occurring
before the Close of Escrow, and (iii) any sums payable by third parties to
Seller in respect of, or arising out of, the Property, paid after the Close of
Escrow for periods or with respect to events occurring before the Close of
Escrow.


 


3.                                    PURCHASE PRICE AND DEPOSIT.


 


3.1           Purchase
Price.  The purchase price for the
Property shall be $65,141,045 (the “Purchase Price”).


 


3.2           Payment
of Purchase Price.  The Purchase
Price shall be payable as follows :


 


3.2.1 Within three
business days after the Opening of Escrow (defined below), Purchaser shall
deposit in escrow with Escrow Holder, by check or in immediate, same-day
federal funds, the sum of $1,500,000 (the “Deposit”). Immediately upon Escrow
Holder’s receipt of the Deposit (the “Opening of Escrow”), Escrow Holder shall
invest the same in a federally insured interest-bearing account acceptable to
Seller and Purchaser. All interest accruing on the Deposit shall be deemed part
of the Deposit. Upon expiration of the Due Diligence Period, if Purchaser has
not previously terminated this Agreement by its terms, the Deposit shall become
nonrefundable, except as expressly provided herein.


 


3.2.2 If all the
conditions in section 7.1 hereof have been satisfied or waived by
Purchaser, Purchaser shall deposit in current funds with Escrow Holder, at
least one business day before or, if it shall not delay the Close of Escrow on,
the Closing Date, an amount equal to the Purchase Price minus the Deposit and
all interest accrued thereon, and plus or minus applicable prorations pursuant
to section 10 hereof.


 


3.3           Disposition
of Deposit Upon Failure to Close. If the
Close of Escrow fails to occur due to Purchaser’s default under this Agreement
(all of the conditions to Purchaser’s obligation to close having been satisfied
or waived), the disposition of the Deposit and all interest accrued thereon
shall be governed by section 13.1 hereof. If the Close of Escrow fails to
occur due to Seller’s default under this Agreement (all of the conditions to
Seller’s obligation to close having been satisfied or waived), the Deposit and
all interest accrued thereon shall promptly be refunded to Purchaser. If the
Close of Escrow fails to occur due to the failure of any of the conditions set
forth in sections 7.1 or 7.2, hereof other than as a result of Purchaser’s or
Seller’s default under this Agreement, the disposition of the Deposit and


 


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all
interest accrued thereon shall be governed by section 9.3 hereof.


 


4.            PROPERTY INFORMATION; TITLE AND SURVEY REVIEW;
INSPECTIONS AND DUE DILIGENCE; TENANT ESTOPPEL CERTIFICATES; CONFIDENTIALITY.


 


4.1           Property Information.  If
not delivered by Seller to Purchaser before the Effective Date, Seller shall
deliver to Purchaser within five business days after the Effective Date, to the
extent in Seller’s possession, the following (collectively, the “Property
Information”):


 


(a)           the Leases;


 


(b)           [intentionally deleted];


 


(c)                                  the most current operating statements for the
Real Property;


 


(d)                                 copies of the Contracts;


 


(e)                                  existing land title surveys, if any, for the
Real Property;


 


(f)                                    Development Agreement dated November 5,
2001, among Seller, Costco Wholesale Corporation, and Harkins Phoenix Cinemas,
L.L.C., and all amendments thereto (the “Development Agreement”); and


 


(g)                                 any environmental, soils and/or engineering reports
prepared for Seller or Seller’s predecessors.


 


4.2           Title and Survey Review; Title Policy.


 


4.2.1
Delivery of Title Commitment and Survey. Seller has, prior to the
Effective Date, at Seller’s sole cost and expense, obtained and delivered to
Purchaser: (i) a preliminary title commitment covering the Real Property (the “Title
Commitment”), together with legible photocopies of all documents (collectively,
the “Title Documents”) referenced in the Title Commitment, which is intended to
comply with the Title Commitment Requirements specified in Schedule 1;
and, (ii) a new or updated ALTA survey for the Real Property, dated not more
than thirty (30) days prior to the Effective Date (the “Survey”), which is
intended to comply with the Survey Requirements specified in Schedule 2.  Notwithstanding the foregoing, Seller makes no
representations or warranties, and Seller shall have no responsibility, with
respect to the completeness of the Title Documents made available to Purchaser
by the Title Company, or the accuracy of the Survey.


 


4.2.2
Title and Survey Review and Cure. On or before the end of the Title
Review Period, Purchaser shall deliver to Seller and Escrow Holder written
notice (“Purchaser’s Title and
Survey Notice”) of Purchaser’s approval or disapproval of the matters reflected
in the Title Commitment and Survey. The failure


 


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of Purchaser to deliver
to Seller Purchaser’s Title and Survey Notice on or before the end of the Title
Review Period shall be deemed to constitute Purchaser’s approval of the
condition of title to the Real Property.  If Purchaser disapproves any matter of title
shown in the Title Commitment or Survey, Seller may, but shall have no
obligation to, within five days after its receipt of the Purchaser’s Title and
Survey Notice (“Seller’s Election Period”), elect to eliminate or ameliorate to
Purchaser’s reasonable satisfaction the disapproved title matters by giving
Purchaser written notice (“Seller’s Title and Survey Notice”) of those
disapproved title matters, if any, which Seller agrees to so eliminate or
ameliorate by the Closing Date.  Any
title exception disapproved by Purchaser shall be deemed ameliorated to
Purchaser’s reasonable satisfaction to the extent that Seller either causes
such exception to be removed from the Title Policy (as defined in section 4.2.3,
below)  or to be affirmatively insured
over.  If Seller does not elect to, or is
unable to, eliminate or ameliorate any disapproved title matters, if Purchaser
reasonably disapproves Seller’s Title and Survey Notice, or if Seller fails to
timely deliver Seller’s Title and Survey Notice, Purchaser shall have the
right, upon delivery to Seller and Escrow Holder, on or before five days
following the expiration of Seller’s Election Period, of a written notice, to
either: (a) waive its prior disapproval, in which event said disapproved
matters shall be deemed approved; or (b) terminate this Agreement and the
Escrow (as defined in section 9.1, below). 
Failure to take either one of the actions described in subsections (a)
and (b), above, shall be deemed to be Purchaser’s election to take the action
described in subsection (a), above.  If Purchaser elects to terminate this
Agreement as provided in subsection (b), above, this Agreement shall automatically
terminate, the parties shall be released from all further obligations under
this Agreement (except pursuant to any provisions which by their terms survive
a termination of this Agreement), the Deposit shall be immediately returned to
Purchaser and Purchaser shall immediately return all Property Information to
Seller.  Notwithstanding the foregoing,
Seller shall cause to be released on or before the Close of Escrow all
consensual monetary liens encumbering the Property (other than Permitted Exceptions
[defined in section 4.2.3, below], and those created by the actions of
Purchaser or its agents, representatives, contractors or employees), except for
mechanics’ and materialmen’s liens with respect to which Seller may, in lieu of
obtaining releases, at Seller’s sole cost and expense, take such action
necessary to have such liens removed as exceptions to the Title Policy or
obtain title insurance coverage for such liens.


 


If any encumbrance or
other exception to title arises or is discovered after the delivery of the
Title Commitment and Survey (an “Additional Encumbrance”), the party
discovering such Additional Encumbrance shall promptly give written notice
thereof to the other. No later than five days after delivery of the notice of
such Additional Encumbrance, Purchaser shall deliver a new Purchaser’s Title
and Survey Notice to Seller specifying whether the Additional Encumbrance is
approved or disapproved. In


 


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addition, Seller may
propose Additional Encumbrances to Purchaser, for Purchaser’s approval. No
Additional Encumbrance may be disapproved by Purchaser unless it materially and
adversely affects the value of the Real Property, or its use or development as
a retail shopping center. If Purchaser objects to the Additional Encumbrance,
the parties shall proceed in the same manner as set forth above for disapproved
title matters arising from the Title Commitment and Survey. If Purchaser fails
to deliver Purchaser’s new Title and Survey Notice within the time specified in
this paragraph, Purchaser shall be deemed to have approved the Additional

Encumbrance(s).  After the Effective
Date, Seller covenants not to cause Additional Encumbrances to be imposed on
the Real Property which shall encumber the Real Property after the Close of
Escrow without Purchaser’s prior written consent, not be unreasonably withheld
or delayed. Not later than fifteen (15) days prior to the Closing, Seller shall
obtain and deliver to Purchaser an updated Survey and updated Title Commitment,
dated no earlier than 45 days before the Closing Date. Any new items shown on
such updated Survey and/or Title Commitment shall, unless previously disclosed
to Purchaser as an Additional Encumbrance, be deemed to be an Additional
Encumbrance, which shall be resolved as provided above


 


4.2.3 Delivery of
Title Policy at Closing.  As a
condition precedent to the Close of Escrow, the Title Company shall have issued
and delivered to Purchaser, or shall have committed to issue and deliver to
Purchaser, with respect to the Real Property, an Extended Coverage ALTA Owner’s
Policy of Title Insurance (1992 Form) (the “Title Policy”) issued by the Title
Company as of the date and time of the recording of the Deed (as defined in section 6.1,
below) conveying the Real Property, in the amount of the Purchase Price,
insuring Purchaser as owner of good and marketable fee simple title to the Real
Property, subject only to the Permitted Exceptions, and in compliance with the
title requirements described in Schedule 2.  “Permitted Exceptions” shall mean and include:
(a) any lien to secure payment of real estate taxes, including special
assessments, not delinquent, (b) all matters which could be revealed or
disclosed by a physical inspection or a survey of the Real Property, and
matters affecting the Real Property which are created by or with the written
consent of Purchaser, (c) the rights of the tenants under the Leases affecting
the Real Property, (d) all exceptions disclosed by the Title Commitment or
Survey relating to the Real Property which are approved, or deemed approved, by
Purchaser in accordance with section 4.2.2 hereof, and (e) all applicable
laws, ordinances, rules and governmental regulations (Including, without
limitation, those relating to building, zoning and land use) affecting the
development, use, occupancy or enjoyment of the Real Property.


