Document:

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                                                                   Exhibit 10.4

                         NONCOMPETITION AGREEMENT

         This Noncompetition Agreement (the "AGREEMENT") is made and entered
into as of ___________, 2002, by and between Washington Trust Bancorp, Inc.
(the "COMPANY") and Patrick J. Shanahan, Jr. (the "EXECUTIVE").

                                   WITNESSETH:

         WHEREAS, the Company and First Financial Corp., (the "SELLER") have
entered into an Agreement and Plan of Merger dated as of November 12, 2001
(the "MERGER AGREEMENT") pursuant to which Seller will merge with and into
Buyer (the "MERGER");

         WHEREAS, the Executive is currently the Chairman, Chief Executive
Officer and President of the Seller and the parties acknowledge that the
Executive has considerable knowledge, business contacts and expertise
relating to the business of the Company, which knowledge, contacts and
expertise, if used in competition with the Company would substantially harm
the business and financial prospects of the Company;

         WHEREAS, the execution of this Agreement is a condition precedent to
the Company's obligations to consummate the Merger

         NOW, THEREFORE, in consideration of the mutual covenants set forth
herein and other good valuable consideration, the parties hereto agree as
follows:

         1.       AGREEMENT CONSIDERATION

         In consideration for execution of this Agreement and the Executive's
performance of the covenants of the Executive contained herein, the Company
agrees to pay to the Executive $840,000.00 within two (2) business days
following consummation of the Merger. It is understood and agreed that the
execution and delivery of this Agreement by the Executive is a material
inducement to the willingness of the Company to enter into the Merger Agreement
and to consummate the transactions contemplated thereby.

         2.       NON-COMPETE

         The Executive agrees that during the three-year period following
consummation of the Merger, the Executive will not, directly or indirectly, (i)
become a director, officer, employee, principal, agent, consultant or
independent contractor of any insured depository institution, trust company or
parent holding company of any such institution or company which has an office in
Rhode Island, Massachusetts or Connecticut (a "COMPETING BUSINESS"); PROVIDED,
HOWEVER, that this provision shall not prohibit the Executive from owning bonds,
non-voting preferred stock or up to two percent (2%) of the outstanding common
stock of any such entity if such common stock is publicly traded; PROVIDED,
FURTHER, HOWEVER, that this provision shall not prohibit the Executive from
owning the common stock or from serving as a director of the Company or any of
its subsidiaries, (ii) solicit or induce, or cause others to solicit or induce,
any employee of the Company or any of its subsidiaries to leave the employment
of such entities or (iii) solicit (whether by mail, telephone, personal meeting
or any other means) any customer of the

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Company or any of its subsidiaries to transact banking business with any other
entity, whether or not a Competing Business, or to reduce or refrain from doing
any banking business with the Company or its subsidiaries, or interfere with or
damage (or attempt to interfere with or damage) any banking relationship between
the Company or its subsidiaries and any such customers.

         3.       CONFIDENTIALITY

         Except as required by law or regulation (including without limitation
in connection with any judicial or administrative process or proceeding), the
Executive shall keep secret and confidential and shall not disclose to any third
party (other than the Company or its subsidiaries) in any fashion or for any
purpose whatsoever any information regarding the Company, Seller or any of their
respective subsidiaries, which is not available to the general public to which
he had access at any time during the course of his employment by Seller or its
subsidiaries, including without limitation, any such information relating to:
business or operations, plans, strategies, prospects or objectives; products,
technology, processes or specifications; research and development, operations or
plans; customers and customer lists; distribution, sales, service, support and
marketing practices and operations; financial condition, results of operations
and prospects; operational strengths and weaknesses; and personnel and
compensation policies and procedures.

         4.       INJUNCTIVE RELIEF; REMEDIES

         The Executive agrees that damages at law will be an insufficient remedy
to the Company in the event that the Executive violates any of the provisions of
Sections 2 or 3, and that the Company may apply for and, upon the requisite
showing, have injunctive relief in any court of competent jurisdiction to
restrain the breach of threatened or attempted breach of or otherwise to
specifically enforce any of the covenants contained in Section 2 or 3. The
Executive also agrees that such remedies shall be in addition to any and all
remedies, including damages, available to the Company against the Executive for
such breaches or threatened or attempted breaches.

         5.       RELEASE

         (a) For, and in consideration of the commitments made herein by the
Company, the Executive, for himself and for his heirs, successors and assigns,
does hereby release completely and forever discharge the Company and its
subsidiaries, affiliates, stockholders, attorneys officers, directors, agents
and employees, successors and assigns, and any other party associated with the
Company (the "RELEASED PARTIES"), to the fullest extent permitted by applicable
law, from any and all claims, rights, demands, actions, liabilities,
obligations, causes of action of any and all kind, nature and character
whatsoever, know or unknown, in any way connected with his employment by Seller
or any of its subsidiaries (including in each case predecessors thereof) either
as a director, officer or employee, or in connection with the termination of
such employment. Notwithstanding the foregoing, the Executive does not release
the Company from any obligations of the Company, Seller or any of their
respective subsidiaries to the Executive under (i) any employee benefit plan,
agreement or arrangement of Seller or the Company or any of their respective
subsidiaries, whether or not referred to in this Agreement, pursuant to which
the Executive is entitled to any benefits or payments, (ii) the Merger Agreement
and (iii) this Agreement.

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         (b) For and in consideration of the commitments made herein by the
Executive, including without limitation the releases in paragraph (a) above, the
Company, for itself, and for its successors and assigns does hereby release
completely and forever discharge the Executive and his heirs, successors and
assigns, to the fullest extent permitted by applicable law, from any and all
claims, rights, demands, actions, liabilities, obligations, causes of action of
any and all kind, nature and character whatsoever, known or unknown, in any way
connected with the Executive's employment by Seller or any of its subsidiaries
(including predecessors thereof), either as a director, officer or employee.
Notwithstanding anything in the foregoing to the contrary, the Company does not
release the Executive from claims arising out of any breach by the Executive of
(i) any law or regulation by the Executive during the term of and related to his
employment by Seller or any of its subsidiaries (including predecessors
thereof), either as a director, officer or employee, or (ii) this Agreement.

         6.       NO DISPARAGEMENT.

         The Executive agrees that he shall not, directly or indirectly, make
any statement (whether orally, in writing or through any other media), or take
any other action, if such statement, or action is intended or could reasonably
be expected to disparage the Company, or any of its affiliates or to adversely
affect the reputation or business or credit standing of the Company or any of
its affiliates.

         7.       REPRESENTATIONS AND WARRANTIES

         The Company and the Executive represent and warrant to each other that
they have carefully read this Agreement and consulted with respect thereto with
their respective counsel and that each of them fully understands the content of
this Agreement and its legal effect. Each party hereto also represents and
warrants that this Agreement is a legal, valid and binding obligation of such
party which is enforceable against it in accordance with its terms.

         8.       SUCCESSORS AND ASSIGNS

         This Agreement will inure to the benefit of and be binding upon the
Executive and his heirs, successors and assigns, and upon the Company, including
any successor to the Company by merger or consolidation or any other change in
form or any other person or firm or corporation to which all or substantially
all of the assets and business of the Company may be sold or otherwise
transferred. This Agreement may not be assigned by any party hereto without the
consent of the other party.

         9.       NOTICES

         All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (with confirmation),
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):

         if to the Company, to:

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                           Washington Trust Bancorp, Inc.
                           23 Broad Street
                           Westerly, RI  02891
                           Attn:  John F. Treanor, President
                                 and John C. Warren, Chief Executive Officer

         with copies to:

                           Goodwin Procter LLP
                           Exchange Place
                           Boston, MA  02109-2881
                           Attn:  Paul W. Lee, P.C.
                                  and John T. Haggerty, Esq.
         and

         if to the Executive, to

                           Patrick J. Shanahan, Jr.
                           10 Celestia Court
                           North Kingstown, RI  02903

         with a copy to:

                           Bingham Dana LLP
                           150 Federal Street
                           Boston, MA  02110
                           Attn:  Neal J. Curtin, Esq.
                                  and Stephen H. Faberman, Esq.

10.      WITHHOLDING

         The Company may withhold from any amounts payable under this Agreement
such Federal, state, local or foreign taxes as shall be required to be withheld
pursuant to any applicable law or regulation.

11.      ENTIRE AGREEMENT; SEVERABILITY

         (a) This Agreement incorporates the entire understanding between the
parties relating to the subject matter hereof, recites the sole consideration
for the promises exchanged and supersedes any and all prior agreements, both
written and oral, between the Company and the Executive or the Seller and the
Executive, in either case with respect to the subject hereof. In reaching this
Agreement, no party has relied upon any representation or promise except those
set forth herein.

         (b) Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of

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this Agreement or affecting the validity or enforceability of any of the terms
and provisions of this Agreement in any other jurisdiction. If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable. In all such cases, the
parties shall use their reasonable best efforts to substitute a valid, legal and
enforceable provision which, insofar as practicable, implements the original
purposes and intents of this Agreement.

         12.      WAIVER

         Failure to insist upon strict compliance with any of the terms,
covenants or conditions hereof shall not be deemed a waiver of such term,
covenant or condition. A waiver of any provision of this Agreement must be made
in writing, designated as a waiver and signed by the party against whom its
enforcement is sought. Any waiver or relinquishment of any right or power
hereunder at any one or more times shall not be deemed a waiver or
relinquishment of such right or power at any other time or times.

         13.      COUNTERPARTS

         This Agreement may be executed in counterparts, all of which shall be
considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.

         14.      GOVERNING LAW

         This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Rhode Island applicable to agreements
made and entirely to be performed within the jurisdiction.

         15.      HEADINGS

         The headings of sections in this Agreement are for convenience of
reference only and are not intended to qualify the meaning of any section. Any
reference to a section number shall refer to a section of this Agreement, unless
otherwise stated.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

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         IN WITNESS WHEREOF, the Company and the Executive have caused this
Agreement to be executed as of the date first above written.

                                    WASHINGTON TRUST BANCORP, INC.

                                    -------------------------------------
                                    By:
                                    Title:

                                    EXECUTIVE:

                                    -------------------------------------
                                    Patrick J. Shanahan, Jr.

                                    NONCOMPETITION AGREEMENT<Page>

                         AGREEMENT FOR PURCHASE AND SALE

                                 AUGUST 29, 2001

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                                TABLE OF CONTENTS

<Table>
<Caption>

ARTICLE                                                                   PAGE

<S>                                                                       <C>
ARTICLE 1  BASIC DEFINITIONS.................................................1

ARTICLE 2  PURCHASE..........................................................4

ARTICLE 3  CONDITIONS PRECEDENT.............................................11

ARTICLE 4  COVENANTS, WARRANTIES AND REPRESENTATIONS........................16

ARTICLE 5  DEPOSIT; DEFAULT.................................................24

ARTICLE 6  CLOSING..........................................................27

ARTICLE 7  MISCELLANEOUS....................................................36

</Table>

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                                List of Exhibits
<Table>

<S>                   <C>
Exhibit A --          List of Properties and Seller Subsidiary Owning Interest
Exhibit B --          Disclosure Materials List & Statement
Exhibit C-1 --        Rent Roll (June 28, 2001)
Exhibit C-2 --        Security Deposits
Exhibit D --          Transfer Documents
Exhibit E --          Litigation/Condemnation/Building Code/Zoning
Exhibit F --          Description of Ground Leases
Exhibit G --          Closing Cost Customs
Exhibit H --          RESERVED
Exhibit I --          Excluded Claims
Exhibit J --          Preliminary Title Reports and Title Policies
Exhibit K --          RESERVED
Exhibit L --          Certified Copy of Resolutions of the Board of Directors of Seller
Exhibit M --          RESERVED
Exhibit N --          Certain Contracts
Exhibit O --          Allocation of Buyer's Liquidated Damage
Exhibit P --          Description of Assumed Indebtedness
Exhibit Q             Allocation of Purchase Price
Exhibit R             Allocation of Deposit
Exhibit S             Rights of First Refusal

</Table>

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                         AGREEMENT FOR PURCHASE AND SALE

         THIS AGREEMENT FOR PURCHASE AND SALE is made and entered into as of
August 29, 2001, by and between BURNHAM PACIFIC PROPERTIES, INC., a Maryland
corporation ("Seller"), and PACIFIC RETAIL, L.P., a Delaware limited partnership
("Buyer"). This Agreement shall be effective on the "Effective Date", which is
the date on which the last person signing this Agreement shall have signed this
Agreement.

                                    RECITALS

         A.       Seller, through various subsidiary companies identified on
EXHIBIT A attached to this Agreement, ("Seller's Subsidiaries") is the owner of
a feehold or leasehold interest in certain shopping center properties or the
owner of an equity interest in the limited liability company holding the feehold
interest in certain shopping centers listed on EXHIBIT A attached to this
Agreement and defined below with greater specificity as the "Properties."

         B.       Buyer desires to acquire from Seller and the Seller's
Subsidiaries and Seller desires to sell and cause Seller's Subsidiaries to
convey, assign and transfer, subject to the terms and conditions contained in
this Agreement, the entirety of the interest of Seller and Seller's Subsidiaries
in the Properties.

         C.       Whenever the phrase "Seller agrees to sell the Properties,"
"Seller's obligation to sell the Properties," "the sale of the Properties," or
similar references to the sale of the Properties is used in this Agreement, it
shall mean the sale of the applicable interest in the Property or the applicable
ownership interest in the entity holding fee title to the Property by the
applicable Seller's Subsidiary which is the owner of such interest.

                                    AGREEMENT

         NOW, THEREFORE, Buyer and Seller do hereby agree as follows:

                                    ARTICLE 1
                                BASIC DEFINITIONS

         "Assumed Indebtedness" shall mean the indebtedness described on EXHIBIT
P, attached hereto, applicable to one or more of the Properties, as the context
may require.

         "Closing" shall mean the consummation of a sales transaction for one or
more of the Properties or the consummation of all of the sales transactions for
all of the Properties, as the context may require, as evidenced by the delivery
of all required funds and documents to Title Company for each of the sales
transactions..

                                     Page 1
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         "Closing Date" shall mean October 31, 2001, subject to Seller's right
to extend the Closing Date as provided in Sections 2.7(a), 3.2(b) and 3.2(c) and
Buyer's right to extend the Closing Date as provided in Section 3.2(c) and
Section 6.1.

         "Contract Period" shall mean the period from the Effective Date through
and including the Closing Date (or any earlier termination of this Agreement).

         "Contracts" shall mean all maintenance, service and other operating
contracts, equipment leases and other arrangements or agreements to which Seller
is a party affecting the ownership, repair, maintenance, management, leasing or
operation of the Properties.

         "Disclosure Materials" shall mean those materials described in EXHIBIT
B, the Disclosure Materials List & Statement, to which Buyer has been afforded
access and review rights prior to entering into to this Agreement.

         "Disclosure Materials List & Statement" shall mean the statement set
forth as EXHIBIT B to this Agreement.

         "Ground Leases" shall mean those certain ground leases for the
Properties (or a portion thereof) commonly known as Bell Gardens Marketplace,
Mission Plaza, Fremont Hub, Marin Gateway, Ernst-Brickyard and Ernst-James
Creek, all as more fully described in EXHIBIT F.

         "Hazardous Materials" means any chemical, compound, pollutant material,
substance or other matter that: (a) is defined as a hazardous substance,
hazardous material, hazardous waste or toxic substance under any Hazardous
Materials Law, (b) is controlled or governed by any Hazardous Materials Law, (c)
actually or potentially gives rise to any remediation, permitting, licensing,
reporting, notice or publication requirement on the part of any party hereto,
(d) actually or potentially gives rise to any liability, responsibility or duty
on the part of any party hereto with respect to any third person or governmental
agency, (e) is asbestos or an asbestos-containing material, or (f) is flammable
or explosive material, oil, petroleum product, urea formaldehyde, radioactive
material, or nuclear medicine material.

