Document:

<PAGE>

                                                                    EXHIBIT 10.5

                        REDEMPTION AND RELEASE AGREEMENT

         This REDEMPTION AND RELEASE AGREEMENT (the "Agreement") is entered into
as of April 3, 2001 by and between Burnham Pacific Properties, Inc., a Maryland
corporation (the "Company"), Burnham Pacific Operating Partnership, L.P., a
Delaware limited partnership ("BPOP"), and the holders of all of the outstanding
Series 1997-A Preferred Units ("Units") of limited partnership interest of BPOP
identified on EXHIBIT A hereto (collectively, the "Preferred Unitholders").

         WHEREAS, each of the Preferred Unitholders is the record owner of the
number of Units set forth beside its respective name on EXHIBIT A hereto.

         WHEREAS, the Company, BPOP and the Preferred Unitholders are parties to
that certain Agreement of Limited Partnership, as amended, of BPOP (the
"Partnership Agreement"), which provides for the rights and obligations of the
Partners (as defined therein) and the administration and termination of BPOP;

         WHEREAS, pursuant to that certain Agreement to Contribute, dated as of
December 5, 1997 (the "Contribution Agreement"), by and among the Company, BPOP,
the Preferred Unitholders and the Contributors (as such term is defined in the
Partnership Agreement), the Preferred Unitholders acquired an aggregate of
400,000 Units;

         WHEREAS, the Company or one of its subsidiaries intends to sell
nineteen properties known as the Golden State Portfolio to Weingarten GS, Inc.
on or after April 2, 2001 (the "Weingarten Purchase"), and has entered into a
purchase contract with respect to such sale;

         WHEREAS, BPOP desires to exercise its right to redeem the Units from
the Preferred Unitholders, in accordance with Section 10 of Exhibit B to the
Thirteenth Amendment to the Partnership Agreement (the "Thirteenth Amendment")
relating to the Units, on or after the date on which the Weingarten Purchase is
consummated; and

         WHEREAS, all terms not otherwise defined herein shall have the
respective meanings ascribed to them in the Thirteenth Amendment.

         NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants contained in this Agreement, the parties hereto agree as follows:

SECTION 1.        REDEMPTION.

         1.1.     REDEMPTION OF THE UNITS. BPOP shall exercise its right to
redeem for cash all of the Units held by the Preferred Unitholders on the date
that the Weingarten Purchase is

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                                                                               2

consummated or on the following Business Day (the date of such redemption being
referred to herein as the "Redemption Date") at a price per Unit equal to the
Mandatory Redemption Price as of the Redemption Date. The parties hereto agree
that as of April 3, 2001, the Mandatory Redemption Price per Unit will equal
$26.261112, of which $0.011112 represents the Accrued Distributions per Unit.
During the period beginning on April 3, 2001 and ending on April 13, 2001 the
Accrued Distributions per Unit, and therefore the Mandatory Redemption Price per
Unit, shall increase by $0.005556 for each day after April 3, 2001 up to but not
including the Redemption Date; PROVIDED, HOWEVER, that nothing in this Agreement
is intended to address what the Mandatory Redemption Price would be for any date
after April 13, 2001. The Company shall direct the escrow agent with whom
Weingarten GS, Inc. is depositing the funds in respect of the Weingarten
Purchase to transfer all amounts due to each Preferred Unitholder pursuant to
this Section 1.1 directly to such Preferred Unitholder in accordance with the
instructions set forth in Section 1.3 below.

         1.2.     NOTICE. Notwithstanding anything contained in Section 10(b) of
the Thirteenth Amendment or otherwise to the contrary and provided that the
Units are redeemed in accordance with Section 1.1 above on or prior to April 13,
2001, BPOP and the Preferred Unitholders hereby agree that this Agreement shall
constitute valid and effective notice by BPOP to the Preferred Unitholders of
BPOP's exercise of its right to redeem the Preferred Units under Section 10(b)
of the Thirteenth Amendment.

