Document:

Exhibit
10.1

 

bebe stores, inc.

 

1997 STOCK PLAN

 

 

(As amended and
restated through October 20, 2003)

 

 

TABLE
OF CONTENTS

 

	
  1.

  	
  Establishment and Purpose.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2.

  	
  Administration.

  	
   

  
	
   

  	
  (a)

  	
  Committees of the
  Board of Directors.

  	
   

  
	
   

  	
  (b)

  	
  Authority of the
  Board of Directors.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  3.

  	
  Eligibility.

  	
   

  
	
   

  	
  (a)

  	
  General Rule.

  	
   

  
	
   

  	
  (b)

  	
  Ten-Percent Shareholders.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  4.

  	
  Stock Subject to Plan.

  	
   

  
	
   

  	
  (a)

  	
  Basic Limitation.

  	
   

  
	
   

  	
  (b)

  	
  Additional Shares.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  5.

  	
  Terms
  and Conditions of Stock Purchase Awards or Sales.

  	
   

  
	
   

  	
  (a)

  	
  Stock Purchase Agreement.

  	
   

  
	
   

  	
  (b)

  	
  Duration
  of Offers and Nontransferability of Rights.

  	
   

  
	
   

  	
  (c)

  	
  Purchase Price.

  	
   

  
	
   

  	
  (d)

  	
  Withholding Taxes.

  	
   

  
	
   

  	
  (e)

  	
  Restrictions
  on Transfer of Shares and Vesting.

  	
   

  
	
   

  	
  (f)

  	
  Accelerated Vesting.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  6.

  	
  Terms and Conditions
  of Options.

  	
   

  
	
   

  	
  (a)

  	
  Stock Option Agreement.

  	
   

  
	
   

  	
  (b)

  	
  Number of Shares.

  	
   

  
	
   

  	
  (c)

  	
  Exercise Price.

  	
   

  
	
   

  	
  (d)

  	
  Withholding Taxes.

  	
   

  
	
   

  	
  (e)

  	
  Exercisability.

  	
   

  
	
   

  	
  (f)

  	
  Accelerated
  Vesting and Exercisability.

  	
   

  
	
   

  	
  (g)

  	
  Basic Term.

  	
   

  
	
   

  	
  (h)

  	
  Nontransferability of ISOs.

  	
   

  
	
   

  	
  (i)

  	
  Termination
  of Service (Except by Death or for Cause).

  	
   

  
	
   

  	
  (j)

  	
  Leaves of Absence.

  	
   

  
	
   

  	
  (k)

  	
  Death of Optionee.

  	
   

  
	
   

  	
  (l)

  	
  Termination for Cause.

  	
   

  
	
   

  	
  (m)

  	
  No Rights as a Shareholder.

  	
   

  
	
   

  	
  (n)

  	
  Modification,
  Extension and Assumption of Options.

  	
   

  
	
   

  	
  (o)

  	
  Restrictions
  on Transfer of Shares and Vesting.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  7.

  	
  Terms
  and Conditions of Restricted Stock Units.

  	
   

  
	
   

  	
  (a)

  	
  Restricted Stock
  Units Agreement.

  	
   

  

 

i

 

	
   

  	
  (b)

  	
  Purchase Price.

  	
   

  
	
   

  	
  (c)

  	
  Vesting.

  	
   

  
	
   

  	
  (d)

  	
  Voting.

  	
   

  
	
   

  	
  (e)

  	
  Effect of Termination
  of Service.

  	
   

  
	
   

  	
  (f)

  	
  Settlement
  of Restricted Stock Unit Award.

  	
   

  
	
   

  	
  (g)

  	
  Accelerated
  Vesting and Settlement of Restricted Stock Unit Awards.

  	
   

  
	
   

  	
  (h)

  	
  Restrictions
  on Transfer of Restricted Stock Unit Awards.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  8.

  	
  Payment for Shares.

  	
   

  
	
   

  	
  (a)

  	
  General Rule.

  	
   

  
	
   

  	
  (b)

  	
  Surrender of Stock.

  	
   

  
	
   

  	
  (c)

  	
  Services Rendered.

  	
   

  
	
   

  	
  (d)

  	
  Promissory Note.

  	
   

  
	
   

  	
  (e)

  	
  Exercise/Sale.

  	
   

  
	
   

  	
  (f)

  	
  Exercise/Pledge.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  9.

  	
  Adjustment of Shares.

  	
   

  
	
   

  	
  (a)

  	
  General.

  	
   

  
	
   

  	
  (b)

  	
  Mergers and Consolidations.

  	
   

  
	
   

  	
  (c)

  	
  Reservation of Rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  10.

  	
  Securities Law
  Requirements.

  	
   

  
	
   

  	
  (a)

  	
  General.

  	
   

  
	
   

  	
  (b)

  	
  Financial Reports.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  11.

  	
  No Retention Rights.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  12.

  	
  Duration and Amendments.

  	
   

  
	
   

  	
  (a)

  	
  Term of the Plan.

  	
   

  
	
   

  	
  (b)

  	
  Right to Amend or
  Terminate the Plan.

  	
   

  
	
   

  	
  (c)

  	
  Effect of Amendment
  or Termination.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  13.

  	
  Definitions.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  14.

  	
  Execution.

  	
   

  

 

ii

 

bebe stores, inc.

1997 STOCK PLAN

 

1.                                       Establishment and Purpose.

 

The purpose of the Plan
is to offer selected individuals an opportunity to acquire a proprietary
interest in the success of the Company, or to increase such interest, by
purchasing Shares of the Company’s Stock. 
The Plan provides for the direct award or sale of Shares, the grant of
Options to purchase Shares and the grant of Restricted Stock Units.  Options granted under the Plan may include
Nonstatutory Options (“NSOs”) as well as Incentive Stock Options (“ISOs”)
intended to qualify under Section 422 of the Code.

 

Capitalized terms are
defined in Section 13.

 

2.                                       Administration.

 

(a)                                  Committees of the Board of Directors.  The Plan may be administered by one or more
Committees.  Each Committee shall
consist of two or more members of the Board of Directors who have been
appointed by the Board of Directors. 
Each Committee shall have such authority and be responsible for such
functions as the Board of Directors has assigned to it.  If no Committee has been appointed, the
entire Board of Directors shall administer the Plan.  Any reference to the Board of Directors in the Plan shall be
construed as a reference to the Committee (if any) to whom the Board of
Directors has assigned a particular function.

 

(b)                                 Authority of the Board of Directors.  Subject to the provisions of the Plan, the
Board of Directors shall have full authority and discretion to take any actions
it deems necessary or advisable for the administration of the Plan.  All decisions, interpretations and other
actions of the Board of Directors shall be final and binding on all Purchasers,
all Optionees, all Participants and all persons deriving their rights from a
Purchaser, Optionee and Participant.

 

(c)                                  Administration
with Respect to Insiders.  With
respect to participation by Insiders in the Plan, at any time that any class of
equity security of the Company is registered pursuant to Section 12 of the
Exchange Act, the Plan shall be administered in compliance with the requirements,
if any, of Rule 16b-3.

 

(d)                                 Committee
Complying with Section 162(m). 
If the Company (or any Parent or Subsidiary) is a “publicly held
corporation” within the meaning of Section 162(m), the Board of Directors
may establish a committee of “outside directors” within the meaning of
Section 162(m) to approve any grants under the Plan which might reasonably
be anticipated to result in the payment of employee remuneration that would
otherwise exceed the limit on employee remuneration deductible for income tax
purposes pursuant to Section 162(m).

 

1

 

3.                                       Eligibility
and Award Limitation.

 

(a)                                  General Rule. 
Only Employees, Outside Directors and Consultants shall be eligible for
the grant of Options, the direct award or sale of Shares and the grant of
Restricted Stock Units.  For purposes of
the foregoing sentence, “Employees,” “Outside Directors” and “Consultants”
shall include prospective Employees, prospective Outside Directors and
prospective Consultants to whom Options or Shares are granted in connection
with written offers of an employment or other service relationship with the
Company (or any Parent or Subsidiary). 
Only Employees shall be eligible for the grant of ISOs.

 

(b)                                 Ten-Percent Shareholders.  An individual who owns more than 10% of the
total combined voting power of all classes of outstanding stock of the Company,
its Parent or any of its Subsidiaries shall not be eligible to be granted an
ISO unless (i) the Exercise Price is at least 110% of the Fair Market
Value of a Share on the date of grant, and (ii) the ISO, by its terms is
not exercisable after the expiration of five years from the date of grant.  For purposes of this Subsection (b), in
determining stock ownership, the attribution rules of Section 424(d) of
the Code shall be applied.

 

(c)                                  Section 162(m)
Grant Limit.  Subject to adjustment as provided in
Section 9(a), at any such time as the Company is a “publicly held
corporation” within the meaning of Section 162(m), no Employee or
prospective Employee shall be granted one or more Options within any fiscal
year of the Company which in the aggregate are for the purchase of more than
four hundred thousand (400,000) shares (the
“Section 162(m) Grant Limit”). 
An Option which is canceled in the same fiscal year of the Company in
which it was granted shall continue to be counted against the
Section 162(m) Grant Limit for such period.

 

4.                                       Stock Subject to Plan.

 

(a)                                  Basic Limitation.  The aggregate number of Shares that may be issued under the Plan (upon
exercise of Options, Stock Purchase rights, Restricted Stock Units or other
rights to acquire Shares) shall not exceed five million three hundred thirty
thousand (5,330,000) Shares, subject to adjustment pursuant to Section 9.
The number of Shares that are subject to Options or other rights outstanding at
any time under the Plan shall not exceed the number of Shares that then remain
available for issuance under the Plan. 
The Company, during the term of the Plan, shall at all times reserve and
keep available sufficient Shares to satisfy the requirements of the Plan.

 

(b)                                 Additional Shares.  In the event that any outstanding Option,
Stock Purchase right, Restricted Stock Units or other right for any reason
expires or is canceled or otherwise terminated, the Shares allocable to the
unexercised portion of such Option or other right shall again be available for
the purposes of the Plan.  In the event
that Shares issued under the Plan are reacquired by the Company pursuant to any
forfeiture provision, right of repurchase or right of first refusal, such
Shares shall again be available for the purposes of the Plan, except that the
aggregate number of Shares which may be issued upon the exercise of ISOs shall
in no 

 

2

 

event exceed five million three hundred thirty
thousand (5,330,000) Shares (subject to adjustment pursuant to Section 9).

 

5.                                       Terms and Conditions of Stock
Purchase Awards or Sales.

 

(a)                                  Stock Purchase Agreement.  Each award or sale of Shares pursuant to
Section 5 shall be evidenced by a Stock Purchase Agreement between the
Purchaser and the Company.  Such award
or sale shall be subject to all applicable terms and conditions of the Plan and
may be subject to any other terms and conditions which are not inconsistent
with the Plan and which the Board of Directors deems appropriate for inclusion
in a Stock Purchase Agreement.  The
provisions of the various Stock Purchase Agreements entered into under the Plan
need not be identical.

 

(b)                                 Duration of Offers and
Nontransferability of Rights. 
Any right to acquire Shares pursuant to Section 5 shall
automatically expire if not exercised by the Purchaser within 30 days
after the grant of such right was communicated to the Purchaser by the Company
in writing.  Such right shall not be
transferable and shall be exercisable only by the Purchaser to whom such right
was granted.

 

(c)                                  Purchase Price.  The Purchase Price of Shares to be offered pursuant to
Section 5 shall not be less than 85% of the Fair Market Value of such
Shares.  Subject to the preceding
sentence, the Purchase Price shall be determined by the Board of Directors at
its sole discretion.  The Purchase Price
shall be payable in a form described in Section 8.

 

(d)                                 Withholding Taxes.  As a condition to the purchase of Shares,
the Purchaser shall make such arrangements as the Board of Directors may
require for the satisfaction of any federal, state, local or foreign
withholding tax obligations that may arise in connection with such purchase.

 

(e)                                  Restrictions on Transfer of
Shares and Vesting.  Any
Shares awarded or sold under the Plan shall be subject to such special
forfeiture conditions, rights of repurchase, rights of first refusal and other
transfer restrictions as the Board of Directors may determine.  Such restrictions shall be set forth in the
applicable Stock Purchase Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally.

 

(f)                                    Accelerated Vesting.  Unless the applicable Stock Purchase
Agreement provides otherwise, any right to repurchase a Purchaser’s Shares at
the original Purchase Price (if any) upon termination of the Purchaser’s
Service shall lapse and all of such Shares shall become vested if (i) the
Company is subject to a Change in Control and (ii) the repurchase right is
not assigned to the entity that employs the Purchaser immediately after the
Change in Control or to its parent or subsidiary.

 

3

 

6.                                       Terms and Conditions of Options.

 

(a)                                  Stock Option Agreement.  Each grant of an Option under the Plan shall
be evidenced by a Stock Option Agreement between the Optionee and the
Company.  Such Option shall be subject
to all applicable terms and conditions of the Plan and may be subject to any
other terms and conditions which are not inconsistent with the Plan and which
the Board of Directors deems appropriate for inclusion in a Stock Option
Agreement.  The provisions of the
various Stock Option Agreements entered into under the Plan need not be
identical.

 

(b)                                 Number of Shares.  Each Stock Option Agreement shall specify the number of Shares
that are subject to the Option and shall provide for the adjustment of such
number in accordance with Section 9. The Stock Option Agreement shall also
specify whether the Option is an ISO or an NSO.

 

(c)                                  Exercise Price.  Each Stock Option Agreement shall specify the Exercise
Price.  The Exercise Price of an ISO
shall not be less than 100% of the Fair Market Value of a Share on the date of
grant, and a higher percentage may be required by Section 3(b).  The Exercise Price of an NSO shall not be
less than 85 % of the Fair Market Value of a Share on the date of grant.  Subject to the preceding two sentences, the
Exercise Price under any Option shall be determined by the Board of Directors
at its sole discretion.  The Exercise
Price shall be payable in a form described in Section 8.

 

(d)                                 Withholding Taxes.  As a condition to the exercise of an Option,
the Optionee shall make such arrangements as the Board of Directors may require
for the satisfaction of any federal, state, local or foreign withholding tax
obligations that may arise in connection with such exercise.  The Optionee shall also make such
arrangements as the Board of Directors may require for the satisfaction of any
federal, state, local or foreign withholding tax obligations that may arise in
connection with the disposition of Shares acquired by exercising an Option.

 

(e)                                  Exercisability.  Each Stock Option Agreement shall specify the date when all or
any installment of the Option is to become exercisable.  The exercisability provisions of any Stock
Option Agreement shall be determined by the Board of Directors at its sole
discretion.

 

(f)                                    Accelerated Vesting and
Exercisability.  Unless the
applicable Stock Option Agreement provides otherwise, all of an Optionee’s
Options shall become exercisable and vested in full if (i) the Company is
subject to a Change in Control, (ii) such Options are not assumed by the
surviving corporation or its parent and (iii) the surviving corporation or
its parent does not substitute options with substantially the same terms for
such Options.  Any options which are not
assumed or substituted for in connection with the Change in Control shall, to
the extent not exercised as of the date of the Change in Control, terminate and
cease to be outstanding effective as of the date of the Change in Control.

 

(g)                                 Basic Term. 
The Stock Option Agreement shall specify the term of the Option.  The term of an ISO shall not exceed
10 years from the date of grant, and a shorter term 

 

4

 

may be required by Section 3(b).  Subject to the preceding sentence, the Board
of Directors at its sole discretion shall determine when an Option is to
expire.

 

(h)                                 Nontransferability of ISOs.  No Option shall be transferable by the
Optionee other than by beneficiary designation, will or the laws of descent and
distribution.  An Option may be
exercised during the lifetime of the Optionee only by the Optionee or by the
Optionee’s guardian or legal representative. 
No Option or interest therein may be transferred, assigned, pledged or
hypothecated by the Optionee during the Optionee’s lifetime, whether by
operation of law or otherwise, or be made subject to execution, attachment or
similar process.  Notwithstanding the
foregoing, an NSO shall be assignable or transferable to the extent permitted
by the Board of Directors and set forth in the Stock Option Agreement
evidencing such Option.

 

(i)                                     Termination of Service (Except by
Death or for Cause). 
Unless otherwise specified in the Stock Option Agreement, if an
Optionee’s Service terminates for any reason other than the Optionee’s death or
for Cause (as defined below), then the Optionee’s Options shall expire on the
earliest of the following occasions:

 

(i)                                     The
expiration date determined pursuant to Subsection (g) above;

 

(ii)                                  The
date three months after the termination of the Optionee’s Service for any
reason other than Disability; or

 

(iii)                               The
date six months after the termination of the Optionee’s Service by reason of
Disability.

 

The Optionee may exercise
all or part of the Optionee’s Options at any time before the expiration of such
Options under the preceding sentence, but only to the extent that such Options
had become exercisable before the Optionee’s Service terminated (or became
exercisable as a result of the termination) and the underlying Shares had
vested before the Optionee’s Service terminated (or vested as a result of the
termination).  The balance of such
Options shall lapse when the Optionee’s Service terminates.  In the event that the Optionee dies after
the termination of the Optionee’s Service but before the expiration of the
Optionee’s Options, all or part of such Options may be exercised (prior to
expiration) by the executors or administrators of the Optionee’s estate or by
any person who has acquired such Options directly from the Optionee by
beneficiary designation, bequest or inheritance, but only to the extent that
such Options had become exercisable before the Optionee’s Service terminated
(or became exercisable as a result of the termination) and the underlying
Shares had vested before the Optionee’s Service terminated (or vested as a
result of the termination).

 

(j)                                     Leaves of Absence.  For purposes of Subsection (i) above, Service shall be
deemed to continue while the Optionee is on a bona fide leave of absence, if
such leave was approved by the Company in writing and if continued crediting of
Service for this purpose is expressly required by the terms of such leave or by
applicable law (as determined by the Company).