         "Hazardous Materials Laws" means any and all federal, state or local
laws, ordinances, rules, decrees, orders, regulations or court decisions
(including the so-called "common law") relating to Hazardous Materials,
environmental conditions on, under or about the Property, soil and ground water
conditions or other similar substances or conditions, including without
limitation the Comprehensive Environmental Response Compensation and Liability
Act of 1980, the Superfund Amendments and Reauthorization Act of 1986, the
Federal Clean Air Act, the Federal Water Pollution Control Act, the Resource
Conservation and Recovery Act, the Hazardous Materials Transportation Act, The
Clean Water Act, the Toxic Substance Control Act, California Health and Public
Safety Code Section 25117, Sections 6680 through 6685 of Title 22 of the
California Administrative Code, Division 4, Chapter 30, any amendments to any of
the foregoing, and all rules and regulations promulgated under any of the
foregoing, and any similar federal, state or local laws, ordinances, rules,
decrees, orders or regulations.

         "Improvements" shall mean, as to each of the properties listed on
EXHIBIT A, any and all structures, buildings, facilities, parking areas or other
improvements situated on such Property's

                                     Page 2
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Land and all related fixtures, improvements, building systems and equipment
(including, without limitation, HVAC, security and life safety systems).

         "Intangible Property" shall mean, as to each Real Property: (a) any and
all permits, entitlements, filings, building plans, specifications and working
drawings, certificates of occupancy, operating permits, sign permits,
development rights and approvals, certificates, licenses, warranties and
guarantees, engineering, soils, pest control, survey, environmental, appraisal,
market and other reports relating to such Real Property and associated Personal
Property; (b) all trade names, service marks, tenant lists, advertising
materials and telephone exchange numbers identified with such Real Property; (c)
the Contracts and the Leases; (d) except as set forth on EXHIBIT I attached
hereto (the "Excluded Claims"), claims, awards, actions, remedial rights and
judgments, and escrow accounts relating to environmental remediation, to the
extent relating to such Real Property and associated Personal Property; (e) all
books, records, files and correspondence relating to such Real Property and
associated Personal Property; and (f) all other transferable intangible
property, miscellaneous rights, benefits or privileges of any kind or character
with respect to such Real Property and associated Personal Property, including,
without limitation, under any REAs, provided that the Intangible Property shall
not include any Seller's name or any right to the reference "BPP," "Burnham
Pacific," or "Burnham". Seller shall retain all right, title and interest in the
Excluded Claims.

         "Land" shall mean, as to each of the Properties listed on EXHIBIT A,
the land component of the property as described with precision in the Title
Policies.

         "Leases" shall mean, as to each Real Property, all leases, concession
agreements, rental agreements or other agreements (including all amendments or
modifications thereto) which entitle any person other than Seller to the
occupancy or use of any portion of the Real Property.

         "Lenders" shall mean the lenders described on EXHIBIT P, attached
hereto, applicable to those Properties encumbered by Assumed Indebtedness on one
or more of the Properties, as the context may require, as set forth on Exhibit
P.

         "Loan Documents" shall mean those documents described on EXHIBIT P
which evidence the Assumed Indebtedness.

         "Permitted Exceptions" shall mean the various matters affecting title
to the Properties that are approved or deemed approved by Buyer pursuant to
Section 2.5 below.

         "Personal Property" shall mean, as to each Real Property, all
furniture, furnishings, trade fixtures and other tangible personal property
directly or indirectly owned by the Seller that is located at and used in
connection with the operation of any Real Property.

         "Property" shall mean, with respect to each of the properties listed on
EXHIBIT A and legally described in Schedule A of the preliminary title reports
or title policies listed on EXHIBIT J, the Real Property, the Personal Property
and the Intangible Property. Collectively, such properties shall be referred to
as the "Properties."

         "Purchase Price" shall mean the aggregate purchase price payable by
Buyer to Seller for all of the Properties in the amount of One Hundred Fifty
Eight Million Four Hundred Seventy

                                     Page 3
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Thousand and 00/100 Dollars ($158,470,000.00) (U.S.) payable as provided in
Section 2.2. The Purchase Price is allocated among the Properties as set forth
on EXHIBIT Q. Whenever the term "Purchase Price" is used in this Agreement, it
shall mean the Purchase Price payable for the Property or Properties that are
the subject of the applicable Closing.

         "Real Property" shall mean, as to each property listed on EXHIBIT A and
legally described in Schedule A of the preliminary title reports or title
policies listed on EXHIBIT J, the Land, the Improvements and all the rights,
privileges, easements, and appurtenances to the Land or the Improvements,
including, without limitation, any air, development, water, hydrocarbon or
mineral rights, all licenses, easements, rights-of-way, claims, rights or
benefits, covenants, conditions and servitude and other appurtenances used or
connected with the beneficial use or enjoyment of the Land or the Improvements
and all rights or interests relating to any roads, alleys or parking areas
adjacent to or servicing the Land or the Improvements.

         "Rent Rolls" shall refer to the information schedules attached as
EXHIBIT C-1 to this Agreement pertaining to the Leases.

         "Title Company" shall mean Chicago Title Insurance Company at 2001
Bryan Street, Suite 1700, Dallas, Texas, 75201-3005, Attn: Konrad Kaltenbach
(Telephone: (214) 965-1681).

         "Title Policies" shall refer to Seller's existing title insurance
policies with respect to the Properties, complete copies of which have been or
will be made available by Seller to Buyer.

                                    ARTICLE 2
                                    PURCHASE

         SECTION 2.1 PURCHASE AND TRANSFER. Seller agrees to sell or cause
Seller's Subsidiaries to sell their respective interest in the Properties to
Buyer and Buyer agrees to purchase or cause to be purchased by an affiliate of
Buyer the interest of Seller and Seller's Subsidiaries in the Properties, upon
all of the terms, covenants and conditions set forth in this Agreement.

         SECTION 2.2 TERMS OF PAYMENT; ALLOCATION OF PURCHASE PRICE. Buyer shall
pay the Purchase Price to Seller in accordance with this Section 2.2.

                  (a)      On or before the Effective Date, and as a condition
precedent to the effectiveness of this Agreement, Buyer shall deliver to Seller
a cashier's check or make a bank wire transfer to Seller in the amount of Two
Million Five Hundred Thousand and 00/100 Dollars ($2,500,000.00) (the "Option
Payment"), as an earnest money deposit on account of the Purchase Price. On or
before October 15, 2001, Buyer shall deliver to Seller a cashier's check or make
a bank wire transfer to Seller in the amount of Two Million Five Hundred
Thousand and 00/100 Dollars ($2,500,000.00) (the "Additional Deposit"), as an
additional earnest money deposit on account of the Purchase Price. As used in
this Agreement, the term "Deposit" means the Option Payment, the Additional
Deposit and all amounts which, at the time in question, shall have been
deposited by Buyer. If any provision of this Agreement provides that any portion
of the Option Payment is returned to Buyer or deemed released to Seller then for
all purposes the term "Deposit" thereafter shall not be deemed to include such
amount.

                                     Page 4
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                  (b)      At each Closing, the Purchase Price to be paid by
Buyer to Seller for the Properties that are the subject of the Closing, shall be
the sum of the amounts allocated to such Properties on EXHIBIT Q, payable as
follows:

                           (i)      The portion of the Deposit allocated to such
Properties on EXHIBIT R shall be applied towards the Purchase Price and deemed
paid to Seller;

                           (ii)     Buyer shall assume the Assumed Indebtedness
applicable to such Properties, for which Buyer shall receive a credit towards
the Purchase Price in the amount of the principal balance and all accrued, but
unpaid interest, on such Assumed Indebtedness outstanding as of the Closing
Date; and

                           (iii)    the balance of the Purchase Price, subject
to adjustments, credits and reductions as provided in this Agreement, is to be
paid in cash, to be deposited with Title Company and paid to Seller at the
Closing.

         SECTION 2.3 DEPOSIT.

                  (a)      Seller shall hold and apply the Deposit in accordance
with the terms and provisions of this Agreement. Seller shall deposit the
Deposit in an interest-bearing account similar to accounts in which Seller makes
similar deposits in the ordinary course of its business. Interest earned on the
portion of the Deposit allocated to a specific Property shall be applied to the
Purchase Price allocated to such Property at Closing. Interest earned on the
portion of the Deposit allocated to a specific Property for which this Agreement
is terminated shall not be credited or returned to Buyer, except in the case
such termination is due to a default by Seller or due to the exercise by Seller
of its rights under Section 2.7(b).

         SECTION 2.4 BUYER'S SATISFACTION OF ITS REVIEW AND INSPECTION; SELLER'S
DISCLAIMER.

                  (a)      As more fully described in Section 2.4(c) below,
Buyer acknowledges that Seller has previously delivered copies, or otherwise
made available to Buyer for Buyer's review at Seller's offices in San Diego,
California, and Buyer has reviewed and approved, all of the Disclosure
Materials. Buyer has assumed fully the obligation to completely and adequately
review and consider any or all of such materials. The Disclosure Materials shall
be made continuously available to Buyer at such location throughout the Contract
Period. Buyer shall not have a right to terminate this Agreement based on
Buyer's dissatisfaction with Disclosure Materials.

                  (b)      Following the Effective Date and for the remainder of
the Contract Period, but subject to the provisions of this Section 2.4, Seller
shall permit Buyer, and Buyer's representatives, continued access to the
Properties, and to tenants, parties to REAs, parties to options and rights of
first refusal, Lenders, and parties to management agreements and Contracts, for
Buyer's further investigation of the Properties; provided, however that such
continued access and investigation shall have no effect on the satisfaction of
Buyer with its investigation of the Properties and the Disclosure Materials.
Buyer's exercise of its continued right of access shall be subject to the
following limitations: (i) any entry onto any Property by Buyer, its agents or
representatives, shall be during normal business hours, following not less than
24 hours' prior

                                     Page 5
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notice to Seller (which notice may be by telephone, facsimile or email) and, at
Seller's discretion, if Seller so requests, accompanied by a representative of
Seller; (ii) Buyer shall not conduct any invasive or destructive physical
diligence or inspections of the Properties including, without limitation,
drilling, test borings or other disturbance of any Property for review of soils,
compaction, environmental, structural or other conditions, without Seller's
prior written consent (which may be withheld in Seller's sole and absolute
discretion) provided that Seller shall respond in writing to Buyer's request for
permission to conduct any such diligence or inspections within two (2) business
days after Buyer's request; (iii) prior to any discussions or interviews with
any third party, any partner of Seller, any tenants of a Property or their
respective personnel; and prior to any discussions or interviews with employees
at any Property (which shall be limited to designated senior employees) or third
party property managers, Buyer shall offer Seller the opportunity to have a
representative present; (iv) Buyer shall not disturb the use or occupancy or the
conduct of business at any Property; and (v) Buyer shall indemnify, defend and
hold Seller harmless from all loss, cost, and expense relating to personal
injury or property damage resulting from any entry by Buyer, its agents or
representatives; provided however that Buyer's indemnity shall not include
liability for the mere discovery of any condition already existing on the
Properties and not the result of Buyer's activities.

                  (c)      Buyer acknowledges that Seller has afforded Buyer and
its agents and representatives an opportunity to conduct such appraisals and
investigations of the Properties including, without limitation, investigations
with respect to the physical, environmental, economic and legal condition of the
Properties, prior to the Effective Date and the Buyer has completed all such
investigations to its satisfaction. Except in the case of fraud by Seller, Buyer
assumes the full risk that Buyer has failed completely and adequately to cause
such inspections and consider any and all results of such inspections. Buyer
acknowledges (i) that Buyer has entered into this Agreement with the intention
of making and relying upon its own investigation of the physical, environmental,
economic and legal condition of the Properties and the warranties and
representations of Seller as set forth in Article 4 hereof, (ii) that, other
than those specifically set forth in Article 4 below or in any document to be
delivered pursuant to Section 6.1, Seller is not making and has not at any time
made any warranty or representation of any kind, expressed or implied, with
respect to the Properties, including, without limitation, warranties or
representations as to habitability, merchantability, fitness for a particular
purpose, title (other than those specifically set forth in Article 4 below and
other than Seller's limited warranty of title set forth in the Deeds), zoning,
tax consequences, latent or patent physical or environmental condition,
utilities, operating history or projections, valuation, projections, compliance
with law or the truth, accuracy or completeness of the Disclosure Materials,
(iii) that other than those specifically set forth in Article 4 below or in any
document to be delivered pursuant to Section 6.1, Buyer is not relying upon and
is not entitled to rely upon any representations and warranties made by Seller
or anyone acting or claiming to act on Seller's behalf, (iv) that the Disclosure
Materials include soils, environmental and/or physical reports prepared for
Seller by third parties as to which Buyer has no right of reliance (provided,
however, that nothing herein shall be deemed to have limited Buyer's right to
seek to obtain from the third parties which prepared such reports the right to
rely on such reports at no cost to Seller or to conduct Buyer's own independent
evaluation of the Properties with respect to the matters covered in such
reports), and (v) that the Disclosure Materials may include economic projections
which reflect assumptions as to future market status and future Property income
and expense with respect to the Properties which are inherently uncertain and as
to which Seller has not made any guaranty or

                                     Page 6
<Page>

representation whatsoever. With respect to the soils, environmental and/or
physical reports prepared for Seller by third parties, Buyer acknowledges that
Seller has made no representation whatsoever as to accuracy, completeness or
adequacy thereof. Buyer further acknowledges that it has not received from
Seller any accounting, tax, legal, architectural, engineering, property
management or other advice with respect to this transaction and is relying
solely upon the advice of its own accounting, tax, legal, architectural,
engineering, property management and other advisors. Except as provided in the
representations and warranties of Seller set forth in Article 4 below and except
as otherwise expressly set forth in this Agreement or in any document to be
delivered pursuant to Section 6.1, based upon Buyer's familiarity with and due
diligence conducted by Buyer relating to the Properties and pertinent knowledge
as to the markets in which the Properties are situated and in direct
consideration of Seller's decision to sell the Properties to Buyer for the
Purchase Price, and not to pursue available disposition alternatives, Buyer
shall purchase the Properties in an "as is, where is and with all faults"
condition on the Closing Date and (except in the case of fraud by Seller )
assumes fully the risk that adverse latent or patent physical, environmental,
economic or legal conditions may not have been revealed by its investigations.
Seller and Buyer acknowledge that the compensation to be paid to Seller for the
Properties has taken into account that the Properties are being sold subject to
the provisions of this Section 2.4. Seller and Buyer agree that the provisions
of this Section 2.4 shall survive Closing.

                  (d)      Consistent with the foregoing and subject solely to
the express covenants and indemnities set forth in this Agreement and the
representations set forth in Section 4.1 or in any document to be delivered
pursuant to Section 6.1 below (as such covenants, indemnities and
representations are limited pursuant to Section 4.4 hereof) and except for
rights, claims, demands and liabilities arising out of or based upon any fraud
by any of the Releasees (as defined below), effective as of the Closing Date,
Buyer, for itself and its agents, affiliates, successors and assigns, hereby
releases and forever discharges Seller, Seller's Subsidiaries and their
respective shareholders, partners, members, officers and directors
(collectively, the "Releasees") from any and all rights, claims and demands at
law or in equity, whether known or unknown at the time of this agreement, which
Buyer has or may have in the future, arising out of the physical, environmental,
economic or legal condition of the Properties, including, without limitation,
all claims in tort or contract and any claim for indemnification or contribution
arising under the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601, et. seq.) or any similar federal, state
or local statute, rule or ordinance relating to liability of property owners for
environmental matters. Without limiting the foregoing, Buyer, upon Closing,
shall be deemed to have waived, relinquished and released Seller and all other
Releasees from and against any and all matters arising out of latent or patent
defects or physical conditions, violations of applicable laws and any and all
other acts, omissions, events, circumstances or matters affecting the
Properties, except for breach of the express covenants and indemnities set forth
in this Agreement and the representations and warranties set forth in Section
4.1 or in any document to be delivered pursuant to Section 6.1 (as such
covenants, indemnities and representations are limited pursuant to Section 4.4
hereof) and except for rights, claims, demands and liabilities arising out of or
based upon any fraud by any of the Releasees. For the foregoing purposes, Buyer
hereby specifically waives the provisions of Section 1542 of the California
Civil Code and any similar law of any other state, territory or jurisdiction.
Section 1542 provides:

                                     Page 7
<Page>

         A general release does not extend to claims which the creditor does not
         know or suspect to exist in his favor at the time of executing the
         release, which if known by him must have materially affected his
         settlement with the debtor.

