Document:

exv10w5

 

Exhibit 10.5

AGREEMENT FOR PURCHASE AND SALE OF PROPERTY

     This AGREEMENT FOR PURCHASE AND SALE OF PROPERTY (this “Agreement”) is
made and entered into as of this 13th day of February 2004, by and between the
entities identified and signing on the signature page and Schedule 1 hereto
(each, a “Seller” and collectively, the “Sellers”), and IRET PROPERTIES, a
North Dakota limited partnership, with its address at 12 South Main Street,
Minot, North Dakota 58701 (the “Partnership”).

     WHEREAS, Sellers wish to transfer, and Partnership wishes to acquire, the
Properties (as hereinafter defined), but only upon the terms and conditions
hereinafter set forth.

AGREEMENT

     In consideration of the Earnest Money and the mutual covenants and
agreements contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties,
intending to be legally bound, agree as follows:

     Section 1. Definitions and Exhibits.

     1.1 Definitions. For purposes of this Agreement, each of the following
terms, when used herein with an initial capital letter, shall have the meaning
ascribed to it as follows:

     1.1.1 Affiliates. With respect to any specified Person, any
other Person that directly, or indirectly, through one or more
intermediaries, controls, is controlled by, or is under common
control with the specified Person. For purposes of this definition,
the term “control” means the possession, directly or indirectly, of
the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of voting stock, by
contract or otherwise.

     1.1.2 Agreement. This Agreement for Purchase and Sale of Property.

     1.1.3 Buildings. The buildings located on the Land.

     1.1.4 Closing. The closing and consummation of the purchase
and the sale of the Properties pursuant hereto.

     1.1.5 Closing Date. The date on which the Closing occurs as
provided in Section 10.1 hereof.

     1.1.6 Contract Date. The date upon which this Agreement shall
be deemed effective, which shall be the date first above written.

     1.1.7 Deeds. The warranty deeds to be executed by Sellers in
the form attached hereto as Exhibit H, or in a form approved by the
Partnership.

     1.1.8 Environmental Laws. Any applicable statute, code,
enactment, ordinance, rule, regulation, permit, consent, approval,
authorization, license, judgment, order, writ, common law rule
(including, but not limited to, the common law respecting nuisance
and tortuous liability), decree, injunction, or other requirement
having the force and effect of law, whether local, state,
territorial or national, at any

 

 

time in force or effect relating to: (a) emissions, discharges,
spills, releases or threatened releases of Hazardous Substances into
ambient air, surface water, ground water, watercourses, publicly or
privately owned treatment works, drains, sewer systems, wetlands,
septic systems or onto land; (b) the use, treatment, storage,
disposal, handling, manufacturing, transportation or shipment of
Hazardous Substances; (c) the regulation of storage tanks or sewage
disposal systems; or (d) otherwise relating to pollution or the
protection of human health or the environment.

     1.1.9 Escrow Agent. Consolidated Title Division, 100
Providence Building, Duluth, MN 55802, Attn: Debra Anderson, Fax
No. (218) 720-6810, acting as Escrow Agent pursuant to the terms and
conditions of this Agreement.

     1.1.10 Ground Leases. (a) that certain Ground Lease between A
& L First Street, LLC and St. Luke’s Hospital of Duluth, Inc. dated
as of the 11th of January, 2000; (b) that certain Ground Lease
between A & L of Superior, LLC and Quality Investments, Inc. dated
as of the 17th of May, 1997; and (c) that certain Ground Lease
between A & L of Sandstone, LLC and Gateway Family Health Clinic
dated as of the 1st day of August, 1997.

     1.1.11 Hazardous Substances. All substances, wastes,
pollutants, contaminants and materials regulated, or defined or
designated as hazardous, extremely or imminently hazardous,
dangerous, or toxic, under the following federal statutes and their
state counterparts, including any implementing regulations: the
Comprehensive Environmental Response, Compensation and Liability
Act, 42 U.S.C. §§ 9601 et seq.; the Federal Insecticide, Fungicide,
and Rodenticide Act, 7 U.S.C. §§ 136 et seq.; the Atomic Energy Act,
42 U.S.C. §§ 2011 et seq.; the Hazardous Materials Transportation
Act, 42 U.S.C. §§ 1801 et seq.; or any other federal, state, or
municipal statute, law or ordinance regulating or otherwise dealing
with or affecting materials deemed dangerous or hazardous to human
health or the environment; with petroleum and petroleum products
including crude oil and any fractions thereof; with asbestos; and
with natural gas, synthetic gas, and any mixtures thereof.

     1.1.12 Improvements. The Buildings and any other buildings,
structures, sidewalks, drives, parking lots, landscaping and
improvements located upon the Land, including all systems,
facilities, fixtures, machinery, equipment and conduits to provide
fire protection, security, heat, exhaust, ventilation, air
conditioning, electrical power, light, plumbing, refrigeration, gas,
sewer, and water thereto (including all replacements or additions
thereto between the Contract Date and the Closing Date).

     1.1.13 IRET. Investors Real Estate Trust, a North Dakota
business trust.

     1.1.14 Land. The fee or other estate in each tract or parcel
of land described in Exhibit B and all privileges, rights,
easements, hereditaments and appurtenances thereto belonging, and
all right, title and interest of Sellers and any individual Seller
in and to any streets, alleys, passages and other rights of way
included therein or adjacent thereto (before or after the vacation
thereof).

     1.1.15 Leases. All leases and other agreements granting third
parties rights of possession or occupancy of the Properties or any
part thereof, whether executed before, on or after the Contract
Date.

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     1.1.16 Partnership. The Partnership, as identified and defined
in the initial paragraph of this Agreement.

     1.1.17 Permitted Title Exceptions. Those matters set forth on Exhibit
C and those matters becoming permitted exceptions in accordance with
the provisions of Section 5 hereof.

     1.1.18 Person. An individual, corporation, partnership,
limited liability company, limited liability partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, or other entity.

     1.1.19 Personal Property. The personal property located at
each Property, as listed and organized by Property on attached
Exhibit G, together with all replacements or additions thereto
between the Contract Date and the Closing Date.

     1.1.20 Properties. All of Sellers’ right, title and interest
in, to and under the following (insofar as the same relate to a
single parcel of Land, a “Property”):

	(a)	 	The Land;
	 
	(b)	 	The Improvements;
	 
	(c)	 	The Leases; and
	 
	(d)	 	The Personal Property.

     1.1.21 Prorate. The division of income and expenses of the
Properties between Sellers and the Partnership based on their
respective periods of ownership during the calendar year and as of
12:01 a.m. on the Closing Date.

     1.1.22 Rent. All rent payable by Tenants pursuant to Leases,
including fixed, minimum and base rents, parking revenues and all
other revenues derived from the Properties, including, but not
limited to, reimbursements or escalations for operating expenses,
insurance premiums and state and local real estate taxes and special
or general assessments.

     1.1.23 Security Deposits. Any and all security deposits,
including any accrued interest as required by contract or applicable
law, held by Sellers pursuant to the Leases that have not been
properly applied toward tenant defaults as of Closing, but
specifically including any such deposit which the Tenant alleges to
have been improperly or wrongfully applied to tenant defaults.

     1.1.24 Sellers. The Sellers, as identified and defined in the
initial paragraph of this Agreement.

     1.1.25 Service Contracts. All of the service contracts that
relate to the Properties, or the operation or maintenance thereof,
as listed and organized by Property on attached Exhibit E, which
exhibit comprises a complete list of any such service contracts.

     1.1.26 St. Luke’s Lease Amendment. That certain Global Lease
Amendment Agreement or other such amendment agreement(s) in form and
substance

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satisfactory to the Partnership, amending the leases by and
between St. Luke’s Hospital of Duluth, Inc. and, respectively, A & L
of Sandstone, LLC, A & L of Superior, LLC, A & L of West Duluth,
LLC, A & L of Hibbing, LLC, A & L First Street, LLC and A & L
Pavilion II, LLC, to delete the purchase option rights of the tenant
existing thereunder.

     1.1.27 Tenants. The tenants under the Leases.

     1.1.28 Tenant Estoppel Certificates. The estoppel certificates
which Sellers shall obtain from the Tenants and deliver to the
Partnership, as provided in Section 10 hereof, such certificates to
be in the form of Exhibit F.

     1.1.29 Title Commitment(s). A commitment or commitments for
ALTA Form B (1997) Owner’s Title Insurance Policy(ies) for the
Properties issued by the Title Company in the full amount of the
Purchase Price (in the event that separate commitments are issued in
respect of an individual Property or groups of Properties, all such
commitments shall aggregate to the full amount of the Purchase
Price), agreeing to insure title to the Properties on or after the
Contract Date, showing Sellers as owners of the Properties, and
indicating the conditions upon which the Title Insurer will issue
full extended coverage over all general title exceptions contained
in such policies and including a Zoning 3.1 endorsement, an owner’s
comprehensive endorsement and such other endorsements as the
Partnership may require.

     1.1.30 Title Company. First American Title Insurance Company,
Consolidated Title Division, 100 Providence Building, Duluth, MN
55802, Attn: Debra Anderson, Fax No. (218) 720-6810.

     1.1.31 Warranties. Any and all warranties, guaranties and
similar contracts in favor of Sellers relating or pertaining to the
Properties.

