**Exhibit10.13**

 

 

CONTRACT OF SALE

 

BETWEEN

 

LSF PRESIDIO INVESTMENTI, LLC

 

and

 

AMERIVEST CAMELBACK INC.

 

 

2710-2850 E. CamelbackRoad

Phoenix, Arizona

 

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**TABLE OF CONTENTS**

 
| ARTICLE  I PURCHASE AND SALE       |   |
|------------------------------------|--------|
|                               |   |
|                               | 1.1    | Property. |   |
|                               |   |   |   |
| ARTICLE II PURCHASE PRICE          |   |
|                               |   |
|                               | 2.1    | Purchase Price. |   |
|                               |   |   |   |
|                               | 2.2    | Method of Payment. |   |
|                               |   |   |   |
|                               | 2.3    | Failure to Make Deposit. |   |
|                               |   |   |   |
|                               | 2.4    | Independent Consideration |   |
|                               |   |   |   |
| ARTICLE III                        |   |
|                               |   |
|                               | 3.1    | Deliveries. |   |
|                               |   |   |   |
|                               | 3.2    | Inspections. |   |
|                               |   |   |   |
|                               | 3.3    | Inspection Period |   |
|                               |   |   |   |
|                               | 3.4    | Disclaimer of Warranties. |   |
|                               |   |   |   |
|                               | 3.5    | Release of Claims |   |
|                               |   |   |   |
|                               | 3.6    | Contracts to be  Assumed by Purchaser. |   |
|                               |   |   |   |
|                               | 3.7    | Estoppels |   |
|                               |   |   |   |
|                               | 3.8    | Subordination,  Non-disturbance and Attornment |   |
|                               |   |   |   |
| ARTICLE IV SURVEY AND TITLE        |   |
|                               |   |
|                               | 4.1    | Survey |   |
|                               |   |   |   |
|                               | 4.2    | Title Commitment |   |
|                               |   |   |   |
|                               | 4.3    | Title Policy. |   |
|                               |   |   |   |
|                               | 4.4    | Title. |   |
|                               |   |   |   |
|                               | 4.5    | Bill of Sale. |   |
|                               |   |   |   |
| ARTICLE  V SELLER’S COVENANTS |   |
|                               |   |
|                               | 5.1    | Seller  hereby covenants and agrees with Purchaser as follows: |   |
|                               |   |   |   |
| ARTICLE VI CLOSING                 |   |
|                               |   |
|                               | 6.1    | Closing Date. |   |
|                               |   |   |   |
|                               | 6.2    | Closing |   |
|                               |   |   |   |
|                               | 6.3    | Closing Prorations and  Costs. |   |

 

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|                                 | 6.4    | Real Estate  Taxes and Special Assessments |   |
|--------------------------------------|--------|--------------------------------------------|--------|
|                                 |   |                                       |   |
|                                 | 6.5    | Closing  Estimates and Final Adjustments.  |   |
|                                 |   |                                       |   |
| ARTICLE VII CASUALTY                 |   |
|                                 |   |
|                                 | 7.1    | Casualty.                                  |   |
|                                 |   |                                       |   |
|                                 | 7.2    | Condemnation.                              |   |
|                                 |   |                                       |   |
|                                 | 7.3    | Waiver.                                    |   |
|                                 |   |                                       |   |
| ARTICLE VIII REAL ESTATE COMMISSIONS |   |
|                                 |   |
|                                 | 8.1    | Indemnity.                                 |   |
|                                 |   |                                       |   |
| ARTICLE IX TERMINATION AND REMEDIES  |   |
|                                 |   |
|                                 | 9.1    | Remedies.                                  |   |
|                                 |   |                                       |   |
|                                 | 9.2    | Liquidated Damages.                        |   |
|                                 |   |                                       |   |
| ARTICLE  X ASSIGNMENT OF CONTRACT    |   |
|                                 |   |
|                                 | 10.1   | Assignment.                                |   |
|                                 |   |                                       |   |
| ARTICLE XI MISCELLANEOUS             |   |
|                                 |   |
|                                 | 11.1   | Entire Agreement.                          |   |
|                                 |   |                                       |   |
|                                 | 11.2   | Survival                                   |   |
|                                 |   |                                       |   |
|                                 | 11.3   | Time of Essence                            |   |
|                                 |   |                                       |   |
|                                 | 11.4   | Notices                                    |   |
|                                 |   |                                       |   |
|                                 | 11.5   | Gender; Numbers                            |   |
|                                 |   |                                       |   |
|                                 | 11.6   | Headings.                                  |   |
|                                 |   |                                       |   |
|                                 | 11.7   | Days                                       |   |
|                                 |   |                                       |   |
|                                 | 11.8   | Governing Law                              |   |
|                                 |   |                                       |   |
|                                 | 11.9   | Holidays                                   |   |
|                                 |   |                                       |   |
|                                 | 11.10  | Attorneys’ Fees                       |   |
|                                 |   |                                       |   |
|                                 | 11.11  | Interpretation                             |   |
|                                 |   |                                       |   |
|                                 | 11.12  | Severability                               |   |
|                                 |   |                                       |   |
|                                 | 11.13  | Amendments                                 |   |
|                                 |   |                                       |   |
|                                 | 11.14  | Acceptance of Offer                        |   |
|                                 |   |                                       |   |
|                                 | 11.15  | Confidentiality                            |   |
|                                 |   |                                       |   |
|                                 | 11.16  | Recording                                  |   |
|                                 |   |                                       |   |
|                                 | 11.17  | Counterparts                               |   |

 

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|                                       | 11.18  | No Third Party Rights                            |   |
|--------------------------------------------|--------|--------------------------------------------------|--------|
|                                       |   |                                             |   |
|                                       | 11.19  | No Joint Venture                                 |   |
|                                       |   |                                             |   |
|                                       | 11.20  | Exhibits                                         |   |
|                                       |   |                                             |   |
|                                       | 11.21  | No Personal Liability                            |   |
|                                       |   |                                             |   |
|                                       | 11.22  | Real Estate Reporting  Person                    |   |
|                                       |   |                                             |   |
|                                       | 11.23  | Exchange of Properties                           |   |
|                                       |   |                                             |   |
| ARTICLE XII REPRESENTATIONS AND WARRANTIES |   |
|                                       |   |
|                                       | 12.1   | Purchaser’s  Representations and Warranties |   |
|                                       |   |                                             |   |
|                                       | 12.2   | Seller’s  Representations and Warranties    |   |

 

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**CONTRACT OF SALE**

 

THIS CONTRACT OFSALE (this “Contract”) is entered into as of the Effective Date (asdefined in **Section 2.2(a)** hereof) by and between LSF PRESIDIOINVESTMENT I, LLC, a Delaware limited liability company (the “Seller”),and AMERIVEST CAMELBACK INC., an Arizona corporation (the “Purchaser”),upon the terms and conditions set forth herein.

 

ARTICLE I

 

PURCHASE AND SALE

 

1.1                                 Property.  For and inconsideration of the premises, undertakings and mutual covenants of the partiesset forth herein, Seller hereby agrees to sell, transfer, assign and/or conveyunto Purchaser and Purchaser hereby agrees to accept, buy and pay for thefollowing properties, rights, interests and assets (hereinafter referred to,collectively, as the “Property” and/or the “Project”):

 

(a)                                  Thatcertain tract of real property located in the City of Phoenix, Maricopa County,Arizona, described in **Exhibit A** attached hereto and by thisreference incorporated herein for all purposes (the “Land”), togetherwith all right, title and interest of Seller in and to (i) all improvementslocated thereon (the “Improvements”); (ii) the rights, benefits,privileges, easements, tenements, hereditaments, and appurtenances thereon orin anywise appertaining to such real property, including that certainDeclaration of Conditions and Restrictions, recorded in Docket 12246, page1155, records of Maricopa County, Arizona (the “Declaration”), subject,in each case however, to the “Permitted Exceptions” (as hereinafter defined);and (iii) all development rights, air rights, sewer rights and permits, water,water rights, riparian rights, and water stock relating to the Land;

 

(b)                                 Allequipment, machinery, furniture, furnishings, supplies, and other tangiblepersonal property and fixtures of any kind owned by Seller and attached to orlocated within the Improvements and used in connection with the ownership,maintenance or operation of the Land or the Improvements, excluding any itemsof personal property owned by tenants at Project (“Tenants”) as setforth in the Rent Roll (hereafter defined) and further excluding any items ofpersonal property owned by third parties and leased to Seller (collectively,the “Personalty”);

 

(c)                                  Allof Seller’s right, title, and interest in any leases, occupancy agreements, orother agreements demising space in, providing for the use of and/or occupancyof the Improvements or the Land (collectively, the “Leases”), as setforth on the rent roll attached hereto as **Exhibit F** (the “Rent Roll”);

 

(d)                                 Allof Seller’s right, title, and interest in all agreements, other than Leases, ifany, for the leasing or licensing of rooftop space of equipment,telecommunications equipment, cable access and other space, equipment, andfacilities

 

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that are locatedon or within the Project and generate income to Seller including agreement thatmay be made by Seller after the Effective Date and prior to Closing aspermitted by this Agreement (“Licenses”);

 

(e)                                  Tothe extent only the same are assignable by Seller to Purchaser, all of Seller’sright, title, and interest in and to any and all (i) contracts or agreements,such as maintenance, service or utility contracts relating to the ownership, maintenanceand operation of the Land or the Improvements, which are to be assigned toPurchaser pursuant to the provisions of **Section 3.6** below (but expresslyexcluding the property management agreement for the Project), (ii) warrantiesand guaranties currently in force and effect with respect to the Land, theImprovements, the Personalty, the Licenses, and/or the Leases, (iii) allpermits or similar documents relating to the Land, the Improvements, thePersonalty, the Licenses, and/or the Leases, (iv) telephone exchanges and otheridentifying material relating to the Property, (v) CAD files, plans, drawings,specifications, surveys, engineering reports and other technical descriptionsof the Land or the Improvements, (vi) all leasing commission obligations, and(vii) other property (real, personal or mixed) owned by Seller and used inconnection with the ownership, leasing, maintenance, service or operation ofthe Land, the Improvements, the Licenses, or the Leases; and

 

(f)                                    Allof Seller’s right, title and interest in and to all rights to the trade names,assumed names, or business names or similar names by which the Property iscurrently operated, including, but not limited to “Camelback Lakes OfficeComplex,” and the goodwill and other intangible assets associated with theoperation of the Property by Seller except for any trade names, symbols, ormarks relating to Seller’s name, the name of any direct or indirect generalpartner, member, or venturer in Seller, or any derivative of any of theforegoing.

