Document:

Exhibit
10.12

 

	
  One Citizens Plaza

  	
  GUARANTY

  
	
  Providence, Rhode Island 02903

  	
  (FOR EXECUTION BY CORPORATIONS)

  

 

 

For good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and in consideration of any and all loans, advances, extensions of credit,
equipment financing and equipment leases now or hereafter made or extended by
CITIZENS LEASING CORPORATION, a Rhode Island corporation with its offices at
One Citizens Plaza, Providence, Rhode Island 02903 to, for the account of or on
behalf of J. Jill, LLC (hereinafter called the “Obligor”), and as an inducement
for Citizens Leasing Corporation to make future loans, advances and extensions
of credit to, and to enter into future equipment financing and equipment leases
with Obligor, the undersigned (hereinafter called the “Guarantors”), hereby
jointly and severally, unconditionally and absolutely, guarantee to Citizens
Leasing Corporation, Citizens Bank of Massachusetts, and any of their
affiliates (collectively “CLC”) the full and prompt payment and performance by
Obligor of all obligations which Obligor now or hereafter may have to CLC under
the Master Security Agreement dated as of December 23, 1998 and the promissory
notes now or hereafter issued pursuant to such agreement (the “Agreements”) and
the full and prompt payment when due of all rentals, principal, interest,
charges and all other sums which Obligor may now or hereafter owe to CLC,
arising under the Agreements, howsoever evidenced, whether secured or
unsecured, and hereby jointly and severally agree to indemnify CLC against any
losses CLC may sustain and any expenses it may incur as a result of any default
by Obligor under the Agreements, or as a result of the occurrence of any
default under or as defined in the Agreements and/or as the result of the
enforcement or attempted enforcement by CLC of any of its rights against the
Guarantors hereunder.

 

This Guaranty is a
continuing, unconditional and absolute guaranty of payment and
performance.  If for any reason any
rental payment installment, principal or interest payment or any other sum or
indebtedness now or hereafter owing by Obligor to CLC under the Agreements
shall not be paid promptly when due, Guarantors will forthwith pay such sum to
CLC, without regard to any counterclaim, set-off, deduction or defense of any
kind which Obligor or Guarantors may have or assert, and without abatement,
suspension, deferment or reduction on account of any occurrence
whatsoever.  The Guarantors hereby waive
notice of and consent to the leasing and subleasing or financing, as
applicable, of all equipment and other property now or hereafter leased or
financed under or described in the Agreements, and any schedule(s), rider(s),
individual leasing record(s) or acceptance form(s) executed pursuant thereto,
to any subleasing or other use or disposition of any equipment or collateral
(regardless of whom any such sublessee or user may be), to all of the
provisions of the Agreements, to any amendments thereof, to any actions taken
thereunder, and to the execution by Obligor of the above-referenced Agreements
and of any other agreements, documents and instruments now or hereafter
executed by Obligor in connection therewith. 
The Guarantors further waive the following:  notice of incurring of indebtedness and
obligations by Obligor; acceptance of this Guaranty by CLC; presentment and
demand for payment, protest, notice of protest and notice of dishonor or
non-payment of any instrument evidencing the indebtedness or obligations of
Obligor; any right to require suit against Obligor or any other party before
enforcing this Guaranty; any right to have security applied before enforcing
this Guaranty; any and all rights Guarantors may have against the Obligor by
way of subrogation, reimbursement, set-off, claim or otherwise arising out of
the payment or performance by Guarantors of any of Obligor’s obligations to
CLC; all defenses which might constitute a legal or equitable discharge of a
surety or guarantor; and all other notices and demands otherwise required by
law which the Guarantors may lawfully waive. 
In the event this Guaranty is enforced by suit or otherwise, the
Guarantors will reimburse CLC upon demand for all expenses incurred in
connection therewith, including, without limitation, reasonable attorneys’
fees.

 

The Guarantors represent and
warrant that they are familiar with, and will continue at all times to be
familiar with, the business and condition of the Obligor, and the Guarantors
hereby waive notice of any change in the financial condition of Obligor which
is known to CLC.

 

Guarantors’ obligations
hereunder shall not be released, discharged, terminated or impaired in any
manner whatsoever, irrespective of the lack of any notice or consent of the
Guarantors, by any of the following:  (a)  new agreements or obligations of Obligor with
or to CLC; (b) amendments, indulgences, extensions, modifications, renewals or
waivers of default as to any existing or future agreements or obligations of
Obligor or third parties with or to CLC, or extensions of credit by CLC to
Obligor; (c)  adjustments, compromises or
releases of any obligations of Obligor, any Guarantor or other parties, or
exchanges, releases, dispositions or sales of any security of Obligor, any
Guarantor or other parties; (d) invalidity, irregularity, defect, or
unenforceability, for any reason, of any provision of any of the Agreements, or
of any instrument or writing, or acts or omissions by CLC or Obligor; (e)
interruptions in the business relations between CLC and Obligor; (f) voluntary or
involuntary bankruptcy (including a reorganization in bankruptcy) of Obligor or
entry of an order for relief against or with respect to the Obligor under Title
11 of the United States Code; (g) composition, extension, moratoria or other
forms of debtor relief granted to Obligor pursuant to law presently in force or
hereafter enacted; (h) payment of any or all obligations and indebtedness by
Obligor in the event such payment is invalidated or avoided by a trustee,
custodian or receiver of Obligor; (i) the death or dissolution of Obligor; and
(j) the reorganization, merger or consolidation of Obligor into or with another
entity, corporate or otherwise, or the sale or disposition of all or
substantially all of the capital stock, business or assets of Obligor to any
other person or party.