 


4.3                                 Inspections;
Due Diligence Period.


 


4.3.1 Inspections in
General. Commencing from the Effective Date and continuing through and
including the Closing Date, Purchaser, its agents and employees shall have a
limited license (the “License”) to enter upon the Real Property for the


 


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purpose of making
non-invasive inspections at Purchaser’s sole risk, cost and expense. Before any
such entry, Purchaser shall provide Seller with a certificate of insurance
naming Seller as an additional insured, with an insurer and insurance limits
and coverage reasonably satisfactory to Seller. All of such entries upon the
Real Property shall be at reasonable times during normal business hours and
after at least 48 hours’ prior notice to Seller, and Seller or Seller’s agent
shall have the right to accompany Purchaser during any activities performed by
Purchaser on the Real Property. Notwithstanding anything stated to the contrary
herein, Purchaser’s right to inspect any of the occupied space in the Real
Property shall be subject to the terms and conditions of the Lease with respect
to such space, and such inspections shall not interfere with the rights of
tenants. If any inspection or test disturbs the Real Property, Purchaser shall
restore the Real Property to the same condition as existed before the
inspection or test. Purchaser shall defend, indemnify Seller and hold Seller,
Seller’s, shareholders, directors, members, managers, partners, officers,
tenants, agents, contractors and employees and the Real Property harmless from
and against all losses, costs, damages, claims and liabilities, including but
not limited to, mechanics’ and materialmen’s liens and Seller’s attorneys’
fees, arising out of or in connection with Purchaser’s inspection of the Real
Property. The License shall be deemed revoked upon termination of this
Agreement. The provisions of this section 4.3.1 shall survive the Close of
Escrow or the earlier termination of this Agreement. Notwithstanding anything
stated to the contrary herein, Purchaser’s rights under this Section 4.3.1
to inspect the Real Property after the Due Diligence Deadline shall not be
deemed or construed to extend the Due Diligence Deadline, or give Purchaser any
additional rights to terminate this Agreement.


 


4.3.2 Environmental
Inspections. The inspections under section 4.3.1 may include
non-invasive Phase I environmental inspections of the Real Property, but no
Phase II environmental inspections or other invasive inspections or sampling of
soil or materials, including without limitation construction materials, either
as part of the Phase I inspections or any other inspections, shall be performed
without the prior written consent of Seller, which may be withheld in its sole
and absolute discretion. If consented to by Seller,
the proposed scope of work and the party which shall perform the work shall be
subject to Seller’s review and approval, which may be withheld in its sole and
absolute discretion.


 


4.3.3 Termination
During Due Diligence Period.  If
Purchaser determines, in its sole discretion, before the expiration of the Due
Diligence Period, that the Real Property is unacceptable for Purchaser’s
purposes, Purchaser shall have the right to terminate this Agreement by giving
to Seller notice of termination (“Termination Notice”) before the expiration of
the Due Diligence Period, in which event the Deposit shall be immediately
refunded to Purchaser, Purchaser shall immediately return all Property
Information to Seller and, except for those


 


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provisions of this
Agreement which expressly survive the termination of this Agreement, the
parties hereto shall have no further obligations hereunder. If Purchaser fails
to deliver a Termination Notice to Seller and Escrow Holder on or before the
expiration of the Due Diligence Period, Purchaser shall be deemed to be
satisfied with all aspects of all of the Real Property (other than title and
survey matters, which shall continue to be governed by the provisions of section 4.2),
including, without limitation, the condition and suitability of all the Real
Property for Purchaser’s intended use, and Purchaser shall be obligated to
acquire the Real Property in accordance with the provisions of this Agreement.


 


4.4                                 Tenant
and REA Estoppel Certificates. It is a condition precedent to Purchaser’s obligation to consummate this transaction
that Seller obtain and deliver to Purchaser, not less than tan (10) business
days prior to the Closing Date, estoppel certificates (“Tenant Estoppel
Certificates”), dated no earlier than 45 days before the Closing Date, in the
form attached as Exhibit H or other form required under each particular Lease,
executed by: (a) each of the following named tenants: Bed Bath & Beyond,
Borders Books, Marshalls, Circuit City, Sports Authority, Mor Furniture,
Carrabbas, Red Robin, Petco, Krispy Kreme, Paul Lee’s Chinese Kitchen (if a
lease has then been executed with Paul Lee’s Chinese Kitchen), Village Inn,
McDonalds and Peter Piper Pizza and (b) tenants occupying at least 85% of the
leased rental floor area of the Real Property, excluding the floor area leased
under the leases described in subsection (a), above.  Seller shall diligently attempt to obtain
Tenant Estoppel Certificates from all tenants of the Property.


 


Only with respect to
Leases described in subsection (b), above, for which Seller shall not have
received and delivered to Purchaser Tenant Estoppel Certificates (not to exceed
15% of the floor area thereof), Seller shall deliver to Purchaser not less than
ten (10) business days prior to Closing, in lieu thereof, a Seller’s
certificate substantially in the form of Exhibit E (“Seller’s Estoppel Certificate”),
for each such Lease.


 


It is a condition
precedent to Purchaser’s obligation to consummate this transaction that Seller
obtain and deliver to Purchaser, not less than ten (10) business days prior to
the Closing Date, estoppel certificates (“REA Estoppel Certificates”) from each
party to any reciprocal easement agreement, declaration, or similar agreement
recorded against the Property (each, an “REA”) stating: (a) whether such party
knows of any default tinder the REA, and if there are known defaults,
specifying the nature thereof; (b) whether to such party’s knowledge the REA
has been assigned, modified or amended in any way (and if it has, then stating
the nature thereof); and (c)whether to such party’s knowledge, the REA is in
full force and effect.


 


4.5           Contracts. On or before the
end of the Due Diligence Period, Purchaser shall notify Seller which of the
Contracts Purchaser
wishes to assume at Closing, and which of the Contracts


 


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Purchaser
wishes Seller to terminate as of the Closing Date. If Purchaser doeS not so
notify Seller, Purchaser shall be deemed to have elected to assume all of the
Contracts at Closing. Notwithstanding anything stated to the contrary herein,
Purchaser shall not be obligated to assume any of Seller’s obligations under,
and Seller shall terminate at Close of Escrow, the management and leasing
agreement with respect to the Property, if any.


 


Purchaser
acknowledges that Seller and Costco Wholesale Corporation are parties to a Sharing
Agreement, as amended (the “Sharing Agreement”), with respect to, inter  alia,
the Development Agreement dated October 15, 2001, between the City of
Avondale and Costco Wholesale Corporation, as amended, recorded on November 5,
2001, in the official records of Maricopa County, Arizona, as Instrument no.  2001-1034469. Neither the Sharing Agreement
nor the Development Agreement is a Contract. All rights, duties and obligations
of Seller under the Development Agreement and the Sharing Agreement shall remain
the rights, duties and obligations of Seller following the Closing Date. Seller
shall indemnify and hold Purchaser harmless from any asserted claims against
Purchaser arising out of or related to the Development Agreement and/or the
Sharing Agreement. Purchaser agrees to reasonably cooperate with Seller so that
Seller may exercise all of its rights, duties and obligations under the
Development Agreement and/or the Sharing Agreement.


 


4.6                                 Confidentiality. Before the Close of Escrow or if the Close
of Escrow never occurs, the Property Information and all other information,
other than matters of public record or matters generally known to the public,
furnished to, or obtained through inspection of the Real Property by,
Purchaser, its affiliates, lenders, employees, attorneys, accountants and other
professionals and agents relating to the Real Property, shall be treated by
Purchaser, its affiliates, lenders,
employees, attorneys, accountants
and other professionals and agents as confidential, and shall not be disclosed
to anyone (except as reasonably required in connection with Purchaser’s
evaluation of the Real Property) except to Purchaser’s consultants who agree to
maintain the confidentiality of such information, and the Property Information
shall be returned to Seller by Purchaser if the Close of Escrow does not occur.
The terms of this Agreement shall not be disclosed to anyone before the Close
of Escrow except to Purchaser’s and Seller’s consultants who agree to maintain
the confidentiality of such information. The confidentiality provisions of this
section 4.6 shall not apply to any disclosures made by Purchaser or Seller
as required by law, by court order, or in connection with any subpoena served
upon Purchaser or Seller, although Purchaser and Seller shall provide each
other with written notice before making any such disclosure.


 


5.                                     OPERATIONS AND RISK OF LOSS


 


5.1           Ongoing Operations. During the
pendency of this Agreement, but subject to the limitations set forth below,
Seller


 


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shall carry on its
businesses and activities relating to the Real Property in the same manner as
it did before the Effective Date.


 


5.2                                 New
Contracts.  Before the expiration of
the Due Diligence Period, Seller may, without Purchaser’s consent, enter into
contracts relating to the Real Property, as long as Seller provides Purchaser
with written notice of the same not later than ten days prior to the end of the
Due Diligence Period.  Following the
expiration of the Due Diligence Period, Seller shall not enter into any
contract that shall be an obligation affecting the Real Property subsequent to
the Close of Escrow (except contracts entered into in the ordinary course of
business that are terminable without cause on 30-days’ notice), without the
prior consent of the Purchaser. 
Purchaser’s consent shall not be unreasonably withheld, and Purchaser
shall respond to Seller’s request for Purchaser’s consent within ten days.


 


5.3                                 Leasing
Arrangements.  Before the expiration
of the Due Diligence Period, Seller may, without Purchaser’s consent, enter into
new leases of space in the Real Property and amendments, expansions and
renewals of the Leases, as long as Seller provides Purchaser with prior written
notice of the same not less than ten days prior to the end of the Due Diligence
Period.  Following the expiration of the
Due Diligence Period, Seller may enter into new leases of space in the Real
Property and amendments, expansions and renewals of Leases, only with Purchaser’s
prior written consent, which shall not be unreasonably withheld or delayed. Notwithstanding
the foregoing, Purchaser’s failure to consent to a proposed tenant will not be
deemed unreasonable if:  (a) the proposed
tenant’s use would violate any REA, any existing exclusive or any prohibited
use in any tenant Lease, or otherwise be incompatible with a first class
shipping center;  (b)  the proposed minimum rent is less than the
minimum rent specified for such space in the Rent Roll; or (c) the proposed
lease contains sent concessions which extend beyond the Closing Date which are not
reflected on the Rent Roll (unless Seller agrees to give Purchaser a credit at
the Close of Escrow for such unexpired concession).  Purchaser shall be deemed to have consented
to any new Lease or any Lease amendment, expansion or renewal if it has not
notified Seller specifying with particularity the matters to which Purchaser
reasonably objects, within five days after its receipt of Seller’s written
request for consent, together with a copy of the Lease amendment, expansion or
renewal, or the new Lease.  Purchaser
acknowledges that Seller is currently in negotiations (including negotiations
of letters of intent) for those leases (the “Pending Leases”) described on Schedule 3.
Purchaser expressly consents to Seller entering into each of the Pending
Leases, provided that the final version of each Pending Lease contains economic
terms which are no less favorable to the landlord than those shown on Schedule 3.  At the Close of Escrow, Purchaser shall, with
respect to all new Leases that were entered into pursuant to this section 5.3,
and with respect to all other Lease amendments, expansions, assume in writing
(pursuant to the Assignment of Leases and Contracts and Bill of Sale) Seller’s obligations
arising on or after the Closing Date under such new 


 


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Leases and Lease
amendments, expansions or renewals.