 

The Propertydescribed in subsections (c), (d), (e), and (f) of this Section 1.1 ishereinafter sometimes referred to as the “Intangible Property.”  The Property shall not include, and Sellershall retain (to the extent each of the following accrued prior to Closing(defined below)), any cash, bank accounts, prepaid obligations and accountsreceivable, claims and causes of action, and rights to receive insurance orcondemnation proceeds; provided, however, any prepaid obligations so retainedby Seller shall be prorated in accordance with the provisions of Article VI andcasualty and condemnation proceeds shall be paid to Purchaser to the extentrequired by Article VII.

 

ARTICLE II

 

PURCHASE PRICE

 

2.1                                 Purchase Price. The purchase price for the Property shall be an amount equal to the sumof Thirty-two Million and No/100 Dollars ($32,000,000.00) (the “PurchasePrice”).

 

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

 

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(a)                                  “EffectiveDate” means the last date upon which Seller and Purchaser shall have fullyexecuted this Contract, as indicated by the signature blocks set forthbelow.  Within three (3) Business Days(as hereinafter defined) after the Effective Date (such date hereinafter referredto as the “Escrow Date”), the parties hereto shall exchange fullyexecuted originals of this Contract and shall cause one (1) fully executedoriginal of this Contract to be delivered to Chicago Title Insurance Company(the “Escrow Agent”), whose national account office is located at 2001Bryan Street, Suite 1700, Dallas, Texas 75201, Attention Ted Darby, and anearnest money deposit (the “Earnest Money Deposit”) in the amount of$320,000.00 in immediately available funds shall be deposited by Purchaser withthe Escrow Agent.  The Earnest MoneyDeposit shall be placed in an interest bearing account by the Escrow Agent andany income or interest earned on the Earnest Money Deposit prior to Closing (ashereinafter defined) shall be deemed a part of the Earnest Money Deposit forall purposes of this Contract. Notwithstanding anything to the contrary contained herein, Purchasermay, in Purchaser’s sole and absolute discretion, and at any time on or priorto the expiration of the Inspection Period elect to terminate this Contract inaccordance with **Section 3.3** hereof and receive arefund of the Earnest Money Deposit by giving written notice to Seller andEscrow Agent.  Upon such termination,the Earnest Money Deposit shall be immediately returned to Purchaser, andneither Seller nor Purchaser shall have any further rights or liabilities underthis Contract, except as provided in **Sections 3.2, 8.1, 9.1, 11.10, and 11.15**hereof.

 

(b)                                 Thebalance of the Purchase Price, after reducing the Purchase Price by the amountof the Earnest Money Deposit (including all interest credited thereto pursuantto **Section2.2(a)** above) and adjusting the Purchase Price to take intoaccount prorations, charges and credits in accordance with the terms of thisContract, shall be paid by Purchaser in same day funds immediately available tothe Escrow Agent at the Closing.

 

2.3                                 Failure to Make Deposit.  If Purchaser fails to timely make thedeposit of the Earnest Money Deposit with the Escrow Agent as provided for in **Section2.2**, then Seller, in its sole discretion shall have the right toterminate this Contract, and upon any such termination neither Seller norPurchaser shall have any further rights or liabilities under this Contract.

 

2.4                                 Independent Consideration.  Notwithstanding anything herein to thecontrary, Seller shall retain $100.00 as independent consideration for Seller’sperformance hereunder from the proceeds of the Earnest Money Deposit deliveredto the Title Company by the Purchaser.

 

ARTICLE III

 

DELIVERIES AND INSPECTIONS

 

3.1                                 Deliveries. Seller has, on or before the Effective Date, delivered to Purchaser, thefollowing items and documents (the “Delivered Documents”) pertaining tothe Property:

 

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(a)                                  tothe extent in Seller’s possession, copies of all certificates of insurance,certificates of occupancy, warranties, licenses, permits, authorizations andapprovals relating to the construction, occupancy and operation of the Land andthe Improvements;

 

(b)                                 acomplete copy of all Leases, including any amendments thereto;

 

(c)                                  copiesof all real estate tax bills for the calendar year, 2002 and 2003 andconfirmation of rental tax payments;

 

(d)                                 completecopies of all service, maintenance and similar contracts entered into by Sellerin connection with the Property and all leasing commission obligationscurrently in effect on the Property (the “Service Contracts”);

 

(e)                                  acopy of the most recent survey of the Land in Seller’s possession;

 

(f)                                    tothe extent in Seller’s possession, the most recent site plan and the mostrecent floor plans and building elevations for the buildings on the Property;and

 

(g)                                 tothe extent in Seller’s possession, and not otherwise addressed in (a) through(f) above, the items identified in Exhibit I attached hereto.

 

Failure ofPurchaser to terminate this Contract prior to the expiration of the InspectionPeriod shall be deemed approval by Purchaser of any material or informationdelivered to Purchaser pursuant to this **Section 3.1**.  Purchaser acknowledges and agrees that,(a) Seller delivers the material and information described in this **Section3.1** without representation or warranty as to the accuracythereof, and (b) Purchaser specifically acknowledges and agrees that Sellershall have no liability or responsibility for any inaccuracy thereof.  PURCHASER ACKNOWLEDGES AND UNDERSTANDS THATTHE DELIVERED DOCUMENTS AND OTHER MATERIALS AND ANY INFORMATION (AS DEFINED IN **SECTION11.15** HEREOF) PROVIDED TO PURCHASER PURSUANT TO THIS CONTRACTMAY HAVE BEEN PREPARED BY PARTIES OTHER THAN SELLER AND, EXCEPT AS EXPRESSLYSET FORTH IN THIS CONTRACT, THAT NEITHER SELLER NOR ANY OF ITS EMPLOYEES,AGENTS, BROKERS OR CONTRACTORS MAKE NOR HAVE MADE ANY REPRESENTATION ORWARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE COMPLETENESS, CONTENT ORACCURACY THEREOF.  PURCHASERSPECIFICALLY RELEASES SELLER, AND ITS EMPLOYEES, AGENTS, BROKERS ANDCONTRACTORS FROM ALL CLAIMS, DEMANDS, CAUSES OF ACTION, JUDGMENTS, LOSSES,DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEY’S FEES WHETHERSUIT IS INSTITUTED OR NOT), WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT,ASSERTED AGAINST OR INCURRED BY PURCHASER BY REASON OF THE INFORMATIONCONTAINED IN (OR THAT SHOULD HAVE BEEN CONTAINED IN) SUCH DELIVERED DOCUMENTSAND/OR OTHER MATERIALS.

 

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3.2                                 Inspections. Purchaser and its employees and agents shall have the right andpermission after the Effective Date and through the Inspection Period****toenter upon the Project or any part thereof at all reasonable times upon atleast two (2) Business Days’ advance notice by Purchaser to Seller, in a mannernot to unreasonably disturb any Tenant nor damage or injure the Project, toinspect all aspects of the Project, at Purchaser’s sole cost and expense, andto make such inspections, studies and tests of the Project, at Purchaser’s solecost and expense, which Purchaser deems necessary or advisable; provided,however, that Seller shall have the right to approve and be present for anysuch inspections, studies and test of the Project.  Purchaser shall indemnify and hold harmless Seller from andagainst any and all losses, claims, costs (including attorney’s fees and costsof court), damages or judgments caused to the Project, any Tenant thereof, orSeller (including any mechanics’ and/or materialmen’s liens or claims thereofthat may be filed or asserted against the Project or Seller by anyoneperforming such work, studies, tests or inspections or entering the Project orproviding materials in connection therewith on behalf of Purchaser) which arisefrom or relate to such inspections, studies and tests made by or on behalf ofPurchaser.  Immediately following anysuch inspections, studies and tests made by or on behalf of Purchaser,Purchaser shall be required, at Purchaser’s sole cost and expense, to returnthe Project to the condition the Project was in prior to commencement of suchinspections, studies and tests. Additionally, in the event the Closing does not occur (due to no faultof Seller), Purchaser shall promptly deliver to Seller, without representationor warranty, at no cost or expense to Seller, (i) copies of any and allstudies, tests or inspection reports Purchaser has obtained or obtains withrespect to the Property, and (ii) any and all copies of the DeliveredDocuments.  In addition, Seller willmake available to Purchaser at Seller’s offices in Phoenix the general ledgerand building maintenance reports for the Project for the most recent twelve(12) months.

 

Notwithstandingthe foregoing, Purchaser shall not conduct a Phase II environmental assessmentunless same is required by a Phase I inspection and provided Purchaser obtainsSeller’s prior written consent, not to be unreasonably withheld.  Additionally, notwithstanding anything tothe contrary set forth elsewhere in this Contract, Purchaser shall not, withoutfirst obtaining the prior written consent of Seller (which Seller may withholdin its sole and absolute discretion) disclose to any party whomsoever (otherthan Purchaser’s attorneys, consultants and lender) any environmentalinformation Purchaser obtains with respect to the Property, unless suchdisclosure is required by applicable law or by order of a court or tribunal ofcompetent jurisdiction.  In the eventthat Purchaser is or becomes legally compelled by applicable law or by order ofa court or tribunal of competent jurisdiction to disclose any of suchinformation, Purchaser will (if time and law permits) provide Seller with atleast fifteen (15) days advance written notice (or if applicable law forces anearlier disclosure, with as much advance written notice as is possible underthe circumstances) so that Seller may seek a protective order or otherappropriate remedy and/or waive compliance with the provisions of thisparagraph.  Purchaser shall promptlydeliver to Seller, without representation or warranty, at no cost or expense toSeller, copies of any and all environmental information Purchaser has obtainedor obtains with respect to the Property.

 

Purchaser has no rightunder this Contract to reduce the Purchase Price on account of any inspections,studies or tests made by Purchaser, or for any other reason.  Seller has no legal duty to agree to, noreven consider, any such request made by Purchaser.

 

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3.3                                 Inspection Period.

 

(a)                                  Purchaser’sobligations under this Contract shall be conditioned upon its receipt andapproval, at Purchaser’s sole cost and expense, of various reports (geological,engineering, soil, drainage, flood plain, environmental, etc.) satisfactory toPurchaser of inspections and its review of the Property and of all mattersrelated thereto, in each case in Purchaser’s sole and absolute discretion.  Purchaser shall have until 5:00 p.m.,Mountain Standard Time, on February 11, 2004 (the “Inspection Period”),to make such inspections, review and approve the Delivered Documents, andotherwise review and approve the Property, all at Purchaser’s sole cost andexpense.