 

Without limiting the
generality of the foregoing, Guarantors hereby expressly agree that this
Guaranty shall apply to all indebtedness and obligations owed by the Obligor to
CLC under the Agreements, whether or not such indebtedness and obligations are
currently outstanding or advanced to the Obligor after the date hereof.  Guarantors hereby waive any right to receive
notice of, or consent to, the incurring of any additional indebtedness and
obligations by Obligor; and CLC may advance additional funds to the Obligor
pursuant to the Agreements (as the same may be amended or modified from time to
time) in reliance upon the fact that this Guaranty will apply to such
additional indebtedness and obligations, and without the necessity of CLC
obtaining any reaffirmation of this Guaranty.

 

1

 

For the purposes of this
Guaranty and indemnity, all sums owing to CLC by Obligor under the Agreements
shall be deemed at CLC’s election, and without notice, to have become
immediately due and payable if (a) Obligor defaults in any of its obligations
or indebtedness to CLC or if there shall occur default under any of the
Agreements; (b)  a petition under any Chapter
of the Bankruptcy Code, as amended, or for the appointment of a receiver,
trustee or custodian of any part of the property or business of Obligor be
filed by or against the Obligor or there shall enter an order for relief
against or with respect to the Obligor under Title 11 of the United States
Code; (c) Obligor makes a general assignment for the benefit of creditors,
suspends business or commits any act amounting to a business failure; or (d) a
default shall occur by any of the Guarantors hereunder.

 

Each Guarantor further
covenants and agrees that during such time as this Guaranty is in effect, other
than as part of the merger of the Guarantor with or into any parent (including
the Obligor), subsidiary or company under common control with the Guarantor
(each a “Corporate Reorganization”), it will make no substantial change in its
financial status, nor cause or suffer any substantial diminution of its net
worth as the same exists on the date hereof, nor enter into any transaction
which might materially and adversely affect its ability to perform under this
Guaranty.  In the event of any breach of
said covenants and agreements, or in the event of any Guarantor’s insolvency or
bankruptcy, all indebtedness and obligations of Obligor, regardless of their terms,
shall at CLC’s election, and without notice, be deemed for the purposes of this
Guaranty to have become immediately due and payable, and at CLC’s election, the
Guarantors shall promptly pay CLC the entire amount of said indebtedness and
obligations of Obligor, and CLC shall be entitled, to take any action deemed
necessary or advisable to enforce this Guaranty, including, without limitation,
the enjoining of any breach or threatened breach of this paragraph.

 

This Guaranty is assignable
to CLC without notice to the Guarantors, but may not be assigned by the
Guarantors other than as part of a Corporate Reorganization in which case the
surviving entity of such Corporate Reorganization shall be bound by the terms
of this Guaranty as if originally a signatory hereto.  The term “Guarantors” as used herein shall,
if this Guaranty is signed by more than one party, mean the “Guarantors and
each of them” and each undertaking herein contained shall be their joint and
several undertaking.  Each reference to
the “Guarantors” shall be deemed to include the successors and assigns of the
Guarantors, all of whom shall be bound by the provisions of this Guaranty.  This Guaranty shall be construed liberally in
favor of CLC and shall inure to the benefit of its successors and assigns.  Legal rights and obligations hereunder shall
be governed by and construed in accordance with the laws of the State of Rhode
Island.  Wherever the context so requires
herein, the singular number includes the plural, and the plural number includes
the singular.

 

EACH GUARANTOR, TO THE EXTENT
IT MAY LAWFULLY DO SO, HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE
COURTS OF THE STATE OF RHODE ISLAND AND UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF RHODE ISLAND, AS WELL AS TO THE JURISDICTION OF ALL COURTS FROM
WHICH AN APPEAL MAY BE TAKEN THEREFROM, FOR THE PURPOSE OF ANY SUIT, ACTION OR
OTHER PROCEEDING ARISING OUT OF ANY OF ITS OBLIGATIONS UNDER OR WITH RESPECT TO
THIS GUARANTY, AND EXPRESSLY WAIVES ANY AND ALL OBJECTIONS IT MAY HAVE TO VENUE
IN ANY OF SUCH COURTS.  EACH GUARANTOR
HEREBY EXPRESSLY WAIVES ANY RIGHT GUARANTOR MAY HAVE TO A TRIAL BY JURY WITH
RESPECT TO ANY MATTER ARISING OUT OF THIS GUARANTY.  EACH GUARANTOR HEREBY ACKNOWLEDGES AND AGREES
THAT PERSONAL SERVICE OF PROCESS IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT
OF ANY OF ITS OBLIGATIONS UNDER OR WITH RESPECT TO THIS GUARANTY MAY BE MADE BY
MAILING A COPY OF THE SUMMONS AND COMPLAINT TO SUCH GUARANTOR AT ITS BUSINESS
ADDRESS DESIGNATED IN ITS STATE OF INCORPORATION BY REGISTERED OR CERTIFIED
MAIL, RETURN RECEIPT REQUESTED.