 

5

 

(k)                                  Death of Optionee.  Unless otherwise specified in the Stock Option Agreement, if an
Optionee dies while the Optionee is in Service, then the Optionee’s Options
shall expire on the earlier of the following dates:

 

(i)                                     The
expiration date determined pursuant to Subsection (g) above;

 

or

 

(ii)                                  The
date 12 months after the Optionee’s death.

 

All or part of the
Optionee’s Options may be exercised at any time before the expiration of such
Options under the preceding sentence by the executors or administrators of the
Optionee’s estate or by any person who has acquired such Options directly from
the Optionee by beneficiary designation, bequest or inheritance, but only to
the extent that such Options had become exercisable before the Optionee’s death
or became exercisable as a result of the death.  The balance of such Options shall lapse when the Optionee dies.

 

(l)                                     Termination for Cause.   Unless otherwise specified in the Stock
Option Agreement, if an Optionee’s Service is terminated for Cause, the Option
shall terminate and cease to be exercisable immediately upon such termination
of Service.  Unless otherwise defined by the Optionee’s Stock
Option Agreement or contract of employment or service, for purposes of this
Section 6(l) “Cause” shall mean any of the
following: (1) the Optionee’s theft, dishonesty, or falsification of any
Company documents or records; (2) the Optionee’s improper use or disclosure
of a the Company’s confidential or proprietary information; (3) any action
by the Optionee which has a material detrimental effect on the Company’s
reputation or business; (4) the Optionee’s failure or inability to perform
any reasonable assigned duties after written notice from the Company of, and a
reasonable opportunity to cure, such failure or inability; (5) any
material breach by the Optionee of any employment or service agreement between
the Optionee and the Company, which breach is not cured pursuant to the terms
of such agreement; (6) the Optionee’s conviction (including any plea of
guilty or nolo contendere) of any criminal act which impairs the Optionee’s
ability to perform his or her duties with the Company; or (7) Optionee’s
conviction for a violation of any securities law.

 

(m)                               No Rights as a Shareholder.  An Optionee, or a transferee of an Optionee,
shall have no rights as a shareholder with respect to any Shares covered by the
Optionee’s Option until such person becomes entitled to receive such Shares by
filing a notice of exercise and paying the Exercise Price pursuant to the terms
of such Option.

 

(n)                                 Modification, Extension and
Assumption of Options. 
Within the limitations of the Plan, the Board of Directors may modify,
extend or assume outstanding Options or may accept the cancellation of
outstanding Options (whether granted by the Company or another issuer) in
return for the grant of new Options for the same or a different number of
Shares and at the same or a different Exercise Price.  The foregoing notwithstanding, no 

 

6

 

modification of an Option shall, without the consent
of the Optionee, impair the Optionee’s rights or increase the Optionee’s
obligations under such Option.

 

(o)                                 Restrictions on Transfer of
Shares and Vesting.  Any
Shares issued upon exercise of an Option shall be subject to such special
forfeiture conditions, rights of repurchase, rights of first refusal and other
transfer restrictions as the Board of Directors may determine.  Such restrictions shall be set forth in the
applicable Stock Option Agreement and shall apply in addition to any
restrictions that may apply to holders of Shares generally.

 

7.                                       Terms and Conditions of
Restricted Stock Units.

 

(a)                                  Restricted Stock Units Agreement.  Each Restricted Stock Units award pursuant
to Section 7 shall be evidenced by a Restricted Stock Units Agreement
between the Participant and the Company. 
Such award shall be subject to all applicable terms and conditions of
the Plan and may be subject to any other terms and conditions which are not
inconsistent with the Plan and which the Board of Directors deems appropriate
for inclusion in a Restricted Stock Units Agreement.  The provisions of the various Restricted Stock Units Agreements
entered into under the Plan need not be identical.

 

(b)                                 Purchase Price.   No monetary payment (other than applicable tax withholding, if
any) shall be required as a condition of receiving a Restricted Stock Units
award, the consideration for which shall be services actually rendered to the
Company, a Parent or Subsidiary, or for its benefit.

 

(c)                                  Vesting.   Restricted
Stock Units may or may not be made subject to vesting conditions based upon the
satisfaction of such Service requirements, conditions or restrictions, as shall
be established by the Board of Directors and set forth in the Restricted Stock
Units Agreement.

 

(d)                                 Voting.  Participant
shall have no voting rights with respect to shares of Stock represented by
Restricted Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company).

 

(e)                                  Effect of Termination of Service.  Unless otherwise provided by the Board of
Directors in the grant of Restricted Stock Units and set forth in the
Restricted Stock Units Agreement, if a Participant’s Service terminates for any
reason, whether voluntary or involuntary (including the Participant’s death or
disability), then the Participant shall forfeit to the Company any Restricted
Stock Units which remain subject to vesting conditions as of the date of the
Participant’s termination of Service.

 

(f)                                    Settlement of Restricted Stock
Unit Award.  The Company
shall issue to the Participant as soon as practicable following the date of
termination of the Participant’s Service, a number of whole shares of Stock
equal to the number of whole Restricted Stock Units 

 

7

 

as set forth in and subject to the Restricted Stock
Units Agreement which are no longer subject to vesting conditions, subject to
withholding of applicable taxes, if any.

 

(g)                                 Accelerated Vesting and
Settlement of Restricted Stock Unit Awards.  Unless the applicable Restricted Stock Units
Agreement provides otherwise, all of a Participant’s Restricted Stock Units
shall become vested in full if (i) the Company is subject to a Change in
Control, (ii) such Restricted Stock Units do not remain outstanding,
(iii) such Restricted Stock Units are not assumed by the surviving
corporation or its parent and (iv) the surviving corporation or its parent
does not substitute a substantially equivalent award.  The  Restricted Stock Units
shall be settled in accordance with Section 7(f) immediately prior to the
effective date of the Change in Control to the extent the Restricted Stock
Units are neither assumed or substituted for in connection with the Change in
Control.

 

(h)                                 Restrictions on Transfer of
Restricted Stock Unit Awards. 
Prior to the issuance of shares of Stock in settlement of a Restricted
Stock Unit award, the award shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, or garnishment by
creditors of the Participant or the Participant’s beneficiary, except by will
or by the laws of descent and distribution.

 

8.                                       Payment for Shares.

 

(a)                                  General Rule. 
The entire Purchase Price or Exercise Price of Shares issued under the
Plan shall be payable in cash or cash equivalents at the time when such Shares
are purchased, except as otherwise provided in this Section 8.

 

(b)                                 Surrender of Stock.  To the extent that a Stock Option Agreement
so provides, payment may be made all or in part with Shares owned by the
Optionee or the Optionee’s representative. 
Such Shares shall be surrendered to the Company in good form for
transfer and shall be valued at their Fair Market Value on the date when the
Option is exercised.  This
Subsection (b) shall not apply to the extent that acceptance of Shares in
payment of the Exercise Price would cause the Company to recognize compensation
expense with respect to the Option for financial reporting purposes.

 

(c)                                  Services Rendered.  At the discretion of the Board of Directors,
Shares may be awarded under the Plan in consideration of services rendered to
the Company, a Parent or a Subsidiary prior to the award.

 

(d)                                 Exercise/Sale. 
To the extent that a Stock Option Agreement so provides, and if Stock is
publicly traded, payment may be made all or in part by the delivery (on a form
prescribed by the Company) of an irrevocable direction to a securities broker
approved by the Company to sell Shares and to deliver all or part of the sales
proceeds to the Company in payment of all or part of the Exercise Price and any
withholding taxes.

 

8

 

(e)                                  Exercise/Pledge.  To the extent that a Stock Option Agreement so provides, and if
Stock is publicly traded, payment may be made all or in part by the delivery
(on a form prescribed by the Company) of an irrevocable direction to pledge
Shares to a securities broker or lender approved by the Company, as security
for a loan, and to deliver all or part of the loan proceeds to the Company in
payment of all or part of the Exercise Price and any withholding taxes.

 

9.                                       Adjustment of Shares.

 

(a)                                  General.  In
the event of a subdivision of the outstanding Stock, a declaration of a
dividend payable in Shares, a declaration of an extraordinary dividend payable
in a form other than Shares in an amount that has a material effect on the Fair
Market Value of the Stock, a combination or consolidation of the outstanding
Stock into a lesser number of Shares, a recapitalization, a spin-off, a
reclassification or a similar occurrence, the Board of Directors shall make
appropriate adjustments in one or more of (i) the number of Shares
available for future grants under Section 4, (ii) the number of
Shares covered by each outstanding Option and Restricted Stock Unit award,
(iii) the Section 162(m) Grant Limit set forth in Section 3(c) or
(vi) the Exercise Price under each outstanding Option.  Notwithstanding the foregoing, any
fractional shares resulting from an adjustment pursuant to this Section 9
shall be rounded down to the nearest whole number, and no any event may the
exercise price be decreased to an amount less than the par value, if any, of
the Stock.

 

(b)                                 Mergers and Consolidations.  In the event that the Company is a party to
a merger or consolidation, outstanding Options, Stock Purchase rights and
Restricted Stock Units shall be subject to the agreement of merger or
consolidation.  Such agreement, without
the Optionees’, Purchasers’ or Participants’ consent, may provide for:

 

(i)                                     The
continuation of such outstanding Options, Stock Purchase right or Restricted
Stock Units by the Company (if the Company is the surviving corporation);

 

(ii)                                  The
assumption of the Plan and such outstanding Options, Stock Purchase rights or
Restricted Stock Units by the surviving corporation or its parent;

 

(iii)                               The
substitution by the surviving corporation or its parent of options, stock
purchase rights or restricted stock units 
with substantially the same terms for such outstanding Options, Stock
Purchase rights or Restricted Stock Units; or

 

(iv)                              The
cancellation of such outstanding Options without payment of any consideration.

 

(c)                                  Reservation of Rights.  Except as provided in this Section 9,
an Optionee, Purchaser or Participant shall have no rights by reason of
(i) any subdivision or consolidation of shares of stock of any class,
(ii) the payment of any dividend or (iii) any other increase or
decrease in the number of shares of stock of any class.  Any issuance by the Company of shares 

 

9

 

of stock of any class, or securities convertible into
shares of stock of any class, shall not affect, and no adjustment by reason
thereof shall be made with respect to, the number or Exercise Price of Shares
subject to an Option.  The grant of an
Option pursuant to the Plan shall not affect in any way the right or power of
the Company to make adjustments, reclassifications, reorganizations or changes
of its capital or business structure, to merge or consolidate or to dissolve,
liquidate, sell or transfer all or any part of its business or assets.

 

10.                                 Securities Law Requirements.

 

(a)                                  General. 
Shares shall not be issued under the Plan unless the issuance and
delivery of such Shares comply with (or are exempt from) all applicable
requirements of law, including (without limitation) the Securities Act of 1933,
as amended, the rules and regulations promulgated thereunder, state securities
laws and regulations, and the regulations of any stock  exchange or other securities market on which
the Company’s securities may then be traded.

 

(b)                                 Financial Reports.  Each Optionee, Purchaser and Participant
shall be given access to information concerning the Company equivalent to that
information generally made available to the Company’s common shareholders.

 

11.                                 No Retention Rights.

 

Nothing in the Plan or in
any right, Option or Restricted Stock Unit granted under the Plan shall confer
upon the Purchaser, Optionee, or Participant any right to continue in Service
for any period of specific duration or interfere with or otherwise restrict in
any way the rights of the Company (or any Parent or Subsidiary employing or
retaining the Purchaser, Optionee or Participant) or of the Purchaser, Optionee
or Participant which rights are hereby expressly reserved by each, to terminate
his or her Service at any time and for any reason, with or without cause.

 

12.                                 Duration and Amendments.

 

(a)                                  Term of the Plan.  The Plan, as set forth herein, shall become effective on the date
of its adoption by the Board of Directors, subject to the approval of the
Company’s shareholders.  In the event
that the shareholders fail to approve the Plan within 12 months after its
adoption by the Board of Directors, any grants of Options or sales or awards of
Shares that have already occurred shall be rescinded, and no additional grants,
sales or awards shall be made thereafter under the Plan.  The Plan shall continue in effect until the
earlier of its termination by the Board or the date on which all of the Shares
available for issuance under the Plan have been issued and all restrictions on
such Shares under the terms of the Plan and the agreements evidencing Options
and awards granted under the Plan have lapsed. 
However, all ISOs shall be granted, if at all, within ten (10) years
from the earlier of the date the Plan is adopted by the Board of Directors or
the date the Plan is duly approved by the shareholders of the Company.  Notwithstanding the foregoing, if the
maximum number of Shares issuable pursuant to the Plan as provided in
Section 4 has been increased at any time (other than pursuant to
Section 9), all 

 

10

 

ISOs shall be granted, if at all, within ten (10)
years from the earlier of (i) the date on which the latest such increase in the
maximum number of Shares issuable under the Plan was approved by the shareholders
of the Company or (ii) the date such amendment was adopted by the Board of
Directors.

 

(b)                                 Right to Amend or Terminate the Plan.  The Board of Directors may amend, suspend or
terminate the Plan at any time and for any reason; provided, however, that any
amendment of the Plan which increases the number of Shares available for
issuance under the Plan (except as provided in Section 9), or which
materially changes the class of persons who are eligible for the grant of ISOs,
shall be subject to the approval of the Company’s shareholders.  Shareholder approval shall not be required
for any other amendment of the Plan.

 

(c)                                  Effect of Amendment or Termination.  No Shares shall be issued or sold under the
Plan after the termination thereof, except in settlement of Restricted Stock
Unit awards and upon exercise of an Option granted prior to such
termination.  The termination of the
Plan, or any amendment thereof, shall not affect any Share previously issued or
any Option previously granted under the Plan.

 

13.                                 Definitions.

 

(a)                                  “Board
of Directors” shall mean the Board of Directors of the Company, as
constituted from time to time.

 

(b)                                 “Change
in Control” shall mean:

 

(i)                                     The
consummation of a merger or consolidation of the Company with or into another
entity or any other corporate reorganization, unless 50% or more of the
combined voting power of the continuing or surviving entity’s securities
outstanding immediately after such merger, consolidation or other
reorganization is owned by persons who were shareholders of the Company
immediately prior to such merger, consolidation or other reorganization, in
substantially the same proportions as their ownership of Company stock prior to
the transaction ; or

 

(ii)                                  The
sale, transfer or other disposition of all or substantially all of the
Company’s assets.

 

A transaction shall not
constitute a Change in Control if its sole purpose is to change the state of
the Company’s incorporation or to create a holding company that will be owned
in substantially the same proportions by the persons who held the Company’s
securities immediately before such transaction.

 

(c)                                  “Code”
shall mean the Internal Revenue Code of 1986, as amended.

 

11

 

(d)                                 “Committee”
shall mean a committee of the Board of Directors, as described in
Section 2(a).

 

(e)                                  “Company”
shall mean bebe stores, inc., a California corporation.

 

(f)                                    “Consultant”
shall mean an individual who performs bona fide services for the Company, a
Parent or a Subsidiary as a consultant or advisor, excluding Employees and
Outside Directors.

 

(g)                                 “Disability”
shall mean that the Optionee is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment.

 

(h)                                 “Employee”
shall mean any individual who is a common-law employee of the Company, a Parent
or a Subsidiary.

 

(i)                                     “Exchange
Act” shall mean the Securities Exchange Act of 1934, as amended.

 

(j)                                     “Exercise
Price” shall mean the amount for which one Share may be purchased upon
exercise of an Option, as specified by the Board of Directors in the applicable
Stock Option Agreement.

 

(k)                                  “Fair
Market Value” shall mean, as of any date, the value of a Share as
determined by the Board of Directors, in its sole discretion, subject to the
following:

 

(i)                                     If,
on such date, there is a public market for the Stock, the Fair Market Value of
a Share shall be the closing sale price of a Share (or the mean of the closing
bid and asked prices of a Share if the Stock is so quoted instead) as quoted on
the Nasdaq National Market, the Nasdaq Small-Cap Market or such other national
or regional securities exchange or market system constituting the primary
market for the Stock, as reported in the Wall Street Journal or such
other source as the Company deems reliable. 
If the relevant date does not fall on a day on which the Stock has
traded on such securities exchange or market system, the date on which the Fair
Market Value shall be established shall be the next day on which the Stock was
so traded following the relevant date, or such other appropriate day as shall
be determined by the Board of Directors, in its sole discretion.

 

(ii)                                  If,
on such date, there is no public market for the Stock, the Fair Market Value of
a Share shall be as determined by the Board of Directors in good faith.

 

(l)                                     “Insider”
shall mean an officer or a director of the Company or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.

 

12

 

(m)                               “ISO”
shall mean an employee incentive stock option described in Section 422(b)
of the Code.

 

(n)                                 “NSO”
shall mean a stock option not described in Sections 422(b) or 423(b) of
the Code.

 

(o)                                 “Option”
shall mean an ISO or an NSO granted under the Plan and entitling the holder to
purchase Shares.

 

(p)                                 “Optionee”
shall mean an individual who holds an Option.

 

(q)                                 “Outside
Director” shall mean a member of the Board of Directors who is not an
Employee.

 

(r)                                    “Parent”
shall mean any corporation (other than the Company) in an unbroken chain of
corporations ending with the Company, if each of the corporations other than
the Company owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such chain.  A corporation that attains the status of a
Parent on a date after the adoption of the Plan shall be considered a Parent
commencing as of such date.

 

(s)                                  “Plan”
shall mean this bebe stores, inc. 1997 Stock Plan.

 

(t)                                    “Participant”
shall mean an individual to whom the Board of Directors has granted a
Restricted Stock Unit pursuant to Section 7.