 

(b)                                 Priorto the expiration of the Inspection Period, Purchaser shall determine, in itssole and absolute discretion, whether it intends to purchase the Property, andif Purchaser determines that it does not wish to proceed with the acquisitionof the Property from Seller pursuant to this Contract, Purchaser shall deliveron or prior to the expiration of the Inspection Period written notice (the “Non-FeasibilityNotice”) to Seller and Escrow Agent that Purchaser has elected to terminatethis Contract, and upon Seller’s and Escrow Agent’s receipt of such notice (i)this Contract shall terminate, (ii) Purchaser shall be entitled to receive aprompt refund of the Earnest Money Deposit, (iii) Purchaser shall return toSeller all of the Delivered Documents within four (4) days after such transaction,and (iv) neither Seller nor Purchaser shall have any further rights orliabilities under this Contract, except for the obligations contained in **Sections3.2, 3.3, 8.1, 9.1, 11.10, and 11.15** hereof, which shall surviveany such termination.  If Purchaserfails to deliver the Non-Feasibility Notice to Seller and Escrow Agent on orbefore the expiration of the Inspection Period, all objections by Purchaser tothe condition of the Property or status of title to the Property shall bedeemed waived, Purchaser shall have no right to terminate this Contractpursuant to this **Section 3.3**, and the Earnest MoneyDeposit shall thereafter be retained in escrow as security for performance ofthis Contract by Purchaser.

 

3.4                                 Disclaimer of Warranties.  PURCHASER IS ACQUIRING THE PROPERTY “ASIS” WITH ALL FAULTS AND DEFECTS. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS CONTRACT, SELLER HEREBYSPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY, ORAL OR WRITTEN,INCLUDING, BUT NOT LIMITED TO THOSE CONCERNING (I) THE NATURE AND CONDITION OFTHE PROPERTY AND THE SUITABILITY OF THE PROPERTY FOR ANY AND ALL ACTIVITIES ANDUSES WHICH PURCHASER MAY ELECT TO CONDUCT THEREON, (II) THE MANNER,CONSTRUCTION, CONDITION AND STATE OF REPAIR OR LACK OF REPAIR OF ANYIMPROVEMENTS LOCATED ON THE PROPERTY, (III) THE NATURE AND EXTENT OF ANYRIGHT-OF-WAY, LEASES, POSSESSION, LIEN, ENCUMBRANCE, LICENSE, RESERVATION,CONDITION OR OTHERWISE, (IV) THE ACCURACY OF ANY INFORMATION PROVIDED TOPURCHASER, AND (V) THE COMPLIANCE OF THE PROPERTY OR ITS OPERATION WITH ANYLAWS, RULES, ORDINANCES, OR REGULATIONS OF ANY GOVERNMENT OR OTHER BODY, ITBEING SPECIFICALLY UNDERSTOOD THAT PURCHASER SHALL HAVE THE FULL OPPORTUNITYDURING THE INSPECTION

 

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PERIOD TO DETERMINE FORITSELF THE CONDITION OF THE PROPERTY. THE SALE OF THE PROPERTY AS PROVIDED FOR HEREIN IS MADE ON AN “AS IS”BASIS, AND PURCHASER EXPRESSLY ACKNOWLEDGES THAT, IN CONSIDERATION OF THEAGREEMENTS OF SELLER HEREIN, EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THISCONTRACT, SELLER MAKES NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, ORARISING BY OPERATION OF LAW, INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTYOF QUANTITY, QUALITY, CONDITION, HABITABILITY, MERCHANTABILITY, SUITABILITY ORFITNESS FOR A PARTICULAR PURPOSE OF THE PROPERTY, ANY IMPROVEMENTS, THEPERSONALTY, OR SOIL, WATER, AIR OR OTHER ENVIRONMENTAL CONDITIONS.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED INTHIS CONTRACT, SELLER SPECIFICALLY DISCLAIMS ANY WARRANTY, GUARANTY OR REPRESENTATION,ORAL OR WRITTEN, PAST OR PRESENT, EXPRESS OR IMPLIED, CONCERNING THEPROPERTY.  PURCHASER ACKNOWLEDGES THAT,EXCEPT AS EXPRESSLY PROVIDED HEREIN, PURCHASER IS PURCHASING THE PROPERTY BASEDSOLELY UPON PURCHASER’S OWN INDEPENDENT INVESTIGATIONS AND FINDINGS AND NOT INRELIANCE UPON ANY INFORMATION PROVIDED BY SELLER OR SELLER’S AGENTS ORCONTRACTORS. WITHOUT LIMITING THE FOREGOING, PURCHASER ACKNOWLEDGES THAT SELLERHAS MADE NO AGREEMENT TO ALTER, REPAIR OR IMPROVE ANY OF THE PROPERTY.

 

3.5                                 Release of Claims.  Except as otherwise set forth herein, without limiting theprovisions of **Section 3.4**, Purchaser releases Seller and itsemployees, agents and brokers from any and all claims (whether known orunknown, and whether contingent or liquidated) arising from or related to (a)any defects, errors or omissions in the design or construction of anyimprovements upon the Property, whether the same are a result of negligence orotherwise; or (b) other conditions (including environmental conditions) affectingthe Property, whether the same are a result of negligence or otherwise.  The release set forth in this **Section3.5** specifically includes without limitation any claims underany Environmental Laws (hereafter defined), under the Americans with DisabilitiesAct of 1990, 42 U.S.C. §§ 12101 etseq. (or any other federal,state or local laws similar thereto), or with respect to any Environmental Risk(hereafter defined).  “EnvironmentalLaws” means all laws (federal, state, local or foreign) relating to pollutionor the environment or relating to public health, welfare, or safety, includingwithout limitation, the Solid Waste Disposal Act, as amended by the ResourceConservation and Recovery Act (42 U.S.C. §§ 6901 etseq.), theComprehensive Environmental Response, Compensation and Liability Act of 1980(42 U.S.C. §§ 9601 etseq.), the Emergency Planning and CommunityRight to Know Act (42 U.S.C. §§ 11001 etseq.), the Clean Air Act(42 U.S.C. §§ 7401 etseq.), the Clean Water Act (33 U.S.C. §§1251 etseq.), the Toxic Substances Control Act (15 U.S.C. §§2601 etseq.), the Hazardous Materials Transportation Act (49U.S.C. §§ 1801 etseq.), the Occupational Safety and Health Act(29 U.S.C. §§ 651 etseq.), the Federal Insecticide, Fungicideand Rodenticide Act (7 U.S.C. §§ 136 etseq.), and the SafeDrinking Water Act (42 U.S.C. §§ 300f etseq.), as any of thesame may be amended from time to time, any state or local law dealing withenvironmental matters, any common law, and any regulations, orders, rules, procedures,guidelines and the like promulgated in connection therewith, regardless ofwhether the same are in existence on the date of this Contract.  An “Environmental Risk” means anyrisk of liability under Environmental Laws, including without limitation,(a) the presence, release, or

 

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discharge of anypetroleum or petroleum products or constituents, radioactive materials,asbestos in any form that is or could become friable, lead-based paint,polychlorinated biphenyls (“PCBs”); and (b) the presence, release, or dischargeof any “hazardous substance,” “hazardous waste,” “hazardous materials,”“pollutants,” or “contaminants” (as defined by any Environmental Laws).  IT IS SPECIFICALLY INTENDED BY SELLER AND PURCHASERTHAT THE RELEASE CONTAINED HEREIN BE WITHOUT LIMIT, IRRESPECTIVE OF THE CAUSEOR CAUSES OF ANY SUCH CLAIMS (INCLUDING, WITHOUT LIMITATION, PRE-EXISTINGCONDITIONS, STRICT LIABILITY OR THE NEGLIGENCE OF ANY PARTY OR PARTIES[INCLUDING SELLER], WHETHER SUCH NEGLIGENCE BE SOLO, JOINT OR CONCURRENT,ACTIVE OR PASSIVE).

 

3.6                                 Contracts to be Assumed by Purchaser.  At Closing, Purchaser shall take anassignment of and assume all of the Service Contracts, except for those ServiceContracts capable of termination without penalty or payment of any kind thatPurchaser elects in writing not to accept prior to the end of the InspectionPeriod (the “Rejected Contracts”); and Purchaser also shall assume allobligations under the Service Contracts but not the Rejected Contracts, whichshall be terminated at Closing (the Service Contracts less the RejectedContracts being herein referred to as the “Assigned Contracts”), whichare to be performed after the Closing. Purchaser also will cooperate with Seller in any efforts made by Sellerto have Seller released from any liability that may accrue after the Closingunder any of the Assigned Contracts. After the end of the Inspection Period, Seller will terminate anyAssigned Contract if directed by Purchaser, but only if Purchaser agrees in awritten instrument in form and of content acceptable to Seller to pay alltermination penalties and costs payable pursuant to such terminated AssignedContract and otherwise agrees to indemnify and hold harmless Seller from all loss,cost and expense that may arise from such termination, and provided that nosuch termination shall be effective prior to the Closing.

 

3.7                                 Estoppels. Seller shall request that all Tenants execute statements in the formattached hereto as Exhibit G (“Tenant Estoppel”); provided,however, that if the form of Tenant Estoppel attached hereto as Exhibit Grequests information in addition to or different from that required to be givenpursuant to a Tenant’s Lease, such Tenant may execute an estoppel certificatein the form required pursuant to its Lease and be deemed to have provided aTenant Estoppel within the meaning of this Section 3.7 and shall be deemedsatisfactory to and accepted by Purchaser. Receipt no later than five days prior to Closing of the Tenant Estoppelsfrom Tenants leasing eighty-five percent (85%) of the leased net rentable areaof the Improvements, to include Tenant Estoppels from 100% of the Tenantsleasing 10,000 square feet or more of net rentable area in the Improvements,shall be a condition to Purchaser’s obligation to Close hereunder.  Seller shall deliver requests for the SNDAs(hereinafter defined) and Tenant Estoppels to the Tenants within ten days afterthe Effective Date.  Seller shallpromptly deliver to Purchaser any Tenant Estoppels received by Seller.