 

Each undersigned corporation
warrants for itself that it is authorized by law and by its articles of
incorporation and by-laws to execute this Guaranty, and the officers signing
the same warrant that they are specifically authorized thereunto by a duly
adopted resolution of the board of directors or shareholders of the
corporation.

 

IN WITNESS WHEREOF, the
Guarantors have caused this instrument to be executed this 26th day of December,
2004.

 

 

	
  WITNESS:

  	
  The J. Jill Group, Inc.

  
	
   

  	
  4 Batterymarch Park

  
	
   

  	
  Quincy, MA 02169

  
	
   

  	
   

  
	
  /s/ Mara D. Calame

  	
   

  	
  By:

  	
  /s/ Olga L. Conley

  	
   

  
	
   

  	
   

  
	
   

  	
  Title

  	
  EVP/Chief Financial Officer

  	
   

  
	
   

  	
   

  
	
   

  	
  Guarantor’s Employer I.D. No.

  	
  04-2973769

  	
   

  
								

 

2Exhibit 10.01

 

STANDARD
OFFER, AGREEMENT AND ESCROW

INSTRUCTIONS FOR PURCHASE OF REAL ESTATE

(Non-Residential)

AIR Commercial Real
Estate Association

 

	
   

  	
             December
  21, 2004              

  
	
   

  	
  (Date for Reference
  Purposes)

  

 

1.               Buyer.

1.1  Guitar Center, Inc. a Delaware 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 30 or  60            days after the waiver or expiration of the
Buyer’s Contingencies, (unless a
different Closing date is established by mutual written agreement of the
Parties)  (“Expected
Closing Date”) to be held by First American Title Company - Escrow                                     (“Escrow Holder”) whose
address is 2829 Townsgate
Road., #103, Westlake Village, CA 91361                                , Phone No.       818-707-7019     , Facsimile No.         818-449-4190       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.

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) Three building structures of approximately 96,033 square
feet in aggregate situated on approximately 7.02 acres of land.                                               is located in the City of Westlake Village            , County of Los Angeles                           , State of California                        , is commonly known by the street address of 5775 Lindero Canyon Road, Westlake Village,
CA 91362                                            
and is legally described as: (to be inserted during Escrow)                                                                                                                    
(APN: 2054-029-054                            ).

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 corrected to meet the requirements of First American Title Company - Mike Nuesca                      
(“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, 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 none.                                      

                                                                                                                                                                                                                   

                                                                                                                                                                                                                   

                                                                                                                                                            (collectively, the “Improvements”).

2.4  The fire sprinkler monitor:o is owned by Seller and included in the
Purchase Price, o is leased by Seller, and Buyer will need to
negotiate a new lease with the fire monitoring company, or ý ownership will be detemined during Escrow but if ownership is determined to be that of
Seller, then ownership will be transferred to Buyer as part of the Purchase
Price at Closing.

2.5  Except as provided in Paragraph 2.3, the
Purchase Price does not include Seller’s personal property, furniture and
furnishings, and                                                                                                       
all of which shall be removed by
Seller prior to Closing.

3.               Purchase Price.

3.1  The purchase price (“Purchase Price”) to be paid by Buyer to
Seller for the Property shall be $12,200,000.00                  , 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):

  	
    $            12,200,000.0

  
	
  (Strike
  if not

  	
   

  	
   

  	
   

  	
   

  
	
  applicable)      (b)  Amount
  of “New Loan” as defined in paragraph 5.1, if any:                                                    $                                  

  
	
                          (c)  Buyer
  shall take title to the Property subject to and/or assume the following
  existing                               deed(s)
  of trust (“Existing Deed(s) of Trust”)
  securing the existing promissory note(s)                               (“Existing Note(s)”):

  	
   

  	
   

  
	
                                (i)  An
  Existing Note (“First Note”)
  with an unpaid principal balance as of 

  	
   

  
	
                                      the
  Closing of approximately:                                                                                               $                                 

  
	
                                      Said
  First Note is payable at $                               per
  month,

  	
   

  	
   

  
	
  (Strike if
  not                including
  interest at the rate of                               % per annum
  until paid (and/or the 

  	
   

  	
   

  
	
  applicable)                 entire unpaid
  balance is due on                                                        ).

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
                               (ii)
  An Existing Note (“Second Note”)
  with an unpaid principal balance as of the Closing 

  	
   

  
	
                                     of
  approximately:                                                                                                                   $                                 

  
	
                                     Said
  Second Note is payable at $                               per
  month,

  	
   

  	
   

  
	
                                     including
  interest at the rate of                               % per annum
  until paid (and/or the                                    entire
  unpaid balance is due on                                                        ).