     1.2 Index to Other Defined Terms.

	 	 	 	 	 
	Term
	 	Defined in Section

	1031 Exchange

	 	 	7.10	 
	Additional Documents

	 	 	7.7	(d)
	CAM/Tax Payments

	 	 	4.3	(e)
	Closing Year

	 	 	4.3	(e)
	Code

	 	 	7.10	 
	Earnest Money

	 	 	3	 
	Gap Notice

	 	 	5.2	 
	Inspection Date

	 	 	6.3	 
	Operating Expenses

	 	 	4.3	(e)
	Purchase Price

	 	 	4.1	 
	South Pond Guarantee

	 	 	9	(g)
	Survey

	 	 	6.1	(i)
	Surviving Service Contracts

	 	 	6.1	(d)

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	Term
	 	Defined in Section

	Title Policy

	 	 	5.1	 
	Title Notice

	 	 	5.1	 
	Transfer

	 	 	7.7	(c)
	Unpermitted Exceptions

	 	 	5.1	 

     1.3 Exhibits. Attached hereto and forming an integral part of this
Agreement are the following exhibits, all of which are incorporated into this
Agreement as fully as if the contents thereof were set out in full herein at
each point of reference thereto:

	 	 	 
	Exhibit A

	 	Bill of Sale
	Exhibit B

	 	Description of Land
	Exhibit C

	 	Permitted Title Exceptions
	Exhibit D

	 	Environmental Reports
	Exhibit E

	 	List of Service Contracts
	Exhibit F

	 	Form of Tenant Estoppel Certificate
	Exhibit G

	 	List of Personal Property
	Exhibit H

	 	Warranty Deed
	Exhibit I

	 	Assignment and Assumption of Leases
	Exhibit J

	 	Non-Foreign Certificate
	Exhibit K

	 	Assignment and Assumption of Surviving Service Contracts
	Exhibit L

	 	Uncompleted Lease Obligations
	Exhibit M

	 	Assignment and Assumption of Intangibles
	Exhibit N

	 	Additional Documents
	Exhibit O

	 	Form(s) of Property Management Agreement

     Section 2. Purchase and Sale Agreement. Subject to and in accordance with
the terms, conditions and provisions hereof, Sellers agree to sell and convey
the Properties to the Partnership, and the Partnership agrees to purchase the
Properties from Sellers.

     Section 3. Earnest Money; Escrow Agent. Within five (5) business days
after the execution and delivery of this Agreement (with all schedules and
exhibits hereto completed and attached), the Partnership will deposit with the
Escrow Agent the sum of Two Hundred Fifty Thousand Dollars ($250,000.00) cash.
Said sum, together with all income earned on the investment thereof, are herein
collectively referred to as the “Earnest Money.” The Earnest Money shall be
invested by Escrow Agent in a money market or other daily interest account.
The Earnest Money shall be held by the Escrow Agent until disbursed as set
forth in this Agreement. The Partnership shall execute any appropriate W-9
forms and deliver the same to the Escrow Agent.

     If the Partnership acquires the Properties, the Earnest Money shall be
returned by the Escrow Agent to the Partnership. If all of the conditions
precedent set forth in Section 9(a) - 9(g) are not met or resolved to the
satisfaction of the Partnership or the Partnership terminates this Agreement as
expressly permitted pursuant to the provisions hereof, the Earnest Money shall
be returned by the Escrow Agent to the Partnership. If all of the conditions
precedent set forth in Section 9(a) — 9(g) have been satisfied or waived by the
Partnership and thereafter Sellers terminate the Agreement pursuant to Section
9(h) or the Partnership fails to acquire the Properties

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pursuant to the terms of this Agreement and Seller is not in default, then the
Earnest Money shall be delivered to Sellers and shall be retained by Sellers as
liquidated damages.

     If there is a dispute between the Partnership and Sellers as to the
distribution of the Earnest Money or if for any other reason the Escrow Agent
in good faith elects not to make any such disbursement, the Escrow Agent shall
continue to hold the Earnest Money until otherwise directed by written
instructions executed both by Sellers and the Partnership, or by a final
judgment of a court of competent jurisdiction.

     Sellers and the Partnership acknowledge that the Escrow Agent is acting
solely as a stakeholder at their request and for their convenience, that the
Escrow Agent shall not be deemed to be the agent of either of the parties, and
that the Escrow Agent shall not be liable to either of the parties for any act
or omission on its part unless taken or suffered in bad faith, in willful
disregard of this Agreement, or involving gross negligence.

     The sole duties of Escrow Agent shall be those described herein, and
Escrow Agent shall be under no obligation to determine whether the other
parties hereto are complying with any requirements of law or the terms and
conditions of any other agreements among said parties. Escrow Agent may
conclusively rely upon and shall be protected in acting upon any notice,
consent, order or other document believed by it to be genuine and to have been
signed or presented by the proper party or parties. Escrow Agent shall have no
duty or liability to verify any such notice, consent, order or other document,
and its sole responsibility shall be to act as expressly set forth in this
Agreement. Escrow Agent shall be under no obligation to institute or defend
any action, suit or proceeding in connection with this Agreement unless first
indemnified to its satisfaction. Escrow Agent may consult with respect to any
question arising under this Agreement and shall not be liable for any action
taken or omitted in good faith upon advice of such counsel.

     Section 4. Purchase Price.

     4.1 Purchase Price. Sellers shall sell and the Partnership shall purchase
the Properties for the amount of Sixty-Six Million Nine Hundred Fifty Thousand
Dollars ($66,950,000) (the “Purchase Price”). The Purchase Price, as adjusted
by the prorations provided for in Section 4.3 hereof, shall be paid in full by
the Partnership in cash by wire transfer of immediately available funds at the
Closing to an account or accounts designated by Sellers.

     4.2 It is understood and agreed that, at Closing, the Partnership shall
take title to the Properties free and clear of any debt of Sellers, and Sellers
shall be responsible for the payment of any penalties, fees or costs required
to prepay or remove any debt from the Properties.

     4.3 Prorations. Sellers and the Partnership shall Prorate the following
at Closing, as a credit or debit to the Purchase Price:

     (a) Security Deposits. The Security Deposits and interest due
thereon pursuant to the Leases, if any, shall, at the option of the
Partnership, be credited to the Purchase Price or paid or delivered
to the Partnership in cash at Closing. The Partnership shall assume
responsibility for such assigned Security Deposits and shall
indemnify, defend and hold Sellers harmless from any loss or damage
that Sellers suffer due to a claim by Tenant for any such Security
Deposits, to the extent that the Security Deposits in dispute were
actually transferred or credited by Sellers to the Partnership.

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     (b) Utilities/Expenses. The parties shall Prorate water,
electricity, sewer, gas, telephone and other utility charges or
operating expenses (to the extent not paid or payable by Tenants),
based to the extent practicable on final meter readings and final
invoices.

     (c) Service Contracts. Subject to subparagraph (e) of this
Section 4.4, the parties shall Prorate amounts paid or payable under
the Service Contracts (as defined herein).

     (d) Taxes and Special Assessments. To the extent not paid or
payable by Tenants under the Leases, the parties shall Prorate all
general real estate, personal property and ad valorem taxes and
installments of special assessments (including interest thereon)
payable for the calendar year in which the Closing occurs, on a
calendar year basis utilizing actual final tax bills, if available
prior to Closing. If such bills are not available, then such taxes
shall be prorated on the basis of the most currently available tax
bills and promptly re-prorated upon the issuance of final bills
therefor and any amounts due from any party to the other shall be
paid in cash at that time. Prior to or at Closing, Sellers shall
pay or have paid all tax bills that are due and payable prior to or
on the Closing Date and shall furnish evidence of such payment to
the Partnership and the Title Company. All installments of special
assessments (together with all interest thereon) due and payable
after Closing shall be paid by the Partnership subject to prorations
as provided herein. The parties’ respective obligations to reprorate
real estate taxes (including but not limited to the obligation to
reprorate any such taxes that are paid by Sellers, but are
ultimately refunded to the Partnership as a result of a successful
tax protest proceeding) shall survive the Closing and shall not
merge into any instrument of conveyance delivered at Closing. If
following the Closing, Sellers or the Partnership actually receive
any refund on account of such prorated taxes or assessments, an
equitable adjustment will be made between the parties subject to any
portion of such refund which may be due Tenants pursuant to the
terms of the Leases.

     (e) Rent. The parties shall Prorate all Rent. Additionally,
to the extent received by Sellers prior to Closing, the following
will be paid by Sellers to the Partnership at the Closing: (i)
prepaid rent; and (ii) any and all reimbursements or escalations due
under Leases (collectively the “CAM/Tax Payments”) for utilities,
insurance premiums and operating expenses (including, but not
limited to, real estate tax payments and special assessments
(collectively, “Operating Expenses”) received by Sellers from
Tenants and properly allocable to the period, from January 1 of the
calendar year in which the Closing occurs (the “Closing Year”) until
the Closing Date, in excess of amounts properly allocable against
the CAM/Tax Payments for the Closing Year for (x) those documented
amounts actually expended by Sellers for the payment of Operating
Expenses during the period from January 1 of the Closing Year, until
the Closing Date, and (y) any documented Operating Expense amounts
that Sellers have become obligated prior to the Closing Date to pay
and that Sellers or any Seller agree they or it will pay subsequent
to the Closing Date and Sellers agrees to indemnify and hold
harmless the Partnership therefrom. If any Operating Expenses shall
not be ascertainable by the Closing Date, an estimate shall be made
thereof based on 110% of the most recent bills therefor, with a
reproration immediately upon receipt of the actual bills therefor,
and Sellers will pay the Partnership, or the Partnership will pay
Sellers, as the case may be, upon demand of the party entitled to
such payment, any amount due such party as a result

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of such reproration. The Partnership and Sellers agree to cooperate
in determining the reproration of such Operating Expenses. The
Partnership shall not be required to collect any delinquent rents
due to Sellers from Tenants. Further, after the Closing Date,
Sellers shall not have any right to pursue legal action against
Tenants (or any guarantors) who have defaulted, prior to the Closing
Date, under the Leases.

     (f) The parties shall Prorate fees paid or payable under any
licenses and permits in respect to the Property or other Intangible
Property assigned to the Partnership, subject to the provisions of
Section 4.4(e) above.

     (g) The parties shall Prorate all state and local taxes
relating to the Property and all receipts, Rent and revenues derived
therefrom, subject to the provisions of Section 4.4(d) and (e)
above.