 


5.4                                      Damage
or Condemnation. Risk of loss resulting from any condemnation or eminent
domain proceeding which is commenced or has been threatened against the Real
Property before the Close of Escrow, and risk of loss to the Real Property due
to fire, flood or any other cause before the Close of Escrow, shall remain with
Seller, If before the Close of Escrow the Real property or any portion thereof
shall be materially damaged, or if the Real Property or any material portion
thereof shall be subjected to a bona fide threat of condemnation or
shall become the subject of any proceedings, judicial, administrative or
otherwise, with respect to taking by eminent domain or condemnation, Purchaser
may elect not to acquire the Real Property by delivering written notice of such
election to Seller within five days after Purchaser learns of the damage or
taking, in which event Purchaser shall no longer be obligated to purchase, and
Seller shall no longer be obligated to sell, the Real Property. If the Closing
Date is within the said five-day period, the Close of Escrow shall be extended
to the next business day following the expiration of said five-day period. If
no such election is made or if the damage is not material, this Agreement shall
remain in full force and effect, the purchase contemplated herein, less any
interest taken by eminent domain or condemnation, shall be effected with no
further adjustment, and upon the Close of Escrow, Seller shall assign, transfer
and set over to Purchaser all of the right, title and interest of Seller in and
to any awards that have been or that may thereafter be paid for such taking,
and Seller shall assign, transfer and set over to Purchaser any insurance
proceeds that may thereafter be paid for such damage or destruction giving
Purchaser a credit at the Close of Escrow for any deductible under such
policies.  For purposes of this section 5.4,
(i) “Material damage” or “Materially damaged” means damage exceeding
$250,000.00, (ii) “material portion” means any portion of the Real Property
that has a fair market value exceeding $250,000.00.


 


The provisions of this section 5.4
hereof shall govern their obligations in the event of damage or destruction to
the Real Property or condemnation of all or part of the Real Property.


 


6.                                     SELLER’S AND PURCHASER’S DELIVERIES


 


6.1                                 Seller’s
Deliveries into Escrow. No later than one business day before or, if it
shall not delay the Close of Escrow on, the Closing Date, Seller shall deliver
into Escrow (as defined in section 9, below) to the Escrow Holder the
following, all in form and substance reasonably acceptable to Purchaser:


 


(a)                                  Deed.  A special warranty deed (the “Deed”), executed
and acknowledged by Seller, conveying to Purchaser Seller’s title to the Real
Property;


 


(b)                                 Assignment
of Leases and Contracts and Bill of Sale. 
An Assignment of Leases and Contracts and Bill of Sale (“Assignment of
Leases and Contracts and Bill of Sale”);


 


11





















 


(c)                                  State
Law Disclosures.  Any such disclosures and reports as are
required by applicable state and local law in connection with the conveyance of
the Real Property;


 


(d)                                 Non-Foreign
Certificate.  A Non-foreign Certificate
executed by Seller;


 


(e)                                  Certificates
of Insurance.  Certificates of insurance
of tenants under the Leases, as required by the Leases;


 


(f)                                    Vacancy
Escrow Agreement.  Three (3)
counterparts of a Vacancy Escrow Agreement (as defined in section 7.1(f)),
executed by Seller;


 


(g)                                 Obligation
to Purchase and Right of First Refusal Agreement.  An Obligation to Purchase and Right of First
Refusal Agreement executed by Seller, in the form of Exhibit G, attached hereto
(the “Pad Agreement”);


 


(h)                                 Notice
to Other Owners.  Five counterparts
of a Notice to Other Owners, executed by Seller, which shall, under section 11.17
of the Construction, Operation and Easement Agreement among Seller, Costco
Wholesale Corporation and Harkins Phoenix Cinemas, L.L.C., recorded on November 5,
2001, in the official records of Maricopa County, Arizona, as instrument no.
2001-1034470, as amended by the First Amendment of Construction, Operation and
Reciprocal Agreement dated December 31, 2003, recorded on January 6,
2004, in the official records of Maricopa County, Arizona, as instrument no.
2004-0013091 (collectively, the “OEA”), release Seller from unaccrued
obligations under the OEA from and after the Closing Data (the “Notice to Owners”);
and


 


(i)                                     Additional
Documents.  Any additional documents
that Escrow Holder or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement.


 


6.2                                 Purchaser’s
Deliveries into Escrow.  No less than
one business day before or, if it shall not delay the Close of Escrow on, the
Closing Date, Purchaser shall deliver into Escrow to the Escrow Holder the
following:


 


(a)                                  Purchase
Price.  The Purchase Price, less the Deposit
that is applied to the Purchase Price, plus or minus applicable prorations,
deposited by Purchaser with the Escrow Holder in immediate, same-day federal
funds wired for credit into the Escrow Holder’s escrow account;


 


(b)                                 Assignment
of Leases and Contracts and Bill of Sale. 
An Assignment of Leases and Contracts and Bill of Sale executed by
Purchaser;


 


(c)                                  Vacancy
Escrow Agreement.  Three (3)
counterparts of a Vacancy Escrow Agreement, executed by Purchaser;


 


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(d)                                 Pad
Agreement.  Pad Agreement, executed
by Purchaser;


 


(e)                                  Notice
to Owners.  Five counterparts of the
Notice to Owners, executed by Purchaser;


 


(f)                                    State
Law Disclosures.  Any such disclosures and reports as are required
by applicable state and local law to be provided by purchasers in connection
with the conveyance of the Real Property; and


 


(g)                                 Additional
Documents.  Any additional documents that
Escrow Holder or the Title Company may reasonably require for the proper
consummation of the transaction contemplated by this Agreement.


 


6.3                                 Closing
Statements/Escrow Fees; Tenant Notices.  Concurrently with the Close of Escrow, Seller
and Purchaser shall deposit with the Escrow Holder executed closing statements consistent
with this Agreement in the form required by the Escrow Holder.  Seller and Purchaser shall execute, at the
Close of Escrow, and Purchaser shall deliver to each tenant immediately after
the Close of Escrow, tenant notices regarding the sale of the Real Property.


 


6.4                                 Post-Closing
Deliveries.  Immediately after the
Close of Escrow, to the extent in Seller’s possession, Seller shall deliver to
Purchaser:  the original Leases; copies
or originals of the Contracts, receipts for deposits, and unpaid bills; all
keys, if any, used in the operation of the Real Property; and, if in Seller’s
possession or control, any “as-built” plans and specifications of the
Improvements.  Seller shall instruct its property
manager to deliver to Purchaser any of the foregoing which is in its property
manager’s possession or control.


 


7.                                     CONDITIONS TO
PURCHASER’S AND SELLER’S OBLIGATIONS.


 


7.1                                 Conditions
to Purchaser’s Obligations. The Close of Escrow and Purchaser’s obligation
to consummate the transaction contemplated by this Agreement are subject to the
satisfaction of the following conditions for Purchaser’s benefit (or Purchaser’s
waiver thereof, as Purchaser may waive any or all of such conditions) on or
before the Closing Date or on the dates designated below for the satisfaction
of such conditions:


 


(a)                                  All
of Seller’s representations and warranties contained in this Agreement shall be
true and correct in all material respects as of the Effective Date and as of
the Closing Date, subject to any qualifications hereafter made to any of Seller’s
representations as provided for in section 11.1 hereof;


 


(b)                                 As
of the Closing Date, Seller shall have performed its obligations hereunder and
all deliveries to be made at Close of Escrow by Seller shall have been
tendered, including


 


13





















 


but not limited to Seller
having obtained and delivered to Purchaser the Tenant Estoppel Certificates,
Seller Estoppel Certificate and REA Estoppel Certificates described in section 4.4,
above and Seller having delivered to Purchaser the audit representation letter
described in section 15.19;


 


(c)                                  There
shall exist no actions, suits, arbitrations, claims, attachments, proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings, pending or threatened against Seller, that
would materially and adversely affect Seller’s ability to perform its
obligations under this Agreement;


 


(d)                                 There
shall exist no pending or threatened action, suit or proceeding with respect to
Seller before or by any court or administrative agency which seeks to restrain
or prohibit, or to obtain damages or a discovery order with respect to, this Agreement
or the consummation of the transaction contemplated hereby; and


 


(e)                                  As
of the Closing Date, construction which is landlord’s obligation with respect
to the Leases therefor shall have been completed as required under such Leases.  Said construction shall be completed in
accordance with all the plans and specifications therefor as accepted by the
City of Avondale, Arizona.  If and to the
extent of landlord’s obligation under the pertinent Lease, Seller shall be
solely liable for any and all “punch list” items.  If such items are not completed as of the Closing
Date, Seller shall deposit into the Vacancy Escrow Account an amount reasonably
estimated by Seller and Purchaser for completion of such items, to be disbursed
upon completion of such work and delivery to Purchaser and the Escrow Agent of
estoppel certificates, certificates of occupancy and other evidence reasonably
requested by Seller, Purchaser and/or Escrow Holder.


 


(f)                                    As
of the Closing Date, one hundred percent (100%) of the gross leasable area of
the Property is leased to tenants who have commenced and are current in their
payment of minimum rent under their respective Leases, and have not filed for bankruptcy
or other relief from creditors (the “Minimum Occupancy Level”).  Notwithstanding the foregoing, if, on the
Closing Date, the Minimum Occupancy Level is not met, the requirements of the preceding
sentence shall be deemed to be satisfied if all of the following requirements
are met:  (i) at least eighty five
percent (85%) of the gross leaseable area of the Property is leased to tenants
who have commenced and are current in their payment of minimum rent under their
respective Leases, and have not filed for bankruptcy or other relief from
creditors; and (ii) on the Closing Date, Seller shall deposit into an account
to be held and administered by the Escrow Holder (the “Vacancy Escrow Account”)
pursuant to a Vacancy Escrow Agreement in the form attached as Exhibit G (the “Vacancy Escrow Agreement”) an
amount for each square foot of the Property which doesn’t meet the Minimum Occupancy
Level, equal to the sum of :


 


14





















 


(A)                Eighteen (18)
months of minimum rent calculated at the minimum rent rates for each such space
as shown on the Rent Roll;


 


(B)                  Eighteen (18)
months of real estate tax, common area expenses, and insurance calculated at
$4.00 per square foot;


 


(C)                  Leasing
commissions, calculated at $5.00 per square foot; and


 


(D)                 Tenant
improvement allowances, calculated
at $25.00 per square foot (if the vacant space is raw) or $5.00 per square foot
(if the vacant space has previously been improved).