  	
   

  	
   

  
	
  (Strike if
  not     (d) Buyer shall give Seller a
  deed of trust (“Purchase Money Deed of
  Trust”) on the 

  	
   

  	
   

  
	
  applicable)
        roperty, to secure the promissory note of
  Buyer to Seller described in paragraph 6

  	
   

  	
   

  
	
                           (“Purchase Money Note”) in the amount of:                                                                                 $                                 

  
	
   

  	
   

  	
  Total Purchase Price:

  	
    $             12,200,000.0

  
									

 

 

	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  INITIALS

  	
  INITIALS

  

 

 

1

 

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  o  Buyer has delivered
to Broker a check in the sum of $                             ,
payable to Escrow Holder, to be held by Broker until both Parties have executed
this Agreement and the executed Agreement has been delivered to Escrow Holder, or ý Buyer
shall deliver to Escrow Holder a check in the sum of $120,000.00              
within five (5) business days following
the date 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 acount 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:

(a) Within 5 business days after the Date of
Agreement, Buyer shall deposit with Escrow Holder the additional sum of $                      to
be applied to the Purchase Price at the Closing.

(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 $                      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)

       5.1  This offer is contingent upon Buyer obtaining
from an insurance company, financial institution or other lender, a commitment
to lend to Buyer a sum equal to at least                 %
of the Purchase Price, at terms reasonably acceptable to Buyer. Such loan (“New Loan”) shall be secured by a first deed
of trust or mortgage on the Property. If this Agreement provides for Seller to
carry back junior financing, then Seller shall have the right to approve the
terms of the New Loan. Seller shall have 7 days from receipt of the commitment
setting forth the proposed terms of the New Loan to approve or disapprove of
such proposed terms. If Seller fails to notify Escrow Holder, in writing, of
the disapproval within said 7 days it shall be conclusively presumed that
Seller has approved the terms of the New Loan.

       5.2  Buyer hereby agrees to diligently pursue
obtaining the New Loan.   If Buyer shall fail to notify its Broker, Escrow
Holder and Seller, in writing within                 days
following the Date of Agreement, that the New Loan has not been obtained, it
shall be conclusively presumed that Buyer has either obtained said New Loan or
has waived this New Loan contingency.

       5.3  If, after due diligence, Buyer shall notify
its Broker, Escrow Holder and Seller, in writing, within the time specified in
paragraph 5.2 hereof, that Buyer has not obtained said New Loan, this Agreement
shall be terminated, and Buyer shall be entitled to the prompt return of the
Deposit, plus any interest earned thereon, less only Escrow Holder and Title
Company cancellation fees and costs, which Buyer shall pay.

6.               Seller Financing  (Purchase Money Note). 
(Strike if not applicable)

       6.1  The Purchase Money Note shall provide for
interest on unpaid principal at the rate of              %
per annum, with principal and interest paid as follows:                                                                                                                                                                     .

                                                                                                                                                                                                                  .

                                                                                                                                                                                                                  .

                                                                                                                                                                                                                  .

The Purchase Money Note and Purchase Money Deed of Trust shall be on
the current forms commonly used by Escrow Holder, and be junior and subordinate
only to the Existing Note(s) and/or the New Loan expressly called for by this
Agreement.

        6.2  The Purchase Money Note and/or the Purchase
Money Deed of Trust shall contain provisions regarding the following (see also
paragraph 10.3 (b)):

              (a)
Prepayment. Principal may be
prepaid in whole or in part at any time without penalty, at the option of the
Buyer.

              (b)
Late Charge. A late charge of 6%
shall be payable with respect to any payment of principal, interest, or other
charges, not made within 10 days after it is due.

              (c)
Due On Sale. In the event the
Buyer sells or transfers title to the Property or any portion thereof, then the
Seller may, at Seller’s option, require the entire unpaid balance of said Note
to be paid in full.

       6.3  If the Purchase Money Deed of Trust is to be
subordinate to other financing, Escrow Holder shall, at Buyer’s expense prepare
and record on Seller’s behalf a request for notice of default and/or sale with
regard to each mortgage or deed of trust to which it will be subordinate.

6.4  WARNING:
CALIFORNIA LAW DOES NOT ALLOW DEFICIENCY JUDGEMENTS ON SELLER FINANCING.  IF BUYER ULTIMATELY DEFAULTS ON THE LOAN,
SELLER’S SOLE REMEDY IS TO FORECLOSE ON THE PROPERTY.

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             Level One Commercial Real Estate Services                                
represents Seller exclusively (“Seller’s Broker”);

 

ý             CB Richard Ellis, Inc.                                                                    
represents Buyer exclusively (“Buyer’s Broker”); or

 

o                                                                                                                     represents both Seller and Buyer (“Dual Agency”).

 

The Parties acknowledge that Brokers are the procuring cause of this
Agreement. See paragraph 24 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 inserted for reference purposes
at the tope of page 1.

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.

 

2

 

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 AIR
Commercial 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 on or
before the opening of Escrow within 10 or               days
following the Date of Agreement. Buyer has 60 10 days from the receipt of said disclosures to
approve or disapprove the matters disclosed.