     For purposes of calculating prorations, the Partnership shall be deemed to
be in title to the Properties, and therefore entitled to the income therefrom
and responsible for the expenses thereof, for the entire day upon which the
Closing occurs. All such prorations shall be made on the basis of the actual
number of days of the year and month that shall have elapsed prior to the
Closing Date. The amount of such prorations shall be prorated as of Closing
and equitably adjusted in cash to the extent necessary after Closing, as and
when complete and accurate information becomes available. Seller and the
Partnership agree to cooperate and use their good faith and diligent efforts to
make such adjustments no later than one hundred and twenty (120) days after
Closing. Bills received after Closing that relate to expenses incurred or
services performed allocable to the period on and prior to the Closing Date
shall be paid by Sellers, subject to the above-described proration provisions.
Sellers and the Partnership shall each be responsible for the accounting and
validity of billings to Tenants for those Operating Expenses incurred during
each of Sellers’ and the Partnership’s respective periods of ownership of the
Properties.

     4.4 Closing Costs. The Partnership shall pay: (i) all recording and
filing charges in connection with the Deeds; (ii) one-half of all escrow and
closing agent charges; (iii) all costs of the Partnership’s due diligence (the
parties specifically agreeing that all costs for any ALTA-ACSM as-built surveys
of the Properties shall be paid by the Partnership); (iv) one-half of the
premium for the Owner’s Title Policy; and (v) the premium for all endorsements
relating to the Owner’s Title Policy. Sellers shall pay: (i) one-half of all
escrow and closing agent charges; (ii) the cost of the Title Commitment and
one-half of the premium for the Owner’s Title Policy (excluding the cost of
endorsements thereto); (iii) the cost of preparation and recording of all
documents (other than the Deeds) necessary to place record title in the
condition warranted by Sellers in this Agreement; and (iv) any deed or other
tax payable on account of or in connection with the conveyance of the Property
to, or recording of the deed to, the Partnership. Each party shall pay its own
attorneys.

     4.5 Apportionment Credit. If the apportionments to be made at the Closing
result in a credit balance (a) to the Partnership, at the option of the
Partnership such sum shall be paid at the Closing by giving the Partnership a
credit against the Purchase Price or by a payment in cash to the Partnership by
Sellers at Closing, in either case, in the amount of such credit balance, or
(b) to Sellers, the Partnership shall pay the amount thereof in cash to Sellers
at the Closing or, at the Partnership’s option, by an increase in the Purchase
Price.

     Section 5.

     5.1. Title to the Property; Surveys. Within ten (10) days after the
Contract Date, Sellers shall obtain (at Sellers’ cost and expense) Title
Commitment(s) issued by the Title Company in the amount of or aggregating to
the Purchase Price, showing the condition of title to the Land and

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Improvements and naming the Partnership as the proposed insured, together
with legible copies of all recorded exceptions and covenants, conditions,
easements, and restrictions affecting the Properties. The Title Commitment(s)
shall contain the conditions upon which the title insurance policy(ies) that
will be issued at the Closing pursuant to the Title Commitment(s) (the “Title
Policy”) will provide extended coverage insurance that shall result in the
deletion of the following exceptions: (a) liens for labor or materials,
whether or not of record; (b) parties in possession (other than Tenants under
Leases, solely as such tenants); (c) unrecorded easements; and (c) exceptions
that an accurate survey would disclose. The Title Commitment(s) shall include
an ALTA Form 3.1 zoning endorsement, an owner’s comprehensive endorsement, and
any other endorsements required by the Partnership. The Partnership may obtain
(at its own cost and expense) ALTA-ACSM as-built surveys of any and all of the
Properties for which Sellers have not provided an ALTA-ACSM as-built survey,
and may (at its own cost and expense) cause to be updated and re-certified to
the Partnership all of the ALTA-ACSM as-built surveys of the Properties
provided to the Partnership by the Sellers. The Partnership shall hire a
surveyor or surveyors and shall order such Surveys, if any, within ten (10)
days of the later of (a) the Contract Date and (b) receiving all of the Title
Commitments. If the Title Commitment(s) or the Surveys disclose exceptions to
title or other matters that are not Permitted Title Exceptions and are not
approved by the Partnership (“Unpermitted Exceptions”), then the Partnership
shall notify Sellers in writing (the “Title Notice”) of the Partnership’s
objections within ten (10) days after the Partnership has received both all of
the Title Commitment(s) and all of the Surveys (newly-obtained or as updated
by, and re-certified to, the Partnership), and, in such event, Sellers shall
use their best efforts to cure such Unpermitted Exceptions and to obtain
endorsements to the Surveys confirming that the Unpermitted Exceptions have
been cured. If such Unpermitted Exceptions are not removed or insured over
within the permitted time, the Partnership shall have the right to elect by
written notice to Sellers given at or prior to the Inspection Date (i) to
terminate this Agreement and receive a full refund of the Earnest Money, or
(ii) take title subject to the Unpermitted Exceptions without any reduction in
the Purchase Price. Notwithstanding anything to the contrary contained herein,
Sellers shall be obligated to remove as a title exception (x) all mortgages,
security deeds, mechanic’s liens, or other security instruments encumbering the
Properties not expressly to be assumed by the Partnership herein, and (y) all
past due ad valorem taxes and assessments (excluding future installments of
assessments being paid in installments). In addition, Sellers shall be
obligated to remove, bond over or insure over any judgments or tax liens
against the Sellers (which do not result from acts or omissions on the part of
the Partnership) which have attached to and become a lien against the
Properties.

     5.2 Pre-Closing “Gap” Title Defects. The Partnership may, at or prior to
Closing, notify Sellers in writing (the “Gap Notice”) of any objections to
title or the Surveys (a) raised by the Title Company or included in any Surveys
between the expiration of the Inspection Period and the Closing and (b) not
disclosed by the Title Company or the surveyor, as the case may be, or
otherwise known to the Partnership prior to the expiration of the Inspection
Period; provided that the Partnership must notify the Sellers of such objection
to title or the Surveys within ten (10) business days of being made aware of
the existence of such exception. If the Partnership sends a Gap Notice to the
Sellers, the Partnership and the Sellers shall have the same rights and
obligations with respect to such notice as apply to a Title Notice under
Section 5.1 hereof. In the event that any Survey or Surveys are not received
by the Partnership at least ten (10) business days prior to Closing, the
Sellers may either (i) delay the Closing to permit the Partnership to receive
and review such Survey(s), with the Partnership required to notify the Sellers
in writing within ten (10) business days of receipt of the Survey(s) of any
objections to such Survey(s), in which case the Partnership and the Sellers
shall have the same rights and obligations as apply to a Title Notice under
Section 5.1 hereof, or (ii) the Sellers may elect to proceed with the Closing,
in which case the Sellers shall reimburse the Partnership for all costs and
expenses of obtaining an endorsement (in form and

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substance acceptable to the Partnership) to the Title Policy insuring the
Partnership and any lenders to the Partnership against any title exception(s)
which may be disclosed by such Survey(s), and the Sellers shall further
indemnify the Partnership against any costs, expenses, claims or losses
resulting from any title exception(s) which may be disclosed by such Survey(s).

     Section 6. The Partnership’s Inspection.

     6.1 Document Inspection. The Partnership and Sellers acknowledge that the
Partnership may, by itself or through such agents, consultants and others as
Partnership shall designate, inspect, test and analyze the Properties and may
examine, review and inspect all books, records and files relating to the
Properties or Sellers’ operation of the Properties including, without
limitation, income and expense statements and information, repair and
maintenance invoices and records, all Tenant correspondence files for current
Tenants, and drawings and specifications for construction of improvements on
the Properties. Sellers will, within ten (10) days after the Contract Date,
deliver to the Partnership complete copies of each of the following documents
related to the Properties, hereby certified by the Sellers to the Partnership
to be complete and materially accurate:

     (a) The Leases;

     (b) A current rent roll for the Properties;

     (c) List of all security deposits, prepaid rent or other sums
currently held by Sellers under the Leases;

     (d) Copies of all current Service Contracts. At Closing,
Sellers shall provide to Partnership evidence of the termination of
any Service Contracts that are terminable and that Partnership has
indicated by written notice delivered to Sellers that Partnership
desires to have terminated. The Service Contracts not so terminated
are herein referred to as the “Surviving Service Contracts.”
Sellers shall provide at Closing a then current list of such
Surviving Service Contracts, such list to be certified by Sellers as
being true and complete;

     (e) Copies of all permits, approvals, certificates, notices,
feasibility studies and application of or to any governmental or
quasi-governmental entities, regarding the Properties;

     (f) Complete plans and specifications of the Properties and a
set of as-built plans and specifications marked to show any
modifications, if available, and any other architectural or
engineering reports in the possession or control of Sellers;

     (g) All appraisal, engineering, soils, hazardous materials,
environmental and architectural maps, plans, notes, reports,
studies, drawings and specifications prepared for or in connection
with the Properties and its development, to the extent that the same
are in the possession or under the control of Sellers;

     (h) Environmental reports for the Properties as identified on
Exhibit D hereto;

     (i) Copies of the most recent surveys of the Properties in
Sellers’ possession (as updated by, and re-certified to, the
Partnership, and, together with the surveys obtained by the
Partnership under Section 5.2 hereof, the “Surveys”);

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     (j) A list and detailed description of all insurance claims
(both liability and casualty) relating to the Properties over the
period of its ownership by the Sellers through the Contract Date;

     (k) Income and expense statements showing the financial results
of operating the Properties during calendar years 2000, 2001, 2002
and current-to-date financial statements for calendar year 2003;

     (l) With respect to each Seller, certified copies of
organizational documents, articles, resolutions and bylaws necessary
to verify the legal existence of the Seller and the authority for
the transaction; and

     (m) A current depreciation schedule for each Property,
including all improvements thereto listing the current tax basis of
each Property and its depreciation history for the past two years.