 

(u)                                 “Purchase
Price” shall mean the consideration for which one Share may be acquired
under the Plan (other than upon exercise of an Option), as specified by the
Board of Directors.

 

(v)                                 “Purchaser”
shall mean an individual to whom the Board of Directors has offered the right
to acquire Shares under the Plan (other than upon exercise of an Option).

 

(w)                               “Restricted
Stock Unit” shall mean a bookkeeping entry representing a right granted to
a Participant pursuant to Section 7 of the Plan to receive a share of
Stock on a date determined in accordance with the provisions of Section 7
and the Participant’s Restricted Stock Units Agreement.

 

(x)                                   “Restricted
Stock Units Agreement” shall mean a written agreement between the Company
and a Participant who is granted Restricted Stock Units under the Plan which
contains the terms, conditions and restrictions pertaining to the acquisition
of such award.

 

(y)                                 “Rule
16b-3” shall mean Rule 16b-3 under the Exchange Act, as amended from time
to time, or any successor rule or regulation.

 

13

 

(z)                                   “Section 162(m)”
shall mean Section 162(m) of the Code.

 

(aa)                            “Service”
shall mean service as an Employee, Outside Director or Consultant.  Service shall not be deemed to have
terminated merely because of a change in the capacity in which an individual
renders Service to the Company (or any Parent or Subsidiary) or a change in the
corporation for which the individual renders such Service, provided that there
is no interruption or termination of the individual’s Service.

 

(bb)                          “Share”
shall mean one share of Stock, as adjusted in accordance with Section 9
(if applicable).

 

(cc)                            “Stock”
shall mean the Common Stock of the Company.

 

(dd)                          “Stock
Option Agreement” shall mean the agreement between the Company and an
Optionee which contains the terms, conditions and restrictions pertaining to
the Optionee’s Option.

 

(ee)                            “Stock
Purchase Agreement” shall mean the agreement between the Company and a
Purchaser who acquires Shares under the Plan which contains the terms,
conditions and restrictions pertaining to the acquisition of such Shares.

 

(ff)                                “Subsidiary”
means any corporation (other than the Company) in an unbroken chain of
corporations beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.  A
corporation that attains the status of a Subsidiary on a date after the
adoption of the Plan shall be considered a Subsidiary commencing as of such
date.

 

14.                                 Execution.

 

The undersigned hereby
certifies that the foregoing is the bebe stores, inc. 1997 Stock Plan as
amended.

 

	
   

  	
  bebe stores, inc.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
     President

  
				

 

14

 

PLAN HISTORY

 

	
  June 26,
  1997

  	
   

  	
  Plan adopted by the
  Company’s Board of Directors with a share reserve of 1,000,000 shares

  
	
   

  	
   

  	
   

  
	
  July 15,
  1997

  	
   

  	
  Plan approved by the
  Company’s shareholders

  
	
   

  	
   

  	
   

  
	
  April 6,
  1998

  	
   

  	
  Plan amended and
  restated by the Company’s Board of Directors (effective upon the effective
  date of the initial registration by the Company of its stock under
  Section 12 of the Securities Exchange Act of 1934, as amended (the
  “Company’s IPO”)

  
	
   

  	
   

  	
   

  
	
  April 9,
  1998

  	
   

  	
  Company effected a
  2.83:1 stock split resulting in a share reserve of 2,830,000 shares

  
	
   

  	
   

  	
   

  
	
  May
  18, 1998

  	
   

  	
  Amended and Restated
  Plan approved by the Company’s shareholders (effective upon the Company’s
  IPO)

  
	
   

  	
   

  	
   

  
	
  June 16,
  1998

  	
   

  	
  Effective date of the
  Company’s IPO

  
	
   

  	
   

  	
   

  
	
  August 2000

  	
   

  	
  Increase of the maximum
  number of shares that may be issued to 4,330,000 approved by Board

  
	
   

  	
   

  	
   

  
	
  November 2000

  	
   

  	
  Increase of the maximum
  number of shares that may be issued to 4,330,000 approved by Shareholders

  
	
   

  	
   

  	
   

  
	
  March 25,
  2003

  	
   

  	
  Plan amended by the
  Company’s Board of Directors to provide for the grant of Restricted Stock
  Units.

  
	
   

  	
   

  	
   

  
	
  June 13,
  2003

  	
   

  	
  Plan amended to include
  “a conviction for a violation of any securities law” as a part of the
  definition of “Termination for Cause”.

  
	
   

  	
   

  	
   

  
	
  August 27,
  2003

  	
   

  	
  Increase of the maximum
  number of shares that may be issued to 5,330,000 approved by Board.  .

  
	
   

  	
   

  	
   

  
	
  October 20,
  2003

  	
   

  	
  Board approves
  amendment of plan to add Section 162(m) provision to preserve Company’s
  ability to deduct in full certain plan-related compensation with a grant
  limit of

  

 

15

 

	
   

  	
   

  	
  400,000 shares per
  fiscal year.

  
	
   

  	
   

  	
   

  
	
  December 8,
  2003

  	
   

  	
  Increase of the maximum
  number of shares that may be issued under the Plan to 5,330,000 and
  Section 162(m) grant limit of 400,000 shares approved by Shareholders.

  

 

16Exhibit
10.17

 

STANDARD
OFFER, AGREEMENT AND ESCROW

INSTRUCTIONS FOR PURCHASE OF REAL ESTATE
(Non-Residential)

American Industrial Real Estate Association

 

	
   

  	
  January 20, 2004

  
	
   

  	
  (Date for Reference
  Purposes)

  

 

1.                                      Buyer.

 

1.1                                 bebe
stores, inc., a California corporation, (“Buyer”)
hereby offers to purchase the real property, hereinafter described, from the
owner thereof (“Seller”)
(collectively, the “Parties” or
individually, a “Party”), through
an escrow (“Escrow”) to close on
thirty five (35) days, or sooner at Buyer’s sole discretion* (“Expected Closing Date”) to be held by
Wilshire Escrow Company, attn.: Pamela Wood (“Escrow
Holder”) whose address is 4270 Wilshire Boulevard, Los Angeles, CA
90010 Phone No. 323-935-3530, Facsimile No. 323-938-8927 upon the terms
and conditions set forth in this agreement (“Agreement”).  Buyer shall have the right to assign Buyer’s
rights hereunder, but any such assignment shall not relieve Buyer of Buyer’s
obligations herein unless Seller expressly releases Buyer.      [*following opening of escrow]

 

1.2                                 The
term “Date of Agreement” as used
herein shall be the date when by execution and delivery (as defined in
paragraph 20.2) of this document or a subsequent counteroffer thereto,
Buyer and Seller have reached agreement in writing whereby Seller agrees to
sell, and Buyer agrees to purchase, the Property upon terms accepted by both
Parties.

 

2.                                      Property.

 

2.1                                 The
real property (“Property”) that is
the subject of this offer consists of (insert a brief physical description) an
approximately 50,000 square foot concrete and steel three story office building
located on approximately 33, 898 square feet of land zoned LA CL07153 is
located in the City of Los Angeles, County of Los Angeles, State of California,
is commonly known by the street address of 10345 West Olympic Boulevard and is
legally described as: to be provided through escrow (APN: 4319-006-052).

 

2.2                                 If
the legal description of the Property is not complete or is inaccurate, this
Agreement shall not be invalid and the legal description shall be completed or
correct to meet the requirements of Investor’s Title attn.:  Debbie Hiltz (“Title Company”), which shall issue the title policy
hereinafter described.

 

2.3                                 The
Property includes, at no additional cost to Buyer, the permanent improvements
thereon, including those items which pursuant to applicable law are a part of
the property, as well as the following items, if any, owned by Seller and at
present located on the Property: 
electrical distribution systems (power panel, bus ducting, conduits,
disconnects,

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Initials

  	
   

  	
  Initials

  

 

1

 

lighting fixtures); telephone distribution systems
(lines, jacks and connections only); space heaters; heating, ventilating, air
conditioning equipment (“HVAC”);
air lines; fire sprinkler systems; security and fire detection systems;
carpets; window coverings; wall coverings; and all apertunences, whether
structural or non-structural including, but not limited to all existing filing
systems, cabinetry, telecommunications systems infrastructure/wiring, etc.; in
addition, existing “garden area” furniture/furnishings shall be included
(collectively, the “Improvements”).

 

2.4                                 The
fire sprinkler monitor:  ý
is owned by Seller and included in the Purchase Price, or o
is leased by Seller, and Buyer will need to negotiate a new lease with the fire
monitoring company.

 

2.5                                 Except
as provided in Paragraph 2.3, the Purchase Price does not include Seller’s
personal property, furniture and furnishings, and NONE.

 

3.                                      Purchase
Price.

 

3.1                                 The
purchase price (“Purchase Price”)
to be paid by Buyer to Seller for the Property shall be $10,950,000.00, payable
as follows:

 

	
  (a)

  	
   

  	
  Cash down payment,
  including the Deposit as defined in paragraph 4.3 (or if an all cash transaction,
  the Purchase Price):

  	
   

  	
  $

  	
  10,950,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Total Purchase Price:

  	
   

  	
  $

  	
  10,950,000.00

  	
   

  

 

3.2                                 If
Buyer is taking title to the Property subject to, or assuming, an Existing Deed
of Trust and such deed of trust permits the beneficiary to demand payment of
fees including, but not limited to, points, processing fees, and appraisal fees
as a condition to the transfer of the Property, Buyer agrees to pay such fees
up to a maximum of 1.5% of the unpaid principal balance of the applicable
Existing Note.

 

4.                                      Deposits.

 

4.1                                 ý
Buyer shall deliver to Escrow Holder a check in the sum of $500,000.00 when
both Parties have executed this Agreement and the executed Agreement has been
delivered to Escrow Holder.  When
cashed, the check shall be deposited into the Escrow’s trust account to be
applied toward the Purchase Price of the Property at the Closing.  Should Buyer and Seller not enter into an
agreement for purchase and sale, Buyer’s check or funds shall, upon request by
Buyer, be promptly returned to Buyer.

 

4.2                                 Additional
deposits:

 

(b)                                 Within
5 business days after the contingencies discussed in paragraph 9.1 (a)
through (k) are approved or waived, Buyer shall deposit with Escrow Holder the
additional sum of $5,000,000.00 to be applied to the Purchase Price at the
Closing.

 

 

4.3                                 Escrow
Holder shall deposit the funds deposited with it by Buyer pursuant to
paragraphs 4.1 and 4.2 (collectively the “Deposit”), in a State or Federally chartered bank in an
interest bearing account whose term is appropriate and consistent with the
timing requirements of this transaction. 
The interest therefrom shall accrue to the benefit of Buyer, who hereby
acknowledges that there may be penalties or interest forfeitures if the
applicable instrument is redeemed prior to its specified maturity.  Buyer’s Federal Tax Identification Number is
                                  .  NOTE: 
Such interest bearing account cannot be opened until Buyer’s Federal Tax
Identification Number is provided.

 

5.                                      Financing Contingency.  (Strike
if not applicable)

 

6.                                      Hidden
Numbering

 

7.                                      Real
Estate Brokers.

 

7.1                                 The
following real estate broker(s) (“Brokers”)
and brokerage relationships exist in this transaction and are consented to by
the Parties (check the applicable boxes):

 

ý eOffice Suites, Inc. attn.: Howard Sher
represents Seller exclusively (“Seller’s
Broker”);

 

ý Commercial Resource Real Estate Services: J.
Beimforde represents Buyer exclusively (“Buyer’s
Broker”); or

 

The Parties acknowledge
that Brokers are the procuring cause of this Agreement.  See paragraph 24 for disclosures
regarding the nature of a real estate agency relationship.  Buyer shall use the services of Buyer’s
Broker exclusively in connection with any and all negotiations and offers with
respect to the Property for a period of 1 year from the Date of Agreement.

 

7.2                                 Buyer
and Seller each represent and warrant to the other that he/she/it has had no
dealings with any person, firm, broker or finder in connection with the
negotiation of this Agreement and/or the consummation of the purchase and sale
contemplated herein, other than the Brokers named in paragraph 7.1, and no
broker or other person, firm or entity, other than said Brokers is/are entitled
to any commission or finder’s fee in connection with this transaction as the
result of any dealings or acts of such Party. 
Buyer and Seller do each hereby agree to indemnify, defend, protect and
hold the other harmless from and against any costs, expenses or liability for
compensation, commission or charges which may be claimed by any broker, finder
or other similar party, other than said named Brokers by reason of any dealings
or act of the indemnifying Party.

 

8.                                      Escrow
and Closing.

 

8.1                                 Upon
acceptance hereof by Seller, this Agreement, including any counteroffers
incorporated herein by the Parties, shall constitute not only the agreement of
purchase and sale between Buyer and Seller, but also instructions to Escrow
Holder for the consummation of the Agreement through the Escrow.  Escrow Holder shall not prepare any further
escrow instructions restating or amending the Agreement unless specifically so
instructed by the Parties or a Broker herein. 
Subject to the reasonable approval of the Parties, Escrow Holder may,
however, include its standard general escrow provisions.

 

 

8.2                                 As
soon as practical after the receipt of this Agreement and any relevant
counteroffers, Escrow Holder shall ascertain the Date of Agreement as defined
in paragraphs 1.2 and 20.2 and advise the Parties and Brokers, in writing,
of the date ascertained.

 

8.3                                 Escrow
Holder is hereby authorized and instructed to conduct the Escrow in accordance
with this Agreement, applicable law and custom and practice of the community in
which Escrow Holder is located, including any reporting requirements of the
Internal Revenue Code.  In the event of
a conflict between the law of the state where the Property is located and the
law of the state where the Escrow Holder is located, the law of the state where
the Property is located shall prevail.

 

8.4                                 Subject
to satisfaction of the contingencies herein described, Escrow Holder shall
close this escrow (the “Closing”)
by recording a general warranty deed (a grant deed in California) and the other
documents required to be recorded, and by disbursing the funds and documents in
accordance with this Agreement.

 

8.5                                 Buyer
and Seller shall each pay one-half of the Escrow Holder’s charges and Seller
shall pay the usual recording fees and any required documentary transfer
taxes.  Seller shall pay the premium for
a standard coverage owner’s or joint protection policy of title insurance.

 

8.6                                 Escrow
Holder shall verify that all of Buyer’s contingencies have been satisfied or
waived prior to Closing.  The matters
contained in paragraphs 9.1 subparagraphs (b), (c), (d), (e), (g),
(i), (n), and (o), 9.4, 9.5, 12, 13, 14, 16, 18, 20, 21, 22, and 24 are,
however, matters of agreement between the Parties only and are not instructions
to Escrow Holder.

 

8.7                                 If
this transaction is terminated for non-satisfaction and non-waiver of a Buyer’s
Contingency, as defined in paragraph 9.2, then neither of the Parties
shall thereafter have any liability to the other under this Agreement, except
to the extent of a breach of any affirmative covenant or warranty in this
Agreement.  In the event of such
termination, Buyer shall be promptly refunded all funds deposited by Buyer with
Escrow Holder, less only Title Company and Escrow Holder cancellation fees and
costs, all of which shall be Buyer’s obligation.

 

8.8                                 The
Closing shall occur on the Expected Closing Date, or as soon thereafter as the
Escrow is in condition for Closing; provided, however, that if the Closing does
not occur by the Expected Closing Date and said Date is not extended by mutual
instructions of the Parties, a Party not then in default under this Agreement may
notify the other Party, Escrow Holder, and Brokers, in writing that, unless the
Closing occurs within 5 business days following said notice, the Escrow
shall be deemed terminated without further notice or instructions.

 

8.9                                 Except
as otherwise provided herein, the termination of Escrow shall not relieve or
release either Party from any obligation to pay Escrow Holder’s fees and costs
or constitute a waiver, release or discharge of any breach or default that has
occurred in the performance of the obligations, agreements, covenants or
warranties contained therein.

 

 

8.10                           If this
Escrow is terminated for any reason other than Seller’s breach or default, then
at Seller’s request, and as a condition to the return of Buyer’s deposit, Buyer
shall within 5 days after written request deliver to Seller, at no charge,
copies of all surveys, engineering studies, soil reports, maps, master plans,
feasibility studies and other similar items prepared by or for Buyer that
pertain to the Property.  Provided,
however, that Buyer shall not be required to deliver any such report if the
written contract which Buyer entered into with the consultant who prepared such
report specifically forbids the dissemination of the report to others.

 

9.                                      Contingencies
to Closing.

 

9.1                                 The
Closing of this transaction is contingent upon the satisfaction or waiver of
the following contingencies.  IF BUYER FAILS TO NOTIFY ESCROW HOLDER, IN WRITING, OF
THE DISAPPROVAL OF ANY OF SAID CONTINGENCIES WITHIN THE TIME SPECIFIED THEREIN,
IT SHALL BE CONCLUSIVELY PRESUMED THAT BUYER HAS APPROVED SUCH ITEM, MATTER OR
DOCUMENT.  Buyer’s
conditional approval shall constitute disapproval, unless provision is made by
the Seller within the time specified therefore by the Buyer in such conditional
approval or by this Agreement, whichever is later, for the satisfaction of the
condition imposed by the Buyer.  Escrow
Holder shall promptly provide all Parties with copies of any written
disapproval or conditional approval which it receives.  With regard to subparagraphs (a)
through (l) the pre-printed time periods shall control unless a different
number of days is inserted in the spaces provided.

 

(a)                                  Disclosure.  Seller shall make to Buyer, through escrow, all of the applicable
disclosures required by law (See American Industrial Real Estate Association (“AIR”) standard form entitled “Seller’s
Mandatory Disclosure Statement”) and provide Buyer with a completed Property
Information Sheet (“Property Information
Sheet”) concerning the Property, duly executed by or on behalf of
Seller in the current form or equivalent to that published by the AIR within 10
or 10 days following the Date of Agreement. 
Buyer has 10 days from the receipt of said disclosures to approve
or disapprove the matters disclosed.