(b) Physical Inspection. Buyer has the Due Diligence Period 10 or              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 the Due Diligence
Period 30 or             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 and the Brokers 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 the Due Diligence Period 30 or         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 the Due Diligence Period 30 or         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 days following the opening of Escrow or           days
following the Date of Agreement. Buyer has the Due
Diligence Period 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 the Due Diligence Period 30 or               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 on or before the
opening of Escrow within 10 or             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 on or before the opening of Escrow within
10 or              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 including without limitation all service contracts and the
parking Sublease between Safe Publishing Company Inc. and BankCard USA Merchant
Services Inc. (the “Parking Sublease”). Buyer  has the Due Diligence Period 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           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             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         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             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

 

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any portion thereof, from any cause whatsoever, which would cost more than  $10,000.00 $50,000.00 to repair or cure. If the cost of repair or
cure is $10,000.00 $50,000.00 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 $50,000.00 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 except for the amount of Seller’s insurance deductible. If the cost to repair or cure is more
than  $10,000.00 $50,000.00, 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, if
any, 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 during the Due Diligence Period  until such time as all Buyer’s
Contingencies have been satisfied or waived, Seller and/or its agents may solicit, entertain but not and/or accept back-up offers to purchase the 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 on Title Company’s standard form, duly executed and in recordable form,
conveying fee title to the Property to Buyer with the documentary transfer taxes to be shown in an
off-record affidavit.

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

(c)  If applicable, the Existing Leases and Other The 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.  A
termination of the Existing Lease between Seller as landlord and Safe
Publishing Company Inc. as tenant.

(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 A
bill of sale, duly executed, conveying title to any included personal property
to Buyer,  and also an assignment from Seller to Buyer
of all of Seller’s intangible rights pertaining to the Property (eg
construction related warranties, etc.). 
Seller will also provide to Buyer keys, operating manuals, etc.

(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.

 

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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 from Buyer as Tenant and deposit under the Parking Sublease 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 are true and correct on the date of this
Agreement, shall be true on Close of Escrow and shall survive the Closing and delivery of the
deed for a period of 1 year  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 Safe
Publishing Company Inc. under its new lease with Buyer. 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 with notice to Seller 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 including the Letter of Intent between Buyer
and Seller dated 11-24-2004.

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

 

5

 

other communication, each such communication shall be in writing and
shall be delivered personally, by messenger or by certified mail or reputable
overnight courier (eg FexEx, UPS) , 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 certified mail shall be deemed given on the intended recipient’s receipt or refusal of receipt. 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

Westlake Village, California                           on the date of December 24, 2004 at 5:00 PM                               , 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              $500,000.00             . 
UPON PAYMENT OF SAID SUM TO SELLER, BUYER SHALL BE RELEASED FROM ANY
FURTHER LIABILITY TO SELLER, BUT  AND ANY ESCROW CANCELLATION FEES AND TITLE
COMPANY CHARGES SHALL BE PAID BY BUYER SELLER.

 

	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Buyer Initials

  	
  Seller Initials

  

 

22.   ARBITRATION OF DISPUTES.   (This Arbitration of Disputes paragraph is applicable
only if initialed 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” PROVISION 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 of 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.

23.7  1031
Exchange. Both Seller and Buyer agree to cooperate with each other
in the event that either or both wish to participate in a 1031 exchange.  Any party initiating an exchange shall bear
all costs of such exchange.

 

6

 

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 titles 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          4.2       
through          30          .  (If
there are no additional provisions write “NONE”.)

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

                                                                                                                                                                                                                        

 

ATTENTION:
NO REPRESENTATION OR RECOMMENDATION IS MADE BY THE AIR COMMERCIAL 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:

  
	
   

  	
   

  
	
  CB Richard Ellis, Inc.

  	
   

  	
  Guitar Center, Inc. a Delaware Corporation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Attn:

  	
  G. Horwitz, M. Slater, A. Aufhammer

  	
   

  	
  By:

  	
  /s/ Leland P.
  Smith

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Date:

  	
  December 23,
  2004

  	
   

  
	
  Address:

  	
  355 South Grand Avenue, Suite 2700

  	
   

  	
  Name Printed:

  	
  Leland P. Smith

  	
   

  
	
  Los Angeles, CA 90071

  	
   

  	
  Title:

  	
  Senior V.P.

  	
   

  
	
  Telephone:

  	
  (213) 613-3364                                                

  	
   

  	
  Telephone:

  	
  (818) 735-8800                                                

  	
   

  
	
  Facsimile:

  	
  (213) 613-3538                                                

  	
   

  	
  Facsimile:

  	
  (818) 735-7923                                                  

  	
   

  
														

 

7

 

	
  Email:

  	
  gary.horwitz@cbre.com

  	
   

  	
   

  	
   

  
	
  Federal ID No.

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Leland P.
  Smith

  	
   

  
	
   

  	
  Date:

  	
  December 23,
  2004

  
	
   

  	
  Name Printed:

  	
  Leland P. Smith

  
	
   

  	
  Title:

  	
  Senior V.P.

  
	
   

  	
  Address:

  	
  5795 Lindero Canyon Road

  
	
   

  	
  Westlake Village, CA 91362

  
	
   

  	
  Telephone:

  	
  (818) 735-8800                                                        

  
	
   

  	
  Facsimile:

  	
  (818) 735-7923                                                           

  
	
   

  	
  Email:

  	
   

  
	
   

  	
  Federal ID No.