     6.2 Physical Inspection. The Partnership and its consultants and agents
shall have the right, from time to time prior to the earlier of the Closing or
termination of this Agreement, to enter upon the Properties to examine the same
and the condition thereof, and to conduct such surveys and to make such
engineering and other investigations, inspections, tests and studies as the
Partnership shall determine to be reasonably necessary, all at the
Partnership’s sole cost and expense. The Partnership agrees to conduct such
activities during normal business hours to the extent practicable. The
Partnership agrees to pay all costs of such surveys, investigations,
inspections, tests and studies and to indemnify and hold Sellers harmless from
and against any claims for injury or death to persons or damage to property
arising solely out of any action of any person or firm entering the Properties
on the Partnership’s behalf as aforesaid, which indemnity shall survive the
Closing and any termination of this Agreement without the Closing having
occurred. Notwithstanding the foregoing, the Partnership shall not be liable
hereunder for the discovery of a preexisting condition at the Properties or for
the consequences of such discovery.

     6.3 Formal Inspection Period. Notwithstanding the Partnership’s
continuing right of inspection contained in Section 6.2 above, the Partnership
shall have until that date which is thirty (30) days after the date on which
the Partnership has received all documents and items specified in Section 6.1
above (the thirtieth day being the “Inspection Date”) in which to make such
surveys, investigations, inspections, tests and studies permitted herein with
respect to the Properties, the documents delivered to Partnership pursuant to
Section 6.1, and any other thing or matter relating to the Properties as the
Partnership deems appropriate, to obtain all internal approvals to complete
this transaction, and, at the sole discretion of Partnership, to terminate this
Agreement on or before such Inspection Date if the Partnership is not, for any
reason or for no reason, satisfied with the Properties or does not obtain such
approvals. The thirty (30) day formal inspection period shall not commence
until the Sellers certify in writing to the Partnership that Sellers have
provided the Partnership with all documents and items specified in Section 6.1
above. If the Partnership terminates this Agreement on or before the
Inspection Date, the Earnest Money shall be returned to the Partnership and
neither party shall have any further obligation to the other except as to
provisions herein which are to survive termination. If the Partnership fails
to give written notice of the Partnership’s exercising such right to terminate,
to be received by Sellers on or before the Inspection Date, then the
Partnership shall be deemed to have approved all aspects of the Properties
(except title and survey, which shall be governed by Section 5 hereof) and to
have elected to proceed with the purchase of the Properties pursuant to the
terms hereof, and the Partnership’s rights to terminate under this Section 6.3
shall be deemed to have been waived and the Partnership shall be bound to
proceed with the acquisition of the Properties pursuant to the

 Page 11 of  26

 

terms of this Agreement by the Partnership. This Section 6.3 shall not be
deemed to limit the Partnership’s additional termination rights under Section 5
of this Agreement.

     6.4 Environmental Assessment. The Partnership may obtain a current ASTM
Phase I environmental site assessment for the Properties, performed by an
environmental consultant acceptable to the Partnership. If the Partnership
elects to terminate this Agreement because the Environmental Report is
unacceptable, the Partnership must do so by written notice to Sellers given on
or before the Inspection Date. If the Partnership so terminates this Agreement
on or before the Inspection Date because the Environmental Report is
unacceptable, the Earnest Money shall be returned to the Partnership and
neither party shall have any further obligation to the other except as to
provisions herein which are to survive termination.

     Section 7. Sellers’ Representations, Warranties and Covenants. In
addition to any other representations, warranties and covenants provided by
Seller to the Partnership elsewhere in this Agreement, Sellers represent,
warrant and covenant to the Partnership as of the Contract Date and the Closing
Date:

     7.1 Leases – Complete Copies. The Leases made available to the
Partnership pursuant to Section 6.1 hereof are complete and accurate copies of
all of the Leases currently in effect with respect to the Properties, and there
are no written or oral promises, understandings or commitments with Tenants
other than as set forth in such Leases as delivered to Partnership.

     7.2 Leases – Default. The Leases are in full force and effect. Sellers
have completed and/or paid for all tenant improvements and other inducements
required to be completed or paid by Sellers as landlord under the Leases,
except as revealed onExhibit L attached hereto; and, except as may be revealed
on Exhibit L, Landlord has no further obligations with respect thereto. Except
as set forth on the rent roll delivered to Partnership pursuant to Section 6.1,
no Tenant has any right to extend the term of such Tenant’s Lease. No Tenant
has any option or right of first refusal to purchase any of the Properties.

     7.3 Service Contracts. A complete and accurate list and description of
all of the Service Contracts currently in effect with respect to the Properties
is set forth in Exhibit E hereto. Sellers are not in default under any of the
Service Contracts. The Service Contracts delivered to Partnership pursuant to
Section 6.1 hereof are complete and accurate copies of all of the Service
Contracts.

     7.4 Authority. Sellers are formed pursuant to, and in good standing
under, the laws of the State of Minnesota. Sellers are not subject to any
proceeding in bankruptcy or any proceeding for dissolution or liquidation.
Each Seller is duly authorized do to all things required of it under or in
connection with this Agreement. Each Seller’s execution, delivery and
performance of its obligations under this Agreement will not conflict with or
result in a breach of, or constitute a default under, any contract, instrument,
law, governmental rule, regulation, judgment, decree or order to which Seller
is a party or by which Seller is bound.

     7.5 Environmental Matters. To the best of Sellers’ knowledge, and except
as may be revealed in any environmental report delivered to the Partnership
pursuant to Section 6.1 hereof: (a) Hazardous Substances have not been used,
generated, transported, treated, stored, released, discharged or disposed of
in, onto, under or from the Properties in violation of any Environmental Laws
by Sellers or by any predecessor-in-title or agent of Sellers, by any Tenants
or by any other person at any time; (b) there are no above-ground or
underground tanks or any other underground storage facilities located on the
Properties, (c) there have never been such tanks or facilities on the
Properties; and (d) there are no wells or private sewage disposal or treatment
facilities located on

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the Properties and there have never been such wells or private sewage disposal
or treatment facilities located on the Properties.

     7.6 Non-Foreign Status. No Seller is a “foreign person” as that term is
defined in the Internal Revenue Code of 1986, as amended and the Regulations
promulgated pursuant thereto.

     7.7 Current Reporting Requirements. At the Partnership’s request, at any
time before or after the Closing Date, Sellers agree to provide to the
Partnership’s designated independent auditor: (a) access (to the same extent
to which the Partnership would be entitled to such access) to the books and
records of the Properties and all related information regarding the period for
which the Partnership is required to have the Properties or any individual
Property audited under the regulations of the Securities and Exchange
Commission, and (b) a representation letter delivered by each managing agent of
the Properties, regarding the books and records of the Properties, in
connection with the normal course of auditing the Properties in accordance with
generally accepted auditing standards.

     7.8 Legal and Tax Matters. Sellers have consulted their own financial,
legal and tax advisors with respect to the economic, legal and tax consequences
of the sale of the Properties and have not relied on the Partnership, IRET or
any of their officers, directors, affiliates or professional advisors for
advice as to such consequences. The Partnership acknowledges that Sellers may
structure the disposition of the Properties as a like kind exchange under
Section 1031 (a “1031 Exchange”) of the Internal Revenue Code of 1986, as
amended (the “Code”), at the Sellers’ sole cost and expense. The Partnership
has agreed to cooperate in all reasonable respects with Sellers to effectuate
such 1031 Exchange, and Sellers acknowledge and agree that:

     (a) The Closing shall not be extended or delayed by reason of
such 1031 Exchange, unless the Partnership has breached its
obligations to Sellers under this Agreement;

     (b) The Partnership shall not be required to incur any
additional cost or expense as a result of such 1031 Exchange, other
than the cost of the Partnership’s counsel in connection with the
preparation of this Agreement. Seller covenants and agrees that it
shall, on demand, reimburse the Partnership for any additional cost
or expense (including, but not limited to, reasonable attorneys’
fees) incurred by the Partnership as a result of any audit or tax
litigation to which Seller is or may be a party or which is or may
be otherwise directly attributable to the 1031 Exchange; and

     (c) Subject to the Partnership’s performance and fulfillment of
the express covenants and conditions contained in this Agreement,
and except for the express obligations and liabilities of the
Partnership under this Agreement, the Partnership shall incur no
personal liability under any document or agreement required in
connection with such 1031 Exchange, and the Partnership shall not be
required to execute any such document or agreement that does not
expressly exculpate and release the Partnership, its successors,
assigns, affiliates, officers, employees, agents and representatives
from any liability or obligation arising out of, or in connection
with, the 1031 Exchange.

Sellers further acknowledge that, subject to the Partnership’s performance and
fulfillment of the express covenants and conditions contained in this
Agreement, the Partnership does not warrant, and shall not be responsible for,
the tax consequences to Sellers of the transactions contemplated by this
Agreement or any actions the Sellers may have taken prior to and/or in
anticipation of the transactions contemplated by this Agreement.

 Page 13 of  26

 

     7.9 Governmental Matters. Sellers have not received written notice from
any governmental body having jurisdiction over the Properties, and has no
knowledge (without having made any investigation or inquiry), of (a) any
pending or contemplated annexation or condemnation proceedings, or purchase in
lieu of the same, affecting or which may affect all or any part of the
Properties, (b) any proposed or pending proceeding to change or redefine the
zoning classification of all or any part of the Properties, (c) any proposed
change(s) in any road patterns or grades which would adversely and materially
affect ingress or egress to or from the Properties or (d) any uncured violation
of any legal requirement, restriction, condition, covenant or agreement
affecting the Properties or the use, operation, maintenance or management of
the Properties.

     7.10 Power and Authority. Each Seller represents that the execution and
performance by such Seller of this Agreement has been approved by all necessary
action, and Seller has the full legal corporate power and authority to enter
into and perform this Agreement in accordance with its terms, and this
Agreement will constitute the valid and binding obligation of Seller,
enforceable and in accordance with its terms. The execution, delivery and
performance of this Agreement and all documents in connection herewith are not
in contravention of or in conflict with any deed of trust, agreement, or
undertaking to which any Seller is a party or by which any Seller or any of its
property, including the Properties, may be bound or affected.

