Document:

Exhibit 10.01

                 PURCHASE AND SALE AGREEMENT OF SHOPPING CENTER

         THIS PURCHASE AND SALE AGREEMENT ("Agreement") is entered into
effective September 1, 2004 (the "Effective Date"), by and between MONTGOMERY
REALTY GROUP, INC., a Nevada corporation (hereinafter "Seller") (with right of
assignment), and PAUL PRIES, an individual or assignee (hereinafter "Buyer") and
is based upon the following facts and representations:

                                    RECITALS

         A.       Seller owns that certain real property consisting of 4.27
                  acres of land, more or less, commonly known as the Orchard
                  Supply Shopping Center located at 1041 & 1061 Market Place,
                  San Ramon, California (hereinafter the "Shopping Center").

         B.       The Shopping Center consists of certain real property
                  comprising of land, appurtenances, improvements, buildings,
                  fixtures and personal property all of which is collectively
                  referred to hereinafter as the "Property".

         C.       Buyer wishes to purchase the Property, on the price and terms
                  set forth herein.

         NOW, THEREFORE, in consideration of the mutual promises contained
herein, Seller and Buyer agree as follows:

                                    AGREEMENT

         1. ASSETS INCLUDED IN SALE. Seller hereby agrees to sell and convey to
Buyer, and Buyer hereby agrees to purchase from Seller, the following:

                  (a) Land. That certain parcel of land consisting of
approximately 4.27 acres, more or less, described as Assessor's Parcel No.
213-702-007-5, located in the City of San Ramon, County of Contra Costa,
California, and more particularly described in Exhibit `A' attached hereto
(hereinafter the "Land").

                  (b) Appurtenances. Any and all rights, privileges and
easements appurtenant to the Land, including without limitation, all minerals on
and under the Land, all oil, gas or hydrocarbon drilling rights as well as all
development rights and credits, air rights, solar rights, water, water rights
whether within or without the Land, and any easements, rights-of-way or other
appurtenances used in connection with the beneficial use and enjoyment of the
Land including but not limited to all existing licenses, authorizations,
approvals, zoning permits, together with any development permits, subdivision
map applications, surveys or similar rights which may accrue to the benefit of
the Property from the date this contract is entered into until the closing date,

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

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<PAGE>

as the same may be incidental to or appurtenant to the Land (hereinafter,
collectively, the "Appurtenances");

                  (c) Improvements. Any and all buildings and improvements
together with fixtures and articles of attached or appurtenant to or used in
connection with the Shopping Center, including but not limited to, all
apparatus, equipment and appliances used in connection with the operation and
occupancy thereof, such as heating and air conditioning systems (hereinafter
"HVAC") and facilities used to provide any utility services, ventilation, or
other services thereto, together with all plumbing, lighting, electrical and
related fixtures, and any pumps, water tanks, signs, benches, shrubbery or
outdoor statuary, to the extent that they are located in or on the premises
herein described (all of which hereinafter collectively referred to as the
"Improvements").

                  (d) Personal Property. Any and all personal property of Seller
located on or in or used in connection with the operation of the Shopping
Center. The personal property that will be transferred by Bill of Sale at the
closing is more fully set forth on a completed inventory list attached hereto as
Exhibit `C' (hereinafter "Personal Property"); and

                  (e) Intangibles. Seller shall assign to Buyer any and all
interest of Seller in any and all leases and/or rights of first refusal as the
same may be connected with the Property, together with any and all development
applications, permits, maps, surveys, studies or other rights that may currently
exist or which may arise between the date this contract is executed and the
closing date (hereinafter the "Intangibles"). Seller shall convey all
Intangibles that it has in and to all development rights and other intangibles,
including but not limited to, certificates of occupancy, licenses,
authorizations, approvals, permits, and signage rights relating to or affecting
the Property to the extent the same may be owned controlled by Seller and are
assignable to Buyer which intangibles are listed in Exhibit `D.

                  (f) Leases and Security Deposits. Seller shall assign and
Buyer shall assume all tenant leases in effect at the Closing date pursuant to
the Assignment and Assumption of Lease Agreement set forth on Exhibit `H'
attached hereto.

                  (g) Other Contracts. Seller shall assign such maintenance
contracts, service contracts and similar matters as Buyer may chose to assume.
Buyer and Seller shall determine which contracts Buyer wishes to assume and
Buyer and Seller shall execute an Assignment and Assumption Agreement as to said
contracts in form substantially similar to that set forth on Exhibit `I'
attached hereto. As to all maintenance, service and similar contracts which
Buyer does not wish to assume, Seller shall use reasonable commercial efforts to
terminate said contracts effective as of the Closing date. The tenant leases,
together with the maintenance, service and related contract rights that Buyer
elects to assume are hereinafter collectively referred to as the "Contract
Rights."

                  All of the items described in subsections (a), (b), (c), (d),
(e), (f), and (g) above are intended to be consistent with each other and in

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

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furtherance of the parties objective that Buyer is purchasing all of Seller's
interests in the Property itself so as to own and control such interests to the
same extent that Seller owns and controls them except as to those rights are
non-assignable, related to adjacent properties, or specifically excepted by
other provisions of this Agreement.

         2. PURCHASE PRICE. The Contract Purchase Price of the Property is SEVEN
MILLION NINE HUNDRED FIFTY THOUSAND DOLLARS ($7,950,000) (hereinafter the
"Contract Purchase Price").

         3. BUYER'S DEPOSITS WITH ESCROW. Deposits shall be made by Buyer as
follows:

                  (a) Initial Deposit. Within three (3) days after the Effective
Date of this Agreement, Buyer shall deposit in escrow with First American Title
Guaranty Company (hereinafter "Title Company") at its office at 1850 Mr. Diablo
Boulevard, Suite 300, Walnut Creek, California 94947, a deposit in the form of
cash in the amount of ONE HUNDRED FIFTY THOUSAND DOLLARS ($150,000,00)
(hereinafter "Initial Deposit"). All sums comprising the Initial Deposit shall
be held in an interest bearing account and interest accruing thereon shall be
held for the account of Buyer.

                  b) Additional Deposit. Within three (3) days after the removal
of Buyer's Contingencies as set forth below, including, but not limited, to
Section 5 regarding Title, Section 8 regarding property due diligence, and
Section 6 regarding the financing contingency. Buyer shall increase its deposit
with Title Company by making an additional deposit in the amount of ONE HUNDRED
FIFTY THOUSAND DOLLARS ($150,000) (hereinafter "Additional Deposit") such that
the total deposit by Buyer with Title Company shall then be THREE HUNDRED
THOUSAND DOLLARS ($300,000.00) (hereinafter "Increased Deposit"). All sums
comprising the Increased Deposit shall, except as provided by Paragraph (c)
below, be held in an interest bearing account and interest accruing thereon
shall be held for the account of Buyer. In the event the sale of the Property as
contemplated hereunder is consummated, the Increased Deposit plus interest
accrued thereon, if any, shall be credited against the Purchase Price.

                  (c) Refund of Deposit. In the event this Agreement terminates
for any reason within the first thirty (30) days from the Effective Date of this
Agreement, all deposits including interest which are held in escrow shall be
refunded to Buyer (together with interest thereon, if any) and neither Buyer nor
Seller shall have any further obligation under this contract.

                  (d) Liquidated Damages. The parties agree that in the event of
a breach of this Agreement by Buyer it would be difficult to measure Seller's
damages and that Seller's retention of the Increased Deposit shall constitute
Seller's measure of damages, said sum being liquidated damages, and said sum
being agreed upon by the parties hereto after review by their respective
attorneys.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       3
<PAGE>

                  THE PARTIES HAVE AGREED THAT SELLER'S ACTUAL DAMAGES, IN THE
                  EVENT OF A DEFAULT BY BUYER, WOULD BE EXTREMELY DIFFICULT OR
                  IMPRACTICABLE TO DETERMINE. THEREFORE, BY PLACING THEIR
                  INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE INCREASED
                  DEPOSIT AMOUNT HAS BEEN AGREED UPON, AFTER NEGOTIATION, AS THE
                  PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AND AS
                  SELLER'S EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY,
                  IN THE EVENT OF A DEFAULT UNDER THIS AGREEMENT SOLELY ON THE
                  PART OF BUYER.

                      Seller: _______                      Buyer: PP

         4. TITLE TO THE PROPERTY.

                  (a) Real Property. At the Closing, Seller shall convey to
Buyer (or assignee) marketable and insurable fee simple title to the Real
Property by duly executed and acknowledged grant deed in a form acceptable to
Buyer. Evidence of delivery of marketable and insurable fee simple title shall
be the issuance by Title Company of a CLTA Owner's Policy of Title Insurance, in
the full amount of the Contract Purchase Price insuring fee simple title to the
Real Property in Buyer, subject only to those exceptions as Buyer approves
pursuant to section 5 below. Said policy shall provide full coverage against
mechanics' or materialmen's liens and shall contain such special endorsements as
Buyer may reasonably require. The Title Company shall obtain, if requested by
Buyer, reinsurance agreements from such companies and in such amounts as Buyer
may request.