  	
  95-4600862

  
	
   

  	
  Attn: Ellen Rosenberg, Esq.

  	
   

  
	
   

  	
  with a copy to:

  	
   

  
	
   

  	
  Donfeld, Kelley & Rollman

  	
   

  
	
   

  	
  11845 W. Olympic Blvd.

  	
   

  
	
   

  	
  Suite 1245

  	
   

  
	
   

  	
  Los Angeles, CA 90064

  	
   

  
	
   

  	
  Attn: Fredric A. Rollman, Esq.

  	
   

  
	
   

  	
  Fax: 310-312-8014

  	
   

  
																

 

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, Buyer agrees to pay CB Richard Ellis per Addendum paragraph
24 and Seller
agrees to pay Broker, s Level One Commercial Real Estate Services, a real estate Brokerage Fee in a sum per separate written Agreement. equal
to            %
of the Purchase Price divided in such shares as said Brokers shall direct in
writing.  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 PROPERTY INFORMATION SHEET IS REQUIRED TO BE
DELIVERED TO BUYER BY SELLER UNDER THIS AGREEMENT.

 

	
  BROKER:

  	
  SELLER:

  
	
   

  	
   

  
	
  Level One Commercial Real Estate Services

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Attn:

  	
  Jeffrey K. Hitz

  	
   

  	
  Date:

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Name Printed:

  	
  John M. Gooden

  	
   

  
	
  Address:

  	
  3835R. E. Thousand Oaks Blvd., #224

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (818 ) 879-5700                                                    

  	
   

  
	
  Westlake Village, CA 91362

  	
   

  	
  Facsimile:

  	
  (818 ) 879-5717                                                   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Telephone:

  	
  (805 ) 497-3900                                                 

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
  Facsimile:

  	
  (805 ) 496-7689                                                 

  	
   

  	
  Date:

  	
   

  	
   

  
	
   

  	
   

  	
  Name Printed:

  	
  Denise M. Gooden

  	
   

  
	
  Email:

  	
  jhitz@levelonecommercial.com

  	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  	
  Address:

  	
  5775 Lindero Canyon Road

  	
   

  
	
  Federal                                   ID
                                         No.

  	
   

  	
  Westlake Village, CA 91362

  	
   

  
	
   

  	
   

  	
   

  	
  Telephone:

  	
  (818 ) 879-5700

  	
   

  
	
   

  	
  Facsimile:

  	
  (818 ) 879-5717

  	
   

  
	
   

  	
  Email:

  	
  jgooden@inside12x12.com

  	
   

  
	
   

  	
  Federal ID No.

  	
   

  	
   

  
	
   

  	
  with a copy to:

  	
   

  
	
   

  	
  Attn: Folger, Levin & Kahn LLP

  	
   

  
	
   

  	
  1900 Avenue of the Stars

  	
   

  
	
   

  	
  28th Floor

  	
   

  
	
   

  	
  Los Angeles, CA 90067

  	
   

  
	
   

  	
  Attn: Carol Kerr, Esq.

  	
   

  
	
   

  	
  Fax: 310-556-3770

  	
   

  
																																

 

These forms are often modified to meet changing
requirements of law and needs of the industry. Always write or call to make
sure you are utilizing the most current form: AIR COMMERCIAL REAL ESTATE
ASSOCIATION, 700 South Flower Street, Suite 600, Los Angeles, CA 90017.   (213) 687-8777.

 

© Copyright
2003 By AIR Commercial Real Estate Association.

All rights
reserved.

No part of
these works may be reproduced in any form without permission in writing.

 

8

 

ADDENDUM TO THE STANDARD OFFER, AGREEMENT AND
ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE, DATED DECEMBER 23, 2004, FOR
THE PREMISES AT 5775 LINDERO CANYON ROAD, WESTLAKE VILLAGE, CALIFORNIA, WHERE
GUITAR CENTER, INC. IS THE BUYER AND JOHN M. GOODEN AND DENISE M. GOODEN
ARE THE SELLERS

 

4.2                               (Continued)
Additional deposits: Unless Buyer has elected to terminate the Purchase
Agreement by providing written notice thereof to Seller on or before the expiration of the Due Diligence Period, within two (2)
business days following the expiration of the Due Diligence Period or, if
earlier, the date on which Buyer has provided written notice that it desires to
proceed to closing and purchase the Property, Buyer shall deposit with Escrow
Holder the additional sum of $380,000.00 to be applied to the Purchase Price at
the Closing.  The entire fully funded
deposit of $500,000 will be non-refundable upon expiration of the Due Diligence
Period, unless the Closing fails to occur through no fault of Buyer, in which
event the Deposit plus accrued interest shall be returned to Buyer.  If Buyer elects to terminate this Agreement
either before or after the expiration of the Due Diligence Period and
regardless of reason therefore, all Escrow costs incurred by Buyer and Seller
will be paid by Buyer.