Buyer hereby specifically acknowledges that Buyer has carefully reviewed this
subsection and discussed its import with legal counsel and that the provisions
of this subsection are a material part of this Agreement.

                                 ---------------
                                      Buyer

                  (e)      Subject to the express covenants and indemnities set
forth in this Agreement and the representations of Seller set forth in Section
4.1 or in any document to be delivered pursuant to Section 6.1 (as such
covenants, indemnities and representations are limited pursuant to Section 4.4
hereof), Buyer shall indemnify, defend, protect and hold Seller harmless from
and against any and all claims, actions, causes of action, demands, liabilities,
damages, costs and expenses (including attorneys' fees), whether direct or
indirect, known or unknown, foreseeable or unforeseeable, which are be asserted
against Seller by third parties at any time after the Closing due to acts or
omissions occurring and first arising after Closing, on account of or in any way
arising out of or connected with the Properties, including: (i) the physical
condition, nature or quality of the Properties (including the soils and
groundwater on and under the Real Property); (ii) the presence or release in,
under, on or about the Properties (including the soils and groundwater on and
under the Real Property) of any Hazardous Materials; and (iii) the ownership,
management or operation of the Properties, including any claim or demand by any
tenant for the refund or return of any security deposit or other deposit;
provided, however, Buyer shall not be obligated to indemnify Seller with respect
to any such claims, actions, causes of action, demands, liabilities, damages,
costs or expenses to the extent caused by the acts or omissions of Seller. At
the Closing, upon the request of Seller, Buyer shall deliver to Seller a
certificate reaffirming the foregoing.

                  (f)      Subject to the express covenants and indemnities set
forth in this Agreement and the representations of Buyer set forth in Section
4.2 or in any document to be delivered pursuant to Section 6.1, Seller shall
indemnify, defend, protect and hold Buyer harmless from and against any and all
claims, actions, causes of action, demands, liabilities, damages, costs and
expenses (including attorneys' fees), whether direct or indirect, known or
unknown, foreseeable or unforeseeable, which are asserted against Buyer by third
parties at any time after the Closing due to acts or omissions occurring and
first arising before Closing, on account of or in any way arising out of or
connected with the Properties, including: (i) the physical condition, nature or
quality of the Properties (including the soils and groundwater on and under the
Real Property); (ii) the presence or release in, under, on or about the
Properties (including the soils and groundwater on and under the Real Property)
of any Hazardous Materials; and (iii) the ownership, management or operation of
the Properties, including any claim or demand by any tenant for the refund or
return of any security deposit or other deposit; provided, however, Seller shall
not be obligated to indemnify Buyer with respect to any such claims, actions,
causes of action, demands, liabilities, damages, costs and expenses to the
extent caused by the acts or omissions of Buyer. At the Closing, upon the
request of Buyer, Seller shall deliver to Buyer a certificate reaffirming the
foregoing

                                     Page 8
<Page>

         SECTION 2.5 TITLE EXCEPTIONS.

                  (a)      Title shall be conveyed by Seller or Seller's
Subsidiaries to Buyer (x) to the fee interest in the Real Property by grant
deed, (y) to the leasehold interest in the Real Property by an assignment of
ground lease, and (z) to the equity interest in the entity owing fee title to
the Real Property by assignment of member interest, as applicable, and in each
case subject to: (i) liens to secure payment of real estate taxes and
assessments not delinquent; (ii) applicable zoning and use laws, ordinances,
rules and regulations of any municipality, township, county, state or other
governmental agency or authority; (iii) all matters that would be disclosed by a
physical inspection, that are disclosed by the existing surveys of the Real
Property that have been made available to Buyer by Seller or that are actually
known to Buyer; (iv) the Loan Documents, as applicable; (v) any exceptions or
matters created by Buyer, its agents, employees or representatives; (vi) all
Leases, (vii) Contracts accepted by Buyer pursuant hereto; (viii) the Ground
Leases, as applicable, and (ix) the exceptions (other than those marked through
for deletion) set forth on Schedule B of the preliminary title reports or title
policies approved by Seller and Buyer and attached to this Agreement as EXHIBIT
J. The foregoing exceptions to title are referred to as the "Permitted
Exceptions."

                  (b)      On or before the Closing of any Property, Seller
shall eliminate any deeds of trust, mortgages, judgment liens, mechanics' liens,
and materialmen's liens encumbering such Property, except: (i) the Loan
Documents evidencing the Assumed Indebtedness and creating the lien securing the
Assumed Indebtedness, if applicable to such Property, (ii) monetary liens not
arising from the acts or omissions of Seller or any of its employees, agents,
contractors, or affiliates, or (iii) mechanics' liens or material liens
pertaining to work in progress as of the Closing, the completion of which Buyer
has agreed to undertake. If Seller does not remove or provide to the
satisfaction of Buyer for removal of the objectionable exceptions to title
before Closing, Buyer shall have the right (x) to terminate this Agreement as to
such Property in which case the Purchase Price for the Properties shall be
reduced by the amount of the Purchase Price allocated to the affected Property,
the portion of the Deposit allocated to the affected Property shall be returned
to Buyer and the term "Deposit" shall be deemed to be reduced by an amount
corresponding to the portion of the Deposit returned to Buyer, or (y) to proceed
with consummation of this transaction notwithstanding such objectionable items.

                  (c)      Seller shall have no obligation to execute any
affidavits or indemnifications in connection with the issuance of Buyer's title
insurance excepting only the such customary affidavits as to authority, the
rights of tenants in occupancy, the status of mechanics' liens and other
affidavits or indemnifications reasonably necessary to address matters of title
which Seller has agreed to or is required to remove or cure pursuant to this
Section 2.5.

         SECTION 2.6 ESTOPPELS, SNDAS, EXTENDED TITLE COVERAGE AND LENDER
REQUIREMENTS. At any time on or before October 15, 2001, Buyer may terminate
this Agreement as to any one or more specific Property pursuant to any provision
in this Section 2.6 as to such Property or Properties.

                  (a)      Seller shall have no obligation to deliver estoppel
certificates ("Estoppels") or subordination, non-disturbance and attornment
agreements ("SNDAs") from tenants occupying the Properties, from ground lessors
under the Ground Leases or from parties

                                     Page 9
<Page>

to reciprocal easement agreements, declarations of restrictions or similar
agreements ("REAs") encumbering the Properties. Subject to the foregoing, during
the Contract Period, Buyer and Seller shall cooperate in preparing and obtaining
Estoppels and SNDAs in a form acceptable to Buyer and Buyer's lender in their
sole discretion. Seller and Buyer shall jointly prepare such Estoppels and SNDAs
and shall use commercially reasonable efforts to obtain such Estoppels and
SNDAs. If Buyer, by October 14, 2001, has not received (i) all Estoppels
acceptable to Buyer in its sole discretion from ground lessors and parties to
REAs and (ii) Estoppels and SNDAs acceptable to Buyer in its sole discretion
from tenants occupying at least eighty percent (80%) of the gross leasable area
within any Property (the "Estoppel/SNDA Threshold"), Buyer may terminate this
Agreement as to the affected Property by delivering written notice of its
election to do so no later than October 15, 2001. If Buyer elects to terminate
the Agreement pursuant to this Section 2.6(a), the Purchase Price for the
Properties shall be reduced by the amount of the Purchase Price allocated to the
Property or Properties for which the Estoppel/SNDA Threshold has not been
reached, that portion of the Option Payment allocated to such affected Property
or Properties shall be deemed released to Seller and the term "Deposit" shall be
reduced by an amount corresponding to the portion of the Option Payment deemed
released to Seller.

                  (b)      If Buyer, by October 14, 2001, shall not have
received confirmation from the Title Company of its willingness to issue (i) an
ALTA policy or other form of extended coverage reasonably satisfactory to Buyer
for any Property, (ii) CLTA endorsements 100, 100.20, 101.4, 103.3, 103.1A,
103.5, 103.7, 116, 116.1, 116.4, 116.7, 123.2, and 129, to the extent
applicable, for any Property located in the State of California, and equivalent
endorsements, to the extent available and applicable, for any Property located
outside of the State of California, or (iii) other required endorsements (the
"Extended Coverage"), all of which are acceptable to Buyer in its sole
discretion, Buyer may terminate this Agreement as to such affected Property or
Properties by delivering written notice of its election to do so no later than
October 15, 2001. If Buyer elects to terminate the Agreement pursuant to this
Section 2.6(b), the Purchase Price for the Properties shall be reduced by the
amount of the Purchase Price allocated to the Property or Properties for which
the Extended Coverage shall not be issued or available, that portion of the
Option Payment allocated to such affected Property or Properties shall be deemed
released to Seller and the term "Deposit" shall be reduced by an amount
corresponding to the portion of the Option Payment deemed released to Seller.

                  (c)      If Buyer, by October 14, 2001, determines, in sole
discretion, that Buyer is or will be unable to fully satisfy the requirements of
its prospective lender, as to any specific Property or Properties not subject to
the Assumed Indebtedness, Buyer may terminate this Agreement as t such affected
Property or Properties by delivering written notice of its election to do so no
later than October 15, 2001. If Buyer elects to terminate the Agreement pursuant
to this Section 2.6(c), the Purchase Price for the Properties shall be reduced
by the amount of the Purchase Price allocated to such affected Property or
Properties, that portion of the Option Payment allocated to such affected
Property or Properties shall be deemed released to Seller and the term "Deposit"
shall be reduced by an amount corresponding to the portion of the Option Payment
deemed released to Seller.

                                    Page 10
<Page>

                  (d)      Notwithstanding anything to the contrary contained in
this Section 2.6, Buyer's right to terminate this Agreement as to the Property
commonly known as Fairwood Square pursuant to Section 2.6(a) or Section 2.6(b)
is further conditioned upon Buyer concurrently terminating this Agreement as to
the Property commonly known as Village East regardless of satisfaction of the
Estoppel/SNDA Threshold and the availability of the Extended Coverage for the
Village East Property. Likewise, notwithstanding anything to the contrary
contained in this Section 2.6, Buyer's right to terminate this Agreement as to
the Property commonly known as Village East pursuant to Section 2.6(a) or
Section 2.6(b) is further conditioned upon Buyer concurrently terminating this
Agreement as to the Property commonly known as Fairwood Square regardless of
satisfaction of the Estoppel/SNDA Threshold and the availability of the Extended
Coverage for the Fairwood Square Property.

         SECTION 2.7 Seller's Rights As to Certain Properties

                  (a)      Seller shall have the right, in its sole discretion,
to delay the Closing to a date not later than February 1, 2002 with respect to
the Property commonly known as Ontario Village.

                  (b)      Seller is negotiating a certain Redemption and
Distribution Agreement with the original contributors of the Properties commonly
known as Palms to Pines, Mission Plaza and Plaza de Monterey (collectively, the
"Carver Properties"). If Seller shall not conclude negotiations of such
Redemption and Distribution Agreement on or before September 15, 2001, Seller
may terminate this Agreement as to the Carver Properties by delivering written
notice of its election to do so no later than September 15, 2001. If Seller
elects to terminate the Agreement pursuant to this Section 2.7(b), the Purchase
Price for the Properties shall be reduced by the amount of the Purchase Price
allocated to the Carver Properties, that portion of the Option Payment allocated
to the Carver Properties shall be returned to Buyer, and the term "Deposit"
shall be deemed reduced by an amount corresponding to the portion of the Option
Payment returned to Buyer. If Seller or its successor by merger or operation of
law or a liquidating trust established for Seller subsequently sells the Carver
Properties to a third party for an aggregate purchase price in excess of the
aggregate amount of the Purchase Price allocated to the Carver Properties under
this Agreement, Buyer shall be entitled to receive payment in the amount equal
to fifty percent (50%) of the amount of the aggregate purchase price for the
Carver Properties paid by the third party minus (x) the aggregate Purchase Price
allocated to the Carver Properties under this Agreement, (y) the closing costs
incurred by Seller in connection with the sale of the Carver Properties to such
third party and (z) the liability incurred by Seller or Seller's Subsidiaries
under any and all tax protection agreements or contribution agreements to which
Seller or Seller's Subsidiaries are parties with respect to the Carver
Properties and which provide for protection against gain recognition for any of
the contributors.

                                    ARTICLE 3
                              CONDITIONS PRECEDENT

                                    Page 11
<Page>

         SECTION 3.1 CONDITIONS.

                  (a)      Notwithstanding anything in this Agreement to the
contrary, Buyer's obligation to purchase any one specific Property shall be
subject to and contingent upon the satisfaction or written waiver by Buyer of
the following conditions precedent, as applicable, with respect to such
Property:

                           (i)      The willingness, upon the sole condition of
                                    the payment of any regularly scheduled
                                    premium, of the Title Company to issue a
                                    CLTA or standard overage owner's policy or
                                    policies of title insurance, with respect to
                                    each Property, except the Properties
                                    commonly known as Ladera and Margarita Plaza
                                    for which no title insurance shall be
                                    obtained, insuring Buyer (or Buyer's
                                    permitted assignee or nominee) that the fee
                                    title or leasehold title of Seller or
                                    Seller's Subsidiaries, as applicable, in the
                                    applicable Real Property is vested of record
                                    in Buyer (or Buyer's permitted assignee or
                                    nominee) on the Closing Date subject only to
                                    the printed conditions and exceptions of
                                    such policies and the Permitted Exceptions
                                    applicable to such Real Property (excluding
                                    the exceptions referred to in Section
                                    2.5(a)(iii) [other than matters shown by new
                                    surveys acquired after the Effective Date by
                                    Buyer or matters imposed by the Title
                                    Company based on its inspection of the
                                    Properties] and excluding Contracts referred
                                    to in clause (vii) of such Section other
                                    than recorded Contracts) (the "Buyer's Title
                                    Policies"); provided that, if and to the
                                    extent that the Title Company requires, as a
                                    condition of the deletion the exception
                                    referred to in Section 2.5(a)(iii) up-dated
                                    or more current surveys, Buyer shall cause
                                    such surveys to be obtained before the
                                    Closing Date and Buyer shall bear the cost
                                    of such surveys.