 

(b)                                 Physical Inspection.  Buyer has 10 or 21 days from the receipt of
the Property Information Sheet or the Date of Agreement, whichever is later, to
satisfy itself with regard to the physical aspects and size of the Property.

 

(c)                                  Hazardous Substance Conditions Report.  Buyer has 30 or 21 days from the receipt of
the Property Information Sheet or the Date of Agreement, whichever is later, to
satisfy itself with regard to the environmental aspects of the Property.  Seller recommends that Buyer obtain a
Hazardous Substance Conditions Report concerning the Property and relevant
adjoining properties.  Any such report
shall be paid for by Buyer.  A “Hazardous Substance” for purposes of this
Agreement is defined as any substance whose nature and/or quantity of
existence, use, manufacture, disposal or effect, render it subject to Federal,
state or local regulation, investigation, remediation or removal as potentially
injurious to public health or welfare. 
A “Hazardous Substance Condition”
for purposes of this Agreement is defined as the existence on, under or
relevantly adjacent to the Property of a Hazardous Substance that would require
remediation and/or removal under applicable Federal, state or local law.

 

 

(d)                                 Soil Inspection.  Buyer has 30 or 21 days from the receipt of the Property
Information Sheet or the Date of Agreement, whichever is later, to satisfy
itself with regard to the condition of the soils on the Property.  Seller recommends that Buyer obtain a soil
test report.  Any such report shall be
paid for by Buyer.  Seller shall provide
Buyer copies of any soils report that Seller may have within 10 days of
the Date of Agreement.

 

(e)                                  Governmental Approvals.  Buyer has 30 or 21 days from the Date of
Agreement to satisfy itself with regard to approvals and permits from governmental
agencies or departments which have or may have jurisdiction over the Property
and which Buyer deems necessary or desirable in connection with its intended
use of the Property, including, but not limited to, permits and approvals
required with respect to zoning, planning, building and safety, fire, police,
handicapped and Americans with Disabilities Act requirements, transportation
and environmental matters.

 

(f)                                    Conditions of Title.  Escrow Holder shall cause a current
commitment for title insurance (“Title
Commitment”) concerning the Property issued by the Title Company, as
well as legible copies of all documents referred to in the Title Commitment (“Underlying Documents”) to be delivered to
Buyer within 10 or 10 days following the Date of Agreement.  Buyer has 10 days from the receipt of
the Title Commitment and Underlying Documents to satisfy itself with regard to
the condition of title.  The disapproval
of Buyer of any monetary encumbrance, which by the terms of this Agreement is
not to remain against the Property after the Closing, shall not be considered a
failure of this contingency, as Seller shall have the obligation, at Seller’s
expense, to satisfy and remove such disapproved monetary encumbrance at or
before the Closing.

 

(g)                                 Survey. 
Buyer has 30 or 21 days from the receipt of the Title Commitment and
Underlying Documents to satisfy itself with regard to any ALTA title supplement
based upon a survey prepared to American Land Title Association (“ALTA”) standards for an owner’s policy by a
licensed surveyor, showing the legal description and boundary lines of the
Property, any easements of record, and any improvements, poles, structures and
things located within 10 feet of either side of the Property boundary
lines.  Any such survey shall be prepared
at Buyer’s direction and expense.  If
Buyer has obtained a survey and approved the ALTA title supplement, Buyer may
elect within the period allowed for Buyer’s approval of a survey to have an
ALTA extended coverage owner’s form of title policy, in which event Buyer shall
pay any additional premium attributable thereto.

 

(h)                                 Existing Leases and Tenancy Statements.  Seller shall within 10 or 10 days of the
Date of Agreement provide both Buyer and Escrow Holder with legible copies of
all leases, subleases or rental arrangements (collectively, “Existing Leases”) affecting the Property,
and with a tenancy statement (“Estoppel
Certificate”) in the latest form or equivalent to that published by
the AIR, executed by Seller and/or each tenant and subtenant of the
Property.  Seller shall use its best
efforts to have each tenant complete and execute an Estoppel Certificate.  If any tenant fails or refuses to provide an
Estoppel Certificate then Seller shall complete and execute an Estoppel
Certificate for that tenancy.  Buyer has
10 days from the receipt of said Existing Leases and Estoppel Certificates
to satisfy itself with regard to the Existing Leases and any other tenancy
issues.

 

 

(i)                                     Other Agreements.  Seller shall within 10 or 10 days of the
Date of Agreement provide Buyer with legible copies of all other agreements (“Other Agreements”) known to Seller that
will affect the Property after Closing. 
Buyer has 10 days from the receipt of said Other Agreements to
satisfy itself with regard to such Agreements.

 

(j)                                     Financing.  If paragraph 5 hereof dealing with a financing contingency
has not been stricken, the satisfaction or waiver of such New Loan contingency.

 

(k)                                  Existing Notes.  If paragraph 3.1(c) has not been stricken, Seller shall
within 10 or 10 days of the Date of Agreement provide Buyer with legible copies
of the Existing Notes, Existing Deeds of Trust and related agreements
(collectively, “Loan Documents”)
to which the Property will remain subject after the Closing.  Escrow Holder shall promptly request from
the holders of the Existing Notes a beneficiary statement (“Beneficiary Statement”) confirming:  (1) the amount of the unpaid principal
balance, the current interest rate, and the date to which interest is paid, and
(2) the nature and amount of any impounds held by the beneficiary in
connection with such loan.  Buyer has 10
or 21 days from the receipt of the Loan Documents and Beneficiary Statements to
satisfy itself with regard to such financing. 
Buyer’s obligation to close is conditioned upon Buyer being able to
purchase the Property without acceleration or change in the terms of any
Existing Notes or charges to Buyer except as otherwise provided in this
Agreement or approved by Buyer, provided, however, Buyer shall pay the transfer
fee referred to in paragraph 3.2 hereof.

 

(l)                                     Personal Property.  In the event that any personal property is
included in the Purchase Price, Buyer has 10 or 21 days from the Date of
Agreement to satisfy itself with regard to the title condition of such personal
property.  Seller recommends that Buyer
obtain a UCC-1 report.  Any such report
shall be paid for by Buyer.  Seller
shall provide Buyer copies of any liens or encumbrances affecting such personal
property that it is aware of within 10 or 10 days of the Date of Agreement.

 

(m)                               Destruction, Damage or Loss.  There shall not have occurred prior to the
Closing, a destruction of, or damage or loss to, the Property or any portion
thereof, from any cause whatsoever, which would cost more than $10,000.00 to
repair or cure.  If the cost of repair
or cure is $10,000.00 or less, Seller shall repair or cure the loss prior to
the Closing.  Buyer shall have the
option, within 10 days after receipt of written notice of a loss costing
more than $10,000.00 to repair or cure, to either terminate this transaction or
to purchase the Property notwithstanding such loss, but without deduction or
offset against the Purchase Price.  If
the cost to repair or cure is more than $10,000.00, and Buyer does not elect to
terminate this transaction, Buyer shall be entitled to any insurance proceeds
applicable to such loss.  Unless
otherwise notified in writing, Escrow Holder shall assume no such destruction,
damage or loss has occurred prior to Closing.

 

(n)                                 Material Change.  Buyer shall have 10 days following receipt of written notice
of a Material Change within which to satisfy itself with regard to such
change.  “Material Change” shall mean a change in the status of the use,
occupancy, tenants, or condition of the Property that occurs after the date of
this offer and prior to the Closing. 
Unless otherwise

 

 

notified in writing,
Escrow Holder shall assume that no Material Change has occurred prior to the
Closing.

 

(o)                                 Seller Performance.  The delivery of all documents and the due
performance by Seller of each and every undertaking and agreement to be
performed by Seller under this Agreement.

 

(p)                                 Warranties.  That each representation and warranty of Seller herein be true
and correct as of the Closing.  Escrow
Holder shall assume that this condition has been satisfied unless notified to
the contrary in writing by any Party prior to the Closing.

 

(q)                                 Brokerage Fee.  Payment at the Closing of such brokerage fee as is specified in
this Agreement or later written instructions to Escrow Holder executed by
Seller and Brokers (“Brokerage Fee”).  It is agreed by the Parties and Escrow
Holder that Brokers are a third party beneficiary of this Agreement insofar as
the Brokerage Fee is concerned, and that no change shall be made with respect
to the payment of the Brokerage Fee specified in this Agreement, without the
written consent of Brokers.

 

9.2                                 All
of the contingencies specified in subparagraphs (a) through (p) of
paragraph 9.1 are for the benefit of, and may be waived by, Buyer, and may
be elsewhere herein referred to as “Buyer’s
Contingencies.”

 

9.3                                 If
any Buyer’s Contingency or any other matter subject to Buyer’s approval is
disapproved as provided for herein in a timely manner (“Disapproved Item”), Seller shall have the
right within 10 days following the receipt of notice of Buyer’s
disapproval to elect to cure such Disapproved Item prior to the Expected
Closing Date (“Seller’s Election”).  Seller’s failure to give to Buyer within
such period, written notice of Seller’s commitment to cure such Disapproved
Item on or before the Expected Closing Date shall be conclusively presumed to
be Seller’s Election not to cure such Disapproved Item.  If Seller elects, either by written notice
or failure to give written notice, not to cure a Disapproved Item, Buyer shall
have the election, within 10 days after Seller’s Election to either accept
title to the Property subject to such Disapproved Item, or to terminate this
transaction.  Buyer’s failure to notify
Seller in writing of Buyer’s election to accept title to the Property subject
to the Disapproved Item without deduction or offset shall constitute Buyer’s
election to terminate this transaction. 
Unless expressly provided otherwise herein, Seller’s right to cure shall
not apply to the remediation of Hazardous Substance Conditions or to the
Financing Contingency.  Unless the
Parties mutually instruct otherwise, if the time periods for the satisfaction
of contingencies or for Seller’s and Buyer’s said Elections would expire on a
date after the Expected Closing Date, the Expected Closing Date shall be deemed
extended for 3 business days following the expiration of:  (a) the applicable contingency
period(s), (b) the period within which the Seller may elect to cure the
Disapproved Item, or (c) if Seller elects not to cure, the period within
which Buyer may elect to proceed with this transaction, whichever is later.

 

9.4                                 Buyer
understands and agrees that until such time as all Buyer’s Contingencies have
been satisfied or waived, Seller and/or its agents may solicit, entertain
and/or accept back-up offers to purchase the subject Property.

 

 

9.5                                 The
Parties acknowledge that extensive local, state and Federal legislation
establish broad liability upon owners and/or users of real property for the
investigation and remediation of Hazardous Substances.  The determination of the existence of a
Hazardous Substance Condition and the evaluation of the impact of such a
condition are highly technical and beyond the expertise of Brokers.  The Parties acknowledge that they have been
advised by Brokers to consult their own technical and legal experts with
respect to the possible presence of Hazardous Substances on the Property or
adjoining properties, and Buyer and Seller are not relying upon any
investigation by or statement of Brokers with respect thereto.  The Parties hereby assume all responsibility
for the impact of such Hazardous Substances upon their respective interests
herein.

 

10.                               Documents
Required at or before Closing:

 

10.1                           Five
days prior to the Closing date Escrow Holder shall obtain an updated Title
Commitment concerning the Property from the Title Company and provide copies
thereof to each of the Parties.

 

10.2                           Seller
shall deliver to Escrow Holder in time for delivery to Buyer at the Closing:

 

(a)                                  Grant
or general warranty deed, duly executed and in recordable form, conveying fee
title to the Property to Buyer.

 

(b)                                 If
applicable, the Beneficiary Statements concerning Existing Note(s).

 

(c)                                  If
applicable, the Existing Leases and Other Agreements together with duly
executed assignments thereof by Seller and Buyer.  The assignment of Existing Leases shall be on the most recent
Assignment and Assumption of Lessor’s Interest in Lease form published by the
AIR or its equivalent.

 

(d)                                 If
applicable, Estoppel Certificates executed by Seller and/or the tenant(s) of
the Property.

 

(e)                                  An
affidavit executed by Seller to the effect that Seller is not a “foreign
person” within the meaning of Internal Revenue Code Section 1445 or
successor statutes.  If Seller does not
provide such affidavit in form reasonably satisfactory to Buyer at least
3 business days prior to the Closing, Escrow Holder shall at the Closing
deduct from Seller’s proceeds and remit to Internal Revenue Service such sum as
is required by applicable Federal law with respect to purchases from foreign
sellers.

 

(f)                                    If
the Property is located in California, an affidavit executed by Seller to the
effect that Seller is not a “nonresident” within the meaning of California
Revenue and Tax Code Section 18662 or successor statutes.  If Seller does not provide such affidavit in
form reasonably satisfactory to Buyer at least 3 business days prior to
the Closing, Escrow Holder shall at the Closing deduct from Seller’s proceeds
and remit to the Franchise Tax Board such sum as is required by such statute.

 

 

(g)                                 If
applicable, a bill of sale, duly executed, conveying title to any included
personal property to Buyer.

 

(h)                                 If
the Seller is a corporation, a duly executed corporate resolution authorizing
the execution of this Agreement and the sale of the Property.

 

10.3                           Buyer
shall deliver to Seller through Escrow:

 

(a)                                  The
cash portion of the Purchase Price and such additional sums as are required of
Buyer under this Agreement shall be deposited by Buyer with Escrow Holder, by
federal funds wire transfer, or any other method acceptable to Escrow Holder as
immediately collectable funds, no later than 2:00 P.M. on the business day
prior to the Expected Closing Date.

 

(b)                                 If
a Purchase Money Note and Purchase Money Deed of Trust are called for by this
Agreement, the duly executed originals of those documents, the Purchase Money
Deed of Trust being in recordable form, together with evidence of fire
insurance on the improvements in the amount of the full replacement cost naming
Seller as a mortgage loss payee, and a real estate tax service contract (at
Buyer’s expense), assuring Seller of notice of the status of payment of real
property taxes during the life of the Purchase Money Note.

 

(c)                                  The
Assignment and Assumption of Lessor’s Interest in Lease form specified in
paragraph 10.2(c) above, duly executed by Buyer.

 

(d)                                 Assumptions
duly executed by Buyer of the obligations of Seller that accrue after Closing
under any Other Agreements.

 

(e)                                  If
applicable, a written assumption duly executed by Buyer of the loan documents
with respect to Existing Notes.

 

(f)                                    If
the Buyer is a corporation, a duly executed corporate resolution authorizing
the execution of this Agreement and the purchase of the Property.

 

10.4                           At
Closing, Escrow Holder shall cause to be issued to Buyer a standard coverage
(or ALTA extended, if elected pursuant to 9.1(g)) owner’s form policy of title
insurance effective as of the Closing, issued by the Title Company in the full
amount of the Purchase Price, insuring title to the Property vested in Buyer,
subject only to the exceptions approved by Buyer.  In the event there is a Purchase Money Deed of Trust in this
transaction, the policy of title insurance shall be a joint protection policy
insuring both Buyer and Seller.

 

IMPORTANT:  IN A PURCHASE OR EXCHANGE OF REAL PROPERTY,
IT MAY BE ADVISABLE TO OBTAIN TITLE INSURANCE IN CONNECTION WITH THE CLOSE OF
ESCROW SINCE THERE MAY BE PRIOR RECORDED LIENS AND ENCUMBRANCES WHICH AFFECT
YOUR INTEREST IN THE PROPERTY BEING ACQUIRED. 
A NEW POLICY OF TITLE INSURANCE SHOULD BE OBTAINED IN ORDER TO ENSURE
YOUR INTEREST IN THE PROPERTY THAT YOU ARE ACQUIRING.

 

 

11.                               Prorations
and Adjustments.

 

11.1                           Taxes. 
Applicable real property taxes and special assessment bonds shall be
prorated through Escrow as of the date of the Closing, based upon the latest
tax bill available.  The Parties agree
to prorate as of the Closing any taxes assessed against the Property by
supplemental bill levied by reason of events occurring prior to the
Closing.  Payment of the prorated amount
shall be made promptly in cash upon receipt of a copy of any supplemental bill.

 

11.2                           Insurance.  WARNING:  Any insurance
which Seller may have maintained will terminate on the Closing.  Buyer is advised to obtain appropriate
insurance to cover the Property.

 

11.3                           Rentals, Interest and Expenses.  Scheduled rentals, interest on Existing
Notes, utilities, and operating expenses shall be prorated as of the date of
Closing.  The Parties agree to promptly
adjust between themselves outside of Escrow any rents received after the
Closing.

 

11.4                           Security Deposit.  Security Deposits held by Seller shall be
given to Buyer as a credit to the cash required of Buyer at the Closing.

 

11.5                           Post Closing Matters.  Any item to be prorated that is not
determined or determinable at the Closing shall be promptly adjusted by the
Parties by appropriate cash payment outside of the Escrow when the amount due
is determined.

 

11.6                           Variations in Existing Note Balances.  In the event that Buyer is purchasing the
Property subject to an Existing Deed of Trust(s), and in the event that a
Beneficiary Statement as to the applicable Existing Note(s) discloses that the
unpaid principal balance of such Existing Note(s) at the closing will be more
or less than the amount set forth in paragraph 3.1(c) hereof (“Existing Note Variation”), then the
Purchase Money Note(s) shall be reduced or increased by an amount equal to such
Existing Note Variation.  If there is to
be no Purchase Money Note, the cash required at the Closing per paragraph 3.1(a)
shall be reduced or increased by the amount of such Existing Note Variation.