     7.11 Litigation. There is no controversy, investigation, complaint,
protest, protest, proceeding, suit, litigation or claim relating to the
Properties or any part thereof or Sellers which might adversely affect the
Properties, except as set forth in writing delivered by Sellers to Buyer within
10 days after the Effective Date,

     7.12 Governmental Notices. Except for notices relating to matters which
have been previously cured, Sellers have not received any written notice from a
governmental body having jurisdiction over the Properties of any violations of
laws, codes or ordinances affecting the Properties.

     7.13 Condemnation. There is no pending, nor to the best of Sellers’
knowledge, threatened, condemnation or eminent domain proceeding affecting any
portion of the Properties.

     7.14 Permits. Sellers have not received written notice from any
governmental body having jurisdiction over the Properties asserting the
violation of the terms of any permit required for the operation of the
Properties as presently operated, or threatening to revoke, cancel, suspend or
not renew any such permit.

     7.15 Mechanics’ Liens. All bills and claims for labor performed and
materials furnished to or for the benefit of the Properties prior to the date
of execution hereof have been paid in full.

     7.16 No Bankruptcy. No Seller (i) is in receivership or dissolution; (ii)
has made any assignment for the benefit of creditors or admitted in writing its
inability to pay its debts as they mature; (iii) has been adjudicated a
bankrupt or filed a petition in voluntary bankruptcy or a petition or answer
seeking reorganization or an arrangement with creditors under the federal
bankruptcy law or any other similar law or statute of the United States or any
jurisdiction and no such petition has been filed against any Seller or any of
its property or affiliates, if any; and (iv) none of the foregoing are pending
or threatened.

     7.17 Historic Property Designation. The Properties and any individual
Property are not now and are not presently contemplated or threatened to be
designated as an historic property or properties under applicable law.

 Page 14 of  26

 

     7.18 Material Defects. To the best of Sellers’ knowledge, there is no
“material defect” existing with respect to any of the Improvements or any part
or portion thereof. For the purposes of the foregoing, a “material defect” is
one which can be reasonably anticipated to cost more than two thousand dollars
($2,000.00) to cure.

     7.19 Condition Regarding Representations and Warranties. It shall be a
condition of Closing that the representations, warranties and covenants
contained in this Section 7 are true and correct at Closing and Sellers shall
reaffirm these representations and warranties at Closing if Sellers believe
them to be true at Closing. If Sellers or the Partnership learn that any of
said representations or warranties becomes inaccurate between the Contract Date
and the Closing Date, Sellers or the Partnership shall immediately notify the
other party in writing of such change. The Closing Date shall be automatically
extended for ten (10) days in order to allow Sellers to cure such change. If
Sellers so cure such change, this Agreement shall proceed to Closing. If
Sellers do not cure such change, the Partnership may either (a) terminate this
Agreement by written notice to Sellers, in which case the Earnest Money shall
be returned to the Partnership and the parties shall have no further rights or
obligations hereunder, except for those which expressly survive such
termination, or (b) waive such right to terminate and proceed with the
transaction pursuant to the remaining terms and conditions of this Agreement.
If the Partnership elects option (b) in the preceding sentence, the
representations and warranties shall be deemed to be automatically amended to
reflect said change. The representations, warranties and covenants contained
in this Section 7 shall survive Closing.

     Section 8. Operations Pending Closing. Sellers, at their expense, shall
use reasonable efforts to operate the Properties until the Closing Date or
until the termination of this Agreement, whichever is earlier, in accordance
with past practices. Sellers shall not, without the prior written consent of
the Partnership, which consent shall not unreasonably be withheld, enter into
or agree to enter into any lease or other agreement concerning occupancy or use
of any of the Properties, other agreements concerning operation or ownership of
the Properties, or any modification or amendment of any existing Lease, Service
Contract or any other agreement relating to the Properties which would survive
Closing; or institute any summary or other eviction proceeding or action
against any Tenant or occupant of the Properties.

     In connection with leases or renewals of existing Leases executed by
Sellers after the Contract Date, the Partnership shall be responsible for
payment of only the unamortized portion (amortized without interest on a
straight line basis over the Lease term) of any Tenant finish allowance,
commissions and concessions, and leasing costs including design costs granted
under such Leases and attributable to the portion of the Lease term after the
Closing Date, provided the Partnership has approved in writing Sellers’
execution of any such Lease or amendment and the amount of the costs to be
incurred thereby. The portion of such Tenant finish allowance and commissions
attributable to the period on or prior to the Closing Date shall be paid by
Sellers.

     Sellers agree, through and including the Closing Date and at Sellers’ sole
cost and expense, to:

     (a) keep all existing Sellers’ insurance policies affecting the
Properties or any portion thereof in full force and effect;

     (b) use commercially reasonable efforts to keep in full force
and effect and/or to renew all licenses and permits, if any,
pertaining to Sellers’ ownership or operation of the Properties or
any portion thereof; and

 Page 15 of  26

 

     (c) use commercially reasonable efforts to continue to provide
all services currently provided by Sellers with respect to the
Properties or any portion thereof, and to continue to operate,
manage and maintain the Properties in substantially the same manner
as Sellers currently operate, manage, repair, replace and maintain
the Properties.

     Sellers agree to give the Partnership written notice of any citation or
other notice which Sellers may receive, subsequent to the Contract Date and
prior to the Closing Date, from any governmental authority and alleging any
violation of any law, ordinance, code rule, regulation or order regulating the
Properties or the use thereof and shall, prior to the Closing Date and at its
expense, cure the matter raised by such notice.

     Section 9. Conditions to Closing. The Partnership’s obligation to proceed
to Closing under this Agreement is subject to the following conditions
precedent:

     (a) Each and all of Sellers’ representations and warranties set
forth in this Agreement shall be true and correct at the Contract
Date and at the Closing Date and the Partnership shall have received
an update certificate from Sellers at Closing affirming that
Sellers’ representations and warranties herein are true and correct
as of the Closing Date;

     (b) At least ten (10) days prior to Closing, the Partnership
shall have received a Tenant Estoppel Certificate, in the form
attached hereto as Exhibit F, from each Tenant under the Leases, or
shall have received Tenant Estoppel Certificates in the form
attached hereto as Exhibit F from all Tenants listed on Schedule 2
hereto (the “Major Tenants”) and from a sufficient number of the
remaining Tenants such that the Partnership shall have received in
the aggregate Tenant Estoppel Certificates from Tenants (excluding
the Major Tenants) leasing 90% of the space in the Improvements that
is leased by Tenants. Sellers shall provide a backstop estoppel
certificate in respect of any Tenant from which the Partnership has
not received a Tenant Estoppel Certificate, and shall indemnify,
defend and hold the Partnership harmless from all losses, claims,
demands, causes of action and suit or suits of any nature whatsoever
arising out of or relating to the Partnership’s failure to receive
any such Tenant Estoppel Certificate;

     (c) The Partnership shall have received such landlord ground
lease estoppel certificates, consents, releases and other documents
from each landlord under the Ground Leases as shall have been
required by the lending institutions providing financing to the
Partnership in respect of the Properties;

     (d) The St. Luke’s Lease Amendment in form and substance
satisfactory to the Partnership shall have been executed and shall
be in full force and effect in accordance with its terms;

     (e) The Partnership shall have waived or be deemed to have
waived its right to terminate pursuant to Section 6.3 hereof;

     (f) None of the Tenants shall be the subject of any proceedings
under state or federal law relating to bankruptcy or any similar
proceedings;

     (g) A guarantee (the “South Pond Guarantee”) from A & L
Partnership, LLP and/or Joseph R. Link, as may be acceptable to the
Partnership, in a form

 Page 16 of  26

 

satisfactory to the Partnership, guaranteeing, for a period of
five years from the Closing Date, the payment of immediately
available funds to the Partnership in amounts sufficient to ensure
the receipt by the Partnership of total net operating income, before
debt service, of not less than $333,000 annually in respect of the
improvements and property known as the South Pond Retail Center
(Parcel VII described in Exhibit B hereto).

     (h) The Partnership shall have obtained a commitment from one
or more lenders to provide financing, satisfactory to the
Partnership in its sole discretion, equal to seventy percent (70%)
or more of the Purchase Price.

     If any of the foregoing conditions are not satisfied or waived by the
Partnership on or before the Closing Date, the Partnership (and, with respect
to the financing contingency in Section 9(h) hereof, the Sellers) may terminate
this Agreement on written notice to Sellers or the Partnership, as the case may
be, provided that the Sellers may not terminate this Agreement pursuant to this
provision in less than one hundred and eighty (180) days from the date hereof,
and, in such event, this Agreement shall cease and terminate, the Earnest Money
shall be applied as set forth pursuant to Section 3, and neither party shall
have any further obligation hereunder except as to covenants which are to
survive termination.

     Section 10. Closing.

     10.1 Time and Place. Provided that all of the conditions set forth in
this Agreement are theretofore fully satisfied or performed, the Closing shall
be held at 10:00 a.m. on April 1, .2004, or such later date as elected by the
Sellers pursuant to Section 5.2 hereof.