                           (ii)     Seller's performance or tender of
                                    performance of all material obligations
                                    under this Agreement with respect to the
                                    applicable Property, including Seller's
                                    covenants under Section 4.2 with respect to
                                    such Property;

                           (iii)    On or before the Closing Date, with respect
                                    to those Properties subject to the Assumed
                                    Indebtedness, Seller and Buyer shall have
                                    obtained as to such Properties (x) the
                                    written approval of Buyer's purchase of the
                                    Properties subject to the Assumed
                                    Indebtedness from each Lender, (y) a written
                                    acknowledgement from such Lender that no
                                    default exists in the payment of principal
                                    or interest or monetary payments of the
                                    Assumed Indebtedness and, to such Lender's
                                    knowledge, no other material default exists
                                    and (z) a release of Seller and Seller's
                                    Subsidiaries from all obligations of
                                    borrower under the applicable Loan Documents
                                    (each a "Lender's Consent").;

                                    Page 12
<Page>

                           (iv)     On or before the Closing Date, with respect
                                    to those Properties subject to a Ground
                                    Lease which requires consent of the ground
                                    lessor to the purchase of the leasehold
                                    interest, Seller and Buyer shall have
                                    obtained the written consent of such ground
                                    lessor to Buyer's purchase of the leasehold
                                    interest in such Properties (each a "Ground
                                    Lessor's Consent") and Seller and Buyer
                                    shall use their commercially reasonable
                                    efforts to obtain each such Ground Lessor's
                                    Consent;

                           (v)      On or before the Effective Date, this
                                    Agreement and the transaction contemplated
                                    herein shall have been approved by the Board
                                    of Directors of Seller;

                           (vi)     On or before the Closing Date, Seller and
                                    Buyer shall have obtained the waiver or
                                    deemed waiver from those parties identified
                                    on EXHIBIT S having a right of first refusal
                                    for the Properties identified on EXHIBIT S
                                    (the "ROFR Party"). If, during the Contract
                                    Period, any ROFR Party shall have properly
                                    and timely exercised its right of first
                                    refusal and purchased the applicable
                                    Property or Properties, then the Purchase
                                    Price for the Properties shall be reduced by
                                    the amount of the Purchase Price allocated
                                    for the Property or Properties for which the
                                    applicable ROFR Party exercised its option,
                                    that portion of the Deposit allocated to
                                    such affected Property or Properties shall
                                    be returned to Buyer and the term "Deposit"
                                    shall be deemed reduced by the amount of the
                                    Deposit returned to Buyer;

                           (vii)    As of the Closing Date, there shall not have
                                    been bankruptcy filings during the Contract
                                    Period (either voluntary or involuntary) for
                                    any Property involving tenants whose
                                    aggregate annual rent as stated in the
                                    respective leases of such tenants aggregates
                                    more than ten percent (10%) of the aggregate
                                    annual rent from all tenants for such
                                    Property (provided, however, that if
                                    bankruptcy filings have occurred with
                                    respect to leases in which the annual rent
                                    exceeds ten percent (10%) of the annual rent
                                    with respect to all leases for such
                                    Property, then this condition precedent
                                    shall not apply if Seller agrees that the
                                    Purchase Price for any affected Property or
                                    Properties shall be reduced by an amount
                                    equal to 10 times the aggregate annual rent
                                    in excess of such ten percent (10%) amount
                                    payable under the leases affected by such
                                    bankruptcy filings);

                           (viii)   All of Seller's representations and
                                    warranties as set forth in Article 4 are
                                    true and correct in all material respects as
                                    of October 12, 2001 as to all Properties
                                    (except as to Ontario Village Property for
                                    which Seller's representations and
                                    warranties shall be true and correct in all
                                    material respects as of the Closing Date for
                                    the

                                    Page 13
<Page>

                                    Ontario Village Property), but in each case
                                    as modified by additional information
                                    provided by Seller to Buyer;

                           (ix)     There shall have occurred no damage,
                                    destruction or Taking which would entitle
                                    Buyer to terminate this Agreement as to any
                                    Properties pursuant to the provisions of
                                    Section 7.1;

                           (x)      Seller shall cause the existing
                                    environmental insurance policy issued by AIG
                                    Environmental covering the Properties (and
                                    other properties owned by Seller and
                                    Seller's Subsidiaries) to be assigned to
                                    Buyer as to the Properties with an
                                    allocation of coverage limits under such
                                    policy to the Properties in the amount of
                                    [$8,500,000] to the extent the terms of the
                                    policy permit such assignment; provided that
                                    such assignment shall prohibit Buyer from
                                    making claims under such policy for any
                                    release or other matter first arising after
                                    the Closing for such Property; and

                           (xi)     On or before the Closing, Buyer shall have
                                    obtained, at its sole cost and expense,
                                    certifications that no Uniform Commercial
                                    Code financing statements evidencing the
                                    existence of any security interest
                                    encumbering the Personal Property or the
                                    equity interest of Seller or Seller's
                                    Subsidiaries in the limited liability
                                    companies that are the fee owners of the
                                    Properties commonly known as Margarita Plaza
                                    and Ladera Center and no fixture filings are
                                    on file in either the central filing records
                                    for Uniform Commercial Code filings of any
                                    state in which any Property is located or in
                                    the Uniform Commercial Code records of any
                                    county in which any Property is located

                  (b)      Notwithstanding anything in this Agreement to the
contrary, Seller's obligation to sell any one specific Property shall be subject
to and contingent upon the satisfaction or written waiver by Seller of the
following conditions precedent, as applicable, with respect to such Property:

                           (i)      Buyer shall tender to Seller payment of the
                                    Purchase Price for the Property or
                                    Properties which are the subject of a
                                    Closing, as adjusted pursuant to the
                                    provisions of this Agreement; and

                           (ii)     On or before the Closing Date, Seller and
                                    Buyer shall have obtained the Lender's
                                    Consents, if applicable for the Property or
                                    Properties which are the subject of a
                                    Closing, upon terms reasonably acceptable to
                                    Seller and Buyer;

                           (iii)    On or before the Closing Date, Seller and
                                    Buyer shall have obtained the Ground
                                    Lessor's Consents, if applicable for the
                                    Property or Properties which are the subject
                                    of a Closing; and

                                    Page 14
<Page>

                           (iv)     Seller's obligation to sell the Properties
                                    identified on EXHIBIT S is subject to the
                                    provisions of Section 3.1(a)(vi) to the
                                    extent any ROFR Party exercises its option
                                    to purchase the Property or Properties
                                    subject to a right of first refusal as
                                    described in EXHIBIT S.

         SECTION 3.2 FAILURE OR WAIVER OF CONDITIONS PRECEDENT.

                  (a)      If any of the conditions set forth in Section 3.1(a)
is not fulfilled or waived in writing by Buyer as to any specific Property,
Buyer may, by written notice to Seller, terminate this Agreement as to such
Property, but not as to any other Property or Properties. If any of the
conditions set forth in Section 3.1(b) is not fulfilled or waived in writing by
Seller as to any specific Property, Seller may, by written notice to Buyer,
terminate this Agreement as to such Property, but not as to any other Property
or Properties. Either party may, at its election, at any time or times on or
before the date specified for the satisfaction of the condition, waive in
writing the benefit of any of the conditions set forth in Sections 3.1(a) and
3.1(b) above. In any event, Buyer's consent to the close of escrow with respect
to any specific Property pursuant to this Agreement shall waive any remaining
unfulfilled conditions for the benefit of Buyer with respect to such Property,
but such consent shall not waive Buyer's right with respect to any of the other
Properties or of Seller's covenants, representations, or warranties which
survive Closing as herein provided.

                  (b)      Notwithstanding anything to the contrary contained in
Section 3.2(a), if Buyer desires to terminate this Agreement as to any Property
or Properties based upon a failure of the conditions set forth in Sections
3.1(a)(i), (ii), (iv), (v), (vi), or (viii) above, Seller shall have the right
(by giving notice to Buyer), but not the obligation, for a period of 30 days
within which to cure such failure and the Closing as to such affected Properties
only shall be deferred for such curative period. If Seller has not cured such
failure within such cure period then Buyer may elect to terminate this Agreement
as to such affected Property.

                  (c)      Notwithstanding anything to the contrary contained in
Section 3.2(a), if Buyer desires to terminate this Agreement based upon a
failure of the condition set forth in Sections 3.1(a)(iii), Seller and Buyer
shall each have the right (by giving notice to the other), but not the
obligation, to delay the Closing for an additional period or periods to a date
not later than June 30, 2002, if exercised by Seller, and to a date not later
than January 31, 2002, if exercised by Buyer, as to the affected Property or
Properties to provide Seller and Buyer with additional time to obtain the
Lender's Consents and the Closing as to such affected Property or Properties
only shall be deferred for such period or periods. The parties shall mutually
cooperate and use commercially reasonable efforts to obtain the Lender's
Consents to the sale of the Properties encumbered by the Assumed Indebtedness.
If Buyer and Seller are not able to obtain the Lender's Consent for any specific
Property or Properties within such additional time, then Buyer may elect to
terminate this Agreement as to such affected Property. If, for any specific
Property, Buyer has (i) accepted the Loan Documents with all existing terms and
conditions therein without modification, (ii) executed and delivered to Lender
the Loan Assignment and Release Documents (as defined in Section 6.1(a)(xii)) in
exactly the form required by Lender and all other documents required by Lender
for the assumption of the Assumed Indebtedness; (iii) formed a single purpose
entity (to the extent required by Lender) or any other entity to take title

                                    Page 15
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to the Property, which entity satisfies all of the requirements of Lender; and
(iv) substituted a sufficiently capitalized entity or entities for all
environmental indemnities, non-recourse carve-out indemnities or guaranties, if
any, in place of any existing third party indemnitors or guarantors, which
substituted entity is satisfactory to Lender, and Lender's Consent has not been
obtained with respect to such Property notwithstanding satisfaction of the
foregoing conditions and Buyer's commercially reasonable efforts to obtain such
Lender's Consent, then upon Buyer's exercise of its right to terminate this
Agreement as to such Property, the Purchase Price for the Properties shall be
reduced by the amount of the Purchase Price allocated to the affected Property,
the portion of the Deposit allocated to the affected Property shall be returned
to Buyer and the term "Deposit" shall be deemed to be reduced by an amount
corresponding to the portion of the Deposit returned to Buyer. If any one of the
conditions enumerated in the foregoing sentence has not been satisfied, then
upon Buyer's exercise of its right to terminate this Agreement as to the
affected Property, the Purchase Price for the Properties shall be reduced by the
amount of the Purchase Price allocated to the affected Property, the portion of
the Deposit allocated to the affected Property shall be deemed released to
Seller and the term "Deposit" shall be deemed to be reduced by an amount
corresponding to the portion of the Deposit released to Seller.

                  (d)      In the event this Agreement is terminated as to any
Property or Properties by either Seller or Buyer as a result of the failure of a
condition precedent which is not waived in writing by the party for whose
benefit such condition precedent exists, and other than a termination resulting
from a default by Buyer under this Agreement, the Purchase Price for the
Properties shall be reduced by the amount of the Purchase Price allocated to the
affected Property or Properties, that portion of the Additional Deposit
allocated to such affected Property or Properties shall be returned to Buyer,
that portion of the Option Payment allocated to such affected Property or
Properties shall be deemed released to Seller, and the term "Deposit" shall be
deemed reduced by the amount of the Additional Deposit returned to Buyer and the
amount of the Option Payment deemed released to Seller. This Section 3.2(d)
shall not apply to the condition precedent set forth in Section 3.1(a)(iii), for
which the terms of Section 3.2(c) shall apply, or the condition precedent set
forth in Section 3.1(a)(vi), for which the terms of Section 3.1(a)(vi) shall
apply, with respect to failure of such conditions.

                                    ARTICLE 4
                    COVENANTS, WARRANTIES AND REPRESENTATIONS

         SECTION 4.1 SELLER'S WARRANTIES AND REPRESENTATIONS. Seller expresses
to Buyer the representations and warranties set forth below as of the date of
this Agreement. Seller hereby represents and warrants with respect to itself and
Seller's Subsidiaries (as applicable) as follows:

                  (a)      The Seller is duly organized, validly existing and in
good standing under the laws of its jurisdiction of organization and the Seller
is qualified to do business in California. The Seller has full power and lawful
authority to enter into and carry out the terms and provisions of this Agreement
and to execute and deliver all documents which are contemplated by this
Agreement, and all actions of the Seller necessary to confer such power and
authority upon the persons executing this Agreement (and all documents which are
contemplated by this Agreement) on behalf of the Seller have been taken. Each of
the Seller's Subsidiaries is duly

                                    Page 16
<Page>

organized, validly existing and in good standing under the laws of its
jurisdiction of organization and each of the Seller's Subsidiaries is qualified
to do business in the State in which the Properties owned by such Seller's
Subsidiary is located. Attached hereto as EXHIBIT L is a true and correct copy
of a resolution of the Board of Directors of Seller authorizing, confirming and
ratifying the execution of this Agreement and the performance by Seller of all
actions necessary or appropriate to consummate the transactions contemplated by
this Agreement;

                  (b)      Except with respect to the third party consents
expressly described in or contemplated under this Agreement or expressly
required under any agreements included in Intangible Property, the Seller's
execution and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the performance of the Seller's obligations under the
instruments required to be delivered by the Seller and the Seller's Subsidiaries
at the Closing, do not and will not require the consent, approval or other
authorization of, or registration, declaration or filing with, (collectively,
"Consents") any governmental authority (excepting the recordation of Closing
documents contemplated in this Agreement and any filings required under
applicable state or federal securities or tax laws) or any other person or
entity, except such Consents as will be obtained on or before Closing or as to
which the failure to obtain would not have a material and adverse effect on
Seller's performance of its obligations under this Agreement, and do not and
will not result in any material violation of, or material default under, any
term or provision of any agreement, instrument, mortgage, loan agreement or
similar document to which the Seller or Seller's Subsidiaries is a party or by
which the Seller or Seller's Subsidiaries is bound;

                  (c)      Except as set forth in EXHIBIT E, there is no
litigation, investigation or proceeding pending or, to the best of the Seller's
knowledge, contemplated or threatened which would impair or adversely affect the
ability of Seller or Seller's Subsidiaries to perform its respective obligations
under this Agreement;

                  (d)      Neither the Seller nor any of the Seller's
Subsidiaries is a "foreign person" as defined in Internal Revenue Code
1445(f)(3);

                  (e)      Except as set forth in EXHIBIT E, as of the date of
this Agreement, Seller has no knowledge that, and has received no written notice
from any governmental authorities that, eminent domain proceedings for the
condemnation of any Property or any part of a Property are pending;

                  (f)      Except as set forth in EXHIBIT E, as of the date of
this Agreement, Seller has no knowledge of, and has received no written notice
of, any threatened or pending litigation affecting the Property;

                  (g)      Except as set forth in EXHIBIT E, as of the date of
this Agreement, Seller has received no written notice from any governmental
authority that the improvements constituting any Property are presently in
material violation of any applicable building codes where such violation has not
been cured in all material respects;

                  (h)      Except as set forth in EXHIBIT E, as of the date of
this Agreement, Seller has received no written notice from any governmental
authority that any Property is presently in

                                    Page 17
<Page>

material violation of any applicable zoning, land use or other law, order,
ordinance, rule or regulation affecting the Property which violation has not
been cured, that any investigation has been commenced or is contemplated with
respect to any such possible failure of compliance and Seller has not received
written notice from any insurance company or Board of Fire Underwriters of any
defect or inadequacy in connection with a Property or its operation where such
defect or inadequacy has not been cured in all material respects;

                  (i)      Except as set forth in EXHIBIT N, as of the date of
this Agreement, no Contracts involving payment in excess of $5,000 per annum
with respect to any Property will be binding upon Buyer after the Closing, other
than such Contracts that are cancelable by the owner of the Property within 30
days after written notice from such owner without penalty or premium;

                  (j)      As of the date of this Agreement, except as set forth
in the environmental reports included within the Disclosure Materials and any
reports or studies prepared by or for Buyer, Seller has received no written
notice of the presence or release of any Hazardous Materials presently
deposited, stored, or otherwise located on, under, in or about any Property
which require reporting or potentially require reporting to any governmental
authority, monitoring, clean up or remediation or are otherwise not in material
compliance with environmental laws, regulations and orders;

                  (k)      The Rent Rolls for all of the Properties (other than
those commonly known as Ladera and Margarita Plaza) constituting EXHIBIT C-1 to
this Agreement accurately identify as to each Lease as of June 28, 2001; the
date of the rent start; the expiration date of the current term of the Lease;
the current base rental payable under such Lease; amount of additional rent
(i.e., cost recovery) currently billed to the tenant under the Lease; and the
approximate gross leaseable area of the premises, and the list of security
deposits for all of the Properties (other than those commonly known as Ladera
and Margarita Plaza) attached hereto as EXHIBIT C-2 accurately identifies each
Lease the amount of any security deposit held by Seller. As of June 28, 2001,
Seller had not received written notice of any material default by Seller under
any Leases, which default had not been cured in all material respects, and
Seller has not delivered any default notice to a tenant under any Lease, except
with respect to delinquent rents disclosed in the aged delinquency report
contained within the Disclosure Materials, and, to Seller's knowledge and except
as set forth in the delinquency reports provided by Seller to Buyer, Seller was
not aware of any other material default by a tenant under a Lease, which
defaults have not been cured in all material respects; and

                  (l)      With respect to the matters contained in the
Disclosure Materials List & Statement and the Disclosure Materials, to
Seller's knowledge, Seller has not willfully or intentionally or as a result of
gross negligence omitted to state any material facts required to be stated
therein or willfully and intentionally or as a result of gross negligence made
any untrue statement of a material fact, which would render the Disclosure
Materials List & Statement or the Disclosure Materials materially misleading.