                  (b) Personal Property. At the Closing, Seller shall transfer
title to the personal property by a bill of sale in the form attached hereto as
Exhibit `C', such title to be free of any liens and encumbrances.

                  (c) Permits, Licenses and Intangibles. At the Closing, Seller
shall transfer all Intangibles together with other development rights by means
of Transfer and Assignment of Rights to Intangible Property attached hereto as
Exhibit `E'.

                  (d) Assignment & Assumption of Leases. At the Closing, Seller
shall transfer to Buyer and Buyer shall assume all liability under all tenant
leases currently in effect at the Shopping Center. The Assignment and Assumption
of leases shall be done by written instrument substantially in the form attached
hereto as Exhibit `H'.

                  (e) Assignment & Assumption of Service Contracts. At the
Closing, Seller shall transfer to Buyer and Buyer shall assume all liability
under those service contracts effecting the Shopping Center which Buyer elects
to assume. The Assignment and Assumption of Service Contracts shall be done by
written instrument substantially in the form attached hereto as Exhibit `I'.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

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<PAGE>

         5. TITLE INSPECTION AND CONTINGENCY REMOVAL.

                  (a) Title. During the time periods set forth below, Buyer
shall review and approve title to the Real Property. Within three (3) days from
the execution date of this Agreement, at Seller's sole cost and expense, Seller
or Seller's agent shall deliver to Buyer:

                  (i)      a current preliminary title report on the Real
                           Property issued by Title Company;

                  (ii)     at Buyer's request, and (except for documents already
                           in Seller's actual possession) at Buyer's sole cost
                           and expense, Buyer may order copies of all existing
                           and proposed easements, covenants, restrictions,
                           agreements or other documents as the same may relate
                           to the Property from the Title Company. However, to
                           the extent any of such documents are in Seller's
                           actual possession, Seller shall make copies of said
                           documents available to Buyer at Seller's sole cost
                           and expense. If Seller has no such documents exist,
                           Seller shall provide to Buyer a certification of
                           Seller to that effect;

                  (iii)    copies of the two (2) most recent property tax bills
                           for the property; and

                  (iv)     at Buyer's request and at Buyer's sole cost and
                           expense a chain of title report for the Real
                           Property.

                  Any exception to title is deemed accepted by Buyer unless
Buyer notifies Seller otherwise in writing. In any event, Seller hereby agrees
to remove all monetary liens, encumbrances and judgments of any nature
whatsoever encumbering title to the Real Property on or before closing of
escrow.

                  (b) Buyer's Contingency Removal Period. Buyer shall have ten
(10) days from the receipt of the preliminary title report set forth in
subsection 5(a) above to determine if, other than monetary liens which will be
paid off at the close of escrow, there are any exceptions to title to which
Buyer objects. Unless written notice of said objections is received within ten
(10) days of delivery of said preliminary title report, Buyer shall be deemed to
have approved all title matters. From the date of Buyer's approval of title,
Seller shall not permit any adverse change to arise to the title (other than
monetary encumbrances removable at the Closing) nor shall Seller permit any
cloud upon title not disclosed in the Preliminary Title Report to arise so as to
affect title at Closing. If Buyer does object to any title matter, then Seller
shall have five (5) days to advise Buyer that Seller can remove the title matter

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       5
<PAGE>

prior to the close of escrow, or whether the title matter is not curable by the
Closing. Buyer shall have three (3) days from Seller's reply to determine if
Buyer will accept title as Seller has indicated. If Buyer elects not to accept
title as Seller has indicated this Agreement shall terminate and neither party
shall have any obligation to the other party and the Initial Deposit shall be
returned to Buyer.

         6. PROPERTY DUE DILIGENCE CONDITIONS. Except for title matters as set
forth in Section 6 hereof, Buyer shall conduct its due diligence and either
terminate this Agreement or remove Buyer's due diligence contingencies and
proceed with this Agreement within thirty (30) days after the Effective Date of
this Agreement (hereinafter "Buyer's due diligence period"). All of Buyer's due
diligence contingencies are set forth in this Section 6. To facilitate Buyer's
due diligence Seller shall allow Buyer reasonable access to the Property and, to
the extent reasonably available to Seller, Seller shall provide Buyer with the
documents as more fully set forth below.

                  (a) Property Documents. Within ten (10) days of the Effective
Date of this Agreement, Seller shall deliver to Buyer to the extent the same are
available to Seller and in Seller's actual possession, the documents set forth
below. Said documents shall be supplied at a single time (except as otherwise
agreed upon between Buyer and Seller) and shall be delivered with a cover letter
setting forth all documents delivered pursuant to this Section 6. To the extent
that Seller does not have any of the following documents in its actual
possession, Seller shall indicate in its cover letter that it does not have any
such documents.

                  (b) The documents to be provided by Seller to Buyer shall
include the following:

                           1.       Copies of all tenant leases;

                           2.       Copies of all CAM receivable billings to
                                    Orchard Supply Center during the prior 24
                                    month period;

                           3.       Copies of all insurance billings to Orchard
                                    Supply Center during the prior 24 month
                                    period;

                           4.       A schedule of all repairs in excess of
                                    $5,000 performed at the Shopping Center
                                    during the prior 24 months;

                           5.       A current rent roll for the Shopping Center;

                           6.       Income and expenses statements for the
                                    Shopping Center for 2001, 2002 and 2003;

                           7.       Income and expense statements for the six
                                    months ended June 30, 2004;

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

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<PAGE>

                           8.       Any surveys of the Property in Seller's
                                    actual possession concerning the Shopping
                                    Center;

                           9.       Any property condition reports in Seller's
                                    actual possession concerning the Shopping
                                    Center;

                           10.      All appraisals of the Shopping Center
                                    performed during the past four (4) years;

                           11.      Any and all seismic engineering reports
                                    regarding the Shopping Center in Seller's
                                    actual possession;

                           12.      Copies of all licenses, plans, permits,
                                    signage rights, building plans, permits, all
                                    contracts affecting the Property as the same
                                    are in Seller's actual possession;

                           13.      Copies of all environmental reports
                                    affecting the Property as the same are in
                                    Seller's actual possession;

                           14.      Such other contracts or documents of
                                    significance to the Property.

                  (c) Review and approval or disapproval of reports generated is
at the Buyer's sole discretion.

                  (d) Survey. If Seller has a survey of the Property it shall be
delivered to Buyer together with the other property due diligence documents.
However, if Seller does not have a survey, or if the survey is no sufficient to
obtain an ALTA Title Policy, then Buyer shall obtain an ALTA survey of the Land
and deliver a copy thereof to Buyer as soon as practicable after its completion.
The ALTA land survey shall be used for purposes of inducing Title Company to
issue to Buyer at the Closing an ALTA Owner's Policy of Title Insurance.
Additionally, if Buyer, at Buyer's sole election conducts a survey for purposes
of determining the feasibility of a subdivision map and/or a tentative
subdivision, Buyer shall as soon as practicable after its completion deliver a
copy thereof to Seller. Within Buyer's due diligence period, Buyer shall review
and approve all surveys and related issues relating to the Property.

                  (e) Other Matters. Buyer shall review and approve within the
due diligence period all other matters relating to or effecting the Property.

                  (f) Cooperation of Seller. Seller shall cooperate with Buyer,
at no cost to Seller, to assist Buyer in Buyer's efforts to access to the
Property to conduct Buyer's due diligence investigation.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       7
<PAGE>

                  (g) Limited Actual Knowledge. Buyer acknowledges that Seller
is a Nevada corporation and that it does not directly manage the Property.
Accordingly, Seller's access to documents may be limited. Seller shall use
reasonable efforts to elicit from agents, property managers, employees and
others associated with the Property such documents that may be in their
possession so as to deliver the same to Buyer. Buyer acknowledges that Seller's
document production is likely to be very limited and Buyer will consequently
conduct its own due diligence inspections, employ qualified experts, agents,
employees, brokers or other persons of Buyer's sole choosing to conduct a
property due diligence in a manner satisfactory to Buyer in all respects. Buyer
shall rely upon its own experts, agents, employees, brokers and other persons
working for Buyer to determine whether the Property is satisfactory for Buyer's
purposes.

                  (h) Due Diligence Conditions. The foregoing conditions in this
Section 6 are all of Buyer's due diligence conditions precedent, and these
conditions precedent are intended solely for the benefit of Buyer. If within
Buyer's due diligence period, Buyer does not give Seller written notice of
approval of the due diligence contingencies, Buyer shall be deemed to have
elected to terminate this Agreement and the Initial Deposit shall be returned to
Buyer (together with interest thereon, if any). In the event Buyer gives written
notice of Buyer's acceptance and/or waiver of all said due diligence
contingencies, then this Agreement shall continue in full force and effect and
Buyer shall increase its deposit as set forth in Section 3 above. Once Buyer has
approved and/or waived its due diligence contingencies, Buyer may not cancel
this Agreement.