     10.2 Closing Documents. For and in consideration of, and as a condition
precedent to the Partnership’s payment of the Purchase Price pursuant to this
Agreement, Sellers shall obtain and deliver to the Partnership at the Closing
the following documents (all of which shall be duly executed and, if required
for recording, acknowledged, which documents the Partnership agrees to execute
and acknowledge where required):

     10.2.1 A Warranty Deed(s) in the form attached as Exhibit H
hereto and by this reference made a part hereof, conveying to the
Partnership all of Sellers’ right, title and interest in and to the
Properties, subject only to the Permitted Title Exceptions;

     10.2.2 An Assignment and Assumption of Leases in the form
attached as Exhibit I hereto;

     10.2.3 A Non-Foreign Certificate in the form attached as
Exhibit J hereto;

     10.2.4 Original executed counterparts of the Leases and each
Surviving Service Contract;

     10.2.5 The Bill of Sale for all Personal Property in the form
attached as Exhibit A hereto;

     10.2.6 Evidence of the termination of all Service Contracts
other than the Surviving Service Contracts, and both an Assignment
and Assumption of Surviving Service Contracts and an Assignment and
Assumption of Intangibles in the forms attached hereto as Exhibits K
and Exhibit M, respectively;

Page 17 of 26

 

 

     10.2.7 Notice of Sale from Sellers to each Tenant, and a Notice
of Sale from Sellers to each Vendor under each Service Contract in a
form to be approved by the Partnership;

     10.2.8 Tenant Estoppel Certificates, in the form attached as
Exhibit F hereto, from each Tenant;

     10.2.9 Certificates and other required documentation in respect
of the Ground Leases, as specified in Section 9 above;

     10.2.10 The South Pond Guarantee, as specified in Section 9
above; and

     10.2.11 Such further documents as the Partnership may
reasonably request to carry out the provisions of this Agreement.

     10.3 The Partnership shall deliver to Sellers at Closing:

     10.3.1 The Purchase Price;

     10.3.2 A Property Management Agreement (five (5) year term,
to be subject to subordination and assignment to the Partnership’s
financing) in respect of each of the Properties, substantially in
the form attached hereto as Exhibit O, duly executed by the
Partnership, which documents the respective Sellers agree execute or
cause to be executed by the manager(s) thereunder; and

     10.3.3 Such further documents as Sellers may reasonably
request to carry out the provisions of this Agreement.

     10.4
The parties shall jointly execute and deliver to each other a Closing Statement.

     Section 11. Default and Remedies.

     11.1 Should Sellers breach any of Sellers’ covenants,
representations, or warranties contained in this Agreement, the
Partnership may, upon twenty (20) days written notice to Sellers, and
provided such breach or failure is not cured within such twenty (20) day
period:

     (i) terminate this Agreement, without further liability
on the Partnership’s part except as set forth in Section 6.2
and, in such event, the Partnership shall be entitled to a
return of the Earnest Money and shall have no further
liability hereunder; and/or

     (ii) enforce specific performance of this Agreement,
provided such action is commenced within ninety (90) days
after the date of the Partnership’s written notice to Sellers
pursuant to this Section; and/or

     (iii) seek damages from Sellers on account of any such
default.

     11.2 Should the Partnership, after the Inspection Date and prior to
Closing, default in respect to any of its covenants, representations, or
warranties contained in this Agreement and Sellers are not in material
default hereunder, Sellers may terminate this Agreement in accordance
with applicable statutes without further liability on Sellers’ part, in

Page 18 of 26

 

 

which event Sellers shall have the right to the Earnest Money, which
shall be considered liquidated damages and such right of termination
shall be Sellers’ sole remedy hereunder (other than for a default by the
Partnership under Section 6.2, hereof for which Sellers may seek damages
either before or after such termination), it being agreed that the
damages which Sellers would incur would be difficult, if not impossible,
to calculate, but that such liquidated damages are a reasonable estimate
of the damages that would be incurred by Sellers.

     Section 12. Condemnation or Destruction.

     12.1 Condemnation. If, between the Contract Date and the Closing Date,
any condemnation or eminent domain proceedings are initiated or threatened that
might result in the taking of any part of the Improvements or the Land or
access to the Land from adjacent roadways, the Partnership, at its sole
discretion, may elect to terminate this Agreement without cost, obligation, or
liability on the part of the Partnership except as set forth in Section 6.2, in
which event this Agreement shall terminate all rights and obligations of the
parties hereunder shall cease and the Earnest Money shall be returned to the
Partnership. If this Agreement is not terminated, Sellers shall assign to the
Partnership all of Sellers’ right, title, and interest in and to any award
pertaining to the Properties made in connection with such condemnation or
eminent domain proceedings. The Partnership shall notify Sellers within
fifteen (15) calendar days after its receipt of written notice from Sellers of
such condemnation or eminent domain proceeding, whether it elects to exercise
its right to terminate. If the Partnership fails to notify Sellers of its
election within said fifteen (15) calendar day period, such failure shall
constitute an election to terminate this Agreement as aforesaid. The Closing
Date shall be adjusted, if necessary, to allow for such election.

     12.2 Damage or Destruction. Sellers shall bear all risk of loss to the
Properties until the Closing Date. If, between the Contract Date and the
Closing Date, all or any portion of the Property is damaged or destroyed by
fire or other casualty and the cost to repair and restore the Property is more
than Fifty Thousand Dollars ($50,000.00) or the amount of such damage would
give any Tenant the right to terminate its Lease, the Partnership, at its sole
option, may elect to terminate this Agreement without cost, obligation, or
liability on the Partnership’s part except as set forth in Section 6.2, in
which event all rights and obligations of the parties hereunder shall cease and
the Earnest Money will be returned to the Partnership. If either this
Agreement is not terminable in accordance with the foregoing, or is terminable
but is not terminated, Sellers shall, upon Closing, assign to the Partnership
all of Sellers’ right, title, and interest in and to any insurance proceeds,
including, without limitation, rent loss insurance proceeds, if any, except for
proceeds for rent losses prior to Closing, payable as a result of such damage
or destruction plus Sellers shall pay to the Partnership the amount of any
deductible losses under such insurance policies and at Closing shall have no
further repair or restoration obligations. Sellers shall fully advise the
Partnership regarding the insurance policies covering such damage or
destruction and the probable amount of any insurance proceeds payable as a
result of such damage or destruction. The Partnership shall notify Sellers
within fifteen (15) calendar days after receipt of written notice from Sellers
of such damage or destruction of its election. If the Partnership fails to
notify Sellers of its election within said fifteen (15) calendar day period,
such failure shall constitute an election to terminate this Agreement as
aforesaid. The Closing Date shall be adjusted, if necessary, to allow for such
election.

     Section 13. Assignment. Neither the Partnership nor Sellers shall assign
any of their rights hereunder without the prior written consent of the other.
Notwithstanding anything herein to the contrary, Sellers agrees that the
Partnership may in its sole discretion make partial assignments of fractional
interests in this Agreement to individuals or entities who identify such
fractional interest in a Property as their Replacement Property under Section
1031 of the Internal Revenue Code. the Partnership will directly transfer
such fractional interests to the Exchangers at Closing as well as

Page 19 of 26

 

 

execute the customary 1031 exchange documents proposed by Asset Preservation,
Inc. or other national recognized 1031 exchange accommodation companies. No
assignment for IRC Section 1031 purposes shall release the assigning party. If
the Partnership assigns this Agreement to effectuate a like-kind exchange, the
Partnership agrees to indemnify and hold Sellers harmless from and against all
costs, claims and expenses associated with the Partnership’s participation in
an IRC Section 1031 exchange.

     Section 14. The Partnership’s Representations, Warranties and Covenants.

     14.1 General. The Partnership represents and warrants that, as of the
Contract Date and the Closing Date:

     (a) The Partnership is a validly formed limited partnership under the
laws of North Dakota, is in good standing in the state of North Dakota, is
qualified to do business in the States in which the Land is located, and
is duly authorized to do all things required of it under or in connection
with this Agreement;

     (b) The Partnership is not subject to any involuntary proceeding for
dissolution or liquidation;

     (c) The parties executing this Agreement on behalf of the Partnership
are duly authorized to so do, and, upon execution, this Agreement will be
duly executed by and binding upon the Partnership;

     (d) All consents and approvals required of the partners of the
Partnership for the consummation of the transactions contemplated by
this Agreement have been obtained or will have been obtained as of
the Closing.

     14.2 Tax Matters. The Partnership represents, warrants and covenants as
follows:

     (a) The Partnership acknowledges that Sellers may structure the
disposition of the Properties as a 1031 Exchange. The Partnership
shall cooperate in all reasonable respects with such Sellers to
effectuate such 1031 Exchange; provided, however, that:

     (i) The Closing shall not be extended or delayed by
reason of such 1031 Exchange, unless the Partnership has
breached its obligations to Sellers under this Agreement;

     (ii) The Partnership shall not be required to incur any
additional cost or expense as a result of such 1031 Exchange,
other than the cost of the Partnership’s counsel in connection
with the preparation of this Agreement. Seller covenants and
agrees that it shall, forthwith on demand, reimburse
Partnership for any additional cost or expense (including, but
not limited to, reasonable attorneys’ fees) incurred by the
Partnership as a result of any audit or tax litigation to
which Seller is or may be a party or which is or may be
otherwise directly attributable to the 1031 Exchange; and

     (iii) Subject to the Partnership’s performance and
fulfillment of the express covenants and conditions contained
in this Agreement, and except for the express obligations and
liabilities of the Partnership under this Agreement, the
Partnership shall incur no personal liability under any
document or

Page 20 of 26

 

 

agreement required in connection with such 1031 Exchange, and
the Partnership shall not be required to execute any such
document or agreement that does not expressly exculpate and
release the Partnership, its successors, assigns, affiliates,
officers, employees, agents and representatives from any
liability or obligation arising out of, or in connection with,
the 1031 Exchange.

     (c) Subject to the Partnership’s performance and fulfillment of
the express covenants and conditions contained in this Agreement,
the Partnership does not warrant the tax consequences to Sellers of
the transactions contemplated by this Agreement or any actions that
the Sellers may have taken prior to and/or in anticipation of the
transactions contemplated by this Agreement.

     Section 15.
Broker and Broker’s Commission. The Partnership and Sellers each warrant
and represent to the other that such representing and warranting party has not
employed or made any commitment to a broker or agent (including without
limitation any real estate or securities broker, agent, dealer, or salesperson)
in connection with the transaction contemplated hereby. Each party agrees to
indemnify and hold the other harmless from any loss or cost suffered or
incurred by it as a result of the indemnifying parties’ representation herein
being untrue.