 


Notwithstanding the
foregoing, if, as of the Closing Date, there are tenant spaces for which Leases
have been executed but the tenant has not yet commenced payment of minimum rent
under its respective Lease, then the amounts specified in items (A)–(D) above
shall be adjusted to reflect the actual amounts of such items per the tenant’s
Lease.  If any such Lease provides for
concessions (such as abated rent) which is not reflected on the Rent Roll, and
which concession hasn’t been fully earned prior to the Closing Date, Purchaser
shall receive a credit equal to the portion of the concession which is unearned
as of the Closing Date. Following the Closing Date, the amounts deposited into
the Vacancy Escrow Account shall be disbursed by the Escrow Holder pursuant to
the terms and conditions of the Vacancy Escrow Agreement.


 


(g)                  As of the
Closing Date, all of the tenants listed on the Rent Roll whose demised premises
are 14,000 or more square feet
(the “Major Tenants”) shall be open for business in all or substantially all of
their demised premises, have commenced and are current in their payment of
minimum rent under their respective Leases, and have not filed for bankruptcy
or other relief from creditors.


 


(h)                  As of the
Closing Date, the updated Survey and updated Title Commitment to be delivered
by Seller to Purchaser shall disclose no Additional Encumbrances which have not
been resolved pursuant to section 4.2.2, above.


 


(i)                      If the Real
Property cannot be legally conveyed to Purchaser without first obtaining
approval by the City of Avondale, County of Maricopa or other municipal
authority of a “Final Plat,” “Plat of Subdivision,” “lot line adjustment” or
similar document (in each case, a “Subdivision Plat”) then it is a condition
precedent to Purchaser’s obligation to consummate this transaction that Seller
obtain final and unconditional approval of the Subdivision Plat, at Seller’s
sole cost and expense, prior to the Closing Date. Purchaser shall fully
cooperate with Seller’s efforts to obtain municipal approval of the Subdivision
Plat, at no cost or expense to Purchaser.  Seller shall provide Purchaser


 


15





















 


with copies of all
correspondence, applications and other submissions to the municipal
authorities, and shall otherwise regularly apprise Purchaser of the status of
approval of the Subdivision Plat.


 


If, notwithstanding the
nonsatisfaction of any such condition, the Close of Escrow occurs, there shall
be no liability on the part of Seller for breaches of representations and
warranties of which Purchaser had knowledge as of the Close of Escrow.


 


7.2                                 Conditions
to Seller’s Obligations. The
Close of Escrow and Seller’s obligations to consummate the transaction
contemplated by this Agreement are subject to the satisfaction of the following
conditions for Seller’s benefit (or Seller’s waiver thereof, as Seller may
waive any or all of such conditions) on or before the Closing Date or the dates
designated below for the satisfaction of such conditions:


 


(a)                                  All
of Purchaser’s representations and warranties contained in this Agreement shall
be true and correct in all material respects as of the Effective Date and as of
the Closing Date;


 


(b)                                 As
of the Closing Date, Purchaser has performed its obligations hereunder and all
deliveries to be made at Close of Escrow by Purchaser shall have been tendered
including, without limitation, the deposit with Escrow Holder of the amounts
set forth in section 6.2(a) hereof;


 


(c)                                  There
shall exist no actions, suits, arbitrations, claims, attachments, proceedings,
assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings, pending or threatened against Purchaser,
that would materially and adversely affect Purchaser’s ability to perform its obligations
under this Agreement; and


 


(d)                                 There
shall exist no pending or threatened action, suit or proceeding with respect to
Purchaser before or by any court or administrative agency which seeks to restrain
or prohibit, or to obtain damages or a discovery order with respect to, this Agreement
or the consummation of the transaction contemplated hereby.


 


8.                                    CLOSE OF ESCROW; POSSESSION.


 


8.1                                 “Close
of Escrow” shall mean the recording of the Deed in the official records of
Maricopa County, and Seller’s receipt of the Purchase Price and the other
amounts due Seller in accordance with the provisions of section 9.1(b)
hereof.  The Escrow and Purchaser’s right
to purchase the Real Property shall terminate automatically if the Close of
Escrow does not occur on or before the Closing Date.


 


8.2                                 Sole
exclusive possession of the Real Property, subject


 


16





















 


only to the Permitted
Exceptions, shall be delivered to Purchaser on the Closing Date.


 


9.                                 ESCROW.


 


9.1                                 Closing.
The escrow (the “Escrow”) for the consummation of this transaction shall be
established, with Escrow Holder at the address indicated in section 15.1
hereof by the deposit of a fully executed counterpart of this Agreement with
Escrow Holder.  Escrow Holder shall
immediately execute and date the acceptance by Escrow Holder attached to this
Agreement and deliver a counterpart thereof to Purchaser and Seller, specifying
the date Escrow is opened.  This
Agreement shall constitute both an agreement between Purchaser and Seller, and
escrow instructions for Escrow Holder. If Escrow Holder requires separate or
additional escrow instructions which it deems necessary for its protection,
Seller and Purchaser shall promptly, upon request by Escrow Holder, execute and
deliver to Escrow Holder such separate or additional escrow instructions (the “Additional
Instructions”). In the event of any conflict or inconsistency between this
Agreement and the Additional Instructions, this Agreement shall prevail and
govern. The Additional Instructions shall not modify or amend the provisions of
this Agreement unless otherwise agreed to in writing by Seller and Purchaser.


 


On the Closing Date, if
the conditions set forth in sections 7.1 and 7.2 hereof have been satisfied or
waived, Escrow Holder shall take the following actions in the order indicated
below:


 


(a)                                  With
respect to all closing documents delivered to Escrow Holder hereunder, to the
extent necessary, Escrow Holder is authorized to insert, into all blanks
requiring the insertion of dates, the date of the recordation of the Deed or
such other date as Escrow Holder may be instructed in writing by Seller and Purchaser;


 


(b)                                 Simultaneously,
record the Deed in the official records of Maricopa County, and deliver to
Seller, in immediate, same-day federal funds, the Purchase Price, plus or
minus, as the case may be, the amounts determined in accordance with the provisions
of section 10 hereof, Purchaser’s signed counterparts of the Assignment of
Leases and Contracts and Bill of Sale, the Vacancy Escrow Agreement and the Pad
Agreement, and a conformed copy of the recorded Deed;


 


(c)                                  Deliver
to Purchaser a counterpart of those items referred to in section 6.1
hereof and a conformed copy of the recorded Deed;


 


(d)                                 Cause
the Title Company to issue the Title Policy for the Real Property in accordance
with the provisions of section 4.2.3 hereof;


 


(e)                                  Deliver
to Seller and Purchaser a final closing statement which has been certified by
Escrow Holder to be true and


 


17





















 


correct; and


 


(f)                                    Deliver
an original counterpart of the Owner’s Notice to each of Costco, Harkins, Bank
of America and Desert Taco, in the manner required under the QEA.


 


9.2                                 Escrow
and Title Charges.


 


(a)                                  Upon
the Close of Escrow, escrow charges, title charges and other closing costs
shall be allocated between Seller and Purchaser as follows:


 


(i)                                     Seller
shall pay:  (A) the premium for a
standard ALTA title policy, (B) the cost of recording the Deed, (C) one-half of
any escrow fees or similar charges of Escrow Holder, (D) all sales, gross
receipts, compensating, stamp, excise, documentary, transfer, deed or similar
taxes or fees (City, County and State) payable in connection with the
consummation of the transactions contemplated by this Agreement, and (E) all
costs incurred in connection with obtaining, updating or recertifying the
Survey.


(ii)                                  Purchaser
shall pay:  (A) one-half of any escrow
fees or similar charges of Escrow Holder, (B) the premium and any additional
costs (including any survey costs) for extended ALTA coverage (additional to
the premium for standard ALTA coverage) and the cost of any endorsements to the
Title Policy, if required by Purchaser, and (C) all costs incurred in
connection with Purchaser’s environmental or other inspections of the Real
Property.


 


(iii)                               Except to the extent
otherwise specifically provided herein, all other expenses incurred by
Seller and Purchaser with respect to the negotiation, documentation and closing
of this transaction, including, without limitation, Purchaser’s and Seller’s
attorneys’ fees, shall be borne and paid by the party incurring same.


 


(b)                                 If
the Close of Escrow does not occur by reason of Purchaser’s or Seller’s default
under this Agreement, all escrow and title charges (including cancellation
fees) shall be borne by the party in default.


 


9.3                                 Procedures
Upon Failure of Condition.
Except as otherwise expressly provided herein, if any condition set forth in
sections 7.1 or 7.2 hereof is not timely satisfied or waived for a reason other
than the default of Purchaser or Seller in the performance of its respective
obligations under this Agreement:


 


(a)                                  This
Agreement, the Escrow and the respective rights and obligations of Seller and
Purchaser hereunder shall terminate (other than the indemnity and insurance
obligations of Purchaser set forth in sections 4.3.1 and 14 hereof, and the
confidentiality provisions of section 4.6
hereof which shall survive such termination) at the written election of the
party for


 


18





















 


whose benefit such
condition was imposed, which written election must be made (i) within five days
after the date such condition was to be satisfied, or (ii) on the date the
Close of Escrow occurs, whichever occurs first;


 


(b)                                 Escrow
Holder shall promptly return to Purchaser all funds of Purchaser in its
possession, including the Deposit and all interest accrued thereon, and shall
promptly return and to Seller and Purchaser all documents deposited by them
respectively, which are then held by Escrow Holder;


 


(c)                                  Purchaser
shall return to Seller the Property Information; and


 


(d)                                 Any
escrow cancellation and title charges shall be borne equally by Seller and
Purchaser.


 


10.                           PRORATIONS.


 


Each proration
hereinafter provided to be made as of the Close of Escrow shall be made as of
the end of the day before the Closing Date. In each proration set forth below,
the portion thereof applicable to periods beginning as of Close of Escrow shall
be credited to Purchaser or charged to Purchaser as applicable, and the portion thereof applicable to periods ending as of
Close of Escrow shall be credited to Seller or charged to Seller as applicable.


 


10.1                           Rent.
All rent (including, without limitation, all minimum rents, additional rents
and retroactive rents, but excluding tenant reimbursements for Operating Costs
(as defined in section 10.2, below)) and all other income (collectively,
the “Rents”) collected under Leases in effect on the Closing Date shall be
prorated as of the Close of Escrow on an accrual basis. Any Rents which are in
arrears as of the Close of Escrow to the extent payable for the period before
the Close of Escrow, shall remain the property of Seller.  Purchaser shall apply Rent from tenants that
are collected within 12 months after the Close of Escrow, (a) first, to Rents
which are due to Purchaser after the Close of Escrow, and (b) second, to Rents
which were due to Seller on or before the Close of Escrow.  Purchaser shall make reasonable efforts,
without suit, to collect any Rents applicable to the period before the Close of
Escrow including, without limitation, sending to tenants bills for the payment
of past-due Rents during the first 12-month period following the Closing
Date.  Seller may pursue collection of
any Rents that were past-due as of the Closing Date, but Seller shall have no
right to terminate any Lease or any tenant’s occupancy under any Lease in
connection therewith.