         1.3.     PAYMENT. On the Redemption Date, the Company or BPOP shall pay
the amounts set forth in Section 1.1 above in immediately available funds prior
to 4:00 p.m. New York City time according to the following instructions:

         MJL ASSOCIATES:

                  Bank Name:          Bear Stearns
                                      New York, NY
                  ABA #:
                  Account Name:       MJL Associates
                  Account #:
                  Attention:          Jason Berlinger
                  Phone:              310.201.2607

         SAB ASSOCIATES:

                  Bank Name:          Bear Stearns
                                      New York, NY
                  ABA #:
                  Account Name:       SAB Associates
                  Account #:
                  Attention:          Jason Berlinger
                  Phone:              310.201.2607

         EUGENE S. ROSENFELD:

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                                                                               3

                  Bank Name:          US Trust of California
                                      Los Angeles, CA
                  ABA #:
                  Account Name:       Eugene Rosenfeld
                  Account #:

         STEVEN A. BERLINGER:

                  Bank Name:          Bear Stearns
                                      New York, NY
                  ABA #:
                  Account Name:       Steven A. Berlinger
                  Account #:          748-54515-17-GH5
                  Attention:          Jason Berlinger
                  Phone:

         JACK AND CONNIE MAHONEY FAMILY TRUST:

                  Bank Name:          Sanwa Bank California
                                      Newport Beach, CA  92660
                  ABA #:
                  Account Name:       Jack and Connie Mahoney Family Trust
                  Account #:
                  Attention:          Pam Dyson
                  Phone:              949.797.1900

         SHERRI F. CASSIDY:

                  Bank Name:          Citizen's National Bank of Texas
                                      Bellaire, TX
                  ABA #:
                  Account Name:       Sherri Cassidy
                  Account #:
                  Phone:              713.661.4444

         1.4.     CANCELLATION OF UNITS. Notwithstanding anything to the
contrary set forth in Section 10(c)(ii) of the Thirteenth Amendment or
otherwise, upon the full payment of the amounts set forth in Section 1.1 above
in accordance with Section 1.3 above, the Preferred Unitholders will cease to be
Partners of BPOP, will cease to be Unitholders with respect to the Units, will
have no interest in or claims against BPOP or the Company by virtue of such
Units and will have no voting or other rights with respect to such Units, and
such Units will be deemed to be cancelled.

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                                                                               4

SECTION 2.        REPRESENTATIONS AND WARRANTIES OF THE PREFERRED UNITHOLDERS.

         Each of the Preferred Unitholders severally, and not jointly,
represents and warrants to the Company and BPOP as follows:

         2.1.     AUTHORITY OF PREFERRED UNITHOLDERS. The Preferred Unitholder
has full right, authority, power and capacity to enter into this Agreement and
to carry out the transactions contemplated hereby. This Agreement constitutes a
valid and binding obligation of the Preferred Unitholder, enforceable against
such Preferred Unitholder in accordance with its terms.

         2.2.     HOLDER STATUS. The Preferred Unitholder is (i) the "holder"
(as such term is used in Section 10(b) and Section 10(c) of the Thirteenth
Amendment) of the number of Units set forth beside its name on EXHIBIT A hereto,
and (ii) the only person or entity entitled to receive any notices from the
Company or BPOP concerning, or any payments to be made by the Company or BPOP
with respect to, such Units pursuant to the Thirteenth Amendment.

SECTION 2A.  REPRESENTATIONS AND WARRANTIES REGARDING CONTRIBUTORS.

         Each of the Preferred Unitholders, other than Sherri F. Cassidy,
severally, and not jointly, represents and warrants to the Company and BPOP that
each of the Contributors identified on EXHIBIT B hereto has been dissolved in
accordance with the laws of their respective states of formation and the terms
of their respective formation documents.

SECTION 3.        REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND BPOP

         3.1.     AUTHORITY OF THE COMPANY. The Company hereby represents and
warrants to the Preferred Unitholders that the Company has full right,
authority, power and capacity to enter into this Agreement and to carry out the
transactions contemplated hereby. This Agreement constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.

         3.2.     AUTHORITY OF BPOP. BPOP hereby represents and warrants to the
Preferred Unitholders that BPOP has full right, authority, power and capacity to
enter into this Agreement and to carry out the transactions contemplated hereby.
This Agreement constitutes a valid and binding obligation of BPOP, enforceable
against BPOP in accordance with its terms.

SECTION 4.        RELEASE BY THE COMPANY AND BPOP.

         For and in consideration of the covenants and promises set forth in
this Agreement and subject to the payment by or on behalf of BPOP of the amounts
set forth in Section 1.1 hereof, each of the Company and BPOP, on behalf of
itself and its assigns, representatives, agents, subsidiaries and affiliates,
hereby fully and finally releases, acquits and forever discharges the Preferred
Unitholders, their heirs, executors, predecessors, successors and past or
present affiliates and subsidiaries, and each of their present and former
stockholders and the present and