         7. BUYER'S INVESTIGATIONS OF PROPERTY CONDITION.

                  (a) Reasonable Access. Seller shall afford authorized
representatives of Buyer reasonable access to the Property for the purposes of
satisfying Buyer with respect to Buyer's due diligence inspections and the
representations and warranties of Seller herein, and with respect to
satisfaction of any conditions precedent to the Closing herein. Buyer shall also
have access to the Property for the purpose of conducting environmental surveys,
property condition investigations, market studies, other investigations, surveys
or other physical inspections or studies including but not limited to the roof,
plumbing, heating and air conditioning systems, structural integrity of the
improvements and any environmental or geologic conditions, or other matters that
Buyer may wish to include in its due diligence inquiry of the Property. Seller
shall cooperate with Buyer in providing access to the Property and satisfying
the conditions contained herein.

                  (b) Cost of Inspection. Buyer shall bear the cost of any
inspections or studies undertaken. Buyer shall indemnify and hold Seller free
and harmless from all claims and liability with respect to such physical
inspection or study or any costs arising in connection with respect to such
physical inspection or study or any costs arising in connection with the same
prior to the Closing herein except to the extent any claim or liability arises
from the willful misconduct or gross negligence of Seller, or its agents,
contractors, or employees. Buyer shall repair any damages to the Property caused
by such inspection or study, and shall otherwise restore the Property to
substantially the condition which existed prior to conduct of the same.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       8
<PAGE>

                  (c) Copies of all Documents. Buyer shall, to the extent Buyer
performs any property due diligence studies or reports, appraisals, market
studies, zoning studies and similar matters as the same may relate to Buyer's
due diligence investigation of the Property. Buyer shall supply copies of such
due diligence materials to Seller at no cost to Seller (other than any nominal
charges for photocopying or similar reproduction costs). Buyer shall, to the
extent Buyer performs property condition surveys, land surveys, environmental
surveys, appraisals, zoning studies, market studies and similar due diligence
matters, then Buyer shall supply copies of such due diligence materials to
Seller. Buyer acknowledges that if the transaction contemplated herein should
fail to close on the price and terms set forth herein, then Seller shall have
the right to use any and all of said due diligence information for either
Seller's own development of the Property or for the benefit of any future
purchaser; provided, however, that so long as Buyer and Seller remain in
contract under the terms of this Agreement, Seller shall keep all such due
diligence reports and information confidential and shall not disclose the same
to any back up offeror

         8. FINANCING CONTINGENCY. Within five (5) days after the Effective Date
of this Agreement, Seller shall disclose in writing to Buyer the name and
contact information regarding the lender that currently holds the first mortgage
loan that currently encumbers the Property. Within five (5) days of the date of
Seller's letter, Buyer shall contact said lender and use its best efforts to
solicit from the lender a written commitment permitting Buyer to assume the
existing first mortgage loan on Property at the Closing (which loan has a
principal balance of approximately $4,812,000). In connection therewith, Buyer
(or its assignee) shall supply all financial information requested by said
lender, including, but not by way of limitation, financial statements,
independent appraisals, opinions of outside accountants, opinions of counsel,
schedules of real estate owned and similar matters normally requested by
commercial lenders from owners of commercial real estate who seek to become
borrowers. Buyer shall also pay all application fees, appraisal fees and other
charges that may be necessary or appropriate to secure said loan assumption.
Buyer shall pay all loan documentation fees and loan assumption fees at or
before the Closing. Buyer shall have a total of forty-five (45) days from the
Effective Date of this Agreement to waive the financing contingency. In the
event the financing contingency set forth in this Section 8 is not waived within
said forty-five (45) day period, then either party may terminate this Agreement
upon written notice to the other party. In the event of such a termination,
Buyer's Initial Deposit (together with interest thereon, if any) shall be
returned to Buyer.

         9. BACK-UP OFFERS. At all times until the waiver of Buyer's due
diligence contingencies and Buyer increases its deposit to the amount of the
Increased Deposit so that there is a non-refundable deposit on account with
escrow, Seller shall have the right to solicit and accept back up offers. Seller
may enter into binding Agreements with other offerors; provided, however, that
any such agreements shall be subject to Buyer's rights under this Agreement.
Seller further agrees to work with Buyer in good faith to close this transaction
on the price and terms set forth herein.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       9
<PAGE>

         10. CONDITIONS PRECEDENT TO CLOSING.

                  (a) Buyer's Contingencies. This Agreement is expressly
contingent upon satisfaction of the following conditions (hereinafter "Buyer's
Contingencies") and Buyer shall have no obligation to close under this Agreement
unless all the following conditions have been satisfied or have been waived by
Buyer.

                  (b) Buyer's Title Contingencies. Approval by Buyer of all
title contingencies set forth in Section 5 of this Agreement within the time
periods set forth therein.

                  (c) Buyer's Property Due Diligence. Approval by Buyer of all
contingencies set forth in Section 6 above, during Buyer's thirty (30) day due
diligence period.

                  (d) Buyer's Financial Contingency. Approval by the existing
first mortgage lender within the time limitations set forth in Section 8, so as
to permit Buyer to assume the existing first mortgage loan, subject only to
Buyer's payment of an assumption fee and related costs.

                  (e) Commitment to Issue Buyer's Title Insurance. Escrow Agent
shall have agreed to issue to Buyer, Buyer's Title Insurance Policy, which
policy may not actually be received until after the Close of Escrow.

         After the satisfaction or waiver of Buyer's contingencies, failure by
either Seller or Buyer to conclude this Agreement shall constitute a material
breach by said party of this Agreement.

         11. CLOSING AND ESCROW.

                  (a) Closing Date. The closing date (hereinafter the "Closing
Date") hereunder shall be on such date that is ninety (90) days after the
removal of all contingencies, or if the scheduled close of escrow falls on a
Saturday, Sunday or legal holiday, then the close of escrow date shall be two
business days after the scheduled close of escrow date. Close of escrow shall
constitute transfer of possession.

                  (b) Escrow Funds. If Buyer has already increased its deposit
by the Additional Deposit Amount such that the Title Company is holding the
Increased Deposit, then if the Closing does not occur on or before the Closing
Date without fault by the Seller, then the Title Company as escrow holder shall
within two (2) business days after the scheduled Closing Date, return pay the
Buyer's Increased Deposit over to the Seller as liquidated damages.

                  (c) Escrow Instructions. Buyer and Seller shall each submit to
the Title Company, not less than three (3) days prior to the Closing Date,
additional escrow instructions consistent with the provisions of this Agreement.

                  (d) Seller's Documents. At least two (2) business days prior
to the Closing, Seller shall deliver to Title Company as escrow, the following:

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       10
<PAGE>

                           (i)      a duly executed and acknowledged grant deed
                                    conveying to the Buyer the Real Property and
                                    all rights, privileges and easements
                                    appurtenant thereto;

                           (ii)     a duly executed bill of sale covering the
                                    Personal Property, in the form attached
                                    hereto as Exhibit `C';

                           (iii)    a Certificate from the California Secretary
                                    of State (or a commercial reporting service
                                    satisfactory to Buyer) that indicates that
                                    as of the Certificate Date there are no
                                    filings against Seller in the office of the
                                    Secretary of State under the California
                                    Commercial Code that would be a lien on any
                                    of the items specified in said Bill of Sale
                                    above (other than such filings, if any, as
                                    are being released at the time of the
                                    Closing);

                           (iv)     an assignment and assumption of all rights
                                    to the various tenant leases effecting the
                                    Property, in the form attached hereto as
                                    Exhibit `H';

                           (v)      an assignment and assumption of service
                                    contracts effecting the Property, in the
                                    form attached hereto as Exhibit `I';

                           (vi)     originals of all, plans, specifications,
                                    reports and similar documents of
                                    significance as the same relate to the
                                    Property, if any.

                           (vii)    originals or copies of all service
                                    contracts, maintenance contracts and
                                    management contracts, if any, affecting the
                                    Property (hereinafter, collectively,
                                    "Service Contracts") to be continued by
                                    Buyer, as determined by Buyer in its sole
                                    discretion, after the Closing, and any
                                    warranties or guaranties received by Seller
                                    from any contractors, subcontractors,
                                    suppliers, materialmen, consultants,
                                    architects, engineers and others who have
                                    performed work on the Property;

                           (viii)   to the extent available to Seller originals
                                    of all architectural plans, designs,
                                    permits, studies, reports, or similar
                                    documents of significance relating to the
                                    Property;

                           (ix)     an affidavit of Seller that Seller is not a
                                    "foreign person" within the meaning of 26
                                    U.S.C. Section 1445 duly executed by Seller
                                    in the form attached hereto as Exhibit `E';

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       11
<PAGE>

                           (x)      closing statement in form and content
                                    satisfactory to Buyer and Seller;

                           (xi)     a certified copy of the corporate resolution
                                    authorizing the sale;

                           (xii)    a certified statement that the signatures on
                                    all transfer documents, Deed, Bill of Sale,
                                    Assignment & Assumption agreements and
                                    related documents are duly authorized
                                    signatures; and

                           (xiii)   any other documents, instruments or
                                    agreements called for hereunder which have
                                    not previously been delivered.