 

3.8                                 Subordination, Non-disturbance andAttornment.  Seller shallreasonably cooperate with Purchaser to obtain from all Tenants a subordination,non-disturbance, and attornment agreement in a form reasonably acceptable toPurchaser and Purchaser’s lender (“SNDA”) no later than five days prior toClosing.  Receipt of the SNDAs shall notbe a condition of Purchaser’s obligation to Close.

 

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ARTICLE IV

 

SURVEY AND TITLE

 

4.1                                 Survey.  Sellershall deliver to Purchaser within ten (10) days after the Effective Date ofthis Contract a copy of an update of the most recent survey of the Land inSeller’s possession (the “Survey”). Purchaser shall have the right to obtain an additional update andre-certification of the Survey at Purchaser’s sole cost and expense.

 

4.2                                 Title Commitment.

 

(a)                                  Sellerhas delivered to Purchaser, on or before the Effective Date of this Contract,an ALTA Form 1992 title commitment (the “Title Commitment”) from theEscrow Agent setting forth the status of the title to the Land and theImprovements, pursuant to which the Escrow Agent agrees to insure title to theLand and the Improvements pursuant to an ALTA Owner’s Extended Coverage Policyin the full amount of the Purchase Price (the “Title Policy”), and (ii)legible copies of all documents referred to in the Title Commitment (the “TitleDocuments”).

 

(b)                                 Ifany exceptions appear in the Title Commitment, other than the standard printedexceptions, that are unacceptable to Purchaser, then Purchaser shall, withinten (10) days after the Effective Date (the “**Title Review Period**”),notify Seller in writing of such fact. If, on or before five (5) days after receipt of such notice (the “**TitleCure Period**”) from Purchaser, Seller fails to either cure oragree to cure by Closing any such objection (without having any obligation todo so), then Purchaser may terminate this Contract by delivering written noticeto Seller and the Escrow Agent within five (5) days after the end of the TitleCure Period, and upon such termination Purchaser, subject to the provisions of **Section3.3** above, shall be entitled to a prompt return of the EarnestMoney Deposit as Purchaser’s sole and exclusive remedy for Seller’s failure toeliminate or modify any title exceptions. Failure of Purchaser to notify Seller and the Escrow Agent as aforesaidand/or to terminate this Contract as permitted under this **Section 4.2** shall bedeemed approval by Purchaser of any unacceptable exceptions which have not beeneliminated or modified, and Purchaser shall accept such title as Seller candeliver.  For the purposes of thisContract, (i) the lien for general real estate taxes for the calendar yearduring which the Closing shall occur and subsequent years, (ii) all easements,restrictions, other conditions or encumbrances which are shown on the TitleCommitment and/or the Survey and which are not objected to by Purchaser and/orare not cured by Seller as described above, (iii) the Declaration, and (iv) theLeases are hereinafter collectively referred to as the “Permitted Exceptions”.

 

4.3                                 Title Policy. Seller shall pay the premium for a standard owner’s policy of titleinsurance, and Purchaser shall pay the costs of any extended coverage and/ortitle endorsements that Purchaser elects to obtain.

 

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4.4                                 Title.  At theClosing, Seller shall convey to Purchaser, by Special Warranty Deed in formattached hereto as **Exhibit C** (the “Deed”),indefeasible fee simple to the Land and the Improvements, free and clear of anyand all liens, encumbrances, conditions, easements, assessments, restrictionsand other conditions, except for the following:

 

(a)                                  Allof the Leases and other agreements, recorded and unrecorded, which burden theProperty, and the rights of the tenants and other parties claiming thereunder;

 

(b)                                 TheAssigned Contracts; and

 

(c)                                  ThePermitted Exceptions.

 

4.5                                 Bill of Sale. At the Closing, Seller shall assign and transfer to Purchaser, by billof sale and assignment of leases and service contracts executed by Seller andPurchaser in the form attached hereto as **Exhibit D** (the “Bill of Sale”),all of Seller’s right, title and interest in and to the Leases, Personalty,Assigned Contracts, and Intangible Property, free and clear of any and allliens, security interests, encumbrances, conditions, easements, assessments andrestrictions, except for the matters described in **Section 4.4** hereof.

 

ARTICLE V

 

SELLER’S COVENANTS

 

5.1                                 Seller hereby covenants and agrees withPurchaser as follows:

 

(a)                                  Atall times from the Effective Date to the Closing, Seller shall cause to bemaintained in force, “all-risk” casualty insurance upon the Project in the sameamounts as the insurance coverage on the Project on the Effective Date.

 

(b)                                 Atall times from the Effective Date to the Closing, Seller shall operate andmaintain the Project in substantially the same manner as it is now managed, andSeller shall use reasonable efforts to maintain the physical condition of theProject in its current condition, reasonable and ordinary wear and tear anddamage by fire, other casualty and condemnation excepted.

 

(c)                                  Sellershall neither transfer nor remove any Personalty or fixtures from the Projectsubsequent to the Effective Date, unless the same are no longer needed for themaintenance and operation of the Project or except for purposes of replacementthereof, in which case such replacements shall be promptly installed prior toClosing and shall be comparable in quality to the items being replaced.

 

(d)                                 “NewDocument” means (1) any lease, lease extension, lease modification or leasetermination; (2) any other document creating or consenting to an additionalencumbrance upon the Land or the Improvements; and (3) any contract oragreement entered into by Seller that will bind Purchaser after the Closing,unless the

 

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same is terminablewithout penalty on no more than thirty (30) days notice.  Seller shall promptly notify Purchaser ofany New Document.  Seller shall not,after the expiration of the Inspection Period, enter into any New Documentwithout the prior written consent of Purchaser, which shall be deemed given ifno response is made by Purchaser within five (5) Business Days after Seller’swritten request for approval.

 

(e)                                  Sellerhas finalized plans for updating and modifying the HVAC system for theProperty.  The work remaining to beperformed consists of replacing the four (4) original rooftop HVAC units thathave not previously been replaced. Seller either will complete the replacement of such units, at Seller’scost, prior to Closing or provide to Purchaser a credit against the PurchasePrice equal to 100% of the cost of the replacement work not performed byClosing as reasonably determined by Seller.

 

ARTICLE VI

 

CLOSING

 

6.1                                 Closing Date.  Provided Purchaser does not elect to terminate this Contractpursuant to the provisions of this Contract permitting Purchaser to do so, theconsummation of the purchase and sale contemplated hereby (the “Closing”)shall be held at the offices of the Escrow Agent on or before March 12, 2004(the “Closing Date”); provided, however, Seller shall have the right toextend the Closing Date for up to an additional ten (10) business days in orderto satisfy the conditions set forth in Section 3.7.

 

6.2                                 Closing.

 

(a)                                  Exceptas otherwise provided below, at Closing, Seller shall deliver or cause to bedelivered to Purchaser each of the following items:

 

(1)                                  Theduly executed and acknowledged Deed, conveying the Land and the Improvements toPurchaser as provided in **Section 4.4**;

 

(2)                                  Theduly executed Bill of Sale as provided in **Section 4.5**;

 

(3)                                  Allmaster keys in Seller’s possession to all locks on the Project and the originalcopy of the Leases, to the extent in Seller’s possession;

 

(4)                                  Anexecuted affidavit confirming that Seller is not a foreign entity in accordancewith the provisions of Section 1445 of the Internal Revenue Code of 1986, asamended;

 

(5)                                  Anexecuted notice to the Tenants under the Leases in the form of **Exhibit E**attached hereto (the “Notice to Tenant”);

 

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(6)                                  Evidenceacceptable to the Escrow Agent and Purchaser authorizing consummation by Sellerof the purchase and sale transaction contemplated hereby and the execution anddelivery of the closing documents on behalf of Seller;

 

(7)                                  Theoriginals of all books and records of account, correspondence with Tenants andsuppliers, Assigned Contracts, Leases and all Lease files, Licenses,maintenance records and warranties, and other agreements, plans, andspecifications and other items affecting the Property, to the extent inSeller’s possession;

 

(8)                                  IntentionallyDeleted.

 

(9)                                  Payall costs associated with Title Policy except any portion of the premium inexcess of the premium for a standard coverage owner’s form and endorsementsthat Purchaser or its lender may desire to the Title Policy;

 

(10)                            Anyother Closing documents that may be reasonably required by the Escrow Agent orPurchaser to consummate this purchase and sale; and

 

(11)                            TheSNDAs, to the extent secured pursuant to Section 3.8 above, and Estoppels inaccordance with Section 3.7 above.

 

(b)                                 Atthe Closing, Purchaser shall:

 

(1)                                  Deliverthe Purchase Price for the Property required to be paid in accordance with **Section2.2**;

 

(2)                                  Deliverevidence acceptable to the Escrow Agent and Seller authorizing consummation byPurchaser of the purchase and sale transaction contemplated hereby and theexecution and delivery of the closing documents on behalf of Purchaser;

 

(3)                                  Executethe Bill of Sale described in **Section 6.2(a)(2)**;

 

(4)                                  Executeand deliver the “As-Is” Certificate in the form of **Exhibit B** hereto;

 

(5)                                  Executethe Notice to Tenant and immediately deliver a copy of same to Tenant;

 

(6)                                  IntentionallyDeleted.

 

(7)                                  Payall costs associated with any premium in excess of the premium for a standardowner’s policy of title insurance and for any deletions,

 

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modifications,amendments or endorsements Purchaser or its lender may desire to the TitlePolicy; and

 

(8)                                  Deliverall additional documents and instruments as in the opinion of the Escrow Agentare necessary to the proper consummation of this transaction.

 

6.3                                 Closing Prorations and Costs.  Provided the Purchase Price for the Propertyrequired to be paid in accordance with **Section 2.2** is received by the TitleCompany no later than 2:00 p.m., Mountain Standard Time, on the Closing Date,the items in subparagraphs (a) through (f) of this **Section 6.3** shall beapportioned or prorated between Seller and Purchaser as of 11:59 p.m., MountainStandard Time, on the day immediately preceding the Closing Date (with allprorations to be made on a 365 day year basis) (if funds are received after2:00 PM, Mountain Standard Time, on the Closing Date, the prorations shall bemade as of the Closing Date rather than the day immediately preceding theClosing Date):

 

(a)                                  Assessmentsunder Recorded Documents.  Anyassessments under any recorded document constituting a lien or charge on theProperty which are due and payable in the calendar year in which the Closingoccurs.