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                                                                               5

former officers, directors, partners, members, stockholders, trustees,
representatives, employees, principals, agents, affiliates, subsidiaries,
predecessors, successors, assigns, beneficiaries, insurers and attorneys of any
of them (collectively, the "Preferred Released Parties") from any and all
actions, debts, claims, counterclaims, demands, liabilities, damages, causes of
action, costs and expenses of every kind and nature whatsoever, in law or in
equity, whether known or unknown, which the Company or BPOP had, has, or may
have had at any time in the past until and including the date hereof against the
Preferred Released Parties, or any of them. Notwithstanding any other provision
of this Agreement to the contrary, this paragraph shall not apply to any and all
actions, claims, counterclaims, demands, liabilities, damages, causes of action,
costs and expenses arising out of or relating to the enforcement by the Company
or BPOP of their rights under the express terms of this Agreement. The Company
and BPOP agree not to institute, bring or make any litigation, lawsuit, claim or
action against any of the Preferred Release Parties with respect to any and all
claims released in this Agreement. Each of the Company and BPOP hereby
represents and warrants that it has adequate information regarding the terms of
this Agreement, the scope and effect of the releases set forth herein, and all
other matters encompassed by this Agreement to make an informed and
knowledgeable decision with regard to entering into this Agreement, and that it
has consulted with counsel and independently and without reliance upon the
Preferred Release Parties made its own analysis and decision to enter into this
Agreement.

SECTION 5.        RELEASE BY THE PREFERRED UNITHOLDERS.

         For and in consideration of the covenants and promises set forth in
this Agreement and subject to the payment by or on behalf of BPOP of the amounts
set forth in Section 1.1 hereof, each Preferred Unitholder, on behalf of itself
and its assigns, representatives, beneficiaries, heirs, executors, agents,
subsidiaries and affiliates, hereby fully and finally releases, acquits and
forever discharges the Company, BPOP, their predecessors, successors and past or
present affiliates and subsidiaries, and each of their present and former
stockholders and unitholders and the present and former officers, directors,
partners, members, stockholders, unitholders, trustees, representatives,
employees, principals, agents, affiliates, subsidiaries, predecessors,
successors, assigns, beneficiaries, insurers and attorneys of any of them
(collectively, the "BPOP Released Parties") from any and all actions, debts,
claims, counterclaims, demands, liabilities, damages, causes of action, costs
and expenses of every kind and nature whatsoever, in law or in equity, whether
known or unknown, which the Preferred Unitholder had, has, or may have had at
any time in the past until and including the date hereof against the BPOP
Released Parties, or any of them, including, but not limited to, any claims
which relate to or arise out of the Preferred Unitholder's rights or status as a
present or former stockholder of the Company, as a present or former holder of
units of limited partnership interest in BPOP or as a present or former partner
of BPOP, including, without limitation, any claims for additional shares of any
capital stock of the Company, additional units of limited partnership interest
in BPOP or additional payments or distributions from the Company or BPOP.
Notwithstanding any other provision of this Agreement to the contrary, this
paragraph shall not apply to any and all actions, claims, counterclaims,
demands, liabilities, damages, causes of action, costs and expenses arising out
of or relating to the enforcement by a Preferred Unitholder of its rights under
the express terms of this Agreement. The Preferred Unitholders agree not to
institute, bring or make any litigation,

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                                                                               6

lawsuit, claim or action against the Company, BPOP or any BPOP Released Party
with respect to any and all claims released in this Agreement. Each of the
Preferred Unitholders hereby represents and warrants that it has adequate
information regarding the terms of this Agreement, the scope and effect of the
releases set forth herein, and all other matters encompassed by this Agreement
to make an informed and knowledgeable decision with regard to entering into this
Agreement, and that it has consulted with counsel and independently and without
reliance upon the BPOP Released Parties made its own analysis and decision to
enter into this Agreement.

SECTION 6.        ADDITIONAL AGREEMENTS.

         6.1.     CONTRIBUTION AGREEMENT. The parties hereto agree that, upon
payment of the amounts set forth in Section 1.1 hereof in accordance with
Section 1.3 hereof, the Contribution Agreement, and all of the agreements
entered into in connection therewith by the Company, BPOP and/or one or more of
their affiliates, on the one hand, and each of the Preferred Unitholders and/or
one or more of their affiliates, on the other hand, shall hereby terminate and
shall have no further force and effect and none of the parties to any of such
agreements shall have any further rights or obligations thereunder.

         6.2.     PARTNERSHIP AGREEMENT. The parties hereto agree that, upon
payment of the amounts set forth in Section 1.1 hereof in accordance with
Section 1.3 hereof, (i) the Partnership Agreement shall have no further force
and effect between or among the Company, BPOP and/or one or more of their
affiliates, on the one hand, and each of the Preferred Unitholders and/or one or
more of their affiliates, on the other hand, and (ii) the Company, BPOP and/or
one or more of their affiliates, on the one hand, and each of the Preferred
Unitholders and/or one or more of their affiliates, on the other hand, shall
have no further rights against or obligations to the others thereunder.