     Section 16. Notices. Wherever any notice or other communication is
required or permitted hereunder, such notice or other communication shall be in
writing and shall be delivered by hand, by nationally-recognized overnight
express delivery service, by U.S. registered or certified mail, return receipt
requested, postage prepaid, or by electronic “fax” transfer with prompt
telephone confirmation to the addresses set out below or at such other
addresses as are specified by written notice delivered in accordance herewith:

	 	 	 	 	 	 	 
	SELLERS:

	 	c/o Joseph R. Link
	

	 	11 East Superior Street, #570
	

	 	Duluth, Minnesota 55802
	

	 	Fax: (218) 727-9559
	

	 	Telephone: (218) 727-9556
	 
	 	 
	With a copy to:

	 	William M. Burns
	

	 	Hanft Fride, A Professional Association
	

	 	1000 U.S. Bank Place
	

	 	Duluth, Minnesota 55802
	

	 	Fax: (218) 529-2401
	

	 	Telephone: (218) 722-4766
	 
	 	 
	PARTNERSHIP:

	 	IRET Properties, a North Dakota limited partnership
	

	 	12 South Main, Suite 100
	

	 	Minot, North Dakota 58701
	

	 	Fax: (701) 837-4738
	

	 	Telephone: (701) 838-7785
	

	 	Attn: Thomas A. Wentz, Jr.
	 
	 	 
	ESCROW AGENT:

	 	Consolidated Title Division
	

	 	100 Providence Building
	

	 	Duluth, MN 55802
	

	 	Fax: (218) 720-6810
	

	 	Telephone: (218) 722-1495

Page 21 of 26

 

 

     Such notices shall be deemed received (a) on the date of delivery, if
delivered by hand, (b) the date tendered to the overnight express delivery
service, if sent by overnight delivery service, (c) on the date mailed, if
mailed, or (d) on the date of transmission, if sent by electronic “fax”
transfer device.

     Section 17. Arbitration.

     Any controversy or dispute of any nature whatsoever between or among the
parties regarding or relating to this Agreement or the services provided
hereunder shall be settled by binding arbitration in Hennepin County,
Minnesota. Said arbitration shall comply with and be governed by the
provisions of the Federal Arbitration Act and shall be conducted by a single
arbitrator pursuant to the rules of the American Arbitration Association. The
arbitrator may award fees and costs to the prevailing party. The arbitrator
shall have no authority to award punitive damages or to alter in any way the
provisions of this Agreement. Judgment upon the arbitrator’s award may be
entered in any Court having jurisdiction thereof. The decision of the
arbitrator shall be final and conclusive. With respect to such arbitration:

     (a) All questions as to the meaning of the above clause or as to the
arbitrability of any dispute under the clause shall be resolved by the
arbitrator, and the arbitrator’s decision thereon shall be binding and not
subject to judicial review.

     (b) Every aspect of this arbitration clause is intended to be
severable. If any term or provision, in general or with respect to a
specific situation, is illegal or invalid for any reason whatsoever, such
illegality or invalidity shall not affect the validity of the remainder.

     Section 18. Miscellaneous.

     18.1 Governing Law; Headings; Rules of Construction. This Agreement shall
be governed by and construed in accordance with the internal laws of the State
of Minnesota, without reference to the conflicts of laws or choice of law
provisions thereof. The titles of sections and subsections herein have been
inserted as a matter of convenience of reference only and shall not control or
affect the meaning or construction of any of the terms or provisions herein.
All references herein to the singular shall include the plural, and vice versa.
The parties agree that this Agreement is the result of negotiation by the
parties, each of whom was represented by counsel, and thus, this Agreement
shall not be construed against the maker thereof.

     18.2 No Waiver. Neither the failure of either party to exercise any power
given such party hereunder or to insist upon strict compliance by the other
party with its obligations hereunder, nor any custom or practice of the parties
at variance with the terms hereof shall constitute a waiver of either party’s
right to demand exact compliance with the terms hereof, except the Closing of
this Agreement shall constitute waiver of all conditions to Closing except to
the extent otherwise agreed in writing at Closing.

     18.3 Entire Agreement. This Agreement contains the entire agreement of
the parties hereto with respect to the Property, and no representations,
inducements, promises or agreements, oral or otherwise, between the parties not
embodied herein or incorporated herein by reference (including without
limitation the Letter of intent dated November 4, 2003 between the Partnership
and A & L Partnership, LLP) shall be of any force or effect.

     18.4 Binding Effect. This Agreement shall be binding upon and shall inure
to the benefit of the parties hereto and their respective heirs, executors,
administrators, legal representatives, successors and assigns.

Page 22 of 26

 

 

     18.5 Amendments. No amendment to this Agreement shall be binding on any
of the parties hereof unless such amendment is in writing and is executed by
the party against whom enforcement of such amendment is sought.

     18.6 Possession. Possession of the Properties shall be given by Sellers
to the Partnership at Closing, subject to the Permitted Title Exceptions.

     18.7 Date For Performance. If the time period by which any right, option
or election provided under this Agreement must be exercised, or by which any
act required hereunder must be performed, or by which the Closing must be held,
expires on a Saturday, Sunday or legal or bank holiday, then such time period
shall be automatically extended through the close of business on the next
regular business day.

     18.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all of
which, when taken together, shall constitute but one and the same instrument.

     18.9 Time of the Essence. Time shall be of the essence of this Agreement
and each and every term and condition hereof.

     18.10 Severability. This Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations, and is intended, and shall for all purposes
be deemed to be, a single, integrated document setting forth all of the
agreements and understandings of the parties hereto, and superseding all prior
negotiations, understandings and agreements of such parties. If any term or
provision of this Agreement or the application thereof to any person or
circumstance shall for any reason and to any extent be held to be invalid or
unenforceable, then such term or provision shall be ignored, and to the maximum
extent possible, this Agreement shall continue in full force and effect, but
without giving effect to such term or provision.

     18.11 General Indemnity.

     (a) Subject to the provisions of Section 4.2, Sellers agree to
indemnify, to defend, and to hold the Partnership harmless from, all
claims, demands, causes of action, and suit or suits of any nature
whatsoever arising out of or relating to its ownership and/or
operation of the Properties prior to the Closing (whether any such
claims, demands, causes of actions, or suits are asserted prior to
or after the Closing and any activities related thereto); provided,
however, nothing in this Section 19.11(a) shall constitute an
indemnity as to environmental matters except as to environmental
liability arising out of the acts or omissions of the Sellers, their
agents, employees, and contractors.

     (b) Subject to the provisions of Section 4.2, the Partnership
agrees to indemnify, to defend, and to hold Sellers harmless from
all claims, demands, causes of action, and suit or suits of any
nature whatsoever arising out of or relating to its ownership and/or
operation of the Properties after the Closing and any and all
activities relating thereto; provided, however, nothing herein shall
constitute an indemnity as to environmental matters except as to
environmental liability arising out of the acts or omissions of the
Partnership, its agents, employees, and contractors. Sellers’
obligations hereunder shall survive for three (3) year(s) after
Closing and be subject to a threshold aggregate amount of $10,000.

Page 23 of 26

 

 

     18.12 Survival. Except as otherwise expressly provided herein, neither
this Agreement nor any provision contained herein shall be cancelled or merged
with any deed or other instrument on, as of, at or by reason of the Closing,
and the covenants and obligations of the parties shall survive the Closing.

     18.13 Further Assurances. After the Closing, the Partnership and Sellers
shall execute, acknowledge, and deliver, or cause to be executed, acknowledged,
and delivered such instruments and take such other actions as may be reasonably
necessary or advisable to carry out their respective obligations under this
Agreement and under any Exhibit, document, certificate, or other instrument
delivered pursuant thereto. Subsequent to Closing and within thirty (30) days
after written notice from the Partnership, Sellers shall provide the
Partnership with all original records of account and other such data and
documents in Sellers’ then possession or control, provided such records, data
and documents are necessary to address a dispute with a Tenant under any Lease.

          IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement

to be executed and sealed by its duly authorized signatory, effective as of the
day and year first above written.

	 	 	 	 	 	 	 
	 	 	SELLERS
	 
	 	 	 	 	 	 
	 	 	A & L of Superior, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L of West Duluth, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L Crib, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L of Hibbing, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L Diamond LLC

Page 24 of 26

 

 

	 	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L of Sandstone, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L Denfeld Retail, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	South Pond Center, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L First Street, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L Partnership, LLP
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	A & L Pavilion II, LLC
	 
	 	 	 	 	 	 
	

	 	By:	 	 	 	 
	

	 	 	 	
	 	 
	

	 	Its:	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	PARTNERSHIP:
	 
	 	 	 	 	 	 
	 	 	IRET Properties,

 Page 25 of 26

 

 

	 	 	 	 	 	 	 	 	 	 	 
	 	 	a North Dakota Limited Partnership	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	By:	 	IRET, Inc.,
	 	 	 	 	a North Dakota corporation,
	 	 	 	 	Its: Sole General Partner
	 
	 	 	 	 	 	 	 	 	 	 
	

	 	 	 	By	 	 	 	 	 	 
	

	 	 	 	 	 	
	 	 	 	 
	

	 	 	 	Its:	 	 	 	 	 	 

 Page 26 of 26<PAGE>
                                                                 Exhibit 10.18.1

     Confidential Materials omitted and filed separately with the Securities
              and Exchange Commission. Asterisks denote omissions.