 

(b)                                 CollectedRent.  All collected rent and otherincome under the Leases in effect at the Closing, but excluding payments thatmay constitute rent but are provided for in other subparagraphs of this **Section6.3**.  Seller shall becharged with any rentals actually collected by Seller before Closing butapplicable to any period of time after Closing.  Uncollected rent and other income shall not be prorated.  If Purchaser collects after Closing anydelinquent rents or other income relating to Seller’s period of ownership ofthe Property, Purchaser shall remit promptly such sums to Seller.  Purchaser shall bill and attempt to collectsuch delinquent rent and other income in the ordinary course of business, butshall not be required to take legal action, or terminate any Leases or threatento terminate any Leases to collect any delinquencies.  After Closing, Seller shall have the right to institute legal actionor otherwise collect any rents delinquent for any period prior to the Closingwithout prejudice to Purchaser’s obligations hereunder, however, Seller shallhave no right to cause any such Tenant to be evicted or to exercise any other“landlord” remedy set forth in such Tenant’s lease other than to sue Tenants nolonger in possession of the premises at the Project for collection.

 

(c)                                  Utilities.  All utilities, including water, sewer,electric, and gas, based upon the last reading of meters prior to the Closing.  Seller shall endeavor to obtain meterreadings on the day before the Closing Date, and if such readings are obtained,there shall be no proration of such items. Seller shall pay at Closing the bills therefor for the period to andincluding the Closing Date, and Purchaser shall pay the bills therefor for theperiod subsequent thereto; provided, however, if the utility company will notissue separate bills or meter readings cannot be obtained on the day before theClosing Date, Purchaser will receive a credit against the Purchase Price forSeller’s portion and will pay the entire bill prior to delinquency after theClosing.  No proration shall be made forutility expenses that are separately metered to and paid directly by Tenant andfor which

 

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Seller has noobligation to pay.  Additionally, Sellershall retain the right to receive reimbursement or refund of all securitydeposits held by any such utility companies in connection with the provision ofservices prior to the Closing Date and Purchaser shall arrange to make its ownutility deposits.

 

(d)                                 Feesand Charges under Service Contracts. Fees and charges under such Assigned Contracts as are being assigned toand assumed by Purchaser at the Closing, on the basis of the periods to whichsuch Assigned Contracts relate.

 

(e)                                  ExpenseReimbursement.  Where the Leasescontain Tenant obligations for taxes, common area expenses, operating expensesor additional charges of any other nature (“Expense Reimbursement”), andwhere Seller shall have collected any portion thereof in excess of amountsincurred by Seller for such items for the period prior to the Closing Date,then there shall be an adjustment and credit given to Purchaser on the ClosingDate for such excess amounts collected. Purchaser shall apply all such excess amounts to the charges owed byPurchaser for such items for the period after the Closing Date and, if requiredby the Leases, shall rebate or credit the Tenants with any remainder.  If it is determined at any time afterClosing that the amount collected during Seller’s ownership period exceededexpenses incurred during the same period by more than the amount previouslycredited to Purchaser at Closing, then Seller shall promptly pay to Purchaserthe deficiency.  If it is determinedafter Closing that the amount collected during Seller’s ownership periodexceeded expenses incurred during the same period by less than the amountpreviously credited to Purchaser at Closing, then Purchaser shall promptly payto Seller the deficiency.  Also, if itis determined after Closing that the amount collected during Seller’s ownershipperiod is less than the expenses incurred during the same period, thenPurchaser shall promptly pay to Seller the deficiency upon receipt from Tenantsof the deficiency.

 

(f)                                    OtherIncome or Expenses.  Seller shall beresponsible for and shall pay any and all Tenant improvement costs, Tenantimprovement allowances, and leasing commissions in connection with the Leaseslisted on the Rent Roll.  Purchaser

 

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shall beresponsible for and shall pay any and all Tenant improvement costs, Tenantimprovement allowances, and leasing commissions pertaining to all New Documentsentered into by Seller, in accordance with this Agreement, after the EffectiveDate and prior to the termination of the Inspection Period without Purchaser’sapproval, or entered into by Seller after the termination of the InspectionPeriod which have been approved or deemed approved by Purchaser.  In addition, Purchaser shall receive acredit against the Purchase Price to the extent provided in **Section5.1(e)** above All other expenses related to the ownership oroperation of the Property shall be prorated in the manner customary in theState of Arizona.

 

(g)                                 GeneralClosing Costs.  Each party shall payall of the fees and expenses of its own counsel in entering into andconsummating the transactions described in this Contract.  Seller and Purchaser agree to execute anyreal estate transfer declarations required by the state, county or municipalityin which the Project is located.  Allother customary costs in connection with the Closing, including recording andsimilar charges, will be apportioned in accordance the custom in MaricopaCounty, Arizona.

 

(h)                                 TenantSecurity Deposits.  Seller shallretain all Tenant security deposits under the Leases, and Purchaser shallreceive a credit at Closing against the Purchase Price equal to the sum of allsuch deposits.  Purchaser shall,immediately upon taking possession of the Property, deliver to all Tenants acopy of the Notice to each Tenant, notifying Tenant of the transfer of theProperty to Purchaser and Purchaser’s receipt and responsibility for suchTenant’s security deposit.

 

(i)                                     Possessionof Property.  At the Closing,possession of the Property shall be delivered to Purchaser, subject only to thematters described in **Section 4.4** above.

 

(j)                                     Sellershall provide to Buyer at Closing a credit (“Credit”) against the balance ofthe Purchase Price payable at Closing in the amount by which (i) the baserental income, together with parking revenue in the amount of $115,000.00(collectively “Base Rent”), as shown on the Rent Roll attached hereto as ExhibitF, for the twelve month period beginning on the first day of the monthimmediately after the month in which the Closing occurs is less than (ii) theamount of $4,300,000.00.  To the extentthat the Rent Roll for the Property and corresponding Base Rent does notincrease between the Effective Date and the date of Closing such that the BaseRent at Closing remains the same as that shown on the Rent Roll attached tothis Agreement, Purchaser and Seller agree that if the Closing occurs in themonth of March 2004 the Credit shall be $355,691; and if the Closing occurs inthe month of April 2004 the Credit shall be $293,704.  If new Leases are entered into prior to Closing, then the Creditshall be adjusted to take into account the rent to be paid thereunder duringsuch 12 month period, calculated in the same manner as set forth above in thisSection 6.3(j).  Base Rent shall not bereduced by reason of any failure of a Tenant to pay rent or a default by Tenantunder its Lease.

 

6.4                                 Real Estate Taxes and SpecialAssessments.  Real estatetaxes for the year in which the Closing occurs shall be prorated based on thedate of the Closing.  Purchaser will beresponsible for payment of all subsequent real estate taxes.  Purchaser or Seller shall be given a

 

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credit for such prorationat the Closing.  All prorations will bebased upon the last known actual net real estate taxes payable according to thepublic record, subject to post-Closing adjustments as provided herein.  Purchaser shall remit to Seller any refundof real estate taxes received with respect to the Property which pertain to theperiod of Seller’s ownership.

 

6.5                                 Closing Estimates and FinalAdjustments.

 

(a)                                  Inconnection with the Closing, Seller agrees to prepare or cause its representativesor accountants to prepare a schedule of tentative adjustments required by **Sections6.3 and 6.4** and to provide such schedule to Purchaser and EscrowAgent not less than two (2) Business Days prior to the Closing Date for reviewand approval by Purchaser and its representatives or accountants.  Such adjustments, if and to the extent knownor estimated and agreed upon as of the Closing Date, shall be paid by Purchaserto Seller (if the prorations result in a net credit to Seller), or by Seller toPurchaser (if the prorations result in a net credit to Purchaser) by a creditagainst the amount payable on account of the Purchase Price payable on theClosing Date.

 

(b)                                 Anysuch adjustments not finally determined or agreed upon as of such Closing Dateshall be paid by Purchaser to Seller, or by Seller to Purchaser, as the casemay be, from time to time in cash as soon as practicable following the receiptor determination of the information necessary to make the adjustments after theClosing Date.  Seller and Purchaseragree to cooperate and use their best efforts to make such adjustments no laterthan one hundred and twenty (120) days after the Closing Date.

 

(c)                                  Withoutlimiting the generality of subparagraph (b) above, after year-end (or otherapplicable period) adjustments with the Tenants under the Leases for taxes,assessments, maintenance charges, and operating expenses, Purchaser shallprepare and present to Seller a calculation of the re-proration of taxes,assessments, Expense Reimbursements, and those operating expenses to which theExpense Reimbursements relate, based upon the actual amount of such itemscharged to or received by the parties for the year or other applicable fiscalperiod.  The parties shall make theappropriate adjusting payment between them within thirty (30) days afterpresentment to Seller of Purchaser’s calculation.

 

(d)                                 Fora period of twelve (12) months following the Closing Date, Purchaser andPurchaser’s successors and assigns shall make available to Seller and itssuccessors and assigns, and Seller shall make available to Purchaser andPurchaser’s successors and permitted assigns, and their respective employees,agents and representatives all books and records maintained with respect to theProperty which relate to any of the items to be prorated or allocated underthis Contract in connection with such Closing, which books and records shall bemade available for inspection and copying upon reasonable notice duringordinary business hours.  Any suchinspection shall be at reasonable intervals and at the inspecting party’s solecost and expense.

 

(e)                                  Selleragrees to cooperate with Purchaser through March 31, 2005 in connection withany audit of the Property performed in connection with 8K

 

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compliance issuesof the Securities and Exchange Commission, provided that such cooperation shallnot require Seller to expend any funds or incur any expenses or liability, andif Seller incurs any expense, Purchaser shall reimburse Seller therefor.  The provisions of this Subsection 6.5(e)shall survive Closing.

 

ARTICLE VII

 

CASUALTY

 

7.1                                 Casualty.  If prior to the Closing, (a) all or a substantial part of theProject is damaged or destroyed by fire or other casualty whatsoever, and (b)the cost of repair for which is reasonably estimated by a qualified independentthird party retained by Seller to be less than $500,000, Purchaser shall acceptthe Project in its then condition and proceed with the Closing without anyabatement or reduction in the Purchase Price, in which event Purchaser shall beentitled to (i) an assignment of all of Seller’s right, title and interest inand to any claims Seller may have under the insurance policies covering theProject and any insurance proceeds payable by reason of such casualty, and (ii)a credit against the Purchase Price in the amount of Seller’s insurancedeductible(s).  If Purchaser is requiredto proceed under clause (b) above, Seller shall not compromise, settle oradjust any claims to such proceeds without Purchaser’s prior writtenconsent.  If the cost of repair isreasonably estimated to exceed $500,000, the Purchaser may terminate thisContract by delivering written notice of such termination to Seller and theEscrow Agent within ten (10) days after Purchaser receives notice of that theestimated cost of repair will exceed $500,000.