                  (m)      With respect to financial records which are included
within the Disclosure Materials, the information for 1999 and 2000 as to
historical minimum rents, historical percentage rents, historical expenses and
historical additional rent (cost recoveries) is true and

                                    Page 18
<Page>

correct in all material respects. Seller's warranty as to accuracy does not
apply with respect to budgets or projections for future periods.

                  (n)      The list of leases (identified by date) and
amendments (also identified by date) as contained in the Disclosure Materials
and included as part of EXHIBIT B is accurate and complete in all material
respects.

                  (o)      Seller is not in default in payment of principal or
interest under the Assumed Indebtedness or in payment of rent or other monetary
amounts under the Ground Leases. To Seller's knowledge, Seller is not in default
of any other material provision of the Assumed Indebtedness or the Ground
Leases.

                  (p)      The Loan Documents listed in EXHIBIT P are the only
documents to which Seller is a party relating to the Assumed Indebtedness.

                  (q)      Except as set forth in EXHIBIT S, as of the date of
this Agreement, Seller has no knowledge of any parties having an option, right
of first refusal, right of first offer or other right to purchase any Property
or Properties that would be triggered by the transaction contemplated hereby.

                  Subject to the provisions of Section 4.4, Seller shall be
liable for the breach of any representation and warranty of Seller set forth in
this Section 4.1.

                                    * * * * *

                  For the foregoing purposes, the terms "Seller's knowledge" or
words of similar effect shall mean the current actual, subjective knowledge of
Scott Verges, Michael Rubin and Daniel Platt (collectively, the "Knowledge
Persons"), in each case without independent investigation or inquiry other than
inquiry of Kevin Cavanaugh. Seller represents and warrants to Buyer that these
individuals are the individuals employed by Seller that have primary management,
or maintenance responsibility for the Properties so that no individual likely to
have material and specialized knowledge as to the Properties has been omitted
from this list. Such individuals' knowledge shall not include information or
material which may be in the possession of Seller or the named individuals, but
of which the named individuals are not actually aware. None of the named
individuals whose sole knowledge is imputed to a Seller under this Section nor
any party other than the Seller affording a representation shall bear
responsibility for any breach of such representation.

         SECTION 4.2 SELLER'S COVENANTS. Seller hereby covenants and agrees as
follows:

                  (a)      During the Contract Period, Seller will exercise
reasonable and good faith efforts (i) to operate and maintain the Properties in
a manner consistent with current practices and (ii) to comply, where such
compliance is the obligation of Seller (and not of a tenant or other party) in
all material respects with all material laws and regulations applicable to the
Properties;

                  (b)      During the Contract Period, Seller will not sell or
otherwise dispose of any significant items of Personal Property unless replaced
with an item of like value, quality and utility;

                                    Page 19
<Page>

                  (c)      Following the Effective Date and until the end of the
Contract Period, Seller shall not enter into or modify any Contracts relating to
the operation or maintenance of a Property, except for (i) those entered into in
the ordinary course of business with parties which are not affiliates of Seller
and (A) which are cancelable upon not more than thirty (30) days prior notice
without penalty or premium or (B) which require payments to the applicable
vendor of $2,000 or less per year , or (ii) those otherwise approved in writing
by Buyer, which approval shall not be unreasonably withheld and shall be deemed
given if Buyer should fail to approve or disapprove proposed Contract matters in
writing within three (3) business days following receipt of Seller's written
request (which shall include all material information necessary to allow Buyer
to make an informed decision). At Buyer's written request provided at least
three (3) business days prior to the Closing Date, Seller shall deliver notice
of termination on the Closing Date as to any and all Contracts that Buyer
desires to terminate, provided that such termination shall be effective
following any notice or waiting period for such termination described in the
Contract. Notwithstanding the foregoing, Seller shall terminate all property
management agreements (including without limitation the property management
agreement with DDR Real Estate Services, Inc. ("DDRS")), brokerage agreements
and exclusive leasing agreements applicable to the Properties as of the Closing
Date, at Seller's expense;

                  (d)      Following the Effective Date and until the end of the
Contract Period, Seller will not execute or modify in any material fashion any
Leases or any Ground Leases, other than with Buyer's prior consent, which shall
be deemed given if Buyer (in the person of Philip Montgomery or Richard Mack,
representatives of Buyer) should fail to approve or disapprove proposed lease
matters in writing within five (5) business days following receipt of Seller's
written request (which shall include all material information necessary to allow
Buyer to make an informed decision). Buyer shall exercise its rights of approval
of leasing matters reasonably and in good faith. Seller shall use reasonable
efforts to continue to seek leases for the Properties in a manner consistent
with present practice;

                  (e)      During the Contract Period, Seller shall not
voluntarily create, consent to or acquiesce in the creation of liens or
exceptions to title without Buyer's prior written consent, provided that (i)
Buyer shall not unreasonably withhold or delay consent to any proposed matters
affecting title necessary to maintain or enhance the value of the pertinent
Property and (ii) Seller shall be permitted without Buyer's consent to pursue
all actions necessary to memorialize the subdivision, property exchange and
redevelopment activities of the Property commonly known as the Fremont Hub (the
"Fremont Hub Redevelopment") and make any non-material changes to the
documentation and site plans relating thereto. Notwithstanding the foregoing,
Seller (x) shall routinely keep Buyer advised of and involved in the
developments relating to the Fremont Hub Redevelopment; (y) will not consent to
any material changes to the documentation and site plans relating to the Fremont
Hub Redevelopment without obtaining Buyer's consent; (z) will not enter into any
lease for the Fremont Hub, enter any construction contract or development
services agreement relating to the Fremont Hub Redevelopment or approve any
construction budget for the Fremont Hub Redevelopment, without in each case
obtaining Buyer's prior consent, and such consent shall be deemed given if Buyer
(in the person of Philip Montgomery or Richard Mack, representatives of Buyer)
should fail to approve or disapprove such proposed lease, agreement or budget in
writing within five (5) business days following receipt of Seller's written
request (which shall include all material information necessary to allow Buyer
to make an informed

                                    Page 20
<Page>

decision). Buyer shall exercise its rights of approval under this Section 4.2(e)
without delay, reasonably and in good faith.

                  (f)      During the Contract Period, Seller shall maintain its
currently effective policies of property insurance and rental loss insurance for
the Improvements;

                  (g)      During the Contract Period, Seller shall use
commercially reasonable efforts (but at no material cost to Seller except as may
otherwise be expressly provided in this Agreement) to obtain all third party and
governmental approvals and consents necessary to consummate the transactions
contemplated hereby and to assist Buyer in obtaining Buyer's financing and to
otherwise consummate the transactions contemplated hereby;

                  (h)      During the Contract Period, Seller shall maintain its
books accounts and records in accordance with generally accepted accounting
principles and in a manner consistent with past practice;

                  (i)      During the Contract Period, Seller shall observe and
comply with the material terms and conditions of all Contracts, Leases, Property
licenses, and Property approvals;

                  (j)      During the Contract Period, Seller shall not
knowingly or intentionally take any action which would cause the representations
and warranties contained in Section 4.1 (other than as permitted in this
Agreement) to cease to be true and correct in all material respects as of the
Closing Date as though then made and shall promptly notify Buyer of any event,
circumstances or discovery inconsistent therewith;

                  (k)      During the Contract Period, Seller shall comply in
all material respects with the Leases and all existing easements, covenants,
conditions, restrictions and other encumbrances affecting any Property;

                  (l)      During the Contract Period, Seller shall use
reasonable efforts to provide Buyer with copies of any written notices received
by Seller during the Contract Period, which notices relate to matters described
in Section 4.1;

                  (m)      During the Contract Period, Seller shall notify Buyer
of any litigation filed against Seller or concerning any of the Properties
during the Contract Period within a reasonable period of time after Seller is
made aware of such litigation and EXHIBIT E shall be revised to include such
litigation;

                  (n)      Seller will cooperate with any auditors for Buyer, in
connection with an audit of 1999 and 2000 combined financial statements for the
Properties, including allowing such auditor access to all relevant records of
Seller, access to Seller's MRI system and rendering such other assistance as is
reasonable, which audit will begin after the Effective Date and conclude within
75 days after Closing; provided that Buyer shall pay all fees and expenses
charged by such auditor for such audit; .

                                    Page 21
<Page>

         SECTION 4.3 Buyer's Warranties and Representations.

         Buyer hereby represents and warrants to Seller that the following are
true as of the date of this Agreement:

                  (a)      Buyer is a duly formed and validly existing limited
partnership under the law of the state of its formation and is (or on the
Closing Date will be) in good standing under the laws of the states where each
Property is located and Buyer has the full right, authority and power to enter
into this Agreement, to consummate the transactions contemplated herein and to
perform its obligations hereunder and under those documents and instruments to
be executed by it at the Closing, and each of the individuals executing this
Agreement on behalf of Buyer is authorized to do so, and this Agreement
constitutes a valid and legally binding obligation of Buyer enforceable against
Buyer in accordance with its terms.

                  (b)      Buyer's execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the performance of
Buyer's obligations under the instruments required to be delivered by Buyer at
the Closing, do not and will not result in any material violation of, or
material default under, any term or provision of any agreement, instrument,
mortgage, loan agreement or similar document to which Buyer is a party or by
which Buyer is bound.

                  (c)      There is no litigation, investigation or proceeding
pending or, to the best knowledge of Philip Montgomery or Richard Mack,
representatives of Buyer, contemplated or threatened against Buyer which would
impair or adversely affect Buyer's ability to perform its obligations under this
Agreement or any other instrument or document related hereto.

         SECTION 4.4 SURVIVAL/LIMITATIONS.

                  (a)      Subject to subsection (b) below, the parties agree
that Seller's warranties and representations contained in Sections 4.1 of this
Agreement shall survive Buyer's purchase of the Properties and the Closing Date
for a period ending on the earlier of the first anniversary of the applicable
Closing Date for the affected Property or December 31, 2002 (the "Limitation
Period"). Such termination as of the close of the Limitation Period shall apply
to known as well as unknown breaches of such warranties or representations.
Subject to subsection (b) below, Buyer's waiver and release set forth in Section
2.4 shall apply fully to liabilities under such representations and warranties
not set forth in a Claim Notice as described below. Buyer specifically
acknowledges that such termination of liability represents a material element of
the consideration to Seller.

                  (b)      Any claim of Buyer based upon a breach of any
representation or warranty or covenant or a claim under any indemnity contained
in this Agreement or any representation, warranty, covenant or indemnity
contained in any other document or instrument delivered by Seller to Buyer at
Closing (collectively a "Breach") shall be expressed, if at all, in writing
setting forth in reasonable detail the basis and character of the claim (a
"Claim Notice"), and must be delivered to Seller prior to the expiration of the
applicable Limitation Period. Notwithstanding the foregoing, Buyer's right to
make and recover any claim pursuant to a Claim Notice shall be subject to the
following: (i) with respect to a Breach of Seller's representations and
warranties

                                    Page 22
<Page>

contained in this Agreement or a Breach under an indemnity contained in the
Assignment of Intangibles or the Assignment of Leases (as such terms are defined
in Section 6.1(a) below), Buyer shall not make any claim on account of such
Breach unless and until the aggregate measure of such claims with respect to the
Property exceeds $500,000, in which event Buyer's claims shall be limited to an
amount equal to the amount by which such aggregate claims exceed such $500,000
threshold and (ii) Seller's aggregate liability for claims arising out of all
Breaches (i.e., those described in clause (i) above as well as all other
Breaches) shall not, in the aggregate, exceed $2,500,000.00 exclusive of the
amounts of any insurance proceeds actually received by Seller which are to be
applied to Breaches, and (iii) Buyer shall have no right to deliver a Claim
Notice with respect to a Breach of a representation and warranty of Seller
contained in this Agreement to the extent that Buyer had knowledge of such
Breach as of the Closing Date. Notwithstanding anything to the contrary provided
in this Agreement, in no event shall Seller be liable to Buyer for any
consequential or punitive damages based upon any breach of this Agreement,
including breaches of representation or warranty. Subject to applicable
principles of fraudulent conveyance, in no event shall Buyer seek satisfaction
for any obligation from any shareholders, officers, directors, employees,
agents, legal representatives, successors or assigns of such trustees or
beneficiaries, nor shall any such person or entity have any personal liability
for any such obligations of Seller. Provided, however, that the limitations set
forth in this Section 4.4(b) shall not apply in the event of fraud.

                  (c)      Seller shall have a period of 30 days within which to
cure a Breach for which a Claim Notice has been received, or, if such Breach
cannot reasonably be cured within 30 days, an additional reasonable time period
of up to an additional 60 days (for a total of 90 days), so long as such cure
has been commenced within such 30 days and is at all times diligently pursued.
If the Breach is not cured after actual written notice and within such cure
period, Buyer's sole remedy shall be an action at law for damages against
Seller, which must be commenced with respect to a Breach of a representation or
warranty contained in this Agreement or a Breach of a covenant contained in
Section 4.2 hereof, if at all, by a date which is the earlier of the first
anniversary of the applicable Closing Date for the Property affected by the
Breach or December 31, 2002. The existence or pendency of such cure rights shall
not delay the Closing Date. The provisions of this Section 4.4 shall survive the
Closing or any termination of this Agreement.

         SECTION 4.5 OPERATING RECORDS

         Each party agrees to make available to the other party from time to
time, but not more frequently than quarterly, upon reasonable notice, for a
period of two years following the Closing Date, such party's operating records
for the Properties, to the extent such party has operating records, in order to
permit the requesting party to prepare such historical financial statements for
the Properties as such party requires to satisfy legal or contractual
obligations. The party making its operating records available shall have no
obligation to prepare any operating statements or incur any expense in
connection with the provisions of this Section. Seller shall not be obligated to
retain operating records or make such operating records available to Buyer to
the extent such records have been delivered to Buyer.

                                    Page 23
<Page>

         SECTION 4.6 SELLER'S EMPLOYEES.

         During the Contract Period, Buyer shall have the right to discuss with
any officer, director, employee or agent of Seller or any of Seller's affiliates
the possibility of such person's becoming an officer, director, employee or
agent of Buyer or an affiliate of Buyer prior to or after the Closing.

         SECTION 4.7 BUYER'S COVENANTS AS TO FREMONT HUB.

         During the Contract Period, Buyer shall use commercially reasonable
efforts to negotiate a development services agreement with DDRS relating to
development services to be performed by DDRS after the Closing for the Fremont
Hub Property on behalf of Buyer with respect to the Fremont Hub Redevelopment.
Such agreement shall be executed by Buyer concurrent with the Closing for the
Fremont Hub Property, shall contain commercially reasonable terms regarding the
scope of the services to be performed by DDRS, the fees to be paid to DDRS, and
the performance standards for DDRS that will be acceptable to Buyer, and shall
have a term ending on the date which is the earlier of (a) the date on which all
services to be performed by DDRS under the agreement have been completed or (b)
November 1, 2002. The fees to be payable pursuant to the development services
agreement shall not exceed the following: (i) with respect to leasing
commissions, the current fees payable under the existing liquidation services
agreement between Seller and DDRS and (ii) with respect to other development
services fees, an amount not to exceed four percent (4%) of the hard costs for
the Fremont Hub Redevelopment. During the Contract Period, Seller shall utilize
the services of Jenkens & Gilchrist as its chief outside counsel in connection
with all matters relating to the Fremont Hub Redevelopment. Notwithstanding
anything to the contrary contained herein, DDRS shall not be a third party
beneficiary to this Section 4.7 or any other provision of this Agreement.