Buyer may waive compliance on Seller's part under any of the foregoing items by
an instrument in writing.

                  (e) Buyer's Documents and Funds. At least one (1) business day
prior to the Closing, Buyer shall deliver to Title Company as escrow, the
following:

                           (i)      the Purchase Price in immediately available
                                    funds;

                           (ii)     immediately available funds sufficient to
                                    pay all title insurance and other Closing
                                    costs allocable to Buyer as provided for
                                    herein;

                           (iii)    an acknowledgement of liability sunset
                                    reflecting the provisions of Section 11 of
                                    this Agreement in the form attached hereto
                                    as Exhibit `G';

                           (iv)     execution of the Assignment and Assumption
                                    of Lease form attached hereto as Exhibit
                                    `H';

                           (v)      execution of the Assignment and Assumption
                                    of Service Contracts in form attached hereto
                                    as Exhibit `I';

                           (vi)     Buyer's acceptance of Buyer's assumptions
                                    and obligation; and

                           (vii)    any other documents, instruments or
                                    agreements called for hereunder which have
                                    not previously been delivered.

Seller may waive compliance on Buyer's part under any of the foregoing items by
an instrument in writing.

                  (f) Other Documents. Seller and Buyer shall each deposit such
other instruments as are reasonably required by the Title Company as escrow
holder or otherwise required to close the escrow and consummate the purchase of
the Property in accordance with the terms hereof.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       12
<PAGE>

                  (g) Prorations. The Title Company shall prorate all rents,
non-delinquent real property taxes, water, sewer and utility charges, amounts
payable under the Service Contracts, annual permits and/or inspection fees
(calculated on the basis of the period covered), insurance premiums (as to those
policies, if any, that Buyer determines will be continued after the Closing),
and other expenses normal to the operation and maintenance of the Property on
the basis of a 365-day year as of 12:01 a.m. on the date the grant deed is
recorded. Seller shall endeavor to have all meters for serving utilities,
including but not limited to, water, sewer, gas and electricity read on the day
before the Closing Date for proration purposes.

         Seller and Buyer hereby agree that if any of the aforesaid prorations
cannot be calculated accurately on the Closing Date, then the same shall be
calculated within thirty (30) days after the Closing Date and either party owing
the other party a sum of money based on such subsequent proration(s) shall
promptly pay said sum to the other party, together with interest thereon at the
rate of ten percent (10%) per annum from the Closing Date to the date of payment
if payment is not made within ten (10) days after delivery of a bill therefore.

                  (h) Closing Expenses. Buyer shall pay the fee for the policy
of title insurance. Seller shall pay the cost of all transfer taxes applicable
to the sale as well as the full amount of any assessments or bonds on the Real
Property. Seller and Buyer shall each pay fifty percent (50%) of all escrow
charges, document processing fees and other charges (other than attorneys fees)
as the same may relate to the closing of this transaction.

                  (i) Closing. Upon satisfaction and completion of all other
matters set forth in this Section 9, escrow shall close and Seller's grant deed
shall be delivered to Buyer and recorded and all of Seller's other documents as
set forth above shall be delivered by Title Company to Buyer. At the Closing
Buyer's funds shall be paid to Seller, as Seller may so designate, and Buyer's
documents as set forth above shall be delivered to Seller.

                  (j) Estoppel Certificates. Seller shall obtain and deliver to
Buyer an estoppel certificate from Orchard Supply Hardware not later than the
expiration of Buyer's contingencies period as set forth in Section 8. As to all
other tenant estoppels, Seller shall supply them to Buyer not later than the
Closing. Said estoppel certificates from the existing tenants at the Property
shall be in the Form substantially similar to the estoppel certificate attached
as Exhibit `J' or in such other form of estoppel as may be set forth in the
lease with the particular tenant.

         12. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents
and warrants to Buyer, subject to the limitations of Section 11 below, as
follows:

                  (a) Title. Seller is the legal and equitable owner of the
Property, with full right to convey the same, and without limiting the
generality of the foregoing, Seller has not granted any options or rights of
first refusal to third parties to purchase or otherwise acquire any interest in
the Property which may impede or remain outstanding after the Close of Escrow.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       13
<PAGE>

                  (b) Assessments. To Seller's actual knowledge, there does not
exist, and there are no plans to impose, any governmental or quasi-governmental
assessments against or affecting the Property which will be binding on Buyer or
the Property after the Closing Date, except as specifically set forth on the
Title Report.

                  (c) Compliance with Laws. Seller has not received written
notice of any, and to Seller's actual knowledge there is no violation of any
applicable statute, ordinance, regulation, order, or other law, including,
without limitation, zoning regulations and obligations to obtain applicable
business licenses and permits, concerning the use of the Property or the
existence or construction of the Improvements.

                  (d) No Material Physical Defect. Except as disclosed to Buyer
in writing during the due diligence period of Section 6, hereof, to Seller's
actual knowledge, there are not now, and at the time of Closing there will not
be, any material physical defect concerning the Property;

                  (e) True Originals and Copies. The architectural plans,
consulting reports and all other contracts or documents delivered to Buyer
pursuant to this Agreement are, and at the time of Closing will be, true and
correct originals or copies;

                  (f) Pending Land Use Changes. Except as disclosed to Buyer in
writing, during the property due diligence period, Seller has no actual
knowledge of any condemnation, zoning or other land-use regulation proceedings,
either instituted or planned to be instituted, which would adversely affect the
use and operation of the Property for its intended purpose or the value of the
Property, nor has Seller received notice of any special assessment proceedings
affecting the Property.

                  (g) Licenses and Permits. Except as disclosed to Buyer in
writing during the property due diligence period hereof, Seller has a
certificate of occupancy and all permits and related matters for the normal use
and operation of the Property, in its current condition and all such licenses,
permits, authorizations, zoning, sign and signage approvals, easements and
rights-of-way are valid and current, and are in good standing and are
unencumbered.

                  (h) Labor Dispute. Seller is not a party to any labor dispute
that could adversely affect the Property.

                  (i) Contracts-Deeds Trust. Except for back up offer contracts
as set forth in Section 11 hereof, during the due diligence period hereof and at
the time of Closing there will be no outstanding contracts made by Seller
affecting the Property or for any improvements to the Property which have not
been fully paid for. Except as provided in Section 8 above, Seller shall cause
to be discharged all mortgages or deeds of trust in which Seller is Trustor and
which effect the Property prior to or at the Closing.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       14
<PAGE>

                  (j) Similar Operations. Seller knows of no facts and has not
failed to disclose any fact which would prevent Buyer from using and operating
the Property after Closing in the manner similar to the way other similar
properties in the area are operated.

                  (k) Hazardous Substances. Except as disclosed to Buyer in
writing during the due diligence period of hereof, to Seller's actual knowledge,
neither Seller nor any predecessor owner, occupant or user of the Property, or
any past or current tenant, has spilled, disposed of, released, or stored on,
under or at the Property any Hazardous Substances (excepting only minor
quantities maintained in accordance with commercially reasonable standards and
applicable environmental laws);

                  (l) Adjacent Properties. Except as disclosed to Buyer in
writing during the due diligence period hereof, Seller has no actual knowledge
that the Property or any adjacent property has been used as a dump or landfill
or that any Hazardous Substances have been generated, released, stored
(excepting only minor quantities maintained in accordance with commercially
reasonable standards and applicable environmental laws) or deposited over,
beneath or on the Property or the adjacent property.

                  (m) Government Inquiry. Except as disclosed to Buyer in
writing during the due diligence period hereof, Seller has not been notified of
any proceeding or inquiry by any governmental authority with respect to the
production, storage, disposal or use of any hazardous waste or other toxic or
hazardous substance on or under the Real Property.

                  (n) Hazardous Material Clean Up. Nothing in this Agreement
shall be deemed (a) a release of Seller from its liability, if any, to any
governmental entity or third party (including without limitation Buyer) for any
violation of applicable environmental laws; or (b) a waiver of any rights of
Buyer to seek contribution from Seller in any action under the provisions of the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq., or any other toxic or hazardous materials cleanup statute, law
or regulation; or (c) any statutory or common law indemnification by Buyer in
favor of Seller (or any other person or entity) respecting environmental or
related matters.