 


10.2                           Operating
Costs and Additional Rent Reconciliation. Seller, as landlord under the
Leases, is currently collecting from tenants under the Leases additional rent
to cover taxes, insurance, utilities (to the extent not paid directly by
tenants), common area maintenance and other operating costs and expenses


 


19





















 


(collectively, “Operating
Costs”) in connection with the ownership, operation, maintenance and management
of the Real Property. To the extent that any additional rent (including,
without limitation, estimated payments for Operating Costs) is paid by tenants
to the landlord under the Leases based on an estimated payment basis (monthly,
quarterly or otherwise) for which a future reconciliation of actual Operating
Costs to estimated payments is required to be performed at the end of a
reconciliation period, Purchaser and Seller shall make an adjustment at the
Close of Escrow for the applicable reconciliation period (or periods, if the
Leases do not have a common reconciliation period) based on a comparison of the
actual Operating Costs as of the Close of Escrow to the estimated payments as
of the Close of Escrow. If, as of the Close of Escrow, Seller has received
additional rent payments in excess of the amount that tenants shall be required
to pay, based on the actual Operating Costs as of the Close of Escrow,
Purchaser shall receive a credit in the amount of such excess. If, as of the
Close of Escrow, Seller has received additional rent payments that are less
than the amount that tenants would be required to pay based on the actual
Operating Costs as of the Close of Escrow, Seller shall receive a credit in the
amount of such deficiency. Operating Costs that are not payable by tenants
either directly or reimbursable under the Leases shall be prorated between
Seller and Purchaser and shall be reasonably estimated by the parties if final
bills are not available.


 


10.3                           Taxes
and Assessments.  Real estate taxes
and personal property taxes on the Property, including without limitation installments
of general, special or betterment assessments on the Property (“Taxes”), shall
be prorated based upon the period (i.e., calendar or other tax fiscal year) to
which some are attributable, regardless of whether or not any such Taxes are
then due and payable or are a lien. 
Seller shall pay at or prior to Closing (or Purchaser shall receive
credit for) any unpaid Taxes attributable to periods prior to the Closing Date
(whether or not than due and payable or a lien as aforesaid) . Seller shall
receive credit for any previously paid or prepaid Taxes attributable to periods
from and after the Closing Date. In the event that as of the Closing Date the
actual tax bills for the tax year or years in question are not available and
the amount of Taxes to be prorated as aforesaid cannot be ascertained, then
rates, millages and assessed valuation of the previous year, with known
changes, shall be used; and after the Closing Date and when the actual amount
of Taxes for the year or years in question shall be determinable, such Taxes
will be reprorated between the parties to reflect the actual amount of such
Taxes.


 


10.4                           [Intentionally
Omitted.]


 


10.5                           Tenant
Deposits.  All tenant security deposits
reflected in Leases or disclosed in Tenant Estoppel Certificates and not
theretofore applied to tenant obligations under the Leases shall be transferred
or credited to Purchaser at the Close of Escrow.  As of the Close of Escrow, Purchaser shall
assume


 


20





















 


Seller’s obligations
related to tenant security deposits. Purchaser shall indemnify, defend and hold
Seller harmless from and against all demands and claims made by tenants arising
out of the transfer or disposition of any security deposits and shall reimburse
Seller for all attorneys’ fees incurred or that may be incurred as a result of
any such claims or demands as well as for all losses, expenses, verdicts, judgments,
settlements, interest, costs and other expenses incurred or that may be
incurred by Seller as a result of any such claims or demands by tenants.


 


10.6                           Utilities
and Utility Deposits.  Utilities for
the Real Property (excluding utilities for which payment is made directly by
tenants), including, without limitation, water, sewer, electric and gas, based
upon the last reading of meters before the Close of Escrow, shall be
prorated.  Seller shall endeavor to
obtain meter readings on the day before the Closing Date.  If such readings are obtained, there shall be
no proration of such items, Seller shall pay at Close of Escrow the bills
therefor for the period to the day before the Close of Escrow, and Purchaser
shall pay the bills therefor for the period subsequent thereto.  If the utility company shall not issue
separate bills, Purchaser shall receive a credit against the Purchase Price for
Seller’s portion and shall pay the entire bill before delinquency after Close
of Escrow.  If Seller has paid utilities no
more than 30 days in advance in the ordinary course of business, Purchaser
shall be charged its portion of such payment at Close of Escrow.  Purchaser shall be responsible for paying any
security deposits required by utility companies providing service to the Real
Property.


 


10.7                           December Stub
Period.  Purchaser shall receive a
credit at the Close of Escrow for the “December Stub Period” amounts for minimum
rent and CAM Expenses for the Unoccupied Spaces, as all such terms are defined
in the Vacancy Escrow Agreement.


 


10.8                           Percentage
Rents.  Percentage rents (“Percentage
Rents”) actually collected for the month in which the Close of Escrow occurs
shall be prorated as of the Closing Date. Percentage Rents due after the Close
of Escrow shall not be prorated. 
Nevertheless, after Purchaser has completed any reconciliation of actual
Percentage Rents payable and estimated Percentage Rents paid by tenants, and
all reconciled amounts have been paid by tenants, a reconciliation shall be
made between Seller and Purchaser with respect to such Percentage Rents. Pursuant
to such reconciliation, Seller and Purchaser shall each be entitled to its
proportionate share of all Percentage Rents paid for the subject Lease year
used to calculate each tenant’s Percentage Rents (less any out-of-pocket costs
incurred in collecting said amounts, which shall belong to Purchaser) based on the
number of days of such year during which Seller and Purchaser owned the
Property (and adjusted for any amount of Percentage Rent prorated at Close of
Escrow or received by Seller or Purchaser). As used in this section, “Percentage
Rents” shall not include and shall have deducted from such Percentage Rent
amount any “base” or “minimum” rent component which is payable each month
(regardless of actual sales), “base” or “minimum” rent component shall


 


21





















 


be prorated or otherwise
handled in the manner provided in this Agreement. Purchaser shall make
reasonable efforts, without suit, to collect all Percentage Rents payable after
the Close of Escrow and relating
to the period before the Close of Escrow, and all Percentage Rents which are
delinquent as of the Close of Escrow, including, without limitation, sending to
tenants bills for the payment of the same. Seller may pursue collection of all
Percentage Rents payable after the Close of Escrow and relating to the period
before the Close of Escrow and all Percentage Rents which are delinquent as of
the Close of Escrow, although Seller shall have no right to terminate any Lease
or any tenant’s occupancy under any Lease in connection therewith.


 


10.9                           Final
Adjustment After Closing.  If final
prorations cannot be made at the Close of Escrow for any item being prorated
under this section 10, as long as Purchaser or Seller identifies any such
proration (“Post-Closing Proration”) in writing before the Close of Escrow,
Purchaser and Seller shall allocate such items on a fair and equitable basis as
soon as invoices or bills are available and applicable reconciliation with
tenants have been completed, with final adjustment to be made as soon as
reasonably possible after the Close of Escrow (but in no event later than 90
days after the Close of Escrow, except that adjustments arising from Percentage
Rants under section 10.8 hereof shall not be subject to such 90-day
limitation, but shall be made as soon as reasonably possible).  Operating Costs shall be a Post-Closing
Proration. Payments in connection with the final adjustment shall be due no
later than 100 days after the Close of Escrow, except that adjustments arising
from Percentage Rents under section 10.8 hereof shall not be subject to
such 100-day limitation, but shall be made as soon as reasonably possible.
Seller shall have reasonable access to, and the right to inspect and audit,
Purchaser’s books to confirm
the final prorations for a period of one year after the Close of Escrow.
Notwithstanding anything to the contrary stated in this section 10, except
for any reconciliation arising out of Percentage Rents under section 10.8
hereof and except for any Post-Closing Prorations (which must be determined and
paid within 100 days after the Close of Escrow), all prorations made under this
section 10 shall be final as of the Close of Escrow and shall not be
subject to further adjustment (whether due to an error or for any other reason)
after the Close of Escrow.


 


11.                               SELLER’S REPRESENTATIONS AND WARRANTIES; AS-IS.


 


11.1                           Seller’s
Representations and Warranties. In consideration of Purchaser’s entering
into this Agreement and as an inducement to Purchaser to purchase the Real
Property from Seller, Seller makes the following representations and warranties
to Purchaser, as of the Effective Date:


 


(a)   (i)       Seller
has the legal right, power and authority to enter into this Agreement and the
instruments described herein, and to consummate the transaction contemplated
hereby;


 


22





















 


(ii)       All requisite action (corporate, trust,
partnership or otherwise) has been taken by Seller in connection with the
entering into this Agreement and the instruments described herein, and the
consummation of the transaction contemplated hereby. No consent of any partner,
shareholder, trustee, member, manager, trustor, beneficiary, creditor,
investor, judicial or administrative body, governmental authority or other
party is required;


 


(iii)      The individuals executing this Agreement
and the instruments described herein on behalf of Seller and the partners of
Seller, if any, have the legal power, right and actual authority to bind Seller
to the terms and conditions hereof and thereof;


 


(iv)     This Agreement and all documents required
hereby to be executed by Seller are and shall be valid, legally binding
obligations of, and enforceable against, Seller in accordance with their terms;
and


 


(v)      The execution and delivery of this
Agreement and the documents and instruments described herein, the incurrence of
the obligations set forth herein, the consummation of the transaction
contemplated herein, the compliance with the terms of this Agreement and the
documents and instruments referenced herein do not and shall not conflict with
or result in the material breach of any term, condition or provision of, or
constitute a default under, any bond, note or other evidence of indebtedness or
any contract, indenture, mortgage, deed of trust, loan, partnership agreement,
articles of organization, operating agreement, lease or other agreement or
instrument to which Seller is a party, affecting Seller or affecting the
Property;


 


(b)                   To Seller’s
actual knowledge, Seller has not received any written notice that either the
Property or Seller, or both, are subject to any existing, pending or threatened
investigation or inquiry by any governmental authority or to any remedial
obligations under any applicable laws pertaining to health or the environment;


 


(c)                    To Seller’s
actual knowledge, the Rent Roll and the copies of the Leases delivered to
Purchaser are true, current and complete copies thereof.  There may, however, be minor variances in the
copies of Leases resulting from copier errors. Seller shall correct any
mistakes in the Lease copies due to copier errors within a reasonable time
after becoming aware of such errors;


 


(d)                   Seller has no
actual knowledge that the Real Property has been contaminated by, or used for
the storage or disposal of, any hazardous substances, hazardous waste or petroleum
which, as of the Effective Date, is required by any governmental entity to be
remediated;


 


23





















 


(e)                                  Seller
has no actual knowledge of any pending litigation (including, without
limitation, any condemnation or notice of condemnation) affecting or related to
the Property;


 


(f)                                    Seller
has no actual knowledge of any governmental violations with respect to the Property,
or that the interior and exterior structures are not in a good state of repair,
free of leaks, structural problems and mold, or that the Property is not in
compliance with federal, state, city and county ordinances, environmental laws
and concerns;


 


(g)                                 no
tenant under a Lease has a lease term that exceeds the lease term stated in its
Lease, nor does any tenant under a Lease, except as set forth in its Lease,
have an option or right of first refusal to purchase or extend; and


 


(h)                                 Purchaser
shall have no obligation whatever regarding the construction described in section 7.1(e),
above.