                                    ARTICLE 5
                                DEPOSIT; DEFAULT

         SECTION 5.1 BUYER'S DEFAULT & DEPOSIT. Buyer shall deliver the Deposit
as required under Section 2.2. In the event that this transaction is consummated
as contemplated by this Agreement, then the entire amount of the Deposit (as may
be adjusted pursuant to the terms of this Agreement) shall be credited against
the Purchase Price. The entire amount of the Option Payment shall be
nonrefundable except in the event this transaction fails to close due to
termination of this Agreement pursuant Section 2.5(b), Section 2.7(b), Section
3.1(a)(vi) or Section 5.2 in which event that portion of the Option Payment
allocated to the affected Property shall be returned to Buyer. If the Agreement
is terminated as to any Property or Properties pursuant to Section 3.2(c), the
portion of the Option Payment allocated to the affected Property shall be
returned to Buyer to the extent permitted under Section 3.2(c). BUYER
ACKNOWLEDGES THAT SELLER'S AGREEMENT NOT TO PURSUE OR ACCEPT OTHER OFFERS TO
PURCHASE ALL OR ANY OF THE PROPERTIES IS SUFFICIENT CONSIDERATION FOR THE OPTION
PAYMENT AND THAT THE NON-REFUNDABILITY OF THE OPTION PAYMENT IS A MATERIAL
INDUCEMENT TO SELLER IN AGREEING TO ENTER INTO THIS AGREEMENT. In the event this
transaction fails to close as to a specific Property due to termination of this
Agreement pursuant to Sections 2.5(b), 3.1(a)(vi), 3.2, 5.2 or 7.1, that portion
of the Additional Deposit allocated to the affected

                                    Page 24
<Page>

Property shall be returned to Buyer, and the portion of the Option Payment
allocated to the affected Property shall be deemed released to Seller or
returned to Buyer as expressly set forth in those Sections of the Agreement.
Except in the foregoing events, the entire Additional Deposit shall be
non-refundable. BUYER ACKNOWLEDGES THAT THE CLOSING OF THE SALE OF THE
PROPERTIES TO BUYER, ON THE TERMS AND CONDITIONS AND WITHIN THE TIME PERIOD SET
FORTH IN THIS AGREEMENT, IS MATERIAL TO SELLER. BUYER ALSO ACKNOWLEDGES THAT
SUBSTANTIAL DAMAGES WILL BE SUFFERED BY SELLER IF SUCH TRANSACTION IS NOT SO
CONSUMMATED DUE TO BUYER'S DEFAULT UNDER THIS AGREEMENT. BUYER FURTHER
ACKNOWLEDGES THAT, AS OF THE DATE OF THIS AGREEMENT, SELLER'S DAMAGES WOULD BE
EXTREMELY DIFFICULT OR IMPOSSIBLE TO COMPUTE IN LIGHT OF THE UNPREDICTABLE STATE
OF THE ECONOMY AND OF GOVERNMENTAL REGULATIONS, THE FLUCTUATING MARKET FOR REAL
ESTATE AND REAL ESTATE LOANS OF ALL TYPES, AND OTHER FACTORS WHICH DIRECTLY
AFFECT THE VALUE AND MARKETABILITY OF THE PROPERTIES. IN LIGHT OF THE FOREGOING
AND ALL OF THE OTHER FACTS AND CIRCUMSTANCES SURROUNDING THIS TRANSACTION, AND
FOLLOWING NEGOTIATIONS BETWEEN THE PARTIES, BUYER AND SELLER AGREE THAT THE
AMOUNT OF THE DEPOSIT REPRESENTS A REASONABLE ESTIMATE OF THE DAMAGES WHICH
SELLER WOULD SUFFER BY REASON OF BUYER'S DEFAULT HEREUNDER. ACCORDINGLY, BUYER
AND SELLER HEREBY AGREE THAT, IN THE EVENT OF SUCH DEFAULT BY BUYER UNDER THIS
AGREEMENT, SELLER MAY TERMINATE THIS AGREEMENT BY GIVING NOTICE TO BUYER AND
TITLE COMPANY. IN THE EVENT OF SUCH TERMINATION, SELLER SHALL RETAIN THE DEPOSIT
AS LIQUIDATED DAMAGES IN LIEU OF ANY OTHER CLAIM SELLER MAY HAVE AT LAW OR IN
EQUITY (INCLUDING, WITHOUT LIMITATION, SPECIFIC PERFORMANCE) ARISING BY REASON
OF BUYER'S DEFAULT. THE PARTIES HAVE INITIALED THIS SECTION 5.1 TO ESTABLISH
THEIR INTENT SO TO LIQUIDATE DAMAGES.

Seller's                            Buyer's
Initials: _________________         Initials: ___________________

This Section 5.1 is intended only to liquidate and limit Seller's rights to
damages arising due to Buyer's failure to purchase the Properties and shall not
limit the indemnification or other obligations of Buyer pursuant to (A) any
other documents delivered pursuant to this Agreement or (B) Sections 7.2 and 7.8
of this Agreement.

         SECTION 5.2 SELLER'S DEFAULT. If, as to any specific Property, (a)
Buyer has demonstrated that it is fully ready and able to perform all of its
material closing obligations (e.g., able to deliver the necessary funds into
escrow), (b) all of the conditions precedent in Section 3.1(b)(ii), (iii) and
(iv), if applicable to such affected Property, have been satisfied by Seller or
waived by Seller in its sole discretion, and (c) Seller shall refuse to perform
its material closing obligations under this Agreement (e.g., by refusing to
convey the Property to Buyer at Closing), then Buyer's sole and exclusive remedy
shall be either (i) to pursue an action for specific

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performance, provided, that notwithstanding anything to the contrary contained
herein, Buyer's right to pursue an action for specific performance is expressly
conditioned on Buyer not being in default hereunder or (ii) to receive from
Seller (x) a return of that portion of the Deposit allocated to the affected
Property in the event Seller refuses to perform its material closing obligations
with respect to such Property (in which case the term "Deposit" shall be deemed
reduced by the amount returned to Buyer) plus (y) the allocated amount of
$2,500,000.00 as set forth on EXHIBIT O for such affected Property as liquidated
damages. In connection with such liquidated damage amount, SELLER ACKNOWLEDGES
THAT THE CLOSING OF THE SALE OF THE PROPERTIES TO BUYER ON THE TERMS AND
CONDITIONS AND WITHIN THE TIME PERIOD SET FORTH IN THIS AGREEMENT, IS MATERIAL
TO BUYER. SELLER ALSO ACKNOWLEDGES THAT SUBSTANTIAL DAMAGES WILL BE SUFFERED BY
BUYER IF SUCH TRANSACTION IS NOT SO CONSUMMATED DUE TO SELLER'S DEFAULT UNDER
THIS AGREEMENT. SELLER FURTHER ACKNOWLEDGES THAT, AS OF THE DATE OF THIS
AGREEMENT, BUYER'S DAMAGES WOULD BE EXTREMELY DIFFICULT OR IMPOSSIBLE TO COMPUTE
IN LIGHT OF THE UNPREDICTABLE STATE OF THE ECONOMY AND OF GOVERNMENTAL
REGULATIONS, THE FLUCTUATING MARKET FOR REAL ESTATE AND REAL ESTATE LOANS OF ALL
TYPES, AND OTHER FACTORS WHICH DIRECTLY AFFECT THE VALUE AND MARKETABILITY OF
THE PROPERTIES. IN LIGHT OF THE FOREGOING AND ALL OF THE OTHER FACTS AND
CIRCUMSTANCES SURROUNDING THIS TRANSACTION, AND FOLLOWING NEGOTIATIONS BETWEEN
THE PARTIES, SELLER AND BUYER AGREE THAT THE ALLOCATED AMOUNT OF $2,500,000.00
AS SET FORTH ON EXHIBIT O FOR THE AFFECTED PROPERTY REPRESENTS A REASONABLE
ESTIMATE OF THE DAMAGES WHICH BUYER WOULD SUFFER BY REASON OF SELLER'S DEFAULT
HEREUNDER IF BUYER DOES NOT ELECT TO ENFORCE SPECIFIC PERFORMANCE. ACCORDINGLY,
SELLER AND BUYER HEREBY AGREE THAT, IN THE EVENT OF SUCH DEFAULT BY SELLER UNDER
THIS AGREEMENT AS TO A SPECIFIC PROPERTY, BUYER MAY TERMINATE THIS AGREEMENT AS
TO SUCH AFFECTED PROPERTY BY GIVING NOTICE TO SELLER AND TITLE COMPANY AND IN
THE EVENT OF SUCH TERMINATION, BUYER SHALL RECEIVE A REFUND OF THAT PORTION OF
THE DEPOSIT ALLOCATED TO THE AFFECTED PROPERTY (AND THE TERM "DEPOSIT" SHALL BE
DEEMED REDUCED BY THE AMOUNT RETURNED TO BUYER) AND ALSO RECEIVE FROM SELLER THE
ALLOCATED AMOUNT OF $2,500,000.00 AS SET FORTH ON EXHIBIT O FOR THE AFFECTED
PROPERTY AS LIQUIDATED DAMAGES.

Seller's                            Buyer's
Initials: _________________         Initials: ___________________

Nothing contained in this Section 5.2 is intended to limit Buyer's rights under
Sections 7.2 and 7.8 of this Agreement.

         It is expressly understood and agreed that Seller shall become
obligated to pay the aforesaid liquidated damage amount only if Seller shall
refuse to perform its material closing

                                    Page 26
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obligations under this Agreement, e.g., by refusing to convey the Properties to
Buyer at Closing upon Buyer's tender of the cash portion of the Purchase Price.

                                    ARTICLE 6
                                     CLOSING

         SECTION 6.1 CLOSING AND ESCROW ARRANGEMENTS. Escrow for the purchase
and sale contemplated by this Agreement shall be opened by Buyer and Seller with
Title Company. Closing of the transaction contemplated by this Agreement shall
occur on the Closing Date, subject to (i) Buyer's right to extend the Closing
Date to November 30, 2001 by delivering to Seller on or before October 21, 2001,
written notice of Buyer's election to extend the Closing Date, (ii) Buyer's
right to extend the Closing Date for certain Properties only as provided in
Section 3.2(c), (iii) Seller's right to extend the Closing Date for certain
Properties only as provided in Sections 3.2(b) and 3.2(c) and (iv) Seller's
right to extend the Closing Date for the Property commonly referred to as
Ontario Village as provided in Section 2.7(a). Upon exercise by Buyer of its
option to extend pursuant to clause (i) above, the term "Closing Date" shall
mean November 30, 2001 as to the affected Properties only and upon exercise by
Buyer of its option to extend pursuant to clause (ii) above, the term "Closing
Date" shall mean the date to which such Closing is deferred pursuant to the
applicable Section 3.2(c) as to the affected Properties only. Upon exercise by
Seller of its option to delay Closing pursuant to Sections 3.2(b), 3.2(c) and
2.7(a) as to the affected Properties only, the term "Closing Date" shall mean
the date to which such Closing is deferred pursuant to the applicable
subsections of Section 3.2 or Section 2.7(a). At least one business day prior to
the Closing Date, Seller and Buyer shall each deliver escrow instructions to
Title Company consistent with this Article 6, and designating Title Company as
the "Reporting Person" for the transaction pursuant to Section 6045(e) of the
Code. By signing below, Title Company agrees to act as the "Reporting Person"
for the transaction pursuant to Section 6045(e) of the Code and to complete and
file with the IRS Forms 1099-S (and furnish Buyer and Seller with copies
thereof) on or before the due date therefor. In addition, the parties shall
deposit in escrow, at least one business day prior to the Closing Date (unless
otherwise provided below in this Section 6.1) the funds and documents, to the
extent applicable, for the Property or Properties that are the subject of such
Closing as described below:

                  (a)      Seller shall deposit (or cause to be deposited):

                           (i)      a duly executed and acknowledged deed
                                    pertaining to the Real Property portion of
                                    each of the Properties, each in the form
                                    attached to this Agreement as EXHIBIT D-1
                                    (collectively, the "Deeds"), an assignment
                                    of Ground Leases with respect to the
                                    Properties subject to the Ground Leases in
                                    the form attached to this Agreement as
                                    EXHIBIT D-5 (the "Ground Lease Assignments")
                                    or an assignment of the member interest in
                                    the limited liability company owning the
                                    Properties commonly known as Ladera and
                                    Margarita Plaza for which such interest is
                                    being acquired in the form attached to this
                                    Agreement as EXHIBIT D-6 (the "Assignments
                                    of Member Interest");

                                    Page 27
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                           (ii)     a duly executed bill of sale pertaining to
                                    the Personal Property portion of each of the
                                    Properties, each in the form attached to
                                    this Agreement as EXHIBIT D-2 (collectively,
                                    the "Bills of Sale");

                           (iii)    a duly executed counterpart assignment and
                                    assumption pertaining to the Intangible
                                    Property portion of each of the Properties,
                                    each in the form attached to this Agreement
                                    as EXHIBIT D-3 (collectively, the
                                    "Assignments of Intangibles");

                           (iv)     a duly executed counterpart assignment and
                                    assumption pertaining to the Leases, each in
                                    the form attached to this Agreement as
                                    EXHIBIT D-4 (collectively, the "Assignments
                                    of Leases");

                           (v)      a certificate from Seller certifying the
                                    information required by any of the states in
                                    which any of the Properties are located to
                                    establish that the transaction contemplated
                                    by this Agreement is exempt from the tax
                                    withholding requirements of such states (the
                                    "State Certificates");

                           (vi)     a certificate from Seller certifying the
                                    information required by 1445 of the Code to
                                    establish, for the purposes of avoiding
                                    Buyer's tax withholding obligations, that
                                    Seller is not a "foreign person" as defined
                                    in 1445(f)(3) of the Code (the "FIRPTA
                                    Certificate");

                           (vii)    a letter executed by Seller and, if
                                    applicable, its management agent and the
                                    Buyer, in form and substance satisfactory to
                                    Buyer, addressed to all tenants of each
                                    respective Property, notifying all such
                                    tenants of the transfer of ownership of the
                                    Property and directing payment of all rents
                                    accruing after the Closing Date to be made
                                    to Buyer or such other party as Buyer
                                    directs (the "Tenant Notices");

                           (viii)   to the extent not previously delivered to
                                    Buyer and in Buyer's possession or under its
                                    control, originals of any of the Contracts,
                                    Leases, licenses, approvals, plans,
                                    specifications, warranties, other Intangible
                                    Property and other books and records
                                    relating to the ownership and operation of
                                    the Property (or if the original is not in
                                    the Seller's possession or control, copies
                                    thereof to the extent in Seller's possession
                                    or control);

                           (ix)     an updated Rent Roll for each Property in
                                    the same format as was used for the Rent
                                    Rolls attached hereto as EXHIBIT C-1 or in
                                    such other format as is reasonably
                                    acceptable to Buyer dated no later than five
                                    (5) days prior to Closing;

                           (x)      subject to the provisions of Section 2.5,
                                    such affidavits as may be reasonably and
                                    customarily required by the Title Company to
                                    issue

                                    Page 28
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                                    the Buyer's Title Policies in the form
                                    required hereby (including, without
                                    limitation, without exception for
                                    parties-in-possession (other than tenants
                                    under the Leases) or mechanics' or
                                    materialmen's liens which are to be
                                    satisfied by Seller pursuant to Section 2.5)
                                    together with such other documents
                                    reasonably required by the Title Company for
                                    Seller to comply with the obligations under
                                    Section 2.5;

                           (xi)     evidence reasonably satisfactory to the
                                    Title Company as to the legal existence and
                                    authority of the Seller and the authority
                                    and incumbency of the persons signing
                                    documents on behalf of the Seller;

                           (xii)    duly executed documentation required by the
                                    Lender and acceptable to Seller evidencing
                                    that Buyer has accepted the conveyance of
                                    the Property subject to the Assumed
                                    Indebtedness and the Loan Documents and the
                                    release of Seller and Seller's Subsidiaries
                                    from all obligations under the Loan
                                    Documents (the "Loan Assignment and Release
                                    Documents"); and

                            (xv)    such other documents and instruments as may
                                    be required by any other provision of this
                                    Agreement or as may reasonably be required
                                    by Title Company or otherwise to carry out
                                    the terms and intent of this Agreement.