         6.3.     HOLDER STATUS. Each of the Preferred Unitholders agrees,
severally and not jointly, that it shall remain through and including the
redemption of the Units pursuant to the terms hereof (i) the "holder" (as such
term is used in Section 10(b) and Section 10(c) of the Thirteenth Amendment) of
the number of Units set forth beside its respective name on EXHIBIT A hereto and
(ii) the only person or entity entitled to receive any notices from the Company
or BPOP concerning, or any payments to be made by the Company or BPOP with
respect to, such Units pursuant to the Thirteenth Amendment.

SECTION 7.        MISCELLANEOUS.

         7.1.     AMENDMENT. This Agreement may be amended only by a written
instrument executed by all of the parties hereto.

         7.2.     SEVERABILITY. Any provision of this Agreement which is found
to be prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any

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                                                                               7

such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.

         7.3.     GOVERNING LAW. This Agreement shall be deemed to be a contract
under the laws of the State of Delaware and shall be construed and endorsed in
accordance with such laws, without regard to the doctrine of conflicts of laws.

         7.4.     CAPTIONS. The captions in this Agreement are for convenience
of reference only and shall not define or limit the provisions hereof.

         7.5.     COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original but all of which together shall constitute one and the same instrument.

         7.6.     ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns. This Agreement shall not be
assigned by any party hereto without the prior written consent of the other
parties.

         7.7.     CONSENT TO JURISDICTION. Each party hereto hereby irrevocably
and unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the State of Delaware, and any Appellate Court from any
thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
Delaware State, or, to the extent permitted by law, in such federal, court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right that any party hereto may otherwise have to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction.

         7.8.     SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the redemption of the Units.

         7.9.     SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, including, without
limitation, specific performance to enforce this Agreement, in addition to any
other remedy at law or equity. The parties further agree to waive any
requirement for the posting of any bond in connection with any such remedy.

         7.10.    TERMINATION. This Agreement shall terminate and have no
further force and effect if the Redemption Date and the payment of the amounts
provided for in Section 1.1 hereof do not occur on or prior to April 13, 2001.

<PAGE>

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

                                     BURNHAM PACIFIC PROPERTIES, INC.

                                     By:          /s/ Scott C. Verges
                                          --------------------------------------
                                           Name:       Scott C. Verges
                                           Title:      Chief Executive Officer

                                     BURNHAM PACIFIC OPERATING
                                     PARTNERSHIP, L.P.

                                     By:      Burnham Pacific Properties, Inc.
                                     Its:     General Partner

                                     By:          /s/ Scott C. Verges
                                          --------------------------------------
                                           Name:       Scott C. Verges
                                           Title:      Chief Executive Officer

<PAGE>

                                     MJL ASSOCIATES, a California Limited
                                     Partnership

                                     By:     MJL Investments, Inc., a California
                                             corporation, as General Partner

                                     By:        /s/ John S. Long
                                          --------------------------------------
                                           Name:       John S. Long
                                           Title:      President

                                     /s/ Eugene S. Rosenfeld
                                     -------------------------------------------
                                     EUGENE S. ROSENFELD

                                     /s/ Steven A. Berlinger
                                     -------------------------------------------
                                     STEVEN A. BERLINGER

                                     JACK & CONNIE MAHONEY FAMILY TRUST
                                     dated February 2, 1999

                                     By: /s/ Jack L. Mahoney
                                         ---------------------------------------
                                         Jack L. Mahoney, Trustee

                                     /s/ Sherri F. Cassidy
                                     -------------------------------------------
                                     Sherri F. Cassidy

                                     SAB ASSOCIATES, a California Limited
                                     Partnership

                                     By:     SAB Investments, Inc., a California
                                             corporation, as general partner

                                     By:  /s/ Steven A. Berlinger
                                          --------------------------------------
                                           Name:       Steven A. Berlinger
                                           Title:      President

<PAGE>

                                    EXHIBIT A

                                 UNIT OWNERSHIP

           NAME OF SELLING UNITHOLDER                            NUMBER OF UNITS
           --------------------------                            ---------------

MJL Associates, A California Limited Partnership                     142,745

SAB Associates, A California Limited Partnership                      48,366

Eugene S. Rosenfeld                                                  102,763

Steven A. Berlinger                                                   47,581

Jack and Connie Mahoney Family Trust                                  51,084

Sherri F. Cassidy                                                      7,461
                                                                     -------
---------------
         TOTAL                                                       400,000
                                                                     =======

<PAGE>

                                    EXHIBIT B

CONTRIBUTORS:

HPBA - Benicia Associates, L.L.C.
HPBA - Madera Associates, L.L.C.
HPBA - Castro Associates, L.L.C.
HPBA - Redondo Beach Associates, L.L.C.
HPBA - Suisun Associates, L.L.C.
HPBA - Durate Associates, L.L.C.
HPBA - Sacramento Associates, L.L.C.
HPBA - Westminster Associates, L.L.C.
HPBA II - AC Sacramento Associates, L.L.C.
HPBA II - Bell Gardens Associates, L.L.C.
HPBA II - Bellflower Associates, L.L.C.
HPBA II - Fremont Associates, L.L.C.
HPBA II - Menifee Associates, L.L.C.
HPBA II - Placerville Associates, L.L.C.
HPBA II - San Jose Associates, L.L.C.
HPBA II - San Marcos Associates, L.L.C.
HPBA II - Santa Rosa Associates, L.L.C.
HPBA II - Shasta Associates, L.L.C.
HPBA II - SHP Sacramento Associates, L.L.C.
HPBA II - Vacaville Associates, L.L.C.

Each of the foregoing was a Delaware limited liability company.<PAGE>

                                                                    EXHIBIT 10.6

                        BURNHAM PACIFIC PROPERTIES, INC.

                          EXECUTIVE RETENTION AGREEMENT

         AGREEMENT made as of this 9th day of April, 2001 (the "Effective
Date"), by and among Burnham Pacific Properties, Inc., a Maryland corporation
with its principal place of business in San Diego, California (the
"Corporation"), and together with its subsidiaries (the "Employers"), and Scott
C. Verges of Berkeley, California (the "Executive"), an individual presently
providing services to the Corporation as its Chief Executive Officer and
President.

         WHEREAS the Employers are in the process of selling their assets
pursuant to the Corporation's Plan of Complete Liquidation and Dissolution (the
"Plan of Liquidation") and the Board of Directors of the Corporation believes
that the retention of the Executive is in the best interests of the Corporation
during such process;

         WHEREAS the Corporation and the Executive are parties to that certain
Senior Executive Severance Agreement dated as of June 30, 1999, as amended (the
"Severance Agreement");

         WHEREAS in order to encourage the Executive to continue his employment
with the Corporation and to exert his best efforts toward the completion of the
liquidation of the Corporation, the Corporation desires to terminate the
Severance Agreement and provide the Executive with benefits described in this
Agreement; and

         WHEREAS the Executive has agreed to terminate the Severance Agreement
pursuant to the terms and conditions hereinafter set forth.

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

         1.       RETENTION BENEFITS.

                  (a)      The Corporation agrees to loan to the Executive (i)
         on April 11, 2001, an amount equal to $800,000 in cash and (ii)
         $400,000 in cash on each of September 15, 2001 and December 15, 2001
         or, if earlier, upon the Termination Date (collectively, the "Loans"),
         provided, however, that the Corporation shall have no obligation to
         make any such Loan on any such date if prior thereto (1) the Executive
         terminates his employment with the Employers other than (x) for Good
         Reason or (y) by reason of death or disability (within the meaning of
         the Employers' long-term disability coverage as in existence as of the
         Effective Date) ("Disability") or (2) the Executive's employment is
         terminated by the Employers for Cause (any such termination described
         in (1) and (2), a "Voluntary Termination"). The Loans shall be
         evidenced by promissory notes in the form of Promissory Note attached
         hereto as EXHIBIT A. The Loans shall be payable in full within five (5)
         days after the Executive's employment with the Employers terminates if
         it terminates prior to the Termination Date pursuant to a Voluntary
         Termination. The

<PAGE>

         Loans will be automatically forgiven when and if (i) the Executive
         remains employed by any of the Employers until the Termination Date,
         (ii) the Executive terminates his employment with the Employers for
         Good Reason or by reason of death or Disability prior to the
         Termination Date or (iii) the Executive's employment is terminated by
         the Employers other than for Cause prior to the Termination Date (any
         such termination described in (ii) and (iii), an "Involuntary
         Termination").