 

9.1(a)                 (Continued)
Contingencies to Closing / Due Diligence Period:  The satisfactory approval of Buyer’s
inspection of all aspects of the Property during an investigation period of
sixty (60) days (the “Due Diligence Period”), from the date Escrow opens, to
inspect [a] any documents related to the Property, including, without
limitation, any and all leases (including leases pending signature), operating
statements and other financial information deemed necessary to verify the
financial status of the Property, [b] the site plans, “as-built” plans, zoning
approvals, compliance with building and parking codes, building permits and
other agreements pertaining to the construction of the Property, [c] title
documents, surveys, engineering and environmental inspections and otherwise
conduct inspections, which in the opinion of Buyer are deemed necessary (at
Buyer’s expense), shall be deemed contingencies for the benefit of Buyer. On or
before the commencement of the Due Diligence Period, Seller agrees to disclose
to the Brokers and to Buyer any and all information which Seller has regarding
present and future zoning and environmental matters affecting the Property and
regarding the condition of the Property, including but not limited to
structural, mechanical and soils condition, the presence and location of
asbestos, PCB transformers, other toxic, hazardous or contaminated substances,
and underground storage tanks in, on or about the Property.  On or prior to the expiration of the Due
Diligence Period, Buyer, in its sole and absolute discretion, shall either (a)
provide written notice to Seller of Buyer’s determination that Buyer desires to
proceed to closing and purchase the Property in accordance with the Purchase
Agreement and furnish the increased deposit as required by Section 4.2, or (b)
terminate the Purchase Agreement, for any or no reason, by giving written
notice thereof to Seller.  If Buyer gives
written notice to Seller of Buyer’s election to terminate, then the Purchase
Agreement shall terminate and the Deposit with interest thereon shall be
returned to Buyer.

 

10.                               (Continued)
Documents Required at or before Closing:

 

10.2 (i) Standard Industrial/Commercial Multi-Tenant
Lease – Net (AIR form) between Buyer, as landlord, and Safe Publishing Company
Inc., as tenant, duly executed by Safe Publishing Company, Inc., and in the
form of Exhibit A attached hereto, together with the $30,000 security
deposit required thereunder.

 

10.3 (g) Standard Industrial/Commercial Multi-Tenant
Lease – Net (AIR form) between Buyer, as landlord, and Safe Publishing Company
Inc., as tenant, duly executed by Buyer, and in the form of Exhibit A
attached hereto.

 

11.                               (Continued)
Prorations and Adjustments:

 

11.8                           Notwithstanding
anything to the contrary in Section 11 or elsewhere in this Agreement, Seller
shall pay the costs of any standard title insurance, transfer or sales taxes,
and any title curative work it elects to undertake.  Buyer shall pay recording fees, extended
title insurance costs and all costs in connection with the physical inspection,
accounting audit and other investigations made in connection with Buyer’s due
diligence review.  The Buyer and Seller
shall pay for their respective attorney fees. 
All escrow fees shall be paid equally by Buyer and Seller.

 

12.                               (Continued)
Representation and Warranties of Seller and Disclaimers:  UPON CLOSE OF ESCROW AND EXCEPT AS
OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, THE PROPERTY WILL BE CONVEYED
TO BUYER “AS IS, WHERE IS WITH ALL FAULTS” WITH NO RIGHT OF SET-OFF OR
REDUCTION IN THE PURCHASE PRICE, AND SUCH SALE SHALL BE WITHOUT REPRESENTATION
OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED (INCLUDING, WITHOUT LIMITATION,
WARRANTY OF USES, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE), AND
SELLER DISCLAIMS AND RENOUNCES ANY OTHER REPRESENTATION OR WARRANTY.  BUYER UNDERSTANDS THAT SELLER IS MAKING NO
REPRESENTATIONS OR WARRANTIES REGARDING THE PROPERTY OR ITS PHYSICAL OR LEGAL
CONDITION (EXCEPT TO THE MINIMUM EXTENT THAT ANY NONWAIVABLE REPRESENTATIONS OR
DISCLOSURES ARE REQUIRED UNDER APPLICABLE LAW, OR AS OTHERWISE EXPRESSLY

 

 

ADDENDUM TO THE STANDARD OFFER, AGREEMENT AND
ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE, DATED DECEMBER 23, 2004, FOR
THE PREMISES AT 5775 LINDERO CANYON ROAD, WESTLAKE VILLAGE, CALIFORNIA, WHERE
GUITAR CENTER, INC. IS THE BUYER AND JOHN M. GOODEN AND DENISE M. GOODEN
ARE THE SELLERS

 

PROVIDED IN THIS AGREEMENT). 
BUYER THEREFORE ACKNOWLEDGES THAT EXCEPT AS TO THE MINIMUM EXTENT OF ANY
NONWAIVABLE, MANDATORY REPRESENTATIONS OR DISCLOSURES AS DESCRIBED IN THE
FOREGOING PARENTHETICAL, OR AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
BUYER SHALL RELY SOLELY ON BUYER’S OWN INSPECTIONS AND INVESTIGATIONS AND NOT
ON ANY STATEMENTS OR REPRESENTATIONS BY SELLER OR SELLER’S AGENTS.