                                    AGREEMENT

This agreement is made by and between

IDENIX PHARMACEUTICALS, INC.  a corporation organized and existing under
the laws of the State of Delaware, having its principal offices located at
125 CambridgePark Drive, Cambridge, MA 02140 represented by its legal
representative Mr. Jean-Pierre Sommadossi (hereinafter referred to as
"Idenix")

                                       and

IDENIX SARL, a corporation organized and existing under the laws of France,
having registered offices in Immueuble "La Vigie" 170 rue Leon Blum, 34000
Montpellier, France, represented by its legal representative Mr. Jean-Marc
Allaire (hereinafter referred to as "Idenix SARL")

                                       and

UNIVERSITA' DELGI STUDI DI CAGLIARI, having a principal place of business at
Cittadella Universitaria, SS 554 KM 4.5, 09133 Monserrato, Cagliari, Italy,
represented by the Chancellor Prof. Pasquale Mistretta (hereinafter referred to
as the "University")

                                     whereas

a) on 4th of January 1999 the University and Idenix SARL, this last on behalf
and for the benefit of Idenix, entered into an agreement entitled "Co-operative
Antiviral Research Activity Agreement" (hereinafter referred to as "Co-operative
Agreement") aimed at performing a joined research activity in the antiviral
substances field;

b) in accordance with the Co-operative Agreement, on 14 December 2000 the
University and Idenix entered into a license agreement (hereinafter "License
Agreement") according to which the University grants to Idenix the exclusive
license for the exploitation, whether direct or indirect, of the results
obtained and that will be obtained from the performance of the activity
indicated under the previous point;

c) the above mentioned Co-operative Agreement and License Agreement have
been initially amended on 10 April 2002;

d) said agreements have been further amended with the deed undersigned by the
parties on May 8, 2003, also in consideration of the transactions at that time
pending between Idenix and Novartis Pharma AG for the acquisition, by this last,
of the majority of the shareholding of Idenix (the amendments indicated in this
point have become effective on May 8, 2003, following
<PAGE>
to the occurred execution of a "Development, License and Commercialization
Agreement" and of a "Manufacturing and Supply Agreement" by and among Idenix,
Idenix (Cayman) Limited and Novartis);

e) in compliance with the provision set forth under art. 9.1 of the
Co-operative Agreement, art. 3 of the License Agreement states that Idenix
shall pay to the University earned royalties at a rate equal to

      (i)   [**]% of Net Sales in case of direct exploitation of the results
            obtained from the performance of the research activity in accordance
            with Co-operative Agreement;

      (ii)  [**]% of Sublicense Payments or Royalties in case of
            sublicense of the Intellectual Property Rights

now, therefore, in consideration of the premises and the mutual covenants herein
contained, Idenix, Idenix SARL and the University agree as follows:

1.  The premises shall represent an integral and substantial part of this
agreement.

2.  Also in consideration of the relevance of the results that the parties
are obtaining from the joined research carried out, the royalty rate
payable by Idenix or any of its subsidiaries indicated under art. 9.1 of
the Co-operative Agreement and art. 3 of the License Agreement shall be
increased from [**]% to [**]%.

The parties hereby furthermore agree that such an increased royalty rate shall
apply to technology and other property that becomes initially subject to patent
applications (including US provisional applications) which constitute the parent
case filed on or after 14 May 2003.

For the purposes of this point 2, the date of the first filing of each parent
case patent application shall be considered (not the date of the corresponding
foreign extensions).

The parties hereby agree that the rate of royalty will be exclusively determined
by reference to the date of filing of the parent application.

3. The percentage defined under previous point 2 shall be calculated on Net
Sales whether performed directly by Idenix or by a sublicense. As regards to
patent applications, including US provisional patent applications, filed before
14 May 2003, from the execution date of the present agreement, the [**]% royalty
shall as well be calculated on Net Sales whether performed directly by Idenix or
by a sublicense. For the purpose of this section 3, the definition of "Net
Sales" provided under section 1.10 of the License Agreement shall apply.

3.1. Idenix shall provide the University of Cagliari with the right of a yearly
audit to check the correct undertakings and fulfillments of any obligations of
the Cooperative Agreement, of the License and relevant amendments.

4. The present document represents an amendment to art. 9.1 of the Co-operative
Agreement and to art. 3 of the License Agreement that, with reference to any
other provision, shall entirely apply in the current version (and with the
possible amendments that might be brought in the future) to the relationships
existing among the parties (and with the possible amendments brought in the
<PAGE>
future). The parties however agree that in any case in which it is provided to
the University the right to grant non exclusive licenses, this has to be
understood both as non exclusive and exclusive license right.

5. The parties hereby agree that the patents filed by or on behalf of Idenix or
Novartis in order to protect the results of the activity performed in pursuance
of the Cooperative Agreement, are therefore deemed subject to the terms of the
License Agreement and shall be included in the Annex to the License Agreement. A
copy of Annex A as it is currently constituted is attached hereto and made a
part of the License Agreement. The Annex A attached hereto supercedes in its
entirety the Annex A referred to in the amendment dated 10 April 2002 of the
License Agreement and Co-operative Agreement. In the future, Idenix will provide
to include in such Annex the new patent applications concerning results obtained
within the Cooperative Activity, providing the University with a quarterly
communication of such Annex including the new patent applications which updated
Annex A will be deemed to be agreed to by the University.

In the Annex A attached hereto are not included the following patents: US patent
application No. 60/626184 (Sommadossi) and US patent application No. 60/326192
(Sommadossi) that were un-correctly inserted in previous Annex A of the License
Agreement, since they are not part of the Co-operative Antiviral Research
Activity Agreement due to the fact that Professor Paolo LA Colla did not
contributed, even partially, to the achievement of the relevant inventions.

6. In order to clarify the provisions set forth in the agreement undersigned by
the parties on 8 May 2003 mentioned in the premises, the parties recognize and
accept that the rights and the obligations, stated upon the Dipartimento di
Scienze e Tecnologie Biomediche by the Co-operative Agreement and by the License
Agreement (as finally amended on 8 may 2003) shall be considered exclusively
referred to the Sezione di Microbiologia e Virologia Generale e Biotecnologie
Microbioche, directed by Prof. La Colla.

7. The parties hereto agree that the initial term of the Co-operative Agreement,
as amended, shall expire on January 22, 2007 and that the Co-operative Agreement
may be renewed for additional four year periods by mutual consent of the parties
expressed in writing at least 30 days prior to the expiration of the then
current term.

8. This agreement is drafted in English, and for the sole purpose of allowing
the University to better comprehend the relevant content, in Italian, being
understand that in case of contrasts between the English version and the Italian
version, the English one shall prevail.

    June 30, 2004
--------------------------------------
    Date

   /s/Jean Pierre Sommadossi
--------------------------------------
name and appointment

IDENIX PHARMACEUTICALS, INC.

   /s/Jean Pierre Sommadossi
--------------------------------------
name and appointment
<PAGE>
IDENIX SARL

/s/ Pasquale Mistietia
--------------------------------------
Prof. Pasquale Mistietia

/s/ Pavlo LaColla
--------------------------------------
Prof. Pavlo LaColla
<PAGE>
                                    EXHIBIT A

<TABLE>
<CAPTION>
                                                                            PATENT /       ISSUE /
TITLE                                                 FILING   SERIAL       PUBLICATION    PUB.
& DOCKET NAME    COUNTRY   OWNER        INVENTORS     DATE     NUMBER       NUMBER         DATE        STATUS
-------------    -------   -----        ---------     ----     ------       ------         ----        ------
<S>              <C>       <C>          <C>           <C>      <C>          <C>            <C>         <C>
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
                                        P.
                                        LaColla,
IDX1006          U.S.      USC IDXINC   JP.           5/26/01  09/863,816   2003/0060400   03/27/03    Allowed
                                        Sommadossi
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
                                        P.
                                        LaColla,
IDX1006 CON 3    U.S.      USC IDXINC   JP.           6/20/03  10/602,692   2004/0097462   05/20/04    Published
                                        Sommadossi
                                        P.
                                        LaColla,
IDX1006 DIV      U.S.      USC IDXINC   JP.           6/20/03  10/602,693   2004/0063622   04/01/04    Published
                                        Sommadossi
[**]             [**]         [**]      [**]          [**]     [**]         [**]           [**]        [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]                       [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]                       [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]                       [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]                       [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]                       [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]                       [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                                            PATENT /       ISSUE /
TITLE                                                 FILING   SERIAL       PUBLICATION    PUB.
& DOCKET NAME    COUNTRY   OWNER        INVENTORS     DATE     NUMBER       NUMBER         DATE        STATUS
-------------    -------   -----        ---------     ----     ------       ------         ----        ------
<S>              <C>       <C>          <C>           <C>      <C>          <C>            <C>         <C>
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
IDX1007          U.S.         USC       P.          5/23/01   9/864,078   2003/0050229    3/13/03    Allowed
                             IDXINC     LaColla,
                                        JP.
                                        Sommadossi
IDX1007CON1                                         6/20/03  10/602,691   2004/0097461   05/20/04    Published

[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]         [**]           [**]        [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
[**]             [**]         [**]      [**]          [**]     [**]                                    [**]
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                            PATENT /       ISSUE /
TITLE                                                 FILING   SERIAL       PUBLICATION    PUB.
& DOCKET NAME    COUNTRY   OWNER        INVENTORS     DATE     NUMBER       NUMBER         DATE        STATUS
-------------    -------   -----        ---------     ----     ------       ------         ----        ------
<S>              <C>       <C>          <C>           <C>      <C>          <C>            <C>         <C>
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                                        J-P
                                        Sommadossi
IDX1009CON1      US CON    USC IDXINC   P LaColla     1/24/03  10/350,772   2003/0225114   12/04/03    Published
                                        M Artico
                                        M Bryant
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                                                            PATENT /       ISSUE /
TITLE                                                 FILING   SERIAL       PUBLICATION    PUB.
& DOCKET NAME    COUNTRY   OWNER        INVENTORS     DATE     NUMBER       NUMBER         DATE        STATUS
-------------    -------   -----        ---------     ----     ------       ------         ----        ------
<S>              <C>       <C>          <C>           <C>      <C>          <C>            <C>         <C>
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IDX 1031
2'-C-Methyl-3'-
O-L-Valine
Ester                                   JP
Ribofuranosyl    U.S.         USC.      Sommadossi    6/27/03  10/607,909   2004/0077587   04/22/04    Published
Cytidine for                 IDXINC     P La
Treatment of                            Colla
Flaviviridae
Infections
(NM283)

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</TABLE>

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