                  (o) Definition. As used in this Agreement the term "Hazardous
Substances" shall have the meaning set forth in 42 U.S.C. ss. 9601 (14),
expanded to include petroleum.

                  (p) No Litigation Pending. There is no litigation pending or
threatened against Seller or, to Seller's actual knowledge, any basis therefore
that arises out of the ownership of the Property or that might detrimentally
affect the proposed use or operation of the Property, or the value of the
Property or adversely affect the ability of Seller to perform its obligations
under this Agreement.

                  (q) Foreign Person. Seller is not a "foreign person" within
the meaning of 26 U.S.C. ss. 1445(f)(3).

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       15
<PAGE>

                  (r) Sufficiency of Documents. This Agreement and all documents
executed by Seller which are to be delivered to Buyer at the time of Closing
are, or at the time of Closing will be, duly executed and delivered by Seller,
and at the time of Closing will be sufficient to convey title (if they purport
to do so), and at the time of Closing will not violate any provisions of any
agreement or judicial order to which Seller is a party or to which Seller or the
Property is subject.

                  (s) Due Authority. This Agreement and documents, certificates
and instruments executed or to be executed by Seller in connection with the
transfer of the Property to Buyer have been or will be duly authorized, executed
and delivered, and each constitutes or shall constitute a legal, valid and
binding agreement enforceable against Seller in accordance with its terms.

                  (t) Covenants. Seller hereby covenants and promises to and for
the benefit of Buyer as follows:

                           (i)      Seller will not knowingly commit or
                                    knowingly permit any action that will result
                                    in a violation after the date of this
                                    Agreement of any applicable statute,
                                    ordinance, regulation, order or other law,
                                    including without limitation, zoning or
                                    environmental regulations concerning use of
                                    the Property or the existence or
                                    construction of the Improvements.

                           (ii)     Except as otherwise previously disclosed to
                                    Buyer in writing prior to the expiration of
                                    Buyer's due diligence period, Seller shall
                                    notify Buyer promptly of any written notice
                                    received by Seller of any lawsuits,
                                    condemnation proceedings, rezoning, or other
                                    governmental order or action thereof known
                                    to Seller which materially adversely affects
                                    the Property or any interests of Buyer
                                    therein.

                           (iii)    The existing insurance policies currently in
                                    effect with respect to the Property, or
                                    equivalent coverage, shall remain
                                    continuously in effect from the Effective
                                    Date of this Agreement to the Close of
                                    Escrow.

                           (iv)     Orchard Supply Hardware (OSH) self insures
                                    both its property damage insurance and its
                                    liability insurance. Consequently, funds
                                    from OSH may not also be used to repair or
                                    replace any damage to the Property, subject
                                    to the terms and conditions of lease.

                           (v)      After the date of this Agreement Seller
                                    shall not cause or permit to be recorded in
                                    the public records any matter encumbering
                                    the Property, and Seller's agrees that if
                                    any such matter is so recorded that Seller
                                    shall clear title by the Close of Escrow.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       16
<PAGE>

         12. NO REPRESENTATIONS BY SELLER. Seller makes no representations that
the Property is fit for a particular purpose, will meet the investment goals of
Buyer or will generate future income based upon past performance. Buyer shall
rely solely upon its own agents, brokers, employees, experts and others to
ascertain whether or not the Property meets Buyer's investment criteria. Except
for the representations and warranties expressly set forth in this Agreement,
which representations and warranties shall sunset at the Closing as set forth in
Section 14 below, no representation or warranty, express or implied is made by
Seller and Buyer shall rely solely upon its own investigation and judgment.

         13. REPRESENTATIONS AND WARRANTIES OF BUYER. All documents executed by
Buyer which are to be delivered to Seller at the Closing are to be or at the
time of Closing will be duly executed and delivered by Buyer (or assignee), and
are or at the Closing will be legal, valid and binding obligations of Buyer, and
do not and at the time of Closing will not violate any provisions of any
agreement, mortgage, deed, note or other document or instrument to which Buyer
is a party or to any court order to which Buyer is subject.

         14. WAIVER AND SUNSET.

                  (a) As Is. Notwithstanding any other provision of this
Agreement to the contrary, Buyer agrees to buy the Property "AS IS" and shall
not rely upon any representations or warranties of Seller as to the condition of
the Property, its suitability for as a retail shopping center, its financial
suitability or any other matter. Buyer agrees to rely solely upon its own
experts, consultants and professionals in determining the condition of the
Property.

                  (b) Sunset Provision. Seller has given certain representations
in this Agreement and it is the intent of the parties hereto that said
representations are given by Seller to Buyer for purposes of assisting Buyer
with the due diligence and Closing of this transaction. At the Closing, any and
all representations and warranties of Seller to Buyer shall cease and be
terminated such that, any representation by Seller contained in this Agreement,
will be true at the Closing, but shall not survive the Closing, such that absent
material falsity of said representation at the Closing, Buyer cannot suffer
damages as a result of any representation or warranty of Seller. Seller agrees
that its representations were made solely to assist Buyer in conducting Buyer's
due diligence investigation, and that Buyer is aware that all said
representations are "to the actual knowledge of Seller" such that Seller is not
assuring the ultimate truth of said representations, but merely indicating to
Buyer that Seller is not engaged in any fraud or concealment with respect to
matters effecting the Property.

                  (c) Buyer Reliance. Should any litigation arise by reason of
Seller's representations or warranties the parties intend that Buyer place no
reliance upon said representations, and that Buyer conduct an appropriate
inquiry into the truth or falsity of any and all representations to ascertain

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       17
<PAGE>

the true conditions of the Property. In any litigation, Seller have liability
only to the extent it can be shown that Seller willfully made a false
representation or willfully concealed a material fact from Buyer, and that Buyer
had no method whereby Buyer could protect itself based upon its own
investigation and diligence.

                  (d) Contractual Statute of Limitation. In no event may any
action for any reason be commenced against Seller by Buyer, Buyer's assignee, or
any successor in interest, more than sixty (60) days after the Closing
contemplated herein, and Buyer on behalf of itself, its assignees, successors
and assigns hereby waives any and all rights to recover any money from Seller
for any reason, unless action thereon is commenced within said sixty (60) day
period following the Closing. This "statute of limitations" provision shall
apply to any action brought against Seller including, but not limited to actions
based on Hazardous Substances or Seller's representations.

                  (e) No Oral Representation. Buyer and Seller agree that there
are no oral representations from either party.

         14. LOSS BY CASUALTY; CONDEMNATION. Until the date of Closing
hereunder, the risk of loss of, or damage to, the Property by fire or other
casualty, and the risk of its being taken in whole or in part by eminent domain,
shall be on Seller. If the Property or any part thereof is damaged by fire or
other casualty, one of the following shall apply:

                  (a) Repairable. If the damage can be repaired, Seller shall
have the option of restoring the damaged property to its condition immediately
prior to the occurrence causing the damage, in which event Buyer shall complete
the transaction as originally planned; provided that Seller shall be required to
exercise this option if the damage amounts to one million dollars ($1,000.000)
or less, the amount of the damage to be determined by independent appraisal if
the parties cannot agree.

                  (b) Non-Repairable. If the damage cannot reasonably be
repaired, or if Seller elects not to repair damage as provided above, or if the
Property is entirely or substantially destroyed, Buyer shall have the option of
taking the Property as is, together with the proceeds of all insurance payable
with respect to the damage or destruction, and paying the Contract Purchase
Price therefore. Alternatively, Buyer may elect to rescind this Agreement, in
which event all amounts theretofore paid by Buyer to or for the account of
Seller shall be returned to Buyer.

                  (c) OSH Self Repair. If OSH repairs damages to its premises
and/or compensates Seller by reason of either damages or an eminent domain, then
the sale of the Property under this Agreement shall proceed, with the Buyer
paying the full Contract Purchase Price, with any proceeds from OSH to be paid
to the Buyer or credited to Buyer's account.

                  (d) Condemnation. If the Property or any material part thereof
is taken or threatened by eminent domain, Buyer shall have the option of taking
what is left of the Property, together with the proceeds of any award made to

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       18
<PAGE>

Seller on account of the taking, and paying the Contract Purchase Price
therefore. Alternatively, Buyer may elect to rescind this Agreement, in which
event all amounts theretofore paid by Buyer to or for the account of Seller
shall be returned to Buyer. For purposes of this paragraph, a "material part of
the property" means $1,000,000; if less than a material part of the Property is
taken, Buyer shall complete the transaction under its original terms and shall
be credited with the amount of the award made to Seller for such taking.

         15. POSSESSION. Possession of the Property shall transfer to the Buyer
at the Closing.

         16. MAINTENANCE OF THE PROPERTY. Between the date of mutual execution
of this Agreement and the Closing, Seller shall maintain the Property in good
order, condition and repair, reasonable wear and tear excepted and Seller shall
otherwise operate the Property in the same manner as before the making of this
Agreement, the same as though Seller were retaining the Property.