                  (b)      The Employers agree to use their reasonable best
         efforts to obtain a ruling or similar advice from the Internal Revenue
         Service ("IRS Advice") to the effect that the payments provided for
         hereunder would not be deemed to be "parachute payments" within the
         meaning of Section 280G(b)(2) of the Internal Revenue Code of 1986, as
         amended (the "Code") or would otherwise not be subject to the excise
         tax imposed by Section 4999 of the Code (such excise tax is hereinafter
         referred to as the "Excise Tax"). In addition, the Employers and the
         Executive agree to use their reasonable best efforts to develop an
         alternative by January 15, 2002 which will provide the Employers and
         the Executive with substantially the same comfort which would be
         provided by IRS Advice. For this purpose, the Employers and the
         Executive agree that an opinion of counsel or a determination made by
         Deloitte & Touche LLP or other accounting firm will not be deemed to
         provide comfort which is substantially equivalent to that which would
         be provided by IRS Advice. If neither IRS Advice nor other alternative
         providing substantially the same comfort is received by January 15,
         2002, and the Executive remains employed by the Employers through the
         Termination Date or the Executive's employment with the Employers
         terminates prior thereto pursuant to an Involuntary Termination, the
         Corporation agrees to pay to the Executive an amount (the "Gross-Up
         Payment") determined in accordance with (i) and (ii) below in cash
         within twenty business days of the Termination Date, which amount is
         currently estimated by Deloitte & Touche LLP to be $794,000 if the
         Termination Date were to occur prior to January 1, 2002.

                  (i)      The Gross-Up Payment shall be equal to the amount
                           which must be paid to the Executive such that the net
                           amount retained by the Executive pursuant to Section
                           1(a) of this Agreement and received pursuant to
                           Section 2(a) of this Agreement, after deduction of
                           any (A) Excise Tax on any payments by the Employers
                           to or for the benefit of the Executive pursuant to
                           the terms of this Agreement (the "Retention
                           Payments"), and (B) Federal, state, and local income
                           tax, employment tax and Excise Tax upon the payment
                           provided by this subsection (b), but not after the
                           deduction of any other taxes or amounts) shall be
                           equal to the Retention Payments less the amount of
                           the Gross-Up Payment. (The Gross-Up Payment is not
                           intended to compensate the Executive for any income
                           taxes or employment taxes payable with respect to the
                           Retention Payments other than those income taxes and
                           employment taxes payable with respect to the Gross-Up
                           Payment itself.)

                  (ii)     The amount of the Gross-Up Payment shall be
                           determined by Deloitte & Touche LLP or any other
                           nationally recognized accounting firm selected

                                       2
<PAGE>

                           by the Employers, which shall provide detailed
                           supporting calculations both to the Employers and the
                           Executive within fifteen business days of the
                           Termination Date, or at such earlier time as is
                           reasonably requested by the Employers or the
                           Executive. For purposes of determining the amount of
                           the Gross-Up Payment, the Executive shall be deemed
                           to pay federal income taxes at the highest marginal
                           rate of federal income taxation applicable to
                           individuals for the calendar year in which the
                           Gross-Up Payment is to be made, and state and local
                           income taxes at the highest marginal rates of
                           individual taxation in the state and locality of the
                           Executive's residence on the Termination Date, net of
                           the maximum reduction in federal income taxes which
                           could be obtained from deduction of such state and
                           local taxes.

                  (iii)    For purposes of this subsection (b), Deloitte &
                           Touche LLP (or such other accounting firm determining
                           the amount of the Gross-Up Payment pursuant to (b)(i)
                           above) shall assume that the Retention Payments are
                           subject to Excise Tax.

                  (c)      "Termination Date" shall mean the earliest of (i) the
         conveyance of the Employers' assets and liabilities into a liquidating
         trust, (ii) the sale of all of the Employers' real estate assets or all
         of the outstanding securities of the Corporation (whether by merger or
         otherwise), or (iii) January 15, 2002.

                  (d)      "Cause" shall mean, and shall be limited to, the
         occurrence of any one or more of the following events:

                           (i)      a willful act of dishonesty by the Executive
                                    with respect to any matter involving any of
                                    the Employers; or

                           (ii)     conviction of the Executive of a crime
                                    involving moral turpitude; or

                           (iii)    the deliberate or willful failure by the
                                    Executive (other than by reason of the
                                    Executive's physical or mental illness,
                                    incapacity or Disability) to substantially
                                    perform the Executive's duties with the
                                    Employers and the continuation of such
                                    failure for a period of 30 days after
                                    delivery by the Employers to the Executive
                                    of written notice specifying the scope and
                                    nature of such failure and their intention
                                    to terminate the Executive for Cause.