 

11.7                           Variations in New Loan Balance.  In the event Buyer is obtaining a New Loan
and the amount ultimately obtained exceeds the amount set forth in
paragraph 5.1, then the amount of the Purchase Money Note, if any, shall
be reduced by the amount of such excess.

 

12.                               Representation
and Warranties of Seller and Disclaimers.

 

12.1                           Seller’s
warranties and representations shall survive the Closing and delivery of the
deed for a period of 3 years, and, are true, material and relied upon by
Buyer and Brokers in all respects. 
Seller hereby makes the following warranties and representations to
Buyer and Brokers:

 

(a)                                  Authority of Seller.  Seller is the owner of the Property and/or has
the full right, power and authority to sell, convey and transfer the Property
to Buyer as provided herein, and to perform Seller’s obligations hereunder.

 

 

(b)                                 Maintenance During Escrow and Equipment Condition At
Closing.  Except as otherwise
provided in paragraph 9.1(m) hereof, Seller shall maintain the Property
until the Closing in its present condition, ordinary wear and tear
excepted.  The HVAC, plumbing,
elevators, loading doors and electrical systems shall be in good operating
order and condition at the time of Closing.

 

(c)                                  Hazardous Substances/Storage Tanks.  Seller has no knowledge, except as otherwise
disclosed to Buyer in writing, of the existence or prior existence on the
Property of any Hazardous Substance, nor of the existence or prior existence of
any above or below ground storage tank.

 

(d)                                 Compliance.  Seller has no knowledge of any aspect or condition of the
Property which violates applicable laws, rules, regulations, codes or
covenants, conditions or restrictions, or of improvements or alterations made
to the Property without a permit where one was required, or of any unfulfilled
order or directive of any applicable governmental agency or casualty insurance
company requiring any investigation, remediation, repair, maintenance or improvement
be performed on the Property.

 

(e)                                  Changes in Agreements.  Prior to the Closing, Seller will not
violate or modify any Existing Lease or Other Agreement, or create any new
leases or other agreements affecting the Property, without Buyer’s written approval,
which approval will not be unreasonably withheld.

 

(f)                                    Possessory Rights.  Seller has no knowledge that anyone will, at
the Closing, have any right to possession of the Property, except as disclosed
by this Agreement or otherwise in writing to Buyer.

 

(g)                                 Mechanics’ Liens.  There are no unsatisfied mechanics’ or
materialmens’ lien rights concerning the Property.

 

(h)                                 Actions, Suits or Proceedings.  Seller has no knowledge of any actions,
suits or proceedings pending or threatened before any commission, board,
bureau, agency, arbitrator, court or tribunal that would affect the Property or
the right to occupy or utilize same.

 

(i)                                     Notice of Changes.  Seller will promptly notify Buyer and
Brokers in writing of any Material Change (see paragraph 9.1(n)) affecting
the Property that becomes known to Seller prior to the Closing.

 

(j)                                     No Tenant Bankruptcy Proceedings.  Seller has no notice or knowledge that any
tenant of the Property is the subject of a bankruptcy or insolvency proceeding.

 

(k)                                  No Seller Bankruptcy Proceedings.  Seller is not the subject of a bankruptcy,
insolvency or probate proceeding.

 

(l)                                     Personal Property.  Seller has no knowledge that anyone will, at
the Closing, have any right to possession of any personal property included in
the Purchase Price nor

 

 

knowledge of any liens or encumbrances affecting such
personal property, except as disclosed by this Agreement or otherwise in
writing to Buyer.

 

12.2                           Buyer
hereby acknowledges that, except as otherwise stated in this Agreement, Buyer
is purchasing the Property in its existing condition and will, by the time
called for herein, make or have waived all inspections of the Property Buyer
believes are necessary to protect its own interest in, and its contemplated use
of, the Property.  The Parties
acknowledge that, except as otherwise stated in this Agreement, no
representations, inducements, promises, agreements, assurances, oral or
written, concerning the Property, or any aspect of the occupational safety and
health laws, Hazardous Substance laws, or any other act, ordinance or law, have
been made by either Party or Brokers, or relied upon by either Party hereto.

 

12.3                           In the
event that Buyer learns that a Seller representation or warranty might be
untrue prior to the Closing, and Buyer elects to purchase the Property anyway
then, and in that event, Buyer waives any right that it may have to bring an
action or proceeding against Seller or Brokers regarding said representation or
warranty.

 

12.4                           Any
environmental reports, soils reports, surveys, and other similar documents
which were prepared by third party consultants and provided to Buyer by Seller
or Seller’s representatives, have been delivered as an accommodation to Buyer
and without any representation or warranty as to the sufficiency, accuracy,
completeness, and/or validity of said documents, all of which Buyer relies on
at its own risk.  Seller believes said
documents to be accurate, but Buyer is advised to retain appropriate
consultants to review said documents and investigate the Property.

 

13.                               Possession.

 

Possession of the
Property shall be given to Buyer at the Closing subject to the rights of
tenants under Existing Leases.

 

14.                               Buyer’s
Entry.

 

At any time during the
Escrow period, Buyer, and its agents and representatives, shall have the right
at reasonable times and subject to rights of tenants, to enter upon the
Property for the purpose of making inspections and tests specified in this
Agreement.  No destructive testing shall
be conducted, however, without Seller’s prior approval which shall not be
unreasonably withheld.  Following any
such entry or work, unless otherwise directed in writing by Seller, Buyer shall
return the Property to the condition it was in prior to such entry or work,
including the recompaction or removal of any disrupted soil or material as
Seller may reasonably direct.  All such
inspections and tests and any other work conducted or materials furnished with
respect to the Property by or for Buyer shall be paid for by Buyer as and when
due and Buyer shall indemnify, defend, protect and hold harmless Seller and the
Property of and from any and all claims, liabilities, losses, expenses
(including reasonable attorneys’ fees), damages, including those for injury to
person or property, arising out of or relating to any such work or materials or
the acts or omissions of Buyer, its agents or employees in connection
therewith.

 

 

15.                               Further
Documents and Assurances.

 

The Parties shall each,
diligently and in good faith, undertake all actions and procedures reasonably
required to place the Escrow in condition for Closing as and when required by
this Agreement.  The Parties agree to
provide all further information, and to execute and deliver all further
documents, reasonably required by Escrow Holder or the Title Company.

 

16.                               Attorneys’
Fees.

 

If any Party or Broker
brings an action or proceeding (including arbitration) involving the Property
whether founded in tort, contract or equity, or to declare rights hereunder,
the Prevailing Party (as hereafter defined) in any such proceeding, action, or
appeal thereon, shall be entitled to reasonable attorneys’ fees.  Such fees may be awarded in the same suit or
recovered in a separate suit, whether or not such action or proceeding is
pursued to decision or judgment.  The
term “Prevailing Party” shall
include, without limitation, a Party or Broker who substantially obtains or
defeats the relief sought, as the case may be, whether by compromise,
settlement, judgment, or the abandonment by the other Party or Broker of its
claim or defense.  The attorneys’ fees
award shall not be computed in accordance with any court fee schedule, but
shall be such as to fully reimburse all attorneys’ fees reasonably incurred.

 

17.                               Prior
Agreements/Amendments.

 

17.1                           This
Agreement supersedes any and all prior agreements between Seller and Buyer
regarding the Property.

 

17.2                           Amendments
to this Agreement are effective only if made in writing and executed by Buyer
and Seller.

 

18.                               Broker’s
Rights.

 

18.1                           If this
sale is not consummated due to the default of either the Buyer or Seller, the
defaulting Party shall be liable to and shall pay to Brokers the Brokerage Fee
that Brokers would have received had the sale been consummated.  If Buyer is the defaulting party, payment of
said Brokerage Fee is in addition to any obligation with respect to liquidated
or other damages.

 

18.2                           Upon
the Closing, Brokers are authorized to publicize the facts of this transaction.

 

19.                               Notices.

 

19.1                           Whenever
any Party, Escrow Holder or Brokers herein shall desire to give or serve any notice,
demand, request, approval, disapproval or other communication, each such
communication shall be in writing and shall be delivered personally, by
messenger or by mail, postage prepaid, to the address set forth in this
Agreement or by facsimile transmission.

 

19.2                           Service
of any such communication shall be deemed made on the date of actual receipt if
personally delivered.  Any such
communication sent by regular mail shall be deemed given 48 hours after
the same is mailed.  Communications sent
by United States Express Mail or

 

 

overnight courier that guarantee next day delivery
shall be deemed delivered 24 hours after delivery of the same to the
Postal Service or courier. 
Communications transmitted by facsimile transmission shall be deemed
delivered upon telephonic confirmation of receipt (confirmation report from fax
machine is sufficient), provided a copy is also delivered via delivery or
mail.  If such communication is received
on a Saturday, Sunday or legal holiday, it shall be deemed received on the next
business day.

 

19.3                           Any
Party or Broker hereto may from time to time, by notice in writing, designate a
different address to which, or a different person or additional persons to
whom, all communications are thereafter to be made.

 

20.                               Duration
of Offer.

 

20.1                           If this
offer is not accepted by Seller on or before 5:00 P.M. according to the time
standard applicable to the city of Los Angeles, CA on the date of
January 22, 2004, at 12:30 p.m., it shall be deemed automatically
revoked.

 

20.2                           The
acceptance of this offer, or of any subsequent counteroffer hereto, that
creates an agreement between the Parties as described in paragraph 1.2,
shall be deemed made upon delivery to the other Party or either Broker herein
of a duly executed writing unconditionally accepting the last outstanding offer
or counteroffer.

 

21.                               LIQUIDATED DAMAGES.  (This
Liquidated Damages paragraph is applicable only if initialed by both Parties).

 

THE PARTIES AGREE THAT IT
WOULD BE IMPRACTICABLE OR EXTREMELY DIFFICULT TO FIX, PRIOR TO SIGNING THIS
AGREEMENT, THE ACTUAL DAMAGES WHICH WOULD BE SUFFERED BY SELLER IF BUYER FAILS
TO PERFORM ITS OBLIGATIONS UNDER THIS AGREEMENT.  THEREFORE, IF, AFTER THE SATISFACTION OR WAIVER OF ALL
CONTINGENCIES PROVIDED FOR THE BUYER’S BENEFIT, BUYER BREACHES THIS AGREEMENT,
SELLER SHALL BE ENTITLED TO LIQUIDATED DAMAGES IN THE AMOUNT OF
$250,000.00.  UPON PAYMENT OF SAID SUM
TO SELLER, BUYER SHALL BE RELEASED FROM ANY FURTHER LIABILITY TO SELLER, AND
ANY ESCROW CANCELLATION FEES AND TITLE COMPANY CHARGES SHALL BE PAID BY SELLER.

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Buyer Initials

  	
   

  	
  Seller Initials

  	
   

  

 

22.                               ARBITRATION OF DISPUTES.  (This
Arbitration of Disputes paragraph is applicable only if initiated by both
Parties.)

 

22.1                           ANY
CONTROVERSY AS TO WHETHER SELLER IS ENTITLED TO THE LIQUIDATED DAMAGES AND/OR
BUYER IS ENTITLED TO THE RETURN OF DEPOSIT MONEY, SHALL BE DETERMINED BY
BINDING ARBITRATION BY, AND UNDER THE COMMERCIAL RULES OF THE AMERICAN
ARBITRATION

 

 

ASSOCIATION (“COMMERCIAL
RULES”).  ARBITRATION
HEARINGS SHALL BE HELD IN THE COUNTY WHERE THE PROPERTY IS LOCATED.  ANY SUCH CONTROVERSY SHALL BE ARBITRATED BY
3 ARBITRATORS WHO SHALL BE IMPARTIAL REAL ESTATE BROKERS WITH AT LEAST
5 YEARS OF FULL TIME EXPERIENCE IN BOTH THE AREA WHERE THE PROPERTY IS
LOCATED AND THE TYPE OF REAL ESTATE THAT IS THE SUBJECT OF THIS AGREEMENT.  THEY SHALL BE APPOINTED UNDER THE COMMERCIAL
RULES.  THE ARBITRATORS SHALL HEAR AND
DETERMINE SAID CONTROVERSY IN ACCORDANCE WITH APPLICABLE LAW, THE INTENTION OF
THE PARTIES AS EXPRESSED IN THIS AGREEMENT AND ANY AMENDMENTS THERETO, AND UPON
THE EVIDENCE PRODUCED AT AN ARBITRATION HEARING.  PRE-ARBITRATION DISCOVERY SHALL BE PERMITTED IN ACCORDANCE WITH
THE COMMERCIAL RULES OR STATE LAW APPLICABLE TO ARBITRATION PROCEEDINGS.  THE AWARD SHALL BE EXECUTED BY AT LEAST 2 OF
THE 3 ARBITRATORS, BE RENDERED WITHIN 30 DAYS AFTER THE CONCLUSION OF THE
HEARING, AND MAY INCLUDE ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY PER
PARAGRAPH 16 HEREOF.  JUDGMENT MAY
BE ENTERED ON THE AWARD IN ANY COURT OF COMPETENT JURISDICTION NOTWITHSTANDING
THE FAILURE OF A PARTY DULY NOTIFIED OF THE ARBITRATION HEARING TO APPEAR
THEREAT.

 

22.2                           BUYER’S
RESORT TO OR PARTICIPATION IN SUCH ARBITRATION PROCEEDINGS SHALL NOT BAR SUIT
IN A COURT OF COMPETENT JURISDICTION BY THE BUYER FOR DAMAGES AND/OR SPECIFIC
PERFORMANCE UNLESS AND UNTIL THE ARBITRATION RESULTS IN AN AWARD TO THE SELLER
OF LIQUIDATED DAMAGES, IN WHICH EVENT SUCH AWARD SHALL ACT AS A BAR AGAINST ANY
ACTION BY BUYER FOR DAMAGES AND/OR SPECIFIC PERFORMANCE.

 

22.3                           NOTICE:
BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING
OUT OF THE MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISIONS DECIDED
BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING UP ANY
RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL.  BY INITIALING IN THE SPACE BELOW
YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH
RIGHTS ARE SPECIFICALLY INCLUDED IN THE “ARBITRATION OF DISPUTES”
PROVISION.  IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE.  YOUR AGREEMENT TO THIS ARBITRATION PROVISION
IS VOLUNTARY.

 

WE HAVE READ AND
UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE
MATTERS INCLUDED IN THE “ARBITRATION OF DISPUTES” PROVISION TO NEUTRAL
ARBITRATION.

 

 

	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Buyer Initials

  	
   

  	
  Seller Initials

  	
   

  

 

23.                               MISCELLANEOUS.

 

23.1                           Binding Effect.  This Agreement shall be binding on the Parties without regard to
whether or not paragraphs 21 and 22 are initialed by both of the
Parties.  Paragraphs 21 and 22 are
each incorporated into this Agreement only if initialed by both Parties at the
time that the Agreement is executed.

 

23.2                           Applicable Law.  This Agreement shall be governed by, and paragraph 22.3 is
amended to refer to, the laws of the state in which the Property is located.

 

23.3                           Time of Essence.  Time is of the essence in this Agreement.

 

23.4                           Counterparts.  This Agreement may be executed by Buyer and Seller in
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.  Escrow Holder, after verifying that the
counterparts are identical except for the signatures, is authorized and
instructed to combine the signed signature pages on one of the counterparts,
which shall then constitute the Agreement.

 

23.5                           Waiver of Jury Trial.  THE
PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR
PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS AGREEMENT.

 

23.6                           Conflict. 
Any conflict between the printed provisions of this Agreement and the
typewritten or handwritten provisions shall be controlled by the typewritten or
handwritten provisions.

 

24.                               Disclosures
Regarding The Nature Of A Real Estate Agency Relationship.

 

24.1                           The
Parties and Brokers agree that their relationship(s) shall be governed by the
principles set forth in the applicable sections of the California Civil Code,
as summarized in paragraph 24.2.

 

24.2                           When
entering into a discussion with a real estate agent regarding a real estate
transaction, a Buyer or Seller should from the outset understand what type of
agency relationship or representation it has with the agent or agents in the
transaction.  Buyer and Seller
acknowledge being advised by the Brokers in this transaction, as follows:

 

(a)                                  Seller’s Agent.  A Seller’s agent under a listing agreement with the Seller acts
as the agent for the Seller only.  A
Seller’s agent or subagent has the following affirmative obligations:  (1) To
the Seller:  A fiduciary duty
of utmost care, integrity, honesty, and loyalty in dealings with the
Seller.  (2) To the Buyer and the Seller:  a. Diligent exercise of reasonable
skills and care in performance of the agent’s duties.  b. A duty of honest and fair dealing and good faith.  c. A duty to disclose all facts known
to the agent materially affecting the value or desirability of the property
that are not known to, or within the diligent attention and observation

 

 

of, the Parties. 
An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party which does not involve the
affirmative duties set forth above.

 

(b)                                 Buyer’s Agent.  A selling agent can, with a Buyer’s consent, agree to act as
agent for the Buyer only.  In these
situations, the agent is not the Seller’s agent, even if by agreement the agent
may receive compensation for services rendered, either in full or in part from
the Seller.  An agent acting only for a
Buyer has the following affirmative obligations.  (1) To the Buyer:  A fiduciary duty of utmost care, integrity,
honesty, and loyalty in dealings with the Buyer.  (2) To the Buyer and the
Seller:  a. Diligent
exercise of reasonable skills and care in performance of the agent’s
duties.  b. A duty of honest and
fair dealing and good faith.  c. A
duty to disclose all facts known to the agent materially affecting the value or
desirability of the property that are not known to, or within the diligent
attention and observation of, the Parties. 
An agent is not obligated to reveal to either Party any confidential
information obtained from the other Party which does not involve the
affirmative duties set forth above.