 


For purposes of this section 11.1,
the phrase “To Seller’s Actual Knowledge” shall mean the actual (and not
implied, imputed or constructive) knowledge of Jeff Allen (whom the Seller
represents is the vice president of the managing member of the managing member
of Seller), without any inquiry or investigation of any other parties,
including, without limitation, the tenants and the property manager of the Real
Property.


 


The representations and
warranties made by Seller in this Agreement shall survive the recordation of
the Deed for a period of 12 months and any action for a breach of Seller’s
representations or warranties must be made and filed within said 12-month period.
If, after the Effective Date, but before the Close of Escrow, Seller becomes
aware of any facts or changes in circumstances that would cause any of its
representations and warranties in this Agreement to be untrue at Close of
Escrow, Seller may notify Purchaser in writing of such fact. In such case, or if Purchaser obtains
information which would cause any of Seller’s representations and warranties to
be untrue at Close of Escrow, Purchaser, as its sole and exclusive remedy,
shall have the right, chosen in a writing from Purchaser to Seller no later
than three business days after Seller shall have so notified Purchaser or
Purchaser shall have obtained such information, to either (i) terminate this
Agreement, in which case the Deposit shall be immediately returned to Purchaser
and neither party shall have any rights or obligations under this Agreement
(except for sections 4.3.1 and 15.5 which survive termination of this
Agreement), or (ii) accept a qualification to Seller’s representations and
warranties as of the Close of Escrow and complete the purchase and sale of the
Property without any rights to recovery for breach of the unqualified
representation and warranty. Failure of Purchaser so to elect either subsection (i)
or (ii), above, shall be deemed to be Purchaser’s election to take the action
described in subsection (ii), above. If, however, Seller’s representations
and warranties shall be untrue at the Close of Escrow because of Seller’s
intentional misrepresentation,


 


24





















 


in lieu of the remedies
described in subsections (i) and (ii), above,
within three business days after Purchaser’s becoming aware of the same, upon
written notice from Purchaser to Seller, Seller shall be in default under this
Agreement. Other than as set forth in the three immediately preceding
sentences, if Purchaser proceeds with the Close of Escrow, Purchaser shall be deemed to have expressly waived
all remedies for the breach of any representation or warranty discovered by
Purchaser before the Close of Escrow.


 


11.2                           As-Is.  As of the expiration of the Due Diligence
Period, Purchaser shall have:


 


(a)                                  examined
and inspected the Property, and shall know and be satisfied with the physical
condition, quality, quantity and state of repair of the Property in all
respects (including, without limitation, the compliance of the Real Property
with the Americans With Disabilities Act of 1990 Pub.L. 101-336, 104 Stat. 327
(1990), and any comparable local or state laws, as amended (collectively, the “ADA”)),
and by proceeding with this transaction following the expiration of the Due Diligence
Period shall be deemed to have determined that the same is satisfactory to
Purchaser;


 


(b)                                 reviewed
the Property Information and all instruments, records and documents which
Purchaser deems appropriate or advisable to review in connection with this transaction,
including, without limitation, all architectural drawings, plans,
specifications, surveys, building and occupancy permits, and any licenses,
leases, contracts, warranties and guaranties relating to the Real Property or
the business conducted thereon, and Purchaser, by proceeding with this
transaction following the expiration of the Due Diligence Period, shall be deemed
to have determined that the same and the information and data contained therein
and evidenced thereby are satisfactory to Purchaser;


 


(c)                                  reviewed
all applicable laws, ordinances, rules and governmental regulations (including,
but not limited to, those relating to building, zoning and land use) affecting
the development, use, occupancy or enjoyment of the Real Property, and
Purchaser, by proceeding with this transaction following the expiration of the
Due Diligence Period, shall be deemed to have determined that the same are
satisfactory to Purchaser; and


 


(d)                                 at
its own cost and expense, made its own independent investigation respecting the
Property and all other aspects of this transaction, and shall have relied
thereon and on the advice of its consultants in entering into this Agreement,
and Purchaser, by proceeding with this transaction following the expiration of
the Due Diligence Period, shall be deemed to have determined that the same are
satisfactory to Purchaser.


 


TO
THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, AND EXCEPT FOR SELLER’S
REPRESENTATIONS AND WARRANTIES IN SECTION 11.1 OF


 


25





















 


THIS
AGREEMENT AND ANY WARRANTIES OF TITLE CONTAINED IN THE DEED DELIVERED AT THE
CLOSE OF ESCROW (“SELLER’S WARRANTIES”), THIS SALE IS MADE AND SHALL BE MADE
WITHOUT REPRESENTATION, COVENANT OR WARRANTY OF ANY KIND (WHETHER EXPRESS,
IMPLIED OR, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, STATUTORY) BY
SELLER. AS A MATERIAL PART OF THE CONSIDERATION FOR THIS AGREEMENT, PURCHASER
SHALL ACCEPT THE PROPERTY ON AN “AS IS” AND “WHERE IS” BASIS, WITH ALL FAULTS,
AND WITHOUT ANY REPRESENTATION OR WARRANTY, ALL OF WHICH SELLER HEREBY
DISCLAIMS, EXCEPT FOR SELLER’S WARRANTIES. EXCEPT FOR SELLER’S WARRANTIES, NO
WARRANTY OR REPRESENTATION IS MADE BY SELLER AS TO FITNESS FOR ANY PARTICULAR
PURPOSE, MERCHANTABILITY, DESIGN, QUALITY, CONDITION, OPERATION OR INCOME,
COMPLIANCE WITH DRAWINGS OR SPECIFICATIONS, ABSENCE OF DEFECTS, ABSENCE OF
HAZARDOUS OR TOXIC SUBSTANCES, ABSENCE OF FAULTS, FLOODING, OR COMPLIANCE WITH
LAWS AND REGULATIONS INCLUDING, WITHOUT LIMITATION, THOSE RELATING TO HEALTH,
SAFETY AND THE ENVIRONMENT (INCLUDING, WITHOUT LIMITATION, THE ADA) . PURCHASER
ACKNOWLEDGES THAT, EXCEPT FOR SELLER’S WARRANTIES, PURCHASER HAS ENTERED INTO
THIS AGREEMENT WITH THE INTENTION OF MAKING AND RELYING UPON ITS OWN
INVESTIGATION OF THE PHYSICAL, ENVIRONMENTAL, ECONOMIC USE, COMPLIANCE AND
LEGAL CONDITION OF THE PROPERTY AND THAT PURCHASER IS NOT NOW RELYING, AND
SHALL NOT LATER RELY, UPON ANY REPRESENTATIONS AND WARRANTIES MADE BY SELLER OR
ANYONE ACTING OR CLAIMING TO ACT, BY, THROUGH OR UNDER OR ON SELLER’S BEHALF
CONCERNING THE PROPERTY. ADDITIONALLY, PURCHASER AND SELLER HEREBY AGREE THAT
(A) EXCEPT FOR SELLER’S WARRANTIES, PURCHASER IS TAKING THE PROPERTY “AS IS”
WITH ALL LATENT AND PATENT DEFECTS AND THAT EXCEPT FOR SELLER’S WARRANTIES,
THERE IS NO WARRANTY BY SELLER THAT THE PROPERTY IS FIT FOR A PARTICULAR
PURPOSE, (B) EXCEPT FOR SELLER’S WARRANTIES, PURCHASER IS SOLELY RELYING UPON
ITS EXAMINATION OF THE PROPERTY, AND (C) PURCHASER TAKES THE PROPERTY UNDER
THIS AGREEMENT UNDER THE EXPRESS UNDERSTANDING THAT THERE ARE NO EXPRESS OR
IMPLIED WARRANTIES, EXCEPT FOR SELLER’S WARRANTIES.


 


WITH
RESPECT TO THE FOLLOWING, PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT SELLER
SHALL NOT HAVE ANY LIABILITY, OBLIGATION OR RESPONSIBILITY OF ANY KIND AND THAT
SELLER HAS MADE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND:


 


THE
CONTENT OR ACCURACY OF ANY REPORT, STUDY, OPINION OR CONCLUSION OF ANY SOILS,
TOXIC, ENVIRONMENTAL OR OTHER ENGINEER OR OTHER PERSON OR ENTITY WHO HAS
EXAMINED THE PROPERTY OR ANY ASPECT THEREOF;


 


THE
CONTENT OR ACCURACY OF ANY OF THE ITEMS (INCLUDING, WITHOUT LIMITATION, THE
PROPERTY INFORMATION) DELIVERED TO PURCHASER PURSUANT TO PURCHASER’S REVIEW OF
THE CONDITION OF THE PROPERTY; AND


 


THE
CONTENT OR ACCURACY OF ANY PROJECTION, FINANCIAL OR MARKETING ANALYSIS OR OTHER
INFORMATION GIVEN TO PURCHASER BY SELLER OR REVIEWED BY PURCHASER WITH RESPECT
TO THE PROPERTY.


 


PURCHASER IS A
SOPHISTICATED REAL ESTATE INVESTOR AND IS, OR


 


26





















 


SHALL
BE AS OF THE CLOSE OF ESCROW, FAMILIAR WITH THE REAL PROPERTY AND ITS
SUITABILITY FOR PURCHASER’S INTENDED USE. THE PROVISIONS OF THIS SECTION 11.2
SHALL SURVIVE INDEFINITELY ANY CLOSING OR TERMINATION OF THIS AGREEMENT AND
SHALL NOT BE MERGED INTO THE DOCUMENTS EXECUTED AT CLOSE OF ESCROW.