         17. BUYER'S CONSENT TO NEW CONTRACTS EFFECTING THE PROPERTY. Seller
shall not, after the date of Seller's execution of this Agreement, enter into
any lease, amendment of lease, contract or agreement or permit any tenant of the
Property to enter into any sublease, assignment of lease, contract or agreement
pertaining to the Property without obtaining Buyer's prior written consent
thereto, which consent shall not unreasonably be refused.

         18. PERMITTED ASSIGNEE. Buyer may assign this Agreement with Seller's
prior written consent, which consent shall not be unreasonably withheld. For
purposes of determining "reasonable" shall be defined as a person or other
entity that has substantial net worth so as to fulfill all of the obligations of
this Agreement. Seller may request financial information from any prospective
Buyer or Assignee.

         19. MISCELLANEOUS.

                  (a) Notices. Any notice, consent, approval, waiver or other
communication required or permitted to be given under this Agreement shall be in
writing and shall be deemed to have been duly given when delivered personally or
five (5) days after deposited in the United States mail, certified mail, postage
prepaid, return receipt required, and addressed as follows:

                  If to Seller:      Mongomery Realty Group, Inc.,
                                     a Nevada corporation
                                     Attention: Dinesh Maniar
                                     400 Oyster Point Boulevard, Suite 415
                                     So. San Francisco, CA 94080
                                     Telephone: (650) 266-8080
                                     Facsimile: (650) 266-8089

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       19
<PAGE>

                  With a copy to:    James T. Graeb, Esq.
                                     400 Oyster Point Boulevard
                                     Suite 415
                                     So. San Francisco, CA  94080
                                     Telephone:  (650) 266-8080
                                     Facsimile:  (650) 266-8089

                  If to Buyer:       Mr. Paul Pries
                                     c/o Marcus & Millichap
                                     750 Battery Street, Suite 500
                                     San Francisco, CA  94111
                                     Telephone: (415) 391-9220
                                     Facsimile:

                  With a copy to:    Mr. Patrick Mockler
                                     Marcus & Millichap
                                     2626 Hanover Street
                                     Palo Alto, CA  94304
                                     Telephone:
                                     Facsimile:

or such other address as either party may from time to time specify by notice
hereunder to the other.

                  (b) Brokers and Finders. Seller shall be responsible for the
payment of the Seller's portion of the brokerage fees and/or commissions owing
to Marcus & Millichap by reason of this transaction, in such amount as is set
forth in a separate agreement. Said commissions shall be paid from escrow at the
closing. If any other broker or finder perfects a claim for a commission or
finder's fee based on any contact, dealings or communication with any party
hereto, the party through whom the broker or finder makes such claim shall be
responsible for said commission or fee and all costs and expenses (including
reasonable attorneys' fees) incurred by the other party in defending against the
same. Nothing in this Section or Agreement shall create any third party
beneficiary rights in favor of any broker. The provisions of this paragraph
shall survive the Closing.

                  (c) Successors and Assigns. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors,
heirs, administrators and assigns. Without being relieved of any liability under
this Agreement, Buyer reserves the right to take title to the Property in a name
or assignee other than Buyer.

                  (d) Assignment. Except as provided in Section 18 above,
neither party to this Agreement may assign this Agreement to another party,
except that Seller (or Maniar) may assign this Agreement to an IRC ss. 1031
exchange accommodator.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       20
<PAGE>

                  (e) Amendments. Except as otherwise provided herein, this
Agreement may be amended or modified by, and only by, a written instrument
executed by Seller and Buyer.

                  (f) Governing Law. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of
California.

                  (g) Merger of Prior Agreements. This Agreement contains the
entire agreement of the parties and supersedes all prior negotiations,
correspondence, understandings and agreements between the parties, relating to
the subject matter hereof.

                  (h) Enforcement. If either party fails to perform any of its
obligations under this Agreement or if a dispute arises concerning the meaning
or interpretation of any provision of this Agreement, the defaulting party or
the party not prevailing in such dispute, as the case may be, shall pay any and
all costs and expenses incurred by the other party in enforcing or establishing
its rights hereunder, including, without limitation, court costs and reasonable
attorneys; fees.

                  (i) Time of the Essence. Time is of the essence of this
Agreement.

                  (j) Exchange Transaction. In the event that Seller elects to
consummate the transaction contemplated herein by virtue of an exchange
transaction under Section 1031 of the Code, Buyer shall cooperate with Seller in
so effecting Seller's consummation of such transaction subject to the following
conditions:

                           (i)      The period for the Closing shall not be
                                    extended by such exchange transaction;

                           (ii)     Buyer shall not take title to any property
                                    as part of any such exchange transaction;

                           (iii)    Buyer shall not be required to advance any
                                    funds whatsoever or incur any obligation or
                                    liability whatsoever in connection with any
                                    such exchange transaction;

                  (k) Specific Performance. Seller acknowledges that in the
event of a breach or default or threatened breach or default under this
Agreement by Seller prior to the Closing, damages at law will be an inadequate
remedy and, accordingly, without in any manner limiting any other remedies
available to Buyer, Seller's obligations under this Agreement may be enforced by
specific performance.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       21
<PAGE>

                  (l) Attorneys' Fees. Seller and Buyer shall each bear their
own attorneys' fees in the performance of this Agreement; provided, however,
that in the event of a dispute between Buyer and Seller regarding enforcement or
interpretation of this Agreement, the prevailing party in such dispute shall be
entitled to recover from the other party all reasonable attorneys' fees costs
and expenses generated by reason of said dispute.

                  (m) Headings. The headings of the various sections of this
Agreement are for the convenience of the parties and shall not be used in the
interpretation of this Agreement.

                  (n) Interpretation. This Agreement shall be construed
according to the normal meaning of words and phrases, and shall not be read
against either party to this Agreement. In any dispute regarding interpretation
of this Agreement, the Court shall seek to base its interpretation on the normal
meaning of such words and phrases.

                  (o) Days and Business Days. As used in this Agreement, the
term "day" shall refer to a calendar day and the term "business day" shall refer
to any calendar day other than a federal holiday, Saturday or Sunday.

                  (p) Other Construction. As used herein the term "may" is
permissive and the term "shall" is mandatory. The term "will" means the
statement of an intention and not an obligation. The singular shall include the
plural and the neuter, the masculine and feminine.

                  (q) Further Assurances. Each party agrees to cooperate with
the other party and to execute such additional instruments and documents as may
be reasonably necessary or proper in order to carry out the provisions of this
Agreement.

                  (r) No Waiver. The waiver by either party of the performance
of any covenant, condition or promise shall not invalidate this Agreement and
shall not be considered a waiver of any other covenant, condition or promise.
The waiver shall not constitute a waiver of time for performing any other act or
any identical act required to be performed at a later time. The exercise of any
remedy provided in this Agreement shall not be a waiver of any remedy provided
by law, and the provisions in this Agreement for any remedy shall not exclude
any other remedy unless such remedy is expressly excluded.

                  (s) Invalid Provisions. If any one or more of the provisions
of this Agreement shall for any reason be held to be invalid, unenforceable or
illegal in any respect, such invalidity, illegality or unenforceability shall
not affect any other provisions of this Agreement, and this Agreement shall be
construed as if such invalid, illegal or unenforceable provisions had never been
set forth.

                  (t) Exhibits. All exhibits attached are incorporated into this
Agreement.

                  (u) Confidentiality. Buyer and Seller shall keep the terms and
conditions of the transaction contemplated by this Agreement confidential and
shall not disclose any information regarding the same prior to the Closing;

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       22
<PAGE>

provided, however, that both Buyer and Seller shall have the right to disclose
the terms of this Agreement and other information to their respective directors,
officers, employees, attorneys, consultants and such other persons or entities
from whom consent to transfer is required. Buyer shall have the right to make
inquiries regarding the Property of governmental officials and current and
former service providers, contractors, tenants and other persons having
knowledge of the Property and shall have the right to state as the basis for any
such inquiries that Buyer has entered into this Agreement with Seller for the
purchase and sale of the Property.

                  IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written. Seller.

                                              SELLER:

                                              MONTGOMERY REALTY GROUP, INC.
                                              a Nevada corporation

Dated: 9/8, 2004                              By: /s/ Dinesh Maniar
                                                 ------------------------------
                                                  Dinesh Maniar
                                                  President

Dated: 9/2/2004                               BUYER:

                                              By: /s/ Paul Pries
                                                 ------------------------------
                                                 Paul Pries

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       23
<PAGE>

                                   Exhibit "A"

                          DESCRIPTION OF REAL PROPERTY

REAL PROPERTY in the City of San Ramon, County of Contra Costa, State of
California, described as follows:

PARCEL ONE:

Parcel A as shown on the Parcel Map entitled "Minor Subdivision 902-95" filed
May 22, 1996, in Book 169 of Parcel Maps at Page 13, Contra Costa County
Records.