                  For purposes of clauses (i) and (iii) of this Section 1(d), no
         act, or failure to act, on the Executive's part shall be deemed
         "willful" unless done, or omitted to be done, by the Executive without
         reasonable belief that the Executive's act, or failure to act, was in
         the best interest of the Employers;

                  (e)      "Good Reason" shall mean the occurrence of either of
         the following events:

                                       3
<PAGE>

                  (i)      A material adverse change in the nature or scope of
                           the Executive's duties from the duties exercised by
                           the Executive upon the Effective Date, provided,
                           however, that any change in the Executive's duties
                           resulting from asset sales or other transactions
                           contemplated by the Plan of Liquidation, or the
                           liquidation of the Corporation itself shall not be
                           deemed to be a material adverse change for this
                           purpose; or

                  (ii)     a reduction in the rate of annual compensation
                           received by the Executive for his services as
                           President and Chief Executive Officer of the
                           Corporation as in effect on the Effective Date or as
                           the same may be increased from time to time; or

                  (iii)    the termination by the Employers of the employment of
                           the Executive's administrative assistant without the
                           consent of the Executive; or

                  (iv)     a change by the Employers in the location of the
                           Executive's Employer-provided office space without
                           the consent of the Executive.

                  (f)      For purposes of this Agreement, the Executive shall
         be deemed to be employed by the Employers if he is an employee of any
         of the Employers or if he is providing services pursuant to that
         certain Consultant Leasing Agreement between Burnham Pacific Operating
         Partnership, L.P. and Mandel, Buder and Verges and any fees paid to the
         Executive pursuant thereto shall be deemed to have been paid by the
         Employers.

2.       SPECIAL TERMINATION PAYMENTS.

                  (a)      In the event the Executive remains employed by the
         Employers through the Termination Date or the Executive's employment
         with the Employers terminates pursuant to an Involuntary Termination,
         the Employers shall reimburse the Executive for the full cost of
         continuing the health, dental and/or life insurance coverage in effect
         for the Executive immediately prior to the Termination Date or date of
         Involuntary Termination, whichever is relevant, to the extent
         available, or any similar coverage obtained by the Executive, for up to
         thirty-six (36) months after the Termination Date or date of
         Involuntary Termination, whichever is relevant.

                  (b)      The Employers shall pay to the Executive all
         reasonable legal and mediation fees and expenses incurred by the
         Executive in obtaining or enforcing any right or benefit provided by
         this Agreement, except in cases involving frivolous or bad faith
         litigation initiated by the Executive.

         3.       TERMINATION OF SEVERANCE AGREEMENT, RELEASE AND LIQUIDATING
                  TRUST.

                  (a)      In consideration of the execution by the Corporation
         of this Agreement, the Executive and the Corporation hereby agree that
         the Severance Agreement is terminated in its entirety, shall have no
         further force and effect, and none of the parties

                                       4
<PAGE>

         thereto shall have any further rights or obligations thereunder, and
         the Executive hereby irrevocably and unconditionally releases and
         forever discharges the Employers, their officers, directors,
         shareholders, successors and assigns from any and all claims, demands,
         actions, controversies and causes of action that he may have relating
         to such payments or benefits.

                  (b)      Upon the request of the Corporation, the Executive
         agrees to serve at the sole discretion of the Corporation as
         liquidating trustee for any liquidation trust formed in connection with
         the liquidation of the Corporation and will perform all of the duties
         typically performed by such a trustee. The parties hereto shall
         negotiate in good faith to enter into a mutually acceptable agreement
         with respect to these and other terms concerning the Executive's
         serving as liquidating trustee prior to the Executive's serving as
         such. The Corporation and the Executive agree that if the Corporation
         exercises its option hereunder to have the Executive act as liquidating
         trustee, the agreement shall provide, among other things, that the
         Executive shall be paid monthly at the rate of $500 per hour spent
         performing such duties, plus expenses, provided that the Executive
         shall receive no less than $5,000 per month.

         4.       WITHHOLDING. All payments made by the Employers under this
Agreement shall be net of any tax or other amounts required to be withheld by
the Employers under applicable law.

         5.       NOTICE AND DATE OF TERMINATION; DISPUTES; ETC.

                  (a)      NOTICE OF TERMINATION. During the term of this
         Agreement, any purported termination of the Executive's services (other
         than by reason of death) shall be communicated by written Notice of
         Termination from one party hereto to the other party hereto in
         accordance with this Section 5. For purposes of this Agreement, a
         "Notice of Termination" shall mean a notice which shall indicate the
         specific termination provision in this Agreement relied upon and the
         Date of Termination (as defined below). Further, a Notice of
         Termination for Cause is required to include a copy of a resolution
         duly adopted by the affirmative vote of not less than two-thirds (2/3)
         of the entire membership of the Board at a meeting of the Board (after
         reasonable notice to the Executive and an opportunity for the
         Executive, accompanied by the Executive's counsel, to be heard before
         the Board) finding that, in the good faith opinion of the Board, the
         termination met the criteria for Cause set forth in Section 1(d)
         hereof.