 


	
   

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
  PURCHASER’S
  INITIALS

  	
   

  



 


12.                             PURCHASER’S
COVENANTS, REPRESENTATIONS AND WARRANTIES; RELEASE.


 


In consideration of Seller
entering into this Agreement and as an inducement to Seller to sell the Real
Property to Purchaser, Purchaser makes the following covenants, representations
and warranties;


 


12.1                           Authority.  Purchaser has the legal right, power and authority
to enter into this Agreement and to consummate the transactions contemplated
hereby, and the execution, delivery and performance of this Agreement have been
duly authorized and no other action by Purchaser is requisite to the valid and
binding execution, delivery and performance of this Agreement, except as otherwise
expressly set forth herein.  There is no
agreement to which Purchaser is a party or to Purchaser’s knowledge binding on Purchaser
which is in conflict with this Agreement.


 


12.2                           Release.  By proceeding with this transaction following
the expiration of the Due Diligence Period, Purchaser shall be deemed to have
made its own independent investigation of the Property, the Property
Information and the presence of Hazardous Materials on the Real Property as Purchaser
deems appropriate. Accordingly, subject to the representations and warranties
of Seller expressly set forth in section 11.1 hereof, Purchaser, on behalf of
itself and all of its officers, directors, partners, shareholders, members,
managers, employees, representatives and affiliated entities (collectively, the
“Releasors”), hereby expressly waives and relinquishes all rights and remedies Releasors
may now or hereafter have against Seller, its successors and assigns, officers,
directors, partners, shareholders, members, managers, employees,
representatives and affiliated entities (the “Seller Parties”), whether known
or unknown, which may arise from or be related to:  (a) the physical condition, quality, quantity
and state of repair of the Real Property, and the prior management and
operation of the Real Property, (b) the Property Information, (c) the Real
Property’s compliance or lack of compliance with any federal, state or local
laws or regulations, and (d) any past, present or future presence or existence
of Hazardous Materials on, under or about the Real Property, and with respect
to any past, present or future violation of any rules, regulations or laws, now
or hereafter enacted, regulating or governing the use, handling, storage or
disposal of Hazardous Materials, including, without limitation, (i)  all rights and remedies Raleasors may now or hereafter
have under the Comprehensive Environmental Response Compensation and Liability
Act of 1980 (“CERCLA”), the Superfund


 


27





















 


Amendments and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, and
the Toxic Substance Control Act, each as amended, and any similar state, local
or federal environmental law, rule or regulation, and (ii) all claims, whether
known or unknown, now or hereafter existing, with respect to the Real Property
under section 107 of CERCLA (42 U.S.C.A. §9607) . As used herein, the term
“Hazardous Material (s)” includes, without limitation, any hazardous or toxic
materials, substances or wastes, such as (1) any materials, substances or
wastes which are toxic, ignitable, corrosive or reactive, and which are
regulated by any local governmental authority or any agency of the United
States government, (2) any other material, substance or waste which is defined
or regulated as a hazardous material, extremely hazardous material, hazardous
waste or toxic substance pursuant to any laws, rules, regulations or orders of
the United States government, or any local governmental body, (3) asbestos, (4)
petroleum and petroleum based products, (5) formaldehyde, (6) polychlorinated
biphenyls (PCBs), and (7) freon other chlorofluorocarbons.


 


WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, PURCHASER, ON BEHALF OF ITSELF AND
THE OTHER RELEASORS, HEREBY ASSUMES ALL RISK AND LIABILITY RESULTING OR ARISING
FROM, OR RELATING TO THE OWNERSHIP, USE, CONDITION, LOCATION, MAINTENANCE, REPAIR
OR OPERATION OF THE PROPERTY.


 


THE
FOREGOING WAIVERS, RELEASES AND AGREEMENTS BY PURCHASER, ON BEHALF OF ITSELF
AND THE RELEASORS, SHALL SURVIVE THE CLOSE OF ESCROW AND THE RECORDATION OF THE
DEED, AND SHALL NOT BE DEEMED MERGED INTO THE DEED UPON ITS RECORDATION.


 


13.                             DEFAULT AND DAMAGES.


 


13.1                           DEFAULT BY PURCHASER.  PURCHASER AND SELLER HEREBY ACKNOWLEDGE AND AGREE
THAT IF THE CLOSE OF ESCROW FAILS TO OCCUR DUE TO A PURCHASER DEFAULT (ALL OF
THE CONDITIONS TO PURCHASER’S OBLIGATIONS TO CLOSE HAVING BEEN SATISFIED OR WAIVED), SELLER SHALL SUFFER DAMAGES
IN AN AMOUNT WHICH SHALL, DUE TO THE SPECIAL NATURE OF THE TRANSACTION
CONTEMPLATED BY THIS AGREEMENT AND THE SPECIAL NATURE OF THE NEGOTIATIONS WHICH
PRECEDED THIS AGREEMENT, BE IMPRACTICAL OR EXTREMELY DIFFICULT TO ASCERTAIN. IN
ADDITION, PURCHASER WISHES TO HAVE A LIMITATION PLACED UPON THE POTENTIAL
LIABILITY OF PURCHASER TO SELLER IF THE CLOSE OF ESCROW FAILS TO OCCUR DUE TO A
PURCHASER DEFAULT, AND WISHES TO INDUCE SELLER TO WAIVE OTHER REMEDIES WHICH
SELLER MAY HAVE IN THE EVENT OF A PURCHASER DEFAULT. PURCHASER AND SELLER,
AFTER DUE NEGOTIATION, HEREBY ACKNOWLEDGE AND AGREE THAT THE AMOUNT OF THE
DEPOSIT REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH SELLER SHALL
SUSTAIN IN THE EVENT OF SUCH PURCHASER DEFAULT. PURCHASER AND SELLER HEREBY
AGREE THAT SELLER MAY, IF THE CLOSE OF ESCROW FAILS TO OCCUR DUE TO A PURCHASER
DEFAULT, TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO PURCHASER AND ESCROW
HOLDER, CANCEL THE ESCROW AND RECEIVE OR RETAIN THE DEPOSIT AS LIQUIDATED
DAMAGES, AND ESCROW HOLDER SHALL IMMEDIATELY DELIVER (UNLESS IT HAS ALREADY
DONE SO) THE DEPOSIT TO SELLER. SUCH RETENTION OF THE DEPOSIT BY


 


28





















 


SELLER
IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER AMD SHALL NOT BE DEEMED
TO CONSTITUTE A FORFEITURE OR PENALTY.


 


NOTHING
IN THIS SECTION 13.1 SHALL (A) PREVENT OR PRECLUDE ANY RECOVERY OP
ATTORNEYS’ FEES OR OTHER COSTS INCURRED BY SELLER PURSUANT TO SECTION 15.5,
OR (B) IMPAIR OR LIMIT THE EFFECTIVENESS OR ENFORCEABILITY OF THE
INDEMNIFICATION OBLIGATIONS OF PURCHASER CONTAINED IN SECTION 4.3.1
HEREOF. SELLER AND PURCHASER ACKNOWLEDGE THAT THEY HAVE READ AND UNDERSTAND THE
PROVISIONS OF THIS SECTION 13.1 AND BY THEIR INITIALS IMMEDIATELY BELOW
AGREE TO BE BOUND BY ITS TERMS.


	
   

  	
  SELLER’S
  INITIALS:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  
	
   

  	
  PURCHASER’S INITIALS:

  	
  /s/ [ILLEGIBLE]

  	
   

  
					



 


 


13.2                           Default
by Seller.  If Seller defaults in its
obligations to sell and convey the Property to Purchaser pursuant to this
Agreement, Purchaser’s sole and exclusive remedy shall be to elect one of the
following: (a) to terminate this Agreement, in which event Purchaser shall be
entitled to the return by the Escrow Holder to Purchaser of the Deposit, or (b)
to bring a suit for specific performance, but any suit for specific performance
must be brought within 180 days of Seller’s default, with Purchaser waiving the
right to bring suit at any later date to the extent permitted by law, This
Agreement confers no present eight, title or interest in the Property to
Purchaser, and Purchaser shall not file a lie pendens or other similar
notice against the Real Property except in connection with, and after, the
proper filing of a suit for specific performance.


 


14.                                BROKER’S COMMISSIONS.


 


Except for Kitchell
Development Company, Seller’s broker, and Escee Commercial, Purchaser’s broker,
both of which shall be paid by Seller, neither party hereto has had any contact
or dealing regarding the Real Property, or any communication in connection with
the subject matter of this transaction, through any licensed real estate broker
or other person who can claim a right to a commission or finder’s fee as a
procuring cause of the sale contemplated herein. If any other broker or finder
perfects a claim for a commission or finder’s fee, the party responsible for
the contact or communication on which the broker or finder perfected such claim
shall indemnify, save harmless and defend the other party from said claim, and
all costs and expenses (including reasonable attorneys’ fees) incurred by the
other party in defending against the same.


 


15.                                MISCELLANEOUS PROVISIONS.


 


15.1                           Notices.
 All written notices or demands of any
kind which either party hereto may be required or may desire to serve on the
other in connection with this Agreement shall be served by personal service, by
registered or certified mail, recognized overnight courier service or facsimile
transmission. Any such


 


29





















 


notice or demand so to be
served by registered or certified mail, recognized overnight courier service or
facsimile transmission shall be delivered with all applicable delivery charges
thereon fully prepaid and, if the party so to be served be Seller, addressed to
Seller as follows:


 


Gateway Pavilions,
L.L.C.,


c/o Kitchell Development
Company


1707 E. Highland, Suite
100


Phoenix, Arizona 85016


Attention:  Mr. Jeff Allen


Fax No.: 
(602) 264-6133


 


with a copy thereof to:


 


Martin L. Flicker, Esq. 

1000 Quail Street, Suite 210 

Newport Beach, California 92660 

Fax No.: (949) 252-9335


 


and, if the party so to
be served be Purchaser, addressed to Purchaser as follows:


 


Inland Real State
Acquisitions, Inc.


2901 Butterfield Road


Oak Brook, Illinois  60523


Attention: Mr. Lou
Quilici


Fax No.: (630) 218-4935


 


with a copy thereof to:


 


Robin Rash, Esq.