In addition, Seller shall deliver to Buyer on the Closing Date, outside of
escrow, to the extent in Seller's possession or control, the originals of all
Leases, Contracts and tenant files and all keys to the applicable Properties.

                  (b)      Buyer shall deposit:

                           (i)      on the Closing Date, immediately available
                                    funds sufficient to pay the balance of the
                                    applicable portion of the Purchase Price,
                                    plus sufficient additional cash to pay
                                    Buyer's share of all escrow costs and
                                    closing expenses;

                           (ii)     a duly executed counterpart for each of the
                                    Assignments of Intangibles, Ground Lease
                                    Assignments, the Assignments of Member
                                    Interest, the Loan Assignment and Release
                                    Documents, Assignments of Leases (and Tenant
                                    Notices where required);

                           (iii)    a certificate duly executed by Buyer in
                                    favor of Seller confirming the waivers and
                                    acknowledgments set forth in Sections 2.5
                                    and 4.4 above;

                           (iv)     evidence reasonably satisfactory to Title
                                    Company as to the legal existence and
                                    authority of the Buyer and the authority and

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                                    incumbency of the persons signing documents
                                    on behalf of the Buyer; and

                           (v)      such other documents and instruments as may
                                    be required by any other provision of this
                                    Agreement or as may reasonably be required
                                    by Title Company or otherwise to carry out
                                    the terms and intent of this Agreement.

         SECTION 6.2 TITLE. Title Company shall close escrow on the Closing Date
by:

                  (a)      recording the Deeds and Ground Lease Assignments;

                  (b)      issuing the Buyer's Title Policies to Buyer pursuant
to Section 3.1 above;

                  (c)      delivering to Buyer originals of the Bills of Sale,
the FIRPTA Certificate, the State Certificates, executed counterparts of each of
the Assignments of Intangibles, Assignments of Leases, the Ground Lease
Assignments, the Assignments of Member Interest, the Loan Assignment and Release
Documents, and all of the other documents in escrow under Section 6.1(a);

                  (d)      delivering to Seller (i) a counterpart for each of
the Assignments of Intangibles, the Assignments of Leases , the Ground Lease
Assignments, the Assignments of Member Interest, and the Loan Assignment and
Release Documents executed by Buyer, (ii) the certificate described in Section
6.1(b)(iii) above, and (iii) funds necessary for payment of the cash portion of
the Purchase Price payable for the Properties that are the subject of the
Closing pursuant to Section 2.2; and

                  (e)      if directed by the parties, delivering the Tenant
Notices to the tenants by certified mail, return receipt requested.

         SECTION 6.3 PRORATIONS.

                  (a)      Taxes. Real estate taxes, personal property taxes and
any general or special assessments with respect to the Properties which are not
the direct payment obligation of tenants pursuant to the Leases (as opposed to a
reimbursement obligation) shall be prorated as of the Closing Date -- to the end
that Seller shall be responsible for all taxes and assessments that are
allocable to any period prior to the Closing Date and Buyer shall be responsible
for all taxes and assessments that are allocable to any period from and after
the Closing Date. To the extent any real or personal property taxes subject to
apportionment in accordance with the foregoing are, as of the Closing Date, the
subject of any appeal filed by or on behalf of Seller, then notwithstanding
anything to the contrary contained in this subparagraph, (i) no apportionment of
the taxes being appealed shall occur at the Closing, but instead such
apportionment shall be deferred until the outcome of the appeal is final and the
amount of taxes owing becomes fixed at which time Seller shall be responsible
for all such taxes that are allocable to any period prior to the Closing Date
and Buyer shall be responsible for all such taxes that are allocable to any
period from and after the Closing Date, and (ii) Seller shall provide Buyer with
adequate security, either in the form of a bond or by escrowing the amounts
being appealed, to assure Buyer that Seller's portion of such tax liability,
including any penalty, will be available. To the extent any taxes

                                    Page 30
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which are the subject of an appeal have been paid by Seller under protest and
the appeal results in Buyer receiving a credit toward future tax liability or a
refund, then Buyer shall, within thirty (30) days following receipt of such
refund or notice of such credit, pay to Seller the full amount of such refund or
credit allocable to the period prior to the Closing Date, excluding, however,
any portion of such refund or credit that is required to be passed through to
the tenants pursuant to any Leases or to other parties by contract (existing on
the Closing Date).

                  (b)      Prepaid Expenses. Buyer shall be charged for those
prepaid expenses paid by Seller which will benefit Buyer allocable to any period
from and after the Closing Date, including, without limitation, annual permit
and confirmation fees, fees for licenses and all security or other deposits paid
by Seller to third parties which Buyer elects to assume and to which Buyer then
shall be entitled to the benefits and refund following the Closing Date.

                  (c)      Property Income and Expense. The following prorations
and adjustments shall occur as of the Closing. Prior to the Closing Date, Seller
shall provide all information to Buyer required to calculate such prorations and
adjustments, and representatives of Buyer and Seller shall together make such
calculations:

                           (i)      General. Subject to the specific provisions
                                    of clauses (ii), (iii), (iv) and (v) below,
                                    income and expense shall be prorated on the
                                    basis of the actual days of the applicable
                                    month and on a cash basis (except for items
                                    of income and expense that are payable less
                                    frequently than monthly, which shall be
                                    prorated on an accrual basis). All such
                                    items attributable to the period prior to
                                    the Closing Date shall be allocated to
                                    Seller; all such items attributable to the
                                    period on and following the Closing Date
                                    shall be allocated to Buyer. Buyer shall be
                                    credited at Closing with (a) any portion of
                                    rental agreement or lease deposits which are
                                    refundable to the tenants and have not been
                                    applied to outstanding tenant obligations in
                                    accordance with the terms of the applicable
                                    Lease and (b) rent prepaid beyond the
                                    Closing Date. Seller shall transfer Seller's
                                    entire interest in any letters of credit or
                                    certificates of deposit held by Seller as
                                    the deposits described in clause (a) above
                                    and shall diligently cooperate with Buyer in
                                    obtaining any reissuance or confirmation of
                                    the effectiveness of the transfer of such
                                    instruments. Buyer shall not be entitled to
                                    any interest on rental agreement or lease
                                    deposits or prepaid rent accrued on or
                                    before the Closing Date, except to the
                                    extent any such amount of interest is
                                    refundable or payable to any tenant under a
                                    Lease or applicable law. Seller shall be
                                    credited at Closing with any prepaid rent
                                    under the Ground Leases, any impounds or
                                    escrow accounts held by the Lender or by the
                                    Lender's servicers with respect to any of
                                    the Properties subject to the Assumed
                                    Indebtedness, as confirmed by Lender or its
                                    servicer, as applicable, and any refundable
                                    deposits or bonds held by any utility,
                                    governmental agency or service contractor,
                                    to the extent such deposits or bonds are
                                    assigned to Buyer on the Closing Date. If
                                    Lender or its servicer has not

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                                    confirmed the aforesaid amounts on or before
                                    the Closing Date, such credit will be given
                                    to Seller within five (5) business days
                                    after such amounts are so confirmed.

                           (ii)     Leasing Costs. Buyer shall be credited at
                                    Closing with any leasing commissions, tenant
                                    improvements or other allowances to be paid
                                    by Buyer after the Closing Date with respect
                                    to the current term of any Lease shown on
                                    the Rent Rolls attached hereto as EXHIBIT
                                    C-1, and Seller shall pay on or before the
                                    Closing Date all such items payable prior to
                                    the Closing Date. Seller shall be credited
                                    at Closing with an amount equal to (A) the
                                    amount of any leasing commissions, tenant
                                    improvements and other allowances paid by
                                    Seller after the Effective Date to the
                                    extent such items relate to new Leases or
                                    Lease modifications executed or extensions
                                    of terms or expansions of premises that are
                                    not shown on the Rent Rolls attached hereto
                                    as EXHIBIT C-1 and permitted under the terms
                                    of this Agreement, multiplied by (B) a
                                    fraction in which the numerator is the
                                    number of months or partial months of the
                                    stabilized term (i.e., the term following
                                    the tenant's entry into occupancy and
                                    commencement of unabated rental obligations)
                                    of any such Lease following the Closing Date
                                    and the denominator is the number of months
                                    or partial months in the stabilized term of
                                    such Lease. Buyer shall assume all
                                    obligations for any leasing commissions,
                                    tenant improvement or other allowances
                                    payable following the Closing Date with
                                    respect to Leases or Lease modifications
                                    executed or extensions of terms or
                                    expansions of premises that are not shown on
                                    the Rent Rolls attached hereto as EXHIBIT
                                    C-1 and which are permitted under the terms
                                    of this Agreement. Any expenditures or
                                    commitments to expenditures relating to
                                    Leases or modifications or extensions of
                                    terms or expansions of premises, in excess
                                    of the amounts budgeted and approved as part
                                    of Buyer's approval of the Lease (where such
                                    approval is required) shall be subject to
                                    Buyer's specific approval, which shall not
                                    be unreasonably withheld and shall be deemed
                                    given if Buyer should fail to approve or
                                    disapprove such excess expenditure within
                                    five (5) business days following receipt of
                                    Seller's written request and delivery of
                                    material information reasonably necessary to
                                    allow Buyer to make an informed decision.

                           (iii)    Rents. Rents (including both minimum rent
                                    and Additional Rent, as herein defined)
                                    payable by tenants under the Leases (other
                                    than delinquent rents), shall be prorated as
                                    and when collected (whether such collection
                                    occurs prior to, on, or after the Closing
                                    Date). Buyer shall receive a credit for the
                                    amounts actually received by Seller (i.e.,
                                    landlord) before the Closing Date and which
                                    pertain to any period after the Closing
                                    Date. Buyer shall not receive a credit

                                    Page 32
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                                    at the Closing for any rents for the month
                                    in which the Closing occurs which are in
                                    arrears and have not then been received. As
                                    to any tenants who are delinquent in the
                                    payment of rent on the Closing Date, Seller
                                    shall be permitted to use reasonable efforts
                                    including commencement of legal action after
                                    the Closing Date to collect or caused to be
                                    collected delinquent rents and other damages
                                    (but shall not be permitted to file an
                                    unlawful detainer action, an action to
                                    otherwise evict the tenant or terminate the
                                    tenant's lease or an involuntary petition
                                    against the tenant under bankruptcy laws or
                                    other debtor relief laws). Any and all rents
                                    so collected by either party following the
                                    Closing (less a deduction for all reasonable
                                    collection costs and expenses incurred by
                                    the collecting party) shall be successively
                                    applied (after deduction for reasonable
                                    collection costs) to the payment of (x) rent
                                    due and payable for the month in which the
                                    Closing occurs, (y) rent due and payable for
                                    the months succeeding the month in which the
                                    Closing occurs (through and including the
                                    month in which payment is made) and (z) rent
                                    due and payable for the months preceding the
                                    month in which the Closing occurs. If all or
                                    part of any rents or other charges received
                                    by Buyer following the Closing are allocable
                                    to Seller pursuant to the foregoing
                                    sentence, then such sums shall be promptly
                                    paid to Seller; if all or part of any rents
                                    or other charges received by Seller
                                    following the Closing are allocable to Buyer
                                    pursuant to the foregoing sentence, then
                                    such sums shall be promptly paid to Buyer.
                                    Seller reserves the right to pursue any
                                    damages remedy Seller may have against any
                                    tenant with respect to such delinquent
                                    rents, but shall have no right to exercise
                                    any other remedy under the Lease (including,
                                    without limitation, termination or
                                    eviction).

                           (iv)     Additional Rents. Any percentage rent,
                                    escalation charges for real estate taxes,
                                    parking charges, operating and maintenance
                                    expenses, pass-throughs for roof, parking
                                    area and other capital asset replacements
                                    (including amortization payments),
                                    escalation rents or charges, electricity
                                    charges, cost of living increases or any
                                    other charges of a similar nature other than
                                    fixed or base rent under the Leases
                                    (collectively, the "Additional Rents") shall
                                    be prorated as of the Closing Date between
                                    Buyer and Seller, proration payments to be
                                    made on or before the date which is ninety
                                    (90) days following the end of the calendar
                                    year in which the Closing occurs based on
                                    the actual number of days of the year and
                                    month which shall have elapsed as of the
                                    Closing Date. Prior to Closing, Seller shall
                                    provide Buyer on an estimated basis with
                                    information regarding Additional Rents which
                                    were received by Seller prior to Closing and
                                    the amount of reimbursable expenses paid by
                                    Seller prior to Closing. If Seller's
                                    collections of such amounts is in excess of
                                    the amounts actually paid by Seller for such
                                    items for the

                                    Page 33
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                                    period prior to Closing, then Buyer shall
                                    receive a credit at Closing for the excess
                                    amounts collected. Buyer shall apply all
                                    such excess amounts to the charges owed by
                                    Buyer for such items for the period after
                                    the Closing and, if required by the Leases,
                                    shall rebate or credit the tenants with any
                                    remainder. If it is determined that the
                                    amount collected during Seller's ownership
                                    period was less than the amounts actually
                                    paid by Seller for such items for the period
                                    prior to the Closing, then the collection
                                    and remitting of such amounts shall be
                                    governed by the provisions of subsection
                                    (iii) above regarding the post-closing
                                    application of rents. With respect to
                                    reimbursable expenses paid by Seller prior
                                    to Closing, but not billed to tenants prior
                                    to Closing, Seller will provide to Buyer all
                                    relevant information including supporting
                                    documentation and Seller's calculation of
                                    the amount to be billed to each tenant. On
                                    or before the date which is ninety (90) days
                                    following the end of the calendar year in
                                    which the Closing occurs, Buyer shall
                                    deliver to Seller a reconciliation of all
                                    expenses reimbursable by tenants under the
                                    Leases, and the amount of Additional Rents
                                    received by Seller and Buyer relating
                                    thereto (the "Reconciliation"). Upon
                                    reasonable notice and during normal business
                                    hours, each party shall make available to
                                    the other all information reasonably
                                    required to confirm the Reconciliation. In
                                    the event of any overpayment of Additional
                                    Rents by the tenants to Seller, Seller shall
                                    promptly, but in no event later than fifteen
                                    (15) days after receipt of the
                                    Reconciliation, pay to Buyer the amount of
                                    such overpayment and Buyer, as the landlord
                                    under the particular Leases, shall pay or
                                    credit to each applicable tenant the amount
                                    of such overpayment. In the event of an
                                    underpayment of Additional Rents by the
                                    tenants to Seller, Buyer shall pay to Seller
                                    the amount of such underpayment within
                                    fifteen (15) days following Buyer's receipt
                                    of any such amounts from the tenants.

                           (v)      Fremont Hub Redevelopment Costs. Seller
                                    shall be credited at Closing for the Fremont
                                    Hub Property with any out-of-pocket
                                    construction costs and expenses (including
                                    both hard and soft costs), permit fees,
                                    subdivision fees, survey costs, and leasing
                                    costs relating to the Fremont Hub
                                    Redevelopment and incurred by Seller after
                                    the Effective Date.

                  (d)      Adjustments to Prorations. Subject to Section 6.3(a)
and 6.3(c)(iv) above, after the Closing, the parties shall from time to time, as
soon as is practicable after accurate information becomes available and in any
event within one (1) year following the Closing Date, recalculate and
reapportion any of the items subject to proration or apportionment (i) which
were not prorated and apportioned at the Closing because of the unavailability
of the information necessary to compute such proration, or (ii) which were
prorated or apportioned at the Closing based upon estimated or incomplete
information, or (iii) for which any errors or omissions in computing prorations
at the Closing are discovered subsequent thereto, and thereafter the proper

                                    Page 34
<Page>

party shall be reimbursed based on the results of such recalculation and
reapportionment. Unless otherwise specified herein, all such reimbursements
shall be made on or before thirty (30) days after receipt of notice of the
amount due. Any such reimbursements not timely paid shall bear interest at a per
annum rate equal to ten percent (10%) from the due date until all such unpaid
sums together with all interest accrued thereon are paid if payment is not made
within ten (10) days after receipt of a bill therefor.