 

14                                  Buyer’s
Entry.  Notwithstanding the other
provisions in Section 14, Buyer may not conduct a Phase II examination of the
Property without Seller’s prior consent. 
Buyer shall have the right to conduct a Phase I examination of the
Property, it being understood that the Phase I examination in Seller’s current
possession (of which a copy will be provided by Seller to Buyer on or before
the commencement of the Due Diligence Period) is at least several years
old.  Buyer shall indemnify and defend
with counsel reasonably acceptable to Seller, and hold Seller harmless from,
all claims (including claims of lien for work or labor performed or materials
or supplies furnished), demands, liabilities, losses, damages, costs, fees and
expenses, including Seller’s reasonable attorneys’ fees, costs and expenses,
arising from the acts or activities of Buyer or Buyer’s agents, employees or
representative in, on or about the Property during or arising in connection
with Buyer’s inspection of the Property.

 

23.7 1031 Exchange (continued):  Buyer acknowledges that Seller is disposing
of the Property in a transaction intended by Seller to qualify as a deferred
like-kind exchange under Internal Revenue Code Sec. 1031 (the “Exchange”) and
that Seller may assign its obligation to transfer the Property to Buyer under
the definitive Purchase and Sale Agreement to a qualified intermediary (“QI”)
to complete the Exchange, so long as: (i) there is no delay in the Closing,
(ii) there is no additional cost to Buyer, and (iii) Buyer is not required to
take title to any property other than the Property.

 

24.                               Brokers
(continued):  Seller shall compensate
Level One Commercial Real Estate Services pursuant to the terms of a separate
agreement.  Buyer shall compensate CB
Richard Ellis, as Buyer’s representative, in an amount equal to one percent
(1%) of the Purchase Price, which amount shall be paid through Escrow at the
Closing.

 

27.                               Americans
with Disabilities Act - ADA:  Please
be advised that an owner or tenant of real property may be subject to the
Americans With Disabilities Act (the ADA), a Federal law codified at 42 USC Section
12101 et seq.  Among other requirements
of the ADA that could apply to the Property, Title III of the ADA requires
owners and tenants of “public accommodations” to remove barriers to access by
disabled persons and provide auxiliary aids and services for hearing, vision or
speech impaired persons by January 26, 1992. 
The regulations under Title III of the ADA are codified at 28 CFR Part
36.  Buyer is urged to review the ADA and
regulations as CB Richard Ellis and Level One Commercial cannot give legal advice
on these issues.

 

28.                               Assignment:  Buyer shall have the right, after giving
written notice to Seller, to assign its rights under the Purchase and Sale
Agreement and this Addendum to any entity controlled by, or under common
control of, Buyer, so long as a delay is not created.

 

29.                               Lease-Back
of Premises:  Effective as of the
Closing, Safe Publishing, Inc. (“Tenant”) will lease its existing premises for
one (1) period of six (6) months to facilitate Tenant’s relocation to space
outside of the Property.  Lease rate
shall be Fifty-three Thousand Dollars ($53,000) per month, triple net.  Seller shall be granted the right to cancel
this lease with thirty (30) days notice; provided, however, that the minimum
lease term shall be three (3) months. 
The lease terms will be incorporated in AIR form of Standard
Industrial/Commercial Multi-Tenant Lease – Net attached hereto as Exhibit A.  The lease presently in effect between Seller
and Tenant shall be cancelled by Seller and Tenant, effective as of the
Closing.

 

30.                               Buyer’s
Representations.  Notwithstanding
anything to the contrary set forth in this Agreement, Buyer hereby warrants and
represents to Seller that, as of the date of this Agreement and as of the
Closing, this Agreement and the performance of Buyer’s obligations under it and
all the documents executed by Buyer that are to be delivered to Seller at the
Closing are, or on the Closing date will be, duly authorized, executed and
delivered by Buyer and are, or at the Closing date, will be, legal, valid and binding
obligations of Buyer and do not, and on the Closing date, will not, violate any
provisions of any agreement or judicial order to which Buyer is a party or to
which Buyer or the Property is subject. 
No consent of any partner, shareholder, creditor, investor, judicial or
administrative body, government agency or other party is required for Buyer to
enter into or to perform Buyer’s obligations under this Agreement, except as
has already been obtained.  Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is qualified to do business as a foreign
corporation in the State of California.

 

 

ADDENDUM TO THE STANDARD OFFER, AGREEMENT AND
ESCROW INSTRUCTIONS FOR PURCHASE OF REAL ESTATE, DATED DECEMBER 23, 2004, FOR
THE PREMISES AT 5775 LINDERO CANYON ROAD, WESTLAKE VILLAGE, CALIFORNIA, WHERE
GUITAR CENTER, INC. IS THE BUYER AND JOHN M. GOODEN AND DENISE M. GOODEN
ARE THE SELLERS

 

AGREED AND ACCEPTED:

 

BUYER:  
GUITAR CENTER, INC.

 

	
  By:

  	
  /s/ Leland P. Smith

  	
   

  
	
   

  
	
  Its:

  	
  Senior V.P.

  	
   

  
	
   

  
	
  Date:

  	
  December 23, 2004

  	
   

  
	
   

  
	
   

  
	
  SELLERS:

  
	
   

  
	
   

  	
   

  
	
  John M. Gooden

  
	
   

  
	
   

  	
   

  
	
  Denise M. Gooden

  
	
   

  
	
  Date:

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