 

If a portion ofthe Project is damaged by fire or other cause whatsoever, and Purchaser eitherhas no right to terminate this Contract pursuant to **Section 7.1**, or Purchaserhas elected, or is deemed to have elected, not to exercise such terminationright, then this Contract shall continue in full force and effect, andPurchaser shall accept the Property in its then condition and proceed with theClosing, subject to the other provisions of this Contract, without anyabatement or reduction in the Purchase Price. In such event, Purchaser shall be entitled to (x) an assignment of allof Seller’s right, title and interest in and to any claims Seller may haveunder the insurance policies covering the Project and any insurance proceedspayable by reason of such casualty, and (y) a credit against the Purchase Pricein the amount of Seller’s insurance deductible(s), and Seller shall notcompromise, settle or adjust any claims to such proceeds without Purchaser’sprior written consent.

 

7.2                                 Condemnation.  If eminent domain or condemnation proceedings are commencedagainst an immaterial portion of the Property, then this Contract shall notterminate, and at Closing all rights to the proceeds thereof shall be assignedby Seller to Purchaser.  Notwithstandingthe foregoing, if any eminent domain or condemnation proceedings are commencedagainst any material portion of the Property, then Purchaser shall have theright, as its sole and exclusive remedy, to terminate this Contract bydelivering written notice of such termination to Seller and the Escrow Agentwithin ten (10) days after Purchaser receives notice of the commencement ofsuch proceedings.  Upon suchtermination, the Earnest Money Deposit shall be returned to Purchaser, andneither Seller nor Purchaser shall have any further rights or liabilities underthis Contract, except as provided in **Sections 3.2, 3.3, 8.1, 9.1, 11.10, and 11.15**.

 

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If Purchaser elects notto terminate this Contract as provided by this **Section 7.2**, then theClosing shall take place as herein provided without abatement of the PurchasePrice, and there shall be assigned to Purchaser at the Closing all right, title,and interest of Seller in and to any condemnation awards.

 

7.3                                 Waiver. Purchaser and Seller agree that the provisions of **Sections 7.1 and 7.2**shall govern the respective rights and obligations of Purchaser and Seller withregard to the subject matter of **Sections 7.1 and 7.2**.

 

ARTICLE VIII

 

REAL ESTATE COMMISSIONS

 

8.1                                 Indemnity.  Purchaser and Seller represent and warrantto each other that it has engaged no real estate broker or agent in connectionwith the sale of the Property other than Mike Auther, of Jacor Partners (the “Broker”).  Seller shall pay a real estate commission tothe Broker, pursuant to the terms of a separate agreement between Seller andBroker.  Otherwise, each of Purchaserand Seller shall indemnify and hereby agree to hold the other party harmlessfrom any brokerage or finder’s fee or commission claimed by any person claimingby, through or under the indemnifying party for or on account of this Contractor the transactions contemplated hereby.

 

ARTICLE IX

 

TERMINATION AND REMEDIES

 

9.1                                 Remedies.

 

(a)                                  Exceptas specifically provided otherwise herein, if Purchaser fails to perform itsobligations at Closing for any reason other than a failure by Seller to performits obligations hereunder, then Seller may as its exclusive remedy, terminatethis Contract by delivering written notice of such termination to Purchaser andthe Escrow Agent, in which event the Earnest Money Deposit shall be forfeitedand paid to Seller as liquidated damages for Purchaser’s default hereunder.

 

(b)                                 IfPurchaser terminates this Contract pursuant to any provision hereof expresslypermitting it to do so, the Earnest Money Deposit shall be immediately returnedto Purchaser, and neither Seller nor Purchaser shall have any further rights orliabilities under this Contract, except for the indemnity obligations and otheragreements contained in **Sections 3.2, 3.3, 8.1, 11.10 and 11.15**hereof, which shall survive any such termination.

 

(c)                                  Exceptas specifically provided otherwise herein, if, at or prior to Closing, Sellerdefaults in performing its obligations hereunder for any reason other than afailure by Purchaser to perform its obligations hereunder, and Seller fails tocure such default within ten (10) days after written notice from Purchaser toSeller specifying such

 

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default, Purchasermay, as its sole and exclusive remedy, either (i) terminate this Contract bydelivering written notice of such termination to Seller and the Escrow Agentand receive a return of the Earnest Money Deposit, or (ii) pursue specificperformance of Seller’s obligation to convey the Property to Purchaser, inwhich event Purchaser shall be deemed to have accepted the condition ofSeller’s title to the Property. Purchaser waives all other remedies (including the right to recoverdamages) arising from Seller’s breach of this Contract.

 

9.2                                 Liquidated Damages.  Seller and Purchaser hereby acknowledge and agree they haveincluded provisions for payment of liquidated damages in this Contract, because,in the event of a breach by Purchaser, the actual damages incurred by Sellercan reasonably be expected to approximate the amount of liquidated damagescalled for herein, and because the actual amount of such damages would bedifficult if not impossible to accurately measure.

 

ARTICLE X

 

ASSIGNMENT OF CONTRACT

 

10.1                           Assignment. Purchaser shall not assign its rights or delegate its duties under thisContract without the written consent of Seller; provided, however, Purchasermay, without first obtaining Seller’s written consent, assign its rights underthis Contract to any Affiliate (defined below) of Purchaser, or to a partyacting as Purchaser’s qualified intermediary in a tax deferred exchange underSection 1031 of the Internal Revenue Code, so long as Purchaser gives Seller atleast five (5) days’ prior written notice of such assignment.  In the event Purchaser assigns or delegatesits rights hereunder in accordance with the immediately preceding sentence, Purchasershall provide Seller with an original of the assignment document, which shallbe subject to Seller’s approval (which approval shall not be unreasonablywithheld, conditioned or delayed) and must (a) provide that the assigneeassumes all of Purchaser’s obligations and liabilities hereunder, (b) expresslyrun to the benefit of Seller, and (c) contain provisions whereby the individualor entity initially executing this Contract agrees to be and remain jointly andseverally liable for all of Purchaser’s obligations and liabilities (including,without limitation, obligations and liabilities in the nature of and/orrelating to indemnity and/or reimbursement) hereunder, or alternatively, suchindividual or entity shall provide a written guaranty, in form and substancereasonably acceptable to Seller, guaranteeing any such assignee’s performanceof such obligations and the payment and/or satisfaction of any such liabilitieshereunder.  For the purposes of thisparagraph, the term “Affiliate” means (x) an entity that directly orindirectly controls, is controlled by or is under common control withPurchaser, (y) an entity at least a majority of whose economic interest isowned by Purchaser or its principals, or (z) an entity in which Purchaserretains a direct interest of not less than 25% and which entity is controlledby Purchaser; and the term “control” means the power to direct themanagement of such entity through voting rights, ownership or contractualobligations.

 

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ARTICLE XI

 

MISCELLANEOUS

 

11.1                           Entire Agreement.  This Contract embodies the entire agreement between the partiesand cannot be varied except by the written agreement of the parties.  All prior agreements between Seller andPurchaser relating to the subject matter hereof, including without limitationall letters of intent or proposed letters of intent, are terminated and of nofurther force and effect.  Except asotherwise expressly provided in this Contract, Seller makes no representations,warranties or agreements with respect to the Property.

 

11.2                           Survival.  Allterms and provisions contained in this Contract shall merge into the documentsexecuted at Closing and shall not survive the Closing; provided, however, theprovisions of (i) **Sections 6.3**, **Section 6.4** and **Section6.5** which contemplate performance of obligations after theClosing, and the provisions of **Article XII**, shall survive the Closingfor a period of one (1) year following the Closing, and (ii) **Section3.4** and the provisions of **Articles VIII, IX**, and this **ArticleXI** shall survive forever without limitation.

 

11.3                           Time of Essence.  Time is of the essence in this Contract.

 

11.4                           Notices.  Anynotice required or permitted to be delivered hereunder shall be deemed to bedelivered (a) when received by the addressee if delivered by courier service,(b) if mailed, two (2) days after deposit in the United States mail, postageprepaid, certified mail, return receipt requested, or (c) if sent by telecopy,when transmission is received by the addressee with electronic or telephonicconfirmation, in each such case addressed or telecopied to Seller or Purchaser,as the case may be, at the address or telecopy number set opposite thesignature of such party hereto.

 

11.5                           Gender; Numbers.  Words of any gender used in this Contract shall be held andconstrued to include any other gender, and words in the singular number shallbe held to include the plural and vice versa unless the context requiresotherwise.

 

11.6                           Headings. The captions used in connection with the articles and sections of thisContract are for convenience only and shall not be deemed to construe or limitthe meaning of the language of this Contract.

 

11.7                           Days.  Exceptwhere Business Days are expressly referred to, references in this Contract todays are to calendar days, not Business Days. “Business Day” means any calendar day except a Saturday, Sundayor banking holiday.

 

11.8                           Governing Law. THIS CONTRACT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THELAWS OF THE STATE OF ARIZONA.

 

11.9                           Holidays.  If the final date of any period provided for herein for theperformance of an obligation or for the taking of any action falls on a dayother than a Business Day, then the time of such period shall be deemedextended to the next day which is a Business Day.

 

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11.10                     Attorneys’Fees.  If a legal action isbrought to enforce the terms of this Contract, the prevailing party shall beentitled to collect its costs of court, including reasonable attorneys’ fees.

 

11.11                     Interpretation.  The parties acknowledge that each party andits counsel have reviewed this Contract and that the normal rule ofconstruction to the effect that any ambiguities are to be resolved against thedrafting party shall not be employed in the interpretation of this Contract orany amendments or exhibits hereto.

 

11.12                     Severability.  If any provisions of this Contract are heldto be illegal, invalid or unenforceable under present or future laws, suchprovision shall be fully severable, and this Contract shall be construed andenforced as if such illegal, invalid or unenforceable provision had nevercomprised a part of this Contract, and the remaining provisions of thisContract shall remain in full force and effect and not be affected by theillegal, invalid or unenforceable provision or by its severance from thisContract, provided that both parties may still effectively realize the completebenefit of the transaction contemplated hereby.