                  (e)      Prior Year's Reconciliation. If the Closing occurs
before Seller has performed the annual reconciliation of Additional Rent for the
calendar year immediately preceding the calendar year in which the Closing
occurs, then Seller shall, as soon as practicable after Closing, perform such
reconciliation at its sole cost and expense. Upon completion of such annual
reconciliation, Seller shall immediately deliver to Buyer a detailed description
of any Additional Rent which are payable by or reimbursable to any present
tenant (the "Prior Year Reconciliation"). The Prior Year Reconciliation shall be
accompanied by all applicable back-up documentation, together with Seller's
check for such Additional Rent which is reimbursable to a tenant. Based upon
Seller's calculations, Buyer shall send customary statements for reimbursement
of Additional Rent to tenants under the Leases based on the Prior Year
Reconciliation, and shall remit to Seller within thirty (30) days of receipt,
all sums so collected. If Seller's calculations show that Additional Rent has
been overpaid by any present tenant and Seller has submitted its check to Buyer
for such amounts, Buyer shall refund such Additional Rent to such tenant.

                  (f)      Survival. The provisions of this Section 6.3 shall
survive the Closing.

         SECTION 6.4 OTHER CLOSING COSTS.

                  (a)      Payment of the premium for the issuance of the
Buyer's Title Policies (other than that portion of the premium for obtaining an
ALTA, rather than a CLTA owner's policy of title insurance or other standard
coverage, and the premium for any endorsements to Buyer's Title Policies) in the
amount of the Purchase Price shall be paid by Buyer or Seller according to
custom as set forth in EXHIBIT G. Buyer shall pay the additional premium for
obtain an ALTA or extended coverage, rather than a CLTA or standard coverage,
owner's policy of title insurance and the premium for the issuance of any
endorsements to Buyer's Title Policies. Seller shall pay all county and city
documentary transfer or transaction taxes or fees due on the transfer of the
Properties. All other Closing costs, except as otherwise provided below, shall
be paid by Seller and Buyer according to custom in the county in which the
applicable Property is located as set forth on EXHIBIT G attached hereto.

                  (b)      Seller shall pay 50% of any escrow or other costs
charged by or reimbursable to the Title Company.

                  (c)      Buyer shall pay 50% of any escrow or other costs
charged by or reimbursable to the Title Company.

                  (d)      Seller shall pay transfer fees related to the Assumed
Indebtedness.

                                    Page 35
<Page>

                  (e)      Seller shall pay all fees, costs, premiums, and
penalties, if any, for releasing of record all deeds of trust and mortgages
(other than the Loan Documents evidencing the Assumed Indebtedness), if
applicable to such Property, and which are not Permitted Exceptions.

         SECTION 6.5 FURTHER DOCUMENTATION. At or following the close of escrow,
Buyer and Seller shall execute any certificate, memoranda, assignment or other
instruments required by this Agreement, law or local custom or otherwise
reasonably requested by the other party to effect the transactions contemplated
by this Agreement and shall take such other actions (but at no material cost or
expense) as are reasonably requested by the other party to effect the
transactions contemplated by this Agreement.

                                    ARTICLE 7
                                  MISCELLANEOUS

         SECTION 7.1 DAMAGE OR DESTRUCTION. If at any time prior to the Closing,
Seller determines that any of the Properties has been destroyed or damaged by
earthquake, flood or other casualty and that such damage will require more than
$750,000 for any one Property, (a "Casualty"), or if a proceeding is instituted
for the taking of all or any material portion of any of the Properties under the
power of eminent domain (a "Taking"), Buyer may terminate this Agreement as to
the affected Property within fifteen (15) days after the date Buyer receives
notification in writing by Seller of such Casualty or Taking. Upon such
termination, the Purchase Price for the Properties shall be reduced by the
amount of the Purchase Price allocated for the Property that has incurred the
Casualty damage or is the subject of a Taking. If Buyer does not so terminate
this Agreement as to the affected Property, Buyer shall be deemed to have waived
the material loss or damage from such Casualty or Taking and shall proceed to
close, as provided hereinbelow. If Buyer waives any material loss or damage from
such Casualty or Taking and proceeds to consummate the purchase and sale
transaction, or in the event of immaterial loss, damage or condemnation as to
any Property, then Buyer shall consummate the purchase of such Properties in
accordance with this Agreement, in which event Seller shall assign to Buyer at
the Closing (A) any insurance proceeds payable to Seller on account of such
Casualty (excluding rental income insurance proceeds allocable to the period
prior to Closing) or (B) any award payable to Seller by reason of the Taking
(excluding any award for a temporary taking to the extent allocable to the
period prior to Closing), as the case may be. If Buyer fails to give such notice
within such 15-day period, then Buyer shall be deemed to have elected to
terminate this Agreement pursuant to this Section 7.1. The Closing Date shall be
deferred, if necessary, to permit Buyer to have the 15-day period following
receipt of notice of a Casualty or a Taking to make the election specified
hereinabove. If Buyer terminates this Agreement pursuant to this Section 7.1,
then that portion of the Additional Deposit allocated to the affected Property
shall be returned to Buyer, that portion of the Option Payment allocated to such
affected Property shall be deemed released to Seller, and the term "Deposit"
shall be deemed reduced by the amount of the Additional Deposit returned to
Buyer and the amount of the Option Payment deemed released to Seller and neither
Seller nor Buyer shall have any further obligations under this Agreement, except
Buyer's obligation to perform those obligations set forth in Sections 2.4(b),
7.2, and 7.8 of this Agreement. Except as provided in Section 4.2(f), nothing
herein shall be deemed to

                                    Page 36
<Page>

constitute an obligation on the part of Seller to carry or maintain any
insurance of any kind whatsoever pertaining to the Property.

         SECTION 7.2 FEES & COMMISSIONS. Each party to this Agreement warrants
to the other that no person or entity can properly claim a right to a real
estate or investment banker's commission, finder's fee, acquisition fee or other
brokerage-type compensation (collectively, "Real Estate Compensation") based
upon the acts of that party with respect to the transaction contemplated by this
Agreement except the brokers who have been retained by Seller pursuant to a
separate written agreement and whose Real Estate Compensation shall be paid by
Seller and except for First Union Securities, Inc. and GE Capital Corporation,
each retained by Buyer and whose Real Estate Compensation will be paid by Buyer
 . Each party hereby agrees to indemnify and defend the other against and to hold
the other harmless from any and all loss, cost, liability or expense (including
but not limited to attorneys' fees and returned commissions) resulting from any
claim for Real Estate Compensation by any person or entity based upon such acts.

         SECTION 7.3 SUCCESSORS AND ASSIGNS. Prior to the Closing Date, Buyer
will assign this Agreement to a Delaware limited partnership, in which P.O'B
Montgomery & Company, Apollo Real Estate Advisors, GE Capital Corporation or
affiliates of each or any of them will be equity investors. Except as stated in
the preceding sentence, Buyer may not assign any of Buyer's rights or duties
hereunder without the prior written consent of Seller, which may be withheld in
Seller's sole discretion.

         SECTION 7.4 NOTICES. Any notice, consent or approval (or request for
consent or approval) required or permitted to be given under this Agreement
shall be in writing and shall be given or requested by (i) hand delivery, (ii)
Federal Express or another reliable overnight courier service, (iii) facsimile
telecopy, or (iv) United States mail, registered or certified mail, postage
prepaid, return receipt required, and addressed as follows:

To Seller:

         Burnham Pacific Properties, Inc.
         100 Bush Street, Suite 2400
         San Francisco, California 94104
         Attn: Scott C. Verges
         Fax No.:  (415) 352-1711

With a copy at the same time to:

         Burnham Pacific Properties
         110 West A Street, Suite 900
         San Diego, California  92101
         Attn:  Michael L. Rubin
         Fax No.: (619) 652-4710

                                    Page 37
<Page>

With a copy at the same time to:

         MBV Law LLP
         101 Vallejo Street
         San Francisco, California  94111
         Attention:  Danna Kozerski
         Fax No.:  (415) 433-6563

To Buyer:

         Pacific Retail, L.P.
         5550 LBJ Freeway
         Suite 380
         Dallas, Texas, 75240
         Attention :  Philip Montgomery
         Fax No.:  972-490-4905

With a copy at the same time to:

         Jenkens & Gilchrist, P.C.
         1445 Ross Ave
         Suite 3200
         Dallas, Texas  75202
         Attention:  Winston W. Walp II
         Fax No.:  (214) 855-4300

Any such notice, consent or approval (or request for consent or approval) shall
be deemed given or requested (i) if given by hand delivery, upon such hand
delivery, (ii) one (1) business day after being deposited with Federal Express
or another reliable overnight courier service, (iii) if sent by facsimile, the
day the facsimile is successfully transmitted, or (iv) if sent by registered or
certified mail, three (3) business days after being deposited in the United
States mail. Any address or name specified above may be changed by notice given
to the addressee by the other party in accordance with this Section 7.4. The
inability to deliver because of a changed address of which no notice was given,
or rejection or other refusal to accept any notice, shall be deemed to be the
receipt of the notice as of the date of such inability to deliver or rejection
or refusal to accept. Any notice to be given by any party hereto may be given by
the counsel for such party.

         SECTION 7.5 ENTIRE AGREEMENT. Excepting this Agreement and the attached
exhibits, which are by this reference incorporated herein, and all documents in
the nature of such exhibits, when executed, contain the entire understanding of
the parties and supersede any and all other written or oral understanding.

         SECTION 7.6 TIME. Time is of the essence of every provision contained
in this Agreement.

                                    Page 38
<Page>

         SECTION 7.7 INCORPORATION BY REFERENCE. All of the exhibits attached to
this Agreement or referred to herein and all documents in the nature of such
exhibits, when executed, are by this reference incorporated in and made a part
of this Agreement.

         SECTION 7.8 ATTORNEYS' FEES. If any dispute between Buyer and Seller
should result in litigation, the prevailing party shall be reimbursed for all
reasonable costs incurred in connection with such litigation or arbitration,
including, without limitation, reasonable attorneys' fees and costs, and the
cost of experts. For purposes of this Agreement, the terms "attorneys' fees" and
"attorneys' costs" shall include the fees and expenses of counsel to the
prevailing party, which may include printing, photocopying, duplicating and
other expenses, air freight charges and fees billed for law clerks, paralegals
and other persons not admitted to the bar but performing services under the
supervision of an attorney

         SECTION 7.9 CONSTRUCTION. The parties acknowledge that each party and
its counsel have reviewed and revised this Agreement and that the normal rule of
construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement or
any amendments or exhibits hereto.

         SECTION 7.10 GOVERNING LAW. This Agreement shall be construed and
interpreted in accordance with and shall be governed and enforced in all
respects according to the laws of the State of California (without giving effect
to conflicts of laws principles).

         SECTION 7.11 CONFIDENTIALITY. Following the full execution of this
Agreement and Buyer's delivery of the Option Payment to Seller, the parties
shall issue a joint press release with respect to this transaction, which press
release shall be in a form approved by Seller and Buyer.

         SECTION 7.12 COUNTERPARTS. This Agreement may be executed in one or
more counterparts. All counterparts so executed shall constitute one contract,
binding on all parties, even though all parties are not signatory to the same
counterpart.

         SECTION 7.13 REPRESENTATIVE. Buyer shall be entitled to rely upon any
notice, approval or decision expressed in writing by Scott C. Verges or Daniel
Platt acting alone on behalf Seller. Seller shall be entitled to rely upon any
notice, approval or decision expressed by Philip Montgomery or Richard Mack
acting alone or on behalf of Buyer.

         SECTION 7.14 STATE SPECIFIC PROVISIONS.

                  (a)      Buyer is hereby apprised of and shall determine
whether any Real Property is located within the coastal zone under the
California Coastal Act.

                  (b)      Buyer is hereby apprised of and shall determine
whether any Real Property is located within a special studies zone under the
Alquist-Priolo Geologic Hazard Act.

                  (c)      To the extent required by law, Seller and Buyer agree
to provide a Real Estate Transfer Disclosure Statement.

                  (d)      Seller shall provide Buyer with a form California
590-RE.

                                    Page 39
<Page>

                  (e)      Buyer and Seller acknowledge that Seller is required
to disclose if the Property lies within the following natural hazard areas or
zones: (1) a special flood hazard area designated by the Federal Emergency
Management Agency (Cal. Civ. Code 1102.17); (2) an area of potential flooding
(Cal. Gov. Code 8589.4); (3) a very high fire hazard severity zone (Cal. Gov.
Code 51183.5); (4) a wild land area that may contain substantial forest fire
risks and hazards (Pub. Resources Code 4136); (5) an earthquake fault zone (Pub.
Resources Code 2621.9); or (6) a seismic hazard zone (Pub. Resources Code 2694).
Buyer and Seller acknowledge that Seller shall employ the services of either
Vista Information Solutions, Inc. or Environmental Data Resources, Inc. (which,
in such capacity is herein called "Natural Hazard Expert") to examine the maps
and other information specifically made available to the public by government
agencies for the purpose of enabling Seller to fulfill its disclosure
obligations with respect to the natural hazards referred to in California Civil
Code Section 1102.6c(a) and to report the result of its examination to Buyer and
Seller in writing. The written report prepared by the Natural Hazard Expert
regarding the results of its examination fully and completely discharges Seller
from its disclosure obligations referred to herein, and, for the purpose of this
Agreement, the provisions of Civil Code Section 1102.4 regarding the
non-liability of each of Seller for errors or omissions not within its personal
knowledge shall be deemed to apply and the Natural Hazard Expert shall be deemed
to be an expert, dealing with matters within the scope of its expertise with
respect to the examination and written report regarding the natural hazards
referred to above. In no event shall Seller have any responsibility for matters
not actually known to Seller.

         SECTION 7.15 CALCULATION OF TIME PERIODS.

         The term "business days" when used in this Agreement means all days
excluding Saturdays, Sundays, and any state or national holidays (including the
optional bank holidays listed in California Civil Code Section 7.1). All periods
of time referred to in this Agreement shall include all Saturdays, Sundays and
state and national holidays unless the period of time specifies business days.
In the computation of any period of time provided for in this Agreement or by
law, the day of the act or event from which said period of time runs shall be
excluded, and the last day of such period shall be included, unless it is not a
business day, in which case the period shall be deemed to run until the end of
the next business day.

[NO FURTHER TEXT ON THIS PAGE; SIGNATURES FOLLOW ON NEXT PAGE]

                                    Page 40
<Page>

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

SELLER:

    BURNHAM PACIFIC PROPERTIES, INC.,
    a Maryland corporation
    Its:  General Partner

    By:  /s/ Scott C. Verges
        -------------------------
             Scott C. Verges
             Its:   President and CEO

BUYER:

    PACIFIC RETAIL, L.P.,
    a Delaware limited partnership

    By:      POB Pacific Retail Partner, Inc.,
             a Delaware corporation
             a General Partner

             By:
                   -------------------------------------
             Name:
                   -------------------------------------
             Title:
                   -------------------------------------

    By:      AP-GP POB IV LLC,
             a Delaware limited liability company
             a General Partner

             By:      Kronus Property IV, Inc.,
                      a Delaware corporation

                      By:
                         -------------------------------
                      Name:
                            ----------------------------
                      Title:
                            ----------------------------

                                    Page 41
<Page>

                                    EXHIBIT A

PROPERTY                                    SELLER SUBSIDIARY OWNING TITLE

Bell Gardens Marketplace
Brickyard Plaza
Cruces Norte
Fairwood Square
Farmington Village
Fremont Hub
Gateway Center
Greentree Plaza
James Village
Ladera Center
Margarita Plaza
Mission Plaza
Ontario Village
Palms to Pines
Park Manor
Plaza de Monterey
Silver Plaza
Village East

                                    Page 42

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