PARCEL TWO:

An easement, not to be exclusive, as an appurtenance to Parcel One above, for
the installation, construction and maintenance of an underground storm drain
over a portion of Lot 5 of Subdivision 6959 (324 M 29), as set forth in the
Declaration of Establishment of Utility and Access Easements and Covenants
recorded September 13, 1988, Book 14576, Page 301, Official Records and First
Amendment recorded September 23, 1988, Book 14608, Page 526, Official Records.

PARCEL THREE:

Rights appurtenant to Parcel One above as contained in the Declaration of
Reciprocal Easements executed by Dinesh Maniar, an unmarried man, recorded May
22, 1996, Series No. 96-94292, Offical Records.

A.P. No.: 213-702-007

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       24
<PAGE>

                                   Exhibit "B"

            LIST OF PERSONAL PROPERTY TO BE DELIVERED AT THE CLOSING

         To Be Determined During the Sixty (60) day Period Following the
Effective Date of This Agreement

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       25
<PAGE>

                                   Exhibit "C"

                              WARRANTY BILL OF SALE

         For and in consideration of the sum of Ten Dollars ($10.00) and other
good and valuable consideration the receipt of which is hereby acknowledged,
Montgomery Realty Group, Inc., a Nevada corporation ("Seller") does hereby sell,
transfer, and convey to Mr. Paul Pries (or assignee) ("Buyer"), the following
personal property which Seller warrants to be free and clear of all
encumbrances, to wit:

                  The personal property is itemized on Schedule of Personal
                  Property attached hereto and incorporated herein by this
                  reference.

         Seller does hereby covenant with Buyer that the undersigned is the
lawful owner of such personal property, and that the undersigned has good right
to sell the same as aforesaid and will warrant and defend the title thereto unto
Buyer, its successors and assigns, against the claims and demands of all persons
whomsoever. All such personal property is sold in its "as is" condition.

         DATED this _____ day of __________________, 2004.

                                             SELLER:

                                             MONTGOMERY REALTY GROUP, INC.
                                             a Nevada corporation

                                             By:_____________________________
                                                 Mr. Dinesh Maniar
                                                 President

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       26
<PAGE>

                                   Exhibit "D"

                     LIST OF INTANGIBLES, PERMITS AND RIGHTS

         To Be Determined During the Sixty (60) day Period Following the
Effective Date of This Agreement

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       27
<PAGE>

                                   Exhibit "E"

            TRANSFER AND ASSIGNMENT OF RIGHTS TO INTANGIBLE PROPERTY

         Montgomery Realty Group, Inc., a Nevada corporation (licensed to do
business in the State of California), as Owner of the rights, permits
authorizations and other intangibles, as set forth on Exhibit "D", does hereby
assign, convey, transfer and deliver without reservation all of its rights in
said items to Mr. Paul Pries or assignee ("Transferee").

         Transferor warrants that said rights, permits and authorization were
lawfully obtained and represents the rights and authorizations are as set forth
in the documents.

         The parties recognize that some of the "intangibles" listed on Exhibit
"D" may not be assignable, either by their terms or by operation of law.
Accordingly, Seller makes no warranty to Buyer as to Buyer's ability to operate
under such intangibles.

         DATED this _____ day of __________________, 2004.

                                             SELLER:

                                             MONTGOMERY REALTY GROUP, INC.
                                             a Nevada corporation

                                             By:_____________________________
                                                 Mr. Dinesh Maniar
                                                 President

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       28
<PAGE>

                                   Exhibit "F"

                              NON-FOREIGN AFFIDAVIT

         Section 1445 of the Internal Revenue Code provides that a transferee of
a U.S. real property interest must withhold tax if the transferor is a foreign
person. To inform the transferee that withholding of tax is not required upon
disposition of a U.S. real property interest by Montgomery Realty Group, Inc. a
Nevada corporation ("Seller"), the undersigned hereby certifies the following on
behalf of Seller:

         1. Seller is not a foreign corporation, a foreign partnership, a
foreign trust or a foreign estate (as those terms are defined in the Internal
Revenue Code and Income Tax Regulations); and

         2. Seller's U.S. taxpayer identification number is ; and

         3. Seller's office address is _______________________________,
_____________________, California _______________.

         Seller understands that this certification may be disclosed to the
Internal Revenue Service by transferee and that any false statement contained
herein could be punished by fine, imprisonment, or both.

         Under penalty of perjury, the undersigned declares that he has examined
this certification and to the best of his knowledge and belief it is true,
correct and complete, and he further declares that he has authority to sign this
document on behalf of himself.

         IN WITNESS WHEREOF, Montgomery Realty Group, Inc., a Nevada
corporation, through its corporate President, has executed this certificate as
of this ____ day of __________, 2004.

                                              SELLER

                                              MONTGOMERY REALTY GROUP, INC.
                                              a Nevada corporation

                                              By:_____________________________
                                                   Mr. Dinesh Maniar
                                                   President

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       29
<PAGE>

                                   Exhibit "G"

                  ACKNOWLEDGMENT OF LIABILITY SUNSET PROVISIONS

         Buyer hereby acknowledges that he is not relying on any representation
or warranties of Seller in purchasing this property and that Buyer is purchasing
the property AS IS, except that Buyer is relying on Seller's not having
willfully made a false representation or Seller's not having willfully concealed
a material fact from Buyer that Buyer could not have protected himself against
based on Buyer's own investigation and diligence. Buyer expressly agrees to be
bound by the sunset and limitations periods set forth in Section 20 of the
Purchase and Sale Agreement.

         Buyer hereby waives the provisions of California Civil Code ss. 1542
which section reads as follows:

         A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT
         KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
         RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
         SETTLEMENT WITH THE DEBTOR.

Dated September 2, 2004

                                                       /s/ Paul Pries
                                                     ---------------------------
                                                      Mr. Paul Pries

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       30
<PAGE>

                                   EXHIBIT "H"

                              ASSIGNMENT OF LEASES

         THIS AGREEMENT dated ______________, 2004 (the "Agreement"), is entered
into by and between Montgomery Realty Group, Inc, a Nevada corporation (licensed
to do business in the State of California) ("Assignor") and Mr. Paul Pries
("Assignee").

                                   WITNESSETH:

         WHEREAS, Assignor is the lessor under certain leases executed with
respect to that certain real property commonly known as the Orchard Supply
Shopping Center, San Ramon, California, which leases are described in Schedule 1
attached hereto (the "Leases");

         WHEREAS, Assignor desires to assign its interest as lessor in the
Leases to Assignee, and Assignee desires to accept the assignment thereof;

         NOW, THEREFORE, in consideration of the promises and conditions
contained herein, the parties hereby agree as follows:

         1. Assignor hereby assigns to Assignee all of its right, title and
interest in and to the Leases herein described.

         2. Assignor warrants and represents that as of the date hereof:

                  (a) The attached list includes all of the Leases affecting the
property being acquired by Assignee from Assignor. As of the date hereof, there
are no assignments or agreements to assign the Leases to any other party.

                  (b) The Leases are in full force and effect and there exists
no default on the part of Assignor thereunder, nor does Assignor have any actual
knowledge of any defaults or any acts or events which with the passage of time
or the giving of notice could become defaults thereunder on the part of any
tenant thereunder.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       31
<PAGE>

         3. Assignor hereby agrees to indemnify Assignee against and hold
Assignee harmless from any and all cost, liability, loss, damage or expense,
including without limitation, reasonable attorneys' fees, originating prior to
the date hereof and arising out of the lessor's obligations under the Leases
described in Schedule 1.

         4. Assignee hereby assumes all of the landlord's or lessor's
obligations under the Leases described in Schedule 1 and agrees to indemnify
Assignor against and hold Assignor harmless from any and all cost, liability,
loss, damage or expense, including without limitation, reasonable attorneys'
fees, originating subsequent to the date hereof and arising out of the lessor's
obligations under the Leases.

         5. In the event of any litigation between Assignor and Assignee arising
out of the obligations of the parties under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing party's costs and expenses or such litigation,
including, without limitation, reasonable attorney's fees.

         6. This Agreement shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.

         IN WITNESS WHEREOF, the Assignor and Assignee have executed this
Agreement the day and year first above written.

                           ASSIGNOR:

                                            MONTGOMERY REALTY GROUP, INC.
                                            a Nevada corporation

                                            By:_____________________________
                                                 Mr. Dinesh Maniar
                                                 President

                           ASSIGNEE:

                                            /s/ Paul Pries
                                            ------------------------------
                                             Mr. Paul Pries

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       32
<PAGE>

                                   Exhibit "I"

                         Assignment of Service Contracts
                            Warranties and Guaranties
                          and Other Intangible Property

         THIS ASSIGNMENT is made and entered into this _____ day of
______________, 2004, by Montgomery Realty Group, Inc., a Nevada corporation
("Assignor"), in favor of Mr. Paul Pries.

         FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby
acknowledged, Assignor hereby assigns and transfers unto Assignee all of its
right, title, claim and interest in and under:

         (A) all warranties and guaranties set forth in Schedule 1 attached
hereto, made by or received from any third party with respect to any building,
building component, structure, fixture, machinery, equipment, or material
situated on, contained in any building or other improvement situated, or
comprising a part of any building or other improvement situated on, any part of
that certain real property described in Exhibit A attached hereto;

         (B) all of the Service Contracts listed in Schedule 2 attached hereto;
and

         (C) any intangible property now or hereafter owned by Assignor in
connection with the real property described in Exhibit A or any improvements or
personal property located thereon, including without limitation, the right to
use any trade name now used in connection with said real property and any
governmental permits or licenses, agreements, utility contracts, or other rights
relating to the ownership, use or operation of said real property.

         ASSIGNOR AND ASSIGNEE FURTHER HEREBY AGREE AND COVENANT AS FOLLOWS:

         1. Assignor covenants that the Warranties and Guaranties described in
Schedule 1 and the Service Contracts described in Schedule 2 are in full force
and effect and there exist no defaults thereunder, nor any acts or events which
with the passage of time or the giving of notice could become defaults
thereunder, on the part of any party thereto.

         2. In the event of any litigation between Assignor and Assignee arising
out of the obligations of Assignor under this Assignment or concerning the
meaning or interpretation of any provision contained herein, the losing party
shall pay the prevailing, without limitation, reasonable attorneys' fees.

         3. This Assignment shall be binding on and inure to the benefit of the
parties hereto, their heirs, executors, administrators, successors in interest
and assigns.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       33
<PAGE>

         IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment
the day and year first above written.

                           ASSIGNOR:
                                              MONTGOMERY REALTY GROUP, INC.
                                              a Nevada corporation

                                              By:_____________________________
                                                   Mr. Dinesh Maniar
                                                   President

                           ASSIGNEE:

                                                 /s/ Paul Pries
                                                ------------------------------
                                                Mr. Paul Pries

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       34
<PAGE>

                                   Exhibit "J"

             Tenant's Estoppel Certificate and Attornment Agreement

To:

Re:   ______________________

         The undersigned (the "Lessee") understands that you are presently
negotiating the purchase of the certain real property commonly known as Orchard
Supply Hardware Shopping Center of which the Lessee is a tenant. The Lessee
hereby certifies the following information with respect to the Lease (the
"Lease", including any amendments to or modifications of the same) under which
the Lessee is a tenant and agrees that you may rely upon the same in purchasing
said real property:

         1. The copy of the Lease (including any amendments to or modifications
of the same) attached hereto as Exhibit A is a true, correct and complete copy
of the Lease, and the Lease is in full force and effect and has not been
modified or amended except as specifically set forth below.

         2. The Lessee asserts no claim of default or offset or defense against
the payment of rent or other charges payable by the Lessee and asserts no claim
against the Lessor under the Lease in regard to the premises occupied by Lessee.
There is no default by Lessor under the Lease.

         3. All fixed minimum rental has been paid to the end of the current
calendar month, which is _______________ and no rent under the Lease has been
paid more than one month in advance of its due date except as stated in Item no.
10 below regarding security deposits.

         4. The premises leased to Lessee are ______ square feet of retail
space.

         5. Date of original Lease: _____________________________ Dates of any
amendments or modifications:
________________________________________________________________________________

         6. Current annual fixed minimum rental:________________________________
_______________________________________________________________

         7. Lease termination date: ____________________________________________

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       35
<PAGE>

         8. The Lease provides for an option to renew the Lease term as follows:
________________________________________________________________________________

         9. The Lease contains no first right of refusal, option to expand, or
option to terminate, except as follows: ________________________________________
No notice to terminate has been given by the undersigned.

         10. Lessor is holding a security deposit of $ __________.

         11. The undersigned is not in default under the Lease and is current in
the payment of any taxes, utilities, common area maintenance payments, or other
charges required to be paid by the undersigned.

         12. The improvements and space required to be furnished according to
the Lease have been duly delivered by the Lessor and accepted by the Lessee.

         13. Lessee has no defenses as to its obligations under the Lease and
claims no setoff or counterclaim against Lessor, except as provided as follows
in the lease:__________________________.

         14. Lessee has not received notice of any assignment, hypothecation,
mortgage, or pledge of Lessor's interest in the Lease or the rents of other
amounts payable thereunder, except for notice of Lessor's assignment to County
Savings Bank.

         15. Lessee has not entered into any sublease, assignment or other
agreement transferring any of its interest in the Lease or the leased premises.

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       36
<PAGE>

         16. The Lessee certifies that he is required to pay a pro rata share of
real property taxes, as well as pro rata share of the operating expenses.
Moreover, the Lessee is required to pay or all utilities, including water and
sewer, used in and upon the leased premises.

         17. Under the Lease the Lessee is entitled to the use of _____________
parking spaces.

Dated: ____________, 2004

                                                Very truly yours,

                                                By:_____________________________
                                                Its: ___________________________

                    Buyer and Seller acknowledge receipt of a copy of this page.
                                                 Buyer's Initials (PP)(_______)
                                                 Seller's Initials (DM)(_______)

                                       37QuickLinks
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Exhibit 4.2  

 
 

AMENDMENT NO. 2 TO
  RIGHTS AGREEMENT    
    

        This AMENDMENT NO. 2, dated as of September 7, 2004 (this "Second Amendment") to the Rights Agreement (the
"Rights Agreement"), dated as of January 25, 1995, by and between Ultimate Electronics, Inc., a Delaware corporation (the
"Company") and Wells Fargo Bank, N.A. (formerly known as Norwest Bank Minnesota, N.A.) (the "Rights
Agent") as amended by that certain Amendment No. 1 to the Rights Agreement, dated as of January 31, 1995 (the "First
Amendment"), is entered into by and between the Company and the Rights Agent. Capitalized terms used without definition herein are as defined in the Rights Agreement. 

        WHEREAS,
the parties hereto now wish to amend the Rights Agreement in accordance with Section 27 of the Rights Agreement. 

        NOW,
THEREFORE, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration the receipt and sufficiency of which the parties
expressly acknowledge, the parties agree as follows. 

        1.     Amendment to Section 7(a). Section 7(a) shall be amended by deleting Section 7(a) in
its entirety and replacing it with the following: 

        (a)   Except
as otherwise provided herein, the Rights shall become exercisable on the Distribution Date, and thereafter the registered holder of any Right Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein) in whole or in part, upon surrender of the Right Certificate, with the form of election to purchase on the reverse side
thereof duly executed, to the Rights Agent at the office or agency of the Rights Agent designated for such purpose, together with payment of the Purchase Price for each one one-hundredths
of a Preferred Share as to which the Rights are exercised, at any time which is both after the Distribution Date and prior to the earliest of (i) the close of business on February 10,
2007 (the "Final Expiration Date"), (ii) the time at which the Rights are redeemed as provided in Section 23 hereof (the "Redemption Date") or (iii) the time at which such Rights
are exchanged as provided in Section 24 hereof. 

        2.     Miscellaneous. 

        2.1.  The
terms and provisions of the Rights Agreement shall remain in full force and effect except as specifically modified by the First Amendment and this Second Amendment. 

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

        2.3.  The
First Amendment, this Second Amendment and the Rights Agreement (including schedules and exhibits hereto and thereto) sets forth the entire understanding of the
parties relating to the subject matter hereof and thereof and supersede all prior agreements and understandings among or between any of the parties relating to the subject matter hereof. This Second
Amendment may not be amended, modified, altered or supplemented other than by means of a written instrument duly executed and delivered on behalf of the parties hereto. 

        2.4.  Each
party shall execute and deliver such further documents and instruments and shall take such other further actions as may be required to carry out the intent and
purposes of this Second Amendment. 

[Signature
Page to Follow] 

 

        IN
WITNESS WHEREOF, the undersigned have executed this Second Amendment as of the date first above written. 

	

 	
 	

ULTIMATE ELECTRONICS, INC.
	

 	
 	

By:	
 	

/s/  DAVID A. CARTER      

	 	 	Name:	 	David A. Carter
	 	 	Title:	 	Senior Vice-President Finance, Chief Financial Officer, and Secretary
	

 	
 	

WELLS FARGO BANK, N.A.

(successor to Norwest Bank Minnesota, N.A.)
	

 	
 	

By:	
 	

/s/  CHERYL KELLY      

	 	 	Name:	 	Cheryl Kelly
	 	 	Title:	 	Officer and Account Manager

2

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AMENDMENT NO. 2 TO RIGHTS AGREEMENT

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