                  (b)      DATE OF TERMINATION. "Date of Termination," with
         respect to any purported termination of the Executive's services during
         the term of this Agreement, shall mean the date specified in the Notice
         of Termination. In the case of a termination by the Employers other
         than a termination for Cause (which may be effective immediately), the
         Date of Termination shall not be less than 30 days after the Notice of
         Termination is given. In the case of a termination by the Executive,
         the Date of Termination shall not be less than 15 days from the date
         such Notice of Termination is given. Notwithstanding any other
         provision of this Agreement to the contrary, in the

                                       5
<PAGE>

         event that the Executive gives a Notice of Termination to the
         Employers, the Employers may unilaterally accelerate the Date of
         Termination.

                  (c)      NO MITIGATION. The Employers agree that, if the
         Executive's employment by the Employers is terminated during the term
         of this Agreement, the Executive is not required to seek other
         employment or to attempt in any way to reduce any amounts payable to
         the Executive by the Employers pursuant to Sections 1 and 2 hereof.
         Further, the amount of any payment provided for in this Agreement shall
         not be reduced by any compensation earned by the Executive as the
         result of employment by another employer, by retirement benefits, by
         offset against any amount claimed to be owed by the Executive to the
         Employers, or otherwise.

                  (d)      MEDIATION OF DISPUTES. The parties shall endeavor in
         good faith to settle within 90 days any controversy or claim arising
         out of or relating to this Agreement or the breach thereof through
         mediation with JAMS, Endispute or similar organizations. If the
         controversy or claim is not resolved within 90 days, the parties shall
         be free to pursue other legal remedies in law or equity.

         6.       ASSIGNMENT; PRIOR AGREEMENTS. Neither the Employers nor the
Executive may make any assignment of this Agreement or any interest herein, by
operation of law or otherwise, without the prior written consent of the other
party, and without such consent any attempted transfer shall be null and void
and of no effect. This Agreement shall inure to the benefit of and be binding
upon the Employers and the Executive, their respective successors, executors,
administrators, heirs and permitted assigns. In the event of the Executive's
death after becoming entitled to any payments provided for under Sections 1 and
2 of this Agreement but prior to the completion by the Employers of all payments
due him thereunder, the Employers shall continue such payments to the
Executive's beneficiary designated in writing to the Employers prior to his
death (or to his estate, if the Executive fails to make such designation).

         7.       ENFORCEABILITY. If any portion or provision of this Agreement
shall to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement, or the application of such
portion or provision in circumstances other than those as to which it is so
declared illegal or unenforceable, shall not be affected thereby, and each
portion and provision of this Agreement shall be valid and enforceable to the
fullest extent permitted by law.

         8.       WAIVER. No waiver of any provision hereof shall be effective
unless made in writing and signed by the waiving party. The failure of any party
to require the performance of any term or obligation of this Agreement, or the
waiver by any party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

         9.       NO CONTRACT OF EMPLOYMENT. Nothing in this Agreement shall be
construed as creating an express or implied contract of employment and, except
as otherwise agreed in

                                       6
<PAGE>

writing between the Executive and the Employers, the Executive shall not have
any right to be retained in the service of the Employers.

         10.      NOTICES. Any notices, requests, demands, and other
communications provided for by this Agreement shall be sufficient if in writing
and delivered in person or sent by registered or certified mail, postage
prepaid, to the Executive at the last address the Executive has filed in writing
with the Employers, or to the Employers at their main office, attention of the
Board of Directors.

         11.      EFFECT ON OTHER PLANS. Nothing in this Agreement shall be
construed to limit the rights of the Executive under the Employers' benefit
plans, programs or policies.

         12.      AMENDMENT. This Agreement may be amended or modified only by a
written instrument signed by the Executive and by a duly authorized
representative of the Employers.

         13.      GOVERNING LAW. This contract shall be construed under and be
governed in all respects by the laws of the State of California.

         14.      OBLIGATIONS OF SUCCESSORS. In addition to any obligations
imposed by law upon any successor to the Employers, the Employers will use their
best efforts to require any successor (whether direct or indirect, by purchase,
merger, consolidation or otherwise) to all or substantially all of the business
or assets of the Employers to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Employers would be
required to perform if no such succession had taken place.

         IN WITNESS WHEREOF, this Agreement has been executed as a sealed
instrument by the Employers by their duly authorized officers and by the
Executive, as of the date first above written.

                            BURNHAM PACIFIC PROPERTIES, INC.

                            By:      /s/ Philip Schlein
                               -------------------------------------------------
                                     Name:    Philip Schlein
                                     Title:   Chairman, Compensation Committee

                            /s/ Scott C. Verges
                            ----------------------------------------------------
                            Scott C. Verges

                                       7

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