 

(c)                                  Agent Representing Both Seller and Buyer.  A real estate agent, either acting directly
or through one or more associate licenses, can legally be the agent of both the
Seller and the Buyer in a transaction, but only with the knowledge and consent
of both the Seller and the Buyer. 
(1) In a dual agency situation, the agent has the following
affirmative obligations to both the Seller and the Buyer:  a. A fiduciary duty of utmost care,
integrity, honesty and loyalty in the dealings with either Seller or the
Buyer.  b. Other duties to the
Seller and the Buyer as stated above in their respective sections (a) or
(b) of this paragraph 24.2. 
(2) In representing both Seller and Buyer, the agent may not
without the express permission of the respective Party, disclose to the other
Party that the Seller will accept a price less than the listing price or that
the Buyer will pay a price greater than the price offered.  (3) The above duties of the agent in a
real estate transaction do not relieve a Seller or Buyer from the
responsibility to protect their own interests. 
Buyer and Seller should carefully read all agreements to assure that
they adequately express their understanding of the transaction.  A real estate agent is a person qualified to
advise about real estate.  If legal or
tax advice is desired, consult a competent professional.

 

(d)                                 Further Disclosures.  Throughout this transaction Buyer and Seller
may receive more than one disclosure, depending upon the number of agents
assisting in the transaction. Buyer and Seller should each read its contents
each time it is presented, considering the relationship between them and the
real estate agent in this transaction and that disclosure.  Brokers have no responsibility with respect
to any default or breach hereof by either Party.  The liability (including court costs and attorneys’ fees), of any
Broker with respect to any breach of duty, error or omission relating to this
Agreement shall not exceed the fee received by such Broker pursuant to this
Agreement; provided, however, that the foregoing limitation on each Broker’s
liability shall not be applicable to any gross negligence or willful misconduct
of such Broker.

 

24.3                           Confidential Information:  Buyer and Seller agree to Identify to
Brokers as “Confidential” any communication or information given Brokers that
is considered by such Party to be confidential.

 

 

25.                               Construction Of Agreement.  In construing this Agreement, all headings
and title are for the convenience of the parties only and shall not be
considered a part of this Agreement.  Whenever
required by the context, the singular shall include the plural and vice
versa.  Unless otherwise specifically
indicated to the contrary, the word “days” as used in this Agreement shall mean
and refer to calendar days.  This
Agreement shall not be construed as if prepared by one of the parties, but
rather according to its fair meaning as a whole, as if both parties had
prepared it.

 

26.                               Additional Provisions:

 

Additional provisions of
this offer, if any, are as follows or are attached hereto by an addendum
consisting of paragraphs 28 through 37. 
(If there are no additional provisions write “NONE.”)

 

	
  see addendum,
  attached

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

ATTENTION:  NO REPRESENTATION OR RECOMMENDATION IS MADE
BY THE AMERICAN INDUSTRIAL REAL ESTATE ASSOCIATION OR BY ANY BROKER AS TO THE
LEGAL SUFFICIENCY, LEGAL EFFECT, OR TAX CONSEQUENCES OF THIS AGREEMENT OR THE
TRANSACTION TO WHICH IT RELATES, THE PARTIES ARE URGED TO:

 

1.                                      SEEK
ADVICE OF COUNSEL AS TO THE LEGAL AND TAX CONSEQUENCES OF THIS AGREEMENT.

2.                                      RETAIN
APPROPRIATE CONSULTANTS TO REVIEW AND INVESTIGATE THE CONDITION OF THE
PROPERTY.  SAID INVESTIGATION SHOULD
INCLUDE BUT NOT BE LIMITED TO:  THE
POSSIBLE PRESENCE OF HAZARDOUS SUBSTANCES, THE ZONING OF THE PROPERTY, THE
INTEGRITY AND CONDITION OF ANY STRUCTURES AND OPERATING SYSTEMS, AND THE
SUITABILITY OF THE PROPERTY FOR BUYER’S INTENDED USE.

 

WARNING:  IF THE PROPERTY IS LOCATED IN A STATE OTHER
THAN CALIFORNIA, CERTAIN PROVISIONS OF THIS AGREEMENT MAY NEED TO BE REVISED TO
COMPLY WITH THE LAWS OF THE STATE IN WHICH THE PROPERTY IS LOCATED.

 

NOTE:

 

1.                                      THIS
FORM IS NOT FOR USE IN CONNECTION WITH THE SALE OF RESIDENTIAL PROPERTY.

 

2.                                      IF
THE BUYER IS A CORPORATION, IT IS RECOMMENDED THAT THIS AGREEMENT BE SIGNED BY
TWO CORPORATE OFFICERS.

 

 

The
undersigned Buyer offers and agrees to buy the Property on the terms and
conditions stated and acknowledges receipt of a copy hereof.

 

	
  BROKER:

  	
   

  	
  BUYER:

  
	
  Commercial
  Resource Real Estate Services

  	
   

  	
  bebe stores,
  inc., a California corporation

  
	
   

  	
   

  	
   

  
	
  Attn:

  	
  Justin Beimforde

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
  Partner

  	
   

  	
  Date:

  	
   

  
	
  Address:

  	
  520 South Grand
  Avenue, Ste. 690

  	
   

  	
  Name Printed:

  	
  Manny Mashouf

  
	
  Los Angeles,
  CA  90071

  	
   

  	
  Title:

  	
  Chief Executive
  Officer

  
	
  Telephone:

  	
  (213) 627 6700
  x17

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
  Facsimile:

  	
  (213) 627-6727

  	
   

  	
   

  
	
  Federal ID No.

  	
  95-3945478

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Date:

  	
  1-21-04

  
	
   

  	
   

  	
  Name Printed:

  	
  M. Mashouf

  
	
   

  	
   

  	
  Title:

  	
  CEO

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone/Facsimile

  	
   

  
	
   

  	
   

  	
  Federal ID No.

  	
   

  
																	

 

27.                               Acceptance.

 

27.1                           Seller
accepts the foregoing offer to purchase the Property and hereby agrees to sell
the Property to Buyer on the terms and conditions therein specified.

 

27.2                           Seller
acknowledges that Brokers have been retained to locate a Buyer and are the
procuring cause of the purchase and sale of the Property set forth in this
Agreement.  In consideration of real
estate brokerage service rendered by Brokers, Seller agrees to pay Brokers a
real estate Brokerage Fee in a sum equal to 4% of the Purchase Price,
divided in such shares as follows:  2.5%
to Commercial REsource Real Estate Services and 1.5% to eOffice Suites.  This Agreement shall serve as an irrevocable
instruction to Escrow Holder to pay such Brokerage Fee to Brokers out of the
proceeds accruing to the account of Seller at the Closing.

 

27.3                           Seller
acknowledges receipt of a copy hereof and authorizes Brokers to deliver a
signed copy to Buyer.

 

NOTE:  A PROPRIETARY INFORMATION SHEET IS REQUIRED
TO BE DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT.

 

	
  BROKER:

  	
   

  	
  SELLER:

  
	
  eOffice Suites,
  Inc.

  	
   

  	
  10345 Olympic
  LLC

  
	
   

  	
   

  	
   

  
	
  Attn: Howard
  Sher

  	
   

  	
  By:

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
   

  
	
  Address:

  	
  13101 Washington
  Blvd.

  	
   

  	
  Name Printed:

  	
   

  
								

 

 

	
  Los Angeles, CA

  	
   

  	
  Title:

  	
   

  
	
  Telephone:

  	
  (310) 566 7004

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
  Facsimile:

  	
   

  	
   

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Date:

  	
   

  
	
   

  	
   

  	
  Name Printed:

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
  Address:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Telephone/Facsimile:

  	
   

  
	
   

  	
   

  	
  Federal ID No.

  	
   

  
															

 

 

ADDENDUM
TO THE STANDARD OFFER, AGREEMENT AND ESCROW

INSTRUCTIONS FOR THE PURCHASE OF REAL ESTATE DATED

JANUARY 20, 2004, BY AND BETWEEN bebe stores, inc. AND/OR ASSIGNEE,

AS BUYER AND 10345 OLYMPIC LLC, AS SELLER, FOR THE PROPERTY AT

10345 WEST OLYMPIC BOULEVARD, LOS ANGELES, CALIFORNIA 90064

 

28.                               In
addition to Contingencies to Closing referenced in Paragraph 9(e) above,
Seller to grant Buyer the right, at Buyer’s sole cost and expense, to apply
with the City of Los Angeles, for a Code Update Inspection in order to
establish the Property’s current standing with the City of Los Angeles relating
to compliance with associated issues of the City of Los Angeles’s most recent
zoning, codes and restrictions.  The results
of such Code Update Inspection shall be, per Paragraph 9(e) above,
contingencies to the close of escrow.

 

29.                               Seller
to provide to Buyer any and all existing reports concerning:
1) Environmental integrity of the Property (Phase I and Phase II
environmental assessments); 2) Compliance with City of Los Angeles Codes,
including but not limited to ADA (Americans with Disabilities Act)
requirements; 3) City requirements, if any, for fire safety/sprinklers
(including most recent Title 19 backflow pressure test inspection;
4) Seismic compliance and/or seismic upgrade work that has been completed;
5) Copies of most recent occupancy permits and business licenses for all
past and present delineated rentable areas; 6) Per Paragraph 2.4,
Seller to disclose whether current fire sprinkler monitor system is owned by
Seller or leased by Seller. 
Additionally, should records of non-compliance exist for any of the
above referenced items, Seller shall likewise provide these to Buyer.  Investigation of all of these items shall
be, per Paragraph 9, contingencies to the close of escrow.

 

30.                               In
addition to Contingencies to Closing referenced in Paragraph 9 and those
above, Seller to provide any and all documentation relating to Property’s
current status with the City of Los Angeles regarding all aspects of compliance,
whether or not these items are included in documents referenced in
Paragraph 9(a) and/or 9(e). 
Further, Seller to provide Buyer with any and all documentation relating
to agreements made by Seller and City of Los Angeles regarding parking
(minimums, “grandfather”/legal non-conforming provisions, etc.); Certificate(s)
of Occupancy and/or Business License(s); and/or any outstanding or
unresolved/non-reconciled issues that may exist relative to Property’s standing
with the City.

 

31.                               Notwithstanding
the time periods detailed in Paragraph 9 above, and to all references in
Paragraph 1.2 and Paragraph 9 to “Date of Agreement,” all Buyer Due
Diligence periods to expire twenty one (21) days following opening of escrow.

 

32.                               Notwithstanding
any provisions of Paragraph 9 above to the contrary, within ten (10) days
following opening of escrow, Seller to provide Buyer with any and all building
plans; engineering reports, surveys; maps; seismic and/or soils reports and/or
other type environmental reports; grading plans; schematic drawings; mechanical
systems drawings, maintenance contracts and records, etc.; for the
Property.  Seller consents to Buyer, at
Buyer’s sole cost and expense, commencing any such investigations and reviews
as Buyer may deem necessary.  In the event
of escrow cancellation for any reason other than Seller’s default, Buyer shall
promptly return any above referenced materials.

 

22

 

33.                               In
the event of Buyer’s dissatisfaction with any of the contingent due diligence
items described above, and notwithstanding reference to the contrary in any
paragraph above, prior to the twenty first (21st) day following
opening of escrow, Buyer, in Buyer’s sole discretion, may instruct Escrow
Holder to return to Buyer any funds deposited into Escrow by Buyer, following
Escrow Holder’s receipt of Buyer’s written cancellation instructions.

 

Regarding
Costs of Escrow:  Seller shall pay
One-half (1⁄2) of the escrow fees; that portion of the premium for the Title
Policy equivalent to the premium to CLTA Owner’s Standard Coverage Policy of
Title Insurance; the cost of documentary transfer tax in connection with the
recordation of the Grant Deed (Buyer to cooperate with Seller to minimize the
Documentary Transfer Tax paid by Seller, at no cost to Buyer, and subject to
Buyer’s counsel review and approval of minimization process); the cost of any
obligations of Seller hereunder; and any other closing costs or charges not
expressly provided for herein and customarily paid by a Seller of real property
in Los Angeles County, California. 
Buyer shall pay:  One-half (1⁄2) of
the escrow fees; the cost of recording the Grand Deed; the premium for the
Title Policy in excess of the premium for a CLTA Owner’s Standard Coverage
title policy; the cost of any other obligations of Buyer hereunder; any other
closing costs or charges not expressly provided for herein and customarily paid
by a Buyer of real property in Los Angeles County, California.  In the event that this escrow shall fail to
close by reason of default of either party hereunder, the defaulting party
shall be liable for all escrow and title cancellation charges.  In the event that the escrow shall fail to
close for any other reason, each party shall pay one-half (1⁄2) of all escrow and
title cancellation charges.

 

34.                               In
consideration of Buyer’s entering into this Agreement and as an inducement to
Buyer to purchase the Property, Seller makes the following representations and
warranties, each of which is material and is relied upon by Buyer (the
continued truth and accuracy of which shall constitute a condition precedent to
Buyer’s obligations to close hereunder and each of which shall survive the
close of escrow):  There are no suits
pending against or affecting or, to the best of Seller’s knowledge, without
having made investigation thereof, threatened against the Property or its use,
whether in law or at equity; to the best of Seller’s knowledge, without having
made investigation thereof, Seller is not aware or the existence of any violation
of law or violation of governmental regulation with respect to the Property;
there are no pending, or to the best of Seller’s knowledge, without having made
investigation thereof, threatened proceedings in eminent domain, which would
affect the Property, or any portion thereof, nor would any proposed, projected,
nor proscribed municipal, county, state, or federal action whether in action or
in concept, which may affect Buyer’s projected use of the Property as an
executive office and design studio, as of the opening of escrow.  Additionally, except as described on
Exhibit ”B” attached hereto, there are no leases and/or other agreements
affecting the Property.

 

35.                             Notwithstanding
anything to the contrary contained herein, the telephone system/switch currently
on the Premises is excluded from the Purchase Price and shall be removed by

 

23

 

Seller, at Seller’s sole
cost and expense, prior to close of escrow. 
Should Buyer determine that it wishes for the telephone system/switch to
remain on the Premises, Seller shall transfer title to the telephone
system/switch for the sum of $15,000.00.

 

36.                               Buyer
to cooperate with Seller in a Section 10.31 Tax Deferred Exchange,
provided that cooperation and participation in such an exchange is at no cost
to Buyer and that cooperation and participation in such an exchange does not
unduly delay the close of escrow described in Paragraph 1.1.  Undue delay to the close of escrow is deemed
to be April 1, 2004, or later.

 

37.                               All
notices, requests, demands and other communication given or required to be
given hereunder shall be in writing and personally delivered or sent by United
States registered or certified mail, postage prepaid, return receipt requested,
or sent by a nationally recognized courier service such as Federal Express,
duly addressed to the parties as follows:

 

	
  To Buyer:

  	
  bebe stores, inc.

  
	
   

  	
  860 South Los Angeles
  Street

  
	
   

  	
  Los Angeles, California
  90014

  
	
   

  	
  Attention:  Mr. Manny Mashouf, Chief Executive
  Officer

  
	
   

  	
   

  
	
  With a Copy To:

  	
  Commercial REsource
  Real Estate Services

  
	
   

  	
  520 S. Grand Avenue

  
	
   

  	
  Suite 690

  
	
   

  	
  Los Angeles, California
  90071

  
	
   

  	
  Attention:  Justin Beimforde

  
	
   

  	
   

  
	
  To Seller:

  	
  10345 Olympic LLC

  
	
   

  	
  c/o eOffice Suites

  
	
   

  	
  13101 West Washington
  Boulevard

  
	
   

  	
  Los Angeles, CA 90066

  
	
   

  	
   

  
	
  To Escrow Holder:

  	
  Wilshire Escrow Company

  
	
   

  	
  4720 Wilshire Boulevard

  
	
   

  	
  Los Angeles, California
  90010

  
	
   

  	
  Attention:  Ms. Pamela J. Wood

  

 

Delivery
of any notice or other communication hereunder shall be deemed made on the date
of actual delivery thereof to the address of the addressee, if personally
delivered, and on the date indicated in the return receipt or courier’s records
as the date of delivery or as the date of first attempted delivery, if sent by
mail or courier service.  Any party may
change its address for purposes of this Paragraph by giving notice to the other
party and to Escrow Holder as herein provided.

 

24

 

WILSHIRE ESCROW
COMPANY

a corporation

4270 Wilshire
Boulevard

Los Angeles, California
90010

(323)
935-3530       Fax (323) 938-8927

www.wilshire-escrow.com

 

	
  Opening Escrow
  Instructions:  SALE

  	
  Escrow Number:  116254

  
	
  Escrow Officer:  Pamela J.
  Wood (Ext. 317)

  	
  Date:  January 22,
  2004

  

 

THIS
“OPENING ESCROW INSTRUCTIONS” IS AN AMENDMENT TO THAT CERTAIN STANDARD OFFER,
AGREEMENT AND ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE, DATED
JANUARY 20, 2004

 

	
  CASH THROUGH ESCROW

  	
   

  	
  $

  	
  10,950,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  TOTAL CONSIDERATION

  	
   

  	
  $

  	
  10,950,000.00

  	
   

  

 

RE:  10345 West Olympic Boulevard, Los Angeles,
California 90064-2548

 

1)                                      DATE OF AGREEMENT/OPENING DATE OF
ESCROW/CLOSING DATE: 
Undersigned herein agree that the Date of Agreement is January 21,
2004, the opening date of escrow is January 22, 2004, and the closing date
of escrow is on or before February 26, 2004 (UNLESS EXTENDED AS SHOWN
BELOW).