 

11.13                     Amendments.  No modification or amendment of this Contractshall be effective unless made in writing and executed by both Seller andPurchaser.  If any approval or consentis required pursuant to any provision of this Contract, such approval orconsent shall be deemed given only if it is in writing, executed by the partywhose approval or consent is required.

 

11.14                     Acceptanceof Offer.  This Contractconstitutes an offer by Seller to sell the Property on the terms and conditionsset forth herein.  Unless soonerterminated or withdrawn by notice in writing to Purchaser, this offer shalllapse and terminate at 5:00 p.m., Mountain Time on January 14, 2004, unlessprior to such time Purchaser has executed and delivered to Seller four (4)fully executed counterparts of this Contract. In the event this offer terminates pursuant to the provisions of theimmediately preceding sentence, Seller shall have no further duties,obligations or liabilities to Purchaser hereunder.

 

11.15                     Confidentiality.

 

(a)                                        Sellerand Purchaser agree to keep the terms of this Contract confidential untilClosing if the Closing occurs and for two (2) years following the EffectiveDate, if the Closing does not occur; provided, however, that each party maydisclose this Contract and the Information (defined below) to its attorneys,accountants, partners or prospective partners (and parties who own an interestin such partners), financial advisors, consultants, engineers, lenders, andEscrow Agent (the “Recipient Parties”) and as may be required by any andall laws or regulations applicable to Purchaser.  Purchaser also may disclose the terms of this Contract to anyother party as approved by Seller (and upon such disclosure, the party to whomdisclosure is made shall be deemed a Recipient Party) as long as prior to suchdisclosure such Recipient Party agrees to be bound by the provisions of this **Section11.15** by an instrument reasonably acceptable to Seller in formand content.

 

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(b)                                       “Information”means (1) all documents and other written information furnished (whether priorto, simultaneously with or subsequent to the execution hereof) by or on behalfof Seller with respect to the Property, including the documents furnished under**Sections3.1, 4.1 and 4.2** of this Contract, and (2) all analyses, compilations,forecasts, studies, tests, assessments or other documents which contain orotherwise reflect such information or Purchaser’s review of, or interest in,the Property, regardless of when the same are obtained.  Purchaser agrees that, except as otherwiseprovided herein, the Information will be kept confidential and shall not,without Seller’s prior written consent, be disclosed by Purchaser or by theRecipient Parties in any manner whatsoever, in whole or in part to any thirdparty other than any of the Recipient Parties, and Purchaser shall instruct theRecipient Parties not to use the Information for any purpose other than inconnection with Purchaser’s purchase of the Property. Moreover, Purchaseragrees to reveal the Information only to such of the Recipient Parties who needto know the Information for the purpose of evaluating the Property, who areinformed by Purchaser of the confidential nature of the Information and whoagree to act in accordance with the terms and conditions of this **Section11.15**.  In any event,Purchaser agrees to take such steps as are reasonably practicable to maintainthe confidentiality of the Information and prevent any disclosure thereof inviolation of this **Section 11.15** by any of Purchaser’sagents, partners, representatives or employees.

 

(c)                                        Ifthe Closing does not occur, all copies of the Information provided by Sellerwill be returned to Seller, and copies of any other Information obtained by oron behalf of Purchaser shall be delivered to Seller, within ten (10) days uponSeller’s request.  That portion of theInformation which consists of analyses, compilations, forecasts, studies orother documents prepared by the Recipient Parties and which are based upon orcontain summaries of the Information will, at Seller’s request, be destroyed(except to the extent a consultant retains a copy of any report prepared by it)and in all events shall continue to be subject to the terms of this **Section11.15** for two (2) years following the Effective Date.

 

(d)                                       Theterm “Information” shall not include such portions of the informationwhich (i) are or become generally available to the public other than as aresult of a disclosure by Purchaser or Purchaser’s agents, partners,representatives or employees, or (ii) are or become available to Purchaser on anon-confidential basis from a source (other than Seller or Seller’s agents)which is not prohibited from disclosing such information to Purchaser by alegal, contractual or fiduciary obligation.

 

(e)                                        IfPurchaser or any of the Recipient Parties to whom Purchaser transmits theInformation becomes legally compelled by order of a court or tribunal ofcompetent jurisdiction to disclose any of the Information, Purchaser will (iftime and law permits) provide Seller with prompt notice so that Seller may seeka protective order or other appropriate remedy and/or waive compliance with theprovisions of this **Section 11.15**.

 

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(f)                                          NeitherSeller nor Purchaser shall make any public announcements or issue any pressreleases regarding the transaction contemplated by this Contract prior toClosing; after Closing, any such announcement or release by either party whichcontains the name of the other party, any direct or indirect partner orventurer in such other party, or any derivative of any of the foregoing shallbe subject to the other party’s approval.

 

11.16                     Recording.  This Contract shall not be placed of publicrecord.

 

11.17                     Counterparts.  This Contract may be executed in any numberof counterparts, each of which shall be an original but all of which togethershall constitute one instrument.

 

11.18                     NoThird Party Rights.  Nothing inthis Contract, express or implied, is intended to confer upon any persons otherthan the parties hereto and their respective successors and assigns, any rightsor remedies under or by reason of this Contract.

 

11.19                     No JointVenture.  Notwithstandinganything to the contrary contained herein, this Contract shall not be deemed orconstrued to make the parties hereto partners or joint venturers, or to rendereither party liable for any of the debts or obligations of the other.

 

11.20                     Exhibits.  ExhibitsA through I,inclusive, which are attached hereto and incorporated herein by reference.

 

11.21                     NoPersonal Liability.  No member,partner, investor, employee, officer, director or representative of Seller orSeller’s members shall have any personal liability under this Contract or anydocument executed in connection with the transactions contemplated in thisContract.

 

11.22                     RealEstate Reporting Person.  EscrowAgent is hereby designated the “real estate reporting person” for purposes ofSection 6045 of Title 26 of the United States Code and Treasury Regulation1.6045-4 and any instructions or settlement statement prepared by Escrow Agentshall so provide.  Upon the consummationof the transaction contemplated by this Contract, Escrow Agent shall file theForm 1099 information return and send the statement to Seller as required underthe aforementioned statute and regulation.

 

11.23                     Exchangeof Properties. Purchaser and Seller acknowledge that either Seller orPurchaser may desire to structure the transaction evidenced hereby as part ofan exchange of properties (i) of like-kind within the contemplation of Section1031 of the Internal Revenue Code, or (ii) involving condemnation proceedswithin the contemplation of Section 1033 of the Internal Revenue Code.  Any such exchange of properties is referredto herein as an “Exchange”.  Theparties agree to cooperate with each other in structuring such an Exchangeprovided that (a) such cooperation shall be without out-of-pocket cost orexpense to the party not structuring such Exchange; (b) the party structuringsuch Exchange shall pay all of the other party’s out-of-pocket costs or expensesarising due to such Exchange; (c) the party structuring such Exchange shallgive notice of the proposed structure of the Exchange at least two (2)

 

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Business Days prior tothe Closing Date; (d) no such Exchange structure shall require the party thatdoes not structure such Exchange to hold legal or equitable title to anyproperty other than the Property; and (e) no such Exchange or structuring inrelation thereto shall delay or operate to postpone the Closing Date or anytime periods set forth in this Contract, nor shall the obligations of any ofthe parties hereto be modified, amended or assigned as a result of any suchExchange.

 

ARTICLE XII

 

REPRESENTATIONS ANDWARRANTIES

 

12.1                           Purchaser’s Representations andWarranties.  Purchaser herebyrepresents and warrants the following to Seller:

 

(a)                                  Purchaseris an Arizona corporation, which is duly formed, validly existing and in goodstanding under the laws of the State of Arizona and has the full right, powerand authority to enter into, and to perform all of its obligations under, thisContract, and all persons signing this Contract and/or any documents andinstruments in connection herewith on behalf of Purchaser have full power andauthority to do so;

 

(b)                                 ToPurchaser’s actual knowledge, there are no actions, suits or proceedingspending or threatened, before or by any judicial or administrative body, anyarbiter or any governmental authority, against or affecting Purchaser whichwould affect Purchaser’s ability to perform its obligations under thisContract;

 

(c)                                  ToPurchaser’s knowledge, neither the execution or delivery of this Contract northe performance of Purchaser’s obligations under this Contract violates, orwill violate, any contract or agreement to which Purchaser is a party or bywhich Purchaser is otherwise bound; and

 

(d)                                 Purchaserhas (or as of the Closing Date will have) sufficient funds available to it tofund the payment of the Purchase Price at Closing.

 

12.2                           Seller’s Representations andWarranties.  Seller representsand warrants to Purchaser as of the date hereof, and such representations andwarranties be deemed remade by Seller to Purchaser as of the Closing Date:

 

(a)                                  Selleris a limited liability company which is duly formed, validly existing and ingood standing under the laws of the State of Delaware and has the full right,power and authority to enter into, and to perform all of its obligations under,this Contract, and all persons signing this Contract and/or any documents andinstruments in connection herewith on behalf of Seller have full power andauthority to do so;

 

(b)                                 ThisContract is, and all other documents executed by Seller pursuant hereto willbe, duly authorized, executed, and delivered by Seller and is and will be thelegal, valid, and binding obligations of Seller, enforceable against Seller, inaccordance with their respective terms, and, to Seller’s Knowledge, thisContract and

 

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such documents donot and will not violate any provisions of any agreement, order or judgment towhich Seller, is a party or to which it is subject;

 

(c)                                  ToSeller’s Knowledge, Seller’s execution of this Contract, consummation of thetransactions herein contemplated, and performance and observance of theobligations of Seller hereunder and under all other agreements and instrumentsherein mentioned to which Seller is a party will not conflict with or result inthe breach of any law, regulation, order, writ, injunction or decree of any courtor governmental authority or of any agreement or instrument to which Seller isnow a party or to which it or the Property is subject, or constitute a defaultthereunder and, to Seller’s Knowledge, no consent, waiver or approval by anythird party is required in connection with the execution and delivery by Sellerof this Contract or the performance by Seller of the obligations to beperformed by Seller under this Contract;

 

(d)                                 Sellerhas received no written notice from any city, county, state or othergovernmental authority of any violation of any law, statute, ordinance,regulation, or administrative or judicial order or holding with respect to theProperty, which violation has not been corrected;

 

(e)                                  Thatto the best of Seller’s Knowledge, (i) the Property, or any part thereof, hasnever been used as a sanitary landfill or waste dump site; (ii) no undergroundstorage tanks are present on the Property; (iii) there is no litigation withrespect to the Property relating to Environmental Law violations; (iv) nonotice of violation or other written communication has been received by Sellerfrom a governmental agency or any other person or entity alleging or suggestingan Environmental Law violation on the Property; and (v) Seller has notdeposited or released any “hazardous substance”, “hazardous waste”, “hazardousmaterials”, “pollutants”, or “contaminants” as defined by any EnvironmentalLaws, on the Property in violation of Environmental Laws in existence as of theEffective Date.