The Inland Real Estate
Group, Inc./Law Department


2901 Butterfield Road


Oak Brook, Illinois 
60523


Fax No.: (630) 218-4900


 


and, if the party to be
served be Escrow Holder, addressed to Escrow Holder as follows:


 


First American Title
Company 

National Commercial Services 

30 N. LaSalle Street, Suite 310 

Chicago, IL 60602 

Attention: Steven Zellinger 

Fax No.: (312) 553-0480


 


Service of any such
notice or demand so made by personal delivery, registered or certified mail,
recognized overnight courier or facsimile transmission shall be deemed given
and received on the date of actual delivery as shown by the addressee’s
registry or certification of receipt or, as to facsimile transmissions, by “answer
back confirmation” (as long as a copy of such notice or demand is delivered by
any of the other methods provided above within one business day following
receipt of such facsimile


 


30





















 


transmission), as
applicable, or at the expiration of the third business day after the date of
dispatch, whichever is earlier. Either party hereto may from time to time, by
notice in writing served upon the other as aforesaid, designate a different
mailing address to which or a different person to whose attention all such
notices or demands are thereafter to be addressed.


 


15.2                           Assignment;
Binding on Successors and Assigns.  Purchaser
may assign its rights and obligations under this Agreement to an entity
sponsored by Inland Retail Real Estate Trust, Inc., Inland Western Retail Real
Estate Trust, Inc. or Inland Real Estate Investment Corporation, or their
affiliates, without the consent of Seller, provided Purchaser (a) provides written
notice to Seller and Escrow Holder not later than five (5) days prior to the
Closing Date; and (b) Purchaser remains liable to Seller for all obligations of
Purchaser under this Agreement. Except as described in the previous sentence,
Purchaser shall not assign, transfer or convey its rights or obligations under
this Agreement or with respect to the Property without the prior written
consent of Seller, which consent Seller may withhold in its sole and absolute
discretion.  Any such attested assignment
without the prior written consent of Seller shall be void and Purchaser shall
be deemed in default hereunder.  Seller
shall not assign, transfer or convey its rights or obligations under this Agreement
or with respect to the Property without the prior written consent of Purchaser,
which consent Purchaser may withhold in its sole and absolute discretion.  Any such attempted assignment without the
prior written consent of Purchaser shall be void and Seller shall be deemed in
default hereunder.  Subject to the
foregoing, and except as provided to the contrary herein, the terms, covenants,
conditions and warranties contained herein, and the powers granted hereby,
shall inure to the benefit of and bind all parties hereto and their respective
successors and assigns, and all subsequent owners of the Property.  Any assignment shall not relieve the
assigning party from its liability under this Agreement.


 


15.3                           [Intentionally
Omitted.]


 


15.4                           Further
Assurances.  In addition to the acts
and deeds recited herein and contemplated to be performed, executed or delivered
by Seller or Purchaser, Seller and Purchaser shall perform, execute and
deliver, or cause to be performed, executed and delivered, on the Closing Date
or thereafter, all such further acts, deeds and assurances as Purchaser or
Seller, as the case may be, may reasonably require in order to consummate fully
the transactions contemplated hereunder.


 


15.5                           Attorneys’
Fees.  If any legal action or any arbitration
or other proceeding is brought, or if an attorney is retained for the
enforcement of this Agreement or any portion thereof, or because of any alleged
dispute, breach, default or misrepresentation in connection with any of the provisions
of this Agreement, the prevailing party shall be entitled to recover from the
other party reimbursement for the reasonable fees of attorneys


 


31





















 


and other costs
(including court costs and witness fees) incurred by it, in addition to any
other relief to which it may be entitled. The term “prevailing party” means the
party obtaining substantially the relief sought, whether by compromise,
settlement or judgment.


 


15.6                           Survival
of Representations, Warranties and Agreements.  Unless otherwise expressly stated in this
Agreement, (a) each of the covenants, obligations, representations, and
agreements contained in this Agreement shall survive the Close of Escrow and the
execution and delivery of the Deed only for a period of six months immediately
following the Closing Date, and (b) any claim based upon a misrepresentation or
a breach of a warranty contained in this Agreement shall be actionable or
enforceable only if notice of such claim is given to the party which allegedly
made such misrepresentation or breached such covenant, obligation, warranty or
agreement within six months after the Closing Date. Notwithstanding anything
stated to the contrary in this Agreement, the indemnification provisions of
sections 4.3.1, 10.5 and 14 hereof and the provisions of sections 4.5, 4.6,
10.1, 10.3, 10.8, 10.9, 11.2, 12.2, 13.2, 15.5, 15.16 and 15.17 hereof shall
survive the termination of this Agreement or the Close of Escrow without limitation,
and shall not be merged with the recording of the Deed.


 


15.7                           Entire
Agreement.  This Agreement contains
the entire agreement and understanding of the parties in respect to the subject
matter hereof.  The literal words of this
Agreement shall govern, and all prior negotiations, drafts and other extrinsic communications,
whether oral or written, shall have no significance or evidentiary effect.  Neither this Agreement nor any of its
provisions may be changed, amended, discharged, waived or otherwise modified
orally, but only by an instrument in writing duly executed by the party to be
bound thereby.  This Agreement accurately
reflect the agreements and understandings of the parties hereto with respect to
the subject matter hereof.


 


15.8                           Governing
Law. This Agreement shall be governed by the laws of the State of Arizona.


 


15.9                           Counterparts.
 This Agreement may be executed
simultaneously in one or more counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same
instrument.


 


15.10                     Headings;
Construction.  The various headings
of this Agreement are included for convenience only and shall not affect the
meaning or interpretation of this Agreement or any provision hereof. When the
context and construction so require, all words used in the singular herein
shall be deemed to have been used in the plural, the masculine shall include
the feminine and the neuter, and vice  versa. The use in this
Agreement of the term “including” and related terms such as “include” shall in
all cases mean “without limitation.” All references to “days” in this
Agreement shall be construed to mean calendar days unless


 


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otherwise expressly
provided, and all references to “business days” shall be construed to mean days
on which national banks are open for business.


 


15.11                     Time of
Essence. Time is strictly of the essence with respect to each and every
term, condition, obligation and provision hereof, and the failure to perform
timely any of the terms, conditions, obligations or provisions hereof by either
party shall constitute a material breach of, and non-curable (but waivable)
default under, this Agreement by the party so failing to perform.


 


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


 


15.13                     No Third
Party Beneficiaries. This Agreement is for the sole and exclusive benefit
of the parties hereto and their respective permitted successors and assigns,
and no third party is intended to, or shall have, any rights hereunder.


 


15.14                     Joint
Product of Parties. This Agreement is the result of arms-length negotiations
between Seller and Purchaser and their respective attorneys.  Accordingly, neither party shall be deemed to
be the author of this Agreement and this Agreement shall not be construed
against either party.


 


15.15                     Calculation
of Time Periods. If the last day of any period of time hereunder is not a
business day, the period shall run until the end of the next business day. The
last day of any period of time described herein shall be deemed to end at 5:00
p.m., Mountain Standard Time.


 


15. 16                  Waiver of
Jury Trial. To the extent permitted by applicable law, the parties hereby
waive any right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby.


 


15.l7                        No
Personal Liability.  Notwithstanding
anything stated to the contrary herein, Seller’s liability under this Agreement
shall be limited to Seller’s interest in the Property and neither Seller,
Seller’s constituent partners, Seller’s asset manager, nor Seller’s directors,
officers, shareholders, partners, members, managers, employees or agents shall
have any personal liability hereunder.


 


15.18                     Section 1031
Exchange.  Seller may consummate the
sale of the Real Property as part of a so-called like kind exchange (the “Exchange”)
pursuant to Section 1031 of the Internal Revenue


 


33





















 


Code of 1986, as amended
(the “Code”), but only if the Close of Escrow shall not be delayed or affected
by reason of the Exchange. The consummation or accomplishment of the Exchange
shall not be a condition precedent or condition subsequent to Seller’s
obligations under this Agreement. Purchaser shall not, as a result of this section 15.18:
(i) have its rights under this Agreement increased or diminished, or (ii) be responsible
for compliance with, or be deemed to have warranted to Seller that, the
Exchange in fact complies with Section 1031 of the Code.


 


15.l9                        Cooperation
with Purchaser’s Audit. Seller agrees to cooperate fully with Purchaser and
Purchaser’s representatives to facilitate Purchaser’s evaluations and reports,
including at least a one (1) year audit of the books and records of the
Property that qualify, comply with and can be used in a public offering and an
audit representation letter to be delivered by Seller prior to the Closing
Date.


 


IN WITNESS WHEREOF, the
parties hereto have executed this Agreement the day and year first above
written.


 


               PURCHASER 


 


	
  INLAND REAL ESTATE
  ACQUISITIONS, INC.,

  an Illinois corporation

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


 


SELLER


 


	
  GATEWAY PAVILIONS, L.
  L. C.,

  an Arizona limited liability

  company

  
	
   

  
	
   

  
	
  By:

  	
  KDC-GP Partners,
  L.L.C.,

  
	
   

  	
  an Arizona limited
  liability

  company, Manager and Member

  
	
   

  	
   

  
	
  By:

  	
  Kitchell Development

  
	
   

  	
  Company, an Arizona

  
	
   

  	
  corporation, Managing

  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Jeff Allen

  	
   

  
	
   

  	
  Jeff Allen,

  
	
   

  	
  Vice
  President

  
					



 


Acceptance by Escrow Holder:


 


First American Title Company hereby
acknowledges that it has


 


34





















 


PURCHASER


 


	
  INLAND REAL ESTATE
  ACQUISITIONS, INC.,

  an Illinois corporation

  
	
   

  
	
  By:

  	
  /s/ [ILLEGIBLE]

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  [ILLEGIBLE]

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  SRVP

  	
   

  
					



 


 


SELLER


 


	
  GATEWAY
  PAVILIONS, L.L.C.,

  an Arizona limited liability

  company

  
	
   

  
	
   

  
	
  By:
  

  	
  KDC-GP
  Partners, L.L.C.,

  
	
   

  	
  an
  Arizona limited liability

  
	
   

  	
  company,
  Manager and Member

  
	
   

  	
   

  
	
  By:

  	
  Kitchell
  Development

  
	
   

  	
  Company,
  an Arizona

  
	
   

  	
  corporation,
  Managing

  
	
   

  	
  Member

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Jeff Allen,

  
	
   

  	
  Vice President

  
						



 


Acceptance by Escrow
Holder:


 


First
American Title Company hereby acknowledges that it has received a fully
executed original or originally executed counterparts of the foregoing
Agreement of Purchase and Sale Agreement and Escrow Instructions, agrees to act
as Escrow Holder thereunder, and agrees to be bound by and strictly perform the
terms thereof as such terms apply to Escrow Holder.


 


 


	
  Dated: 8-11-04, 2004.

  	
   

  	
  FIRST
  AMERICAN TITLE

  COMPANY

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Elizabeth Rune

  	
   

  
	
   

  	
   

  	
   

  	
  Its Authorized Agent

  



 


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