 

2)                                      EXTENDED CLOSING DATE:  Pursuant to the Purchase Agreement/Escrow
Instructions, Seller reserves the option to use subject property as part of a
tax deferred exchange and Buyer agrees to cooperate providing, among other
things, this escrow is closed no later than April 1, 2004.  Undersigned herein agree that Seller must
give faxed notice to escrow holder no later than February 23rd, if Seller
requires additional time for his tax deferred exchange.  It is further agreed that Buyer shall be
given a four (4) business day notice, prior to the closing date, if said
closing days has been extended for Seller’s tax deferred exchange.

 

3)                                      DEPOSIT:  Buyer’s required deposit in the amount of $500,000.00 has been
received in escrow.

 

4)                                      VESTING:  Policy of Title Insurance to show title
vested in:  BEBE STORES, INC., A CALIFORNIA CORPORATION.

 

5)                                      LEGAL
DESCRIPTION:  SEE EXHIBIT ”A”
ATTACHED HERETO AND MADE APART HEREOF FOR LEGAL DESCRIPTION.

 

6)                                      ENCUMBRANCES:  Title Policy shall be free from encumbrances
EXCEPT:

 

a)                                      General
and Special Taxes, including levies therein, for fiscal year 2003-2004
including personal property taxes, if any, assessed against any former owner,
ALL OF WHICH, AS CURRENTLY ASSESSED HAVE BEEN PAID BY SELLER PRIOR TO OPENING
ESCROW.

 

b)                                     Covenants,
conditions, restrictions, reservations, exceptions (including oil, gas or
mineral rights) rights of way, rights and easements of record and in deed to
file, if any, affecting the use and occupancy of said property, subject to
Buyer’s approval pursuant to Paragraph 9.1(f) of the Purchase
Agreement/Escrow Instructions.

 

***
ESCROW NO. 116254 — PLEASE SIGN ON PAGE FIVE ***

 

1

 

7)                                      PRORATIONS:  All prorations are to be based on a 30 day month.  Prorations shall be prorated as of
12:01 A.M. of the day of the close of escrow, regardless of the actual
time of recording.  Buyer and Seller acknowledge
and agree that any supplemental tax bills for the current fiscal year received
after closing shall be prorated as set forth above and paid in cash outside
escrow to the party entitled to such payment, which obligation shall survive
the close of escrow.  Escrow holder is
not concerned with proration of Property taxes based on supplemental tax bills
not issued prior to closing of escrow. 
There will be no proration of utilities and/or operating expenses
through escrow.

 

a)                                      Fire Insurance:  – NO PRORATION, Buyer to procure their own insurance outside of
escrow.

 

b)                                     Rents/deposits:  – NO PRORATION – property is vacant.

 

c)                                      Property Taxes:  – Prorate taxes based on latest available tax bill as of CLOSE OF
ESCROW.  (Wilshire Escrow Company is not
held responsible for any personal Property tax which may be assessed against
any former owner of the above described Property nor for the corporation or
license tax of any corporation as a former owner.)

 

8)                                      BUYER’S CONTINGENCIES:  PARTIES TO THIS ESCROW HEREIN UNDERSTAND AND
AGREE THAT PURSUANT TO THE ORIGINAL, THE FOLLOWING CONTINGENCIES WILL BE DEEMED
APPROVED BY BUYER IF WRITTEN DISAPPROVAL IS NOT RECEIVED WITHIN THE FOLLOWING
TIME LIMITS:

 

a)                                      AIR Mandatory Disclosure Statement:  10 days after receipt of same.  Seller to provide said document to Buyer as
shown above.  If said documents are received
in escrow for delivery to Buyer, then escrow holder shall cause same to be
messengered to Buyer from Escrow Holder within 1 business day of receipt
of same.

 

b)                                     All other Disclosures and Property Information Sheet:  – February 13, 2004.  Buyer herein acknowledges that all other
documentation, required for Buyer’s due diligence approval, including the
Property Information Sheet, as completed and signed by Seller, is being
delivered to Buyer with these opening escrow instructions via messenger for
delivery to Buyer on Monday, February 2nd.

 

c)                                      Physical Inspection:  – February 13, 2004.

 

d)                                     Hazardous Substance:  – February 13, 2004.

 

e)                                      Soils Inspection:  – February 13, 2004.

 

f)                                        Government Approvals:  – February 13, 2004.

 

g)                                     Preliminary Title Report and Underlying Documents:  – February 13, 2004.  Buyer herein acknowledges receipt of copy of
updated title report issued by Investor’s Title Company, Order
No. 173737-19, dated June 21, 2004 and copies of underlying documents
as described therein.  Items 23, 26,
27, 28, 29 and 30 as shown in schedule B are to be eliminated by close of
escrow.  All other items shown in
schedule B will be deemed approved if not disapproved within the
contingency time limit as shown herein.

 

h)                                     ALTA Supplemental Title Report:  – February 13, 2004.  Buyer, must furnish title company with
acceptable survey at Buyer’s own expense, using Buyer’s own resources before
said ALTA Supplemental Report will be issued. 
If Buyer has not delivered Survey to Title Company by February 2,
2004, it will be deemed Buyer has elected not to procure that ALTA extended
owner’s title policy.

 

2

 

i)                                         Copies of Leases and Estoppel Certificates (if
applicable):  –not
applicable, there are no tenants occupying subject property.

 

j)                                         Other Agreements, if any:  – February 13, 2004.

 

k)                                      Personal Property:  Buyer has until February 13, 2004 to
satisfy itself with regard to the title condition of such personal
property.  Seller to deliver copies of
any liens or encumbrances affecting such property, that it is aware of to Buyer
by NOON on January 23, 2004.  IF
BUYER WANTS A UCC-1 REPORT ORDERED THROUGH ESCROW, Buyer must deliver
instructions and funds to pay for the cost of report to escrow, prior to the
ordering of same, and in said event, herein authorizes and instructs escrow
holder to pay for said report immediately upon receipt of same, regardless of
status of escrow.

 

9)                                      ADDITIONAL DEPOSIT:  Pursuant to the AIR Purchase Contract/Escrow
Instructions, Buyer to deposit in escrow within 5 business days after the
contingencies shown above have been eliminated, an additional $5,000,000.00 in
escrow, making a total of $5,500,000.00 deposited in escrow.

 

10)                                TENANT STATUS: 
Undersigned seller herein confirms:  Subject property IS NOT occupied by tenant(s).

 

11)                                SAVINGS ACCOUNT:  The undersigned principals instruct escrow holder to place funds
deposited by BUYER in a Money Market Savings Account at Mellon First Business
Bank located at 601 West 5th Avenue, Los Angeles, California in the name
of Wilshire Escrow Company as Trustee for the above numbered escrow.  At the close of escrow interest is to be
disbursed to BUYER.  In the event escrow
fails to close, earned interest is to by distributed to BUYER, EXCEPT INTEREST
WHICH IS SUBJECT TO LIQUIDATED DAMAGES. 
Escrow is instructed to withdraw funds from the interest bearing account
only for redeposit in the within escrow. 
BUYER MUST FURNISH THE BANKING
INSTITUTION WITH A COMPLETED AND SIGNED “W-9” FORM AS TO TAXPAYER NAME AND ID
NO. TO BE FURNISHED THE IRS BEFORE ANY INTEREST BEARING ACCOUNT WILL BE OPENED.

 

12)                                STATE TAX WITHHOLDING:  Under California Revenue and Taxation Code
Sections 18805 and 26131, every Buyer must, unless an exemption applies,
deduct and withhold 3-1/3% of the gross sales price from Seller’s proceeds and
send it to the Franchise Tax Board if the Seller has a last known address
outside of California or if the Seller’s proceeds will be paid to a financial
intermediary of the Seller.  Penalties
may be imposed on a responsible party for non-compliance with the requirements
of these statutes and related regulations. 
Seller and Buyer agree to execute and deliver any instrument, affidavit,
statement or instruction reasonably necessary to carry out these requirements,
and to withholding of tax under those statutes if required.

 

13)                                FEDERAL TAX WITHHOLDING:  Under the Foreign Investment in Real
Property Tax Act (FIRPTA), IRC Section 1445, every Buyer must, unless an
exemption applies, deduct and withhold 10% of the gross sales price from
Seller’s proceeds and send it to the Internal Revenue Service, if the Seller is
a “foreign person” under that statute. 
Penalties may be imposed on a responsible party for non-compliance with
the requirements of these statutes and related regulations.  Seller and Buyer agree to execute and
deliver any instrument, affidavit, statement or instruction reasonably
necessary to carry out these requirements, and to withholding of tax under
those statutes if required.

 

14)                                WATER CONSERVATION CERTIFICATE:  Buyer and Seller are aware that the City of
Los Angeles is subject to an ordinance which requires the Seller of
residential, commercial or industrial real property to install in all showers
low-flow showerheads and to install in all toilets a water closet flush
reduction device.  This ordinance
requires that Seller, prior to the close of escrow of this transaction, provide
Buyer with written notice of these requirements and with written confirmation
that Seller has complied with this ordinance.

 

3

 

15)                                PRELIMINARY CHANGE OF OWNERSHIP REPORT:  The Buyer agrees to deliver to the escrow
holder, at least two days prior to the close of escrow, a Preliminary Change of
Ownership Report, in accordance with Section 480.3 of the Revenue and
Taxation Code of the State of California, or be charged through escrow with the
$20.00 penalty assessment levied by the County Recorder at the time of the
recording of the conveyance document when the same is presented to the County
Recorder without said Report.

 

16)                                MATTERS OF INFORMATION:  The following items shown in the above
described Agreement/Escrow Instructions are agreements and/or conditions
between buyer and seller, with which escrow holder is not to be concerned:  2.3; 2.4; 2.5; 7; 9.4; 9.5; 11.5; 12; 13;
14; 15; 16; 17.1; 18; 20; 22; 23; 24; 25; 27.1; 27.3 and 34.

 

17)                                UPDATED PRELIM:  Paragraph 10.1 is herein amended in that escrow holder need
only request an updated preliminary report when escrow holder deems it
necessary and copies of same need not be furnished to all parties.

 

18)                                COPIES OF SURVEYS, ETC. TO SELLER (IN THE EVENT OF
CANCELLATION): 
Paragraph 8.10 is herein amended in that escrow holder shall not be
concerned with said Seller’s request, if a copy of any such request from Seller
to Buyer, is not received in escrow, prior to the cancelling of escrow.

 

19)                                SELLER COMPLIANCE:  Moneys as needed from Buyer to close escrow,
deposited into escrow will be evidence that Buyer has inspected the property
and has satisfied himself, through his own investigation, that Seller has
complied with Item 35 of the Air Contract/Escrow Instructions and same
will no longer be a condition of escrow.

 

20)                                COMMISSION PAYMENT(S):  Inasmuch as there is more than one broker being
paid a commission from seller’s proceeds per Item 27.2 of the above
described Agreement/Escrow Instructions, it is understood that escrow holder
will disburse commission as shown on the AIR Purchase Contract/Escrow
Instructions without having to receive written authorization from brokers.

 

21)                                HOLD OPEN FEE:  Should the Buyer and Seller hereto fail to execute closing
instructions within sixty (60) days after the closing date set forth in these
instructions, then Escrow Holder shall be entitled to receive an additional sum
of $25.00 each month as a hold-open fee, which sum may be deducted monthly from
funds on deposit with Escrow Holder. 
The parties hereto do agree that said additional sum is a reasonable
fee.

 

22)                                COMMON INTEREST DISCLOSURE:  It is hereby disclosed to all parties to
this transaction that certain Officers and Directors of WILSHIRE ESCROW COMPANY
are similarly Officers and Directors of both WINDSOR EXCHANGE CORP. and FREEMAN
EXCHANGE, INC.

 

4

 

GENERAL
INSTRUCTIONS

 

1-C)                          You are
hereby authorized to destroy without liability and without further notice to
us, all documents, papers, instructions and any other material in connection
with this escrow five years after termination of same.

 

2-C)                          We,
jointly and severally, agree to save and hold you harmless, by reason of any
misrepresentation or omission by any of the parties to this escrow as to
compliance with rules and/or regulations of any governmental agency, State,
Federal, Municipal, or otherwise, as concerns rent control, priorities, price
ceilings, and matters of a like nature.

 

3-C)                          In the
event that the conditions of this escrow have not been complied with at the
expiration of the time provided for herein, you are instructed to complete the
same at the earliest possible date thereafter, unless we or either of us have
made written demand upon you for return of the money and/or instruments
deposited by either of us, in which case you may return all instruments and/or
funds to the respective parties hereto and this escrow will without further
notice be considered terminated, or you may withhold and stop all further
proceedings in this escrow without liability for interest on funds held or for
damages or otherwise until receipt of mutual cancellation instructions by all
parties shall have been deposited in this escrow, whereupon you are then
instructed to disburse the escrow funds and instruments accordingly, less your
proper charges.  You are further authorized
and instructed to remit all the funds by your check to the party(ies)
depositing same in this escrow if this escrow is not consummated, unless
specifically instructed to the contrary.

 

4-C)                          If
conflicting demands are made or notice served upon you or legal action is taken
in connection with this escrow, you shall not be required to determine the same
or take any action in the premises, but may withhold and stop all further
proceedings without liability therefor, or you may file suit in interpleader or
for declaratory relief.  If you are required
to respond to any legal summons or proceedings or if any action of interpleader
or declaratory relief is brought by you, we jointly and severally agree to pay
all costs, expenses and reasonable attorney’s fees expended or incurred by you,
and a lien is hereby created in your company’s favor to cover said items.  We agree to save you harmless as escrow
holder hereunder from all loss and expenses, including reasonable attorney’s
fees and court costs sustained by reason of any action, legal or otherwise, which
may in any way arise out of this escrow, before or after closing,
notwithstanding anything in these instructions to the contrary.

 

5-C)                          We
jointly and severally, agree that in the event of cancellation we shall pay you
a sum sufficient to pay you for any expenses which you have incurred pursuant
to these instructions and a reasonable cancellation fee for services rendered
by you, said expenses and fees to be put in escrow before cancellation is
effective.  We further agree that said
charges may be apportioned to us in a manner which you consider equitable and
that your decision in that regard will be binding and conclusive upon us.  Any funds which have been deposited by a
licensed real estate broker for either or both of us shall be returned to such
broker.

 

6-C)                          Any
action brought against the escrow holder, based on these instructions or the
transaction arising therefrom, shall be filed within one (1) year from the
closing of said escrow, or shall be forever barred.

 

7-C)                          Recordation
of any instruments delivered through this escrow, if necessary or proper in the
issuance of the policy of title insurance called for, is authorized, and in
connection therewith, funds and/or instruments received in this escrow may be
delivered to, or deposited with any Bank, Title Company, Savings and Loan
Association, or Licensed Escrow Agent, subject to your order, prior to the
close of escrow, for the purpose of complying with the terms and conditions of
these escrow instructions.

 

Wilshire Escrow Company
is licensed by the DEPARTMENT OF CORPORATIONS of the State of California under
License #963 0326 issued in 1944.

 

5

 

Receipt of a copy of
these instructions is hereby acknowledged; my signature on all instruments and
instructions pertaining to this escrow indicates my unconditional acceptance
and approval of same.

 

BUYER SIGNATURE(S):

 

bebe stores, Inc.

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Manny Mashouf, Chief Executive Officer

  

 

MAILING:  860 South Los Angeles Street, Los Angeles,
CA 90066

 

FORWARDING:                                                                                                    

 

The foregoing terms,
provisions, conditions and instructions are hereby approved and accepted in
their entirety and concurred in by me. 
I will hand you necessary documents called for on my part to cause title
to be shown as above, which you are authorized to deliver when you hold or have
caused to be applied funds set forth above within the time as above
provided.  Pay your escrow charges, my
recording fees, charges for evidence of title as called for whether or not this
escrow is consummated, except those the buyer agreed to pay.  You are hereby authorized to pay bonds,
assessments, taxes, and any liens of record, including prepayment penalties, if
any, to show title as called for.  Affix
documentary transfer stamps on deed as required.  Receipt of a copy of these instructions is hereby acknowledged.

 

SELLER
SIGNATURE(S):

 

10345 Olympic LLC

 

	
  By:

  	
   

  	
   

  
	
   

  	
  Harvey J. Lind, Managing Member

  

 

MAILING:  13101 West Washington Blvd., #100, Los
Angeles, CA 90066

 

MAILING:

 

* * *  ESCROW NO. 116254 –
PLEASE SIGN ABOVE  * * *

 

6

 

ESCROW NO.
116254-010

 

LEGAL DESCRIPTION

 

PARCEL 1:

 

LOTS 12, 13, 14, 16
AND 17 IN BLOCK 19, OF TRACT NO. 7260, IN THE CITY OF LOS ANGELES, COUNTY OF
LOS ANGELES, STATE OF CALIFORNIA, AS PER MAP RECORDED IN BOOK 79,
PAGE(S) 98 AND 99 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER OF SAID
COUNTY.

 

EXCEPT THEREFROM THAT
PORTION OF SAID LOT 14, LYING SOUTHEASTERLY OF THE FOLLOWING DESCRIBED
LINE:

 

BEGINNING AT A POINT IN
THE NORTHERLY LINE OF SAID LOT 14, DISTANT THEREIN 13.22 FEET WESTERLY
FROM THE NORTHEASTERLY CORNER OF SAID LOT 14; THENCE SOUTHWESTERLY IN A
DIRECT LINE 76.29 FEET TO THE SOUTHWESTERLY LINE OF SAID LOT 14, DISTANT
THEREON 65.50 FEET NORTHWESTERLY FROM THE MOST SOUTHERLY CORNER OF SAID
LOT 14.