 

(f)                                    ToSeller’s Knowledge, there are not any existing or threatened litigation,condemnation or similar proceedings against or involving the Property orSeller’s interest therein;

 

(g)                                 Thereare no attachments, levies, executions, assignments for the benefit ofcreditors, receivership, conservatorship, or voluntary or involuntaryproceedings in bankruptcy (or pursuant to any other debt or relief laws) filedby Seller, or, to Seller’s Knowledge, pending in any current judicial oradministrative proceedings against Seller;

 

(h)                                 TheLeases that are listed or referenced on the Rent Roll provided by Seller underSection 3.1(b), constitute all of the Leases affecting the Property, as suchRent Roll, is modified, amended or supplemented from time to time after theEffective Date in accordance with the Contract.  The Leases have not been modified or amended except as identifiedon the Rent Roll.  To Seller’s actualKnowledge,  (i) Seller has not sentwritten notice to any Tenant claiming that the Tenant is in default under itsLease,

 

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which defaultremains uncured; (ii) no person has or claims any right of occupancy orpossession of any part of the Property except pursuant to a Lease or thePermitted Encumbrances; (iii) except as set forth in the Tenant Estoppels, noTenant has asserted any defense, offset, claim or counterclaim in writingagainst Seller under a Lease, and Seller has not received notice of any defaultunder any Lease; (iv) there are no Tenant improvement allowances or leasingcommissions unpaid as of the date hereof that will not be either paid bySeller, prior to Closing, or escrowed at Closing, as provided above; (v) theRent Roll reflects the actual rent due from Tenants under the Leases; (vi)except as set forth in the Leases and on the Rent Roll, no Tenant is entitledto any free rent, abatement of rent, or similar concession, and Seller has notaccepted any prepaid rent or prepayment of any other sum due under the Leasesfor more than thirty (30) days in advance; (vii) Seller has delivered toPurchaser true and complete copies of all Leases entered into by Seller aslandlord, and Seller has delivered to Purchaser true and complete copies of allother Leases in Seller’s possession; and (viii) the security deposits set forthon the Rent Roll are all the security deposits paid by the Tenants under theLeases.

 

(i)                                     Otherthan those service contracts, maintenance agreements, leasing commission orbrokerage agreements, repair contracts, property management contracts, contractsfor the purchase or delivery of labor, services, materials or goods, suppliesor equipment or similar agreements entered into by or on behalf of Seller (A)which are included in the Delivered Documents, (B) which will be terminatedprior to Closing, or (C) which are cancelable on no more than thirty (30) days’notice without the payment of any termination fee or cancellation penalty (allof the foregoing contracts or agreements referenced in clauses (A) (B) or (C)hereof are collectively referred to as the “Contracts”), Seller does nothave any other agreements presently affecting the Property other than theLeases and the Permitted Encumbrances. Seller has delivered to Purchaser true and complete copies of each ofthe Contracts.  The Contracts representthe complete agreement between Seller and such other parties as to the servicesto be performed or materials to be provided thereunder and the compensation tobe paid for such services or materials, as applicable.  Seller has no Knowledge of any default underany of the Contracts.

 

(j)                                     Tothe best of Seller’s Knowledge, the Delivered Documents prepared by Seller anddelivered to Purchaser are or will be true, accurate, and complete and Sellerdoes not know of any material misstatements contained in the DeliveredDocuments; provided that Seller does not represent and warrant the accuracy ofprojections or budgets.

 

(k)                                  Forpurposes of this Contract, the term “to Seller’s Knowledge” shall mean thepresent actual (as opposed to constructive or imputed) knowledge solely ofJulie Echols (the asset manager), without any independent investigation orinquiry whatsoever.

 

(l)                                     Ifany representation or warranty made by Seller in this Contract is not true asof the date hereof (or as of the Closing Date), and Purchaser becomes aware ofsuch untrue representation on or prior to Closing, then Purchaser shall havethe right, as

 

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its sole andexclusive remedy (Purchaser hereby waiving all other remedies), either (i) toterminate this Contract in accordance with the provisions hereof by deliveringwritten notice to Seller and the Escrow Agent prior to Closing, in which casethe Earnest Money Deposit shall be paid to Purchaser, and neither Seller norPurchaser shall have any further rights or obligations under this Contract,except as provided in **Sections 3.2, 3.3, 8.1, 9.1, 11.10, and 11.15**hereof, or (ii) to elect to purchase the Property subject to such untruerepresentation or warranty without any adjustment to the Purchase Price.

 

(m)                               If,however, Purchaser first discovers such untrue representation or warranty afterthe Closing Date but within one (1) year after the Closing Date, then (a)Seller shall have no liability whatsoever unless and until the damages causedby such untrue representation or warranty exceed $32,000, and (b) Seller’stotal liability, if any, to Purchaser or any other party with respect to anyand all such untrue representations or warranties in the aggregate shall in noevent exceed $320,000.00.

 

(n)                                 Notwithstandinganything contained in this Contract to the contrary, any and allrepresentations and warranties of Seller contained in this **Section 12.2** shallsurvive the Closing only for a period of one (1) year after the Closing Dateand shall in all events be subject to the limitation on liability specified inthe immediately preceding sentence. From and after the expiration of such 1 year period, Seller shall haveno liability whatsoever to Purchaser with respect to any such representationsor warranties, as to which a claim was not made by Purchaser within such 1 yearperiod (unless otherwise provided in **Articles VIII, IX and XI**).

 

[END OF PAGE; SIGNATUREPAGES FOLLOW]

 

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EXECUTED by Seller the15th day of January, 2004.

 
| ADDRESS:                            | LSF PRESIDIO INVESTMENT  I, LLC,      |
|-------------------------------------|---------------------------------------|
| c/o Presidio  Investments, Ltd.     | a Delaware limited  liability company |
| 2001 Bryan Tower                    |                                  |
| Suite 2000                          |                                  |
| Dallas, TX  75201              | By:                                   | LSF Presidio Holdings,  LLC, a Delaware limited liability |
| Attention:  Julie Echols       |                                  | company, its sole  member |
| Telecopy No:  214.691.1930          |                                  |
|                                |                                  |
|                                | By:                                   | Lone Star Fund III  (U.S.), L.P., a Delaware limited  partnership, its co-manager |   |
|                                |                                  |
| With copies to:                     |                                  |
|                                | By:                                   | Lone Star Partners III,  L.P., a Delaware |   |
| Hudson Advisors                     |                                  | limited partnership,  its general partner |   |
| 717 N. Harwood                      |                                  |
| Suite 2200                          | By:                                   | Lone Star Management  Co. III, Ltd., its general partner |
| Dallas, TX 75201                    |                                  |
| Attn: Joe Jernigan                  |                                  |
| Telecopy No:  214.459.1475          |                                  |
|                                | By:                                   | Mary Etta Ford |
| AND                                 | Name:                                 | Mary Etta Ford |
|                                | Title:                                | Assistant Secretary |
|                                |                                  |
| Baker Botts L.L.P.                  |                                  |
| 2001 Ross Avenue                    | By:                                   | Presidio Arizona  Holdings LLC, a Texas limited |
| Dallas, TX  75201-2980         |                                  | liability company, its  co-manager |
| Attention:  Jonathan W. Dunlay |                                  |   |
| Telecopy No:  214.661.4711     | By:                                   | Presidio Investments,  Ltd., a Texas limited |
|                                |                                  | partnership, its sole  member |
|                                |                                  |
|                                | By:                                   | Centenary Partners,  Ltd., a Texas limited partnership, its general partner |
|                                |                                  |
|                                | By:                                   | Continental Star  Investments, Inc., a Texas corporation, its general partner |
|                                |                                  |
|                                |                                  |
|                                | By:                                   | Michael G. Loftis |
|                                | Name:                                 | Michael G. Loftis |
|                                | Title:                                | President |
|                                     |                                       |  |  |  |  |  |  |  |  |  |  |  |

 

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EXECUTED byPurchaser the 13th day of January, 2004.

 
| ADDRESS:                                     | AMERIVEST CAMELBACK  INC., |
|----------------------------------------------|----------------------------|
|                                         | an Arizona corporation     |
|                                         |
| AmeriVest Properties,  Inc.                  |
| 1780 South Bellaire Street                   |
| Suite 515                                    | By:                        |   | John B. Greenman |   |
| Denver, Colorado  80222                 | Name:                      |   | John B. Greenman |   |
| Attention:  John B. Greenman            | Title:                     |   | Vice President |   |
| Telephone:  303.297.1800                |
| Telecopy:  303.291.7353                 |
|                                         |
| With a copy to:                              |
|                                         |
| Steven G. Wright, Esq.                       |
| Isaacson, Rosenbaum,  Woods & Levy, P.C. |
| 633 Seventeenth Street                       |
| Suite 2200                                   |
| Denver, Colorado  80202                 |
| Telephone:  303.292.5656                |
| Telecopy:  303.292.3152                 |
|                                              |                            |  |  |  |  |  |

 

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| Attachments                 |   |                                                                 |
|-----------------------------|--------|----------------------------------------------------------------------|
|                        |   |                                                                 |
| Receipt and  Acknowledgment |   |                                                                 |
| Exhibit A                   | -      | Legal Description                                                    |
| Exhibit B                   | -      | “As-Is” Certificate                                        |
| Exhibit C                   | -      | Form of Special  Warranty Deed                                       |
| Exhibit D                   | -      | Form of Bill of Sale  and Assignment of Leases and Service Contracts |
| Exhibit E                   | -      | Form of Notice to  Tenant                                            |
| Exhibit F                   | -      | Rent Roll                                                            |
| Exhibit G                   | -      | Tenant Estoppel  Certificate                                         |
| Exhibit H                   | -      | Intentionally Deleted                                                |
| Exhibit I                   | -      | Documents Requested For  Due Diligence                               |
|                             |        |                                                                      |  |  |

 

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