 

ALSO EXCEPT THE INTEREST
OF THE CITY OF LOS ANGELES IN THAT PORTION OF LOT 13 DESCRIBED AS FOLLOWS:

 

BEGINNING AT THE MOST
SOUTHERLY CORNER OF SAID LOT 13; THENCE NORTHWESTERLY, ALONG THE
SOUTHWESTERLY LINE OF SAID LOT 13, (66) FEET; THENCE NORTHEASTERLY, IN A
DIRECT LINE TO A POINT IN THE NORTHEASTERLY LINE OF SAID LOT 13, DISTANT
THEREON (65.50) FEET NORTHWESTERLY FROM THE MOST EASTERLY CORNER OF SAID
LOT 13; THENCE SOUTHEASTERLY, ALONG SAID NORTHEASTERLY LINE, (65.50) FEET
TO SAID MOST EASTERLY CORNER; THENCE SOUTHWESTERLY, ALONG THE SOUTHEASTERLY
LINE OF SAID LOT 13, (91.45) FEET TO THE POINT OF BEGINNING, AS CONDEMNED
BY FINAL DECREE OF CONDEMNATION, A CERTIFIED COPY OF WHICH WAS RECORDED
DECEMBER 18, 1939 IN BOOK 17134 PAGE 181, OFFICIAL RECORDS.

 

PARCEL 2:

 

THAT PORTION OF
LOT 15, BLOCK 19 OF TRACT 7260, IN THE CITY OF LOS ANGELES, AS
PER MAP RECORDED IN BOOK 79 PAGES 98 AND 99 OF MAPS, IN THE OFFICE OF
THE COUNTY RECORDER OF SAID COUNTY, LYING NORTHWESTERLY OF THE FOLLOWING
DESCRIBED LINE:

 

BEGINNING AT A POINT IN
THE EASTERLY LINE OF SAID LOT 15, DISTANT THEREON 13.47 FEET NORTHERLY
FROM THE SOUTHEASTERLY CORNER OF SAID LOT; THENCE SOUTHWESTERLY IN A DIRECT
LINE TO A POINT IN THE SOUTHWESTERLY LINE OF SAID LOT, DISTANT THEREON 13.22
FEET WESTERLY FROM THE SOUTHEASTERLY CORNER OF SAID LOT.

 

PARCEL 3:

 

LOT 11 BLOCK 19
OF TRACT 7260, IN THE CITY OF LOS ANGELES, AS PER MAP RECORDED IN
BOOK 79 PAGES 98 AND 99 OF MAPS, IN THE OFFICE OF THE COUNTY RECORDER
OF SAID COUNTY.

 

THE PROPERTY IS MORE COMMONLY KNOWN
AS

 

10345 West Olympic Boulevard

Los Angeles, California 
90064-2548

 

APN:  4319-006-052

 

EXHIBIT “A”

 

7

 

WILSHIRE ESCROW COMPANY

a corporation

 

4270 Wilshire Boulevard

Los Angeles, California 90010

(323) 935-3530       Fax (323) 938-8927

www.wilshire-escrow.com

AMENDMENT/SUPPLEMENT TO ESCROW INSTRUCTIONS

 

	
  TO:

  	
   

  	
  WILSHIRE ESCROW
  COMPANY

  	
   

  	
  ESCROW NO:  116254

  
	
   

  	
   

  	
  Pamela J.
  Wood (Ext. 317)

  	
   

  	
  DATE:  February 6, 2004

  
	
   

  	
   

  	
  Escrow Officer

  	
   

  	
  PAGE 1 OF 1

  

 

RE:                              10345
West Olympic Boulevard, Los Angeles, California 90064-2548

 

THESE ESCROW INSTRUCTIONS
ARE HEREBY AMENDED/SUPPLEMENTED TO READ AS FOLLOWS:

 

Harvey Jeffrey Lind, as
Trustee of the 1992 Harvey and Lauen Lind Family Trust, dated 10-26-92, as
amended 03-08-99, AND Howard A. Sher, as Trustee of the Sher Family Trust
Dated 01-15-99; Managing Members of 10345 Olympic LLC, herein acknowledge they
have reviewed original escrow instructions and supplements and/or amendments
thereto to date, including commission agreement, as previously executed by
Harvey Lind, managing member of 10345 Olympic LLC and approves of same in their
entirety.

 

SELLER
DISCLOSURE:  Undersigned
Buyer herein understands and acknowledges that Howard A. Sher, signing as
Trustee of a managing member trust for 10345 Olympic, LLC is a California Real
Estate Licensee and is affiliated with eOffices Suites, a Broker to this
transaction.

 

 

	
  10345 Olympic,
  LLC

  	
   

  	
  bebe stores,
  Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Harvey Jeffrey
  Lind, Trustee of the 1992

  Harvey and Lauen Lind Family Trust dated

  10-26-92, as amended 03-08-99, Managing Member

  	
   

  	
   

  	
  Manny Mashouf, Chief Executive Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Howard A.
  Sher, Trustee of the Sher Family Trust Dated 01-15-99, Managing Member

  	
   

  	
   

  

 

8

 

WILSHIRE ESCROW COMPANY

a corporation

 

4270 Wilshire Boulevard

Los Angeles, California 90010

(323) 935-3530       Fax (323) 938-8927

www.wilshire-escrow.com

AMENDMENT TO ESCROW INSTRUCTIONS

 

	
  TO:

  	
   

  	
  WILSHIRE ESCROW
  COMPANY

  	
   

  	
  ESCROW NO:  116254

  
	
   

  	
   

  	
  Pamela J.
  Wood (Ext. 317)

  	
   

  	
  DATE:  February 18, 2004

  
	
   

  	
   

  	
  Escrow Officer

  	
   

  	
  PAGE 1 OF 1

  

 

RE:                              10345
West Olympic Boulevard, Los Angeles, California 90064-2548

 

TOTAL PURCHASE PRICE
AND/OR TERMS TO PURCHASE PRICE ARE HEREIN AMENDED AS FOLLOWS:

 

	
  CASH THROUGH
  ESCROW

  	
   

  	
  $

  	
  4,557,000.00

  	
   

  
	
  EXISTING DEED OF
  TRUST WITH APPROXIMATE BALANCE OF

  	
   

  	
  $

  	
  6,393,000.00

  	
   

  
	
  TOTAL
  CONSIDERATION

  	
   

  	
  $

  	
  10,950,000.00

  	
   

  

 

Buyer agrees to take
title “SUBJECT TO” existing Deed of Trust of record, in favor of Bank of the
West, securing a Note with an approximate unpaid principal balance of
$6,393,000.00.

 

Buyer requests escrow
holder to procure a Demand for Payoff and intends to pay said existing loan in
full within 2 business days after the successful close of escrow herein.  If the unpaid balance proves to be more or
less than stated above you are to adjust the cash down accordingly.

 

Buyer will be delivering
the funds to payoff said loan in full to Investor’s Title Company prior to the close
of this escrow and herein authorizes and instructs escrow holder to request
title company to pay said loan in full as soon as possible after the successful
close of this escrow.

 

Escrow holder is to hold
all seller’s proceeds until said loan has been confirmed paid by title
company.  All moneys needed to pay said
loan in full, above the unpaid principal, shall be credited to buyers in the
form of a refund check through escrow herein.

 

Any additional expenses
of title company to be able to issue a title policy, after close of escrow,
showing property free and clear of any encumbrances, shall be charged to Seller
through escrow herein.

 

	
  10345 Olympic,
  LLC

  	
   

  	
  bebe stores,
  Inc.

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  Harvey Jeffrey
  Lind, Trustee of the 1992

  Harvey and Lauen Lind Family Trust dated

  10-26-92, as amended 03-08-99, Managing Member

  	
   

  	
   

  	
  Manny
  Mashouf, Chief Executive Officer,

  Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Howard A.
  Sher, Trustee of the Sher Family Trust

  Dated 01-15-99, Managing Member

  	
   

  	
   

  

 

9

 

WILSHIRE ESCROW COMPANY

a corporation

 

4270 Wilshire Boulevard

Los Angeles, California 90010

(323) 935-3530       Fax (323) 938-8927

www.wilshire-escrow.com

AMENDMENT/SUPPLEMENT TO ESCROW INSTRUCTIONS

 

	
  TO:

  	
   

  	
  WILSHIRE ESCROW
  COMPANY

  	
   

  	
  ESCROW NO:  116254

  
	
   

  	
   

  	
  Pamela J.
  Wood (Ext. 317)

  	
   

  	
  DATE:  February 24, 2004

  
	
   

  	
   

  	
  Escrow Officer

  	
   

  	
  PAGE 1 OF 1

  

 

RE:                              10345
West Olympic Boulevard, Los Angeles, California 90064-2548

 

THESE ESCROW INSTRUCTIONS
ARE HEREBY AMENDED/SUPPLEMENTED TO READ AS FOLLOWS:

 

As a matter of agreement
between the undersigned, with which escrow holder is not to be concerned:  Each party agrees not to disclose any of the
terms of this Agreement without the prior written consent of the other party
other than as required by law.

 

 

	
  10345 Olympic,
  LLC

  	
   

  	
  bebe studio
  realty, LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:  bebe
  studio, Inc., sole member

  
	
   

  	
  Harvey Jeffrey
  Lind, Trustee of the 1992

  	
   

  	
   

  
	
   

  	
  Harvey and Lauen
  Lind Family Trust dated

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  10-26-92, as
  amended 03-08-99, Managing Member

  	
   

  	
   

  	
  Manny Mashouf, Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Howard A.
  Sher, Trustee of the Sher Family Trust

  Dated 01-15-99, Managing Member

  	
   

  	
   

  

 

10

 

WILSHIRE ESCROW COMPANY

a corporation

 

4270 Wilshire Boulevard

Los Angeles, California 90010

(323) 935-3530       Fax (323) 938-8927

www.wilshire-escrow.com

AMENDMENT/SUPPLEMENT TO ESCROW INSTRUCTIONS

 

	
  TO:

  	
   

  	
  WILSHIRE ESCROW
  COMPANY

  	
   

  	
  ESCROW NO:  116254

  
	
   

  	
   

  	
  Pamela J.
  Wood (Ext. 317)

  	
   

  	
  DATE:  February 24, 2004

  
	
   

  	
   

  	
  Escrow Officer

  	
   

  	
  PAGE 1 OF 1

  

 

RE:                              10345
West Olympic Boulevard, Los Angeles, California 90064-2548

 

THESE ESCROW INSTRUCTIONS
ARE HEREBY AMENDED/SUPPLEMENTED TO READ AS FOLLOWS:

 

Title
to  subject  property  shall  vest  as  follows:

 

bebe studio realty, LLC,
a California limited liability company

 

The Grantee, as named
above, herein acknowledges that it has reviewed original escrow instructions
and supplements and/or amendments thereto to date as previously executed by
bebe stores, Inc. and approves of same in their entirety.

 

Deposit(s) in escrow to
be credited to the account of the above named Grantees without consideration
for the account of bebe stores, Inc. who no longer has any interest in and to
said subject property.

 

Undersigned Seller herein
authorizes and instructs escrow holder to correct the Grant Deed, already
executed by Seller, to reflect buyer’s vesting as shown above.

 

 

	
  10345 Olympic,
  LLC

  	
   

  	
  bebe studio
  realty, LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:  bebe
  studio, Inc., sole member

  
	
   

  	
  Harvey Jeffrey
  Lind, Trustee of the 1992

  	
   

  	
   

  
	
   

  	
  Harvey and Lauen
  Lind Family Trust dated

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
  10-26-92, as
  amended 03-08-99, Managing Member

  	
   

  	
   

  	
  Manny Mashouf, Chairman

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Howard A.
  Sher, Trustee of the Sher Family Trust

  Dated 01-15-99, Managing Member

  	
   

  	
   

  

 

11

 

WILSHIRE ESCROW COMPANY

a corporation

 

	
  WILSHIRE ESCROW
  COMPANY

  	
  ESCROW NO:  116254

  
	
  4270 Wilshire
  Boulevard

  	
  DATE:  February 24, 2004

  
	
  Los Angeles,
  California 90010

  	
  Pamela J.
  Wood (Ext. 317)

  
	
  (323) 935-3530

  	
  Escrow Officer

  

 

AMENDED ESCROW
INSTRUCTIONS PERTAINING TO COMMISSION

 

RE:                              10345
West Olympic Boulevard, Los Angeles, California 90064-2548

 

At the close of escrow
pay to the following licensed real estate broker(s) as a commission for
services rendered, the sum of $273,750.00 which you are authorized and
instructed to deduct from funds due me under the above numbered escrow:

 

These instructions are
conditional upon Selling Agent crediting Buyer with $50,000.00 from commission
due them at the successful close of escrow.

 

Said amount is to be
disbursed as follows: 

 

	
  LISTING AGENT:

  	
  $0.00

  	
  To:

  	
  eOffice Suites, Inc.

  13101 West Washington Boulevard

  Los Angeles, CA 90066

  Agent:  Howard Sher

  
	
   

  	
   

  	
   

  	
   

  
	
  SELLING AGENT:

  	
  $273,750,00

  	
  To:

  	
  Rinaldo Elliott Hunt

  Funds to be sent via wire transfer to Wells Fargo Bank

  Los Altos Center Branch

  
	
   

  	
   

  	
   

  	
  Routing
  No. 122000247

  
	
   

  	
   

  	
   

  	
  for
  credit to the account of Rinaldo E. Hunt Real Estate Trust Account

  
	
   

  	
   

  	
   

  	
  Account
  No. 8606667668

  

 

 

	
   

  	
  10345 Olympic,
  LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Harvey Jeffrey
  Lind, Trustee of the 1992 Harvey

  and Lauen Lind Family Trust dated 10-26-92, as

  amended 03-08-99, Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Howard A.
  Sher, Trustee of the Sher Family

  Trust Dated 01-15-99, Managing Member

  

 

Undersigned Broker herein
authorizes and instructs escrow holder to credit the sum of $50,000.00 to Buyer
at the successful close of escrow.

 

	
   

  	
   

  
	
   

  	
  Rinaldo Elliott Hunt

  

 

Undersigned herein
acknowledged:

 

	
  bebe studio
  realty, LLC

  
	
   

  
	
  By:  bebe studio, Inc., sole member

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Manny Mashouf, Chairman

  

 

12

 

SUPPLEMENTAL
ESCROW INSTRUCTIONS

 

	
  TO:

  	
   

  	
  WILSHIRE ESCROW COMPANY

  	
   

  	
  ESCROW NO:  116254

  
	
   

  	
   

  	
   

  	
   

  	
  DATE:  February 24, 2004

  
	
   

  	
   

  	
   

  	
   

  	
  PAGE 1 OF 2

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

1)                                      Windsor
Exchange Corp., a California corporation (“Windsor”), is hereby substituted for
10345 Olympic LLC, a California limited liability company, Exchangor, as
Seller in this escrow, in connection with Exchangor’s desire to effect a
like-kind exchange pursuant to I.R.C. Section 1031.

 

2)                                      Buyer
hereby acknowledges and agrees that:

 

a)                                      Windsor
will be acquiring the real property described in this escrow (the “Property”)
concurrently with Windsor’s conveyance thereof to Buyer, solely for the purpose
of facilitating Exchangor’s desire to effect a like-kind exchange.  Windsor has not made or assumed, nor shall
Windsor be liable for, any covenant, obligation, representation or warranty
made by Exchangor concerning or affecting the Property or the condition
thereof, except Windsor’s agreement to convey the Property to buyer in
accordance herewith.

 

b)                                     Buyer
has investigated and is satisfied with the Property and all contingencies to
this transaction, and shall acquire the Property “as is” and without
representation or warranty of Windsor. 
Buyer hereby releases Windsor and shall hold harmless Windsor from and
against any claim, liability or expense in connection with the Property or any
term or condition of this transaction.

 

c)                                      Buyer’s
sole recourse shall be to proceed against Exchangor with respect to any claim
or allegation of buyer concerning the Property or any continuing covenant,
obligation, representation or warranty of Exchangor in connection with this
transaction; and Exchangor agrees to remain liable to Buyer and that the
conveyance of the Property to Windsor shall not relieve Exchangor therefrom.

 

3)                                      The
Acknowledgements and agreements of Buyer set forth herein shall survive the
close of escrow and recordation of any deed or other instrument in connection
herewith.

 

4)                                      Any
and all prorations, escrow fees and other costs of expenses chargeable to
Seller in connection with conveyance of the Property shall be paid from funds
otherwise payable to Seller at closing. 
You are instructed to pay net proceeds of sale to Windsor by wire
transfer or cashier’s check, as directed by Windsor.

 

5)                                      Neither
this amendment nor any existing escrow instructions referred to herein shall
supersede, amend or modify any exchange or other agreement between or among the
undersigned parties outside of escrow.

 

As a
matter of record, with which this escrow is not concerned, undersigned herein
understand and acknowledge that the officers and shareholders of Windsor
Exchange Corp. are the same officers and shareholders of Wilshire Escrow
Company, a California corporation.

 

6)                                      Notwithstanding
any other specific provision herein, Exchangor hereby requests that the
conveyance of the Property shall be by “Direct Deed” from Exchangor to Buyer
pursuant to the provisions of Internal Revenue Ruling 90-34.

 

13

 

ALL OTHER TERMS AND
CONDITIONS OF THIS ESCROW SHALL REMAIN UNCHANGED.

 

	
  ACCOMODATOR/SELLER:

  	
   

  	
  BUYER:

  
	
  Windsor Exchange Corp.

  	
   

  	
  bebe studio realty, LLC

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:  bebe studio, Inc., sole member

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Manny Mashouf, Chairman

  
	
   

  	
   

  	
   

  

 

 

	
  EXCHANGOR:

  	
   

  
	
   

  	
   

  
	
  10345 Olympic
  LLC

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Harvey Jeffrey
  Lind, Trustee of the 1992 Harvey

  and Lauen Lind Family Trust dated 10-26-92, as

  amended 03-08-99, Managing Member

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Howard A.
  Sher, Trustee of the Sher Family Trust

  dated 01-15-99, Managing Member

  	
   

  

 

14

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